1984-12-11

Hon. Sinclair Stevens (Minister of Regional Industrial Expansion) moved: that Bill C-15, an Act respecting investment in Canada, be read the second time and referred to the Standing Committee on Regional Development.
He said: Mr. Speaker, the debate today is a debate on creating jobs for Canadians. It is a debate on getting Canadians to be more confident, more willing to invest their huge savings in productive investments. Canada needs in real terms about $100 billion in new equity investment between now and 1991. This Government, this Progressive Conservative Government, is planning now to achieve this target. The Liberal Government gave up. In doing so, I would suggest that they stopped thinking positively. The past Government was, in effect, willing to relegate some 600,000 Canadians to the jobless rolls rather than change an ideology they had become addicted to. Their hostility to what they called foreign investment was paramount.
The new agency described in Bill C-15, on which we are now commencing second reading debate, I would suggest will, in concert with the private sector, provincial Governments and our trade services, work with Canadian investors and nonCanadian investors to ensure that there are productive jobs created for Canadians between now and the 1990s. By changing the name of the agency, we will be sending a positive signal, changing from that hostile-sounding terminology of Foreign Investment Review Agency, to one of: We are open for business once again. I suggest that in changing the mandate from one of foreign investment review to Investment Canada we will demonstrate that indeed there is a strong, positive signal once again coming from Canada with respect to our investment potential, and that those who have money to invest, be they Canadian or non-Canadian, are once again welcome in this country.
[DOT] (UIO)
The Foreign Investment Review Agency, which we know was created in 1974, became, I suggest, an agency that was out of touch with the realities of 1980. Canada's economic
welfare and growth depend on investment. Much of this investment must come from non-Canadian sources. It must come from abroad, and indeed from the reinvestment of earnings by non-Canadian firms resident in Canada.
Canada's performance in the international race for investment has not been helped by FIRA, it has been hindered. Canada should be seen as an attractive place to invest, but unfortunately, in the minds and eyes of many of the world investors, Canada does not have that attractive image any longer. The negative impact of FIRA has given Canada a poor image among potential investors. Our capacity to compete in world markets for technology, investment and trade itself has consequently been hampered.
In a recent European Management Forum study Canada was ranked 22 out of 22 with respect to our attitude and receptiveness to inward investment, as they call it. Imagine, 21 countries such as Australia, New Zealand, Japan, the United States, the United Kingdom, Ireland and Greece were ranked higher on the list of those willing to welcome foreign investment than was Canada. This Government believes, Mr. Speaker, that that is not good enough. Those who are now jobless in the country expect the Government of the day to do more than simply discourage non-Canadian investment from this country, consequently cutting down our full potential. Every industrialized nation in that study was perceived to be more receptive to investment than Canada with respect to their individual countries. We will not allow Canada to continue in last place as a safe, welcome place for non-Canadian investment.
Investment Canada will adopt a positive stance toward non-Canadian investment but it will also want to encourage Canadian investors. Investment Canada, with its new mandate, will be designed to co-ordinate private sector investment, provincial Government activity, our trade services, and, of course, the role of the federal Government in achieving the productive plants, machinery and jobs that we need in Canada. In this new approach we are accepting the reality of the 1980s. We are once again putting Canada in step with the mood of the world today. We are not allowing some outworn ideology to say to Canadians that they cannot have that productive capital which non-Canadians may wish to invest in this country.
In short, let me say that we have found that there are many Canadians who would like to invest in this country. Certainly, they have the savings to invest in this country but they are hesitant because they do not have that necessary confidence to put their investment dollars to work.

December 11, 1984
Investment Canada Act
We also find that there are non-Canadians who are interested in investing in Canada but they want Canadian partners. They believe that they would be more comfortable if they could work with Canadian investors in developing a business, industry or other activity here.
The purpose of Investment Canada as set out in Bill C-15 is to weld, to bring together, those types of investors. Its purpose is to bring Canadians who have funds to invest together with non-Canadian investors to work in a joint partnership, if you will. These non-Canadian investors may bring new technology or new distribution while also being interested in opening a plant in Canada with a view to serving not just the Canadian domestic market but all of the Americas and serving, through Canada, whatever demands there may be with respect to products that could be sold in the United States, Central and South America and throughout the world. This is what Investment Canada is hoping to achieve.
Let me direct Hon. Members' attention to Clause 5 of the Bill. It sets out some of the positive aspects that we perceive for Investment Canada. Clause 5 reads:
(1) The Minister shall
(a)	encourage business investment by such means and in such manner as the Minister deems appropriate;
(b)	assist Canadian businesses to exploit opportunities for investment and technological advancement;
(c)	carry out research and analysis relating to domestic and international investment;
(d)	provide investment information services and other investment services to facilitate economic growth in Canada;
(e)	assist in the development of industrial and economic policies that affect investment in Canada;
(f)	ensure that the notification and review of investments are carried out in accordance with this Act-
In short, this is a positive piece of legislation that will allow us once again to muster that investment which this country needs in plants and equipment to give our Canadian unemployed work in the future.
To those who may wish to oppose this Bill, I suggest they answer to the unemployed of this country as to why they are disinclined to allow the funds to be mustered to put those people back to work.
I have already set out certain of the subclauses that describe the positive aspects of this Bill. I would also emphasize that when this Bill becomes law it will also ensure that there will be suitable scrutiny of non-Canadian investment over certain thresholds. For example, with respect to direct acquisitions, we will review those that involve an investment of $5 million or more. The $5 million figure was chosen because, at this level, acquisitions are deemed to be of a consequential nature. If we take the 1983 figures as our base, it will mean that we have removed from any review 80 per cent in number of the cases that would ordinarily be reviewed. I would emphasize that the remaining 20 per cent that we will still be reviewing under this clause do represent 90 per cent of the assets involved based on the 1983 Figures.
In short, what we are saying is that with respect to new investment, as most of the Members realize from the kits we distributed, there will be no review other than in a very narrow sector.
With respect to acquisitions, we are saying that if they involve S5 million or more there will be a review that catches 90 per cent in dollar terms, but 80 per cent of what the previous Government was reviewing in number will not be reviewed any longer.
I would also mention that as far as reviews are concerned indirect acquisitions, which are now fully reviewable regardless of size, under the new legislation will only be reviewed if they involve an investment of $50 million or more.
Let us put this into perspective. It is one thing for me perhaps to say in numbers, and this is true if you take all the categories, that 90 per cent will not be reviewed, but I believe many people in Canada do not realize the nature of the review which the former Government was enforcing.
The hundreds of cases that went through are very revealing. Since I have had the responsibility for the existing legislation, I have been asked to pass on whether a non-Canadian should have the right to buy, say, a hair-stylist shop or a hamburger stand in Canada. Those were two applications.


Mr. Axworthy:: What about a popcorn stand?


Mr. Gauthier:: Silly Sine.


Sinclair McKnight Stevens: Another one that my friend mentioned was a popcorn wagon.


Some Hon. Members:: Oh, oh!


Lloyd Axworthy: Don't forget the peanut stand. That is usually part of your line.


Sinclair McKnight Stevens: This fellow, Mr. Speaker, who happened to be a non-Canadian, proposed to buy a popcorn stand from which he would sell, he said, peanuts, candy floss and other related items. When he made that proposal, his lawyers, and this is the law of the land, said: "Of course, you will have to clear that through FIRA". Apparently this fellow said: "What on earth is FIRA?" It was described to him as the Foreign Investment Review Agency of the Dominion of Canada. He made his application. On average, it takes $6,000, if you take the total budget of the existing agency, to process every application. The application chugged through the agency. In due course it came to me. I had to weigh whether this was a significant benefit to Canada. Having found that, in my opinion, it was a significant benefit, the application would then go to Cabinet itself.
The previous Government used up over 20 per cent of its Cabinet agenda reviewing these kinds of cases. This is why we are suggesting that 90 per cent of that type of review is not needed, that we can indicate people are welcome to come to Canada and get on with such investments. We have though
December 11, 1984

reserved the right in terms of indirect acquisitions, as I say, of $50 million or more and direct acquisitions of $5 million or more, to take a look at them and in that way we will catch the bulk of the big dollar items with respect to the legislation.


Mr. Waddell:: One minister.
[DOT] (U25)


Sinclair McKnight Stevens: I would emphasize that not only are we freeing up the system, we are allowing the system to function in the way the Hon. Member for Windsor West (Mr. Gray) perhaps anticipated when he wrote the original "Gray" report. This is often forgotten. In 1973 when the Foreign Investment Review Act was introduced, it followed the Gray report which recommended that the Government only intervene in important cases. This is sometimes forgotten.
1 would like to quote from the report. It recommended such interference or intervention by "limiting the review process to major transactions". It went on to indicate that such review would be possible to maximize economic impact while minimizing the number of cases subject to intervention.
In effect, by knocking out 90 per cent of the cases which are otherwise reviewable, we are simply putting in place what the original Gray report indicated was needed. This is where I suggest that perhaps the problem arose. Ideology was aided and abetted, we will recall, in that period from 1972 to 1974 by this red rump group over there.


Ian Gardiner Waddell: You are the ideologue; we are the practical ones.


Sinclair McKnight Stevens: The Government of the day brought in legislation which was far more sweeping than the Gray report ever anticipated. It was sweeping to the point of saying that every non-Canadian investment in the country should be subject to review.
Let me give another example. There is a moose hunting lodge not far from here which a non-Canadian thought he might like to buy. That of course triggered FIRA. We had to pass on that one. Apparently it is only open 10 days a year, but whether there was a significant benefit to Canada in having a non-Canadian buy that five acres with seven cabins on it had to be weighed. It took the might of the whole Cabinet to come to that determination.


Mr. Nielsen:: There is a significant benefit to the moose.


Lloyd Axworthy: That is about the level of judgment they could make.


Sinclair McKnight Stevens: My critic in the Official Opposition has made a comment. I remind him that when FIRA was put in place unemployment in the country was slightly over 5 per cent. Today it is over 11 per cent.


Mr. Orlikow:: What will it be a year from now?


Sinclair McKnight Stevens: A lot lower, my friend.


David Orlikow: We will look at it a year from now.
Investment Canada Act


Lloyd Axworthy: That is not what your Minister of Finance (Mr. Wilson) says. You had better read his report.


Sinclair McKnight Stevens: It is interesting how the socialists come alive when we start pointing out a few of the hard facts. They have been saying; "My goodness, don't water down this thing called FIRA because it may trigger unemployment in the country", totally ignoring the fact that the unemployment with which we are now living is more than twice as high, number-wise, what it was when FIRA was put in place. Even on a percentage basis, it has gone from 5 per cent to over 11 per cent.


David Orlikow: It will be 12 per cent next year.


Ian Gardiner Waddell: You are creating unemployment to fight inflation. Don't you know that?


Sinclair McKnight Stevens: Let me touch upon another point which I believe Bill C-15 improves tremendously. I am referring to the question of how soon a person who has to have his investment reviewed receives an answer. Under the Act at the present time, there is a 60-day period. However, if the Minister dawdles and does not come to a decision, it is a very simple thing to apply for an extension. Once the extension is applied for, there is no termination. Cases have run for over a year before a person is given a yes or no answer. One has run for 18 months.
[DOT] (M30)
That is one of the great deficiencies in the present legislation. A person has a right to know. We are suggesting in our Bill that a 45-day turnaround is appropriate. From the date the application is finally filed, the Minister should be able to get enough information, contact the provinces and the various Ministers that might be interested, come to a conclusion and give an answer within 45 days.
There is a further 30-day extension in cases where that is required. However, if the Minister has not made up his mind after 75 days, the application is deemed to be approved. This is another positive signal to send to those who are interested in investment in this country. We hope Members will support it.
I would emphasize that during that period all the normal checks will be made. What we will be determining is not whether it is of significant benefit to Canada. In all fairness, how can one say that a non-Canadian who wishes to buy a hair-stylist shop is making an investment that is of significant benefit? That is why we are suggesting that it is too nebulous a word. Let's call it net benefit. Do we find that there is a net benefit? If we do, the application should be approved within 45 days, certainly within the 75-day period.


Ian Gardiner Waddell: You are assuming they are negative once you use the word "net".


Sinclair McKnight Stevens: My socialist friend is spouting again. A socialist does not realize that there are credits and debits. As far as net benefit is concerned, I think even a socialist would realize that that is exactly what you have to weigh when you are considering whether an investment should be approved, wheth-

December 11, 1984
Investment Canada Act
er it is of net benefit to Canada. Over 90 per cent of the time even the previous Government said there was a benefit to Canada and approved the application. We are saying the test should be more clear. Call it net benefit and hopefully we will project an image that is positive in the world for Canadian investment rather than negative.
The changes I have mentioned so far can be seen as the correcting of the negative aspects of the Foreign Investment Review Act. Earlier I mentioned the positive aspects. Let me touch on the one reservation we have made within Bill C-15. For those investments that may be of a cultural nature or of a national identity nature, we feel that, regardless of size, there should be a review process. When the parliamentary committee is seized with this legislation, we would like it to make some suggestions as to what should be included under the headings of cultural and national identity.
We believe that by regulation there should be a provision that ensures that book publishing or the media field, for example, should not be allowed to pass into non-Canadian hands without a review. That is why we have that big reservation. It is not necessarily a question of whether an investment is over $5 million. It is much more a question of what is the nature of what is being acquired. I anticipate that at committee various groups in the cultural field will indicate why they feel that something other than book publishing, for example, should be included under that general heading. We are interested to hear from Members on that. That is an important exception to the over-all open, non-review position that we want to take.


Mr. Caccia:: How about films?


Sinclair McKnight Stevens: We have the suggestion of films. I hope the Hon. Member turns up at committee and makes his case. I am not saying that films will not be included under the heading of cultural or national identity as far as this cause is concerned.


Ian Gardiner Waddell: Can we sneak in oil companies too?


Sinclair McKnight Stevens: My socialist friend asks if we can sneak in oil companies. That shows their obsession. Regardless of the consequence and the number of people who may be thrown out of work, their ideology is paramount.
What I mainly want to do this morning is to give the highlights of this legislation, to stress that we believe it is a very integral part of our economic package to get this country back to work and get prosperity on the uptick once again. It is a very essential ingredient in our package. It is a campaign promise that we made very clear throughout the election. It is a promise that we believe the Canadian public expect us to deliver on in this House.


Some Hon. Members:: Hear, hear!


Jean-Robert Gauthier: That is the first applause you have had.


Sinclair McKnight Stevens: Oh, no. My friend is counting. That is seven.
The legislation before us, Bill C-15, is much more than a modification of the previous Act. This legislation heralds a new day for Canada. Investment Canada will take us from a negative and defensive policy to a positive and forward-looking policy. Critics charge, including my socialist friend, that the legislation throws the door open to economic domination by non-Canadians. They say we will be unable to control acquisitions of Canadian business. These suggestions demonstrate a lack of understanding of the contents of the Bill.
More important, those suggestions are unworthy of Canada. They indicate some unsureness. They indicate a reluctance for Canada to take its rightful position in the world today as one of the most active and dynamic countries, a country having great promise if we simply come into the 1980s and accept that there is a role for capital, be it Canadian or non-Canadian, in the building of this great country.
I will conclude by saying that this Bill respecting investment in Canada is intended to enable us to build bridges rather than barriers. Canadians want more from the Government than an investment watchdog. Canadians want to know that their Government is actively encouraging and seeking investment that is in their best interests. Moreover, Canadians want to know that their country is indeed back in business.
In closing, I would say that I welcome any constructive criticism that fellow Members of the House or of the other place may care to offer during debate on this Bill. 1 certainly look forward to hearing in our committee review the various representations, but through it all I have the genuine hope that these debates about an Act respecting investment in Canada will make Canadians proud once again to be Canadians in a world setting and will let the world know that Canada has now come up to the 1980s.


Some Hon. Members:: Hear, hear!


Mr. Deputy Speaker:: Does anyone wish to speak on debate? The Hon. Member for Winnipeg-Fort Garry (Mr. Axworthy).


David Orlikow: Mr. Speaker, I rise on a point of order. I was just wondering if there is a period for questions and comments at this time.


Mr. Deputy Speaker:: No, there are no questions after speeches of the first three speakers.


Lloyd Axworthy: Mr. Speaker, we welcome very much the introduction of this Bill by the Hon. Minister because it is the first major piece of economic legislation the Government has brought in as part of its so-called new regime of economic revival. Therefore, it gives this House its first chance to debate at some length and in a comprehensive way the outlines and positions of the new Conservative Government in relation to its stated objectives of economic growth.
We thank the Minister for his explanation of the Bill. I think he fully represents and constitutes the embodiment of
December 11, 1984

that kind of Conservative representation by which, for better or for worse, we will be governed for the next four years at minimum.
I think this is an important debate. 1 hope all Members of the House will take full advantage of it, listen to it carefully and respond to the arguments that are made. I would hope that the Hon. Minister and his colleagues both in Cabinet and in the Conservative caucus, rather than simply responding in some Pavlovian fashion to the call to arms and to the rhetorical flourishes, will listen carefully to what those opponents and critics of their positions have to say.
I believe that we come here sharing the same objective. We share an interest in creating work in the country. We have the shared goals of generating growth, encouraging investment and of having Canadian industry become a major participant in a new kind of world economy. When it comes down to our basic goals, I think we can say honestly that we on both sides of the House start from the same premise. Where we disagree fundamentally is in the methodology.
It is not as if one side or the other is for or against the creation of jobs. However, our primary concern with this legislation is that it is a faulty mechanism. It is one that is based upon seriously false premises. The end result of the enactment of this legislation will not be the creation of more jobs in Canada but will be the loss of jobs and economic opportunity. It will not provide an incentive for more Canadian investment but in fact will provide a deterrent to the establishment of an effective, modern, competitive, industrialized economy in Canada.
When living in an environment in which there is a requirement for individual countries to compete through high value-added products, manufacturing and high-technology industries, the end result of the Hon. Minister's legislation will be to provide a major deterrent and handicap to growth and development. Therefore, we have a very deep and abiding concern with this legislation.
We believe that if anyone has been caught up in ideology or theology, it is the high priest of the Ministry of Regional Industrial Expansion who has preached an evangelical sermon for years and has now found a new pulpit but in fact will not provide redemption for Canadians as a result. We will in fact find that the opposite will take place. That is why we hope that this debate will be listened to. We hope that we will be able to persuade, through argument at second reading and during committee stage, that there should be changes to this legislation in order not to damage Canadian business and in order to provide better incentives for Canadians to invest in their own economic system.
The real question is what is to be the proper direction and thrust of government policy in order to provide for the development of proper investment and effective job creation. I should say, by the way, that the two are not necessarily synonymous. The one thing we have certainly learned as we have moved into an age of knowledge-intensive industries is that new capital investment does not necessarily lead immediately to job creation unless the benefits of that capital investment and the
Investment Canada Act
profit from the wealth it creates is distributed in a way that will create jobs.
Someone could invest x amount of dollars in new machinery to gain productivity, but the end result, at least in that plant or location, would be the elimination of jobs. Therefore, to come at it from a simplistic point of view and simply say capital investment per se is sufficient does not take into account the realities of our present-day economy in which there can be a high level of job elimination or subtraction. What one must do is make sure that the capital investment is allocated and distributed, both on a regional and sector-by-sector basis, to ensure that there is a net gain in job creation for Canadians.
Another reason we have very serious concerns about what the Minister is trying to do is that, first, the so-called Investment Canada legislation is being brought forward in advance of the major economic Budget that the Minister of Finance (Mr. Wilson) has promised for next spring. It is not part of an integral, comprehensive plan. It is being rushed forward without giving Canadians an opportunity to see what the other parts of the formula will be. We are being given a one-shot unilateral approach by this Minister without having it put in the context of an economic policy.
What we have been promised by the Minister of Finance is consultation and discussion after which we will see the final results some time next spring. However, this Minister, for reasons known only to him or to his colleagues, has taken two initiatives which are quite outside the thrust of the approach of the Minister of Finance. Both his selling off the Crown corporations, thereby affecting in a very dramatic way development in the aerospace sector and the-


Sinclair McKnight Stevens: Positively.


Lloyd Axworthy: Negatively, because we do not know what the results will be. The Minister will not tell us. He will not tell us what the impact will be of selling to foreign buyers Cana-dair or de Havilland. We have the potential of another Avro Arrow on our hands. The Minister has not issued any guidelines, rules or conditions for that sale. This means that a foreign buyer can buy Canadair or de Havilland, strip its new technology and take it south, north, east or west and leave us with a hulk. The aerospace industry would then be abandoned. We have no idea what the framework of the sale will be because the Minister, when questioned before the committee, refused to say.
We are faced with a Minister who is not only working outside of the framework laid down by the Minister of Finance, but is initiating actions which have the serious potential of damaging major industrial sectors of the country. I suggest that the same fallacy is being perpetrated through this legislation. By not being able to judge its impact with relation to the other initiatives by the Government-which we will have to wait another six or seven months to see-we are being asked to buy a pig in a poke, one which carries with it some very serious potential problems for Canadian investors and Canadian business.

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Investment Canada Act
1 would like to deal in part with the major principles of this legislation. First, the Minister decides to change the name. To quote Shakespeare, "What's in a name?" The Minister has told us there has been a perception abroad that the very name "FIRA" has struck fear and loathing in the minds of foreign investors and that somehow there is an atmosphere of anxiety and apprehension over the very name "FIRA". I believe it would be of some interest to its officials to know that they have had this incredible amount of power over foreign investors, who are usually much more hard-nosed and calculating than that.
However, if we accept the statement made by the Minister just 20 or 30 minutes ago that there is this incredible sense of fear and loathing, how does he explain the statement by the United States ambassador, Mr. Robinson, who has never been known as a man who limits his statements? He has always been more than forthright and honest in his comments about Canadian programs and policies. I quote from the Conference Board of Canada, not what you would call a Liberal think-tank, by any means. On page 9 Mr. Robinson said: "Canada remains a very good country for people to invest their money". It seems to me that the U.S. ambassador is not subject to the same fear and loathing which the Minister of Regional Industrial Expansion (Mr. Stevens) believes.


Sinclair McKnight Stevens: He did not say "non-Canadians".


Lloyd Axworthy: Mr. Robinson said in fact that we had made changes and things were now improving.


Sinclair McKnight Stevens: Read page 58.


Lloyd Axworthy: Let me continue, Mr. Speaker, and ask about that big foreign investment community out there. A questionnaire was sent out and one of the questions was: "What is it that affects your decision to invest or not to invest in Canada?" Out of 333 companies, 6.6 per cent named some facet of government regulation; only 6.6 per cent, Mr. Speaker. That is the "atmosphere of fear and loathing" about which the Minister talks.
When asked what makes these investors invest, a much higher percentage of companies said it is the whole question of market opportunities, competitiveness and profitability, the normal criteria by which business people make decisions. This Government has gone to this enormous time, effort and expense to tell us we have to change the perception when in fact the perception is generally positive.


Sinclair McKnight Stevens: Read page 58.


Lloyd Axworthy: We have gone through the studies. We have received statements from the U.S. ambassador and, in fact, we could quote, if the Minister likes, a number of other similar statements. It is far more a problem, Mr. Speaker, in the minds-and I use that term loosely-of the Conservatives because it has been part of their theology. They have gone around the country year after year preaching hate against
FIRA. They have tried to whip up a storm of resentment. Where the problem has been is when Conservative spokesmen have appeared before American, German or French audiences and told them that FIRA is a terrible thing. That has been the problem, Mr. Speaker.
Let us look at the facts, Mr. Speaker, never mind the perception. Let us look at the reality. If there was such an incredible amount of anxiety out there, how does the Minister explain that last year over $4.1 billion of foreign capital was invested in this country?


Sinclair McKnight Stevens: That did not regain what we lost in 1981 and 1982. What about the money that left?


Lloyd Axworthy: The fact is, Mr. Speaker, that 1,000 foreign investors made applications and 97 per cent of those applications were approved. The Minister has tried to make out that FIRA was acting as some kind of a tight screen through which only the odd little person was able to sneak through, but 97 per cent of the applications last year were approved.


Sinclair McKnight Stevens: One hundred and sixty you did not even decide.


Lloyd Axworthy: Why does the Minister argue when somehow those who wanted to invest in Canada were, by and large, given the right to invest after they had properly gone through and been judged in relation to significant benefit to Canada? That is the key question. It is not the flow of capital which is the issue. It is what happens to the capital when it arrives. It is the impact of that capital and what it does in terms of creating jobs, research and development and world product mandates, which is the real issue.
It is the ultimate capitulation and surrender by this Government that it is totally eviscerating the opportunity of Canada to determine whether foreign capital will be used in a positive, constructive way, in order to ensure that the businesses which were acquired or started in this country would in fact be used to create jobs. By eliminating those requirements, by having no screening whatsoever for new business, by taking indirect acquisitions up to $50 million, and by raising the threshold for direct acquisitions, it is eliminating-as the Minister himself said-90 per cent of those applications, which means that investors can come into this country, buy a Canadian company, strip its technology, take it back to St. Louis, leaving nothing but the hulk; and the Minister says that is going to create jobs. That is the problem, Mr. Speaker, which this Minister does not understand.
FIRA was not used to keep capital out. It was used as a bargaining, leverage agency in order to make sure that we received proper benefits for this country.


Mr. Mazankowski:: You have to be kidding!


Sinclair McKnight Stevens: Most of them didn't even come to bargain.


Lloyd Axworthy: That was the reason for FIRA and those people opposite did not understand its performance. That is the blindness. That is the theology. That is the problem. Hon.
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Members opposite did not understand how it worked and they still don't. The Minister has been so blinded and conditioned for so long that he refuses to understand that the Foreign Investment Review Agency was an instrument designed to ensure that there was benefit from that capital for Canadians.
The end result of what the Minister is now doing is that Canadian companies which have developed a new technology, a value-added manufacturing base, can be acquired without any requirement or condition, and the benefits of that research and development or technology will not be given to Canadians but will be given to foreigners. Therefore, the net result of the Minister's initiative will not be the ability of Canadians to build a highly knowledge-intensive industry base, either in its traditional industries or its new industries, and we will run the real danger of having those attributes and assets stripped from Canadian companies and taken somewhere else. If the Minister thinks that that is going to create a place for Canada to compete in a highly competitive international atmosphere and environment, then, Mr. Speaker, he is out to lunch-


Charles L. Caccia: He is dreaming in colour.


Lloyd Axworthy: -and performing a serious disservice to the Canadian economy and to the Canadian business community.


Mr. Gustafson:: You have been out to lunch for 16 years.


Lloyd Axworthy: What interests me about the grand claims made for Investment Canada is that it is just not for foreign investment, it is going to be for all investment. We are going to have one central agency which will provide the stimulus and be the catalyst for all Canadian investors. But what does this legislation empower the Minister to do? He is empowered to publish a few pamphlets, from the looks of it. There is nothing in this legislation which provides any incentive, any more flexible opportunity for Canadian small business whatsoever. There is nothing here. It is a camouflage. It is a phony. It is a subterfuge. It is cosmetics. There is nothing which will enable the Canadian small business community to develop more capital.
Why has this Government been so reluctant and evasive in providing the kind of stimulus for small business when there is a full amount of capital in this country? We are the largest savers in the world. Thirteen per cent of our disposable income is in savings. Why is there not something in this legislation, or in the initiatives put forward by the Minister of Finance, to unlock that capital for equity or venture purposes for small business?


Sinclair McKnight Stevens: It is in there.


Lloyd Axworthy: There is nothing in there at all. The Minister can provide a few pamphlets. However, Mr. Speaker, as part of the Investment Canada initiative, for example, one idea should have been to fold in the Federal Business Development Bank as part of the operation so that Canadian investors could have a proper loan guarantee position available to them to invest in these areas.
Investment Canada Act
Why has the Government been absolutely silent on the issue of a competition Bill? We tried several times, over their opposition, to bring in a Bill to allow for more competition in the business community. Why has the Government been reluctant to do the same? It is because we know in whose back pockets they belong. This is not a Government that really believes in competition. It does not really believe in breaking up the concentration of capital.
Part of the problem in this country has been far too much concentration of capital in large corporations. We know that job creation will take place primarily in the small and medium business sector, not in the large companies. In fact, there have been net job losses in the large companies. The major job creation will take place in the small business sector. From comparative studies between small business in Canada and the U.S. we know that the same percentage of new businesses emerges each year in the small business sector but they tend to hit a dead zone area and find it more difficult to expand and become medium or large size.
One of the reasons for that is our financial system. It is too rigid, too structured, and there is not enough venture and investment capital. But nothing this Government has done, either in this legislation or in the initiatives of the Minister of Finance, provides any opportunity for Canadian business in this area.
I hear the Minister of Regional Industrial Expansion was eloquent about how he wants to create jobs. I am in favour of that, no problem; but let us see what he is going to do. He says it is in the legislation, but where? Where is the policy or the program? Where is the freeing up of the economic rules and framework to allow that flow of capital to emerge? For example, when we were in government we initiated major programs of deregulation. We brought more competition into the transportation industry, specifically airline and trucking. We believed there had to be more scope for private innovation and competition. But where have we gone since then? The economic statement of the Minister of Finance added substantial new charges to the transportation industry which will detract from the industry's ability to take advantage of deregulation. They now face higher costs because of government action. We have this group of people who get up on every platform across the country and preach a theology of innovation and competition, and then turn around and increase costs for the small business community of Canada.
This is flip-flop, Mr. Speaker. They say one thing and do another. They have wonderful rhetoric but when you look at the real nature of their actions, you see a very different picture. They are so obsessed and mesmerized by the deficit reduction theology they have that they are now restricting the channels and opportunities for growth. They have dampened the opportunities for growth through these measures of heavier government spending, heavier government costs. The opportunity for the business community and consumers generally to have more money in their pockets through competition has thereby been lost.

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The Minister stood up this morning and said it is a new day for Canada, the heralding of a new age. Yet it is the Government that is dampening and suffocating the possibilities for growth. That is the real danger. I hope the Conservatives will not smirk about it but take it into consideration. I am sure that during the committee hearings we will have enough witnesses to provide evidence of that. The Science Council of Canada, for example, has given us numerous analyses. I suggest the Minister might want to read some of their reports. They point out time and time again that if we are to provide for the development of a knowledge-intensive, high value-added industry in this country, then we must protect our industry in that area from takeover and acquisition and suffocation. Members opposite do not necessarily have to listen to me, although I think it would be wise if they did. They might want to listen to the Science Council as to what is required in terms of industrial strategy to meet the international competition we face.
The Minister talks about the 1980s; I am talking about the 1990s and the years beyond. The young people coming out of our universities and colleges are going to have to find jobs in those knowledge-intensive industries, but because of this Minister's actions those industries will all be south of us or north of us or east and west of us because they will not be able to survive here. That is the problem. That is the scenario which has been laid out for us. We do not have an open door; rather we are becoming the doormats of the world.
Do you know what is absolutely mind boggling about this, Mr. Speaker? This Government says it is going to establish a new relationship with the United States, the biggest foreign investor. We have this new privileged relationship. The Prime Minister (Mr. Mulroney) was in New York last night and the business community applauded him. Of course they did. They always like to see people come down there that they can sell the Brooklyn Bridge to. They love people like that. Of course they are going to applaud and stamp their feet and whistle and cheer. They like to see guys who are going to lie on their backs and go bow-wow. That is what is going on, Mr. Speaker.
I ask the Minister: did he make any effort, did the Secretary of State for External Affairs (Mr. Clark) make any effort, did the Minister for International Trade (Mr. Kelleher) make any effort to get reciprocity from the Americans on the prohibitions to foreign investment that are rampant in that country? They have anti-trust laws, securities laws, procurement laws, exclusion from a number of sectors. The Americans do not have a FIRA, but they sure as heaven have a lot of protective measures to ensure that foreign investors cannot buy up American businesses of all kinds.
There are many examples, and the Minister knows them, of a Canadian business going down to the States and there must be public disclosure because of the Securities Exchange Commission. Where is this in our Bill? If we are going to have an open hunting season on Canadian business, we should get the same rights in the United States. Perhaps, Mr. Speaker, the Minister has done this secretly or in private. But I do not believe that we should be making these kinds of changes in our ability to monitor foreign investment when other countries are
not giving us the right to do the same in their country. Talk about selling out! Talk about poor bargaining! The wool has been pulled over our eyes and the Prime Minister is going down there and reinforcing that all over again.
No one is arguing, Mr. Speaker, that the United States is our major trading partner and source of foreign capital. Under FIRA they supplied 60 per cent of our trade, as I read the figures, or more depending on how you measure it. If that is the case, before we bring in this legislation, before we totally eviscerate our ability to make foreign capital responsible and accountable, why in God's name do we not ask the same thing of the Americans? Why do we simply give away our side of the bargain and not get anything in return? Is that what you call good business? Is that the kind of deal the Minister wants to go around making? We are simply the fall guys for the rest of the world. Is that going to be the new era, the new age? Canadians are simply the soft touches and easy makes in the international environment. Is that the kind of new economic policy we can expect?
If not, then I think the Minister better get on a plane tonight and go down to his friends in Washington. He should tell them that we are on second reading of this Bill, he knows the opposition is going to hold him there for a long time and so he has some time to bargain. Let him ask what those guys are prepared to give us in return. If he does not, then he is in serious dereliction of his responsibilities to the people of Canada as a Minister of the Crown. I think he should understand that.
Not only are we giving away our institutional rights, Mr. Speaker; not only are we threatening the potential for Canadian small business to develop its own specialized areas of competence and expertise and marketing, but we are doing it without getting anything in return. Canadians could compete if they had the same rights, but where are they? Why were we not down there bargaining for those reciprocal rights? That is the problem, Mr. Speaker.
That is why we on this side of the House say that, with regard to job creation and capital investment, this Bill is based on some very major fallacies. If we consider the industrial reality that we will be facing in the country, the Minister is in fact pulling out some of the major props. He received great laughs and hurrahs from his colleagues when he said that they are getting away from "significant" benefit and it will now be "net" benefit. That means that if it is a slight smidgen, half an iota, he is going to sell the store.


Mr. Deans:: How would you know?


Lloyd Axworthy: We will not know, of course, because now, all of a sudden, the only arbitrator, the only judge, the high priest of Canadian investment, will be this Minister. I do not blame him in a sense for trying to accumulate all this power unto himself.


Ian Deans: You know all about that.
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Lloyd Axworthy: Certainly ministerial discretion is an honoured tradition on both sides of the House.
Let us look at the practical realities, Mr. Speaker. The Minister said that he does not want to take up the time of the Cabinet. He made the spurious statement that investment review takes 20 per cent of the time of Cabinet. That is absolute nonsense. I can say that because I was a member of Cabinet. Of course, it may have accounted for 20 per cent of the paperwork. The reason for having Cabinet review was to give other Ministers who have industrial or economic concerns the opportunity to raise a point if they felt it necessary. It also gave regional Ministers from across Canada some insurance that they could protect economic development and opportunity in their own regions. That has now been lost, Mr. Speaker. This Minister can simply make a decision totally on his own cognizance without any sober second thought or any reference to his colleagues. That goes against one of the fundamental principles of Canadian parliamentary government. The Cabinet has always been the repository and defender of regional interests. Because of the weakness of our Senate, and I do not have to go through that whole theory-


Ian Deans: It is full of Liberals.


Lloyd Axworthy: Thank God for that small blessing that we
have.


Ian Deans: It is very small.


Lloyd Axworthy: The fact of the matter is that the Cabinet of Canada has always been the route through which regions of the country have been able to ensure some protection of their interests. This is an area of major importance to every region of the country. Depending on which new business comes in or is acquired, it could have dramatic negative effects in Nova Scotia, British Columbia or the Prairies. All of a sudden we have eliminated the opportunity for the Ministers representing those regions to provide some sober second thought, some other calculation or assessment.
I think that is a very major weakness in this Bill and I hope the Minister will reconsider it. We can ask former ministers of industry to come to committee and tell him that it did not take that time of Cabinet. The time was available. It was a residual right, but it certainly did not encompass the amount of time which this Minister claims it did. The Minister is bringing in legislation which eliminates the capacity for regional protection and judgment.
The Minister has taken the position that he is going to ensure quick, efficient service through this new agency. Of course, he has eliminated most of the review. He has taken out 90 per cent of the applications. He has also said that there is an absolute 45-day deadline after which anything goes.
Let us go back to the principle which I put forward that I hope the Minister might accept, even though we have not heard him say it. When there is an application by a foreign company or enterprise to acquire a Canadian asset, there must be some capacity on this side of the border to ensure that that
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acquisition will protect jobs. Members have been raising in the House the problem with Black and Decker. They have not fulfilled the requirements. What would happen if no requirements were put on them? Oftentimes there is a very important requirement that serious bargaining and negotiations be entered into to ensure that the new acquisition will provide a world product mandate for that Canadian company, protect the jobs and ensure that R and D remains here. There are a number of benefits. What happens if the deadline passes and an agreement has not yet been reached? Why should they agree? What foreign enterprise, knowing that there is an absolute cut-off deadline, is going to bargain in good faith? Why should they? They will simply back away and say-


Sinclair McKnight Stevens: Because they will get a "no".


Lloyd Axworthy: We have not seen any "noes" yet. The Minister has simply said that it is a wide-open world, that they are not stopping anything. They are reading the speeches of the Minister. There were 1,500 people at a dinner in New York where the Prime Minister was promising open skies and open ground.


Sinclair McKnight Stevens: What do you think the reviews are for?


Lloyd Axworthy: Well, that is what we are asking. The review is there to get benefits for Canadians. The term "significant benefit" has been eliminated. New businesses have been eliminated. The threshold on indirect acquisition has been raised. The message is clear. The Government does not want to provide a review, or bargaining or negotiation. The Government is saying that since there is a constituency out there which kind of likes the idea of a screening agency, it will keep the former structure. It is like one of those old western movie sets. There is a big tall building in the front and nothing at the back. It is pure subterfuge, Mr. Speaker. That is all the Minister is giving us. He is not giving us anything real or substantial that Canadian can count upon to protect their interests. The Minister is simply providing a veritable goose. Anything goes through in 20 seconds.
That is why we feel there are serious problems relating to this legislation with regard to the philosophy, the premise and the understanding of the economic environment and what we must do to establish, protect and enhance a Canadian industrial strategy. That is why we feel this legislation is very faulty and damaging and raises a large number of questions that will have to be examined before the House will be able to form any judgment upon it.
In sheer economic terms, Mr. Speaker, we hope that the Minister and his colleagues will reflect upon this.


Sinclair McKnight Stevens: We will need better arguments than we have heard from you.


Lloyd Axworthy: That is the attitude, Mr. Speaker. They know everything.


Ian Deans: That isn't really fair either. I don't agree with him all the time, but the arguments aren't all that bad.

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Lloyd Axworthy: I thank the Member for Hamilton Mountain (Mr. Deans) for that endorsement.
Let us raise the other side of the coin, Mr. Speaker, and Members of the House will have lots of time to discuss it. I know this will bring a scowl and a look of scorn to the Minister's face because he does not believe in this. There is an issue of sovereignty involved. There is a question of the protection of Canadian institutions. Any Government of Canada that has been elected by the people with the kind of mandate this Government received cannot simply put that on the shelf and refuse to deal with it. There is a fundamental issue of ownership and control, because that does, in part, allow us to have some management over our own future. We cannot simply engage in a series of giveaways in the areas of trade, foreign investment and foreign policy. In three short months in the area of foreign policy, the Government has tied its little wagon to the American bulldozer without a question, a contrary word or even a reservation.
In a most revealing interview this weekend, the Secretary of State for External Affairs said that the Government will simply say "Ready, aye ready" to the American positions on foreign policy. He said that the previous Government became too obsequious at times. Prime Minister Trudeau with his peace initiatives had the nerve to go to talk to other countries, and he even talked to eastern European countries-


Mr. Deputy Speaker:: Could I ask the Hon. Member to conclude his speech?


Lloyd Axworthy: Mr. Speaker, on a point of order, I believe that there is unlimited time for the first three speeches.


Mr. Deputy Speaker:: There is a limit of 40 minutes. The unlimited time is for the Prime Minister and the Leader of the Opposition.


Lloyd Axworthy: Then I will conclude. I simply raised that point for consideration. I know that many of my colleagues will be more than happy to expand upon this Bill in the days, weeks and months ahead as we debate second reading. I will simply thank the Minister for giving us for the first time some of the bare bones of this new Conservative age. I want to say that those bones will need a very good rattling; otherwise we are in real danger of selling out this country for a mess of potage and getting nothing in return.


Mr. Steven W. Langdon (Essex-Windsor):: Mr. Speaker, this is a historic debate of immense importance to the country and to our economic future. It is a historic debate, first because it represents the first real initiative which this Conservative Government has taken. As business people have said, they like the smell from the kitchen, but now the stew-or perhaps I should say the popcorn-is served. The Government now has publicly to defend the direction which we believe prejudice is pushing the Government to take the country toward.
Second, and perhaps even more important, it is a historic debate because this subject, the issue of foreign investment, is something that we in Canada have dealt with for decades. It is a subject that has been agonizing Canadians for well over 100 years, since the first subsidiary established itself in Ontario in 1872. We must remember that history. It is a history that should show us something; a history of a growing presence of foreign investment over the years until the 1930s. During the difficulties of the 1930s when we needed jobs, there was a major outflow of that foreign investment which made our depression worse than it otherwise would have been.
We must also recall the tremendous sense of dynamism, expansion and growth in our Canadian companies as we emerged from World War II. However, there was a huge inflow of American foreign investment which snuffed out those growing Canadian companies that offered us at that stage a chance to grow in our own economy and build on our own resources.
We must also remember that the Foreign Investment Review Agency was not a cheap political trick quickly brought out by a Liberal Government in trouble. It was the result of a long period of careful study and of immensely popular activity and pressure throughout the country to address a concern which Canadians recognized was important, but for the economic well-being of the country.
There has been documentation in this country, starting with the Gordon Commission in the 1950s and moving to the Watkins report in the 1960s and the Gray report in the 1970s, showing the problems which foreign investment can create in this country. It is out of those careful analyses and efforts to understand what was taking place that the decision was made to try to establish a review mechanism along with a number of other legislative initiatives. We are talking about something which has been part of our history and which our history has taught us to pay careful attention to and be seriously concerned about. Frankly, our history has taught us that foreign investment is something that must be handled with care and a sense of control for the sake of our country's future.
I believe it is very important at the start of this debate to define exactly what it is that we are debating. The Minister would have us believe that we are debating the future of employment in this country. That is simply not the case. We are not debating whether this country should have direct foreign investment. Our Party has pressed strongly, for instance, for more Japanese investment in the automobile industry here, and we believed that government action was necessary to push Japanese investors into establishing plants in this country.
It is not a question of wanting to block out direct foreign investment. Nor is it a question of investment promotion. It is quite possible today, without a new Bill or any legislation, for the Minister and his colleagues to promote foreign investment in this country. In fact, our high commissions and embassies throughout the world presently do precisely what the Minister says he wants Investment Canada to do. They talk to potential investors and promote the possibilities of investment in this
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country which will benefit the country. The debate is not about that.
It is not a debate about whether the Cabinet should have to consider popcorn dealers in Edmonton. It is quite possible for procedures to be set up at any time by any government which will ensure that cabinet looks only at the most important and significant investments in terms of the process itself. It is not a debate about cabinet process.
It is not a debate about whether FIRA is perfect. We in this Party have had passionate criticisms of FIRA in the last ten years. We have seen FIRA as a closed and secretive agency which has not been prepared to be upfront with the Canadian people and with communities that have been damaged by companies that have not fulfilled their commitments. We have criticisms of that agency and would be pleased to support changes in the way that agency operates. In fact, we have suggested some changes.
There are three basic issues involved in this debate. First, with so much of our economy already in foreign hands, is there reason to be concerned about direct foreign investment and should we try to offer some alternatives to it? That is the first issue.
Second, does it make economic sense to have a review process to try to deal with some of the problems of foreign investment?
Third, is promotion of direct foreign investment from abroad the way to make Canadian investment and entrepreneurship more dynamic?
I want to deal with each of these real issues in the debate and leave aside the bogus issues that I think have been too much at the centre of what we have been talking about so far.
The first thing we have to recognize is the incredible proportions of foreign control here in our economy. We have data, the most recent available from Statistics Canada, which lay out the position very clearly. If we take all manufacturing, 51 per cent of our manufacturing industry is foreign controlled, as is 98 per cent of the rubber industry, 51 per cent of agricultural machinery, 92 per cent of transportation equipment, 70 per cent of electrical apparatus, 71 per cent of chemicals, and 52 per cent of miscellaneous manufacturing.
We are not talking about bringing in some new small additions to a country basically under its own control. We are talking about a country in which the proportion of foreign investment is already massive and which no other industrialized country in the world can match.


Ian Deans: Not that we want them to.


Steven W. Langdon: There has been a drop since 1971 in the proportion of foreign control. It may well be that the existence of FIRA has helped that. If so, all I can say is halleluja! Thank God we are finally getting a little more sense of control over the direction in which we are going.


Sinclair McKnight Stevens: Is it better to have people out of work?
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Ian Deans: Don't be silly. You don't listen.


Steven W. Langdon: The argument that is commonly made by economists in countries throughout the world is to bring in some foreign investment as a leavening to a local economy, to bring in some technology to help spruce things up a little bit and to push domestic firms so that they are more competitive and more in touch with some of the changes in technology throughout the world.
Those arguments are made in economies that have 10 per cent, 15 per cent, or 20 per cent foreign control. The arguments are not sensible, they just do not make sense in an economy that has 51 per cent of its manufacturing industry already foreign controlled. Surely to God, Mr. Speaker, that 51 per cent foreign control will act as a mechanism to bring in new technology, new ideas and suggestions from outside. Our problem is not new foreign investment and new input from the outside, but too many inputs and too much of an overload on an economy to make it possible for ourselves to shape the future.
That is just not an argument relevant to Canada. In fact, our problem becomes a problem with the multinational companies that are already here. Again, the data are gloomy and spectacular on this point. If we look at the recent period of devastating economic difficulty in Canada, we see that out of the top 50 companies in Canada, those that were U.S. owned lost twice as many jobs in 1982 and 1983 as those that are Canadian owned.


Ian Deans: Are you listening, Sine? That is the answer to your question.


Steven W. Langdon: All over the globe multinational companies are rationalizing, shaping their own business empires, as they must. They are run by business people and they have to do it on the basis of what makes sense for them as international entities. When that happens there is absolutely no guarantee at all that we in this economy will get a fair shake out of what those large companies are doing.


Ian Deans: That is true.


Steven W. Langdon: There is absolutely no guarantee at all. If we simply sit back and let it happen, we will have what we have had here in Canada in the last four years, namely plant shut-downs, American companies moving out and Canadian workers out of work. In short, we will have exactly the opposite of the picture which the Minister has painted for us. We will have a worsening of the economic crisis that we have rather than any improvement.
We simply cannot leave ourselves to the mercy of multinational enterprises. There has to be some kind of control, some input, for our communities as these companies carry out their game plans throughout the world.
Why, if there are problems and we need some mechanism to deal with them, do we have a review mechanism? I think first we have to recognize that a great many countries have precisely that kind of review mechanism. If we look, for instance, at

December 11, 1984
Investment Canada Act
the recent book put out by the British North American Committee entitled Governments and Multinationals: Policies in the Developed Countries, it is very clear that we are not alone. We are not the only country looking to review companies from outside coming into Canada. What about Japan, France, Australia and Italy? All of those countries have review mechanisms.


Sinclair McKnight Stevens: All less than us.


Steven W. Langdon: Even the United States has important mechanisms by which it sees to it that any company being established in the U.S.A. faces some kind of overview by its Government.
1 think as well that the evidence that the Conservatives believe in is simply not there. They suggest that there has been a downturn in direct foreign investment coming in as a result of FIRA. In fact, if you take the last four years for which we have data, Mr. Speaker, starting in 1981, each and every year the net flow of direct foreign investment into this country has increased.


Sinclair McKnight Stevens: No.


Steven W. Langdon: I can give the Minister statistics.


Sinclair McKnight Stevens: Take a look at the IMF figures.


Steven W. Langdon: From a negative balance of $4.4 billion in 1981 we had a negative $900 million in 1982. In 1983 we were up to a positive $200 million and so far in 1984 we are up to a positive $1.3 billion.


Mr. Crofton:: What is your source?


Steven W. Langdon: The Source? Statistics Canada: total direct foreign investment in place. These are the latest figures available. The reality is that, contrary to the myth, FIRA was not preventing inflows.
Because of the many problems that exist with direct foreign investment, we need a review mechanism to bargain with those companies, not to exclude them. The goal is not to exclude foreign investment. The goal is to take that $1.3 billion of net inflows this year and see to it that each and every company coming into the country provides the greatest possible benefit to us. That is what the review mechanism is for.


Sinclair McKnight Stevens: Read the Act.


Steven W. Langdon: I have read the Act. The existing problems in terms of direct foreign investment need a response. Let us not pretend that those problems do not exist. Every serious study which has taken place in Canada and in other parts of the world has documented that such problems exist and have to be recognized. For example, the research and development undertaken by foreign companies in Canada is much lower than the research and development undertaken by Canadian companies. If we simply take those firms with more than 500 employees,
foreign companies contributed only 2 per cent of their sales to research and development while Canadian companies contributed 10.3 per cent of their sales. If we turn to imports, we see that foreign companies imported four times as much as Canadian companies in the manufacturing sector. If we take the entire industrial sector, we see that foreign companies imported five times as much as Canadian companies. Every dollar of extra import means lost jobs in Canada for Canadians who could be producing the inputs to those companies.
It is not only the problem of purchases. It is the problem of outflows. One would think from what the Minister says that foreign investors come here and give us a gift of billions of dollars of investment. He forgets in a short-sighted way that we have to pay back that gift along with the significant profits which those companies can earn here.
If we take the question of outflows, U.S.-controlled firms which comprise 36 per cent of industrial assets accounted for 61 per cent of external remittances. Money which could be invested here but is instead sent home costs this country jobs. Jobs are not the only cost of outpayments by these companies. They also succeed in escaping from the diligence of the popular Minister of National Revenue (Mr. Beatty). There are various cases which demonstrate the way in which multinational companies aim effectively to set up their tax system so that they take their profits in the country where the taxes are least.
A detailed study of the computer industry in Canada found that in 1981 there was a $50 million loss of tax income through this mechanism. As a result, foreign companies transferring their profits out of the country in the form of purchases from their parent companies abroad led to 30 per cent fewer taxes from the industry than we would otherwise have had in Canada. In addition, these companies exported far less than Canadian companies of the same size and in the same industry. In 1978, 90 per cent of the exports of these companies were just exports to parent companies abroad.
We know from historical data that over half the subsidiaries established here do not have the complete freedom to export. Various restrictions are placed upon them. Every dollar of lost export earnings contributes to job loss in this country.
The problems exist. They are immense. They are well documented. Can a review mechanism or a bargaining mechanism help us to deal with these problems? Frankly, it is difficult to have a certain answer to that question. The way the previous Government set up FIRA created an instrument which operated in a secretive, closed way. This meant that we were unable to monitor carefully the benefits of the review process. In that sense the previous administration was the author of its own misfortune in the attack which is being undertaken on FIRA. If a more open, publicly accountable review mechanism had been set up, we would be able to judge its benefits better.
An internal evaluation study has now been completed within FIRA. We shall be asking for that study to be released. Our understanding is that it showed that the great majority of companies with which FIRA bargained in fact met the com-
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mitments they made to create more employment in Canada, to do more research and development here, to export more outside the country and to buy more inputs within Canada. This tells us that FIRA has not lost jobs. Instead, it has gained jobs for Canadians by the bargaining it has undertaken with companies that went through the review process.
We all know that not enough companies went through the review process. Too many were exempted. Too many of the large multinational companies here have never had to face a review by FIRA. But, faulty though it was, the mechanism showed that reviewing foreign investment proposals could gain greater benefits for us.
There is a third issue: Will this Bill "redynamize" the Canadian private sector? Is it possible, by bringing in new foreign investment, somehow to shake up Canadian entrepreneurs and get them investing again? I think the exact opposite will take place as a result of this Bill. The Bill exempts any new investment from being reviewed. It permits any American competitor to come into the country and set up operations in direct and immediate competition with a Canadian firm. Absolutely nothing can be done to stop that. The result could be the bankruptcy of such a Canadian firm with no recourse whatsoever to turn to the Government for assistance. The way to growth, the way to expansion and the way to having entrepreneurship once more moving ahead is to encourage small companies throughout Canada by assisting them in every possible way.
It is precisely these small companies which become sitting ducks as a result of the new Bill. Any company with under $5 million in assets can now be taken over by an American company. Nothing can be done to stop it. There will be no review mechanism, no careful attempt on the part of the Government to work out a joint venture. Instead, those emerging Canadian entrepreneurs, those who can give us our future, will be faced with temptation far too often. When their business gets to a level of $2 million, $3 million or $4 million in assets, they will be able to settle back, as so often was the case in the past in this country, and sell out their firm at a nice high price to the United States. They will be able to retire to Florida, sit back, put their feet up and stop their contribution to this country and the entrepreneurship which could expand it.
I cannot understand the logic of the approach that those very companies that we should be working hardest to protect, those with under $5 million in assets, should have open season declared on them by this Bill. We need a new economic strategy to help the private sector much more, to assist it to make a contribution to building an economy in Canada, not only one that we control but one that gives us the jobs we need. This Bill does not help that process; it hurts it.
This Bill is a major step backwards. This Bill ends all review of new investment proposals, all small takeovers of growing, independent Canadian firms. There will be no more review of that. Even significant-sized subsidiaries in this country can be
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taken over by indirect takeover with no review mechanism there to stop it.
When the Bill was released on Friday, we said the Bill should have been called Warehouse Canada instead of Investment Canada. It is a Bill to sell our country out. It will turn the industrial estates across this country into a series of warehouses. American companies will set up business, bring in their goods from abroad and maybe repackage them, if we are lucky. They will buy out small Canadian firms to do that, shutting down the production of those firms, and sell as importers. It will cost us again and again the jobs and the opportunities this country so desperately needs.
I cannot understand the economic logic of what is being done. The political logic I understand. I understand that the Government is anxious to tell the United States that we are its best friend once again. We will do anything. We will lay out the door mat and open the doors. If they cannot get in through the door, we will open the windows. We will do anything to prove to the United States that we are going back to our old dependent position of saying "absolutely" when they want something done.
That is the politics of it. We in this party will not let the Minister of Regional Industrial Expansion (Mr. Stevens) and his Cabinet create the impression across this country that they are doing this to get jobs in Canada. It is not jobs they are going to get; it is joblessness that they will create. The cases are already there. We have talked in this House about the Black and Decker case, about the shut-down now being planned in Barrie, Ontario. There will be 600 jobs lost in that community.
Government supporters have to understand that under this Bill, Black and Decker would have been completely free of any review when the takeover occurred. In the case of the GE subsidiary in Barrie, Black and Decker indirectly purchased a subsidiary worth less than $50 million. They would have had complete freedom to shut down that subsidiary without any negotiation process, without any help for the workers involved, without any negotiation with the community and without any review mechanism by the Government of Canada. That kind of economic nonsense will damage communities across this country one by one over the next 10 years, if this Bill goes into effect.
We have talked about the need to have a different kind of mechanism. We would like to see a review undertaken by a body that operates like the Anti-Dumping Tribunal, for example. It would hear representations publicly from the companies seeking to establish a takeover, from the community affected and from the workers affected. That kind of review mechanism would hold the companies to a public set of commitments. Second, it would give workers the chance to push companies to make new and different commitments. Third, it would permit communities to know what their future will be.
We would support that kind of commitment, but that is not what this Bill gives us. This Bill puts a fox in charge of the chickens and it does so unilaterally. It makes the Minister of Regional Industrial Expansion, with his oft expressed bias in

December 11, 1984
favour of foreign investment, the man who will review every future takeover in this country. I do not believe Canadians want that fox in charge of our chickens.
The jobs it will cost are not just, in that case, jobs from new investment, jobs from takeovers of small companies, jobs from indirect takeovers, but jobs from large takeovers. By taking this out of the control of Cabinet and putting it to the gentle mercies of the Minister of Regional Industrial Expansion, even large-scale takeovers will be subject to approval without guarantees to the Canadian people.
There are two visions for the future which will compete in this debate. I predict the debate will go on a long time because we intend to fight this Bill in a tough and effective way. There is a vision of an independent, strong Canada under our own control, giving us the jobs we need for our future. On the other hand, there is a vision of a country dependent, weakened, with an economy that relies on others to give it dynamism, an economy and a policy prostituting itself to try and get direct foreign investment from whoever will provide it.
We will fight for that first vision of a strong, independent economy under our own control. As this fight goes on, it is that vision of a positive, exciting future for all the people of this country which will win support. I predict that this first major initiative of the Conservative Government will be one of the first steps that ultimately costs it the popular support of the people of this country.


Mr. Deputy Speaker:: It being one o'clock, I do now leave the chair until two o'clock.
At 1 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.

[Stage Direction]
[ Translation]

Mrs. Lucie Pepin (Outremont):: Mr. Speaker, today, there are nearly 500 people from Bangladesh who are now living in the Montreal area and are waiting for a reply from the federal authorities. Many have been waiting for over a year, living with the fearful thought that they might have to go back to their native country and the military regime they wanted to escape.
Today, between 20 and 25 applicants for refugee status have received deportation orders, the reason given being that they
were not political but economic refugees. It is quite clear that if these people return to Bangladesh, they will probably suffer retaliation. I therefore urge the Minister of Employment and Immigration (Miss MacDonald) to accede to the request for a moratorium by the Bangladesh Refugee Action Committee and the Centre des services sociaux du Montreal metropolit-ain.
Since the present system under which applications for refugee status are processed is inefficient and is now being reviewed by Rabbi Gunther Plaut, and since Amnesty International and Development and Peace have both denounced the many human rights violations in Bangladesh, including cases of imprisonment, torture and execution, I think that cancelling these deportation orders should be a priority.
In my opinion, the Minister of Employment and Immigration should do everything in her power to defend the rights of these applicants, and this could be done if the Minister would consider the concerns of the main parties involved. Furthermore, no decision should be made until such time as the system for processing the files of applicants for refugee status has been changed.


Mr. Speaker:: I regret to inform the Hon. Member that her time has expired.



ROUTINE PROCEEDINGS


Mr. Speaker:: I must apologize to the House. I have a duty to perform before we can continue with statements.
I have the honour to lay upon the Table the report of the Auditor General of Canada to the House of Commons for the fiscal year ended March 31, 1984. I remind Hon. Members that, under Standing Order 69(1 )(q), this report is deemed to have been permanently referred to the Standing Committee on Public Accounts.
We will now continue with Statements pursuant to Standing Order 21.



STATEMENTS PURSUANT TO S.O. 21


Mr. Cyril Keeper (Winnipeg North Centre):: Mr. Speaker, Jackson Beardy has long been a part of our lives. Now he is a part of our heritage. His name is linked with those of Mor-riseau, Ray, and Objig, artists who gave a solid sense of pride to Indian people.
Jackson was a midwife to the rebirth of Indian culture and tradition. In his work one could see the spirituality which underpins Indian values. In the beginning his paintings sold for a pittance while he struggled to gain the recognition which he so richly deserved. In time, his work was recognized, first in Winnipeg and later at the National Arts Centre.
Canada has lost a great artist, Indian people a trail-blazer, and Manitoba a favourite son. We mourn his passing.



STATISTICS CANADA


Mr. Gilles Bernier (Beauce):: Mr. Speaker, I would like to submit to the House some views on the Canadian Labour force data provided by Statistics Canada.
1 feel that Canadians are poorly informed and receive information that may seem erroneous to them since the unemployment rate is calculated on the basis of the number of people in the labour force. However, the labour force includes workers receiving remuneration and the so-called officially unemployed, that is, those receiving unemployment insurance benefits. Mr. Speaker, many workers without jobs who are not eligible for unemployment insurance are not included in the labour force. Furthermore, people receiving social benefits such as welfare, who are able to work but have no other means of support than what the State has to offer, are also excluded from the labour force. It is high time we had official or more coherent statistics that reflect the Canadian situation in all areas of the economy.
Mr. Speaker, labour force data often form the basis for setting levels of monetary compensation under Government programs, both regionally and locally. Unfortunately, on the basis of these data, some ridings are penalized and fail to receive funds that are essential for economic recovery, and especially-


Mr. Speaker:: I regret to inform the Hon. Member that his time has expired.



THE ECONOMY


Mr. Dan McKenzie (Parliamentary Secretary to Minister of Veterans Affairs):: Mr. Speaker, last night in New York City the Prime Minister (Mr. Mulroney) announced that once again Canada is open for business.


Some Hon. Members:: Hear, hear!


A. Daniel McKenzie: His words won the standing ovations of American businessmen who were filled with gratification that their business initiatives are now wanted and welcomed by the Canadian people.
Great relief and pleasure were felt by both countries at learning that the Prime Minister is terminating the odious provisions of the National Energy Program. The Prime Minister has not only established a new harmony between Canada and the United States but has provided a major stepping stone toward the revitalization of our economy. Because of his warm invitation to our southern neighbours, the days of solving all problems in Canada by borrowing more money are finally coming to an end.
I am sure all Members of the House will want to join me in congratulating the Prime Minister on his successful visit to New York. A more appropriate time could not be had to provide Americans with an opportunity to do mutually profitable business with our country, and to give Canadians new hope for prosperity and a flourishing economy as we enter a new year.



CULTURAL AFFAIRS


Mr. Sergio Marchi (York West):: Mr. Speaker, the cultural and artistic communities in Canada are asking themselves what happened to the Government on the way to Parliament Hill. Prior to the election these communities were wined and dined over a rich menu of promises and accolades. The Conservative Party boasted: "We are committed to real growth in federal contribution to cultural development".
The question remains: what happened after September 4? In short, with the tabling of the economic statement the cultural community was treated to the real dark colours of the Government. Not only was the CBC budget cut by a total of $85 million but cultural agencies and projects lost $15 million in funding.
The arts industry is very labour intensive. Approximately 66 per cent of its budget goes to salaries. Therefore government cuts will mean a significant reduction in jobs in this sector. These cuts will also undermine the value of the role the arts play in creating a cultural identity for all Canadians.

December 11, 1984
In recent days we have seen a Government eager to sell out its economic independence. I hope and urge that the Government does not sell out Canada's cultural industry.



GOVERNMENT ADMINISTRATION


[Stage Direction]
deficit is caused by the recession in combination with discretionary policies of previous Governments dealing with tax policies, interest rates, and a range of economic measures that have absolutely nothing to do with the viability of social programs in our country. What is being perpetrated by this Government, with respect to the so-called burden social programs are on the economy of the country, is nothing short of a hoax.
Mr. Fernand Ladouceur (Labelle):: Mr. Speaker, my stat-ment is of interest to all Members in this House. On September 4, 1984, the Progressive Conservative Party was brought to power by a majority of Canadians and by this very fact a number of us were entrusted with new responsibilities as Members of Parliament, as representatives and as aggressive supporters of the interests of our ridings.
After having been better than three months in office, I am amazed if not shocked by the little information and the total lack of interest shown by our predecessors with respect to the forwarding of files during the transfer of powers. This problem is even more acute, and I am sure that this shameful situation, to say the least, reflects a lack of ethics and blatant irrespect for the wishes and aspirations of our constituents.
Mr. Speaker, in view of those failures and this feeling of injustice, it is my hope that we, in this House, will be introducing measures ensuring that files are transferred whenever a new Member is elected, with this transfer being mandatory in order that our constituents may enjoy a minimum of equity. This will give a new lustre to our institutions and administrations.
* *
*



SOCIAL SECURITY


Mr. Bill Blaikie (Winnipeg-Birds Hill):: Mr. Speaker, I would like to call to the attention of the House a recent study done by the Organization for Economic Co-operation and Development which shows that Canada devotes 11.8 per cent of its Gross Domestic Product to social services compared to an average for other rich industrialized nations of 14.1 per cent. The study shows that Canada runs a poor sixth among the big seven OECD countries in sharing the returns from the economy with the poor, the unemployed, pensioners, veterans and the like.



THE ECONOMY


Mr. Don Ravis (Saskatoon East):: Mr. Speaker, the Economic Council of Canada recently released its twenty-first annual review of Canada's economy. The report indicates that the deficit has helped erode business and investor confidence and has slowed the growth of jobs in the private sector. It could become even more serious in the future unless the Government takes steps to control it. The unchecked spending of the previous Liberal administration has forced our Government to make serious financial decisions to bring about order in federal government spending so that many more jobs can be created, along with future prosperity for our country.
It is, therefore, ironic that Hon. Members in the Opposition have shown such concern over the Government's initiative to restore international investor confidence in Canada through the establishment of Investment Canada under Bill C-15, which was tabled in the House last Friday. It is new initiatives like this which will begin to repay the approximately $190 billion of debt which the Liberal Government has accumulated over the past decade, mortgaging the future of our youth.
Restoring confidence in our economy will result in greater job opportunities for both young and old. However, this will not be as instantaneous as members of the Opposition demand. Canadians must judge the level of sincerity of the Liberals and the New Democratic Party who now want instant solutions and who criticize every initiative of a new Government, one which is trying to resolve the economic crisis in our country. The gloom and doom statements of the Opposition are in direct contrast to the growing optimism which Canadians feel for the future.



NUCLEAR ARMAMENTS


[Stage Direction]
The present Government would have us believe that social programs are the cause of our deficit. This report demonstrates that that is completely false, and that the Government is using the deficit as a cover for its own ideological agenda against universality and social programs, things which it has opposed for a long time. The fact of the matter is that the
Hon. Warren Alimand (Notre-Dame-de-Grace-Lachine
East): Mr. Speaker, since I did not have an opportunity to speak in the nuclear freeze debate yesterday, I would like to explain my "yes" vote on that resolution. I have been strongly in favour of the Mexican-Swedish freeze proposal for some time. There are now over 50,000 nuclear weapons in the world,
December 11, 1984
[Stage Direction]
which have a destructive power one million times that of the Hiroshima bomb. This resolution proposed a bilateral, verifiable nuclear freeze as a first step toward nuclear reduction and disarmament. It recently passed 112 to 11 in the First Committee at the United Nations, with Canada opposing.
Some opponents of the freeze argue that a freeze at this time would be wrong because the Soviet Union is ahead of the U.S.A. Even if that is true, one does not require an absolute balance when one already has sufficient bombs to destroy all of mankind. The balance of power with respect to nuclear weapons cannot be judged in the same way as with tanks and rifles.
I voted for the Liberal amendment because it recognized the important new situation of the superpowers agreeing to meet on these issues early in the new year. I then voted for the principal motion on the freeze, despite some partisan clauses added by the New Democratic Party, because I thought that the freeze proposal was too important and should transcend narrow partisan interests.
Although the resolution was defeated, I hope we will have a chance to debate it again next year. This is a question of human survival, Mr. Speaker.


Mr. Bill Tupper (Nepean-Carleton):: Mr. Speaker, we live in a time when vast scientific, technological forces like microelectronics are in action and promise to change our lives. These forces hold out a promise for longer life, labour saving mechanisms, new economic wealth, and thousands of new jobs.
We are entering into a new era with microelectronics with enormous increases in processing and memory capability. It is presenting the industrialized world with fast breaking processes of opportunity and change. It has recently been suggested by the president of one of Canada's high technology companies that this industry alone, at the international level, is a $200 billion a year industry.
In 1982-1983 a committee of academic and industrial experts, formed with the support of the National Sciences and Engineering Research Council, recommended that two centres of world class excellence in microelectronics be established in Canada. The centres are to provide state of the art facilities for carrying out microelectronic research and to provide industry with access to leading edge technology. It is crucial that Canada develop prominence in microelectronics and semi-conductors if it is to compete internationally in this fast developing field.
I look forward to our present Government, which is providing such refreshing leadership, to support the development of these centres of excellence. Furthermore, Ottawa-Carleton is a logical place for one of these centres because the region is two years ahead of any other area in Canada, with the necessary
Oral Questions
infrastructure in place and the unique potential to relate to local industries.


Mr. Speaker:: I regret to advise the Hon. Member that his time has expired.



ORAL QUESTION PERIOD


Mr. Russell MacLellan (Cape Breton-The Sydneys):: Mr. Speaker, my question is directed to the Minister of Energy, Mines and Resources. Yesterday we in Canada suffered the indignity of hearing our energy policy announced in the United States before it was announced in this House and to the people of Canada. In view of the euphoric statement made by the Premier of Nova Scotia, when the Canada-Nova Scotia offshore oil and gas agreement was signed, on the benefits the back-in provisions would have for the people of Nova Scotia, can the Minister tell the House if consent to the proposed changes in the back-in provisions has been received from the Government of Nova Scotia?


Hon. Pat Carney (Minister of Energy, Mines and Resources):: Mr. Speaker, I believe the Hon. Member in posing his question has ignored the fact that the energy policy was a key part of the economic statement which was presented in this House by the Hon. Minister of Finance. So the statement that it was released in the United States is simply not correct.
In view of the Hon. Member's specific reference to the back-in provisions, I can tell him that I have been in touch with Premier Buchanan, as has the Prime Minister, and with the Energy Minister of Nova Scotia, and we have committed to them that we will give them a better deal than they got from the previous administration. And they know that we will honour our word.


Some Hon. Members:: Hear, hear!


Mr. Speaker:: Order.


Russell Gregoire MacLellan: May I say, Mr. Speaker, that the Government does not have it in its philosophy to give a better deal to the Province of Nova Scotia.


Some Hon. Members:: Oh, oh!


POLICY CHANGES-REQUEST FOR COMPENSATION
Russell Gregoire MacLellan: If the
Minister is saying that the Government of Canada has not received the consent of the Province of Nova Scotia to the

Oral Questions
changes in the back-in provisions, why not? What deal is the Government going to give to the Province of Nova Scotia? What compensation is it going to give to the people of Nova Scotia for this change?


Pat Carney: Mr. Speaker, the line of questioning rather surprises me in view of the fact that the back-in provisions were unilaterally established by the Liberal administration without a word to Nova Scotia, or Alberta, or to any other province.


Some Hon. Members:: Hear, hear!


CANADIAN OWNERSHIP OBJECTIVE
Russell Gregoire MacLellan: May I remind the Minister that if this change is made without the consent of the Province of Nova Scotia, then what we have here is a unilateral abrogation of the Canada-Nova Scotia offshore oil and gas agreement. I would like to say to the Minister that the Prime Minister has said in his statement that the National Energy Program failed in its objective of Canadi-anization, which is not correct, because-


Mr. Speaker:: Does the Hon. Member have a supplementary question?


Russell Gregoire MacLellan: I would like to ask the Minister how can it be said that the objective of 50 per cent Canadian ownership has not been achieved, when we have not reached 1990? We are ahead of schedule. If the Government is going to open the doors, the floodgates of Canada, to non-Canadians, how will we ever achieve this Canadianization?


Pat Carney: Mr. Speaker, no.


HIBERNIA OILFIELD DEVELOPMENT
Hon. William Rompkey (Grand Falls-White Bay-Labrador):: Mr. Speaker, my question is also directed to the Minister of Energy, Mines and Resources. The Minister will know that a key element of Newfoundland's proposal for the development of Hibernia was catch-up for that province, and a key way of doing this was the back-in provision. Can the Minister tell us if, during her recent visit to Newfoundland, she discussed the elimination of the back-in provision with the Government of Newfoundland? And can she tell us if it agreed to that?


Pat Carney: Mr. Speaker, the Hon. Member chooses to ignore the fact that the back-in, as brought in by the Liberal Government, was straight confiscation. That is a kind of policy which has never been considered a Canadian policy. In view of the Atlantic accord, presently being negotiated in detail with the Government of Newfoundland, we are in fact giving Newfoundland a great deal of the management of the offshore and the same kind of revenue regime that other provinces got.
They do not need the back-in. I mean, if you give it all to them, they do not need the back-in.


NEGOTIATIONS WITH NEWFOUNDLAND
Bill Rompkey: Mr. Speaker, the back-in was certainly not unilateral. As a matter of fact Premier Peckford asked not only for 25 per cent back-in, but for 40 per cent back-in. How can the Minister square doing away with this key element of Newfoundland policy with the fact she is negotiating a deal in the best interests of Newfoundland? How can she have any credibility now in the province in negotiating that deal?


Pat Carney: Mr. Speaker, may I point out that the Liberal Government never made any deal with Newfoundland at all, on the back-in or anything else. They had no deal at all with Newfoundland. I can only point out that Premier Peckford signed the agreement in principle, which was also signed by the then Leader of the Opposition, and his Government is glad to sit at the negotiating table with us these very weeks to negotiate a deal which will be the most important thing that ever happened to Newfoundland since it joined Confederation.


Some Hon. Members:: Hear, hear!


FOREIGN INVESTMENT REVIEW AGENCY
Hon. Edward Broadbent (Oshawa):: Mr. Speaker, I would like to welcome the Prime Minister back. He took his-


Some Hon. Members:: Hear, hear!


Mr. Speaker:: Order, please.


Some Hon. Members:: Hear, hear!


Mr. Speaker:: Order, please.


Jean-Robert Gauthier: Sing "Danny Boy".


Lloyd Axworthy: How about the "Star Spangled Banner"?


Mr. Speaker:: Order, please.


John Edward Broadbent: The Prime Minister took his puffn' stuff routine to the New York investment community. In fact-


Lloyd Axworthy: He bought the Brooklyn Bridge.


John Edward Broadbent: -he welcomed the American investors to come up here and drink Canada dry. More than that, he offered to hold the glass for them.
I would like to ask the Prime Minister this. One of the purposes of FIRA has been to ensure successfully that the companies it monitored produced more jobs in Canada and
December 11, 1984

increased their purchases in Canada. In short, it was to make sure that foreign firms with a presence in this country brought to Canada tangible benefits, not just benefits for their investors. Considering that, why is the Government of Canada abolishing this important agency which has been serving Canadian interests?


Right Hon. Brian Mulroney (Prime Minister):: Because, Mr. Speaker, as the Right Hon. John Diefenbaker once said, the Progressive Conservative Party stands for positive economic nationalism, which means jobs and growth. That is what we are trying to do.


Some Hon. Members:: Hear, hear!


Martin Brian Mulroney: One of the questions that I was asked in New York by the Chase Manhattan Bank was: "Where is Ed?"


Some Hon. Members:: Oh, oh!


Martin Brian Mulroney: I said 1 will be seeing him.


Mr. Hnatyshyn:: He is riding around in his chauffeured car.


Martin Brian Mulroney: Because of a situation that my hon. friend is familiar with, which we inherited, that being in excess of 1.5 million Canadians out of work, we felt it was incumbent upon us to attempt to attract, both nationally and internationally, the kinds of capital required to create jobs for Canadians and build new economic strength in the country. We felt this was a positive as opposed to a pernicious way of doing it, and we plan to do it with a view to creating jobs for Canadians.


John Edward Broadbent: I remind the Prime Minister that one of John Diefenbaker's first acts was to shut down the Arrow and ship those sophisticated aircraft production jobs back to the United States. So he is following in good order.


AGENCY'S MONITORING OF FOREIGN OWNED COMPANIES
John Edward Broadbent: Mr. Speaker, I would like to ask the Prime Minister to put aside the charming rhetoric for a minute and deal with the question. Is he aware that FIRA has done an internal study which points out that a majority of the foreign owned firms it has monitored have increased their jobs here, have done more research and development, and increased their purchase of other Canadian products? In other words, because they have been monitored by FIRA and met certain Canadian standards, they serve not only the interests of their investors but the interests of Canada. Why, in heaven's name, when we had an agency like that, and at a time when we need Canadian jobs, has the Prime Minister of Canada gone down to sell everything out to the United States?


Martin Brian Mulroney: I know full well, Mr. Speaker, as opposed to the Leader of the NDP, who our friends are. I have no hesitation in saying that the United States of America, Great Britain, France, and other tradition-
Oral Questions
al allies, are friends, and will be treated by us as friends and not as enemies.


Some Hon. Members:: Hear, hear!


Martin Brian Mulroney: That is the difference between us and the NDP.
Regarding the substance of the speech, I am not in disagreement with my right hon. friend, the Leader of the Opposition, who said many times, and with good reason, when he was seeking the leadership of his Party, that the combination of the NEP and FIRA send out negative and hostile signals around the world, denying Canada the investment capital it needs to create jobs.


Ian Deans: That is nonsense. The two of you are wrong.


Martin Brian Mulroney: I almost voted for him myself.


Some Hon. Members:: Oh, oh!


Martin Brian Mulroney: I know we will have the co-operation of my hon. friend, the Leader of the NDP, because Canadians want jobs. They want job creation, and we need investment to create the hundreds of thousands of jobs that Canadians need.


John Edward Broadbent: Mr. Speaker, the Prime Minister said he and the Leader of the Opposition were in agreement on this point. That does not surprise me. They agreed on most things in the election campaign. That is not news to Canadians.


Mr. Turner (Vancouver Quadra):: Ask him to take the car back, Brian.


REASONS FOR ELIMINATING AGENCY
John Edward Broadbent: Mr. Speaker, I would like to ask the Prime Minister to shatter his own interesting interest in the House and deal with the question that was asked. The question is simply this. FIRA is designed to welcome foreign investment if it benefits Canadians as well as the foreign investor. Almost every other industrial country in the world, whether it is the United States, Japan, France, or West Germany, has its equivalent of FIRA. Therefore, why in heaven's name at this point, precisely when we need 1.5 million jobs, is the Government of Canada setting aside this positive instrument designed to protect Canadian interests?


Martin Brian Mulroney: Mr. Speaker, what the countries my hon. friend referred to have is indeed an agency in regard to the influx of foreign capital. But it resembles infinitely more the positive dimensions of Investment Canada rather than the retrograde and regressive provisions of FIRA. I know we will have the full support of the Opposition in what we are trying to do.


Some Hon. Members:: Oh, oh!


Martin Brian Mulroney: The Hon. Member for Saint-Henri-West-mount was applauding lustily last night in New York.

December 11, 1984
Oral Questions


John Napier Turner: He was being polite.


Some Hon. Members:: When?


Martin Brian Mulroney: During dinner.
We are going to extend the hand of friendship to the NDP and ask for their help in attracting the capital we need. That might mean the NDP will have to take a more open look at who our friends are, and where we can get investment capital to create jobs in Oshawa and elsewhere.


Some Hon. Members:: Hear, hear!


Mr. Speaker:: Order, please.


John Edward Broadbent: That is why we have an auto pact.


Mr. Speaker:: Order, please. The Hon. Member for York Centre.


CROWN CORPORATIONS
Hon. Bob Kaplan (York Centre):: Mr. Speaker, my question is directed to the Minister of Regional Industrial Expansion. The answers given so far by the Minister have shown lack of sensitivity to the risk that foreign investment can have some negative effects. He has observed that he may have foreign buyers for the Canadair and de Havilland aircraft companies. Will the Minister confirm that the new investment agency which the Government is proposing to establish, even as weakened as it is, would have no jurisdiction at all to review the purchase of these two government owned companies?


Sinclair McKnight Stevens: Mr. Speaker, the Hon. Member must know that the sale of a Crown corporation, certainly under the Financial Administration Act, requires the approval of Cabinet and, in most instances, the approval of the House. Surely to suggest that Investment Canada should have a review, in addition to the cabinet review and that which would take place in the House, is totally unnecessary.


Robert Phillip Kaplan: Mr. Speaker, the corporations are not technically Crown corporations. They are private companies which are owned by the federal Government, and therefore in the same position, but not technically covered by that requirement for review.


REQUEST THAT PARLIAMENTARY COMMITTEE REVIEW OFFERS TO PURCHASE
Robert Phillip Kaplan: In view of the statement of the Minister, and given the fact that he appears insensitive to the risks to the jobs and the prospects for these two companies, will he agree that, before any deals are made to sell these two
companies, a parliamentary committee will have an opportunity to review fully the offers and ensure that Canadian interests are indeed protected?


Sinclair McKnight Stevens: Mr. Speaker, I am surprised that the Member would put the question in the context that he has. I will give him an assurance that the Cabinet, by Order in Council, will certainly approve of any such sale. If it is deemed necessary in the circumstances, certainly if the Financial Administration Act entails a review in the House, it would of course include a committee review as well.


INVESTMENT CANADA
Steven W. Langdon: Mr. Speaker, the Prime Minister is discussing the new Bill, C-15, and its benefits. How will it help Canadian jobs to make small Canadian companies, valued under $5 million, sitting ducks for U.S. take-over?


Martin Brian Mulroney: Mr. Speaker, the problem is because of the negative and hostile signals emanating from Canada. You could not get anybody to put a plugged nickel in this country because the rules of the game were being changed. What is required-


Ian Deans: That's not true.


Some Hon. Members:: Oh, oh!


Martin Brian Mulroney: I know it hurts.


John Edward Broadbent: They are putting $1.5 billion in Oshawa, Brian.


Martin Brian Mulroney: I know it hurts.


Ian Deans: That is hogwash.


Mr. Speaker:: Order, please. Order, please. We are getting into that situation again. Perhaps Members could agree to listen to the questions and to the answers equally.


William Alexander (Bill) Blaikie: Why don't we get some answers? Then we'll listen to them.


Martin Brian Mulroney: In response to my hon. friend, we are attempting to create a climate of confidence and to send out a signal to international investors around the world that this is a good and honourable place to do business, and that the laws of the country will apply.


Ian Deans: That has always been the case.


Martin Brian Mulroney: That is the proper climate for the attraction of capital. We believe, and we hope we are right and that the Hon. Member shares this, that with 1.5 million Canadians

December 11, 1984

seeking employment, a large infusion of job creating equity capital is required. We must get it from around the world. That requires signals and programs to be advanced that will attract the degree of confidence that inspires those decisions to be made. That is exactly what we are doing because we believe that the hundreds of thousands of jobs that Canadians are crying out for can best be created in that manner.


Ian Deans: You need new business for that.


Steven W. Langdon: Mr. Speaker, I must say that it seems that the Prime Minister has not read the Bill that has been tabled in the House.


PROVISION OF JOBS
Steven W. Langdon: Will the Prime Minister tell us how we can possibly be creating more jobs by allowing small Canadian firms valued under $5 million to be taken over? That is the point-taken over and possibly shut down by those companies when the take-over takes place. How does that help Canadian jobs?


Some Hon. Members:: Hear, hear!


Martin Brian Mulroney: My hon. friend introduces an unbecoming degree of melodrama into a straightforward proposition.


Ian Deans: Talking about melodrama-


Martin Brian Mulroney: The fact of the matter is that before one talks of take-overs one must talk about the urgent requirement in this nation-


Ian Deans: How about Schefferville and closing it down?


Martin Brian Mulroney: Schefferville? I won every poll in Schefferville in the last election. How about Schefferville?


Some Hon. Members:: Hear, hear!


Some Hon. Members:: More! More!


Ian Deans: How about the decisions made in New York?


Mr. Speaker:: Order, please.


Ian Deans: Tell us how that benefits us.


Mr. Speaker:: Order, please. Order, please. Would the Prime Minister like to finish his answer?


Martin Brian Mulroney: Moreover, we put together the most generous severance package in the history of Canadian industry, and you should follow it.


Ian Deans: They are still unemployed, every last one of them.


Martin Brian Mulroney: It is a model for all Canadians, and you should be proud of it.
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Now, with regard to your buddy, I think my hon. friend, with his experience, will recognize that what was lacking in the previous Government of Canada was a degree of confidence. We are trying to send out a positive signal to investment capitals which will cause those decisions to be made so that jobs will be created. I give my hon. friend the assurance that once the capital is in Canada it will conduct itself honourably and pursuant to national legislation.


PRESENCE IN GALLERY OF YUKON GOVERNMENT LEADER, MR. CHRIS PEARSON
Mr. Speaker:: May I interrupt the proceedings to indicate the presence in our gallery today of Mr. Chris Pearson, the Leader of the Government of Yukon in the Yukon Legislative Assembly.


Some Hon. Members:: 
CULTURAL AFFAIRS
Mr. Marcel Prud'homme (Saint-Denis):: Mr. Speaker, yesterday the Minister of Communications told the Federation des journalistes professionnels du Quebec, and I quote:
The extent of the deficit and the debt load facing us today will impose a significant constraint on the Government's ability to meet our economic requirements.
However, during the last election campaign, a message from the Right Hon. Prime Minister of Canada to the Canadian Conference of the Arts made it clear that there would be not only consultations but also an increase in the amount of funding earmarked for the arts in general.
I would like to ask the Minister how he manages to reconcile the statement he made yesterday with his many promises, and I shall refrain from reading them all to you today, since I would otherwise be out of order. Considering that at the time the national debt was public knowledge, since the Right Hon. Leader of the Opposition had clearly indicated to Canadians in Edmonton what the extent was of the national debt, how after making these promises yesterday, could the Minister say the words I just quoted?


Hon. Marcel Masse (Minister of Communications):: Mr. Speaker, as specified in the Throne Speech, there will first be consultations with the cultural agencies, especially in the radio and television sector. Thanks to the Minister of Finance's economic statement, the Canadian economy will improve and funding will follow.

December 11, 1984
Oral Questions


Marcel Prud'homme: Mr. Speaker, would the Minister be so kind as to reconcile for the House his campaign statements with yesterday's statement and the announcement to be made by the President of the CBC at 10 past 3 this afternoon which will concern the elimination of probably 1,150 jobs in Ottawa, Toronto, Montreal, Vancouver especially, Winnipeg-


Mr. Speaker:: Order, order. The Hon. Member for Calgary East.


FINANCE
Mr. Alex Kindy (Calgary East):: Mr. Speaker, my question is for the Prime Minister.


Mr. Nystrom:: Sock it to him.


Alex Kindy: In his speech yesterday to the Economic Club in New York he mentioned that he wants to have a review of energy taxation policy. Could he tell the House whether this would bring economic sense so that companies would be taxed on profits and not on revenues?


Martin Brian Mulroney: If there is one thing I cannot stand, it is a hostile question.


An Hon. Member:: How about a plant?


Martin Brian Mulroney: I would like to say to my hon. friend that, for too long, in the energy sector companies were crushed by taxation prior to them having any money in their balance sheet. We want to ensure that a degree of prosperity returns to the small and medium companies operating in the energy sector. As the Right Hon. Leader of the Opposition has often said, you tax them after they have made some money, and not before.


AUDITOR GENERAL'S REPORT
Mr. Mike Cassidy (Ottawa Centre):: Mr. Speaker, my question which is directed to the Prime Minister, concerns the Auditor General's report. In view of the fact that vital information respecting the expenditure of over $10 billion of taxpayers' money is being withheld from the Auditor General by Departments such as National Defence and Transport, on the instruction of the Clerk of the Privy Council, will the Prime Minister undertake that this kind of interference with the work of the Auditor General on behalf of Parliament will cease, and that the specific instructions that are blocking the Auditor General from doing his job will be withdrawn?


Martin Brian Mulroney: We want to co-operate fully-indeed we have-with the Auditor General of Canada, who is an outstanding public servant. I will be meeting with him later this afternoon, but I can tell my hon. friend that I have instructed the custodian of the cabinet papers of previous Governments to review the withheld documents to confirm whether or not they constitute confidences of the previous Government.
As my hon. friend knows, there is an area involving confidential communications between Ministers which is properly within the purview of Cabinet. But it is our intention to give to the Auditor General of Canada all information, other than that, that he quite properly seeks. He has the full co-operation of the Government of Canada in this regard and I have so instructed the Clerk of the Privy Council.


F-18 FIGHTER AIRCRAFT ACQUISITION EXPENDITURES
Michael Morris Cassidy: Mr. Speaker, is the Prime Minister aware that the Auditor General has revealed that there is an additional expenditure of $3.5 billion on the F-18 fighter program over and above the $5 billion that the program was already expected to cost?
Is he aware that the cabinet secrecy rule has been used to deny the Auditor General access to information about whether or not that money is well spent? Will those restrictions be removed now so that the Auditor General can do his job?


Martin Brian Mulroney: Mr. Speaker, my understanding is that the only matters that have not been provided to the Auditor General in regard to this case involve some submissions to Cabinet, very few, that fall within the purview of the custom to which I have just referred my hon. friend.
I am also informed that the Auditor General has seen some 60 cases full of documents related to this transaction. However, I will be meeting with him later this afternoon to ascertain if he requires any further documents that I can make available to him.


EDUCATION
Mr. Roland de Corneille (Eglinton-Lawrence):: Mr. Speaker, my question is directed to the Secretary of State. He will recall that his Liberal predecessor commissioned Mr. A1 Johnson to conduct an extremely important inquiry into the vital matter of funding for universities and colleges throughout the country so that federal and provincial Governments could devise a failsafe formula that was fair to all. Is the official copy, or even the draft copy of the Johnson Report on postsecondary education, now ready? Did he share those recommendations with his provincial counterparts when he met with them yesterday on this important subject?
December 11, 1984


Hon. Walter McLean (Secretary of State):: Mr. Speaker, I thank the Hon. Member for his question. I expect to have that report from Mr. Johnson by the end of the year. The report is on the survey he has conducted after being in touch with the post-secondary community and many of the provincial Governments, in an effort to provide a background for the ongoing discussions between the Secretary of State and the Ministers of Education. Yesterday's discussions were a first consultative step in which I was listening to the provincial and territorial Ministers of Education.


Roland de Corneille: In other words, the draft copy and the content of that important report were not shared.


PROVINCES' USE OF FEDERAL FUNDS
Roland de Corneille: Mr. Speaker, although he did not share the Johnson Report with the provincial Ministers yesterday, did he get a commitment from the provinces to the effect that they will not divert federal funds from their intended purpose of supporting post-secondary education, into other areas? Did he get a commitment from the provinces that they would use those federal funds for the purpose of post-secondary education?


Walter Franklin McLean: Mr. Speaker, the context of the conversation between Ministers responsible concerned looking to the future and determining the priorities of the provincial Governments and the federal Government.
As the Hon. Member knows, in the next year and a half there will have to be a renewal of the agreement with the federal Government with respect to the timetable. This is in the context of the Government's commitment to consult with the provinces about their priorities, as well as to let the provinces understand the federal priorities with regard to post-secondary institutions.


SMALL BUSINESS
Mr. Iain Angus (Thunder Bay-Atikokan):: Mr. Speaker, my question is directed to the Minister of State (Small Businesses). The Minister will be aware that, with the changeover from FIRA to Investment Canada, the Government has eliminated the review of acquisitions of small businesses by foreign investors, and also eliminated the controls and nature of new businesses created by foreign investors. Will the Minister tell the House, and Canada's small business community, what plans he has to protect already financially strapped small businesses from excessive and potentially unfair competition by well financed foreign interests, especially the large U.S. based franchises?
Oral Questions


Hon. Andre Bissonnette (Minister of State (Small Businesses)):: Mr. Speaker, Canada's small business community is now experiencing recovery. Soon we will begin a period of consultations to reconsider the funding of small businesses and, after those consultations, we will take appropriate steps to ensure that small businesses continue to grow and provide jobs for Canadians.


REINVESTMENT OF PROFITS
Iain Francis Angus: Mr. Speaker, does the Minister not agree that the substantial increase in the percentage of Canadian ownership of small business since 1971 guarantees greater reinvestment of the profits in Canada as opposed to foreign economies? Will he indicate what plans he has to ensure that the profits made in Canada by foreign companies will be reinvested here where they belong?


André Bissonnette: Mr. Speaker, foreign investments in Canada will not reduce the number of jobs in this country. As I said, they will be a boon to Canadian businesses, and Investment Canada will see to it that the money is reinvested in Canada and creates jobs.


FISHERIES
Mr. Gerald Comeau (South West Nova):: Mr. Speaker, my question is directed to the Minister of Fisheries and Oceans. The herring roe industry in Atlantic Canada has now become a multimillion dollar export sales industry. Would the Minister instruct his officials to study the problem of waste disposal that was ignored by the previous administration, and report on solutions that may be implemented in the 1985 season? Would he instruct his officials to consider developing markets for the by-products so that the industry can gear up to freeze or salt the herring by-products?


Hon. John A. Fraser (Minister of Fisheries and Oceans):: Mr. Speaker, I want to thank the Hon. Member for South West Nova for raising a matter which needs to be raised and was not dealt with by the former administration. The Hon. Member is absolutely right, that during the herring roe catch last year vast quantities of herring were spoiled. They were not reduced to meal because the machinery was unavailable. Consequently there was a high protein loss.
I have instructed my officials to look into the matter. I can tell the Member that this entire matter will be discussed in January with the industry advisory committee. I thank him for raising it.

Oral Questions TRANSPORT


AUTOMOBILE EMISSIONS
Hon.   Chas. L. Caccia@Davenport: Mr. Speaker, will the Minister of Transport inform the House if he will announce a decision with respect to the reduction of car emissions, now that the committee appointed by him completed its deliberations and consultations a few days ago?


Donald Frank Mazankowski: Mr. Speaker, as a result of the public hearings held in Ottawa a few days ago, a consolidated report is being put together by officials of Transport Canada, E, M and R, Environment, and DRIE, which will then be submitted to the respective Ministers for consideration.


DATE OF DECISION ANNOUNCEMENT
Hon.   Chas. L. Caccia@Davenport: Mr. Speaker, when will the Minister make a decision and announce it to the industry, the public, and particularly to those groups that are so concerned about reducing acid rain emissions in Canada?


Donald Frank Mazankowski: Mr. Speaker, as soon as the consolidated report is received by the respective Ministers it will, naturally, be considered, and I expect an announcement will be forthcoming soon after that report is considered.


ENVIRONMENTAL AFFAIRS
William Alexander (Bill) Blaikie: Mr. Speaker, my question is for the Minister of the Environment. She indicated to me last week that some of the cuts in her Department might be reviewed. Could she confirm that, on the contrary, in conversation with senior Canadian Wildlife Service Officials, her Deputy Minister announced that further cuts were planned, including the cancellation of a 4 per cent inflation increase in Environment Canada's budget, and an additional $13 million in program cuts? Could the Minister confirm what her Deputy Minister said?


Hon. Suzanne Blais-Grenier (Minister of the Environment):: If my colleague will allow me, Mr. Speaker, I will ask my Deputy Minister exactly what he said, or what he is supposed to have said, before I make any comment on a conversation of which I am not aware.


MINISTER'S RESPONSIBILITY
William Alexander (Bill) Blaikie: Mr. Speaker, 1 have had an opportunity to listen to a tape of that conversation, and I can tell the Minister that that is what her Deputy Minister has said.


Some Hon. Members:: Oh, oh!


An Hon. Member:: A tape?


William Alexander (Bill) Blaikie: My question is-


Some Hon. Members:: Oh, oh!


Mr. Speaker:: I would like to hear the question. Is that possible?


William Alexander (Bill) Blaikie: Mr. Speaker, when is the Minister of the Environment going to become the Minister who feels responsibility for the environment? Will she either point out the ecological blindness of the Government she is a part of, or have the decency to resign?


Suzanne Blais-Grenier: Mr. Speaker, I am pleased to announce to my colleague that I have no intention of resigning, period.


AUDITOR GENERAL'S REPORT
Mr. Gerry St. Germain (Mission-Port Moody):: Mr. Speaker, my question is for the Minister of Public Works. Based on the fact, and on information received by the Auditor General, he has brought to light that only 6 per cent, and I repeat 6 per cent, of all major government contracts were let on a truly competitive basis by way of public tender, and that the remaining 94 per cent were basically awarded on a sole-source basis by the previous Government.


Some Hon. Members:: Oh, oh!


Gerry St. Germain: Is the Minister prepared to look at substantial changes in the method of bidding for government projects which, in the words of the Auditor General, is possibly the most blatant misuse of tax dollars in the country today?


Hon. Roch La Salle (Minister of Public Works):: Mr. Speaker, I wish to thank the Hon. Member for his altogether relevant question, this being the day the Auditor General makes his report public. I am sure you will agree with me just how imperative it had become to change the government,
December 11, 1984

particularly in light of the poor performance of that department. In my opinion, the same thing applies everywhere else.
Under those circumstances, I can assure the Hon. Member that there will be changes, corrections and positive recommendations to safeguard the interests of Canadians and show more fairness to those who want to do business with the new government.


AUDITOR GENERAL
Miss Aideen Nicholson (Trinity):: My question, Mr. Speaker, is addressed to the President of the Treasury Board. Of recent years Parliament has passed a number of laws to facilitate the work of the Auditor General-the Auditor General Act of 1977, and more amendments to the Financial Administration Act which set up the Comptroller General's office. Will the Minister say if he is now prepared to bring in legislation to give effect to the Public Accounts Committee's recommendation that the Auditor General be empowered to report audits to Parliament on a completion date basis, instead of only annually, so that problems could be addressed and corrected more quickly?


Hon. Robert de Cotret (President of the Treasury Board):: Mr. Speaker, that is a question I have been discussing with the Auditor General. Yes, it is correct that we have had several meetings. This question is certainly something that we are looking at very closely. Hopefully I will be in a position to respond favourably to the request of the Auditor General in a very short period of time.


NORTHERN AFFAIRS
Mr. Keith Penner (Cochrane-Superior):: Mr. Speaker, I have a question for the Minister of Indian Affairs and Northern Development. I would like to ask the Minister about development on the North Slope of Yukon, which is one of the most environmentally sensitive areas anywhere in Canada. Could the Minister tell the House when the permanent screening committee, which is to review all development proposals, will be established, and who will be serving on that committee, so that all proposals that are submitted can be fully and adequately reviewed?


Hon. David Crombie (Minister of Indian Affairs and Northern Development):: Mr. Speaker, I thank the Hon. Member for his question. As he will know, there has been a meeting recently in that part of the country dealing with the proposal. The interim committee idea was not adopted and
Oral Questions
therefore we are moving to the permanent screening committee. The membership of that committee is not yet filled and, when it is, of course I will advise the House and the Hon. Member.


CARIBOU HERD DATA
B. Keith Penner: Mr. Speaker, my supplementary is for the Minister of Indian Affairs and Northern Development. In view of the announced cut-back of the federal research work on the North Slope's Porcupine Caribou herd, could the Minister tell us whether there will now be sufficient data available on this herd to guide the decisions of this screening committee? In addition, can the Minister assure the House that the Yukon territorial Government will carry out fully, and I mean fully, all of the research work that is presently being done by the Canadian Wildlife Service?


David Edward Crombie: I am advised that sufficient funds are available, Mr. Speaker. If the screening committee requires more funds then, of course, I shall be happy to receive any submission in that regard.
Second, with respect to the responsibilities of the Yukon Government, it is a Government that I trust, and I know it will carry out its responsibilities.


INDUSTRY
Ian Gardiner Waddell: Mr. Speaker, my question is for the Prime Minister. I, too, would like to welcome him back from 42nd Street.
Yesterday I asked his Science and Technology Minister how far the Government intended to go to attract foreign capital. The Minister replied that the Government had not ruled out the B.C. concept of economic free zones in spite of the fact that those zones would sometimes go as far as destroying minimum wage legislation. Does the Prime Minister agree with his Minister, namely, that the Government has not ruled out supporting economic free zones?


Martin Brian Mulroney: Mr. Speaker, I do not think the Minister used the term "the B.C. concept" at all. It is not germane to B.C. It is found in some areas where they are desirous of attracting capital and creating new jobs. It is one that we proposed to look at, along with thousands of others.


UNION RIGHTS
Ian Gardiner Waddell: Mr. Speaker, given the fact that British Columbia's Industry Minister, Don Phillips, has said that he wants the support of the federal Government because in these zones "unions will not have any

December 11, 1984
Oral Questions
jurisdiction", is this where the Government's policy is going? Is this how far the Prime Minister will go to attract foreign investment, that is, with economic free zones where union rights will be excluded?


Martin Brian Mulroney: Mr. Speaker, why would my hon. friend read something so nasty into an open proposition?


Mr. Benjamin:: We know you guys.


Martin Brian Mulroney: We stand ready more than any Government before us to co-operate with trade unionism in this country, which we regard as a viable and indispensable force-


Some Hon. Members:: Hear, hear!


Martin Brian Mulroney: -which is probably why more trade unionists voted for Progressive Conservatives rather than for the NDP.


Some Hon. Members:: Hear, hear!


Some Hon. Members:: Oh, oh!


An Hon. Member:: Even Dennis McDermott voted Progressive Conservative.


Some Hon. Members:: Oh, oh!


Some Hon. Members:: Hear, hear!


Mr. Speaker:: Order, please. Order.


ABORTION
Mr. John Nunziata (York South-Weston):: Mr. Speaker, my question is for the Right Hon. Prime Minister. Does his Government intend to review the abortion provisions of the Criminal Code?


Martin Brian Mulroney: Mr. Speaker, I would refer the question to my hon. friend, the Minister of Justice, but there are no such intentions being brought before the Government at this moment.


John V. Nunziata: I have a supplementary question, Mr. Speaker.


Mr. Speaker:: No, the time for questions, I am afraid, has expired.


PRIVILEGE
Mr. Speaker:: I am now prepared to rule on the question of privilege which was put to me the other day by the Hon. Member for York South-Weston (Mr. Nunziata). Order, please. I do not know whether Hon. Members can hear the ruling, given the noise.
On Friday, December 7, the Hon. Member for York South-Weston raised as a question of privilege-


Some Hon. Members:: Order.


Mr. Speaker:: I remind Hon. Members that there are certain traditions about the House of Commons.
On Friday, December 7, the Hon. Member for York South-Weston raised as a question of privilege a complaint arising from a statement made in committee by the Hon. Member for Burnaby (Mr. Robinson). The Hon. Member for York South-Weston alleged that, in making the statement, the Hon. Member for Burnaby abused his parliamentary privilege. I indicated in my preliminary comments following the Hon. Member's submission that the privilege of a Member of Parliament when speaking in the House or in a committee is absolute, and that it would be very difficult to find that any statement made under the cloak of parliamentary privilege constituted a violation of that privilege.
Since then the Hon. Member for York South-Weston has made a further submission to me by letter. He argues that there are restrictions on a Member's freedom of speech. In cases where a statement might be interpreted as an offence against the authority or dignity of the House, he argues that Parliament itself can question the exercise of the right of freedom of speech even though it may not be questioned in any court or place outside of Parliament. In his submission in the House he also averred on the basis of a citation from Main-got's Parliamentary Privilege in Canada that while our privileges are defined, "contempt of the House has no limits".
The limits of privilege and contempt have never been precisely defined. However, the distinction between the two is explained in Volume 28 of the Third Edition of Halsbury's Laws of England at page 464 in the following terms:
The power of both Houses to punish for contempt is a general power similar to that possessed by the superior courts of law and is not restricted to the punishment of breaches of their acknowledged privileges. Any act or omission which obstructs or impedes any member or officer of the House in the discharge of his duty, or which has a tendency to produce such a result may be treated as a contempt even though there is no precedent of the offence. Certain offences which were formerly described as contempts are now commonly designated as breaches of privilege, although that term more properly applies only to an infringement of the collective or individual rights or immunities of one of the Houses of Parliament.
It can hardly be asserted that the statement made by the Hon. Member for Burnaby in committee had the effect of obstructing or impeding any Member or officer of the House in the discharge of his duty. In the case of accusations against
December 11, 1984

Members of Parliament, these can be made only by laying a specific charge by way of a substantive motion of which proper notice is given. This is the only course open to a Member who wishes to accuse another Member of a wrongdoing or condemn another Member for an impropriety or misdemeanour. This can be verified by reference to page 378 or Erskine May's Twentieth Edition. I suggest the Hon. Member read that.
I would also refer to a ruling of Mr. Speaker Michener on June 19, 1959 in which he affirmed that the conduct of a Member of Parliament, even though reprehensible, cannot form the basis of a question of privilege although it can form the basis of a charge by way of a substantive motion. The ruling is a long one, but I should like to quote the following sentence:
In my view, simple justice requires that no Hon. Member should have to submit to investigation of his conduct by the House or a committee until he has been charged with an offence.
There are, of course, exceptions to this principle in cases where the conduct of a Member has led to the obstruction of other Members or of the House in the fulfilment of their duties. There is one further citation to which I would refer. On page 82 of Erskine May's Twentieth Edition, it is indicated:
Subject to the rules of order in debate, a Member may state whatever he thinks fit in debate, however offensive it may be to the feelings, or injurious to the character, of individuals: and he is protected by his privilege from any action for libel, as well as from any other question or molestation.
I think this makes the situation very clear. It is not for me to discuss whether Members should or should not have this protection. It would be for Parliament to change the law if it felt this degree of immunity were too great. In terms of our practice, I have no alternative but to rule that the matter raised by the Hon. Member for York South-Weston does not fulfil the conditions necessary to enable me to accord it priority as a question of privilege.



ROUTINE PROCEEDINGS


[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. Paul Dick (Parliamentary Secretary to Minister of State (Government House Leader)):: Mr. Speaker, the following questions will be answered today: Nos. 14 and 25.


Mr. Howie: How many lawyers are employed by the Department of Indian Affairs and Northern Development?
Investment Canada Act


David Edward Crombie: There are 21 lawyers assigned to the Department from the Department of Justice.


Mr. Howie: How many lawyers are employed by the Department of Agriculture?


Hon. John Wise (Minister of Agriculture):: There are seven lawyers assigned to the Department from the Department of Justice.


Paul Wyatt Dick: I ask, Mr. Speaker, that the remaining questions be allowed to stand.


Mr. Speaker:: The questions as enumerated by the Hon. Parliamentary Secretary have been answered. Shall the remaining question be allowed to stand?


Some Hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Stevens that Bill C-15, an Act respecting investment in Canada, be read the second time and referred to the Standing Committee on Regional Development.
Mr. Dave Dingwall (Cape Breton-East Richmond):: Mr. Speaker, I join in this debate because I think the Bill tabled by the Minister of Regional Industrial Expansion (Mr. Stevens) has far-reaching consequences for many regions of Canada, particularly the less fortunate ones.
There are a number of concerns, but at the outset I want to thank the Minister for bringing forward Bill C-15. This is the first opportunity the Government has taken to indicate to the House and to the Canadian people the actual type of climate it wants to see created in the country for economic opportunities. I am a little confused, however, knowing the personality of the Minister involved. Perhaps other Members can well understand what has taken place.
It seemed to me that the tabling or introduction of this legislation should have taken place well after or simultaneous to the tabling of the Budget which is to come down in February, 1985. Unfortunately, this piece of legislation has been set out by the Government and the Minister without knowing the full parameters of the economic policy of the Minister of Finance (Mr. Wilson) or the direction in which the Conservative Party wants to take the Canadian economy.

December 11, 1984
Investment Canada Act
I want to clarify for Hon. Members opposite as well as those to my left that we in this Party are cognizant of the fact that foreign investment is needed in Canada. My Party has never been opposed to foreign investment in the Canadian economy. For Members opposite to suggest or imply that, through innuendo, questions or commentaries, is totally misleading. I want to make perfectly clear that we are supportive of foreign investment.
That is not to suggest, however, that foreign investment in Canada should take place without restrictions or controls. This is where we differ greatly from the Conservative Party of Canada. That Party believes, as was announced by the Minister of Regional Industrial Expansion, that basically there ought not to be any restrictions or controls on foreign investment takeovers in Canada. We disagree. There ought to be. Foreign investment is important to the Canadian economy notwithstanding restrictions. It is important to small businessmen. It is important to various regions of the country because it can, provided there are certain restrictions and levers at the control of the Government in power, assist and enhance economic opportunities for Canadians.
We have heard a great deal of the rhetoric of the Minister responsible for this legislation, who says that it will be the cure for unemployment. Respectfully, it is the same rhetoric that the Canadian people heard in August, 1984-that the Conservative Government upon election would create tens of thousands of new jobs. That is what we heard. The exact opposite has occurred because of the Financial direction revealed in the economic statement of the Minister of Finance, which reduces moneys in the Canadian economy by $4.2 billion. He has displaced 50,000 people for the month of November. So much for job creation.
Now we have a new scenario. First it was inflation, then productivity, and then: Elect the Tories and we will have tens of thousands of new jobs. That did not work, so we have another vaudeville act, foreign investment. The Prime Minister (Mr. Mulroney) went to the United States and said: "Come one, come all; come to Canada. There will be no restrictions whatsoever". He says in this House that this will increase employment opportunities. I hope the Minister responsible will come before committee and place before Members of Parliament the impact studies showing how much foreign investment will come into the country as a result of these changes and how many jobs will be created.
I would like to know how many jobs will be created in the Province of Quebec as a result of the changes to this legislation. How many jobs will be created in the next fiscal year in Atlantic Canada and how many in western Canada? We hope to obtain that information. It is misleading for Members opposite to talk about job creation on one hand and on the other to refuse to place before Parliament as of recent date the statistics which would confirm their prediction that employment opportunities will be increased. I find that to be intellectually dishonest on their part.
Members opposite, particularly the Minister, have argued that the restrictions in the Foreign Investment Review Agency under the previous administration were too harsh, that somehow economies and countries around the world ought not to have restrictions. Perhaps he is blind because he refuses to acknowledge that the United States has restrictions on foreign investment. It may be a little bit "sexier," if I can coin a phrase, in terms of their anti-trust laws, but they have restrictions on foreign investment in their country. Why should Canada be different?
It is the second scene of the vaudeville act over there. Jobs, jobs, jobs will be created with the Foreign Investment Review Act changed to Investment Canada. That is the new byline of this group. Somehow there will be thousands of new jobs. I do not believe that for one moment and neither do the Canadian people. If we look at what has taken place in the past, the arguments of the Minister of Regional Industrial Expansion do not hold up.
For the last 10 years that FIR A was in operation, in excess of 6,000 applications were reviewed at, I might add, a success rate of over 91 per cent. That is a very substantial success rate for any country, whether it be Canada, the United States or any of the European countries. When the Minister and the Member opposite allude to the fact that we have curtailed foreign investment, I find that to be intellectually and factually dishonest because the opposite is true.
Let us look at the figures for last year. Foreign investment in Canada was substantial, despite what the Prime Minister said today in Question Period. There are a great number of people who want to invest in Canada. The significant difference between our Party and that Party is in the phrase "significant benefit to Canada", which were the operative words in the Foreign Investment Review Act. Under Investment Canada, the operative words are merely "a net benefit".
Significant benefit to whom? To the regions of this country? That was not mentioned by this Minister. We meant significant to the unemployed, to the youth and to the entrepreneurs of this country. This Government with its vaudeville act is not concerned for the regions, young people or the entrepreneur- not one iota. It wants foreign investment to come in and cherry pick, to pick off the best viable operations. Whether it be a Crown corporation or private sector, it says pick them off and send the technology back to the foreign country.
This Party does not want that. We want to encourage our young people to be involved in business. We want our young people to have jobs in the future. We want a climate of solid economic development, not one that is short term but long term, not only for the eighties but for the nineties as well.
The Minister came before Parliament and said that FIRA was too negative. He said that the name was negative, so the Government changed it to Investment Canada. My NDP colleagues call it Warehouse Canada. I call it Sellout Canada because it is a sellout. This Government will feel the crunch when it faces the Canadian people. I wish they would call an election now. They would be gone.
December 11, 1984

In a cursory review of Bill C-15, Mr. Speaker, you see that the legislation places the ultimate authority for decision-making as a result of foreign investment with the Minister of Regional Industrial Expansion. I want Members to understand fully that we in Canada have enjoyed a Cabinet system where decisions were made by Cabinet to reflect the concerns and aspirations of the regions of this country. No longer will that be the case. The authority rests with the Minister responsible. Under Clause 5 he has the authority for Investment Canada. Industries which could previously be leveraged by the Cabinet or the Ministry to relocate in less fortunate areas of the country will no longer have to do so. The Minister will sit back, as evidenced by many transactions that this individual has been confronted with, and allow the course of business to go along on its own. Therefore, the poorer regions of the country are once again being short-changed by the Conservative Government.
We saw this happen with regard to the creation of jobs. That was one priority. Now the priority is cutting the deficit. Government Members have reduced moneys to the IRDA Program for regional industrial expansion by $200 million. What are they doing now? They are relinquishing authority which was previously held by the entire Cabinet to a single Minister, a Minister whose track record in the private sector was a less than profitable or brilliant one, I would suggest.
This piece of legislation has only one phrase dealing with Canadian investors. What has the Tory Government done with regard to assisting Canadian investors through this piece of legislation? It has done absolutely nothing. There has been no compassion for the Canadian small business entrepreneur and no compassion for the small investor. It is a sellout of Canadian business opportunities to foreign countries.
What about protection for workers in the country? The Minister responsible stood in his place and said: "It is the flow of capital into the country that is germane to getting employment in Canada moving again". I respectfully suggest that that is both intellectually and factually dishonest. It is not the flow of capital into this country but what is done with the capital when it gets here that is germane to creating employment. Do we want workers in Ontario, British Columbia, Nova Scotia and P.E.I. to have more capital come across the border only to find that new machinery which will displace workers has been bought? Is that what the Conservative Government stands for? Is that what the substantive parts of this Bill are about? That is what the Bill says. There is absolutely no protection for the Canadian worker. Where are the safeguards? There are none whatsoever. There is an inflow of capital but there is no protection.
Of course, free season has been declared on Crown corporations. Those silent Members on the back-benches, sheep that they are, say absolutely nothing. Some Crown corporations were put in place because of certain economic conditions in the regions. Others were put in place for other reasons. Nevertheless, they were put in place. What is this Government prepared
Investment Canada Act
to do? It is prepared to sell them out as well and to sell out Canadian workers.
By introducing this Bill, the Government has not provided for debate in the House a list of draft regulations pursuant to the Bill. It has refused to do so. That is an old soft shoe and part of the vaudeville act taking place over there and over on the book-ends on either side of me. Government Members have proposed to go to committee and invite individuals to put forward their suggestions. Then at the end of the day we will be presented with a document which, through the large majority opposite, will be confirmed by the committee and obviously by the House of Commons. The Government ought to place those regulations before Parliament now so the Canadian people will have an understanding of what direction the Government wants to take with regard to the cultural aspects of this Bill.
We are going to review this Bill clause by clause in committee. Hopefully we will have witnesses from all provinces across the country come forward and testify. We want to review the Bill because the Prime Minister indicated that the appointment of any individual to a senior public position ought to be reviewed by a committee. I would hope that we would have an opportunity to review the new managing director for Investment Canada. Of course, his credentials ought to be laid before the Standing Committee on Regional Industrial Development so we will all have an opportunity to view at first hand, his other expertise and his other beliefs regarding his responsibilities in implementing the provisions of this Act. We will want to have an opportunity to peruse that information as well.
As stated by the Minister responsible, the Bill is somehow to be the cure for unemployment in the country. There is not a Member in the Chamber who does not want to see unemployment reduced significantly. However, the approach that this Government has taken with regard to foreign investment is the wrong approach. It is wrong because it does not protect workers and wrong because it does not provide incentive for Canadian investors. As you well know, Mr. Speaker, we in Canada have one of the highest savings rates in the free world. However, the Minister has refused-I should not say refused, Mr. Speaker; he simply does not have any inkling whatsoever as to how to put legislation forward which would attack the problem of having Canadians invest in their own future.
In concluding my remarks, I would like to say that unemployment is the major problem in the country. The Tories believe the major problem to be the deficit. What Tory Members are putting forward here today will in no substantial way reduce unemployment in the country. Alternatively, if they believe it will, then surely they will see that the Minister responsible for regional industrial expansion will table in this House forthwith information which will show beyond a shadow of a doubt that the Bill will reduce unemployment in the regions of the country. They will have him show the statistics and studies and produce the people who have conducted those studies.


S0162-36 COMMONS DEBATES
[Stage Direction]
December 11, 1984
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In closing, I would say that we are going to oppose this Bill. We are going to suggest amendments to it and we are going to have a thorough examination of it, not only at second reading stage, which will take many, many months, but in committee as well.
Mr. Deputy Speaker:: Any questions or comments? If not, we shall resume debate.


Ian Deans: Mr. Speaker, I am a little perplexed by the fact that none of the Government's supporters are interested in speaking on this debate. I would have hoped that, given the vital importance of the topic we now have before us, it would have generated a little more interest than apparently has been generated to this point in time. I say this recognizing that there are months ahead of us and that there will be ample opportunity by the end of March or early April for anyone who wishes to participate to do so. I do urge upon government back-benchers to remember, however, that the opportunity to give 20-minute speeches will, of course, run out and they will be restricted to making 10-minute comments come the end of February and into early March.
Having said that, I want to say that I doubt very much if, in the life of this Parliament, there will be another debate that will so clearly distinguish the policy direction of the Government from that which would be taken by the New Democratic Party.
I believe it is fair to say that in this debate alone there is a choice to be made. You can either believe with a sort of blind faith that an investor invests out of the goodness of his or her heart, taking into account all of the ramifications and consequences of that investment on other than themselves; or you can believe that an investor with a vested interest-which, of course, ties the two words together-invests in his own best interests and will pay only-cursory attention to the effect of his particular enterprise on those who might come into contact with it or be affected by it. I want to make it clear that I am not saying that investors do not care what happens to other people. 1 am sure they do on an individual basis. I am sure they do not like to see the kind of thing which has just occurred in India where thousands of people were killed or maimed or will suffer for the rest of their lives as a result of inadequate provisions for the protection not only of the workers inside the plant but of the community. I do not believe for one moment that the principals in that particular company consciously sat down and said, "We don't care what happens to those people". But what they did not do, and what they were not required to do, is to make that one of their primary considerations. They were not required to sit down and consciously factor into their costs the cost of providing the kind of environmental and human protection which would have guaranteed that such an occurrence could not take place.
I do not want to attribute to those people all of the worst possible motives. I attribute to them the motives which drive
them, that is, the desire to accumulate wealth. I personally do not share that desire, but I do understand that that goal drives a large number of people in our society and, in fact, it will be held by this Government and by others, not necessarily part of the governing party, as being a worth-while motive.
When one recognizes that that is the primary driving force behind the investor and those who make the decisions on behalf of investors, then one must put in place measures which will guarantee a level of behaviour by those persons which will be satisfactory to the community as a whole. It is interesting to note that investors put those kinds of measures in place to protect themselves from each other, to protect themselves in the stock-market from dealings which would perhaps otherwise result in actions which might be detrimental to the total investment community. What we are suggesting, following along on that example, is the necessity for Members of Parliament and for the Government of Canada to recognize what it is that motivates investors and to then make sure that we have in place the kinds of guarantees which will ensure that the public interest is also served by the investment which takes place.
I would like to say to the Government, Mr. Speaker, that if we are to lose investment dollars to another part of the world simply because that country is prepared to run risks with health, safety or the environment and it is not prepared to take into account the public good, so be it. If a company decides to move from Hamilton to Mexico-as did Allen Industries Canada Ltd.-because of the fact that it can get away with paying pitiful wages, it can get away without protecting the environment, it can get away without industrial accident protection, it does not have to pay unemployment insurance premiums and does not have to provide the benefits that the people of Canada have not only become accustomed to, but deserve, so be it. If an investor is prepared to invest his money elsewhere because he does not have to make those kinds of commitments to Canadians, he can bloody well invest his money elsewhere! That is fine with me. I am not interested in turning Canada into some economic backwater. I am not interested in seeing Canada drop back from the at least reasonably acceptable levels of protection for humans and for the environment which are established. I am not interested in providing an opportunity for someone to walk in with a handful of down-payment dollars, borrow the balance from Canadian banking and financial institutions, turn all of that into a tenfold profit, then put it all in his pocket and walk away. I am not interested in that. That does not help Canada and certainly does not provide anything of value. There is no lasting value in an operation which will put $100,000 or $100 million into Canada if its only purpose is to close the plant down, take the profits it was able to make and ultimately move back to where it came from or to some other part of the world, in order to begin the exercise all over again. I feel the Government has an obligation to consider that prospect. It has an obligation to try to understand that that is the way the system works.
December 11, 1984

My colleague, the Hon. Member for Essex-Windsor (Mr. Langdon), asked the Prime Minister (Mr. Mulroney) today how it benefits the Canadian jobless to make available to those who would invest the opportunity to take over an existing company, integrate its operations into the present operation and simply hang on to the distribution system, then close down the manufacturing operation in Canada. How does that benefit the Canadian jobless? The answer is clear, it does not. And there are countless examples where that has occurred. Even with FIRA, that has occurred. If the Government were truly interested in trying to provide for Canadian needs, it would not eliminate FIRA but would look for ways to improve it. That is the direction in which we ought to be going.
How many new jobs are created when a company decides, as did United Technologies, to take over a viable operation in Canada, Otis Elevator, as part of its world-wide conglomerate operation, and then systematically to reduce its involvement in Canada at the manufacturing level? In the recent past, Otis Elevator was providing elevators, escalators, and all kinds of hoisting equipment all around the world. This equipment is now being provided out of New Jersey or out of Germany instead of out of Hamilton or Toronto. Where is the benefit from allowing that kind of take-over?
The Prime Minister says we are trying to create jobs. There were no jobs created there. That is an example of the kinds of major conglomerate operations which this Government is now trying on bended knee to convince to bring their money to Canada. For what? They buy the company, run it down and then take advantage of the already developed customer network by selling to that customer network from their existing operations elsewhere. They then have the nerve to write off their losses against their tax payable in Canada. The Canadian taxpayer not only does not end up with jobs, expertise or research and development, but ends up paying for the loss of these things.
That, Mr. Speaker, is what is wrong with the approach of this Government. It does not seem to take a critical view of the real world. I would like to see investment in Canada so that people have jobs. I want to see research and development taking place here. I want opportunities for our young people who are coming out of the universities and colleges to find jobs in high technology fields. I want to find in Canada the will to develop an indigenous and unique Canadian process which will make Canada first in the world. However, we will not get that in a country like this unless we require from those who are going to establish their operations here that they set out a program and make a commitment to the country as a whole. They have to talk about having Canadians running the operations and developing a research and development component indigenous to this country. They have to give a world mandate for certain product lines that they will develop here. You do not get those kinds of things unless you ask for them. You cannot guarantee they will be in place unless you have it in a contract. Even then it is difficult to try to enforce it. But it is at least possible to measure it, enforceable or otherwise. You can say to them: "You told us you would do this thing". They
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in turn may well be prepared to sit down and consider whether or not a commitment is something they have to live up to. But as the Minister talks about it, this is not the kind of thing we are going to see.
We hear Canada is open for business again. I predict those famous words will come back to haunt the Prime Minister. As I listened to what he was saying and looked at his objectives and desires over and against past performance, I could not help thinking that Canada is going to get the business again. That is how it seemed to me. There is no way, under this new legislation, to ensure that the kind of development we get is going to be in our long-term best interests. As my colleague said earlier, it is not as if we do not have any foreign investment. Can you imagine the debate in the U.S. Congress and Senate if 52 per cent to 53 per cent of all U.S. manufacturing and industrial component were owned by Canadians? Could you picture it? Could you imagine the debate if 52 per cent to 53 per cent of all U.S. industry and commerce were owned by the Japanese, the Europeans or someone in Hong Kong? It would never tolerate it. It would never accept it. It would be moving-I beg your pardon?


Mr. Friesen:: It used to be owned by the British Government.


Ian Deans: And it changed it.


Steven W. Langdon: A revolution.


Ian Deans: But the United States would never tolerate it. You know that as well as I do, Mr. Speaker; I can tell from the look in your eye that you agree with my every word. If this debate were taking place in the U.S. Congress, the seats would be filled. Every Congressman would be rising to defend American interests. Every single Congressman would be speaking on behalf of the necessity to develop an economy in the region he represents, an economy primarily owned, controlled, operated and directed by Americans.


Mr. Jepson:: Stratford is calling.


Ian Deans: My colleague says that Stratford is calling. Do you know what is wrong? The trouble is that my colleague seems unable to separate the presentation from the substance.


James Kenneth (Jim) Jepson: Theatrics from the-


Ian Deans: The substance, I want to say to him, is of infinite value, whether he knows it or not. In time to come he will look back and regret the fact that when the opportunity was given to him to rise and speak he did not take it. It is absolutely essential in this House at this time that the Members of Parliament get up off their backsides and speak for Canada. They have to understand that what we are talking about is not some passing phase. This is not just a matter of saying , "Well, two or three weeks from now things will be okay and we will all get back to normal". What the Government is doing is making a fundamental decision about who is

December 11, 1984
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going to own, operate and control the future of Canada and Canadians. We are deciding here today that the 53 per cent of our economy at present owned by those who do not reside or have any interest in Canada other than to make money will become 63 per cent or 73 per cent. At what point do they own enough? At what point do we say: Damn it, it is time for us to stand up and speak for ourselves. It is time for us to redirect the necessary funds. It is time for us to provide the incentives for Canadians.
Why did the Government not bring forth legislation that would have encouraged Canadians to invest? Why open up the borders to whoever wants to come in without any requirement of any kind? If this Government believes it is necessary to try, as was said earlier today, to open up and shake loose the pools of savings of Canadians, why has the Government decided to open up the floodgates of foreign investment and thereby make it virtually impossible for Canadians to compete? Why?
I find this a very aggravating situation, Mr. Speaker. It is aggravating because it is so clear to me, as I look what the Government has done or is in the process of doing, that the end result can be nothing other than that 10 years from now it will not be 53 per cent, it will be 63 per cent or 73 per cent of Canada's economy owned by other than Canadians. Many small entrepreneurs in Canada who are fighting it out, trying to survive against the much larger conglomerate operation in another part of the world, will succumb almost out of necessity to the sale of their manufacturing facility to their major competitors who may well be ten times their size. That competitor will, as they have always done, then move to consolidate. That consolidation will be done in such a way as to have most of the manufacturing done in those areas of low wage and little benefit. The Canadian operation will end up being simply a warehouse for the distribution of products made elsewhere. That is the process. If you doubt it, Mr. Speaker, then look at the process. What the Government is talking about is free trade. Add free trade to this Bill and you open up the doors for the gradual if not immediate elimination of many of the smaller Canadian manufacturing enterprises.
You know as well as I do that what we need to meet the domestic requirements of Canada can be produced with a week, or perhaps less, of production capacity in many of the operations south of the border. You know that as we open up free trade, the opportunity for Canadian subsidiaries of U.S. operations to enter the U.S. market will be severely restricted by the parents' directives. But in Canada no such requirement will pertain. You will then end up with more and more and more of U.S. and other countries' goods entering Canada without any protection for Canadian industry.
With the introduction of the economic free zones that we now hear the Government talking about, Mr. Speaker, we will see the elimination of minimum wages, workers' compensation payments and unemployment insurance. You will see people having to work in ghetto-like surroundings without any protection. The end result will be that Canadians' standard of living will suffer immeasurably.
What we see from this Government, if you look at the entire program, is a destabilization of the social fabric of Canada. This Government is moving toward eliminating the very things that many in this House have fought for and attempted to develop, in fact have begun to develop over many, many years. I want to let you know, Sir, as I sit down that this Bill is yet another step toward making sure that Canada, although it will have sovereignty in name, will certainly not have sovereignty in fact.


Benno Friesen: Mr. Speaker, I just want to comment on what the Hon. Member has said. He reminds me of the newspaper editor who, in his column, prayed: Lord, save me from those guys who criticize and minimize those other guys whose enterprise has made them rise above those guys who criticize and minimize. That is all we hear from the New Democratic Party.
I want to correct his historical anecdote regarding the United States. Would it allow legislation that would let others invest in the United States? I want to remind him that the United Kingdom pretty well owned and controlled the economy of the United States until World War I. At that time Great Britain needed the money it had invested in the United States to pay for World War I. Therefore, it sold off its investments in the United States to pay for that war. It was not American legislation that drove out the United Kingdom pound; it was the need to pay for that war. It was not American walls that drove out U.K. investment; it was the U.K.'s choice to sell its investment.


Ian Deans: Mr. Speaker, the Member must understand that only 2 per cent of the entire American economy is foreign owned. If we had 2 per cent, or even 10 per cent foreign owned, I would not mind opening the doors. However, at 53 per cent I have serious reservations about the value of opening the doors even further. Equally important, as the Hon. Member knows, are the circumstances that surrounded the ownership by Britons in the United States. It was not necessarily always, or even primarily, in the area of direct investment. In many cases it was the result of loans made for the development that took place.
I would like to go back to one other point. I would like to suggest to the Member, through you, Mr. Speaker, that I do not want a war and the necessity to fund a war to bring us to our senses. I do not think we should have to wait until there is a need for a great war effort before the U.S. withdraws its funds from Canada. I would much prefer that we did this in an orderly, sane and sensible way with some economic planning involved. As the Member full well knows, it was in fact the war effort that resulted in the withdrawal, if you will, of much of the financial involvement by Britain in the United States. Quite clearly, if that were required as opposed to sensible direct and economic planning approaches, I would choose the latter.
December 11, 1984


Mrs. Mary Collins (Capilano):: Mr. Speaker, I rise to speak in favour of the Bill that has been presented on investment in Canada. I found it very interesting to listen to my colleague from Hamilton Mountain. This is a good opportunity to debate a basic concept which truly does differentiate between the points of view of those of us in the Government and those on the other side of the House. I think the Hon. Member will agree that during the campaign which took place this summer we were very clear about this differentiation. We were very clear about our view of economic growth, job creation, and the need for foreign investment in the country. I am pleased that we are able to bring forward, so early in the mandate of our Government, some concrete, specific actions to put in place those campaign promises. I might remind the Hon. Member that we have the support of the Canadian public on those policies. We have formed the Government. We have a commitment to the Canadian public to put in place the policies that were presented in the Investment Canada Bill.
I would like to spend a few minutes today discussing why this Bill was needed. I recall the time 10 years ago when the Liberals introduced the Foreign Investment Review Agency. I do not think that anyone understood at that time the very negative impact that it would have on investment in Canada. As the years went on and we became experienced with the delays and frustrations, it became very evident to our friends across the border and in other countries that Canada was not welcoming foreign investment. In fact, in many cases Canada was doing its best to discourage it. That did result in loss of jobs and a lowering of economic growth in the country. About four or five years ago when this problem was at its height, a common phrase was that investors had no fear but FIRA itself. I am pleased that today we can remove that sense of fear and say to potential investors that we do welcome their investment and confidence in this country and in this Government.
I would like to give you some examples from my own experience of what has happened in the past few years. I think we are all familiar with the story of Cyprus Anvil. In fact, the leader of the Yukon Territory was with us today. As a result of FIRA's lack of approval for foreign investors to keep that mine open and operating and to maintain jobs for Yukon, that mine has been in great difficulty. We do not know what its future will be and there could very well be loss of jobs there.
I came back on the plane this morning from the West Coast. Every time I fly across this land I am amazed at its vastness. I realize the tremendous potential that we have, but 1 also realize that we do not have the investment dollars in the country to turn some of those opportunities into realities. I came back on the plane with a gentleman from California. He related a story to me which took place in about 1977. His company had concrete plans to invest in a high-tech industry in Quebec. It put its plant into operation. The people here had the expertise and the knowledge they required. They were going to employ professional people to develop skills and new technology. They worked with FIRA over a period of about two years. They were totally frustrated. They were never able
Investment Canada Act
to get their equity position in place in this country and could not go ahead with that investment. As a result of that, those highly skilled people were not able to get jobs in that industry and that economic potential was not realized in this country.
Of course this gentleman's reaction to investment in Canada has been totally negative. Happily, I was able to relate to him what the Government is doing. I was able to explain to him the program of Investment Canada. His reaction was that his company would be prepared to take a second look. I had been hearing about the kinds of things that our colleagues have been bringing up. I asked this man why he wanted to invest in Canada, what it was that attracted him. He said that it was the fact that we have expertise and skills in this area, but also that he believed and had seen in practice that Canadians really understood the work ethic. I felt really good about that. You do not hear that very often. I believe that is true and I certainly welcomed hearing that from one of our friends from the United States. I would like to be able to say to him and others that their investment capital is welcome in this country to help us create those jobs and economic growth.
A couple of weeks ago the Conference Board of Canada produced its report. I think we all found that very interesting. In that report the Conference Board reviewed the experience of FIRA and interviewed a number of companies. I would like to relate some of the comments it received from some of the people it talked to. One of the companies said that on a scale of one to ten it would rate Canada at zero. This was in terms of welcoming foreign investment. Another official with a British holding company said that his firm considered totalitarian states such as Chile, China and troubled Northern Ireland as more attractive places to invest. The author of the study found that rather shocking and so do we. That is not the kind of atmosphere and the kind of mat that we want to set out for potential investors.
The Conference Board discovered that about half the companies it interviewed had been deterred because of FIRA. A number of specific issues were addressed in that study. One issue concerned the delays people had experienced with FIRA, the lack of clarity in the criteria as well as the cost of undertaking those reviews.
I have heard that concern echoed many times by my colleagues. In fact, friends of mine who are lawyers who were involved in assisting companies to obtain their applications through FIRA have been quite open in saying that they realize that they are the only ones who benefited from the whole experience. I do not believe that FIRA has benefited anyone else.
In addition to actual investments that have been deterred or have not come to Canada, FIRA has also been used as an excuse in some cases. I have seen examples where potential investors have said that because of FIRA they do not wish to proceed with investments here. It is hard to document that type of case and we really do not know how often that has happened, but it has existed. With that excuse no longer

Investment Canada Act
available we will be able to tell private companies and small and large businesses that are potential investors that we know what kind of investment we want and that they will not have to go through a review process and face unnecessary delays. There will be no excuse for them not to invest.
I believe that this legislation is a very sensible approach to the whole question of foreign investment. The fact that new businesses will be exempt from review seems to be a very commonsense approach. Why should anyone who has some money and wants to start a new business in this country be prevented from doing so? Of course, there is provision for protective measures in areas of particular concern to our cultural heritage. Of course, I support that and I know that it is important to protect.
Potential purchasers of businesses with less than $5 million in assets will be able to proceed with those investments without review. The Minister gave some interesting examples of that this morning. This means that approximately 80 per cent of businesses will be exempt from review, according to the Bill. Indirect acquisitions involving more than $50 million will be subject to review. Although it is difficult to determine such a figure, we know that indirect acquisitions of more than that sum involve major acquisitions the impact of which might be questioned. We will have the opportunity to review those acquisitions. Most other acquisitions that are relatively routine will be welcomed and processed quickly.
This legislation also corrects a number of other problems in the review process. I believe the most important problem concerns the timing. Many of us have been involved in dealing with the bureaucracy from which we cannot get an answer. Eventually people give up or not even try. This legislation makes such dealings very clear. The Minister must be efficient because he has 30 days in which to respond.


Mr. Manly:: Forty-five.


Mary Collins: Plus the 45 days, if they are advised. If they are not advised, the acquisition is exempt. I believe that is fair because the onus should be on the Government to indicate that there may be a problem and a review is necessary. This will ensure that these issues are dealt with in a timely manner. Since the onus is on the Minister to make the decision, it eliminates the need to go through Cabinet.
We can assure those who are interested in investing in Canada and whose application exceeds the limits of exemption that their review will be conducted fairly and in a timely manner.
I am also pleased to see the change in how the assessment will be done. I have always had some difficulty in understanding what "significant benefit" meant. I could not relate it to anything from my personal experience, and I believe that a change to the concept of "net benefit" will enable us to deal with these applications in a more businesslike manner. Our method of assessing that benefit will be more clearly understood by all those involved.
We have also added criteria to ensure that these investments are compatible with cultural policy. We will look at the effect of international competitiveness to make sure that these criteria are not only fair but ensure that these investments which are subject to review are compatible with our national goals.
We need the investment. I must disagree with the Hon. Member for Hamilton Mountain (Mr. Deans) in that respect. We must remember that our country is still young. We have had relatively little time to accumulate a lot of wealth. While Canadians are among the best savers in the world, we do not have the mass accumulation of money that is required to develop our resource industries or alternative industries that are required in this country.
Several years ago, at the national policy convention of the Conservative Party, I had the opportunity to discuss this issue. One of my colleagues on the panel conducted an analysis on how much money this country needed in the next few years. His assessment at that time was that we would need approximately $1.5 trillion during the 1980s and $4.5 trillion during the 1990s. There is no way that our own economy can generate that kind of savings or equity. We must go outside to attract that equity in order for Canada to grow.
What we do have is great human energy because we are a young country. Canadians have ideas, and I believe that is what the more mature societies in the rest of the world are looking for. I believe that Europe, the United States and the Pacific Rim countries are interested in what we have to offer. I think we have a tremendous potential of developing partnerships to expand our expertise and our human energy along with the dollars from other societies.
Hon. Members opposite are concerned about the risks involved. I find this concern rather interesting because it seems to reflect a very negative attitude toward the human spirit. It is as if everything in life had to be controlled because we have no sense of faith in ourselves. I fundamentally disagree with that concept. I believe that we are a nation of risk-takers and our Government wants to encourage the risk-takers in this country. We want to encourage those who have capital to use it in partnership with other capital to take risks and invest in opportunities in this country in order to create the jobs that we so badly need.
I had the opportunity to return to my riding of Capilano on the weekend to talk to some business people there about their initial reaction to the investment Canada Bill. The reactions were all positive. I believe they see it as a sign of hope and the fulfilment of a commitment by the Government.
I also had the opportunity to get some reaction from people in Calgary where I used to live. The reaction of the energy industry, upon whom we are counting to make major new investment for the creation of jobs, has been truly positive. The Independent Petroleum Association and the CPA have both lauded the efforts of the investment Canada Bill. They predict that it will result in new drilling activity. It is another step in the right direction toward the kind of positive climate they need to make those investments.

Representatives of those industries were in Ottawa last week. I know that a number of Members had an opportunity to talk to them. Many of those representatives said that while they were interested in what we were saying, they wanted some concrete evidence that we would take action.
We hope to see changes in the FIRA legislation and in the National Energy Program. Now they can say that we have started that process. We have put in place some concrete evidence of our commitment. Investment Canada will encourage investment. 1 can assure my colleagues that the western reaction to this legislation is extremely positive.
Our Prime Minister (Mr. Mulroney) was in New York yesterday. The kind of response he had there was also positive. As we go to Japan next week, we will have the opportunity of meeting with Japan's business community. The Japanese too will see this as a positive new approach and we will once again be able to enter into discussions on joint ventures and new investments from Japan as well.
The West particularly has suffered I think from some of the problems of FIRA over the last 10 years and it is with a great sense of relief that we shed that burden of encroachment which was so unnecessary. It dampened the human spirit of this country. I am glad we have divested ourselves of that burden, that onerous and negative aspect toward investment, and instead are replacing it with something very positive that will create a new era of co-operation for us on the international scene. We will see Canada once again take its place in the international market-place and be open for business once more.


The Acting Speaker (Mr. Paproski):: Are there any questions or comments?


Mrs. Finestone:: Mr. Speaker, my question is addressed to the Hon. Member for Capilano (Mrs. Collins). I am enjoying this exchange with her. I heard a statement made by the Hon. Member and I would like clarification from her on it. It is one of the areas that I think is-

-fuzzy, as we would say.

I will not speak in French. I will continue in English. Does this Government intend to do away with some of the significant benefit clauses of the previous legislation which the Hon. Member feels are very vital in order for us to promote this atmosphere of goodwill? With words alone will we change the whole atmosphere?
If you look at the Bill itself, Mr. Speaker, there are very few real changes. I guess the real change is the mirror images. With those significant clauses that the Hon. Member describes as the untouchables, cultural policy compatible with national goals, could the Hon. Member explain what is a cultural policy compatible with national goals, please?
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Mary Collins: Yes, Mr. Speaker. I am always so pleased to have questions from my hon. colleague and I, too, am enjoying this dialogue. I think as one of the new assessment factors we are adding compatibility with cultural policy. I believe that will require some further discussion and definition. My understanding is that it would cover particularly the areas of publishing and broadcasting. These are two areas over which we feel very sensitive about ensuring Canadian control. Those are the two about which I feel most strongly.


James Douglas Manly: Mr. Speaker, I was interested in the comments of the Member who said that Canada is a new country and has not had time yet to develop its own capital. Coming from British Columbia I am sure the Hon. Member for Capilano (Mrs. Collins) will be familiar with the situation that we have in our lumber industry. It is of great concern to me and to other British Columbians that that resource has been depleted. Capital moved in and depleted the resource. It then moved out. It did not build up any of the infrastructure or any secondary industry. As a result, we are more vulnerable than ever to world markets.
My question is not an original question, it is the same question to which my colleague tried to get an answer from the Prime Minister (Mr. Mulroney). How does the Member feel about the provisions in this Bill that allow foreign capital to come in and take over small Canadian businesses without any kind of review? The Bill in effect creates open season for small business. The Hon. Member talked about the need for more risk. Does she not feel that perhaps this is creating an unacceptably high level of risk for small Canadian businesses?


Mary Collins: No 1 do not, Mr. Speaker, share the Hon. Member's view on that. No one has to sell his company. No one tells me that I have to sell out. It is up to me as a business person. I do not see this as a great threat to our small business community. Certainly if those small businesses that need capital to grow have difficulty getting it in Canada and they have a colleague or a friend or someone in another country who can join with them, I see that as an advantage. I do not at all share the fears which the Hon. Member has expressed. I have been a small business person and have worked in both small and large business. I do not at all share the Hon. Member's negative feeling about this approach.


Steven W. Langdon: Mr. Speaker, if I may, I should like to start out by saying that it is not our side expressing a lack of faith in ourselves. It is not our side which seems to be convinced that everything from hairdressers to popcorn sellers should be set up by foreign investment. I am proud to be able to say that it should be the case in Canada that we provide our own hairdressers and popcorn sellers. It should not be something for which a Minister has to stand up and apologize.
I have a couple of questions for the Hon. Member. First, 1 will just follow up on the question my colleague asked. I can understand as a business person why the Member might be interested in seeing open season for American investors. It is very important that each of us when we enter this Chamber shift from being business people, university professors, or

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whatever, to becoming Members of Parliament, thinking about the people of our communities. How can it help the people of a community working for that small business person to have a company bought out and reduced in size or shut down by an American company, as will become possible under this legislation?
Second, the Hon. Member talked about routine cases, which the change in the threshold level for indirect takeovers will now permit to go through without review. How can it be routine for a plant in a community, such as Black and Decker in Barrie with its 600 workers, to be taken over without review as would have been the case under this new Bill? We have had that confirmed by the FIRA people. How can it be routine to have such an act take place, a plant shutdown and 600 people thrown out of work?


Mary Collins: Mr. Speaker, anything is possible. I do not think that in our role as Members of Parliament we are trying to legislate to control our society totally. It is the other way.
First, I am thinking of the community. I am thinking about the people who need jobs and who are not going to get those jobs unless we get new and additional capital investment in Canada. That is who I care about. That is who I want to see prosper. I believe we need help and assistance in attracting the $1.2 trillion or whatever we need for new investment. I think our new approach is psychological to some extent and will help to create that positive climate.
I also object to the Hon. Member's first comment when he said something about an open season for American investors. To me that has a negative connotation to our American friends. What is wrong with American investors? They are some of our dearest friends. Why should we not welcome their investments? 1 do not share his view that anyone would invest major capital in this country in order to close something down and basically lose that investment. I just do not think that is the reason people invest. We will see in the future, but I am confident that this is not the pattern we will see.


Lorne Edmund Nystrom: I am sure the Hon. Member for Assiniboia (Mr. Gustafson) would tell the Hon. Member privately that we have had that theme in our Province of Saskatchewan for over two and a half years. He can tell the Hon. Member that the number of people on welfare has risen by 22 per cent and that the unemployment rate in our province has doubled. Is she aware of this reaction in Saskatchewan? Is she trying to emulate that kind of record? I know it embarrasses to a great degree Hon. Members such as the Hon. Member for Assiniboia.


Mary Collins: Mr. Speaker, I am not particularly familiar with the situation in Saskatchewan. However, I can assure the Hon. Member that our approach is to create jobs, to encourage investment and to develop economic growth which is so necessary. Our friends from across the oceans and across the border will assist us in doing so.


The Acting Speaker (Mr. Paproski):: The period for questions and comments has terminated.



PROCEEDINGS ON ADJOURNMENT MOTION

The Acting Speaker (Mr. Paproski):: Order, please. It is my duty, pursuant to Standing Order 45, to inform the House that questions to be raised tonight at the time of adjournment are as follows: The Hon. Member for Trinity (Miss Nicholson)- Government Expenditures-Work of review committee, (b) Composition of advisory committee; the Hon. Member for Winnipeg-Birds Hill (Mr. Blaikie)-Environmental Affairs- Canadian Wildlife Service-Cancellation of Herring Gull Egg Program, (b) Minister's view; the Hon. Member for Hastings-Frontenac-Lennox and Addington (Mr. Vankoughnet)-Penitentiaries-Escape of three inmates from Bath Institution.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Stevens that Bill C-15, an Act respecting investment in Canada, be read the second time and referred to the Standing Committee on Regional Development.
Mr. Don Boudria (Glengarry-Prescott-Russell):: Mr. Speaker, I am pleased to have an opportunity to participate in this debate on behalf of my Party. We are not discussing today whether or not Americans are our friends. We already know this. It was very interesting to listen to the remarks of the Hon. Member for Capilano (Mrs. Collins) who seemed to suggest that because Americans are our friends, we must have no laws and we must let them come in and do what they like.
I have friends, but they do not take over my house. When they come to my place, they are guests. They usually behave in such a way that I am still the master of my own house. As Canadians, we are masters of our own country. We should ensure that our laws are such that we continue to be masters of our own destiny. Whether or not Americans are our friends is not the discussion today. We know they are our friends. However, if one is standing beside an elephant and the elephant rolls over on top of one, whether or not it was a friendly elephant, the result is the same-one is flattened like a pan-


SUBJECT MATTER OF QUESTIONS TO BE DEBATED
[Stage Direction]
December 11, 1984
[Stage Direction]
cake. The discussion as to whether or not the Americans are our friends need not enter into this debate at all.
We have heard the Government say, as I said previously that the United States is our ally and therefore we should be in a position of submission or do whatever it wants. It is interesting to note that not long ago-and I believe it was yesterday- we discussed the arms issue. The Government talked about the fact that our position should be a position of strength when dealing with other countries. It appears that on the peace issue we have to negotiate from a position of strength. On the other hand, when it talks about trade issues, we have to negotiate from a position of submission. I fail to realize how the Government could have those two very contradictory views from one day to the next. I think the positions taken should have been the complete reversed of the ones taken by the Government.
This morning we listened very attentively to the Minister's statement. He described the previous Government's position as outworn ideology. Moments later he described in the House the Gray report of 1973 which advocated, as he described it, that control of foreign investment be only directed at large corporations. It is very interesting that on the one hand the Government described our views as being outmoded and then it returned to views of earlier years and called them the modern and appropriate way to act now.
There is outworn ideology at times, but it does not come from the Liberal Party. It comes from the Government which has outworn views, views which are 20 years to 40 years old. The Conservatives have not been in power for many years. Now that they are back in power, they take the position that whatever worked in 1950 will work in the 1980s. That is not so. This is a different world. It is a different generation. We have to live with different realities. Of course the Americans are still our friends. We know that, but that is not what is at stake. What is at stake is being the masters of our own destiny.
Also this morning the Minister took great pains to describe how F1RA affected such industries as hamburger stands. I thought that was rather amusing, for the largest restaurant chain in the world is a chain of hamburger stands. As a matter of fact, it is one of the largest corporations in the world. To indicate that that particular industry, the restaurant industry, is not important and that foreign investment regulations were not in order does not take into account the reality with which that industry lives. The threat of multinational corporations and very large chains is indeed present for that industry as it is for many others.
I, for one, should like to know where the Bill stands in terms of the policy and philosophy of the Government regarding competition. The Government talked about the need for more competition. How can we have more competition when multinationals come here, buy our small and medium-sized industries, make them part of their conglomerate structure and eliminate whatever competition exists? Or should we have multinationals creating a temporary competitive position against small Canadian companies until they are forced out of
Investment Canada Act
business? Is that competition? In the long term it will result in more and more corporate concentration, not more competition.
The Hon. Member for Capilano just told us that FIRA had a bad name and that sometimes FIRA was even used as an excuse. In other words, a company which did not really want to invest here would say, "I will not invest in Canada because of FIRA". If it did not want to invest here in the first place, what is the point of including that particular element in the discussion? It was not going to come here anyway, by the admission of the Hon. Member for Capilano. If it did not want to invest in this country in the first place, it does not matter whether it used that particular excuse, the excuse that our hockey players are too big, the excuse that there was too much snow in this country or that heating bills were too high. What is the point in using alternative excuses if the Hon. Member has already identified that the company did not want to come here? To say that FIRA was used as an excuse by people who did not want to come here in the first place does not add to the credibility of this legislative initiative.
Investment Canada was an election promise. We have heard a lot about election promises lately. Some of us have reminded the Government of all the promises that were made and all the promises that have not been delivered. I have here the Tory collection of 338 promises. I have brought some of these to the attention of the House before. I will do so again today so as not to disappoint anyone.
I want to talk about the foreign investment promises. Some of these promises are contradictory. The measure before us today does not fulfil the promises that were made. Let me read some of them. The first promise reads:
Attract more foreign direct investment in order to lessen the country's sensitivity to every upward movement in U.S. interest rates.
That is a rather interesting promise. It does not require another promise to be contradictory. It is contradictory in itself. How will having more U.S. business here lessen our dependence on U.S. interest rates? I am having difficulty understanding how this promise stands on its own, let alone against anything else. The second promise reads;
Pass a law banning new foreign investment in at least four sectors; banking and finance, the media, energy and telecommunications.
Is that not interesting in view of the Bill before us today? The third promise reads:
Hold public hearings to decide whether to extend this ban to other sectors of the economy.
We are waiting for the public hearings before we pass this Bill. Let us have the public hearings that were promised. That is the third promise in the investment policy of the Conservative Party. We cannot pass this Bill before the public hearings are held. We want the benefit of much input from Canadians in every walk of life, from one coast to the other, before adopting this legislative measure. After all, we on this side want the Government to deliver on its election promises. It promised to hold public hearings before deciding to extend this ban to other sectors of the economy. The fourth promise reads:
[Stage Direction]
December 11, 1984
Investment Canada Act
Make the entire operation overseen by an agency that might be called Investment Canada or Caninvest.
Apparently that was an alternative title. During the election campaign the Conservatives said there would be an Investment Canada agency. However, the role for it as described at that time was vastly different from what we see today. Today we see that Investment Canada will be this Government's advertising agency for attracting foreign capital. That is not the role that was described during the election campaign. All that is the same is the title. It is the same in name only. Its role is very different.
In most cases there will be no review for new investments. That is what the Minister stated this morning. If the Government has not completed its work by the end of the waiting period, the period of wait will be deemed to be approval for the process. In other words, the Government must get its act together and complete any review very quickly or approval will be deemed to have been given.
That is in direct contradiction to the Bill. Clause 5 states "The Minister shall". The duty is on the Minister. The Minister is to carry out various things. I will read some of them:
-ensure that the notification and review of estimates are carried out in accordance with this Act;-
-assist in the development of industrial and economic policies that affect investment in Canada;
Throughout Clause 5, the onus is on the Minister. It is the duty of the Minister to do various things. If initiates are not taken during the waiting period, approval is deemed to have been given. That is a flagrant contradiction. We cannot have those two policies simultaneously. The Minister cannot, on one hand, have the duty and, on the other hand, have a loophole which says if it is not done within a certain number of days, it is deemed to be an approval. That clause needs to be reviewed.
We are not here to discuss whether we want foreign investment. We want foreign investment, but we must ensure that investment from outside the country is in the best interest of all Canadians. In addition, it must be in the best long-term interests of this country. It cannot be a shortsighted initiative. We need long-term planning and long-term initiatives that will be to the benefit of this country for many years.
If adopted, this policy could do for us what it did for Central America and place us in the position where we are totally dominated by others and no longer the masters of our own destiny. We do not want that. This Government should have second thoughts, look at the Bill again and have a mindset whereby it will make major modifications to the Bill. Maybe the name does need to be changed. Maybe we need to review part of the Act. We on this side are open to constructive suggestions. However, we do not want to sell the store. The Prime Minister (Mr. Mulroney) said that this country was open for business. However, we are not open at firesale prices.
[ Translation]
Mrs. Mailly:: Mr. Speaker, I would like to ask the Hon. Member whether he thinks the sale of Petrofina to Petro-Canada has created jobs in Canada, since a number of his
colleagues have suggested that the presence of a foreign company in this country tends to create more unemployment than employment.
Therefore, I would like to know first of all, whether the purchase of Petrofina by Petro-Canada has created jobs in Canada, and second, whether the Hon. Member knows how many Japanese and German companies involved in packaging, hi-tech and computers decided against setting up business in Canada because they did not want to waste time going through the screening process, and finally decided to go to the United States or Europe.
Does the Hon. Member agree that situations of this kind are indeed disturbing as far as job creation is concerned?


Don Boudria: Mr. Speaker, I am sure that my colleague, the Hon. Member for Gatineau (Mrs. Mailly), is aware that in the past, 92 per cent of all applications made to FIRA were approved. It is therefore wrong to say that the screening process has discouraged foreign investment. And that is not what we are trying to do today.
Mr. Speaker, the important thing is to ensure that foreign investment is in the best interests of our country. That is what we want. And I am sure that the people of the riding of Gatineau would agree.
Mr. Speaker, as far as Petrofina is concerned, we realized that the oil industry in this country did not belong to us at all. We were, in fact, entirely at the mercy of foreign investors. We were not our own masters in the oil sector. So we made a decision, and it was a good one, that the industry should belong to Canadians. We could not start from scratch, so we had to buy existing corporations, and we had to pay the price. This had to be done. The Government made a decision, fully aware that it was necessary and that it was in the best interests of our country.
Mr. Speaker, the House will recall that in 1979, a Prime Minister mentioned selling Petro-Canada. And you know how voters reacted when they tried to sell Petro-Canada. They did not take very kindly to that decision. It is important for us to own our oil industry and the whole energy sector or at least a large part of it, to ensure that foreign investors do not do what they did during the oil crisis when oil tankers were turned away from Canadian shores and routed to other countries. This has happened, Mr. Speaker, and-


The Acting Speaker (Mr. Paproski):: Order, please. Any more questions?


Claudy Mailly: A point of order, Mr. Speaker.
I asked two questions to my colleague. Did Petro-Canada's purchase of Petrofina create jobs? I also asked him whether the existence of-


The Acting Speaker (Mr. Paproski):: I am sorry.
December 11, 1984



The Hon. Member for Yorkton-Melville (Mr. Nystrom) has a question?


Lorne Edmund Nystrom: Yes, Mr. Speaker, I have a question for the Hon. Member for Glengarry-Prescott-Russell (Mr. Boudria). I was pleased with the remarks that he made about the need for FIRA and the fact that he is an economic nationalist and wants to be-

-masters in our own house, in our own country.

I agreed very much with him and am glad he is taking that position. Hopefully he will have some influence on the Government across the way. I want to ask him whether or not he was disappointed with what was happening to FIRA under the previous Liberal Government.


Ramon John Hnatyshyn: They butchered it, you're right.


Lorne Edmund Nystrom: The Hon. Member for Saskatoon West (Mr. Hnatyshyn) whom we in Saskatchewan call "Red Ray", by the way, and who is one of the few red Tories left, has said that the Liberals have butchered FIRA. That really sums up what was done under the previous Minister of Industry, the Hon. Ed Lumley, a very good friend of mine.
The Hon. Member referred to the Gray report as being good and substantive. Over the years, a number of Liberal Ministers seemed to interpret the regulations in a very tough and positive way and in more of an economic nationalist way. However, in the last three or four years, we have seen FIRA'S teeth pulled and the old hound dog was left with just a few old teeth. I am wondering whether or not this has disappointed the new Hon. Member of the House because he seems to be taking a much tougher stand than the one taken by the previous Liberal Government. Was he critical of the approach that it was taking? Does he agree with me that one reason the Conservative Government can now get rid of FIRA so easily is that the Liberals had already started down that path in any event?


Don Boudria: Mr. Speaker, the Liberals had no intention of dismantling this agency. The Liberals, of course, created FIRA. Some people say that the Hon. Member's Leader did not say that our Leader was very supportive of that agency. We know, of course, that we had to modify it. We know that in the last few years during difficult economic times, we sometimes had to adjust our policies. It is a delicate balancing act. However, to go from there to the position of the Government opening the door and letting anything in, whether or not it is beneficial to our country, is a far different story. That is not the kind of policy for which the Liberal Party stands.
We want the protection of our Canadian industries. We want to own a substantial portion of them ourselves. Foreign investments are welcome, but they must be in the best interests of our country.
Investment Canada Act


Mr. Dorin:: Mr. Speaker, I would like to make a comment on the Hon. Member's speech. I would like to try to answer one of the questions he raised during his speech, and that was, how foreign investment affects interest rates in the country in a positive way. I would like to try to explain that to him and to point out to the Hon. Member for Yorkton-Melville (Mr. Nystrom), who unfortunately is leaving the Chamber, that I think it is very clear that the reason the Liberals were unable and chose not to enforce the laws-


The Acting Speaker (Mr. Paproski):: Order, please. I would appreciate the Hon. Member directing his question to the Hon. Member for Glengarry-Prescott-Russell (Mr. Boudria).


Murray Dorin: The comment that I have is simply in explanation to the Hon. Member's question regarding interest rates. As the Hon. Member knows, interest rates in this country are affected by United States interest rates. If there becomes too large a differential in rates, equity on capital flows from this country to the United States. In fact, having equity capital inflows balances off, to some degree, and puts upward pressure on the Canadian dollar. This allows the Bank of Canada some room to manoeuvre in terms of interest rates and in terms of maintaining a lower interest rate structure.
I would point out that since 1980, in excess of $30 billion of equity capital has left the country, causing problems for the Canadian dollar and forcing the Bank of Canada to respond by having abnormally high interest rates. I would point that out as the answer to the Hon. Member's question.


Don Boudria: Mr. Speaker, that was a very interesting lecture on economics given by the Hon. Member. However, I am sure you would agree with me, Mr. Speaker, that having more United States companies in Canada when there are high U.S. interest rates cannot lower interest rates in Canada. That assumption is absolutely preposterous. Those companies get their money from the U.S. capital market at those same high interest rates. The theory that we can lower interest rates in the country in proportion to what they are in the United States by getting more money from the United States comes from a school of economics that only that Hon. Member can understand.


The Acting Speaker (Mr. Paproski):: Questions and comments are now terminated.


Mr. Ernie Epp (Thunder Bay-Nipigon):: Mr. Speaker, when I rise to debate a Bill like this one, I feel that the work 1 put in this past summer to achieve the opportunity to speak here was fully justified. In the development of the Canadian nation, consideration of a Bill dealing with how foreign investment might come to Canada and what its consequences might be is of the most enormous importance in determining what kind of country we have now and how the nation will develop in the future.
This afternoon, particularly in view of the limited time before us, I would like to consider first of all something of the development past that has brought us to this position. It is an

December 11, 1984
Investment Canada Act
appropriate season to be considering the kind of Bill that is before us. If anything reflects the kind of Christmas spirit and hope that Santa Claus will be good to us again, it is surely the thinking that is reflected by the Investment Canada Bill. Here we have this conviction that if Canadians are good and the Government throws open its doors, then all sorts of good things can come to us.
When one listens to the Prime Minister (Mr. Mulroney) responding to questions about this subject, one has an overwhelming sense of the extent to which our goodness in the way of throwing open the doors is absolutely essential for good things like gifts on Christmas Eve to come to the Canadian people. Surely there should be a more careful analysis of the whole matter to determine if that is likely to be the result.
Colleagues of mine have earlier indicated the questions we must ask ourselves. There are very serious questions to ask ourselves in deciding whether it is in fact sensible to think that, like Christmas, foreign investment is going to bring us all kinds of gifts and make our economy a stronger one. The kind of fuzzy thinking which has gone into this proposal is reflected in the statement of the Minister on Friday last. We were told that Canada's interests will be advanced by encouraging Canadian and non-Canadian investment, not by discouraging it. That, I dare say, is true as a whole statement, but to put "Canadian investment" and "non-Canadian investment" together in that way reflects the fuzzy thinking indulged in by the Conservative Government over these last weeks.
As I said a few days ago with respect to the borrowing authority Bill, what the Government has served up in talking about the deficit is a great deal of descriptive material, but I could find no real reason for us to believe that it understands why the deficit has reached the point it has and whether it really has a program to deal with it. In a similar way, in the few weeks before Christmas, we debate a Bill which is designed to have Santa Claus visit Canada one more year.
I said at the outset that the question which faces us here is one of the development of the Canadian nation. I believe it is worth looking back over the last couple of decades-and even farther back than that-to recognize how concern among Canadians has developed with respect to foreign investment and its impact on Canada. Many people believe-and I expect that is true of my Conservative friends-that that was a Liberal preoccupation back in the days when a royal commission headed by Walter Gordon investigated Canada's economic prospects. Of course, it was the Liberals later on in the 1960s and 1970s who took this up. It is perhaps in a partisan way that the Government has chosen to react to it. I spent some time looking at the concerns of the Conservative Opposition around 1956, the Conservative Opposition which had the opportunity soon afterwards to form the government. When I considered, in particular, the national development program which the Conservative Opposition put before the St. Laurent government at the time, I was astonished to discover the extent to which the Conservatives were at the time concerned about
national development, about the impact of foreign investment on that development, and about the need to plan in order to ensure that development took place. I find myself wondering where the Member for Qu'Appelle-Moose Mountain (Mr. Hamilton) is these days in the midst of all of these things. I am sure he remembers all too well the effort he put into developing programs and plans for national development back in those days, which were oriented to what Canadians could do, not what foreigners could bring to this country.
I must say that as early as 1956 to 1957, I was surprised at first, then pleased in a sense, to see that a predecessor in my riding years ago, a man of singular power in the Canadian economy, the Right Hon. C. D. Howe, was also concerned about good corporate citizenship. That is a theme which, of course, became the key word of the 1960s, as at the end of the Diefenbaker Government the Liberals attempted to come to grips with the question of what foreign investment in Canada represented, how it operated and what sort of controls- although at that point they were hardly thinking of controls- or influence or persuasion should be brought to bear.
I believe what the Government now needs to realize is that through the 1960s and into the following decade, as Canadians were faced with the realities as they applied to Canada, they saw the evidence of overwhelming foreign ownership in manufacturing and resource industries. As Canadians worried about what the consequences would be in terms of lack of control of their own economy, a consensus built up in this country that something should be done about it. I say, to the shame of my colleagues to my right, who are much depleted now from the numbers they had in those days, that the Liberal Governments acted very slowly in recognizing that national concern. A number of studies occurred, a parliamentary committee was set up, and there were other studies outside as well. Eventually a cabinet committee considered the matter. However, it was not until the minority Government of 1972 to 1974 that action was finally taken to establish the Foreigh Investment Review Agency. It was recognized that harmful consequences could follow from foreign investment and it became obvious that some sort of screening mechanism was absolutely essential. Some of that concern is, of course, recognized in the Investment Canada Bill which is before us. There will be screening for larger takeovers. But there is the possibility of takeovers of smaller companies and the open door policy for new investments. These activities will not be under any control. We will clearly lose the potential screening and negotiating possibility which the Foreign Investment Review Agency offered us.
In the midst of slower business activity in this country, and in the midst of a recession, which we all hope will not slide into something worse in the next few months, the Government may feel that this is the appropriate action. But I believe that the Canadian people have a real concern about how the economy of this country might be developed. They have a real concern about the loss of control which will come. This Government may find itself bucking the tide of public opinion rather than riding it.
December 11, 1984

Because of the consequences of foreign investment in this country, as well as in other countries, the basis for decisionmaking should be a sound, penetrating and deep understanding of what the consequences are. I have spent a certain amount of time reading literature on the subject, Mr. Speaker, and it seems to me that there has been a failure on the part of those people who are avidly determined to have foreign investment here, and on the part of those who oppose it, to make a definitive and conclusive case for their particular perception of it.
There is less blame to be laid at the door of the opponents of foreign investment because the kind of information which is required is often locked away. One of the unfortunate aspects of the operations of the Foreign Investment Review Agency is the secrecy under which it operates and the confidentiality which cloaks the agreements it arrives at with foreign investors. It makes it impossible to do the sort of careful study which is required. Governments which are convinced that foreign investment is necessary could surely obtain access to information which is required. What seems to me utterly lamentable is the fact that the information has not been obtained and the case has not been made. There are abundant reasons for questioning the value of foreign investment.
There are a variety of points which I would be happy to explore when we take up this subject again. We have now a superficial, utterly simplistic argument that what we need to have is Santa coming in again, bringing us these gifts, then we will have prosperity in this country and all will be well.


The Acting Speaker (Mr. Paproski):: Order, please. It being five o'clock, the House will now proceed to the consideration of private Members' business as listed on today's Order Paper.



PRIVATE MEMBERS' BUSINESS-MOTIONS

["Order. The hour provided for private Member's business has now expired.", 'December 11, 1984\nAdjournment Debate']
The Acting Speaker (Mr. Paproski):: Shall all orders and items preceding item No. 126 stand?


Some Hon. Members:: Stand.


The Acting Speaker (Mr. Paproski):: Stand.
Income Tax Act



Mr. Ricardo Lopez (Chateauguay) moved: that, in the opinion of this House, the government should consider the advisability of amending the Income Tax Act in order to eliminate reassessments and legal actions for the payment of income tax in arrears in cases where errors or omissions happened in taxpayers' income tax returns for the pre-1984 fiscal years.
He said: Mr. Speaker, considering the economic renewal we are experiencing and want to encourage, I suggest that the Government amend the Income Tax Act, and more specifically, Section 152, in order to eliminate reassessments and legal actions for the payment of income tax in arrears in cases where errors or omissions happened in taxpayers' income tax returns for the pre-1984 fiscal years.
I am actually suggesting a kind of general amnesty. I want to propose the following amendment as sub-paragraph 4 to Section 152:
(a)	Notwithstanding paragraph I52(4)(a), as of January 1, 1984, if any taxpayer or person Filing a return of income for taxation years prior to January 1, 1984, has made any misrepresentation in filing the return, the Minister shall not proceed with any reassessment, additional assessment or assessment of tax, interest or penalties under this Part.
(b)	Any proceedings relating to the reassessment, additional assessment or assessment of tax interest or penalties under this Part, on the basis that the taxpayer or person Filing a return of income has made any misrepresentation, and started and still pending before January 1, 1984, shall be dropped and no other proceedings undertaken for the taxation years ending before January I, 1984.
The general principle of this amendment is to prevent the Minister from issuing reassessments in cases of misrepresentation for the years prior to January 1, 1984. The amendment does not, of course, apply to taxpayers against whom court proceedings for tax recovery have already been initiated.
This is a constructive measure for economic renewal that will allow taxpayers to start with a clean slate. Mr. Speaker, 1 also feel that in future, we should consider a similar amendment to Section 239 of the same Act which concerns the possibility of bringing criminal charges against taxpayers who made false returns. A provision should be included to make it possible for any person anxious to set the record straight with Revenue Canada to file returns for the years prior to January 1, 1984 without fear of criminal or judicial proceedings.
Similarly, there has to be a limit on administrative penalties on returns for pre-1984 fiscal years.
Our opinion therefore is that all those measures will make our fellow Canadians regain confidence, forget about previous years and start anew without fearing that they might lose everything they had before 1984. In addition, these amendments are very much in keeping with the new government's ideology and the Canadian Charter of Rights and Freedoms.
December 11, 1984

Income Tax Act
In fact, the accused has the right to be tried within a reasonable time limit. It is very important that the taxpayer be deemed innocent, even in a case of infraction of the civil law.
Our proposed amendment to Section 239 closely reflects the spirit and feelings of the new government. Besides, the Progressive Conservative study group on the activities of Revenue Canada reached the same conclusion in April 1984: offenders have the right to be heard before being declared guilty. Let us not forget that most Canadians are honest citizens quite prepared to pay their taxes. They must have faith in our tax collectors rather than be afraid of them. The Minister has no time limit to review files in cases where fraud is suspected, otherwise it is four years after the first assessment notice. That certainly makes Canadians very insecure.
The same study group also pointed out that Revenue Canada was insensitive, discriminatory and disgraceful towards offenders, making them lose respect for the tax collection system which ought to have been fair and equitable. Let us be mindful of the fact that Canada's tax collection system rests on self-assessment and good will on the part of taxpayers who willingly file honest returns every year and pay any tax owing. Self-assessment has to be one of the most effective and least oppressing tax collection methods. The system will operate only as long as taxpayers support it. Their support will not be forthcoming unless they are convinced the system is fair and a climate of confidence prevails between both parties. Failing that, we breed mistrust, fear and deceit.
These amendments are designed to elicit voluntary divulgation of undeclared income by taxpayers who did not file a return, or filed one with mistakes or missing data. In one fell swoop, the State will fill its coffers by collecting-rather cheaply-taxes owing and recouping funds stashed away in foreign countries by delinquent taxpayers who are afraid to bring those funds back to Canada and draw the attention of Revenue Canada. This money could be laundered, brought back home and then invested to contribute to our economic recovery.
If the taxpayer has lost confidence in the fairness of our voluntary tax system, he will be tempted to join the so-called underground economy, which escapes taxation. By its very nature, the underground economy cannot be measured accurately, but its value is estimated to range between $40 and $80 billion. And although this is not sustained by any concrete evidence, we suspect that more and more money is being invested in this parallel economy. The greater part of this money is being exported to countries such as Switzerland and the Bahamas which are naturaly delighted to receive it. However, this money should stay in and benefit Canada, because huge amounts are involved. The delinquent taxpayer is not anxious to bring home his money for fear of incurring the wrath of Revenue Canada. As long as he feels this sword of Damocles hanging over his head, he will never try to bring his money back and invest it in this country. Thanks to these
amendments, we will be able to redirect toward the mainstream of our economy a good part of these funds. In an area of economic reconstruction, it is clearly advisable to patriate as much money as possible to serve the interest of the Canadian people as a whole.
I suggest, Mr. Speaker, that these amendements are a great step to help Canada make a new start.


Mr. Claude Lanthier (Parliamentary Secretary to Minister of Finance):: Mr. Speaker, the proposal made in the motion before the House is aimed at clearing up a very serious situation that has developed over the years. To our consternation, we found out recently that under the previous Government, there had been a rapid rise in income tax arrears. The so-called underground economy expanded as Canadians became involved in an increasing and alarming number of economic activities that were liable to escape the scrutiny of the tax collector. We believe that the total amount of unpaid taxes, that is, amounts owing to Revenue Canada which are not being contested, is now as high as $3.5 billion. This is a more than substantial amount since it represents over one-tenth of the federal deficit we inherited. In addition, there are also the taxes being avoided by the so-called underground economy. Unfortunately, we still have no accurate means of estimating the amount of income generated by the underground economy and undeclared economic activities that escape the scrutiny of Revenue Canada. There are, however, many indications that it is a very substantial amount that would be more than welcome in helping to reduce the federal deficit.
The proposal made by the Hon. Member for Chateauguay (Mr. Lopez) is in fact asking for an amnesty in cases where the taxpayer made an error or omission in filing his income tax return. I must say, with respect, that this proposal does raise a number of problems and some specific questions in my mind. First of all we must determine whether this is the best way to provide a fair solution to a rather complex problem. We should also ask ourselves what the consequences would be of such an amnesty. Giving an amnesty would be the same as saying that the problem no longer exists. It is certainly true that it would no longer exist for the taxpayers concerned. However, the problem would still exist for the Government which would have to give up hundreds of millions of dollars in revenue that could and should eventually be collected.
We must consider the situation in terms of the major objectives and priorities of the Government. In my opinion, there are three major objectives: bringing about an economic renewal in Canada, putting some order in public finance after many years of increasing deficits, and providing assistance to needy Canadians.
The proposal contained in the surprising motion now before us would go against these objectives. The proposed cancella-
December 11, 1984

tion of unpaid income taxes would increase the deficit and the Federal debt and in fact curtail the ability of the Government to contribute to economic renewal and growth. If this solution were applied, the Federal Treasury would be less capable of providing assistance to Canadians who really need it. This would be the direct and harmful impact such a proposal would have on the financial freedom of movement needed by our new Government to meet its objectives. In addition, this proposal would have major indirect effects of which the most important would be to alter our existing taxation system. This system at the present time is based on self-assessment by Canadian taxpayers. We trust Canadians to fairly report their own income and to submit the proper amount of tax. This system is based to a large extent on mutual trust and respect.
Indeed, the Minister of National Revenue (Mr. Beatty) described this mechanism quite well in the unequivocal speech he gave before this Chambre last November 16 during the throne speech debate when he said the following:
For the self-assessment system to survive, all taxpayers must believe that they are being treated fairly and equally. At the same time, the Government must believe that all taxpayers will fairly report their income and submit the proper amount of tax on time.
If we were to agree to the proposal as it is worded in this motion, what would be the reaction of the majority of taxpayers who pay the proper amount of tax? Would they not be irritated by the increased burden placed on them because of the amnesty granted to others owing such a considerable amount of taxes? Would they not conclude that this type of amnesty favors those who have filed false tax returns in the past, whether accidentally or voluntarily? Would they not be tempted themselves in the future to file false statements in the hope that a convenient amnesty would eventually be granted in their own case?
I believe that the conclusion is clear. Such a procedure would greatly weaken our tax system. It would reward dishonesty while we are trying to encourage Canadian citizens to act honesty in their relations with the state. Instead of correcting the problem of unpaid taxes, this proposal would make it worse and it would degenerate uncontrollably. There is a definitely better solution, and this is the one followed by the Minister of National Revenue, who is implementing the conclusions and recommendations of the Progressive Conservative Task Force on Revenue Canada.
Let us consider the $3.5 million in back taxes which are not being questioned by taxpayers. This amount does not only represent the mistakes and omissions made in the past by taxpayers when filing their income tax returns. These are cases which the motion now before us attempts to deal with. This amount also includes taxes owed by taxpayers who have reported their full income but who are unable to pay their tax in full because they find themselves in a temporary financial bind.
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The Minister of National Revenue has indicated that there was a distinction to be drawn between taxpayers who try to evade tax and those who because of financial difficulties cannot pay, at least momentarily.
The Minister of National Revenue is committed to a humane, compassionate and tactful treatment by Revenue Canada of people in need. Past experience unfortunately has shown that a stringent attitude by Revenue Canada could generate distrust, noncompliance, frustration and even bitterness. It is possible and it is important to be both firm and fair. Revenue Canada has finally taken a number of definite steps to increase the efficiency of the tax collecting process. The Department will hire additional staff, and this will enable collectors to spend more time with deserving taxpayers who momentarily find it difficult to pay their taxes. Mutually acceptable arrangements will provide for the staggering of payments. The Department's set target is to collect $400 million over and above the unpaid moneys that normally would be collected by Revenue Canada under the former procedure.
The Minister has also pondered over the problems of Canadians who fail to report income earned from so-called underground practices and activities. In his explicit address to the Canadian Association of Tax Studies, he urged taxpayers who had failed to report all their income to come forward and pay their taxes, without fear of legal action, under the new departmental regulations dealing with voluntary returns. This is but one of a number of reforms designed to give Revenue Canada a more humane, more efficient and less stringent profile.
In the area of collection, in-service training programs for tax collectors will be implemented so that the collecting of unpaid taxes will become a better and more accurate process. Where taxes are due, Revenue Canada will send out a series of notices of collection that will set out more clearly the Department's relevant policy and the rights of the taxpayers. Then, before finally taking legal action, the tax collectors will be required to try to the best of their ability to contact, by telephone or otherwise, the defaulting taxpayers and give him every possible chance to pay his debt, without having to resort to the cumbersome intricacies of legal proceedings.
Hon. Members of this dignified House will know surely that the amendments to the Income Tax Act now before the House include a number of measures advocating a legislation reform.
One of the basic causes of taxpayer resentment in the past has been the feeling that, whenever assessments are opposed, the taxpayer is considered guilty until proven otherwise. Such a position, contrary to our basic judicial system, was held because in the past taxpayers were required to pay the full amount of the objectionable assessments even before the dispute had been resolved or even examined.

December 11, 1984
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The new legislation provides that the taxpayer will not have to pay the disputed tax until the matter has indeed been heard. In order to prevent the new system from being abused, the courts will be empowered to impose penalties for irresponsible appeals.
Other amendments to the Income Tax Act are actually aiming for the same goal, namely handling taxpayers with fairness, sensivity and respect. The Canadian Tax Court therefore has the power to refund appeal costs to taxpayers, so that they will not abstain from appealing a decision before a neutral, fair and impartial court for mere financial reasons. Also, the maximum period for the Department to establish new assessments has been reduced from four to three years in all cases except willful evasion, blatant negligence or obvious fraud.
Those are some of the proposals for positive changes to the Act. A number of other amendments of a technical nature that already have been or are in the process of being introduced also are aimed, as I have already said, at treating taxpayers in a fairer, more humane way.
There was a time when the Minister of National Revenue had a quota system. This method of assessing the work done by tax auditors must be dropped because they often saw it as an incentive do be unduly harsh with taxpayers. In other words, the new system will stress quality rather than quantity. Another practice which has been stopped is the premature enlightenment of the medias every time a taxpayer is accused-even before the trial-and the reprehensible habit of releasing the names of people mentioned in regular reports on inquiries conducted by the department.
A few days ago, the Minister of National Revenue announced a series of improvements to the tax administration system. For instance, when a Revenue Canada auditor checks a tax return, he will get in touch more often with the taxpayer before changing the amount of tax owing, and the taxpayer will have more time to prepare his response, 30 days instead of 21 days, as is the case now. Anyway, the 30-day delay is a common practice in business circles. Written explanations concerning new computerized assessments will provide more details and data in clearer and less ambiguous terms. That will certainly help taxpayers know exactly where they stand.
Communication services between taxpayers and Revenue Canada are being modernized, a definite plus at the critical tax-return time when the Canadian taxpayer is most in need of information, clarifications and even advice. The network of tax assistance seasonal centres will be enlarged and 24 new such centres will be opened. Business hours for free telephone services offered by district offices will be extended during the busy period when most tax returns are usually filed. Special communication services will soon be available for people who suffer from blindness or hearing difficulties.
Is this not an impressive although incomplete list of the changes which Revenue Canada intends to make where its
relations with the Canadian public are concerned? These progressive initiatives are the follow up of the major conclusions reached earlier this year by the Progressive Conservative Task Force, which found that the unbending attitude too often present in the past simply frustrated taxpayers and caused them to resist and to avoid paying taxes. This fresh new attitude illustrates the firm conviction of this Government that Canadians can be trusted.
I believe that, after due consideration to the proposal made by the Hon. Member for Chateauguay (Mr. Lopez), we should feel this same confidence in Canadian taxpayers and not presume that Canadians generally will refuse to pay their tax. In the past, these taxpayers may have had valid reasons not to trust the former Government and to conclude that they had nothing to do with its financial problems. In this case, the simplistic solution of declaring an amnesty for fed-up taxpayers is definitely unacceptable. The real answer lies in providing taxpayers with every opportunity to settle their accounts and, in cases of financial difficulties, to wait for their situation to improve.
The second element of this solution which heralds a new era is to improve Government operations. In this way taxpayers will have fewer valid reasons in the future to have problems and to resent a Government which used to be arrogant. I truly believe that the progressive and positive reforms we intend to bring about in the operations of Revenue Canada are a perfect example of the type of renewal in public administration which responsible Canadians are looking forward. Thank you, Mr. Speaker.


The Acting Speaker (Mr. Charest):: The Hon. Member for Regina East (Mr. de Jong).


Some Hon. Members:: Hear, hear!


Mr. Simon de Jong (Regina East):: I thank the Hon. Members for the applause. Mr. Speaker, I wish to join in the debate on the Private Member's Bill introduced by the Hon. Member for Chateauguay (Mr. Lopez). I am afraid the Hon. Member for Chateauguay failed to convince me and I would venture to say he failed to convince most Members of this House of the justification for his Private Member's Bill. As the Parliamentary Secretary to the Minister of National Revenue and Canada Post (Mr. Vincent) has pointed out, this Private Member's Bill would give in essence an amnesty to all taxpayers who might have deliberately or not deliberately falsified their tax returns in the previous year. Certainly we do not believe that this is how the problem that faces the Canadian Government and the taxpayers should be solved.
I am afraid the Parliamentary Secretary and the Minister himself are somewhat naive when they believe that an honest appeal by this Government would automatically mean that hundreds of thousands of people, corporations, businesses large
December 11, 1984

and small, which in the past might have cheated a little on their tax would all at once come forward and do the right thing. In this new era which the Government claims it has established, would truth and justice like a bolt of lightning hit all taxpayers and from now on we will have nothing but honesty prevailing in this field? I feel the Minister and the Parliamentary Secretary are somewhat naive. I hope this is just propaganda and really not government policy. If this is government policy, we will be in some difficulty in the years ahead.
Paying taxes in an exercise that most people the world over do not relish. People feel that these are moneys they have earned either through business activity or labour. They want to keep as much of that money for their own use. Of course, in a society like ours that is dependent very much upon government activity to maintain our roads to provide health services and to do all the things a modern state must do in order for a modern civilization to exist, one of the forms of revenue for these purposes must be the tax system.
The tax system must be fair and must appear to be fair. It must appear and in reality be something whereby people are treated on an equal basis. In our system and in the system of most of the industrialized civilized world there is a progressive income tax system. The greater your income, the greater your ability to help foot the public bill, and according to our system, the greater amount you are called upon to contribute to the national purpose. Again, it should be realized that most people who earn an income do so with the assistance of government in one form or another. If we did not have our health system, our education system, our rail and road system, and what not, most Canadians could not earn an income. The ability to earn that income is dependent upon the fact that we have a modern state providing these essential services.
For the Hon. Member to suggest in his Private Member's Bill that the Department of National Revenue should be restricted to auditing returns only for this year, and that the taxpayer be given an amnesty so that the Department would no longer be able to audit returns for 1984 and prior, I do not think it will help the Government or make the tax system fairer.
When you look at Revenue Canada taxation estimates, for 1984-85, Mr. Speaker, you see two important activities that the Department carries on. One is post assessing. This operation consists of the examination of certain things for deduction or exemption which are accepted without question at the initial assessing in order to expedite the flow of returns. In other words, when the income tax returns come in, the National Revenue Department gives them a very brief look. Most of the forms are accepted at face value. Taxes are collected. Cheques are issued for money owed to a taxpayer, and so forth. Subsequently, I understand about 3 per cent of the returns are audited. As well, the Department audits to make sure income reported on the tax form is the income supported by such slips as T-4s from employers and the T-5s from the banks.
We find in the Estimates for 1984-85 that this activity in the year 1982-83 brought in some $828,948,000, which is a
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fair chunk of change so to speak. In essence, what this Private Member's Bill is suggesting is that the Government forgo these revenues. Remember that this figure of $828 million which the Government collected because of its audit functions really covered only 3 per cent of corporations that filed income tax returns. This means that a fair amount of money is not collected. It means that a fair number of companies, either deliberately or not deliberately, fill out their corporate tax sheets in an improper way. All of the information is not there. It means that a 3 per cent audit netted the Government, just on the corporation side, some $645 million last year. What the Private Member's Bill suggests is that the Government kisses $645 million good-bye. If we had tremendous surpluses in government revenues perhaps there would be some justification for this. I wish the Hon. Member would express his indignation at the $200 million which the Government wants to save by cutting back on unemployment insurance.
The Hon. Member, I am sure, will be supportive of the Government's cut-backs to the UIC program. I am sure there are people ripping the system off. May I suggest that those people are people with very low incomes? Yet the Government is willing to hire several hundred policemen to police UIC recipients. I am sure they will be given quotas and they will be forced to justify their income by making sure that a certain percentage of the people they interview every day will be found ineligible for UIC payments.
The Government should be as concerned about collecting the $3.5 billion which is owed to it. These moneys are not in dispute. Heaven knows the amount of money owed to the Government which is in dispute. However, there is this $3.5 billion which everyone agrees is owed to the Government. It is out there. It is 10 per cent of the deficit.
Day in and day out we stand in the House to try to imprint upon the Government that it does not have a deficit because of overspending. The deficit is there because the Government has not been collecting the taxes it should be collecting. The deficit could be reduced off the top by 10 per cent if the Government would only collect the undisputed amount of money due to it.
The area of undisputed tax which galls me the most is the $328 million or so which employers have deducted from their employees. These deductions were in the form of income tax, UIC and CCP. These moneys have not been remitted to the Government. They are held in trust. It is not even their money. It used to be some $428 million, but the Minister has already kissed $100 million off. He said that he would not bother collecting that, that it was dead, that it was gone. There is still some $328 million owing to the public Treasury by people who hold this money in trust.
I understand that such workers are eligible for UIC payments if the corporation goes bankrupt and still owes the Government money from UIC deductions. I also understand that very often these workers experience tremendous difficulty in obtaining the coverage owing to them. It is a long, drawn-out fight to gain the coverage for which they have paid. For

December 11, 1984
Income Tax Act
the Hon. Member to suggest in his Bill that there ought to be an amnesty I find a little too much. In fact, it contradicts his own Party's task force on Revenue Canada. In its report the following was indicated:
The Task Force sympathizes with these taxpayers yet recognizes that the Minister must have adequate time in which to audit tax returns. However, it also believes that four years is excessive and suggests a three year time frame, when fraud is not involved.
We will have to see the type of legislation the Minister will be introducing to limit the period of time within which audits occur. I hope the Government is sincere in reducing its deficit and in ensuring that we have a fair taxation system. All Canadians should be treated equally and fairly. I am hoping that we do not have one tax law for the rich and another for the poor. I am hoping that we do not have one tax law for big corporations which are able to hire tax accountants and tax lawyers to keep the Government spinning in circles and another tax law for the small ones. These large corporations can hold on to hundreds of millions of dollars in unpaid taxes. They can use these moneys internally and save a fair amount because the penalty charged by the Government is prime minus one. It is in the interests of these corporations to retain these hundreds of millions of dollars within the corporate sector because the amount of interest they are paying is much less than they would have to pay at the bank. I hope the Government is as anxious to go after the big guys as it is to go after the small guys. I hope everyone is indeed treated equally and fairly. We have some distance to go in this regard.
Let us look at what a salaried worker pays in income tax, the number of his deductions and the number of income tax games he can play compared with corporations. We see that fairness does not exist. There is no way a salaried worker can hide income. He does not have similar exemptions. For example, he cannot defer taxes. However, there are some $32 billion in deferred taxes owed to the Government of Canada. That is enough to wipe out the deficit. Although salaried workers are unable to defer taxes, corporations seem to enjoy that benefit.
I understand CPR owes some $1.5 billion in deferred taxes.


Mr. Malone:: Hear, hear!


Simon Leendert de Jong: I hear the Hon. Member for Crowfoot (Mr. Malone) saying "Hear, hear". He is another fan of the CPR. I am sure there are many more across the way. This is why I do not have much faith in the Government opposite that we will have a fair taxation regime and that everyone will be treated equally. The CPR should be treated in the same way as the people working for it and drawing salaries. I doubt the banks will end up paying the same amount of tax that all their clerks pay. Indeed I doubt that we will have a fair taxation system with the people who are able to afford it paying their fair share. We do not have a fair taxation system. We really do not have a progressive system. In fact, it is the inverse. The people least able to pay, average working men and women, pay the most. The people best able to pay are the ones who pay the least. The economic philosophy and policies of the Government encourage that even further. I really do not expect a fair taxation policy from the Government. We will see. We will
attempt to push the Government into accepting a basic fairness in our taxation regime.
I find the Private Member's Bill of the Hon. Member for Chateauguay to be unacceptable. I expect that it is unacceptable to the Hon. Member for Crowfoot. I am sure it will be unacceptable to most Members on the government side. It makes an unfair system more unfair and therefore repugnant to Canadians.


Mr. Raymond Garneau (Laval-des-Rapides):: Mr. Speaker, without wishing to take up too much of the House's time, I simply want to say that if there is a vote, we shall be voting against the present proposal. I do feel rather sorry for the Hon. Member for Chateauguay (Mr. Lopez), since he is not getting much support from his own colleagues for a proposal into which he probably put a lot of work.
I also think it is rather ironic that basically, the Hon. Member for Chaateauguay is only putting into practice what his hon. colleagues said they would do when they criss-crossed the country on their partisan committee to seek the views of Canadian taxpayers on our tax system. The message they gave at the time and to which his own colleagues might well object today, was that there was so much abuse on the part of the Department of National Revenue, and so it seemed quite normal to the Hon. Member and in line with the Progressive Conservative policy over the last two years, to present this proposal and try to eliminate in one fell swoop all those flagrant examples of injustice.
Mr. Speaker, the Hon. Member for Chateauguay will learn, as will Canadian taxpayers, that there is a considerable gap between the rhetoric of his Party's politicians and what they actually do here in the House. I feel very sorry for him, and I hope he will get some sympathy from his colleagues and will get them to understand that when a message is given to Canadians, it must be considered when the time comes to pass legislation.
And now, Mr. Speaker, I think I may say, in more general terms, that it is clear the Government of a country cannot afford to let an amendment consisting of three or four lines deprive it of all the money owed by some taxpayers just because there might have been some omission or error in their income tax returns. It would be too easy for people to avoid paying what they owe, to avoid paying their fair share to finance public expenditures, and all for reasons that are basically futile. It would also be unfair to taxpayers who are not in arrears, who file complete returns and who meet their obligations as responsible citizens by paying their taxes.
I heard the Hon. Member for LaSalle (Mr. Lanthier) make some suggestions. Mr. Speaker, if there is a way to humanize the Income Tax Act, whether we are referring to the federal, provincial or municipal provisions in this respect, obviously no
December 11, 1984

one can object to that. However, the fact remains that the only way to collect money is to get people to pay.
I feel that the message we are getting from our friends opposite, or at least the message they may be getting through to Canadian taxpayers, is that now the Progressive Conservative Party is in power, there are going to be lots of ways to avoid paying taxes. There are going to be plenty of opportunities for the reason who owes $100,000 or $200,000 in taxes, when the interest rate paid by the bank is higher than the fine a judge might impose, as the Member for LaSalle said. There will be a lot of people, a lot of taxpayers who will be tempted to use the tax office as a bank instead of getting their own financing and paying the taxes they do owe the Government, in any case.
I think that what the Hon. Member for LaSalle is saying- and a few days ago, I heard the Minister of National Revenue speaking in the same vein, and the House will recall most of the speeches made during the election campaign-is that it is doing Canadians a disservice to give the impression that there are many ways of avoiding taxes and putting off paying them, and finally, that this would penalize the honest taxpayer who pays his taxes on time. I think this is not the impression a responsible Government ought to give, unless sooner or later it is prepared to accept proposals like the one made by the Member for Chateauguay. If that is the case, I would urge the Hon. Member for Chateauguay to go around the House and persuade his colleagues to vote for him, because his proposal is in line with the impression this Government wanted to give earlier.
Mr. Speaker, I will not use up any more of the House's time. If it even comes to a vote on this motion, we shall certainly vote against it.


Mr. Michel Champagne (Champlain):: Mr. Speaker, I understand quite well the concern which my colleague the Hon. Member for Laval-des-Rapides (Mr. Garneau) has expressed; he knows how difficult it is to collect money, in view of his occupation before his election to the House. I must say, however, that the motion moved by our colleague is one which we should consider and discuss seriously.


An Hon. Member:: Until six o'clock.


Michel Champagne: Perhaps until six o'clock, I agree, Mr. Speaker; what we must take into account, however, is its impact on the Canadian public as a whole.
Clearly, there are some people who, over the years, have been lucky enough-if I can use that expression-not to pay any income tax, but that does not necessarily mean that we should set a rule and apply it unilaterally to all Canadians, as the previous administration used to do.
I shall not delay the House any longer, Mr. Speaker. I simply wanted to indicate that the motion moved by my
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colleague the Hon. Member for Chateauguay is fine per se, but I wonder whether it was sensible to introduce it today.


Mr. Joe Reid (St. Catharines):: Mr. Speaker, the Hon. Member for Chateauguay (Mr. Lopez) knows full well that his motion touches on a branch of the law which concerned the Progressive Conservative Party well in advance of the September 4 election to a very great degree, to the degree that at our own expense this Party formed a task force that travelled across the land to identify the attitude and problems and the specific concerns that affected the taxpayers of this land.
Many of those concerns were reflected in the votes that were cast on September 4, returning a Party which had a concern for the taxpayer in heart and in mind. That task force came up with a report entitled "A Taxayers Bill of Rights". During that election campaign, our Party made a commitment that this Government would be responsive to the needs and concerns of the individual taxpayer. Nowhere is this more important than in the dealings between Government and citizen as it is in the administration of our tax laws. The aims of the Government were spelled out in great detail in the Speech from the Throne opening this new session. It stated:
The taxation system will be made simpler and fairer and more accountable to the people's representatives in Parliament. The rights of taxpayers must be protected. In particular, legislation will be presented to ensure that no taxpayer has to pay taxes in dispute before an impartial hearing has been concluded.
As an additional protection, taxpayers launching future objections will be eligible to file claims for the refund of disputed amounts already paid and these will be returned if the case is not dealt with expeditiously by the Department within a reasonable period of time. There will be protection against abuse of these new privileges in that the courts will be empowered to assess penalties where it is clear that taxpayers have launched frivolous or groundless appeals purely to delay the payment of taxes legally owed.
One of the most significant of the changes made is to exempt persons with taxes payable of $1,000 or less from the requirement to pay in quarterly instalments. In the past, quarterly payments have been required for those with taxes of $400 or more. The main beneficiaries will be 350,000 senior citizens who will be freed of the obligation to make their tax payments in instalments. This new threshold of $1,000 will also apply to corporations. It will be of great assistance to some 50,000 corporations, mainly small businesses and family farm corporations.


The Acting Speaker (Mr. Charest):: Order. The hour provided for private Member's business has now expired.

December 11, 1984
Adjournment Debate



PROCEEDINGS ON ADJOURNMENT MOTION

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

Aideen Nicholson: Mr. Speaker, on the day after the new Cabinet was sworn in, the Prime Minister (Mr. Mulroney) announced that the Deputy Prime Minister (Mr. Nielsen), along with the President of the Treasury Board (Mr. de Cotret), the Minister of Justice (Mr. Crosbie) and the Minister of Finance (Mr. Wilson) had been assigned the task of reviewing all departmental programs and submitting action plans for Cabinet approval within six months. This was generally considered to be a way of prescribing more cuts. That has not been denied.
Subsequently, an advisory committee of seven businessmen was named. This committee did not include any women, Francophones, environmentalists, representatives from health and social services or from consumers' associations. Two names of union officials were included but then subsequent reports cast doubts upon whether or not they would in fact be participating or what the nature of their participation would be.
At a press conference on November 18, the President of the Treasury Board said that neither the Treasury Board Secretariat nor the office of the Comptroller General had been targeted for review. "We don't take programs," were the words attributed to the President of the Treasury Board.
In terms of numbers, there are between 50,000 and 60,000 person-years involved in programs of the central agencies as compared with perhaps 170,000 or more involved in delivering services to taxpayers. If cuts are necessary, surely they should be done with great care, delicacy and sensitivity and done equally in all Departments.
This is the kind of thing that raises the question of whether cuts are being taken on the basis of ideology or on the basis of efficiency. We hear a lot of talk about how the Government means to cut fat out of the bureaucracy but we are really talking about people and their jobs and about people delivering services to other people.
A few days ago, I asked the Deputy Prime Minister if he would confirm that the central agencies were being excluded from the cuts. He answered that the premise of my question was wrong and that he was not involved in a cutting exercise but in an exercise of looking at duplications, overlaps and so on and that all Departments would be treated equally. I then asked the Deputy Prime Minister if he would restructure his advisory committee to reflect this kind of mandate. I cannot see that an advisory committee composed of only seven businessmen who have purely administrative backgrounds is competent alone without other assistance to advise on eliminating programs to do with the environment, health, social services and so on.
The Deputy Prime Minister gave me a very broad and general answer which described what appeared to be consultations with the Quebec Federation of Labour but he did not say exactly if or how he intends to alter his advisory committee. I am pleased to see the Deputy Prime Minister in the House this evening and I look forward to receiving more precise information.


Erik Nielsen: Mr. Speaker, I am glad the Hon. Member gave me this opportunity to clarify what the Task Force on Program Review was all about. I think it is important that she and other Members of the House are as well informed as possible regarding an exercise which is not targeted at cost cutting at all, but is targeted at improving efficiency and delivery to the client groups outside of the internal structure of Government and to looking inside as well.
The terms of reference of the task force were announced on September 18 when the Prime Minister (Mr. Mulroney) announced the creation of the task force and its composition under my chairmanship. We have been asked to review government programs with the intent to produce a profile of government programs which is simpler, more understandable and more accessible to the Canadian public, to their clientele, and where decision-making is decentralized as far as possible with those in direct contact with client groups.
The task force itself has been asked and mandated to begin reporting within six months, the termination date being March 17. The work program, in order to address its task with a sense of order and intelligence, has set its objective to compile an inventory of all of those programs in Government, which has been accomplished. The second stage was to deal with those broad program categories.
With respect to the advisory committee, I can tell the Hon. Member that the task force Ministers made a very deliberate decision to involve the private sector in a very positive and meaningful way. To do this we have called upon national organizations-which was part of my announcement on November 16-with respect to the creation of a Private Sector Advisory Committee. This Committee is now, at this moment-which is some time from when the Hon. Member asked her question-made up of representatives of the Canadian Federation of Labour, represented by Mr. Austin Thorne; the Canadian Labour Congress, represented by Mr. Robert Baldwin; the Canadian Institute of Chartered Accountants, represented by Mr. Phillip Aspinall, who has been elected Chairman by the choice of the private sector advisory committee; the Business Council on National Issues, represented by Mr. Jerry Heffernan; and the Canadian Association of Management Consultants, represented by Mr. Ted Netten. All of these individuals were designated by those organizations them-
December 11, 1984

selves. There is the Canadian Manufacturers' Association, represented by Mr. Peter Riggin; the Canadian Chamber of Commerce, represented by Mr. Harold Milavsky; the Canadian Federation of Independent Business, represented by Mr. Ronald Farano; the Canadian Organization of Small Business, represented by Mr. Geoffrey Hale; Conseil du Patronat du Quebec, represented by Jean D'Ailly, whose name, I am sure, will be familiar to the Hon. Member; le Groupement Quebecois d'entreprises, represented by Mr. Richard Bourbeau. Mr. Laberge of the Quebec Federation of Labour, who was supposed to get back to me today, has not done so, but I am sure that I will hear from him before the week is out. It is an ongoing process. In addition, Mr. Darcy McKeough, the former Treasurer of Ontario, has been appointed as Private Sector Liaison adviser in order to provide liaison between myself, in my capacity as Chairman of the Task Force, and the Private Sector Advisory Committee.
I believe that all Hon. Members of the House will want to join with me in tendering our gratitude and congratulations to these designated individuals for serving on a Private Sector Advisory Committee involving this very important work at a dollar a year. With no cost to the taxpayer whatsoever, we are involving the private sector in a very meaningful and productive way in this task of program review.
On the public side, our activities involve our appointment of Dr. Peter Meyboom as the Public Service Adviser to co-ordinate whatever studies are necessary during the assessment phase of our work. To date, as I announced on November 19, the program inventory is now complete. It contains 989 programs delivering a total of $92 billion in direct and indirect benefits to individuals, businesses, organizations or a combination of all three. A total of 126 Departments and agencies are responsible for the delivery of these programs, involving 173,000 person years.
I invite the Hon. Member, and all Hon. Members of the House, to co-operate with us in this work to streamline and make more effective and efficient the delivery of these programs to the public, and to examine those internal programs as well, which is going to result in more efficiency and effectiveness by Government.


ENVIRONMENTAL AFFAIRS-CANADIAN WILDLIFE SERVICE-CANCELLATION OF HERRING GULL EGG PROGRAM. (B) MINISTER'S VIEW
William Alexander (Bill) Blaikie: Mr. Speaker, I rise to pursue a question I asked of the Minister of the Environment (Mrs. Blais-Grenier) with respect to cutbacks in her Department. In doing so, I would like to express my concern on three fronts, if you will.
We have before us in the form of various cuts initiated by this Government a package which is cause for despair among those of us concerned about the environment, in that we seem to be moving towards rather than back from the day when we will have an economy and society based on the proper stewardship and management of our resources and our common
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planetary heritage. The three areas I refer to are cutbacks in the research program of the Canadian Wildlife Service, the cut of the NRC environmental secretariat, and the cutbacks in research and development in the area of alternate energy.
First of all, Mr. Speaker, with respect to that which has received the most attention, the cutbacks in the research program of the Canadian Wildlife Service, I would just like to put on the record some of the things which have been cut. We have the Wildlife toxicology projects which go under the following names. The identification and monitoring of the occurrence and effects of toxic substances on gulls and other fish-eating birds on the Great Lakes. That is a very important program and part of Canada's contribution to the Great Lakes Water Quality Agreement. There is the monitoring of effects of forestry insecticides on birds in New Brunswick, the monitoring of effects of agricultural rodenticides and insecticides on birds in Alberta, identifying effects of toxic substances on bird populations in the Great Lakes, and the monitoring of contaminants in birds on the Fraser River Delta in British Columbia. Then there are projects to rehabilitate endangered species which have been cancelled; the reintroduction of Peregrine Falcons in eastern Canada, in Nova Scotia, the rehabilitation of the Piping Plover in the Maritimes, and the reintroduction of the Pine Marten to Newfoundland. In this same area veterinary pathology services, and bioelectronic services have been cancelled. Programs in conservation of international wildlife, like the Porcupine Caribou program, which I have mentioned in this House before, have been cancelled. There are interprovincial and territorial agreements which have been affected, such as the CWS membership on the Beverly-Kaminuriak Caribou Management Board. There is the whole matter of support to other federal services which has been cut in forestry, national parks and other federal lands. And then there is wildlife interpretation where there have been severe cuts. Then, Mr. Speaker, we have the cuts, as I mentioned, in the NRC environmental secretariat, a body which has produced between 80 and 90 reports on subjects such as acid rain, herbicides, insecticides, fluorides, PCBs, mercury, lead and noise pollution in the past 15 years. It is an impartial source of scientific information on which governments have been able to base their decisions. It is a disaster that this kind of research is being cut out by the Government.
The third dimension of my concern, Mr. Speaker, and I have raised this in the House with the Minister of Energy, Mines and Resources (Miss Carney), is in relation to the cuts in alternative energy research and development, and how they compare to the absolutely uncritical approach of the Government to the furtherance of the nuclear energy option in Canada.
As a result of recent Government cuts, we have a 100 per cent cut in conservation and alternative energy research and development. That contrasts with trends elsewhere in the world. There is a trend to Government support for R and D in this area in the U.S., West Germany and Japan. That trend is not recognized by the Conservatives. In the United States alone they will spend $174.5 million in direct support while

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millions more is raised through R and D limited partnerships. Instead of that, from this Government we get cuts in the work of the NRC in active solar research. The NRC provided an essential base for product improvement and price reduction, reducing the price of a standard solar domestic hot water package from $4,000 in 1982 to $2,700 in 1984. The NRC was on schedule to bring the cost to $1,500 by 1988, at which time solar would be competitive across Canada with conventional sources of energy.
Before the cut-backs in conservation and alternative energy research and development, over 60 per cent of the Government's funding in energy R and D went into the nuclear area. That percentage will now be much higher, Mr. Speaker. I suppose the Tory reason for this is that they cannot figure out a way to put a meter on the sun. If you cannot make money off it, it cannot be worthwhile. We know that if the Tories do figure out a way to put a meter on the sun and sell the franchise to a multinational, then we might get solar research.
The Minister has said that a higher principle was involved. That higher principle was the cutting of the deficit. Mr. Speaker, there is no higher principle than the preservation of human life and our common planetary heritage in which that life must carry on. The Government is fond of talking about the deficit, and mortgaging our future. By engaging in the kinds of cut-backs in environmental services that it is now engaged in, it is mortgaging our environmental future. That is the kind of mortgaging of our future that cannot be paid back in the same way that a financial deficit can be. Until the Government realizes that, it will continue to lead us down the road to ecological disaster.


Suzanne Blais-Grenier: Mr. Speaker, I am grateful to my colleague for this highly emotional intervention which gives me the opportunity to provide more information on cutbacks in my department and tell Canadians that my colleague of the Opposition is indulging in pure and simple demagoguery.
As I said before in the House, my department, in cooperation with the Department of National Health and Welfare and the Department of Oceans and Fisheries, is pursuing research on toxic products and monitoring their effects, particularly in the Great Lakes area. Environment Canada now has 78 highly qualified employees in that region.
Mr. Speaker, the cutbacks amount to 305 person-years in a department with over 10,000 employees. As I said time and again, I have always been prepared to reconsider, if necessary, those cutbacks which have to do with our federal responsibilities or international agreements, or which might possibly affect the health of Canadians. I did say I would have consultations.
I spoke with many scientists, people active in the programs involved and some of our representatives within international research or monitoring agencies. The Herring Gull Egg Program has come under close scrutiny, due consideration being given to other resources in the department. I came to the conclusion that we can maintain the egg monitoring program by meshing it with the activities of Burlington's Wastewater Technology Centre.
I told the Canadian co-chairman of the Great Lakes Joint Monitoring Commission about this decision, and he gave me the assurance that it did not in any way detract from our international commitments.
I might also remind my colleague that toxicological research is going on in 24 departments, as prescribed in 58 acts or regulations, and that our efforts aimed at improving Canadian expertise in that field are being maintained and increased.
I want to reassure Canadians, Mr. Speaker. We are aware of our responsibilities. We assume them. We do not shirk them.


PENITENTIARIES-ESCAPE OF THREE INMATES FROM BATH INSTITUTION
Mr. Bill Vankoughnet (Hastings-Frontenac-Lennox and Addington):: Mr. Speaker, I am grateful for this opportunity to speak further on a matter of great concern that I raised on December 5, 1984 in the House. At that time I directed a question to the Solicitor General (Mr. MacKay) regarding a recent escape from the Bath Institution and hostage-taking incident at Bath, Ontario. This incident greatly disturbs me.
Three inmates broke out of the Bath Institution and forcibly entered a private residence. A retired couple from Bath were aroused from their sleep, tied up with a clothes line and held at gunpoint. They watched helplessly as the inmates searched their home for money, broke into a gun cabinet and stole three weapons. The inmates then fled in the family car.
People should not have to take the time or bear the expense to bring these convicts before the courts once again. I hope that the Solicitor General will impress upon his officials that it is the primary duty of Correctional Services Canada to ensure custody and control of inmates in order to minimize the risk of harm being inflicted by inmates on the public, the staff, other inmates or themselves. At the same time, of course, we should recognize international standards of human treatment.
If inmates continue to escape, our correctional system will no longer be serving the people by protecting society from these criminals; those people who have demonstrated by their actions that they cannot and will not live by the commonsense and common decency of our society. Victims of crime are quite often forced to pay in real terms for having been at a certain place at the wrong time. I am also advised that the OPP are often called to retrieve inmates from various public places. Apparently, it is a common event for prisoners to walk to the village in order to have a few alcoholic drinks.
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There are three specific points that I would like to urge on all Members of the Elouse, specifically on the Minister, for their evaluation. First, the process involved in the classification of prisoners must be closely examined. Perhaps the principle should be altered to more accurately reflect the goal of protecting our society; not just for the protection of the individual who is incarcerated. Somehow, this has been twisted around. We are putting criminals into institutions from which the inmates can escape and go for a drink or a joy ride. This must stop. The process of classifying prisoners is in serious need of revision. We must ensure that the punishment fits the crime, not the criminals' own needs.
Another point I wish to make concerns the deterrent concept of our criminal system. There are two concepts in this area; rehabilitation and retribution. Rehabilitation implies that the purpose behind imprisoning people who have contravened the law is to rehabilitate them so that they can return to our society as someone new, ready and willing to participate in our society. This may be a noble concept but I have serious doubts as to its effectiveness. In most cases the rehabilitation concept removes the responsibility of the crime from the criminal. This is not right. Our society is based on our citizens being responsible for their actions. 1 am not denying that some people need help and should receive it, but I believe we have gone overboard in some cases. In our attempt to help a few we have removed the principle of being responsible for one's own actions.
The concept of retribution is the other point. Retribution means atonement or satisfaction given for injury. In order to make our correctional and judicial system work we cannot forget the value of retribution. If we do, we will fail in our attempt to provide a fair, just and appropriate correctional system. I urge the Minister to seriously examine the purpose and intent of our correctional system. If we take away the responsibility for one's action, how can that person ever return to a society in which we are responsible for our actions? Serving time for crimes against society is not enough. That is why I believe our correctional system must have punishment to fit the crime. It is hard to determine a just punishment for persons who induce terror by holding people at gunpoint. Sending two potted plants and some money may be very fine, but it is not retribution, especially when it is not from the people who are directly involved.
My third point concerns the security of our correctional institutions. When I hear of a prison escape and the terrible events that sometimes follow, such as in the recent Bath Institution case, I become very alarmed. How can we allow people who are being held accountable for some crime already committed to commit yet another crime? In order to ensure that retribution is paid for crimes already committed, we have a responsibility to the victim of the crime, society and even the criminal that the security and enforcement of the punishment is complete and not lacking anything. The people charged with securing and ensuring that the sentence be carried out must be given the resources and money to do so. That means everything from perimeter control to the authority necessary to
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maintain an institution at the local level. I urge the Minister to ensure that these resources are provided to the correctional systems' employees. The employees need our support.
Finally, may I add that the recent incident concerning the Bath Institution is not the only situation about which I am concerned. It is an example of the terrible things that are being allowed to happen. These must stop. I ask the Solicitor General to give this House and all Canadians his assurance that such matters as prisoner classification, appropriate punishment, and improvement of security in our correctional institutions will be dealt with quickly and carefully. These are matters of extreme importance.


Hon. Elmer M. MacKay (Solicitor General of Canada);: Mr. Speaker, it is a pleasure for me to respond this evening and put on the record the appreciation I have for my colleague for bringing this serious matter to the attention of the House. 1 want to thank him for the meeting we had in the recent past when he brought some of these concerns to my attention in another forum.
The Hon. Member raised this question the day after it occurred in a conscientious and timely manner. As he has pointed out, there have been some developments in the interim. The three men involved were arrested the next day, December 5, and are now in custody. In a rare show of concern, and 1 think in an appropriate one, although as he pointed out, it did not involve the escapees themselves, the other inmates at Bath Institution took up a collection, collected a significant amount of money for needy people in the area and sent an apology and some flowers to the elderly couple their former comrades had victimized in that escape.
As the Hon. Member knows, Bath Institution is a minimum security institution. While it has no perimeter fence or outside patrol, security precautions are taken. There are counts of inmates every 45 minutes. There are other checks and there are alarmed doors.
In order to be placed in such a minimum security facility an inmate must show by his behaviour that he is a suitable candidate. Prediction of suitability or prediction of human behaviour is an inexact science at best. I believe our people in the department have done a reasonably good job, but that is not to say there is not room for improvement. We look at factors such as the length of sentence, the type of crime, the history of violence in the community and the risk of escape.
These three inmates were all serving their first federal terms. They all started their terms in medium security institutions and their behaviour up to that point was satisfactory. While they were at Bath no problems were observed. In fact, two of these men had successfully completed unescorted temporary absences. One of the three, however, had earlier this year been unlawfully at large from another minimum security institution. I am concerned about this and 1 will pass my concerns on to the Commissioner. This inmate did not by his behaviour demonstrate an undue risk. One of the three was

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due to be released on parole on December 17. It is very difficult to understand why he committed this act when release was close at hand.
Finally, the security inquiry report is not yet complete. I look forward to receiving the report and the light it will shed on this particular case. I will, of course, share it with the Hon. Member, and I want to assure him that I take very seriously the other matters he has raised. I appreciate the need to
improve many of the factors which are still placing an undue burden on our system as far as the protection of Canadians is concerned.


The Acting Speaker (Mr. Charest):: The motion to adjourn the House is now deemed to have been adopted. Accordingly, this House stands adjourned until tomorrow at two o'clock in the afternoon, pursuant to Standing Order 2(1).
At 6.30 p.m. the House adjourned.

Wednesday, December 12, 1984