1984-12-14

STATEMENTS PURSUANT TO S.O. 21


Mr. Don Boudria (Glengarry-Prescott-Russell):: Mr. Speaker, the people of Glengarry-Prescott-Russell have spoken. Yesterday, voters said they were fed up with promises and wanted no part of unilateral cutbacks. They want to keep their jobs, and they want the universality of social programs to be maintained. The message they gave applies to all Conservatives. Last night, the Tories went down to a crushing defeat in the riding of Prescott and Russell. The honeymoon is over. If the people of Ontario or voters across the country were called to the polls today, the results would be vastly different from what they were on September 4 of this year. The Liberal Party is vibrant and dynamic, both nationally and at the provincial level, and we shall continue to express the aspirations of all Canadians.
Voters are wary customers, Mr. Speaker. They realize that the provincial cousins of the Tories across the way are tarred with the same brush. The people of Prescott and Russell were not up for sale. The cheques, the promises and the big Tory guns were a complete failure, Mr. Speaker.


VOLUNTARY ORGANIZATIONS
Mr. David Daubney (Ottawa West):: Mr. Speaker, the attention of Members of this House and of Canadians everywhere has been drawn in recent weeks to the famine in Africa. The Canadian Government has responded to that crisis, but the real measure of our concern as a nation has been the outpouring of contributions by individual Canadians to nongovernment organizations.
The voluntary sector has shown, in this and other crises, that it can respond quickly and effectively to the problems of Canada and the world. This Government has made clear its
commitment to the principle of voluntary action, and has identified the voluntary sector as an equal partner with government in meeting the economic and social needs of Canadians.
For seven years the National Voluntary Organizations Coalition has been asking the Government to change the tax laws, to replace the existing tax deduction for charitable donations with a 50 per cent tax credit. The previous Government was consistently unresponsive to this proposal. It is my hope that this Government, clearly committed to voluntary action, will meet its pledges with action by implementing these changes to the Income Tax Act. If we are genuinely committed to the role of non-government agencies in the fight for social and economic development in Canada and abroad, there is no better path we could follow.


NORTH ATLANTIC TREATY ORGANIZATION
Mr. Bill Blaikie (Winnipeg-Birds Hill):: Mr. Speaker, I rise to call on the Government to rethink the cavalier way in which it agrees to the testing of various military equipment over native homelands which have never been ceded to the Government by treaty. These lands, contrary to official perceptions, are not uninhabited and therefore suitable for testing.
They are the traditional homelands of the Innu people of Labrador and the North Shore of Quebec who have been subjected to low level highspeed test flying by West German fighter planes, putting at risk wildlife patterns that they depend upon, and terrorizing their camps. Or they are the traditional lands of the Dene in northern Alberta and Saskatchewan where the Cruise missile is tested without their permission.
The increasing use of so-called "unoccupied" territory for military purposes should be stopped if native people are to believe that Canadians and their Government really take seriously concepts like Indian nationhood, aboriginal rights and title.
These lands are the collective backyards of real people and real communities whose rights are recognized in the Canadian Constitution. Let the Progressive Conservatives, who are so fond of talking about property rights, ask themselves how they would appreciate analogous testing in their suburban backyards on the grounds that over significant periods of time they appear to be "unoccupied".

December 14, 1984


VETERANS AFFAIRS
Mr. Bill Gottselig (Moose Jaw):: Mr. Speaker, I rise today to bring to the attention of this House an urgent matter that affects many veterans in Canada. A constituent of mine has been having a problem in getting an interpretation with respect to sub-section 12(2) of the Pension Act as it relates to the possibility of medical negligence on the part of Canadian Armed Forces doctors.
My constituent had 30 years of service to our country and was released from the Armed Services for medical reasons in 1976. He has since been advised by medical authorities that there is a good possibility his condition was not diagnosed or treated correctly. He was advised by the Pensions Advocate in January, 1984, that all the documentation necessary to proceed with his appeal had been received.
I have been advised by officials of the Royal Canadian Legion that there are over 100 cases of a similar nature awaiting the interpretation of this section of the Act.
I would urge the Minister of Veterans Affairs (Mr. Hees) to instruct his officials to put this matter on an urgent priority basis in order to receive a ruling at an early date.
Veterans who have given many years of service to our country are entitled to better treatment than that which was provided by the previous Liberal administration.


SOCIAL SECURITY
Mr. Jean-Robert Gauthier (Ottawa-Vanier):: Mr. Speaker, in July, 1982, a story in Maclean's magazine by the now Director of Communications for the Progressive Conservative Party, quoted the present Minister of Justice (Mr. Crosbie) as saying: "If I told you what we (the Conservatives) would do, we'd never get elected".
Earlier this week the Minister of Finance (Mr. Wilson) followed in the same vein as his colleague. He told reporters that people earning more than the national average should no longer expect full benefits from social programs. Yet the Prime Minister (Mr. Mulroney) has contradicted his Finance Minister by denying that his Government plans to cut social programs. He still insists that social programs are a "sacred trust".
Who are the Canadian people supposed to believe, Mr. Speaker? Is this part of the Tories' hidden agenda?
The Canadian people are beginning to see this Government in a new light. They promised jobs and a new day for Canada. But instead they have thrown thousands of people out of work with no hope of future employment. And they have plans to reduce and restrict access to unemployment insurance benefits. Having created more unemployment they now turn their backs
on the problem and cut off one of the few means people have to support themselves.
The people of Canada want to know, Mr. Speaker, if this is another item on the Tories' hidden agenda?
Our Prime Minister says that he does not believe a bank president is entitled to the same benefits as the needy in this country. But it is not the bank presidents who are going to suffer from the devastating actions of this Government. It is the majority of Canadians, in the low income groups and the middle class, who are going to suffer tremendously from the actions of the Government.


AUDITOR GENERAL'S REPORT-GOVERNMENT POSITION
Mr. Jean-Guy Guilbault (Drummond):: Mr. Speaker, since the report of the Auditor General of Canada was tabled on December 11th of this year, Canadians have seen with considerable concern the irresponsible way in which the Liberal Government has administered public funds, and not one Liberal Member has apologized for this to the people of Canada.
Here are a few examples of bad management. The CF-18 fighter aircraft will cost at least $3.5 billion more than projected. VIA Rail omitted to pay back $74 million in surplus funds. The Department of Indian Affairs and Northern Development neglected to account for the way a $500 million grant was spent. The Department of Public Works, after signing eight major lease-purchase agreements totalling $1.9 billion, failed to advise Parliament of its acquisitions. Seven harbour commissions have been keeping annual gains of $79 million without the Minister's authority. Federal real estate has not been managed in line with its value. The Government's banking transactions were poorly administered and have resulted in an annual loss of at least $95 million over the last five years alone.
Mr. Speaker, since the Liberals do not intend to apologize, 1 want to give Canadians the assurance that the 211 Progressive Conservative Members are going to clean up the Government's finances.


EDUCATION
Mr. Vic Althouse (Humboldt-Lake Centre):: Mr. Speaker, the previous Government announced that it would sponsor five chairs in women's studies at Canadian universities. We understand that the present Government is following through with


OHO)   FINANCE
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December 14, 1984
[Stage Direction]
these placements but has yet to allocate chairs to Quebec and the Prairies. The University of Saskatchewan has proposed a prairie regional chair in women's studies to be located there. This chair would have a special focus on native and rural women. The Provincial Council of Women of Saskatchewan fully supports this action. I urge the Government to place a chair in women's studies at the University of Saskatchewan.
There is a dire need for research programs in areas affecting women-in law, economics, agriculture, commerce, education, and health, particularly as they relate to rural women. Because of their unique situation, rural and native women have not experienced the benefits of many policy changes and social programs which have benefited urban women.
We believe that a special focus on rural and native women is long overdue. Because of its historical involvement with rural women, because of its strong commitment to native programs, and because it is located in a province with a high percentage of native and rural women, the University of Saskatchewan is particularly well suited. I urge the Government to take such action immediately.

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Mr. Edouard Desrosiers (Hochelaga-Maisonneuve):: Mr. Speaker, I should like to commend the Minister of Communications (Mr. Masse) for his outstanding work in respect of the CBC.
However, I would draw your attention to the fact that 3,700 francophone artists have been penalized by the CBC for over twenty years, no less. Canadians throughout the country watch CBC programs eager to see the same people, the same individuals. Our old artists no longer work, our young musicians and artists are never seen on the CBC network, yet the mandate of the CBC is to promote our culture from sea to sea.
Mr. Speaker, I think that four individuals have been controlling CBC programs for many years, and I would urge the Minister of Communications to give the necessary instructions to the CBC president with a view to giving our musicians and artists, young and old alike, an opportunity to display their talent on the CBC network-


Mr. Speaker:: I regret to interrupt the Hon. Member.


AGRICULTURE
Mr. Maurice Foster (Algoma):: Mr. Speaker, Canadian agriculture is facing the worst debt crisis since the 1930s. A combination of continued low commodity prices, increased input costs, including high interest rates, and a sudden decline in farm land values during the last few years has placed many family farms in jeopardy.
A recent Farm Credit Corporation survey revealed that 39,000 farmers were experiencing severe financial stress and that 1,700 were actually facing financial collapse and bankruptcy. The tragedy of these figures is that the farmers in the worst financial shape are the youngest farmers in Canada today. They are the most productive, and they account for one-half of all of Canada's food production.
The second tragedy is that this Conservative Government has not taken any substantial action to save these vital young farmers from financial collapse. For example, in November the Minister of Agriculture (Mr. Wise) put a moratorium on foreclosures of FCC loans until January 15, 1985, and promised to take action to help these young efficient farmers to survive. However, no effective action has been taken and none is planned, because there is no farm legislation on the Order Paper of the House to date. 1 call upon the Minister of Agriculture to stop this pussyfooting around and to take decisive action to avoid this impending calamity for thousands of young Canadian farmers.
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VETERANS AFFAIRS
Mr. Bill Tupper (Nepean-Carleton):: Mr. Speaker, Canadians heard all about the spending cuts in the economic statement, but how many realize that that same statement brought long awaited good news for over 140,000 war veterans and their survivors?
Veterans have been promised an enhanced indexation formula for war disability pensions for many years. The enhancement was to ensure parity with the average wage of five representative categories of public servants. For just as many years, the veteran has been disappointed and has, in fact, seen his or her pension fall behind the average composite wage as a result.
The Minister of Veterans Affairs (Mr. Hees) announced, pursuant to the economic statement, that the disparity and the disappointment would be brought to an end. The basic rate is to be raised to reflect parity, and the indexation formula is to be improved to ensure that the disability pensioner never again falls behind. Measures were also announced which will provide for the payment of the married rate pension and, where applicable, the exceptional incapacity allowance and the

December 14, 1984
Oral Questions
attendance allowance for the full year following a veteran's death. These benefits are currently reduced or eliminated within a month of a veteran's death.
Veterans in Nepean-Carleton and all across Canada will be delighted by these changes. For this reason, I urge the Minister of Veterans Affairs to proceed with all possible haste to bring the necessary legislation before Parliament. Canada's war veterans have been patient long enough.



ORAL QUESTION PERIOD


Hon. Douglas C. Frith (Sudbury):: Mr. Speaker, my question is for the Prime Minister. I will quote, so that I do not make any mistakes in the quotation. Yesterday the Minister of Finance was quoted as having said that the politics of fear forced the Conservatives to hide their plans during the election campaign from the Canadian public to cut spending and review social programs.
Instead, we have ended up with the Conservatives playing politics of deception, politics of duplicity, and politics of dishonesty. Yesterday I asked the Prime Minister if middle income Canadians could expect cuts in their Old Age Security and in their family allowance benefits, and he replied no. While he was saying that here in the House, his Finance Minister was indicating that social programs for middle income families cannot be afforded today. Canadian families are confused, and are fed up with the Prime Minister saying one thing to this House and the Finance Minister saying something totally opposite. Who is speaking for the Government?


Right Hon. Brian Mulroney (Prime Minister):: Mr. Speaker, my hon. friend said that he was going to quote textually. He may have quoted textually from a press report. He did not quote textually from the transcript of the statement of the Minister of Finance, who never said any such thing. The transcript reveals that.
When he used the term "the politics of fear", he was referring to politics as practised by the Liberal Party over many years which consistently distorted the positions of the Conservatives and the NDP during election campaign. That is what he was referring to. He has made no change. That is best exemplified by the Member for Ile-Jesus who, during the election campaign, said that the Leader of the Conservative Party was leading a bunch of Orangemen. That is the politics of fear and distortion, and that is why they were repudiated. That is the politics of fear as practised by the Liberal Party, the politics of division over so many years.
What the Minister of Finance said was entirely consistent with his earlier statement, and consistent with the views as expressed in this House, that there is a legitimate question to be asked as to whether we are making the best possible use of scarce resources on behalf of those in our society who need it most. That is the position that he is trying to have debated. I hope that my hon. friend, who does it very well, will engage in that kind of thoughtful debate of which he is, from time to time, capable.


REVIEW OF FAMILY ALLOWANCES
Douglas Cockburn Frith: Mr. Speaker, the Conservatives have deceived the Canadian public more in the first three months in office than we did in 75 years. The Finance Minister is quoted as having said in that same interview that his mind is already made up with respect to the review of family allowances. If that is the case, why are we going to go through the charade of the issuance of a white paper and the so-called consultative process with the Canadian public, if the Government has already made up its mind on what cuts will take place and when?


Martin Brian Mulroney: Mr. Speaker, the Hon. Member belongs to a political party whose Leader campaigned in 1974 opposing wage and price controls and then introduced them, and who in 1979 participated in defeating a Government by saying 18 cents a gallon was too much. The Hon. Member for Windsor said that if gas went above 18 cents a gallon, he would resign.


Mr. Nielsen:: And interest rates.


Martin Brian Mulroney: And interest rates as well. What we have done is consistent with what we have indicated.
If I may, Mr. Speaker, as I referred to earlier today at a press conference, in a speech to the Publishers' Association of Canada in April of last year I indicated that if we were elected we would invite Canadians, via discussion papers and this kind of exchange, of course, to examine, through the tax system as well, the best utilization we could make of these scarce resources.
If the impression conveyed by the press was that the Minister of Finance has come into this with a closed mind, I want to assure my hon. friend that that is not the case. He has an open mind on the subject and he looks forward to hearing from you as soon as he returns to the House.


POSITION OF MINISTER OF FINANCE
Douglas Cockburn Frith: Mr. Speaker, my last question is very simple. It has now been admitted by the Minister of Finance that there was a hidden agenda. Why did the Prime Minister not tell the truth to Canadians during the election campaign and, instead, wait until after the September
December 14, 1984

4 mandate to come good to the Canadian public with his actual intentions?


Martin Brian Mulroney: Mr. Speaker, I think I have already answered that. I know that my hon. friend would not disagree with me when I say that the Minister of Finance is well known as a man of tremendous integrity and honesty. He speaks the truth at all times. He consults openly and widely, and I know that my hon. friend will want to applaud that statement because it is absolutely true.


REQUEST THAT GOVERNMENT DEFINE &quot;AVERAGE INCOME&quot;
Mr. Raymond Garneau (Laval-des-Rapides):: Mr. Speaker, I am sure you will agree that clarifying the statements of the Minister of Finance and the Prime Minister is no easy task. In a press interview, and I have the transcript by the way, the Minister of Finance said that social programs, and specifically family allowance and old age security pensions, would have to be cut because the Government no longer could afford them. According to the tax figures published in 1983, only 9.1 per cent of personal income tax returns declared incomes above $35,000. I would therefore ask the Prime Minister for the Government's definition of an average income. Is it $35,000, $34,000, $25,000, $40,000? Could he inform the House of this definition, so that people will not panic because of these family allowance cuts?


Martin Brian Mulroney: Mr. Speaker, I feel that the Minister of Finance was trying to open up a dialogue and debate on this important issue, and I am referring to the sensible utilization of the public funds at our disposal, for the benefit of the neediest in our society. I think I must congratulate my hon. friend who, after listening to the Minister of Finance on November 8, applauded his courage, since basically, he agreed with his message. I want to congratulate him because he was quite right to do so.


Raymond Garneau: Mr. Speaker, for someone who has just accused my colleage of reading only part of the statements, the Right Hon. Prime Minister is not doing very well. He should have read the rest of my remarks.
The purpose of my question is to prevent any misunderstanding, since there are people among the general public who are wondering whether they are going to lose their family allowance or their old age security pensions. Mr. Speaker, 9.1 per cent of Canadian taxpayers have incomes over $35,000. Could the Prime Minister inform the House at what level old age security pensions and family allowance will be cut off and how his Government is going to establish that level? Are we going to have an army of investigators? How is it going to work?
Oral Questions


Martin Brian Mulroney: Mr. Speaker, first of all, my hon. friend's question ignores the context of the statements made by the Minister of Finance. There will be a dialogue, and I hope it will be a two-way street.
Proposals and study documents will be tabled in the House and there will be discussions at the national level. What we are trying to do, and perhaps we are too optimistic, is to see whether we can obtain the objective participation of Opposition Members. We know we are going to get that participation from Canadians in April, which will help us make value judgments on very important issues, on what to do about an economy that was left in a terrible state, where we have a large number of our fellow citizens who urgently need public funds, those who are the neediest in our society. We want to help them instead of bank presidents earning $500,000 per year. That is what we want to do.


Mr. Speaker:: I rise with great respect. Order, please.


UN IVERSALITY-PRIME M1N ISTER'S STATEMENT
Ms. Margaret Mitchell (Vancouver East):: Mr. Speaker, my question is directed to the Prime Minister. Does he still stand by the statement which he made on March 7 when he said: "We are not going to tolerate distortions of our position. We are in favour of universality of social programs and it shall not be touched"?


Martin Brian Mulroney: Yes, Mr. Speaker, I stand by that position.


Some Hon. Members:: Hear, hear!


Margaret Anne Mitchell: I hope, in saying that, the Prime Minister realizes that universality means that benefits go to all Canadians.


STATEMENT ATTRIBUTED TO MINISTER OF FINANCE
Margaret Anne Mitchell: Mr. Speaker, is the Prime Minister aware that in a taped interview yesterday the Minister of Finance said: "Upper and middle income social programs cannot be afforded today"? Does this reflect the Prime Minister's position and the Government's position on universality?


Martin Brian Mulroney: No, Mr. Speaker.


REQUEST FOR REFORM OF TAX SYSTEM
Margaret Anne Mitchell: Mr. Speaker, it is obvious that the Prime Minister is refuting what the Minister of Finance said. Why does the Prime Minister not stop

December 14, 1984
Oral Questions
using universality as a red herring? I would like to return to the bank manager whom he mentioned yesterday-


Mr. Hnatyshyn:: Question.


Mr. Speaker:: Order.


Margaret Anne Mitchell: Is the Prime Minister really interested in fairness? If so, why does he not reform the tax system so that the bank president pays a handsome amount of income tax to help pay for all social programs?


Martin Brian Mulroney: Mr. Speaker, I think my hon. friend would agree that it would be very unfair on a matter of this importance to segregate one part of a sentence and try to imply that that is government policy. I think if my hon. friend looked at-


Margaret Anne Mitchell: I asked you.


Martin Brian Mulroney: I tried to respond to your question.


Margaret Anne Mitchell: Answer it now.


Martin Brian Mulroney: If you would allow me, I would be happy to proceed. I indicated in a speech in April of last year, before the Association of Canadian Publishers, that indeed the tax system would be an important instrument in seeking fairness with regard to social programs. I hope my hon. friend would agree that when you have a deficit in excess of $37 billion or $38 billion, and when you are borrowing to pay the interest on the debt, what you are doing is diminishing opportunities for those in our society who need it most.
What we are trying to do is ask whether the Opposition is mature enough to participate in a debate which will help those in Canada who need it most. That is what it is all about.


Some Hon. Members:: Hear, hear!


USE OF POSSIBLE SAVINGS
Hon. Herb Gray (Windsor West):: Mr. Speaker, the Prime Minister, in his November interview with The Toronto Star, said any money saved from social programs would not be used to reduce the deficit. Can he explain why the Minister of Finance, in his taped interview with the Canadian Press yesterday, said that is exactly what the Government intends to do? And if there is any doubt about that, could ne explain why he said a moment ago that is what he intends to do-to use saved from social programs to reduce the deficit?


Martin Brian Mulroney: Mr. Speaker, I know my hon. friend is a man of such consistency that he is here notwithstanding a formal promise to resign because of a clear violation of the most important promise to Canadian people-two of them-one in regard to gas prices and the other in regard to interest rates. I hope he will submit his resignation after the next question.
My hon. friend knows full well that, having inherited an economic mess which is without precedent, and which was left
by his Government, we are trying to restore a degree of sanity to the finances of Canada in order to have a favourable impact on interest rates and to participate in the job-creation process which is required. Concomitant with that is our obligation to examine, with you and with your help, those scarce resources to ensure, if we can, that those in our society-the dispossessed, the underprivileged, and the poor-receive a better share of the resources than those who are wealthy.
I wish you would stop defending the wealthy in this country because it is those in need we should be looking after, and that is what we are trying to do.


Herbert Eser (Herb) Gray: Mr. Speaker, the Prime Minister has just confirmed that he and his Government intend to use money saved on social programs to reduce the deficit.


Some Hon. Members:: Oh, oh!


ELECTION CAMPAIGN POLICY
Herbert Eser (Herb) Gray: Further, Mr. Speaker, 1 want to ask the Prime Minister if this is correct, that he said in his press conference earlier today the Conservatives had to be "prudent" in putting out policy decisions during the summer elections? Is he not, therefore, confirming that during the election campaign the Conservatives did not tell the full story of what they intended to do, not to a handful of bank presidents but to millions of ordinary Canadians? Is that not why the Minister of Justice said before the election campaign that if the public knew what the Conservatives were going to do, they would never get elected?


Martin Brian Mulroney: Mr. Speaker, I suppose my hon. friend cannot have it both ways. The fact of the matter is that the word "prudence" was used. You are quite right, I did use that word, and we did proceed prudently, because we witnessed the volte-face, the turnabouts, and the rejection of principles as established by the Liberal Party. You campaigned on direct policies and you repudiated them as soon as you got back into office. The Canadian people have had enough of that. We have been consistent from beginning to end, and we are delivering on promises-


Some Hon. Members:: Oh, oh!


Martin Brian Mulroney: -designed to help ordinary Canadians and those in need. We are trying to create jobs and get the economy going again.


Some Hon. Members:: Hear, hear!


FAMILY ALLOWANCES AND PENSIONS
Mr. Neil Young (Beaches):: Mr. Speaker, my question is also directed to the Prime Minister and is fairly straightforward, I believe. With respect to family allowances and pensions, does it continue to be the principle of this Government to
December 14, 1984

observe universality in payments to both of those groups who are recipients? If it is, and if, as the Prime Minister has said, the Minister of Finance is announcing policy which is not a part of government policy, why is the Minister of Finance being allowed to make these statements?


Martin Brian Mulroney: Mr. Speaker, the Minister of Finance has not announced policies in any way counter to-


William Alexander (Bill) Blaikie: He is babbling.


Martin Brian Mulroney: -what we have discussed in the House. Any Hon. Member of this House, including, I assume, my hon. friend, has from time to time had his phrases unintentionally distorted by the media-


Mr. Deans:: Come on!


Martin Brian Mulroney: In point of fact, the Minister of Finance has been thoroughly consistent-


Ian Deans: That won't wash, not this time.


Martin Brian Mulroney: We would hope, given the calamitous economic situation which we inherited, that there would be a degree of maturity and co-operation from the Opposition to help the Government and to help the country through a difficult period, as opposed to the distortions and nit picking which we see coming from the other side of the House.
We are inviting your co-operation and your understanding of the new way of consultation so that we can bring about economic growth and prosperity.


RECORDING OF MINISTER'S WORDS
Neil Young: My supplementary question is also directed to the Prime Minister, Mr. Speaker. What we have here is government by a wink and a nod. I listened to the tape as well as the Prime Minister did. Is the Prime Minister suggesting to this House that the Canadian Press reporter played around with that tape and actually falsified the tape? I heard the tape. What the Minister of Finance said is exactly what is being said by other Hon. Members in this House.


Martin Brian Mulroney: I am making no such suggestion at all. The Canadian Press reporters involved, I understand, are extremely competent people and are held in high regard for that reason. All I am saying is that the manner in which the statement appeared in some newspapers was not at all consistent with what the Minister of Finance was saying.


Margaret Anne Mitchell: What about the tape?


Martin Brian Mulroney: I can assure you that what the Minister of Finance was saying was consistent with our desire to improve the economic situation of the country and does in no way-in no way-take positions which do violence to honourable Canadian customs.
Oral Questions


LEVEL OF REVENUE AFFECTED BY BUDGETARY CUT-BACKS
Jean-Robert Gauthier: Through you, Mr. Speaker, I should like to direct my question to the Prime Minister and afford him an opportunity to explain himself.
Mr. Prime Minister, there is a contradiction in this government. The media and the Canadian people have their own perceptions concerning your position and that of your Minister of Finance. Let us try to see through the smokescreen of verbiage which befogs the whole issue.
Can you tell us, and this relates to the question of the Hon. Member for Laval-des-Rapides . . . Over 13 million tax returns fall below the $35,000 mark.
At what income level will your cut-backs in social programs-such as family allowances and old age pensions- become operative?


Martin Brian Mulroney: Mr. Speaker, that is the purpose of the consultation process, the purpose of the dialogue with Members of the Opposition, the unions and the private sector. That is the purpose of the economic summit, of the First Ministers' conference scheduled for February 14 and 15.
Considering the pitiful inheritance we were left with, what can be done to bring relief to those Canadians who need the help of the federal machinery?
We want to try to bring help to needy Canadians, and that is the explanation. No decision has been made, as my colleague would know, and we urge him to enlighten us and co-operate with us in the preparation of more generous policies towards our destitute fellow Canadians.


BUDGETARY CUT-BACKS-POSITION OF BAIE-COMEAU RESIDENTS
Jean-Robert Gauthier: A supplementary, Mr. Speaker.
If I understood correctly, the Prime Minister has just confessed that his mind is made up. He consults, then confirms.
May I ask the Prime Minister if people in his riding- Baie-Comeau, for example-will accept that their family allowances and their old age security benefits be reduced without having been consulted about it? I am sorry, but the Prime Minister did not have a mandate to reduce old age security benefits.


Martin Brian Mulroney: The people of Baie-Comeau who are watching us will say: Here is the Member for Vanier trying to misrepresent the position of our dear Member, for that is exactly what you are doing.
The Hon. Member knows very well that I never said that, that the Minister of Finance never said that, but honest

December 14, 1984
Oral Questions
dialogue is such a novel exercise for you that you do not accept it. We are seeking your co-operation, a national dialogue, so as to be able to give Canadians as much money as we can in the most productive manner possible.


MIDDLE-INCOME SOCIAL PROGRAMS-STATEMENT ATTRIBUTED TO MINISTER
Ian Deans: Mr. Speaker, my question is also directed to the Prime Minister. The Prime Minister now knows that the interview which is being discussed here during Question Period is a taped interview. The Minister of Finance was heard to say quite clearly that middle-income social programs cannot be affforded today. Is the Prime Minister saying that the Minister of Finance is wrong?


Martin Brian Mulroney: I am saying that the Minister of Finance, as my hon. friend has done from time to time, introduced subjects to invite debate and discussion. That is the object of the entire exercise.


Some Hon. Members:: Oh, oh!


Martin Brian Mulroney: We have entered into this debate with open minds and with honest positions. We are trying to seek participation from my hon. friend. I hope there will be no disagreement from my hon. friend, who blinks and nods so disapprovingly-


Ian Deans: Because you are not telling the truth.


Martin Brian Mulroney: -that, when we have inherited an almost bankrupt situation, we have a moral imperative to try to provide help to those in Canada who need it most, the widows, the dispossessed, and the underprivileged. And we are going to do it with or without your help. That is what we are going to do.


Some Hon. Members:: Hear, hear!


Mr. Speaker:: Order, please. Could we return to the idea that we listen to questions and listen to answers civilly on both sides of the House, please.


GOVERNMENT POLICY
Ian Deans: Mr. Speaker, I want to go back to the Prime Minister, notwithstanding all of his idle, useless rhetoric. Given that the statement of the Minister of Finance is absolutely clear, is the Prime Minister saying now that the Minister of Finance is wrong in his statement that the Government of Canada, and the people of Canada, cannot afford to continue with the social programs which are presently in place for those who are deemed to be middle-income Canadians?


Martin Brian Mulroney: I am not
saying that the Minister of Finance is wrong. I am saying that,
as usual, the Hon. Member chooses to place a wrong interpretation on what the Minister of Finance said.


Some Hon. Members:: Hear, hear!


Martin Brian Mulroney: You have made a career out of it. You should change.


Mr. Speaker:: The Hon. Member for Winnipeg-Fort Garry.


Ian Deans: Some day we will have a real debate.


Martin Brian Mulroney: You won't be there.


Ian Deans: Then you pick the place.


Mr. Speaker:: Order, please.


AFFORDABILITY OF UNIVERSAL PROGRAMS
Hon. Lloyd Axworthy (Winnipeg-Fort Garry):: Mr. Speaker, I think the Prime Minister recognizes by this time that this is a matter of great seriousness. There are a number of people, not only in the Chamber but throughout the country, who want some answers to this very important issue. You say that the Government is interested in those in need. 1 presume that includes women who, even though they may be in a middle income family, receive family allowance and need it to supply certain provisions for their children. The same is true with senior citizens.
We are talking about the Minister of Finance who is the senior economic Minister in the Government. He has said that these programs can no longer be afforded. Is that a clear statement on behalf of the Minister of Finance, representing the Government, that the Government no longer believes that we can afford universal programs for those in middle and upper middle income categories?


Martin Brian Mulroney: Mr. Speaker, when I came into the House a year ago I was warned to pay particular attention to the Member for Winnipeg-Fort Garry when he was maudlin. This is the case today. You have wilfully distorted a position of the Minister of Finance. I think it is unbecoming that on a matter so sensitive and so important you would attempt to sow fear and concern among Canadians when you know full well, because of the repeated statements of the Government and the Prime Minister of Canada, that our only intention in initiating this debate is an attempt to help those in our society who need it most, including the people to whom you refer.
As proof of our bona fide, notwithstanding the horrendous economic situation that we inherited, we provided more money to widows and to veterans who defended Canada and who needed it. That is the object of the entire exercise.


Some Hon. Members:: Hear, hear!


Lloyd Axworthy: Mr. Speaker, I think the Canadian people will judge who is being maudlin at this point in time.
December 14, 1984


GOVERNMENT POSITION
Lloyd Axworthy: Mr. Speaker, the Minister of Finance is quoted directly as saying: "What we're saying is that there are people who don't need it. Upper and middle income social programs cannot be afforded today." Those are not my words; those are his words.
Is that a clear statement of a position taken by your Government that you believe that these programs, which affect over 13 million Canadians, can no longer be afforded? Is that the proposition that you are going to be putting forward in the release of your social papers?


Martin Brian Mulroney: Mr. Speaker, my hon. friend knows full well that his statement is fundamentally vexatious. My hon. friend has chosen to segregate one part of a sentence from a lengthy interview.
While my hon. friend was a member of the ministry he resorted to the same notion of inviting discussion on serious matters, through white papers or other means. The Minister of Finance is attempting to initiate discussion across the country to get views that might help us in our desire to deliver services more efficiently to those who need them most. I think my hon. friend would agree with that, because I think it is a proper and reasonable course to follow, particularly when we are burdened with such an enormous federal debt.


PROGRAMS REFERRED TO BY MINISTER
William Alexander (Bill) Blaikie: Mr. Speaker, my question is for the Prime Minister. Would the Prime Minister be willing to tell the House what programs he thinks the Minister of Finance was referring to in the statement? Surely that could be answered without any accusations of things being distorted or taken out of context. If the Minister of Finance was trying to stimulate discussion, perhaps the Prime Minister could tell us what middle income social programs the Minister of Finance had in mind.


Martin Brian Mulroney: Mr. Speaker, perhaps once my hon. friend has had a chance to read the interview fully, and place it in its proper context, he will see, as I think any objective observer would, that the object of the exercise was precisely to invite reasonable dialogue and to avoid, to the extent humanly possible, supercilious questioning. I see we have not been fully successful.


William Alexander (Bill) Blaikie: Mr. Speaker, it does not seem supercilious to me to ask a specific question if the Prime Minister is interested in dialogue. We cannot talk about things of which we know not.


PROGRAMS QUERY
William Alexander (Bill) Blaikie: Will the Prime Minister tell lus what programs the Minister of Finance was referring to so that we can respond to the invitation which the
Oral Questions
Prime Minister has extended, without any detail or substance, time after time today?


Martin Brian Mulroney: Given the clarity of the question, I think I can fairly say, and I hope my hon. friend will agree with this, that when he takes the time to read the full interview, I genuinely believe he will find that it is not a substantial variance from the statement set out by my hon. friend, the Minister of Finance, on November 8. There is a genuine desire to invite mature and reasonable dialogue on a vital question. I look forward to my hon. friend participating in that in a very productive way.


SCIENCE AND TECHNOLOGY
Mrs. Suzanne Duplessis (Louis-Hebert):: Mr. Speaker, my question is directed to the Minister of State for Science and Technology.
The Minister is probably already aware of the existence of a well structured action group in the riding of Louis-Hebert. The purpose of this group, which calls itself the GATIQ, is to promote the establishment of hi-tech industry in the Ste. Foy-Quebec City area. I intend to work along the same lines as the group, and I support its goals without reservation. I would like to know whether the Minister could inform the House of the measures he has taken and intends to take in this respect.


Hon. Thomas Siddon (Minister of State for Science and Technology):: Mr. Speaker, I shall be delighted to answer the Hon. Member's question.

I would like to inform the Hon. Member that it has been my pleasure to visit Quebec on two occasions to visit officials at Laval University and the optics laboratory there, and to meet with the group of which the Member speaks-

-GATIQ, the Groupe d'action technologique industrielle de Quebec.

We are favourably inclined toward the proposal to establish a technological industrial park in Quebec along the lines of the proposals that we have been receiving. In a short period of time we will be announcing a decision as to the location of that industrial park and the optics laboratory to be contained therein.

December 14, 1984
Oral Questions POLITICAL PARTIES


TORONTO ELECTION CAMPAIGNS-STATEMENT ATTRIBUTED TO MINISTER OF FINANCE
Mr. Sergio Marchi (York West):: Mr. Speaker, I would like to get back to the real debate and ask the Prime Minister a question. His Finance Minister was also quoted in this famous interview as saying that "the election campaigns that we fight in downtown Toronto are don't vote for the Tories or they are going to send you back to Italy." As an Italian Canadian I was profoundly shocked that the Minister would insult the intelligence and integrity of this proud, hard-working community. Questo governo e propio ignorante!
Can the Prime Minister provide the House with evidence that would support this disturbing allegation, and does he share his Minister's observations about Italians' understanding of the Canadian political system?


Martin Brian Mulroney: Mr. Speaker, I thank my hon. friend for his observation. For my part, and that of my Party, we have been honoured by the support that we have received from the Italian community in Canada which made such an outstanding contribution to our national life. We are deeply honoured because of the growing support that we receive from that community.
During election campaigns, from time to time, tactics have been used by the Liberal Party. I don't think you would be unfamiliar with them. In fact the Member sitting near you went to Quebec City and said that Brian Mulroney is leading a party of Orangemen.


An Hon. Member:: It's true.


Martin Brian Mulroney: He says that is true. In point of fact, I am leading the Orangemen, the Knights of Columbus- [Translation]
-the Chamber of Commerce, the Knights of Columbus, the Dames de Sainte-Anne, the Filles d'lsabelle-

-and the Italians.


Sergio Marchi: It is exactly statements like that are why your Party has not got the support from the Italian community, and never will.


Mr. Speaker:: Order. I don't know what is happening here today. It is getting quite out of hand. Wednesday becomes Friday, and Friday becomes Tuesday.
A supplementary question.


REQUEST FOR APOLOGY
Sergio Marchi: Mr. Speaker, I ask my supplementary in all seriousness, and I hope he answers the question. In light of the insulting and derogatory nature of your Finance Minister's question, will you, as Leader of the
Government, and the Finance Minister, issue immediately in the House a formal apology to the Canadian Italian community? Will he do that to show that he has credibility to back up his words?


Martin Brian Mulroney: Mr. Speaker, I can tell my hon. friend that I and my Party are delighted and honoured by the support, and growing support, we receive from the Italian Canadian community which has done so much to build a magnificent Canada. The only unfortunate racist statement was made by the Hon. Member-


Sergio Marchi: Answer the question.


Martin Brian Mulroney: -who tried to introduce an old canard into Canadian politics. It was for that reason that the Liberal Party was so resoundingly rejected across the country. That is why.


Mr. Speaker:: The Hon. Member for Essex-Windsor.


Mr. Beatty:: Can all the rest of us go home, Mr. Speaker?


Some Hon. Members:: Oh, oh!


SOCIAL SECURITY
Mr. Steven W. Langdon (Essex-Windsor):: Mr. Speaker, my question is directed to the Prime Minister. It is a very serious and deeply felt question. When the Minister of Finance of this country says that we cannot afford social programs for middle income Canadians, is the Prime Minister saying that the Finance Minister is wrong?


Martin Brian Mulroney: I am saying that the Finance Minister never said that.


Ian Deans: He did.


Martin Brian Mulroney: I am saying-


Ian Deans: Why don't you answer the question? He did say it.


Martin Brian Mulroney: I want my hon. friend from Hamilton Mountain-


Ian Deans: You can't get away with all that.


Martin Brian Mulroney: -to save his energy for Christmas. It is coming.


Ian Deans: Are you going to allow Christmas this year, Sir?


Martin Brian Mulroney: I am saying to my hon. friend who, since coming to the House, has demonstrated a degree of leadership not yet seen in the front benches of his Party, that he would recognize that this statement must be read in its complete context. I am satisfied that a proper reading of that will
December 14, 1984

indicate that what the Minister was attempting to do was to engender thoughtful debate on an important matter.


GOVERNMENT POLICY
Steven W. Langdon: Mr. Speaker, in view of the fact that the economy of this country is desperately in need of clear signals, will the Prime Minister now publicly state that that position attributed to the Minister of Finance, rightly or wrongly, is not the policy of the Government?


Martin Brian Mulroney: Mr. Speaker, the policy of the Government is that which was articulated so well by the Minister of Finance on November 8. It is clear, and speaks to the serious nature of the problems confronting the country.


Mr. Rodriguez:: Answer his question.


Martin Brian Mulroney: It invites substantial discussion and participation. I know that you will want to participate in the debate. The Minister has spoken to it, and I have spoken to it. I hope, when placed in context, that my hon. friend will agree that the manner in which we have done it is not unreasonable.


CANADA WORKS PROGRAM
Mr. Jim Jepson (London East):: Mr. Speaker, in the absence of the Minister of Employment and Immigration my question is directed to the Deputy Prime Minister. In light of the fact that small business creates between 70 per cent and 80 per cent of all new jobs, and that these are permanent jobs connected to real economic growth, will the Minister consider trying to target the funding of the Canada Works Program toward the small business sector, replacing the currently existing focus on the activities of social agencies which although deserving, should be considered under other programs?


Lloyd Axworthy: Here we go again.


Erik Nielsen: Mr. Speaker, in the absence of the Minister I will take notice of the Hon. Member's question and ensure that his very interesting contribution to the debate is brought to her attention.


SOCIAL SECURITY
Hon. William Rompkey (Grand Falls-White Bay-Labrador):: Mr. Speaker, my question is directed to the Prime Minister and it concerns the same Canadian Press interview.
Oral Questions
Earlier, in his economic statement, the Minister of Finance inferred that Newfoundlanders were lazy because they preferred unemployment insurance to jobs.


Some Hon. Members:: Oh, oh!


Bill Rompkey: As I read the Canadian Press interview, now he infers that they were too stupid to understand cut-backs in IRDP and family allowances if the Tories had discussed that during the election campaign. In light of these statements by the Minister of Finance, how many more put-downs must Newfoundlanders suffer at the hands of the Minister of Finance? When will the Minister of Finance rid himself of the stereotype image of Newfoundlanders as quaint but inferior Canadians?


Martin Brian Mulroney: Mr. Speaker, may I say, with respect to my hon. friend, that I thought that that kind of distortion went out of our political life quite some time ago. The Hon. Member knows full well that the Minister of Finance is a man of uncommon honour and probity.
He has participated in a very substantial way with my brilliant friend, the Minister of Energy, Mines and Resources, in bringing about an energy offshore agreement in Newfoundland which will bring honour, and prosperity, and new opportunities to Newfoundlanders, the likes of which they have not seen since they joined Confederation. I think it is a good day for Newfoundland, and a good day for Canada.


Bill Rompkey: That untold wealth may come by the end of the decade. In the meantime, the assessment of Bill Davis is that we are poor Canadians.


MINISTERIAL TREATMENT
Bill Rompkey: Mr. Speaker, will the Prime Minister move to stop this cavalier condescension on the part of Upper Canadian Tories? If his Ministers do not understand us, would they at least treat us with respect and dignity?


Martin Brian Mulroney: Mr. Speaker, I think my hon. friend knows that he is held in the highest regard and treated with great dignity, certainly by members of my Party and I know by all Members of the House. He has made a splendid contribution to Canada in his time here, and I salute him for it.


CANADIAN RADIO-TELEVISION AND TELECOMMUNICATIONS COMMISSION SUSPENSION OF CALGARY CABLE STATION
Mr. Gordon Taylor (Bow River):: Mr. Speaker, my question is directed to the Acting Minister of Communications, or the Parliamentary Secretary. The CRTC believes the Liberals are

December 14, 1984
Oral Questions
still in power. It has suspended a cable station in Calgary allegedly because it played Christian music. Will the Minister look into this and ascertain why the CRTC is so opposed to Christian programs and Christian music?


Hon. Walter McLean (Secretary of State):: Mr. Speaker, in the absence of the Minister of Communications I will take the question as notice. I can assure my hon. colleague that I will raise this matter with him personally as I have a special interest in that subject.


FISHERIES
Mr. Jim Fulton (Skeena):: Mr. Speaker, my question is directed to the Prime Minister. Last night we learned that the investigation into the tragic loss of life on the B.C. coast on October 11 concluded that the federal Government weather services on the coast of British Columbia are inadequate. Will the Prime Minister give his commitment that the necessary funds and personnel to implement the recommendations made in that report will be forthcoming immediately?


Hon. John A. Fraser (Minister of Fisheries and Oceans):: Mr. Speaker, this is a case in which the Hon. Member has more than one Minister who is quite prepared to deal with the question. It is part of the openness of this Government.
I can answer the Hon. Member. I have read the report. As he knows, I made that report available to him yesterday. I know of his concern.
I made it quite clear yesterday in this House, and to the media afterwards, that there would be no cut of expenditures that would impair the efficiency of weather reporting. The recommendations in that report will be studied, and where there has to be improvement, funds will be found. There is nothing more important to this Government than the safety of the people on the ships and the boats on the west coast of British Columbia.


PERSONNEL AND FUNDING
James Ross Fulton: Mr. Speaker, I have a supplementary question for the Prime Minister. It is quite clear what the Minister of Fisheries is saying. It is very nice that there will be no cuts. But what the report concludes is that weather services in British Columbia are inadequate. We are talking about a question of life and death.


Mr. Speaker:: What is the question, please?


James Ross Fulton: Will the Prime Minister give his personal commitment that the necessary personnel and funds will be
made available immediately so that more lives are not lost off the coast of British Columbia?


Martin Brian Mulroney: Mr. Speaker, I will make this clear statement. Obviously the health and safety of people take precedence over everything else. In the light of that, I will be happy to meet with my colleagues in Transport and Fisheries in an attempt to resolve the matter, and respond favourably to my hon. friend as soon as I can.


Some Hon. Members:: Hear, hear!


Mr. Speaker:: Order, please. Before I have a couple of other things to say, might I remind the House-I did not want to interrupt Question Period today to do it-that it is a tradition, and in fact a rule, of the House that questions be put and answered through the Chair. We are getting a long way away from that practice. I just want to remind Members that that is the rule of the House.


FINANCE, TRADE AND ECONOMIC AFFAIRS SECOND REPORT OF STANDING COMMITTEE RULED OUT OF ORDER
Mr. Speaker:: Yesterday the Standing Committee on Finance, Trade and Economic Affairs presented its second report. It is recorded in the Votes and Proceedings as Sessional Paper No. 331-8/4. The operative paragraph, after the Committee explains that while it was studying the Annual Report of the Economic Council of Canada, reads as follows:
During its consideration of this Order of Reference, your Committee discussed the issues relating to the television and radio broadcasting of its proceedings and has agreed to recommend that the Special Committee on the Reform of the House of Commons be instructed by the House to examine in detail the matter of radio and television broadcasting of the proceedings of all standing and special committees of the House of Commons.
Standing Order 69 lists the standing committees of the House and sets out their powers. These powers are generally discussed in citations 620 and 621 of Beauchesne's Fifth Edition. There it is pointed out that committees often have to report to the House to seek the widening of an order of reference or to ask for some additional authority. It is also pointed out in Beauchesne's Fifth Edition, Citation 621, that a committee " . . . can only consider those matters which have been committed to it by the House." There are numerous rulings on this subject by my predecessors, and Bourinot's Fourth Edition at page 469 is to the point:
A committee is bound by, and is not at liberty to depart from, the Order of Reference.
On June 13, 1984, Mr. Speaker Francis made exactly the same point, as did also Madam Speaker Sauve on June 29, 1983. May's Twentieth Edition at page 644 is no less clear.
In the present case the Finance Committee recommends that another committee be instructed to do something, namely to study the radio and television broadcasting of the committees of the House. It is certain that the Finance Committee is
December 14, 1984

not empowered to consider that question. The relevance of this question to the Annual Report of the Economic Council of Canada is not established in the second report of the Committee, and in my opinion it could not be.
For good and obvious reasons, one committee cannot direct another, not even indirectly, as committees are creatures of the House and can only do what the House orders or directs. They have no relation one to another.
Therefore, I have to rule that the second report of the Standing Committee on Finance, Trade and Economic Affairs is out of order and tha the Votes and Proceedings will reflect this fact.
At this point, I might also mention that the matter of broadcasting of committee proceedings seems to be occupying more than one standing committee of this House. In this connection I have already written to all committee chairmen. Committees, it is clear, are masters of their own procedure, but it is also clear that they must act only within the scope of the powers given to them by the House as they are but creatures of the House. The issue of broadcasting is one that rests currently with the House. It is a complex one and has been a subject of discussion from time to time. But as Speaker it is my duty to ensure that any initiative on such a matter remains the prerogative of the House until the House chooses otherwise.
The Hon. Member for Vancouver-Kingsway (Mr. Waddell) is rising on a point of order?


Mr. Waddell:: A clarification if I might, Mr. Speaker. I have been in the House six years-


Mr. Speaker:: With great respect, does the Hon. Member have a point of order?


Ian Gardiner Waddell: Mr. Speaker, it seems to me there are certain prerogatives that remain with Mr. Speaker himself, including examples of broadcasting-


Mr. Speaker:: The Member's point of order, please? Does the Hon. Member have a point of order?


Ian Gardiner Waddell: My point of order is that I think the Speaker should use these prerogatives to have influence in bringing the House of Commons up to date technologically, including-


Mr. Speaker:: I take it the Member wishes to make an intervention on the question of broadcasting. That is not a point of order. The Member has other routes through his own House Leader as to whether he wishes a committee of the House struck again. That is hardly a point of order. In fact, it is not a point of order.
Order Paper Questions CLERK OF PETITIONS' REPORT


CALL FOR REINSTATEMENT OF CAPITAL PUNISHMENT
Mr. Speaker:: I have the honour to inform the House that the petition presented by the Hon. Member for Parry Sound-Muskoka (Mr. Darling) on Thursday, December 13, 1984, meets the requirements of the Standing Orders as to form.



ROUTINE PROCEEDINGS


[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. Paul Dick (Parliamentary Secretary to Minister of State (Government House Leader)):: Mr. Speaker, the following questions will be answered today: Nos, 31, 49, 50, and 75.


Mr. Howie: Is there any mechanism for the government to express its attitude toward specific productions of the National Film Board and, if so (a) what is it (b) did the government make use of the mechanism with respect to the Board's production "The Kid who Couldn't Miss"?


Hon. Marcel Masse (Minister of Communications):: The
NFB is one of the agencies within my portfolio but decisions on questions of production are the responsibility of the Board itself.
Each agency has a selected board and a management whose role it is to make artistic and content decisions. The government will not intervene in the internal matters of the NFB as this would only serve to restrict the ability of the NFB to explore the types of social and cultural issues and concerns that serve to shape our lives.
The NFB has informed me that it has conducted an internal review of some of the criticisms raised against the film and concluded that the director, Paul Cowan, was scrupulous in his research and fair in his presentation of the exploits of Billy Bishop in the film.
There is a well established precedent, recognized through successive governments, which constrains the politicians responsible for Canada's cultural agencies, such as the NFB and the CBC, from intervening in the artistic and content decisions which must be made by these agencies. The government is committed to this precedent.
Some objections were raised concerning the depiction of Billy Bishop in this film. Notably, A. J. Bauer, Chairman of Billy Bishop Heritage, wrote to the NFB in March, 1984, outlining at least 15 historical and factual errors in this film, pertaining to the exploits of Billy Bishop. The NFB then asked the director to review and justify his research material. On

December 14, 1984
Order Paper Questions
August 16, 1984 Francis Macerola wrote to Mr. Bauer, that, as a result of the NFB's internal review, he was satisfied with the director's interpretation and that he would not withdraw or revise the film, as requested by Mr. Bauer. The film was not seen as denying the truth of the legend and Billy Bishop's heroism, but merely raised the possibility of some myth.


Mr. Howie: In each of the past three fiscal years, what was the amount of (a) interest earned by the (b) employee contributions to (c) employer contributions to the (i) Canadian Forces Superannuation Account (ii) Public Service Superannuation Account (iii) Royal Canadian Mounted Police Superannuation Account and, in each case, what total amount was paid for disability, survivor and retirement pensions?


Mr. Doug Lewis (Parliamentary Secretary to President of the Treasury Board):: 


[Stage Direction]
(000.000's)		
(a) Interest Credited	Additional Interest Earned	(b) Employee Contributions	(c) Employer Contributions	(d) Pension Payments1981-82	837.3	355.0	403.4	606.1	459.61982-83	980.9	544.1	467.4	478.3	515.91983-84	1,260.7	481.7	494.3	467.3	567.8
CANADIAN FORCES SUPERANNUATION ACCOUNT (000,000 s)
(a) Interest Credited	Additional Interest Earned	(b) Employee Contributions	(c) Employer Contributions	(d) Pension Payments1981-82	618.0	262.0	91.3	198.9	291.51982-83	754.4	307.0	104.3	183.2	315.21983-84	932.6	259.2	113.3	200.2	335.9ROYAL CANADIAN MOUNTED POLICE SUPERANNUATION ACCOUNT (000,000 s)	1981-82	68.0	28.9	26.8	53.2	15.91982-83	102.5	21.8	31.4	60.7	18.51983-84	127.5	21.6	33.8	64.7	20.8
Noic: The accounts cam interest quarterly at a rate determined as if the excess of receipts over disbursements each quarter since the accounts were established had been invested in Government of Canada 20 year bonds. In effect, the quarterly rate is based on the weighted average yield of all investments over the previous 20 year period.
Some interest earnings in excess of the rate used in the most recent actuarial reports on the accounts (6.5% per annum) have not been credited to the accounts, but rather have been used to offset the cost of amortizing actuarial deficiencies that arise mainly as a result of annual salary increases. The above employer contributions include the net cost of amortizing actuarial deficiencies after the application of interest earnings of the accounts which were in excess of the rate assumed by the actuary.
Mr. Howie: Was the family planning division of the Department of National Health and Welfare dismantled or substantially reduced and, if so, for what reason?


Hon. Jake Epp (Minister of National Health and Welfare):: The Family Planning Division of the Department of National Health and Welfare has not been dismantled. In the context of governmentwide expenditure restraint, the Family Planning Grants, a funding program administered by the Family Planning Division, was reduced by $700,000 in each of 1983-84 and 1984-85 for a total of $1.4 million. The manpower and operating budgets of the Division were not affected.
The Family Planning Grants program included project funding and sustaining funding (to national family planning voluntary organizations). During 1983-84, the responsibility for the sustaining funding was transferred to the Sustaining Grants Program for National Voluntary Health Organizations. This program received a substantial injection of new funds in 1983-84 and as a result of this, the family planning organizations whose funding had been reduced by the above-mentioned expenditure restraint, received new funds which essentially brought them back to the levels of funding previously planned.


Mr. Nunziata: In the past five years, how many inmates of federal correctional institutions have (a) attempted (b) committed suicide?


Hon. Elmer M. MacKay (Solicitor General of Canada):: In
so far as the Correctional Service of Canada is concerned:
	1980	1981	1982	1983	1984	(January to November 14. 1984)
(a) Attempted						
suicides	46	69	65	52	57	(b) Suicides	10	12	11	19	16


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


Victor Fredrich (Vic) Althouse: Mr. Speaker, could I ask the Parliamentary Secretary, in light of the fact that almost half of the questions on the Order Paper are from opposition parties, whether he would be able to attempt to provide more answers to opposition questions? Almost all questions answered are exclusively government questions at this point.


Ramon John Hnatyshyn: That was explained yesterday.


Paul Wyatt Dick: Mr. Speaker, I would like to inform the House that up to and including today the number of questions on the Order Paper placed there by members of the Conservative Party was 67 and the number disposed of is 25. Almost all of these were on the Order Paper in previous years; the work had
December 14, 1984

been done by previous governments but they had not been answered. Therefore it was very easy to answer them. The amount answered represents 37.3 per cent.
Members of the Liberal Party have placed 55 questions on the Order Paper, eight have been disposed of, which represents 14.5 per cent. Members of the New Democratic Party have placed 22 questions on the Order Paper, none of which has been answered as yet. I hope to rectify that as soon as possible.
In total, 22.9 per cent of the questions have been answered to date. I would like to inform Hon. Members of the House that the number of questions answered is considerably higher than the number answered in the last two Parliaments on the 28th day of sitting.


Jean-Robert Gauthier: Mr. Speaker, yesterday I asked the Parliamentary Secretary whether he would answer question No. 91 dealing with the court challenges program which, as he knows, is a very, very important issue in this country. The Parliamentary Secretary replied "soon". Could he give me a definition of what the word "soon" means?


Paul Wyatt Dick: Mr. Speaker, it means not in a long time. It means in a shorter period of time.


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


Some Hon. Members:: Agreed.



GOVERNMENT ORDERS


Hon. Barbara McDougall (Minister of State (Finance)) moved: that Bill C-8, an Act to amend the Petroleum and Gas Revenue Tax Act, be read the second time and referred to Committee of the Whole.
She said: Mr. Speaker, I am pleased on behalf of our Government to rise in the House today and put before Hon. Members for second reading Bill C-8, an Act to amend the Petroleum and Gas Revenue Tax Act.
The Bill before us clears up some unfinished business from the last Parliament. Many of the provisions included in this Bill have been in effect for over two years, despite the fact that the Bill never received parliamentary approval. Taxpayers acting in good faith have filed their returns and paid their taxes as though these provisions had the force of law. It is only fair to the affected taxpayers to give this Bill our final approval so that assessments can be completed and refunds paid.
Petroleum and Gas Revenue Tax Act
With the exception of one important amendment, we will be proceeding with the Bill essentially unchanged from the form in which it was tabled last winter. We hope this will avoid any unnecessary delays in its passage.
The Bill includes some significant policy changes to the Petroleum and Gas Revenue Tax Act which were introduced by the former Government and were effective on either June 1, 1982 or January 1, 1983. These amendments implicitly recognize the failure of the tax in its original form to cope with both the upturns and downturns which are an inescapable part of doing business. In order to remind Hon. Members, the relieving measures included the introduction of a $250,000 annual credit for small corporate producers against their PGRT liabilities on Division 1 production revenues, a provision for the deduction of drilling expenses and the cost of oil well machinery related to an enhanced oil recovery project from the projects earned production revenue, and a one-year reduction in the effective rate of PGRT from 12 per cent to 11 per cent.
The temporary reduction in the PGRT rate is now history. It applied from mid-1982 until mid-1983, a period which was particularly difficult for oil and gas companies.
The annual credit for small corporate producers was set at a maximum of $250,000 by the former Government. This $250,000 credit ensured that the very smallest, struggling producers were not burdened by a tax they could ill afford to pay.
While this credit was certainly a move in the right direction, it did not go far enough. Therefore, today's Bill includes a new measure which my colleague, the Minister of Finance (Mr. Wilson), announced in his recent economic statement. The $250,000 annual tax credit against the PGRT liability on production revenue will be doubled to $500,000 effective January 1, 1985. The doubling of the maximum credit against PGRT will provide the Canadian petroleum industry with an extra $35 million per year. We have chosen to make this major move since the Bill was tabled in Parliament last year because many Canadians want and need very badly modifications in the tax regime.
The Government recognized that major modifications were called for in the tax structure as it applied to the oil and gas sector. All Canadians, but especially those engaged in this sector, need more incentives to invest, to invest right here in our own great land. Through appropriate incentives we can achieve a much larger participation by Canadian investors in this sector as well as increased discovery rates and development of resources.
This would mean increased reliance upon Canadian oil so that we would benefit as producers because we would pay Canadians in addition to and rather than foreign producers. As consumers we would benefit from lower dependence on foreign supplies, and as taxpayers we would benefit by reducing our deficit.
Therefore I urge Hon. Members to give the Bill speedy passage, not only because it is an incentive to the Canadian oil and gas sector to proceed full tilt with their part in restoring Canada's economy to prosperity but, more important, the Bill
1246

December 14, 1984

Petroleum and Gas Revenue Tax Act
is an indication of our Government's desire to review the whole issue of federal energy taxation.
The Bill effectively doubles the small producer credit against the petroleum and gas revenue tax. We recognize that there is still a lot of scope for further flexibility in the federal energy tax system. Therefore, in our ongoing review of energy taxes we will continue to balance very carefully the interests of producers, producing provinces, consuming provinces, consumers and general taxpayers.
My colleague, the Hon. Minister of Energy, Mines and Resources (Miss Carney), has already consulted with interested parties throughout Canada on this issue. We look forward to increased productivity and satisfaction in this area.
The doubling of the annual tax credit against liability about which I spoke earlier does not penalize the diligent efforts of small-sized Canadian producers. These producers have furthered the exploration of the western sedimentary basin and they deserve our full appreciation and recognition. I also want to signal our Government's appreciation of the steps which other producing provinces have taken to encourage increased activity in that province. We wish to support the positive results from this activity.
The capital deduction related to enhanced oil recovery projects has the effect that no PGRT is payable on the revenue from one of these projects until project participants have recovered their eligible capital investment. My colleagues and I have been most gratified to see the way in which the oil and gas industry has responded to even partial relief from the National Energy Program of the former Government.
Following the introduction of the enhanced oil recovery capital reduction, the industry announced work on three major projects at Cold Lake, Wolf Lake and Elk Point. Many older experimental projects are now also undergoing expansion. This renewed activity not only creates jobs and provides a hint of the vitality which the West used to enjoy before the National Energy Program was introduced by the former Government, but also ensures that Canadians are ready to exploit fully our oil reserves.
This Government applauds the innovation, hard work and willingness to take risks which have made these projects possible. We look forward to working with the industry and the provinces to achieve a more general rebound in exploration and development in all producing regions.
The Bill before us also includes a number of technical amendments. The most important one is a measure which will ease tax compliance for royalty holders. Prior to this amendment, which was effective on January 1, 1984, numerous small freeholders were required to make sense out of the intricacies and the legal concepts associated with the tax. In some cases taxpayers were paying more to their accountants to fill out their returns than they actually received in royalties. Now all royalty recipients will have their tax paid for them on a withholding basis.
The revenue implications of the older measures in the Bill were detailed during the last Parliament. The total cost of the
measures to the Government was computed at that time to be $1.3 billion over the 1982-86 period. We believe that the energy sector is an area of growth for the Canadian economy rather than a source of revenue for the federal Government. We want a stable national energy policy to achieve energy self-sufficiency, to increase Canadian participation in exploration, to keep prices low, and to ensure that energy issues do not disrupt national unity as they did under the last Government.
In reviewing the energy sector we are striving for a policy which recognizes and supports the contribution oil and gas producers make to economic growth and prosperity in the country. We are still contemplating further action in the areas of oil pricing, energy taxation and incentives in particular. Therefore, we will be continuing our consultations with representatives of industry, provincial Governments and other interested parties before making any changes to this tax which we believe are necessary. Although we may decide to introduce further changes to this tax following a full review of energy policy which is now under way, it is only fair to those taxpayers who have filed their 1982, 1983 and 1984 PGRT returns and who may be awaiting refunds to have the Bill passed as speedily as possible. We prefer not to hold up the assessment of these old returns while a whole new policy is being debated.
Therefore I urge Hon. Members to give the Bill prompt passage to enable affected taxpayers to benefit from its simplifying and relieving amendments.


Some Hon. Members:: Hear, hear!


Miss Aideen Nicholson (Trinity):: Mr. Speaker, I intend to be very brief because the measure before us is almost identical to those introduced by the previous Government. There is one exception to which the Minister addressed herself, namely that the tax credit is being doubled for small producers. The original wording in the December 7, 1983 version of the corporate tax credit reads as follows:
That an annual tax credit be introduced for a corporation or an associated group of corporations of up to $250,000 in respect of taxes payable under Division I of the Act on production revenue, other than production royalties, attributed to the period after May 31, 19S2.
The current version will increase that with slightly different dates. The current version reads:
That an annual tax credit of up to
(a)	$250,000 for the period from June 1, 1982 to December 31, 1984, and
(b)	$500,000 for the period commencing on January 1, 1985,
be introduced for a corporation or an associated group of corporations in respect of taxes payable under Division I of the Act on production revenue other than production royalties.
We have a measure which is essentially the same as those introduced in the past, except for this doubling of the tax credit. The doubling of the tax credit will result in something in the order of $64 million forgone by the Government. As the Minister said, these are old measures and it is essential to deal with them promptly so that outstanding tax returns can be dealt with.



December 14, 1984

Today is perhaps not the occasion for a detailed energy debate, although I would point out that in February, 1984 when the then Minister of State for Finance introduced these measures, it became the occasion for a very far-ranging debate on energy policy generally. We in this Party do not intend to delay the debate particularly, but we do want to have in the near future a very full debate on the Government's proposed changes to energy policy.
The economic statement tabled in this House by the Minister of Finance (Mr. Wilson) some time ago made reference to this change in the Petroleum and Gas Revenue Tax. He stated that while the Government would be proceeding with those changes, the Government did want a very full examination of all our energy policies. We look forward to that debate.


Ian Gardiner Waddell: Mr. Speaker, I rise as my Party's energy critic to speak on this change to the Petroleum and Gas Revenue Tax. I spoke on it the last time it was before the House. At that time the Hon. Member for Comox-Powell River (Mr. Skelly) was our energy critic. I am back in my old job and pleased to be here.
Mr. Speaker, I have not had the opportunity to congratulate you on your new suit. You look very debonair, even more debonair than usual. In fact, I prefer it to every suit I have seen you wear except for one, your football uniform with your football hat. That looked even better, not to mention other suits.
I want to say something about this Bill. I see you are smiling, Mr. Speaker. You may not be in a moment. One thing I got out of the Minister's speech was that the policy of the Conservatives was to keep energy prices low. If there is one thing that Canadians know, it is that the Conserative Party is a party of high energy prices. It does not represent the consuming public of Canada adequately. That Party continues to hose Canadians at the pumps and to hose them in their houses when paying for home heating oil.
The evidence is the Consumer Price Index issued this morning for December, 1984. The latest increase was November. It shows that food did not change from November, 1984; housing and clothing were approximately the same. The big increase was 2.9 per cent for energy. According to the Consumer Price Index, after three months of Conservative government energy prices have increased almost 3 per cent. That is consistent with the Conservatives buying the line hook, line and sinker of the big oil industries in Canada. They have taken it, swallowed it and are going to implement it. This Bill is an example of how that happens.
Let me explain a little bit about the PGRT. Coming from Alberta, I know you understand it, Mr. Speaker, but there may be some new Members who do not know about it. The PGRT is part of the National Energy Program introduced in 1980. It is part of the taxation system of the program. I know the Member knows that, but I wonder if the Member knows why the Conservatives ultimately want to get rid of the PGRT, the problems with the PGRT and other forms of taxation for
Petroleum and Gas Revenue Tax Act oil companies and consumers. Let me tell him something about that.
The Petroleum and Gas Revenue Tax is levelled almost right at the well. It takes the producers' gross revenues and deducts operating costs. The tax is on that amount of money. I believe this Bill reduces it from 12 to 11 per cent. It hits right in there.
The provinces do not like this. They see it not as a tax but a royalty, a grab at a portion of the oil. Western Canadian provinces believe, and I support them on this, that royalties are the prerogative of the provinces. Natural resources are the major thing the western provinces have to give us the kind of economic long-term growth that they have in Ontario and Quebec with their manufacturing industries. That is jealously guarded in the West. This is thought of as a royalty and the western provinces do not like it.
The oil companies do not like it because they have to pay tax. It is not like the old system of depletion and super depletion allowances. Under the old system, you produced the oil, subtracted your operating costs and then subtracted other costs such as old machinery, this company buying that machinery from your subsidiary, paying money or not paying money to the subsidiary that did the navigation and the drilling, and suddenly there was no money to tax. Oil companies were famous for never paying very much taxes.
In Question Period today we were debating precisely that. The Government is about to lower the boom on the middle class in Canada. There was a lot of blarney today, but the Prime Minister (Mr. Mulroney) was very weak in its defence. To be fair to the Prime Minister, it was indefensible.
The Minister of Finance (Mr. Wilson) let the cat out of the bag. The Government has decided it has to cut the deficit. The way it will do that is by cutting spending and social programs. It will do that with programs that affect the upper and middle classes. That is a little more fair, but it will have a real impact on a lot of people.
There is another way it could cut the deficit. It is relevant to this Bill. It could make some of the corporations in this country pay a decent share of taxation like ordinary Canadians must. There are about $24 billion worth of deferred taxes owing. Can you defer your taxes, Mr. Speaker? No way. However, oil companies, banks and companies like that can defer their taxes, and of course they never pay their taxes. Therefore, the Government has a big deficit and has to deal with things like what happened in Question Period today when the Prime Minister had to defend what was virtually indefensible. He is going to bring in policies to take away some of those social programs from the middle class of Canada.
These 211 Conservative Members will not be cheering so loudly when their constituents start writing or phoning them and saying: "Hey, I have to pay more for my heating oil and my gasoline as a result of your policies. Now you are taking away my baby bonus or my pension supplement", or whatever. That is why this Bill is important.

December 14, 1984
Petroleum and Gas Revenue Tax Act
For those who are interested in energy, this Bill contains another important item. There is a pattern forming here. In 1980, some of my colleagues and I predicted that this would happen. The National Energy Program was implemented. I will not call the policy radical, conservative or whatever. It was, however, certainly a new policy. It had a tremendous amount of impact. I know Members of the Conservative Party had criticisms of that policy and I might say that they put those criticisms very well. I see a few of the people today who were involved when they were on this side of the House. As a matter of fact, I miss them. I do not know where they are now. They had very strong criticisms about the policy. I did not agree with all of those criticisms but I congratulate them for making them. As the senior member of the Energy Committee, I feel that I am alone here on this side of the House.
A pattern developed, Mr. Speaker. The energy policy was implemented and the Government, as predicted, started retreating from that energy policy because of the pressure of the biggest and the best-financed lobby in Canada. The Consumers' Association of Canada has nothing on the Canadian Petroleum Association or IPAC, which is supposedly made up of the medium-sized companies but has some large companies indirectly involved in it. For the last three or four years, that lobby had produced these nice advertisements on television to show what nice guys the oil companies are. Anyone who knows anything and has read The Seven Sisters by Anthony Sampson can see the pattern created throughout the world by large oil companies in this century. In fact, large oil companies push their own interests to the extreme. If that means that Exxon in the United States wants to divert some of its oil bound for Imperial Oil of Canada to the United States because of a crisis or because it can make money, it will do it. That is fair enough under its terms.


Mr. Thacker:: Mr. Speaker, I rise on a point of order. My friend knows full well that that diversion was pursuant to an international agreement whereby the western countries agreed to apportion the cut-backs equitably. It was pursuant to an international agreement.


The Acting Speaker (Mr. Paproski):: I regret that that is not a point of order.


Ian Gardiner Waddell: Mr. Speaker, my friend can enter into the debate later. I suggest he read the book The Seven Sisters. I think he will find it very enlightening. The average Canadian feels it in his guts. He or she knows what big oil is up to. He or she knows that big oil wants to puts its hand in his or her pockets and take out some more money.
This Bill indicates another interesting trend. It amends the definition of old oil so as to bring into that category some new oil as well. Let me explain it to you, Mr. Speaker. I know you understand it, but perhaps some of the Members do not.
What is new oil and old oil? Is all oil not the same? Let me explain. Through the National Energy Program, the Government decided as a matter of national policy that Canadians should pay less than the world price for what was considered
an essentially Canadian resource. Some Members disagreed with that. Members of the Conservative Party in particular disagreed with that. Members of the New Democratic Party and the Liberal Party spoke of a blended price because we were importing some of our oil and could blend it in with the Canadian-priced oil.
The Government then set a price that was lower than the world price. It decided that when new oil was discovered, world prices could be charged for that oil. That provided a way to be able to charge world prices and also recognize that discovering new oil costs more money these days. Old oil was discovered when it cost about $ 1 per barrel to discover oil and it sold for $2 a barrel. Now oil sells at $28 American or about $38 Canadian a barrel. Quite rightly, the Government realized that it could not give a big windfall to those oil companies that discovered oil at $1 a barrel and were able to sell it at $38 a barrel, so the Government then began to talk in terms of old oil and new oil and that made some sense.
Of course, the oil companies started to pressure and lobby the Government. What could the Liberal Government do? It really did not want to completely change its National Energy Program or completely change its pricing scheme to accommodate the companies but it had to find some way of accommodating them. One way the Government yielded was very simple. It just called old oil new oil. If old oil is called new oil, it can fetch a higher price. That was a very smart thing to do. This Bill, to some extent, extends the concept of allowing old oil to be called new oil. It is just a horse of a different name and more money can be given to the oil companies.
The name of the game of this Government is to take money from the consumers of Canada and give it to the oil companies of Canada. We should make that very clear. You heard the Minister's speech, Mr. Speaker. She virtually said the same thing when she spoke. I would remind her that she has to pay a price. The consumers will have to pay a price and the Government will not have as much money. Then, if the Government wants to tackle its deficit, it will have to start cutting back on baby bonuses, pensions and the things that help ordinary middle-class Canadians. The Government may have 211 Members now. However, if it continues that policy, it may receive a few votes from oil company presidents, but the great majority of the Canadian public will not vote for it.
There is another problem with this Bill, and I want to talk a little bit about that. When this tax is reduced from 12 per cent to 11 per cent, will any of the benefits pass on to the consumers? The answer is no, it will not. I cannot see anywhere in this Bill that indicates that consumers are going to receive any benefit at all. The Minister has argued that jobs are created if we expand the industry. Of course, there are some jobs created when the oil industry is expanded. The oil industry must be treated fairly like all industries in Canada. I say to the Government that it should not believe that it will create 300,000 or 500,000 jobs if it just gives the Canadian Petroleum Association everything it wants. That is the line that is being peddled and that is the line that is being bought by the present Minister of Energy.
December 14, 1984

The other day the Minister said in the House that we should look at all the jobs that are being created. The fact is that since this Minister of Energy has taken office, jobs have been lost. We have lost 3,000 jobs in the energy department of the National Research Council. Most of those jobs went to private enterprise and private industry. The money was funnelled through the National Research Council and went to ideas like new glass manufacturing that would be equivalent to triple glazing and third generation solar technology. The Government did not know what it was doing when it cut back on that. The Government is so into the propaganda of the Canadian Petroleum Association that it does not look to see where jobs are created.
I will give you an example, Mr. Speaker. The Hon. Member for Mission-Port Moody (Mr. St. Germain) is a reasonable Member and will understand this. If he wanted to create a job at a McDonald's restaurant in Mission-Port Moody, the capital cost would be about $15,000. If he wanted to create a job in light manufacturing, it would cost as much as $150,000 or $200,000. If he wanted to create a job in heavy manufacturing, it might cost as much as $500,000. That is the capital cost involved in creating a job. But if he wanted to create jobs in the Beaufort Sea or Hibernia, he might be talking about $1 million or $2 million.
I am sure the Hon. Member would agree that we must look at the cost of creating jobs. I say to the Government, when it is lobbied by the Canadian Petroleum Association and when it is pressured to develop resources offshore, in the North and so on, that it should remember the cost of creating the jobs. I do not have the figures that the National Research Council energy department has, but I would bet that it would cost a heck of a lot less than a million dollars to create jobs.
Some of those jobs were created in Vancouver. The riding of the Hon. Member opposite, as well as my riding, were two areas which had some of the best industry in soft energy technology. We must not lose that. It is not hippie, or yoghur-ty. A lot of Conservatives probably associate soft energy with the sixties, but it is the latest technology. Canada is a world leader in that technology. However, we are cutting it back at the expense of putting a heck of a lot more money into the oil industry.
The oil industry is important. The Hon. Member for Athabasca (Mr. Shields) entertained me in his riding. He is wonderful at showing people around the tar sands. It is important for that industry to continue. But we should not succumb to the siren song that we must give more and more to big oil companies, because they will want more and more. They will want to get rid of the PGRT, to which the Minister alluded in her speech, and then they will want super-depletion allowances and capital cost allowances; they will want to defer their taxes and so on. We will be back to the old ball game in which big oil companies do what they like.
By and large, it is an industry which is foreign-controlled. The National Energy Program tried to push for Canadian
Petroleum and Gas Revenue Tax Act ownership of the energy industry, but it appears that the Government is going to back away from that, unless it comes up with some very innovative taxation scheme for Canadianiz-ing the industry. Our Party would be open to that.
I am prepared to have this Bill pass today. I accept the Minister's argument that companies have filed returns and they have to know where they stand. It is only fair. Because they are operating in this regime, it would be wrong for us to delay the legislation.
I have flagged several issues. One issue is that there are not the millions and millions of jobs which big oil companies suggest. In fact, there are more jobs in soft energy than there are in non-renewable resources.
Second, there will have to be a change in the PGRT, according to government policy. We will be watching that very closely to see that it is not simply a return to the old regime, which was basically a giveaway to oil companies.
Third, if the Government follows its present pattern, it will give more away to oil companies. As I have indicated, on the basis of the Consumer Price Index figures of today, the one item which really increased was energy. In the first three months of Conservative government energy went up. That is typical. Perhaps some government Members do not understand that the Conservatives want to redistribute money from the average ordinary Canadian, both at the pump and in the home. That money will go into the pockets of big oil companies, which are largely foreign-controlled.
If that is the kind of change for which Canadians voted, I am very surprised. I do not think Canadians want that kind of system, especially when they realize what the Conservatives are doing.


The Acting Speaker (Mr. Paproski):: In view of the Member's very kind remarks toward the Chair in his preamble, I must inform him that he has approximately 20 minutes remaining. I would like to bring to the attention of the House that the first three speakers had a 40-minute maximum. We will now revert to 20-minute speeches with questions and answers.


Ian Gardiner Waddell: Mr. Speaker, I would like to thank you for suggesting that I had more time. However, I will not take the time. As a young lawyer I learned that the judge was sometimes on my side, but that if I continued to speak, sometimes the judge went against me. So you quit while you are ahead!


Mr. St. Germain:: Mr. Speaker, I rise on a point of order. In view of the fact that there is time remaining, could we get the unanimous consent of the House to ask the Hon. Member a couple of questions?


The Acting Speaker (Mr. Paproski):: No, I will recognize the Hon. Member for Grand Falls-White Bay-Labrador (Mr. Rompkey).


Bill Rompkey: Mr. Speaker, I want to associate myself with the remarks

December 14, 1984
Petroleum and Gas Revenue Tax Act of the Hon. Member for Vancouver-Kingsway (Mr. Waddell) with regard to your sartorial splendour. Those of us in the House who have seen you in other suits and in other places know that you are equally-


The Acting Speaker (Mr. Paproski):: I will let the Hon. Member finish; however, the Hon. Member for Brampton-Georgetown (Mr. McDermid) is rising on a point of order.


Mr. McDermid:: Mr. Speaker, I apologize to my colleague from Newfoundland, but 1 am seeking clarification from the Chair. This will be the third opposition spokesman to one government spokesman. What is the rotation in speaking?


The Acting Speaker (Mr. Paproski):: It is up to the discretion of the Speaker. If the Hon. Member looked at Beau-chesne's Fifth Edition, Citation 301, he would be made aware of that. I recognized the Hon. Member for Trinity (Miss Nicholson) on the opposition side before the Hon. Member for Grand Falls-White Bay-Labrador. I recognized him because I said that he would be the next speaker. You will follow him.


Bill Rompkey: Mr. Speaker, now we must not only congratulate you on your sartorial splendour, but as well on your discretion and judgment.
I want some latitude today. I do not intend to delay the Bill unnecessarily, but I have some questions which I feel are relevant to the PGRT, energy taxation and policy that I want to put on the record. This is the only opportunity I have to do that. I appreciate the Minister of State for Finance (Mrs. McDougall) may not have all the answers to the questions which I will raise today; however, they are in regard to the deal which is being formulated between Canada and Newfoundland. It is a deal which we have been told about but which we have not seen.
What we have seen is a letter of June 14 from the then Leader of the Opposition to the Premier of Newfoundland. It is the only document on which we have to base our suppositions. It is important for us to know what is in that deal. I would like to put some very serious questions on the record.
The sixth principle in the letter states that "the Province would have the ultimate decision in matters affecting the mode of development. . . subject to the federal override". That is very important.


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


The Acting Speaker (Mr. Paproski):: The Hon. Member for Athabasca (Mr. Shields) on a point of order.


Jack Wendele Shields: Mr. Speaker, I do not mean to belittle what the Hon. Member is saying, but I think the point of relevance is clear. He is talking about an agreement on the offshore rather than the Bill.


The Acting Speaker (Mr. Paproski):: I think the Hon. Member is getting to the Bill. That is not a point of order.


Bill Rompkey: Mr. Speaker, I think the relevance will be clear, if the House will bear with me.
The sixth principle which is outlined in Mr. Mulroney's letter, who was then the Leader of the Opposition, indicated that the province would have the ultimate decision-


The Acting Speaker (Mr. Paproski):: The "Prime Minister".


Bill Rompkey: The now Prime Minister, who was then the Leader of the Opposition, indicated that the province would have the ultimate decision in matters affecting the mode of development, subject to a federal override. That is very important because the Province of Newfoundland would like to use concrete platforms in the development phase, as opposed to shipping the oil directly to market. Concrete platforms could be made in Newfoundland, thereby creating more jobs for Newfoundlanders and Labradoreans. The use of concrete platforms in the development stage of that oil in Hibernia, Mr. Speaker, is clearly in our best interests, and if the province has the final say, no doubt it will choose them.
However, what about the federal override? In what circumstances will the federal override be used? How ultimate is the province's decision if the federal Government has the final say? We are told that the federal Government would call the shots if the province's choice delayed "unreasonably" the attainment of self-sufficiency and security of supply in Canada. My second question is, then, what is "unreasonably"? How do you define it? Who defines it? These are questions to which we do not have the answers at this point. However, the answers mean a great deal to my province which has the highest unemployment, the highest per capita debt and the highest cost of living.
Furthermore, with respect particularly to energy policy, we are told that the Government has now backed off back-in rights. We are told that the Crown's share of back-in rights will no longer be entertained by the Government of Canada. The federal Minister of Energy, Mines and Resources (Miss Carney) seems to be under the illusion that back-in rights, the Crown's share, was somehow imposed unilaterally by the previous Government.
I would like to point out, Mr. Speaker, for the record, that back-in rights have indeed been a fundamental and essential element of the Newfoundland proposal on the offshore from the beginning. As a matter of fact, it was not so much "back-in" as "front-in", and companies which have drilled off Newfoundland-not under federal regulations but under provincial regulations-have known from the beginning, from the first day they went there to drill, that not only would they have to give up 25 per cent, but that 40 per cent would go to the Crown. Indeed, the present Premier of Newfoundland, when he was Energy Minister as well as when he was Premier, was quite adamant about that. Indeed, I would say he staked and based his career on the proposition that Newfoundland had to catch up and that back-in rights, the Crown's share, was a fundamental way of doing it. I think it is fair to say that the
December 14, 1984

Premier of Newfoundland brought the oil companies virtually to their knees on that particular point. However, now we are told that back-in rights are no longer to be entertained.
As the Premier, the Government of Newfoundland and Newfoundlanders saw it, the only way for our province to catch up was if it owned a piece of the action. Indeed, it was almost, I would say, a sacred trust. Yet Mr. Marshall said the other day during his meeting here in Ottawa that it is no longer sacred. He says now: "That is the policy of the Government of Canada. It is no longer sacred as far as we are concerned, and we accept the policy of the Government of Canada". But if the Crown share goes, if back-in rights are no more, how does Newfoundland collect revenue? I put those questions on the record. Will it be from royalties? Perhaps it will, we do not know. Will it be from PGRT? We do not know.
Perhaps the Minister of State for Finance could answer this question: Is the federal Government, as part of this deal with Newfoundland, going to turn over PGRT to the province? Is that part of the deal? What is the answer to that question?
What other federal taxes are going to go to the Province of Newfoundland if back-in rights are no longer to be entertained? We are told in the Prime Minister's letter of June 14 that the federal Government will maintain the right to establish and collect federal taxes. If it is going to collect them, are they going to hold them or is it going to turn them over to the provinces? These are very important questions for my province, Mr. Speaker.
The letter of the present Prime Minister, the former Leader of the Opposition, also tells us that any Government he led would promise a development fund for infrastructure. That is good. I support that, and the previous administration no doubt did offer the same proposal. However, what about funding for education and training for Newfoundlanders and Labradoreans? It seems to me, Mr. Speaker, that that is of paramount importance. There is no mention at all, though, in that letter-and I suspect in the deal which is now being consummated-of any proposition, philosophical or financial, for the enhancement, development and the furthering of education and training for Newfoundlanders. There will be revenues to the provinces, and management, perhaps. But how do we ensure jobs for ordinary Newfoundlanders unless they have the skills to take those jobs?
In the past, the guidelines for PIP grants were a great step in the right direction because they ensured Newfoundland content which included a lot of local people in those jobs. But are those PIP grants going to continue to exist? We do not know that. And if those financial safeguards and levers are not there, then what do we put in their place and how do we ensure that Newfoundlanders get the skills to take those jobs? There are many who will seek those jobs and simply not get them on the basis of lack of skills.
Bear in mind, Mr. Speaker, that 50 per cent of eligible young people in Newfoundland and Labrador are unemployed at this point. That is a tragic figure. A lot of those young people are looking not simply to the fishery, logging or mining, but, indeed, to this offshore deal as a means of securing
Petroleum and Gas Revenue Tax Act employment. The point I am making is that one can talk all one likes about revenues and management, but if ordinary people, and particularly young people, do not have the necessary skills to take those jobs which are open, then, really, those things are not going to be of benefit to the ordinary Newfoundlander.
Instead of providing more training, the Government in its economic statement, has slashed funds and cut back on programs for young people. Those young people depended on those programs for employment, to fund their education and to help themselves for the future. What is going to take the place of those programs which have been slashed? We do not know. We do not hear a word about that. It seems to me that is a pretty important question.
It is obvious, then, Mr. Speaker, that at this point Newfoundlanders are being asked to venture into the unknown. The provincial motto is "Launch forth into the deep". It seems to me that is what we are doing at this point.
What I am really asking for here today is information. I would like the answers to those legitimate questions. We may receive those answers and find that this is a great deal. If it is a good deal for Newfoundland, I will say so, and if it is a good deal for Canada, I will say so. However, at this point in time we do not know. Certain members of the provincial and federal Cabinets may know but I, as a legitimately elected Member of Parliament for Newfoundland, do from not know. The Premier of Ontario knows what is in that agreement, but I do not know. What I am really asking for here, Mr. Speaker, is for the answers to those legitimate questions.
I hope it is a good deal and if it is, as I say, we will applaud it. But I want to make sure, and I intend to make sure, that my province gets the best deal possible from the Government of Canada. And that is difficult to do when the Government will not say what is in that deal.
I raise those questions today in the context of PGRT and energy policies because we need those questions answered, Mr. Speaker, and we need them answered right now.


The Acting Speaker (Mr. Paproski):: There is one minute remaining for questions and comments.


Jack Wendele Shields: Mr. Speaker, I would like to ask the Hon. Member a question. I understand his concerns, but does the Hon. Member not recognize that the agreement which is being proposed for the offshore Newfoundland gas and oil would be set up so that it is treated in exactly the same way as the resources in Alberta, Saskatchewan and Manitoba, or British Columbia, for that matter? Does the Hon. Member not understand that there may not be agreement between Government and Government with regards to training, just as there has never been an agreement between the federal Government and the Alberta Government with respect to training people to participate in the jobs which are created? The Province of Newfoundland is being treated as the other provinces. It is up to the Province of Newfoundland, when it gives out the drilling right and when it administers the oil fields, that-

December 14, 1984
Petroleum and Gas Revenue Tax Act


The Acting Speaker (Mr. Paproski):: I regret to interrupt the Hon. Member. However, the Hon. Member for Grand Falls-White Bay-Labrador (Mr. Rompkey) might like to think about the question over the next hour, and as there is still approximately ten minutes for questions and comments, he can answer the question when we come back.
[ Translation]
Order please. It being one o'clock, I do now leave the chair until two o'clock this afternoon.
At 1 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.
The Acting Speaker (Mr. Paproski):: In view of the fact that the person who finished speaking is not in the House, I would like to recognize-


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


The Acting Speaker (Mr. Paproski):: The Hon. Member for Gander-Twillingate (Mr. Baker) on a point of order.


George Baker: Mr. Speaker, I would like to have some clarification; I think it would be helpful to the House. When a Member finishes speaking just before the clock reaches 1 p.m. and then does not re-enter the House at 2 p.m., and the time remaining in the question and comments period is nine minutes, is it the opinion of the Chair that comments cannot then be made concerning his speech? I understand Your Honour's point about questions, but I wonder whether Your Honour would make a ruling on comments.


The Acting Speaker (Mr. Paproski):: Comments can be made, but we naturally cannot have anyone answering questions. If there are going to be comments made, I have no choice but to recognize the Hon. Member for Athabasca (Mr. Shields), who had the floor, for comments only because there will not be any questions asked. I would like to recognize the Hon. Member for Athabasca who was, at that time, concluding his last comment.


Jack Wendele Shields: Mr. Speaker, thank you very much for your very wise ruling.
In the Member's address in the House he was taking exception to the fact that there was not a training component in the agreement being drawn up between the federal Government and the Government of Newfoundland with regard to sharing the offshore resources. I was trying to point out to the Hon. Member that the agreement is treating Newfoundland and its offshore resources, the Hibernia fields, in exactly the same way as the resources in the Provinces of Alberta and Saskatchewan are treated by the federal Government and those provincial Governments. In my mind that puts Newfoundland on an equal footing with the Prairie provinces, the other oil-producing provinces in the country.
The onus is then on the provincial Government of Newfoundland to encompass the training and employment components in agreements granting drilling and development rights in Hibernia. In my view this puts much more persuasive power in the hands of the Newfoundland Government than it would otherwise. I wanted to know why the Hon. Member would not recognize this.
My other comment is that in Question Period yesterday and today I noticed that one Newfoundland Opposition Member of Parliament was questioning very strongly, and in fact condemning, the negotiations taking place between the Minister of Energy, Mines and Resources (Miss Carney) and her counterpart in Newfoundland. Given that the whole underlying theme of the negotiations and the impending agreement is to make Newfoundland equal to any other producing province in Canada, why would the Member not agree that this is the best approach? Surely, all provinces must be treated equally and fairly. That is what our Government is attempting to do.


George Baker: Mr. Speaker, I listened very carefully to the Hon. Member for Grand Falls-White Bay-Labrador (Mr. Rompkey) during his speech on this Bill. One of his main points was that we, as Members of Parliament, do not have access to any of the information that is contained in that agreement. We do not even have access to the reports that the Minister of Energy, Mines and Resources has concerning offshore oil development in Newfoundland.
The Hon. Member for Athabasca (Mr. Shields) talked about jobs. That is why Members on this side in the Liberal Party have been attempting to have the Minister of Energy release a report which she has from Mobil Oil. She informs the House and Canadians that she cannot release the report until she knows what mode of development the Newfoundland Government wants.
The real reason why she will not release the report is that Mobil Oil talks about the number of jobs that will come to Newfoundlanders as a result of this development. I have it on very good authority that it will about equal the number of people who were laid off in the provincial Department of Highways over the past eight years because of automated equipment.
I remind the House that there is an average of 59,000 people in Newfoundland per month per year drawing unemployment insurance. There are 124,000 Newfoundlanders who filed for unemployment insurance in the past year.
The other point I want to make with respect to the hon. gentleman's speech concerns the fact that the Minister of Energy, Mines and Resources today announced an agreement with Newfoundland to provide additional support equipment, such as helicopters and fixed-wing aircraft, for search and rescue operations on the offshore. The Minister stated today that there will be a second fixed-wing tracker aircraft sta-
December 14, 1984

tioned in St. John's with the federal Department of Fisheries which can be used for search and rescue. The big announcement was that a Canadian Armed Forces helicopter with SAR capability will be deployed to St. John's. However, from where is it being deployed? It is being deployed from Gander, Newfoundland, 150 miles in a straight line from the City of St. John's. It is stealing it from one part of Newfoundland and assigning it to St. John's.
The Government is doing this because the request came from both Members of the House who represent that area and from the Province of Newfoundland. However, it was not from the Province of Newfoundland, it was from the Government of Newfoundland. This amounts to stealing from one area of the province to give to another area of the province. The Government is removing that search and rescue capability needed by fishermen in central and northern Newfoundland and placing it in St. John's to fulfil, so the Minister claims, promises that she made during the election campaign. That is not fulfilling a promise; it is stealing from one to give to another.


Jack Wendele Shields: Mr. Speaker, I would like to comment on something the Hon. Member for Gander-Twillingate (Mr. Baker) mentioned in his remarks.


The Acting Speaker (Mr. Paproski):: There is no one to
answer your question. I do not believe there should be another comment at this time. Unless there is someone prepared to ask a question or make another comment, the Member is not in the House and I cannot allow a supplementary comment. [Translation]
The period for questions and comments has expired. [English]


John Horton McDermid: Mr. Speaker, I appreciate being recognized. I felt this morning that I was not recognized, probably because Your Honour took seriously what I said in jest about playing football back in the days when they did not use helmets. For that, I apologize.
I listened with great interest to the debate this morning as well as to the Minister of State for Finance (Mrs. McDougall) who introduced Bill C-8 for second reading. Bill C-8 concerns the changes we want to make to the petroleum and gas revenue tax.
This is the first opportunity I have had to speak in the House since the election. I would like to take the opportunity to thank the electors of Brampton-Georgetown for being so kind to me over the summer. It was a great summer and it was even better after Labour Day. I want to thank them most sincerely for their kindness and I will try to justify the overwhelming support which they gave to me.


Jean-Robert Gauthier: We all make mistakes.


John Horton McDermid: The Hon. Member for Ottawa-Vanier (Mr. Gauthier) should be so lucky as to have such a majority.
Petroleum and Gas Revenue Tax Act
Bill C-8 puts into place a number of fiscal measures affecting the PGRT that date back to 1982. Before I expand on that,
I want to point out that in the 11 weeks since the Government has taken office a number of important incentives have taken place on the energy front. Of course, the focus of these early measures has been to assist an industry which has been brought to its knees over the last number of years, despite the efforts of the Hon. Member for Vancouver-Kingsway (Mr. Waddell) to convince us that it is an industry that is hosing the public.
We want to assist the industry in the short run in order to create jobs. The creation of employment is a very important part of our over-all goal. Jobs are needed in Alberta where unemployment ranges from 13 per cent to 14 per cent. This industry, which has struggled in the last few years, must get back on its feet to restart that engine of growth.
As a first step, the Government consulted with the provinces and the industry. We sought their advice about how to turn it around and acted upon that advice on November 1 when the Minister adopted a market-sensitive pricing regime for natural gas exports.


Lloyd Axworthy: We did that.


John Horton McDermid: The Hon. Member for Winnipeg-Fort Garry (Mr. Axworthy) wants to take credit for it.


Lloyd Axworthy: We announced it in June.


John Horton McDermid: According to the industry, an additional 3.11 billion cubic metres will be sold over and above what would have been marketed under the previous system. This translates into an extra $1 billion in foreign exchange, the preservation of thousands of jobs and the creation of thousands more.
Another initiative is the Bill we are discussing today. These proposals were contained in the economic statement by my colleague, the Minister of Finance (Mr. Wilson), through which PGRT credits to small producers have been doubled to $500,000. This will help the smaller firms who are often the most aggressive explorers and spenders. The lower rate of PGRT to integrated oil sands plants is extended for a further year. This indicates our Government's support for huge employment growth-generating projects. We are told it is worth some $35 million through 1985-86.
At the same time while this was going on, the economic statement provided protection for our vital primary and petrochemical industries. Farmers, fishermen, loggers and mine operators are eligible for the fuel sales tax relief with respect to commercial uses. These industries, together with the petrochemical industry, are also eligible for rebates equivalent to the increase in the PCC applied to refiners. That is worth some $135 million through 1985-86.
There are many other initiatives undertaken by the Minister of Energy, Mines and Resources (Miss Carney). I think

December 14, 1984
Petroleum and Gas Revenue Tax Act
everyone in this House will agree that she did a masterful job initially as the official spokesman for energy in her Majesty's Loyal Opposition. She accomplished as an opposition critic something which the Government of the day could not accomplish. We are seeing the fruits of those negotiations now coming to the fore with the productive discussions and agreements that are going on with the great Province of Newfoundland.
We saw the Minister of Energy for Newfoundland in the gallery the other day. He had a big grin on his face. If he had died right there on the spot the undertaker would never have been able to get the smile off his face. He is extremely happy. I know all Newfoundlanders, with the exception of two or three in the House in the Opposition, will be more than pleased with the results of the negotiations. Again, of course, our number one concern is employment for Newfoundland in order that Newfoundlanders may take advantage of the resources that are available there. We welcome that.
I can say that negotiations are going on extremely well with the producing provinces in the west. My Minister is at present winging her way to the west and will be meeting with western energy ministers at the first of the week. All Canadians, and we in the House of course, can be very satisfied and feel comfortable and confident that energy negotiations are being carried out in an exemplary fashion by the Minister of Energy. She is doing a marvellous job and we all wish her the best.


Some Hon. Members:: Hear, hear!


John Horton McDermid: Another interesting development is the new co-operation between provincial and federal Governments so lacking over the last number of years with a Prime Minister who thrived on confrontation. The new regime is co-operating and consulting with the provinces in many, many areas. An initial meeting was held between my Minister, the Minister of Energy, and the Hon. Philip Andrewes, the Minister of Energy for Ontario. Mr. Andrewes has made it very clear that class 34 of schedule 2 of the income tax regulations, which pertains to fast write-offs for equipment used in the energy conservation area, was due to lapse in 1984 and requested that it be extended. An announcement to this effect was made by the Minister of Finance and the Minister of Energy just recently. That was accomplished with the encouragement and suggestion of the Minister of Energy for Ontario. Co-operation, conciliation and consensus are going on in the field of energy with our partners, the provinces, in the energy field in this great country. I can assure Canadians that there will be benefits arising from these agreements that will please not only the producing provinces but the consuming provinces as well. I want to touch on that in my remarks today.
This Bill is an important Bill because the legal authority does not yet exist for a whole series of tax changes of a relieving nature that the industry has been promised but has not yet received in law. Many companies are affected and they have completed their tax returns for the past two and a half years in good faith, expecting these measures to have been passed by the previous Government. It is crucial that we now
move quickly to retain industry confidence, that the Parliament of Canada keeps promises and can function in an efficient and business-like manner.
If I might with your permission, Mr. Speaker, just go into a brief history of the PGRT, it was introduced effective January 1, 1981 at an 8 per cent level. The Government at that time indicated the rate would be reviewed. It certainly was reviewed; after one year the rate was doubled to 16 per cent although many taxpayers were given a resource allowance of 25 per cent, they paid an effective tax of 12 per cent on their net operating revenues. The rate is still 50 per cent above the 1981 level. I am not sure that is what the Government meant when it said it was going to review it as it went along. The Government certainly reviewed it, upward. This tax, I believe has been-I do not think I am exaggerating when I say this- the single most unpopular tax of all those introduced as part of the previous Government's revenue sharing scheme. Why? The most important reason is that it was a tax on revenues and not on profits. It made no recognition, none whatsoever, of the high capital costs associated with bringing on new oil and gas supplies.
Second, the producing provinces as owners of the resource have always objected to the federal Government imposing a tax so close to the wellhead.
Third, many individual Canadians who have small royalty income-and this is very important-either because they are geologists, those fellows who do the searching and are involved in developing oil and gas plays, or because they were farmers who held freehold mineral rights, suddenly had 16 per cent of their income taken away at source. In some cases these royalties were an important source of retirement income. To add insult to injury, the Government even made them pay income tax on the money that had already been taxed away from them.
Most importantly, however, the PGRT reduced the incentive to reinvest because it was not profit-sensitive. It also reduced the cash flow available to companies, and because the tax rate was subject to review there was much uncertainty in the industry. This uncertainty and lack of confidence led to a poor investment climate and an unwillingness to invest in otherwise attractive opportunities.
I listened to my socialist friend, the Hon. Member for Vancouver-Kingsway (Mr. Waddell), this morning who criticized firms for reinvesting money in the industry to search for new resources. He said it was a terrible thing for them to do. He said they should pay that money in taxes, not reinvest it in the industry, not create jobs or keep the economy going. They want the big tax-grab. That is all the socialists would do if they were ever in power; they would grab all the money they could get. You think businesses had their problems with the Liberals, Mr. Speaker, but heaven forbid if the socialists were ever in power.


John Horton McDermid: I will come back to the Hon. Member for Essex-Windsor (Mr. Langdon) later on when we are discussing


Some Hon. Members:: Oh, oh!
December 14, 1984

Bill C-15 because I have a lot to debate with him. He can go back to reading his paper now because I know he does not understand anything about the energy industry.


An Hon. Member:: Say something worth listening to.


John Horton McDermid: The Hon. Member may understand why we are in so much trouble in the energy industry when I have finished my remarks.


John R. Rodriguez: Why don't you read Beauchesne?


John Horton McDermid: I am having enough trouble reading this speech. Because of the downturn in the energy industry, the Members from Windsor who are chuckling were as much affected as anyone. The ripple effect of the energy industry into Ontario is tremendous. In my riding alone there are 42 companies which do a great deal of business with the oil patch. When there is a downturn in the economy out there, it hurts my riding as well as the ridings in the Windsor area. Those Hon. Members can sit there and chuckle all they want, but it is very serious. It is as important to Ontario as it is to the producing provinces. Once they understand that, maybe they will get behind some of the incentives and programs which the Government is putting forward.
In early 1982 the previous Government, after tremendous pressure from the Opposition, finally recognized the damage which had been done by the taxes and put together a package of ad hoc changes. It reduced the one-year general PGRT rate from 16 per cent to 14.67 per cent and after the resource allowance it was reduced from 12 per cent to 11 per cent. It introduced the new $225,000 tax credit for incorporated working interests and reduced the PGRT rate on existing tar sands plants to 8 per cent for two years. The industry responded positively to these measures on the assumption that these changes would in fact be delivered. Therefore we must ensure that Bill C-8 is passed now so that they will finally be enacted and the industry will not be penalized for acting in good faith.
None of these measures did much to change the basic nature of the PGRT. It was still a tax on revenues, not on profits. It took another year of hounding by Her Majesty's Loyal Opposition before the then Government took another step to amend the PGRT and make it partially sensitive to profitability. On April 19, 1983 a Budget was delivered which proposed some capital expenditures for enhanced oil recovery projects, and that capital be deducted in the calculation of PGRT.
Anyone who has taken the time to look at the energy industry and has been west would know that enhanced oil is expensive to produce. It was clear that under the burden of a revenue tax and high provincial royalties, these projects would not have taken place. The result would have been even higher rates of unemployment in an industry which I think it is fair to say-I think the Hon. Member for Athabasca (Mr. Shields) will agree-is an industry that is ready to get back to work. It is ready to go. It wants to go. I think we have seen some changes with mini-megaprojects which the Minister of State
Petroleum and Gas Revenue Tax Act for Finance mentioned, such as Wolf Lake, Cold Lake, Elk Point and Peace River.
The tragedy is that it took so long for the Liberals to recognize the damage a revenue tax can do in a capital-intensive industry that many jobs were lost in the interim. It is obvious to those of us in the east that many jobs were lost. We see a lot of Alberta licence plates back in Ontario.
It is of concern that this measure was not put into law. We must enact it very quickly. During the years from 1981 to 1983 the PGRT took some $4.5 billion out of the oil and gas industry. It is not only the total amount that was removed which could otherwise have been used to create jobs; it was also the manner in which it was collected. It was applied to both high reinvestors and low reinvestors without distinction. It not only removed the cash available to be reinvested, it also removed the incentive to reinvest. It created a negative investor psychology. It was a tax which bore no relationship to profit, with a PIP grant system that paid for activity only. It did not reward success.
In the few minutes remaining 1 want to say that with the election of the new Government we have arrived at a new chapter in the history of the PGRT. As the Minister of Finance indicated in his November 8 economic statement, we are taking the initiative of doubling the $250,000 PGRT credit and extending the lower rate now provided to existing tar sands plants for an additional year. All these modifications have been packaged into Bill C-8. It is an important step in revitalizing the oil and gas industry, but far from the last one that we are prepared to take. In the not too distant future I am sure we will be discussing many new initiatives from the Minister of Energy, Mines and Resources and the Minister of Finance which will be extremely positive for the country.


Some Hon. Members:: Hear, hear!


Aideen Nicholson: Mr. Speaker, I had one or two questions which I had hoped to put to the Minister of State for Finance (Mrs. McDougall) at Committee of the Whole stage. However, it begins to look as though we may not reach that stage today. I also note that the Minister is no longer in the House. Therefore I will direct them to the Hon. Parliamentary Secretary to the Minister of Energy, Mines and Resources (Mr. McDermid), since they follow on his speech.
The Bill before us doubles the corporate tax credit from $250,000 to $500,000. In the economic statement of the Minister of Finance (Mr. Wilson) on November 8, the cost of these measures was estimated at $64 million in fiscal year 1985-86. Could the Parliamentary Secretary tell me exactly how this cost was arrived at and what are the elements in it? Since he and other Members on his side have spoken a lot about energy as an engine of growth, may we know exactly what studies have been done and how many jobs will be created as a result of the doubling of the tax credit?


John Horton McDermid: Mr. Speaker, I thank the Hon. Member for her question. I cannot answer specifically how the numbers were arrived at; that was done through the Department of

December 14, 1984
Petroleum and Gas Revenue Tax Act
Finance. I will get the information for her. I am sure it is doubling what the previous Government estimated it would cost at $250,000.
What is important is that this particular tax incentive will go to small and medium-sized energy industries, the ones which will grow and hire people, the ones which will put unemployed people back to work. That is the key to the whole program, if that kind of taxation break goes primarily to small and intermediate oil companies. They need that type of incentive in order to survive, to expand and to provide much needed employment in energy producing areas.


Steven W. Langdon: Mr. Speaker, first I should like to make a brief comment. I think the Hon. Member has quite properly drawn the connection between what happens with respect to energy policy and general economic conditions within the country. However, I think the nature of that connection could have been explored a little differently than the Hon. Member did. One could, for instance, have talked about the tremendous damage that was inflicted on the industrial sector partly through uncertainty and partly through the direct impact of the tax load, both in 1979 under the previous Conservative administration and under this administration. One of the very first acts since coming to power was to raise taxes yet again on gasoline for the consumer in this country. I will not say it has had a major and devastating effect. Let's not engage in rhetorical overkill. However, it has given rise to some serious problems in my constituency.
My questions are two slightly different ones. The Parliamentary Secretary made the case that the PGRT, because it is a revenue tax, should never have been imposed. Does the Parliamentary Secretary recognize that the oil resources of this country belong to the people of Canada and that they deserve at least some guaranteed return from each barrel of oil that is taken out of the ground?
I also want to follow up on what I see as some contradiction. If it is always a mistake to use taxation on the corporate sector which is not related to profit, why has the Conservative Government, as one of its first acts in office, increased the manufacturing sales tax, which is precisely the kind of tax unrelated to profit which the Parliamentary Secretary has so strongly criticized?


John Horton McDermid: Mr. Speaker, I first want to comment on what the Hon. Member said about increasing the cost of energy as outlined in the statement of the Minister of Finance. We have a compensation fund in this country which is supposedly to be a break-even operation. It permits the basic price of oil to be the same across this country so that one area of the country does not pay more than its fair share. That compensation fund was haemorrhaging or losing money at the rate of $140 million a month. It is about $1.2 billion in debt right now. Had the previous Government done what it was supposed to do, as it states in the legislation, and adjusted that, we would not have a deficit of $1.2 billion. The increase brought
in by the Minister of Finance slowed down the haemorrhaging. It did not prevent it but it slowed it down from $140 million to $10 million a month. However, we still have $1.2 billion deficit in a fund that was supposed to be a break-even fund.
It is fine for the socialists to criticize that, but they never come back and ask where we are going to get the money to pay these huge deficits that have been amassed, especially on something that was designed to be a break-even operation. It was designed to level off the price so that it would be fair to all consumers from coast to coast.


Sergio Marchi: Where are you going to get the money?


John Horton McDermid: That is one of the problems. I am glad the Hon. Member has asked the question. If his Government had asked that when it was piling up these huge deficits, maybe we would not be in the trouble we are today. They should have asked themselves where they were going to get the money to do all these fancy things. Had they asked the question, maybe we would not be in the trouble we are today. The Member sits back and throws that out. He should remember who was around here for the last number of years and whose mess we are trying to clean up. It is not an easy job and it is not a pretty picture.


William Tupper: Mr. Speaker, I congratulate the Hon. Member for Brampton-Georgetown (Mr. McDermid), who represents a riding in the Province of Ontario, on speaking so constructively about the needs of one of Canada's great industries. It was equally delightful to hear him recognize the importance of the petroleum industry to the Province of Ontario. He reminded the House how in the early years of this decade, from 1981 to 1983 in particular, the downturn in that important industry in Canada reflected on Ontario, how it hurt our steel industry and our iron ore producers and the spinoff effects. Will the Parliamentary Secretary tell the House how close Canada is to being self-sufficient in hydrocarbons?


The Acting Speaker (Mr. Paproski):: It will have to be fast.


John Horton McDermid: Mr. Speaker, the short answer is it depends on to whom you are talking. I think we are fairly close to energy self-sufficiency in this country.


The Acting Speaker (Mr. Paproski):: I regret to interrupt the Hon. Member, but the time for questions and comment has expired.


John R. Rodriguez: Mr. Speaker, I too want to comment on your elevation to your present position. I know that you will fill that chair with a great deal of decorum and presence.
I want to make a few comments on Bill C-8 by which the Government seems to be taking care of its friends pretty well. It is on the road to looking after its friends. I have no objection to the Conservatives looking after their friends in the cabbage patch, and I presume that is where the Cabbage Patch dolls come from, or is it the oil patch?
December 14, 1984

Why are we so anxious to exploit non-renewable energy sources in this country when the measures which the previous Government had in place encouraged Canadians to be energy conservationists? The Government is cutting back and over the next two years will eliminate the CHIP program. That is one program that looked after ordinary Canadians. It assisted ordinary Canadians in conserving energy.
The Government will eventually eliminate the RRAP program. RRAP is a conservation measure to assist low-income Canadians to insulate their homes and make them more energy-efficient. This Government through Bill C-8 is taking care of its oil producing and oil company friends. It has ignored and is in fact penalizing ordinary Canadians by removing the very measures which allow them to save on their energy costs.
There have been cut-backs on research for solar energy and other alternative energy sources. There is a downplaying and a cut-back. The Minister frowns. I do not know why she frowns, but that is what her Government is doing. This Government wants Canadians to go back to an era of consume, consume, consume. This is so that their wealthy friends on Bay Street who are in the oil business can put the profits in their pockets. Is that not marvellous, Mr. Speaker?
There is a surplus of natural gas in this country. It is supposed to be cheaper than conventional oil, yet in many small communities, and particularly in those in northern Ontario, the extension of gas lines into communities has been halted. This means that ordinary Canadians cannot have access to a reasonable source of energy.
The Government has now gone the other way. It is saying that we should pay world price for oil. We will settle with paying the world price for gas as well because we are selling gas to the American market cheaper than to the Canadian market. That is the kind of thing at which the Minister and the Government should really look. How can we deliver the surplus energy sources we have in the country to ordinary Canadians at a reasonable price?
We in northern Ontario have concerns. We are not impressed with the great competition among the oil companies that sell home heating fuel and petroleum for automobiles. We have been complaining about the existence of a differential of up to 10 cents per gallon on regular leaded gas between southern Ontario and northern Ontario. We have been asking why this differential exists. We asked the Consumer and Corporate Affairs Department of the previous Liberal Government to investigate the possibilities of a scam, price fixing or an agreement not to compete. We have always been put off. An investigation to determine why there should be this differential has never been launched.
Indeed, Mr. Speaker, the recent Consumer Price Index clearly indicates the rise in petroleum prices. For example, since October the price of petroleum has gone up 2.9 per cent. That means that ordinary Canadians have had to pay 2.9 per cent more for their petroleum or their home heating fuel since
Petroleum and Gas Revenue Tax Act the Government has taken office. In fact, while the Government eliminates the opportunity for Canadians to have reasonably priced energy and while it has cut back and will eventually eliminate grants to ordinary Canadians that allow them to save money on energy costs, it is allowing the price of energy to rise. The price of fossil fuel energy is rising and ordinary Canadians will pay the shot.
I think Members opposite need to be even-handed and fair. Through this Bill we are taking care of their friends and buddies in Texas, in Alberta and on Bay Street. At the same time I think they should be even-handed and make sure that ordinary Canadians get a fair shake. They have won the friends who are more important to them. The ones who are the most important are the oil barons who can contribute to the Tory coffers and who have all their bum-boys and bum-girls elected into those seats-


Some Hon. Members:: Oh, oh!


John R. Rodriguez: Mr. Speaker, I will withdraw that and substitute the word "lackeys". I see Members over there are nodding now. That term is more acceptable to them. They agree with it and feel that it is more parliamentary. Their lackeys are over there to look after their friends in the oil patch. That is the ambivalence with which I am faced as I read Bill C-8. It will be with some trepidation that I decide how 1 will vote on this Bill.


Ramon John Hnatyshyn: Mr. Speaker, I rise on a point of order. I am not rising to comment on the speech made by the Hon. Member for Nickel Belt (Mr. Rodriguez). However, as we in the Conservative Party say, "Bring back Judy Erola". That, however, is not the point of my rising.
There have been discussions between the House Leaders with respect to a Ways and Means motion that the Minister of State for Finance (Mrs. McDougall) wishes to table at this time. There have been discussions with respect to the content and procedure to allow the Minister of State to rise at this time and, by unanimous consent, table a Ways and Means motion. I consulted with the House Leader of the New Democratic Party at noon today and I believe he has conveyed that information to the Hon. Member for Humboldt-Lake Centre (Mr. Althouse), who will understand the implications of what has happened in terms of the Excise Tax Act Bill which is before the House. I would simply ask you to allow the Minister to stand at this time to table this motion, Mr. Speaker.


The Acting Speaker (Mr. Paproski):: Do we have unanimous consent?


Some Hon. Members:: Agreed.

December 14, 1984
Petroleum and Gas Revenue Tax Act



ROUTINE PROCEEDINGS


Barbara Jean McDougall: Mr. Speaker, I hereby table in both official languages two copies of a Ways and Means motion to amend the Excise Tax Act and ask that an Order of the Day be designated for its consideration.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mrs. McDougall that Bill C-8, an Act to amend the Petroleum and Gas Revenue Tax Act, be read the second time and referred to Committee of the Whole.
The Acting Speaker (Mr. Paproski):: I think we should revert to questions and comments on the speech made by the Hon. Member for Nickel Belt (Mr. Rodriguez). Are there any questions or comments?
[ Translation]


Mrs. Mailly:: Mr. Speaker, if my hon. colleague from Nickel Belt (Mr. Rodriguez) would pay attention, I would like to ask him a question.
I would like to ask the Hon. Member whether he agrees that some of those people he has been insulting for the last twenty minutes, using every kind of epithet-and I have only one word for this kind of treatment but I will not say it-but in any case, some of the people out West whom he has been insulting are entrepreneurs, Canadians who are investing their energies, their imagination, their money, their dreams and their desires to help their fellow Canadians by creating jobs. These entrepreneurs out West are Canadians too, and they are people who create jobs. Nevertheless, my hon. colleague from Nickel Belt (Mr. Rodriguez) gives the impression that they are just a bunch of thieves without any conscience at all, whose only purpose in life is to get rich.
I would like to ask him a very serious question. Does he not agree that the oil industry creates jobs, as was said so aptly by my hon. colleague from Nepean-Carleton (Mr. Tupper)? When there is a drop in production in the oil industry out West, Canadians in Ontario and Quebec are the ones who suffer. They are still suffering today, and many are unemployed because production went down as a result of a number
of signals that, I think, were aimed at scaring off investors and at punishing, as the Hon. Member for Nickel Belt (Mr. Rodriguez) would love to do, at punishing people who prefer to make money through their own energies and efforts instead of getting grants and cheques. In the latter case, they can just sit back and let the State take charge of their lives, tell them where to work, what to do, where to invest-
Does my hon. colleague not have the energy and the interest for a serious debate of a few minutes, instead of indulging in rhetoric which adds nothing to the debate because it is too doctrinaire, emotional and ideological?


John R. Rodriguez: Mr. Speaker, I want to make it very clear that I did not call the entrepreneurs names; I called the members of the Conservative Party lackeys. That is not an indecent term, it is an endearing term. It is an endearing term between the Conservatives and their bosses in the oil patch.
I might point out to the Hon. Member that these poor entrepreneurs have done well in exploiting the resources of Canada.


Claudy Mailly: Answer the question!


The Acting Speaker (Mr. Paproski):: I am sorry.

Would the Hon. Member allow the Hon. Member for Nickel Belt (Mr. Rodriguez) to finish his answer?


John R. Rodriguez: I do not mind the Hon. Member asking me a question. After I have answered it, I suppose she will tell me that I am wrong.


Claudy Mailly: Answer it.


John R. Rodriguez: I will. Just listen and be patient.


Claudy Mailly: No.


John R. Rodriguez: Oh, she does not want to be patient. Well, she must make up her mind.


The Acting Speaker (Mr. Paproski):: Order, please. I realize it is Friday, but the Hon. Member for Nickel Belt has the floor. Would he please answer the question. Could we please have a little order.


John R. Rodriguez: The poor entrepreneurs which I have ridiculed today have done very well in exploiting Canadian resources. They were offered PIP grants. Over a five-year period $8.6 billion was budgeted for the oil companies. To do what? To exploit Canadian resources and then charge us an arm and a leg for those resources. The entrepreneurs have done extremely well. Some of the oil companies in Canada have made spectacular profits but have not paid a penny in income tax.
December 14, 1984

There are jobs to be created in the renewable resource sector. There is an opportunity to create jobs in the renewable energy sector of Canada. But the Government has chosen to cut back. That was the point I was making. I do not mind the Government looking after its friends in Bill C-8, but it must think of the consumers, the ordinary Canadians. The Government has allowed the oil companies to have breaks, but at the same time the cost of energy has risen 2.9 per cent since the beginning of October. In many parts of Canada people have to heat their homes earlier and longer, and they must drive greater distances to their workplace, because they do not have the kind of urban transportation which we enjoy in the city of Sudbury and in other large cities. We are allowing the price of oil to increase to the world price, but at the same time we are not demanding the world price for natural gas. The Government must be even-handed in the way it deals with its friends in the oil patch. It does not deal with ordinary Canadians in the same fashion it deals with its friends in the oil patch.


Édouard Desrosiers: Mr. Speaker, I would like to draw the attention of the Hon. Member for Nickel Belt (Mr. Rodriguez). He said earlier that the Progressive Conservative Party was taking care of its friends. He may recall that it was the Progressive Conservative Party that not long ago appointed a Member of his own Party as ambassador. I might also remind him that the Progressive Conservative Party is there to help the friends of all parties in Canada.


John R. Rodriguez: Mr. Speaker, if the Government is looking for the odd opposition Member to appoint to a position so that thereafter it can, with great pomposity, appoint every Tory to every board and commission, then it is on the right track, because it is doing that. However, the Government should not expect me to thank it for appointing New Democrats to positions. I want to see what it will do for ordinary Canadians. That is how the Government will be judged.


The Acting Speaker (Mr. Paproski):: The time for questions and comments has expired.


Mr. Dave Nickerson (Western Arctic):: Mr. Speaker, I would like to make a few brief remarks on Bill C-8 which is before the House today. I would like to compliment the Minister of State for Finance (Mrs. McDougall). In my opinion, and in the opinion of my colleagues, she has been doing an excellent job. I would suspect that in their heart of hearts, Hon. Members opposite would agree with me.


Some Hon. Members:: Hear, hear!


Dave Nickerson: A number of Bills have come forward which are advantageous to all Canadians. The Bills will furnish tax relief and do all sorts of good things on behalf of the Government of Canada.
Bill C-8 has been in the works for some time. Most of it came to us as a legacy from the previous Government. It had
Petroleum and Gas Revenue Ta.\ Act
to be put forward because there were so many problems in the PGRT as it existed. I am pleased that there has been an increase from $250,000 to $500,000 for the credit which is available to small producers. That measure should help the small companies who are having such a hard time in the West. They were hit hard by the Liberal national energy policy. The Government is making changes which will remove some of the ill effects of the ill-conceived Liberal policy of the past.
The enhanced recovery deduction will help to get tertiary oil production moving again in western Canada. It will help with projects such as the tar sands in northern Alberta. Again, we are trying to turn around the bad effects of the national energy policy.
There is one other point to which I would like to refer in the Bill, that is, the facility which will be made available for the transfer of unused exploration and development expense tax credits on the amalgamation or winding-up of a corporation which is engaged in the energy business. We all know that a number of small oil companies had their backs up against the wall and were forced into bankruptcy by Liberal policy. All that was worth anything to them were tax losses. I am pleased to see this provision in the Bill. It will ensure that the tax credits will not remain completely unused. They will not expire, and they can be used by a successor corporation. That will be an advantage-as the Hon. Member for Nickel Belt (Mr. Rodriguez) indicated-to our friends. We do have friends in the oil industry on this side of the House. Our friends are the people who drill oil wells and the people who draw seismic lines. They are the friends of my Party. They ought to be the friends of the NDP, but apparently the NDP has no sympathy for the people who are engaged in the drilling of oil wells or anything else which goes on in the oil and gas business.
I would like to say a few words about the over-all approach of the Bill. What is required is not a fine-tuning of the existing legislation, but an over-all examination of the tax laws which affect oil and gas. This is only an interim measure. A lot of things must be done to improve the tax royalty situation on oil and gas.
We could look at the NEP. What did that program really try to do? First of all, the Liberal Government of that day wanted to control the energy business in Canada. Legitimately, under the Constitution, it is primarily a provincial responsibility. However, the Liberal Government was not satisfied with that. It wanted to grab the whole thing and put on a lot of federal controls, destroying much of the industry in the process. It was a tax grab. There has never been a tax grab like it in the history of Canada. What the Liberal Government wanted to do was to extract from the energy industry and energy consumers $50 billion in five years. That was its projected plan to finance some of the ill-conceived schemes which it had going, and which still have to be paid for, unfortunately. That idea did not work out because oil prices did not escalate at the rate which was initially forecast.

December 14, 1984
Petroleum and Gas Revenue Tax Act
However, what did the Liberal Government do when the price of oil jumped so high several years ago? Instead of letting the market look after itself, instead of letting supply and demand fix the prices, what it did was to keep the price, as far as the producer and the provincial take were concerned, at very much the same level, and then, by fiat, it increased the price to something very near world prices. The difference in between was the money that the Liberal Government of the day was going to take out of it. It was going to get all of that new price increase all to itself by taking it out of the industry and out of the consumers' pockets by way of the PGRT and a myriad of other oil and gas taxes which it had imposed.
I believe we have to get out of price fixing in the oil and gas business. I have a great deal of confidence in the market to come up with the best price under the circumstances. There are number of buyers and a number of sellers all competing in the open market. That will set the real price, not some manufactured price which the Government pulls out of a drawer some place. We have to get the oil and gas industry back to free market principles. Why should there be, Sir, the new oil reference price, the NOOR and the SOOP, and all these other things which are created by the Government? When you go to the gas pump and you buy a gallon of gas to put in your tank, you do not care whether that is new oil or old or some other kind of oil; it is all the same. There should be no difference between old oil prices and new oil prices. It is all the same as far as the market is concerned. I listened to the Hon. Member for Vancouver-Kingsway (Mr. Waddell) and I thought the light was beginning to shine into his rather thick skull when he asked the rhetorical question: Why should there be old oil prices and new oil prices? I thought he was going to give as lucid an explanation as to why there should not be those two prices I am presently doing. But that did not occur to him, Sir. All he wanted to do was to aggravate further the government control system, to the detriment, in the long run, of people who work in the oil and gas industry and the Canadian consumers.
What we have to work toward in the oil and gas industry, Mr. Speaker, is a free market price and free market principles. We must take those restrictions off the industry, let them go back to work, let them find more oil and gas, let them produce more oil and gas, thereby bringing the level of prices down. We must not let the situation escalate, which it is likely to do under the present circumstances.
What we need, Sir, is a much more simplified tax system for oil and gas in this country, not the PGRT, this oil tax and that compensation fund, or something else. We must get back to a simplified system and one which respects the constitutional niceties in Canada between federal and provincial areas of taxation. That, Sir, is my pitch this afternoon. I will be very pleased to vote in favour of this Bill. It makes sense. It makes the existing Act a little more fair and workable. However, what we have to do in the next several months is to take a new look at pricing and taxation in the oil and gas industry, and I have every confidence that the new Minister of Energy, Mines
and Resources (Miss Carney), the new Minister of Finance (Mr. Wilson) and his very able assistant, the Minister of State for Finance, will do precisely that. In two years or three years hence, I am sure we will see a revitalization of the Canadian energy industry.


The Acting Speaker (Mr. Paproski):: Questions or comments?


Steven W. Langdon: Mr. Speaker, I have a short question arising out of the impassioned plea of the Hon. Member for Western Arctic (Mr. Nickerson) to allow the market system to rule entirely in the case of oil and gas.
It is common for people who do not read history to be condemned to repeat history. I wonder if the Hon. Member is aware of the fact that had we followed that principle throughout the first 20 years of the oil and gas industry in post-war Canada, we would not have had the development of that industry because the expansion and exploration which took place at that time, and the remarkable contribution which that industry was able to make to the Province of Alberta, were based entirely on the willingness within this country to accept a price for oil which was significantly higher than the world price. That is a principle which we felt made sense because it helped to develop an important resource for us in the future. Would the Hon. Member agree that if we had followed his advice right from the start and allowed market prices to rule in the case of gas and oil, we would not presently have the kind of oil and gas industry we have now in this country?


Dave Nickerson: No, Mr. Speaker, I certainly do not agree with that concept or idea of history. I agree with the Hon. Member that those who do not read history, in all likelihood, are going to repeat it. That is precisely, Sir, what the people on the other side of this room are doing. They have not read the history books and have not seen that over several thousand years of human existence, wherever government has come in and tried to control prices or to dictate what should happen, as time goes by it has had to relent because it ends up with a system where there is misallocation of resources and where prices are generally higher than what they should be under free market conditions. We can never turn the clock back and try a different system under the circumstances, but it is my suspicion, Sir, because that is all we can have, that had we not had all this allocation of market areas in Canada, and had we not controlled the price, we would have a more healthy situation today.
The Canadian oil industry would have grown up more accustomed to free market principles. We would not have had a system where western Canada for a long time has been subsidizing eastern Canada when it comes to oil and gas prices. All in all, it would have been a much healthier situation.


Victor Fredrich (Vic) Althouse: Mr. Speaker, I would like to ask a question of the Hon. Member for Western Arctic (Mr. Nickerson). The Hon. Member in his comments blamed the Liberal Government for not allowing supply and demand to function. He has
December 14, 1984

followed up that allegation in his reply to my friend, the Hon. Member for Essex-Windsor (Mr. Langdon). If the Hon. Member really wants to be objective, could he not say that his own Government has already initiated some of the same kind of intervention in the market, given the fact that Canadian natural gas sells cheaper across the border in the United States than what we charge our own people, and given the fact that the Government has expressed a very clear intention to make that distortion even worse by adding another 9 per cent or 10 per cent when we go to full world price? Does the Hon. Member not see that that is clearly interfering with the real market price which, I would suggest, is being established across the line with our export price, and that is, the true price? How does the Hon. Member justify asking Canadians to pay more than what we will sell it for to Americans? And how does he justify proposing to add another 9 per cent or 10 per cent as we shortly go to full world price?


Dave Nickerson: Mr. Speaker, what is happening with the present Government policy with respect to export gas prices is precisely opposite to the Hon. Member's interpretation. Markets exist in the United States for surplus Canadian gas in fields which are primarily in Alberta. The price of gas in the northern United States is set very much by market conditions. They are quite willing to buy Canadian gas at a certain price. They are not prepared to pay prices considerably in excess of other gas available to them from other sources. Therefore, we in Canada have to ask ourselves whether we should close off the border and not sell our gas to them at all or, alternatively, whether we should keep Albertans at work in the gas fields. Should we have foreign exchange coming into Canada as a result of these gas sales? Anyone whose business it is to drill gas wells or operate gas plants will certainly agree with you that the Government of Canada is on the right track as far as this export gas pricing policy is concerned.


Victor Fredrich (Vic) Althouse: Mr. Speaker, I have spent most of my lifetime watching the price effects of another commodity, namely, wheat, which always sells at the surplus price on world markets. That, eventually, almost without fail, becomes the price in Canada for that product. We are told that, as farmers, we cannot do anything about it. That is the law of supply and demand. Why does the law of supply and demand have to be re-interpreted for the oil and gas people when their surplus markets do not set the price for domestic production? Why should we have a special set of circumstances for them and not for the producers of other raw products in the country?


Dave Nickerson: Mr. Speaker, the Hon. Member from the New Democratic Party has played right into my hand because pricing of wheat is one of my favourite subjects. In the United States they have a free market for wheat, they have private people in the grain business, whereas in Canada it is the opposite. We have a monopoly on wheat.


Mr. Benjamin:: Which do you prefer?
Petroleum anil Gas Revenue Tax Act


Dave Nickerson: The prices are set, as the Hon. Member says, more or less internationally. There is not much difference when transportation costs are taken into account.
If one studies the two systems one would see that for the past 35 years American export wheat production, with its free market system, has increased three-fold. In Canada, with a government monopoly on wheat sales, the volume of production of export wheat has remained virtually the same.


Leslie Gordon Benjamin: That is not true.


Dave Nickerson: We see the expansion in the American agricultural economy. As a result of socialist policies, we see the static system in Canada.


The Acting Speaker (Mr. Paproski):: I hope that Hon. Members will stop playing poker in the House. Let us get on with the questions and answers.


Leslie Gordon Benjamin: Mr. Speaker, I was intrigued when the Hon. Member for Western Arctic (Mr. Nickerson) said that the grain business is his favourite topic. After he was through speaking we figured he could not have had any other topic that was favourite.
Which system does the Hon. Member prefer? The system of the Canadian Wheat Board does not have a monopoly because a great volume of our grain is sold outside the Canadian Wheat Board in the feed grain system. Does the Hon. Member prefer that system or does he prefer the American free market system? As a Conservative Member of Parliament, would he mind telling us which one of these systems is the best to have?


Dave Nickerson: Mr. Speaker, I thought I answered that. I do not think there is any doubt in the Hon. Member's mind as to where I stand on that question. My preference is to have a free market rather than a controlled market.


Leslie Gordon Benjamin: Conservatives are against the Wheat Board.


The Acting Speaker (Mr. Paproski):: Questions and comments are now terminated. Is the House ready for the question?


Jack Wendele Shields: Mr. Speaker, I too want to congratulate you on your elevation to that very high and honourable post. Believe me, all Albertans are proud of you today.


Some Hon. Members:: Hear, hear!


Jack Wendele Shields: I would like to make some brief comments on Bill C-8. I want to congratulate the Minister of State for Finance (Mrs. McDougall) for introducing the Bill and on her remarks on the Bill and explanation of it. It is really too bad that Members do not get away from the partisan rhetoric and sit down to actually look at the facts and consider what this Bill is attempting to do.


Leslie Gordon Benjamin: You tell us. We can hardly wait.

December 14, 1984

Petroleum and Gas Revenue Tax Act


Jack Wendele Shields: Yes, I am going to attempt to tell you what happened in my community in northeastern Alberta, in Edmonton, Calgary and communities like Grand Prairie when the national energy policy was introduced and the petroleum gas revenue tax was imposed. I have heard Members from the New Democratic Party call it a revenue tax only. It was a production tax.
What would happen to the farming industry if farmers were taxed on every bushel produced before input costs or expenses were taken into account? What would happen if farmers were taxed 20 cents on every bushel they grew whether they were going broke or not? How would that reflect on a farmer's operation?
This was a confiscation tax. It is like a royalty imposed by the federal Government on assets that they do not own. I hear the New Democratic Party saying that the people of Canada own the resources. In one sense that is true because we are all Canadians from coast to coast. However, the jurisdiction of the oil resource belongs to the province. The Minister of Energy, Mines and Resources (Miss Carney) has just gone to Newfoundland to work out a deal whereby Newfoundland's offshore resources will be treated in exactly the same way as the inland resources.
The Member for Nickel Belt (Mr. Rodriguez) was quite vocal. What would happen to the mining industry in northern Ontario if there was a production tax on every tonne of ore removed from the mine-


John R. Rodriguez: There is a tax.


Jack Wendele Shields: -prior to any other calculation? I heard the other Hon. Member from the NDP say that expenses were taken into account prior to the deduction of the petroleum gas revenue tax. That is absolutely false. Consider a small service station that is franchised and gets a name or a hamburger store like McDonald's that gets a name. Those franchise operators must pay to the franchiser, the head office, based on the volume period. It does not matter whether there is an overrun in expenses because of labour force or new equipment. They pay on a monthly basis based on their total volume in their stores. You see them go out of business all the time. That is exactly what happened in western Canada.
The purpose of the National Energy Program was to Canadianize the industry. I would point out that in 1947, when Leduc No. 1 was found, there was a massive influx of oil companies from the United States, including oil servicing companies, geophysical companies and mud companies with all the ancillary activities that take place in the oil fields. All of these people came from the United States, and indeed I worked with many of those people as a young man. The head-offices were in Oklahoma, Texas, California and other such places.
By 1968, and into the 1970's, 95 per cent of all those companies were Canadian-owned. For example, some of the rigs manufactured in Edmonton and Calgary were used in the
Middle East, the Far East, and Europe. These rigs were produced and developed in Canada. For example, some of the innovations for those rigs were patented and produced in Alberta. Some of the rig producers in Alberta were renowned around the world for the expertise and knowledge which they had gained. These companies were 95 per cent to 98 per cent Canadian-owned.
Did the National Energy Program affect the major oil producers when it was introduced? The National Energy Program affected the small companies that employed Canadians and used Canadian expertise. It actually destroyed the small companies, many of which went bankrupt.
At the same time, nailing the energy industry or the oil industry in western Canada had the ripple effect which hit the manufacturing sector in Ontario and Quebec, resulting in a gigantic loss of jobs. That is what we are talking about.
One Member of the New Democratic Party asked where the oil industry would be had Canada decided not to accept oil from western Canada at higher than world price. He fails to mention that this high price was cut off at ten cents a barrel higher than the world price. That includes some of the transportation costs to bring it to market. These facts are really irrelevant because at the same time the marketing of Canadian oil into the United States market would not be allowed, and that had to be addressed. The quotas were necessary but the sale was there and the industry would have remained at world price, which would have allowed a free economy. This would have worked well. The destruction of the oil industry in western Canada was beyond belief.
The NDP talked about multinational companies and how they are our friends. I live in Fort McMurray which has a population of 35,000 people. When I first went to Fort McMurray there were less than 3,000 people. At that time the Great Canadian Oil Sands Limited plant was being built. This plant was financed 100 per cent by the Sun Oil Company of Canada which came and spent millions and millions of dollars to develop the plant. The boast of the then Premier of the Province, Ernest Manning, was that there was not one nickel of government money in this plant. He was correct.
Although the company lost millions of dollars year after year, the mine remained and it kept producing because of the dream of the chairman of the board who wanted to make it work because the time was coming when oil sands would because very important to the world. I wonder where we would be today if Great Canadian Oil Sands Limited had not gone there and pioneered the development of the oil sands. The population of Fort McMurray grew to 7,000 people as a result of that one plant. The second plant, Syncrude, came onstream, and we now have a population of 35,000. It is an example of the jobs that have been created in that community and across the country. I hope this Bill is passed quickly in order to enable the industry to create more jobs in this country.


Mr. Gagnon:: Mr. Speaker, the Hon. Member for Nickel Belt (Mr. Rodriguez) and the Hon. Member for Humboldt-Lake Centre (Mr. Althouse) made the same allegation about
December 14, 1984

selling gas cheaper to the U.S. market than the Canadian market. Would the Hon. Member for Athabasca (Mr. Shields) comment on the Toronto citygate price by which no gas exports can leave this country at less than the Toronto citygate price? This means that there is no situation in which we are exporting gas to the U.S. market at a lower price than that of Canadian gas.


Jack Wendele Shields: I thank the Hon. Member for Calgary North (Mr. Gagnon) for his question. He is absolutely right. The Toronto citygate price includes the prices of the gas commodity and the transportation costs from the fields in such places as the Peace River country to the Toronto city gate.
No gas can be sold across the U.S. border for less than the Toronto citygate price. The fact that it seems unreasonable that we have gas fields in Suffield in southern Alberta and a market across the border in Montana is a very contentious issue among the gas companies. One can understand why. However, an artificial price has been set, which is the Toronto citygate price. The Hon. Member is correct in stating that we are not selling gas to the United States market for less than the price at which we are selling to Canada as a result of the Toronto citygate price.


Steven W. Langdon: Mr. Speaker, I would like to begin by paying tribute to the very people that the Hon. Member for Athabasca (Mr. Shields) has been talking about. In fact, I believe that he makes a valid point that entrepreneurs, both from outside Canada and from Canada, have made a tremendous contribution to the development, expansion and successful presence today of an extremely important oil and gas sector in our economy.
However, I think we should look at the history of that development somewhat more carefully than that given by the Hon. Member. I think, first, we have to recognize that at the beginning there were a great many Canadian entrepreneurs who were involved in early exploration and development. If we look-and I hate to point it out to Hon. Members-at the economic history of this industry, we see that in the first five years of its development a very significant majority of the oil wells drilled were drilled by Canadians. The point at which the industry began to shift is in the context of successful wells that were dug. Even in that context a significant number of Canadians were successful, but the great majority of them found it necessary to sell their discoveries to large international companies in order to develop the resources to a point where they could serve the country. That is not a problem, but that is the history, and I think we should get the history right.
Second, we should recognize that although the United States now may be incredibly interested in importing gas and oil from Canada, that has not historically been the case. Anybody who has looked at the history of the petroleum industry will know that there have been, at different stages since World War II, important import barriers which the United States put up to the sale of Canadian oil and gas within
Petroleum antI Gas Revenue Tax Act
that market. It was in the context of those import barriers and the financing difficulties that Canadian entrepreneurs were having in developing their resources in the West-because the banks on Bay Street were no more sympathetic to Alberta then than they are now-that we adopted a strategy in this country to provide prices well above the world level for all the oil that was produced in western Canada.
I have to put it very bluntly, Mr. Speaker. The constituents of Essex-Windsor for 25 years paid the price to keep the oil industry in Alberta growing, developing and prospering. It is because of that historical contract that took place within this country in the 1950s and 1960s that the people of my constituency and the people of the Province of Ontario in 1970 and 1980 said that they had the right to some say in what was happening to the Canadian resources in oil and gas which they had helped develop.
We as well as the other Parties in this House have had to wrestle carefully with the difficult principles involved in trying to reconcile, on the one hand, the concern of the Province of Alberta which had been poor and then had become rich on the basis of oil and gas, with the interest of the province of Ontario based on manufacturing which had itself sacrificed through consumer prices for 25 years in order to build up that oil and gas industry. As have the Members in all Parties, we found that sorting out that dilemma was not an easy process. We found certain principles which helped us to establish a policy that at least had some consistency.
Let me outline to the House a few of those principles. The first one was to recognize what the history of the industry taught us, that we could not rely on the market system to decide what happened to gas and oil in Canada. As I said earlier, if we had done that, we would not have seen the kind of development in Athabasca, to which the Hon. Member referred. We would not have seen the kind of development in Calgary which is the source of so much prosperity in that community. We would not have the prosperity of Edmonton created throughout the years which occurred because we in Ontario paid significantly more than the marketplace would have provided for oil and gas. We said it was absolutely correct to take a strategy into this policy area which said, "Let's use the market system to some degree, but let's not let it rule the future evolution of such a crucial part of our economy".


Blaine Allen Thacker: I never bought a tractor for less than world price and a tariff.


Steven W. Langdon: If we look at the case of tractors, we will see that historically we have prevented farmers from importing tractors from England so that Massey-Ferguson, among others, could maintain a market here in which it could sell at a higher price. There is a royal commission report on farm machinery to which I refer the Member. Let him trace it back and he will find that he has made a mistake in this area as well.
Let me continue. We are talking about points of principle. If we move away from this first point, that the market cannot be

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Petroleum and Gas Revenue Tax Act
permitted in this crucial area to decide everything, I think a second principle on the basis of the first principle is that Canadians across the country helped to build the oil and gas industry so that all Canadians can share in that industry.
What about the resources that come out of the ground? Consumers who contributed to building these resources over the years have a right to get some return from those resources when world prices go way up and, as a result, the value of those resources here in Canada goes way up. That is why we adopted as a principle the view that those resources taken out of the ground, whether in the Arctic, Alberta, British Columbia, or Saskatchewan, were resources that did indeed belong to the Canadian people, and that in turn it was proper to put a tax on those resources. That ensured that no matter how much some company could do in the way of the padding of expenditures between taking that gas out of the ground and selling it to the consumer, there was a guaranteed amount which went to the people of Canada.
The third principle has been the clear recognition, when talking about the great increase in price that took place as a result of what was happening in the rest of the world, that all those economic rents should not be allowed to go either to the companies themselves or to the oil companies and provinces in which production was based. Again this was a windfall to Canada as a whole. On the basis of that, there should be a sharing of those rents. That is where the principle of old oil and new oil in fact became important for us. As economists looking at what was taking place in the country, we knew that it was important to offer every possible encouragement to people to explore for new oil. We knew that if we tried, as a federal or provincial jurisdiction, to take away those rents from those producing and finding new oil, we would offer a disincentive. That was not the case with respect to oil which had already been discovered. Thus it made economic sense to make the distinction between old and new oil.
In the application of these principles, we found a way of drawing together both the western and eastern wings of our Party. It was a reconciliation which I urge upon people such as the Hon. Member for Brampton-Georgetown (Mr. McDer-mid) who speaks with such passion about the oil industry. I appreciate the passion. I wish there was a little more logic associated with it.
In looking at taxation questions with respect to the oil and gas industry, I suggest that the Government should not look to an imposition, as it has done, on Ontario consumers. Instead, it should look to seeking to treat more fairly the tremendous tax benefits which the corporate sector has enjoyed in recent years. If it feels it is essential to increase tax revenue to cover some of the costs of equalizing prices across the country in oil and gas, that is where the Government should turn, not to the consumers of Ontario.
I do not wish to prolong this debate. However, I want to put clearly on the record the fact that our Party has approached this matter in a serious way, in an attempt to ensure that
certain philosophical principles follow through which reflect the history of the country and the contribution we have all made to the development of the oil and gas industry and which reflect the concerns of the Hon. Member for Athabasca (Mr. Shields) that we owe a debt of gratitude to the entrepreneurs who took risks to help in a national effort to make the industry grow.


Mr. Fennell:: Mr. Speaker, I just want to clarify two points. I know Hon. Members want to get the Bill through, but this is the first time I have risen in the House in this session. I was supposed to speak on another Bill and I want to get this Bill through, but I should like to make two comments. The Hon. Member started to tell us that it was Canadians who found the original oil in the West, that it was Canadian oil companies. That is inaccurate. He had better find out the facts. It was Imperial Oil which spent millions of dollars until the find at Leduc. Canadians from Bay Street did not have the guts to put any money in the West.


Some Hon. Members:: Oh, oh!


Thomas Scott Fennell: What the Hon. Member stated about the beginnings of the industry in the West is inaccurate.
I spent eight weeks studying the National Energy Program. It is a damn shame it was written by economists not by oilmen; this country would have been in much better shape today.


Steven W. Langdon: Mr. Speaker, I recognize the pain and chagrin on the face of the Hon. Member for Brampton-Georgetown. However, I have to make a quick comment. I refer the Hon. Member to the classic study of the history of the oil industry in western Canada written in our economic history books, including the classic study of Ronald Shearer. They indicate very clearly the early stages of that industry. I refer the Hon. Member to this study because it is a crucial part of our history. In fact, the risk-taking entrepreneurs were Canadian. The people who were prepared to put their money on the line were Canadian. He should check it out and he will see.
In fact, I will make a small commitment to the Hon. Member. I will track down the article for him and pass it on to him. If he concedes, his second speech in the House will be a speech of apology for his incorrect references.


The Acting Speaker (Mr. Paproski):: Since there are no more questions, is the House ready for the question?


George Baker: Mr. Speaker, I have been asked by the Liberal House Leader and by the Minister of State for Finance (Mrs. McDougall) not to give a major presentation because they want to see the Bill get through. However, I will use just a minute. When the Government wants a Bill to get through in a hurry, it should coach its Members not to make statements-


Mr. Nunziata:: Inflammatory statements.


George Baker: Exactly, inflammatory statements. They should not make such statements in the House so that we get angry.
December 14, 1984

They should not make incorrect statements. The Parliamentary Secretary to the Minister of Energy, Mines and Resources (Mr. McDermid) said that everyone in Newfoundland, all Newfoundlanders, would be happy with the federal-provincial agreement except for the Newfoundlanders in the Opposition.
1 will not sit here without making some comment on such a remark.
In my one minute let me indicate that we in Newfoundland have been listening to promises by the provincial Tory Government-as well as promises by this Tory Government-for years, promises of thousands of jobs. If we could eat promises, every Newfoundlander would weigh 600 pounds.
For the Parliamentary Secretary to rise and make such a statement came close to making me rise today to prevent the Bill from going through. It is only because of the request of the House Leader of the Liberal Party and the request of the Minister of State for Finance that I will now take my seat. That is a warning to government Members.


Some Hon. Members:: Hear, hear!


The Acting Speaker (Mr. Paproski):: Is the House ready for the question?


Some Hon. Members:: Question.


The Acting Speaker (Mr. Paproski):: Mrs. McDougall, seconded by Mr. Hnatyshyn, moves that Bill C-8, an Act to amend the Petroleum and Gas Revenue Tax Act, be now read the second time and referred to a Committee of the Whole.
Is it the pleasure of the House to adopt the motion?


Some Hon. Members:: Agreed.


[Stage Direction]
Motion agreed to, Bill read the second time and the House went into committee thereon, Mr. Paproski in the chair.
Steve Eugene Paproski: Order. House in committee of the whole on Bill C-8, an Act to amend the Petroleum and Gas Revenue Tax Act.
In view of the fact that it is awfully close to four o'clock, we will not see the clock in order to expedite this matter.
Clause 1 agreed to.
On Clause 2-


John Horton McDermid: Mr. Chairman, under Clause 2, I was asked by my colleague how the numbers were arrived at in the extension of the tax credit on the PGRT. I should like to ask the Hon. Minister now if we could have some clarification of that point so that my colleague's question is answered.


Barbara Jean McDougall: Mr. Chairman, as to the figures, the cost is $35 million per calendar year, and the $64 million represents the cost for the first two fiscal years. It does not relate to the figures published previously because the last estimate was based on a more optimistic view of energy prices and because of the adjustment from a $250,000 credit to a $500,000 credit.
Business of the House
Clause 2 agreed to.
Clauses 3 to 5 inclusive agreed to.
On Clause 6-Credit deductions


Aideen Nicholson: Mr. Chairman, can the Minister tell us what studies were done to justify doubling the amount for this tax credit and what sort of economic analysis and comparisons were done because in other areas of the Department of Energy we see a cut of $60.4 million, including some alternative energy programs? I would be interested in knowing the rationale for cutting the $60 million, which includes alternative energy, at the same time as giving this tax break which results in forgone revenues of something over $60 million to the oil industry.


Barbara Jean McDougall: Mr. Chairman, I do not want to comment on anything except this Bill. There were no particular studies made in connection with this. It was calculated by checking actual company by company data. The change was made because it is obvious from the experience in the Province of Saskatchewan, where there has been a very active drilling program, since it revised its legislation that tax incentives are important to this particular area of the industry.


Aideen Nicholson: Mr. Chairman, is there any appraisal of the number of jobs that are expected to be created as a result of this tax credit, particularly in comparison with the number of jobs that are being eliminated by the other measures in the economic statement which affect energy, mines and resources?


Barbara Jean McDougall: Mr. Chairman, we do not have a specific number, but we do have indications from our conversations with industry people that they expect quite an increase in activity and quite a few more jobs as a result.


Steve Eugene Paproski: Shall clause 6 carry?


Some Hon. Members:: Agreed.
Clause 6 agreed to.
Clauses 7 to 13 inclusive agreed to.


[Stage Direction]
Title agreed to.
Bill reported, read the third time and passed.

Ramon John Hnatyshyn: Mr. Speaker, I rise on a point of order. I want to extend my thanks to members of the Opposition, particularly the Hon. Member for Gander-Twillingate (Mr. Baker) who demonstrated a restraint that is typical of him but has not been seen today until now. I do appreciate the co-operation.
I rise now with respect to the business of the House on Monday. Hon. Members will recall that earlier this afternoon the Minister of State for Finance tabled a Ways and Means

December 14, 1984
Capital Gains Tax
motion with respect to the Excise Tax Bill. It is my intention to call the Ways and Means motions of the Minister as the first item of business on Monday. Following the calling of those motions, we will then proceed with the business as announced yesterday with respect to Monday, that is to say, we will deal with the Public Works Bill. I anticipate, with the co-operation of the House after discussion with the House Leaders, that we will be able to conclude all stages of that legislation at some point on Monday. When we do, we will be able to devote our full time and attention to the well-known Bill dealing with Investment Canada.


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


Leslie Gordon Benjamin: Mr. Speaker, I rise on a point of order. Would the Chair be willing to not see the clock at five o'clock in order that whatever Member has a Bill today will be entitled to the full hour, and that we not see the clock until seven minutes after five?


The Acting Speaker (Mr. Paproski):: Is that agreed?


Some Hon. Members:: Agreed.



PRIVATE MEMBERS' BUSINESS-MOTIONS

["The hour provided for the consideration of Private Members' Business has now expired.\nIt being 5.07 p.m., this House stands adjourned until Monday next at eleven o'clock a.m., pursuant to Standing Order 2(1).\nAt 5.07 p.m. the House adjourned.", 'Monday, December 17, 1984']
The Acting Speaker (Mr. Paproski):: Shall all items and orders preceding No. 160 stand by unanimous consent?


Some Hon. Members:: Agreed.



[Stage Direction]
SUGGESTED ABOLITION OF CAPITAL GAINS TAX ON FARM LAND Mr. Blaine A. Thacker (Lethbridge-Foothills) moved:
That, in the opinion of this House, the Government should consider the advisability of abolishing the capital gains tax on bona fide farm land.
He said: Mr. Speaker, I am indeed honoured to rise in this Thirty-third Parliament to propose my first Private Members' motion which, I may say, is exactly the same as the motion which I proposed in the Thirty-second Parliament, namely that the Cabinet should consider the advisability that capital gains tax be abolished on bona fide farm land. I was convinced then and I still am that it is in the national interest of Canada and of all citizens of Canada to have this motion passed. I believe that this time I have some reason to be genuinely optimistic. There is a new Government in place, so we have another chance. More evidence has been accumulated that capital
gains tax is harming the family farm. I will argue that it is harming the nation as a whole.
As well, the Government has indicated that it is prepared to establish a parliamentary committee. That likely is in the process. Therefore, it should be easy for the Government to accept this motion. I believe that Members of this House, particularly those who are familiar with the farm scene, and even those who are not, will realize soon that it is in the national interest that we not tax the family farm as we have been.
I commend the Minister of Finance (Mr. Wilson) for responding so quickly to the pressure put upon him to honour the campaign promise. I know from talking to many farmers that they are genuinely impressed that in the first 90 days so much has been done for the benefit of agriculture. In the West, they speak of the $60 million so quickly provided to assist farmers because of the drought, and the $120 million that went to grain producers through western grain stabilization. All producers across the nation will have started to benefit from the 4.8 cents per litre fuel tax not being imposed which otherwise they would have been faced with. Of course, the freeze in the freight rate helps the grain exporter.
The Farm Credit Corporation has put a freeze on foreclosures across the entire country until more time can pass and we can get a handle on the problem. The Farm Credit Corporation's interest rates have been lowered and, of course, the appeal board can now act as an intermediary between an individual farmer who may be in trouble and the financial institutions. That is of enormous benefit because the farmer can go before a group of his peers who will look at his problem. In cases where the farmer is a good manager but has financial problems for reasons often beyond his own control, the financial institution will very likely accept a decision made by his fellow farmers to give him a chance. By the same token, there are a few farmers who are in the position of having no hope at all. They will be more apt to accept a decision of their own peer group telling them that it is obvious they are not going to make it and that they had better spend their time doing something else.
Dual labelling has been enormously popular with the farm community. I wish to commend the Minister of Finance and the Minister of Agriculture (Mr. Wise) for having taken those steps.
I would ask the special parliamentary committee that was set up to remember some of the broad facts when looking at this special exemption. There is a general law that imposes capital gains tax but there are certain exceptions in many cases. I am asking that bona fide farm land be placed under a special exemption so that capital gains tax is not imposed. That is done in all sorts of cases. For example, there is a general law that imposes income tax on all of us but there are exemptions for those who are married, for those with children and for those who are over a certain age. All of that adds to
December 14, 1984
[Stage Direction]
the strength of the general principle. I am saying that we should be doing this for the farmers.
As you know, Mr. Speaker, on a world scale, Canada has a mere one half of 1 per cent of world population. Yet we are the stewards of over 3 per cent of the arable land of the world. That imposes an enormous responsibility on us. We are a small population with a great deal of land as compared to the rest of the world. There is no doubt in my mind at all that the plight of Ethiopia is simply the first such plight that has been brought to our attention. Within the next 10 years, Canadians are going to be called upon to produce food and share it with the rest of the world in a way we have never been called upon before. In order to do that, we need the family farm. In order to keep the family farm, we need to abolish capital gains tax on land that is kept in genuine agricultural production.
As we all know, Canada is a huge country. It is composed of 2.3 billion acres. While we have that huge area under our legal and sovereign jurisdiction, only 13 per cent of that land is arable. Of that arable land, only 4 per cent is designated Class I and Class II land. That is further complicated by the fact that over 50 per cent of the Class I land and over 30 per cent of the Class II land lies within 50 miles of the huge metropolitan centres like Vancouver, Edmonton, Winnipeg, Toronto and Montreal, centres which are expanding at an enormous rate. We are giving up truly enormous amounts of good land.
My researcher, Mr. Darryl Pat, dug out the fact that between 1971 and 1976, we lost some 12,460 hectares of prime land each year. That is a very serious statistic. If we impose capital gain taxes on the rest of that land, we will simply draw more and more land out of agricultural production.
You may properly ask why we should exempt farmers from this tax, Mr. Speaker. There are many reasons, but I do not want to take too long as I know other Members wish to stand and put their views before us. Clearly, a basic fact that we must realize is that farmers in this country are not well off. In my area of the country, there are big farms and the farmers are better off than most. When looking at Canada as a whole, though, farmers are not well off. The average income of farmers in 1980 was some $13,265. The average income for all tax filers in that year was $18,241. You will realize instantly, Mr. Speaker, that farmers make only 72.7 per cent of the average income of all Canadians. Our income of $52,000 plus looks pretty generous compared to the income of the farmers who are putting the bread and butter on our tables.
Out of that 72 per cent of the average Canadian income, farmers must provide totally for their own pension. They do not have a salary like you and I, Mr. Speaker, and the taxpayers of the nation are putting extra money aside over and above the $52,000 they put directly in our pocket so that we will have a pension. Farmers do not have a pension. The land has always been the farmer's pension. Because they like the style of life and are committed to the land, farmers have been prepared to take a much lower income while they are working. However, the land is their pension. When they want to move to town, they sell their land. They buy a little home in town and their sons and daughters carry on with the farm.
Capital Gains Tax
The income of the farmers has become so low that over 58 per cent of farmers or their spouses must work off the farm in order to keep the farm together. The country is put in a fragile position when over 50 per cent of its best farmers must work off the land in order to keep the family together and the farm going.
I would note as well that most of us who live in the cities hold only one job. We do not need to hold two jobs to keep our families together; nor is our major investment, our home, subject to capital gains taxes. All of these big wonderful mansions in which we all live are capital gains tax free. We should expect at least the same type of consideration for the farmer's major investment, the farm.
I have no doubt in my own mind, and I think most Members agree, that capital gains taxes in fact destroy the family farm. I believe that the family farm is critical if we who live in the cities want to continue to have such cheap food. However, 1 hope that food will become more reasonably priced because it is unreasonably cheap right now.
The family farm is clearly the most efficient kind of farm. You will get a great deal of work out of the man and his wife who have a dream of developing a piece of land and passing it on to their children. They will work 18 or 20 hours a day winter and summer in order to keep that farm together and pass it on to their children. It is also best for the land itself. Huge corporations with professional management groups have employees who are not committed to the land. We will never get the same degree of conservation and preservation from them as we do from the family farmer who walks on his land every day and becomes deeply attached to it. If we destroy the family farm, we in the cities will pay far, far more for food than we pay today.
The Parliamentary Secretary for the Minister of Agriculture (Mr. Blais) may rise and point out that there are rollovers. It is true that there are roll-overs, but the roll-overs have become a trap because the tax will ultimately have to be paid. Six generations down the line, some descendant might have to pay the taxes for six generations. That will drive virtually all of the land out of production. As well, it blocks the farmer's ability to pass his land as an economic unit on to a son or daughter who wishes to stay on the land, while at the same time remaining fair to the other children who must move off the land and take other jobs. It is absolutely impossible for a farmer to do that because the value of the land has gone way beyond its productive value as a result of inflation. A child inheriting a farm or buying it for its 1971 value simply cannot afford to pay the farm's present fair market value. The farmer cannot afford to transfer it at the 1971 value because he must do justice by his other children. It is a trap. As a result of inflation it is not working, and therefore it must be done away with.
The third reason is clearly one which a lot of people in the cities do not appreciate, and perhaps I do not appreciate it to its full extent. The reason for the abolition of the capital gains
[Stage Direction]
December 14, 1984
Capital Gains Tax
tax is to enable the people who live in the cities to continue to have land and food which is cheap. If we looked at the statistics we would find that on the average Canadians spend only 13 per cent of their disposable income on genuine home food. That figure rises to about 16 per cent if fast foods, such as McDonald's, are included. But for real food which is prepared and served at home, on the average Canadians spend 13 per cent of their disposable incomes. Europeans spend about 30 per cent of their disposable income on food. In centrally-planned economies, over 50 per cent of disposable income is spent on food. Therefore, we are not paying our farmers an adequate price for their products. Until we are prepared to do that, so that farmers can have a reasonable standard of living and can save enough money to pay capital gains taxes, we should, in all fairness, not charge the capital gains tax. It would be much easier to impose the capital gains tax on farmers if we were spending 25 per cent of our income on food, as do most other countries.
In summary, Canada has a small population which has an enormous responsibility to produce food for the world. The capital gains tax is affecting the production of food both domestically and internationally. I believe that the House should adopt the motion. It is a motion which calls upon Cabinet to consider the advisability of the abolition of capital gains tax on bona fide farm land. I hope it is a motion which my colleagues will accept.
Victor Fredrich (Vic) Althouse: Mr. Speaker, I am pleased to rise to discuss the policy of the capital gains tax. In addition, I am pleased that the Hon. Member for Leth-bridge-Foothills (Mr. Thacker) has raised the topic. I have no objection to a further study, but I am somewhat puzzled. The Hon. Member for Lethbridge-Foothills comes from the governing Party which made its policy on the capital gains tax very clear during the election campaign and prior to the campaign. That policy was for the total abolition of the capital gains tax on farm land.
In the economic statement the Government indicated that it would immediately study the question of the capital gains tax along with other taxation matters respecting Section 31 and agri-bonds. I am wondering if the Hon. Member has not picked up some vibrations, being a member of the caucus, which would indicate that there is some foot-dragging going on regarding this promise. Is the Government going to change its policy? Is it having second thoughts? Does it not think that its mandate was clear? Are 211 seats not enough? Did the people of rural Canada not speak and tell the Government that they were prepared to have a change in the capital gains tax legislation? I know the Hon. Member is very experienced and very good at picking up vibrations. I think he must have been getting some bad vibrations from his colleagues in caucus. We in this Party would be pleased to help push the process to change the capital gains tax legislation.
While the rhetoric on the election hustings was very clear, the Prime Minister (Mr. Mulroney) and virtually every Member who was elected said that they would immediately do away with the capital gains tax upon election. It was one of the
Government's prime planks in its platform for farmers. However, upon election, the action which it took on taxation was simply to introduce a Liberal proposal. It did not provide exemptions or tax relief. It simply introduced a policy which would permit up to $120,000 worth of RRSPs. That is not an exemption or abolition of the capital gains tax; it is a method of extending the tax. By extending the tax, it avoids it from one year to the next and delays it, rather than abolishes it.
The Government says that it is prepared to look at the policies which it espoused. Did it not do a study prior to making those promises, as was done by our Party? Did it not look at the effects of the policy beyond a straight abolition? Did it not look at the effects it would have on communities, family farms and the provinces? Did it forget that such a move on taxation would affect the provinces? Did it not consider the potential for inequity in the total exemption of the capital gains tax?
I suppose it is necessary to have a study. It is a shame that we must have after-the-fact studies to justify a policy which was fought during the election campaign. I would hope that the Progressive Conservative Party would do a little homework on its policies and election promises so that it would be aware of the effects of what it is advocating before it goes to the hustings, instead of waiting until it finds that it cannot in good conscience carry out the promises upon which it was elected.
For example, does the Government not realize the effects a total exemption would have on windfall profits for some land holders? We assume that the policy is to help farmers, but how would the Government monitor it? How would it ensure that it is only permitted in cases where the land is being kept in farming? How would the Government determine who is a bona fide farmer?
I have heard several of the Hon. Member's colleagues argue that the abolition of the capital gains tax would reduce land prices. That argument avoids common sense and economic logic. However, on the hustings they argued that if there were no capital gains tax, farmers would sell their land at lower prices and therefore the cost of food would decrease. That is the first economic theory I have heard which suggests that the price of land in a free and open market-which I contend we have-is set by the seller rather than the buyer. The buyer determines what will be the price and the seller will take that price whether or not there is a capital gains tax.
It is quite clear that the existing law is inequitable as it applies to roll-overs within families. Not all families are so simply structured that they are made up of one or two children who want to share in the family farm. In most cases, the roll-over is extremely simple. They can avoid the capital gains tax because the transfer can take place directly from the parents to the children. Our law currently says there will then be no capital gains tax. However, when there are more than one or two children, and some children who do not particularly want to farm, it is very difficult to establish a price and a fair sharing of the assets of that property, particularly in cases where the parents have died and willed the property to some of the children and are hoping that the rest of the children will be
December 14, 1984

provided for by whoever takes over the farm with a monetary settlement. In those cases, depending on the method of the transfer, there are sometimes very real hardships created for the people who have chosen to stay on the farm.
There are questions about the total exemption policy which the Conservatives had been advocating on the hustings and from which they seem to be backing away. Do people who have bought land for speculation within the last ten years qualify equally with those people who have farmed for 30 years, 40 years or 50 years? Those johnny-come latelies, the whiz kids of the investment community in rural Canada who, just in the last ten years, have been able to realize four times, five times, and sometimes as much as ten times their investment, do they get a full exemption for their rather shallow commitment to agriculture when compared to the people who have invested a whole lifetime? That question was never addressed in the full exemption policy. I believe it would be quite unfair to provide what would be a windfall profit to some whiz kid investor which is not provided for as a pension to someone who has committed his or her whole lifetime to agriculture.
I believe, therefore, it is clear that the full exemption policy which the Conservatives ran with in the election campaign has some very real shortcomings. We had recognized those shortcomings, Mr. Speaker, in the policy which our Party presented to the people of Canada. We had done our homework and suggested a couple of changes which we thought would have been more equitable and realistic. First, we suggested that one of the basic problems with the capital gains tax, and one of the largest inequities as it is applied across the country, stems from the fact that the valuation day was set at the end of 1971. The reason that is an inequitable time to start is that some regions of the country in 1971 were very depressed with respect to the farm scene. The prairie regions had extremely low land prices in 1971 as compared to land prices in other parts of the country where there were livestock and mixed crops. The capital gains tax, as a result, fell more heavily on prairie farmers than on farmers in other regions of Canada. We had proposed to change the valuation date from the end of 1971 to the end of 1976 because 1976 was a period of time when the various regions of the country had land prices more or less at equity.
We had also suggested that it was clearly necessary to recognize the fact that farm people do put their whole lifetime into their farms and that that is their only source of pension funds. We had suggested an exemption which would apply to all farmers of $100,000 of capital gain. The first $100,000 of capital gain which accrued between the sales price and the value at 1976 would have been exempt from capital gain. We had borrowed this suggestion, I have to admit, from one of the provinces which has already implemented such an exemption. Under the New Democratic Government of Saskatchewan, between 1971 and 1982 there was a $100,000 exemption on the provincial share of income tax generated because of capital gain.
Capital Gains Tax
That brings me to my last point, Mr. Speaker, the question which apparently the Progressive Conservative Party totally ignored during the election campaign and which it is now coming up against as it finds itself attempting to implement its full exemption of capital gains tax. It is a very fundamental question in a federation like ours. Can those Progressive Conservative Governments at the provincial level stand to take a reduction in their tax take because of a full exemption on all capital gains on farm land? Will those provinces do like the New Democratic Government did in Saskatchewan and provide exemptions, and will they go along with the full federal exemption? That question does not seem to have been asked of the various provincial Premiers. Perhaps that is why this Government is now dragging its feet on the promise it made up and down the byroads of rural Canada, to abolish capital gains tax on farm land absolutely and completely. I believe now the Conservative Government is beginning to come up against the reality of the fact that the provinces do not seem to be particularly enamoured of the proposal. It has not taken into account the very real possibility of windfall gains for people who have dedicated very little of their working lifetime to agriculture. It does not know how to deal with the problem of land being taken out of agriculture. How is that monitored? The Conservative Government is opposed to that sort of monitoring through FIRA or any investment agencies. But it seems quite clear that if land is going to stay in agriculture, there will have to be some sort of follow-up agency to make certain that that is in fact the case when land changes hands and the capital gains tax is avoided.
Finally, I should say that I have no objection to seeing this motion go for further study. I am just very sorry that so little homework was done by the Progressive Conservative Party before it went to the country with such an over-all policy prior to the introduction of which so little preparation had been done.


Don Boudria: Mr. Speaker, I am pleased to participate in the debate on this motion. I believe the motion is very well intentioned, Mr. Speaker, but I must point out one flaw in it which is of concern to me.
The motion addresses itself to the topic of abolishing capital gains tax on bona fide farm land. The problem is, Mr. Speaker, that not all bona fide farm land is owned by bona fide farmers. The difficulty I have, Mr. Speaker, is that being on the outskirts of the city of Ottawa, my own constituency is a very large agricultural area. Nevertheless, we see the urban sprawl coming closer, and I am sure that is the case in the area surrounding most cities. There are large tracts of good farm land classed I, II, III and IV agricultural land, which is presently owned by major developers. In some cases that land is owned by developers and leased or rented back to farmers to grow crops on, although that is not always the case. We could argue that good agricultural land should not be used for development purposes. However, we will leave that debate for the legislators of the Province of Ontario. That debate has gone on for a long period of time.

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Capital Gains Tax
However, there is a considerable amount of good farm land owned by developers. Although l want to see bona fide farmers get the benefit of selling their land without having to pay capital gains, i certainly do not want to see large developers get that same benefit with the land they have rented out to farmers. Consider the situation of a developer leasing land back to a farmer for a number of years. We are trying to help the farmer through this. In this particular case the farmer is still working the land but someone else will get the deduction when it is sold. That particular proposition concerns me.
I recognize the good intentions of the resolution. If this were ever to be incorporated into a Bill it would have to be tightened up considerably to ensure that we do not give that type of benefit to very large developers. As we all know, Canadian businesses now receive considerable tax breaks of various sorts. In this resolution we are trying to give a break to farmers. I would hope that this break would not end up benefiting large companies which have very little, if anything, to do with the farming process. In many cases those same concerns are responsible for taking farm land out of production eventually.
A resolution similar to this was introduced in the House some time ago by a Liberal Member. I have in my hand an editorial from the London Free Press of October 3, 1983. It comments on a similar resolution which was placed before the House by the then Member for Essex-Kent, Mr. Robert Daudlin. This article indicates that Mr. Daudlin had brought forward such a resolution, but it had another feature in it which I think is very interesting. It provided that it would be a one-time exemption from capital gains tax to farmers of the country. That is not perfect either, of course, because you could argue that farmers often own many tracts of land. If they sell one portion and take advantage of the deduction at that time, when they sell another parcel of land in the future, perhaps a larger portion, they would not be able to get the benefit of the deduction. Although that particular proposition was not perfect, the intent was good.
I am rather surprised to hear about all these tax breaks right now, Mr. Speaker. I am surprised because during the election campaign we heard that the Government wanted to do all things for all people. I am sure you will recall that, Mr. Speaker, being the non-partisan person that you are. Since the election we have seen the exact opposite from the Government. We have seen indirect taxes introduced. In the expenditure and program review document which I have in my hand the Government introduced new taxes. They are called "increased revenue generation". If that isn't newspeak for taxes, I don't know what it is. I find it very interesting that the Hon. Member would bring forth this kind of resolution at a time when we are seeing only increases in taxes from the Government.
I will read some of them to you, Mr. Speaker, because I am sure you would be very interested to know about this doubletalk on the part of the Government.
[ Translation]
For instance, under "cost recovery" we see that the Government's agricultural services sector will have an additional cost recovery of $32.3 million.
In other words, Mr. Speaker, this means that taxes for farmers will go up by a total of $32.3 million. I think the Hon. Member could also have suggested in his motion that the Cost Recovery Service, as proposed in the Expenditure and Program Review, not be implemented. I think this is extremely important if we want Canadian farmers to save money, because although the Government made the promises mentioned earlier, for instance to remove the tax on gas, which it did, in part, and so on, on the other hand, it has given and it has taken away, as I indicated in the House a few weeks ago when we had a debate on this subject.
Furthermore, we see that a number of expenditures earmarked by the previous Government for various farm programs have also been eliminated. This means that many benefits offered farmers by the previous Government have in fact disappeared, for instance, the Canagrex Corporation, which will shortly be disbanded by the new Government. This corporation which was to have been involved in farm product marketing, Mr. Speaker, would have been of benefit to many Canadian farmers. However, this Government has, once again, chosen to make Canadian farmers a present of cutbacks and tax increases.

Having said that, I want to return to the resolution, recognizing the shortcomings that it has. In my view it should also talk about those other hidden taxes which I mentioned a moment ago. We heard members of the New Democratic Party say that the capital gains tax should be removed for those who are re-investing the money in an agri-bond type of scheme to ensure that the money stays in farm-land. They say that in those particular instances we should forgo the capital gains tax for farmers.
I see a problem with that, Mr. Speaker. Many people are able to take funds from registered retirement savings plans and invest them however they like as long as the plan is registered. Under that particular scheme the farmer would not be able to do that. He would not have the same benefit that many other citizens have. In adopting this motion we should ensure that the forgoing of the capital gains tax should not necessarily be linked with the agri-bond issue. Of course, Mr. Speaker, there should be some encouragement for investing funds in agribonds, if and when the Government finally decides to put that particular proposal into action. I do not think it should be a condition that farmers must put their funds in agri-bonds in order to get the benefit of not paying the capital gains tax. There are other methods of doing that which we could debate in the House, but I do not think that should be a condition.
December 14, 1984

I also think that farmers who own larger farms should be entitled to the same feature rather than just those with farms worth $100,000 or less.
Again, let us relate this to registered retirement savings plans for a variety of people. Let us assume that someone invests $3,500 a year in the savings plan for 35 years of their working life. The money they will have will exceed $1 million, including interest. Why should we give benefits to farmers that only amount to $100,000 when others have far greater benefits with respect to their retirement?
Of course, it could be argued that funds from the sale of farm land could also be put into a registered retirement savings plan so that farmers could enjoy that same benefit later.
While that may be true, we must remember that, in the case of farmers, their retirement planning pretty well takes place only once, that is, when they take the funds from the farm to invest. Since they do this at a later stage in life than those who invest in RRSPs beginning at the age of 25 or 30, it is usually a different method.
In other words, I believe farmers should be able to benefit from this particular clause not only for the first $100,000 but for a larger amount. I am sure that others could respond by asking what one would do in the case of large corporate farming concerns such as Heinz. Should they be able to benefit in this way? Of course, the answer is no.
On the other hand, those farmers who jointly own a few hundred acres of land with their sons for a dairy or other operation should be assured that the funds are available all at once without capital gains in order to benefit the maximum number of people.
When discussing this Bill today, we should remember that this issue is really on the periphery of the whole question of agriculture. I am concerned that while we spend time discussing issues such as this, which are not the most important questions facing agriculture, we may be digressing from the real concern facing all farmers, which is the availability of long term financing and the lack of adequate revenues for our farmers.
Last weekend I read an interesting paper on farmers' equity that was prepared by one of the major banks. There is a certain school of thought that perhaps some farmers were the cause of their own demise as a result of spending too much or purchasing more equipment than they needed. Certainly there are studies which do not confirm that belief. As a matter of fact, farmers still have a fair amount of equity in their farm, but the problem is that they never know what interest rates they must deal with. Mortgages are renewed on a very frequent basis now rather than the long-term financing that was available at one time in this country.
Perhaps we should concentrate more on discussing longterm financing, which was also promised by the Government during the election campaign. While today's topic is an impor-
Capital Gains Tax
tant issue, it is peripheral to the central issue of long-term financing and adequate revenue generation for our farmers. Those are the two most important issues that we should address.
Last weekend I had the opportunity to meet with members of our local Federation of Agriculture. They gave me a copy of a brief which they presented to eastern Ontario members of the Conservative caucus. Their brief outlines a variety of promises that the Conservative candidates made during the election. The farmers commented on these promises during my meeting with them. It was their opinion that the two central issues facing farming today, at least for the farmers of eastern Ontario, were those involving financing and revenue generation.
When I asked specifically if capital gains should be directly connected to the agri-bond issue in the way I described earlier, it was their view that it should not be and that farmers should be able to take their money out of farming when they retire, without having to put it back into an agri-bond in order to get the capital gains exemption we are discussing today.
I am in favour of this particular resolution while recognizing that it must be done in such a way as to ensure that the farmers rather than large corporations benefit from it. I also recognize that there are other issues in agriculture which we should be addressing as a priority rather than this issue.


Mr. Geoff Wilson (Swift Current-Maple Creek):: Mr. Speaker, I wish to make a few remarks. First, many of my constituents will welcome this Bill that was introduced by the Hon. Member for Lethbridge-Foothills (Mr. Thacker). With regard to the previous speaker, I would point out that any reference to agricultural land in this Bill is land sold for continued agricultural use. That should be understood throughout. It is the policy of this Party and I am sure it is the import of the Bill we are speaking to today.
In the interest of some stability and because many people acted in good faith on the RRSP proposal, our Government decided to carry on with it, pending a report of the soon to be formed committee to study a number of aspects relating to farm financial matters. These matters include Section 31, capital gains and agri-bonds.
I was particularly interested in some remarks made by the Hon. Member for Humboldt-Lake Centre (Mr. Althouse) with respect to Saskatchewan. The farm capital gains problem is relatively more acute in Saskatchewan and it has been exacerbated there because our friends in the NDP had a land bank program in the Province of Saskatchewan which helped to drive up land prices drastically. In their lust for collectivization, or state ownership of land, they taxed Saskatchewan farmers and used their tax money in order to outbid them for land. To add insult to injury, they turned around and leased that land to their friends for rentals which were well below the fair market value. Perhaps it is the NDP who should do some homework when talking about this issue.
The first relief in regard to capital gains should go to the farming community by virtue of their unique position as price

December 14, 1984
Capital Gains Tax
takers. The farmers' costs are rising rapidly while their returns are diminishing as a result of exposure to the world market. The resultant cost price squeeze has placed many farmers in serious financial difficulties.
Many older farmers would like to retire at this time but are caught in this classic Catch 22 situation where they cannot afford to carry on yet cannot afford to sell either. Certainly, the abolition of capital gains on farm lands for continued agricultural use will enable that older farmer to secure enough for his land to retire with some dignity yet to permit land transfer at a price that a young purchaser can expect to repay.
I have no hesitation in supporting the Bill put forward by the Hon. Member.


Mr. G. M. Gurbin (Parliamentary Secretary to Minister of the Environment):: Mr. Speaker, before I make a few brief comments I would like to recognize the very capable and able way in which the Hon. Member for Lethbridge-Foothills (Mr. Thacker) brought forward this motion and presented it to this House with his explanation. I have known the Member for a number of years now and I know that he has a constant and genuine concern about all agricultural financing but particularly this area. He has great expertise that he can share with others in this House, and we will all gain from his input to this debate.
There is no question that the concerns raised by all Members who have participated in the debate today are real and genuine. There are serious problems in agriculture and serious concerns have been expressed in the House of Commons today. Solutions to all the problems of agriculture, obviously, are not to be found by adjusting the tax laws that apply to farmers. However, like other Members I welcome the proposal of the Minister of Finance (Mr. Wilson) to invite a parliamentary committee to study some of the important taxation issues affecting agriculture. The taxation of capital gains on farm land is one of these issues. In his November 8 economic and fiscal statement, the Minister also said he will be seeking the views of the committee on the complex issue of the taxation of part-time farmers and on the proposal which has been under discussion for some time for issuing agri-bonds as a way of reducing interest costs of investments in farming.
The House has before it a motion and there has been debate on it by the Hon. Member for Humboldt-Lake Centre (Mr. Althouse) as to why we should have to discuss this issue. But let me say to the Hon. Member that he cannot have it both ways. The Minister of Finance has already indicated in his November 8 statement, as was mentioned by a previous speaker, that we are stopping certain taxation measures on farm fuels. This results in a net return to agriculture of nearly $100 million. That is a significant effort taken in the first economic statement which this Government has made. A number of other significant things have happened. Through the economic
statement, the Minister opened up the process. Comments were made during the election period, but even in the comments made here, regardless of how we approach it, we have been criticized severely for not having the level of consultation and co-operation on the one hand, and, on the other hand, we are being criticized here today for not acting post haste in coming forward with issues that have a significant impact on the entire agricultural community. In opening up this process and in bringing forward these issues into a special committee or a standing committee of the House, which is expected to bring back recommendations and to have considered this and other important agricultural financing issues, the Minister will be in a position prior to his next budget to do the kinds of things that are important to agriculture.
I think those are the two sides of the coin, Mr. Speaker. In balance, the Minister has attempted in short order to try to provide the opportunity for input and discussion that I think all Members of this House would like to encourage and support.
With that I would like to offer the support of the Minister of Finance and the Government for the motion presented by the Hon. Member for Lethbridge-Foothills. With the co-operation and understanding of other Members of the House, who I hope will be of like mind, we would like very much to see this motion referred to the appropriate committee.


George Baker: Mr. Speaker, as I understand it we have until 5.07 p.m. before the House adjourns, that is two minutes from now. I do not think that any Member of this House wants to delay the question put forward by the Hon. Member for Lethbridge-Foothills (Mr. Thacher) who is simply reminding the Government of one of its many promises. The P.C. commitment to agriculture is, "to ensure financial stability for the agricultural community. We will abolish ..That is not "shall" and not "perhaps" but, "we will abolish the capital gains tax on the sale of farm property for continual agricultural purposes". The Hon. Member for Lethbridge-Foothills is simply nudging the Government and the Cabinet. He is reminding them that they made that commitment. I think each Member of the House supports the resolution which he put forward today in the manner in which he has always performed in this Chamber on behalf of his constituents.


The Acting Speaker (Mr. Paproski):: Is it the pleasure of the House to adopt the motion?


Some Hon. Members:: Agreed.
Motion (Mr. Thacker) agreed to.


The Acting Speaker (Mr. Paproski):: The hour provided for the consideration of Private Members' Business has now expired.
It being 5.07 p.m., this House stands adjourned until Monday next at eleven o'clock a.m., pursuant to Standing Order 2(1).
At 5.07 p.m. the House adjourned.

Monday, December 17, 1984