1985-12-02

[Stage Direction]
The House resumed from Friday, November 29, consideration of the motion of Mrs. McDougall (for the Minister of Finance) that Bill C-84, an Act to amend the Income Tax Act and related statutes and to amend the Canada Pension Plan, the Unemployment Insurance Act, 1971, the Financial Administration Act and the Petroleum and Gas Revenue Tax Act, be read the second time and referred to a legislative committee.
Mr. Don Boudria (Glengarry-Prescott-Russell):: Mr. Speaker, I am pleased to participate in this debate this morning, a bright election morning in our country. 1 notice that perhaps quite a few members of the Conservative caucus are busy helping out their colleagues, the Pequiste Conservatives in Quebec.


Mrs. Mailly:: On a point of order, Mr. Speaker.


Mr. Deputy Speaker:: The Hon. Member for Gatineau (Mrs. Mailly), on a point of order.


Claudy Mailly: I hope we are not going to waste the whole morning hearing about the pet peeves of the Hon. Member for Glengarry-Prescott-Russell (Mr. Boudria), and that he will confine his remarks to the subject before the House today, namely, a Budget Bill.


Mr. Deputy Speaker:: I am sure the Hon. Member for Glengarry-Prescott-Russell knows the Standing Orders very well.


Don Boudria: Thank you, Mr. Speaker. I notice that the remarks of the Hon. Member for Gatineau (Mrs. Mailly) are as useful as always, and I shall give them the consideration they deserve, that is to say, 1 shall ignore them. I do intend to speak to Bill C-84, and I may say, in passing, that I do not blame the Hon. Member for Gatineau for being offended at my reference to the Pequistes Conservatives, her friends in Quebec, because if I were in her shoes, I would not be feeling very comfortable either, because they are obviously going to get "clobbered" later today, and-


Claudy Mailly: On a point of order, Mr. Speaker.


Mr. Deputy Speaker:: The Hon. Member for Gatineau (Mrs. Mailly), on a point of order.


Claudy Mailly: Mr. Speaker, the Hon. Member's speech is still far from relevant, and 1 wish he would show us the courtesy he seems to be very reluctant to display in this House.


Mr. Deputy Speaker:: The Hon. Member for Glengarry-Prescott-Russell (Mr. Boudria) may proceed.


Don Boudria: Mr. Speaker, 1 hope I can make my speech without constant interruptions from an Hon. Member who has so little to say.
In any case, let us proceed with Bill C-84, which our party is very reluctant to approve. Although we agree there have been some technical changes in the Bill which may be beneficial, the Bill also contains certain policies which are quite offensive and in some parts I would say even repugnant. Again, this may be why some Conservative Members are feeling very uncomfortable this morning.

Let us talk about the child tax exemption provisions of this Bill. Just in case the Member for Gatineau (Mrs. Mailly) has not concluded that that is part of the Bill, I will remind her so that she does not stand up on another point of order. This Bill will gradually decrease the child tax exemption from $710 in 1986 to $560 in 1987 and $470 in 1988. If you couple those child tax exemptions with other provisions of the same Bill, mainly the provisions on the child tax credit, you will see that a situation has been created in which the poor people of the country will be getting less and less, and the rich people, the friends of the Conservatives, will be getting more. This is not simply empty rhetoric, Mr. Speaker. I will give you tangible proof of what I am telling you.
Let us look at the net annual benefits for a one income earner family with two children under the age of 18 residing in the Province of Ontario at certain income levels. A family such as I have described earning $10,000 a year received a total of $1,540 in 1985 and will receive $1,888 in 1988, a very small increase indeed. A family earning $60,000 will, at the same time, lose approximately $200 under these provisions. Looking at that measure on the surface one could say that perhaps it is not so bad. However, when you couple this with other provisions of the same Bill and other Government legislation such as the capital gains tax exemption, you see how unfair it really is.
The capital gains tax exemption clearly benefits people at the upper end of the income scale while penalizing those at the lower end who obviously cannot take advantage of the capital gains provisions. You see, Mr. Speaker, one of the prerequi-

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sites for gaining on your capital is that you must have capital to start with. Obviously, if you are trying to struggle to maintain a family of four on $10,000, $15,000 or $20,000, there is simply no capital left over to increase in value. 1 am sure that the Conservative Members sitting on this side, who appear to be very reasonable people even though they are Tories, can understand that. I hope that they will take the position of our caucus on this Bill. The net effect is that after four years a family of four earning $15,000 a year will have lost some $400 or $500. However, a family of four earning $200,000 a year will have a benefit of roughly $2,000 at the end of that period. Where is the social justice from a Government that believes in that kind of approach?
I believe that the Minister of Finance (Mr. Wilson) perhaps best described the word "Conservative" in Progressive Conservative during a speech last fall. He emphasized the meaning of Conservative when he said that this country had a shortage of rich people. That is the reasons he gave for part of our financial difficulties. However, I see it somewhat differently as a Liberal. It is not the shortage of rich people that concerns me but the surplus of poor people. I am not worried about a shortage of rich people because they can look after themselves. However, it is those many people who are living below the poverty line about whom we should be concerned and whose lot we should try to improve. While the Government likes to take much of the credit for lower unemployment, I remind Hon. Members that most of the jobs that have been created are only part time and short term. At a time when we still have very high unemployment, with hundreds of soup kitchens across the country, we should be more concerned about the plight of our needy rather than the shortage of rich people which seems to concern the Minister of Finance so much.
I am disturbed about other provisions of this Bill. For instance, there is the cancellation of the Registered Home Ownership Savings Plan, or RHOSP. I believe that this was a very good program which was beneficial to young people. A young family who could afford to put money away were able to receive a tax advantage under this program and, after saving a substantial amount in a Registered Home Ownership Savings Plan, could use those funds to buy a home of their own. It is a very worth-while investment and that plan helped thousands of people, mostly young people, to own their own home.
Of course, the Government says that it wants to encourage the private sector. Its first step was to cancel a program which aimed to make homeowners of a number of Canadians, particularly young Canadians. This seems to run contrary to that Tory policy. Perhaps the Tories abandoned this measure because it had a certain element of social justice which was contrary to Conservative policy.
After the federal-provincial conference in September 1985, the Government indicated that it wanted to withdraw from making housing policy and hand it over to the provinces.
Perhaps therein lies the reason for the cancellation of the Registered Home Ownership Savings Plan. It was the Government's view that it should not provide small tax benefits to enable people to own their own home because it was not a federal responsibility. Perhaps that is the view taken by the Conservatives in this debate and the reason this program was cancelled. If that is not the case, I certainly hope that a member of the Conservative Party who is knowledgeable about these issues will clarify that position. Perhaps that Member could explain why the Tories have decided to cancel a very worth-while home ownership savings plan.
The Liberal Party believes that the whole issue of housing is indeed an important one in which the federal Government should be involved. It is a national issue and the federal Government should work with the provinces in developing a housing policy. It is not appropriate for the Government simply to abandon this policy.
There seems to be a general view held by members of the Conservative Party that the country would run better without Government interference. Perhaps they were elected in the belief that they should not govern, as opposed to being elected in order to govern. Of course, that is unacceptable because the Government must be involved in leadership. A Party that is in power must provide good Government, not necessarily no Government at all.
We do not know what the Government will do with the funds that it will save a result of cancelling the RHOSP. Perhaps it will find ways to bail out more banks or other small interest groups. Perhaps it will even use the money to increase the number of rich. However, I can wager that the Government will not use the funds to decrease the number of poor.
I also want to talk briefly about Registered Retirement Savings Plans. Many Canadians are now saving funds for their retirement years through these savings plans. I think that it is generally a good means for people to put money aside for their retirement years. It will assist them in gaining independence for as long as possible so that they will not be a burden on others and will have as well a very worth-while feeling of being able to take care of themselves.
I notice that the Government has decided to increase the amount which will be eligible for contribution under RRSPs. While I believe that is worth-while as well, there must be a limit so that the RRSP remains a useful retirement measure as opposed to something which will amass large amounts of capital beyond the mere necessity of providing for one's retirement. Therefore, I express some caution about increasing those amounts by an unduly large amount.
The Government has decided that a person presently on a pension can no longer take pension receipts and invest those in a spousal Registered Retirement Savings Plan. That may sound a little complicated but it is not. The provision is disturbing, particularly for women. In the past, many men at retirement age who had a younger spouse would contribute toward a spousal RRSP, using the receipts of the funds that they had. It is my understanding that this will no longer be possible under the new method. I have received over a dozen
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letters from constituents, particularly men with somewhat younger spouses, who are rightfully concerned about this proposal. We know that the life expectancy of women is considerably longer than that of men-some seven or eight years. Of course, this realistically means that women, especially if they are younger than their spouse to begin with, will be around significantly longer and will have to provide for themselves for many years. That being the case, the Government should ensure that the provisions of Registered Retirement Savings Plans encourage contributions in order to provide for women who will be alone for a number of years in the future, at least in all likelihood, once their spouses have deceased. This provision of the Government should be corrected.
1 should like to speak briefly about small business bonds, another provision of the Bill. It is a good measure to assist businesses in difficulty. The farm sector has been the recipient of small business bonds, which of course assist farms subjected to severe financial duress. Farmers could borrow funds from these bonds at a lower rate of interest, and the funds which they were borrowing were not tax deductible in exchange. That procedure has been of benefit to some. However, something is missing. The Government, in its summer election platform, made a number of promises to the agricultural sector. I may have referred to some of its promises once or twice before, but in the event that I forgot this one, I should like to refer to the document entitled 338 Tory Promises. The third promise under Agriculture reads as follows:
Allow the Farm Credit Corporation to offer agri-bonds so that farmers will have access to reasonably priced funds.
The Government has totally forgotten its commitment to farmers with regard to agri-bonds. We could say that it has forgotten about farmers altogether; that would probably be a far more accurate statement. In any case, it has completely forgotten this particular promise, along with other promises which it made, particularly with regard to Section 31 of the Income Tax Act. I remind the Government about its promises and ask: Why are those promises not kept in this Bill?
Unfortunately my time is drawing to an end. I invite Hon. Members to participate in the debate as it is a very important issue. In particular, I invite Conservative Members to rise and fight for their constituents who are being subjected to terrible injustice in the Budget of the Minister of Finance.


Mr. Tom Hockin (London West):: Mr. Speaker, it is a pleasure to rise to speak on this Bill. It is one of the most important ones with which the House will deal this year. It raises key questions of principle, some of which were raised by the Hon. Member for Prescott-Russell in a gingerly way.


Don Boudria: It is Glengarry-Prescott-Russell.


Thomas Hockin: I should like to make three or four major points about the Bill in order to help clarify for the Hon. Member why we are not too concerned about his worry as to whether or not we agree with him.
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The Conservative Government of today is trying to raise different questions in a more eloquent way and to implement programs which answer questions that the Hon. Member never considered asking. First, I think about the vocabulary of the Hon. Member when he talked about helping the poor. His way of helping the poor would be to generate more and more direct government programs to create jobs.
Let us look at what the Government has done in the past 15 months. It has created 343,000 new jobs through letting the private sector operate effectively, through lowering interest rates and through allowing the great battery of business creativity in the private sector to charge the engine. That is the program which creates jobs, but the Hon. Member looks to Government programs to create them. Government programs can do some things, but nothing like the 343,000 new jobs created through the private sector and through the approach of the Budget.
The Hon. Member spoke about the plight of the poor. He likes to appropriate that issue to himself and to appropriate his great concern for the poor to being a very special quality of the Liberal Party. If the Liberals were so concerned about the poor, why did they not do the number of the very effective things which are being accomplished by this Bill? For example, we have abolished income splitting through low interest loans, as well as tax shelters for the use of yachts and recreational vehicles. These abuses were created by Liberal Governments and sustained by them, to the detriment of the poor. There are many more examples.
Also we had an exposition from the Hon. Member on housing. His approach to housing would be to have a new program or to retain the old RHOSP. We should not have Government programs with the name "housing" just to say that we have housing programs. The Liberal way of governing for the last 20 years of 30 years was to pass legislation which was essentially an expression of sentiment. The Bill would contain the right words but in practice it accomplished very little for the target group. Our approach to housing was not to produce yet another piece of legislation which sounded as if it were propitious for housing. We lowered interest rates. No one would rise in the House and say that lowering interest rates hurts housing. According to the latest figures of last week,
196,000	new units are being constructed, thank to low interest rates and thanks to the approach of the Budget, compared with half that many when we were first elected. In our housing policy we lower interest rates and back it up with philosophy in a Budget which gives investor confidence to build housing. Our approach is not to implement new alphabet soup RHOSP and call it a new housing program or to keep RHOSP just for the sake of keeping it.
The Budget tries to change the whole vocabulary of political debate when it comes to public policy. The Budget talks about incentives, more than subsidies. Also it talks about providing for future generations as well as present ones, instead of just responding to the people who knock at the door of the Hon. Member for Prescott-Russell.

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Don Boudria: It is Glengarry-Prescott-Russell. The people of Glengarry are being offended.


Thomas Hockin: I thank the Hon. Member for Glengarry-Prescott-Russell (Mr. Boudria).
By changing the vocabulary of political debate, we are talking about future generations rather than the present ones. I will expand on that in a few minutes. We tried to change that vocabulary by talking about capital in a useful, public-spirited way. We have discovered-and 1 do not know why the previous Government had such trouble understanding it-that most of the new jobs being created in Canada were through petites entreprises, small businesses. When they obtain proper capital inflow, they can do amazing things and create a tremendous number of jobs. Women starting small businesses have especially benefited from the growth of the small business sector. That is a major part of what the Budget stands for.
First, we ensured that venture capital and RRSP funds could flow, as well as funds from other pools of capital which could never flow to small businesses before. They will now be allowed to flow, which will make an enormous difference. We are inviting the people of Canada and the Hon. Member for Glengarry-Prescott-Russell (Mr. Boudria) to ask this question: How do you get enough capital to small business so it can employ people? We are asking that rather than: How do we create yet another Government program to employ people directly for a limited time?


Don Boudria: It is the trickle-down principle.


Thomas Hockin: No, it is not. As a matter of fact, it is an immediate injection principle. You have heard about the turbo-charged engine? That is what we are talking about.
Investment, controlling the deficit, dealing with abuses and dealing with capitalization for small business are the major principles of this Budget. Speaking first about investment, I find that the position of the Opposition very often is that corporations exist simply to be taxed. Of course, corporations should be taxed, but they have a more important function in our national life. They should be the energy cells so that the economic engine can operate to increase the size of the economic pie. That is why we have brought in the very bold and useful lifetime capital gains exemption of $500,000. The Opposition has described this as a "giveaway to the wealthy". It does not know the people who can take advantage of this. They are not the wealthy.


Don Boudria: Are there all kinds of welfare recipients using it?


Thomas Hockin: There are people who would like to expand their business but cannot see much incentive to do so without this provision. There are people who would like to, perhaps, pass on to their children an expanded business but see no incentive to do so. This Bill gives them that incentive, and it is phased in so that it is not irresponsibly expensive for the
federal Government Budget in the first two years. It provides incentives rather than simply taxing for the sake of taxing.
The second major thrust of the Budget is against the deficit. All Members of the House are looking for a solution to this problem. However, generally we do not hear too many constructive solutions generally from the Opposition because it usually expresses concern only over a cut-back. We are trying to introduce a new set of questions, a new vocabulary, into this issue. We are trying to ask what is going to happen in 1995, only ten years away, to the youth and the aged? What will happen to the burgeoning number of Canadians over 65? We know the problems the Canada Pension Plan is having, how poorly funded it is. What happens to future generations if the deficit continues to grow at this alarming rate? Quite frankly, any Government will have its options limited in 1995 if all our taxes are going to service the debt. This Budget is an attempt to look after future generations by trying to modify indexation and cut back the rate of growth of federal Government spending. We are trying to change the whole concept of where federal Government money should go. It should be invested in the future, not just in the present.
The third thing this Budget tries to do, which I find particularly important and which perhaps has not been highlighted in the media as much as it should be, is to come to terms with legislation which sounds good but really does not accomplish very much. We have tried to do this, for example, in our treatment of the research and development tax credit, small business bonds and so on. What we need in Canada is legislation and spending programs specifically targeted to specific needs.
The fourth thing this Budget tries to do is to deal with the problem of capital starvation in small business. This is not an issue which concerns just The Financial Post or the Report on Business; it is something which affects everyone in every village and town in Canada. We are trying to provide streams of capital which can flow into small business. We have already seen almost a "jump start" to the economy in the last 12 months given the huge number of jobs which have been created. I suggest that the infusion of capital which this Budget will bring about in the years to come will help lower interest rates because it will mean less pressure on a small pool of capital; larger pools of capital will be created.
There has been in the past, in our approach toward small business, an attitude of condescension. The attitude has been that if you have a pension or are the holder of an RRSP, then do not invest in small business because it might collapse. To some extent that perception helped to prevent the growth of small business. They do not take this view in the United States. Down there it is sometimes the case that the smalller the business, the more attractive the investment opportunity. The changes we are trying to make to the investment ability of pension plans, RRSPs and others will encourage investment in small business and hopefully change that psychology.
What 1 am trying to suggest is that if we look at these issues differently, we will not worry too much about some of the problems which the Hon. Member for Glengarry-Prescott-
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Russell worries about. He worries about more Government programs with the right names on them. We are trying to change the focus. Let us not produce a Government program unless it accomplishes the purpose for which it is designed. Sometimes you can do that by strengthening the private sector, especially through increasing capitalization for small business. The best example we have of helping small business is the strengthening of the capital sector through lower interest rates.
In conclusion, Canadians generally feel that the $500,000 capital gains exemption will reward those who are willing to take a risk. What if it does not? What if we find that this whole program is not working all that well? We can change it. However, quite frankly, this program has been so well received and investment intentions are already in place to such a degree, that I suggest this will be perhaps one of the longest lasting elements of any Budget to date. As well, people worry about the validity of our efforts to create jobs through lower interest rates and less government participation in the economy. I invite them to look at our experience over the last 12 months. It is almost psychological. A great deal of what we are discussing here is not even in legislation yet, but the fact that we are intending to open up the economy to the private sector, has helped small business in our attempt to target social spending to those groups who need it. All this is already helping the country a great deal psychologically. It too has already had a good effect on the economy.
UO)
In conclusion, last night I was in Montreal and I rode a bus back to Ottawa at midnight. As you know, Mr. Speaker, leaving Montreal, the roads in the city are a bit rough and a bit slippery when it is raining as it was last night. The bus I was on was filled with a very precious cargo including many very fine Canadians, some of which were Conservative Members of Parliament returning from a dinner party in Montreal. The beginning of the trip was a bit slippery and a bit bumpy but within 10 to 15 minutes, we hit the high road and that precious cargo had a wonderful trip back to Ottawa.
The Budget started out with a few rocky months and a few bumps. We did not get knocked off the road but there were a few bumps. That will happen with any journey. The journey we are taking with this Budget has a cargo of immense value for Canada. The journey is now becoming extremely smooth because the people of Canada realize how important it is. Therefore, I commend this Bill to the House and hope that it receives speedy passage.


Don Boudria: Mr. Speaker, I would like to congratulate the Hon. Member for his fine speech on how to deal with rocky and bumpy issues. I am glad he acknowledged that the Tories have had a bumpy ride so far. However, if he thinks his rough ride is over, I have to tell him that the road ahead is a lot worse than the one he has just been on, particularly since the Tories have such a propensity for bungling.
I do have a few questions to ask the Hon. Member regarding his remarks as they pertained to this Bill. He talked about capital gains and said this would help just about everyone. I
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would like to know specifically how the welfare recipients of my riding will benefit from that particular measure. They are most interested in this measure and they want to know how the Hon. Member for London West (Mr. Hockin) thinks that the capital gains tax exemption will help the Government in its quest for social justice.
I would also like to know about the tax on the rich. Again, the Hon. Member said that we need to decrease the deficit. I agree with that in principle. Taxing the rich would go a long way toward achieving that goal. A promise was made, a promise which was broken, by the way, just in case you have not come to that conclusion yet, Mr. Speaker. What the Prime Minister (Mr. Mulroney) said in the House on this issue has been recorded by Hansard of November 22, 1984 on page 491 so it has to be true if the Prime Minister said it. He said:
The commitment I made that evening was to the minimum tax and to that sense of fairness that inspires both of us. We will follow through with regard to a minimum tax.
Is that not nice? He went on to say, in response to the Hon. Member who asked the question:
-I give him the assurance that it will be in the budget.
The Minister of Finance, in the Budget of May 23, said that he would be introducing a minimum personal income tax beginning in 1986 to ensure that high-income Canadians pay their fair share. Why is there a contradiction between what the Prime Minister said would be in the Budget right away and what the Minister of Finance said would not be in the Budget right away but would be delayed for one year? Perhaps the Hon. Member could tell us, which one of the two was stating what the Minister of Indian Affairs and Northern Development (Mr. Crombie) has called untrue facts? Perhaps he could tell us, which one of the two was not telling Canadians the whole truth and nothing but the truth?


Thomas Hockin: Mr. Speaker, I am very pleased to answer these questions. The Hon. Member for Glengarry-Prescott-Russell (Mr. Boudria) did not use the occasion of his recent remarks to respond to the questions I raised regarding housing and so on. Still, I am happy to answer his questions.
First, he asked me how welfare recipients will be helped by the $500,000 capital gains tax exemption. The answers to that question are legion. There are thousands of ways to answer that question. I think the most vivid answer is this one: last week, three constituents came to my constituency office and told me that they had a business which employed welfare recipients for limited periods of time to deliver things for them from door to door. They said that because of this particular capital gains tax exemption, they are thinking of expanding their business because they can see a future for it. They said that they could therefore hire more welfare recipients and could hire them for longer periods of time. There are thousands of combinations of that example that will occur because of this measure. It is the faith that will occur through stimulating small business in this way that will create the jobs rather than the approach of the Hon. Member.

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The second question he asked dealt with the tax on the rich. I am very pleased to answer that question. He knows we are going to bring in a minimum tax early in the new year. Second, he knows that we have brought in a surtax on upper-income earners, something the Liberal Government never did. Liberal Members-members of the Party that is supposed to worry about these matters-did not do anything but express rhetorical concern. We have done something practical by bringing in a surtax on upper-income earners as well as a surtax on large corporations. There will also be a surtax of 5 per cent on federal income tax payable by large corporations from July 1, 1985, to December 31, 1986. These are practical actions of equity and fairness. That is more than simply rhetoric.


Mr. Attewell:: Mr. Speaker, I would like to compliment my colleague, the Hon. Member for London West (Mr. Hockin), for some very direct and honest remarks about this Bill which truly is important. Perhaps the Hon. Member could expand somewhat on his remarks regarding the capital gains tax exemption. 1 do not believe he touched on the benefits to the farm community in particular. As well, I would like to stress the extreme importance that a Bill like this has on the investment climate in Canada.
The Conservative Party is a Party that believes in rewarding men and women who want to start up new businesses, and this type of approach has a great positive ripple effect on the economy. I would ask my colleague to expound on some of the thinking behind the capital gains tax exemption and particularly how it has been welcomed by the farm community.


Thomas Hockin: Mr. Speaker, I am very pleased to respond to that question. The effect on the farm community is immediate because the legislation has been much more immediate than it has been for measures affecting other areas of the economy. The farm community in Canada has also suffered enormously from high interest rates and we have come to terms with those. That together with the capital gains tax provision will be of enormous value to the farm community. Two of the key things that matter to the farm community, interest rates and capital gains, have both been tackled and ameliorated to a significant degree within a year.
London, Ontario, is surrounded by the great farm land of Middlesex County, Oxford County, Perth County and others. Issues affecting the farm community affect the City of London, a part of which I represent. I can see the economy of London itself coming back because of the improvement and because of the optimism which exists in the farm communities that surround the city. Of course, there are problems with some farmers who for one reason or another have debts with which they have difficulty dealing. The effect of the capital gains tax exemption together with lower interest rates will make an enormous difference to the entire agricultural community which surrounds my riding.


Don Boudria: Mr. Speaker, I am sure it is just an oversight on the part of the Member, but a little while ago I asked the Hon. Member why it was that there was a direct contradiction
between the promise of the Prime Minister to tax the rich this year and the promise of the Minister of Finance to tax the rich next year. Very briefly and in concise terms can the Hon. Member explain the inconsistency to us? Why was one of the two making statements which are, in fact, not true?


Thomas Hockin: Mr. Speaker, of course, there is an answer which should be obvious to the Hon. Member. It is the answer which has been given by the Government. The surtax which has been brought in with respect to upper income Canadians and large corporations performs that role in the interim. It will perform that role until we design a solution to a minimum tax which will work. The fidgeting and thrashing around in trying to approach the problem, as the Liberals did by bringing a Bill which they would wrap up and throw out-


Don Boudria: In other words, you do not know the answer.


Thomas Hockin: Just one minute. No one could make an investment in that type of unpredictable legislative environment. We will try to get it right, and that is why we will wait until 1986.


Mr. Deputy Speaker:: On debate, the Hon. Member for Ottawa Centre (Mr. Cassidy).


Mr. Mike Cassidy (Ottawa Centre):: Mr. Speaker, first, I would like to make a comment on what the Hon. Member for London West (Mr. Hockin) had to say. What he does not understand and what his Government does not understand is that if there is a surtax on individuals or corporations that earn high incomes their tax rate will be very low because of the abuses and loopholes in the tax system and that they will not pay anything at all. One of the serious weaknesses of the present Government is the fact that under pressure from the New Democratic Party it promised to place a minimum tax on the rich and close the tax loopholes which exist. However, in the year and a half during which the Government has been in office it has not done this. God knows when we will see any legislation in this respect. I fear that it will have no impact at all.
The major message of Bill C-84, the Bill which we are debating today, is that the Government is committed to opening up more tax loopholes and to providing more benefits for corporations and rich individuals as opposed to putting in place a fair tax system which members of the New Democratic Party feel we need in Canada. Canadians from coast to coast have been telling the Leader and members of my Party that this is what we should have.
I wish to speak about the process with respect to the Bill and then talk about the contents of it. The Bill was tabled last week on November 26. That was six months and three days after the tabling of the May 23, 1985 Budget. It is a disgrace that a Government which talked about trying to come up with new procedures in order to reform the budgetary process to make it more understandable and more effective should present us with a 235-page Bill and give us one day in which to
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debate it. This comes from a Government which talked about making Parliament more effective with respect to complex and extremely important matters such as the tax system.
On top of that the Government has indicated through its House Leader that it expects that the Bill will be made law before we rise at Christmas. Because of other problems which the Government has with respect to the prorogation of Parliament at Christmas, we will have no choice but to sit extra hours or do whatever is necessary in order to deal with the Bill if the pressure is put on in order to pass it. 1 say to Hon. Members that this is a lot of nonsense.
How can any Member of Parliament be expected to go through an extremely complex and lengthy piece of legislation and be knowledgeable about it in such a short time? The fact of the matter is that in the debate on second reading we talk about the major measures which were contained in the Budget of last May. We will not be able to get down to the nitty-gritty of the Bill. A legislative committee will be established and a handful of members will spend a few days discussing this legislation.
The Government has indicated that it does not fear using closure with respect to subject matters before committees in order to stifle discussion. Thus, the committee will come back before the House with a half-baked response to the Bill. At the behest of the Department of Finance we will end up making this piece of legislation law.
When the Government came to power it said it would change the way things worked in Ottawa. In fact, things are much the way they prevailed before. The Government has left bureaucrats in the Department of Finance to work out what every section of this particular Bill should stipulate. The Government has left Parliament with almost no time at all to comment and participate in any coherent and relevant way with respect to the Bill.
At the same time, the Minister of Finance (Mr. Wilson) tabled proposals with respect to improving the Canadian budgetary process. That budgetary paper acknowledges the complexity of the process. It talks about the need for reform. The Standing Committee on Procedure and Organization has been considering that very question. If the Government were serious about the question then it would have implemented what it could have done now. We would have seen the Bill some six weeks ago. We would have had a chance to gain some input from tax practitioners and from organizations such as the National Council on Welfare, the National Anti-Poverty Organization and others concerned with tax fairness. We have not seen a bit of that. All these groups are now being told that they have to run like hell if they want to have any input at all in terms of the legislative committee when it finally sits down to look at this measure.
I wish to recall for Members of the House the way in which we have dealt with the Budget up until this point in time. The initial debate involved the deindexation of pensions. 1 am proud to say that because of the pressure of millions of elderly and not so elderly Canadians, and because of the work of my Party, and to some extent the work of the other opposition
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Party, we succeeded in making the Government withdraw that extremely objectionable measure late in June. This was a measure which would have taken spending power away from senior citizens.
There are a great many other objectionable features in the Budget as well. Most of these are contained in the Bill which is before us. I wish to remind Members of the House, particularly those who sit on the Government side, that crow as they may about what they see as an improvement in the economic situation since September of 1984, it is a fact that we still have 1.3 million unemployed Canadians. It is a fact that our unemployment rate is 10.3 per cent. It is a fact that part-time work continues to increase and that many part-time workers are working part-time because no full-time work is available even though they would like to be working full-time.
It is a fact that the Macdonald Commission and the Government are trying to con Canadians into believing that 6 per cent or 7 per cent is the lowest level of unemployment which can conceivably be reached in Canada. It is a fact that the Government forecasts that unemployment will be down to only around the 8 per cent level by 1990. This means that one million Canadians will continue to be unemployed. I think it is outrageous that we should have a Government which is prepared to tolerate on an ongoing basis one million or more unemployed Canadians.
It is a fact that there is an increasing number of Canadians who, quite simply, are discouraged and do not even figure on the unemployment rolls. It is a fact and a scandal that tens if not hundreds of thousands of native Canadians living on reserves are not even counted on the unemployment rolls because it is said that they are not living in an area where jobs are available and, therefore, are not realistically looking for work.
It is a fact that Canadians are losing $40 billion to $50 billion in GNP annually because of the intolerably high level of unemployment which we have in the country. Members of my Party and I say that if we are really serious about bringing down the deficit and about ensuring a decent life for Canadians we would make unemployment the number one priority. That is obviously not the case when one considers Bill C-84 and the actions of the Government.
How can we get Canadians back to work? First, there is fiscal policy, monetary policy and industrial policy to be considered. Interests rates have been reduced because of what has taken place as a result of developments in the United States. This is the reason for housing starts being up from what they were before. It is the reason for the improvement we have seen in terms of investment. It is quite simply a fact that with interest rates down peole who rejected investments or house purchases a few months ago are now being able to consider the matter. The fact is that our interest rates are running at 2 per cent or 3 per cent ahead of those in the United States. The fact is that real interest rates in our country are still at the level of 3 per cent or more. They are far higher than they should be and no action has been taken by the Government to do anything about it.

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This past weekend I attended a conference in Ottawa on full employment. At this conference an economist, Michael McCracken, estimated that we could have an increase in employment of 500,000. Ele suggested that we could bring down the unemployment rate by 1 per cent, 2 per cent or more if we were to reduce interest rates by 200 basis points. He said that that would be very clearly conceivable and possible.
1 do not want to speak about industrial policy because of the amount of time available. However, with respect to fiscal policy the Government had a choice. It could have placed money into job-creating investments, but it has not done so. The Government could have ensured that fiscal and tax policy could be more efficient in terms of creating jobs but, instead, it has gone in the opposite direction. This is exactly what we see in Bill C-84.
1 find it almost laughable when the Minister of State for Finance (Mrs. McDougall) talks about improving the efficiency and effectiveness of Government by cutting waste. In this respect does she consider the payment to depositors of the Canadian Commercial Bank and the removal of obstacles to economic growth? A great many of these obstacles for ordinary Canadians is the fact that quite simply there are no jobs available. In this respect she also says that we should make better use of scarce and precious resources. Is that why the Government gave a huge tax hand-out to the Reichmann family for the buy-out of Gulf? Is that why the Government has been anxious to give hand-outs to Dome Petroleum? One has to ask that kind of question.
The Minister of State for Finance (Mrs. McDougall) talked about how the Government is building on the basic sense of compassion, tolerance and justice which is the essence and character of our Canadian people. That is good rhetoric and 1 congratulate the speech writers in the service of the Minister of State for Finance. However, they do not realize, as she does not, that when we take indexation away from the family allowance and when other measures are put in place which affect and hurt ordinary Canadians, we are surely not putting compassion and tolerance into our tax system. In fact, we are taking those things away.
If the Government had a real sense of commitment to fairness, we would have the minimum tax proposals in force right now. We would have a system which, instead of giving more to the rich, would undo some of the unnecessary and unreasonable concessions which came in in the 1982 Budget under the Liberals and which have been perpetuated under the present Government.
I would point out that the increases in the RRSP deduction proposed in this Bill are virtually certain to reduce aggregate demand in comparison with the situation in which the same tax dollars were used to either reduce income tax or to raise Government spending. Quite simply, the RRSP proposals are inefficient in fiscal terms. We save far more than do the Americans as a proportion of our Gross National Product. We save so much that in fact we take job creating demand away
from the economy. That is inefficient use of fiscal policy. It means that rather than helping people get back into jobs, the Government is hindering them.
Through the Western Accord, the Government is given lower tax revenues mainly from the production of old oil. There is no direct incentive to increase exploration by making new oil production more profitable. The bang for the buck, in fiscal terms, from that multi-billion dollar concession to the western oil companies would have been very much larger had the same number of dollars been spent in a way which increased the profitability of new oil production. In other words, this is a fiscal incentive which is not going to help directly to create jobs in Alberta and elsewhere in western Canada. We have to ask what would happen if we were to take $1 billion and, rather than giving it to the depositors-mainly foreign banks and large corporations-in those insolvent western banks we had used that money to fund municipal enterprise corporations or to fund buy outs of some foreign corporations which are seeking to close down here in Canada. What 1 suggest would happen would be far more job creation.
What about the abolition of the capital gains tax? Hon. Members of the Government are saying what a wonderful thing this is, despite evidence to the contrary from every credible economist in the country. This is total "pie in the sky" in terms of a useful and efficient fiscal incentive for the creation of jobs or for the stimulation of job creating investment. There will be some improvement and some incentive for small businesses as a part of this Bill, and some help for farmers. Those parts of the Bill are welcome. However, we are only talking about perhaps 10 per cent or 20 per cent of the total incentive. We are talking of $1 billion to be added to the deficit by 1990 on an annual basis because of this half million dollar tax concession on capital gains. And there is no guarantee that those capital gains will even be earned in Canada. It could be done, as my colleagues have said, in Texas or in the fine art market at Sotheby's. From almost everywhere in the world the profits can come back to Canada and be available tax free. No one has said it specifically, but through judicious tax planning, a couple who, for example, have investments abroad which yield them $1 million in capital gains will be allowed to keep the complete profit without paying any tax.
On behalf of my constituents, many of whom are living in poverty, I regret to say, within 10 or 15 minutes' walk of this Parliament Building, I say that situation is intolerable. It is intolerable that we are giving $1 million tax free to some people while at the same time our tax system takes $300 or $400 per annum from families earning less than $10,000 a year, and will continue to do so. In fact, in certain cases, we are going to tax them more heavily than before.
The National Council on Welfare has calculated the impact of the Budget on families. The tax concessions and changes which are in Bill C-84 will mean that by 1990, in five years, a family with one wage earner and two kids who earns $15,000, will wind up $2,400 worse off because of the changes in income tax and the child tax credit under this Government. A family earning $35,000 will be $4,200 a year worse off. But is
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a family with one wage earner and two kids, earning $80,000, going to pay more? Is that going to be the impact? No. Because of the concessions on capital gains in particular, that family will actually be $5,662 better off after five years than if the existing tax system had prevailed.
We have an inequitable tax system right now. It is a tax system which, rather than being weighted to people's ability to pay, is too easy on people in the upper income brackets and too harsh on people in the low income brackets. The Conservatives, who I see are sitting very quietly right now, are going to make that worse because of this particular Bill.
I travelled across the country with our task force on jobs last year. We went to places like Chicoutimi and Quebec City. We went into every corner of Canada. The message we received had a real impact on our policy. We learned that there is a tremendous amount of initiative, ideas and ability among ordinary Canadians, and that is backed by municipal and enterprise funds, by industrial commissioners who are looking for new ways of creating jobs in different communities, by trade unions, by small businesses, by people who are setting up co-ops, and by individuals who want to buy out foreign control firms, which are not being particularly enterprising here. The message we received was: "For God's sake, let's take advantage of that kind of entrepreneurship, that kind of initiative, rather than continuing to discourage it". We will not take advantage of this entrepreneurship by simply putting money into the pockets of people earning $50,000 and more a year, most of whom live in Toronto, Vancouver, in southern Ontario, perhaps a few in Montreal and some in Alberta. We will not do it in that way. I would like to see a buy-out fund whereby a group of Canadians can take over an American firm which is threatening to pull out of Canada because of free trade which the Tories will have negotiated within one year or two years' time with the United States. Canadians should be able to get some access to financial resources in order to take over a particular company and show what Canadians can do with companies which often are badly managed.
I would like to see an end to the kind of abuses which are going on. People who are wealthy and powerful are well looked after and people who are poor have little done for them.
Last weekend I came back from a few days away and I felt compelled-I am not quite sure why-to read that terrible article by Conrad Black in The Globe and Mail's Report on Business magazine. Conrad Black is a parasytic excrescence on the hind of capitalism here in Canada as far as I am concerned. He drives around in stretch limousines and lives on expense account lunches. My constituents and I are paying for that, and there he was slamming Canadians for not having the will and drive to work. I want to say to all of those people in that corporate elite who are benefiting from Bill C-84 and from the Budget, that ordinary Canadians want to work. A million and more of them want to get back on the job. They deplore the fact that the Government is not making the cration of employment a real priority. These ordinary Canadians have intiative and ideas. They have all kinds of entrepreneurship. They want to be given a chance in terms of managing and
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running the enterprises in which they are involved rather than seeing those enterprises run into the ground by the managers who are responsible right now.
Conrad Black managed the Dominion Stores into the ground when six years ago it was the pre-eminent retailer in the grocery business in Canada. He just about did the same thing to Massey-Ferguson before he bailed out. He has done that to Standard Broadcasting and is about to do that to the Daily Telegraph in England. We do not need preaching from people like that. What we need is to bring together the initiative, the ideas and excitement, not just of the small entrepreneurial or managerial class, and not just of the small expense account class, but of every single Canadian.
The $1 billion a year which is going into capital gains exemptions under this particular Bill, most of which will go to people earning $50,000 a year or more, should in fact be made available to ordinary Canadians in many ways. One of the few things in this particular Bill which I can applaud is that there is incentive for the venture funds set up by trade unions. That is a good thing, but it is swamped by the objectionable features of Bill C-84. I think that we should borrow and develop ideas from other countries by which people earning $10,000 or $20,000 a year can start to get themselves into co-operative and can perhaps take over sections of the business in which they work which their parent corporation wants to ge rid of.
These are the kinds of things which our task force on jobs began to look at and which we would like to have implemented for the creation of a fair tax system which does not just give to the rich. We need a tax system, an enterprise system, and a Government system that seeks to tap the talents and abilities of every Canadian. Those are the reasons for which 1 personally cannot support Bill C-84 and for which I deplore the way in which the Government is trying to ram this Bill through Parliament.


Thomas Hockin: Mr. Speaker, in that long oration there was a nugget of news for me. Does the New Democratic Party now stand for all-out criticism of RRSPs on the basis that they are an inefficient use of capital? I ask this because the Canada Pension Plan is going to have great trouble being properly funded in the next ten years. About one-third of the workforce is being looked after by corporate pension plans and so on. RRSPs are growing in importance. Is the Hon. Member against RRSPs? If so, what would he put in their place?
Also, does the Hon. Member know something I do not know? I thought that Conrad Black was at least a millionaire. It seems to me that the $.5 million capital gains exemption would not be of much use to him as he has already passed that finish line.


Michael Morris Cassidy: Mr. Speaker, a couple with one income of $80,000 and two kids is going to get an extra $1,000 in 1986, thanks to the increase in contribution limits on RRSPs. Frankly, I think the incentives for increased savings which are entailed in the very substantial increases in the RRSP limits,

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which will in fact be of use only to people earning high incomes, do not make a heck of a lot of sense when we have a lesser demand. If we had more demand we would have more jobs in our economy right now.
For most Canadians RRSPs within the existing limits are what they can afford to put aside. You may want to index that to allow it to move gradually to take account of changes in money values. I have no particular problem with that. However, the very sharp increase which is proposed here, which creates a very substantial new tax shelter through the use of RRSPs, is something that I simply do not believe should have high priority.
I note that the Government announced last week that it is delaying by a year changes in the pension system. The Hon. Member asks whether there are not problems with the pension system. Those problems have existed for 15 years, Mr. Speaker. The Conservatives in Ontario, whom the Hon. Member presumably supports, quite systematically delayed action in that particular area which would have benefited ordinary working people. If we wanted to make one specific change in the pension system which would benefit ordinary working people, it would be to reduce to a couple of years the period for vesting to ensure that people in their twenties and thirties can maintain the credits from pensions to which they had contributed rather than having to wait until they reach the age of 45 or, in some cases, never get any benefit at all. Unfortunately, there has been no drive to do that, either by the previous Liberal Government or the new Government which could have done it in the year and a half that it has been in power.


Mr. Ricard:: Mr. Speaker, first of all I want to congratulate the Hon. Member who just made a very elaborate speech about unemployment and high interest rates and the rest-I see he agrees-and I am sure he was speaking straight from the heart.
However, I would like to know way the Hon. Member for the New Democratic Party is going to vote against Bill C-84, since it seems to provide answers to our current problems. And on this memorable day for Quebec, I would like to know what he and his party, and especially his little brother in Quebec, have to say about the way they would deal with these problems, because there must be many Quebecers who are waiting for their answer today, before casting their vote.


Michael Morris Cassidy: Mr. Speaker, I appreciate the Hon. Member's comments, and I can inform him right away that the capital gains tax exemption of up to $500,000, or even $1 million in the case of a couple, will do nothing for many regions in Quebec where there are no opportunities for earning that much money, except for those who are already well off.
Large regions with many people who are quite poor are looking for ways to create jobs. I was particularly struck by the situation in the Saguenay-Chicoutimi-Lac-Saint-Jean area, where industrial commissioners and people from the
unions, all kinds of people, appeared before our task force on unemployment and jobs and told us that they were looking for ways to use the entrepreneurial spirit that exists in these regions, but it was clear that the capital gains tax exemption would not be very useful in that situation.
Our main reason for objecting to Bill C-84 is that it is ineffective and unfair in terms of its tax measures. Instead of levying taxes on the rich, the Government has decided to add a capital gains tax exemption, which means that since most capital gains are acquired by people earning more than $50,000 per year-average Quebecers, those who are voting today, are going to pay for benefits for the wealthy. And that is something we find totally unacceptable.


Mr. McCrossan:: Mr. Speaker, I am sure that the Member did not intentionally mislead the House, but he asked why, if the Government were serious about pension reform, it did not do something such as bring in a two-year vesting provision. I wonder whether he has actually taken time to read the Budget, because the two-year vesting provision is in it. Pension reform takes up one-sixth of the Budget papers by count. There is also complete provision for portability and for equal benefits for men and women. It is probably the major section of the Budget. When he asks why the Government has not brought this in, I wonder whether he has taken the time to read the material because it is there.
He asks why we have not yet tabled anything in the House. As a former provincial representative I am sure that he recognizes the importance of harmonizing the provincial and federal statutes with respect to pensions benefit standards. If he had taken the time to read the papers he would realize that there have been meetings going on through August and September with the provinces to ensure that the legislation which is to be brought into the House this month by the federal Government will be in harmony with that which is likely to be brought into the provincial legislatures. When he suggests that nothing is being done, I suggest that he plainly does not know what he is talking about.


Michael Morris Cassidy: Mr. Speaker, I remarked on the fact that while RRSP limits have been increased in 1986 mainly for people who are self-employed or in upper income brackets, nothing is to be done about pensions until 1987, according to the news of the past few weeks. In the past 16 months the Government could have decided that due to the need to harmonize in a number of other areas it could not do everything on pensions. However, under those circumstances I am suggesting that promises and White Papers are not enough. Nothing has been done to benefit a 28-year-old with a couple of kids who is concerned about whether his or her job is going to survive and who would like to see results from contributions to a corporate pension plan should they move, either for career purposes or because their firm is about to fold.
The Government could have said that it is going to bring in two-year vesting now and if the provinces do not follow along that is too bad. That is the approach the Government of
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Manitoba took. I think that we needed that kind of leadership from a Government somewhere in order to break the impasse. The pension industry and large corporations, in many cases, have quite adamantly resisted for 15 years any meaningful action on the pension front. I speak from an historical basis because I was a provincial Member in the Ontario Legislature for 13 years. White Paper was followed by task force, which was followed by Royal commission, as the Member knows, but no action was taken. Of course, action could have been taken before now. It might not have been perfect or ideal, but at least it could have addressed the question of ensuring that the equity in pension funds being built up by ordinary Canadians, many of whom have no other form of retirement savings apart from the Canada Pension Plan, would not be lost to them if they lost a job because of recession or because of change in their position.


Mr. Barry Turner (Ottawa-Carleton):: Mr. Speaker, I am pleased to speak to Bill C-84, an Act to amend the Income Tax Act and related statutes and to amend the Canada Pension Plan, the Unemployment Insurance Act, 1971, the Financial Administration Act and the Petroleum and Gas Revenue Tax Act. While I do not agree with the Member for Ottawa Centre (Mr. Cassidy) very often, I do agree that this is a very thick Bill. It consists of 235 pages.
This is a major piece of legislation and, as the Minister of State for Finance (Mrs. McDougall) says, it is very complex. I am not a financial expert or a tax lawyer and when I was asked on Friday to speak to this Bill I was not sure what I would say in 20 minutes. It takes longer than that simply to read the first few chapters. It would certainly take days and weeks to understand it thoroughly.
Fortunately, this Bill will go to committee soon where we will have an opportunity to review it extensively with expert witnesses to see what it really means to the average Canadian. The Hon. Member for Kamloops-Shuswap (Mr. Riis) said last week during debate that this Bill requires an explanation paper to help us understand what the "legalese, gobbledegook" means. He is correct that the Bill is somewhat confusing, so let me talk about some of the generalities of the Bill before us this morning.
Bill C-84 is one of a series of Bills that provide legislative authority for tax and other measures announced in the May, 1985 Budget. This particular Bill deals with most of the Budget income tax measures, some of which I will review now.
The capital gains tax exemption measure has caused considerable controversy. It is a lifetime personal capital gains exemption of up to $500,000 that will be phased in over the next six years, beginning with a $20,000 exemption in 1985. However, the full exemption will take effect immediately for qualifying farm properties. We are telling farmers that those who have worked a lifetime working the land and putting their future into the farm will be allowed to keep that investment when it is sold. The same incentive applies to small businesses that have been built up over the years. The total amount of
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$500,000 is actually well above expectations. During the spring the rumour was that the exemption would be $100,000 or $200,000, and the announcement of a $500,000 capital gains tax exemption was a surprise to most people.
Whoever said that Tory times are tough times is dead wrong. In fact, this is a very generous tax measure that is intended to trigger a major change in the attitude of Canadians towards savings and investment. I admit that this is somewhat of a risk and we are banking on this new measure to spur investment interest in the dynamic small and mediumsized businesses because we all know that this is where the real jobs are created in this country.
Another measure in the Bill deals with labour-sponsored venture capital. Investors in labour-sponsored venture capital funds will be provided with a federal tax credit of up to 20 per cent of the share purchase price. This credit will be conditional on the availability of a provincial credit of at least 20 per cent in the investor's province. The combined federal-provincial credits will not exceed 40 per cent. This is just another step toward federal-provincial co-operation, creating incentives to create jobs. This particular labour-sponsored venture capital and the proposed federal tax credit is to encourage workers to invest in the economy in a form that will directly benefit the labour force through the injection of capital into the small businesses that are responsible for the jobs in the various communities.
Another feature of the Bill deals with pension and RRSP investment in small businesses. Some measures in Bill C-84 will assist small businesses to obtain equity financing for the first time from registered retirement savings plans, deferred profit-sharing plans, registered retirement income funds and others. These pension funds will be allowed to establish special tax-exempt small business investment corporations. The ability of pension funds to invest in small business investment limited partnerships will be expanded.
Another part of the Bill deals with housing loans. Employees who relocate to maintain their employment or begin a new job-goodness knows that there are lots of new jobs in this country-will not be taxed on certain subsidized housing loans. Canadians have been reluctant to accept promotions and move to new parts of the country because of the various aspects of uprooting one's home and moving to a new neighbourhood. We are giving greater incentive to do this and, according to this provision, the maximum tax-free subsidy will be equivalent to the benefit on a $25,000 interest-free loan and will apply to the first Five years of the loan.
We are not giving the store away; we are merely creating an additional incentive for those who are asked to move to a new job in order to advance their career.
The Bill also deals with research and development. Tax credits earned on the first $2 million of the current R and D expenditures will be fully refundable compared to the 40 per cent at present. This will encourage small and medium-sized businesses to risk research and development and come up with new ideas in order to continue to make Canadian goods and services more competitive in the international market.

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There is another part of the Bill which deals with disabled people. The eligibility for the $2,590 disability deduction is expanded to include all severely disabled persons. The Income Tax Act currently allows this special deduction to be claimed by disabled persons, but under the present rules only those persons who are blind or confined to a bed or wheelchair qualify for this deduction. The Budget proposes to broaden the definition of disability in the tax legislation so as to include the many other severely disabled conditions which do not result in confinement to a bed or wheelchair. As a result of this new measure in the Budget, it is expected that approximately
185,000	Canadians will be eligible for the deduction under this new definition, compared with the 65,000 under the present definition.
Another part of the Bill deals with artists. The visual artists will be permitted to write off costs involved in creating a work of art in the year that the expenses are incurred. At present, they must wait until the work is sold. Rules for charitable donations from artists' inventories are made more flexible.
The question of income splitting was also mentioned this morning. This is another component of Bill C-84. The rules pertaining to income splitting among family members are tightened in order to prevent tax avoidance through the use of low interest loans to family members. How can anyone say that this is unfair or inequitable? In fact, we are closing another Liberal loophole.
Bill C-84 looks at other questions dealing with the surtax on upper income earners. I repeat, there will be a surtax on upper income earners for the 18 month period beginning on July 1, 1985, of 5 per cent on federal basic tax between $6,000 and $10,000, and 10 per cent on federal basic tax in excess of $15,000. This Bill provides for a surtax of 5 per cent on federal income tax payable by large corporations, which will be in place from July 1, 1985 to December 31, 1986.
There is capital tax on larger financial institutions. For the two years commencing January 1, 1986, larger financial institutions will be subject to an annual tax of 1 per cent of capital employed in Canada in excess of $200 million. How can any Party in the House, particularly the New Democratic Party, say that we are not going to tax large corporations?
Another part of the Bill deals with the question of home ownership savings plans. RHOSPs, as they are called, will no longer qualify for preferential tax treatment, effective May 23,
1985.	Funds may be withdrawn on a tax-free basis at any time after May 22, 1985. Interest income earned after January 1,
1986,	on existing home ownership savings plan accounts will now be taxable. The savings rate has been just too high, and RHOSP is one of the reasons for that. We are trying to unlock slowly a total amount of $2 billion, which has been accumulated in RHOSPs since 1974 when I believe they were first introduced. The availability of these funds now on a tax-free basis, coupled with other incentives in the Budget, represent a large pool of funds which can be used to support entrepreneurial job-creating investments and to purchase many consumer goods in Canada.
These are some of the tax components which are now being affected by Bill C-84. However, what does all this really mean? As the Minister of State for Finance said when she discussed the Bill last week in the House, it represents a substantial and integral component of the Government's program to secure durable economic renewal for all Canadians.
There are certainly some controversial parts of Bill C-84. I think there are controversial parts in any Bill presented in the House. I should like to refer to statistical record to keep the particular Bill and the tax measures in their over-all context in light of the tremendous successes which we have had to date. The Speech from the Throne last fall talked about three main themes-national reconciliation, economic renewal and renewed internationalism. In the area of national reconciliation, let us look at what has happened in Canada in the last 14 months. We inherited a country with regions that were totally forgotten in the national process of decision-making. We have come up with an energy accord in Newfoundland and the Western Accord. The National Energy Program impaired investment in the energy sector in western Canada. In 1981, the well-known New York firm of Salomon Brothers indicated that it was not worth reporting on the Canadian oil and gas sector because of the National Energy Program. Its August, 1985 release indicated that the reinvestment potential in the Canadian oil and gas industry would double over the next four years as a result of the policies of the new Government. We predict that investment this year in the energy sector in western Canada will increase by $2 billion over 1984. That will create about 10,000 new jobs in western Canada. That is keeping our promise of jobs, jobs and more jobs.
Also in the area of national reconciliation, natural gas prices have been affected. Recent Ottawa Gas advertisements in the newspaper, particularly the one of last week, have indicated: "The Government is on your side", because consumer prices for natural gas are lowering. Quebec has dropped separation as a fundamental option in its particular policies. The opportunity for us to bring Quebec into the constitutional accord is tremendous. We have westerners back at the cabinet table for the first time in 20 years. We have signed historic numbers of ERDA agreements in mining, tourism, forestry, science and technology. We finally have peace with our provinces. We have been consulting with the provinces. We have had dozens and dozens of meetings with our provincial counterparts. As a result, there has been the signing of very successful economic agreements.
In the area of economic renewal, the numbers speak for themselves. This is good news which opposition Members do not seem to like to hear. In fact, the media does not seem to like to talk about it enough. We have had successes in the area of creating more jobs. We are always criticized for either overspending or underspending, not enough or too much. We have had the slowest growth in government spending of the last 17 years. Apart from debt financing, spending this year will rise by only 2 per cent. The deficit has decreased for the
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first time in 13 years. According to recent information from Statistics Canada, there has been a $500 million reduction in the deficit. While I am on that subject, let me integrate something from the Business Council on National Issues. It conducted a press conference in Ottawa in October, 1985. Mr. Frazee, the Chairman of the Business Council on National Issues-he is also the Chairman and CEO of the Royal Bank of Canada-said the following:
The immediate challenge facing the federal Government and all Canadians ... is to gradually bring a halt to the rising ratio of our collective indebtedness in relation to our Gross National Product. The current federal Government, which inherited a serious fiscal situation, has taken a number of important initiatives to restrain expenditure growth and tackle the deficit. However, the problem is so serious that more must be done.
The Business Council produced a very important paper; I recommend it to all Hon. Members of the House. I should like to refer to the following reference in its paper:
More than half of all income taxes in 1981 were paid by individuals with taxable incomes of less than $30,000. Almost one quarter of all income taxes in 1981 were paid by those with taxable incomes of less than $20,000. Middle and working-class Canadians are therefore largely paying for the interest on our debt. Accordingly, it can be expected that this group will actually be hurt the most by continuing deficits and rising debt charges.
That is why the Council is bringing us the important message that we have to live more within our means.
The list of achievements goes on and on. The replacement of FIRA has encouraged tremendous amounts of investment in Ontario. We all know the economic indicators dealing with bank rates. The bank rate is down three basis points, to the lowest level in seven years. A young couple buying a home today with a mortgage of $50,000 will pay $8,000 less over a five-year term and save $125 on each monthly payment. As the Hon. Member for London West (Mr. Hockin) mentioned, housing starts are up. Building permits are up 37 per cent in the last year. Automobile sales, the heart of Ontario industry, are up 27 per cent over last year. Retail sales were up 13 per cent and 14 per cent in August and September. That shows a confidence on the part of Canadians in what the Government is doing to stimulate economic renewal.
On the international front, we have renewed our relations with the United States. We have strengthened our communication and co-operation with our largest trading partner. We have looked at increasing our commitments to NATO and Europe. We are sending troops to the Sinai, and Canada is speaking out more and more at the United Nations. We are searching for a very durable peace.
We should continue to remind ourselves of all the achievements integrated into the over-all direction of Bill C-84. Canada is strengthening itself month by month. Business confidence is up. Consumer confidence is up. Retailers are expecting to do a booming business this Christmas, for the first time in many years. The need is not for the Government to intervene more directly in the economy, but to restore a climate conducive to confidence, investment and growth. That is exactly what we are doing.
The Hon. Member for Saint-Henri-Westmount (Mr. Johnston) spoke last week in the debate on this Bill about the
Income Tax Act
retreat we made on the old age security question. Yes, we retreated. We admitted that it was wrong. We listened to the grey power. However, we should remember the MacEachen Budget of 1981. There was retreat after retreat after retreat; dozens of them. We have only moved on one issue because we know the direction which we are giving to the country is a very strong, healthy and positive one. All economic indicators demonstrate that we are on the right course to economic recovery.
Also the Hon. Member for Saint-Henri-Westmount spoke about the tax credits being increased for investment in Cape Breton from 50 per cent to 60 per cent. He as not sure what kind of an impact that might have or was having. Let me refer quickly to some of the results to date. The Superior Sausage Company Limited is to build and expand meat facilities in Cape Breton. Another one speaks of a vitamin supplement to be manufactured in Cape Breton. Another announcement concerns a drapery firm receiving federal assistance to invest in Glace Bay. Another one concerns a Cape Breton company and expansion of export markets for Canadian deer hide with assistance from the federal Government. There has been a considerable and immediate reaction to investing more and more in that particular part of Canada.
Let me conclude by touching on a comment made recently by the Conference Board of Canada, specifically on November 29, when it said that business leaders think they will do better in the next six months. That shows confidence and without confidence, Canadians will send their money elsewhere. As well, I recommend to all Members of the House an article in the winter 1985-86 edition of the Financial Post magazine which talks about the outlook for 1986. If you think I am biased in my political judgment, you should read that article and the good news it has for the whole nation. There is also an article here that talks about paddling our own canoe. That is what we are starting to do in the economic and the nationalistic sense by creating more and more lasting jobs for the people of this country.


Mr. Deputy Speaker:: Questions and comments? Debate.


Mr. George Baker (Gander-Twillingate):: Mr. Speaker, before I get to the main purpose of my intervention in this debate, I want to deal with a couple of questions. These have already been dealt with and I cannot say I am an expert on some of these subjects. I do not think anyone is really an expert on some of these subjects. However, I have a couple of comments.
The Minister of Finance (Mr. Wilson) talked about holders of retirement funds such as RRSPs being allowed to invest up to 50 per cent of the fund in shares of Canadian-controlled corporations. There is one restriction involving a limit of 10 per cent of the shares in any one company. Given that, in certain cases, if someone were to invest less than $50,000 and all the payments required under the regulations, he would find, 1 estimate, the measure to be prohibitively expensive.

December 2, 1985
Income Tax Act
As well, the legislation requires a shareholder's agreement covering all shareholders. As you know, in these small companies that the Minister was talking about, there are several shareholders' agreements covering many different shareholders. Therefore, one would have to conclude that certain investments, certainly those under the $500,000 lifetime capital gains exemption, will not be covered under the Act.
The other main point was that the Minister claimed he was going to shut the door on income splitting. That is a situation where you have a high-income person with a low-income spouse. He or she loans the low-income spouse money and they would then pay less tax. I note that the legislation permits the sale of assets or a share of assets to a spouse at market value. In other words, you could have a high-income spouse who purchases from a low-income spouse a portion or all of a house, thereby getting around the regulations.
As to the capital gains exemption itself, I think everyone would agree that it is too broad. What does it profit small business if you are allowed tax free gains from the sale of fur coats, jewellry, summer cottages or a condominium in Florida? Certainly that is not acceptable. The legislation also draws a line between dividends and capital gains. A corporation could now look for ways of withdrawing excess capital so that it is not taxed at the normal rate of 25 per cent on dividends. It would declare it as capital gains, and that would eliminate a very fundamental difference between the way dividend income and capital gains are treated. I think that is a dangerous precedent. All corporations will now be looking at ways to withdraw funds and have them treated as tax-free capital gains.
All of this will certainly complicate matters of force Revenue Canada to look at this from year to year to determine how it is being used, and this will create more paper work. There is a provincial complication as well. Quebec says it will go along with the exemption for a year, but Ontario says it will continue to collect the capital gains tax.
My final point is that if the Government goes ahead with a minimum tax and applies that to capital gains, one will cancel out the other. If it is not applied, then the minimum tax becomes a joke. On the other hand, surely it is nonesense, plain stupidity, to have a minimum tax apply to capital gains if they are tax exempt.
These are minor points although they certainly have not been raised in this Chamber. However, the main point I want to make concerns the part of this Bill dealing with the Unemployment Insurance Act. Page 214 of this Bill deals with Part V of the Unemployment Insurance Act, 1971. There are pages and pages of amendments. What is the purpose of this particular part of the Bill? To find that out all we have to do is to look at the first clause. Clause 134 reads:
Section 67 of the Unemployment Insurance Act, 1971 is repealed and the following substituted therefor:
It talks about the definitions of authorized person, documents, dwelling house, judge, and then about the definition of the Minister. As you look over these amendments you see that certain sections of the Act are modified and changed, sections
dealing with seizure of documents, persons authorized to seize documents and enter premises. The point is that the emphasis should not be on the documents that the Government is able to procure through seizure and it should not be on the documents the Government is able to seize in order to find out if someone owes money to the federal Government under the auspices of the Minister of National Revenue (Mr. MacKay). The emphasis of the Government should be on the documents that are available to the poor man or woman who is drawing unemployment insurance and gets into trouble under this Act. That is the problem with these particular sections of the Income Tax Act. The reason it is a problem is very simple.
If one looks at the access to records and documents by the federal Government in a dispute with the Minister of National Revenue under the Unemployment Insurance Act as outlined in the Bill before us today, one begins to discover that evidence that is presented to the judge as defined in this Act is not lacking from the point of view of the Department or the Minister of National Revenue versus the appellant. It is lacking from the point of view of the appellant versus the Minister of National Revenue.
Someone who is drawing unemployment insurance today dare not go to work. He should not lift a finger, he should not move away from the phone and he should not leave his house because if he does, he is going to be nailed. That is a fact. When looking at the appeals and what emanates from these particular clauses in the Income Tax Act which are under discussion as well as the amendments to the Unemployment Insurance Act, one can see why this is especially so today.
If a fellow were drawing unemployment insurance benefits and the Unemployment Insurance Commission said that he was working on the side and therefore did not qualify for unemployment insurance a year later, then modified sections of this Act would give the Department the right to seize papers and documents from any employer. We are dealing with both an Act and the regulations. These cases go before umpires, judges or boards of referees, and what is under dispute is the Act. However, the regulations might show that such records are not necessary.
For example, it is in the regulations that someone drawing unemployment insurance need not report 25 per cent of his income. If he is discovered to have been collecting an income while drawing unemployment insurance benefits, he is automatically cut off and has to prove before a board of referees and eventually before a judge that that was not his principal source of income or that it could not have been his principal source of income.
There are many examples today of people who are laid off from Public Service jobs. Perhaps a plumber with the Department of Transport gets laid off because of cuts which are taking place in every Government Department and tries to go out on his own. He keeps a record of his income and presents that to the board of referees and eventually to a judge, and this is done under this section which is one of the sections that is
December 2, 1985

dealt with by this Bill. That person has already signed an affidavit. What would be the purpose then of allowing someone under the auspices of the Minister of National Revenue to enter upon that person's premises in order to steal whatever can be stolen to develop a case against him? Would it not be better if the Government of Canada were to turn around and say to that particular man: "Look, we encourage you to go out and work. Just report your earnings. Just tell us the name of your employer and we will leave it at that". No, that is not the case.
The second reason why records do not mean anything when dealing with the Unemployment Insurance Act is that one can draw incorrect conclusions from the records of employment and moneys owed which the Act speaks about. We have all experienced many such cases. 1 heard of a case the other day of a gentleman who, according to the records that the Government would be able to seize, is guilty of an offence. However, according to the regulations, he could defend his actions before a judge. The problem is that he will lose his unemployment insurance benefits until the cumbersome system gets around to the Minister of National Revenue who controls the Unemployment Insurance Act. What a stupid thing that is. If we are going to change something, we should change that. We should put the Unemployment Insurance Act under the auspices of the Minister of Employment and Immigration (Miss MacDonald) and not under the auspices of the Minister of National Revenue through a Bill like this.
If the Government were to acquire the records of every single fisherman in Newfoundland who sold fish to a fish plant, probably everyone who lives on islands around the coastline would be disqualified from unemployment insurance benefits. Why is this so? It is because the Act and the Unemployment Insurance Commission indicate that a fisherman gets a stamp in the week the shipment is made. They would all be disqualified. Hundreds of such cases are now being appealed in Newfoundland.
The fact of the matter is that if the collector-boat did not come in in one particular week and a fisherman put his fish on ice and sold it the following week, the regulations state that he could average that earning out. However, the Department of National Revenue does not do that. The Unemployment Insurance Commission would know the difference but not the Department of National Revenue. The tax experts in the Department of National Revenue who determine whether someone is eligible under this Act that is being amended here today would not know the difference.
The Department has investigators who know the Act down pat. They will find out that a particular fisherman shipped fish on a Monday, and that means that only one stamp will be issued for that week. That is all the investigators see on the records that can be seized. The fisherman now has only one stamp. However, under appeal, he can claim two stamps. After all, he did receive two stamps, as did the buyer. It is nonsense for us to be passing legislation like this which only makes it more convenient for the Government of Canada.
As I see it from reading this very complex Bill, we are now going to be facilitating the seizure of records. We in Newfoundland have had a lot of experience with the seizure of records. The Department of National Revenue and the Unemployment Insurance Commission are hitting particular areas. They bring in the RCMP and it looks like some raid on a coastal community during the Vietnam war. Helicopters come in to seize the records of a particular employer and to search the homes of employees. Sometimes, the seizure of the records themselves and the law as it appears in the Act are contradicted by the regulations. It is the poor unemployment insurance benefits recipient and eventual appellant who suffers.
What do we see in this Bill? This Bill makes changes to the Unemployment Insurance Act in order to facilitate the Government's budget measures. Not only that, it goes a little bit further, and that has not been explained by the Government in its introduction of this Bill to the House. Just a moment ago, I picked up this document and started reading through it. I was wondering what it had to do with the budget measures and the Ways and Means motions. The fact is that some of these clauses are simply being slipped in for the Government's convenience.
We warned the Government of Canada-and I suppose we could have warned any Government-that over the years or in the future when we start fooling around with the Unemployment Insurance Act and when we start to solidify the case of the Minister of National Revenue against someone drawing unemployment insurance benefits, we will be doing a disservice to the people of Canada, and particularly to the primary producers. I may have something more to say about this this afternoon.


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


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.

Don Boudria: Mr. Speaker, yesterday marked the end of the shoe quotas for all intents and purposes. I rise today to bring to the attention of the House the blatant hypocrisy of the Conservative Government of Canada when, on June 15, 1982, seven prominent Conservative Members of Parliament were here on Parliament Hill protesting with the shoe workers. They were the present Minister of Veterans Affairs (Mr. Hees), the Minister of

December 2, 1985
Fitness and Amateur Sport (Mr. Jelinek), the Minister of Public Works (Mr. La Salle), and the Minister of Regional Industrial Expansion (Mr. Stevens), as well as three other Members of Parliament.
On May 3, 1984, the Prime Minister (Mr. Mulroney), the then Leader of the Official Opposition, said that a Conservative Government would not abolish import quotas in the footwear and textile industries. He added further that the policy on quotas would remain the same and that he was not in favour of free trade in these types of industries. He also said that he did not intend to bow to pressures which could be exercised by the Common Market or the United States to bring down the quotas on footwear and textile products.
The Minister of Regional Industrial Expansion himself is quoted as having said on August 1, 1985-


Mr. Speaker:: I regret to interrupt the Hon. Member but his time has expired.


THE LATE VALINDA AND ANDREW LEONARD
Mr. Gordon Taylor (Bow River):: Mr. Speaker, last Saturday, with the Right Hon. Joe Clark, the Hon. Connie Oster-man, MLA, Mayor John Richter and hundreds of Canadians from near and far, in 22 degree below zero weather, 1 attended the funeral of Valinda, beloved wife of Edward Leonard and daughter of Harvey and Leah Uffelman, and her young son Andrew, who were killed by terrorists in Malta. The ecumenical service in St. Mary's Catholic Church was predicated on the sure and certain hope of the resurrection.
As the casket was brought into the cathedral, with a beautiful wreath of fresh flowers in the centre, and a coloured photo of Ed and Valinda Leonard and Andrew shortly after he was born on one side, and a coloured photo of Valinda and Andrew taken just a few days before the tragedy on the other, it was hard to hold back the tears.
Father B. Field and the Right Hon. Joe Clark read several verses of scripture including "In my Father's house are many mansions", and Mrs. Margaret Berreth sang beautifully "Lead Me Gently Home". Rev. S. Bessy delivered a stirring message "In times like these ... we need to trust God". Following the community service the congregation of every church in the area provided refreshments for the vast crowd.
The shock of the death of this beautiful wife, who spent her life helping others, and her handsome child, was eased by the prayers of Canadians throughout the nation, the helpful concern of the Prime Minister of Canada (Mr. Mulroney) on behalf of the Government of Canada, and of the Right Hon. Joe Clark. Let us pray and work together in such a way that such a terrible tragedy will never happen again.


FISHERIES
Mr. Ray Skelly (Comox-Powell River):: Mr. Speaker, 1 wish to call an extremely important matter to the attention of this House. It is the announcement over the weekend that the Minister of Fisheries and Oceans (Mr. Siddon) intends to cancel the Salmon Enhancement Program in British Columbia and his indication that salmon enhancement from this point on will be done by privatization and management. That, in short, means that Government hatcheries built at taxpayers' expense will be turned over to the private sector. That will not save Canadians one dime. In fact it will cost more to produce salmon.
Wages in those hatcheries will be reduced to the minimum wage. The technology and innovative procedures which have been developed in the hatcheries will accrue to specialized industry instead of being spread throughout the entire industry.
The other aspect of enhancement by management will mean it will allow more escapement to try to produce more fish, but when the habitat is not protected and the spawning channels are not increased, we will have a very serious problem where the total allowable catch, and the fishermen's income, will be reduced and no more fish will be produced. The Government must wake up and remove itself from its rigid, philosophical confines, and begin to do things in a way which is acceptable and proper in the community.


SEARCH AND RESCUE
Hon. James A. McGrath (St. John's East):: Mr. Speaker, I rise today to draw to the attention of this House the heroic efforts of seven Canadians employed by Sealand Helicopters Ltd. of St. John's, who risked their lives in a rescue and medical supply mission in and around Armero, Colombia, following that country's devastating volcano erruption.
The mission, voluntarily undertaken by these seven brave men, involved flying into the most severely affected parts of Colombia and rescuing those who survived the devastating mud slides. In Colombia for a private sector project, the Sealand's Super Puma helicopter was immediately diverted to aid the Colombian Government in its rescue efforts. I might add that it is not the first time this company has been involved in search and rescue.
The Sealand crew was led by Captain Robert Freeman and included Captains Malcolm Fraser and Paul Dorfman, Engineers Daniel Merritt, Howard Sturge and Dean Porter, and Avionics Technician Neil Burt.
I am proud to have brought this matter to the attention of the House, and I have written to the Secretary of State for
December 2, 1985

External Affairs (Mr. Clark), bringing this matter to his attention.


AGRICULTURE
Mr. Maurice Foster (Algoma):: Mr. Speaker, it is amazing to listen to the western Tory Members trying to defend the Government's disappointing token efforts at assistance for drought striken farmers in the southern Prairies. The assistance plan which was announced last week, and could have been announced three months ago, has been universally condemned on the Prairies as being barely a fraction of what was needed.
I never thought we would see the day when a Tory Minister would brag and boast about the payout of money under the Western Grain Transportation Act, the Western Grain Stabilization Fund, and Crop Insurance as evidence of what his Government has done for farmers. All these are good programs. They all help farmers. But they all were in place long before the current Government took office. Farmers will not be fooled. They are not about to thank the Government for giving them money to which they were already entitled and on which they have already paid premiums. The payment of $5 to $10 per acre on average is not even 20 per cent of what western farm organizations agreed was needed, and even these payments will not be made until next March or April.
The Minister can quote the President of the Saskatchewan Wheat Pool out of context, as he did last Thursday, but he will not change the reality. As farmers, the Minister of Agriculture (Mr. Wise) and the Minister of State for the Canadian Wheat Board (Mr. Mayer), and the Member for Assiniboia (Mr. Gustafson), who chaired the special Committee on Disaster Assistance, should all be embarrassed at the low priority their Government gives to agriculture.


THE LATE J. C. BYRNE TRIBUTE TO MINING PIONEER
Mr. Bill Tupper (Nepean-Carleton):: Mr. Speaker, recently Mr. J. C. "Jerry" Byrne, Chairman of Rayrock Resources, a man whose name is almost synonymous with Canadian mining, passed away. He was born in Sault Ste. Marie in 1910, attended high school in Haileybury, and took a degree in geology and economics at Queen's University.
He and his brothers discovered and brought into production then Canada's richest and farthest north gold mine, Discovery Mines. This was followed by bringing the Rayrock Uranium Mine, also in the Territories, into production.
Jerry Byrne was an entrepreneur with remarkable foresight. Income earned at Discovery and Rayrock was reinvested in at least 10 other mining enterprises across Canada which produced or currently produce uranium and several precious and base metals. He was also responsible for bringing into production several mines in Ireland and the United States. His companies pioneered the now widely used heap leaching process for low grade gold and uranium ores.
Most important, his entrepreneurship and leadership resulted in the creation of thousands of jobs in numerous communities across Canada, together with the infrastructure in those communities. Mr. Byrne was a life member of the Canadian Institute of Mining and Metallurgy and a director of the Mining Association of Canada. Mr. Speaker and colleagues, Canada and the mining industry have lost a special person.


CANADIAN NATIONAL RAILWAYS
Hon. Edward Broadbent (Oshawa):: Mr. Speaker, during the 1984 election campaign the slogan of the Conservative Party was: "Jobs, jobs, jobs". Right now the slogan of people in the City of Moncton is: "Preserve our existing jobs".
The reason for that, Mr. Speaker, is that the more than 1,200 men and women who work for CN shops in Moncton have very good reason to believe they may lose their jobs. They have seen the federal Conservatives stand back and watch CN Marine cut back on its services in Atlantic Canada and elsewhere. They have not yet heard the Conservative Government stand up and say that the jobs in Moncton at CN, the largest industrial employer in New Brunswick, will be preserved. The Government should ensure the preservation of these jobs.

The unemployment rate in New Brunswick is over 15 per cent, and the federal Government is ultimately responsible for ensuring that no region or city or town will suffer the full impact of cutbacks imposed by a Crown corporation.


VOLUNTARY ORGANIZATIONS
Thomas Hockin: Mr. Speaker, last year over 80 per cent of the Christmas gifts donated to the Salvation Army in London, Ontario, were generated by a unique idea called the "Angel Tree" in a local shopping mall. Here is how it works. Any willing donor picks a small angel from the tree which lists the name, age, and clothing size of a needy child. The gift is then returned and registered with the paper angel attached.

December 2, 1985
Last year, in concert with the Salvation Army, a local radio station and the mall, the angel tree received close to 3,000 gifts. The "Angel Tree" approach is not only satisfying and enjoyable for the donor, but ensures a happy festive season and fills a real need for thousands of children.
This idea is the genius of Ginny Vershagen and has gained support here in Ottawa and is being tried at three local shopping centres.
I commend the idea of the "Angel Tree" to my colleagues as I remind the House of the approaching festive season and of those less fortunate than ourselves.


CONFEDERATION
Mr. John Nunziata (York South-Weston):: Mr. Speaker, in the Throne Speech of November 5 last year the Conservative Government proudly made the commitment that the new Parliament would bring with it "the new beginning of a new era of national reconciliation-a new era of federalism". The Government said it was its priority to "breathe a new spirit into federalism".
After the First Ministers' Conference in Halifax last week it is obvious that the Government was only blowing hot air in the Throne Speech. The Government clearly stated last year that all regions of the country would be represented in the national Government. Obviously the Government's definition of representation omitted the words "compromise", "negotiation", "sensitivity", and "co-operation".
On the issue of free trade negotiations the provinces have been left wondering what part they will be allowed to play, and to what extent, in protecting Canada's national interests. Premier Peterson of Ontario pinpointed the essence of this important issue when he stated that Canada must not only speak with one voice, but with a voice that must speak for all Canadians and all Governments.
Unilateral cuts in health and post-secondary education have been unilaterally deemed non-negotiable by the federal Government. Despite calls from many Premiers for a reordering of federal priorities, it is clear that these issues have been dismissed from the arena of compromise and negotiation. If the past week's meeting is any indication of the Government's commitment to national reconciliation and a new era of federalism, Canadians in all parts of Canada have been sadly cheated.


Mr. Speaker:: 1 regret to advise the Hon. Member that his time has expired.


THE DISABLED AND THE HANDICAPPED
Mr. Alan Redway (York East):: Mr. Speaker, my constituents, and indeed all Canadians, were delighted with the measures announced recently by the President of the Treasury Board (Mr. de Cotret) to improve access for the disabled to federal Government buildings. These new measures required federal Government Departments to improve accessibility on a priority basis for Crown-owned and long-term Crown-leased buildings without, I might add, exceeding the limit of their previously approved budgets. This is an important step and one that is long overdue. Many provinces and municipalities in Canada, including my own municipality, initiated a similar program some six or seven years ago to ensure that public buildings are accessible to the disabled.
During the past weekend I visited the East York Recreation Club for Disabled Adults in my riding. The founder of that Club, Gord Hamilton, is a disabled athlete. He has represented Canada and won medals for Canada all over the world in the Disabled Olympics.
It is high time that Gord Hamilton and thounsands of others like him have proper access to federal buildings and I applaud the Government for this initiative, an initiative that the former Government should have taken years ago.



ORAL QUESTION PERIOD


Right Hon. John N. Turner (Leader of the Opposition):: Mr. Speaker, 1 am at a loss to understand that, after a very important First Ministers' Conference involving an important issue like free trade, the Prime Minister is not here to answer questions in the House. If that is the case, 1 am constrained to put my questions to the Secretary of State for External Affairs. These questions are of the utmost importance and 1 would have thought that the first Minister of the Crown would have been here to respond to them.
The Joint Federal-Provincial Statement on Free Trade with the United States, issued following the First Ministers' meeting in Halifax, states that: "Ministers agreed to the principle of full provincial participation in the forthcoming trade negotiations between Canada and the United States . .."
Subsequent to that statement, provincial Premiers have interpreted that phrase "full provincial participation" to mean that they are full, joint, and equal partners with the federal Government in the preparation and pursuit of all negotiations
December 2, 1985

with the United States on free trade, and that they have, in effect, a veto power on these negotiations.
Will the Secretary of State for External Affairs, who has been charged with these negotiations, tell us whether he shares that interpretation put on those words by the provincial Premiers? If not, what interpretation does he choose to place on those words?


Right Hon. Joe Clark (Secretary of State for External Affairs):: Mr. Speaker, I think the House will agree that a very important and decisive step forward was taken in federal-provincial relations by the agreement with regard to international trade reached by the federal Government and the provinces. 1 am sure the House would share the support for that agreement which was expressed by the Hon. Member for Shefford, speaking for the Liberal Party.
As the Right Hon. Leader of the Opposition will know, I chaired the meeting of Ministers charged by the First Ministers to achieve agreement. It was the meeting that did, in fact, produce the documented cited by the Right Hon. Leader of the Opposition. During those discussions it was agreed by everyone around the table that the question of the manner of provincial participation in the formulation of the mandate would be a question that would be decided later in the process.


INTERNATIONAL NEGOTIATIONS-POWERS OF PROVINCES- GOVERNMENT POSITION
John Napier Turner: Mr. Speaker, I have a supplementary. Not only is the Prime Minister of Canada not available to provide an explanation of these key words here in the House, he withdrew before the end of the session with the provincial First Ministers, after refusing to give an explanation.
We agree that Ottawa ought to consult with the provinces, but this agreement appears to make the provinces joint and equal partners with the federal Government in international negotiations. My question is as follows: Is the Minister going to admit that the Government has put itself in a well-nigh impossible position? How can the Prime Minister tell the President of the United States that he is speaking for Canada, when the provincial First Ministers claim they have joint monitoring rights and a veto right as well?


Charles Joseph Clark: Mr. Speaker, it is not at all surprising the Liberal Party should be against an approach that can involve the provinces in a process that is very important to Canada's future. That is the history of the Liberal Party, that is what happened under the Liberals, with disastrous results within our own country.
Our position is entirely different, and we have said that the provinces have a right to participate in negotiations. We specified how we would proceed in the initial phase, and we
Oral Questions
have agreed with the provincial First Ministers and the Minister for International Trade that together, we would develop ways of implementing this formula at subsequent stages of the negotiations. That is a major step forward for the consultation process and for Canada's interests.


CANADIAN NEGOTIATOR'S REPORTING AUTHORITY
John Napier Turner: Mr. Speaker, let it be noted that the Hon. Minister has in no way responded to our question. My Party has been on record since my first intervention in the House of Commons on free trade that there ought to be full consultation with the provinces. There is a difference between consultation and the words "full provincial participation" in the communique, which is the reason for the question.
Let me be a little more specific. Mr. Simon Reisman is the chief negotiator; full-time or part-time, we do not yet know. To whom will Mr. Reisman report-to the Prime Minister of Canada, to the Secretary of State for External Affairs, to the provincial Premiers, to both, or to the federal and 10 provincial Ministers? To whom is he reporting as chief negotiator? Let us be specific about it.


Charles Joseph Clark: Mr. Speaker, the Right Hon. Leader of the Opposition is not only repudiating the Hon. Member for Shefford, his own Member of Parliament who approved the agreement when he was speaking on national television on Friday, he is also repudiating the position of the Liberal Premier of Ontario. The Liberal Premier of Ontario said, and 1 quote him from his opening statement: "The Government of Canada must speak with one voice but must speak for all of Canada". That is the principle which we are pursuing. That is a new principle, a principle which did not exist when the Government of the Right Hon. Leader of the Opposition was in office following practices which, on issue after issue, tore the country apart. What we have done is establish a process to bring the country together in a negotiation which is important to our future.


Some Hon. Members:: Hear, hear!


STATEMENTS ATTRIBUTED TO PREMIERS
Hon. Lloyd Axworthy (Winnipeg-Fort Garry):: Mr. Speaker, while the Hon. Minister is in the exercise of having agreement on various statements, would he listen to a few short statements which were issued at the conference last Thursday and Friday. The Premier of Ontario, Mr. Peterson, said: "The bottom line is the negotiating team will take instructions from the First Ministers". Premier Getty of Alberta said: "The negotiating team becomes our team", and Premier Bennett said: "We agree that we 11 Governments will establish the mandate for the negotiations". Does the Secretary of State for External Affairs agree with those statements put forward by the provincial Premiers?

December 2, 1985
Oral Questions


Charles Joseph Clark: Mr. Speaker, the Hon. Member for Winnipeg-Fort Garry, not for the first time, is repeating questions which have already been put and anwered in the House of Commons.


Mr. Guilbault (Saint-Jacques):: When were they answered?


Charles Joseph Clark: The situation, as I indicated earlier, is that at the instruction and behest of all First Ministers, a meeting was held of Ministers interested in representing specific Governments on the question of trade. We agreed, for the first time in history, that we would move away from the empty formula of simply consultation and toward the right of the provinces to participate in the trade negotiations. We agreed that we would spell out how that would be done in the phase that we could see, the preparatory phase, and that we would decide the means by which that principle would be applied in later phases as we moved along. That was agreed by all Governments represented at those discussions.


RESPONSIBILITY OF PROVINCES
Lloyd Axworthy: Mr. Speaker, I would simply say to the Hon. Minister that the reason we repeat questions is that we do not receive proper answers from the Government side. We will keep asking those questions until we get the answers.


Mr. McDermid:: The problem is that you do not like the
answers.


Lloyd Axworthy: The provincial Premiers have said that they are now fully responsible for establishing the mandate for the negotiator and, furthermore, that they will be in the position to make decisions on what will or will not be on the negotiating table.


Mr. Speaker:: Order, please. The preamble to the question is becoming a little long. Could we have the question?


Lloyd Axworthy: I will ask my question, Mr. Speaker. Will the Minister confirm that the provincial Governments now have full responsibility and share in setting the mandate for the chief negotiator and for determining what will and what will not be on the bargaining table?


Charles Joseph Clark: Mr. Speaker, I will confirm again that the provinces have the right to participate in the formulation of the mandate. That is clear, that was agreed. The means by which that principle will be applied in the formulation of the mandate as it was agreed by all Governments there present, the manner of implementation, will be decided as we have a clearer picture of the response of the United States and the nature of the negotiations.
We have here, Mr. Speaker, an historic principle of federal-provincial co-operation on a question which involves all of the
Governments of this country. We have here a situation where we cannot see with certainty-


Mr. Speaker:: Order, please.


Some Hon. Members:: Hear, hear!


CONFERENCE COMMUNIQUE
John Edward Broadbent: Mr. Speaker, I would like to begin by saying that the Prime Minister indicated earlier that he would be in the House. After such an historic conference he had an obligation to be here.


Some Hon. Members:: Hear, hear!


John Edward Broadbent: I will go to the surrogate Prime Minister of the day and ask him about these discussions. The communique he referred to talks about 90 days to sort out certain details. Will the Minister deal with the question of principle? We agree details should be discussed with the provinces, but will the Minister answer this question? Does he agree with the Premier of Ontario and the Premier of Quebec that they have a veto in these discussions? Does he agree with that or does he not? It is a clear question; give us a clear answer.


Some Hon. Members:: Oh, oh!


Charles Joseph Clark: Mr. Speaker, I am pleased to receive from the surrogate Leader of the Liberal Party-


Some Hon. Members:: Oh, oh!


Charles Joseph Clark: -a repetition of the question put by his colleagues. He asks me about the principle. Let me quote to him the principle agreed to by all of the Governments present at the First Ministers' Conference, an historic principle: "The Ministers agreed to the principle of full participation in the forthcoming negotiations between Canada and the United States and the GATT."


REPORTING AUTHORITY OF CANADIAN NEGOTIATOR
John Edward Broadbent: Mr. Speaker, presumably the provincial Premiers will be answering to their Houses what they mean by that. This Minister has an obligation to give clear answers to this House because he speaks for the Government of Canada.
While we agree that the details of fact as they are to be analyzed in the discussions and so on should be discussed with the Premiers, this all makes sense, will he tell us on this fundamental question of principle, so that there is no confusion amongst the Premiers or people of Canada, whether he agrees with Simon Reisman that there is only one boss, the federal boss, or does he agree with the Premier of Ontario and the Premier of Quebec that they have a right to a veto? Will the Minister please answer that question and we will stop putting it to him?
December 2, 1985


Charles Joseph Clark: Mr. Speaker, we have just heard, in the question put, the voice of the old days and the old ways where the role of the provinces was limited to discussion and consultation. Now there has been established, by a Government determined to achieve national unity in fact and in important negotiations affecting all of the jurisdictions of the country, that there will be a principle of provincial participation. We have established how that will apply in the preparatory phase of the negotiations. We have agreed that we will work out together how that will apply to the question of the formulation of the mandate. These procedures go forward step by step. They are being taken that way by all 11 Governments.


Mr. Speaker:: Order, please.


Charles Joseph Clark: We have applied the principle to the first step and we are applying the principle to subsequent steps.


Mr. Speaker:: Order, please. Some of the questions and answers are becoming longer.


POSITION OF GOVERNMENT
John Edward Broadbent: Mr. Speaker, a number of the Premiers have clearly taken one interpretation from this agreement and the federal Government has taken another. Therefore, will the Minister tell the House whether the Government is simply confused on this issue, or is it systematically trying to mislead the people of Canada?


Charles Joseph Clark: Mr. Speaker, neither. We are not the New Democratic Party.


Some Hon. Members:: Hear, hear!


FEDERAL-PROVINCIAL RELATIONS OPPORTUNITY TO SETTLE DIFFERENCES IN CANADA BEFORE NEGOTIATING WITH UNITED STATES
Hon. Jean Chretien (Saint-Maurice):: Mr. Speaker, I have a question for the Secretary of State for External Affairs, who is in charge of these negotiations. Since the free movement of persons, goods and services under the Canadian Constitution does not exist in Canada de facto, and since following the negotiations, the federal Government will not be able to put a treaty into effect without the consent of the provinces where their jurisdictions are concerned, would it not be wiser if the Government started by putting Canada's house in order, before negotiating a treaty it would not be able to put into effect?
Oral Questions


Charles Joseph Clark: Mr. Speaker, we agree it is sensible and important to work together with the provinces in order to achieve a broader joint approach to domestic issues. We are entirely aware of the fact that to achieve this kind of co-operation, there must be leadership at the federal level, capable of stressing the importance of this kind of co-operation. That is why we have departed from the old Liberal habit which almost destroyed our country and now for the first time, we have set up a procedure for establishing a system of co-operation among Canada's jurisdictions.


NEGOTIATIONS WITH UNITED STATES-POSSIBLE VETO FOR PROVINCES
Joseph Jacques Jean Chrétien: Mr. Speaker, perhaps I may rephrase my question.
Does the Minister intend to inform the United States Government that, following negotiations with that Government, if one of the provinces wishes to exercise its veto right on matters falling under provincial jurisdiction, the Canadian Government will not be able to deliver the goods? Does the Minister intend to say this to the Americans, telling them, in fact, that these negotiations will be just a farce so long as there is no agreement in Canada before the start of negotiations?


Charles Joseph Clark: Mr. Speaker, we do not have to explain Canada's constitutional position to the Americans or to the Canadians.
What we want to point out to Canadians and Americans is that we have today co-operation among the various levels of Government which did not exist in the past, and that today we can reach a consensus on national objectives. That is why we concluded this historic agreement in Halifax last week.


PROVINCIAL POSITIONS ON AGRICULTURE AND CULTURAL INDUSTRIES
Mr. Steven W. Langdon (Essex-Windsor):: Mr. Speaker, I would like to try to sort out this bowl of mush that the Minister is trying to feed the House of Commons. I would ask him a very precise question. If the provinces say that they want agricultural policies and cultural industries left off the negotiating table, as indeed many of the provinces have said, will the federal Government respect that decision and follow that course of action?


Charles Joseph Clark: Mr. Speaker, the Hon. Member knows, because he has posed the question and received answers to it before, that we do not intend to start the process of unravelling the negotiations before they begin by taking several subjects off the agenda that will be there in any event. There are two sides to a bargaining table and those issues will be raised by the other side in the negotiations. What we have established for

December 2, 1985
Oral Questions
the first time is that there will be a right of participation and not just consultation for the provinces.
The Elon. Member asked a question about specific fields that might be the subject of negotiations. The means by which we discuss the mandate and apply the principle of provincial participation in the formulation of the mandate is, as has been agreed by all Governments, a matter that will be worked out in the 90 days that are to come.


MINISTER'S POSITION
Steven W. Langdon: Mr. Speaker, in fact the Minister is saying that if the provinces want these points off the negotiating table, he is going to put them on because that is his view. I would ask him precisely how that shows respect for the supposedly grand principle of participation which is such a great new achievement, when in fact all the Secretary of State is doing is conning the provinces into thinking they have a role to play while leaving them out of substantive decisions.


Mr. Hnatyshyn:: I wouldn't talk about Eloward Pawley that way.


Charles Joseph Clark: I am not trying to con the provinces or the people. We have involved the people of Canada and now the provinces in negotiations in a way that is without precedent, whether it be the successful negotiations we had with the United States in the past or the negotiations in which Canada was involved under the MTN. Far from conning the provinces, the Government is inviting the provinces to participate in matters which affect their futures and their interests.


FEDERAL-PROVINCIAL FISCAL ARRANGEMENTS FEDERAL PAYMENTS TO PROVINCES
Hon. Douglas C. Frith (Sudbury):: Mr. Speaker, my question is for the Minister of Finance. Would the Minister not admit that when the Government refused the plea of the provincial Premiers to halt the planned federal cut-backs in growth transfers for medicare and post-secondary education, it not only broke its own election campaign commitment made in the summer of 1984 but also broke the Minister of Finance's commitment not to touch the transfer payments until the spring of 1987? Would he not agree that in fact all the federal Government is doing is exporting its deficit problem to the backs of the provincial Premiers?


Hon. Michael Wilson (Minister of Finance):: Mr. Speaker, the answer is no, no, and no. Let me explain what I mean by that. The increase in transfer payments will be from $65 billion over the last five years to $90 billion over the next five years. Surely that is a significant increase.
Second, we are not transferring the deficit. The spending of the federal Government outside of interest and transfer payments to persons and individuals, last year increased at a rate of 10.8 per cent under the previous Government. This year it will be flat. That is not transferring the problem to the provinces.


BUDGETARY CUT-BACKS-POSSIBLE REACTIONS OF PROVINCES
Douglas Cockburn Frith: Mr. Speaker, the Minister of Finance's own document indicated that he would not touch transfer payments until the spring of 1987, and that promise has been broken.

Does the Minister realize that by cutting back transfer payments to the provinces, he is running the risk of worsening the already critical situation in emergency wards of Quebec hospitals, where patients must wait for hours on end, and that he is forcing the Government of Quebec to consider introducing a user fee?


Michael Holcombe Wilson: Mr. Speaker, I think what the Hon. Member is touching on is a matter that is under the jurisdiction of the provinces. If he has some views on that, perhaps he could speak to Mr. Peterson himself. Perhaps he could speak to the Premier of the Province of Quebec who will be elected today.


John Napier Turner: Who will that be?


Michael Holcombe Wilson: I can give you a suggestion, if you want. However, I would not want to betray confidences to the Leader of the Opposition.
The point I would like to make is that nowhere did I say that I would not be changing anything until April 1, 1987. I did make and keep a promise in January of this year that in the current fiscal year I would not be touching the federal-provincial transfers. In fact, what we did was increase the equalization payments to six provinces.


PUBLISHING INDUSTRY
Mr. Ian Deans (Hamilton Mountain):: Mr. Speaker, my question is for the Minister of Communications. I would like to welcome him back to his seat.


Some Hon. Members:: Hear, hear!


Ian Deans: Does the Minister stand by the policy with regard to the publishing industry that he announced in the middle of the summer just past?
December 2, 1985


Hon. Marcel Masse (Minister of Communications):: Mr. Speaker, to my knowledge the Government has made no changes in the publishing policy announced by the Priorities Committee in Baie-Comeau.


CANADA-UNITED STATES TRADE NEGOTIATIONS
Ian Deans: Mr. Speaker, I wonder then if the Minister would explain what the Secretary of State was talking when he said that the publishing industry can and should be on the negotiating table during the free trade discussions. How are those things consistent one with the other?


Marcel Masse: Mr. Speaker, I think we must be careful here, to avoid confusion. Some cases are now being discussed and examined by the Department of Regional Industrial Expansion, and that is the responsibility of Investment Canada. And there is also a policy for the entire country, which was formulated in Baie-Comeau. So I think these are two entirely different aspects of the question.
Now the Minister of External Affairs is responsible for organizing discussions on free trade with the United States and it is up to him to answer questions pertaining to this area.


EMPLOYMENT
George Baker: Mr. Speaker, I wish to ask a question about a very urgent matter, that is, hunger strikes which are taking place at this very moment in the Province of Newfoundland. The Minister of Employment and Immigration was notified by groups in seven communities last week that they intended to go on hunger strikes to protest the inefficiency of the Government in terms of the approval of works programs which were promised, because these people do not have any incomes.
In the absence of the Minister of Employment and Immigration my question is directed to the Acting Minister. Is the Government aware of these hunger strikes? More important, is the Government aware of the reason for them? If it is aware, what is it planning to do about the matter?


Hon. Walter McLean (Minister of State (Immigration)):: Mr. Speaker, the Government is certainly aware and the Government has acted. As the Hon. Member will know, and as he has been informed, fully $9.5 million in emergency funding has been made available for projects to create jobs. I am
Oral Questions
pleased to report to the Hon. Member that already 91 projects having a total value of $4.7 million have been approved.


STARTING OF PROJECTS
George Baker: Mr. Speaker, people should not have to be driven to this type of action as a result of the inefficiency of the Government in actually approving the projects and getting them started.
Will the Minister assure the House and guarantee these people with no incomes who are on hunger strikes today that these projects will start immediately, today, in every community in which they were promised?


Walter Franklin McLean: Mr. Speaker, I wish to assure Members of the House and, more particularly, the people of Newfoundland, that the Government is proceeding expeditiously. As I have mentioned, already 91 projects have been approved, and others will be approved just as quickly as possible.


FEDERAL-PROVINCIAL FISCAL ARRANGEMENTS FEDERAL PAYMENTS FOR EDUCATION AND MEDICAL CARE
Mr. Rod Murphy (Churchill):: Mr. Speaker, my question is directed to the Minister of Finance. The reason so many questions have been asked in the House with regard to exactly what the Government has signed with regard to trade is because of the confusion over what the Government says and what it does. Before the last election the Government promised to increase funding for post-secondary education and for medicare along the lines of the 1977 cost sharing agreement. Why is it going in the opposite direction today?


Michael Holcombe Wilson: Mr. Speaker, I cannot understand why the Hon. Member does not listen to previous answers. In the last five years funding in post-secondary education and health care amounted to $65 billion. In the next five years it will be in excess of $90 billion. If the Hon. Member cannot add, that is $25 billion plus which will be added to those budgets.


GOVERNMENT'S POSITION
Rodney Edward Murphy: Mr. Speaker, the problem is not with my adding. The problem is with what the Government promised before it was elected. In 1983 the Prime Minister promised 50/50 sharing with respect to medicare. In 1984 he promised to reinstate post-secondary education funding. Why are these promises not being kept?


Michael Holcombe Wilson: Mr. Speaker, the answer I gave to the first question stands. Surely the Hon. Member can understand what an increse is. Some $25 billion over some $65 billion is very close to a 40 per cent increase. That is up, up, up, up-higher.

December 2, 1985
Oral Questions TERRORISM


INTERNATIONAL SECURITY MEASURES-CANADA'S POSITION
Bill Attewell: Mr. Speaker, my question is for the Secretary of State for External Affairs. All Canadians mourn the loss of 60 people who died when Egyptian commandos stormed a hijacked aircraft a week ago Sunday. We particularly mourn the loss of Valinda Leonard and her 16-month old son Andrew. These acts of terrorism must stop. How can Canada bring pressure to bear on countries to tighten up security measures and to take other strong steps to eliminate terrorism and hijacking?


Charles Joseph Clark: Mr. Speaker, this is a most serious question. The Government of Canada can act in two ways. The first is by showing some leadership, and the second is by working in consultation with other countries interested in stopping terrorism. Leadership involves the type of actions which have already been taken, such as the announcement by the Minister of Transport. Consultation involves, for example, the meeting which will be held in Bonn on December 10 and 11 at which Canada will have representation. Canada will be making some proposals as to means by which the world can act together to indicate to terrorists that their acts of terrorism will not be tolerated, that there will be no haven for them, and that there will be the harshest response to the actions which they might undertake.


CANADA-UNITED STATES NEGOTIATIONS-AGRICULTURAL MARKETING QUOTAS
Don Boudria: Mr. Speaker, in the absence of the Prime Minister my question is for the Secretary of State for External Affairs. It concerns free trade.
Last week the Ontario Federation of Agriculture passed a motion expressing grave concern that agricultural programs and quotas could be bargained away in free trade negotiations with the United States. Can the Secretary of State for External Affairs indicate to the House today his clear and unequivocal commitment that that will not happen and that marketing quotas in the agricultural sector will be protected and not bargained away in free trade negotiations?


Charles Joseph Clark: Mr. Speaker, as a Member of Parliament who comes from an agricultural area 1 know, as the Hon. Member should, that for years-almost for decades-the agricultural industry was run into the ground by the disinterest of the Liberal Party and the Liberal Government of the day. This Government was elected to change the situation in agriculture. We have done that on a number of fronts. We do not intend to place agriculture at risk in any negotiations. We believe that there can be advantages for all of Canada in the trade negotiations.


Don Boudria: Mr. Speaker, I gather the answer means no, they will not be bargained away.


QUOTAS-GOVERNMENT POSITION
Don Boudria: If that is the answer, why should dairy farmers in my riding believe what the Secretary of State for External Affairs says about milk quotas, when the Conservative Government lied to workers in the shoe industry in that same riding?


Mr. Speaker:: With great respect, I would like to ask the Hon. Member to rephrase the last part of his question.


Don Boudria: I said the Government, Mr. Speaker.


Mr. Speaker:: The Hon. Member knows, I think, that the issue is language and not to whom his question is directed.


Don Boudria: Sorry, Mr. Speaker. 1 will take that back. [Translation]
Could the Secretary of State for External Affairs give us the assurance that this time, we will not be getting the wrong information or rather, that for once it will be true?


Charles Joseph Clark: I think the answer is that the riding of Glengarry-Prescott-Russell needs a better Member in the House of Commons.


IMPACT OF NEGOTIATIONS ON WOMEN
Ms. Margaret Mitchell (Vancouver East):: Mr. Speaker, my question is also for the Secretary of State for External Affairs. In Halifax the Prime Minister reaffirmed his Government's commitment to integrate women in all aspects of policy and programs. He then completely ignored this when he talked about free trade and transfer payments. Is the Minister aware that in 42 Government studies with respect to trade not one of them examines the impact on women? Will the Minister immediately request that further studies be conducted with respect to the impact of free trade on women?


Charles Joseph Clark: Mr. Speaker, there certainly will be studies with respect to the impacts of trade negotiations on women. One of the things that we know now is that many of those jobs which are threatened today by the protectionist pressures in the United States are jobs which are held by women. We wish to take practical steps and not simply wave rhetorical gestures, in the direction of ensuring that there is not only greater job security for women now but a broader range of opportunity in a workplace which is itself expanding for the women of Canada.
December 2, 1985


REQUEST FOR CONSULTATIONS WITH NATIONAL ACTION COMMITTEE
Margaret Anne Mitchell: Mr. Speaker, it is our understanding that women's groups are particularly concerned about the type of industries which will be phased out by free trade since they are largely industries in which women now work, at notoriously low wages. Will the Minister consult the National Action Committee on the Status of Women, and other groups, on the impact of free trade on women workers, from their point of view, but not from the point of view the Minister represents?
Right Hon. Joe Clark (Secretary of State for External
Affairs): Mr. Speaker, I am quite prepared to receive and to pay attention to any representations and, particularly, any serious data put forward by the National Action Committee or by any other responsible groups in the country.
Working now under the historic agreement arrived at with the provinces last week, we will also in agreeing on common analysis of that data so that we will be working with the provinces not simply in gathering common data, but also have a basis on which Canada can proceed into those negotiations. But it is essential for us that we find ways to achieve both economic growth and the protection of Canadian jobs if we are serious about the status of women in this country. This Government is deeply serious about achieving some range of equality and some real opportunity for Canadian women in an expanding workforce, not in a workforce which is increasingly threatened, as is the case today.


EXCO ENERGY CORPORATION-PLIGHT OF CREDITORS
Mr. Dave Nickerson (Western Arctic):: Mr. Speaker, my question is directed to the Minister of Energy, Mines and Resources. One of the worst aspects of the National Energy Program was the potential for abuse with the PIP Program. Can the Minister tell us if there is any hope that the creditors of the Exco Energy Corporation, presently under investigation by the RCMP, will be able to recover any of the moneys which are owed to them?
Hon. Pat Carney (Minister of Energy, Mines and
Resources): Mr. Speaker, I am aware that this particular case has caused some hardhsip for some constituents of the Hon. Member. But, because this case is under RCMP investigation, I believe it would not be appropriate for me to comment further at this time.
Oral Questions CUSTOMS AND EXCISE IMPORTATION OF AMERICAN MAGAZINE


John V. Nunziata: Mr. Speaker, in the absence of the Minister of National Revenue 1 would like to direct my question to the Minister of Justice. It concerns, again, the December issue of Hustler magazine. The Minister is aware that the magazine should have been seized and destroyed at the border by the Customs officials. On Friday the Minister of State for Finance promised this House that a report would be forthcoming today.
Could the Minister of Justice report to this House on the reasons why this particular edition of the magazine was allowed into Canada? Could he also indicate to the House what steps his Department has taken to ensure that this offensive and disgusting magazine is removed from store shelves in Canada?


Hon. John C. Crosbie (Minister of Justice and Attorney General of Canada):: Mr. Speaker, 1 don't know why the Hon. Member wants to give so much publicity to this issue of Hustler magazine. He continually brings it up in the House. This is a matter which is, under the present legislation, left to the judgment and discretion of certain Customs officials who have a very difficult job to do and who do their best to come down on the right line on each occasion.
The Hon. Member was promised a report. He will get his report when the report is ready. In the meantime I would adivse him not to continue giving such publicity to this magazine.


John V. Nunziata: Mr. Speaker, we were promised the report today and it is obvious that the Government is not serious about stopping the importation of pornography into this country. The problem won't go away if you ignore it.


STAFFING OF DEPARTMENT
John V. Nunziata: Mr. Speaker, my supplementary question is directed to the President of the Treasury Board. Notwithstanding what the Deputy Prime Minister had to say on Friday, will the Minister confirm that over 1,200 jobs will be cut from Customs and Excise in the next five years? And would he not agree that we should be increasing instead of decreasing the number of Customs inspectors in order to stop pornography from coming into Canada?


Hon. Robert de Cotret (President of the Treasury Board):: Mr. Speaker, I will be very happy to look into the specific multi-year operational plans of the Department-


Mr. Gauthier:: You won't.


Robert René de Cotret: -and come back to the Hon. Member. That is the plan we work with over a period of years and I will be very happy to look at the specific numbers and report back to the Hon. Member.

December 2, 1985
Oral Questions CROWN CORPORATIONS


PROPOSED SALE OF DE HAVILLAND CORPORATION
Michael Morris Cassidy: Mr. Speaker, my question is directed to the President of the Treasury Board. It is in regard to the give-away and fire sale prices of the de Havilland Aircraft Corporation to the Boeing Corporation of the United States, which the Minister intends to announce in half an hour's time.
Could the Minister explain why the Government set conditions for the sale of de Havilland requiring that it be sold to a legitimate air frame manufacturer and that there be financial depth in such a way that it effectively excluded the sale of de Havilland to any one other than a foreign corporation? Could the Minister also explain why it was that Rimgate Holdings of Vancouver, a Canadian buyer, was effectively excluded from getting the information it needed in order to submit a bid to keep de Havilland in Canadian hands?


Robert René de Cotret: Mr. Speaker, I will be making a statement on the progress of our privatization program-


John Edward Broadbent: Why not in the House?


Robert René de Cotret: -and I can tell the Hon. Member that, as he obviously well knows, this is part and parcel of our Government's commitment to revitalize the Canadian economy and to move on to economic renewal.


Ian Deans: That sounds like John Diefenbaker and the Arrow.


Robert René de Cotret: I can tell the Hon. Member further that the program is progressing very well for the interests of Canada, for the interests of the employees, and for the interests of the private sector, and very well, indeed, for the over-all economic renewal which we are witnessing in our country at this time.


Michael Morris Cassidy: I can tell the Minister, Mr. Speaker, that it is offensive that the statement he is making will not be made in this House. It is also offensive that the Government's conditions effectively ensured that de Havilland will be sold to foreign hands.


JOB GUARANTEE INQUIRY
Michael Morris Cassidy: Mr. Speaker, will the Minister say why it was that the representatives of the 42,000 workers involved have not been consulted in any way with respect to decisions so vital to the future of the aerospace industry? And will the Minister ensure that there will be job guarantees to keep those aerospace jobs here in Canada?


Robert René de Cotret: The Hon. Member talks about 42,000 workers. I would be very happy to see 42,000 workers at de Havilland. What we are doing is exactly that. We are ensuring that the workforce goes up rather than goes down in that vital industry of ours.


EXTERNAL AID
Mr. Reg Stackhouse (Scarborough West):: Mr. Speaker, my question is directed to the Minister for External Relations. In spite of reports that life is better in Ethiopia than it was a year ago, other reports bring us the news that 100,000 people have died from conditions imposed on them through forced transfer from the north to the south. In view of such forced transfers which are reportedly continuing, what steps can our Government take with other democratic Governments to protect the rights of people under these conditions?


Ms. Copps:: Wake up, guys.


Some Hon. Members:: Shush!


Mr. Nystrom:: She is not a guy.


John Horton McDermid: What a sexist statement.


Mr. Speaker:: Order, please. It is only Monday. All the noise doesn't help.
[ Translation]


Hon. Monique Vezina (Minister for External Relations):: Mr. Speaker, Canada did not take part in the displacement of families in Ethiopia. The support we are giving consists in helping on a case-by-case basis. Mr. David MacDonald, our emergency assistance co-ordinator, has made the necessary contacts, and we have taken steps to help these people overcome the trauma of resettlement.


ENVIRONMENTAL AFFAIRS
Hon. Herb Gray (Windsor West):: Mr. Speaker, my question is directed to the Minister of the Environment. On Friday, Doug Hallett, the senior adviser for Environment Canada, said that "Canadians ingest a high amount of "the dangerous chemicals" PC Bs, just by eating staple foods such as potatoes, vegetables, fruit and meat". He went on to say that the average Canadian may just as well package PCBs and swallow them.
Would the Minister tell the House what immediate steps he is taking to remove this danger from the foods Canadians eat? Can he give us an immediate answer to reassure Canadians, in the light of what his own senior departmental adviser said on this important matter?


Hon. Tom McMillan (Minister of the Environment):: Mr. Speaker, the Hon. Member probably knows that successive Governments, including the one of which he was a part, and certainly this one, have put in place a very rigorous regime to
December 2, 1985

control the use of PCBs and their transportation. In fact, PCBs have been effectively outlawed for use in this country.
The official to whom the Hon. Member made reference in his question was speaking at a seminar as an individual-


Some Hon. Members:: Oh, oh!


Thomas Michael McMillan: He was not commenting on this subject in his capacity as a senior adviser to my Department or to the Government of Canada.


Herbert Eser (Herb) Gray: Mr. Speaker, I would suggest that Dr. Hallett knows a lot more about the subject than the Minister.


REQUEST FOR ESTABLISHMENT OF SUPER FUND TO DEAL WITH TOXIC CHEMICALS
Herbert Eser (Herb) Gray: Will the Minister say today that he will immediately accept the request made at that same conference last Friday by the Ontario Minister of the Environment that the federal Government set up a super fund to help Canadians deal with problems of toxic chemicals, such as the excessive levels of PCBs in food and those in the St. Clair River? Will he make that commitment today?


Thomas Michael McMillan: Mr. Speaker, other Members have raised this proposal. I said then, as I say again, that I have been discussing the matter with my counterparts across the country, including the Minister of the Environment in Ontario. The Government of Ontario has set aside approximately $10 million for this purpose. One proposal was that the Government of Canada match that $10 million. I am looking at the proposal as well as others along the same lines.


CLERK OF PETITIONS' REPORTS
Mr. Speaker:: I have the honour to inform the House that the petitions, with the exception of one, presented by Hon. Members on Friday, November 19, 1985, meet the requirements of the Standing Orders as to form.
One petition presented by the Hon. Member for Spadina (Mr. Heap) did not meet the requirements of the Standing Orders as to form.



POINT OF ORDER


Michael Morris Cassidy: Mr. Speaker, 1 have a point of order which also contains a question of privilege. It arises out of the fact that the Government has chosen not to make a statement to the House respecting the future of the
Petitions
aerospace industry, but to do it by means of a press conference one-half hour after Question Period has taken place. It seems to me, Mr. Speaker, as a Member of the House, that we should all be entitled to have the information necessary to make comments in the House and that it is a derogation of the privileges of Parliament for the Government consistently to go around Parliament by making statements at press conferences rather than using the House which is where those decisions should be announced.


Some Hon. Members:: Shame, shame!


Mr. Speaker:: I think the Hon. Member knows that his representations constitute neither a point of order nor a question of privilege. The Government is free to do what it wishes where it wishes.



ROUTINE PROCEEDINGS


Mr. Don Blenkarn (Mississauga South):: Mr. Speaker, I have the honour of presenting the twelfth report of the Standing Committee on Finance, Trade and Economic Affairs in both official languages.
[Editor's Note: For above report, see today's Votes and Proceedings.]


WAYS AND MEANS TABLING OF NOTICE OF MOTION
Michael Holcombe Wilson: Mr. Speaker, pursuant to Standing Order 65(1), I wish to lay upon the Table, in both official languages, copies of a notice of Ways and Means motion to amend the Income Tax Act. Pursuant to Standing Order 65(2) I ask that an Order of the Day be designated for the consideration of said motion.


PETITIONS
Mr. John R. Rodriguez (Nickel Belt):: Mr. Speaker, I have the privilege and responsibility of presenting several petitions, the first from the Alberta Federation of Labour signed by some 300 members of that organization. I also have a petition from Ottawa, a petition from the Sudbury Legal Clinic, a petition from Local Union 7062 of the United Steelworkers of

December 2, 1985
Petitions
America in Hamilton, a petition from the Winnipeg Labour Council, and a petition signed by many people from the riding of Spadina in Toronto. All of the people who signed these petitions call upon the Government to withdraw the provision, which is to come into effect on January 1, 1986, whereby pension income will be considered earned income for unemployment insurance purposes.


Mr. Gus Mitges (Grey-Simcoe):: Mr. Speaker, I am pleased to present a petition signed by many individuals from the congregation of the United Church of Meaford, Ontario, in my riding of Grey-Sincoe. The petitioners underline their deep concerns and strong feelings that everything possible must be done by all levels of Government to further the cause of peace and disarmament throughout the world.


Margaret Anne Mitchell: Mr. Speaker, I have a petition from a number of people in the Lower Mainland of British Columbia asking that the House of Commons reinstate full indexation of universal family allowances and rescind the unfair tax increases because of the very adverse effect that this will have on families, children, and particularly on single-parent mothers.
I have a similar petition from a number of people in Nova Scotia who feel just as strongly on the other side of Canada. They ask that family allowances be fully indexed and that unfair tax increases be rescinded.


Mr. Cyril Keeper (Winnipeg North Centre):: Mr. Speaker, 1 have a petition signed by a couple hundred people from Winnipeg, most of them from my riding, with regard to family allowances. The petitioners point out that the cut-backs in family allowances will hurt all families, including the very poorest, after the year 1990 and that this measure is unfair and unjust and should be rescinded.


Rodney Edward Murphy: Mr. Speaker, I also have a petition signed by residents of Manitoba indicating their opposition to the federal Government's plan to deindex the family allowance. In the petition the people explain how they need that money for their basic expenses. They also feel that it is an unfair burden on the middle and low income households of Canada.
[ Translation]


Sheila Maureen Copps: Mr. Speaker, 1 received a petition from the residents of the riding of Blainville-Deux-Montagnes who humbly declare that Government programs respecting family allowances and the child tax credit are absolutely necessary to families with children, and that families with children do include a considerable number of singleparent families that happen to be among the most destitute
citizens of our society. The petitioners urge the Government to honour its election promises by restoring full indexation and the full child tax credit for single-parent families.


Mr. Stan J. Hovdebo (Prince Albert):: Mr. Speaker, it is my honour and duty to present to the House a number of petitions from the City of Prince Albert, all of which request the House of Commons to reinstate full indexation of the universal family allowance and to rescind unfair tax increases.



PUBLIC PENSIONS REPORTING ACT


William Paul Joseph McCrossan: for leave to introduce Bill C-255, an Act to impose reporting requirements with respect to public pension plans and to amend certain Acts in consequence thereof.


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


Some Hon. Members:: Agreed.


William Paul Joseph McCrossan: Mr. Speaker, in this year's Auditor General's Report the Auditor General expressed concern that parliamentarians do not have adequate information to assess and fully understand both short and long-term financial implications of public pension programs. Similarly, in the public accounts of Canada for the last five years the Auditor General has noted that he does not have sufficient information concerning Government of Canada employee pensions.
The Public Pensions Reporting Act will require the Government to prepare and file in the House actuarial valuations of all public pension plans using both standards and timetables similar to those imposed on private sector plans.


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

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. Pierre H. Vincent (Parliamentary Secretary to Minister of Finance):: Mr. Speaker, Question No. 473 will be answered today.


Mr. Young: 1. In 1985 and to date, was there a change in the routing of outgoing and incoming aircraft at Pearson International Airport and, if so, were flight
December 2, 1985

patterns changed so that more flights were being routed over the south-east portion of the City of Toronto?
2. During 1985 and to date, did the Department of Transport receive complaints about jet aircraft noise from residents in the Constituency of Beaches and, if so, how many?


Hon. Don Mazankowski (Minister of Transport):: 1. No.
2. Yes, one.
[ Translation]


Pierre H. Vincent: Mr. Speaker, I ask that the remaining questions be allowed to stand.


Mr. Speaker:: The question indicated by the Parliamentary Secretary has been answered.


Don Boudria: On a point of order, Mr. Speaker.


Mr. Speaker:: I recognize the Hon. Member for Glengarry-Prescott-Russell (Mr. Boudria) on a point of order.


Don Boudria: Mr. Speaker, on November 5, 1985, in the House the Government indicated that it would be answering one of my questions concerning the travels of the then Minister of the Environment. Later that day the Government changed its mind and asked that my question be withdrawn from the Order Paper and reput. They had the answer in their hands that day, Mr. Speaker. If the answer was available to be tabled in the House by the Parliamentary Secretary on November 5, 1985, why has it not been done since? Is the answer so embarrassing that the Tories do not dare table it for public view?


Pierre H. Vincent: Mr. Speaker, I am pleased to see that the Hon. Member is asking this question when the Parliamentary Secretary who would normally answer is not in the House. I am glad to take note of his question and 1 will get back to him.


Mr. Speaker:: Shall the remaining questions stand?


Some Hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mrs. McDougall (for the Minister of Finance) that Bill C-84, an Act to amend the Income Tax and related statutes and to amend the Canada Pension Plan, the Unemployment Insurance Act, 1971, the Financial Administration Act and the
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Petroleum and Gas Revenue Tax Act, be read the second time and referred to a legislative committee.
Mr. Bud Bradley (Parliamentary Secretary to Minister of Supply and Services):: Mr. Speaker, I had anticipated that there would be another speaker from the New Democratic Party following the finalization of a speech by a Liberal Member. But I am more than willing to take this opportunity to speak now. It is a privilege to speak to Bill C-84, an Act to amend the Income Tax Act. The Bill provides legislative authority for several income tax measures outlined in the May 1985 Budget. These changes affect three major areas and will encourage private initiative.
These changes include a $500,000 capital gains tax exemption, measures to encourage labour and pension fund investment in small businesses, and improvements to tax incentives available for research and development. There is a special tax credit for investment in Cape Breton. There will be changes to improve Government effectiveness, including an increase of $140 in the child tax credit and increased tax assistance for the disabled and artists. There will be clear limits on Revenue Canada's powers of search and seizure, a measure in this Bill that I loudly applaud.
Among the changes in this Bill to help control the deficit are the modification to personal income tax indexation, an end to the federal tax reduction, a temporary surtax on upper income earners and large corporations, as well as an end to the Registered Home Ownership Savings Plan.
The purpose of this Bill is to continue Canada on the economic road to recovery that was initiated by the Minister of Finance (Mr. Wilson) in his Budget and by this Party in September, 1984. We have seen an indication of that recovery. The unemployment rate has fallen tremendously. Some 333,000 new jobs have been created in Canada. Not only has the bank rate dropped, providing lower interest rates, but the mortgage rate has decreased to a level that will enable people to afford homes. This means that housing starts have begun to climb. Consumer spending has risen. Bankruptcies in Canada are on the decline. Manufacturing orders have increased and the fact is that the Canadian economy is outperforming that of the United States. We intend to continue this growth and improve the economy of this great country.
Many of these indications are of particular interest to my riding of Haldimand-Norfolk. It is a riding which is very similar to many other rural ridings in Canada. It is basically 75 per cent rural, consisting of the usual agricultural sectors; dairy producers, pork producers, beef producers, chicken and turkey producers and egg producers. We have apple growers and strawberry growers. In fact, the riding of Haldimand-Norfolk consists of the whole family of aricultural commodities. It is in my riding that the majority of tobacco in Canada is grown. We grow tomatoes not only for canning or retail sale in stores, but for tomato paste. We grow peanuts and even ginseng in Haldimand-Norfolk.
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Haldimand-Norfolk is an agricultural area that has been ignored for too long and requires direction.
In contrast to agriculture in my riding we have probably the largest steel plant in the world with the Stelco-Erie Works. We have the largest Canadian fossil burning generator plant at Nanticoke and the large Texaco refinery that recently announced expansion plans. My riding, like many others, includes urban areas with textile plants, footwear industries as well as many other small industries and businesses. These industries have been seeking direction for years and we are providing it with this Bill.
Today, I want to deal with the three measures that affect us most directly. They are, the capital gains tax exemption, small business bonds, and the deductions for the disabled. In the six years I have had the privilege of serving the House of Commons, many of my colleagues and I have been striving for a capital gains tax exemption. We literally begged the Government of the day to introduce such a measure that will allow the farmer who has invested his life savings in his farm an opportunity to deduct the gains from the sale of his farm in order to live in retirement with some dignity. Since the farmer may not have to increase the price of his farm in order to retire comfortably, it presents an opportunity to young farmers to purchase a farm at an affordable price. We have fought hard for such a measure during the last three elections and I am pleased to see it being brought into play.
I must admit that I was pleasantly surprised to hear the Minister include small business in that provision. This means that money will be recycled into revitalized, expanded and new businesses. Those people who will be able to deduct the capital gains tax from the sale of their businesses can reinvest in other ventures and create more jobs. I was very pleased to see the Minister take the very wise step of including small businesses in the capital gains tax exemption.
We must give credit to the previous Government for instituting the small business bond. Those bonds provide reduced interest rates to farmers and small businesses in financial difficulties. At present, small businesses and farmers can arrange financing for up to $500,000 at interest rates that have typically been 5 to 6 percentage points less than would have been applicable. The maximum term for these bonds is five years.
The small business bond program was due to expire in 1985. However, the program has played a useful role in providing interest rate relief in cases where business failure might otherwise result. The program was important to agriculture, and there is a growing awareness of its role in that sector. This special tax program has resulted in nearly $700 million of small business bonds being issued. Consequently, we are extending that program for a further two years. I believe this will give the agricultural and small business sector an extra shot in the arm to get them over some very difficult times as our economic recovery continues.
I am particularly familiar with the third area I want to talk about because I participated in my Party's task force on national revenue. The Income Tax Act currently allows for a
special deduction to be claimed by disabled persons. Under the present law, only those persons who are blind or confined to a bed or wheelchair qualify for the deduction. The Budget proposes to broaden the definition of disability in the tax legislation so as to include many other people with severely disabling conditions which do not result in confinement to a bed or a wheelchair. The new definition requires that in order to qualify for the tax deduction, an individual must suffer from a prolonged and severe mental or physical impairment. To be considered prolonged, the impairment must be expected to last at least 12 months. For an impairment to be severe, it must markedly restrict the daily living activities of an individual. In order to be eligible for the deduction, claimants will have to be certified by the Department of National Health and Welfare as having met the requirements of the disability definition. It is expected that approximately 185,000 Canadians will be eligible for the deduction under the new definition, compared with 65,000 under the current definition.
This need was brought home to me during the task force hearings. I recall a young man who came in a wheelchair and strugged on two crutches to come to the table to present his case. He was handicapped and restricted to his wheelchair, but because he wanted to maintain hope and dignity, he strugged on crutches for an hour or two each day. He wanted to have some mobility under his own power and to maintain pride and respect. However, because he did that, he did not qualify as being physically impaired, in that he was not restricted to his wheelchair for the full day.
Another case involved a young lady who was classified as not being disabled under the Act because although she was confined totally to a bed, she was helped or half carried to a chair each day for an hour or two so that she could look out the window; probably the only world she knew. Because she sat in a chair for a couple of hours each day, she was not classified as being totally disabled and confined to bed.
We feel that those injustices should be corrected. I am very pleased to have taken part in the debate on a Bill which corrects those injustices and to have clarified those points for very needy people in the future.
We have many other Members who wish to speak on the Bill. I appreciate having had the opportunity to use a few minutes of the time of the House to voice my respect and support for the Bill, most certainly in the areas I have mentioned.


Maurice Brydon Foster: Mr. Speaker, I am pleased to have the opportunity to make a couple of comments on the speech of the Hon. Member on Bill C-84. The Hon. Member mentioned that he represented a large number of farmers in his riding, including tobacco producers. I should like to take issue with a couple of items which he mentioned. He mentioned the $500,000 capital gains exemption. It will certainly help a number of farmers to get out of farming. However, if we look at the rest of the provisions in the Income Tax Act and in the Budget of last spring, we see that farmers are treated very badly. The Hon.
December 2, 1985

Member talked about the samll business development bond and the small business bond. He knows that the extension of those bonds for a couple of years, except on very rare occasions, does not provide any assistance to farmers because the banks will simply not give them to farmers. There is very little help for those producers in that regard.
Also he knows that on September 1, the Government added some nine cents per gallon to the price of farm fuels and provided no exemption for farmers. It has been estimated that it will cost some large grain producers in western Canada some $1,000 to $1,500 each per year. It seems most unfair that the Government would increase farm input costs at a time when thousands of farmers are facing the loss of their land.
Also he did not mention that on January 1, the Government will impose a further 1 per cent increase in sales tax. This will not only increase the price of farm fuels but will increase the input costs of all farm commodities. Aside from increasing those costs, the Budget did nothing about the farm debt crisis which many tobacco farmers in the constituency of the Hon. Member are facing because of the national marketing hold-up. The Hon. Member and the Minister of Agriculture (Mr. Wise)-


The Acting Speaker (Mr. Paproski):: I do not want to interrupt the Hon. Member for Algoma (Mr. Foster), but I hope he is not on debate. This is the period provided for questions and comments.


Maurice Brydon Foster: Mr. Speaker, I was just placing my comments on the record. I have a couple of questions for the Hon. Member. Why did the Government impose massive new taxes which will cause so much hardship for tobacco producers? Will the Government come good on its commitment in the federal tobacco REDUX program of five cents per package to assist farmers to move into other crops? Why did the Hon. Member not participate in the rally held by 600 or 700 tobacco producers last Saturday in Delhi when they blocked the streets with some 80 tractors? In the Hon. Member really wanted to represent these producers, he would have taken the opportunity to attend that rally, as well as hear the presentation made by the Minister of Agriculture some three weeks ago in St. Thomas when 800 farmers rallied to protest the lack of action on the part of the Government, not only in this Bill but in the Budget of May 23.


T.A. Bud Bradley: Mr. Speaker, do I get 10 minutes to respond to the question? I think the Hon. Member has used up most of my time.
He mentioned the capital gains exemption and that it would only help farmers to get out of agriculture. If he had listened to my speech, he would have realized that I pointed out that farmers in many cases have been required to inflate the price of their farm in order to obtain some money with which to retire. Thus, they will not be required to do that now, and younger farmers will be able to purchse those farms at a much lower price.
Income Tax Act
The Hon. Member referred to the things which he says we have not done for agriculture. He did not talk about the farm credit moratorium which is in place or the $90 million cash crop advance which was lent to tobacco farmers. I did not hear him come to their defence when the press was saying that it was a gift although in reality it was a loan. He did not talk about the fuel tax reduction or farm debt programs such as REDUX. He did not refer to the meetings of the Minister of Agriculture (Mr. Wise) with all commodity groups.
However, he talked about the tobacco tax. I was not pleased with the tobacco tax, and he is aware of that. It is a question which the Minister of National Health and Welfare (Mr. Epp) has answered many times and to my satisfaction. He talked about the REDUX program for tobacco. I am pleased that he raised the issue because it was my concept. Within 15 minutes of the Budget being brought down, I presented a program to three cabinet Ministers-the President of the Treasury Board (Mr. de Cotret), the Minister of Agriculture (Mr. Wise) and the Minister of Finance (Mr. Wilson)-to take five cents from a package of cigarettes and return it to the industry. The Hon. Member should know better. The issue is not to get tobacco farmers out of tobacco. Tobacco farmers feel that if people are smoking cigarettes, they should have the right to grow the tobacco rather than having impure and possibly chemically-laden tobacco coming in from offshore. That is their point. I am pleased to tell the Hon. Member that the third draft is now complete. I have another meeting for 8.30 tomorrow morning with representatives of the Department of Finance and the Department of Agriculture and it will be going to the Minister of Finance tomorrow afternoon.
The Hon. Member talked about Delhi. He may know that I agreed to appear in a Santa Claus parade at the other end of the riding for Saturday morning and I would not want to disappoint Santa Claus. He might know as well that there were a bunch of tobacco farmers last evening at the light-up ceremony in Simcoe which I attended. He may want to know that I took the Regional Chairman, two mayors and a councillor to see the Minister of Agriculture two weeks ago. He may want to know that I had breakfast with tobacco farmers three weeks ago in Langton and met with 18 tobacco farmers a week and a half ago in my riding office. I have taken action in the five directions which they asked me to do. This included asking the Prime Minister (Mr. Mulroney) to restrict imports of tobacco to Canada to a five-year average until the national agency is finalized. If the Hon. Member is going to stand up and make accusations and ask questions on issues he is not fully acquainted with, possibly he should meet me beforehand and I can give him the right questions to ask.


John R. Rodriguez: Mr. Speaker, the Hon. Member made a big to-do about the capital gains tax. He specifically talked about farmers being allowed to keep the capital gain from the sale of their land. We had and have no quarrel with that. 1 think his leader mentioned it in the campaign. Therefore, why not do that for farmers only? Why extend the exemption to all the

December 2, 1985
Income Tax Act
other entrepreneurs who invest in such things as condominiums in Florida, art, racehorses and everything else? In 1985, according to the May budget papers, the Treasury will lose $500 million, rising to $700 million in 1986 and $1 billion by 1990. How do you justify that kind of a loss when you complain about the deficit?
Mir. Bradley: I would like to thank the Hon. Member for Nickel Belt (Mr. Rodriguez) for such a well thought out question. I supported very strongly over the last six years a capital gains exemption for farmers. I know his views on that because we have talked about it many times. It is a policy supported on both sides. I mentioned earlier that I was pleasantly surprised when it was extended to small business. The Hon. Member talks about the entrepreneurs.


The Acting Speaker (Mr. Paproski):: 1 regret that the Parliamentary Secretary's time has expired. I also regret that I cannot recognize the Hon. Member for Hamilton East (Ms. Copps) and the Hon. Member for Cochrane-Superior (Mr. Penner). From this point forward the speeches will be 10 minutes in length and there will be no questions or comments according to the Standing Orders.


Mr. Keith Penner (Cochrane-Superior):: Mr. Speaker, Bill C-84 can in no way be described as a tax reform Bill. However, there are certain aspects of it which my constituents have drawn to my attention through conversations and letters, and they have asked me to bring to the attention of the House three matters of concern to them. The first concerns the repeal of RHOSPs. When the Liberal Government introduced this plan quite a number of years ago its purpose was to encourage home ownership by assisting taxpayers in saving toward that time when they would be able to purchase a house. For the Government of Canada to abolish this plan at this time has to be viewed as a retrograde step.
As all Members know, this plan allowed the payment of up to $1,000 a year to a maximum of $10,000 into the plan. The income earned was free of tax. This meant that over a reasonable period of time a couple could set aside in excess of $20,000 for the purchase of their own home. We all know substantial funds had been amassed in these plans. That in itself attests to its popularity.
It is true that there is in Canada an urgent need for more rental accommodation, especially in large urban areas. However, I doubt very much whether we can justigy the cancellation of this plan on the basis of a shortage of rental accommodation in large cities. Young people, at least those fortunate enough to have a job, saw this plan as one of the few ways open to them whereby they could get a tax break which at the same time was an incentive to make the most important investment any family can ever make, the purchase of their own home. All Members would agree that home ownership contributes a great deal to community and national stability. It gives people a much greater stake in society. Therefore, it seems incongruous to me that a Conservative Government whose principles, I always thought, were to preserve the status quo, to get people to put down roots and become involved and
active in a caring way in building better communities, should do away with a plan which gives people a chance to become home owners. As the King of Siam said through the voice of Yul Brynner, "it is a puzzlement". It is always difficult to determine precisely what the philosophy of this Government is, and perhaps it is better not to even think about it. Perhaps there is no philosophy at work, none of any consequence. However, is it too cynical of me to suggest that the reason this plan was cancelled was simply to free up $2 billion for spending by consumers because, at the same time, the Government is taking out of the economy by way of a gigantic tax break some $1.75 billion? Even the economists on the other side realize that this is no time at all to reduce consumer confidence and spending. After all, we are only just emerging from a recession. Perhaps that is why the RHOSPs were cancelled. However, if that is the reason, I suggest it was cynical in the extreme.
Second, I want to refer to Clause 35 in Bill C-84. This, I am happy to say, is a liberalization of the tax scheme which applies to employees who have started new employment and as a consequence have to move at least 40 kilometres away. I have to commend the Government for this change and 1 do so. The existing legislation was such that the interest payable on house loans received by such employees from their employers was an employee benefit and therefore taxable. I object to that measure in the existing legislation and the Government is going to change it. However, there is a technical problem and that is that a deadline of May 23 will apply.
In the constituency which I represent, there is a community on the North Shore of Lake Superior called Marathon which has been benefiting from a very large gold mine which has been developed nearby. The Hemlo gold find is one of the most active mineral developments anywhere in North America at the present time. Very briefly, this is the problem. One of the companies involved, Teck-Corona, wrote a letter to me outlining its problem as follows:
We are in a situation here where we have just gone into production with a new Gold Mine and have been hiring our Supervisory and Operating Staff over the past one and a half years. We built eighty (80) new homes to be sold to employees and also had twenty (20) trailer lots for sale to employees for a total of one hundred (100) units. Many of our employees were hired prior to May 23, 1985 and some have been hired after that date. On these units, the Company is offering an interest-free loan forgiveable over a ten-year period. As a result of the May 23rd date, we now have fifty-one (51) employees paying tax on the benefit derived from the Company loan and another forty-nine who will not be assessed with a taxable benefit for the same type of loan.
That is not fair, is it, Mr. Speaker? Marathon is not a huge community. About 5,000 people now live there. People working for this same company have now been divided into two groups, one which has a taxable benefit and the other which does not because of this arbitrary date. I would ask my hon. friends opposite to take this matter up in caucus and do something about this injustice.
I have written to the Minister of Finance (Mr. Wilson) regarding this matter. All of the people from Marathon who are concerned about this problem have also written to the
December 2, 1985

Minister of Finance. In reply, he simply said that an extension of the proposal along the lines suggested would represent an additional tax expenditure and add significantly to the deficit.
I cannot accept that at all. It is simply a question of equity and fairness to the community. The Minister of Finance has to do better than that for the people who live there. We cannot divide the employees of one company into two groups in that manner. I know that the Government will not allow that situation to continue. I am quite confident that a correction will be made.
I would make a final plea, and this is my third point. I would like to turn now to a consideration of fairness and equity for prospectors. Motion No. 20 in Bill C-84 indicates that when a prospector exchanges some property on which he has staked claims for shares and sells those shares on the market, those shares cannot be considered as an exemption under the capital gains tax. The Prospectors and Developers Association believe that this is unfair treatment of prospectors regarding the $500,000 lifetime capital gains tax exemption. The association feels that this is objectionable mistreatment of prospectors. Prospectors should be able to receive the benefit of the full capital gains tax exemption.
The Prospectors and Developers Association has 4,000 members from across Canada. Do we in the House realize the contribution that these people make? They are the backbone of the country's mineral exploration industry and they are essential to the development of our mining sector. They feel that they have been dealt with unfairly through Bill C-84. In fact, they telexed the Minister of State for Mines (Mr. Layton) right after the Budget was brought down and pleaded with him to be given consideration.
Are you signalling that my time has nearly expired, Mr. Speaker? I was going to read the telex into the record.


The Acting Speaker (Mr. Paproski):: I regret to inform the Hon. Member that his time has expired.


B. Keith Penner: Thank you, Mr. Speaker, for your patience.


Mr. Simon de Jong (Regina East):: Mr. Speaker, I too wish to join in the debate this afternoon on Bill C-84. I think all Members of the House and all Canadians realize that the economy of Canada is in deep trouble. Canadians are beginning to realize that the high level of unemployment that exists today is becoming a permanent feature of our lives. Canadians are beginning to realize that the agricultural industry is in trouble. Every time I return to my riding of Regina East, I speak to people who are directly or indirectly involved in agriculture and 1 hear one horror story after the other describing to me the serious problems being faced by the agricultural sector. As well, I realize that people who are engaged in the fisheries, lumber and mining industries are all in serious trouble. The manufacturing industry also has its problems and is certainly not running at full capacity.
We are finding, as our economy and society goes through these troubled times, that the Government itself is experiencing some major difficulties. On the one hand, we have a
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shrinking revenue base and on the other hand a greater demand for Government programs. All in all, one begins to realize that while no one and certainly no political Party has all the answers, Canadians need and expect some leadership on the part of the Government. They expect leadership that will help us through these difficul and troubled times.
Let us have a look at the record of the Tory Government so far. During the election campaign, Tory members offered a pretty simplistic solution. They said that the problem in the country was a lack of confidence and that if the people would only elect a Conservative Government, confidence would be restored, new investments would come to Canada and new jobs would be created. They said that prosperity would return again. We now realize that this was somewhat of a sham. Canadians quickly learned what was meant by restoring business confidence. Essentially, it meant that there were further tax breaks to the rich and large corporations and cut-backs to programs that benefit average Canadians coupled with increased taxes for them to pay.
In the first Budget, we saw caps on the indexing of the Old Age Security pensions and the indexing of family allowances. There was a cap on the indexing of the personal exemptions and there were personal income tax increases along with sales and excise tax increases. There were cut-backs in programs that benefit the average Canadian. There were cut-backs in health programs and we will see cut-backs in education programs. We will see cut-backs in programs like the Unemployment Insurance Fund, women's programs and environmental programs. There will be cut-backs in all those areas that benefit ordinary Canadians. Of course, all this has been done in the name of fighting the deficit.
When it comes to sharing the responsibility fairly among all sectors of the Canadian economy, surely the Government deserves very low marks. I am not suggesting that the Government it replaced received high marks. In fact, the program this Government is following is not much different from the program the Liberals followed in the last number of years. That was one of helping the rich and the powerful and socking it to the poor and the middle-income earners. It is done with the notion of restoring business confidence so that business will invest more.
Let us see to what extent the Government is willing to go to restore business confidence. In the Budget, there is a provision to allow for the first $500,000 of one's capital gains to be tax exempt. I understand that this would mean the loss of some half a billion dollars in revenue to the Government. Is that fair? No, it is not fair. Certainly many of us welcomed aspects of this provision. I believe all Members of the House welcomed the way the capital gains tax exemption would affect farmers and small business people. Certainly, no sane or fair-minded person would suggest that a person who engages in quick flips, who has condominiums in Florida, who speculates in real estate, jewellery or in works of art should be given a $500,000 tax holiday. It is not just members of the New Democratic Party who point out these inequities. For example, Mr. William Lawlor, a former official in the Department of Finance

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Policy Division, as well as a technical advisor to the Conservative task force on Revenue Canada, said at a recent conference of the Canadian Tax Foundation in Quebec City:
It (the Capital Gains exemption) is going to be abusive and there will be many varieties of abuse. These won't be understood for some time because of their complexity.
In other words, tax experts are saying that the capital gains provision is much too broad in its scope. Back home, farmers welcome the capital gains provision on the one hand but are realistic enough to ask why it should apply to everyone. These farmers say: "Why should this provision apply to the guy who bought his land next to mine just two years ago, never farmed it and who flipped it over the year after and made hundreds of thousands of dollars of profit?" This should have been given consideration, particularly when the value of farmland was increasing. The suggestion farmers make in my district is that the capital gains tax exemption should only be allowed to those who have actually farmed the land, those who through their sweat, labour, investment and energies have improved the quality of the land. The farmers say that these people should be allowed the benefit of the tax exemption but that it should not be given to everyone. They say: " Do not give it to the land speculator". They certainly claim this will not produce jobs and that it will not restore investor confidence in the country. All it will do is enhance a feeling of tax rip-offs and tax abuse. I tend to think that a wise foreign investor seeing a Government being so naive will not have any confidence in a country which is governed by such a Government.
We have come across other items which are not necessarily new to this Government. Previous Governments have been aware of them. 1 speak of customs and laws which help the well-to-do. For instance, there is the area of advance rulings. I have stood in my place on previous occasions and I have suggested the amount of tax abuse and tax avoidance which occurs under these advance rulings. In fact, the Department of National Revenue made quite a study in this respect in 1982. Some of the best brains in the Department prepared an internal report with respect to the question of tax avoidance. This is what they found, and 1 quote:
It is the opinion of senior management that the focus of tax avoidance has switched from implementing schemes to obtaining departmental approval through the Advance Ruling process.
The report was careful to alert the Department that its auditors were aware of those who practised tax avoidance, and I again quote from the report:
"75.9 per cent of the auditors were aware that tax avoidance is being practised mainly by high income individuals and large corporations.''
Yet, we did not see any change in this policy when the Government was elected. In fact, the Government allowed an advance ruling with respect to the Olympia & York purchase of Gulf Canada. This ruling helped the company save close to $1 billion in taxes which it should rightfully pay. More recently there was the case of Genstar which involved a preferred share issue. Genstar was also provided with the benefit of a
Revenue Canada advance ruling. The total revenue loss can only be estimated in the hundreds of millions of dollars.
There are many other schemes such as the scientific research tax credit scheme introduced by the Liberals and which was continued by the Tories before it was cut off after a loss of some $2 billion. We have come across the case of deferred taxes, which is estimated to have cost close to S30 billion this year. Again, it is of special benefit to the rich. We then come to the question of tax expenditures, which is figured to be close to some $50 billion in lost revenues to the Canadian public. It comes down to a question of fairness. Is it fair that the Royal Bank of Canada does not pay a cent of tax while it reports profits of hundreds of millions of dollars a year? Is it fair that an average income earner of some $30,000 has to pay ever-increasingly larger amounts of tax while those who can pay the most, those who earn and benefit the most from the country, pay less and less?
I claim that this if not fair. In fact, it is obscene. We will be voting against this measure.


The Acting Speaker (Mr. Paproski):: I regret to advise the Hon. Member that his time has expired. The Hon. Member for Egmont (Mr. Henderson).


Mr. George Henderson (Egmont):: Mr. Speaker, I rise today to speak on Bill C-84, which is quite a large document. I will not go into the number of pages it contains but it is a document almost one inch thick. I want to say at the outset that this is a Bill which has a great many ramifications for a great many people. In speaking to the legislation I must say that I am pleased to see the removal of capital gains with respect to the sale of farm property. This is certainly welcomed by farmers in the country. I do not want to underestimate its benefits but it only benefits those who wish to get out of farming. It is in this vein which I would like to make a few brief comments with respect to the situation of agriculture as we see it today.
By allowing this exemption not only will farmers benefit but all entrepreneurs who wish to take advantage of this tax write-off if they wish to buy, sell or deal in condominiums outside of the country will benefit. The estimated cost of this package is $550 million in 1985 and $700 million in 1986. As legislators we have to look at the cumulative effect on the taxpayers of the country. In this way farmers and others who are receiving benefits will see that there is also a cost involved. Not only are they receiving relief in terms of capital gains for farm assets, those who worked all their lives, tilled the soil and built up their assets to the point where they can use this money as a retirement income, they are also paying for others who are actually investing and speculating in other property not only in this country but abroad. It is not as clear-cut as the Government would like to have us believe. If I were a farmer who was able to take advantage of this legislation 1 would have to look for a buyer, someone who is prepared to buy my land. With the price of potatoes and other farm products in my province it would be very difficult for me to get anything substantial for my property and $500,000 would be an awful lot of money to
December 2, 1985

get out of it. After all, who in their right mind would go into agriculture this year as a new entrepreneur or a new farmer and expect to come out with even half a hide? I say this because we have to look at other things this Government has done to farmers. The cumulative effects are very subtle. The Government has put in place new inspection fees for potatoes. It has put in place ferry rate increases for my province. There are increased taxes on farm gasoline. The list goes on and on. Farmers are not just primary producers, they are also citizens and consumers, and they also have to bear the brunt of this kind of legislation. Farmers have families they have to educate and the Minister of Finance's cut-backs in transfer payments will have an effect on post-secondary education in my province. There is only so much that the people in the rural areas of this country can take. It is $500 here, $50 there, $75 somewhere else, and when you add it all up, and take it off one's disposable income, there is very little at the end of the day for one's work and sweat.
A few weeks ago Bill C-75 was before this House. It allowed for dredging fees for harbours and ince-breaking fees which can be imposed by regulation and does not ever have to come back to this Chamber for further debate. There was also the navigational fees for aids to navigation. When Bill C-75 is finally passed in this House and receives Royal Assent, this Minister of Transport (Mr. Mazankowski), or some future Minister of Transport, could quickly, through regulation, impose those kinds of fees. By themselves, they seem very small, but it all adds up.
I listened with great interest to my colleague, the Hon. Member for Gander-Twillingate (Mr. Baker) this morning as he commented on Bill C-84. On page 214 of this massive piece of legislation, under Part V, Unemployment Insurance Act, 1971, it lists the definition of the Act and defines "authorized person" as well as "dwelling house". People from National Revenue will be able to go into a poor fisherman's home in Newfoundland, Nova Scotia, New Brunswick or Prince Edward Island, and audit his books. Many of these people have been harrassed before. The Hon. Member for Gander-Twillingate likened it to Vietnam. "Minister" means the Minister of National Revenue with respect to the Unemployment Insurance Act and I think we should make a change in that because people with the Department of National Revenue are lacking in totally understanding what the primary producers in this great country of ours are doing, how they operate, whereas the people in the Department of Employment and Immigration do have extensive knowledge and understanding of this sector of our economy. The Minister of National Revenue should not be included in this section. I am not blaming this Government because the Unemployment Insurance Act was under the Minister of National Revenue previously. However, we as legislators can do something positive about the piece of legislation which is before the House today. I would ask that when this Bill goes before committee, Hon. Members who scrutinize this legislation take a long and hard look at that and try to improve what has been very, very unfair in the past. Right now
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we have sort of goon squads going out and harrassing people because they have made some mistake, some innocent mistake, in filling out or filing their unemployment insurance claims. The RCMP sometimes are involved in this. Sometimes there is a difference between what the legislation says and what the regulations are described as saying. If we follow the regulations, as the Hon. Member for Gander-Twillingate has mentioned, in many instances we would find that, indeed, the person who is out there drawing unemployment would be in the clear. I see that my time is up, Mr. Speaker, and I will conclude by saying that I think all Hon. Members should have a serious look at this legislation.



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mr. Paproski):: Pursuant to Standing Order 46, it is my duty to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the Hon. Member for Don Valley Est (Mr. Attewell)-Estimates-Forecast of Government expenditures; the Hon. Member for Halifax West (Mr. Crosby)-Air transport- Merger of EPA and CP Air operations; the Hon. Member for Ottawa-Vanier (Mr. Gauthier)-Federal-provincial relations-(a) Participation of Francophones Hors Quebec at Francophonie Summit. (b) Franco-Ontarians-First-class citizenship status-Prime Minister's position.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mrs. McDougall (for the Minister of Finance) that Bill C-84, an Act to amend the Income Tax Act and related statutes and to amend the Canada Pension Plan, the Unemployment Insurance Act, 1971, the Financial Administration Act and the Petroleum and Gas Revenue Tax Act, be read the second time and referred to a legislative committee.
Dave Nickerson: Mr. Speaker, I do not think I will even take my full 10 minutes but there are a few things I want to put on the record.


Jean-Robert Gauthier: Go ahead.

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Don Boudria: I think you ought to.


Dave Nickerson: The Liberals should not shout and squawk over there because the first thing I am going to do is compliment the Hon. Member for Cochrane-Superior (Mr. Penner). I would like to be associated with some of the remarks he made about the taxation of prospectors and the fact that under this Bill we are granting tax exemptions when it comes to capital gains to farmers, to real estate dealers, to people who deal in works of art, practically everyone except the prospector. In the part of the world I come from, which is not that different from the riding of the Hon. Member for Cochrane-Superior, prospectors feel they should have the same types of breaks and taxation as other people can avail themselves of. I do not want to get too complimentary to my friends on the other side of the House because it must be remembered that it was the Liberal Government which put the capital gains tax on prospectors in the first place. If I recall correctly, it was when Ron Basford was Minister of Finance that prospectors found themselves first subject to capital gains tax. That has had an adverse effect on the amount of effort going into mineral exploration, especially by the private individual.
Another point I would like to draw to the attention of the House is a point which might well be looked at when this Bill goes to committee. It deals with the surtax which is to be imposed on people earning relatively high incomes. The cut-off will be roughly around the $40,000 income mark. In certain parts of Canada, someone who is making $40,000 a year is doing quite well and perhaps can afford to pay the additional surtax. In other parts of Canada that amount of income is not that much. It may be only equivalent to an income of $25,000 or $30,000 in the southern parts. Many people in my constituency, especially those who work in the mining and oil and gas industries, will be affected by this special tax. They live in an area where costs are much higher than they are in other parts of Canada. They need a higher income in order to compensate for that higher cost of living. At the same time, they are doing very tough and arduous work, often under very difficult conditions. They work in the cold, quite often under dangerous circumstances. I think they are entitled to that extra compensation.
They are already subjected to higher rates of income tax bcause of the progressive nature of our income tax system and the imposition of this surtax will do them an even greater disservice. Most of the people are in circumstances in which they are unable to do anything except pay every lat nickel of tax which the Act imposes on them. They are earning straight salary and there is nothing they can do to hide some of that income as other people might. When this matter goes to committee the special circumstances of people who would otherwise be considered high income earners ut, because of the location in which they live and do their jobs, are not really that well off by comparison, should be taken into account.
One of the things which I would have liked to have seen in the Bill, which I understand will be addressed before the end
of the calendar year as was promised by the Minister of Finance (Mr. Wilson) in his Budget in May, was the issue of taxation of northern benefits in a fair and equitable manner. As I indicated earlier, people in remote, high cost areas who receive more remuneration are put into a higher tax bracket and pay proportionately more taxes than would someone living in the southern part of the country. I am confident that that matter will be addressed by the Minister of Finance before the end of the year.


Don Boudria: Don't hold your breath.


Dave Nickerson: One of the good things contained in this Bill, among the many other good things, is the Crown priority in dealing with certain moneys in cases of bankruptcy. Cases have been brought to my attention, as I am sure they have been brought to the attention of other Members of the House, in which companies have gone bankrupt after deducting from employees' pay cheques income taxes, unemployment insurance premiums, and Canada Pension plan payments but not, for some reason, remitting those to the Receiver General of Canada. After the company has gone bankrupt, having deducted these moneys from the employees' pay cheques, the friendly Department of National Revenue has come along and demanded payment from those employees again.
Changes are being made through this Bill to give the Crown a degree of priority to take the first proceeds of the liquidation to be used, as it should be, for payment of taxes, unemployment insurance premiums, and Canada Pension Plan payments on behalf of the employees. This will do a lot to control a situation which has previously worked to the detriment of many people who have had money deducted from their pay cheques which was not turned over to the Government of Canada.
Those are the brief remarks which I wish to make, Mr. Speaker. 1 will now turn the floor over to my Liberal colleagues who, I am sure, want to proceed with this debate as long as they possibly can.


Jacques Guilbault: Mr. Speaker, I would like to make my modest contribution to the debate on Bill C-84, a piece of legislation that contains a great number of measures, more than 60 from what I saw in leafing through the Bill. First of all, I have to admit that some of the measures the Bill contains are desirable, but 1 think defending those items should be left to Government Members. On the other hand, the Bill also contains measures I feel are unfair and ought to be changed. I intend to speak to these particular measures today and ask the Government to introduce some changes.
First of all, I notice the legislation proposes to levy a temporary eighteen-month surtax on basic federal income tax.
I hope the Government does not think this surtax can substitute for the minimum tax on the wealthy we were promised and on which the Government is dragging its feet. Actually,
December 2, 1985

the temporary surtax will be draining more money from the pockets of low- and middle-income taxpayers, their numbers being far greater than the number of high-income taxpayers. That is why I hope the Government does not imagine this surtax will be a substitute for the formal promise made by the Conservative Government that it would introduce a minimum income tax for those privileged Canadians with high incomes.
Mr. Speaker, I maintain it is becoming increasingly urgent for this Government to introduce a measure that will levy a minimum tax on people with high incomes, and I was astonished upon examining Bill C-84 to see that there was no such measure in the Bill.
Another measure I find unfair and which I believe should be amended by the Government is the proposal to reduce the taxpayer's personal exemption by 3 per cent, thus in fact de-indexing personal exemptions. In fact this procedure is similar to de-indexation of Old Age Security pensions which the Government tried to have the House adopt and which it had to withdraw because of public pressure. It is more or less the same approach the Government is proposing and still trying to take to family allowances. This particular measure is supposed to reduce personal exemptions which would normally increase with the consumer price index. In other words, if this year, consumer prices increased by about 5 per cent, next year, income tax exemptions would go up by the same percentage. The Government is proposing to de-index this increase by 3 per cent. In fact, this is a sneaky way to take money out of the pockets of taxpayers, very discreetly, without anyone realizing, and for that very reason this measure must be condemned.
The measure also has a proportionally greater impact on the low-income earner that the person with a high income. Granted, high-income taxpayers will pay a bit more, but in proportion to their total income tax, the impact of this measure will be minimal. So percentagewise, low-income earners are going to pay most of the income tax collected in this way. Furthermore, they are going to suffer most because their income tax is increasing more, proportionally, that the amount of income tax paid by the wealthy. I assume the Government may wish to think this over and present an amendment to restore the principle of equity to Bill C-84.
Another measure that worries me tremendously, especially because of the large number of low-income earners in my riding, is the proposal to reduce gradually the personal exemption for children until it reaches the level of family allowances. And here again, the poorest families are going to suffer most. I realize this measure will also affect high-income families, but the tax increase for a high-income family as a result of this measure is minimal if we consider the total income tax paid by a high-income earner. Besides, all things considered, there are so many low and average income families that the Government will collect a lot more taxes from them than from high income families. That is why I suggest that the unfairness of this
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measure lies in the fact that it amounts to a deindexation of personal income tax deductions.
The other provision which upsets me, Mr. Speaker, is the abolition of homeownership savings plans. Again this is a measure which directly affects low and average wage earners. Many of them will see in this measure the end of their dream to own their home one day and they will have to get used to the idea of being tenants for ever.
Mr. Speaker, this measure was not intended for high income Canadians, although some of them did benefit from it, I am sure. The measure was designed to enable average income taxpayers to buy a detached house or at least a duplex, something they could not have done otherwise.
This program was extremely popular, but its abolition spells the end of that dream.
I wish the Government would take time to reflect upon some of the inequities contained in Bill C-84 and refrain from attempting to push this measure through. I agree it contains some constructive provisions, however it is inequitable, and 1 have dealt with only a few of the unfair provisions of this Bill. It seems to me that the Government should take its time and seriously consider some of the worthwhile amendments which ought to be made to the Bill to make sure that justice will prevail.
And so, Mr. Speaker, to give the Government more time to consider the amendments which should be made to this Bill, I would like to move the following motion:
That the motion be amended by deleting all the words after the word "That" and substituting the following therefor:
Bill C-84 be not now read a second time but that it be read a second time this day six months hence.


Charles Joseph Clark: You are filibustering.


Jacques Guilbault: No, we are not fdibustering. This will give the Government enough time to reflect upon the inequities contained in this Bill and come back with acceptable amendments.
That is the amendment 1 would like to propose, Mr. Speaker, seconded by my colleague the Hon. Member for Ottawa-Vanier (Mr. Gauthier).


John R. Rodriguez: Mr. Speaker, it is unfortunate the amendment is only for six months. It should have been for 600 years. I have never seen anything more worthy of complete disregard. This Bill should be sent off with Rip Van Winkle for the next 600 years.
When one attempts to read this Bill, one sees that it is most complicated even to tax accountants and tax lawyers. As a matter of fact, the only identifiable jobs this Bill will create are for tax accountants and tax lawyers.


Jean-Robert Gauthier: Even they are not happy.

December 2, 1985
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John R. Rodriguez: Even they are not happy because it is so highly complex and complicated. As a matter of fact, it seems that this Bill runs contrary to the goal of the Minister of Finance (Mr. Wilson) and the Tories to simplify tax law.


Mr. Brisco:: Do you have to shout?


John R. Rodriguez: Yes, because you go to sleep. This is another example of the Tories talking out of both sides of their mouths.


Don Boudria: Typical Tories.


John R. Rodriguez: Typical "supposi-Tories".


Some Hon. Members:: Order.


John R. Rodriguez: On the one hand they talk about simplifying tax law while, on the other hand, we have a highly complex Bill. Nevertheless, we know what is contained in the Bill.


Donald Alex Blenkarn: You do not.


Mr. Hawkes:: Not if it is complicated, you don't.


John R. Rodriguez: We know what is contained in this Bill inspite of all the gobbledegook. If the Hon. Member for Mississauga South (Mr. Blenkarn) wants to make a speech, I am not stopping him. He has a six month hoist amendment to which he can talk.


Donald Alex Blenkarn: I do not need to be recycled. I have already made a speech.


John R. Rodriguez: We on this side of the House have always believed that the income tax system should be just. The income tax system should be progressive. It should be redistributive in nature. The three hallmarks of good income tax law are: "fairness, progressivity, redistributivity".


Walter Franklin McLean: Say that again?


John R. Rodriguez: The three hallmarks. That is the specificity of it.


Some Hon. Members:: Oh, oh!


John R. Rodriguez: 
The Acting Speaker (Mr. Paproski):: Order, please. I am giving the Hon. Member an extra one minute, which means two minutes, not two fingers.


John R. Rodriguez: You had me worried for a moment, Mr. Speaker. One item in the May Budget which makes absolutely no sense at all is the $500 million capital gains exemption. Who asked the Government to do that? It certainly was not the National Business Insitute. It certainly was not the Toronto Board of Trade. In fact, all knowledgeable corporate friends of the Government have said that it was a stupid thing to do. If the Government wanted to make it selective so that farmers who were selling their land would not have to pay capital gains, that could be done. The Government did not have to open it up to racehorse owners, standard bred horse owners, art entrepreneurs or the owners of condominiums in Florida. The Government did not have to do that. In fact, it has allowed them to make more money, and not one identifiable job will flow from that. I challenge any regressive Tory to stand in the House and tell us how that will create one job. In fact, we have heard comments from very informed individuals-


Robert Hylton Brisco: Mr. Speaker, I rise on a point of order.


The Acting Speaker (Mr. Paproski):: Order, please. The Hon. Member's time has expired.


Robert Hylton Brisco: The answer is very simple, Mr. Speaker. We will have a by-election in his riding.


Hon. Andre Ouellet (Papineau):: Mr. Speaker, I wish to rise at this stage in the debate on Bill C-84, to continue in the same vein as my colleague from Nickel Belt (Mr. Rodriguez), who just finished a speech that was far too short to my taste, because I think there is so much to say about this terrible Government Bill that debate ought to go on for at least six months.
What I find somewhat astonishing is that this Government, with its crushing majority, and with so many backbenchers, has failed to let them express their views on this Bill and tell the House what their constituents think about this entirely reactionary measure proposed by the Minister of Finance (Mr. Wilson).
Actually, Mr. Speaker, Bill C-84, which is a Ways and Means Motion aimed at amending the Income Tax Act and a series of related statutes, shows the true colours of a Government that is very partial to the richer members of our society and to big business in Canada, a partiality that places a burden on low-income earners and small businesses in this country.
We could accept the Government's partial attitude towards the richest groups in this country, provided the Minister of Finance did not try to solve his deficit problems at the expense of Canada's least advantaged groups.
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When we consider his Bill and especially the measures referred to by the Hon. Member for Nickel Belt, and 1 am talking about the measure that provides for a lifetime capital gains tax exemption... Starting in 1985, Canadians will gradually be exempted from paying income tax on capital gains, up to a maximum of $500,000, and this is a lifetime exemption. In other words, the richest people in this country are being given half a million dollars, thanks to the generosity of the Minister of Finance. The exemption applies to individual capital gains earned after 1984, and the purpose is to encourage risk-taking and business investment.
As the Hon. Member for Nickel Belt (Mr. Rodriguez) pointed out, there is no guarantee that these measures will create jobs. At the present time 50 per cent of capital gains are taxable, which means that the exemption will in fact abolish taxes on $250,000 of eligible capital gains. The outright exemption now available to an individual who sells his main residence will be maintained and therefore will be in addition to this $500,000 cumulative exemption. Generally speaking, the new exemption will apply to the capital assets of individuals, except for share dividends and employee share purchase options.
What it means, Mr. Speaker, is that if you want to sell your collection of paintings you can make a handsome profit and not pay any tax. It means that if you own a few houses and are active in the real estate sector, buying and selling houses, you will not pay any tax. Quite obviously the two examples I gave will not create a single job in Canada. Yet the major problem in Canada is unemployment, and the Conservative Government had promised to create jobs for Canadians. And the highlight of the Budget of the Minister of Finance is an unconditional gift to the rich in our society, a gift which will not create a single job in Canada.
That is why we are against this provision in the Budget of the Minister of Finance. We believe it is quite unfair, particularly when we keep in mind some of the other Budget provisions which penalize poorer families and people in Canada. One that is particularly appalling is the partial indexation of deductions and tax brackets above the 3 per cent increase in the consumer price index. Then there is the gradual reduction in the maximum personal exemption for children until the exemption is equal to the annual family allowance payments. Finally, there is the cancellation of the RHOSPs, through which families and young couples were able to put some money aside to buy a home at some time in the future and which will no longer be available because the Government of Canada wants to make small savings by attacking the families who are the worst off in Canada and by reducing family allowances, while it has no qualms about giving $500,000 to the wealthiest in our society. Indeed, Mr. Speaker, the capital gains tax exemption applies to a bare 4.2 per cent of Canadian taxpayers. Individuals with an annual income of over $50,000

December 2, 1985
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will share 63.4 per cent of the benefits provided by the capital gains tax exemption.
I believe that Canadians have every reason to be concerned about the fact that the new capital gains tax exemption favours mostly those who have the highest incomes, whose incomes are made up largely by capital gains. It is obvious that such investments are only speculative. If the Minister of Finance had seen to it that this exemption applied only to investments in Canadian companies and in smaller businesses, we could have understood its objectives. However, there is no restriction provided in this bill, and I think that the Canadian Consumers Association was right to denounce this measure, and so was the Canadian Labour Congress. I would even say that the Canadian Federation of Independent Business, which had suggested that this type of exemption apply particularly to Canadian businesses, has every reason to feel betrayed by the measure proposed by the Minister of Finance.
For all these reasons, I can only oppose Bill C-84, which seems to me completely unfair for small wage-earners and which shows that the Conservative Government has only wealthy friends and does not really concern itself about ordinary Canadians.


Michael Holcombe Wilson: Mr. Speaker, as you know, Bill C-84 is a very important Bill. It contains many of the key elements of the May 23 Budget which are very important to ensuring the continuation of the excellent economic progress we have experienced during the course of the first year of our mandate. Over that period of time we have experienced probably the best economic performance in many, many years. We saw the announcement last Friday of a 6.6 per cent annual growth in the third quarter and a continuation of the excellent performance in the area of investment and housing starts. These are things which demonstrate clearly that Canadians are responding in a very positive and broad way to the initiatives we have taken over the course of the past year. Bill C-84 is designed to continue the positive forward thrust this Government has taken. Certainly it is the intention of this Government to move in a very forthright way to ensure that this progress we have experienced during the course of this year is maintained.
Over the course of the last month or so I have encountered a certain amount of concern on the part of Canadians, tax practitioners as well as people in the small, medium and large business community, who have expressed the concern that this legislation will not be in place prior to the end of this fiscal year. You are aware that we will be changing the method of considering income tax legislation. Previously it had been considered by the House of Commons in Committee of the Whole. We are now going to be using a new approach which will take this legislation into a legislative committee. It is essential that we move quickly to get this legislation into committee because that will give interested Canadians who have to advise their clients on the tax implications the opportunity to express their views on the various elements of this
legislation, and do so in a timely way. People can then plan their affairs in advance of the next fiscal year. I do not want there to be any misunderstanding or uncertainty. I want it to be very clear that this Government is fully committed to the directions we have proposed in this Budget, in particular, the $500,000 lifetime capital gains exemption, the measures designed to help investment in small business, a,nd various changes clearly designed to improve the investment climate, a climate which has demonstrated clearly that it will create jobs.
I want to inform the House that there have been consultations among representatives of the Parties in this House and it has not been possible to reach an agreement pursuant to Standing Order 82 or Standing Order 83 with regard to the allocation of time for the second reading stage of Bill C-84. Therefore, at the next sitting of the House it is my intention to propose the following motion pursuant to provisions of Standing Order 84:
That, in relation to Bill C-84, An Act to amend the Income Tax Act and related statutes and to amend the Canada Pension Plan, the Unemployment Insurance Act, 1971, the Financial Administration Act and the Petroleum and Gas Revenue Tax Act, one sitting day be allotted to the consideration of the second reading stage of the said Bill.
That fifteen minutes before the expiry of the time provided for the consideration of government business on the above-mentioned sitting day, any proceedings then before the House shall be interrupted, if necessary, for the purpose of this Order and, in turn, every question necessary to dispose of the said stage of the said Bill shall be put forthwith and successively, without further debate or amendment.


Stanley J. Hovdebo: Mr. Speaker, we waited long enough for the Bill to be introduced. Now it will leave us without our acceptance.
I think this is the seventh time the Government has used closure in the last little while, and most times it has been for the most important Bills. Before the Hon. Member for Calgary West (Mr. Hawkes) leaves us, I would like to say that as reported on November 25, 1985, in The Citizen of Ottawa, that Hon. Member said the following not too long ago:
"If they carry this propensity towards closure far enough, what will we have? We could have a dictatorship in which everybody submits."
The same article contains the following quote:
"Closure is the mechanism put in place by the Liberal party to shut us up. It is a disgrace to Parliament... to my constituents and to Canadian citizens at large ... It should not be permitted in the House."
Those were the words of the present Government Whip, the Hon. Member for Ontario (Mr. Fennell). Some Members of the Government did not use words which were quite so polite. For instance, the Hon. Member for Bow River (Mr. Taylor) is quoted in the same article as saying the following:
"A sneaky, dirty trick," ... "You are a snake."
Those were the words of Hon. Members of the Government when they were in Opposition as reported by The Citizen. They had those words to say whenever closure was brought in, and that was not as often as it has been brought in by this Government in the last few months. It was quite unusual then but it was unacceptable then and it is unacceptable now.
December 2, 1985

We remember the same Minister saying in the same tones back in May that the budget was tough but fair and a clear break from the past. What is the Government doing? It is taking billions of dollars out of the pockets of individual Canadians and passing that money to the corporate sector.
We are moving closer to the time of year when many children make wishes. By the way, the Government is not helping those children. It is increasing the number of children across the country who will not have their wishes come true this Christmas. I wish that rather than this continuous abomination of increased complexities in the Act, we could have put before the House a Bill which would be as simple as the Minister said it would be and a Bill which would be fair and progressive.
The understanding of democrats all over the world is that a taxation system should be fair and progressive. As my colleague suggested earlier, a taxation system must include several principles. One of those is progressiveness and another one is that those who are taxed must pay relative to what they earn. Neither of these principles have been accepted by the Government. In fact, the Bill does exactly the opposite.
The Government has a propensity to talk about all those people on welfare who should be working. Those people would love to be working but there are no jobs for them. The Government has made a little dent in the unemployment rate which it proudly displays but it does not talk about the 10 per cent of the population who are without jobs.
Rather than taking people off welfare, the Government passes a whole series of measures that will give welfare to the corporate sector. I remember a few years ago, we talked about the corporate welfare bums. When the Liberal Party was in power, it gave us many of the loopholes that are in place. What does this Government do? It piles further loopholes on top of those loopholes already in existence, making it possible for the more than 4,000 people who earn over $200,000 per year to pay no income tax at all. The previous Government eroded the progressive tax structure. This Government, regardless of how much it has promised a fair taxation system, is not doing anything about it.
During the election campaign, the Prime Minister (Mr. Mulroney) suggested that the wealthy should pay handsomely. We have not seen any measures to provide for that as yet. It is, however, spoken of quite often.
Let us look at the corporate welfare Bill. What does this Bill contain? Let us look at the measure that Progressive Conservative Members-and the very name of their Party is a contradiction-speak of most and that is the capital gains tax exemption. That measure supposedly exists to increase investment and jobs. No one has been able to tell us exactly how it will increase jobs. No one has been able to tell us how it will help the lower-income earners.
I must say that even as we talk about progressive legislation, many of us are forced, because of the inequities in the system, to support something which under ordinary circumstances we would consider quite regressive tax legislation. The capital
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gains tax in itself must be considered to be a regressive tax. However, because the tax harms those who own and operate their own businesses such as farmers and small businessmen, the capital gains tax exemption will be of some value to them but the greatest number of people who will use it have ne need of it. They are the ones who will receive the most benefit from it.
This has become a real concern on the part of the Opposition and the people of Canada. We feel that we must change the entire tax system without simply adding more loopholes and increasing the ways a person can get away without paying taxes. Let us begin with the basics and give everyone the kind of tax system they should have. If we did, we would soon be rid of the deficit.


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


Jean-Robert Gauthier: Mr. Speaker, 1 rise on a point of order. So that we in the House who are not in on the secrets of the gods can understand what is going on, 1 understand there are deferred votes to be taken at 6 p.m. If one reads the projected order of business it says that at six o'clock we shall also proceed to the debate on the adjournment motion. I understand that this is contrary to Standing Order 46(7). Is it possible that the projected order of business be adjusted so that those of us who follow the Order Paper can understand and that when there is a vote called there will be no adjournment debate?


The Acting Speaker (Mr. Paproski):: The Hon. Member raises a point of order upon which I would like to comment. The Order Paper does show as the projected business of the day a late show after the vote is taken. That will not happen this evening.


Jean-Robert Gauthier: You also announced it, Mr. Speaker.


The Acting Speaker (Mr. Paproski):: I know that 1 announced it. Standing Order 46(7) states:
When it is provided in any Standing or Special Order of this House that any specified business shall be continued beyond the ordinary daily time of adjournment or that any such business shall be forthwith disposed of or concluded in any sitting, the adjournment proceedings in that sitting shall be suspended unless the sitting is extended pursuant to Standing Order 19(4).
1 appreciate what the Hon. Member has said. I regret that there might be some confusion. As always when the Hon. Member brings a matter such as this to the attention of the Chair he can see that we know what we are doing in the Chamber.

December 2, 1985
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PRIVATE MEMBERS' BUSINESS-MOTIONS   NUCLEAR ARMAMENTS ADVISABILITY OF ESTABLISHING PUBLIC INQUIRY INTO NANOOSE BAY TEST RANGE
Mr. Jim Manly (Cowichan-Malahat-The Islands) moved:: That, in the opinion of this House, the Government should consider the advisability of establishing a public inquiry into the exact functions and mandate of the agreement between Canada and the United States in regard to the Test Range at Nanoose, British Columbia, prior to the renewal of this agreement, due for signing in April, 1986.
He said: Mr. Speaker, I welcome this opportunity to open debate on Motion No. 229 which calls for a full public inquiry before any signing of a renegotiated agreement between Canada and the United States on the Canadian Forces Maritime Experimental and Test Range at Nanoose Bay, British Columbia.
As Hon. Members know, the present agreement expires in April and at the present time it looks probable that a new agreement will be signed at that time. If the Canadian Government has its way the Canadian people will know absolutely nothing about what is involved. In this case ignorance is not bliss. We have a need to know-we have a right to know- what the Americans are up to at Nanoose Bay. I suspect that if Canadians had all the facts there would be such a howl of protest that our Government would back right away from the agreement and that weapons testing at Nanoose would become a thing of the past. For that reason I moved Motion No. 229. I think it is important that we demand the facts and that we have an opportunity to obtain the facts so that we can debate this proposed agreement before it is signed rather than simply see another fait accompli.
Even without a public inquiry we already know enough about the Nanoose Test Range to be very worried and concerned. This is why a group of dedicated peace workers have established the Nanoose Conversion Campaign which is dedicated to changing Nanoose from military to peaceful purposes. They have established a peace camp along the Island Highway where they monitor the comings and goings of American submarines. They hand out information and they draw attention to the threat posed by the test range. It is important to note the dedication of these people and that even in the present unseasonable sub-zero weather on Vancouver Island they are continuing to maintain their camp and presence.
From across Canada the Nanoose Conversion Campaign has drawn some 3,500 signatures on two petitions calling for a public inquiry and urging that the agreement not be renewed. In the absence of any government indications so far that there would be a public inquiry, the Gabriola Island Peace Association is sponsoring a peoples' inquiry into the test range. The association will be holding hearings in Nanaimo on January 18 and 19 and Bishop Remi do Roo and Mel Hurtig will be acting as moderators. There are a number of distinguished people who will be appearing before the panel since a great many
people are concerned about what is happening at Nanoose Bay.
The peoples' inquiry will ask the following quetions. First, are nuclear weapons carried into Nanoose? As we know, the United States Government refuses to confirm or deny their presence. The inquiry will also ask: Who is in charge, Ottawa or Washington? It will ask whether Canadian territory should be used to promote the escalation of the arms race between the superpowers. It will ask whether nuclear-powered vessels are polluting our waters with radiation. Other issues which will be looked at by the peoples' inquiry include the strategies of submarine warfare, the economics of converting the base to peaceful uses and the effects of a nuclear attack on Nanoose Bay. The inquiry will want to look at Nanoose in the context of a nuclear-free Pacific. It will want to consider the position of the three main political Parties. One function of the debate today will be to obtain a clear idea of where the different Parties stand. People already know where the New Democratic Party stands. We passed a motion at our last convention indicating that we were opposed to the renewal of the treaty.
While I commend the people who are organizing this inquiry and who are working hard to ensure that it is taking place at a high level, I have to ask why it should be necessary for private citizens to carry out what should be a Government responsibility. I am pleased that public-spirited citizens have not abdicated from their responsibility in spite of the bad example set by their Government.
Over the past year submarine watchers at both Nanoose Bay and Esquimalt have been concerned about the increase in the number of visiting submarines capable of carrying nuclear weapons. For example, according to Jane's Fighting Ships and Jane's Weapons Systems, the United States submarine Salt Lake City, which has visited Nanoose several times this year, is equipped with SUBROCs. These are anti-submarine missiles with a one kilo-ton nuclear charge. The Salt Lake City is also capable of being fitted with 12 sea-launched Cruise missiles known as Tomahawks. Tomahawks can carry either conventional or nuclear warheads. Other submarines with potential Tomahawk capability which have been seen at Nanoose this year include the La Jolla, Drum, Pintado and Flasher. These vessels are all capable of being fitted with Tomahawks. They are slated to be fitted with these sea-launched Cruise missiles and they already have the SUBROCs which, as I mentioned, carry a one kilo-ton nuclear charge.
I wrote to the Minister of National Defence (Mr. Nielsen) last June asking him some questions about what was happening at Nanoose and whether or not it was Canadian policy that we did not even ask the United States whether or not its vessels carried nuclear weapons. The Minister of National Defence replied on July 31, and I quote:
-it is the policy of the United States ... to neither confirm nor deny the presence of nuclear weapons on board its naval vessels including submarines. It is the practice of the Canadian Government to respect this policy.
In regard to the Canadian/US jointly funded Test Range at Nanoose, the use of the Range by US Navy nuclear propelled and possibly nuclear armed submarines is a defence arrangement whereby Canada contributes to and supports the maritime defence capability of our NATO partner. The weapons
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(torpedos) and sensors (sonobuoys) used on the Range are not armed with explosives of any kind, instead, electronic instrumentation for testing and trials is employed at all times.
I will certainly take the Minister's word that nuclear weapons themselves are not being tested at Nanoose. I do not think we have made that charge. We have been asking what is happening there. We have been raising concerns that systems which will be employed with nuclear weapons are being tested there.
We have been assured by the people in charge that the Nanoose base is not being used for testing the guidance system of the Tomahawk missile. We have been assured that it is not being used for testing the launch system of the Tomahawk missile. What we would then like to know is why are these vessels in Nanoose? Why has the Salt Lake City seen fit to be back and forth from that base several times? We would like to have the answers to those questions.


An Hon. Member:: It's a good harbour.


James Douglas Manly: Yes, it is a good harbour. I am pleased to see that at least one Conservative Member recognizes that it is a good harbour. I would like to suggest that there are probably better uses to put a good harbour to than for testing weapons which have nuclear capability. I hope that perhaps some of the Conservatives can see that there are better uses for that harbour as well.
I think we have to be very concerned about Nanoose in the global context. Americans right now plan for some 758 Tomahawks, or the sea-launch cruise missiles, in a fleet of 140 ships and submarines stationed around the world. The head of the United States cruise missile program, Admiral Stephen Hos-tettler, said this will allow virtually all Navy combatants, not just the carrier battle groups, to go on the offensive whenever necessary and from any corner of the globe. He described Tomahawk deployment as "a new threat spectrum to the Soviets through a world-wide strike capability". The Tomahawks "presents the Soviets with a formidable threat from a 360 degree axis". I do not agree with my Conservative colleague that presenting a 360 degree threat to the Soviets is going to be of any protection to me or to him either.
In what may be one of the most forward-looking statements ever made by promoters of nuclear weapons, we learn that Tomahawks will be helpful not only in World War III, but perhaps in World War IV as well. They will come in handy after Armageddon.
According to an article by William M. Arking, in the Bulletin of the Atomic Scientist, Admiral Frank B. Kelso, Director of the Strategic Submarine Division of the Navy, explained to Congress in 1981 that Tomahawks will not toe automatically launched in a general war scenario but will remain available so that the United States would, in any post-nuclear exchange environment, retain a measure of coercive power.
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Admiral William Williams, Director of the Navy's Strategic and Theatre Nuclear Warfare Division, said in 1981 that the Tomahawk is the sort of weapon which will have great influence in the post-war struggle as a portion of the strategic reserve, that is, those weapons which survive the massive nuclear axchanges. This kind of bizarre post-Armageddon planning for the world war which might follow I believe illustrates the degree to which some of these people have slipped their moorings in terms of any contact with the kind of reality in which most people want to live.
I have just received Ruth Sivard's analysis of World Military and Social Expenditures distributed in Canada by Project Ploughshares. Ms. Sivard points out that in the 40 years since World War II, our world has spent between $3 trillion and $4 trillion to create a nuclear arsenal which would mean global suicide if it was ever used. We now have enough nuclear capability to kill 58 billion people, that is every man, woman and child on earth 12 times over. Yet, we will this coming year spend an additional $800 billion for military programs.
At the same time, every day of the year, some 14,000 children in Africa alone died of hunger or hunger-related causes. That is the kind of world we are living in and that is the kind of context in which we have to look at Nanoose.
In 1982, the United States spent $196 billion on the military while the Soviet Union was not far behind with $170 billion. However, these expenditures have not brought safety or security to either country-quite the reverse. It has brought a degree of insecurity to our entire world. I think it is time that we began to call a halt to this and the place where we must start, of course, is in our own backyard. That is why I am very concerned about Nanoose.
Admittedly, Nanoose is a small part of the total problem. Ms. Sivard points out that every year the United States loses about $1 billion of military equipment. It has such a stockpile that it can lose $1 billion worth of equipment and not know where it goes. Perhaps Nanoose falls into that category. Perhaps the Americans do not even know that Nanoose is there. We know it is there and we know it is not serving a very helpful purpose. We would like to see more detail about what is happening there.
It is supposed to be Canadian Government policy that we do not allow nuclear weapons on Canadian soil. That has been reiterated by the present Government a number of times. However, what good is this policy if we do not even make inquiries about whether or not American vessels carry nuclear weapons when they enter Canadian harbours? What kind of policy is that? It remind me of the story I read in last week's newspaper about a woman who was running an escort service in Victoria. The escort service was involved in some rather strange activities, but she claimed she did not know what happened after the escorts met the gentlemen, that that was not her concern. She just arranged the basic date and what happened after that was none of her concern. The Canadian Government is taking the same kind of see no eveil attitude. It is not interested in what is happening with these vessels which come into Canadian harbours.

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Little New Zealand had the courage to refuse entry to American vessels which do not comply with its nuclear weapon-free policy. This is not an anti-American policy. It is a policy which looks toward world peace. It is a policy which looks toward greater world security. Canada should be willing to take such a step. By refusing to take that kind of step we leave people worried that the base at Nanoose is being used to further the nuclear arms race.
People on Saltspring Island worry that a radio repeating station related to the United States Navy has been established on one of their local mountains. They see this as a link to a growing American military presence at Nanoose. They want no part of it at all. They see this as the sort of thing that over the years can escalate and they say that now is the time to stop.
People in Esquimalt have been told that Polish fishing vessels will no longer be able to have routine servicing maintenance work done in their harbour. The reason given by the federal Government is that it is for security purposes. It is interesting to note that even the Hon. Member for Victoria (Mr. McKinnon), who himself is a former Minister of National Defence, claims he fails to see any security threat from Polish fishing vessels in Esquimalt Harbour. What is the security threat there? The only possible threat which has been suggested to me is that we have the occasional presence of American submarianes and we are losing $20 million a year in business to the Americans because of American security concerns when its submarines enter that harbour. The people of Esquimalt would like to know more about this threat to their economy. People in the Nanoose area would like to know what the effect is of radioactive leakage on their fishery or on their health. They would like to know what monitoring process is in place. Quite frankly, Mr. Speaker, we do not know.
We do not know the answers to a lot of these questions, but we have a lot of concerns. We know enough already to be concerned. We want more information. The people of Canada are entitled to have more information and that is why I am urging the Government to set up a public inquiry. We need the inquiry to find out what part Nanoose is playing in the nuclear arms race. We want that information. Second, we want to determine what effects having the base at Nanoose is having on the health of people and on our economy. I urge the Government and Members opposite to support this motion. I look forward to their co-operation and to a public inquiry.


Mr. Gerry Weiner (Parliamentary Secretary to Minister of Employment and Immigration):: Mr. Speaker, I share the Hon. Member's concern for peace and security in the world. Canada does not take not take a back seat to anyone in being in favour of a comprehensive test ban and in its feelings about the amount of nuclear weapons we have. That is so why we were so heartened by the Gorbachev-Reagan meeting which took place, which meeting will begin a conversation and ongoing relationship between them which, hopefully for all of us, will lead to a way to eliminate nuclear weapons as well as all
conventional weapons in order that we can all live in peace and security.


Some Hon. Members:: Hear, hear!


Gérard (Gerry) Weiner: Mr. Speaker, the Hon. Member for Cowichan-Malahat-The Islands (Mr. Manly) has drawn the attention of the House to the Canadian Forces Maritime Experimental and Test Range located at Nanoose Bay off Vancouver Island. I am very glad to have the opportunity to speak on the Member's resolution. In order that Members of the House will understand a little better what we are talking about, I would like to elucidate today on how this range functions and how it acts in support of the Maritime defence forces of Canada, the United States, and the remaining NATO allies as well as Australia and New Zealand.
The use of Nanoose Bay by both the Canadian Forces and the United States Navy was the subject of discussions which culminated with the signing of an agreement on May 12, 1965, establishing the Nanoose three-dimensional range. The range became operational early in 1966. The original agreement remained in force for a 10-year period and provided for renegotiation thereafter. The agreement was renewed for a second 10-year period on April 14, 1976. Members will be aware that the present agreement expires next year in April, 1986.
The resolution before us suggests that there should be a public examination of the exact mandate and functions of the agreement. I suggest that this agreement, which is public and the terms of which are well known, has been the subject of public examination for some years. 1 would also suggest that our discussion today is an additional public examinatino to which I am happy to contribute. Allow me to say a few words about the functions and the Canadian and American responsibilities at the Canadian Forces Maritime Experimental and Test Range located at Nanoose.
The primary functions of the Nanoose facility assumed by Canada are: (a) operation and maintenance of the Nanoose three-dimensional range; (b) Canadian ships' systems trials such as torpedo launching trials; (e) Canadian torpedo tracking (depth, direction and speed) trials; and (d) Canadian anti-submarine warfare sensors (sonobuoys) proofing and testing.
By the terms of the joint agreement, Canada is responsible for: (a) construction and maintenance of all fixed facilities including buildings, roads, jetties, power, water, et cetera; (b) provision of technicians and personnel to operate the facilities; (c) provisionof range vessels and crews; and (d) administration, security and operational control of the Nanoose threedimensional range. The United States is responsible for: (a) supply, installation and maintenance of all technical equipment for operation of the three-dimensional range; (b) provision of technical personnel; (c) provision of all technical training for range personnel, both Canadian and American; and (d) provision of range vessels and crews.
The available operating time on the three-dimensional range is allotted equally between Canada and the United States. Historically, Canada has not used all of its allotted share of
December 2, 1985

range time. The United States Navy may utilize available range time in excess of its share in return for financial recompense. Although the existing agreement is a collaborative arrangement between Canada and the United States, the commanding officer of the facility is always a Canadian and operational control is Canadian. Further, the weapons tested at Nanoose are never armed. That is, the explosives that would normally fill the warheads are replaced by telemetry.
The Maritime facilities at Nanoose are not only fundamental to Canada's security concerns, but also contribute in a very measurable way to the defensive capabilities of the United States and the remaining NATO navies as well as Our Pacific Rim friends, Australia and New Zealand.


Sheila Maureen Copps: Mr. Speaker, the statement by the previous speaker that this treaty has been discussed and rediscussed and has had a full public airing since its original signing some two decades ago is obviously not borne out by the facts. The fact of the matter is that, even as he said in his own statement today, the nuclear warheads have been replaced by telemetry which, in some way, is supposed to make Canadian people feel more secure because, although there is capacity for nuclear warheads to be on the ships, they are not on them. One of the reasons that it is incumbent upon us to entertain the kind of public input suggested by the Member in his motion is that a lot of people across Canada have concerns about our role in treaties which have previously been signed and treaties which are currently under negotiation.
Let us look, for example, at the issue surrounding the Antiballistic Missile Treaty. The United States Government continues to assure the world that it does not want to incorporate a first-strike capacity into its development of star wars research. It says that it is not interested in a first-strike capacity yet, quite clearly the emanations from Washington, through the President, have shown people around the world that he is looking upon the development of SDI as another means of achieving a nuclear capability in international warfare.
I believe that we have need for a full and open public discussion on this particular treaty and that we should expand that to include a full public airing of the Government's position on SDI. On the one hand we have heard the Prime Minister (Mr. Mulroney) and the Secretary of State for External Affairs (Mr. Clark) stand in the House and say that the Government does not have a direct role to play in SDI. On the other hand, we have heard those same Ministers, as well as other Members, say that they are prepared to look aside and take no action when private companies get into star wars development through contracts with the United States. To my mind, Mr. Speaker, that is, as my hon. friend from Glengarry-Prescott-Russell says, a Pontius Pilate approach to our role in international affairs.
We have heard the Secretary of State for External Affairs and other members of the Conservative Party say that they do not feel that the Government has the capacity to play a leadership role in this area. In fact, Mr. Speaker, I attended a meeting some months ago in the Province of Quebec where a
Nuclear Armaments
representative of the Government said that it loved the star wars development concept and that the only problem was that the Government did not have enough money to pursue it itself on an individual basis. In fact, they were applauding behind the scenes as private companies contributed to the SDI development effort by their contracts with the United States Government and the United States defense department. Quite clearly a double message is being sent to Canadians. Not only is it of great necessity to have this particular treaty examined with much public scrutiny by Canadians, it is also imperative that that type of public scrutiny be applied to the greater question of Canada's involvement in the development of nuclear capacity vis-a-vis the United States.
At one time there was a principle in this country that Canada would never hold nuclear weapons on our soil. The member of the Conservative Party who just spoke mentioned that we needed to have greater development not only only under the NORAD agreement and with NATO countries, but also with the group of ASEAN countries. In fact, we have seen New Zealand take an extremely progressive position in telling the Government of the United States that there is not a place in New Zealand for nuclear warheads.
Notwithstanding the guarantees made by Conservative Members in the House today, we have not had that kind of unequivocal commitment from the Government. The Hon. Member said that the operation is in fact headed by a Canadian. We had those same kind of shallow, do nothing assurances from the Government with respect to the Polar Sea. The Government said that it was in control of the situation with respect to the invasion of our sovereign Arctic waters by the Polar Sea.
In fact, the proof of the pudding is in the eating. The Secretary of State for External Affairs and the Minister of Transport (Mr. Mazankowski) are prepared to prosecute the very people with the Council of Canadians who went to drop a flag on the Polar Sea to show all the world that the Arctic waters are Canadian. They were the only group, with the exception of the Leader of the Opposition (Mr. Turner), who were prepared to take a stand in the Arctic and tell the people of Canada that those are our waters and they will not be infringed by any power, even our great and good neighbour to the south.
In fact, the Government should have given the Council of Canada the Order of Canada for being prepared to recognize the sovereignty of our Arctic waters. However, it washed its hands of the invasion of our sovereign waters by the Polar Sea and at the same time prosecuted the pilot of that small plane who brought this whole question of the Polar Sea to the attention of Canadians. That is the Government's perception of Canadian sovereignty in the Arctic. That is its perception when it comes to dealing with very crucial issues like star wars development.
Is it not the responsibility, the obligation and the right of every Canadian to be involved in the debate surrounding SDI

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research? The Prime Minister and the Government say no to star wars. After the Prime Minister has finished his Decima, he says no to star wars. After he has contacted his pollsters and felt the pulse of the nation, having seen the poll and the public perception on the issue he stands in strong and courageous fashion he says no to star wars.
At the same time, in his unyielding desire to be all things to all people, he goes to the back door of companies and says that the Government cannot be involved because it does not have the capacity or resources but those companies have the full blessing of the Government to go full steam ahead.
Is that an unequivocal opposition to star wars research and the involvement of the Canadian people in star wars development? In fact, it is another example of the Government's apparent desire to make promises and commitments throughout the country, to tell one group that it has its support while standing behind an opposite group. The Prime Minister did not have the guts to state his position on SDI, so he told the people that the Government opposed it. However, he told the companies that the Government supported that initiative.
We are facing the same type of equivocation on the free trade issue. The Prime Minister emerged relatively unscathed after the conference. In an attempt to create the perception of harmony, he launched an agreement. Quite clearly, the Prime Minister did not have the courage to show up in the House today. When the Secretary of State for External Affairs was questioned about the agreement and whether there was veto power involved, as perceived by the provinces, he did not have an answer. Again, he wanted to say one thing to the provinces, one thing to the federal Government, something else to the people of the United States and give another message to the people of Canada.
It is quite clear that we cannot leave this question to Government propaganda and the salesmanship of the Conservatives. It is clear that they are salesmen because they perpetrated the biggest sales job on the people of Canada on September 4.


Mr. Holtmann:: Don't cry.


Sheila Maureen Copps: We know what the "con-servative" Party means as a result of that particular salesmanship job.
The Member says that I am crying. I am not crying. It is the senior citizens of this country who are crying. The farmers of this country are crying.


Felix Holtmann: They are happy. I represent farmers.


Sheila Maureen Copps: The families of this country who are about to lose the fullness of their family allowance are crying. The shoe workers are crying. Believe me, it will be the Conservative Party that will be crying the real blues after the next election as they see their numbers decimated in the House of Commons.


An Hon. Member:: Get to the topic.


Sheila Maureen Copps: That is off the topic but I am being provoked, Mr. Speaker.


Felix Holtmann: You love it.


Sheila Maureen Copps: It is very difficult when I am being provoked.


The Acting Speaker (Mr. Paproski):: Order. I would not want the Hon. Member to be provoked. The Hon. Member for Hamilton East (Ms. Copps) has the floor. Allow her to have the extra few minutes.


Sheila Maureen Copps: Mr. Speaker, there are several questions at stake here. There is the question of credibility, whether we will be able to have a full airing of the question without a public inquiry, and whether we are prepared to leave to bureaucrats, the Secretary of State for External Affairs and the minions the very serious question of the agreement between Canada and the United States which is up for renegotiation in April, 1986.
Given the current record of the Government as it relates to SDI development, given the current spineless action of the Government as it relates to the renegotiation of the ABM treaty and given the current decision of the Government not to pursue an independent foreign policy whether it concerns star wars development, Third World issues or other major questions in which Canada used to be an honest broker, I believe that we cannot leave this question to the Government and the bureaucrats.
Indeed, we support the demand for a full public inquiry so that all the facts concerning this very important treaty can be put on the table and Canadians can finally have their say about the future of their country, particularly as it relates to the possibility of nuclear warheads on our soil.


Mr. Ted Schellenberg (Nanaimo-Alberni):: Mr. Speaker, I am somewhat confused. The Hon. Member for Hamilton East (Ms. Copps) said that it was wrong to send out double messages. Yet she talks about Nanoose and the SDI initiative in the same breath. She talked about the Polar Sea incident but forgets to mention that the Government was hamstrung about what to do because the Liberal Party, of which she is a member, did not leave us with the type of Canadian Armed Forces we needed to protect our sovereignty in the North.
Furthermore, she said that our Prime Minister (Mr. Mul-roney) is without guts. What kind of guts did it take for him to go to Winnipeg and tell the French Canadians in Manitoba that they had just as many rights as Francophones in Quebec? How much courage does it take to tackle an incredibly faltering Canadian economy which was left by her Government and reduce the unemployment rate by 1.3 per cent and bring down the prime rate? That took a lot of guts by our Prime Minister. I should stay on the topic since I just chastised the Hon. Member for not doing so.
I listened with great interest to the points raised by my colleague and Vancouver Island neighbour, the Hon. Member for Cowichan-Malahat-The Islands (Mr. Manly). I was touched by his sincerity but I could not help but be reminded of a passage from the book Canada Views the United States in
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which the authors relate the report in a British newspaper of a young wayward girl who had been brought into court for falling into a dissolute life. The newspaper stated in a disdainful manner that the reason the girl had fallen into disrepute was that: " .. . she had been associating with Americans".
I, too, have been known to associate with Americans. They are our best friends and allies. We are aligned with them economically and militarily. That fact should underscore this debate on the renewal of the agreement between our two nations on CFMETR. The Canadian Forces Maritime Experimental Test Range at Nanoose Bay in my riding is a symbol of the quiet co-operation between Canada and the United States. It is in our nation's best interest to renew the agreement, because, as a maritime nation and as a member of NATO, we must accept some responsibility to provide continued access to our allies maritime forces.
You will notice, Mr. Speaker, that I said: "allies", for it is not just the Americans who utilize METR, as it is known in my riding, but the Australians and the non-nuclear New Zealanders as well. Nor should we neglect the contribution of the base to the local economy. It has been considerable over the last 20 years of this agreement. The present employment figure at METR is, I believe, 217 personnel, 107 of whom are Canadian. In his speech today, the Hon. Member for Cowi-chan-Malahat-The Islands neglected to point out the estimated influx from the base of $10 million per year to the central island economy. He mentions the potential loss of $20 million to Victoria with the possible loss of the Polish fleet, yet he wants to take $10 million out of the central island economy, my riding.
Perhaps it would be wise to take a brief look at the history of the Nanoose Bay area and then examine what actually goes on at the base. The name "Nanoose Bay" means the settlement at the head of the bay. It first appeared officially on the map in 1859. The meaning is derived from the Indian word "Nuas", meaning to push or work in, as Nanoose Harbour pushes inland from the Strait of Georgia. The Indian history of the local area is sketchy, and no accurate records exist. Finally, it is known that various tribes inhabited the area and that the Nanooas lived there prior to 1800. Much of the recorded Indian history has been obtained from one man-a Nanoose Indian appropriately named "Nanoose Bob" who was the sole male survivor of a massacre in 1823 by a band at war with the Nanoose at the time. Perhaps my colleague from Cowichan could have asked someone like Nanoose Bob about the value of being able to protect oneself from one's enemies. Anyway, Nanoose Bob combined an extraordinary capacity to recall the words and legends of his forefathers with a physical vigour-and you may envy this, Mr. Speaker-which enabled him to marry eight times and live to the age of 108.
The first Europeans to visit the area were the Spanish map makers in the 1790s. Their detailed charts indicate that they spent several years in the area, as even small islands such as Maude, Mistaken and the Ballenas were all accurately chart-
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ed. John Enos, a Portugese sailor, was the first European to take up land in the Nanoose Bay area. He arrived in 1863, landing on what he called "Nanoose Bay Peninsula" and what we now call "Powder Point". In time he owned the whole peninsula, which he developed over the next 35 years into a major holding of orchards, agricultural and pasture land.
In 1912, the property was purchased by a giant powder company which continued to make explosives there for many decades. It is worth noting that in clearing the site for the powderhouse foundations, they uncovered evidence of the mass slaughter of 1823. Ranching eventually returned to the area and persisted after the Department of National Defence purchased some 617 acres along the south shore of the peninsula in 1953.
At the time, the Canadian Forces was operating a torpedo test range at Patricia Bay, just north of Victoria. The "Pat Bay" range afforded a sheltered but confined operation area. However, as torpedoes became more sophisticated, their underwater speeds increased, target identification ranges increases, operating depths were extended and torpedo endurance increased. Both Canada and the United States were faced with the problem of finding suitable waters in which these torpedoes could be run and tested to their design limits.
An area in the Strait of Georgia adjacent to Nanoose Harbour seemed ideally suited for such activities. The area was of interest to the Canadian Navy and to the United States Navy, as it met most of their additional requirements for the operation of a fully instrumented, three-dimensional torpedo tracking range. In 1962, a temporary installation was established in Nanoose Bay, and this initial survey and evaluation of the range verified the usefulness of the area.
As my colleague, the Hon. Member for Dollard (Mr. Weiner), has already mentioned, the use of Nanoose Bay by both the Canadian Forces and the United States Navy was the subject of discussions which culminated with the signing of an agreement on May 12, 1965, establishing the Nanoose threedimensional range. The range became operational early in 1966. That is a bit of history about the area. I know it is germane and important to this debate.
Also it should be noted that although the existing agreement is a collaborative arrangement between Canada and the United States, the commanding officer of the facility is always a Canadian. The person is Michael Dunn right now. If the Hon. Member for Hamilton East (Ms. Copps) is ever in the area, she could meet him. Operational control remains Canadian. Also, the weapons tested at Nanoose are never armed, that is, the explosives which would normally fill the warheads are replaced by telemetry.
During the description of the Hon. Member for Dollard of the functions of the Canadian Forces Maritime Experimental Test Range, mention was made of the three-dimensional range. I should like now to offer a brief description of this facility. The ranee covers an effective area 15 miles long and varies in width from two to five miles, giving a total instrumented area in excess of 50 square miles. This instrumented area is contained in a large, mud-bottom through, extending

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Nuclear Armaments
southeast toward the Fraser River delta and providing water depths of 1,000 to 1,480 feet. The area is known on the charts as "Whiskey Gulf'.
On the ranger, specially instrumented objects may be tracked in three dimensions throughout the instrumented portion of the range. Tracking is implemented through the use of a complex system of transducers, receivers and computers. Evenly spaced about the seabed under the range are 24 arrays, each holding about four acoustic hydrophones. Acoustic pulses from the object being tracked are received by this bottom-mounted array. They are amplified, multiplexed and relayed to a computer site. The computer then demultiplexes the information and analyses it to provide an accurate position for the object being tracked. Thus, the moment by moment functioning of a torpedo being trialed is available for detailed analysis.
In addition, Canadian Forces Maritime Experimental Test Range conducts the sample proofing and testing of sonobuoys procured for the Canadian Forces anti-submarine warfare-


Michael Morris Cassidy: Mr. Speaker, 1 rise on a point of order. I have listened with interest to the Hon. Member, but I remark that he is reading his speech. I believe that that is not permitted according to the rules of the House. However, it has happened, and the real question is: Does he or does he not approve of the inquiry which his constituents are seeking?


The Acting Speaker (Mr. Paproski):: Order, please. That is not a point of order. If the Hon. Member has some notes in front of him, that is fine. We are entitled to have notes in front of us. I see no problem with that.


Ted William Schellenberg: Mr. Speaker, I will get to the point. We have just seen a demonstration of why it is said that NDP stands for "no darned patience".
It has been my intention to outline for Members the utility of this maritime facility at Nanoose and to illustrate that, through a co-operative arrangement with the United States, we have available to Canada a modern and "state of the art" maritime test range for proving defensive anti-submarine warfare systems.
To portray the importance to Canadian security of this kind of facility, let me present the figures on Soviet submarine strength for two of its four fleets. In the Soviet northern fleet, there are 40 ballistic firing submarines and 135 attack or anti-shipping submarines. In the Soviet Pacific fleet, there are 24 ballistic missile firing submarines and 97 attack submarines. This totals four short of 300 nuclear propelled submarines, without the addition of its Baltic and Black Sea-Mediterranean submarine fleets. This is a submarine capability of disturbing proportions. It is not diminishing, and it clearly signals that Canada must maintain and promote our maritime anti-submarine warfare defences.
Perhaps Members of Parliament who oppose CFMETR or METR should also oppose the continuing threat to world peace of the Russian submarine base at Murmansk. Or, perhaps those in the NDP, who are so quick to oppose anything military, should read a recent address before the United
Nations, delivered in stirring tones by one of their own- former Ontario NDP Leader, Stephen Lewis, now Canadian Ambassador to the UN. "Lewis is to be applauded for his forthrightness", said one headline.
What did he say? Ambassador Lewis provided an eloquent denunciation of a brutal colonial war and a regime which violates human rights as a matter of policy. He pointed out that more than a million Afghans have been slaughtered since the revolution and that up to a quarter of the population of 20 million has left the country. We can ask the Afghans if they value properly trained men and women, capable of defending their country. We can ask the Afghans if they believe in strength, if they support the proper testing of military equipment and if peace, very often, comes from strength. While we are at it, let us ask the same questions of the Poles, the Czechs, the Hungarians or the millions of other east Europeans who live beneath the boot of the Warsaw Pact. Let us ask our colleagues in the NDP to name one occasion, one time, when NATO invaded another nation.
The Nanoose facility is an integral part of Canada's contribution to the maritime forces of the North Atlantic Treaty Organization. It helps to preserve the peace which some of us have come to appreciate, and it ensures our continued security.
Let me close my contribution to this debate by quoting from my own mail on the issue. One constituent wrote in a letter dated November 13: "With the sad state of the Canadian Armed Forces courtesy of our previous Government I feel that the use of this bay and the range in Georgia Strait is one small contribution that Canada can make to the defence of North America. And activity by U.S. ships should be welcome." Then there is this letter from the Nanaimo Chamber of Commerce dated November 25: "The Economic and Government Affairs Committee of the Greater Nanaimo Chamber of Commerce is in full support of renewing the agreement for the Canadian Forces Maritime Experimental Test Range in Nanoose Bay. The base provides considerable employment to the surrounding area and is a major contributor to the economy of Nanaimo. It is essential that this entity be maintained to provide ongoing economic benefit to the surrounding communities."
The Maritime facilities at Nanoose Bay are not only fundamental to Canada's security concerns, but they also contribute in a very measurable way to the defensive capabilities of the U.S., the NATO navies, and our Pacific Rim friends in Australia and New Zealand. This agreement means over 100 jobs and approximately $10 million for that fragile central island economy. The agreement has worked for Canada and our friends for two decades and it should be renewed next April for a stronger Canada and a lasting peace.


Michael Morris Cassidy: Mr. Speaker, this is an issue of importance not only on Vancouver Island. It touches us all. It is an issue which has been extremely important in the politics of our sister country in the Commonwealth, New Zealand, and it should conern my constituents in Ottawa
December 2, 1985

Centre as well as those of my friend from Cowichan, Malahat and The Islands. The issue is whether Canadians should accept the presence of American or other vessels in our waters while carrying nuclear arms on board. That is the key question raised by this motion which asks for a public inquiry into what goes on in this testing range, and in particular the presence of nuclear arms surface vessels and submarines which it is believed put into port there. Perhaps when the Americans send a ship to Nanoose Bay they always leave their nuclear weapons behind. However, it is clear that those vessels customarily carry nuclear arms. The question I ask is whether it is appropriate that Canada allow itself to become a target for retaliation in the case of a shoot-out between the Americans and the Soviet Union, or whether those sea-borne missiles should stay in either international or U.S. waters. That was the question in New Zealand as well.
Let us look at some the issues raised somewhat eloquently by various Members in this debate. I have no objection to the Hon. Member for Nanaimo-Alberni (Mr. Schellenberg) saying that there is support in his area for the economic benefits of the Nanoose range. This is one factor to be taken into account. I am not sure whether he is saying that it is all right to have nuclear weapons in the immediate vicinity provided enough jobs are created. If the number of jobs went down perhaps he would take a stand on principle and say it is all right to exclude them and eliminate these tests. That may or may not be his position. However, whatever the principle involved, I think the people have the right to know exactly what is going on. That is what is being proposed here.
The Nanoose facility, as was indicated in the debate, has been used for sea-borne weapons testing for a number of years. Perhaps it was originally used purely for conventional testing. However, many of the weapons being tested there now have the potential to carry nuclear warheads as well. I would like to know, on behalf of my constituents, exactly what the situation is. Is it inevitable that any weapons carried by warships in this day and age are potentially usable for nuclear purposes? If that is the case, then I am not exactly sure what kind of position one takes concerning the use of the Nanoose facility for unarmed weapons of a type which could be used for nuclear purposes. What I do know is this. If Canada is to make a contribution to the denuclearization of the conflict between the western and eastern blocs, we have to be vigilant and ensure there is not continued proliferation. Anyone who has looked at these matters knows that one way to stop the nuclear arms race is to stop testing. If they cannot be tested then they are not going to be used. No one will risk putting into operation arms which they have not had an opportunity to test. We know that the failure rate can be quite substantial. Therefore, tests are required. One of the preconditions for nuclear arms reduction is ensuring that no further arms are tested to the point where they can be deployed. After you ban tests then you can ban future deployment. After you ban deployment you can talk about reducing the numbers. Both the U.S. and the Soviet Union have proposed 50 per cent cuts in their nuclear arsenals. After you get to that point you have to start to talk
Nuclear Armaments
about other means by which the two superpowers and their allies can talk about other confidence-building measures by which the threat of war would come to an end.
I recognize that is a long process but you have to start somewhere. My Party was extremely critical of the previous Liberal Government because it permitted cruise missile testing over Alberta. I find it hypocritical for the Hon. Member for Hamilton East (Ms. Copps) to get up and state how solidly her Party deplores the presence of nuclear vessels in Nanoose. The Government formed by her Party when it was in power was no different than the present Government with respect to nucleararmed American vessels entering Nanoose Bay or other harbours. I am told that at the other end of the country, in Halifax, there is a regular presence of American nucleararmed submarines. I am told that if you have a dinghy or rowboat you can row out there, the sailors will come out and say, "Hi, boys" and wave and be very friendly. At the same time they are carrying weapons of death and destruction and this makes Halifax a number one target should the Russians ever choose to let off some missiles on American nuclear missile bases. That is intolerable.
There is time for this motion to come to a vote so let me just appeal to Members of the House. This motion does not say that under no condition should Nanoose Bay remain open. It simply says that the people in this area are asking that an inquiry be held to find out what is going on and what the risks are. They want to know whether nuclear-armed vessels are going into this test range in order to then determine whether that is desirable or not. I therefore ask my colleagues to support this motion and allow it to come to a vote in the minute or two remaining.


Mr. Patrick Crofton (Esquimalt-Saanich):: Mr. Speaker, I welcome the opportunity to add a few comments to this debate. I am sorry there is so little time left.


Michael Morris Cassidy: Well, allow the vote. Sit down.


Patrick Dermott Crofton: It might have been helpful to Members of the House to have an opportunity to listen to someone who has actually served in the navy talk about one of our naval bases.


Some Hon. Members:: Hear, hear!


Patrick Dermott Crofton: I have heard a lot of arrant nonsense from Members opposite on this subject today. I am glad that the Hon. Member for Ottawa Centre (Mr. Cassidy) managed to slip the word "Nanoose" into his speech at the very end because he talked about everything else but that. I can understand members of the NDP wanting to close down a military base because they are opposed to our involvement in NATO and NORAD.


James Douglas Manly: We are asking for a public inquiry.


Patrick Dermott Crofton: It is unfortunate that they choose to ignore history. I am not aware that the peace loving people of the Soviet Union are doing the people of Afghanistan any good right now.

December 2, 1985
Representation Act, 1985
Members have managed to bring into this debate the subjects of tariffs on shoes, the Polar Sea and a whole bunch of things. I am sorry that the Hon. Member for Hamilton East (Ms. Copps) started off by complaining that the Prime Minister (Mr. Mulroney) was not on hand today. I notice she stayed just long enough to say a few words and disappear. Perhaps she is looking for a map to find out just where Nanoose is.
During my time in the Navy I was a qualified weapons officers. I was involved in the original trials of sonar buoys by the Canadian Navy. I have been to Nanoose on a number of occasions. 1 suggest that Hon. Members opposite should do a little homework so that they would know exactly what does transpire there.




[Stage Direction]
The House resumed from Friday, November 29, consideration of Bill C-74, an Act to amend the Constitution Act, 1867 and the Electoral Boundaries Readjustment Act and to provide for certain matters in relation to the 1981 decennial census, as reported (without amendment) from the Standing Committee on Privileges and Elections; and Motions No. 4 (Mr. Rodriguez), and No. 5 (Mr. Foster) (p. 8837).
Mr. Speaker:: Pursuant to Standing Order 13(3), the House will now proceed to the taking of the deferred divisions on the report stage motions of Bill C-74, an Act to amend the Constitution Act. We will vote on the deferred motions as listed in the Order Paper. The first vote will be on Motion No. 4. Mr. Rodriguez, seconded by Mr. Young, moves;
That Bill C-74, An Act to amend the Constitution Act, 1867 and the Electoral Boundaries Readjustment Act and to provide for certain matters in relation to the 1981 decennial census, be amended in Clause 2 by striking out line 34 at page 2 and substituting the following therefor:
"of one, one other member.
4. Among the number of members assigned to Ontario, there shall be
assigned a minimum of eleven members to Northern Ontario."
Call in the Members.


Mr. Speaker:: I declare the motion lost.


Jacques Guilbault: Mr. Speaker, there might be a disposition of the House to apply the result of this vote to the next motion standing in the name of the Hon. Member for Algoma (Mr. Foster).


Ian Deans: Mr. Speaker, I understand now that you might be prepared to put the concurrence vote. 1 believe we could apply the same vote in reverse.


Mr. Speaker:: Let me sort that out by saying that we are now on Motion No. 5. I take it the same vote applies as on Motion No. 4. Mr. Foster, seconded by Mr. Gauthier, moves: Motion No. 5
That Bill C-74, An Act to amend the Constitution Act, 1867 and the Electoral Boundaries Readjustment Act and to provide for certain matters in relation to the 1981 decennial census, be amended in Clause 2 by adding immediately after line 34 at page 2 the following:
"4. Notwithstanding rules 1, 2 and 3, and the Electoral Boundaries Readjustment Act, in dividing Ontario into electoral districts under that Act following the completion of the 1981 decennial census, the electoral boundaries commission for Ontario for the census
(a)	shall consider the aggregate territorial area of the electoral districts described in paragraphs 1 (Algoma), 9 (Cochrane-Superior), 34 (Kenora-Rainy River), 49 (Nickel Belt), 50 (Nippissing), 69 (Sault Ste. Marie), 77 (Sudbury), 78 (Thunder Bay-Atikokan), 79 (Thunder Bay-Nipigon), 80 (Timiskaming) and 81 (Timmins-Chapleau), of the part of the 1976 Schedule relating to the Province of Ontario;
December 2, 1985

(b)	shall divide that area into eleven electoral districts in accordance with the rules provided by section 13 of the Electoral Boundaries Readjustment Act; and
(c)	shall, in accordance with the rules provided by section 13 of the Electoral Boundaries Readjustment Act, divide the remaining territory of Ontario into the number of electoral districts that equals the difference obtained when the number eleven is subtracted from the number of members assigned to Ontario under subsection 51(1) of the Constitution Act, 1867, as amended by the Constitution Act (No. 2), 1974."


Mr. Speaker:: I declare the motion lost.
The next question is on the motion of Mr. Hnatyshyn that Bill C-74, an Act to amend the Constitution Act, 1867 and the
Representation Act, 1985
Electoral Boundaries Readjustment Act and to provide for certain matters in relation to the 1981 decennial census, as amended, be concurred in.
Hon. Members have heard the suggestion. Is it agreed that the same vote will be applied in the reverse?


Some Hon. Members:: Agreed.


Ramon John Hnatyshyn: that the Bill (as amended) be concurred in.


Mr. Speaker:: It being 6.27 p.m., this House stands adjourned until tomorrow at 11 a.m., pursuant to Standing Order 3(1).


[Stage Direction]
The House adjourned at 6.27 p.m.
[Stage Direction]
Tuesday, December 3, 198S