1984-05-15

GOVERNMENT ORDERS


Hon. John C. Crosbie (St. John's West) moved:: That this House is of the opinion that the Government of Canada can manage the economy in a way that would allow us to have lower interest rates than Canada now has and that we can have greater independence in interest rate policy despite the Government's failure to meet its commitment to so manage the economy.
He said: Mr. Speaker, the motion, of course, speaks for itself. In connection with the motion I shall quote a statement made by the present Prime Minister (Mr. Trudeau) when he was in opposition and in an election campaign. On February 10, 1980, in an interview with a reporter from the Toronto Star, he said:
It is my belief we can manage the economy in a way that would allow us to have lower interest rates than we have now and I think we can have greater independence in interest rate policy.
Our problems then were the same as they are now. As a result of eight or ten years then of poorly conceived and poorly carried out Liberal economic policies, the Canadian dollar was under great pressure, interest rates were rising and the Government that had succeeded that Liberal Government was left in that position by the Liberal Government that preceded it. Today, of course, the Liberal Government succeeded itself: there was only an eight-month interregnum. We have had the problems in a much worse form in the four and a half years that Party has been back in power. At that time, out of opposition, the present Prime Minister said that it was his belief we could manage the economy in a way that would allow us to have lower interest rates and we could have greater independence in interest rate policy.
What does the Prime Minister say now, Mr. Speaker, when he is back in power and has been for four and a half years? What the Prime Minister says now and what the Government says now is entirely different. If we look at Hansard for May 10, 1984, page 3594, we find that the Prime Minister, in response to a question posed by the Hon. Member for Kam-loops-Shuswap (Mr. Riis), said:
I take it from the Hon. Member's line of attack that he and his Party are now prepared to concede that when the basic rate in the United States goes up, it is
impossible for Canadian rates not to go up ... we cannot divorce ourselves from the American money markets.
That is the statement of the Prime Minister after he fooled the Canadian people, got back into power and has held power for the last four and a half years. He takes the position that when the basic rate in the United States goes up it is impossible for Canadian rates to do anything else.
At page 3592 of Hansard we find the Minister of State for Finance (Mr. MacLaren) giving that line as well in response to a question from the Hon. Member for York-Peel (Mr. Stevens). The Minister of Finance said:
-but the Hon. Member opposite should understand that interest rates in Canada are a direct reflection of interest rates in the United States.
We have all heard the present Minister of Finance (Mr. Lalonde) and all the other lackeys of the Government mouth the same line time after time in the last four and a half years. The Liberals say one thing to get into power, but once they are in power they take an entirely different line.
In passing, I might refer to the President of the Treasury Board (Mr. Gray) who on February 7, 1980, on City TV, when asked: "Would you lower interest rates?", said: "Yes, I would". When asked: "Would you be prepared to resign your seat if the Government did not carry through on that policy?", he replied: "Yes, I would".
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Of course, we also know that interest rates rose from 14 per cent to 22.5 per cent during that period of this Government, but the President of the Treasury Board never once offered to resign his seat, much less resigned it.
I visited India as part of a parliamentary group two weeks ago. In that country they still have the class known as the "untouchables". In Canada we have a government which should be called the "unspeakable"-unspeakable because of the deceptions it practised on the people of Canada before it came to power and the disappointments it has offered them ever since.
Where is the Minister of Finance today? He is out job hunting. In the Toronto Daily Star of May 14, an article appeared entitled "Lalonde heading for France to seek interest-rate relief-and a new job".


Mr. Cullen:: You're a candid camera, John.


John Carnell Crosbie: We are not allowed to show in this Chamber that the Minister is looking for a new job, according to the Hon. Member for Sarnia-Lambton (Mr. Cullen). The so-called best and the brightest of this Government, the present Minister of Finance, is supposed to be their saviour.

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What is he doing? He has bailed out with parachute half open on his way to Paris with his campaign manager, the Secretary of State for External Affairs (Mr. MacEachen), looking for a job as Secretary General of the OECD. The Prime Minister weeps because we do not support his quest. Of course we do not support his quest. Why should that record of incompetence and economic failure be foisted on the 24 nations which comprise the OECD? Why should we support the present Minister of Finance of Canada who now attempts to bail out, leaving 1.5 million unemployed people behind in Canada? Of course we do not support this nomination for that position, nor does the United States of America support it. Why not? It is because they know that the present Minister of Finance was a leader of the interventionism of the Government in the energy sector of this country. He along with the President of the Treasury Board was the ferocious guardian of FIRA from 1980 to 1983 which did so much damage here in Canada.
The Minister is headed for France to seek interest rate relief and a new job. How does he want to get interest rate relief? He wants to blame everything on the United States of America. That is his excuse.
In connection with this motion, we agree that there is no easy, overnight solution to bring down interest rates, but we are also of the opinion that the economy can be managed in a way which will allow us to have lower interest rates than we now have and which would allow us to have greater independence in interest rate policy. This will take time. The results of 10 years to 15 years of incompetence and economic mismanagement cannot be overcome in a day or a week or a month. Perhaps it will take six months or longer to reverse the woeful lack of confidence which now exists in the world and in Canada with respect to our economic management. It will take time to reassure Canadian and foreign investors that sensible government and sensible policies have returned.
In February, 1980, when the Prime Minister made that statement, the Canadian dollar was worth 87.30 cents in terms of the U.S. dollar, the prime interest rate was at 14 per cent and inflation was at 9.5 per cent, so that real interest rates were about 4.5 per cent. The Canadian interest rate was 1.5 per cent less than the U.S. interest rate. Today the Canadian prime interest rate is one-half of a percentage point less; it is 12 per cent compared with 12.5 per cent in the United States. However, today the Canadian dollar is worth roughly 77 cents in terms of the U.S. dollar. It has depreciated in value over those four years. I do not have the calculation of the percentage decrease, but it has decreased by over 10 cents in terms of U.S. funds. Our assets in Canada today are worth considerably less than they were in February, 1980, as a result of the economic maladministration of the Government.
In the interim we have had interest rates of 22.75 per cent in this country. The lowest interest rate we have had since this Government has been back in office for the last four and one-half years has been 11 per cent. It is now up to 12 per cent and will be going up again. The inflation rate is 4.7 per cent. Therefore, the real rate of interest is 7.3 per cent. That indicates the loss of confidence in this country and in this
Government; the fact that the real interest rate today is 7.3 per cent whereas four years ago it was 4.5 per cent. There is no confidence.
Why is there no confidence in this Government by those who have money to invest or by anyone else? The figures show it. There were 360,000 unemployed in 1968, 4.5 per cent. The present Minister of Justice (Mr. MacGuigan) calls that full employment. We had that when the Liberals came to power in 1968. When the Government came back into power in 1980, there were 967,000 people unemployed, an unemployment rate of 7.5 per cent. How good that sounds now! In April, 1984 the unemployment rate was 11.4 per cent. The number officially unemployed was 1,468,000. That record will show why there is no confidence in this Government or its economic stewardship.
Let me give the figures for the deficits we have had over those same years. In the 11 years from 1972-73 to 1982-83, the Government's deficits totalled $100.7 billion. The deficit started at $999 million. It increased every year except the year in which we were in power for eight months. In 1979-80, the deficit decreased from $12.2 billion to $11.4 billion. It started back up in 1980-81, totalling $12.6 billion. In those 11 years total Government deficits were $100.7 billion. Last year it was $31.4 billion. This year it is estimated it will be $29.6 billion. The Minister says that the deficits for last year, this year and the next three years will total $142.2 billion. In five years they will exceed by one and one-half times what they were in the previous 11 years.
We are told by the Minister that in the next five years he will have to go to the public markets to borrow $114 billion to help meet these debts, of which $109.1 billion will be used to pay interest debt charges alone. That is why the Canadian dollar is floundering. That is why there is no confidence. That is why the dollar is under pressure. We will have to borrow $114 billion for last year, this year and the next three years, and of that, $109 billion will be to pay interest on the debt alone.
We now borrow huge sums just to pay the interest on the debt. That is why there is no confidence. That is why we are in such economic trouble. That is living proof that greater and greater deficits are not the solution to our employment problems. They are not the solution to economic growth. They are causing our unemployment, the failure in economic growth and the weakness of the dollar. Until these ever-increasing deficits are corrected, this country has no economic hope.
Let us look at the warning from the Bank of Canada on March 20, 1980. This is reported in The Globe and Mail. The Bank of Canada warned the federal Government that its large fiscal deficit is discouraging business investments and holding back productivity gains in Canada. I quote from the article:
"The fiscal deficits absorbed savings that could otherwise be channelled by financial markets into financing the expansion of plant and equipment", the central bank said in its annual report.
In March, 1980 the deficit was $12.6 billion for that financial year, and that was the warning issued by the Bank of
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Canada. Today the deficit is double that. Last year it was almost triple that amount. Therefore, the warning given on March 20, 1980 is far outdone by what has happened since.
Just in passing, what happened once the Government was elected? I will give several brief quotations. On May 9, 1981, the then Minister of Finance, the present Deputy Prime Minister, had this advice:
-the Government would not bail out individuals facing mortgage renewals or first-time home buyers trapped by circumstances.
He said that it would be wrong for him to give advice to individuals as to how to manage their affairs. This was said after the interest rate had gone up to 18 per cent, Mr. Speaker. Of course, once that gentleman was in power, he could not give advice to mortgage holders and others as to what they should do in view of the higher interest rates.
What did that same Minister, now Secretary of State for External Affairs, say on November 21, 1980, not six months after the election and after the Liberal Party had said: "Vote Liberal and oil prices will come down"? As reported in the Montreal Gazette, he said:
Canadians will have to accept a lower standard of living to adjust to the higher energy prices-
That is the attitude of this Government once it has been elected and will be in power for five years. The advice it gave after oil prices went up is that Canadians would have to accept a lower standard of living to adjust to higher energy prices.
Finally, the same Minister, on December 12, 1980, just six or nine months after the Prime Minister had said we could be independent of U.S. interest rates, said as reported by The Globe and Mail of December 12, 1980:
Canada has little control over interest rates, which have jumped 39 per cent since the federal Budget was introduced on Oct. 28, but thanks to steps taken by the Governor of the Bank of Canada, Canadian rates are not locked to U.S. rates, he said.
He cannot have it both ways, Mr. Speaker. Either Canada has control over interest rates and it therefore can take some of the independent actions which he says were being taken, or it has not.
In that article the Minister is reported as saying that Canadian rates are not locked to U.S. rates. Today the Minister of State for Finance, following his master the Minister of Finance, says: "Yes, of course we are locked to U.S. interest rates". Yes, we are locked to U.S. interest rates, Mr. Speaker, because of the incompetence, lack of caring and imbecilic economic policies of the Government.
At the moment we are locked into U.S. interest rates. The question to be asked is whether or not we can unlock ourselves. Can we free ourselves? Can Samson break the chains? I say yes. We can break the chains of this dependency if we put into office a government that is going to change this tragic march toward ever and ever greater deficits. That is the only way it can be done, Mr. Speaker.
The situation cannot be changed through a refurbished Liberal Party, a Liberal Party that is like a boa constrictor
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changing its skin. Mr. Turner is now in charge of the skinchanging operation for the Liberal Party. He is in charge of making the Party look different. We are told that the Trudeau caterpillar must be turned into the Turner butterfly so that the Party will have a new look. It does not matter what new look it has because, as I have just shown, we cannot believe a word members of the Liberal Party in this country say.
The net debt of the country at the end of March, 1984 was $150.9 billion, 38 per cent of the GNP. It will be $181 billion at the end of this year. Every Liberal Minister of Finance for the last 12 years has promised to reduce the debt. On June 28, 1982 the present Secretary of State for External Affairs said it all in his Budget Speech. I shall read from that speech as reported on page 18883 of Hansard:
Some say the Government should print more money. Others say it should let the deficit rip.
But that would fail miserably. Inflation and unemployment would get worse. Interest rates would rise even more. Canada would price itself out of world markets. Recovery would be postponed.
That was a painting of the consequences of allowing the deficit to go up. What did the Minister do? He let the deficit go up. He let the deficit rip and what he said would happen did in fact happen.
What else should we look at with alarm, Mr. Speaker? The weakness of the Canadian dollar is caused not only by the Government's internal deficits but by our external borrowing and our capital outflow. Equity grade capital is leaving the country and is being replaced by high-cost hard currency debt market borrowing abroad. This has been accompanied by a tremendous increase in the debt service burden of the country.
Every year since 1977, large capital outflows have made imperative Canada's hard currency borrowing abroad. Do you know, Mr. Speaker, that in the period 1977 to 1983 our cumulative current account deficit was $16.3 billion but our capital outflow or money that left the country totalled $50.9 billion so that we needed foreign borrowings of over $65 billion?
That is what has placed the downward pressure on our exchange rate and caused us to have huge foreign borrowings and high interest rates. We are losing low-cost equity capital. It is being replaced by high-cost debt borrowing. Let me cite the figures. In 1973 Canada has an external debt of $16.4 billion, which was 13 per cent of the GNP and 53 per cent of our exports. Today we have an external debt of $127.4 billion, which amounts to 33 per cent of our GNP and 118 per cent of our exports in any one year. During that period we have had capital outflows of $2.6 billion in 1977, $5.3 billion in 1978, $4.4 billion in 1979, $3.8 billion in 1980, $20.3 billion in 1981, $5.6 billion in 1982 and $8.9 billion in 1983. That is because of the hostility the Government has toward the investor, private and domestic. That is why this capital has left Canada.
Our interest payments outside of Canada have gone from less than $2 billion in 1973, which was about 5 per cent of our export earnings, to over $14 billion last year, which was about

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13 per cent of our export earnings. That is why the dollar is under pressure and its value is down to 77 cents. That, in turn, is why we have the high interest rates which are choking off our economic recovery and putting Canadians in the kind of dilemma that the IMF described in its report, "Fiscal Policy in Major Industrial Countries", which was released this month.
The IMF pointed out the position of Canada in relation to the current value of national output. By far, the largest interest payments are those paid by Italy and Canada, equivalent respectively to about 9 per cent and 7 per cent of GDP. In the United States it is only 4.5 per cent to 5 per cent; the United Kingdom is the same. It is about 3 per cent in France and the Federal Republic of Germany. The IMF states that the presence of such large and intractable budgetary costs is a major obstacle to current efforts of most national authorities to reduce their fiscal deficits. The IMF says that Canada and the other industrial countries have an unwelcome set of options: one, to increase revenue sufficiently to cover the greatly expanded interest payments; two, to make equivalent downward adjustments in other types of public expenditure; or three, to permit the additional interest charges to be pyramided into faster growth of debt in the potentially vicious cycle of interaction between interest expenditure and indebtedness.
The third option is what this country has chosen for the 4.5 years of this regime and for the years from 1972-73 onward. The Government is permitting additional interest charges to pyramid into faster growth of debt in a vicious cycle of interaction between interest expenditure and indebtedness.
How do we know that? We know that simply by looking at the interest costs of the Government. Those interest costs this year will be over $20 billion-


The Acting Speaker (Mr. Guilbault):: Order, please. The Chair regrets to interrupt the hon. gentleman but his time has expired. He may have more time in which to make his remarks during the ten-minute question and answer period which is provided. Any questions?


John Carnell Crosbie: If there is consent, could I finish my remarks?


The Acting Speaker (Mr. Guilbault):: Is there consent for the Hon. Member to terminate his remarks?


Some Hon. Members:: Agreed.


John Carnell Crosbie: Thank you, Mr. Speaker. This is a large subject and difficult to cover in 20 minutes. I will simply refer to the public debt charges. This year they will be $20.3 billion, which is 20.8 per cent of the spending of the federal Government on public debt charges alone. The Minister tells us that it will increase over the next three years to $24.7 billion in 1987-88, or 21.4 per cent of all government spending. Of course, that estimate is certainly far too low. If we have to spend 21 per cent of all revenue on interest, we cannot spend it on improving conditions for ordinary Canadians, we cannot spend it on improving social programs, and we cannot spend it on economic development. That is the dilemma in which this Government has now placed us.
In concluding, which unfortunately I must do quickly, what is the solution? I would like to speak for 20 minutes on the solution. The solution is the reversal of the economic approaches taken by the Government over the last 10 or 12 years in particular. We must overcome the deficit problem, which will certainly take, Mr. Speaker, four years or five years, I would think, by a variety of measures both on the revenue side and on the spending side. There must be tighter control of spending. There must be an increase of revenue. We must cease to intervene, as the Government has done, in the private side of the economy by welcoming foreign and domestic capital. FIRA, Mr. Speaker, should not be the Foreign Investment Review Agency. That implies that we do not want the foreign capital and do not need it, when today that is just what we need if we are going to have economic growth and more jobs. I suggest a change of name to the "Foreign Investment Reception Agency". Let us make it plain that we want to receive foreign investment, although there are certain areas where we may not want the foreign investment to go.
We must have privatization wherever possible; clarification of our own economic position, vis-a-vis the United States; a tremendous emphasis on export trade, and a restoration of confidence to Canadian investors. These are the people who are moving their money out and creating pressure on the dollar. Canadians who feel unwelcome to invest in their own country have been moving sums of capital out these last three years or four years in particular. We must make them feel welcome again, show them that we have a government which is going to operate on proper economic principles. Finally, Mr. Speaker, we must have federal-provincial co-operation and partnership, not the kind of cold war and civil war which we have had in the last number of years.
This is not just a Conservative position, Mr. Speaker. It is a position which is adopted by half the candidates in the present Liberal leadership campaign. Mr. John Turner, the likely winner of course, wants to cut the deficit by $15 billion by streamlining social programs, eliminating redundant services and running a more efficient bureaucracy. He has lacked specificity. No one can persuade this gentleman to give us more details on how he is going to do it, so specificity is not his long suit. However, his intentions are good. His policies are ours. He would bring in, Mr. Speaker, a budget with the same principles as the Crosbie Budget of December, 1979 which this Government now regrets ever having interfered with because that was the start of the movement towards the pitiful economic position in which we now find ourselves.
An increase of 1 per cent in interest rates adds $885 million to the government debt charges. That is how important the interest rate increases are to our own Government.
I thank the House for allowing me several extra minutes, and in conclusion I say that we in this Party are of the opinion that the Government can manage the economy in a way which will allow us to have lower interest rates, that we can have greater independence in interest rate policy. We decry the
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failure of the Government to meet that commitment. That was a commitment made by the Prime Minister who has reversed himself and swallowed himself, as he has done so often in the last four and a half years, with the help of all the Liberal leadership candidates who are now all out swallowing themselves as well.
We believe that can be done. It will not be easy, Mr. Speaker, but we can do it. If we had not been interrupted by a selfish, grasping Liberal Party, helped by its unindicted co-conspirators, the New Democratic Party, in December of 1979, we would have done it and Canada today would be that much better off than it is now.


The Acting Speaker (Mr. Guilbault):: Are there any questions or comments relating to the remarks of the hon. gentleman?


Mr. Althouse:: Mr. Speaker, the Hon. Member rightly accused some of the Liberal leadership candidates of lacking specificity in their solutions to the economic problems. The second item in the Hon. Member's program to reverse government policy was that there would have to be an increase in revenues which, 1 understand, means an increase in the amount of taxes collected.
I would like the Hon. Member to be a little more specific now and to tell us whether he is indeed talking about increasing taxes. If he is simply making a vague reference to increasing the size of the economy, could he tell us how he intends to approach that particular problem so that we can, in fact, have increased revenues? Where is the Hon. Member going to get the increased revenues? By which method?


John Carnell Crosbie: I tried to explain in my brief remarks, Mr. Speaker, that one would have to look both at the expenditure side and the revenue side. The New Democratic Party always advocates tax increases. As a matter of fact, in this House in recent days I have heard the hon. gentleman's Party urging a speculator's tax, whatever a speculator's tax is. If there is such a thing as a speculator's tax, I suppose that could be looked at. However, the kind of revenue increases which we prefer to think of are the kind which will come naturally and inexorably from a better Government which gives confidence, which in turn results in economic growth. That will reverse the decline in revenue which we now see happening in the economy.
There may well have to be other revenue increases. One would have to be in the Government to be able to look carefully at all sources to see which would be most conducive to economic growth or the least damaging to economic growth. One would have to look to see what is the exact economic condition at the time. Are we going to be in government in a month's time? Or are we going to be in government perhaps not for another year? The hon. gentleman must remember that members of this Government can sneak and skulk in their offices around Ottawa. They do not have to call an election until March of 1985. I do not know what the economic conditions are going to be in March, 1985, although I fear they will be a lot worse than they are now.
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Therefore, I cannot say now what I would do in March of 1985, not knowing the economic conditions in March of 1985. Will those Hon. Members opposite continue to cower in their offices, afraid to meet the electorate, afraid to go to an election, breaking all the parliamentary conventions, showing their lack of responsibility? Or will they call an election in June and let us take office in August? When will they choose to get out and let someone else get in? When I know the answer to that, I will tell the hon. gentleman with great specificity from where the revenue increases might come.
I am not like John Turner. John Turner knows that he is going to be in power by the middle of June. As soon as the Liberal convention is held, John Turner is anointed. The Turner butterfly takes over from the Trudeau caterpillar. He knows what the economic conditions are now. He can be asked properly and reasonably to be more specific. As a matter of fact, if the Liberal delegates were worth a darn, they would be pinning him down by asking: "What are you going to do?" They should be asking him: "What social programs are you going to streamline? What redundant services are you going to do away with? How are you going to be more efficient? You are going to be in office in June".


Mr. Evans:: What would you do?


Mr. Riis:: Mean and nasty things.


John Carnell Crosbie: And Mr. Turner knows what the economic conditions of the day are. Despite my burning desire to show more specificity, I cannot do it until I know when the hon. gentleman will call an election. Then I will be as specific as you like.


The Acting Speaker (Mr. Guilbault):: Are there any further questions?


Victor Fredrich (Vic) Althouse: Mr. Speaker, I believe I am beginning to understand a slightly different meaning for the word "specificity" as a result of the Hon. Member's answer. Again, following up on an attempt to understand what "specificity" means, I wonder if the Hon. Member could clarify for us- since it was one of his criteria for reversing the current government approach-the matter of Canada-U.S. relations and restoring confidence among businessmen in Canada. That statement did not tell us very much. I wonder if the Hon. Member could take a couple of minutes to clarify and expand and, if possible, be specific as to precisely what sort of programs he is proposing to ease relations between Canada and the United States and to make businessmen feel welcome in this country. Perhaps the Hon. Member could also tell us just which areas of government policy are now causing businessmen to feel unwelcome and what sore spots exist between Canada and the United States which are hurting our economy.


John Carnell Crosbie: Mr. Speaker, our relationship with the United States has, of course, improved a little since Mr. Hyde turned himself into Doctor Jekyll. We had the present Minister of Finance in his Mr. Hyde character role when he was Minister of Energy and brought in a so-called national energy policy

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which imposed changes in the rules and taxation retroactively. That wrecked the oil and gas industry of Alberta and Saskatchewan and put this country back tremendously in the last several years. I remember in February of 1980 the Prime Minister promised to do the big projects. We have not had a bid project done since. The biggest project we have had was the elevation of Ann Cools to the Senate. That is the only big project we have had since. The oil sands or tar sands plant went out the window. The Cold Lake heavy oil project went out the window. The Labrador Hydro development went out the window. We have not had a big project since because of the NEP and these other programs.
Our relationship with the U.S. has improved a little. Mr. Speaker, when we eliminate the NDP from the House of Commons altogether in the next election, or reduce them to two or three Members, when the United States, the business world and Canadians generally know that there is no longer a possibility of a vicious coalition between the NDP, the socialist lunatic-fringe element of Canadian life, and the Liberal Party, and that we are going to be in office for five years and sensible economic policies are going to be applied, then, of course, there will be a restoration of confidence and better relationships between the U.S. and Canada. I am glad to see the Minister of Fisheries and Oceans (Mr. De Bane) is here because he knows how desirable that is. He knows how important the U.S. is to us for the marketing of fish products. He had the good sense to appoint my brother to the board of Fishery Products International Limited. He is now the interim chairman. I congratulate the Minister of Fisheries; he is almost non-partisan.
To get back to the question, I would like to see-


Mr.   De Bane@: Mr. Speaker, I rise on a point of order. I would like to say to the Chamber that I am very fortunate that Mr. Andrew Crosbie has accepted to act as chairman of that very important company which is going to be the engine of the fishery in Newfoundland. According to every person who works for that company, he is the most competent Newfoundlander.


John Carnell Crosbie: Except for his brother.


Mr.   De Bane@: Obviously, of course, he is not of the same political Party as my friend.


The Acting Speaker (Mr. Guilbault):: Order, please. Would the Minister come to his point of order, if any?


Mr.   De Bane@: Mr. Speaker, my point is that the Hon. Member for St. John's West (Mr. Crosbie) should try to follow the path of his brother and become as responsible and competent as his own brother.


John Carnell Crosbie: Mr. Speaker, he and I are no longer brothers so there cannot be any conflict of interest. The Minister tried to accuse me of a conflict of interest because I asked a question about that company. He can put my brother in every
company the Government has but it will not stop me from asking questions, Mr. Speaker. In any event, the only person in Newfoundland whom it would have been better to appoint than my brother would be myself. However, since I was not invited, I could not accept.


The Acting Speaker (Mr. Guilbault):: There is one minute left in the question period.


Nelson Andrew Riis: Mr. Speaker, I have just a quick question for the Hon. Member. He mentioned that John Turner's policies were the same as "ours". Could he elaborate on what he meant by that? Is he saying that what Turner is saying is basically Conservative policy?


John Carnell Crosbie: Mr. Speaker, I am saying that John Turner exhibits every sign of having the same views with regard to the general direction the Government should move in as a Conservative would have. He is adopting the points that we have been making in the House since 1980. Why he would stay in the same Party that has ignored those views all through these years is beyond me. Let me give an example. Mr. Turner has said-


The Acting Speaker (Mr. Guilbault):: Order, please. The question period has come to an end. The Hon. Member for Kamloops-Shuswap (Mr. Riis) on debate.


Nelson Andrew Riis: Mr. Speaker, it is a pleasure to have an opportunity to follow the hon. Finance critic for the Progressive Conservative Party and to provide another viewpoint as to why our country is experiencing serious economic problems these days. I will perhaps make some responses to some of the comments made by the Hon. Member.
I would like to read once again the motion put forward by the Hon. Member for St. John's West (Mr. Crosbie). It is:
That this House is of the opinion that the Government of Canada can manage the economy in a way that would allow us to have lower interest rates than Canada now has and that we can have greater independence in interest rate policy despite the Government's failure to meet its commitment to so manage the economy.
We agree with the intent and principle of this motion. We believe that we can have a much more independent interest rate policy, a much more independent economic policy, that we can become less than totally dependent upon people like Paul Volcker, the chairman of the Federal Reserve Board in the United States, and that there are a number of areas in which Canada could be moving independently at the moment which would begin to reduce interest rates.
At the outset, Mr. Speaker, I would like to say that while discussion today focuses on interest rates, surely it is more related to the tragic situation of the high unemployment levels which exist in Canada. Presumably we are debating interest rates today because, as Members of Parliament, we are concerned with the very serious plight faced by so many Canadians in all parts of the country. Perhaps one of the difficulties which we have in the House, and which the Government has generally, is that we normally refer to the unemployed in
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statistical terms. We became concerned because the unemployment rate in Canada moved from 11.2 per cent to 11.4 per cent. The figure of 11.4 per cent was bandied around in the House of Commons and throughout the country as indicative of the problem facing the Canadian economy today. Or we may talk in terms of 1,468,000 Canadians unemployed today.
Mr. Speaker, I believe that to a certain extent those statistical terms do not give us a real understanding of this problem. If we appreciated just how devastating and tragic this situation is, I am convinced that the Government would be inclined to take some action. I believe the Government would take steps toward the reduction of interest rates or the capping of them at their present level, toward introducing programs which would provide relief to those sectors of the economy which are especially hard hit as a result of interest rates, and toward providing some encouragement and relief to those sectors in which job creation could take place. I refer specifically to the small business sector.
Perhaps another way to appreciate what the unemployed in this country really represent is to view them as being parts of other political jurisdictions. For example, if we took all of the people in the Yukon Territory and the Northwest Territories and added to that group everyone in the Provinces of New Brunswick, Nova Scotia and Prince Edward Island and a few more people from Newfoundland, we would have the number of people in Canada who are presently looking for, but cannot find, work. That does not include their sons, daughters or spouses.
Another way to look at it, Mr. Speaker, is if we took everyone in the cities of Edmonton, Calgary, Saskatoon, Regina and Winnipeg, that would represent the number of Canadians who want to work today but cannot find work. That is an incredible number of people, Mr. Speaker. There are nearly two million Canadians who, under normal conditions, would be working today and circulating money through their large and small communities. They would be buying goods and services and revving up the economy. Of course, with that number of unemployed, it is impossible. That is why we are primarily discussing interest rates today. It is the interest rate policy being pursued by the present Government which keeps interest rates tracking those in the United States. It keeps interest rates today at a prime rate of 12 per cent.
All indications are that this rate will likely increase in the weeks and months ahead. The assumption that we make in the New Democratic Party is that at these present levels, let alone the escalating levels in the weeks and months ahead, it is impossible to have sustained economic recovery in Canada. It will be absolutely impossible to consider a recovery continuing with interest rates at these or higher levels. It is in that atmosphere that we believe that independent action must be taken.
I do not want to spend too much time this morning talking about Liberal policy because I believe we are well aware that the Minister of Finance (Mr. Lalonde) and the Prime Minister
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(Mr. Trudeau) have said that the Liberal Government is impotent, like financial eunuchs, and that there is very little it can do to set us apart from Paul Volcker in the United States. Mr. Volcker, as chairman of the Federal Reserve Board, is essentially setting our interest rates in Canada which means that an American bureaucrat is deciding what economic action will be taken in Canada. It is a sad day when the Minister of Finance, the Governor of the Bank of Canada, the Prime Minister and the Canadian Cabinet set aside their responsibilities and look to that American bureaucrat in the United States to decide what we do in Canada. I suspect that there are not many other countries whose governments have sat back and depended on another country for guidance in policy decisions in their country, or to let a foreigner set critical economic policies.
I do not believe much can be said about Liberal policy. It is well understood that Canada is tracking United States interest rates. The Liberals are continuing to implement a tax system that sees our deficit grow at each Budget. Naturally, if taxes are not collected as they should be, the deficit will go up. If all kinds of hand-outs are given to individuals or corporations which do not need those hand-outs, of course the deficit will rise. That is the point our Party has been attempting to make. Our tax system is a major contributor to fuelling the deficit situation which exists today.
Deferred taxes to corporations amounted to approximately $25 billion in the past year alone. That is virtually the entire deficit of Canada just in deferred corporate income taxes. While 1 know it will be said that these taxes will be paid back, I recently read a quote from one of the senior executives of Consolidated Bathurst who, when asked about these deferred taxes and when his company intends to pay them back, made the very specific and short answer: "Never". I believe many people hold the assumption that these deferred taxes from year after year and decade after decade will never be paid. That is only one example.
We can talk about the PIP grants to the oil companies. I suggest that the oil companies may almost be embarrassed about receiving billions of dollars from Canadian taxpayers who pay such an exorbitant amount of their exploration costs. I suspect that those in the corporate board rooms are almost embarrassed to be taking the Canadian public for such a ride.


Mr. Epp:: You supported it.


Nelson Andrew Riis: The New Democratic Party never supported PIP grants.


Arthur Jacob (Jake) Epp: The National Energy Program.


Nelson Andrew Riis: I could ask who supported PIP grants when they came to the floor of the House.
Let me deal with the Tory policy. I listened with interest to the Hon. Member for St. John's West and I must say that I never heard so much bafflegab. I would like to call it another word that begins with "b", but it would be unparliamentary.


John Carnell Crosbie: You mean baloney?

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Nelson Andrew Riis: It is not baloney either, as suggested by the Member for St. John's West.
I hear the Conservatives talk about the deficit. I must give the Hon. Member credit when he said that one of the major solutions is to reduce the deficit problem by cutting spending and increasing revenues. However, he lacks specifics in dealing with those solutions. I am perplexed because month after month I see members of the Conservative Party rise in their places to say that S300 million is needed now to assist the West Coast fishery and $500,000 is needed for the East Coast fishery.


Mr. Lewis:: Are you against that?


Nelson Andrew Riis: I am not against that but this is what I hear from the members of the Official Opposition, that money is needed now for the fisheries on the East and West Coasts. They say that additional hand-outs have to be given to the small business community to assist it in job creation and that more money must be spent on the Armed Forces to develop our Navy, Air Force and land forces. They say that more money must be given to the farming community. Furthermore, they say that more tax rates should be given to the farming community, the large and small business community and there should be more tax breaks for artists. They talk about these requirements day after day and they amount to billions and billions of dollars.
However, in the next breath they say that the deficit must be reduced. What our Party wants to know is where they will cut the spending and from which existing programs. All that I ever hear is that the Conservatives want to add more money and I have yet to hear a single area where they will cut. I hope that Hon. Members sitting here today will correct me during the question period and say that there are areas and indicate where they will make cuts. They have yet to give a specific example from the federal deficit where they would make serious cuts. Eventually, I gather, the Hon. Member for St. John's West will have the opportunity during the election campaign to describe what he meant when he said that they will do all sorts of mean, nasty and unpleasant things when they get into power. I am not sure what "mean, nasty and unpleasant things" means but I suspect that I do. However, I do not want to put words into his mouth because he can do that himself.


John Carnell Crosbie: Mr. Speaker, I rise on a point of order. I want to ask the hon. gentleman to correct his quotations. I never said that we will do mean, nasty and dirty things. As I recall, I said that any government that is serious about overcoming the present situation will have to do things that might be considered mean, nasty and whatever the other word was. It is not that we would do them; we would never do anything mean, nasty or otherwise.


The Acting Speaker (Mr. Guilbault):: Order. The Hon. Member for Kamloops-Shuswap (Mr. Riis) could probably disclose to the House what he would intend to do but should refrain from interpreting what other Members have said.


Nelson Andrew Riis: Mr. Speaker, I would never interpret what other Members have said. I will quote specifically what they said. As a matter of fact, it was in The Toronto Star on February 18, 1984, one of Canada's major newspapers. I do not want to speculate on what the Hon. Member might have said; I will quote quite specifically what he did say. He said:
You have to be tough, mean and nasty and do all kinds of unpleasant things.
I am simply quoting from the newspaper and I assume it was correct.
The Hon. Member then referred to the crowding out in the money markets that was taking place today as a result of the high deficits. While the Hon. Member does attend the Finance Committee from time to time, I wish he had been there on March 22 when Governor Bouey appeared before the Finance Committee. His colleague from Etobicoke Centre (Mr. Wilson) asked the Governor of the Bank of Canada if the deficit as it is presently put together will result in crowding out in the money markets. The Governor of the Bank of Canada said no. It was his opinion as Governor of the central bank that there was no crowding out. Since the Hon. Member put so much faith in Governor Bouey, and since his Party must have a great deal of faith in him because they reappointed him when they were briefly in power, I simply say that the Governor of the Bank of Canada dismissed the idea of crowding out as a result of the deficit.
When I hear the Hon. Member, who presumably represents the Conservative Party, criticizing the existing procedures of the Government, I cannot help but recall a few other quotes that I happened to jot down during the past months. One quote is from the recent Conservative Finance critic from Etobicoke Centre. After the Premiers met, he said:
One after another the premiers proposed reducing interest rates, while accepting the inflationary consequences of a lower Canadian dollar. They were convinced that the benefits of lower interest rates and increased economic activity would offset the negative effects of increased inflation.
This is the critical line:
I do not agree with the premiers, 1 agree with the Liberal Party.
The Leader of the Conservative Party at that time, the Right Hon. Member for Yellowhead (Mr. Clark), is quoted in the Toronto Star on May 5, 1982, as saying:
We have looked for a solution other than the government's, but we couldn't come up with an alternative ... At this moment, 1 don't have a better solution.
The previous Finance critic and the previous Leader of the Party said that they were looking at the Government's policies and they agreed with them. We do not have anything to offer in lieu of what is already going on.
That seems to be quite contrary to the points which the Hon. Member for St. John's West was making previously. You wonder if it is possible in the Conservative mythology to walk down both sides of the street at the same time, Mr. Speaker. In one breath they say "We want to reduce the deficit"; in the next breath they say "We want to spend more money here and give more tax giveaways there". Then the Tories say "Yes, but we want an independent interest rate". Speaker after speaker
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says "We must follow the United States interest rates. We agree with the interest rate policy of the present American Government". There is something fishy going on here, Mr. Speaker. There is something confusing in that kind of Conservative logic.


John Carnell Crosbie: You are easily confused.


Nelson Andrew Riis: It may be an indication of what is to come if and when the Conservatives ever form a government in Canada. For example, in July, 1982 the Hon. Member for St. John's West was quoted in Maclean's magazine as having said: "If I told you what I would do, we would never get elected". That might give us a clue as to why the Hon. Member was a little vague in what he would do if the Tories were ever to form a government. Just before that, the Hon. Member for St. John's West in an interview for the Watson Report on television said: "Our leaders have to be a little less honest. We are not being devious and tricky enough". Again I wonder if that does not give us some indication of from where the Hon. Member is coming: the Tories have to be tricky and devious, a little less honest with the people of Canada. However, the crowning statement of them all from the Hon. Member for St. John's West came on November 25, 1983. In an interview with a reporter for The Globe and Mail he said: "We are not giving away anything. If you want to find out what our policies are, presumably, then you must elect us".
Do you think at a time when Canadians are hurting so much that they are prepared to buy a pig in a poke, that they are prepared to say: "I know you are going to do all sorts of mean and nasty things to us, I know you have to be tricky and dishonest. I hear that is what you are saying. We are going to support a political party that tells the people of Canada that is what they will do"? I do not think Canadians will buy that for a moment, Mr. Speaker.
Let me say what I think should be done about interest rates at this moment. I go back to the premise that at present levels, with the prime rate in the 12 per cent range and likely to go up in the next few weeks, what fragile recovery is under way today in certain parts of the country will not be sustained and what strong recovery is occurring in certain sectors will likely be aborted if these interest rates are allowed to track upward or to follow U.S. rates upward.
There are really two sets of policies which the Government could pursue at this time. One is to take some real gutsy action. When I say gutsy action, I mean recognize the severity of the problem and what it means to have nearly two million Canadians who want to work unable to find work. Recognize what that means particularly to the young generation of Canadians seeking work for the first time. The Government of Canada should direct the Governor of the Bank to take steps to reduce those interest rates. If there are some Canadians who would abandon their country, abandon the economic sector and take some speculative money and move it out of the country, I say they should have a right to do that. But they should pay a certain penalty for doing so. After all, we do ask people who move against the general interest of Canadian
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society to pay penalties. Major industrial polluters are asked to pay a penalty if they are contravening the environmental regulations which most Canadians suggest are appropriate. If drinkers drive and jeopardize the lives of innocent Canadians, we penalize them. If people want to move money out of the country at a time when it is desperately needed, they should have that right, but they should pay a penalty. That is why we suggest a speculative tax be considered if necessary.
In conclusion-


The Acting Speaker (Mr. Guilbault):: Order, please. The hon. gentleman's time has expired. Are there any questions?


John Leslie Evans: Mr. Speaker, I hate to contradict what my hon. friend and colleague from Kamloops-Shuswap (Mr. Riis) has said. The Leader of the Opposition (Mr. Mulroney) has made some statements as to where reductions would come in the deficit. Let me quote what the Hon. Leader of the Opposition said: "What would I do? I would cut everywhere and under every circumstance. I would cut consultants, outside lawyers, accountants, advertising, public service, compensation, waste, unproductive subsidies, travel, indexed pensions and fringe benefits, capital construction programs, capital overruns, and just plain bureaucratic excess, to name but a few examples". That was published in The Globe and Mail on August 2, 1982. The author was the Leader of the Opposition speaking about where he would cut to reduce the deficit.
I would ask the Hon. Member whether he has heard similar comments from the Leader of the Opposition. If so, would he confirm that this is what is really behind the Tory rhetoric about deficit reduction?


John Carnell Crosbie: What about Turner's rhetoric?


John Leslie Evans: Right now the Tories are not being specific, Mr. Speaker. But the specifics were put prior to the time the Leader of the Opposition took his current position.


Nelson Andrew Riis: Mr. Speaker, I notice the motion put forward by the Hon. Member for St. John's West says "we can have greater independence in interest rate policy". That does not necessarily mean the Conservatives will have. I think that is very important wording. Obviously the motion was worded with a great deal of thought.
I appreciate the comments made by the Hon. Member in terms of some specifics presented by the Leader. Let me elaborate on that. I want to give the Progressive Conservatives at least some benefit of the doubt, but since the topic has been raised I do recall some discussions, again highlighting the words of the Hon. Member for St. John's West. I hate to refer to the Member for St. John's West all the time when it comes to negative comments. However, I think he did make some reference to the possibility of a means test, cutting back on the universality of family allowance and pensions and that sort of thing. I think though that he might have done some backstep-ping on it some time ago.
With the support of the House, Mr. Speaker, I do have a few additional comments; probably two or three minutes would

May 15, 1984
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be sufficient. Perhaps I could have unanimous consent to finish off some of the suggestions I want to make concerning how we can reduce interest rates.


The Acting Speaker (Mr. Guilbault):: The Chair would suggest that the Hon. Member has the floor during the time allotted for questions and comments. He may use that time to add additional remarks.


Nelson Andrew Riis: I will keep it very brief, Mr. Speaker. I do not want to cut off questioning; I just want to take two or three minutes. I did suggest there was one major area in terms of reducing interest rates which the Government of Canada must look at, and the sooner the better. It has to do with Governor Bouey being directed to reduce interest rates. If that requires a new Governor of the Bank of Canada, so be it. Mr. Diefen-baker appointed a new Governor a few years ago when he felt it was appropriate. This is certainly the time to consider doing it again.
Another area we should consider is the concept of agribonds. The Government presently has that concept in the system. It could move on it very quickly if it wishes. Agribonds are not a new concept; it has been tested in other parts of the world and found successful. The concept would provide real assistance to all of the food producers in Canada. The Government could move on agri-bonds immediately. Also the Government could reinstitute the Small Business Development Bond, the bond issue that encouraged small business to develop and expand.


John Carnell Crosbie: How about mentioning the Hon. Member who introduced it?


Nelson Andrew Riis: I suggest, Mr. Speaker, that it is something we should consider once again in spite of who introduced it, the point being that it is in the system, it has been tested before and found to be somewhat successful.


John Carnell Crosbie: Who is the father of it?


Nelson Andrew Riis: It is just the thing now that would provide much assistance to the small business sector.
I wonder whether it is time to adjust our tax system. If we are concerned about the deficit, and we all are, desperately concerned, is it not the time to adjust our tax system to establish fair taxes in the country so that upper income Canadians who pay no income tax at all today pay a fair share and all of the corporations that have made substantial profits in certain years should be expected to pay at least a minimum tax? I refer to such corporations as the Royal Bank of Canada, the Bank of Montreal, Shell Canada, Simpsons-Sears, the Hudson's Bay Company, Consolidated Bathurst, and a long list of corporations that made in some cases hundreds of millions of dollars in profits and did not pay a single penny of income tax in a particular year. That kind of tax system I do not think assists us in getting the economy back on track and proving to Canadians that we have a fair tax system which treats all people equally.
Before sitting down, I would like to suggest that some of our major financial institutions should co-operate and, in the words of the Prime Minister at Christmastime, bleed a little alongside the rest of Canadians. Most people have now pulled in their belts so tightly that their backbones are up against their belt buckles. It is time to ask the banks and the major financial institutions to set aside some low-interest money to assist the farming community, home owners and the small business sector. We must place more emphasis upon the small business sector, for it is that sector in which jobs will be created and we will be able to bring some relief to the nearly two million Canadians who are jobless today.


Douglas Grinslade Lewis: Mr. Speaker, I noticed with interest that the Hon. Member for Kamloops-Shuswap (Mr. Riis) quoted at length the Hon. Member for St. John's West (Mr. Crosbie). One can only ascribe his increased knowledge to following closely the comments of my colleague.
This brings me to my question concerning a specific interest rate policy. On the weekend the Hon. Member indicated very half-hearted support for his Leader. He indicated that if and when his Leader lost the next election, people would be clamouring for his resignation. One could almost hear the Hon. Member for Oshawa (Mr. Broadbent) saying: "Et tu, Brute!"
My question to the Hon. Member is very simple. Is his reluctance to support his Leader based on his Leader's absolute ignorance of the interest rate structure or is it just general incompentence?


Nelson Andrew Riis: I do not know if that question deserves a comment.


John Carnell Crosbie: Thank you. I have another question for the Hon. Member.


Nelson Andrew Riis: It was totally taken out of context.


Some Hon. Members:: Oh, oh!


Nelson Andrew Riis: It was totally misrepresented. I said nothing of the sort. If the Hon. Member could read-and I suspect he can- he should read it a little more carefully.
The point I was trying to make was that, contrary to what some people were saying-


John Carnell Crosbie: He is hopeless.


Nelson Andrew Riis: I hear a lot of bantering and braying coming from the Conservative benches. They have just gone from 62 per cent of the polls down to about 45 per cent or something like that.


John Carnell Crosbie: It is more than 9.5 per cent.


Nelson Andrew Riis: It was an almost unprecedented drop in support as a result of their "non-policies". The point I was making was that I did not think the New Democratic Party would face any
May 15, 1984

defeat in the next federal election. We are about to pull off one of the most impressive upsets which we have seen in a long time in terms of what political pundits are suggesting. We will be returning with our present contingent and will be adding a number of new seats to our benches. With the kind of nonsense coming from the Hon. Member, he will eat those words six months from now.


Mr. Gamble:: Mr. Speaker, this is not the first occasion that the Hon. Member for Kamloops-Shuswap (Mr. Riis) has referred to a speculators' tax. He referred to it with respect to the transferring of funds outside Canada. Let me delve into that issue at some length, if 1 may.
It occurs to me that the Hon. Member has identified the source of the revenue giving rise to the capital prior to the transfer outside the country. I wonder whether it would apply to a person who made no speculation in the sense that he had no capital transactions and simply saved the balance of his wages that he had not spent prior to retirement and decided to live outside Canada. Would that speculators' tax apply to that retired employee who decided to spend his retirement years in Florida or in other parts of the United States which have a less hostile climate?
If it were not to apply to that person, would it be necessary to appoint a barrage of additional public servants to supervise and examine in detail the development of the fund which would ultimately be transferred outside Canada? In fact, is it not possible that, as a consequence of the examination in detail which would be needed, he would in that way alleviate some of the great unemployment in this country? It would surely mean the hiring of an additional 10,000 or 20,000 employees in the Public Service to examine every dollar transferred out of the country to determine whether those moneys had in fact arisen as a consequence of speculative transactions-


The Acting Speaker (Mr. Guilbault):: Order, please. The time allotted for the question period has come to an end.


Hon. Roy MacLaren (Minister of State (Finance)):: Mr. Speaker, I have listened with interest to the statements of the Hon. Member opposite who presented the motion this morning in the expectation that since he offered criticisms of the Government's policy, he would suggest for his part what he thought should be done. I must congratulate the Hon. Member opposite for his consistency. He has managed to avoid saying for many months-for many years, in fact-what he would do if he were in government. He certainly lived up to that reputation this morning.
I should, however, be fair to him in that on one occasion he offered a comment on what he and his Party would do if in the unlikely event they were to achieve power. He said that he would do exactly what this Government is doing. He said that if he were in government tomorrow, he would continue with the general approach taken by the Finance Minister, that is, emphasize the need to reduce inflation and interest rates, support business and talk about restraint. There we have an endorsement from the Hon. Member opposite of what the
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Government is doing. He endorses the programs and policies of the Government and says in addition that the Finance Minister had little choice except to plan for a deficit in the $30 billion range. He added that a big deficit this year was necessary to encourage economic recovery. The Hon. Member for St. John's West (Mr. Crosbie) is engaging in his usual doom and gloom about the future, but at the same time he says that he would do exactly what the Government is doing, and endorses the economic policies which he attacks in his motion.
Let me say a word about the economic situation in the United States because it is key to understanding recent increases in interest rates in Canada, a central point in the Hon. Member's motion. What we have seen in the United States is a very large structural federal deficit which has put some pressure on money markets and contributed to the increasing interest rates there. That large structural deficit in the United States has coincided with economic recovery, rapid economic recovery, probably at an unsustainable rate but certainly economic recovery. The combination of a high government deficit and more borrowing by the private sector as part of the economic recovery has inevitably meant that interest rates in the United States have increased substantially over past months.
What effect does that have on Canada or indeed on any other industrialized nation? The effect is obvious. It is certainly obvious in the case of Canada. With a free flow of money across our borders, Canadian money will seek a higher rate of return wherever it can find it. That is understandable. Canadians save money and seek a higher rate of return. In such a situation the Canadian response can be one of two things. We can either see interest rates in Canada increase to offer Canadian savers the same opportunity of return on their savings as they can achieve in the United States, or we can see a reduction in the value of the Canadian dollar.
We on this side of the House have worked to moderate both those tendencies. However, it would be naive and foolish for any Member of this House to think that somehow Canadian interest rates can be made immune from rate movements in the United States unless, of course, one wants to subscribe to the sort of cloud cuckoo-land idea of the NDP that there can be some sort of currency restrictions, or what the Member opposite calls a speculative tax on the flow of currency, the flow of Canadian dollars in search of higher rates of return.
The situation is quite clear. The Bank of Canada well summarized the current position of the United States when it noted in its recent report, and I quote:
Because of the dominant role of the United States in the world economy the U.S. fiscal deficit is of particular importance and has attracted widespread concern. That the fiscal deficit of the United States Government is currently much too large to be sustainable is widely agreed both within and outside the United States, but effective U.S. action has been prevented so far by the absence of sufficient internal agreement on how to deal with it, that is, to what extent to reduce expenditures and to what extent to raise taxes. Concerns about whether and when the U.S. fiscal deficit will be dealt with has for some time put upward

May 15, 1984
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pressure on market interest rates both in the United States and around the world.
Let me pick up the last point "around the world". We have seen the same sort of thing happening in other industrialized nations that we have seen in Canada. The West German Bundesbank noted the other day that they had reached the limit of detaching themselves from U.S. currency rates and interest rates are at the lower end possible in Germany. It is evident that in other industrialized countries with open currency markets, as Canada has, the same sort of pressures are present. U.S. interest rates go up and they either put upward pressure on interest rates in other industrialized countries, or the currency of that country falls in value as people move their money out of the domestic currency into U.S. dollars.
Let us look at the evidence. Since February, short-term U.S. interest rates have increased about two percentage points. At the same time, most major trading currencies, including the Canadian dollar, have fallen against the U.S. dollar as speculation of further increases in U.S. interest rates fuelled a strong appreciation in the value of the U.S. dollar on foreign exchange markets.
Canada is obviously not the only nation faced with rising interest rates and a reduction in its exchange rate with the U.S. dollar. The short-term interest rates in most industrialized countries-I have already noted Germany-including France, Japan, The Netherlands, Switzerland and Britain, have all risen appreciably since the beginning of this year. Since February, when U.S. interest rates began to rise, the foreign exchange value of the French franc, the German mark, the Swiss franc and the British pound have all depreciated against the U.S. dollar. The depreciation in the value of the Canadian dollar has in some instances been less than that of other major trading currencies against the U.S. dollar.
However, we do have a situation in Canada where, despite the pressure of higher interest rates in the United States, Canadian interest rates have been maintained at levels that should be a source of reassurance to Canadians about their future economy.
During the second half of 1982, Canadian interest rates declined dramatically. During 1983, those rates remained remarkably stable while U.S. rates trended upwards. As a result of the divergent patterns that began to emerge, the difference in Canadian interest rates and U.S. interest rates narrowed. In late 1982 and through much of 1983, Canadian interest rates, contrary to the historical pattern, were equal to, and in some instances less than, U.S. interest rates. In the first four months of this year, the differentials between short-term rates in Canada and the United States have been roughly zero.
Despite the fact that Canadian interest rates were low in 1983 in comparison to those in the United States, there was nevertheless a net long-term capital inflow of some $2.8 billion into Canada. The Member opposite, with his usual gloomy outlook, said that there had been little foreign investment in Canada, that there had been little inflow of capital into Canada during recent years because of all sorts of nefarious practices that he ascribed to the present Government. If he
would take the trouble to look at the facts, as I have cited, we have seen almost $3 billion of net long-term capital from abroad invested in Canada during the year 1983 alone. When the Member speaks of some terrible but unidentified events that led to a withdrawal of capital or a decision not to proceed with investment in Canada, he is simply talking through his hat. He obviously does not know what he is talking about.


John Carnell Crosbie: The figures are there.


Roy MacLaren: Yes, they are. The net inflow of long-term capital during 1983 was $2.8 billion.
We have a policy being urged upon us by Members opposite which suggests that somehow recent exchange rate and interest rate pressures are in some bizarre way wholly of our own making. Clearly they are not. To think that is the most naive and silly idea that the Member could have. He knows perfectly well what the situation is. He has stated it on many occasions. In 1979, when he was Minister of Finance, he said:
In connection with the three recent interest rate increases, I have concurred with the Governor of the Bank of Canada in his decision.
In saying that, he knew that interest rates in Canada had to increase at that time for many of the same reasons that are present today. When he was Minister of Finance, he further said:
We have a free market economy and the forces of competition will regulate rates.
The Hon. Member knows that. To come into the House today and say there is some sort of magic wand which can be waved and we will have in Canada a Canadian interest rate policy set entirely in Canada is simply nonsense. He knows that and yet he says-


John Carnell Crosbie: Mr. Speaker, I rise on a point of order. I have listened repeatedly to the Minister misquoting me. I said specifically in this House today that there was no magic wand by which anyone could change this situation, that it would take time, and so on. The Minister said that I came in here today and said there was a magic wand which you could wave and change the situation. He has miquoted me repeatedly in his remarks. Would he stick to some kind of accuracy when he makes his speech?


The Acting Speaker (Mr. Guilbault):: The Hon. Member for St. John's West has made his point. We will return to the Minister.


Roy MacLaren: Mr. Speaker, I have not misquoted the Hon. Member. If he looks at Hansard, he will find he said there is no easy, rapid solution, that it might take six months. If he thinks that within six months, somehow Canada and every other industrialized nation can declare independence of major currency and interest rate changes within the United States, then he is again simply talking through his hat. He should know better than that. He must know better than that.
I shall quote word for word what the Hon. Member opposite said in response to a point made in the House on October 25, 1979:
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The hon. gentleman should read the statement of Governor Bouey today and see why interest rates have had to continue to go up; and why they have gone up in the United States-
The Hon. Member knows that. For him to come to the House today and say that in six months the situation could somehow be fundamentally changed is simply for him to engage in a fantasy.
In fact, Mr. Speaker, what we have had in Canada in recent
years-


John Carnell Crosbie: Mr. Speaker, I rise on a point of order. I would refer to this morning's Hansard, Mr. Speaker, since the hon. gentleman challenged my version of what I said. Reading from the "blues", I said: "-we agree that there is no easy overnight solution to bring down interest rates, but we are also of the opinion that the economy can be managed in a way which will allow us to have lower interest rates than we now have which would allow us to have greater independence in interest rate policy. This will take time". That is what I said, Mr. Speaker.
I went on to say: "It will take time to reassure Canadian and foreign investors that sensible government and sensible policies have returned".


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


John Carnell Crosbie: The hon. gentleman should stop misquoting me when the evidence is right here in the "blues".


The Acting Speaker (Mr. Guilbault):: Order, please. Order. There seems to be a tendency this morning for Hon. Members to quote others and that is really not a point of order. For Members to disagree with one another is certainly a matter of
debate. May 1 ask the Hon. Minister to resume his speech and try to stick to his proposals?


Roy MacLaren: Mr. Speaker, I can well understand why the Hon. Member opposite is so sensitive about quotations. He endorses the policies of this Government and then on the other hand says that they are the wrong policies.


John Carnell Crosbie: I have not done that, Mr. Speaker. I rise on a point of order.


Roy MacLaren: I can understand why he would be upset about that.


John Carnell Crosbie: This is really intolerable. I have never in my life said that I endorse the policies of the Government and the hon. gentleman cannot produce any evidence to prove that I did. All I ever said last November was that the general thrust of the April Budget was going in the right direction. However, that statement dealt with the April Budget of a year ago and not with the policies of the Government and its thousand failures since then.


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


John Carnell Crosbie: I am an injured party, Mr. Speaker, a very injured party.
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The Acting Speaker (Mr. Guilbault):: Order, please. This last intervention by the Hon. Member for St. John's West is probably the best example of a false point of order. He may disagree with what the Minister has said but the Minister may interpret what others say. Please do not interrupt Members when they have the floor.


Roy MacLaren: Mr. Speaker, before I was interrupted by a false point of order, I was about to say that in fact there are in Canada today a number of underlying factors which give every reason to reassure all Canadians of the continuing strength of the Canadian dollar and indeed of the likely trend of longer-term interest rates in this country. For example, many in the House have taken some understandable satisfaction from the fact that Canada showed a record trade surplus in January of this year and indeed showed a major trade surplus for the whole of last year while the United States trade imbalance grows larger month by month. In fact, the U.S. current account deficit already far exceeds any previously recorded level.
Contrast that with the situation in Canada. We have enjoyed record export sales over the past 14 or 15 months and there is every reason to believe that that situation shall continue. Why should this situation continue? It is because Canadians have succeeded in reducing inflation which in turn has contributed to a major increase in our productivity and international competitiveness. Canadian industries and workers responded to the Prime Minister's appeal for restraint. They responded to the Government's six and five program, a program largely emulated by the provinces and by the private sector, with the result that we have greatly reduced if not yet eliminated the inflationary bias in our economy.
Canadians working together have thereby increased our international competitiveness through greater productivity. Indeed, as a recent International Monetary Fund survey of costs and competitiveness in major industrialized countries noted, Canada is an example of a country that experienced a significant improvement in its international competitive position. It is clear, Mr. Speaker, that such an improvement contributes to an underlying strength of the Canadian dollar but it equally underlines the necessity for all of us in Canada to continue our fight against inflation.
I am pleased to note, as have so many Hon. Members before me, that we have experienced an impressive recovery from the recession of 1981-82. We have seen our Gross National Product, the measure of the total goods and services produced in the economy, increase significantly over the past two years. We have seen inflation go down and we see our corporate sector to be in a much healthier financial position with stronger cash flows.
There is no question that the Canadian economy is on the mend and well on the way to further growth. Instead of Opposition Members recognizing the facts, we have before us this silly motion put by the Hon. Member opposite who tells us that there are a whole variety of things that could be done to insulate Canadian interest rates and the value of the Canadian dollar-

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John Carnell Crosbie: That is what your Leader said.


Roy MacLaren: -from U.S. pressures by-


The Acting Speaker (Mr. Guilbault):: Order, please. The Chair regrets to interrupt the Hon. Minister but his time has expired. Are there any questions or comments?


John Carnell Crosbie: Mr. Speaker, I have several questions. The hon. gentleman spoke of the strength of the Canadian dollar. I wonder if he could explain to the House how he can say that there is strength in the Canadian dollar when the Canadian dollar has fallen from over 87 cents U.S. in March, 1980 to its present status of hovering just above 77 cents U.S.? That has been a huge diminution in the value of the Canadian dollar and there are no signs that the pressure is off the Canadian dollar. I wonder if the Minister could explain to us, then, how he can say that we now have strength in the Canadian dollar?
At the same time, I wonder if he could explain to us where he gets the figures relating to our capital account performance. The facts are that we had principal capital outflows of minus $8.9 billion in 1983, both in direct investment and in the unidentified outflows. The unidentified outflows were $6.6 billion and the direct investment outflows were $2.3 billion net, making the total of principal outflows last year $8.9 billion. There is now and has been over the last six or eight years a major outflow of capital from Canada caused by both Canadians and Americans. How can the Minister pretend that this is not the situation?
Finally, would the Minister explain to me why he thinks the motion is silly when it is based upon a statement that was made by the Prime Minister (Mr. Trudeau)? The Prime Minister said exactly the same thing as this motion says on February 10, 1980. Is the indication that we can be independent of U.S. policy correct when it is made by a Prime Minister who is no longer in office but incorrect when it is made by a Prime Minister who is in office and spends four and a half years bringing in policies that cause to happen the exact opposite of what was said would happen? This motion is based upon a promise to the Canadian people which was made by the Prime Minister, a promise which he has broken repeatedly.


Roy MacLaren: Mr. Speaker, I shall deal first with the value of Canadian currency versus the United States dollar. The Hon. Member opposite should recognize-and I mean this in all seriousness-that what has happened is that all major foreign currencies have in the recent years, on average, depreciated against the U.S. dollar, including the Canadian dollar. Why is that? In part, it is the result of the situation which I described earlier. We have seen that the United States Government has been running a major structural deficit. We have seen economic recovery occurring in the United States. The combined pressures for borrowing from both the Government and the private sector have driven up interest rates. Money coming from other countries into the United States- foreigners buying U.S. dollars-has meant an upward pressure on the United States dollar. The United States dollar has appreciated against most other major currencies over a fairly
significant period of time, indeed during most of the period of time that the Hon. Member opposite has been talking about. The U.S. dollar has appreciated against the French franc, the U.S. dollar has appreciated against the Canadian dollar, the U.S. dollar has appreciated against the Italian lira, and the U.S. dollar has appreciated against the Japanese yen which is one of the strongest currencies, along with the Swiss franc, in the industrialized world. That is what is happening. The Canadian dollar is no way immune to those pressures any more than the German mark is or the British pound sterling.
With regard to the Member's questions about-and I think he was talking about this-long-term capital inflow into Canada during 1983, I would repeat that there was a net long-term capital inflow in Canada during 1983 of $2.8 billion. If the Member opposite wishes to have an elaboration of the numbers, I would be glad to send them to him.
The final point which the Member made concerned the statements of the Prime Minister with regard to our ability to have an interest rate policy fully, wholly and totally independent of the United States on the one hand, and, on the other hand, the recognition of the fact that today no such policy can be pursued by any industrialized country. He is trying to set up a straw man and knock it over. In fact, what the Prime Minister said was that we can close to a substantial degree the interest gap between Canada and the United States. If the Hon. Member recalls when the Prime Minister made that statement, interest rates in Canada were running well ahead of those in the United States. But over a period of time we have managed to bring down interest rates in Canada close to the point in which during some of 1982 and much of 1983, certain interest rates in Canada were lower or no more than those in the United States. The differential between Canadian and U.S. interest rates was largely closed. That differential was eliminated and Canadian interest rates were reduced as a result of good fiscal management on the part of this Government.
With regard to the current situation, the Hon. Member opposite knows perfectly well that the interest rates in Canada, as in any other industrialized country, are directly affected by interest rates in the United States. I think this is the third time I have made this point today. I suppose I will have to go on making it because the Hon. Member opposite believes and has convinced himself that somehow with the free and open money markets between our two countries-and we are each other's major trading partner-we can somehow isolate ourselves from interest rate pressures in the United States. That is simply not so. Anyone with an Economics 100 knowledge would certainly understand that elementary principle.


Douglas Grinslade Lewis: Mr. Speaker, I would like to quote the Hon. Minister to make sure that I have it right. I believe the Minister said: "Interest rates have been maintained at a level which should reassure Canadians about their economy".
I have a very simple question for the Minister. When he made that statement, was he referring to the 22 per cent
May 15, 1984

mortgage interest rates of 1981-82, or the 18 per cent and 19 per cent prime rates at the same time? To use that "turn around Turner" term, could the Minister clarify which it is that the Canadian home owner, small business person and farmer felt more reassured by-the 22 per cent mortgage interest rate or the 19 per cent prime bank rate?


Roy MacLaren: What I had in mind, Mr. Speaker, was the fact that the fiscal policies of the Government, as expressed in two Budgets and in other policy statements, have contributed to a reduction in inflation in Canada, have increased our international competitiveness and have strengthened the basic underpinning of the Canadian dollar. That has meant that we have been able to narrow the interest rate differential between our two countries. That is what 1 am talking about. I am saying that in Canada over the past couple of years we have, in effect, eliminated the interest rate differential that was such an omnipresent concern of Hon. Members opposite not very long ago. We have eliminated that. It has happened. That is what I am talking about.


John Carnell Crosbie: Mr. Speaker, in asking my question, I would like to point out to the Minister how inaccurate he has been again. Does he realize that in March of 1980 Canadian interest rates were 1.5 per cent less than U.S. interest rates, and that today Canadian interest rates are only .5 per cent less? The interest rate in the U.S. today is 12.5 per cent. It would be 11 per cent in Canada if we were still as well off as we were back in 1980, but it is 12 per cent in Canada and 12.5 per cent in the U.S. Therefore, that is an inaccuracy.
The question which I would like to ask the Minister is this. He wants to pretend the Canadian dollar is stronger vis-a-vis other currencies and that other currencies are more affected by the U.S. dollar than we are. How does he explain the fact that the prime rate today in the United Kingdom is 8.5 per cent? It is not 12 per cent as it is in Canada. It is 8.5 per cent in the United Kingdom; 7.75 per cent in West Germany; 5.7 per cent in Japan; and just 5 per cent in Switzerland. To use those four countries as examples-West Germany and the United Kingdom in particular, as well as Japan and Switzerland-their interest rates are considerably less than ours. How can they have lower interest rates? They still have to contend with the U.S. dollar-


The Acting Speaker (Mr. Guilbault):: Order, please. The question period has come to an end. Resuming debate, the Hon. Member for Simcoe North (Mr. Lewis).


Douglas Grinslade Lewis: Mr. Speaker, I am pleased to rise and speak to this motion that the House is of the opinion that the Government of Canada can manage the economy in a way that would allow us to have lower interest rates than Canada now has and that we can have greater independence in interest rate policy despite the failure of the Government to meet its commitment to so manage the economy. The interesting thing about this particular motion is that it was a statement made by the Prime Minister (Mr. Trudeau) when he was campaigning in the 1980 election. It is a state-
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ment which has been completely abandoned by the Government over the course of the present term of the Liberal Party.
My colleague who preceded me went on to discuss at length things which he felt benefited the Canadian economy and Canadians. He completely ignored the fact that this Government has single-handedly set records for unemployment in the post-depression period. It has set records for high bankruptcies-farm bankruptcies, personal bankruptcies and business bankruptcies-and has set records for mortgage interest rates. This is a Government of record; there is no question about that.
The reason I am interested in participating in this debate is not to deal with this subject at the Governor Bouey level, as the Government would like to deal with it, and not to give obtuse arguments which are not understood by the ordinary people, but to tell it like it is where I come from. I return to my riding every weekend, Mr. Speaker. I have an opportunity on the weekends and either on Mondays or Fridays to see my constituents and discuss with them what the major concern is out there. What is bothering Canadians? Where are the areas of pressure? There is no question that at a constituency level, the level of the ordinary Canadian, the major concern is rising interest rates and the inability of the Liberal Government to do anything about it, its inability to manage its interest rate program in such a way as to protect Canadians. The home owners who are renewing their mortgages are concerned, as is the small business operator who is cutting back on his or her inventory. Employees who are, after all, consumers, are all cutting back on their major purchases. And this is because of the complete lack of action on the part of the Government.
These Canadians remember the Liberal recession of the 1980s. They remember very well the Liberal high interest rate policy which brought about that recession. There is a lot of apprehension out there. My people in Simcoe North want us to try to control our economic destiny rather than simply to watch the Government come in here day in and day out trying to explain away why it cannot do anything about interest rates.
All the while Government Members are saying they cannot do anything about it, the Canadian people know that it was not Ronald Reagan who bailed out Maislin. It was not Ronald Reagan who brought forward the Budget of 1981. It was not Ronald Reagan who built Mirabel. It was not Ronald Reagan who devised our national energy policy. It was not Ronald Reagan who had a slush fund approach to unemployment insurance. It was not Ronald Reagan who drafted the brochures put out by the Canadian Unit Office to publicize eight Liberal Members of Parliament from Quebec. Ronald Reagan had nothing to do with that. That mismanagement and misspending was completely the fault of this Government and the result of this government's actions.
Canadians know that the recession of the 1980s was a result of the Liberal high interest rate policy. There was great hurt out there, Mr. Speaker, and I am not talking about Governor Bouey. I am talking about people who lost their homes, lost

May 15, 1984
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their farms and lost their businesses. There has been unheard of social and economic grief at the constituency level because of the failure of the Liberal Party.
There is a lack of investor confidence because of government policies. We have runaway deficits; $10 billion in 1980 and $31 billion in 1983. We have a national energy policy which drove out foreign investment. There was runaway inflation, and I refer to the Budget of 1981. I suggest to you, Mr. Speaker, that Canadians have had enough. They want a real change.
Members of the Government are now involved in a leadership campaign and it is like watching the Titanic sink all over again. The captain has left the ship, but he sits there in feigned indifference watching six of his former mates claim that they are now going to move the ship off the iceberg because they have some new ideas. Then there is the seventh, the one who has been AWOL for eight years. He is going to come back and save us all, the Bay Street lawyer who quit. He quit for one or two reasons. There is Mr. Turner's version and there is the Prime Minister's version. Then there was the clarification by Mr. Turner, which we all term as the "Turner turnaround". The old clarifier is back at it.
I would like to talk about interest rates. We on this side believe that to have interest rates as part of a policy we have to create a fiscal environment which will reduce interest rates without destroying our currency or reigniting inflation. That sounds impossible, but we suggest we would do it by strengthening the dollar, which has hit an all-time low, and by cutting back on the Government's $31 billion deficit. We suggest that we must create a fair and stable investment climate. That has not been the case under the present Liberal Government. It has gotten into the marketplace. It has interfered with the national energy policy. It has caused capital to fly from this country. Whether it was a dollar or an oil rig, it left.
We had the MacEachen Budget which made it unpopular to invest in Canada. Since 1980 $17 billion of direct investment capital has left this country. That is one of the major reasons our dollar has fallen from 88 cents to 78 cents. That decline in our dollar has forced the Bank of Canada to get into the market and to keep interest rates high.
We suggest, Mr. Speaker, that if we attract investment capital, it will strengthen the dollar. If we strengthen the dollar, interest rates will come down.


John Leslie Evans: How are you going to attract capital?


Douglas Grinslade Lewis: By providing the climate, my friend, not by driving investors out.


John Leslie Evans: By keeping our interest rates higher than the United States interest rates. That is what we have always done.


Douglas Grinslade Lewis: My colleague of the deficit, Mr. Speaker-


John Leslie Evans: That is the way we have always done it for 40 years.


Douglas Grinslade Lewis: -is trying to interrupt me. I refuse to be interrupted by economic rhetoric from that escapee from south of the border. We have a $31 billion national deficit. This Liberal Government borrows over $20 billion a year just to make the interest payments. What is this doing? It is demanding capital from the market. The demand of this Government for capital is consuming 90 per cent of the available capital from personal savings. That is money which could be put into the private sector rather than paying for the "Maislin bail-outs".
We are spending nearly one-half of the money which is available in Canada. This year, the federal Government is going to spend over $100 billion. Compare that to 1968. In 1968 it spent $12 billion. We have a deficit and what does that deficit mean? It means that the interest on government debt is climbing. It is now over $20 billion a year. That deficit is open to question because, as the Auditor General will tell you, Mr. Speaker, there are several ways of looking at it and he disagrees with the way the Government is looking at it.
Who is going to save us from the deficit? Well, there is the gentleman named Mr. Turner. He says that he is going to cut the deficit. Mr. Turner was Minister of Finance from 1972 to 1975. One will remember that that is when inflation jumped from 5 per cent to 11 per cent, the deficit more than quadrupled and federal spending more than doubled. According to a study made by the C. D. Howe Institute, three out of five John Turner Budgets actually widened the gap between the rich and the poor. After the 1973 Turner Budget, the richest families in this country were better off on average by $1,823 while the poorest families were better off by $ 134.
Mr. Turner has said he is going to cut the deficit. He does not say where. He has not even clarified it. Usually with Mr. Turner's statements, we are entitled to a clarification. We always receive a clarification from Mr. Turner. It may be the next day or it may be a couple of days later, but what he says is always clarified. But we have not had clarification of that. What we have had is Tom Maxwell, chief economist of the Ottawa based Conference Board of Canada, saying: "Maybe he is getting rusty under pressure". It was also stated, and I quote:
-he mistakenly said Friday that the Government's own projections call for the deficit's proportion of the Gross National Product to be halved by 1988.
Mr. Turner is obviously poorly briefed and poorly prepared for the anointment that Hon. Members opposite are getting ready for him.
I intend to carry on, Mr. Speaker, and discuss interest rates as they affect the housing sector of the economy. I would appreciate being able to call it one o'clock at this point and continue on afterwards on that particular area of my speech.


The Acting Speaker (Mr. Guilbault):: It being one o'clock, I do now leave the chair until two o'clock this afternoon.
At 1 p.m. the House took recess.
May 15, 1984



COMMONS DEBATES AFTER RECESS

[Stage Direction]
The House resumed at 2 p.m.

Mr. Speaker:: In accordance with past practice may I suggest that the speeches of Her Excellency the Governor General and of the Right Hon. Prime Minister (Mr. Trudeau), given during yesterday's ceremonies, be appended to this day's Hansard. Is this agreed?


Some Hon. Members:: Agreed.


Mr. Speaker:: Agreed and so ordered.



STATEMENTS PURSUANT TO S.O. 21


Mr. Bill Domm (Peterborough):: Mr. Speaker, the Minister of Consumer and Corporate Affairs (Mrs. Erola) will revert to mandatory metric by Order in Council in July, 1984. The decision to impose enforced metric conversion, announced yesterday in a press release, was the direct result of the inability of Jack Halpert and Ray Christiansen to launch an appeal due to insufficient funds.
The Minister's decision to employ Order in Council, which she states will be passed by July of 1984, seriously contradicts her commitment to postpone compulsory metrication pending the outcome of the Government's appeal against Mr. Halpert and Mr. Christiansen. Therefore it is obvious that we can no longer depend upon the current Minister of Consumer and Corporate Affairs to allow this important issue to come before Parliament where it would receive the attention of all Members, and be discussed according to democratic principles. Instead, she fully intends to revert to mandatory metric conversion, enforcing prosecutions, which incur fines, confiscation of equipment, and possible jail terms for using imperial weigh scales.



ADMINISTRATION OF JUSTICE


Mr. Garnet M. Bloomfield (Parliamentary Secretary to Minister of State (Small Businesses and Tourism)):: Mr. Speaker, today I would like to comment on the sentencing of a former Millhaven Penitentiary employee on April 30 of this
year. On December 21, 1983, the RCMP charged a paint shop instructor at Millhaven with possession of marijuana and LSD for the purpose of trafficking drugs to inmates at the Penitentiary. On April 30 he was sentenced to 120 days, which could be reduced to 40 days for good behaviour.
In my view this is a serious miscarriage of justice in light of the crime committed. This instructor had the responsibility of teaching the inmates some valuable trade which might assist in their rehabilitation. Under normal circumstances, any breach in the trust given employees by Correctional Services of Canada is unacceptable. However, to break the law while breaching that trust is an even more serious offence, and the lawbreaker should be penalized harshly.
Surely by anyone's standards imposing a 120-day sentence on a penitentiary employee trafficking drugs to inmates is far too lenient. These criminals have been placed in our penal institutions to pay their debt to society, and hopefully to be rehabilitated. They should not have access to drugs which, if past reports have been accurate, have played a role in inciting prison riots, murders, and other serious disruptions. For those found guilty of supplying inmates with drugs, the penalties should be severe.
I object most adamantly that a judge would rule so leniently in such a serious matter. When such a flagrant break of trust has been committed, I question the wisdom of handing down such a decision. I personally believe that anyone involved-


Mr. Speaker:: The Hon. Member's time has expired.



FINANCE


Mr. Ron Stewart (Simcoe South):: Mr. Speaker, this country needs humane interest rates. Farmers cannot survive on the FCC's rates of over 14 per cent. Small businesses cannot survive added interest increases. More jobs will be lost. Another rise of 1 per cent to 2 per cent will mean that most Canadians will not qualify for home mortgages. No wonder the people have lost confidence in the Government. While Canada's economy burns with high interest rates, our modern day Nero, the Minister of Finance (Mr. Lalonde), is fiddling for a job in France. Canadians are not the only ones who have lost confidence in the Minister. Ronald Reagan prefers a French socialist to a flawed Canadian socialist as head of the OECD.
Canadians are afraid, and are cashing in their Canada Savings Bonds at an alarmingly high rate. Last month's rundown of bonds reached $445 million, up from $217 million one year ago. From November 30, 1983, to April 30, 1984, redemption levels doubled to $2.13 billion from $1.19 billion a year ago. The Government's bankruptcy of policies has resulted in a policy of bankruptcies. Not surprisingly, Canadians are cashing in this Government.

May 15, 1984
I urge the Government to bring down interest rates, to stop this run on Canada Savings Bonds, to protect farmers and small businesses from bankruptcy, and to enable Canadians to purchase homes. Will the cut-and-run Minister enact at least one humane economic policy so that history will not remember this Trudeau protege as a total failure?



CANADIAN LABOUR MARKET AND PRODUCTIVITY CENTRE


Mr. Stanley Hudecki (Parliamentary Secretary to Minister of National Defence):: Mr. Speaker, it is a matter of concern to me that the location for the new Canadian Labour Market and Productivity Centre is almost finalized as being the City of Ottawa. It is a concern because, once again, the policy of decentralization of various national institutes is being overlooked. I feel that it is unfair to many deserving industrial and business centres outside the capital which have equal facilities and better industrial, labour, and business environments than does Ottawa; Hamilton being one such city.
For example, important institutes of higher learning located within or near the Hamilton area include McMaster University, the University of Guelph, the University of Waterloo, and Mohawk College. They could provide a wide variety of input to the new Productivity Centre. McMaster University, in fact, has the only labour studies program in Canada. As well, nearly 70 per cent of all Canadian heavy industry and manufacturing is located within 150 kilometres of Hamilton. The Productivity Centre could therefore draw on the expertise, not only of our manufacturers, but also of a large number of labour leaders.
Hamilton and other cities like it need the benefits of national institutes which, at the moment, are increasing in number and which are being located in Ottawa. I am sure that years from now a decision will be made to move the Productivity Centre to a more appropriate location out of Ottawa. Unfortunately, that move will most likely be carried out at a high cost to the taxpayer, and at the cost of uprooted family lives for the employees of the Centre, as has happened recently with several federal agencies.



NUCLEAR ARMAMENTS


Mr. Bill Blaikie (Winnipeg-Birds Hill):: Mr. Speaker, I read with profound regret this morning that France, headed by a democratic socialist Government, is reported to have exploded a nuclear device in the South Pacific for the second time in four days, according to a New Zealand Government seismologist.
All tests of this kind, Mr. Speaker, are an offence against the planet earth and against the future of the human prospect,
no matter who carries them out and no matter how agreeable one may find other policies of the culprit Government. The fate of the earth is a matter which transcends national loyalty, longstanding friendships, and ideological affinities. Nuclear madness must be opposed and exposed wherever and whenever it is manifested, even when friends are the culprits. This is what mature friendship among nations is about. It is the ability to be honest and critical without fear of retaliation or rejection.
It is about time that Canada's friendship with the United States reached such maturity on both sides of the 49th parallel. I call upon the Government to do its part by developing a more independent foreign policy, and by trusting that if our friendship with the United States is true and mature it will survive such independence. If it does not, we will at least be released from illusion.



WESTERN GRAIN STABILIZATION ACT


Mr. Len Gustafson (Assiniboia):: Mr. Speaker, after much prodding from the Progressive Conservative Party the Government has finally introduced Bill C-33, an amendment to the Western Grain Stabilization Act. With rising input costs and poor grain prices, western grain farmers have been caught in a severe cost price squeeze. Western grain farmers need financial assistance now. Further amendments to the Western Grain Stabilization Act are needed and should be enacted immediately so that an interim payment can be made, as well as a retroactive payment for the 1982-83 crop year.
We do not believe the Government can afford to put off making a payment until October, especially as the stated intention of the Liberal Government has been merely to pay grain farmers only part of their past contributions. A grain farmer who entered the program in 1979 would have paid a maximum of $5,700. If invested at bank rates, this amount would have accumulated to $8,000. The Government has indicated that the average payment will be $2,500 to $3,000. This is too little, too late. The Government is playing politics with the farmers' money.
Also, Mr. Speaker, in reporting from western Canada, I wish to say that the Weyburn Red Wings have very successfully won the Centennial Cup for western Canada.


Some Hon. Members:: Hear, hear!
May 15, 1984



ST. LAWRENCE SEAWAY DEMAND FOR ABANDONMENT OF LOCKAGE FEES

Mr. Joe Reid (St. Catharines):: Mr. Speaker, water was the means of transportation that opened up our country to the explorers and to the economic resources that aided in the development of the country.
The statement by the Minister of Transport to the effect that the St. Lawrence Seaway should not have making money its top priority is very timely, as the subject of Crown corporations is presently before the House for further consideration.
Some Crown corporations, such as the Seaway, are the result of dreams of public-minded citizens as well as of entrepreneurs alike. It took generations of human effort to transform this natural waterway into a transportation artery linking the rest of the world with the heartland of North America. To maintain the economic benefits of the Seaway, a happy balance of user pay and public benefit must be achieved.
The Seaway Authority wants government policy direction. Business and commerce welcome the freeze on Seaway tolls. Lockage fees, however, were imposed for a specific purpose which no longer exists. They should be abandoned, and the accessibility of community ports around the Great Lakes to water transportation should be restored. Such an action would be in keeping with the original dream of this great waterway.



EXTERNAL AFFAIRS


Mr. Bob Ogle (Saskatoon East):: Mr. Speaker, in the last several days it has been brought to my attention that the international arms trade will pass $1 trillion within a year or two. I believe that this is one of the major sins and evils that now face the planet earth.
I would like the House, and every Canadian who can hear my voice, to become even more aware of the divergence that is taking place in the world at this time between those who seek military solutions to problems and those who live in utter misery and poverty. How is it possible that, on a planet with the sophisticated ways of life that we have, the funds which should be used for the well being and health of people are being turned into arms?
It is not only the superpowers that are involved, it is now many of the growing Third World countries. Brazil, Turkey, and Israel are also major arms shippers and major arms sellers.
I repeat that I believe that, in the name of humanity, the Government, this Parliament, and all Canadians must put their united wills together once more to see that this race stops, because it will not bring anything except total destruction. It will not bring anything except death and misery. We have no other choice but to see that it stops.
Oral Questions POLITICAL PARTIES



LIBERAL PARTY LEADERSHIP CAMPAIGN-STATEMENTS ATTRIBUTED TO CANDIDATE JOHN TURNER

Mr. Gordon Taylor (Bow River):: Mr. Speaker, my statement today is about turn around, turn about, turn over Turner. When in government he introduced the Official Languages Act, but in Toronto, when making a pitch for the leadership, he cried: "Leave bilingualism up to the provinces". Later, when in Quebec, he stated: "I will continue the policies of Mr. Trudeau and Mr. Joyal in the area of official languages in Canada". A complete turn around.
Again, the ever turning Turner, when Minister of Finance, increased spending 99.8 per cent. He was an expert at emptying the public coffers, but now he will reduce government spending. Another turn about.
This hope of the Liberals, when in Quebec, said that he approved of Bill 101, that repressive, discriminatory piece of legislation because, he said, it is provincial rights. He introduced the Official Languages Act. Is that not federal legislation? Another spin around.
Our hero from Bay Street will reduce the deficit, but when he was Minister of Finance he introduced deficit spending and borrowing. As a result, Canadians now owe approximately $200 billion. Another turn about.
Guess what? The Liberals hope says that he is going to help the farmers of the West. As director of the CPR, he increased their freight to the point where farmers are going bankrupt. Even worse, he has again been appointed to the CPR board so that there will be another increase in freight to haul grain in July.
Will Mr. turn around, turn about, turn over Turner become Prime Minister of Canada? If he does, Canada will spin in circles. Heaven help us.
This sorrowful story will be continued on yet another day.



ORAL QUESTION PERIOD


Hon. Flora MacDonald (Kingston and the Islands):: Mr. Speaker, in the absence of the Minister of Finance, who, I gather, is in Paris job-hunting, I will direct my question to the Minister of State for Finance.
In 1981 and 1982 thousands of people lost their homes because interest rates soared to an all-time high. Young people in particular were badly burned, and either lost their homes or had to delay buying homes. Now, just as they are regaining confidence, they see the same thing happening again. They see interest rates heading upward. They ask what is happening

May 15, 1984
Oral Questions
and whether they will have to put off buying a home for another five years. I want to ask the Minister what can I tell these young people.


Roy MacLaren: Mr. Speaker, we have seen an increase in interest rates over the last few months. However, they are not of a magnitude that merits comparison with the increases that we saw approximately two years ago. The Hon. Member opposite knows perfectly well that interest rates in Canada and the United States, both of which have increased, are still at a level which is very much lower than those of recent memory.
With respect to the question of the Mortgage Rate Protection Plan, which I assume the Member opposite must have in mind, she will know from an answer that I gave in the House a few days ago that it is our intention to bring in the legislation for the Plan very shortly. That Plan will provide protection for those who choose to participate in it. It will be retroactively effective as of March 1. The rates that were applying at the time a mortgage was either taken out or renewed after March 1 will be at the rates which applied at that time.


Flora Isabel MacDonald: The Minister obviously is not aware of the fear and the concern that ordinary Canadians feel all across the country because of the way they have already been scarred by high interest rates. They see it happening again.


EFFECT ON UNEMPLOYMENT IN CONSTRUCTION INDUSTRY
Flora Isabel MacDonald: Mr. Speaker, there are approximately 700,000 construction workers in this country. Last month 200,000 of them were unemployed. They see a real slowdown in construction because of high interest rates. Developers are saying the same thing. People are afraid of losing their jobs or of not being able to create new ones. What assurance do these people have that if they start projects they will not have to be abandoned three or four months down the road because of escalating interest rates?


Roy MacLaren: Mr. Speaker, I thought that I had answered the question, but evidently I did not. I intended to say to the Hon. Member that indeed we do not anticipate major increases in interest rates in Canada in the foreseeable future. But whether such rates do increase, the protection will be available through the Plan I described a moment ago, which was embodied in the Budget of last February. The Mortgage Rate Protection Plan offers to those who choose to participate in it, for the payment of a premium, protection against the very circumstances which the Hon. Member opposite has described.
In fact we have seen some real progress in the construction industry. When the Hon. Member opposite presents her rather gloomy picture of housing starts in Canada, she should bear in mind that in 1983 housing starts averaged 162,000 units, which was a 30 per cent increase over 1982. In the first quarter of this year there was a 6.3 per cent increase over the fourth quarter of 1983. Therefore we do see some growth in
the housing construction industry. I am sure that the Hon. Member opposite will want to recognize that there is also the additional assurance of further growth in that industry through the use of the Mortgage Rate Protection Plan.


Flora Isabel MacDonald: What the Minister does not understand, and what the Canadian construction industry could tell him, is that every time interest rates go up by one percentage point, construction goes down by one percentage point. The Minister should also know that it is not only home owners or people in the construction industry who are effected; small business is also worried about interest rates.


EFFECT ON SMALL BUSINESS SECTOR
Flora Isabel MacDonald: Mr. Speaker, there were 80,000 small businesses which had to close their doors in 1982 because of high interest rates, and people see the same thing about to happen again. Construction workers, home owners, and small businesses see a direct link between high interest rates and the unemployment that will result. They do not want promises from the Minister that have been made for three, four, and five months. They want to know what kind of action the Government is prepared to take to keep interest rates down.


Roy MacLaren: Mr. Speaker, the Hon. Member opposite must know by now, after having been in the House for the last few days, that interest rate increases in Canada are related to interest rate increases in the United States. That is an inescapable fact. Also there are some things we can do in this country to maintain moderate increases and to limit increases in interest rates. We can do this through increasing productivity, through the promotion of exports and, above all, through the reduction of inflation. On those three fronts the Government has acted, and acted consistently. We have moved to reduce inflation. We now see the CPI running at about 4.7 per cent, a low for inflation in Canada in a very long time. Second, we have seen record levels of exports which have been fulled by increased productivity in our economy, again as a direct result of some of the policies adopted by this Government.
We are in fact, Mr. Speaker, taking steps. We have succeeded in taking steps which do have a very real effect on limiting interest rate increases in Canada. But let us not be naive or fool ourselves. The basic reason that interest rates in Canada are increasing occurs outside our borders, in the United States. Unless the Member opposite wishes to suggest currency controls at our borders, then there is no way to avoid the longer term impact of interest rate changes in the United States.
May 15, 1984


LABOUR CONDITIONS
Hon. James A. McGrath (St. John's East):: Mr. Speaker, my supplementary is for the Minister of Employment and Immigration. Given the fact that it is now the stated position of the Government that the Government can do nothing about high interest rates, that the forces are outside our control because they are beyond our border, what advice does the Minister responsible for employment have for the Government to cushion the negative effects of high interest rates on employment in Canada?
We know that employment has not grown in the past three months. We know the unemployment rate is hovering around 11.4 per cent. We know that youth unemployment is on the increase, and we know that housing starts are down. We know all of these things. What we do not know is what the Government is going to do for the unemployed as a consequence of all this.


Hon. John Roberts (Minister of Employment and Immigration):: Mr. Speaker, I think the general approach is still clear. The Government does believe that the private sector is the motor force for creating jobs in the economy. As the Budgets of my colleague, the Minister of Finance, have indicated, we have undertaken steps to create a context which encourages the private sector to create those jobs. Indeed, that has been happening over the past year. As the Hon. Member I think knows, there has been considerable job creation in Canada at a pace and a rate comparable to that of any other country, including the United States.
In terms of specific efforts, he has asked what advice would I give. I would suggest that we look at those programs which exist now, for instance, the Career Access Program which I believe the Hon. Member supports and, indeed, wants to see strengthened, and that in relation to youth employment; that we direct the young to use that program on the basis of support to private sector employers for the creation of jobs for young people and those entering the economy for the first time. There are a variety of employment creation projects under the administration of my Department or the Commission of Employment and Immigration-the Youth Job Corps Program, Canada Works Program, the LEAD Program, the Career Access Program, which I designed exactly to focus in on some of those employment problems on which the Hon. Member has just touched.


YOUTH UNEMPLOYMENT
James Aloysius McGrath: Mr. Speaker, the Minister takes the position, and I do not quarrel with this, that the private sector is the principal vehicle for job creation. Let me say to the Minister that high interest rates are a disincentive to the private sector to expand. These high interest rates are happening at a time when there are over 500,000 young people unemployed, and that number is going up. They are about to be joined by another 400,000 young people from
Oral Questions
our colleges and universities, looking for jobs. That amounts to one million young people. If they cannot Find jobs in the private sector because the private sector is cutting back as a result of high interest rates, I ask the Minister what is the Government doing? Specifically, what is the Minister doing to cushion the effects of high interest rates?


John (Moody) Roberts: My answer, Mr. Speaker, has to be somewhat repetitive.
I am not sure whether the hon. gentleman was listening very carefully to what I said. No one, certainly no one on this side of the House, wishes to have higher interest rates.
He asked what was being done. I pointed out to him the Career Access Program. That Program does provide a contribution of up to 50 per cent of the salary or the wages of a young person, for up to six months and in some cases up to 12 months, to respond to that problem. We believe it is a much more effective program than the kind of tax deduction which the hon. gentleman and his colleagues have suggested, because the private sector employer receives immediately in his hands and at great advantage to his cash flow, les subventions, the subsidy, which will create a job rather than having to wait many months before having the impact of a tax deduction as suggested by the hon. gentleman. In other words, the approach which we are already using in the Career Access Program is a much more effective one than the alternative which has been suggested by the other side. It does depend upon the partnership and co-operation of the private sector, which we are finding increasingly we have.
The hon. gentleman asks what we are doing. The answer is the Career Access Program, which is an effective way of providing encouragement to the private sector to give a job opportunity to young people entering the labour force for the first time.


HUMAN RIGHTS
Ms. Lynn McDonald (Broadview-Greenwood):: Mr. Speaker, my question today is for the Prime Minister. It emanates from a meeting which was held all day yesterday on Parliament Hill, sponsored by the parliamentary group on Soviet Jewry, concerning the situation of Soviet Jews. One of the recommendations was that a parliamentary committee be established on human rights to deal not only with human rights in Canada but internationally, including the situation of Soviet Jews, and especially that it would monitor the lack of respect for provisions in the Helsinki Accord. Would the Prime Minister tell us whether he favours the establishment of such a parliamentary committee, and whether he would at least give it serious consideration?


Right Hon. P. E. Trudeau (Prime Minister):: Mr. Speaker I do not see personally why the subject could not be taken up

May 15, 1984
Oral Questions
before the existing parliamentary committee on external affairs. The suggestion has not yet reached my desk but I will be happy to see if the House Leaders want to examine that possibility.


U.S.S.R.-RESTRICTIONS ON EMIGRATION OF JEWS
Lynn McDonald: Mr. Speaker, my supplementary question is also for the Prime Minister. It concerns the same meeting. One of the other proposals made at the meeting was for more vigorous action on the part of the Government. Not only should there be quiet diplomacy on the issue of human rights violations, and especially the stopping of exit permits on the part of the Soviet Government, but this matter should be raised more vigorously internationally and in bilateral discussions with the Soviet Government.
There was some criticism that the Canadian Government had not taken what opportunities it could, and it had not been as active on this issue as other western European Governments had been. Could the Prime Minister comment? Could he give us any undertaking that the Government would be more vigorous in dealing with this very important matter of human rights violations and our concern that people, Soviet Jews particularly, be allowed to emigrate to Israel for purposes of family reunification?


Pierre Elliott Trudeau: I would comment gladly, Mr. Speaker, but I am afraid that the comment would be to the effect that the suggestions by the Hon. Member, or by whomever she pretends to be quoting, are quite inaccurate. We have proceeded by quiet diplomacy, as the expression goes, but we have also made statements publicly and very vigorously. We have made them in every meeting concerning and surrounding the Helsinki declaration. We have made them in Madrid. Before that we made them in Belgrade and, at the United Nations in New York. We have made many statements denouncing the unjust treatment of various minorities by the Soviet Union and, indeed, by other countries. That does not preclude the need for quiet diplomacy. From whatever experience I have had, I think the latter produces generally more results than the former.


HOUSING
Hon. Roch La Salle (Joliette):: Mr. Speaker, my question is directed to the Minister responsible for Housing. The House is aware that future home owners and Canadians in general are worried about rising interest rates. The Minister has mentioned a mortgage rate protection program for which legislation is to be introduced very shortly and which will take effect retroactive to March 1. Could the Minister inform the House
today, considering the program's retroactivity, whether new home owners will be entitled to obtain interest rates at the levels existing on March 1 of this year?


Hon. Romeo LeBlanc (Minister of Public Works):: Mr. Speaker, we have made it clear-by the way, I expect the Bill will be before the House in a few days-that the rate to be covered by the Mortgage Rate Protection Program is the rate on the day the home owner renews his mortgage or takes out a mortgage on a new building or home. Therefore, there is no magic day. It will be the rate on the day the transaction is concluded. That is when the program becomes effective.


REQUEST THAT MINISTER PROVIDE MORE INFORMATION
Roch La Salle: Mr. Speaker, the Minister will realize that Canadians are all anxious to pay the lowest rate possible. If I understand the Minister correctly, even if his Bill takes effect retroactive to March 1, it is far from certain that the interest rate prevailing on that date will be the one that will be covered under the Mortgage Rate Protection Program. In the circumstances, considering that interest rates are rising, it is quite possible, from what I gather from the Minister's statement, that Canadians will have to absorb rates that far exceed the rate prevailing on March 1 of this year.
I therefore wish to repeat my question, Mr. Speaker. Can the Minister inform the House very specifically whether the interest rates in his Bill will be those existing at the time the Bill is adopted on third reading or the levels prevailing on March 1? I think the Minister understands the relevance of my question.


Roméo LeBlanc: Mr. Speaker, I agree the question is an important one, and we shall have to be very careful in formulating the answer when we bring the legislation before the House. From the outset, however, we wanted to inform Canadians who were interested in the program when it was announced in the Budget that, pending adoption of the Bill, if their mortgage came up for renewal or they had to take out a new mortgage on a new home, they would be eligible for the Mortgage Protection Program as of March 1. We did not want to leave anyone out. Of course, more specific details will follow once the Bill is tabled.


AGRICULTURE
Mr. Lee Clark (Brandon-Souris):: Mr. Speaker, my question is directed to the Minister of Agriculture. As the Minister knows, today's farmers are part of a capital-intensive industry. As a result, many of them have long-term and short-term
May 15, 1984

indebtedness in the $500,000 to $1,000,000 range. Every time there is an increase in interest rates of 1 per cent, their interest bill per annum increases between $5,000 and $10,000. Bearing that in mind, could the Minister of Agriculture inform the House what specific advice he has given his colleague, the Minister of Finance, with respect to policies that should be followed if today's farmers are to be protected from the Government's high interest policy?


Hon. E. F. Whelan (Minister of Agriculture):: Mr. Speaker, the Hon. Member knows that I have very strong opinions on interest rates.


Some Hon. Members:: Oh, oh!


Eugene Whelan: He really has no right to know the discussions 1 have had with the Minister of Finance concerning interest rates. Those discussions were private and confidential. We have had many meetings on how to work out programs. The Minister of Finance is as concerned about interest rates as anyone in the House.


FARMERS' CONCERN
Walter Leland Rutherford (Lee) Clark: Mr. Speaker, my supplementary question is directed to the same Minister. I heard him say that he has very strong opinions on high interest rates, yet we have seen nothing happen on that side of the House. Therefore I could only assume that unfortunately the Minister lacks influence with his colleagues.
Last week the Minister told me that high interest rates were not a problem for today's farmers, yet farmers in my constituency tell me that high interest rates, more than any other single factor, are forcing them off the land. Will the Minister now concede that farmers in western Canada, and indeed throughout Canada, know more about their problems than he does?


Eugene Whelan: Mr. Speaker, if the Hon. Member claims that he knows very much about their problems, I would think that is an exaggeration. He should compare the amount of knowledge and concern I have for farmers and the things we have done for them, such as subsidizing interest rates-last year alone we spent $36 million on subsidizing interest rates-with what some of the provinces are doing. They should match what we are doing, because agriculture is a joint responsibility.


MEDICAL CARE
William Alexander (Bill) Blaikie: Mr. Speaker, my question is directed to the Minister of National Health and Welfare. By now the Minister will be aware of the fact that the Progressive Conservative Government of Alberta is consid-
Oral Questions
ering privatizing the administration of health care in that province.


Some Hon. Members:: Hear, hear!


William Alexander (Bill) Blaikie: I hear Hon. Members to my right saying "Hear, hear", that that is a good idea. That is interesting. Could the Minister tell us whether she shares our view that any movement in this direction, toward the privatization of health care administration in that province, would violate one of the five basic principles of medicare, that of non-profit administration?


Hon. Monique Begin (Minister of National Health and Welfare):: Mr. Speaker, at this point in time we do not know what Alberta intends to do. The press reports which I read upon my return from Geneva spoke of the Alberta Minister studying how far he could go in using private management in the health system. All I can say and report on right now is that we made sure-and all Hon. Members of the House agreed unanimously-that Section 8 of the Act contained quite a long definition of what public administration must mean.
It is a fact that Nova Scotia had a tiny portion or an element of its management done under contract by MSI, a private management firm. Also Hawkesbury, Ontario, had an experience with private management. For about a year I have known that the Governments of both British Columbia and Alberta are monitoring the situation very carefully. Perhaps it is because of the philosophy of those two provincial Governments that they have pilot projects in the same direction.
We all know that the next attempt at trying to undo medicare will be through the door of the condition called "public administration". For the time being it is strongly defined in the Act, and I have no reason to fear anything.


William Alexander (Bill) Blaikie: This is not the first time the Minister has hedged on these kinds of questions concerning privatization. She did the same thing when I asked her about AMI at Hawkesbury last year.


MINISTER'S POSITION
William Alexander (Bill) Blaikie: Mr. Speaker, does the Minister not regard the contracting out of health care administration in any province to the private sector as a violation of the principle of non-profit administration? There is no need to be ambiguous about that. Does she or does she not approve of that direction? If she does not, what will she do about it?


Monique Bégin: Mr. Speaker, the Hon. Member displays the same impatience as he did four years ago when he joined the House. The net result of what I call the mysteries of life when I talk to him, because he does not seem to understand, is that it takes some time to know the facts, to collect information and to analyse the Act, the framework within which we must work. That did not preclude us from passing the Canada Health Act

May 15, 1984
Oral Questions
with a strong Section defining the parameters which keep medicare under public administration. I will not be governed by the typical NDP line that, just because a Minister was reported in the newspaper as thinking of using a private management company, this implies a sin of some sort. There is nothing wrong with that. Let us wait and see.


AGRICULTURE
Mr. Marcel Dionne (Chicoutimi):: Mr. Speaker, my question is directed to the Minister of Agriculture. Two weeks ago, on twenty-four hours' notice, the Minister agreed to meet delegations from the Lac Saint Jean, Mauricie, Lanaudiere and Quebec City UPA's to discuss losses suffered during the drought in 1983. At the time, the Minister told the delegation that if the Quebec Minister, Mr. Garon, made an official request for financial assistance in paying compensation to these farmers, he would agree to co-operate. Can the Minister inform the House whether he received an official request from Mr. Garon, and if so, whether it is clearly a request for financial assistance from the federal Government?


Eugene Whelan: Mr. Speaker, the Hon. Member speaks of a request from producers at a meeting that was arranged between some Members from la belle Province and the producers concerned. At that time I informed them that there had to be a request because of the agreements we have, and that the request had to come from the province. Since that time I have received a letter from the Minister of Agriculture for the Province of Quebec, not admitting any responsibility, not stating that this is a problem they would like to solve jointly, but giving several excuses, stating that the federal Minister of Agriculture should look after the needs of these farmers. The Minister of Agriculture for la belle Province uses fancy words and gives fancy descriptions of aid, but refuses to put his money where his mouth is.


EXTERNAL AFFAIRS
Mr. Donald W. Munro (Esquimalt-Saanich):: Mr. Speaker, my question is for the Acting Secretary of State for External Affairs. The Secretary of State for External Affairs has already acknowledged that a diplomatic note has been sent to the State Department in Washington protesting the proposed oil drilling leases being put out to tender to interested United States petroleum companies in the area of the Dixon Entrance
off the British Columbia northern coast. Can the Minister say whether that note covered the environmental as well as the sovereignty concerns of Canada, and is he prepared to table that note because it is of such concern to Canadians?


Hon. Gerald Regan (Minister for International Trade):: Mr. Speaker, the actual contents of the note, as I recall, dealt with the issuance of the licences. I would have to examine the note to determine whether the question of environmental concern was included.


CANADIAN SOVEREIGNTY
Donald W. Munro: Mr. Speaker, it seems that the Government is unable to deal with these maritime boundary problems with the provinces, with our neighbours, or with France in connection St. Pierre et Miquelon. Has the Government ever put forward its claims, and the foundations for its claims on the East Coast, the West Coast, the Arctic, and south Newfoundland? If so, has it had a response? If not, why has it not done so?


Gerald Augustine Regan: Mr. Speaker, the Hon. Member is rather global in his examination of territorial boundaries and the underwater area. He may be aware of the fact that negotiations have occurred with France in relation to the underwater boundaries of the St. Pierre and Miquelon area, here in Ottawa, in the past few days. In relation to what he has said about our ability to determine those boundaries, the Hon. Member will realize that, with the extension of territorial limits to 200 miles at sea in all parts of the world, new problems have arisen concerning the territorial boundaries in the underwater area between adjoining countries. Ours is no different from others in that regard. With reference to the Gulf of Maine, the Hon. Member will recall that Canada successfully negotiated an agreement with the United States administration, which the United States Senate then failed to ratify. Under the somewhat quaint Constitution of the United States, that has to occur before a treaty can become effective. That matter is now before the court at The Hague.


SHOE IMPORT QUOTAS
Mr. Bill McKnight (Kindersley-Lloydminster):: Mr. Speaker, I have a question for the Minister for International Trade. The temporary import quota for shoes, which is to expire in November, 1984, has become a matter of great concern between the industry and Canadian consumers. Has the Government made a determination regarding this quota?


Gerald Augustine Regan: Mr. Speaker, we have had extensive discussions in Cabinet on this subject. Yesterday I had consultations with representatives of various segments of the shoe industry. There were further
May 15, 1984

discussions on the matter in Cabinet this morning. I anticipate that I will be able to announce a final decision from Cabinet next Tuesday.


VETERANS AFFAIRS
Mr. Ray Skelly (Comox-Powell River):: Mr. Speaker, my question is for the Minister of Veterans Affairs. The Minister is in possession of a document from the British Government that was declassified after being top secret for 30 years. It indicates that British troops involved in nuclear testing were treated as guinea pigs. The Government willingly tested them under a variety of circumstances which led to exposure to radiation. Canadian troops were present at those tests. Will the Minister undertake to check with the Department of National Defence to determine whether our Government knew that the Canadian troops with those British troops were being treated in the same manner? Did our Government know that those Canadian troops were being treated as guinea pigs in that testing?


Hon. W. Bennett Campbell (Minister of Veterans Affairs):: Mr. Speaker, 1 would like to acknowledge receipt of the document to which the Hon. Member referred. However, the document was only received by my office a half hour ago. Therefore, I have not had a chance to review it. With regard to the second question, yes, I will check.


FUNDING REQUESTED FOR RESEARCH
Raymond John Skelly: Mr. Speaker, today in Ottawa a group of international atomic veterans met with the Minister of Veterans Affairs. Across this country, and in other areas, the plight of that group has fallen on deaf ears. Canadian atomic veterans need financial assistance to put together a case to argue with the Government. They are too small in number. They also need the study which the Minister caused to take place with the University of Ottawa. There is need for an advisory committee to work with that particular study, so that veterans' concerns can be included. Will the Minister undertake to search for funding so that atomic veterans in Canada can organize and put their case effectively to government? Will the Minister consider an advisory committee, made up of atomic veterans and their medical advisers, to provide input into the study which the Minister has commissioned?


W. Bennett Campbell: Mr. Speaker, there are two parts to the Hon. Member's question, the first being the matter of providing funding to veterans' organizations. I think the Hon. Member knows the answer to that question. I have no mandate to provide funding to organizations. Funding for the Department is totally toward the provision of services and benefits to families. In terms of the study, the Hon. Member is aware that it is well under way.
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We expect to receive the results of that study by the end of August. We will welcome any input further to that study that organizations and medical advisers to veterans may wish to make.


THE ECONOMY
Mr. Don Blenkarn (Mississauga South):: Mr. Speaker, in the absence of the Minister of Finance my question is directed to the Minister of State for Finance. The Minister indicated today that there is nothing his Government can do to separate interest rates charged in Canada from those in the United States. In light of that, why can we not have the same employment record as the United States? For example, in full-time employment we are down 4 per cent from mid-1981, and they are up 4 per cent. With regard to investment, we are down 20 per cent and they are up 10 per cent. Why can we not have the same kind of performance? We have their interest rates; why can we not have their economic performance?


Roy MacLaren: Mr. Speaker, the Hon. Member should realize that we in Canada have one of the fastest growing labour forces in the western world. The Hon. Member must realize that, as we create new jobs in Canada, we find that there are more and more people joining the work force, some of whom have traditionally not been members of the labour community in Canada, and others are joining the work force for the first time as the baby boom works its way through the economy.
In addition, as the Hon. Member should realize, we have in fact seen a further increase in employment in Canada. In the month of April employment grew by .2 per cent, a figure which represents about 25,000 to 27,000 additional jobs created in the economy. We are in fact experiencing some net increase in employment levels.


GOVERNMENT POLICY INQUIRY
Donald Alex Blenkarn: Mr. Speaker, the growth in our population and the growth in the number of new entrants to the labour force should increase our country's total productivity. The fact is that the Gross National Product is the same now as it was in mid-1981. It has not grown one bit. The fact is that the rate of full-time employment today is 4 per cent less than it was in mid-1981. The fact is that the American economy is on a roll. The fact is that the Canadian economy is still in a recession.
What policies does the Government have, from a finance point of view at least, which will turn the economy around? What will the Government do? Will it leave Canada to suffer with high interest rates? Is that the Government's entire answer? What proposals does the Government have?

May 15, 1984
Oral Questions


Roy MacLaren: Mr. Speaker, the Hon. Member is simply wrong if he thinks that there has been no growth in the GNP. In fact Canada's GNP has grown, and grown rapidly, in the past 12 months. During certain periods of time it has even exceeded that of the United States. We have experienced very real growth in the total production of goods and services in Canada.
Equally we have seen employment growth of a substantial nature matched, as I noted earlier, by growth in the work force. This is something of which the Hon. Member should be aware. Of course, if the Hon. Member is unaware of them, he should look to the last two Budgets for a clear indication of the policies which the Government is implementing both through a facilitation of private-sector job creation and direct job creation by government investment. This is having a very real and beneficial impact on Canada today.


TEXTILE IMPORT QUOTAS
Mr. Gilbert Parent (Welland):: Mr. Speaker, my question is directed to the Minister for International Trade. I was very interested to note today that the Minister and the Cabinet will be discussing quotas for the shoe industry. May I ask the Minister if such discussions are going on with regard to quotas for the textile industry? Will these quotas be extended, or will they even be curtailed in some way? When can we expect a decision to be made on this issue, Mr. Speaker?


Gerald Augustine Regan: Mr. Speaker, the Hon. Member's question regarding textiles is a much more complex one than the question regarding shoes. The Hon. Member will be aware of the fact that the global restrictions on textiles fall under the arrangements of the multifibre agreement, of which Canada is a signatory along with many other countries.
When supplies of certain kinds of textiles begin coming from a new source, it is necessary in each case for Canada and other countries receiving those textiles to negotiate with the importing country an agreed quota rather than have an uncontrolled flow. The problem is that in the last couple of years there has been a great proliferation of the number of sources from which various types of textiles have been coming. This is a very serious problem, and one which my officials have been addressing by way of negotiations with the importing countries. In most instances we have been coming to satisfactory agreements.


AGRICULTURE
Mr. Jack Shields (Athabasca):: Mr. Speaker, my question is directed to the Minister of Agriculture. Will the Minister
explain to the House why Canadian farmers are forced to pay an average of 30 cents to 40 cents per gallon more for farm fuels than farmers in the United States? What is the Minister doing about this situation?


Eugene Whelan: Mr. Speaker, the Hon. Member is using figures which are different from those we have in our Department. If he used a wide range of figures from the United States, he could come up with nearly anything.
The Hon. Member has failed to point out that he did not ask the same question when farmers in the United States were paying 30 cents to 50 cents per gallon more than Canadian farmers were paying. The Hon. Member did not worry about that situation at that time. He did not mention that we have many kinds of programs for Canadian farmers which do not exist in the United States. We have a crop insurance program, and we have an interest-free advance payment program for farmers. Those kinds of programs do not exist in the United States. We in Canada have all kinds of programs for farmers which do not exist in the United States.
The Hon. Member knows about the National Energy Program. He knows that the premier of his province okayed the National Energy Program and in the last election he said that it was a wonderful program and that he was proud of it.


Mr. Speaker:: The Hon. Member for Crowfoot.


Jack Wendele Shields: Supplementary, Mr. Speaker?


Mr. Speaker:: A short supplementary question then. There are many other Members seeking to be recognized.


Jack Wendele Shields: Thank you, Mr. Speaker. The Minister should be reminded that I represent Canadian farmers and not American farmers.


REQUEST FOR REMOVAL OF TAXES
Jack Wendele Shields: Mr. Speaker, my supplementary question is directed to the same Minister. Will the Minister do something about the situation to which I have referred? The Hon. Member for Vegreville has put a motion before the Standing Committee to remove federal taxes on farm fuels. Will the Minister push that motion through?


Eugene Whelan: Mr. Speaker, I am sure that the Hon. Member is fully aware of the statements that I have made regarding taxes on farm fuels and fuel that is used for food production.


HANNA, ALTA.-WATER SUPPLY
Mr. Arnold Malone (Crowfoot):: Mr. Speaker, my question is also directed to the Minister of Agriculture. I would like to ask him if he is aware of the very serious regional water problem which exists in the community of Hanna, Alberta, both with respect to supply and to quality. Has he signalled
May 15, 1984

the PFRA to take some action? What requests has he made in this regard? Is there some expectation that we might join a provincial program by cost sharing in the important development of a water supply for that community?


Eugene Whelan: Mr. Speaker, I am sure that the Hon. Member is aware that I was in Alberta yesterday and that 1 did meet with the Solicitor for the Town of Hanna who presented a new brief to me indicating what the town wants and how it intends to go about getting it. 1 have been requested to contact the Alberta Minister who is responsible for that program, as well as the former Minister of Transport for the Province of Alberta who, I believe, is now the Chairman of Resources. He has placed a call to me and I hope to return that call to him today. I might point out that there is no agreement with the Province of Alberta for those kinds of programs similar to the agreements we have with the Provinces of Saskatchewan and Manitoba.


Mr. Speaker:: A short question from the Hon. Member for Kamloops-Shuswap.


INDUSTRIAL AND REGIONAL DEVELOPMENT PROGRAM
Nelson Andrew Riis: Mr. Speaker, in the absence of the Minister who is responsible for IRDP, my question is directed to the Minister of State for Finance. I am informed by the Member of Parliament who represents Trail, British Columbia, that the Cominco Corporation has put an application before IRDP for funding to enable it to modernize its smelter and become the biggest and best exporter in the world not only of materials from the smelter but also of technology from the smelter.
There is concern, Mr. Speaker, that so much money has been spent bailing out so many firms in central Canada. Will the Minister use his good offices to intervene and ensure that fair consideration is given to Cominco so that it may receive IRDP funding to modernize its plant?


Roy MacLaren: Mr. Speaker, 1 do not have any details of the proposal described by the Hon. Member opposite. 1 should be glad to look into the question. I am sure that any such proposal will be given every consideration. However, I shall get back to the Member opposite about this question.


SMALL BUSINESS
Mr. John McDermid (Brampton-Georgetown):: Mr. Speaker, my question is directed to the Minister of State for Small
Oral Questions
Businesses and Tourism. In 1981 the now Secretary of State for External Affairs, who was then Minister of Finance, announced with great fanfare a $345 million Indian Business Development Fund. Since that program now falls under this Minister's responsibility, could he tell us how many dollars have been lent from that Fund?


Hon. David Smith (Minister of State (Small Businesses and Tourism)):: Mr. Speaker, a board was established late last fall to develop the criteria-


John Horton McDermid: Two years after the announcement.


David P. Smith: That board was established about two months after my appointment. I do not think that I can be faulted on that point. That board was established to develop criteria. Those criteria were announced about five or six weeks ago. As a matter of fact that board is meeting in Winnipeg this week, and I expect that some of the first projects will be announced very shortly.


Mr. Speaker:: The Hon. Member for Elgin, quickly.


EMPLOYMENT
Hon. John Wise (Elgin):: Mr. Speaker, I would like to direct my question to the Minister of Employment and Immigration. My question is supplementary to one which was asked by my colleague, the Hon. Member for St. John's East, earlier in Question Period, and is with reference to the impact of high interest rates on employment, and particularly on the employment of those young people who are between the ages of 15 and 24.
We know that some $300 million has been assigned to the Career Access Program. It is a good program, and there is no question about that. But in view of the fact that there already exist some 500,000 unemployed young people, as well as an additional 400,000 students unemployed, and in view of the $300 million which is assigned to the Career Access Program, does the Minister honestly think that it will make a serious impact on lowering youth unemployment? I wonder if he could tell me just how many jobs he expects to be created by the program with the $300 million price tag?


John (Moody) Roberts: Mr. Speaker, I did not hear the first part of the question, and I apologize to the Hon. Member. But I do believe that the impact of the Career Access Program will be significant both in terms of providing employment opportunities and providing longer term employment. The major difficulty which young people have, when entering the workforce for the first time, is the vicious circle of not having had work experience. Even though many of the jobs under the Career Access Program may turn out to be short-term jobs-I think
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May 15, 1984
Introduction of Bills
that the majority of them turn out to be longer-term jobs- but, even if they do turn out to be short-term jobs, that will provide the passport of experience which will then enable young people to find more attractive work opportunities downstream.
The difficulty with the Career Access Program is not so much the results, which are good, but the necessity of having the co-operation of the private sector in relation to it. Many companies coming out from underneath the recession, particularly the small and medium-sized businesses, are finding it difficult to provide the overhead costs which participation in the program requires. I will be happy to send the Hon. Member a specific indication of the number of placements we expect, or he might wish to attend the Estimates hearing which will be taking place on Wednesday and Thursday. I could then give him a specific number, if he wishes.



ROUTINE PROCEEDINGS


Mr. Vince Dantzer (Okanagan North):: Mr. Speaker, 1 rise to present a petition signed by 122 citizens of the Mabel Lake community in Lumby, British Columbia.
These people wish to register their objections to the proposed establishment of a rehabilitation centre in Squaw Valley by the John Howard Society with the support of the federal Department of the Solicitor General, Correctional Services Branch.
On behalf of the petitioners, I ask for serious consideration of this petition by the Government.
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*


HERITAGE DAY
Mr. Bill Yurko (Edmonton East) moved: for leave to introduce Bill C-239, an Act to proclaim the first Monday in August "Heritage Day".


Mr. Speaker:: Is it the pleasure of the House that the Hon. Member shall have leave to introduce the Bill?


Some Hon. Members:: Agreed.


William J. Yurko: Mr. Speaker, the purpose of this Bill is to designate the first Monday of August a national holiday called "Heritage Day" and to thus offer to all Canadians an occasion to express their appreciation and their pride in being part of a multicultural nation.


[Stage Direction]
Motion agreed to, Bill read the first time and ordered to be printed.
Mr. Speaker:: When shall the Bill be read a second time? At the next sitting of the House?


Some Hon. Members:: Agreed.


CANADA LABOUR CODE
Hon. Andre Ouellet (Minister of Labour) moved: for leave to introduce a Bill to amend the Canada Labour Code and the Financial Administration Act.


[Stage Direction]
Motion agreed to, Bill read the first time and ordered to be printed.
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*

Hon. Herb Gray (President of the Treasury Board):: Mr. Speaker, I wish to inform the House that there have been consultations among the representatives of the Parties and it has not been possible to reach an agreement pursuant to Standing Order 80 or Standing Order 81 with regard to the allocation of time for second reading stage of Bill C-24, an Act to amend the Financial Administration Act in relation to Crown corporations and to amend other Acts in consequence thereof. Therefore, at the next sitting of the House I shall propose a notion pursuant to Standing Order 82 to allocate one sitting day to the said stage of the said Bill.


Some Hon. Members:: Shame, shame.


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
John Leslie Evans: Mr. Speaker, the following questions will be answered today: Nos. 422, 654, 686 and 787.


Mr. St. Germain: 1.	Did the Iron Mountain Golf Club in Mission, B.C. receive any financial assistance from the Government under the NEED, or any other, program and if
May 15, 1984

so, (a) what was the total amount of assistance (b) was it a (i) loan (ii) forgivable loan (iii) grant?
2.	Did the terms and conditions of the agreement between the Government and the Iron Mountain Golf Club specify the use of such funds and, if so, what percentage went to (a) salaries of employees (b) retire debts or shareholders' loans (c) administrative costs (d) the purchase of new equipment or property?
3.	How many people (a) are employed by the Iron Mountain Golf Club (b) were employed by the club, as a result of financial assistance from the Government (i) what are their names (ii) are any of these people shareholders in the Iron Mountain Golf Club?


Mr. Jean-Guy Dubois (Parliamentary Secretary to Minister of Employment and Immigration):: 1. (a) Financial assistance to the Iron Mountain Golf Club in Mission, British Columbia is being provided under the NEED program and amounts to $1,081,600. (b) A contribution.
2.	The terms and conditions of the agreement between the federal Government and the Iron Mountain Golf Club specify that: (a) 66 per cent or an amount of $712,140 of net project costs is for wages and 6.5 per cent or $71,214 is for employee benefits; (b) None; (c) None; (d) 27.5 per cent or $298,246 is for the purchase of materials related to the improvement of the golf course and the purchase and maintenance of equipment.
3.	(a) 128 individuals are employed by the Iron Mountain Golf Club; (b) 110 individuals are employed by the Iron Mountain Golf Club as a result of assistance provided by the Government; (i) names of project participants cannot be disclosed under the Privacy Act; (ii) there are no shareholders, since the Iron Mountain Golf Club is a non-profit organization.


Mr. McKenzie: 1.	Does the Department of Public Works lease a building in London, Ontario located at 559 Richmond Street for the use of the Department of Agriculture and, if so (a) at what annual cost (b) on what dates was the current lease negotiated and agreed to and on what date does it expire?
2.	Was there a previous lease for this property and, if so, what was the annual cost of leasing the building under its terms?
3.	During what total period did the Department of Agriculture occupy this building and were there any renovations or improvements, paid for by the Department, made during that period and, if so (a) at what total cost, to date (b) under what authority was the expenditure made?
4.	Did the Government conduct any study to determine if there was suitable and less expensive office accommodation prior to renegotiating the lease and (a) if so, what were the results (b) if not, for what reason?


Roméo LeBlanc: 1. Yes, Public Works Canada does hold a lease at 559 Richmond Street, London, Ontario for the sole use by the Department of Agriculture, (a) Total annual rate-$163,000. In addition, the Crown is responsible for all operating and maintenance costs estimated at $85,000 per annum, (b) Current lease term began on November 1, 1983 and terminates on October 31, 1987.
2. The previous lease was held on a net lease until October 31, 1983, at an annual rental of $26,400. The operating and maintenance costs for 1982-1983 amounted to approximately $80,260 per annum.
Order Paper Questions
3.	Public Works Canada has had the subject premises under lease since 1966. (a) Renovation and general improvements to electrical and structural elements amounted to an estimated $200,000 from 1966-1983. (b) All expenditures were made under the authority of the lease agreement in which the Crown was responsible for all repairs.
4.	Public Works Canada conducted a search by means of a public advertisement on May 25, 1983 for existing office space to be used for laboratory purposes for occupancy by Agriculture Canada.
(a)	As a result of the tender, four bids were received and each was evaluated on the basis of: cost; delivery time. Based on client laboratory requirements and the nature of the experiments, the estimated cost of relocation to alternative premises would exceed $2 million for fit-ups alone (not including rent). Further, Agriculture Canada had estimated a cost of an additional $700,000 per year for lost research time.
Although Public Works Canada negotiated at a higher rate for the existing space, a new temporary relocation to alternative leased space until a new facility is constructed, was not technically or economically feasible.
(b)	Not applicable.


Mr. Clark (Yellowhead): 1.	Are members of the Canadian Armed Forces and diplomatic corps required to use the "Child Health Record" announced by the Minister of National Health and Welfare in Parliament on September 20, 1983 and (a) if so, what is the (i) authority (ii) reason for the requirement (b) if not (i) is its use at the discretion of the personnel (ii) for what reason was it introduced?
2.	Does the Government intend the "Child Health Record" to be used by public servants other than those mentioned in part 1 ?


Mr. Russell MacLellan (Parliamentary Secretary to Minister of National Health and Welfare):: 1. No. (a) (i) and (ii)
Not applicable.
(b)	(i) The trial use of the record is entirely voluntary and involves only dependent children aged 16 years and under.
(ii) As follows:
To help parents keep a permanent record of the immunizations, growth and development of their child. Details of serious illness may also be recorded.
To improve continuity of care and prevent duplication of services in families with frequent changes of residence.
To enhance communications between parent, physician, hospital and health personnel and to encourage parents to be more aware of their child's health, growth and development.
2. No.


Mr. Mazankowski: 1. Is there an Advisory Committee on Labour Statistics and, if so, what (a) are its terms of reference (b) is the (i) name (ii) background or expertise (iii) term of appointment of each member (c) remuneration, such as salary or travel

May 15, 1984
Order Paper Questions
expenses (i) do the members receive (ii) did the members receive to date (d) other funding, if any, is provided by the Government?
2. During the fiscal year 1982-83, did the Committee meet and, if so (a) how often (b) how often is it required to meet (c) what matters did it consider (d) what reports and/or recommendations were published?


Mr. Paul-Andre Masse (Parliamentary Secretary to Minister of Supply and Services):: Statistics Canada reports:
1. (a) Terms of Reference: Yes. The Committee's mandate is to provide Statistics Canada with advice on the relevance and effectiveness of its labour data program. The terms of reference include providing counsel on the kinds of statistical information which will be required in the future, advising on analytic priorities, offering guidance on the use of statistical models, and suggesting ways in which Statistics Canada can strengthen its relationships with the labour data user community.
(b)	(i) and (ii) Committee Members: The members have been selected for their expertise and not as representatives of particular communities or interest groups. Current membership is as follows:
Chairperson: Dr. Arthur J. R. Smith. Dr. Smith is an economist with a wealth of experience in both the public and private sectors. He is currently Chairman of Northern Professionals Group. Inc., a past President of the Conference Board of Canada, and former Chairman of the Economic Council of Canada.
Members:
Dr. Janet Norwood. Dr. Norwood is an international authority on labour statistics and the Commissioner of the Bureau of Labour Statistics, United States Department of Labour.
Mr. William Nevins, Chief Economist of the Canadian Construction Association.
Mr. R. Hainsworth, Director of Education with the Ontario Federation of Labour.
Prof. Frank Denton, Professor of Economics, McMaster University.
Prof. Bernard Fortin, Professor of Economics, L'Universite Laval.
Prof. S. F. Kaliski, Professor of Economics, Queen's University.
Prof. Noah Meltz, Director, Centre for Industrial Relations, University of Toronto.
(iii) Each member has been asked to serve a three-year term.
(c)	(i) and (ii) Remuneration: The travel expenses of each member are paid by Statistics Canada in accordance with Treasury Board regulations. In addition, each member is paid on honorarium of $500 per year. To date the members have received their travel expenses of the Committee's inaugural meeting held on January 16, 1984, totalling $1,178 and their honoraria (totalling $3,500).
(d)	Other funding. Statistics Canada has contracted with Northern Professionals Group Ltd., whose Chairman is Dr. Arthur J. R. Smith, for the provision of services in support of the activities of the Advisory Committee. Such services will include the development of materials for meetings, the preparation of Committee reports and analyses of issues reviewed by the Committee and the provision of advice to the Chief Statistician based on the deliberations of the Committee. The total cost of these services, including expenses, shall not exceed $7,500 per annum.
2. (a) Meetings during fiscal year 1982-1983. None. The Committee's first meeting took place in Ottawa on January 16, 1984.
(b)	Frequency of Meetings. It is expected that the Committee will meet twice a year.
(c)	Matters considered. The Committee is an independent body which draws up its own agenda, and the first meeting was devoted to an exploration of topics to be addressed in future sessions. The areas discussed included: occupational employment statistics; labour compensation data in general, and fringe benefit statistics in particular; job vacancy surveys; work sharing statistics; development of a conceptual framework for labour data; flows into and out the labour force; standards of statistical accuracy; small area data; use of models as a source of new statistics.
(d)	Published reports or recommendations. None to date- see 2(a) above.


John Leslie Evans: Mr. Speaker, I ask that the remaining questions be allowed to stand.


Mr. Speaker:: Shall the remaining questions be allowed to stand?


Some Hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Crosbie:
That this House is of the opinion that the Government of Canada can manage the economy in a way that would allow us to have lower interest rates than Canada now has and that we can have greater independence in interest rate policy despite the Government's failure to meet its commitment to so manage the economy.
Douglas Grinslade Lewis: Mr. Speaker, when the House rose for lunch I was at the point in my speech in which
May 15, 1984

I wanted to review the chaos that the policies of the present Liberal Government has brought to the housing sector.
Since the time of the Budget in February, mortgage interest rates have risen from 12.5 per cent to 14 per cent. That will add $50 a month to the cost of servicing a $50,000, 20-year mortgage. That amounts to $12,000 over the life of a mortgage.
The climbing interest rates have affected the demand for new home ownership and have reduced the attractiveness of building rental housing. In April, 1984 housing starts declined to 126,000 a year on a seasonally-adjusted annual basis. In April, 1983 the rate was 179,000. The important thing to remember about the decline in housing starts is that for every housing start that is lost, 2.5 jobs are lost in Canada. In construction, the unemployment rate in April was 22.5 per cent on a seasonally-adjusted basis or 27.3 per cent on an unadjusted basis.
The real tragedy of the chaos in the housing sector the Liberal recession was what it did to real people: the people who were forced to foreclose; the people who went through power of sale proceedings; the people who were forced to sell their homes; the builders who stopped building and the people who worked for those builders who stopped being employed. I suggest that during that time we saw social unrest in Canada, disappointment, heartbreak and chaos.
The tragic thing is that during the time of high interest rates there was no remedy from the Liberal Government. There were no measures adopted by the Government which would protect Canadians from high interest rates. We in the Progressive Conservative Party continually call for measures by the Government which would assist Canadian home owners. We continually demand that the Government stop bail-outs and come to the assistance of people with homes.
We noted with interest the remedies presented in the Budget. The Liberal Party now pretends to be interested in the Canadian home owner. We suggest to you, Mr. Speaker, that it pays lip service only. What it promised in February has not come about by May 14. For example, in the Budget of February, mortgage rate protection insurance was promised. In mid-March the legislation was promised in a few weeks. Two weeks ago it was promised at the end of May. I suggest to you, Mr. Speaker, that if the Liberal Party were really interested in the Canadian home owner, it would bring forward a measure to protect the Canadian home owner.
Let us look at what the Liberal Government did promise. It promised mortgage interest rate protection, and I am quoting from the Budget papers, "based on protecting the interest rate which was the market interest rate prevailing for the relevant mortgage term at the time the mortgage protection is taken out". In other words, Mr. Speaker, protection of home owners with mortgages as at the date that they file their application is envisaged in the Budget.
As a result of the questions which the Progressive Conservative Party asked in this House, the Government has now
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backed down. It has watched mortgage interest rates increase from 12.5 per cent to 14 per cent and it has backed down. It has done that only because this Party brought to its attention the fact that if the Government stuck to what it said in the Budget papers, it would cost Canadian home owners 1.5 per cent on their mortgage protection. We in the Progressive Conservative Party take great pride in the fact that we have forced the Liberal Party to realize the damage which is being done to Canadian home owners by the very failure to bring in legislation-not to promise it, as was done in the Budget.
The Liberal Party also promised in the Budget to repeal Section 10 of the Act so that people who are now renewing their mortgages at high interest rates will have an opportunity to prepay their mortgages during the course of their mortgage term. I suggest to the Government that it is an interesting concept which would find a fair bit of favour on this side, providing we would get a chance to see the mechanics of it. Once again, Mr. Speaker, I suggest to the Government that the Canadian people are fed up with promises. They want to see the legislation.
With respect to the mortgage rate protection program, I suggest to the Government as someone who has practised real estate law for some time that I have a lot of concern for the mechanics of it. How is it going to work? The Government has told us: "Yes, we are going out to visit the banks. We will see five bank presidents, and based on what they tell us we will draft the Act". That is just not good enough for us in the Progressive Conservative Party, Mr. Speaker. We are interested in how that Act operates at the street level. Therefore, we will go out and talk to real estate lawyers and to real estate agents, because those are the people who deal with the Canadian home owner and the Canadian consumer. The Government worries about how it is going to go down with the banks, but I tell the Government that we in this Party have no concern about that. We are concerned with the people at the gut level, the people who are buying homes, the people who are being hurt by the policies of this Government.
Third and finally, Mr. Speaker, something else which the Government has only talked about in the Budget is getting into some set-up where we have long-term mortgages. I would offer the Government every encouragement to do that. However, I ask once again, where is this legislation? Where is this program? Everyone knows that is one of the problem with which Canadians are faced. They used to have 25-year mortgages, then the term went down to five years. Now they are looking at three-year, two-year, one-year and six-month mortgages. This is because of the failure of the Liberal Government to act. If it wants to put stability into the mortgage market, into Canadian home owners' minds, it will bring forward that legislation and it will bring it forward quickly so this Party has a chance to look at it.
In closing, Mr. Speaker, I listened to the Minister of State for Finance (Mr. MacLaren) state, and try to prove by the very statement, that the Government has no ability to control interest rates or to build a safety net to help those people affected by high interest rates. Well, there is just no one out

May 15, 1984
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there who believes the Liberal Party on that issue or any other issue.


The Acting Speaker (Mr. Herbert):: There follows a ten-minute period for questions or comments. If there is no one who wants to ask a question, we will go to debate.


Mr. Douglas Fisher (Mississauga North):: Mr. Speaker, the other day in Saskatoon, the Minister of Agriculture (Mr. Whelan) said that if he were elected Leader of the Liberal Party he would see it as his job to put shoes on the baby and bread on the table. It seems to me we have seldom heard such a clear and succinct expression of the responsibilities of a Liberal Government. It seems to me that the expression of that sentiment sums up in one short statement the precise job we have to do as Liberals in government. It is our job, Mr. Speaker, to counteract unemployment, to cushion the most needy in our society, to stimulate job creation, to continue building a personal security network, and to encourage creative Canadians with new ideas for our future economy. We have done that, Mr. Speaker, through some of the toughest four years since the last great Depression. The Liberal Party has set those goals as our obligation, and we have followed and accomplished those goals.
The Tory attack on this record which we have been hearing today is a Tory attack on government help for business, for the unemployed and for those in greatest need. In the Tory speeches, particularly the speech just made by the Hon. Member for Simcoe North (Mr. Lewis), there is the impression that somehow we could insulate ourselves from the United States. In fact, that is the very spirit of the motion before us today. Since no one else around the world has been able to accomplish that, I have listened with great interest to see how the Tories would do it in our country. I have not heard any concrete proposals, although I do intend to return to the idea suggested to us by the Hon. Member for St. John's West (Mr. Crosbie) earlier in the debate.
I want you to know, Mr. Speaker, that the Tory ideas presented here today are wrong. The world currency market is a fluid market. The United States is the greatest player in that market, a huge magnet, and we would be misleading Canadians if we told them that we could indeed follow the warped policies which have been presented to us today by the Tories. In fact, from now on, when we refer to the Tories we can call them "the little blue rump of the NDP". For years we have heard the New Democratic Party propose these ideas, which have been laughed at by people, including the Hon. Member for Etobicoke Centre (Mr. Wilson). That Hon. Member must be cringing at this motion today. The Hon. Member for Mississauga South (Mr. Blenkarn) sitting over there asks questions about setting up barriers between Canada and the United States. He knows better.


John Horton McDermid: When was that?


Douglas Glenn Fisher: I heard his question addressed to the Minister of State for Finance (Mr. MacLaren) today. What a terrible question that was. It left the impression that Canada could opt
out of the world. The Hon. Member for Mississauga South knows better than that.
On the weekend, Mr. Speaker, The Toronto Star ran a little article on whether Canada could lower interest rates. One official from the Ontario Government said yes. I needed guidance so I read that article with interest. I know the Ontario Tories are often responsible people, unlike the Hon. Member for Mississauga South who will say anything for a vote. This individual is reported in The Toronto Star as saying that we could lower our interest rates by three percentage points.
I read through that article with interest. I read his prescription for lower interest rates. At the end of the article I found that there were only two small price tags to pay for that. The first was a much lower Canadian dollar. The second was a little thing which he called a new tax on foreign investment portfolios which would, in his understated way, undoubtedly spring up if we were indeed to create a huge incentive to move our money out of the country. This man was going to tax that money out in order to prevent people from moving it. That is merely another method of currency control. That method would spring as many leaks as all the other plans which have been tried over the years. Let us dismiss this motion put forward today as the kind of pre-election politicking and hypocrisy that it really is.
We know that the Hon. Member for Etobicoke Centre was right two years ago when interest rates in Canada and the United States were up around 20 per cent. At that time he said that Canada could not do anything different from the United States. That is still true today. That kind of honesty should be the real Tory policy rather than the sort of hypocrisy we have heard here.
Supposedly there are ideas in this motion about the Liberal management of the economy. To this point I have described this management as humane, concerned and activist. Mr. Speaker, there are several characteristics of that management of the economy which I would like to discuss today. In our record you have seen a partnership between government and the private sector. That partnership is designed to create jobs and industrial expansion. That partnership was there in the recession, Mr. Speaker, when we provided help for vital but faltering industries such as Chrysler, Massey-Ferguson, Dome and the fishery. All of those industries came to the Government and with pride and compassion it was ready to respond and support them. We used the power of the Government to soften the blow of the recession and to stimulate the rebirth of our economy.
Just listen to the way we have helped small business, for example, Mr. Speaker.


Donald Alex Blenkarn: Tell us about it. Tell us about the bankruptcies.


Douglas Glenn Fisher: I will read the first sentence of a report from the Department of Regional and Industrial Expansion. "The
May 15, 1984

number of loans to small businesses under the federal Government's Small Businesses Loans Act increased to 25,696 in 1983, a jump of almost 49 per cent over the 17,254 loans made the previous year." Mr. Speaker, we all know that under the Small Businesses Loans Act government and business act as partners to build new businesses and new business expansion. There was an increase of almost 49 per cent in one year in that partnership. That is the way to be an active, concerned government.
The Hon. Member for Mississauga South (Mr. Blenkarn) is laughing. He thinks it is funny that government should be involved in helping.


John Horton McDermid: No, he is laughing at you.


Douglas Glenn Fisher: Let us look at the special recovery projects through which we have helped the economy come out of the recession. There was $4.5 billion committed to the special recovery projects in April of last year. This was not designed as a permanent intervention into the economy but as a onetime shot in the arm. It was aimed at our vital, weaker industries. It was, as well, a way to encourage our big new industries of the future.
Let us look at these specific details. With regard to tourism, we are building a new marina in Mississauga South. We have run an ad campaign right across the northern United States and Canada to develop tourism and to encourage people to spend their money in Canada. With regard to housing, there is the $3,000 grant for ordinary home owners. There is the social housing program which has built over 120,000 social housing units from coast to coast. There is a new mortgage insurance program on its way.
With regard to construction, in the city of Mississauga there is over $12 million of construction aid going into the Pearson Airport. There is assistance for the City of Toronto at Harbour Front. There is a railroad underpass being constructed in Mississauga North at Derry Road which is near Brampton-Georgetown. This story is repeated time and again in riding after riding across Canada as the Government has reached out to help construction, housing, tourism and other weaker sectors in our economy.
With regard to the promising sectors of the future, look at how we have spent our defence dollars over the last four years. The CF-18 program and the frigate program required huge investments of billions of dollars. We required our foreign suppliers to spend their money in Canada because we wanted to keep that money at home and, more importantly, we wanted access to technology and ideas of new developments in these vital sectors. In my city people who build computers, run machine shops, work in exotic metal or are in electronics businesses have all flourished under this Canadian purchase program. The same policy has been helping with the radar improvements program in Transport Canada. The new contract just given to Raytheon will give subcontracts to businesses from coast to coast. The coastguard icebreaker program, the centres of excellence program and the DIP program
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in defence are all examples of the spending of taxpayers' money in Canada in order to get the benefit for our economy and to share in the new technology.
The first point I must make, Mr. Speaker, is that there is a partnership between business and the Government. This partnership has cushioned business. It has helped to revive and rebuild business. This partnership is encouraging industry and new jobs.
The second point I would like to make about the management of our economy, Mr. Speaker, is that we have encouraged continuous personal security through some of the toughest times I have seen in the country. In the recession Canada was one of only two countries which refused to cut back on levels of personal security. In fact, we expanded it through our commitment to job creation, through job sharing, through the Canada-Ontario Employment Development Program and similar programs from coast to coast, through Summer Canada, Canada Works and a host of other job-creation programs aimed at people who needed help in the short term right away. During the recovery we have continued this commitment to personal security. We have continued it through our commitment to medicare and its improvement. We have reformed our pension plans.


Arthur Jacob (Jake) Epp: How?


Douglas Glenn Fisher: We will have increased Guaranteed Income Supplements by over $50 a month by the end of this year.


John Horton McDermid: How did you reform the pension plan?


Douglas Glenn Fisher: That is a renewed commitment to personal security along with the rebuilding of our economy.
I hear the Member for Provencher (Mr. Epp), the Member for Brampton-Georgetown (Mr. McDermid), the Member for Mississauga South and the Member for Kamloops-Shuswap (Mr. Riis) all yelling out. I would encourage you, Mr. Speaker, to ask them to rise and inject some positive ideas into this-


Arthur Jacob (Jake) Epp: Mr. Speaker, I rose on a point of order.


The Acting Speaker (Mr. Herbert):: The Hon. Member for Provencher (Mr. Epp) on a point of order.


Arthur Jacob (Jake) Epp: Mr. Speaker, I will wait for the Hon. Member to finish his comments. However, I do intend to rise and ask him a couple of questions.


Douglas Glenn Fisher: Mr. Speaker, that is unusually polite of the Hon. Member. I appreciate his intervention, unnecessary though it was. It is typically unrevealing of what he really thinks or means.
The third point I would like to make, Mr. Speaker, is that we intend to build our recovery on a strong base across the country. That is why we introduced the six and five program two years ago to help get rid of inflation in our economy. That is why in the summer of 1982 we passed the National Training Act in order that young and unemployed people would have access to retraining. That is why in trade we put an emphasis

May 15, 1984
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on Canagrex, the Export Development Corporation, and the new aid trade scheme.


John Horton McDermid: That is why I am supporting Jean Chretien.


Douglas Glenn Fisher: We put an emphasis on Canadian ownership. That is why we brought in the National Energy Program and the joint spending in defence programs which I described a few minutes ago. That is why we have refused to buckle Tory demands that we throw away FIRA and that we simply stand at the door and toss our money out to foreigners.
We have improved our transport system. We are seeing the improvements now with our air deregulation plans and we saw it in rail with our upgrading of VIA and the Crow rate.


Arthur Jacob (Jake) Epp: You cut VIA.


Douglas Glenn Fisher: I looked at the list of priorities provided by the Hon. Member for St. John's West (Mr. Crosbie). They revealed nothing more than the traditional Tory love of money, a pandering to the provinces, a willingness to bow and scrape to any foreign influence, and a desire to run away from the kind of constructive partnership that I have described between the Canadian Government and the Canadian people.
Liberals put people first. We use the Government to soften outside blows.


Donald Alex Blenkarn: Liberals put people out of work.


Douglas Glenn Fisher: That is why we have refused to cut back our social security program during the recession period. We use government to encourage new ideas, and that is why we put in new tax credits for research and development. We use government to build new social security programs that are adequate to meet the future needs. That is why the last Budget brought in an emphasis on pension reform.
Let us go back to the motion that is in front of us. Let us look in detail at the Tory comments that some magic influence could somehow lower interest rates in Canada. All of us know that the Americans are experiencing the economic phenomenon known as crowding out. Their private and public sectors are competing heavily for the smaller pools of available capital that they have in that country. Their government spending is not like our government spending. It is not going in a recycled way back into their economy. Their spending is not dominated by transfer payments to individuals or to other governments. Their spending increases have been directly competitive spending increases in areas like defence. Second, we know that in the United States they have a much smaller pool of available personal savings.


Donald Alex Blenkarn: Nonsense.


Douglas Glenn Fisher: The personal savings rate in the United States, on a per capita basis, is almost half of ours.


Donald Alex Blenkarn: Absolute dribble.


Douglas Glenn Fisher: Canadians are saving well over 10 per cent of their available income.


Donald Alex Blenkarn: Apples and oranges.


Douglas Glenn Fisher: Again I hear the Hon. Member for Mississauga South (Mr. Blenkarn) yelling. Again I invite him to get up and offer his own ideas in a constructive way in a few minutes.


The Acting Speaker (Mr. Herbert):: Order. I do suggest that we hold off for another two or three minutes. Members will have an opportunity to put questions. The Hon. Member for Mississauga North (Mr. Fisher).


Douglas Glenn Fisher: We know that in the United States the personal savings rate is almost half of ours. They have a higher rate of absolute spending and a lower personal savings pool on which to draw on a per capita basis. That has been pushing up their interest rates. The kind of competition that exists in the money markets in the United States has not been experienced here, but it has been affecting our interest rates because the United States is such a huge magnet on our interest rates.
I see you signalling me that it is time to finish, Mr. Speaker. I would like to take a look at some areas where I believe we should be putting some of our efforts in the future. I would emphasize a continued development of Canadian trade. I agreed with the Hon. Member for St. John's West when I heard him say that earlier. I believe that every Canadian recognizes that trade has been a vital part of our economic recovery. We have seen some particularly strong performances in that area over the last couple of years. It should continue as a high government priority.
I would personally continue to emphasize tourism. We run a deficit in this area that is too big. Being in a northern country, of course our people want to go south to Florida, the Caribbean and Mexico in the winter. But we must find ways to counteract the attractiveness of those areas in order to keep our people here in Canada and to draw Americans into this country so that we can turn a tourism deficit into a tourism surplus.
I would continue to emphasize the high technology and joint production that we have seen in such areas as defence spending programs. I believe that we not only need to share the technology and to offset the costs, we also have a far too great domestic deficit in that area. We are importing too much for our own good. We need to start sharing the technology, developing our own industry, and then exporting our own goods.
Finally, I agree that we need to lower the deficit. Later this year we will be introducing some new taxes at the federal sales tax level, but I do not believe that we need to lower the deficit on the backs of the poor. I do not believe that there is a magic formula that we can use to slash the deficit. It must be lowered carefully. Government spending must be reviewed, which is our obligation. At the same time such a review must be targeted and conducted with an eye on the impact of the cut on the lives of ordinary citizens. Those who stand up here and
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say that they would cut the deficit by some blanket amount are wrong and insensitive.
Those are some of the positive steps we have taken for our economy. I look forward to hearing some of the ideas of some of the hecklers on the other side.


The Acting Speaker (Mr. Herbert):: There follows a ten-minute period for questions and comments.


Arthur Jacob (Jake) Epp: Mr. Speaker, the Hon. Member who just resumed his seat used as his financial guru the Minister of Agriculture (Mr. Whelan) and referred to his statements regarding shoes on babies and food on the table. Does he also agree with the statements made by the Minister of Agriculture last weekend as to what the Government should do about interest rates?


Douglas Glenn Fisher: Mr. Speaker, the Hon. Member has me at a disadvantage since I am an admirer but not a word-for-word disciple of the Minister of Agriculture (Mr. Whelan). I do not know what he said last weekend about this. However. I would rather put shoes on the baby and bread on the table than follow the advice of the Hon. Member for St. John's West who would be mean, nasty and toughminded and who is too frightened to expose his ideas to public debate.


Arthur Jacob (Jake) Epp: Mr. Speaker, I would like to enlighten the Hon. Member on statements that his own Ministers make. On the weekend, the Minister of Agriculture said that he would cap interest rates. Does the Hon. Member subscribe to that philosophy?


Douglas Glenn Fisher: Would I do that? The whole point of my speech has been that 1 do not believe we can do that.


John Horton McDermid: Mr. Speaker, I have a question for the Hon. Member for Mississauga North (Mr. Fisher). Who took the shoes off the baby and who took the bread off the table? That is what 1 would like to find out.


Douglas Glenn Fisher: Mr. Speaker, I am sure that this is a topic that we will hear debated during the election at great length as people attempt to lay blame for the recession. I have no doubt that people would like to do that.
One of the recurring themes in my answer will be that people who attempt that sort of deficit cutting, slashing and hacking that was proposed by the Tory Party during those dark days would have made our situation far, far worse.


John Horton McDermid: During the Hon. Member's speech he mentioned something about not reducing the deficit. Do I take that to mean that he disagrees with the Hon. John Turner who said that he could slash the deficit by $15 billion within a three to five-year period? Does he disagree with that?


Douglas Glenn Fisher: Mr. Speaker, I am pleased to see that the Liberal leadership race has attracted such a wide range of interest. The fact that it has reached the Hon. Member for Brampton-Georgetown (Mr. McDermid) shows that it has indeed been a successful campaign.
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The Hon. Member can check the "blues" or Hansard, but I said in my speech that I would lower the deficit. 1 believe that we can do that in three ways. First, we can do it by making the economic pie larger, which will simply increase government revenue. I am sure that we both agree about that.
Second, we can increase government revenues by increasing taxes. The Member for St. John's West said that this morning. As the Hon. Member knows, that will happen in the fall when some of the increases in federal taxes, particularly the federal wholesale tax, come in.
Third, I believe we can reduce the deficit by reducing spending, but only very carefully. That is what I am trying to emphasize to the Hon. Member. Some of that spending will decrease automatically as demands for unemployment insurance and as demands on the Canada Assistance Program and some of the other social transfer programs decrease. We have an obligation obviously to decrease it beyond that, but in order to do so we must be very careful and sensitive to the needs of the individual.


Mr. Crouse:: Mr. Speaker, I wish to address a question to the Hon. Member for Mississauga North (Mr. Fisher). I enjoyed his comments in the House. However, I want to refer him to an article which appeared in the April 30 edition of Fortune. In that issue there is a table listing the world's largest borrowers. Fortune magazine lists Canada as owing foreigners an amount equal to 34 per cent of its Gross National Product. This puts Canada ahead of France, whose faltering economy was the basis of the article. It also puts Canada ahead of Argentina, which owes foreigners an amount equal to 30 per cent of its Gross National Product.
In terms of its external debt, Canada is described as a third world country in a report on Canada's foreign debt as prepared by William Mackness, Vice President and Chief Economist for the Bank of Nova Scotia. Does the Hon. Member for Mississauga North agree with Mr. Mackness' comment on our economy?


Douglas Glenn Fisher: Mr. Speaker, the Hon. Member is far more well read than I. I congratulate him for his wide source of information and obvious knowledge. 1 am told by my learned colleague here who is the Parliamentary Secretary to the Minister of Finance (Mr. Ferguson) that of the Government of Canada's obligations about 20 per cent are off-shore and 14 per cent are owed to entities such as the Ontario Hydro and provincial governments. I presume obligations to Hydro Quebec or Ontario Hydro would be fully secured loans.
Second, I would take a look at the credit ratings of all these borrowers. They seem to be in the top category. We do not have the World Bank demanding that we reschedule our loans. We seem to be able to meet our obligations quite comfortably and remain in the very highest credit category.
Third, I point out to the Hon. Member that, despite the size of our deficit-in fact I claim because of it-and because of the strong stimulation of the economy, Canada's recovery has

May 15, 1984
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begun on a sound footing and is now carrying on reasonably well. If we take a look at our high credit rating, at the willingness of people to continue lending to us and at the positive reactions in our own economy, we would have to find that the Hon. Member is perhaps stretching the point a little.


Donald Alex Blenkarn: Mr. Speaker, my question is for the Hon. Member for Mississauga North (Mr. Fisher). In his criticism of the Opposition motion today, is he aware that the motion uses the same words as those spoken by our Prime Minister (Mr. Trudeau) on February 10, 1980?


Douglas Glenn Fisher: Sorry, Mr. Speaker?


Donald Alex Blenkarn: Mr. Speaker, I asked the Hon. Member for Mississauga North whether he was aware that the motion today uses the same words as those spoken by our Prime Minister in Toronto on February 10, 1980.


Douglas Glenn Fisher: Mr. Speaker, I was not aware that the Right Hon. Member for Yellowhead (Mr. Clark) said that about his own Government in December. Is that what the Hon. Member is trying to tell us, that the former Prime Minister felt that his Government was falling apart at the seams economically? I am sorry but I am a little confused about the advice the Hon. Member is giving to me.


Donald Alex Blenkarn: Obviously, Mr. Speaker, the Hon. Member for Mississauga North does not even know who the Prime Minister of Canada is. That is how competent he is. That is where he stands with his Party. I understand, Sir, that he is going around the country wearing a red jacket and that type of thing. He can do that for a while. But I was wondering whether he could tell us why, if interest rates are commanded in Canada by the United States, our employment is not at the same level as in the United States. Why can we not have the same kind of growth as is taking place in the United States? For example, in investment in machinery, ours is down 25 per cent from 1981, while that of the Americans is up 10 per cent. In business investment, ours is down 20 per cent while that of the Americans is up 10 per cent. Why are the Americans on an upward roll? Is it because they manage their economy sensibly? Is it because they do not have the wonderful National Energy Program and FIRA? Is it because the Americans have a government that pays attention to business?


Douglas Glenn Fisher: I will be very brief, Mr. Speaker. This question was asked during Question Period almost word for word of the Minister of State for Finance (Mr. MacLaren). I know that the Hon. Member for Mississauga South (Mr. Blenkarn), much as I love him, requires a certain degree of repetition before he remembers certain things. He fits Chairman Khrushchev's perfect description that repetition is the mother of all learning. In his case, that applies. I have to tell you, Mr. Speaker, that the Canadian economy has generally recovered past the 1981 levels. The Hon. Member should listen the next time when a Minister of the Crown gives him that assurance.


The Acting Speaker (Mr. Herbert):: We shall now continue debate. The Hon. Member for Huron-Bruce.


Mr. Murray Cardiff (Huron-Bruce):: Mr. Speaker, I am pleased to have the opportunity today to add my thoughts and comments to this discussion and to remind the Government one more time of the effect that its mismanagement has on the economy and what it is doing in areas of Canada, such as Huron-Bruce. My riding is like many across this country in that it faces similar problems.
The speaker who preceded me, the Hon. Member for Mississauga North (Mr. Fisher), talked of many partnerships the Government has had with various groups in Toronto and across the nation. However, he failed to mention anything about the partnerships with agriculture. One thing is certain. We have to keep reminding Canadians that unless we have a strong a gricultural community, unless we have food, partnership means nothing for those people. Canada's food producers have been doing amagnificent job not only for domestic consumption but also for export. In particular, I would like to discuss the way in which the Government's lack of a strong economic policy is forcing Canadians to accept higher interest rates than they would have to accept if the economy were stronger. Through the Government's high deficit and its inability to strengthen our dollar against the American dollar through increased exports and equity capital inflows, the Government is forcing itself into a position in which it must follow the American interest rate policy.
This should not have to be the case. Canada should be able to form its own interest rate policy. We have the wealth and we have the resources. We should not have to suffer made-in-America interest rates. We should be able to strengthen the dollar and reduce the deficit on our own. By doing that, we can lower interest rates in comparison with other countries rates.
During recent years, high interest rates on farm credit have greatly affected the profitability and even the viability of farm enterprises. At a time when many farms have experienced a declining cash flow due to the decline in commodity prices and the increase in farm costs, interest rates have been a major factor in increased farm bankruptcies, foreclosures and forced sales. They have also been a cause of family distress in farm communities. The increased rate of farm bankruptcies is the most noticeable indication of the harmful effect of high interest rates. By the end of March, 163 farmers had declared bankruptcy this year compared with 115 during the same period a year ago. These figures do not include voluntary liquidations, of which there are probably that many again. This is something of which we take no account but of which we are aware.
While the Government keeps insisting that farm bankruptcies are not that numerous, considering that there are more than 300,000 farmers in Canada, many well respected agricultural economists argue that the number of bankruptcies of which the Government is aware is minimal when compared with the large numbers of undeclared bankruptcies. The Farm Credit Corporation estimates that a full 15 per cent of farmers are likely experiencing financial difficulty.
May 15, 1984

Bankruptcies are not the only problem created by high interest rates. Many farmers are forced to work full time off their farms while they continue to farm just to keep up with their mortgage payments. Many times members of their families are working with machinery even though they are too young to be doing so. However, with their commitment to agriculture, this is the only way they can carry on and perhaps meet their mortgage payments as well as their other expenses.
Even when there is no immediate threat of bankruptcy or bank foreclosure, high rates of interest on both short-term and long-term loans force large numbers of farmers to operate at far less than a fair return or at a loss on their investment. If they were to break even, many of them would be happy at the present time, given the general economy, with their equity declining and their losses becoming greater. However, food producers are generally unable to pass on to consumers their higher interest costs, so it is very difficult for them to adapt to rising interest rates.
Agriculture is a major building block in our national economy. For it to be viable, we need a strong national economy which will allow lower interest rates. Lower costs of money will not only help farmers but will provide relief ot all producers and consumers in the country.
A fact which is often ignored is that agriculture does not exist in a vacuum. Assistance to farmers and a recognition of their inability to handle increases in interest rates will help all Canadians. Lower interest rates to farmers and in fact to all Canadians will help small businesses, small communities, consumers in general, as well as small towns and cities. The hundreds of firms which manufacture machinery, chemicals and numerous other farm inputs would benefit if more farmers could maintain their existing farms or start up new ones. Many farmers would just like the assurance that they will be able to hang on to what they have. For retiring farmers it is very difficult to find new purchasers. The small communities which support the agricultural sector by providing consumer goods for sale would be more viable if agriculture were made more viable.
The point which 1 am trying to stress is that farmers are not just producers. They are very important consumers as well. They buy manufactured goods, often in the form of very expensive farm implements. They buy clothes and food which they do not produce. They buy farm fuels and automobiles. The list goes on and on. If such a large sector in the economy as the agricultural sector is forced into a situation where it is unable to purchase the consumer goods it requires, the ripple effects throughout the rest of the economy will be enormous. It has and will continue to affect small communities which are already shrinking in size.
A declining agricultural sector would also have a huge impact upon our exports. Agriculture now represents about 40 per cent of the Canadian economy and accounts for 10 per cent of our exports. We should be able to improve our export position. We have the ability to increase production so as to
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become even more internationally competitive, but the economy must be strong if we are to do that. Agriculture has tried to serve better the international need for food. Our farmers have done a great job in expanding production and trying to remain competitive. However, they are being forced into uncompetitive positions because of the continuing lack of concern for the fact that farmers cannot indefinitely produce food for Canada and the world at unprofitable rates of return or at losses in many cases.
The Government speaks about finding new markets throughout the world, in the Far East or wherever. It talks about the need to expand agricultural exports, but it does not seem to realize or care that in order to expand our agricultural exports farmers have to be viable and have to be able to compete internationally on international terms. If our goods cost more to produce than those of the European Economic Community, for example, we cannot compete. With interest rates being a major input cost to Canadian farmers, any increase will further erode the comparative advantage they might already have.
Much of our recent trade performance has been disappointing. In 1968, Canada exported more than Japan. Today, Japan's share of world trade is twice that of Canada. We have fallen from fourth to eighth place in world ranking and continue to fall. With that decline, we lost jobs and prosperity.
While agricultural exports are not the only exports with which the Government should be concerned, their importance to our over-all balance of trade cannot be overlooked. Agricultural exports, particularly of western grain, are a major foundation of our national economy. They cannot continue to be eroded as they have been in the recent past. High interest rates and the state of the economy in general will not only hurt individual farmers; they will hurt all Canadians by hurting our balance of trade.
I urge that the Government examine seriously the effects of its high interest rate policy on everyone, not just on urban people. Agriculture is one of our most valuable natural resources. It must have the support of the rest of Canadians in times of economic difficulty. The Government of Canada, which represents the people of the country, is letting down the agricultural community. In so doing, it is letting down all Canadians who, I am sure, recognize how crucial it is to maintain a strong agricultural base.
I will turn now to the specifics of the Government's handling of those issues which most affect farmers. The Farm Credit Corporation recently increased its interest rates on loans to farmers from a flat 13 per cent to 14 per cent for a five-year loan and to as high as 15 per cent for a 10-year loan. I sympathize with the field workers of the FCC who have to discuss financing with farmers and food producers and tell them that the rate is 14 per cent or 15 per cent. That is not offering help. It is only offering a short-term existence until something else comes along.
I asked the Minister of Finance (Mr. Lalonde) how he could accept or justify this increase at a time when farmers are facing more serious difficulties than other groups. The Govern-

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ment claims that the economy is recovering, but the bankruptcy figures which I mentioned previously show that certainly the economy in rural areas is not much to get excited about. The Farm Credit Corporation and other lending institutions are moving on powers of sale, probably more than we have ever experienced before.
1 asked the Minister of Finance why the Farm Credit Corporation was charging 14 per cent on five-year loans when banks were changing farmers 13.5 per cent in the same circumstances and when home owners in the City of Toronto were obtaining mortgages at rates as low as 13.25 per cent. At the same time, five-year government bonds only pay 12.5 per cent. The Government pays 12.5 per cent for its money, then turns around and lends it to farmers at 14 per cent for the same length of time. I am alarmed by these facts because they indicate that farmers are on a lower level of priority than their urban friends. The Government seems to feel that it can keep that situation as it is.
The Minister of Finance responded in the House by saying that I had not checked my facts and that the rates charged by FCC were determined by how much the Government spent for its loans. He did not listen to me when I told him that the Government was not paying 14 per cent for five-year money. Also I was told in the House that the FCC was not making much profit. It should not be making a profit at all. Its mandate is to provide affordable financing to Canadian agriculture. I am generally alarmed over the state of the economy and over a situation which seems to be taking us back down the road toward drastic increases in interest rates.
We keep hearing that the increases in interest rates over the last while are not significant. We are told that they are so minor we have no reason to worry. The Government appears to be doing nothing to allow the Canadian economy to expand so as to become strong enough to have a more independent interest rate policy. We are told that nothing can be done about interest rates in Canada if American rates rise. We should be able to lower interest rates in themselves. The Government should be able to recognize that if interest rates do not come down to affordable levels, the country will be in a major crisis.
I have mentioned that the Minister of Finance seemed uninformed and unconcerned about the increase in FCC rates. I should also add that he appeared completely unwilling to reintroduce the interest rate rebate program which provided relief for many farmers during the last recession. Apparently he feels that such a program will not be necessary unless interest rates are over 20 per cent. I think he is wrong. When Ontario farmers alone are in arrears to the Farm Credit Corporation for $34,200,000, there is a necessity for some program of relief.
Another way in which the Government could help the agricultural sector right now is by swift action on the agribond issue. Again I must return to the biggest concern of all. While farmers would welcome and drastically need lower
Farm Credit Corporation rates, an interest rebate program and the agri-bond or some similar measure, the most important factor is a responsible management of the economy which would allow all sectors of the economy to grow and to be profitable.
The Government must be prepared to make the sort of difficult decisions necessary in order to get our economy on track. It must strive seriously to decrease its deficit by a serious re-evaluation of its priorities. There are many areas in which spending can be cut. There are many areas in which Government expenditure can be re-channelled so that it is more productively spent. This Government can and must strengthen the economy so that all Canadians do not have to be beholden to American policy. This Government must strengthen the dollar by expanding the economy so that it does not have to keep driving up interest rates in order to maintain the value of the dollar.
There is one last point I would like to make about agriculture and the impact of the economy on it. There is a great push these days for stabilization. Stabilization is a crucial factor in the agricultural sector and must be available and practically administered, but stabilization should not be used as a substitute for careful management of the economy. Stabilization should not be used as a factor by which agriculture remains viable on a year-to-year basis. Stabilization programs should be insurance programs against unusually difficult years. The economy should be strong enough so that pay-outs do not have to be made on a regular basis under stabilization programs.
The economy must be strong. It can be strong because we are a nation of wealth. If the economy is strong, the dollar will be strong. We do not need to have these high interest rates which are drawing us further into economic disarray.
I urge the Government not to forget the people whom it has been elected to represent. I urge the Government to consider carefully what it is doing to Canadians. I would like to add a special request, that the Government not forget the producers of food which feeds this nation. Canadian farmers deserve a more positive outlook than they are now encountering. If the farmers in this country are viable, we will all be better off. Farmers have a strong commitment to producing food, not only for this country, but for many other parts of the world. We congratulate the farmers who do that. They deserve a much better break, or at least the opportunity to be able to do those things.


The Acting Speaker (Mr. Herbert):: There follows a ten-minute period for questions or comments.

Are there any questions or comments? If not, we shall continue debate. The Parliamentary Secretary to the Minister of State (Finance) (Mr. Garant).


Mr. Alain Garant (Parliamentary Secretary to Minister of State (Finance)):: Mr. Speaker, during the gloomy days of the recession, it was understandable that some people should make negative forecasts. After all, inflation and interest rates con-
May 15, 1984

tinued to climb, while all other indicators where we would have welcomed an increase, such as housing starts, employment, corporate profits and investor confidence, kept going down. It was hard to be an optimist. It was a real challenge to rise above the day-to-day problems of the recession, to remain confident and to remember Canada's immense potential and our own resourcefulness.
Mr. Speaker, the situation has been turned around, and quite spectacularly so, in many respects. Since November 1982, sixteen months ago, Canada has come out of the recession and made up for lost time. Canada has now made the transition to an era of growth and economic expansion. Unfortunately, there are people who have yet to change the way they react to improvements in our economic outlook. Mr. Speaker, there are still people who are so obsessed with what they see in their rear view mirror they refuse to look anywhere else.
You know as well as I do how important it is to have a balanced view of the situation when managing funds for which one is responsible. Only someone with a forward-looking but realistic attitude is able to assess, with any confidence, the risk associated with certain investments and the opportunities for getting a good return. Mr. Speaker, confidence is itself a determining factor in our economy. In fact, confidence can be just as profoundly satisfying as negativism. Conditioning ourselves for high performance through positive attitudes is not any harder than taking the negative view and letting our problems take over. I am not like some people who prefer to ignore the many encouraging signs of economic expansion we are seeing now, and who, for whatever reason, refuse to believe what they cannot see or touch.
Granted, some sectors in our economy still need further consolidation. However, 1 think more Canadians should stop indulging in this lack of confidence which is a typically Canadian pastime, and look at our successes instead. If we do, we will have some very real reasons to remain optimistic about our economic future.
Mr. Speaker, the best way to measure the consumer's confidence is to find out whether he is investing and where. Today, there are continuing signs that the confidence of Canadians is increasing. Canadians are spending more and more. The preponderance of automobile sales in the recent growth in the retail sector shows that Canadians have enough confidence in their economic future to make major purchases they would not have made during the recession or even at the beginning of our economic recovery. This increasing confidence is expressed in more than just a spending of accumulated savings. In fact, consumers now appear to be willing to borrow money to buy a car, something they would not have dreamed of doing only a few months ago.
Mr. Speaker, the increase in the number of jobs since the beginning of recovery has been exceptionally high. Since the
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end of the recession, 418,000 new jobs have been created. The latest figures confirm that the upward trend is continuing. In April, 25,000 new jobs were created. These last figures are particularly encouraging, because they are a sign that the growth in employment is broadly based. New jobs have been created in most economic sectors and in nearly all provinces. These jobs are occupied by Canadians in all age groups. We should not underestimate the exceptional progress we have made in job creation just because the unemployment rate is going down very slowly. The paradox of slowly declining unemployment combined with rapid growth in the number of jobs can be explained by the increasing number of Canadians who are joining the labour force. We are all aware of today's extraordinary impact of the baby boom on the size of Canada's labour force. Mr. Speaker, as the economy and employment are improving, the number of Canadians who have started to look for jobs has increased. If our labour force was not growing as fast as it is, our unemployment rate would drop far more quickly.
Mr. Speaker, the increasing number of women who have opted for a career testifies to the remarkable capacity of the Canadian economy to absorb additional workers. In 1968,
2.500.000	women were employed, and nearly one-third of women old enough to work were in the labour force. In 1983,
4.500.000	women are employed and more than half the women old enough to work are in the labour force.
Exports are one key to a healthy economy. Canada's export figures since the recovery reflect an unprecedented performance. In the past year, Canada showed the strongest growth in exports of all industrialized countries. We registered a trade surplus of over $18 million last year, which is almost a record. We see a similar picture if we look at the tremendous progress achieved by Canada in corporate profits, the fight against inflation, the balance of payments, housing starts and so forth. This is very encouraging, especially compared to the recent gloomy scenario during the recession. There are, of course, exceptions to the general trend, but the trend itself is more important than the exceptions.
Nevertheless, some people insist on stressing the exceptions and playing on the fears of the public. I condemn those who make a habit of magnifying the exceptions to this sound and positive trend and blowing them up out of all proportion, as though we were on the brink of disaster.
Mr. Speaker, since March 1, the value of the Canadian dollar has been depreciating against the American dollar, at a time when all international currencies have been registering a very strong downward trend. For a better understanding of recent developments on the exchange market, we must see these developments within the broader context of recovery and the international situation.
The value of the Canadian dollar on the international market is determined by both international and domestic factors. As partners in a global economy, all trading countries

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are interdependent, and Canada is no exception. Our economy is particularly sensitive to the changes and tremors that affect the U.S. economy. Actually, the recent depreciation of our dollar against the American dollar is due to tensions originated by our neighbours to the south.
American interest rates have gone up in recent weeks because the U.S. recovery has been stronger than expected in the first quarter of this year and because unprecedented deficit levels are forcing the American Government to borrow extensively on the U.S. market. The United States monetary authorities have admitted that the American economy had been forced into a precarious position as a result of structural and trade deficits. Indeed, Federal Reserve Chairman Paul Volcker has sounded a public alarm about the co-existence of those two deficits which are a clear and genuine threat to the continued growth and stability of American and international markets. Since it was feared that American monetary policy officials might decide to tighten up credit, and since there was growing doubt about a quick decline in the American deficit, their interest rates moved up. That is why interest rates edged up slightly in Canada and our dollar lost a few points.
I am not belittling the strength of our dollar, Mr. Speaker. If we consider all other currencies, including the American dollar, we can only conclude that, all in all, the Canadian dollar has remained quite stable. In 1983, for example, the German mark, the French franc and the British pound all went down markedly as compared with the U.S. dollar, much more so than the Canadian dollar.
It must be understood that the wavering performance of the Canadian dollar cannot be traced back to a weakness in our economy's competitive position. On the contrary, Mr. Speaker, the basic components of our economy which sustain our currency have always been and still are very strong. Our competitive position is gradually improving. There has been a spectacular drop in wage settlements and in the inflation rate, productivity is much better, and our trade balance remains quite favourable. The increase in labour unit costs has slowed down considerably as compared with that of the United States. Our trade surplus has reached record levels, whereas our American neighbours did report a trade deficit. Mr. Speaker, those are all positive developments which have sustained confidence in our dollar during the first year of our recovery, and we have every reason to believe that this confidence will be maintained.
Of course, our aim is to ensure a lasting economic recovery while at the same time leading a strong offensive in the fight against inflation. Mr. Speaker, it would be easier to reach that target if our dollar were stable and if interest rates were stable as well, or even lower. However, the upward trend of American interest rates has put Canada before extremely difficult economic alternatives. Any captain navigating through dangerous and rough seas has to steer the safest possible course.
As we proceed along our course, Mr. Speaker, we hear the voices of those who are so far off the mark in their interpretation of the current situation and who give us such injudicious advice to improve it that, if we were to listen to them, we would soon be shipwrecked. They believe that we should disregard the rising interest rates in the United States and try to increase the value of the Canadian dollar and cut down our interest rates. That is sheer fiction which can only come from a naive outlook on a complex situation and which smacks of irresponsibility. Such a view ignores the economic facts which Canada, as a trading nation, must take into account in spite of the unstable international situation. But what are these facts, Mr. Speaker? On the one hand, we know that sudden drops in the exchange rate may result in inflationary pressures which it is essential to avoid. On the other hand, substantial increases in the interest rates would of course offset downward pressures on the exchange rate, but at the same time, they would destroy our potential for economic growth.
The Minister of Finance (Mr. Lalonde) and the Minister of State (Finance) (Mr. MacLaren) have therefore clearly explained on several occasions in this House that we do not want to cause a major drop in the value of the Canadian dollar, as that would have inflationary effects and would also in any case eventually result in higher interest rates. However, we do not want higher interest rates either, especially at this stage of our economic recovery.
We must therefore determine what method should be followed to cope with the pressures which recently were brought to bear on the rate of exchange and on interest rates. I must specify that our method is first of all a response rather than a remedy. Indeed, the current problem with exchange rate and interest rate instability did not originate in Canada at all. It is therefore impossible to apply Canadian solutions. We may however minimize all of its consequences by taking a middle course between substantially higher interest rates and a devaluated Canadian dollar. And this is exactly what we are doing by promoting a policy of moderation with respect to both the rate of exchange and interest rates.
Mr. Speaker, this is the most serious and the most effective method that could be used. It is also the one which will enable us to turn the present recovery into a sustained economic growth. Moreover, it will allow us to maintain the progress so laboriously achieved these last couple of years in our fight against inflation.
As we are fully aware of the pressures exerted on the interest rates and coming from the United States, we are closely monitoring the situation in that country. However, I would like to allay any anxiety which may have resulted from the rather predictable panic brought about by these events. At the present time, there is no reason to regard the evolution of
May 15, 1984

interest rates as a tendency which will accelerate in the months to come.


The Acting Speaker (Mr. Herbert):: A period of ten minutes is now provided for questions and comments. If there are no questions or comments, we shall proceed with the debate.



PROCEEDINGS ON ADJOURNMENT MOTION


Mr. Deputy Speaker:: It is my duty, pursuant to Standing Order 45, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the Hon. Member for Prince Albert (Mr. Hovdebo)-Western Grain Stabilization Act (a) Timing of pay-out to farmers, (b) Payment of interest; the Hon. Member for Hillsborough (Mr. McMillan)-the Administration (a) Liberal Party campaign-Role of contract employee, (b) Ministerial staff guidelines; the Hon. Member for Victoria (Mr. McKinnon)-Veterans Affairs (a) Nuclear radiation exposure-Demand for expert medical evidence, (b) Case law-Request for acceptance of precedent.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed debate on the motion of Mr. Crosbie:
That this House is of the opinion that the Government of Canada can manage the economy in a way that would allow us to have lower interest rates than Canada now has and that we can have greater independence in interest rate policy despite the Government's failure to meet its commitment to so manage the economy.
Mr. Otto Jelinek (Halton):: Mr. Speaker, it gives me a great deal of pleasure to be able to participate in the debate today. In the few moments which I have at my disposal I would like to concentrate specifically on a very important sector of our economy, namely, small business.
One of the primary reasons for which I entered the political arena in the first place some 10 or 12 years ago was my concerns as a small businessman and the problems which were facing this very vital sector of our economy. When I came to this Chamber, the word "small business" was almost nonexistent. But because of the efforts of many Members of Parliament on both sides of the House who came from business-oriented backgrounds, as well as of interest groups such
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as the Canadian Federation of Independent Business, COSB, the various Canadian chambers of commerce and the Canadian Manufacturers' Association, the importance that the small business sector has on our economy was brought to the forefront. Over the last decade, small business has indeed established itself on the floor of this House of Commons as a very important sector. Yet it is one of the most vulnerable sectors in Canada if government policies and government programs continue to affect it adversely as have the policies and programs of the Liberal administration during the past 10 or 15 years.
I would like to identify the three major problems which are affecting this sector: First, interest rates and the instability of interest rates, which is what we are discussing today; second, under-capitalization, particularly in the area of venture or working capital; and, third, government interference and involvement, such as government directives, controls and paperwork. There are solutions to the major problems facing the small business sector. I will return to those in a little while.
In the meantime I would like to address the point of interest rates and why it is so important that they be stable and, wherever possible, at the lowest possible rate in respect of small business. If a small-businessman does not know what amounts of money he will be paying for his loans three months from now or six months from now, let alone next Thursday- and interest rates can change on a weekly basis-he cannot make long-range plans as to his business operations respecting investment, productivity and other aspects of his operation. As a result, when interest rates suddenly start reaching unexpected highs-as they did in 1981 and 1982 when they reached record levels of 22 per cent plus-record numbers of businesses go bankrupt. When small businesses and businesses in general go bankrupt, unemployment starts to take place. Just when a recovery of our economy was taking place last year, suddenly this Government-which seems to be so insensitive to the problems of the small businessman-is again allowing interest rates to take off without any temporary or intervening measures to help or assist the small businessman in this country or to tell that small businessman what will happen to interest rates and what will happen to the economy.
We have changed predictions and changed budgets every six months. Business cannot operate under those conditions. The only thing that the Prime Minister (Mr. Trudeau) and the Minister of Finance (Mr. Lalonde) say in response to high interest rates is that it is happening in the United States. Why is it that in West Germany interest rates are at 7.75 per cent; in Japan they are at 5.7 per cent; in the United Kingdom they are at 8.5 per cent; and in Switzerland they are at 6 per cent? Why are government Members not saying that? Our interest rates are 4, 5 and 6 percentage points lower than interest rates in the United States.
The Liberal Government says that it cannot do anything because of the situation that exists in the United States. Let me ask the Liberal administration: How can it continue to plead innocence with respect to high interest rates and other economic activities? If, as the Prime Minister and the Minister of Finance say, the reason for high interest rates in this

May 15, 1984
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country is the high level of the interest rates in the United States, how come all the other economic measurements in the United States have improved dramatically when compared to ours? Productivity in Canada, for example, since June, 1981, has increased by 2.5 per cent. You may say that this is not bad under current conditions. However, it has increased in the United States by 9 per cent. In this country, full-time employment has decreased since 1981 by 4 per cent. Yet in the United States it has increased by 4 per cent. That is an 8 per cent difference. Residential investment in Canada has decreased by 15 per cent and has increased in the United States in the same period of time by 28 per cent, a difference of 43 per cent. Investment in machinery has decreased in this country since 1981 by a staggering 25 per cent. Are we the same as the United States? No, because in the United States investment in machinery has increased by 10 per cent. That is a difference of 35 per cent. Average business investment in Canada since 1981 has gone down by 20 per cent. In the United States it has increased by 10 per cent in the same period of time. Personal disposable income in this country, the wealth factor, if you will, has decreased by 2 per cent. Yet in the United States it has increased by 11 per cent. That is a 13 per cent difference. The list goes on, Mr. Speaker.
Therefore, if this Government says that we must do the same thing as the United States in respect of interest rates, why are we not doing the same with regard to unemployment, productivity, investment and all the other important major economic issues which affect every Canadian in this country?
Those clowns who are out campaigning for the leadership of the Liberal Party are not dealing at all with the problems which are affecting Canadians today. Within a month and a half, one of them is going to be sitting here in this House as Prime Minister, with absolutely no answers except to echo what this Government says on a daily basis to us in the Conservative Party and to Canadians.
We in this Party ask these questions of the Minister of Finance or, in my case, as the spokesman for small business and tourism, of the Minister of State for Small Businesses and Tourism (Mr. Smith). Last week, for example, I asked the Minister what representations he had made to the Minister of Finance or to the Cabinet on behalf of the small business sector in relation to the increase in interest rates, which is taking place and which is so adversely affecting the small business community in this country. His answer is found at page 3594 of Hansard of May 10. I will read it, Mr. Speaker, and we will see if you hear an answer to the representations made to the Minister of Finance. The Minister of State for Small Businesses and Tourism said the following:
Mr. Speaker, the Government believes very strongly in the role of small business in pulling the country into a period of economic recovery. That was the main emphasis of the February 15 Budget. The Minister included a number of items in that Budget specifically designed to assist small business. Through the Small Business Loans Act over 25,000 small businesses in Canada got loans last year which they otherwise probably would not have received. I think that is a pretty clear indication of a commitment to the small business sector.
I did not hear in that answer, Mr. Speaker, any specific response to my question regarding interest rates. He did not say whether he made representations to the Cabinet on behalf of small business for which he is responsible in this House. Therefore, I read into his answer that he has not made any representations to Cabinet and does not really care about high interest rates adversely affecting the small business community in this country.
When the Minister in his answer talks about 25,000 small businesses getting a loan under the Small Businesses Loans Act, it is all fine and dandy, but at what rate have those businesses received that loan? I will tell you at what rate. The rate is 8 percentage points higher than inflation. That is at what rate. I have nothing against the Small Business Loans Act. It is a very good piece of legislation. I wish, in fact, it would be expanded to include working and venture capital. But surely, no matter what lip service this Government pays to what it is willing to do for the small business community of what it intends to do for it, if interest rates are going to continue to be allowed to fluctuate on an upward trend, nothing this Government can do and nothing anyone can do is going to solve the problems facing the small business sector and, therefore, solve the unemployment problem.
Canadians are becoming sick and tired of this Government attempts to deal with unemployment, for example by throwing billions of tax dollars into temporary and unproductive make-work projects. That is not where jobs are created, Mr. Speaker. Jobs are created in the marketplace, in productivity. The federal Government should not pay someone a direct grant in order to work him for six weeks or eight weeks so that he can then turn around and go back on unemployment insurance. That is not the way to deal with the problem. We must create a healthy economic climate in this country so that businesses, generally speaking, and specifically the small and mediumsized businesses, can operate in an economic environment which is free of government involvement and interference.
I asked a supplementary question of the Minister of State for Small Businesses and Tourism about high interest rates and representations he has made, to which he replied this:
-it is very interesting to hear the approach of the Hon. Member. He is a well known believer in the free enterprise system, in market forces, in the law of supply and demand, and one who does not believe in intervention. The Government, however, does believe in intervention in certain areas.
The Minister is right, Mr. Speaker, except for the fact that when the Government interferes so much in the private sector and creates such a negative burden for the entrepreneurs of this country, temporary steps must then be taken to protect such a vulnerable sector until the economy has been cleansed of this tremendous negative effect caused by Liberal policies. That is why I said, Mr. Speaker, that there are solutions for those three major problems facing the industry.
There are various options to consider with respect to interest rates. Why does the Government not consider again the initiation of the small business development bond program? This is a program which would virtually allow a small business operation to borrow money through a chartered bank at roughly
May IS, 1984

half the interest rate. I am not suggesting that this should be a program which goes on and on ad infinitum, Mr. Speaker, but it is a program which certainly should be considered when interest rates are increasing, small businesses are being hurt, and unemployment, as a result, is growing on a daily basis.
I have already touched on the subject of venture and working capital. Our Small Businesses Loans Act could be expected to include venture and working capital.
The third major problem facing the small business community, of course, is government intervention and interference. Surely the time has come for governments, generally speaking, to make note of the fact that a business operation does not want Big Brother looking over its shoulder all the time. Surely the people who run governments today must realize that the private sector industry, small business or otherwise, is going to operate a heck of a lot more efficiently on its own than in conjunction with government. All one has to do is to look at the operations of Canada Post to see how efficient an agency it is, one which is now a Crown corporation. One can look at Canadair, for example. By the end of this year taxpayers will have paid out over $2 billion through the Government to keep it afloat. This amount is sufficient to cover the total liabilities of the estimated 10,500 small businesses which went bankrupt in 1982 alone. It is also four times the amount that the Trudeau Government has spent on various small business program in 1982. That is just to keep Canadair afloat. That is just one example. There are many others which the Government knows about.
The time has come, Mr. Speaker. It is long overdue. I said at the outset that both sides in the House as well as the New Democratic Party have established the fact that small business does exist and plays a major factor in our economic way of life. We have seen a sudden advertising campaign by this socialist rump of the Liberals who suddenly find themselves at 10 per cent in the Gallup poll. They are panicking their way into the hearts of the small business community, which is not going to accept them at all. All one has to do is to listen to some of the responses of the leaders of the small business communities to those advertisements. They know what the New Democrats stand for and they are not going to buy it. As I said at the outset, Mr. Speaker, the fact that small business is important has finally come to the floor of the House.
What has not taken root in the House is the fact that the House should not interfere in the workings of the small business sector. The small business person does not want government interference, regulations, controls and directives. He wants to be left alone. If we cannot establish an economic climate in this Parliament which will allow small business people to operate in a free enterprise society, then we must come up in the meantime with programs such as the small business development bond program. We must come up with programs like the Small Businesses Loans Act and expand it to include working capital. We must do those things until we can clean up the bureaucratic mess in which the Liberals have put
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us. I know, as do the majority of Canadians, that the Conservative Party is committed to doing just that. We want to return the word "free" to enterprise so that the small business sector, the private sector, and Canadians as a whole can start producing and benefiting as a result of the policies of a true Conservative Government.


The Acting Speaker (Mr. Herbert):: There follows a period of ten minutes of questions or comments. The Hon. Member for York-Scarborough (Mr. Cosgrove).


Mr. Cosgrove:: Mr. Speaker, we on this side of the House would readily agree with the Hon. Member that small business indeed forms the backbone of employment opportunities in the country. For example, something like 80 per cent of working people are employed in firms which hire less than 20 employees. We have no difficulty with the analysis of the importance of the role of small business in the economy. However, I have some difficulty with the Hon. Member's reliance upon the private sector and his wish, on the one hand, that Government not be involved and, almost in the same breath, his invitation to the Government to support small businessmen.
The one sector in which I am particularly interested is small business in the area of housing. Notwithstanding the figures used for purposes of comparison with the United States, even at their lowest point, the number of housing starts in Canada has always been greater than that in the United States. Yet when the Party opposite had the opportunity of forming the government for a period of nine months, their consultant on housing made two recommendations. The first was that the Government get out of housing and privatize Canada Mortgage and Housing, which has had an enviable record of supporting small business in the production of housing in the country. The second reccmmendation made by the consultant, the former President of the National Conservative Party, was that we get out of co-operative and non-profit housing, which provided thousands of jobs for Canadians and housing for needy Canadians. I notice, Mr. Speaker, that the same Member has now been retained by the Leader of the Opposition (Mr. Mulroney) to give advice again. I am curious as to whether he is giving advice on housing and whether it would be the same advice as that which he gave to the Conservative Party.
What is the Hon. Member's position in terms of support of small business in the area of housing? Is it to get out of supporting the private sector?


Otto John Jelinek: Mr. Speaker, the Hon. Member quotes a number of my colleagues. Of course, I have not seen these quotes. By the way, Mr. Speaker, I think we should keep our comments and questions related to interest rates and to the motion which we are debating today.
With regard to interest rates and housing, I think that if the Liberals and the New Democratic Party had supported what this Party had suggested while we were in government and thereafter, specifically the mortgage deductibility program, we

May 15, 1984
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would be in a far better position today with regard to home owners with high mortgage rates than we are. As a matter of fact, it is my understanding that the Government is in fact considering something similar to that type of situation. As you know, Mr. Speaker, when the Government introduces programs which they have copied from us, we support them, as we did last week on the partial deregulation of the airline industry. That is an idea which came from this side of the House of Commons.
The Hon. Member quoted Members on my side of the House with respect to housing. I should quote to him the Prime Minister saying a few years ago that he would want to manage the economy in such a way that interest rates would in fact come down, because then the economy would be administered more soundly. Or I could quote to him the President of the Treasury Board (Mr. Gray) who said that he would resign his seat if interest rates did not go down, I have a whole series of quotes of statements made by Liberals which have been totally ignored by that Party and by Canadians. Do not talk to me about quotes; talk to me about facts. The facts are that this Party would like to see the Government move in a direction which would utilize mortgage deductibility programs in order to assist home owners in the country when they are hit with high mortgage rates.


The Acting Speaker (Mr. Herbert):: I would caution the Hon. Member that questions are supposed to be directed to the speech of the Hon. Member. He should, in some fashion, be able to relate his questions to the remarks of the Hon. Member. The Hon. Member for York-Scarborough (Mr. Cosgrove).


Paul James Cosgrove: Thank you, Mr. Speaker. I will direct my question to a point raised by the Hon. Member which had to do with the interest deduction policy. I understand from his comments that this is now the official policy of the Conservative Party and presumably would be offered to Canadians in an election campaign.


Otto John Jelinek: I did not say that.


Paul James Cosgrove: Mr. Speaker, the lowest estimate of the cost of such a plan is $2.5 billion. Where in the deficit would the Hon. Member cut the $2.5 billion, if indeed he is not going to add $2.5 billion to the existing deficit?


Otto John Jelinek: Mr. Speaker, I would like to make a clarification with regard to the statement on the home owners' mortgage deductibility program. My comments in response to the question were clearly my own, rather than made on behalf of the Party. When I speak about small business and tourism as the small business and tourism spokesman, then of course I speak on behalf of the Party.
The Minister asks where we would cut the deficit. This Party has outlined numerous ways and means of cutting the deficit. Perhaps I should go back to him as a Member who is involved in a leadership race to replace the Prime Minister as Prime Minister on a temporary basis and ask him where John
Turner, the person who is leading the race, would cut $15 billion from the deficit.


The Acting Speaker (Mr. Guilbault):: Order. Questions are supposed to be directed to the person who has made the speech. If there are no other questions or comments, continuing the debate will be the Parliamentary Secretary to the President of the Privy Council.


John Leslie Evans: Mr. Speaker, this debate has been taking place for many years and the issue of interest rates has been raised from time to time by the Opposition. This should be done because the question of interest rates is important to Canada and to any country in pursuit to economic growth. Economic growth is certainly a major objective of Canadian policy. It is the only method of achieving a higher standard of living and it is the only way we will be able to expand the social safety net that will be required when greater numbers of senior citizens will require pensions in the future. This increased requirement will necessitate different types of growth of government expenditure, which means that we need a greater wealth base from which to work. High interest rates tend to operate contrary to growth and the expansion of the wealth base.


Mr. Deans:: You are absolutely right. We have agreed again.


John Leslie Evans: There is no doubt about that. Hon. Members opposite are saying, "You are right".


Ian Deans: No. One Hon. Member.


John Leslie Evans: I did not need the Hon. Member for Hamilton Mountain (Mr. Deans) to tell me that I am right.


Ian Deans: The trouble is that so far you are right.


John Leslie Evans: I think he was talking directionally, not in terms of the correctness of my comments. I would suggest to him that the statements are right in the correct sense of the word and not in the directional sense of the word.
It is clear that the Opposition is saying today that the Government has, in essence, a policy of high interest rates which are exacerbated by the size of the federal deficit. They are saying that other domestic policies are causing the value of the currency to fall. That is the scenario that the Opposition is trying to establish today in an attempt to indicate that our present situation is the total responsibility and fault of the Government of Canada.
The Opposition is attempting to play down to the greatest extent possible the impact of external factors on Canada. We have heard very often that Canada is a trading nation which depends on trade for 30 per cent of our Gross National Product. Our biggest trading partner is the United States, which accounts for 75 per cent to 85 per cent of our foreign trade. This makes it difficult for me to believe that Members of the Official Opposition do not understand that we have a
May 15, 1984

very close relationship with the United States as a result of the extent to which we depend on the United States for our export trade and markets. If those Members do understand that, they certainly cover it up with statements that imply ignorance. We will need open capital markets with the United States so that that trade and flow of funds can move freely across the border. Otherwise, we simply cannot have an expanding export trade that will generate jobs in this country.
We heard a number of contrary views today. For example, the Member for Kamloops-Shuswap (Mr. Riis) indicated that perhaps we could free ourselves from the strictures of the international capital markets by implementing a speculator tax. Others have indicated other proposals to stop currency from flowing out of the country. The critical factor to remember is that without the ability of capital to flow between the borders of Canada and the United States and other countries, there is a reluctance on the part of those with whom we trade to undertake that trade.
Those with whom we trade must have the ability to receive payment in their own funds. For instance, when the Japanese sell cars, they would like to have Japanese yen in payment for those cars. Therefore, we must exchange Canadian dollars for Japanese yen. In that case, money flows out of the country. When we sell computer products, aircraft parts or indeed automobiles to the United States, that country will exchange their money for Canadian dollars in order to pay us in our currency. If we are going to facilitate foreign trade upon which Canada depends so heavily for our standard of living, we will need an open and freely flowing capital market. The simple fact that we depend so heavily on trade for our standard of living and our hope for a rising standard of living means that we should reject any notion that we can put strictures or constraints upon the flow of funds across the border.
Furthermore, one should consider the impracticality of attempting to apply exchange controls or a speculative tax, with all of the inherent administrative problems that they carry with them. I suggest that Members of the House should abolish that notion once and for all. It is not a realistic solution for an advanced trading nation such as Canada. It simply will not work. Rather, it would cause us great damage in our ability to conduct trade and generate exports. Consequently, this will hurt our ability to create jobs for the unemployed in this country for whom I believe we have the greatest concern.
If we are to have open capital markets, it follows that when the heart and soul of the world's capital market, the United States, undertakes policies that will cause interest rates in that country to rise, there will be a natural tendency for other countries to flow money into the United States to take advantage of those higher interest rates. Of course, this means that the interest rates in other countries will tend to rise or the value of their currencies will tend to fall. That is basic, fundamental economics. An analogy would be two tubs of water connected by a tube. When water is poured into one tub it will form an equal level in both tubs. Similarly, interest rates in Canada and the United States will tend to find the same level. Any attempt to keep interest rates in Canada substan-
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tially below those in the United States will cause a leak and result in a drop in the value of the currency. On the other hand, if we make our interest rates higher than those in the United States, currency will flow here and the value of our currency will tend to rise. Those would be the effects if we were able to do that artificially. With an open and free capital market it is very difficult, if not impossible, over any sustained period of time to push one's interest rates below the rates prevalent in the major capital market country, which is the United States, or to hold one's interest rates appreciably above the rates prevalent in the major capital market country, again the United States.
[DOT] (noo)
Again we have a unique situation in Canada in that we depend very heavily upon the United States for trade, which influences our standard of living very heavily. Canadians are simply not prepared to take the reduction in the standard of living that would go along with any serious attempt to divorce ourselves from that capital trading market in the United States. Canadians will not tolerate it, nor should they.
Anyone who suggests these fancy, quick solutions to the interest rate dilemma in which we find ourselves or to the value of the currency situation in which we find ourselves is deluding himself or herself and is trying to delude Canadians into believing that there is a solution to the interest rate situation that is costless and painless. There is not. That should be self-evident, Mr. Speaker, and anyone who understands the mechanisms of international capital flows, the trading system in the world, will not put forward some of these nonsensical solutions we have heard. I think the Hon. Member for St. John's West (Mr. Crosbie) understands that very well.
Quite frankly, I think the Hon. Member was quite embarrassed by having to introduce such a motion here today and backing it up at the same time with rhetoric that was really contrary to what I know he believes and to what I know he understands in his own heart. It was political rhetoric and it was a good attempt by the Hon. Member, but I think it fell short, as many of my colleagues on this side have been able to point out over the last two to three hours. The Hon. Member for St. John's West, I think, has failed miserably in trying to make political miles with an issue in which he really did not have his heart. He knew what the problems were with the motion he put forward. He knew the unreality of the suggestions he was making, but he did it anyway in an attempt to make some short-term political gain. I suggest that the attempt has backfired. When asked, in a question from one of my colleagues on this side, to be specific as to what he would do, the essence of what he said was that he could not be specific today. Nor could he be specific about 1985 since conditions would be different in 1985, he said. The Hon. Member cannot be specific today. He cannot be specific about the future. I can only imply from that, Mr. Speaker, that the Hon. Member does not have any policy suggestions to make other than what he said a year ago or at the time of the April Budget last year, which was, "I generally agree with the direction in which the Government is going. I generally agree

May 15, 1984
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with the economic policy being implemented by the Government." I think	in his heart of	hearts the great Newfoundlander, if he were	really honest	with us and	if he	were reallyspeaking from	the heart and	getting away	from	the politicalrhetoric, would have to say	today, "If I	were	Minister of
Finance and were faced with the same problems with which the Government is faced today, if I were faced with the kind of deficit interest rate situation with which the United States is confronting Canada today, I would probably do just about what the Minister of Finance (Mr. Lalonde) is doing". If the Hon. Member were really honest and if we were not so close to a general election, that is the kind of thing which the Hon. Member for St. John's West would be saying, because he said it last year, Mr. Speaker.
When you analyse the facts and the situation, we are confronted with a very very difficult situation as a result of the kinds of policies followed in the United States. For the first time in recent history-in fact in my memory-the United States has become an importer of capital. The United States has been a capital exporting nation for generations. It has created a wealth base, massive growth, and it has exported capital to the developing countries. The Americans have exported capital to Canada and to the European countries. The Americans have exported capital to the developing countries where they have built plants and equipment and have created jobs. For the first time in history that I can remember, the United States this year will become a capital importing country. When the United States runs a deficit that verges on $200 billion-it might be somewhere between $150 billion and $200 billion-that is a massive deficit when it is compared to the savings rate in the United States. Let me elaborate. There is the Government borrowing requirement and a very low savings rate in the United States relative to most other countries in the world, and at the same time there is a very rapidly growing private sector-


Donald Alex Blenkarn: A well managed organized economy putting people to work.


John Leslie Evans: -that is putting heavy demands on the capital markets. The only thing that can happen is that interest rates will go up. I hear the Hon. Member on the other side. Let me answer him by saying that those are the free market forces working. Interest rates go up. Why are they going up? They are going up to try to attract new funds into the market to be made available either to the U.S. Government for its borrowing requirements or to the private sector which is placing heavy demands on it. If those savings funds are not generated internally by the U.S. economy, which is the situation the U.S. is facing today because of the low savings rate, then those high interest rates will cause funds to start to flow in from other countries. The effect of that will help to stabilize the U.S. interest rates. However, at the same time, it will put upward pressure on interest rates in every other country from which those funds are being transported into the United States. That is the situation we face. If the United States savings rate were higher and if the United States were generating internally
funds sufficient to finance the U.S. federal deficit and to finance the rapidly growing needs of a business community, where the economy is growing at over 8 per cent, there would not be the kind of upward pressure on interest rates in the U.S. There would not be the kind of upward pressure on interest rates that we are finding here in Canada as a result of the fact that money is naturally flowing into the United States to be invested where interest rates are higher.
Traditionally this country has attracted capital to finance the very rapid growth of development we have had over the last 40 or 50 years. I think Hon. Members will agree that traditionally the way we have done that, which goes on to illustrate my point about the free flow of funds and the effect thereof, is that we have held our interest rates about a half a point above the rates in the United States. That higher interest rate here has caused funds to flow into this country for investment purposes. Because of the great concern this Government and the Governor of the Bank of Canada have had over the last year and a half, we have held our interest rates at the same rates as those in the United States, or somewhere below theirs. Indeed, today in general, our interest rates are about half a point below those in the United States.


Donald Alex Blenkarn: Tell us about the German rate and the Swiss rate.


John Leslie Evans: As a result, we are seeing an outflow of funds, and that is what has put downward pressure on the Canadian dollar. The dollar has dropped because we have tended to keep our interest rates about half a point below those in the United States. We know what high interest rates can do to small business and to individuals who wish to buy a home, to farmers and fishermen and to those people who need to borrow money. We are trying to hold the rates down to the lowest possible level consistent with some stability in our system.
That is the problem with which we are faced, Mr. Speaker. Hon. Members opposite, I am sure, really understand what the situation is. They know that the choices, apart from the options which the Government is currently following, are horrendous from the point of view of our trade, from the point of view of open and free capital markets, and from the point of view of the confidence which the international community will have in Canada as the trading partner, as a source of capital and as a use of capital. It does not do anything for the understanding of Canadians to have Members of Parliament rise in the House and spout rhetoric about what should be done and about how terrible the Government is because it does not take immediate action to reduce interest rates by three percentage points or other actions which Hon. Members of the Opposition know full well would be disastrous in terms of jobs and the standard of living of average Canadians. They know in their hearts, as does the Hon. Member for St. John's West, that if they were in the same position as we are, they would be doing just about what the Government is doing now.
May 15, 1984


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


Donald Alex Blenkarn: Mr. Speaker, the economist from Ottawa Centre knows that if the Americans went in the hole for a deficit of SI50 billion, that would be equivalent to a $15 billion deficit in Canada. The trouble is that we borrow twice as much as the Americans. The Elon. Member should know that we have a surplus of trade which would normally push up our dollar. Normally it would not be at 77 cents. It would be at 82 cents or at 83 cents, but the Government manages the situation in such a manner that our dollar is down to 77 cents.
We have had a great lesson in economics. The fact is that cash is leaving the country for opportunities in the United States. This is why the Government keeps pushing up interest rates. It is trying to get the cash to stay home. This is also why the dollar falls. It has to let the dollar fall to discourage Canadians from cashing in their Canadian dollars for American ones.
I would like to know why the Hon. Member is such an apologist for the Government when he knows about its mismanagement, the effect of the national energy policy and the effect of the discouragement of foreign investment all of which have driven down confidence in Canada and consequently driven up interest rates. If the situation were reversed, he knows that the Canadian dollar would be strong and we would have very much lower interest rates than we presently have.


John Leslie Evans: Mr. Speaker, the Hon. Member is simply wrong on a number of counts. The first area in which he is wrong is when he relates the United States deficit to the Canadian deficit without taking into consideration the differences between the U.S. and Canadian savings rates. The savings rate in Canada is at least three times that in the United States. In relative terms, the U.S. deficit is not half the Canadian deficit. However, when we compare it with the GNP, other personal income and so on, its deficit is slightly below the Canadian deficit.
The key figure is the savings rate. The fact is that Canadians are saving at a rate which allows the deficit in Canada to be financed without putting substantial upward pressure on interest rates domestically. Also, our internal demand for funds in the private sector is nowhere near as vigorous as that demand in the United States. Not only do they have large U.S. borrowing but they have a very large and growing demand from the private sector. At the same time, they have a savings rate which is only a third of the savings rate in Canada. That explains why our deficit has to be looked at in that perspective and why our deficit, while it is certainly substantial and needs to be reduced over time, is not the same problem domestically as is the United States deficit in that country.
When we think in terms of the over-all magnitude of the deficits in absolute dollar terms, a $150 billion deficit will be a massive drain not only on the United States economy but on most other economies in the world. This is because of the size,
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in dollar terms, of that country's deficit and the amount by which it exceeds that country's ability to generate internal savings. That is the problem.
In terms of the trade surplus, yes, we have a trade surplus. Yes, we are doing well in terms of our ability to export and sell goods and services abroad. This is precisely why we have been able to hold our interest rates below those in the United States. We have generated export surpluses. We have done very well in that regard. Our industry is becoming more and more competitive. We are doing well in international markets. That has helped us to hold interest rates below those which exist in the United States for the last while.
We have suffered to some degree with a declining dollar. Recently there has been a declining dollar, primarily because we have kept our interest rates below those in the United States. This has been minimized by the fact, as the Hon. Member said, that we have a trade surplus. We are doing well in international trade, something about which the United States simply cannot brag.


Donald Alex Blenkarn: Let us get the record straight. Interest rates in Canada are a full 1 per cent to 1.5 per cent higher than those in the United States. Treasury bills were sold in the United States this week for just slightly in excess of 10 per cent. We paid 11.74 per cent last week. The prime rates in Canada do not mean the same as those in the United States. Market rates are lower in that country than they are here. It is somewhat strange that the booming, bustling economy in the United States is suddenly the reason that interest rates are so high in Canada. The Americans are doing well. Should we be saying that they should not be doing well, that they should not put their people to work, that they should not have full employment, that their factories should not be bustling or that they should not have jobs because they are making Canada look bad? The Hon. Member had better believe that we look bad. We look terrible.
What is the Hon. Member's answer in that regard? Where does he stand? How will he make our economy a growing one again? Why does he not read the Budget of his own Minister in which he commented about the necessity for interest rates to be restored to more normal rates of interest in capital markets and which he said that if nominal and real rates of interest were to rise significantly from current levels, recovery would be at risk over the immediate term? He knows that it is at risk. He knows that housing starts are falling and that business investment is off. He knows that consumer confidence is gone and that unemployment is rising.
Why can he not come up with a program which somehow separates us from what the Americans have? If our economy has to be the same as that of the Americans, let us have such an economy. If that is the reason for the difference in interest rates, let us have the employment, the growth and the investment which the Americans have. Why do we not have something from his Government instead of weeping and crying over why the Americans are doing so well, borrowing so much and using so much money to buy resources and to build their plants, offices and houses?

May 15, 1984
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John Leslie Evans: The Hon. Member has given me so many points of attack that it would take at least a day to pursue the various areas of folly and fallacy which he has put forward. The fact of the matter is-and this fact is substantiated by my economic colleagues in the United States-that the U.S. is living off the savings of other countries. Economists in the United States will attest to the fact that the U.S. is not generating funds to finance its own growth and development. It is imposing high interest rates on every other country in the world, higher than would otherwise be the case, in order to finance its own internal growth and consumption. That is the problem which the Minister of Finance and the Ministers of the European Economic Community have been discussing and complaining about to the United States for the last six months to nine months. That is the fact of the matter.
If the Hon. Member does not understand what we have been talking about, if he really believes that there is some set of policies which we can implement painlessly that will insulate Canada from the rest of the world, then he is living in Never, Never Land. Obviously he knows that he is putting forth a total ruse. He is misleading, in a general way, the people of this country. I am sure the Hon. Member for St. John's West is upstairs watching this on television. I am sure he is sitting there saying: "The Member for Mississauga South is off on one of his political rhetorical tangents, because he and I both know that if we were in the position of the Government today, we would follow just about the same policy the Government is following".


The Acting Speaker (Mr. Guilbault):: Order. This ends the question period. Resuming debate, the Hon. Member for Hamilton Mountain (Mr. Deans).


Ian Deans: Mr. Speaker, I have a sense of deja vu when I rise to speak on this day on this issue. I have spoken about this so many times that it becomes perhaps boring and certainly repetitious. It is, I think, the single most important question that faces us in Canada at the moment. It is the cause of much of our economic difficulty. In part, if not in whole, it is the reason why we have such high levels of unemployment. It has been the Achilles' heel of our farming community. It has resulted in bankruptcies of small business the likes of which we have not seen in this century. It has played havoc with the dreams of many people and families as they attempt to plan their future as best they can.
The Hon. Member for Ottawa Centre (Mr. Evans) says that having high interest rates is not the policy of the Government. I have heard that phrase on numerous occasions over the course of the last four years. The Government's policy may not be to have high interest rates, but it certainly has inflicted high interest rates on the people of Canada.
Everyone says that high interest rates are a result of the policy set by the administration in the United States. Listening to the debate, you feel that there is nothing we can do about it, that it is our lot to suffer from that policy, that as an independent nation there is very little if anything from a
legislative or economic point of view that we in Canada can actually embark upon that will in any way assist us. High interest rates in Canada have followed to a large extent the movement of interest rates in the United States. My colleague, the Hon. Member for Mississauga South (Mr. Blenkarn), quite rightly said that our interest rates no longer follow those in the United States but in fact lead them. For some time they have led interest rates in the United States. Interest rates have been the main vehicle used by this Liberal Government to strengthen or at least stabilize the value of the dollar over the United States currency.
Every time we raise the question, we are confronted with the same answer: "There is nothing we can do about it". Frankly, I do not accept that. Although I recognize that any actions that we might take would be difficult and although I recognize that any actions we might take would have certain repercussions, the policy that we are now following is difficult and has repercussions. The one thing that I know for certain is that whatever the consequence of our actions, if we want to take actions to lower interest rates, they could not possibly result in more chaos or hardship for Canadian families than the policy being pursued by the Government today of following lock-step behind the United States administration.
This is not an anti-U.S. speech I am making. I want to make that quite clear. Frankly, I do not much care what economic policy the United States follows within the United States. I do not think it is much of my business what policy the United States administration decides to pursue in what it deems to be its own best interests. However, I do care when we in Canada do not have either the will or the desire to attempt to establish for ourselves an independent path that will result in some form of autonomy, in a fiscal and economic sense, for Canada in the future.
If we are going to pursue lock-step the policies of the United States, we are doomed to face these situations over and over again. If we are to tie our interest rates and therefore tie our economy, job creation, ability to house our nation, ability to deal with the question of financing for our small businesses and farming community, if we are to tie all of that to decisions of the United States at every single turn, the consequence can be nothing other than that if they manage their economy badly, we suffer, and if we make the wrong decisions, we suffer. That is unacceptable. I did not get elected to Parliament in order to accept without question the direction being thrust upon us by the United States. Neither did I get elected in order to try to satisfy the demand of the United States for additional capital year after year, as will no doubt be the case in years to come.
I know as I stand here that the people of Canada would be prepared, if need be, to take and hold certain consequences to themselves in the short run if they were assured that the Government had a program which would divorce us economically, to the extent that that is possible, from the fluctuations that continue to occur within the United States as a result of an administration gone wild.
May 15, 1984

1 say to the Hon. Member for Ottawa Centre that I do not expect people to rush forward and embrace us if things do not turn out exactly right. However, I do know that I would rather lose my seat in Parliament trying to create a better society, with a degree of independence, run by Canadians for Canadians, than hold my seat in Parliament trying to satisfy people's desires based on policy made in Washington.
People in Canada cannot afford high interest rates. That is the bottom line. Farmers, small business people and those who might become home owners, and at this point in time are not home owners, cannot afford the high interest rates. Those who will be faced with renewing their mortgages, notwithstanding the scam that is about to be inflicted upon them by the Government in the form of some mortgage insurance program, cannot afford the high interest rates.
I put it to the Minister that the interest rates of today can be identified by any reasonable, sane individual as being high interest rates. The only political statement I will make in a partisan sense is that it worries me when I see the Conservatives offering this motion. I say to my friend, the Hon. Member for Mississauga South, that it worries me because I do remember hearing the former finance critic saying to the Montreal Board of Trade that the high interest rate policy being pursued by the Government was in fact the only policy to follow. I do remember the year 1979 when the Conservatives were in office and interest rates rose week after week almost in the same fashion as they are rising now and as they were in the years 1981 through 1983.
A certain question of integrity arises in the minds of the people when members of the Conservative Party suggest that somehow or other they have seen the light. It is a little bit like the conversion of Saul on the road to Damascus. Conservative Members have now seen the light and recognize the error of their ways. I would accept that if they would state categorically that they had in fact supported the Government's policies in the first place and have now changed their minds. However, they will not say that.
When we were arguing for lower interest rates, we were being chided and chastised by the Conservatives to our right at every single turn. We were being told that what we were pursuing, although desirable, was not practical. In my opinion, what is desirable must be made practical in this instance. We must accept the responsibilities, whatever they may be, and we may discuss the nature of those responsibilities as time passes. However, we must accept the responsibility for managing the nation and its economy and we must accept that responsibility with the full knowledge that if we follow the interest rate policy of the United States, then the opportunities for growth, for people to own a home, for people to open new businesses, for farmers to start up farms and for those who are already engaged in all of those activities in Canada, become considerably reduced.
I would put the argument to the Hon. Member for Ottawa Centre that, as he knows full well, I believe it is neither
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necessary nor desirable to set the interest rate every Thursday.
I think that that creates chaos and slows down the movement in-


John Leslie Evans: It is set every day in the marketplace.


Ian Deans: It is set every day in the marketplace but it is led by the Bank of Canada at every single turn. By shaking his head no, the Hon. Member shows a degree of naivety that I would not have attributed to him.
On Thursdays, the Bank of Canada quite clearly establishes the benchmark, and that benchmark influences the decisions made by every single financial institution in Canada. It may well be that the interest rates fluctuate somewhat around that benchmark, but when the Bank of Canada started to bring interest rates down in the year 1983, every single financial institution followed suit. When the Bank of Canada rate began to rise in late 1983 and into 1984, every single financial institution, banks and others, moved their interest rates up almost lock-step. The only difference between the increase in the bank rate by the central Bank and the increase in the bank rate by the chartered banks and other financial institutions was the usual difference. Those financial institutions increased their rates more than the central bank raised its interest rates. It has always seemed to be the attitude of the financial institutions that if they can gouge a little deeper, then they will gouge away.
The Hon. Member is shaking his head again, but I can produce the statistics to show that this is true for mortgages as well as for other debts. Until last Thursday, the interest rates on mortgages alone rose more than the interest rate set by the central bank. However, that rate rose almost every single week as the bank rate inched ever so slowly to its present high rate.


John Leslie Evans: What term of mortgages?


Ian Deans: The Hon. Member, in an interjection, has said that the rate depends upon what the term of the mortgage is. However, the truth of the matter is that it does not depend on what the term of the mortgage is.


John Leslie Evans: Yes, it does.


Ian Deans: No, it does not. One of the biggest difficulties we have in the country and one of the things for which the Government must stand accountable is the fact that in 1968, the Government eliminated for all time mortgages that were amortized over 20 years or 25 years and were payable at a fixed interest rate. At that point in time, the Government responded to the lobby of the Senate Banking Committee and decided that it would eliminate for all the establishment of a criterion that would guarantee people the ability to take on the responsibility of a mortgage and to pay it off in their lifetimes and still have money to spend.


John Leslie Evans: Section 8 of the Interest Act, it has been there since 1896.


Ian Deans: In 1968, that Act was changed.

May 15, 1984
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John Leslie Evans: No, it was not.


Ian Deans: Yes, it was. However, we will argue that point at another time. Between 1966 and 1968 that matter was debated, and the change to the Act took place in 1968.


Donald Alex Blenkarn: The Bank Act change.


Ian Deans: Yes, that was the Bank Act change.


John Leslie Evans: The banks were lending mortgage money-


Ian Deans: We will argue that point at another time. That is not what I wish to argue at this time. All 1 am saying is that at that point in time, the Government allowed things to happen which impacted detrimentally upon the mortgage situation of the country, to our everlasting regret. I put it to you, Mr. Speaker, that that in itself was a move by a preceding Liberal administration which has caused tremendous hardship over the years.
What worries me of late is looking at the economy as a whole. A great deal of what the Hon. Member for Ottawa Centre has said is true. I concede that he has followed an economic theory that is borne out by statistical evidence. However, I say to the Hon. Member that I have an opinion that is again borne out by some statistical evidence and by some economic theorists.
We could argue the theories of one economic theorist over those of another. However, although I am not an economist, my analysis of the situation at the moment is quite simple. The dollar is down as against the U.S. dollar because of a number of factors, not the least of which is the lack of economic activity in Canada. That decline in economic activity is evidenced by the fact that there are so many people unemployed and by a number of other factors. I put to the Hon. Member that if our interest rate policy were to create considerably lower interest rates, it would strengthen the consumer economy.
There is no doubt that if people could afford to buy homes, they would buy homes. If people could afford to take on such responsibilities at lower interest rates, they would take them on. We saw that happen in the last few months when interest rates decreased. People did in fact have the feeling that things were getting better and they did in fact begin to consume a little more. That feeling was reflected in the growth of the Gross National Product. Although it was a small growth, that feeling was nevertheless reflected in the growth. We are now undermining that growth.
If we were to have a lower interest rate policy, it would inevitably result in a stronger consumer marketplace, and that stronger consumer marketplace would inevitably result in a stronger manufacturing sector, which would result in more jobs and more tax dollars for the Government. That would result in investors seeing activity in Canada and being prepared to put their money into that activity rather than into bonds or high-interest yielding papers. That would result in further economic stimulation, which would result in a stronger dollar. I suggest that that cycle is an intelligent one and it
happens to be the only cycle over which we in Canada have complete control.
I say to the Hon. Member, through you, Mr. Speaker, as I say to the Government, that the policy to which I have just referred is the only policy that creates for Canadians both a sense of our own worth and an opportunity to participate in our own recovery. Even if certain downward trends were to develop in the flow of capital over a short period of time, the very fact that economic stimulation would take place would quickly reverse that trend. I say; through you, Mr. Speaker, to the Hon. Member for Ottawa Centre that I am not interested in people who want to invest their money in Canada simply to get a high rate of return from various pieces of financial paper. That is not helping Canada. If that money is flowing back and forth, as the Hon. Member indicates, when it flows into Canada and then flows out again, it takes with it, sucking away at every turn, the interest that was created in Canada. We do not get the economic benefit of long-term stable investment from the high interest rate structure. The money flows out, and that is why the money flows out. That is why we have such a drain on our finances. By following the United States and by not having the money invested in economic activity in the country-manufacturing and otherwise-and by not having the money directed and put into those areas where the economy is growing, the money goes into paper. By going into paper, it simply drains from Canadians more and more of their expendable capital. We get nothing in return.
I suggest that there is an economy theory-thank you, Mr. Speaker, I see you signalling that I must stop-that is opposite to the one which the Hon. Member for Ottawa Centre pursues and opposite to the one the Government pursues. It is as valid as the economic theory of the Government. It may not be acceptable, but it is as acceptable to those who believe in it, and that includes this Party and many other intelligent people in this country. It is as acceptable to us and to many others as is the economic theory of the Government acceptable to the Government. I am asking that the Government not lose sight of the fact that there is more than one way to deal with this, and the one way that we-


The Acting Speaker (Mr. Guilbault):: Order, please. I regret to interrupt the Hon. Member but his time has expired. There will now be a ten-minute period for questions and comments. The Parliamentary Secretary to the President of the Privy Council (Mr. Evans).


John Leslie Evans: Mr. Speaker, I would like to comment on two matters. The Hon. Member has referred to paper. He says that money flows around and creates paper. It does not. Paper is created as the representation of a debt. That debt represents an investment by somebody in something reai. People do not borrow money simply to have money to hold in their hands. People borrow money to invest in something. They give another person a piece of paper that says "I owe you" and indicates that they are willing to pay interest in exchange for the money that they will put into something real-whether it
May 15, 1984

be a house or a factory, or something else. They invest in real things. When money flows into Canada and we give the people who put the money here a piece of paper, it is because we want the money to do something real. We use the money to build a CPR tunnel or to expand the railways-these types of things. It is a fallacy that it is just paper flowing around.
On the second point, I would like to ask the Hon. Member a question which the Prime Minister (Mr. Trudeau) has put to his Party over the last several days. That question is: If, let us say, tomorrow the Bank of Canada indicated that interest rates were not 11.5 per cent or 11.7 per cent, but that they were going to be 8.7 per cent, how would we force the people who have the money-the savers, all the way from the little person who puts money in a bank up to corporations; the whole spectrum-to lend their money at 8.7 per cent when they can get 11.7 per cent?
The reason people save is to build a nest-egg for the future. They are simply not going to give away three percentage points in interest because of some philanthropic notion. The Hon. Member knows that. I know that. How do we do it by decreeing lower interest rates? How do we force people to save and to give us money at a rate that is below what they can get elsewhere?


Ian Deans: Mr. Speaker, to begin with, the vast majority of people in Canada have never invested a penny outside of this country in their lives. They have never once looked at shipping their money across on a handcart at the border and putting it into a bank. Neither have they opened bank accounts here in U.S. dollars, although that-


John Leslie Evans: You would be surprised.


Ian Deans: I would not be surprised. Whether the Hon. Member believes it or not, the overwhelming majority of Canadians invest their money in only one of two or perhaps three ways: they buy Canada Savings Bonds, and they are now paying something like 10 per cent-


Donald Alex Blenkarn: They are 9.5 per cent.


Lloyd Roseville Crouse: They invest their money in Florida motels.


Ian Deans: They are 9.5 per cent, as my hon. friend indicates. My colleague from South Shore says that they invest in Florida motels. He is only talking about his own friends. I will have you know that my friends do not buy Florida motels. Maybe Conservatives do, but most New Democrats do not.
However, the majority of people go to the bank and put their money into a Canada Savings Bond; some of them buy guaranteed investment certificates, and some of them put their money into savings accounts. That is the overwhelming majority of people. They put it in at whatever the rate happens to be at the time. If the Bank of Canada, over the course of the next three or four months, brought interest rates down, people would still put their money in the bank. They would still buy Canada Savings Bonds and they would still put their money into guaranteed investment certificates. They would look for
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the best possible way within the area in which they travel. Most of them travel within a very small area.
I suggest that the Prime Minister (Mr. Trudeau) is talking about his friends in Mount Royal. He is talking about the people he comes into contact with who do not give a damn about Canada. I am talking about the people who work in the Steel Company of Canada, who put their money in the credit union, in the bank, and in certificates. The amounts are small. Those people will continue to do that whether the interest rate is 8 per cent or 18 per cent.


John Leslie Evans: Well, let the credit unions lower their rates.


Ian Deans: The credit unions cannot lower them because they sit next door to the bank. Clearly-


John Leslie Evans: We sit next door to the United States.


Ian Deans: Do not be ridiculous. The Hon. Member knows full well-


The Acting Speaker (Mr. Guilbault):: The period is supposed to be for short questions and short responses. Both the Hon. Members have made long statements. Is there anyone else wanting to ask a question? The Hon. Member for Mississauga South (Mr. Blenkarn).


Donald Alex Blenkarn: Mr. Speaker, I believe that the people who work for the Steel Company of Canada are a little more sophisticated. They do shop around and they do put their money into credit unions and the like which are organized. They put their money into pension funds which are organized to buy shares in companies and which invest in stock market paper and so on. Directly or indirectly, they are involved in that kind of investment.
I was wondering if the Hon. Member felt that we operated our economy in such a fashion as to encourage people to invest in Canadian equities and encourage foreigners to bring their money into the country. That was happening when the Hon. Member for St. John's West (Mr. Crosbie) was the Minister of Finance and the Canadian dollar moved from 83 cents to 87 cents. People at that time were enthusiastic about investment in Hibernia and in the tar sands projects. At that time Canada was looked upon favourably as a great place to put money into, and the country was starting to grow again. Was that what he was talking about when he said it would tend to make it possible to have lower interest rates in Canada, because there would be money coming into Canada for the opportunities and jobs that are in Canada?


Ian Deans: No, that was not what I had in mind.


John Leslie Evans: Mr. Speaker, maybe the Hon. Member has given us the vehicle by which to get him to understand the point.


Ian Deans: Oh, I understand it.


John Leslie Evans: He said-in response to a comment I made- that credit unions could not lower the interest rates by 3 per

May 15, 1984
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cent in isolation because if the people next door, the banks and others, did not, all the people would move their money out of the credit union and put it into the bank because they would get a higher rate of return. Let us take the analogy of the credit union sitting next to the bank, and the credit union artificially lowering the interest rates that it is paying on deposits and the money goes out of the credit union and into the bank. Now, let us draw a bigger analogy and say that the credit union is Canada and the bank is the United States. If Canada lowers its interest rates artificially, what happens? The same thing that happens when the credit union tries it. Money goes out of this one and into that one.


Ian Deans: Mr. Speaker, the Hon. Member's argument is interesting, but wrong. If that were to be a good analogy, how then does the Hon. Member explain the capacity of West Germany to hold its interest rates below those of the United States? How does he explain Sweden holding its interest rates below those of the United States?


John Leslie Evans: They are not as close and they are not as tied.


Ian Deans: The Hon. Member says that money flows easily, and he knows that is true. However, money does not flow by people walking from one town to the next to put their money in. If the Hon. Member is going to use that kind of analogy, would he try to explain to me how it can be that Sweden, Japan, West Germany and Australia can hold their rates down? How can it be that other countries around the world have been able to do that? More important, how can it be that right within the United States itself instruments can be established to provide money for mortgages at rates considerably below those in Canada? I want to put to the Hon. Member that his analogy, although interesting, is wrong.


John Leslie Evans: It is not wrong.


The Acting Speaker (Mr. Herbert):: That is the end of the
ten-minute period for questions and comments. We will continue debate.


Mr. Ralph Ferguson (Parliamentary Secretary to Minister of Finance):: community, to improve the international economic climate within which our economic progress must be achieved.
Canada's economic recovery continues to exhibit the strength which has made the North American recovery a world leader since the recession. From the fourth quarter of 1982 to the fourth quarter of 1983, real GNP rose by 6.6 per cent in Canada in comparison to only 6.2 per cent in the United States. It has been assumed that the firm but more moderate pace of growth of the fourth quarter will continue in Canada, unlike the situation in the United States where a burst of growth has been indicated. Yet our early figures for 1984 show impressive strength in a number of areas, including retail sales, manufacturers' orders, merchandise trade and, in aggregate, gross domestic product.
Recent indications of a firming pace of recovery in the rest of the industrial world are a source of welcome encouragement. For example, the United States Conference Board reports leading economic indices with annual growth rates at 13 per cent in France, 11 per cent in Japan and 9 per cent in West Germany, similar to the 12 per cent and 10 per cent readings for the United States and Canada respectively.
With more than 30 million unemployed in the industrialized nations of the world, job-creation continues to be a world-wide priority of some urgency. Canada is fully in accord with the need to build lasting solutions to the job challenge through encouragement of private sector expansion and the building of basic economic strength. As a nation which relies on exports for a significant proportion of its jobs, Canada shares fully in the commitment to international action to solve economic problems.
Canada's job-creation pace has been similar to that in the United States. However, our labour force has grown more rapidly. The result is a continuing rate of unemployment in excess of 11 per cent. Youth unemployment is of particular concern in Canada, as it is in the United States. We are projecting gradual but steady reduction in unemployment rates for all age groups, as well as a continuation of fairly rapid labour force growth in the years ahead.
Despite strong evidence of continuing growth, there has been an attempt by some to paint Canada's economic growth rate as faltering as compared to that of the United States. In fact, the recent edging upward of interest rates in both Canada and the United States reflects the concern that economic growth now exceeds a sustainable pace in the United States. This fear is, of course, closely related to concerns about the U.S. Government deficit and to the risk that overly rapid growth would create both rising inflation and rising interest rates.
Canada's competitive position has been improving since the recovery began, assisted greatly by a dramatic fall in the rate of inflation. For example, the rate of inflation, as measured by the GNP deflator, reached 3.8 per cent in the fourth quarter as compared to 4.2 per cent in the United States. Productivity has risen substantially. It is up 3 per cent in the fourth quarter as compared with a year earlier. Manufacturing productivity rose by almost 7 per cent, the best performance in 13 years. Unit
Adjournment Debate
labour cost increases have been moderating to a level of only 0.4 per cent higher in the fourth quarter over a year earlier, as against 2.5 per cent in the United States.
Canada's over-all current account continued to show strength in 1983 with a $1.6 billion surplus, the second highest on record. This is also in contrast to the experience in the United States in recent times. Clearly, the recent downward drift of the Canadian dollar against the U.S. dollar is not a reflection of a fundamental weakness in domestic economic performance.


The Acting Speaker (Mr. Herbert):: Order. I regret to interrupt the Hon. Member.
[ Translation]
Order. It being six o'clock, it is my duty to inform the House that, in accordance with the provisions of Standing Order 62(11), the proceedings on the motion have expired.



PROCEEDINGS ON ADJOURNMENT MOTION

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

Mr. Stan J. Hovdebo (Prince Albert):: Mr. Speaker, amendments to the Western Grain Stabilization Act have been presented to the House of Commons in the form of Bill C-33. What a disappointment they have turned out to be. The New Democratic Party has indicated that it would pass the Bill as quickly as possible if that would guarantee a quick payment to the grain producers. Instead, the Government has come up with a series of amendments which will not allow a payment until November, or so. The farmers need some extra cash flow now rather than in the fall after harvest.
Also, the Government has not put into the Bill the specifics of the formula which will make the stabilization plan useful for the next five years. Instead, the Government has chosen the amount of $250 million and is busily designing a formula which will trigger a pay-out of that amount. In other words, the Government's concern is not so much for the farmers as it is about the money it will have to pay out. The Government wants to keep the payment as low as possible so that only farmers' money will be returned to them. In the last five years farmers have put in $300 million. The Government is manipulating the formula to ensure a payment of $250 million. Not only will the Government not return the farmers' money with interest, it will not even return the farmers' money. No wonder many farmers want out of this stabilization plan.

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Adjournment Debate
My question is therefore a request for clarification, Mr. Speaker. Before the Government tries to push these amendments through the House, will it make the following guarantees? Will it guarantee to establish a secondary pay-out triggering mechanism that will be effective now, next year and for many years to come, and which will be sensitive to producers' needs, as it was intended?
Will the Government put into the amendments a retroactive feature which would allow payments for the 1983 calendar year? The Government could make this possible by an Order-in-Council. The Government was able to do that for the railroads. The Crow benefit was paid to the railroads before the legislation was passed and was made retroactive.
Will the Government put into the amendment an interim payment clause which would allow a payment to any time that a need is indicated and a pay-out is obvious?
Will the Government amend an initial deficiency in the Act and allow the Act to make pay-outs on a regional basis when the circumstances show such a need?
Will the Government arrange and put before the House, or the appropriate committee, an assurance that the cost of operation and its relationship to income will be a major factor in the decision to make a pay-out? Will the individual farmer's net income be a factor in the formula?
In establishing the formula will the Government also address itself to recognizing that there are problems generated by successive crop or market failures which would not otherwise be a problem?
Will the Government also add an insurance factor for crop or market failures for specific crops? If the bottom falls out of the flax market, it affects specialist farmers. The stabilization plan could trigger a payment for those farmers dependent upon that market.
The small amount which the Government intends the amendments to this Act to generate, an average of $2,500 per farmer, will not bail a farmer out of bankruptcy. However, it may buy the fuel or chemical for spraying or harvesting this summer or fall. This Bill could be a good start to an income security plan for the grain farmers. Will the Government move in that direction when it presents this Bill to the appropriate committee?


Mr. Andre Bachand (Parliamentary Secretary to Minister of Agriculture):: Mr. Speaker, in answer to the question raised by the Hon. Member for Prince Albert (Mr. Hovdebo), I agree that making interim payments under the Western Grain Stabilization Act may seem attractive. Many western farmers are now short of cash, and it is true that funds to help them under the Grain Stabilization Program are available.
However, the picture changes if we take a closer look at the issue. First, interim payments are usually made when the present formula for calculating costs and income indicates the
need for such payments. That is not the case now, for the year 1983. In fact, that is why, on May 10 of this year, we tabled a Bill to amend the Western Grain Stabilization Act. The proposed changes should, we hope, result in substantial payments for 1983-84.
To be able to make these payments, the Bill must first be enacted. Furthermore, as the House is aware, the legislation provides that payments cannot be made until the end of the year, which will be the end of July if the Bill is passed in its present form. The new legislation was designed to accelerate pay-outs. We are, in fact, suggesting that the crop year be used instead of the calendar year as the period over which receipts are to be calculated. Thus, farmers will be entitled to receive payments in October or November instead of having to wait for nearly ten months after the end of the calendar year, as is the case under the present program. As a result, interim payments will no longer be such a vital issue.
We must also consider the administrative problems that would be caused by such payments under the new legislation. July deliveries may fluctuate enormously, and it is hard to make a reliable estimate. Furthermore, July 1 is the reference date used by Statistics Canada in calculating expenditures under this program. Final results are not available until two months later. Furthermore, it is difficult to evaluate the expenditures in these figures.
Finally, I may recall that if our Bill is passed, at the end of October farmers will probably be entitled to payments totalling about $300 million. Such payments would come at a time when most farmers are proceeding with major banking transactions. The approximately $6,000 each farmer will receive under the program would therefore be very welcome. That is why I hope every effort will be made to expedite passage of this Bill so that payments can be made at that time.


THE ADMINISTRATION-LIBERAL PARTY CAMPAIGN-ROLE OF CONTRACT EMPLOYEE. (B) MINISTERIAL STAFF GUIDELINES
Mr. Tom McMillan (Hillsborough):: Mr. Speaker, on Monday, April 30, 1984, I posed two questions to the Minister of Justice (Mr. MacGuigan) concerning the continuing involvement of one Jim McDonald in the Minister's Liberal leadership campaign as principal organizer or manager, at the same time that Mr. McDonald is also serving as a contract employee in the Minister's office as a speech writer. There is at least the appearance that the taxpayers of Canada are subsidizing, through the back door, the Minister's partisan activities. In this case it is his bid to become the leader of the Liberal Party of Canada. Such an arrangement between the Minister and Mr. McDonald is not only immoral but also against the Prime Minister's (Mr. Trudeau) guidelines on that subject.
Indeed, on April 11, the Prime Minister told the House in reply to a question from the Hon. Member for Durham-North-umberland (Mr. Lawrence) that there should not be any
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involvement of any ministerial staff, permanent or otherwise, in a leadership candidates' campaign in any important way, in the Prime Minister's words, "without that staff either resigning or asking for a leave of absence."
The guidelines are clear enough. In the case of Mr. McDonald, he can either resign as the Minister's campaign manager or he can step down as a contract employee from the Minister's office. He cannot do both, but he is doing both. This is a clear affront to the law as laid down by the Prime Minister himself.
In response to my questions, the Minister said two things. First, he said Mr. McDonald is not employed in his office, but rather a company in which Mr. McDonald is involved has a contract with the Minister's department. Second, the Minister said the contract in question, though it will continue until after the Liberal leadership convention in mid-June, had been entered into by the Government of Canada before the Minister became a leadership candidate and it must now be honoured until the original expiry date. That was the claim by the Minister. He argued that the contract was with a company in connection with which Mr. McDonald had some activities, but that the signing of it was before the Minister became a candidate and, therefore, everything was fine.
There are two things wrong with the Minister's two-barrelled reply. To begin with, while it is true that the contract in question is with Mr. McDonald's company and not technically with Mr. McDonald himself, the reality is that the company is Mr. McDonald. The company is called Nunavut Communications, which is simply Jim McDonald incorporated for the purpose of his conducting business with clients. Certainly, he has a small staff, and in that sense, the company is more than Mr. McDonald alone. But the company centres on Mr. McDonald; it revolves around him. For all practical purposes it is Mr. McDonald himself. So the Minister was misleading the House in suggesting otherwise.
Moreover, any contract of the kind about which we are talking would have to be honoured by both parties under normal circumstances, as the Minister stated. No question about that. A contract is a contract no matter what might ensue after its signing. Any contract, however, can be broken or nullified with the agreement of both parties. And given the clear conflict between Mr. McDonald's partisan activities and the Prime Minister's guidelines-the incompatibility between the two-the Minister should insist that his campaign manager either resign from that post or resign from this contract position in the Minister's office. Mr. McDonald for his part, should oblige the Minister's order if only to preserve the Minister's reputation for personal integrity in the course of the leadership campaign. Otherwise we can only assume the worst, namely, that Mr. McDonald's contract arrangement is nothing more than a facade behind which he is hiding his true activities in the Minister's office and with the Minister as he travels throughout the country, at taxpayers' expense. His true pur-
Adjournment Debate
pose is the promotion of the Minister's candidacy for the leadership of the Liberal Party.
Mir. A1 MacBain (Parliamentary Secretary to Minister of Justice and Attorney General of Canada): Mr. Speaker, in response to the Hon. Member's question of April 30, I would like to refer him to statements made by the Hon. Minister of Justice (Mr. MacGuigan) in this House on the same day, as well as to the response on May 1, 1984, of the Right Hon. Prime Minister (Mr. Trudeau) to a question put by the Hon. Member for Durham-Northumberland (Mr. Lawrence) concerning the employment of Mr. Jim McDonald. I should like to reiterate that Mr. McDonald ceased to be a contractual employee in the office of the Minister of Justice as of April 1, 1984, and did sever all personal contractual links with the Department of Justice as of that date.


Thomas Michael McMillan: What about his company?


Mr. MacBain:: Therefore no moneys were expended by the Government of Canada on his personal behalf beyond this date.
Regarding the two contracts in question with the Department of Justice, I should like to point out to the Hon. Member that one deals with the provision of speeches for the Minister of Justice on matters pertaining to his portfolio, as well as various legislative programs introduced by the Hon. Minister during the present session of Parliament. The speeches which are required for speaking engagements relating directly to departmental responsibilities of the Minister were written and are presently being drafted by a speech writer hired by that company. The other, which terminated on April 30, 1984, was for the Second People's Law Conference on the Family and the Law which took place in Ottawa on April 9 and 10, 1984. The conference brought together 250 delegates from all parts of Canada, including a large number of professionals experienced in various services dedicated to supporting and enhancing the family as one of the most important institutions in our society.
The company was contracted to organize and arrange the attendance of participants at this conference-accommodation, transportation and conference facilities which included the administration and operation of the conference as a whole.
I should like to state for the record that Mr. McDonald was not directly involved with these two contracts. Both these contracts were signed by one of the co-partners of the company of which Mr. McDonald is a participant.


VETERANS AFFAIRS-NUCLEAR RADIATION EXPOSURE- DEMAND FOR EXPERT MEDICAL EVIDENCE. (B) CASE LAW-REQUEST FOR ACCEPTANCE OF PRECEDENT
Hon. Allan B. McKinnon (Victoria):: Mr. Speaker, on May 10, I asked the Minister of Veterans Affairs (Mr. Campbell) why he does not accept that there is a connection between nuclear radiation and cancer. In a supplementary question I

May 15, 1984
Adjournment Debate
asked him to accept the common law principles of precedent decisions and case law. Those two questions and answers were picked up by Associated Press of Salt Lake City and were published under a headline entitled "Cancer victims win N-test ruling". In part the article read:
A federal judge ruled Thursday that the U.S. government was negligent . .. and ordered it to pay $2.6 million in 10 cases where he blamed fallout for causing cancer.
The article continued, and in the last two paragraphs it noted what was going on the House of Commons in Ottawa as follows:
In Ottawa, Conservative MP Allan McKinnon, ... pressed the compensation claims of Canadian servicemen who developed cancer after exposure to radiation.
The Victoria MP asked Veterans Affairs Minister Bennett Campbell why his department continued to demand expert medical evidence from every claimant despite having recognized the link between cancer and radiation in other cases.
For some years Members of Parliament have been asking the Minister to take action to ensure that all Canadian veterans exposed to radiation at the nuclear tests in Nevada, or at the Chalk River clean-up, be located and the state of their health determined. Repeatedly the Minister has assured the House and these veterans that he was taking action in this regard.
The Minister is really putting us off with promises of studies under way and recommendations forthcoming. Last week in response to my question he said:
We expect to receive a total analysis of their case, and a recommendation arising from the study, later this fall.
This afternoon he said that the study would be ready in August. We are making progress. Perhaps, if we keep asking him, he will be able to produce a report within a week.
Meanwhile, veterans are suffering, and some of them are dying as a result of radiation-induced cancer. It is understood that the interpretation of the governing legislation, the Pension Act, follows common law principles. These principles are based upon the concepts of precedent decisions and case law. The Canadian Pension Commission has failed to follow these principles by requiring every veteran who comes forward with an application for a disability pension for cancer related to his exposure to nuclear radiation to establish, yet again, that there is a connection between his exposure and his illness. The Commission requires that the veteran produce expert medical evidence, from a recognized authority in the field, that his cancer is related to his exposure to nuclear radiation.
This should not be necessary. Not only is it difficult for veterans who live outside Canada's major cities to locate one of these recognized experts, but they should not be required to reinvent the wheel for the benefit of the Commission.
How many such veterans are there in Canada? My understanding is that 600 servicemen took part in the Nevada tests. Another 400 servicemen took part in the Chalk River clean-up. That makes 1,000 veterans who were subject to nuclear radiation. We need to know how many of them developed cancer.
The Pension Commission has the names and addresses of these thousand servicemen who took part, which I understand it received from the Department of National Defence. I understand that is nearly all of them. Others went around on training exercises teaching people to use geiger counters some 20 years ago. They were forced to carry cobalt sources so they would have something to test. If the Department is unable to get in touch with these 1,000 veterans, but is kind enough to give me the names and addresses, I will get in touch with them.


The Acting Speaker (Mr. Herbert):: Order, please. The Hon. Parliamentary Secretary to the Minister of Veterans Affairs.


Mr. Jean-Louis Leduc (Parliamentary Secretary to Minister of Veterans Affairs):: Mr. Speaker, the question raised by the Hon. Member is an interesting one. The relationship between nuclear radiation and cancer has re-opened the debate, not only in Canada, but also in other countries.
The Canadian Pension Commission has already taken steps to obtain information on some aspects of the issue. The Hon. Member is certainly aware that the Commission is financing a study on nuclear radiation and its effects. The Epidemiology and Community Medicine Department of the University of Ottawa Medical School has been asked to carry on this study.
Under this contract a research team has begun to examine the impact of these factors on the death rate. The first thing was to find the members of the Armed Forces who had done decontamination work in Chalk River in 1953 and 1958, as well as those who had attended atomic bomb testings in Nevada and Australia during the fifties.
With the assistance of the Department of National Defence, the researchers were able to trace about a thousand people who took part in those operations. They were also given a list of veterans whose occupation, status and age were roughly the same as those of the people who had been exposed to radiation.
Mr. Speaker, a computer tape with all this information recorded was sent to Statistics Canada, where the data is now being compared with the files on the Canadian death rate up to 1981 inclusively. We hope that this stage of the study will be completed by the end of June. This analysis of the data by computer will enable the University of Ottawa to submit its report by August 31.
The Minister of Veterans Affairs (Mr. Campbell) and the Canadian Pension Commission had hoped to get the report some time ago, but it was very difficult to trace such a large number of veterans.
The Hon. Member for Victoria (Mr. McKinnon) is well aware that, in the meantime, there is nothing to prevent a veteran who believes his health to have deteriorated because of
May 15, 1984

his having been exposed to radiation to apply to the Commission for an allowance. However, once this study has been completed, we hope that its findings will enable the Pension Commission to develop guidelines that will be used to process all allowance appliations related to nuclear radiation and its medical effects.
Adjournment Debate


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

May 15, 1984


APPENDIX
[Stage Direction]
Your Excellency:
(or should I say "Madame", the title the French have used to address their Sovereign?)
It is a privilege and a great pleasure for me to offer you the best wishes of the Government, Parliament, and all the people of Canada on the occasion of your installation as Governor General. As your first official gesture, I would ask you to send Her Majesty, the Queen of Canada, a message assuring her of our loyalty and affection.
[English)
After being represented in Canada by men for such a long time, it is right and proper that Her Majesty should finally have a woman representative here. And I am happy and proud to participate in this momentous event, the installation of our first woman Governor General.
We are gathered today to celebrate a remarkable person but also a welcome evolution of our society. In fact, for this historic event to take place the natural candidate for the position had to be available at the appropriate time.
The time is appropriate, because our modern society is increasingly aware that women's qualities of mind and heart are every bit as valuable as men's, and that we need their fresh approach and commitment to peace and mutual support in order to establish a more humane society in Canada and throughout the world.
The time is appropriate especially because, for some years now, outstanding women have been challenging and conquering old taboos. With skill and determination, they have won access to the highest positions in the land. By freeing themselves from the restrictions that circumscribed their situation, they have inspired us to shake off our old prejudices and practices.
I am thinking here of pioneers like Emily Murphy, Nellie McClung, Louise McKinney, Irene Parlby, Henrietta Muir Edwards, Therese Casgrain, and many others who waged an uncertain battle at difficult times in our history.
I am thinking, too, of Pauline Vanier, Norah Michener, Gabrielle Leger and Lily Schreyer, who have a special place in the hearts of Canadians because their strength and unselfishness have left their stamp on their husbands' tenures as Governors General.
Lastly, I am thinking of all those women who have opened the doors of our highest institutions to their colleagues, women like Agnes MacPhail, who in 1921 became the first woman elected to the House of Commons; Cairine Wilson, the first woman to be called to the Senate, in 1930; then in 1957, Ellen Fairclough, the first woman to serve in the federal Cabinet; Rejane Laberge-Colas, the first woman to serve on a supreme court, appointed in 1969; Muriel Ferguson, who in 1972 became the first woman to serve as speaker of the Senate; Sylvia Ostry, who in the same year was the first woman appointed to a deputy minister's position in the federal public service; Pauline McGibbon, in 1974 appointed the country's first woman lieutenant-governor; Constance Glube, the first woman to become Chief Justice of a Supreme Court, in 1982; and Bertha Wilson, who also in 1982 became the first woman justice of the Supreme Court of Canada.
As the first woman to occupy the chair of Speaker of the House of Commons, in 1980, and to become Governor General of Canada, 1984, you stand in the line of these pioneers. During your remarkable career, you have accumulated probably more "firsts" than any other Canadian woman.
However, it is not merely to add to your record, nor because you are a woman, that the office of Governor General befalls you today. You have been chosen because, in the opinion of all, you are the ideal candidate for the position.
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The role of Governor General is essentially one of rallying Canadians around the ideals that form the basis of our will to live together. .. and who among Canadians could do it better than you, Madame?
First of all, you represent all the richness and diversity of this country. You were born in Saskatchewan and raised in Ontario, right here in Ottawa. After completing your studies in France and Great Britain, our two mother countries, you pursued a career in Montreal in French and English television, with both the CBC and the private sector. Later, you travelled the country from one end to the other as a federal Cabinet Minister. And, as if that were not enough, as Speaker of the House of Commons you were called upon to preside over some of the most fundamental debates in the history of Canada, at the time of the referendum and the patriation of our Constitution.
This long familiarity with Canada has given you a great love for it, a love that, more than anything else, you wish others to
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share. No one can hear you speak of Canada without being struck by your deep sincerity. Moreover, the warmth of your personality embodies to perfection the ideals of open-mindedness and tolerance, the spirit of sharing and brotherhood, that the Fathers of Confederation dreamed of realizing in this land.
These, then, are the reasons underlying your elevation to the position of Governor General of Canada. All Canadians trust in your talents to strengthen the country's unity and to embody, with grace and nobility, that ideal out of which the Canadian federation was born and which continues to inspire it. I am sure they will not be disappointed.
I wish to thank your husband and your son for agreeing to share you with us. I hope they will enjoy helping you carry out your duties.
On behalf of all Canadians, I wish you happiness and good health.
Henri Rochefort said that France had thirty-six million subjects, not counting the subjects of discontent. Give or take a few figures, the statement also applies to Canada.
Madame, may you find the words to persuade us that, for 25 million Canadians committed to live together, there is no subject of discontent that we cannot resolve in our efforts to build this country with honour, justice and respect for our diversity.
May God keep you and inspire you.

[Stage Direction]
Prime Minister,
In accepting the high office of Governor General of Canada, I will be honoured to convey to Her Majesty, Queen Elizabeth II, who has kindly agreed to my nomination, the message which you have entrusted to me, and with it, the assurance of the respect and affection of all Canadians.
I have been deeply touched by your words, Prime Minister. They have illustrated and emphasized your attachment to fundamental values and the importance which you place on the defence of rights and the assurance of equality. They are a testimony to the progress you have always sought to promote and preserve and to your love of this country. I also wish to thank you for having so sincerely and persuasively expressed your ideas on the significant contribution of Canadian women to the life and progress of our society.
[Stage Direction]
In responding to that trust which you have conferred upon me, I follow in the footsteps of the multitude of women who, for 450 years, have served as the inspiration, and to a large degree, the artisans of this nation; those women by whose hands we have prospered and for whose spirit we have been praised. In the days and weeks ahead I will commit my efforts to the promotion of those ideals of unity, brotherhood and
peace. Even then, my determination and commitment are but a small fraction and reflection of the many gestures of good will and affection I have received, and to all 1 am profoundly grateful.
We live in a vast land of plenty which has never been laid waste by natural or political catastrophe. Though we have our problems, they are not as tragic as those faced by people who live in destitution, by the hundreds of millions of human beings pushed to the brink of despair. We go where we like without anyone challenging our right to do so, we say what we like without anyone imposing a totalitarian philosophy or system upon us. Each person is free to follow their own star, hold whatever beliefs they choose, express their ideas and opinions without fear; goods move freely, and each individual can share in them. We are not immune to human suffering, but in Canada it is not as deep-rooted and pervasive as the heartrending misery elsewhere in the world. Although we have to work hard, we do so in safety, and we have never been denied the right to hope.
[Stage Direction]
It is for this reason that, from the smallest family unit to the largest gathering of our national community, we must forge a common purpose that will reinforce good will, bring together all our energies and proclaim the values we have inherited. These values are a reflection, first, of the achievements of our history, of the infinitely varied traditions preserved by our ethnic groups; in a more dynamic way, they are reflected in the long-standing effort by our nation to move along the path of modernization toward a humanism which will add to the common heritage so patiently and painstakingly built up over the years.
We have inherited a vast territory with well-established institutions, boundless resources and material wealth acquired at great sacrifice by those who have gone before, and it is our duty to fashion new tools for new hands; to go beyond our immediate horizons in search of a broader perspective; to scale new and as yet unimagined heights; and to move more quickly and surely toward the ultimate goal of expanding the potential of both the individual and the community. We must build in Canada a life to which people are not merely resigned but in which they will wish to participate fully.
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Who are we and what do we wish to become? The answer is obvious. Despite our varied ethnic and racial origins we are Canadians determined to carry on the building of a great nation. We must go beyond even this ambition and aspire to set an example for the world by a deep involvement in global reconstruction, a reconstruction whose final objective is peace.
Peace is the ultimate goal from which we cannot digress as long as the world is inhabited by starving, mistreated people who are victims of the selfishness, indifference and cruelty of others. Peace should be our rallying cry, our foremost cause, and the most compelling objective of our common action.
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Our commitment to peace must govern our state of mind and determine our approach to life and to work. This cannot be achieved in a nation of polarized thought and divided action. The desire for unity is, beyond doubt, the factor which inspires people to come together to create a truly human community.
In this spirit, we are fond of describing Canada as one big family. But what do we mean by family: a socio-political and cultural reality, an economic situation, a political status. All of these, of course, and also, I would hope, a common purpose to shape together the destiny of every member of the community. This can only be realized if we go beyond our borders and reach out to other nations to share with them the benefits of our efforts and research.
History and geography have determined where and how we live. We are aware how the challenges and obstacles they have provided have influenced our attitudes and our behaviour. What have we achieved through our efforts? I believe that after more than three centuries, our national character is beginning to take shape. All that remains is a final delineation of the traits by which other nations identify us. As Canadians in North America, historically and culturally linked to our countries of origin, we have won the right to determine our own future and to play a role on the international scene.
[Stage Direction]
Should not our role be to return to fundamental values, to adapt to new ways of life, to review the basis of our private and public code of ethics and to utilize for the benefit of all the marvelous products of new technology. In approaching the new frontiers made possible by modern technology we must ensure that man does not become servant to the machine, but rather its master.
This, it seems to me, is a spiritual goal that can transcend mere insular nationalism and inspire us with the ideal of making the human adventure meaningful and filled with enthusiasm and hope. If Valery was right when he said "we now know that civilizations are mortal", we should also realize that each civilization bears within it the seeds of its own regeneration and transformation.
This is the reason I have every confidence in my fellow human beings and in man's potential and it is this that impels me to make an urgent appeal to my fellow Canadians to reach out to each other. If they would only remember that without co-operation, any attempts at communication and understanding will produce only meaningless encounters and temporary truces.
[Stage Direction]
As we approach the end of this century, we are not immune to the crises that buffet our world and threaten its stability. The effects of this turmoil will be suffered even more tragically by the next generation; living as they will in apocalyptic times when virtually everything will be subject to question. We have made great material progress and worked hard to secure
this legacy for our children. We now have more money and more leisure time. Despite this fact, everything around us shows signs of impatience. Weakened by advertising, persuaded to claim, to demand, to receive and to take more, we act far too often like children who leave their broken toys to demand new and more exciting ones capable of rousing them from their state of torpid satiation.
Our mistake lies in our erroneous definition of humanity and the meaning of happiness. We have been seeking such happiness beyond the rainbow and it is now time to step back and reflect calmly, to take stock of our resources so that we can again set out on a voyage of discovery and find the meaning of the human journey.
When I ponder on the youth of this country, I am filled with pride and confidence. Their search for knowledge, their need for involvement, their dynamic nature and their strength of conviction assure us that in their own time they will carry out their role in determining the future. Their attitude shows us that they will be willing to accept the responsibility of mastering their own fate.
The day will come when they will replace us, when those whom we have tried to help will leave the paths we have laid out and go another way to build the city according to their own plans and to meet the new requirements of a new age. Would it not show an unforgiveable arrogance and lack of foresight on our part to try to forestall criticism of us at all costs by contriving to build and mortgage a world for the future which is not ours to create? There is a universal law that governs the progress of civilizations: one generation lays its stone, the next contributes another and, if the building material is always the same, the whole will reflect the vision, spirit and will of those who, one after the other, worked and died to build it. Although we have an obligation to build for future generations, we must not try to take their place and, in our feverish activity, give the impression that we do not trust them to be inventive and resourceful in their turn. We must prepare them for life, but we could be wrong to try to live their lives for them according to a model of our making.
As for myself, I have great faith in the youth of today. My past experience working with youth associations and my daily encounters with young people have revealed to me their spirit and potential. I am certain that when their time comes they will take up the challenge and shoulder it with success. As you yourself have said, Prime Minister, there are no insoluble problems, there are no situations that we cannot improve or correct if we unite our efforts; what we need to do is to talk to each other, to work together intelligently and honestly and let time, "the great sculptor", as Marguerite Yourcenar has so aptly put it, shape and refine the structure of our Canadian federation.
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I believe in the strength of our people, in our collective strength, and in the power to recreate society through the practice of those time-tested virtues that have always led
May 15, 1984
[Stage Direction]
people to surpass themselves and give the full measure of their faith, wisdom and courage. We must practise these virtues together. My task, which I take on publicly before you, is to become better acquainted with my countrymen, to meet with them, to seek them out wherever they are in this great land, and to instil in them the confidence that makes and seals destinies. Our common task is to promote tolerance, to help each other, and to reject imitations of freedom. This is the price of our happiness, but happiness will never be found in the spirit of "every man for himself'; it requires that we share our good fortune as Canadians so that we might benefit the many peoples of the world.
To carry out my duties, I need the help of each and every one of you now and in the future. We must be united in spirit if we are to go forward in unity and brotherhood on the exhilarating road that Providence has so generously laid out before us. As Ecclesiasticus says:
"... as the governor is, so will be the inhabitants of his city." (Eccl. 10:2)
I ask for your support in the days ahead. We share with each other a common inspiration for we have all at one time experienced the eternal truth expressed in the words of the psalm:
"If Yaweh does not build the house, in vain the masons toil..." (Ps. 127:1)
[Stage Direction]
Wednesday, May 16, 1984