1984-05-30

STATEMENTS PURSUANT TO S.O. 21


Mr. Stan Darling (Parry Sound-Muskoka):: 
NORTH ATLANTIC TREATY ORGANIZATION
Mr. Ron Stewart (Simcoe South):: Mr. Speaker, this week the 16 Foreign Ministers of the NATO countries meet for the Alliance's thirty-fifth anniversary meeting. "Peace and freedom through deterrence" has been NATO's strategy since 1949, and it has been a successful one. This strategy has worked as a deterrent to Soviet aggression since 1949 because
NATO members have remained firm in their resolve, despite the best efforts of the peace movement, that pledging a no first use of nuclear weapons would encourage Moscow to launch a conventional attack on western Europe.
At the Atlantic Treaty Association conference last year NATO Secretary General, Joseph Luns, made the following observation:
It has always been an imbalance in weaponry and manpower, coupled with a desire to impose one's will on others by force, which has led nations to consider it worth the risk of beginning a war .. . The safest way to preserve peace is to ensure as close a balance as possible between the arsenals on each side.
That is the principle which must guide the Alliance in the future as we seek fair and verifiable agreements with the Soviet Union.
As Canadians we must live up to the goals to which we are committed. Estimates of defence expenditures as a percentage of Gross Domestic Product for 1983 place us at the bottom of all NATO partners with 2.1 per cent, just ahead of Luxembourg. Our NATO partners deserve and expect more from us in the future.


ENVIRONMENTAL AFFAIRS
Mr. Pierre  Gimai@: Mr. Speaker, last week I heard on the news that the Quebec Minister of the Environment was very proud of the fact that the provincial government was going to proceed with a program to renovate the copper smelter facility at Noranda. Surprisingly, the Minister announced the policy only a few days after the Hon. Minister of Energy, Mines and Resources of the Government of Canada had released a report on non-ferrous metals and smelters across Canada. For over two years, the Quebec Minister has failed to show any concern about the acid rain issue. Now that the Government of Canada has released an excellent and well-researched report, describing the policies and technologies that must be introduced to fight acid rain and upgrade existing technology in non-ferrous smelters, it is rather surprising to see the provincial government wake up all of a sudden and ask for federal assistance, especially since it was at the Federal-Provincial Conference, boycotted by the Quebec Minister of Energy and Resources, that the federal Minister asked for implementation of such policies.

May 30, 1984
Finally, Mr. Speaker, I would like to point out that the only province that was politically hostile and refused to offer any co-operation at the ministerial level with respect to preparing for and organizing the conference, was unfortunately, my home province, the province of Quebec. I think it is unfortunate, because for the benefit of all Canadians, the Government-


Mr. Speaker:: Order. The Hon. Member's time has expired. The Hon. Member for Winnipeg-Birds Hill (Mr. Blaikie).


BANK ACT
Mr. Bill Blaikie (Winnipeg-Birds Hill):: Mr. Speaker, I should like to recall the attention of the House to the issue of the Royal Bank's car buy-back loan program, an issue which was previously raised by my colleague, the Hon. Member for Winnipeg North (Mr. Orlikow), on May 11.
Automobile dealers in my riding have expressed to me what I think should be a concern of all of us in the House, that the Royal Bank may be flouting the will of Parliament by implementing what could well be argued is the leasing of vehicles, an idea which the House rejected when we last debated the Bank Act. It was the clear intent of the House at that time that banks not be allowed to get into the business of leasing vehicles. The Royal Bank's buy-back plan, for all practical purposes, is a form of closed-end leasing under a different name.
The Minister of State for Finance (Mr. MacLaren) indicated to my colleague on May 11 that the Royal Bank plan was under review and that, when the review was completed, he would be able to give an answer. I call upon him to come forward soon and indicate whether the Government intends to let the Royal Bank get away with this or whether it intends to do something about it.


THE CONSTITUTION
Mr. Bill Yurko (Edmonton East):: Mr. Speaker, the very First paragraph in the Constitution Act, 1981, which is Canada's Constitution, states: "Whereas Canada is founded upon the principles that recognize the supremacy of God and the rule of law."
Just how would the Supreme Court interpret and uphold these principles? So I dare ask this Parliament, which passed this Constitution Act, what are these principles? Where are they transcribed? How is this nation, Canada, which is founded upon these principles, to know these principles? Are these principles taught in our schools, in our homes, in our churches, or in our institutions?
On November 23, 1983, I suggested in this assembly that this Parliament proclaim a Day of Prayer in Canada in early 1984, a day on which each of us might dwell upon these principles, a day on which we might all pray for world peace and brotherhood, a day on which each of us, after his or her own manner, can quietly recognize the supremacy of God.


FEDERAL-PROVINCIAL RELATIONS TRANSFER PAYMENTS TO QUEBEC
Mr. Jean-Guy Dubois (Parliamentary Secretary to Minister of Employment and Immigration):: Mr. Speaker, yesterday I made a statement under the provisions of Standing Order 21 about fiscal transfer payments to the province of Quebec.
Today I noticed, and my hon. friend for Lac-Saint-Jean (Mr. Gimai'el) will corroborate me on this, an article in the newspaper La Presse which reported some comments made by the Member for Argenteuil in the National Assembly, Mr. Claude Ryan, who gave some very telling figures. I want to congratulate him and thank him for what he said to the PQ counterparts in Quebec, namely, that if the provinces have the means "to provide plans for free health insurance, hospital insurance, and school and university tuition programs, it is because federal transfer payments made these plans possible. We could not have done this alone. We must realize that! And when we are talking about the pros and cons of the federal system, these are points that must be conceded." Mr. Ryan also commented that between 1974 and 1984, transfer payments received by Quebec from Ottawa increased by 346 per cent. During the same period, Quebec's own tax revenues increased by only 240 per cent. Federal transfer payments represented the following percentages of the federal Budget: 4 per cent in 1937, rising to 8 per cent in 1960 and 20 per cent in 1983. Those are the advantages of Canadian federalism and that is the kind of thing Quebecers should be told, to encourage them to remain in Confederation and continue to be a part of Canada. The province of Quebec must continue to be a part of this country!


AGRICULTURE
Hon. Roch La Salle (Joliette):: Over a month ago, Mr. Speaker, Quebec UPA spokesmen and certain Government Members met with the Minister of Agriculture to seek finan-
May 30, 1984

cial assistance as a result of the drought experienced last summer by farmers in many Quebec ridings. Following that meeting, the Minister of Agriculture said that he would be prepared to compensate those farmers, provided his provincial counterpart made an official request. On April 16 last, the Quebec Minister of Agriculture submitted an official request for federal Government assistance. In response, the federal Minister of Agriculture simply said that the request was worthless since his Quebec colleague did not make a cost-sharing proposal.
That, Mr. Speaker, is an unbelievably stupid joke on the part of certain Government Members who had promised financial aid to the Quebec UPA. Given the condition laid down by the Minister of Agriculture, Mr. Speaker, it was a stupid joke in the circumstances, and I urge the Minister and his Quebec colleagues to elicit an affirmative response from the federal Government, with generous aid, as was done for other regions of the country two or three years ago, and for the same reasons, Mr. Speaker.
That is why I insist and ask Members opposite to stop being such hypocrites when the basic needs of Quebec farmers are involved.



ORAL QUESTION PERIOD


Hon. Brian Mulroney (Leader of the Opposition):: Mr. Speaker, my question is directed to the Minister of Finance. The National Chairman of the Canadian Manufacturers' Association said yesterday that the recovery had turned "generally flat". According to Mr. German, the manufacturing sector had recovered only about 40 per cent of the 300,000 jobs that were lost during the recession. He said that the recovery is still "very hesitant, very uneven and very fragile". Does the Minister agree with the assessment made by the Chairman of the CMA? If so, will he be unveiling any new policies designed to meet this problem, particularly for the
550,000	young people who are out of work and who, it would appear, will be out of work for an extended period of time? Will the Minister be unveiling any new policies in light of this statement?


Hon. Marc Lalonde (Minister of Finance):: Mr. Speaker, I would first like to welcome the Leader of the Opposition back to the House after a long absence.


Some Hon. Members:: Hear, hear!
Oral Questions


Marc Lalonde: I suspect that he found that the more he travelled within Canada, the worse his Party was doing, so he decided to try his luck in the House. I welcome him back and we will see how it will all end up.
I would like to point out to the Hon. Member that there has been a significant recovery in Canada. As a matter of fact, in the first quarter of 1984 the economy recovered all that which had been lost during the recession. We have succeeded in overcoming our position of 1981 before the recession. Unfortunately, we have not yet recovered all of the jobs that were lost, and this is something we are addressing consistently. That problem was addressed in the last Budget of February 15 and is being addressed through the numerous programs that are being implemented by the Department of Manpower and Immigration.
The recovery has been going on. The growth of the Gross National Product in the first quarter of 1984 was in the range of 1 per cent, which is what I had foreseen in the Budget, and I see no reason to believe that we will not continue to see significant growth during 1984.


HOUSING STARTS-REQUEST FOR MEASURES TO ASSIST CONSTRUCTION INDUSTRY
Martin Brian Mulroney: Mr. Speaker, as the Minister knows, housing starts are the alarm bell of the economy, and housing starts were down by 37,000 April to April this year as compared to last year. This has resulted in approximately 100,000 lost jobs. In light of this, what economic measures is the Minister planning to introduce to assist the construction industry so that it may climb out of the very serious doldrums into which it has been placed by the policies of the Government, including its high interest rate policies? Will he outline some specific programs today?


Marc Lalonde: Mr. Speaker, I would first like to remind the Hon. Member that, in his absence, we have discussed the interest rate policy extensively and it has been demonstrated that the Government does not have a high interest rate policy.


Some Hon. Members:: Oh, oh!


Marc Lalonde: On the contrary, we have had a consistent policy of keeping the lowest possible interest rates in this country. This can be shown by looking at Canadian interest rates as compared to those of the United States. Even today the prime interest rates in Canada are half a point below those in the United States. Average mortgage rates, on a consistent basis, are lower in this country than in the United States. The Hon. Member should realize that we have indeed pursued a policy of having the lowest possible interest rate.
Regarding housing starts, it is true that they have not grown as fast as they did last April. However, the Hon. Member will recognize that in the first quarter of this year the increase in housing starts was about 6.3 per cent over that of the last quarter of 1983. He will also recall that in the first part of 1984 we were engaged in a program of very active stimulation

May 30, 1984
Oral Questions
through grants for housing construction, which was terminated in April. There was a very strong demand for housing then because the program of subsidizing the purchase of homes was to conclude at the end of April or early May. That resulted in an artificial increase in the construction rate at that particular time. We foresee that during the course of this year we will see further increases in the rate of housing starts.


INQUIRY WHETHER NEW BUDGET BEING PREPARED
Martin Brian Mulroney: The
current economic analysis by Statistics Canada shows that of the ten leading economic indicators by which one can objectively judge the performance of the Government, six of them are in a state of sharp decline. Since it is becoming clear by any objective standard that the Minister, and his budgetary statements, have clearly misjudged the ailments, and the remedies which should be brought to the economic problems, can the Minister inform the House whether he has instructed his Department to prepare a standby budget, or one which can be brought forward quickly after a new Liberal leader is selected? In other words, it is generally acknowledged that the economic measures have failed. In an attempt to save his own job, does the Minister already have on standby his own Budget to be brought in when the next Liberal leader orders him to do so? Can he tell us that now?


Marc Lalonde: First of all, Mr. Speaker, the Leader of the Opposition should not only have referred to the next Liberal leader but also to the next Prime Minister after the leadership convention, and after the election.


Some Hon. Members:: Hear, hear!


Mr. Hnatyshyn:: Pro tem!


Marc Lalonde: I repeat, after the election also. As far as measures are concerned, I would invite the Leader of the Opposition to convince his Party, and the opposition generally, at least to support the measures which are before this House, which will help the consumers, the housebuilding industry, and the citizens who want to purchase homes.
There is now before this House a Bill providing for mortgage interest rate protection. There is, as well, a Bill amending the Interest Act, which will help home buyers to receive more security and safety in terms of their mortgages. This Bill is before the House now. It will ensure significant protection to Canadian citizens, and I would hope that the Opposition would give it speedy consideration and passage. This is one measure which is right before the House today which is going to be of significant benefit to Canadians. It is supported by all the parties involved in the construction and housing industry, and the Opposition is still dragging its feet.


CREATION OF JOBS-COMPARISON WITH UNITED STATES
Hon. Michael Wilson (Etobicoke Centre):: As a supplementary, Mr. Speaker, I would say to the Minister of Finance that if he is so confident about who is going to be the next Prime Minister, I hope he will tell the next Leader of his Party to call an election, because we are ready for one right here.


Some Hon. Members:: Hear, hear!


Some Hon. Members:: Oh, oh!


Mr. Speaker:: Order, please. The Hon. Member for Etobicoke Centre has the floor.


Michael Holcombe Wilson: Thank you, Mr. Speaker. I see that there are a number of Hon. Members in the back row across the way who are waving goodbye to you. They are not expecting to be back here after the next election.


Some Hon. Members:: Oh, oh!


Some Hon. Members:: Hear, hear!


Michael Holcombe Wilson: I want to point out to the Minister of Finance that Statistics Canada shows that in the past nine months in Canada only 99,000 jobs were created, or approximately .9 per cent. In the United States a comparable figure shows 3,177,000 jobs were created, or 3.1 per cent. That is more than three times a better performance in the United States. Can the Minister give any explanation for this far better performance in the United States other than the series of bad economic decisions taken by his predecessor and by himself since 1980?


Marc Lalonde: Mr. Speaker, first of all I cannot understand the suicidal bent of the Hon. Member. I am sorry that he is so eager to leave politics, together with his Leader, but I will certainly transmit to our new Leader and new Prime Minister the request of the Hon. Member, and I hope he will give it favourable consideration.
As to the question, I invite the Hon. Member to look, not only on a selective basis in selective periods, at the job creation record of this Government over the years, and the last few years in particular. Look at it ever since 1968, for example. He will find that since 1968 this Government has created proportionately 40 per cent more jobs than in the United States. That is the record this Government has behind it.


Michael Holcombe Wilson: Mr. Speaker, I should remind the Minister that I am looking forward to a long and successful career in politics. I am not looking for a job over in Europe right now.


Some Hon. Members:: Hear, hear!


Some Hon. Members:: Oh, oh!
May 30, 1984


IMPACT OF INTEREST RATES-GOVERNMENT JOB-CREATION PROGRAMS
Michael Holcombe Wilson: Mr. Speaker, the Minister commented about not having a high interest rate policy. The fact of the matter is interest rates are higher today than they have been for a long period of time.


Mr. Deans:: You are in favour of high interest rates, you hypocrite.


Michael Holcombe Wilson: Housing start rates in February were 153,000, in March they were 131,000, and in April they were 126,000. Consumer spending is also expected to be affected badly by interest rates.


Ian Deans: Tell the truth, Wilson.


Michael Holcombe Wilson: In what sectors of the economy is the Minister looking for new jobs to be created? Can you hear my question?


Some Hon. Members:: Oh, oh!


Michael Holcombe Wilson: In what areas of the economy is the Minister looking for new jobs to be created? Or is it in fact true that he has ordered his staff to start preparing a new budget in the Department right now so it will be ready for the next Prime Minister?


Marc Lalonde: As far as the job
in Europe is concerned, Mr. Speaker, the Hon. Member does not need to worry. No one is going to put his name forward.


Some Hon. Members:: Hear, hear!


Mr. Stevens:: They did not offer you one either.


Marc Lalonde: My concern for him is what he will do when he has neither a job in Europe nor here after the next election.
As far as the question is concerned, I have indicated that we are trying to create jobs in all areas of the economy, both by direct government support through the national recovery program, the Special recovery projects, the billions of dollars that the Department of Manpower and Immigration is spending in the form of training and direct job creation, and also through the billions of dollars of tax incentives we have provided for the private sector generally. These incentives are available to the private sector to make use of, and we have indicated that we have put forward programs of special interest and advantage to small business. Small and medium business is and will continue to be the main job creator in this country. We are behind it in that effort. I am convinced that with the co-operation we have succeeded in achieving between labour, management, and Governments, we are going to be able to create the required jobs.
Oral Questions


SOCIAL SCIENCES AND HUMANITIES RESEARCH COUNCIL
Ms. Pauline Jewett (New Westminster-Coquitlam):: Mr. Speaker, my question is for the Minister of Communications and concerns the federal Government's funding of the Social Sciences and Humanities Research Council. He will of course know that in 1983-84 the total budget of the SSHRC was $60,048 million, and in the fiscal year 1984-85 the total budget has dropped to $58,869 million. This is due to the failure of the Government to renew the allocation of money for research in areas of national importance. The SSHRC has suffered an actual reduction in its total budget.
In the meeting of the social development committee, which I believe is taking place today or tomorrow, will the Minister take the side of the granting council and the SSHRC for a change, and urge upon his fellow Ministers a continuation of the special funding which was allocated for matters of national significance? Will he urge that upon his fellow Ministers?


Hon. Francis Fox (Minister of Communications):: Mr. Speaker, I have always taken the side of the granting council. If there was a special budget of $5.9 million a year over three years which was given to the SSHRC three years ago, it was in good part because of my intervention with my Cabinet colleagues and, of course, because of their endorsement of the very high importance that the Government gives to the development of the humanities and research and social sciences in general in Canada. The Council has received for this year an appropriation equivalent to inflation. It has also received an increase of $2 million a year into its base budget.


Pauline Jewett: That is not true.


Francis Fox: If the Hon. Member is interested in listening to the answer, I will give it. I have also indicated quite clearly that the Social Sciences and Humanities Research Council is preparing a five-year plan which will be going before my Cabinet colleagues. At that point we will be in a position to examine the requirements of the SSHRC over the years to come. I have not said that the $2 million was the only increase they would be receiving.


Pauline Jewett: Mr. Speaker, that is extremely deceptive. There was no increase of $2 million. The total budget of the SSHRC, as I have said, was reduced by $1,179,000. The total budget was reduced.


Francis Fox: Not true.


Pauline Jewett: The Minister is deceiving us when he says it was increased by $2 million.


Francis Fox: Not true.


Pauline Jewett: I also want to remind him that it was not $5.9 million. It was $11.5 million over three years.

May 30, 1984
Oral Questions


COUNCIL'S REQUEST FOR ADDITIONAL FUNDING
Pauline Jewett: Mr. Speaker, since the Minister has both of those figures wrong, will he realize that the request of the Social Sciences and Humanities Research Council is for at least an additional $5.8 million for this fiscal year? Is he going to support that request in the social development committee and Cabinet?


Francis Fox: Mr. Speaker, I think the Hon. Member should have a look at the balance sheet. There was a program established three years ago, which was temporary in nature, to give an amount of funds to researchers in Canada to do studies on matters which we consider to be national objectives and which the SSHRC and the community in general agreed were of importance to the country. That program came to an end. That was not an amount which was in the base budget of the SSHRC. If the Hon. Member wants to go through the figures she should have a look at what is the base budgeting of the SSHRC. The Hon. Member will see that the SSHRC has not only received increases for inflation, but has received an increase of $2 million in the base of the SSHRC. We have gone on to say that the SSHRC is in the process of providing us with a five-year plan. Obviously, if that five-year plan makes sense, and having seen it I know it makes sense, I would hope that we would be in a position to obtain more funding for the important area which is represented by the SSHRC.


Pauline Jewett: Mr. Speaker, the Minister is quibbling. I was talking about the total budget rather than the base budget. That is what I was talking about, and that is what he keeps avoiding. He is therefore undermining the Social Sciences and Humanities Research Council.


MUSEUMS AND ART GALLERIES
Pauline Jewett: Mr. Speaker, since I am discussing matters of a funding nature with the Minister, who is also responsible for the Canada Museums Construction Corporation, will he explain to the House why he has authorized that Corporation to raise $24 million in private funding when all three Parties in the House agreed only the other day that the new Peace Research Institute should not seek out private funding but should be supported by government funding? Why is he allowing the Museums Construction Corporation to seek $24 million in private funding, which is robbing all the smaller museums in Canada of money from the private sector?


Francis Fox: Mr. Speaker, we have indicated a very strong and clear commitment by the Government to the arts in Canada. We have made sufficient funds available to the Museums Construction Corporation to build two museums in the national capital area. The
National Museum of Man is to be built on the Hull side, and the National Gallery is to be built in Ottawa.
The amount of $190 million has been allocated. While that amount is sufficient to build those museums, if we want those museums to have an outward appearance that Canadians from coast to coast would be proud of, we feel it would be interesting to obtain additional funds from the private sector. This would allow Canadians from coast to coast to participate in the building of each museum and to feel that it is not only a museum given to them by public funds, but also a museum which they have participated in building themselves.


Pauline Jewett: Inconsistent.


FARM CREDIT CORPORATION
Mr. Lee Clark (Brandon-Souris):: Mr. Speaker, my question is for the Minister of Finance. Both The Globe and Mail and The Western Producer have quoted Farm Credit Corporation officials as saying that their lending rate will likely increase by 1 per cent in mid June, even though their lending rate is already at the unacceptable level of 14 per cent to 15 per cent.
In light of the near record number of farm bankruptcies which have already occurred, and in view of the fact that the Bank of Canada rate has declined slightly in the past two weeks, will the Minister reassure Canadian farmers that there will be no increase in the Farm Credit Corporation's lending rate in June? In fact, will he reassure Canadian farmers that there will be no further increase throughout the balance of this calendar year?


Marc Lalonde: Mr. Speaker, the Hon. Member should not necessarily expect the situation to grow worse, and everything he has heard is nothing more than speculative guesses which are now being conveyed by certain media. He knows that the lending rates of the FCC are geared to the interest rates it has to pay to borrow. If, as the Hon. Member indicates, the interest rates-particularly those of the Bank of Canada-seem to be declining, he ought to be encouraged by this trend and assume that interest rates will remain stable. However, I will do as he does and wait to see how interest rates will perform, and he will have to see what happens before year's end.


Walter Leland Rutherford (Lee) Clark: Mr. Speaker, I wish the Minister had gone one step further and made the promise I sought. If he had done that, he would have given Canadian farmers the reassurance they need at this point in time.
May 30, 1984


CORPORATION'S LOSSES
Walter Leland Rutherford (Lee) Clark: Mr. Speaker, one of the reasons that Farm Credit Corporation lending rates are so high is that the Farm Credit Corporation ; expected to recover the losses which have already occurred on FCC loans, at least in part as a result of the Government's failed policies. Why does the Minister expect future borrowers to pay for the losses which have already been incurred by others who have preceded them?


Marc Lalonde: Mr. Speaker, that is a strange question, to say the least. The Hon. Member knows that the corporation has to recover its losses and, obviously, if it incurs deficits as a result of unexpected interest rate increases and its inability to recover as much in loan repayments as it has to pay for its borrowings in the first place, then it has to make the necessary adjustments to balance the books. That is not shrewdness but mere wisdom.


CHANGE IN METHOD OF COMPUTING INTEREST
Mr. Mel Gass (Malpeque):: Mr. Speaker, my question is also for the Minister of Finance. The Farm Credit Corporation has changed its method of computing interest on farm loans. On loans that farmers had opted to repay annually the interest used to be compounded annually. It is now being compounded semi-annually. Why has the Government changed its method of computing the interest rate for farmers? Why has the Government seized on an opportunity to squeeze more money out of farmers by using a very sneaky and underhanded method?


Marc Lalonde: Mr. Speaker, I shall enquire from the Farm Credit Corporation what procedure they have implemented, and I shall report to the Hon. Member. However, if the Farm Credit Corporation is doing as bad as the Opposition claims it does, could the Hon. Member explain to me how its total loans could have increased from $500 million to $800 million in less than two years. Unlike the Opposition, Canadian farmers are satisfied with the services provided by the Farm Credit Corporation.


COST TO FARMERS
Melbourne Alexander Gass: Mr. Speaker, for the Minister's information, the Government has changed the method. On a loan of $100,000 with interest compounded annually, payments used to be $15,098. On the same loan with the interest compounded semi-annually the payment is $15,526.


Some Hon. Members:: Shame.
Oral Questions


Melbourne Alexander Gass: That is an additional $8,566 over 20 years which the farmer has to pay. How can the Minister justify such shameful, deceitful treatment of farmers?


Marc Lalonde: Mr. Speaker, I have already replied to this question when I said that I would enquire from the Farm Credit Corporation. But again, the Hon. Member should know that the money the Corporation is lending had to be borrowed on the marketplace. Therefore, before lending to farmers and producers, it must make sure that it will receive sufficient funds from its borrowers to cover at least what it has to pay to borrow on the marketplace. I suggest again that this is somewhat elementary. The Hon. Member is aware that the Farm Credit Corporation must strive to be self-financing. As a matter of fact, because of the problems encountered by farmers over the past year, the Corporation is now faced with a major deficit. We have taken this reality into account. But the Farm Credit Corporation is anxious to re-establish its financial standing, as is required by law.


CO-OPERATIVES TASK FORCE RECOMMENDATION ON WORKERS' CO-OPERATIVES
Mr. Lyle S. Kristiansen (Kootenay West):: Mr. Speaker, my question is for the Prime Minister. It concerns the Government's position on the key worker co-op recommendations in the Government's financed report by the National Task Force on Co-operative Development, filed with the Government yesterday. As the Prime Minister will recall, the Minister of State for Economic and Regional Development had obvious difficulty answering the question from my colleague, the Hon. Member for Prince Albert, in the House yesterday, in determining whether he was answering as a Liberal leadership candidate or answering as a Minister.
Will the Prime Minister and the Government accept the following key recommendation of the Co-op Task Force, namely, that the federal Government should endorse worker co-operatives as a priority vehicle for employment generation? It should also make funding assistance available to the cooperative movement for the staff work of the steering committee, or for regional development assistance agencies, and for the creation of a pool of start-up funds or start-up guarantees for individual employee owned co-operatives. Will the Prime Minister give an indication of the Government's response to that key recommendation?


Right Hon. P. E. Trudeau (Prime Minister):: Mr. Speaker, the matter is up for government consideration. I will take the Hon. Member's question as a representation.

May 30, 1984
Oral Questions


CONSULTATION WITH CANADIAN LABOUR CONGRESS REPRESENTATIVES
Lyle Stuart Kristiansen: Mr. Speaker, yesterday the Minister of State for Economic and Regional Development indicated as a leadership candidate that he accepted the key thrust of the report. I would hope that the Prime Minister and the Government after some deliberation- it is a government financed report-would also give a positive answer.
Concerning that matter, recommendation 12 of the task force report states that a steering committee should be set up with representatives of the established co-operative movement and emerging worker co-operatives. I am sure the Prime Minister would agree that one of the things we must do is maximize consent to and minimize dissent from the concept, if we want to go ahead. To that degree, would the Prime Minister assure the House in any such development that representatives of the Canadian Labour Congress Joint Committee on Labour and Co-ops would also be included in such consultations so that we can, as I said, maximize consent to and minimize dissent from what is a very positive recommendation from a long awaited task force report?


Pierre Elliott Trudeau: Mr. Speaker, the Hon. Member refers to a leadership candidate's position. I take it that he is making representations to one of the candidates because one of them will become Prime Minister. I, myself, have only until midnight tonight to become a leadership candidate. I believe the entries are closed after that, so I will take notice of the question of the Hon. Member.


Some Hon. Members:: Oh, oh!


Some Hon. Members:: Hear, hear!


PRESENCE IN GALLERY OF THE VICE-MINISTER OF PUBLIC HEALTH OF THE PEOPLE'S REPUBLIC OF CHINA
Mr. Speaker:: May I call to the attention of the House the presence in the gallery of a delegation from the People's Republic of China, led by the Hon. Tan, Yun-He, Vice-Minister of Public Health.


Some Hon. Members:: Hear, hear!


SOCIAL SECURITY
Mr. Raymond Savard (Verdun-Saint Paul):: Mr. Speaker, my question is for the Minister of National Health and Welfare. Today I was reading a statement made by Minister
Camille Laurin, in which he said that he would like to withdraw from all federal old age security programs.
I would like to ask the Minister of National Health and Welfare how she reacts to such a statement.
Hon. Monique Begin (Minister of National Health and
Welfare): Mr. Speaker, I think Dr. Laurin should rather concentrate on the problems of his hospitals, especially the one in Dolbeau, instead of trying to wreck the old age pension system which works quite well and to the satisfaction of Quebec senior citizens.
If Dr. Laurin and the Quebec Government want to hand out supplementary benefits immediately to people between 60 and 64, for instance, there is nothing to prevent them from doing so. However, I do not see why they would want to get rid of something which has very well served Quebecers and will soon do even better since it will provide an additional $50 for single recipients within the next few weeks.


INCLUSION OF WORKMEN'S COMPENSATION PAYMENTS IN DETERMINING ELIGIBILITY FOR GUARANTEED INCOME SUPPLEMENT
Mr. Bruce Halliday (Oxford):: Mr. Speaker, my question is for the Minister of National Health and Welfare. On January 31, 1984, I asked the Minister a question regarding the effects of Bill C-139 on recipients of the guaranteed income supplement, to which she gave an answer which might have been logical and rational for an altogether different question. I will try again. Is the Minister aware that Bill C-139, in Clause 26, requires old age pensioners to declare workmen's compensation pensions in their declaration of income for the calculation of eligibility for a guaranteed income supplement, and does she approve of this attack on senior citizens who are recipients of GIS?
Hon. Monique Begin (Minister of National Health and
Welfare): Mr. Speaker, I must say, and maybe the Prime Minister will not like to hear this, but personally I would love to have no deductions made to pensions for seniors. But that is not very fair. Let me take the trouble to go one step further in the reasoning. I know that workers who get a private disability benefit when they are retired must declare that benefit. They have always had to declare it because it is an added source of income. Seniors who also get income from another source, like the workmen's compensation, unfortunately, but in terms of fairness, must declare it. I may regret this, but it makes sense in terms of simple justice.


MINISTER'S POSITION
Bruce Halliday: Mr. Speaker, the Minister of National Health and Welfare knows that people have to declare that type of income. She should also recognize the fact that workmen's compensation payments should not be considered as earned income, as investment income, or as income
May 30, 1984

from a contributory pension plan. These payments are compensation for an injury that permanently impairs a person's ability to earn income.


Some Hon. Members:: Hear, hear!


Bruce Halliday: In view of the fact that this change adversely affects about 25,000 seniors by removing all or part of their GIS entitlements, will the Minister tell the House what representation she has made to the Minister of Finance to protect these pensioners from this severe erosion of their income, and why has she failed to convince him?


An Hon. Member:: He is hard-hearted.


Hon. Monique Begin (Minister of National Health and Welfare):: I am sorry, Mr. Speaker, but if the opposition Members could stop shouting I would be able to answer the Hon. Member. I repeat, although it may not be a popular stand that I am taking, I have to advise the Hon. Member that those seniors with incomes from different sources having to do with disability must declare these incomes. I do not know why the Hon. Member wants to single out one group who receive disability benefits against another group who receives disability benefits. The Hon. Member's Leader cannot at the same time cut the deficit and keep adding, adding, and adding to the tax system. He must make up his mind and give me the list of what deductions he wants to see given to seniors.


Mr. Mazankowski:: What about your Leader?


Ramon John Hnatyshyn: Check with John Turner.


THE ECONOMY
Hon. George Hees (Northumberland):: Mr. Speaker, my question is for the Prime Minister, the latest entry in the leadership race. As Statistics Canada reports at page 130 of its publication Balance of International Payments Fourth Quarter 1983, between 1971 and 1983 direct investment in Canada from abroad decreased from $925 million in 1971 to $200 million in 1983. During the same period direct investment by Canadians in other countries increased from $230 million in 1971 to $2,575 billion in 1983. Would the Prime Minister advise the House what he and his Government plan to do to try to correct this disastrous trend which has cost Canadians hundreds of thousands of jobs in the intervening 12 years?


Pierre Elliott Trudeau: Mr. Speaker, the Hon. Member is assuming that only foreign direct investment will create jobs in Canada. That is obviously a ridiculous assessment and assumption. Investment by Canadians creates jobs in Canada. Loans by foreigners to Canada, to Canadian corporations, also create jobs. Just looking at the figure of
Oral Questions
direct investment in terms of proportions is not a good way of assessing the reality. The absolute figure of foreign investment in Canada over the last 10 years has multiplied some five or sixfold in absolute figures, up to some $72 billion now, which is three times higher than it was 10 years ago. Perhaps the Hon. Member would want to do a little more work on this. We have time. I have not yet declared for the leadership. I have some more hours to make up my mind.


George Harris Hees: I think that last sentence is the best news the country has had in quite some time.


PRIME MINISTER'S POSITION-DECLINE IN FOREIGN OWNERSHIP
George Harris Hees: Mr. Speaker, my supplementary question is directed to the Prime Minister. Would he not agree that direct investment by Canadians and those from abroad adds greatly to the number of jobs being made available to Canadians in this country and that if these figures had been reversed-that is, if direct investment by Canadians had increased to the same degree which it has increased overseas, and if direct investment in Canada by those overseas had increased by the same amount it decreased in this country-then we would have had hundreds of thousands of additional jobs? If he does not understand that, I would be very glad to bring the figures, which I have here in my hand, over to him and explain them to him, because I know he is a slow learner.


Pierre Elliott Trudeau: Mr. Speaker, I certainly am a slow learner when it comes to absorbing the retrograde ideas of the Hon. Member.


George Harris Hees: Now, get it right.


Pierre Elliott Trudeau: He seems to think that it is an evil thing that the percentage of foreign control of the Canadian economic environment has gone down. It is something toward which this Government has been working, and we are proud of it.


George Harris Hees: That is not what we are talking about at all.


Pierre Elliott Trudeau: I have the figures here. Between 1970 and 1980, foreign control of mining, oil and gas has gone down from 60 per cent to 45 per cent.


Some Hon. Members:: Hear, hear!


George Harris Hees: That is because foreigners have stopped investing in Canada. That is what I was just telling you.


Pierre Elliott Trudeau: I know. The Hon. Member is shouting a repetition of his own question.


George Harris Hees: That is the only way I can get it across to you.


Pierre Elliott Trudeau: If he is asking me questions, I presume he wants an answer.


George Harris Hees: I am trying to get an answer.

May 30, 1984
Oral Questions


Pierre Elliott Trudeau: If he prefers to hear himself shouting, then he can do that in the hallway, and he will have a great audience out there.
In manufacturing, the percentage of foreign control in those 10 years has gone down from 52 per cent to 47 per cent.


Some Hon. Members:: Hear, hear!


Pierre Elliott Trudeau: In agriculture, from 13 per cent to 4 per cent.


Some Hon. Members:: Hear, hear!


Pierre Elliott Trudeau: In construction, from 16 per cent to 10 per cent.


Some Hon. Members:: Hear, hear!


Pierre Elliott Trudeau: In utilities, from 8 per cent to 4 per cent. No wonder the Americans do not like me; we are getting control over our own economy.


Some Hon. Members:: Hear, hear!


Pierre Elliott Trudeau: In wholesale trade, from 27 per cent to 24 per cent. In construction, from 16 per cent to 10 per cent. In retail trade, from 22 per cent to 13 per cent. In services, from 22 per cent to 14 per cent.


Some Hon. Members:: Hear, hear!


Pierre Elliott Trudeau: I would think that a proud Canadian, as the Hon. Member pretends to be, would be delighted that we are asserting greater control over our domestic economic environment.


Some Hon. Members:: Hear, hear!


Some Hon. Members:: Oh, oh!


George Harris Hees: The figures you have produced were brought about simply because foreigners have greatly reduced their investments in Canada-investments which produced jobs.


Mr. Speaker:: Would the Hon. Member resume his seat?


FORESTRY
Mr. Jim Manly (Cowichan-Malahat-The Islands):: Mr. Speaker, my question is directed to the Minister of the Environment. All Canadians concerned with Canada's economic future must be appalled by the Minister's failure to reach adequate forestry agreements with the major forest-producing provinces. Most of the money promised for forestry will be diverted to other purposes, while the crisis in our forests continues to grow.
Considering that the Assembly of First Nations has worked very closely with the Department of Indian Affairs and Northern Development and the Canadian Forest Service to develop
an Indian Forestry Development Program, will the Minister now support the program by making available to it some of the forestry money which he was unable to give away to the provinces?


Hon.   Chas. L. Caccia@Minister of the Environment: Mr. Speaker, concerning the second part of the Hon. Member's question, we are in the process of negotiating an agreement in conjunction with the Minister of Indian Affairs and Northern Development. As to the allegation of the Hon. Member, I wonder where he has been in recent weeks. We have negotiated and brought to a conclusion, in co-operation with the provinces, renewed forestry agreements. The Hon. Member is very wrong in his premise.


James Douglas Manly: Either the Minister did not hear me properly or he has a sadly mistaken notion of what is adequate. I said "adequate forestry agreements". If he thinks he has an adequate forestry agreement with the Province of British Columbia, he had better look again. The Liberals hope that they will make some kind of a comeback in western Canada. How will they do that with an $11 million forestry agreement? The Government has promised to move toward-


Mr. Speaker:: Would the Hon. Member ask his supplementary question?


IMPORTANCE TO ECONOMIC BASE FOR INDIANS
James Douglas Manly: Mr. Speaker, does the Minister recognize the importance of the forestry sector in the development of an adequate economic base for Indian people? Does he recognize that this is a very important component in any movement toward an Indian First Nations Government, to which his Government is supposed to be committed, and to which-


Mr. Speaker:: The Hon. Member has asked his supplementary question.


Hon. Chas L. Caccia (Minister of the Environment):: Mr. Speaker, of course I recognize the importance of protecting and reinforcing the forestry sector across the nation. In the same breath I have to remind the Hon. Member that, when we engage in the process of renewing agreements, we do it in close co-operation and consultation with the provinces. I wish the Hon. Member were sufficiently informed to know that, as far as the B.C. Canada forestry agreement is concerned, we did it for the amount which the Government of British Columbia requested.


UNITED STATES BAN ON METAL FORGINGS
Mr. Girve Fretz (Erie):: Mr. Speaker, my question is directed to the Minister for International Trade. He will remember that about a week or 10 days ago I raised a question in the
May 30, 1984

House regarding the export of defence material to the United States. What information can the Minister give the House today regarding his efforts to persuade the United States to rescind its unilateral action against Canada, relating to the importation of forgings from Canada for United States defence?


Hon. Gerald Regan (Minister for International Trade):: Mr. Speaker, the matter raised by the Hon. Member was brought to the attention of the Government by a number of sources. Representations were made to the appropriate American authorities, in particular to the Department of Defence which had taken this action, apparently primarily as a security measure. Our representations have been well received by the United States.
Our assessment of the impact on Canadian business indicates that it is a much smaller impact than originally thought. Nevertheless, it is not just the question of dollars; the principle is a very important one. We are very confident that the Americans, who are undertaking to examine the situation, will remedy the injustice that would have been done to Canadian manufacturers.


IMPACT ON EMPLOYMENT
Claude Girvin (Girve) Fretz: Mr. Speaker, it may seem like a small amount of business to which the Minister refers, but I would remind him that it affects six plants across Canada, one of which is in my riding, and could directly affect 25 jobs there.


Gerald Augustine Regan: Mr. Speaker, I want to say to the Hon. Member that if I gave him the impression that I felt that the jobs that could be affected were unimportant, I certainly did not want to give that impression at all. If any Canadian jobs are going to be adversely affected as a consequence of an unfair protectionist action by any other country, then I will fight that in every way possible.


INCOME TAX ACT
Mr. Lome Greenaway (Cariboo-Chilcotin):: Mr. Speaker, my question is directed to the Minister of Finance. It concerns Section 31 of the Income Tax Act. Could he tell us if he has appointed the review group that he mentioned in his February 15 Budget, to review Section 31 of the Income Tax Act?


Marc Lalonde: Mr. Speaker, yes, this review group has started its work. It is composed of officials who have already started meeting with representatives of the various organizations. I would be very pleased to provide the Hon. Member with the names of the officials concerned.
Petitions


FORESTRY
Mr. Maurice A. Dionne (Northumberland-Miramichi):: Mr. Speaker, my supplementary question is directed to the Minister responsible for forestry. Can he give the House, particularly the Members from New Brunswick, an indication of when the forestry subagreement with New Brunswick will be signed and implemented?


Hon.   Chas. L. Caccia@Minister of the Environment: Mr. Speaker, the subagreement is in its final stages, and it is my hope that it will be signed very soon.


PETITION
Mr. Speaker:: I have the honour to inform the House that the petition presented by the Hon. Member for Vancouver East (Ms. Mitchell) meets the requirements of the Standing Orders as to form.



ROUTINE PROCEEDINGS


Lorne Everett Greenaway: Mr. Speaker, it is my duty to present a petition signed by 610 citizens of the Cariboo-Chilcotin constituency in British Columbia in support of the following United Nations statement:
The increase in nuclear weapons, far from strengthening international security, on the contrary, weakens it. Enduring peace cannot be built on the accumulation of weaponry.
The nature of the petition is to demand that Parliament take action to cease the testing of the Cruise missile in Canada. The petitioners hope that in your examination of the petition you will find it in order and that you will refer it to the appropriate committee at the earliest possible time.


Mr. Otto Jelinek (Halton):: Mr. Speaker, I wish to present a petition on behalf of constituents in the Town of Milton, Ontario, in my constituency of Halton. I do this only after I have contacted the Minister responsible for Canada Post and the President of the Crown corporation, as far as mail service is concerned.
The petition in brief reads: "We, the residents of Randall Crescent and Pearen Avenue, do hereby formally request your

May 30, 1984
Order Paper Questions
aid in establishing postal service in our area. All necessary criteria for door-to-door delivery were met in August of 1983. Therefore, we see no reason for further delay".
I hope that the House and the Minister will take note of this matter and take the appropriate action.


Mr. Ray Skelly (Comox-Powell River):: Mr. Speaker, I have the honour to present a petition from hundreds of residents of the Bella Coola Valley who signed the petition urging that the House of Commons act to curtail the sports fishing on the Bella Coola River system because of the severe deterioration of the spring stocks. The petition points out that they have also had a 100 per cent closure of the commercial fishery on spring stocks and it is the hope of a broad group, representing all sectors of the residents of the Bella Coola valley, that the Government will act to make the burden of conservation fair by spreading the burden from the commercial fishery to the sports fishery.


Mr. Speaker:: Order. I believe I passed over Tabling of Documents.

[Translation)



SOCIAL SECURITY


Monique Bégin: Thank you very much, Mr. Speaker. You will not be sorry that you called this item.
Under the provisions of Standing Order 42(6), I would like to table in both official languages an Agreement on Social Security reached between the Government of Canada and the Government of Belgium.
As provided by Standing Order 46(4), I would ask you to refer this report to the Standing Committee on Health, Welfare and Social Affairs.


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. John Evans (Parliamentary Secretary to President of the Privy Council):: Mr. Speaker, the following questions will be answered today: Nos. 145 and 742.


Mr. Crosby: 1.	Did Petrofina Canada Inc. have an employee savings plan in operation at the time of the takeover by Petro-Canada and, if so (a) what were the provisions of the plan (b) what respective contributions were made by the employees and by the employers (c) what benefits were earned by the employees?
2.	Did Petro-Canada have an employee savings plan in operation at the time of the takeover of Petrofina Canada Inc. and, if so (a) what were the provisions of the plan (b) what respective contributions were made by the employees and by the employers (c) what benefits were earned by the employees?
3.	Did Petro-Canada make any changes or amendments in the employee savings plan of Petrofina Canada Inc. following the takeover and, if so (a) how many employees were affected by the changes (b) what was the actual projected cost of the changes or amendments to Petro-Canada?
4.	Do any Crown agencies or corporations have an employee savings plan and, if so, which agencies or corporations?


John Leslie Evans: I am informed as follows: 1. Yes.
(a)	Following completion of six months of continuous service, all regular full-time employees were eligible to join the plan.
(b)	The employees contributed 2, 3, 4 or 5 per cent of their salary. After five years of continuous employment, the employees had the option to increase their contribution to 10 per cent in multiples of 1 per cent.
The employer matched two-thirds of the employees' contributions. After five years, the employer matched one-third of the employees' contributions over 5 per cent.
(c)	The employees received employer contributions as follows:
Years of participation in plan
less than five
more than five	100 per cent
2.	Yes. (a) Following completion of six months of continuous service, all regular full-time employees were eligible to join the plan.
(b)	The employees contributed 1, 2, 3, 4 or 5 per cent of their salary. The employer matched employee dollar for dollar.
(c)	The employees received employer contributions as follows:
Years of participation in plan
less than one
one but less than two	50 per cent
two or more	100 per cent
3.	No, Petro-Canada did not make any changes to Petrofina's employee savings plan following the takeover. The Petrofina plan ceased to exist December 31, 1981 and all ex-Petrofina employees were eligible to join Petro-Canada's employee savings plan.
Percentage of employer's contributions
Percentage of employer's contributions
May 30, 1984

4.	Yes. Canadair Limited, Canadian Wheat Board, Eldorado Nuclear Limited (their mining division only), Petro-Canada.


Mr. Manly: 1.	Was the 'no net loss' concept of trade-offs in fish habitat adopted as official policy by the Department of Fisheries and Oceans and, if so, on what date?
2.	Is the 'no net loss' policy applied to the Cowichan Estuary in British Columbia and, if so (a) what public participation was permitted in the decisionmaking process (b) did Doman Industries Limited receive increased right to store logs and, if so, were any studies carried out to ensure that there was a fair trade between the estuarine area in which the storage takes place and the area which the company dedicated to habitat?


Hon. Pierre De Bane (Minister of Fisheries and Oceans):: 1. The "no net loss" concept is under serious consideration, but it has not been adopted officially. The Department's goal in the Cowichan Estuary on Vancouver Island has been to restore fish habitat to the greatest extent possible. Therefore, the no net loss concept would not apply to situations like this.
2. No.


Mr. Speaker:: The questions as enumerated by the Hon. Parliamentary Secretary have been answered.


John Leslie Evans: Mr. Speaker, if Question No. 748 could be made an order for return, this return would be tabled immediately.


Mr. Speaker:: Is it the pleasure of the House that question No. 748 be made an order for return?


Some Hon. Members:: Agreed.


Mr. Mazankowski: 1.	Is there a Rail Advisory Committee 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 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?
Return tabled.


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


Mr. Speaker:: Shall the remaining questions stand?
Motions for Papers


Mr. Schellenberger:: Mr. Speaker, on December 20, 1983 I placed on the Order Paper questions Nos. 302 to 317 inclusive regarding the Northern Transportation Company Limited. The Prime Minister, in answer to my question, stated that those questions would be answered before this company is offered for private sale. To date they have not been answered. Could the Parliamentary Secretary indicate when they will be answered?


John Leslie Evans: Mr. Speaker, I will look into the matter and try to get the Hon. Member an answer to his question as soon as possible.


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


Some Hon. Members:: Agreed.


John Leslie Evans: Mr. Speaker, I ask that all notices of motions for the production of papers be allowed to stand.


Mr. Speaker:: Shall all notices of motions for the production of papers stand?


Mr. Beatty:: Mr. Speaker, you will recall that last week I attempted to catch your eye on this point. For some time now I have had a notice of motion for the production of papers on the Order Paper dealing with public opinion surveys which were commissioned by the Government since the last election. At the present time it stands in my name as motion No. 1, on December 7, 1983.
However, a similar motion has sat on the Order Paper now for, I believe, well over a year. To date no action at all has been taken by the Government on this notice of motion for the production of papers. Indeed, you will probably recall that there was a column in the Ottawa Citizen some weeks ago by Mr. Frank Howard, in which he indicated that the Government was using my notice of motion for the production of papers as a means of blocking the release of public opinion surveys under the freedom of information legislation. It was saying that somehow it would be a contempt of Parliament to release these surveys which I have asked to be released under notices of motions for the production of papers.
Mr. Howard now tells me that some of those polls have in fact been released but the House of Commons has yet to have any action taken on this notice of motion for the production of papers. It appears that the Government has no intention whatsoever of acting on it and indeed could resurrect this particular artifice as a menas of blocking the release of public opinion surveys to others outside the House of Commons. Consequently, I would like to ask that my motion No. 1 be transferred for debate.

May 30, 1984
Ways and Means


Mr. Speaker:: Is it agreed that motion No. 1 be transferred for debate?


Some Hon. Members:: Agreed.


Mr. Pinard:: Mr. Speaker, we shall take the request into consideration and reply tomorrow.


Mr. Speaker:: The Hon. Member has requested that the motion be transferred for debate. It is transferred for debate according to the Standing Orders.


Yvon Pinard: Mr. Speaker, you are right. I knew that but the Hon. Member sought the unanimous consent of the House.


Mr. Speaker:: There appears to be a request by the Hon. Member for his motion to be transferred. Under the Standing Orders he has that right and therefore it is transferred for debate.
Shall the remaining notices of motions for the production of papers stand?


Stanley Kenneth Schellenberger: Mr. Speaker, I rise on a point of order. I also have on the Order paper for production of papers motions Nos. 7, 8, 9 and 10, put on the Order Paper on February 13, 1984, and they are with regard to NTCL as well. I request that the Parliamentary Secretary tell me when they will be answered.


John Leslie Evans: Mr. Speaker, I will look into those matters for the Hon. Member as well.


Mr. Speaker:: Shall the remaining motions for the production of papers stand?


Some Hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
Hon. Yvon Pinard (for the Minister of Energy, Mines and Resources), seconded by Mr. Collenette, moved:
That a Ways and Means motion with respect to the imposition of a Retail Sales Tax in the Nova Scotia offshore area, laid upon the table on Tuesday, May 29, 1984, be concurred in.
Mr. Speaker:: Is it the pleasure of the House to adopt the motion?


Some Hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

[Stage Direction]
Hon. Yvon Pinard (for the Minister of Energy, Mines and Resources), seconded by Mr. Collenette, moved:
That a Ways and Means motion to amend the Income Tax Act, laid upon the table on Tuesday, May 29, 1984, be concurred in.
Mr. Speaker:: Is it the pleasure of the House to adopt the motion?


Some Hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

[Stage Direction]
The House resumed from Tuesday, May 29, consideration of the motion of Mr. LeBlanc that Bill C-37, an Act to amend the National Housing Act, be read the second time and referred to the Standing Committee on National Resources and Public Works.
Mr. John McDermid (Brampton-Georgetown):: Mr. Speaker, I rise to participate in the debate on Bill C-37, an Act to amend the National Housing Act. I am pleased that the Minister is present here today because I have a number of points to make of which he should be aware regarding matters which are causing some concern to my constituents, to those in the housing industry and to those in the finance industry of the country. I think those issues must be addressed by the Government in the committee.
We know that the Act basically does three things. It provides for mortgage rate insurance, it provides for mortgage-backed securities and it provides for moving the Rural and Native Housing Program into the exclusive domain of the federal Government. As I go through my review of the Bill in the House today, I will deal with those matters one at a time.
I would like to begin by dealing with the Mortgage Rate Protection Plan. In committee we will be asking for the background papers for this Mortgage Rate Protection Plan because we have had no access to the background studies which have been done on those proposals. There are many questions which must be answered. Will the program be a money-maker? How was the amount deductible arrived at? How was the fee to be charged arrived at? What were the figures that were used to design the plan itself and to come to a fee of 1.5 per cent on a maximum mortgage of $70,000 which means a fee of $1,050? How was the deductible of 2 per cent arrived at?
May 30, 1984

I have some thoughts of my own regarding that 2 per cent deductible since I am by nature suspicious of plans that are brought forward by this Government. Perhaps now is a good time to comment on that deductible. I have reviewed the record of five-year mortgages from 1951 to 1984. It is interesting to note that from 1951 to 1955 there was an increase of less than 2 per cent in mortgage interest rates. From 1955 to 1960 there was an increase of less than 2 per cent. There was an increase of less than 2 per cent between 1960 and 1965. From 1965 to 1970 there was an increase of exactly 3 per cent and anyone who had such insurance at that time would not have been helped very much. From 1970 to 1975 the increase was less than 2 per cent. From 1975 to 1979 the increase was less than 2 per cent.
The only period of time such an insurance plan would have taken effect was when the present Government was in power and we saw mortgage interest rates skyrocket from 13 per cent right up to 21.5 per cent between December, 1980 and September, 1981. At that time such a scheme would have made some difference. However, if someone had taken out a mortgage at 17 per cent in December, 1981 and by July, 1982 the rate had gone up to 19 per cent again, the mortgage insurance scheme would not have come into effect during that period of time. Mortgage rates then dropped rather dramatically and went down to 12.5 per cent. They are now up to approximately 14.75 per cent. Again an insurance scheme would not come into play.
I now think I understand where the Government got the deductible figure of 2 per cent. The record over the last 34 years shows that there has never been a large enough increase in mortgage interest rates for an insurance scheme to take effect except for the brief period of time when the Liberals forced mortgage interest rates up to about 21.5 per cent. At that time every Member of the House heard very sad stories from people who had lost their homes because of those exorbitantly high interest rates. The best shot the federal Government can make in trying to alleviate the problem is this mortgage insurance protection plan.
I have some concerns that I would like to discuss. Perhaps I could make some positive suggestions to the Minister who is present in the House. I appreciate the fact that he is present and is listening to this debate. First, the maximum mortgage amount to be insured by the Government is $70,000. This limit causes concern in some areas of the country. It causes particular concern in large metropolitan areas like the area of Brampton. It does not pertain as much to the Georgetown portion of my riding but it does cause some concern for Brampton, the Mississauga area, Toronto, perhaps Vancouver and possibly even Ottawa as well. In those areas the maximum of $70,000 is not high enough. That may be the first problem with which we are faced.
It might be worth while for the Minister to take a look at the situation to see if there could not be regional limits which differentiate between areas much like those for the NHA insurance. That insurance scheme applies differently in different areas of the country. That is something that might be
National Housing Act
looked at because I am not sure that the maximum of $70,000 is realistic in some areas of the country today considering the sizes of mortgages that are being assumed.
Another thing that concerns me about that limit is that it is being included in the legislation. That means that that maximum limit remains in the legislation and if we wanted it changed we would have to return to the House to amend the Act. This Bill mentions regulations in 22 places. Heaven knows, that frightens me enough, yet I am here suggesting another regulation. I may be accused of speaking out of both sides of my mouth, but I would like to indicate to the Minister that it may be worth while to take a look at that maximum being in the regulations in order that it can be adjusted from time to time. As he knows, real estate appreciates. It is the one hedge against inflation which people in this country have. I would ask the Government to take that under advisement.
The next matter I would like to speak about is the protection fee. The protection fee of 1.5 per cent is identical whether you take out a one-year mortgage, a three-year mortgage or a five-year mortgage. There is no variation. The best deal, therefore, for anyone who takes out this insurance is a five-year mortgage. It only makes sense. That will cause terrific problems within the financing community. Let us take, for example, a 1.5 per cent increased rate on a one-year mortgage. If a person renews their mortgage for one year and they buy the insurance plan, for them to break even on the insurance plan, the mortgage rate will have to rise 5 per cent in one year. If that person takes out a three-year mortgage and buys the insurance plan, the mortgage rate will have to rise 4 per cent in the three-year period for that person to break even. However, the mortgage rate would only have to increase 3 per cent over a five-year period for that person to break even.
I fiddled with those figures last night. They are approximate, but generally speaking those are the figures. Therefore, the best deal is to renew a mortgage for five years and buy mortgage insurance. The problem is, if there is not a fee which differs from the rate and the length of time for which a person renews his mortgage, tremendous pressure is placed on GICs. Horrendous pressure is placed on the mortgage companies. The upward pressure on GICs for five-year terms will be severe.
As the Minister knows, financial institutions attempt to balance their mortgage loans with their term investment. If it is a five-year mortgage, the mortgage companies attempt to place that up against a five-year GIC. I am concerned about this and I think it is something which the Government should look into. It might look at a rate which varies for a one-year, three-year and Five-year mortgage, to avoid upward pressure on one of the financial segments; the GICs. If there is upward pressure on five-year GICs, then the rates will increase. There is no question that the rates will go up. If the rates go up, it follows that mortgage rates will go up. I think that is something the Minister and his Department should look into. It concerns me that all of a sudden there will be great interest in

May 30, 1984
National Housing Act
five-year mortgages and, therefore, the upward pressure on GICs will be out of control. The resultant increase would be reflected in mortgage rates. That is another concern. We do not want to see those rates go any higher. Even though there will be a mortgage insurance plan to cover that increase, we do not want to see them go any higher.
Another concern is that if there is a tremendous demand on the five-year GIC, that would crowd out the five-year bond market. There would be an emphasis on where that money would be invested. I hope the Minister will take these concerns into consideration.
I am concerned as well that the Bill places restrictions on the eligibility of mortgages. There are three groups of people the Bill does not cover. The first group is those people who took out mortgages before March 1, 1984. If we look at mortgage rates before March 1, 1984, we see that they were approximately 12.5 per cent. Today those rates have risen to 14.25 per cent or 14.5 per cent. The people who took mortgages out before March 1 are the people who are genuinely interested in the plan because they have already seen the rate rise 2 per cent. Those people are not protected and will not be protected. That is a segment of the population which will not be able to participate in this plan for a considerable length of time.
There is a second group which will not be protected under the plan. If a person purchases a home-it may be his first home-which is not a new home but a resale, and if there is a mortgage on the home which is not insured, that person cannot insure the new mortgage which he will be assuming on the home. Therefore, the purchaser of that home cannot take advantage of the plan if there is an existing mortgage as well, if the vendor does not have insurance coverage, then the purchaser cannot get it by taking over an existing mortgage. As the Minister knows, that happens all the time in the used house market. I think these concerns must be addressed.
There is a third group which would not be covered by this plan. If a person bought a home and the vendor took back the first mortgage, then the purchaser could not buy insurance on the mortgage which the vendor would take back. That person would be excluded. The only way that that person might be able to buy a home is if the vendor wanted to make an investment in the mortgage and took back the first mortgage. However, the purchaser would not be allowed to opt into the insurance plan. Those are three areas which require consideration.
Another area which is covered by the Bill is the mortgage-backed securities. This provision is designed, of course, hopefully to provide longer-term mortgages for home owners. Traditionally, we consider interest rates that are provided over and above any investment for five years are usually 1 per cent to
1.5	per cent higher. If it is a ten-year investment, it would probably be 1 per cent to 1.5 per cent higher. Therefore, if we get into longer-term mortgages, that will increase mortgage rates. I would recommend to a person buying a home that they not get into a ten-year mortgage situation, but that is not my decision. However, those people will be paying a much higher
interest rate than they would pay if they had a five-year mortgage.
I would like to refer to another Bill which is not before the House at the moment, Bill C-36. The prepayment penalty situation would be horrendously expensive for anyone who had less than a ten-year mortgage. They would be paying a much larger penalty than others on a prepayment penalty. That would present a problem. As the Minister knows, a vehicle being used in the United States can be traded on the open market. I understand that a Bill was passed in the House in 1976 or 1977 which was called the Mortgage Exchange Corporation. All that Bill needs is proclamation. That Bill would allow those mortgage-backed securities to be traded on the open market. I do not know the disposition of that Bill right now; however, the Minister might be able to enlighten the House on that situation.
The Minister of Finance (Mr. Lalonde), who is also in the House, promised in his Budget that the federal Government would investigate the economic and financial impact of this legislation on the housing market, mortgage rates and on competing ten-year financial instruments. I ask now if in fact that investigation has taken place, and if so, I would hope that that study is produced so that we could, while we are in committee investigating this particular Bill, be very responsible in our approach to it. We will then have the information which I believe is needed for us to make a balanced decision on this particular proposal which is contained within the Bill.
Finally, Mr. Speaker, I am pleased to see that the federal Government will be taking over the entire responsibility in the area of Indian housing. We are extremely concerned about Indian housing. The testimony which was given to us in the Standing Committee on Miscellaneous Estimates within the last month or so indicated that the funding which is available now is barely keeping up with maintaining and bringing up to standard the homes which are already in existence, not to mention new homes for new family formations, and certainly not considering the demand which may come for housing on reserves if other matters are considered in this House.
I am pleased, however, to see that the limit on the total amount to be spent has been increased. I am pleased that the Government has taken that over. Some of my provincial friends may not be too pleased about it, especially in the rural end of the Act as opposed to the Indian people end of the Act, but I am personally pleased that the federal Government has taken that responsibility over completely. I feel in that manner we might be able to make decisions much more quickly. We would be able to establish a housing plan or program without having to depend on the policies and decisions of provincial governments. When it comes to Indian housing, I believe that is going to be very important. Therefore, I congratulate the Minister on that initiative.
I will close my remarks by saying that if this is the best the Government can do, I suppose we will have to put up with it-
May 30, 1984


The Acting Speaker (Mr. Herbert):: Order, please. I am afraid I have to ask the Hon. Member to complete his remarks. His time has expired.


John Horton McDermid: Thank you, Mr. Speaker; I appreciate the reminder.
I would hope that the Minister will take my concerns, as well as the other concerns which will be expressed by Hon. Members of my Party, and address them when the Bill gets to committee.


The Acting Speaker (Mr. Herbert):: There follows a period of up to ten minutes for questions and/or comments. If there are no questions, we will continue debate.


Marc Lalonde: Mr. Speaker, I rise today in support of Bill C-37, an Act to amend the National Housing Act which introduces a mortgage interest rate protection program and encourages the introduction of longer-term mortgages. These proposals were contained in my February Budget and were included in the Budget in response to two important concerns. First was the need to increase security and certainty for home owners in view of the wide fluctuations in mortgage interest rates which were experienced in the last few years. The second concern was to create conditions which will permit the private sector to develop a longer-term mortgage market in Canada. I must say that in my pre- Budget consultations with the housing industry, which recognizes the importance of developing greater confidence and stability in home ownership, I found that these concerns were very widely shared indeed.
The Bill before the House is the result of extensive postBudget consultations with mortgage lenders, housing associations, the Consumer's Association of Canada and other interested parties. In these sessions the implications of the program and the various administrative and technical issues associated with the program were thoroughly discussed. This consultative process has led to a Bill which should receive wide support from the public, and I was happy to hear the general reaction of the previous speaker in that regard.
While some concern had been expressed that consultations would lead to a delay in implementing the Bill in good time, it appears that we have been able to meet that timetable quite effectively. I would hope that all Parties will support the legislation so that Canadian home owners will be able to obtain this protection without further delay.

Both the Mortgage Rate Protection Program and mortgage-backed Securities will make home ownership easier and safer, by taking away much of the uncertainty caused by fluctuating interest rates.

As Hon. Members know, these initiatives are linked to amendments to the Interest Act which have also been introduced in the House. This legislation will strengthen borrowers' rights and increase the flexibility of the mortgage market. In
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effect, we believe it will allow the reintroduction into the market of mortgages for a longer period than five years, which have practically disappeared from the market for a long time. The value of the housing initiatives in the Budget and particularly the mortgage interest rate protection program has been widely recognized. The head of the Canadian Institute of Public Real Estate Companies has said that the mortgage plan, and I quote:
-will lead the way in other countries in developing stability in the mortgage market.
Mr. Logan Tait of the Canadian Real Estate Association said that the mortgage interest rate plan, and I quote:
-will definitely help to bring stability back into the marketplace.
Mr. John Sandusky, President of HUDAC, now the Canadian Home Builders' Association, said that the Government had, and I quote:
-responded very favourably to our concerns.
On May 29, Mr. Sandusky sent a telegram to a number of Members of the House, including myself, which reads as follows:
The 5,000 member-firms of the Canadian Homebuilders' Association formerly HUDAC urge quick passage to second reading of housing legislation re: Mortgage Rate Plan, Mortgage-backed Securities, and Interest Act amendments.
It is signed John Sandusky, President of Canadian Homebuilders Association.

Mr. Speaker, housing has always been one of the Canadian Government's main priorities, and over the last three years, the Government has introduced a number of measures designed to help homeowners.
The Canada Mortgage Renewal Program was set up towards the end of 1981, and upgraded the following year, to help home owners in financial difficulty when they had to renew their mortgages. Homeowners faced with increases in mortgage costs representing more than 30 per cent of their income became eligible for non-taxable grants of up to $3,000. More than 20,000 Canadians in financial difficulty were helped by this plan.
In 1982, the Canadian Home-ownership Stimulation Plan was established, providing $3,000 grants to buyers of newly-built homes. This program has helped more than 260,000 Canadians buying a home for the first time.
In 1983, this Government made it possible for Canadians who bought new homes between April 19, 1983 and March 1, 1985, which is next year, to claim a special tax deduction of up to $10,000, to be contributed to a Registered Home ownership Savings Plan. I may remind the House that this program is still in effect and that Canadians may now make use of the program if they intend to purchase a newly-built home. The program has considerable tax advantages, and I would urge Canadians who have not already done so to find out about the program and see whether they should not consider purchasing

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a new home before the program expires on March 1, 1985. I may also remind the House that this Government has made grants available to home owners for the purpose of home renovation. This is another dimension of the housing sector we have had a tendency to neglect in the past and which fortunately has been given increasing attention in the programs of the Canada Mortgage and Housing Corporation. In 1983 alone, more than 47,000 housing units were renovated with CMHC grants, representing a total of $179 million.
Finally, the federal Government has consulted with the major lending institutions and urged them to respond favourably to the requirements of Canadian individuals who take out mortgages and are faced with problems caused by volatile interest rates.
In this legislation the Government is providing a more fundamental and durable response to the problem of uncertainty in mortgage interest rates. The Mortgage Rate Protection Plan, which has been outlined by my colleague, the Minister responsible for Canada Mortgage and Housing Corporation, has received an enthusiastic response from housing market participants. I believe it will give Canadians who choose to participate a reasonable assurance that large, unexpected increases in interest rates will not lead to serious financial difficulties. This is particularly important for firsttime home buyers. Because of the relatively short terms of mortgages available, these buyers must consider whether they can afford the monthly carrying costs on their homes in the future if interest rates increase sharply when they have to renew their mortgages.
Existing home owners will, of course, also benefit. Mortgage rate uncertainty forces many of them to re-evaluate their saving and spending decisions against the possibility that interest rates would be higher on their renewal dates. The Mortgage Rate Protection Plan will offer both of these groups more security in planning for the future. This increased security for home owners will have a positive influence on the home building industry, on the economy and on the well-being of Canadian society generally.
Members should be aware that the program is not intended to protect home owners against all fluctuations in mortgage rates. Instead, for those individuals who choose to participate, it should be viewed as a safety net that will offer security against severe financial disruption. The Government is prepared to share the risks and the costs with the home owner. Thus the protection will cover three-quarters of any cost increase on a mortgage renewal resulting from an increase in mortgage interest rates greater than 2 per cent, to a maximum of ten percentage points. The fee for the Mortgage Rate Protection Plan has been set at the lowest possible level, 1.5 per cent of the mortgage amount to be protected. For a mortgage of $70,000, for instance, this amounts to a maximum premium of $1,050. The benefits provided upon payment of this fee have been extended as far as is consistent with
ensuring the plan remains fiscally responsible. Every effort has been made to enable home owners who want to use the program to do so by offering them the options of paying the fee up front or adding it to the principal amount and amortizing it over the term of the mortgage. This is how, for instance, it has been indicated that you can buy your protection for as low as something between $11 and $12 a month on a $70,000 mortgage. The latter method will allow a person, therefore, to obtain protection for a very small monthly charge.
Entry into the program is voluntary. No one is forced to join the program. Some have argued that the cost is too high for the benefits available. Maybe some will share that view, but home owners who are concerned about the possible impact of rising mortgage rates-and we have seen this happen already since the last Budget-can decide whether this plan meets their own circumstances. Judging by the response to the Budget proposals, there appears to be substantial interest on the part of the public in general in the program. In fact, more than 14,500 Canadians have written to my Department to ask for more information about the housing proposals contained in the February Budget.

Mr. Speaker, as announced in the Budget, one effect of the Bill will be retroactive to March 1, 1984. For instance, someone who took out a 5-year mortgage at 12.5 per cent on March 1 can purchase coverage against mortgage increases, and that coverage will be based on the rate mentioned, provided that applications under the program, plus the fee, are sent to CMHC within 45 days after the Bill is passed. Since mortgage rates have increased from 2 to 2.25 per cent since March 1, the retroactive effect of the Bill may benefit home owners having renewed or taken out a mortgage since that date.
As for the cost of the program, it is difficult to estimate since it will obviously depend on the number of Canadians taking part in the program and what mortgage rates will be in several years. Nevertheless, we can reasonably assume that the net cost of the program will be close to zero, in other words, the program should be self-financing.

Some Members may well ask: Does this mean that the Government is projecting higher mortgage interest rates? As I have stated many times, the Government is doing everything it can to keep interest rates as low as possible. However, we must recognize that we are participants in an international economy and there are many factors beyond our control that can influence Canadian interest rates. Home owners have expressed concern about the potential effect of higher rates. The Government has responded by providing them with a safety net. At the same time we will continue to focus on maintaining interest rates at the lowest level possible. Home owners would certainly not be unhappy, nor would I, if interest rates were to decline and no benefits were ever paid on this program.
May 30, 1984

Now let me turn for a minute to the provision in this Bill regarding mortgage-backed securities. While this has not received the public attention that the Mortgage Rate Protection Program has, it is an important initiative if we wish to see the reintroduction of longer-term mortgages in Canada, those with terms longer than five years. Further, it would provide for a more smoothly functioning mortgage market by providing an alternative method of financing mortgages.

This part of the Bill has also received the firm support of a number of groups, and I am thinking especially of the Canadian Homebuilders' Association, which favours the development of a market for mortgage-backed securities in Canada, which would make it possible to provide more home buyers with mortgages at reasonable cost. The housing sector has stated that 10-year mortgages would be an essential factor in providing for stability and growth in the residential construction industry. In the course of our post-budget consultations with financial market experts, it was clearly stated, as an essential condition for offering mortgage-backed securities in Canada, that conditions for payment of principal and interest on these securities would have to be strictly observed by the private sector.

Members of the House should be aware that the guarantee involves no government subsidy and will operate on a cost-recovery basis. The Government is taking the initiative in establishing a framework which will permit the private sector to develop a market for mortgage-backed securities. Preliminary indications are that there are several institutions interested in pursuing the development of this market if legislation constraints are dealt with. In addition to the timely payment guarantee, the introduction of mortgage-backed securities requires a legislative amendment to the Interest Act with respect to prepayment privileges. The Interest Act amendment is being handled in a separate Bill.

Finally, Mr. Speaker, I would like to remind the House that these amendments are supported by the housing industry, home owners and mortgage lenders. I have also received encouragement from Hon. Members on both sides of the House.
For example, following the February Budget the Hon. Member for St. John's West (Mr. Crosbie) said that the housing measures were "nice things that no one is going to be against". On February 21 the Hon. Member for Kingston and the Islands (Miss MacDonald) said: "For our part we welcome mortgage insurance". At the risk of seeming immodest, I will also quote the Hon. Member for Parry Sound-Muskoka (Mr. Darling) who said on February 22: "I, too, commend the courageous Minister of Finance on those parts of the Budget
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that will help housing, such as protecting interest rates and allowing a mortgagor to pay off a mortgage without having to pay an arm and a leg".


Ramon John Hnatyshyn: He said that with tongue in cheek, too.


Marc Lalonde: Members opposite have been eager to deal with this Bill. On May 10 the Hon. Member for Mission-Port Moody (Mr. St. Germain) asked why the Mortgage Rate Protection Plan was taking so long. On April 30 the Hon. Member for Simcoe South (Mr. Stewart) said to me: "Before it is too late, Mr. Minister, I ask you on behalf of Canadian home owners and prospective home owners: Where is the beef?"
In view of all that, I would suggest that the Opposition should not hog the Bill in the corner of the House for too long.


Ramon John Hnatyshyn: We did not get beef, we got baloney.


Marc Lalonde: I expect Members opposite to act with the sense of importance and urgency which these measures demand. We have heard their expressions of concern over the impact of interest rates on home owners. We share those concerns. This Bill will provide the means for Canadians to protect themselves against the risk of higher mortgage rates. The amendments in this Bill are made in response to the concerns of Canadians about the uncertainty of future mortgage costs. In these proposals we have tried to ensure that the efficient functioning of the mortgage market is not impaired.
Under normal circumstances none of the proposals will impose significant costs on the federal Government although the Government is prepared to provide assistance in extra-ordinary circumstances. I urge all Parties to support these proposals so that Canadian home owners and prospective home buyers will have improved security against the risk of losing their homes because of fluctuations in mortgage rates over which they have no control.


The Acting Speaker (Mr. Herbert):: Ten-minute period for questions or comments. Questions? The Hon. Member for Joliette (Mr. La Salle).


Roch La Salle: Mr. Speaker, my question is of course directed to the Minister of Finance (Mr. Lalonde). Since mortgage rates today are at about 14.5 per cent, and the Bill provides for an additional 2 per cent, borrowers will be facing rates of 16 or
16.5	per cent, if I understand the program correctly. Is the Minister claiming, with his concept of making home ownership available to all Canadians, that rate of 16.5 per cent is going to encourage people to buy houses? I am not referring to millionaires, I am talking about the average person, the average worker. Does he think this rate is low enough to make home ownership generally accessible?


Marc Lalonde: Mr. Speaker, of course, my answer would depend on the financial climate at the time. I may remind the Hon. Member that even when mortgage rates were at 18 per

May 30, 1984
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cent, 19 per cent or 20 per cent, people were still buying homes. In any case, we must consider the state of the economy at a given time. If we were going through an inflationary period, with inflation at 12 or 13 per cent, as we have experienced in the past, it would not be surprising to see mortgages as high as 16 per cent, while interest on loans would also be very high.
I cannot predict what interest rates will be in five years, for instance when someone's mortgage expires. What the Bill provides is protection against interest rates that may prevail at the time people have to renew their mortgages. It is a little like fire insurance. When a person takes out fire insurance, he does not particularly want to collect. His reasoning is that if something happens, at least he will be covered. When people take out fire insurance, they do not say to themselves: I wish my house would burn down and I could collect the insurance! Unless, of course, they do so for reasons that are neither very legal or ethical. Insurance is a kind of protection, and that is what we are offering today, protection against events that would not be to the advantage of the borrower. I think the best analogy is still fire insurance or accident insurance. Nobody wants to have an accident, nobody wants his house to burn down, but everyone buys insurance, thinking: "If it happens, at least I am covered!" And coverage is what we are providing. If, for instance, interest rates increase by more than 2 per cent in five years, when my mortgage expires I will have the assurance that the Government will pay three-quarters of the difference between 2 per cent and 10 per cent more, for instance, so I am covered.


The Acting Speaker (Mr. Herbert):: The Hon. Member for Joliette (Mr. La Salle), with a supplementary.


Roch La Salle: The Minister's answer is quite clear and it just means that people who have enough money, and I think that is always the minority ... I would like to ask the Minister whether, for instance, with a family income of $35,000 or less, interest rates at 16 per cent would really make homeownership generally accessible? I have the impression that it would still be very hard for thousands of Canadians who would like to buy a home, even at present rates. I agree that anyone with an income of $40,000 and $50,000 or more can cope with today's rates. But what about young couples and so many other Canadians who earn between $20,000 and $35,000, for instance? Does the Minister of Finance still think that present rates are reasonable for this group of individuals which probably includes most first-home buyers?


Marc Lalonde: Mr. Speaker, the Hon. Member is talking about an interest rate of 16 per cent. No one is borrowing at 16 per cent today. The Hon. Member was talking about rates of about 14 or 14.5 per cent for a 5-year period, and he knows as well as I do that lower rates are available for three years or one year. I may also remind the Hon. Member that there are programs to help people on very low incomes. I am thinking of
Co-operative Housing Assistance and similar programs that have been in effect for a number of years, to help people on low incomes who need housing assistance. We do not claim that the Bill before the House today is the answer to all financial problems that may face Canadians who want to buy a home. There will be people on low incomes who will still have to resort to other Government programs designed for their particular needs. What we are offering today is an insurance plan available to all Canadians and which all Canadian home buyers should be able to afford, for a relatively modest fee.
As I said earlier, for a $75,000 mortgage, coverage will cost $11 or $12 per month. This is not excessive in relation to the mortgage amount itself. For a home that costs half as much and with a much lower mortgage, the cost of coverage will be half the amount I just mentioned. With a $35,000 mortgage, the monthly cost will be $5 or $6. I think the advantages are considerable. Here again, no one is forcing Canadians to take advantage of this opportunity, any more than anyone is forcing them to take out fire insurance. I think Canadians should be encouraged to take out this insurance policy, just like the usual insurance policy when they take out a mortgage.


The Acting Speaker (Mr. Herbert):: Any other questions or comments?


Mr. Riis:: Mr. Speaker, my question for the Minister of Finance (Mr. Lalonde) is three-fold. He mentioned repeatedly that he had been consulting with a number of groups, including home owners. Could he share with us in what way he was communicating with home owners to receive input for Bill C-37?
Second, he referred to this insurance plan as being similar to taking out hail or fire insurance. Floods, hail, fire and the like are really acts of God totally unrelated to the works of man. Yet interest rates in other countries, when it comes to mortgages, are set or there is a very definite ceiling allowed. I think specifically of the country of Norway when I make that comment. In a sense we are dealing with man's actions when we talk about interest rates, not acts of God.
Third, the Minister of Finance has indicated his concern many times in the House regarding people who are locked into mortgage rates over a five-year period when interest rates drop substantially. I think he has indicated his interest in a three-year penalty as being a reasonable one under those conditions to allow people to renegotiate their mortgages to take advantage of lower rates. Does the mortgage-backed security aspect take into account this option of a three-month penalty clause being sufficient?


Marc Lalonde: Mr. Speaker, on the first point the Hon. Member knows that we have programs in Canada whereby we put an effective ceiling on the mortgage rates being paid by certain Canadians who are in need. He knows there are
May 30, 1984

programs, for instance, where a person pays 2 per cent for 35 years on his mortgage and CMHC is going to cover the difference. That program is centred on people with lower incomes who need help and support in order to have access to housing.
That is not the type of measure my hon. friend would recommend we apply wholesale. The cost would be horrendous. It would also introduce severe distortions into the economy. We have as much as possible a free market in the mortgage area and in the area of interest rates. The hon. Member knows that we are very dependent upon what is happening in the international community. He talks about acts of God, such as fire and so on. He knows also in the area of interest rates that there are a number of factors over which we have no control domestically. We live in a world with considerable pressures taking place. Canada as a medium-size country is one, suffering particularly from some of the decisions being taken in the United States, which has the largest and strongest economy in the world. It has advantages in some regards, but it also has drawbacks, as the Hon. Member knows.
As far as the other point is concerned, the Hon. Member knows that under the proposed amendments to the Interest Act we have removed the provision concerning the three months' penalty. This has been done following extensive consultations. The Hon. Member asks with whom. I can say that we have had extensive consultations with the Consumers' Association of Canada which comprises hundreds of thousands of Canadians who also happen to be home owners. As I mentioned, 14,500 Canadians have written to me asking for more information on housing. We have consulted with the industry, house builders, et cetera, and found that these people are very interested in selling houses and they have the interest of the potential home buyer very much at heart. They are not interested in building homes just to let them sit empty. Everybody who has an interest in the housing area has been invited to contribute. People have made their contribution, supported the measures we have put forward and the conclusions we have reached.
I hope we will have a very short discussion of this Bill so that it can be considered in committee. We will be very happy to discuss with Hon. Members the details of the measure in committee. I hope in the interests of all Canadians that we can get the Bill considered as quickly as possible.


The Acting Speaker (Mr. Herbert):: Order. The period set aside for questions and comments has expired. Debate. The Hon. Member for Kamloops-Shuswap (Mr. Riis).


Nelson Andrew Riis: Mr. Speaker, I am pleased to have an opportunity to make some comments regarding Bill C-37, an Act to amend the National Housing Act, which is intended to give some relief to the volatile interest rates affecting mortgage holders. I am pleased to see the Minister of Finance (Mr. Lalonde) is in the House as well as the Minister responsible for the Bill.
National Housing Act
I have listened carefully to the observations of a number of Hon. Members regarding Bill C-37. It is important that we recognize the situation in which this Bill is brought forward. We have a very serious housing situation in Canada. Mortgage rates today are in the 14 per cent to 14.5 per cent range which makes home ownership an impossibility now for most Canadians who presently do not own their own homes. Considering that every indicator of which I am aware would suggest there is a good possibility of interest rates increasing in the weeks and months ahead, this gives Canadians cause to believe that the mortgage rates they are paying on their homes will likely increase.
We are talking about a situation of people desiring to be new home owners who are finding it an impossibility today to think seriously about investing in a home. Those who are renegotiating mortgages today and in the weeks and months ahead have serious concerns about the implications of the present high interest rates and the spectre of increasing interest rates. The construction industry has indicated concern as well.
The construction industry in parts of Canada has virtually died. I am thinking particularly of parts of British Columbia and Alberta which for all intents and purposes have no viable housing construction industry at all as a result of the general economic conditions, mortgage interest rates and the uncertainty surrounding the interest rate phenomenon. We are talking about the tens of thousands of manufacturers both large and small which serve the housing construction industry. We find that they too are in a slump situation because new homes are not being built as required.
In the City of Kamloops the mayor wanted to put together a promotional video cassette not too long ago. He asked people in his building department to take pictures of some of the construction going on in the community, but there was no construction going on anywhere in the city. He could not find a person banging on a wall or shingling a roof. People had to manufacture a show of building. That is the situation in a city of 60,000 to 70,000 people.
If you walk around the subdivisions and through the inner cities of Canada, "For Sale" signs have become a reality on most streets. These signs of people moving out of their homes do not reflect a mobility taking place; they reflect growing numbers of Canadians being forced out of their homes or abandoning them.
What has happened is that three or four years ago both husband and wife were working. They could quite easily afford a mortgage payment of $400 or $500, perhaps even a bit higher. They assumed they would have to work, scrimp and save, but making a mortgage payment of $400, $500, or $600 was something they could manage and they entered into a mortgage. Perhaps they tied themselves in for five years or less, but they were into their first home and were part of the home ownership that Canadians have taken to so strongly.
Then one of them was laid off. It might even happen that both were laid off. Interest rates meanwhile have increased. Rather than paying $400, $500, or $600 a month on their

May 30, 1984
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mortgage, they are now required to pay $700, $800, or $900. They are, of course, unable to do so. It takes two, three, or four months of non-payment or partial payment before the axe comes down. For many people the answer is simply to walk away from their home or be forced out by the banks or other financial institutions when they are unable to make their payments. This is an incredible situation, Mr. Speaker.
Members of Parliament, particularly those from western Canada, fly across the country on a weekly basis. They see forests covering the nation from one end to the other. We have thousands and thousands of hectares of forest land. There is space everywhere around our cities. We know the wealth of the country is in place. We know savings accounts and so on, as we are told on a weekly basis, are filled. To have the housing crisis that we have today, you really have to work at it. We have a government that has worked at it and developed it so well that we have literally thousands of Canadians who ought to be living in a home and making mortgage payments today but are not. The housing construction industry is on its knees. It is an incredible situation. Then along comes the Government saying that it has the answer with Bill C-37, the Mortgage Rate Protection Plan.
Let me say at the outset that I will not support this particular program as it has been presented. It is an absolute sham. It is a shame that the Government brings forward a piece of legislation which does not ask the banks to pay any more for the high interest situation. In fact, domestic bank profits are the highest they have ever been in the banking history of the country. That will not be changed one iota. It allows the banks virtually to charge whatever they wish for mortgages.
In effect, the Government of Canada has caused these high interest rates by agreeing to a high interest rate policy, but it will not pay anything in return. Who will pay now to protect themselves from high interest rates? It will not be the Government which created those high rates nor the institutions which benefit from them; it will be Canadian home owners. In other words, they can take out an insurance policy.
As the Minister of Finance said, Canadians are accustomed to taking out insurance policies. They take out hail insurance if they are farmers. They take out fire insurance, theft insurance or whatever. If they take out flood insurance, hurricane insurance, revolution insurance or insurrection insurance on foreign investments, they are dealing with matters completely beyond their control. In many cases they are acts of God. However, what we are dealing with today is the concept of mortgage rates, and that is not an act of God. Perhaps the Minister of Finance would argue against that, since it is his policy, but the point is that interest rates are government policy.
I should like to indicate that this need not be the case. The other day I talked with representatives of the Government of Norway. I asked them what they did about their mortgage rates and how they organized the market in their country. They said that it was simple, that their people could obtain
mortgages at 10 per cent today and the most they will ever have to pay is 12 per cent over a 30-year term. It does not matter if inflation reaches 200 per cent or 300 per cent. It does not matter what happens in terms of the money markets. They have mortgage money for that length of time at a maximum of 12 per cent because the Government of Norway decided that it was important for its people to be able to afford to own their own homes, that it was in the nation's interest.
When the Minister of Finance says that the Government wants Canadians to take out insurance against high interest rates, it is a sham. I think the Government has stepped back from taking responsibility for dealing with high interest rates. As a previous Hon. Member indicated today, this mortgage insurance program does not provide any protection for up to a 2 per cent increase from the day a mortgage is taken out. Today the mortgage rate is 14.5 per cent. What they are saying is that they will allow the rates to go up to at least 16.5 per cent before Canadians obtain any relief whatsoever.
What does it mean when Government Members are asking Canadians to pay at least 16.5 per cent on their mortgages before any relief is provided? Will that bring comfort to the average household in the country? Will people say that they can now afford mortgages at 16 per cent to 16.5 per cent? Some people would say that that is usury, that a 16.5 per cent mortgage rate is totally unacceptable in a country as rich as Canada.
The Government has made an admission that not only is it helpless in this situation, in its own mind, but it is unprepared to deal with the issue as it should. Once again it is asking hard-pressed home owners to carry the can. The Government is asking Canadians to pay premiums which will be 1.5 per cent of their mortgage value. This is to be paid at the time the mortgages are taken out or amortized over the term of the mortgage. On a $70,000 mortgage, that would amount to $1,050 or $11 per month. The insurance will be 2 per cent deductible. In other words, interest rates will have to increase at least 2 per cent before anything is done. If a mortgage were to rise by 6 per cent between the time the mortgage was taken out and its date of renewal, the insurance would not cover the increase resulting from the first 2 per cent. The insurance would cover only three-quarters of the increase in monthly payments over 2 per cent. Therefore, if the rate went up by 6 per cent, which is certainly a possibility in these times, the coverage would be for only 3 per cent of the increase or 50 per cent of the cost.
This is a very expensive piece of insurance. The Government is asking people who are thinking of buying homes to come up with another $1,000 in cash or to be prepared to pay another $11 per month over the term of their mortgage. Quite frankly, we feel this is very misleading.
The Minister of Finance indicated that he has had 14,000 inquiries from Canadians about what the Government was doing to assist them with their mortgages. This does not mean that he has had 14,000 inquiries about Bill C-37. When Canadian citizens find out what really is in Bill C-37, what this mortgage insurance program really means, they will laugh
May 30, 1984

at the Government and say that it cannot be serious if this is its idea of providing Canadians with high interest rate relief. The Government is not prepared to pay a penny itself. It asks Canadian home owners to carry the total burden. Today the Minister of Finance indicated that the Government's intention was not to provide a cent, that it was a break-even plan and that it was a regular insurance program for which people obtaining insurance will pay. Considering that the Government created the situation in part, we feel it is turning its back on its responsibility for encouraging home ownership and assisting Canadians to pay their mortgages.
In a sense it almost rationalizes further interest rates. Then the Government will be able to say that it cannot do anything about high interest rates and that home owners should not be concerned because they can take out insurance if they so wish. I do not think that is a reasonable approach to this matter. We in the New Democratic Party are concerned about the fact that there are other options to pursue. For example, the Government should have the courage and political will to deal with high interest rates. After all, high interest rates in Canada are the problem. We have heard Liberal leadership candidates-and I do not have to name them because the media has done that well-saying that something has to be done about high interest rates. As a matter of fact, one even said that Governor Bouey of the Bank of Canada should be fired because of the advice he has given the Minister of Finance and the Government of Canada.


Mr. Gamble:: That was a joke, remember?


Nelson Andrew Riis: It certainly is a joke. The whole approach is a joke. Leading Cabinet Ministers, one after another, agree that action should be taken on high interest rates. We have seen what other countries do when it comes to dealing with interest rates. If we are to provide affordable mortgages for Canadians, we could categorize the group of Canadians we would like to assist, such as Canadians with family incomes below a certain amount. They should be able to obtain funding for mortgages at a set rate from financial institutions. In other words, we should say to the banks of Canada that they have to set aside a certain portion of their loan portfolios to assist home owners and set mortgage rates at 8 per cent or 10 per cent over a prolonged period of time. That is a requirement of the Bank Act. We could ask other financial institutions to follow suit, to make it a fair system. Other countries do that. They have done it for years and years because they realize that home ownership is important and that affordable housing is important. Whether it is rental or home ownership, it is important that people have affordable housing. They take steps to enable their citizens to obtain it. We are not talking about pie in the sky ideas or magical solutions. We simply say to the Government that it should introduce policies that other countries have proven work very effectively. We want the Government to deal with interest rates or, if not, to bring in a special provision.
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Not long ago there was a special provision for small businesses and farmers. It was called the Small Business Development Bond through which money could be borrowed at half prime plus 1 per cent. It cost some money to enable the small business sector to avail itself of money at half prime plus 1 per cent. If it can be done for that particular sector, surely it can be done for others.
Imagine what this could do for the economy of the country. While it may cost the Government a few hundred million dollars in lost revenue, think of what the federal coffers could gain from the increased housing construction that would go on across the country in every community. We would see construction in rural areas as well if people could afford new homes or add to existing homes. It would result in cash circulating within our country and increased sales tax, personal taxes and corporate taxes. It would assist the construction and manufacturing industries. Most importantly, it would allow Canadians to obtain affordable housing of one kind or another.
We look forward to Bill C-37 going to committee. Since we are only discussing the principle of the Bill at this stage, we will be attempting to Fine tune the Bill and to suggest a number of alternatives.
Let me comment on the mortgage-backed securities portion of this Bill. I commend the Government for taking some steps to increase the availability of mortgages beyond five years, but this means that Canadians will once again be locked into interest rates at perhaps 14 per cent to 15 per cent. If interest rates drop they will be told that they can get out of that agreement, but they will have to pay the entire cost of interest to which they agreed. I distinctly remember numerous occasions in the House when the Minister responsible for CMHC and the Minister of Finance said that a 3 per cent penalty clause ought to be adequate. As a matter of fact, the Minister of Finance was surprised that financial institutions were charging more than 3 per cent. We now have legislation that does away with that 3 per cent option once again. We will debate that loudly and push strongly for that option when this Bill gets to committee.
In conclusion, this Bill is not an answer to the high mortgage costs that Canadians are facing today. It is worse than a sham because it gives Canadians the impression that the Government is taking action when all it is doing is telling them that if Canadians want very second-rate insurance coverage to protect them from higher interest rates, this is the vehicle. That is not what the people of Canada deserve and not what the people of Canada should be getting from the Government.


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


Mr. Miller:: Mr. Speaker, I am not certain that I will have an opportunity to speak at this stage of the debate so I want to ask the Hon. Member to comment on what I feel is a flaw in this legislation. That is, the effect it will have, if passed, on the
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public's lack of will to deal with the fundamental problem of high interest rates which the Hon. Member commented on. If this Bill is passed and people believe that there will be some semblance of protection against increasing interest rates, their will to put pressure on the Government to control those interest rates will wane somewhat. Has the Hon. Member considered how this may reduce some of the political pressure on the Government to take action against the banks that are charging exorbitant rates and reduce some of the pressure on the banking policies of the Liberal Government?


Nelson Andrew Riis: Mr. Speaker, I would be pleased to make a comment in that respect. This Bill gives Canadians the impression that the Government is taking action against high interest rates when it actually shows that the Government is not taking any action at all. The Government is assuming that high interest rates are here to stay and that they are likely to increase. If the Government did not believe that interest rates would increase, there would be no need for this particular Bill. All this Bill does is protect one against increasing interest rates. It does not protect one from being locked into these higher interest rates and enable Canadians to take advantage of lower rates. In fact, it penalizes people because they will not be allowed to take advantage of lower interest rates.
The Government has failed to deal with high interest rates and has based its policies on the assumption that Canadians must follow U.S. interest rates. The Minister of Finance has said that he cannot do anything and must look to Paul Volcker, the Chairman of the Reserve Board in the United States, for guidance. This means that the Government of Canada is saying that a foreign bureaucrat in Washington, D.C. is deciding our monetary policy, the state of the Canadian economy and whether we will stagnate longer, grow, or make matters worse. The Government has no control over what is happening.
I do not believe there is another country in the world whose Minister of Finance would give a foreign bureaucrat all the responsibility to determine its future. The Minister of Finance has made this incredible statement time and again.
In summary, this Bill means that the Government has admitted that interest rates will likely increase and that it plans to do nothing about it. However, if Canadians want to take out very expensive insurance that does not even cover all of their losses as a result of increased rates but simply a portion thereof, they will have the opportunity to do so. I believe it is absurd for the Government to take no action but to introduce the simplistic insurance policy contained in Bill C-37, when we are the richest country in the world with unbelievable resources and a very small population. It does so at a time when there are literally tens of billions of dollars in Canadian savings accounts and a variety of vehicles that would enable the Government to take advantage of lower interest rates. Canadians are interested in getting on with building the economy, of which housing is one option to pursue.


Lyle Stuart Kristiansen: Mr. Speaker, the Hon. Member for Kam-loops-Shuswap (Mr. Riis) commented at some length on the
problems with this Bill. In doing so he pointed out certain shortfalls in other government housing programs that have been undertaken in past years. One of those programs, about which many of my constituents have expressed concern, especially those in the co-operative housing movement, is mentioned in the report of the national task force on co-operative development which was filed with the Government yesterday through the Minister responsible for the Wheat Board. The Minister of State for Economic and Regional Development (Mr. Johnston) suggested in an answer yesterday that he was agreeable with the new co-operative thrust.
Would the Hon. Member elaborate on the impact of the cutbacks in funding from CMHC to the co-operative housing sector? These cuts are in fact destroying the existing structure and support for co-op housing just when the Government seems to be prepared to support more co-op housing and is taking action to protect Canadians against the threat of increased interest rates. Can the Hon. Member for Kamloops-Shuswap (Mr. Riis) give us some examples in his area or other areas of British Columbia that are showing the effect of these cutbacks to CMHC funding for housing co-ops on the housing supply in Canada?


Nelson Andrew Riis: Mr. Speaker, I certainly can respond to that question. In my own constituency, we have had the opportunity of developing two co-operative housing complexes. The first one that was built was, I would say, one of the nicest housing developments in the City of Kamloops. There is another co-operative housing complex presently under construction.
I must say that the interest in co-operative housing has risen beyond anyone's wildest dreams, at least in central British Columbia, and I suspect in other areas of the country with which I am familiar as well. Co-operative housing does allow people who would not otherwise be able to afford their own home the opportunity to do so. They have been built extremely well and are being run extremely efficiently. As I say, they allow people to own their own homes.
Unfortunately, while people have been encouraged to start thinking more and more along the lines of co-operative housing, we are being told by CMHC that funding is no longer available. We are being told that while the interest in co-operative housing is appreciated, the fact is that adequate funding is simply not in place. Many people see co-operative housing as a viable housing option, have supported the concept and see its benefits, but they have found that the financing is simply not there. Considering how well it has worked, in spite of the reports of some of the housing construction organizations, it is a shame that we cannot see more support for this kind of housing option. It has been successful in the past and with proper support, it could certainly be successful in the future as well.


The Acting Speaker (Mr. Herbert):: Are there further questions or comments?
May 30, 1984


Mr. LeBlanc:: Mr. Speaker, I would like to ask the Hon. Member for Kamloops-Shuswap (Mr. Riis) whether or not, being the confirmed socialist that I assume he is, he thinks that a housing project which by obligation must make available only 15 per cent of its housing to people of low income is adequate. Does he think that 15 per cent is an adequate figure, taking into consideration the fact that the number of people who are waiting for better housing is increasing? Does he not think that these organizations should come forward with a much larger percentage of assistance for the occupants of their projects?


The Acting Speaker (Mr. Herbert):: A short response from the Hon. Member for Kamloops-Shuswap (Mr. Riis).


Nelson Andrew Riis: Mr. Speaker, a short response would be that I agree with the general thrust of the question. Co-operative housing is intended to provide a mix of residential ownership, and an increase in the percentage of houses available to those of low income would certainly be appropriate. I believe that it is the mix that is important and that mix could be altered appropriately with the appropriate support of the federal Government to enable a larger percentage of the occupants of co-operative housing projects to be those who come from the low-income strata.


The Acting Speaker (Mr. Herbert):: That is the end of the
period allowed for questions and comments. For continuing debate.


John Albert Gamble: Mr. Speaker, Bill C-37, an Act to amend the National Housing Act, best typifies the new era of legislation that we have come to expect from the Liberal Government. It follows a pattern that is unfortunately becoming all too common.
Before I make some of the remarks I wish to make on second reading of this Bill regarding its general principle, I would like to acknowledge that since there are about 5.3 million households in Canada, half of which are owned by people who have mortgages on their residences, the intended thrust of this legislation smacks of relief. I say that because we have been told what the legislation will in fact do.
We have all seen the little booklets that were published immediately following the release of the Budget by the Minister of Finance (Mr. Lalonde) on February 15 of this year, and we all recognize that since that date, interest rates in Canada have risen by between 2 per cent and 2.5 per cent depending upon the term of the mortgage. The larger increase applies to mortgages with one-year terms and the lower increase, although the higher rate, applies to mortgages with terms of five years. We are now looking at interest rates of roughly 12.75 per cent on mortgages with one-year terms and 14.5 per cent on mortgages with five-year terms, with the expectation that those rates will increase. Accordingly, if this Bill were ever to be of any value, it would be of value now because of the built-in advantage to mortgagors who will take advantage of the Bill since it dates back to March 1. From February 15 to March 1, interest rates did not change appreciably.
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Let me briefly explain to the House what I understand to be the general terms of the Bill. The provisions of the Bill are such that it appears that for a fee of 1.5 per cent of the face value of the secured obligation up to a maximum of $70,000, the mortgagor will be entitled to have that portion of payment under a protected mortgage paid to the extent of 75 per cent thereof by the corporation after self-insuring to the extent of 2 percentage points. I say that it appears to do so because I am not too sure that the legal language used accomplishes the alleged purpose. I believe that mortgagors should understand that that is indeed the case. The protection becomes available for a fee of 1.5 per cent. It is certainly not to be regarded as a gift from the Government, although the Bill clearly indicates that funds are to be made available to the program initially from the Consolidated Revenue Fund.
There are a number of very substantial gaps in the Bill. It refers to benefits, but it does not indicate how those benefits are to be paid. I am at a complete loss as I examine the Bill. When the Minister has an opportunity, perhaps he might like to indicate to us how those benefits are to be paid. Let us assume that we are dealing with a mortgage that was renewed just at the time this plan became effective. When the new renewal comes up, the protection is paid for the full term.
By the way, a five-year mortgage is the best deal and there is no doubt about that since there is no difference in premium rates if a mortgage is taken for five years, for three years or for one year. I think the general public should be made aware of that. As a matter of fact, I think that a big blue flag should be put on all of this material to indicate to home owners that they get the best deal with a five-year term. I would have said a red flag but we are the ones who are drawing this to the attention of the public.
This Bill does not indicate that mortgagees are entitled to receive anything less than that which is provided under the terms of the mortgage. Mortgagees in fact will be paid the full amount. The home owner and CMHC will step in and jointly make the payments that must be made. I would like to know where in the Bill reference is made to who gets the money. Does the home owner receive a monthly cheque from the corporation or does the corporation pay the funds directly to the mortgagee? In any event, that is only one of the gaps in the Bill. I know we will be told that all of that will be established by regulation.
We have been waiting for this legislation for a long time. I certainly do not intend to delay it. However, I believe that it is important to examine in a forthright and honest fashion the way in which the legislation has been drafted. I do not know who the Government has retained in the Department of Justice to draft legislation, but this is, to say the very least, a dog's breakfast. As I examined the Bill, it became apparent that there was one potential for conflict after another. The word "term" is defined on page 10 of the Bill as follows:
-in relation to any borrowing of money or any loan, means a term stipulated for the repayment thereof and includes a period of extension or renewal of such a term.

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If one had a five-year mortgage, "term" would clearly mean that it would include a five-year renewal in the event that the mortgage referred to a potential for renewal, or it would include a renewal if that renewal were negotiated prior to the expiration of the date of the original term. However, if we examine page 11, there appears a rather interesting provision. Clause 34.82(1 )(b)(iii) states:
-the term or each of any such successive terms is not less than one year.
The question is: How can it possibly occur in the event that "term" means original term and any possible renewal thereof? It is interesting to note that "term" is defined in Clause 34.82(a) wherein it reads:
-the home owner obtains for that purpose on or after the expiry of that term;
The plan, as I understand it, contemplates obtaining by an insurance-like premium a protection for the renewal of a mortgage at a rate which is guaranteed with respect to the rate of interest in part only. Clause 34.82, which is the operative part of the Bill in terms of providing protection is, to say the very least, extremely confusing.
If that provision is confusing, I would invite Hon. Members to proceed to Clause 34.83. What I thought was the nature of the protection as explained in the immediately preceding paragraph is destroyed by providing that: "The corporation"- which is CMHC-"may, from time to time, in prescribed manner, establish rates of interest, for publication", and upon such publication the rates which are to apply to the protected loan and the base loan shall be the rates which are established by the corporation. They are to be the rates which will give rise to the extent of the protection. I say that because that is apparently what the words mean but, I cannot understand the process. If, indeed, they do provide for an abatement between the real rate paid and the rate contracted for and if they reduce that gap protection, then I would clearly ask that this matter be drawn to the attention of the public. The public is clearly of a different view.
One of the most troublesome provisions which should concern all Members of the House is the persistent reference to regulation, prescribed forms, prescribed circumstances and deemed consequences. In this 17 page Bill, regulations or prescriptions occur 55 times. What should we call a Bill which provides for such mammoth and substantial changes when, by way of regulation the heart and soul of the Bill may be removed? That is what the Bill does.
I know it is pleasant for the Government to come to the House and say, "Please pass a skeleton and we will add to it the meat. Please stick up a stake and we will stick the limbs on it." That is exactly what it is doing. We will not have to return to this troublesome place-the House of Commons-for further examination and approval or changes. If there are any mistakes, the Government will fix them by regulation.
Let us look at some of the significant provisions which may be altered by regulation. Let us look at the very heart and soul of the Bill in terms of the insuring of mortgage interest rates. As I indicated earlier, that is Clause 34.82. If we examine that Clause from the beginning it states:
(1) Subject to this Part and any regulations made under subsection 34.88(1)-
The very heart of the Bill is subject to regulations. It also makes reference to specific regulations. If we turn to Clause 34.88, among the provisions that may be changed by regulation, on page 16, under item (d) it states:
-prescribing any terms and conditions to which entering into a contract under subsection 34.82(1) shall be subject;
The place to determine the conditions which entitle people to receive their money is in the Bill itself and not in the regulations. We have already established that. People have to pay a premium of 1.5 per cent. The maximum amount of the mortgage that can be secured is $70,000. People are only entitled to recover three-quarters of the amount. It is all spelled out in the legislation. Increases of over 10 per cent interest are not entitled to reimbursement. As well, there is a 2 per cent self-insuring clause. What then does this clause mean? I do not know. Because I do not know, I should naturally be alarmed that I am called upon to pass legislation which, by the very terms of the Bill itself, authorizes the Government to step in and potentially change the main thrust of the legislation.
That is not the only place in the Bill where that kind of circumstance applies. It is sufficiently harmful that I think it requires renewed examination. Surely the Government can come before the House with a plan which is clear. It is able to spell it out in the pamphlet which has been issued. For instance, we could look at one of the provisions in the pamphlet which asks: "Can a Home owner Renew his Protection? Yes. Upon expiry of his or her original mortgage, the homeowner can extend the mortgage protection by paying an additional premium. This gives the homeowner the option of continuous protection until the mortgage is paid off."
One should examine the provisions of Bill C-37, under Clause 34.87(1) which deals with the establishment of the base loan and the protected loan-and one may be deemed to be the same as the other-and then read Clause 34.87(2), which states:
Notwithstanding subsection (1), where a home owner has been provided with protection in respect of any loan, no further protection in respect of that loan may be provided.
That is one statement in the Bill, to my mind, which is in direct contradiction with the statement which appears in the pamphlet. I believe that the Government genuinely intends that the statement which appears in the pamphlet be the law, but this provision in the Bill has, in my submission at least, the very real prospect of creating the opposite effect. If the words are intended to convey some other impression, can they not be spelled out in a fashion which Hon. Members of this House can understand? In their present form they leave me with the very distinct impression that the opposite effect from that originally intended, allegedly, by the Government, will result if this House passes this Bill in this form.
May 30, 1984

In my view, we have a responsibility-if I may deal with the way in which legislation is introduced in this place-to see that Parliament itself understands legislation it passes; not fails to understand, not delegates to someone else, not delegates to the Governor in Council. We have a parliamentary form of government, and the establishment of legislation which is the trunk of a tree on which limbs are to be hung, or which is the skeleton on which the government is to put the flesh, is not the purpose of this House. I urge the Minister, who is here, to go back to the person who is doing the drafting of Bills for him, and when this matter is referred to committee he should be prepared to make some very substantial changes which will reflect what appears to be the alleged intention of the Government.
I also believe that it is vitally important for Members of Parliament, in the event that they are to discharge their duties, to be able to understand clearly and as promptly as possible what the words mean. In addition, every time the words "prescribed" or "fixed by regulation" appear, the Minister must understand that we are denied the right to discharge the obligations placed upon us by our constituents. I find this whole method of drafting legislation to be offensive.


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


Mr. F. Oberle (Prince George-Peace River):: Mr. Speaker, I take pleasure in the opportunity to contribute to this debate this afternoon on Bill C-37, which is designed to establish a mortgage interest rate protection plan. This Bill has in it a main component which is of more interest to me, that is it permits the federal Government to once again become directly involved in the delivery of a number of social housing programs which formerly had to be delivered through a number of provincial agencies.
I am happy that the Minister is in the House this afternoon. He will recall that I raised this question with him a couple of weeks ago. He told me at that time that the agreements with the provinces were short of a few minor details but they would be ironed out in due course. I am pleased in a sense to see that the ironing out which has been done resulted in eliminating the provincial jurisdiction in this area, and permitted the federal Government once again to deliver these programs directly, because that has been a more effective way, at least in my experience, in the past.
I am particularly concerned, of course, with the Rural and Native Housing Program-because of the nature of my constituency-which has been sadly neglected over the last few years. In a sense it is sad that we cannot get together in a more co-operative program of federalism which would permit the two Governments to co-operate in a more effective way. However, it seems that in all cases the federal Government insists on having its piece of plywood outside saying, "This is a federal project. Look at what we are giving you. Look at how generous we are with you. We want to remind you of that when an election comes around".
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Naturally, the provinces want to collect their political currencies as well when these kinds of programs are delivered and public moneys are being spent. Unfortunately, in many cases that has resulted in not delivering the programs at all because the governments cannot get together and that is, in a sense, unfortunate. I do not know what the solution is, the nature of our business being what it is. It will probably always be the case that the government which delivers these kinds of programs wants the political credit for it. As I say, I consider this unfortunate.
There are a number of positive things which I could say about this Bill, but I am very much afraid that it is my role, and the role of the Opposition, to point out the more negative features of the Bill. Let me just say from the outset that apart from the social delivery system which has now been improved upon, I do not see anything in this Bill that is worth considering. There is a lot less there than meets the eye and a lot less than was in the Throne Speech or in the announcements by the Minister of Public Works (Mr. LeBlanc) and the Minister of Finance (Mr. Lalonde) or, indeed, in the Bill itself.
We have a mortgage interest rate protection plan in this Bill. The Minister of Finance a few moments ago stood up in this House and told us not to worry, there is not to be any public money involved in this; that it is sort of a self-supporting, self-sustaining kind of a program; that the mortgage holders will be paying for the protection like buying life insurance or buying any other kind of insurance. What that means, in a sense, is that the mortgage holders, instead of waiting for interest rates to rise, will now have the privilege of paying their interest rates in advance.
There is a $70,000 limit on this program. That means, in many cases, if it is a five-year period, the mortgage holder will now have the privilege not only of paying the current rate of his mortgage, which is 14 per cent or 14.5 per cent, but in addition to that he may pay some interest in advance in the amount of up to $1,500. This shows how much faith the Government has in the stabilization of the market and the stabilization of interest rates.
The Minister of Finance said today during Question Period that his Government does not have a high interest rate policy. I suppose what he is saying to us is that there are no high interest rates in this country. This is just a rumour started by some ungrateful Canadians who cannot afford to renew their mortgages. The Government does not have a high interest rate policy, yet this whole Bill does nothing else but protect mortgage holders not from current high interest rates, but against future increases in interest rates. Therefore, there really is no help in there for the mortgage holder. Instead, it will create a lot of fear, anxiety and uncertainty in the marketplace because we are now saying, "Go and buy your mortgage insurance plan because the storm clouds are coming, interest rates are going to go up and we want you to protect yourself against these fluctuations".

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The problem is not really so much with protecting mortgage holders against high interest rates. What we on this side of the House really expected was an attack by the Government on the cause of high interest rates in the housing field. We in this country have not yet recognized that housing in a modern civilized industrial society like ours is a social right. We pretend that we have recognized that, but we really have not. Like clothing and food, housing is essential, particularly in a country like ours when it gets to 40 below. People need to have shelters, therefore it is a social right. The Government talks about this social right, but it has done very little about it. Having accepted that principle, and recognizing that the problem with the housing industry is that it fluctuates with the economy, that is to say as the economy goes up and down so do interest rates and mortgage rates, other countries have managed to separate the housing market from the rest of the money market.
I would like to give the Minister a few examples of what other countries have done to bring about effective housing policies. It is not uncommon, even today in the U.S., to have a fixed mortgage at 6 per cent. It is not at all uncommon in Britain, France and in Germany to get 40 or 50-year fixed mortgages at 5 per cent or 5.5 per cent. How is it done? What are these people doing that we are not? First of all, they recognize that housing is a social right. Secondly, they have recognized that a home owner, by virtue of being a home owner, is a productive citizen. He is a taxpayer, he buys furniture, carpets, building materials and plants for his garden. He adds to the social inventory of the country. Almost every person aspires to own a home. It is a protection against inflation and they can pass it on to their children. But what do they do? Let us look at some of the schemes in place in the United States.
We have the great problem of a shortage of capital at times. That is the reason why the National Housing Act was created. The banks and financial institutions in our country did not, for whatever reason, satisfy the need that existed. Incidentally, this country has a backlog in demand for housing, about
200,000	housing units. That is, of course, more than we are building every year. Up to April of this year, compared to last year, housing starts are down 37,000 units. That is terrible. These other countries know that housing construction is very stimulative to the economy. The lumber industry, which is in such difficulty right now, would certainly be stimulated by more effective housing programs. This applies to all sectors of the economy. Well then, what can we do? We could entice people to invest not only in their own homes but in the housing market itself.
Canadians have more money invested in term deposits in the banks than any other nation in the world. That is why it is not too wise to make comparisons between Canada and the United States. People in the U.S. tend to invest in the stock market more than do Canadians. Some 27 per cent of all adult Americans invest in the stock market, whereas in Canada it is only 7 per cent. Canadians are, I suppose, very cautious
investors. Perhaps it has to do with a little bit of ignorance about how business and the stock market work. Well, how can we get people to take their money out of the banks and put it in the housing market or small business or whatever? The way to do it in the housing market is to give them the necessary tax inducement to take money out of term deposits and put it in the housing market.
That is not new. In fact, the Government had discovered this idea, but its priorities are all wrong. You can invest money in the film industry and it is deductible from taxable income. You would not believe how much money there is available for the production of films. Well, it is very simple. The Minister would not believe how much money there would be available over night with the right inducements for people to put their money into a mortgage exchange corporation. The Minister has such an instrument. It was passed by Parliament in 1975 but it has never been declared. You pay money into a mortgage exchange corporation and the interest you earn is tax free. The interest rate, of course, is down to 6 per cent or 7 per cent. That saving would then be passed on to home builders and of course the net result would be that your earnings would be the same. If you paid tax on the interest from a 10 per cent or 11 per cent security deposit in a bank, you would be probably worse off than if you were earning 7 per cent in this other instrument. That is one way of doing it.
In 1979 we proposed the mortgage deductibility plan. You could deduct from your taxable income a portion or all of the interest that you paid on your mortgage. That resulted in a very significant saving to home owners and a very significant reduction in interest rates.
Let me tell the Minister of an even more effective and workable system. It was created about 150 years ago in Great Britain. Those governments, a co-op or a union permit people to save in advance for their homes. In Germany it is mostly the unions that manage these saving societies. It is not necessarily the potential home owner himself who does the saving. Parents and grandparents save for their children or grandchildren. Anyone who wants to save in the housing market can put money into a plan and then give it away to someone or even sell the plan for a little profit.
You put some disposable income into a mortgage exchange corporation or savings society. The money is government guaranteed. The interest rate is very low. It is 1 per cent or 2 per cent. You tailor your plan to your needs. If you need $80,000 or $100,000 10 years from now, you have a plan tailored for yourself. In 10 years you will have saved about 25, 30 or even 40 per cent of the total. You get only a very low rate of interest while you are saving. In return, when the plan matures, you get a fixed mortgage for whatever duration you wish at an interest rate which is presently, in most cases, 5.5 or 6 per cent. This happens in Great Britain, France, Italy, Austria and Germany.
These are countries which are over populated. I can fit three of these countries into my own constituency. There are 60
May 30, 1984

million people living in the Federal Republic of Germany. My nephews and nieces there all plan to build their own homes. Some of them are doing it right now. They are doing it at a fixed rate of 5.5 per cent because their fathers, and later on themselves, as they started to work, planned ahead and accepted the responsibility associated with planning your own future and building your house.
In Canada, 35 per cent of our population comes from countries which have this experience. Is it the banks that do not let you do these things because they need their pound of flesh? You are subsidizing the home owners with this nonsense. You are subsidizing the banks, the insurance corporations and the mortgage corporations. Is that the problem? Are you catering to the banks? Are you their puppet? Are you really worried about home owners? Why is it that we in Canada cannot do what other countries have done so effectively over the last 150 years? You make all kinds of comparisons with other countries all the time. These are not socialist ideas. They are effective ideas once you have accepted that housing is one of the three essential elements of life in a country like this. Why is it that you are so stubborn, so totally ignorant, and so totally devoid of any ideas? Why is it that Canadians cannot-
Mr. Speaker, how am I for time? Have I a few more minutes?


The Acting Speaker (Mr. Guilbault):: The Chair was about to rise and advise the Hon. Member that his time is up. The Hon. Member for Malpeque (Mr. Gass) with a question.


Melbourne Alexander Gass: Mr. Speaker, I would like to ask the Hon. Member to finish what he was going to say.


Frank Oberle: Mr. Speaker, I do not wish to abuse the patience of the House. I wanted to finish the question I was posing to the Minister. He has 10 minutes for question period. I would like him to rise and tell me why he is a servant of the banks instead of the executor of the mandate and the responsibility he has to provide Canadians of all walks of life with adequate and affordable shelter.


Mr. Cosgrove:: Mr. Chairman, the last speaker indicated that there is 10 minutes of question period. As I understand the rule, those are 10 minutes of the last speaker. Perhaps following parliamentary procedure it would be in order to further develop this debate by asking questions of the last speaker.
Because of responsibilities that I enjoyed in this area for reporting for Canada Mortgage and Housing, I would be interested to know of the position of the Member and of the Party he represents with respect to affordable housing. How does he propose that housing could be made affordable for Canadians generally? Specifically, what is his view of shelter allowance? Does his Party intend to promote shelter allowance?


Frank Oberle: Mr. Speaker, I am delighted to answer that particular question because I know how anxious that Minister is. I give the present Minister of Housing credit as well for
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understanding the problem. Neither of them understand nor have ever understood the solutions.
A quick way of solving the housing problem in the country, and an even quicker way of finding out what the policies of the Progressive Conservative Party are in this area, is to screw up your courage and call the election. You will know immediately what the solution will be.


Mr.   de Corneille@: Mr. Speaker, I think the subject is too serious to evade in that way. It is time the Opposition became honest about such an important subject. I will repeat the question. If they are going to make comments about policies and talk about them intelligently, they obviously must have a policy in mind. Certainly he would not want to admit that there is no policy there. Is he in favour of shelter allowances?


Frank Oberle: Mr. Speaker, as I told you earlier, this Party will draw from the experience of many people. We told the Government today what the solutions are. I was very generous.
I told of a number of programs which are in place in other countries that have worked very effectively. I told what the results of these programs are. The problem is that we have given these people all kinds of ideas before. Why do they not take these two ideas and run with them? Why do they not tell your leadership contenders to go and announce them?
I am very much afraid, as was the case with all the other ideas we gave them, that they would bungle the whole thing. It does not take just ideas. It takes people who are committed to doing something. It takes people who are prepared to accept the social responsibility that is associated with being in power to put these ideas across. I do not have confidence, nor do Canadians generally, that these people will demonstrate that kind of responsibility.


Roméo LeBlanc: Mr. Speaker, I do not want to filibuster this Bill. It is a very interesting debate. I would like to know what the present Conservative Party thinks of the Mathews Report which, amongst other things, would have suggested the dismantling of CMHC. I will not ask that question.
I know the Hon. Member is seriously interested in the amendments to the rural and native housing program. He seems to suggest that the amendments were brought about because we had a quarrel about signs and credit. If he believes this is the reason, I hope he will check with his provincial government. Does the Hon. Member know that we were unable to deliver to natives and rural people a program in British Columbia because under the law we had to have 25 per cent provincial participation and that participation, without reference to signs or credit, was not forthcoming?


Frank Oberle: Mr. Speaker, the Minister understands my interest in this area as does the former Minister. In all fairness to him, I fully understand what the difficulties were in British Columbia. No social programs were delivered because the province had its priorities in other areas and did not provide the 25 per cent component, as was the requirement under the arrangement.

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In fairness to the Minister, the Government was giving an undue amount of political credits. It was taking all the credits for this housing program and yet the Government did not see fit, at least in my province, and a similar situation exists in other provinces, to get these programs delivered. As I said at the outset, I applaud the Government for taking the necessary initiatives to deliver these programs directly, but that does not get the Government off the hook. This Bill does not attack the root cause of the problem. The housing market is tied to the cyclical nature of the general economy. Unless the Minister has the courage to correct that, we will have continuing serious problems in this area.


Mr. McKenzie:: Mr. Speaker, I have a question for the Hon. Member for Prince George-Peace River (Mr. Oberle). I am sure he will recall during the last election campaign the Liberal ads which appeared over national television during prime time, night after night. We saw the Minister of Transport (Mr. Axworthy) speak repeatedly on interest rates and what a horrible thing it was that interest rates were rising. Night after night over national television on behalf of the Liberal Party, with its usual pack of lies, he stated the Liberals would reduce interest rates.
That was over four years ago. Does the Hon. Member for Prince George-Peace River think that the Liberal Government should bring forward its policy and program on how it is going to reduce interest rates as the Liberals said they would over national television night after night during the 1980 election campaign? Does the Hon. Member not think that four to four-and-a-half years is just a little bit too long for the Liberals to take to bring in this policy of reducing interest rates? Does the Hon. Member think the Liberals should explain why they allowed the interest rates to go to 21 per cent? Interest rates are now on the rise and the Liberals still have not brought forward this policy of reducing interest rates.


Some Hon. Members:: Hear, hear!


A. Daniel McKenzie: The Liberals are going to mislead the Canadian people again going into the next election.


The Acting Speaker (Mr. Guilbault):: The Chair has a problem of whether some questions are allowable. Questions should relate to the remarks made by the previous speaker. The Hon. Member for Winnipeg-Assiniboine (Mr. McKenzie) is referring to something that happened four years ago. The Chair recognizes that the subject of interest rates is in the Bill. The Chair will allow the Hon. Member to reply. This is a border case, which seems to have little to do with what we are discussing.


Frank Oberle: Mr. Speaker, what my friend, the Hon. Member for Winnipeg-Assiniboine (Mr. McKenzie) has said is indicative of the kind of reluctance I would have in giving the Liberals our program in great detail, because they would not know how to handle it. The Liberals let interest rates run away, even though they promised clearly that interest rates
had to go down. I can recall the present President of the Treasury Board (Mr. Gray) getting up every day during question period saying that interest rates must go down. He was almost falling into the aisle while saying it.


A. Daniel McKenzie: He said he would resign.


Frank Oberle: Interest rates went up. As my hon. friend indicated, the President said of the Treasury Board he would resign if interest rates did not go down. He is still here, Mr. Speaker, and he has not come up with any innovative ideas. The same is true with gasoline taxes. The Liberals said the price of gasoline would go up 18 cents if the bad Conservatives stayed in power. Look at what has happened, Mr. Speaker.


The Acting Speaker (Mr. Guilbault):: The question period has now come to an end. For debate, the Hon. Member for Timiskaming (Mr. MacDougall).


Mr. John A. MacDougall (Timiskaming):: Mr. Speaker, I am pleased to take part in the debate, but very concerned in another way. Four years have gone by since this Government has been in power. Now we are in a situation where the Liberals are producing amendments not only to the Interest Act through Bill C-36, but also introducing amendments to the National Housing Act through Bill C-37.
This afternoon during question period we heard that we have to work together, meaning federal, provincial, and municipal governments, but when we look at Bill C-37, what do we see? We do not see federal and provincial governments working together. What we see is the federal Government going on its own. It is a sad state of affairs when we as a federal Government cannot work together with our counterparts in the provinces.
Housing to me and to the Members on this side of the House is very important. Everyone in this country should be able to have affordable housing. Everyone has a right to have a home. Let me speak about rural and native housing. There are a number of reserves in my riding of Timiskaming. Let me introduce to you, Sir, one part of my riding, the Moosonee-Moose Factory area. That area is made up of a native reserve and is in the northern part of James Bay. I went to that part of my riding last week. A housing survey was taking place. It was shocking, to say the least. In 1984 we still have people living in tents. I know that is hard to believe, but it is true. That same survey showed in addition to those living in tents two, three, and four families were living under one roof. In two or three rooms were 12, 14 and 16 individuals. I was told that in winter months, people were sleeping in the attic because that was the only warm area. Today, four years after this Government took over, we are only now debating this question. I hate to say this, but is it because there is a chance we will have an election this year and is it just an election issue? I hope not.
This year in the riding of Timiskaming we are allotted 30 homes under the Native and Rural Housing Program. That will not come close to what is required. In one area of my riding, the Moosonee-Moose Factory area, those 30 homes could be used exclusively. There are other parts to my riding,
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it is a very large rural riding. There are good provisions under this program. There are needy citizens not only in Northern Ontario, but across this country. There are people living in tarpaper shacks. They have pot belly stoves. They are unable to get warm and are unable to provide for their families.
We have to go further. I strongly believe we have to do so with provincial help. We have to work together to resolve the problems in the housing industry. We cannot do it by going it alone. Once again it is determined that this Government will not work with the people. The Liberals have their own thoughts. They do not share the thoughts of Canadians. They have their way of doing things and that is the way it will be.
We intend to change that pattern in a very short period of time. Let me now come to another area. Canadians young and old have always had a dream of owning their own home. We work hard over the years to get what we hope will be affordable housing. People have pride in getting a garden, a beautiful lawn, and a home.
I want to quote something that was said on February 10, 1980, "I would want to manage the economy in such a way that interest rates would, in fact, come down because the economy would be administered in a sound way." The Prime Minister (Mr. Trudeau) said that in an interview with a reporter from The Toronto Star. Since that date I have friends, and I have colleagues who have friends, who have lost their homes because of this Government's policies and the increasing mortgage rates.
The mortgage interest rate policy of the Government has not been good for Canadians. The mortgage rate in 1974 was 11.88 per cent, in 1981 it was 21.46 per cent, and in 1984 it was 14.25 per cent. Approximately 2.2 jobs are created with every home built in the country. Coming from a resource-based area, I know that means employment not only directly in the construction industry but in the steel, forest and other related industries in the riding of Timiskaming and throughout northern Ontario. The adjustable seasonal rate is 166,000 or
22.5	per cent unemployed people in the construction industry across the country. It is a shameful number and it is due to the high interest rate policy of the present Government.
If a mortgage with a base rate of 12 per cent is renewed at 17 per cent, the first two percentage points are not covered by the insurance. Thus, three-quarters of the difference between 17 per cent and 14 per cent, or 3 per cent times three-quarters, which equals 2.25 per cent, will be paid. In other words, the Government is indicating that interest rates are rising. It is plain. It is in the Bill. There is no doubt that the Government is saying: "Hold on to your hats, here we go back to high interest rates". It is time for the Government to dissolve Parliament and go to the people. Then we could be rid of the problem-this Government.


Roméo LeBlanc: Have you read the Gallup?


John Alexander Frances MacDougall: The Gallup is fine. It is galloping along the way we want.
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Mr. Malepart:: Will you be back?


John Alexander Frances MacDougall: I will be back, and I will bring other colleagues from northern Ontario with me.
There are many areas at which I could look, but before concluding my remarks I would like to indicate that people with mortgage interest rates at 17 per cent, 18 per cent and 20 per cent are facing difficult times. Approximately two years to five years ago families had two working members. Today, if we travel across the country, how many families do we find with two members working? It could be the wife or it could be the husband who are working today. If they cannot afford the mortgages they have today, how will they be able to afford insurance to protect them against rising interest rates? If we are looking at $1,050 on a $70,000 mortgage or whatever, that might be a relief in some areas of the country. However, we are still not getting at the problem, which is the economic policies of the Government. This problem is evident in that mortgage interest rates are rising. The Government has mortgaged the future of our young people and the future of their children. At whatever we are looking, be it Bill C-37 or youth employment, it seems to come down to mismanagement by the Government and it is Canadian taxpayers who are paying for it.
I could refer to many sound areas such as native housing, RRAP and townships which do not qualify, housing geared to income and many other areas; however, I thank the House for the opportunity to participate.


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


Jean-Claude Malépart: Mr. Speaker, I realize the Hon. Member arrived here in the House after the short reign of the Progressive Conservative Government. Was he aware of the fact that the Minister responsible for CMHC asked one of his Conservative friends to examine how CMHC could be dismantled and divested of its programs, especially in the area of subsidized housing? The person in question was Mr. Elmer MacKay, who recently stepped down to let the Leader of the Progressive Conservatives run in his riding, I was going to say the little leader, and who is now an influential adviser.
My question will be directed as much to him as to the previous speaker. Do the Progressive Conservatives want an election as soon as possible so they can get rid of CMHC?


John Alexander Frances MacDougall: Yes and no.


Roméo LeBlanc: That is your policy-yes and no.


The Acting Speaker (Mr. Guilbault):: Are there any further questions? The Hon. Member for Prince Albert (Mr. Hov-debo) on debate.


Mr. Stan J. Hovdebo (Prince Albert):: Mr. Speaker, I am pleased to participate in the debate on Bill C-37, which is

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supposedly to provide insurance against rising mortgage interest rates. However, it should be called a Bill to insure against government incompetence, because that is what it really attempts to do. It attempts to patch up the mistakes of the Government of a few years ago, mistakes which have caused the situation where people are losing their homes because of high interest rates and fluctuating interest rates. Instead of suggesting, as this Bill does, putting in place an insurance plan against high mortgage interest rates, it should be possible to put in place a set rate mortgage such as we had for many years.


Frank Oberle: It was brought in by Diefenbaker in 1959.


Stanley J. Hovdebo: That could possibly be so. I would not want to question the Hon. Member on that. A fixed affordable interest rate on long-term mortgages for many years did for the housing industry what was necessary. It did not hamper the building of houses. However, that fixed interest rate was removed by the then Minister of Public Works, Mr. Hellyer, to open up the market so that builders would become involved in constructing affordable houses and would be able to sell them somewhat easier. The record will show that as a result of opening up the market and fluctuating interest rates, for a number of years housing starts declined and that the building industry was not helped. In fact, it made it somewhat more difficult for people to obtain affordable housing and, consequently, somewhat more difficult for people even to find housing.
Bill C-37 allows for interest rates to increase approximately 3 per cent or 3.5 per cent without any assistance being provided. That is a 25 per cent increase on interest rates with respect to the level of present interest rates. I do not consider these to be essentially affordable interest rates.
Instead of attempting to establish an insurance policy to protect against increasing interest rates, I suggest that the Government should withdraw the Bill and introduce measures to assure long-term, fixed and affordable interest rates that would encourage people to buy homes.
For example, I lived in New Zealand for a number of years. That country was in the process of trying to increase the amount of available housing. Therefore, that government only charged 1.5 per cent interest as a service charge to those who wanted to build or buy a home. These funds kept revolving so that when someone paid off their home, the funds were made available to someone else. This process went on for many years and the money was used repeatedly to help people build homes. In approximately 15 years, the amount of available housing increased by 20 per cent. That is the sort of approach that the Government should take.
Once the requirement for homes is established and people are able to buy them, the economy is affected in many ways. When a home is constructed, it is not only those in the construction industry who are involved but those who work in the factories that manufacture furniture, appliances and other
fixtures for the home. This contributes to the economy which, in turn, improves the situation in the country and allows more people to buy homes.
It is only logical to create an economy that easily and quickly satisfies the needs of the people. Instead, the Government's policies have been designed to meet the needs for profit by the banks and other financial institutions. They do not meet the needs of the people who need shelter or those who pay up to 40 per cent of their income for that shelter. This Bill will not solve any of the problems of those who require housing. It does not even solve the problems of those who may be able to buy a home. Those who are paying $250 a month rent and want to buy a home might not do so if they believe that interest rates will increase by 3.5 per cent in the near future. This is true even if they have a reasonable initial interest rate. Of course, that is not possible right now.
What is the basic purpose of this Bill? While it is supposed to enhance the possibility of owning a home, it does everything but that. If an individual who earns $1,000 or $1,500 a month is paying $500 a month for a home, receiving assistance only after interest rates increase by 3.5 per cent is not enough to be encouraged to buy a home. Furthermore, since interest rates are already high, any increase in interest rates may eliminate the possibility of buying a home. Even a 3.5 per cent increase may not be affordable to some home owners. There are many people who earn $1,200 or $1,500 a month and are paying $600 on their mortgage. They cannot afford an increase of $50, and 3.5 per cent is much more than they can afford. In fact, I suspect there are many people who cannot even afford an increase of 1.5 per cent which is required for them to take advantage of this insurance plan.
One of the purposes of this Bill is to guarantee against increases in interest rates. This Bill does not do so because it provides for a basic 3.5 per cent increase before the plan takes effect. Our old laws used to allow a mortgage to be paid off after five years, with a three-month penalty period. This possibility is removed as a result of this Bill. Home owners who have owned their homes for more than five years will not have the possibility to save enough money to pay off their mortgage without a large penalty.
On many occasions in the House, Members from the NDP and the Official Opposition have told the Minister responsible for housing and the Minister of Finance (Mr. La.'onde) about people who are trying to pay off mortgages that have gone out of sight as a result of high interest rates. When they have attempted to do so, they have been charged up to $8,000 in penalties, notwithstanding the three-month interest rate penalty. We have raised questions about those situations that have made it impossible for people to pay off their mortgages and avoid the 19 per cent and 20 per cent interest rates which some people faced. In fact, there are still some people in my constituency who are attempting to get rid of 19 per cent mortgages.
Rather than increase security for some people, this Bill removes some of the security of those who had an opportunity to get out of large mortgage payments from the past. This Bill
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is likely to decrease the amount of affordable housing for Canadians. It is estimated that we currently need approximately one million homes in Canada. If the Government were to establish a logical interest rate structure, without worrying about how much the banks and other financial institutions will make, it could instruct the banks to allot 10 per cent of loans for housing mortgages and they will receive 7 per cent of that. This was done for a number of years. We did that for a good number of years. If we did it again, the number of houses that would be built would be increased very quickly because people would begin to build their own homes or pay the construction industry to build their homes for them.
It is very sad that the financial structure of the country has become more important to this Government than the need for good, affordable housing. It is sad that banks and mortgage companies are more important to the Government than the need for good, affordable housing. Housing is a necessity. I am not even sure that banks are necessary.
When the Social Credit Party first came to power in Alberta, it was probably the first group of socially-minded people to tangle with the banks of Canada. At that time, members of that Government tried to put in place a system which would make use of the productivity and resources of Alberta and its people. They said that they did not need the banks and did not have to give 10 per cent or 20 per cent of their productivity away. They felt they could circulate the money with their own province and establish a financial structure which would be of benefit to Albertans rather than to large banks and financial corporations. The Aberhart Government passed what it thought was the required legislation which was then struck down by the Supreme Court of Canada. The Supreme Court would not allow the Aberhart Government to put in place a structure which would allow Albertans to use their own resources and their own productivity in the way they wanted.
Almost the same kind of thing is happening now. People who want to build a house and live in it cannot do so because the Government feels that we must not interfere with the ability of a bank to make money. There are many people in this country who are quite willing to begin to build houses and, with a little bit of help from the Government, they would do so. I am speaking of course of the large number of people who would like to start co-operative housing projects.
As well, there are a number of people in the country who are making war on that possibility. Builders' associations and other financially-based institutions have very strong lobbies that come to see Members of Parliament here in Ottawa to tell us that co-op housing should not be subsidized by the Government. Unfortunately, the Government is listening to that lobby and not to the millions who want affordable housing. The Government is listening to the banks and the mortgage companies, the companies that will make money on the buying and selling of houses. Consequently, the Government is not ready to allow co-operative housing projects to go ahead.
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Co-operative housing has proven its effectiveness by supplying the community-based and socially integrated housing that is necessary for the people who find it difficult to get together enough money to build a house. It has proved effective for those who do not want to spend $80,000 on a house just to spend another $160,000 on interest in the next 15 years. Rather, they would like to make a commitment to pay for that house. Under the circumstances which have been put in place by the Government and which the Government is keeping in place, those people will pay $80,000 for a house and over the next 15 years will pay another $160,000. They will pay for that house three times. The builder of the house will only receive $80,000 but the person who has bought the house will pay for it three times. The Government is going along with that idea.
Housing is a necessity and a right, and it is something that we in this Parliament should stand up for as best we can and for as long as we can. Instead, we are discussing a Bill that does none of the things that are needed to increase available housing. It does none of the things that are needed to make it possible for those with lower incomes to buy houses. A few years ago, the Government, the Official Opposition and our Party made a commitment to the people of Canada that we would make affordable housing a major part of our platform and we have ceased to do so.


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


Ian Deans: Mr. Speaker, there are two matters that came to my mind as I listened to my colleague explain his views on the Bill and the problems with housing. If I could, I would like to have him elaborate a little bit on both of those matters. I will put them to him one at a time so that I do not confuse anyone who may want to read his response in Hansard or, for that matter, anyone who may want to listen to his response today.
My colleague made mention of the fact that there was a desperate need to encourage the further utilization of co-operative housing as a way of improving the housing stock for Canadians who are of average income and find it most difficult to enter into the housing market as it now exists. I wonder if my colleague is aware of what now appears to be the fact that the Government of the day has reduced its emphasis on co-operative housing and that it now seems to be reducing the amount of money available to co-operative housing? From his own vast experience both here in Canada and abroad, I wonder if my colleague would be able to enlighten us as to how he feels co-operative housing could better serve the needs of that segment of the population that is now unable to qualify in the private housing market as a result of the high interest rates that have been charged?


Stanley J. Hovdebo: Mr. Speaker, not very long ago, I asked a question of the Prime Minister (Mr. Trudeau) in the absence of the Minister of Public Works (Mr. LeBlanc). I asked him to explain why the Government had cut back on its allocations to co-operative housing and why it was not giving the people responsible for co-operative housing across the country the

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money required to keep on building co-operative housing projects. The Prime Minister was unable to answer my question, but he made the commitment to me that he would have the Minister of Public Works, who is the Minister responsible for housing, send me the answer to that question. The Minister of Public Works has still failed to do so.
I can talk about co-operative housing as being a solution to the problem with which we are faced. There are 500,000 people in Canada who are paying more than 30 per cent of their incomes for housing. These are the people who, because so much of their income is committed to housing, would very
quickly join a co-operative if they could be sure that instead of the monthly payments of $400 or so that they had already committed to a project, they would not have to pay $700 a month next year. Many Hon. Members who have been approached by their constituents during the last few years will know that some of those constituents started out with-


The Acting Speaker (Mr. Guilbault):: Order, please. It being six o'clock p.m., this House stands adjourned until 11 a.m. tomorrow, pursuant to Standing Order 2(1).
At 6 p.m., the House adjourned, without question put, pursuant to Standing Order.

Thursday, May 31, 1984