1985-05-30

[Stage Direction]
The House resumed from Wednesday, May 29, consideration of the motion of Mr. Wilson (Etobicoke Centre) that this House approves in general the budgetary policy of the Government; and the amendment of Mr. Johnston (p. 5043).
Mr. Speaker:: There were nine minutes remaining in the question and comment period following the speech yesterday of the Hon. Member for Dollard (Mr. Weiner). Are there any further questions or comments with regard to the speech of the Hon. Member for Dollard? There being no further questions or comments, we shall resume debate.


Hon. Douglas C. Frith (Sudbury):: Mr. Speaker, I welcome this opportunity to give my version of the events which have occurred since that so-called fair but tough Budget which was delivered in this House a week ago. I would like to comment on several areas of the Budget, but I will comment primarily on the areas for which I am the critic, that is, the treatment of our elderly and the families of our society. I will give a general overview of what I see as some great weaknesses in this Budget which was presented by the Minister of Finance (Mr. Wilson) several days ago.
1 question very much, Mr. Speaker, the fairness of a Budget of which the Minister of Finance is so embarrassed that he has to use the word "fairness" some 26 times in his speech. It seems to me that if one has to resort to using the word "fair" so often, there must be some doubt about the fairness and equity of some of the measures which were put into that budget. I would like to speak about the fairness as it relates to the elderly in our society. I am going to quote from a program called CTV Question Period in which the Minister of Finance was asked about the shift in dollars which will occur within the package of spending for the Old Age Security. The Minister at that time said, and I quote:
Yes, as a result of this Budget, there will be some shifting so that those who are in the lower-income brackets for the child tax credit or the Guaranteed Income Supplement will get more, but that is consistent with the principle that we did establish that the balance in the social programs should be weighted more towards those who need it the most.
I feel that this is an absolutely misleading statement with respect to what measures were put into the Budget by the Minister of Finance in both those particular areas. I noticed with care, Mr. Speaker, that this Government chose to put forward only the Estimates and the impact of the Budget in relation to the years 1986-1987. It took several days before we had a leaked document from the Department of Finance which indicated the full impact of those measures until the year 1990-91. When we see the actual impact which these measures are going to have, not only on personal incomes but on the incomes of the elderly and on those families with young children, we don't have to wonder why the Minister of Finance put forward only the years 1986-1987. In those two years, the full impact of the measures announced a week ago would hardly have impacted. It is only when we see what happens in the year 1990-91 that we get the true thrust of what this Budget is all about.
I would like to speak now about the commitment toward the people in the lower-income brackets of which the Minister has made so much. I find it rather mind boggling, to say the least, Mr. Speaker, to actually believe that the Minister thinks that people who live below the poverty line should be expected to share any of the burden of the deficit reduction. 1 am talking in particular about the 1.3 million Canadians who rely on the Guaranteed Income Supplement in order to make ends meet. Those are the 1.3 million Canadians who are over the age of 65 years and who no longer can avail themselves of jobs to protect them against the ravages of inflation. Their only relief is going to come from government cheques and from a Government which believes that in order to protect the dignity of an individual, they should have sufficient income to at least match Statistics Canada's definition of poverty.
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Here we have a Government which, over the next five years, is going to take from the hands of those who qualify for the Guaranteed Income Supplement some 19 per cent of their purchasing power. All of us in this House recognize that anyone who is on the GIS today lives below the poverty line. That is a fact. However, this Government is going to take away a further 19 per cent of the purchasing power of people already below the poverty line, and calls that fair. I would like to read the words of some Members in opposition when we were in Government and brought in the six and five program. When he was in opposition the Minister of Finance said that "the Liberals are putting the boots to those who are hardest hit in the economy today; the low income people and the pensioners." His colleague, now the Minister of Employment and Immigration (Miss MacDonald), said that the caps on indexa-

May 30, 1985
The Budget-Mr. Frith
tion were "the meanest move" that she has ever seen in a Budget.


Ms. Mitchell:: And so it was.


Douglas Cockburn Frith: That is what those key Ministers had to say. I want to remind my friend from the NDP who just said "so it was" just exactly what the Liberal Government did-


Mr. Gauthier:: Ignore her.


Douglas Cockburn Frith: -when we brought in six and five. We made sure that those people in our society who need help the most, those who qualify for the GIS, were going to be double indexed. That is a pretty complicated term, but it meant that in addition to fully indexing to inflation the GIS portion of the OAS cheque, we fully indexed the OAS portion to make sure that the poor in this country would not lose one cent of purchasing power because of the need for sacrifice to bring inflation down to a reasonable and acceptable level. That was the Liberal way. We asked the people of this country to share the burden of reducing inflation but not on the backs of the poor. Do we see that from this Government? Not at all. The Minister says one thing and does the opposite.
The Minister of Finance indicated as well that those in the lower income bracket would get more dollars from the child tax credit. Yet if one looks at the direct impact of his Budget measures on the national accounts component, by the year 1991 there will be a reduction of $80 million in that total package. People can be fooled by numbers, but the facts are that in 1985 dollars every family earning $12,000 a year or more is going to receive less from the child benefit package by the year 1991 than they do today. I question whether that can be termed a fair measure in the Budget.
I find it incredible that the Minister did not accept the advice of the Standing Committee on Health, Welfare and Social Affairs concerning the child tax exemption and tax credit, particularly when the majority of Members on that committee are Conservatives. Here is a Minister who, in the interests of fairness, introduces a tax measure which will reduce the cut-off point for the child tax credit from $26,000 a year of family income to $23,000 a year. I find it incredible that a Conservative Government-I should not say that; I should not find it incredible because, frankly, after September 4, I fully expected this would be a Tory Budget. However, I thought they would at least have the courage to say it was a Tory Budget. Do not try and fool the Canadian public by saying it is a fair measure to decrease the benefits for every family who earns $12,000 a year or more in 1985. At least be straightforward with the Canadian public.
Yesterday, in his speech to the House of Commons, my leader indicated that part of the problem with this Budget is that it is a sneaky Budget. It is sneaky in the sense that they thought they could fool the Canadian public by only showing the impact of these budgetary measures during the first two years. They were trying to hide the impact that this would have on the elderly and the young families in our society. I find it incredible that at the same time as the Government is
giving $500,000 in capital gains exemption, it has chosen to hit the poor families in our society and expects Canadians to believe that this is a fair but a tough Budget.
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I want to talk about the growth factors in the Budget. The Government, which has been in office since last September 4, was handed an economy which was growing at the rate of 4.1 per cent. That was the over-all growth in the country in 1984. In his own Budget documents, the Minister of Finance indicates that growth in our society in 1985 can be expected to drop to approximately 3.1 per cent. Although he is convinced that the measures in this Budget will lead to an economic renewal in the private sector creating thousands upon thousands of jobs, his own figures indicate that growth will be cut in half again in 1985 to the rate of 2.4 per cent. One must have an awful lot of faith in the engine of growth in our society to believe that a growth rate of 2.4 per cent in the economy will lead to the creation of thousands upon thousands of jobs.
Conservatives talk about the economic miracle that has occurred in the United States since the implementation of many of the fiscal policies of President Reagan. They point to the miracle that has occurred in terms of the freeing of free enterprise in the United States. I remind those Conservatives that free enterprise has been freed by putting tax dollars into the hands of consumers. Despite his talk of fiscal restraint. President Reagan has created a deficit in the United States which will approach $200 billion in 1985.
Despite all his rhetoric, President Reagan at least understood that if the fiscal tools of the Government are properly used and directed, they can do a great deal to speed up economic recovery. Do not assume, however, Mr. Speaker, that the direction of $200 billion toward the defence industry is my idea of creative, productive, and socially valuable fiscal spending. I am suggesting that, if properly directed, a deficit can do a great deal to speed up economic recovery. We have seen an example of that in the United States. In addition to increasing the size of the deficit, President Reagan cut taxes of middle income Americans so that they would go on a spending spree, and spend they did. As a result, there has been a decrease in the unemployment rate in the United States, and their growth rate has been higher than that experienced in Canada.
If the Minister of Finance were true to his Conservative beliefs, I would have expected him to have taken the examples of the United States and implemented some of those over-all general directions in Canada. He did not do that, Mr. Speaker. Instead, he chose the Margaret Thatcher way. He chose to increase taxes on middle income Canadians so that they will have less to spend on consumer goods. That will impede growth in our economy next year, as he has admitted. To suggest that he has had such a tough job in cutting the size of the federal deficit leaves little to be imagined.
Eight months ago, the Minister of Finance was handed a $30 billion deficit. By his gift to the multinationals of $2.6 billion and his increase in the size of federal transfers under

May 30, 1985

Established Programs Financing, the Minister of Finance has increased the federal deficit from $30 billion to $38 billion. He then says that he has done such a good job in paring the deficit down to $34 billion that all Canadians should applaud. What hypocrisy and sham. The Minister of Finance cannot learn the lessons of the British economic experience in the last four or five years. Rather than President Reagan's policy direction, he chooses that of Margaret Thatcher. I hope some member of the Government will talk about the pros of Margaret Thatcher's direction.
There have not been many positive improvements to the British economy. Since Margaret Thatcher took office, the unemployment levels have not dropped. There is a lost generation of youth in the U.K. Unemployment for youth between the ages of 18 and 24 in the United Kingdom is approaching 26 per cent. That is a direct result of the economic stupidity on the part of a Government that focuses itself so narrowly on fiscal measures to reduce the size of the federal deficit. It believes so strongly in the private sector for recovery that it has led to an exact opposite result to its original goal..
The Minister of Finance admits that he is anticipating growth of 2.4 per cent in 1985-86. How does he expect there to be a cut in unemployment if the growth rate will be smaller than it was this year?
Let us talk about the Minister's concept of fairness. On Budget night, the Minister of Finance did not indicate to the Canadian public that he plans $2 billion of cuts in transfers to the provinces over the next five years. I assume he does not want that impact to be seen until the year 1989-90, after the next election. He is attempting to fool the Canadian public with this Budget. The impact of each of these budgetary measures will fully impact on the Canadian economy long after the next election. Canadians should be aware of the hidden agenda of this sneaky Budget.
What effect will a cut of 42 billion to Established Programs Financing have on the average Canadian? It involves a transfer of funds for money spent under the Canada Assistance Plan in transition homes and for people who are on welfare lists at every municipal level in this country. Cuts in Established Programs Financing and other such programs will impact on the dollars spent on medicare by the provinces and in post secondary education.
Do you really believe that if the federal Government cuts the transfer to its provincial counterparts by $2 billion that nothing will occur? Surely the provinces will be faced with either cut-backs in those areas or they will have to raise taxes to make up the difference in the transfer of payments from the federal Government to the provinces. That is not my concept of a fair budget. A review of the figures in the Budget documents as they relate to unemployment shows that the Government apparently accepts that unemployment will hover at the 11 per cent mark for most of this decade. Does the Government believe it is fair to expect 1.5 million unemployed to wait five more years for the economic recovery in order to
The Budget-Mr. Frith
get a piece of the pie, while it hands out millions of dollars of tax breaks to the rich in our society? Is that the Conservative's idea of fairness? It is certainly not the Liberal concept of fairness.
I have seen the attack on the regions of our country. I represent an area of this country that has been badly hit by unemployment in the nickel mining industry. I know what it is like to have an unemployment rate above the national average because we have lived with it for the last six or seven years. My riding had the highest unemployment rate in the mid 1980s. Our unemployment rate of 35 per cent was the highest in North America. When Conservatives tell me that make-work programs are not worth anything, they might want to visit communities in our country where it is the only means of job prospects. Without that, people in those areas face only one option, which is to go on the welfare rolls of the municipalities.
There are Members in the Conservative caucus who represent regions in this country that have similar problems to those experienced in Sudbury. I have not heard one Conservative backbencher attack this Budget. They know it will hurt the people whom they represent. This Budget will adversely impact on Atlantic Canada, on northern Ontario and northern Quebec, which are areas of this country that have traditionally relied on government programs. They have relied on the Department of Regional and Industrial Expansion to fuel the growth so that while the unemployment rates are still unacceptable, at least they are lower than they would be without those programs.
The Conservatives used to complain about us, but we pale by comparison with the dollars the Government and its 40 Cabinet Ministers have spent jetting around the world. Now they tell us that they no longer have the money to pay for the programs that will protect the poor in our society who live below the poverty line.
This is sheer hypocrisy, Mr. Speaker. I think the people of Canada will be asking their back-bench Members of Parliament who represent the Conservative Party where they were in the debate of 1985 when the Budget came down. Were they defending the interests of constituents when everyone elected under the Conservative banner in Atlantic Canada knows that this Budget is no damn good for Atlantic Canada? This Budget will severely impact on the day to day lives of constituents, and Conservative Members are not saying a word to the Minister of Finance or to the Prime Minister (Mr. Mulroney).
I must admit one did have the courage. The Member of Parliament who represents Cape Breton finally said that the measures in the Budget were not acceptable to the people of Cape Breton. No wonder, Mr. Speaker, because if he has any hope of being re-elected, he had better be seen to be voicing the concerns of his own constituents. It will be a mark of dishonour on Conservative backbench Members who have not taken advantage of this Budget debate and stood up to defend the interests of their own people.

May 30, 1985
The Budget-Mr. Frith
If this Finance Minister is so convinced that the elderly in our society, those who live below the poverty line should share in the burden of the deficit reduction, then I ask the Minister to appoint a committee this month to travel from Vancouver to Halifax to all of the small centres and to listen to senior citizen organizations and organizations who represent the poor. Let the people voice their concerns about a Government that will take from them 19 per cent in purchasing power over the next five years. Can he tell them that is fair? I am convinced that if he has the courage of his convictions, he should have the courage to establish that committee.
I have already indicated today that I have talked to Patrick Johnston, the Executive Director of the National Association of Poverty Organizations. He is willing to set up part of that travel show. If we can do that and we report back to Parliament, the Government will see its folly and reverse itself in the Budget.


Margaret Anne Mitchell: I have a question for the Hon. Member for Sudbury (Mr. Frith). He shared experiences on the Standing Committee on Health, Welfare and Social Affairs when we were reviewing child benefits. We put a lot of work into the report with some guidelines for child benefits. Does he think that this Government really paid any attention to that report and to some of the principles we felt were very important? The Government has reduced indexing on family allowance, which in my view really erodes the whole principle of universality as well as giving less money to families. Is that his view?
There is a very small increase in the child tax credit, $70 now and $70 later, which is far below what was considered in the options we looked at in the committee. The Government has removed savings from the child benefit package for governments, but not for families. Does the Hon. Member agree with these principles? What does he think should have been done?


Douglas Cockburn Frith: Mr. Speaker, I thank the Hon. Member for Vancouver East (Ms. Mitchell) for the comments and for her questions. Clearly the Government did not listen to the recommendations of our committee. If the Hon. Member remembers correctly, even the backbench Tory Members indicated that the cross-over point for the child tax credit should be significantly higher than what was presented in their own child benefits paper. Not only did the Finance Minister ignore the recommendations of his own Tory backbenchers, he took another Draconian step by reducing the changeover to $23,000 a year.
I find it absolutely incredible, naive and mean to suggest that a family whose total income is $23,000 a year should expect to have a decrease in the child benefits portions that governments gives.
Frankly, the over-all thrust of the Budget, in addition to being anti-old age, is also anti-family and anti-youth. In terms of 1985 dollars, if one takes a look at the national accounts component which I talked about earlier, it indicates that in real 1985 purchasing dollars, every family which earns $12,000 a year or more today will suffer a reduction of dollars to spend.
The Government is going to hand out to the rich in our society $350 million next year in tax free capital gains, which amount will go up to the tune of $700 million by 1990-91. That is what they are doing on the one hand. They can actually hit low income Canadians in this manner.
I just want to point out that 67 per cent of the capital gains benefit will go to 4 per cent of the population. That kind of thrust in the Budget does not surprise me, as it is a Tory thrust, but I hope the people of Canada will remember it when they go to the polls the next time.


Mr. Malone:: Mr. Speaker, I have a quick question for the Hon. Member for Sudbury (Mr. Frith). How did he know that there could be a stabilization of the transfer payments to provinces and that there might be an increase in the collection of revenues for the Government of Canada in future years?


Douglas Cockburn Frith: Mr. Speaker, I suggest that the Hon. Member for Crowfoot (Mr. Malone) look at the national accounts. 1 know they have now been released in the newspapers. Of course, these are all projections, but they indicate the full impact of these measures. It is indicated quite clearly that they are expecting a $2 billion saving in transfers to the provinces by the year 1990-91. Also, in those same papers it is indicated that by 1986-87 they do not anticipate any reduction in transfer payments. This is what led me to the belief that the Government will go to the polls between 1987 and 1988, before the full impact of these measures will be felt by Canadians. Government Members know that if they stick around long enough for Canadians to feel the full impact of these budgetary measures, they will not be sitting on that side of the House after the next dissolution.


Arnold John Malone: Mr. Speaker, I have a supplementary question for the Hon. Member. The point I want to make is that the Hon. Member for Sudbury deludes himself. He spent the greater part of his speech saying that it was a sneaky Budget. He gave as evidence of that, that certain facts would be coming forward in the future which he somehow claimed to be sneaky, and when I asked him how he knew that, he claimed that he read public documents. Obviously it is not sneaky; it is public.
We have laid out a long-term plan by which the country will create real jobs. The Hon. Member and the people of Canada know that taking tax money from taxpayers to pay for the jobs of other people simply creates ongoing situations wherein the ability of those who have the capacity to produce jobs is diminished to the extent that they cannot produce more jobs. The best Governments can ever expect to do is to redistribute wealth.
The Hon. Member talked about the capital gains tax. Surely he does not believe that Studebaker will buy out General Motors or that the owner of a large corporation who may earn $200,000 per year will be enticed to sell out to get the $500,000 advantage. Surely the Hon. Member knows that the capital gains tax applies to little store owners, clothing store
May 30, 1985

owners, farmers, garage owners and people with service stations. Also he knows that after a lifetime of work, when one has the capacity as a result of a system which a Government has put in place to look after oneself as an individual, one does not need social services handed out by a Government. That is the point, and I know that we are trampling on this unholy marriage between the NDP and the Liberal Party.


Douglas Cockburn Frith: Mr. Speaker, I have a quick reply to the Hon. Member's question. I will not suggest that the Hon. Member is naive. I indicated that the budget document was sneaky because it only contained the full impact for the years 1985-86 and 1986-87. They did not have the courage to include the full impact for the year 1990-91 when it will really impact upon the Canadian public.
The only reason I ended up my remarks by referring to this secret document was that it was released by the Department of Finance because it wanted Canadians to see exactly what would be foisted on them. That is what I meant by "sneaky".
1 just want the Hon. Member to understand that 67 per cent of the capital gains benefit will go to 4 per cent of the population. I am telling that Tory Member that when the Budget takes away 19 per cent of the purchasing power of the poor in society and hands it over to the multinationals through the oil agreement and to the top 4 per cent of wage earners, it is not my concept of fairness. If they go to the Canadian public, they will be given the same answer.


Mr. Gagnon:: Mr. Speaker, I would like to indicate to the Hon. Member for Sudbury (Mr. Frith) that I just came from a meeting of the Standing Committee on National Resources and Public Works at which officials of Atomic Energy of Canada appeared. They indicated that they recommended two years ago that the heavy water plant should be cut, that they had reached this conclusion only after detailed and intensive investigation, and that a certain Cabinet Minister of his Party decided that it was worth $100 million per year of Canadian taxpayers' money to keep his seat.
The cost per job is $200,000 per year, per employee, and the employee only receives $28,000. We can shut down this whole plant and for the same amount of money, for the same benefit, have 4,100 on the payroll.


Mr. Speaker:: I regret to advise the Hon. Member that the 10-minute period for questions and comments has expired. I will recognize the Hon. Member on a very short response, like 15 seconds.


Douglas Cockburn Frith: Mr. Speaker, his own Government's measures will create a large national park out of Cape Breton. That is all that will be left for those people once his Government is finished with that measure.
I should like to add one other comment. The people of Cape Breton will remember the gall of this Government to introduce tax measures to attract industry to Cape Breton when it knew dang well that the measures we put in did not attract one industry there.
The Budget-Mr. Masse


Hon. Marcel Masse (Minister of Communications):: Mr. Speaker, as former U.S. President Franklin Delano Roosevelt once said in *Combats pour demain*, to govern means keeping the scales of justice the same for everyone. In fact, these words could very well have been part of the Budget Speech of the Minister of Finance (Mr. Wilson), because they reflect the underlying philosophy of this Budget.
During the past few days, I have listened with a great deal of interest to the comments of Hon. Members on the Budget brought down a week ago by the Minister of Finance. Mr. Speaker, I think it is appropriate to point out that this first Budget is a courageous, realistic and above all fair reflection of the broad economic proposals made by the Government last fall, with a view to stimulating the economic renewal asked for by the vast majority of Canadians.
The basic goal of the Budget proposals is to encourage the initiative of Canadian entrepreneurs, to improve Government effectiveness and to put our financial house in order. In making these proposals, the Government has also acknowledged its responsibility for social programs, and it has taken this rigorous approach in order to be in a position to discharge its responsibility to the less advantaged in our society.
Unlike previous governments, we decided last November and in the Budget before the House today, to take immediate steps to control a deficit that we felt had become a veritable threat to the Government's ability to play its true role and that was draining the energy of the private sector of our economy. We have always maintained, and we still do today, that not governments but private enterprise creates that wealth we need to provide for economic growth and create the jobs Canadians need.
A government cannot act effectively if it has to spend $20 billion or more annually to pay the interest on the national debt. More than 20 per cent of the Government's total expenditure will be used to service the national debt during this financial year. Canadian entrepreneurs cannot find the investment money they need if they must constantly compete with the Government on the capital markets.
We have decided to break this vicious circle. In fact, Canadians have congratulated this Government on the courage it has shown in this respect. The constant upward spiralling of the structural deficit could no longer be tolerated. As a percentage of the gross national product, the deficit rose from 16.6 per cent in 1974-75 to 45.2 per cent in 1984-85. The overall impact of our Budget proposals will be to reduce the deficit by $4.4, $8.3 and finally, $20.1 billion, respectively, over the next three financial years.
As a result of the steps taken by the Government last November, we have been able to cut $8.3 billion in Government spending over three financial years. The Budget brought
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down by the Minister of Finance (Mr. Wilson) will bring about an additional reduction of SI2.1 billion over the same period.
The Government has realized it could not ask Canadian taxpayers to take on the entire burden of reducing the deficit. It had to set an example by controlling its own spending and by making a systematic study of every one of its programs and activities. The expected levelling off of the deficit will be largely the result of the Budget cutbacks we have introduced. We are particularly concerned about the cumulative effect of Budget deficits. Less than 20 years ago, the cumulative deficit or national debt reached $18 billion. Today, it is nearly $200 billion, and this progression could not be allowed to continue.
It will become clear that the Government has not merely paid lip service to the need for reducing this crushing deficit, but has taken steps to deal with it.
We made this decision, Mr. Speaker, because we believe that the vast majority of Canadians wanted us to do so. When they entrusted the Progressive Conservative Party with a mandate for economic renewal, they did so in the knowledge that they were asking for a solution to a serious problem, a solution that could not longer be postponed indefinitely. Since last fall, the Prime Minister (Mr. Mulroney), the Minister of Finance, my colleagues and myself have been conducting consultations with all groups of our society. More than ever, we remain convinced that the vast majority of Canadians not only support our economic proposals but are indeed prepared to shoulder their part of the load in dealing with this country's finances.
Mr. Speaker, we are keenly aware of the fact that this Budget demands sacrifices by all members of our society, and we believe that all Canadians will acknowledge that this effort is necessary. We know that Budget cutbacks will have an impact on certain groups in our population, but our proposals have in no way tampered with the Government's social commitment which it sees as sacred. We have taken this approach precisely to make sure that in the coming years we will be in a position to protect the needy. In my judgment, we would not live up to that commitment if we were to let ever rising expenditures for certain programs grow unchecked. We would then be ignoring a basic fact-the Government's financial resources are not unlimited.
A few speakers in this debate seemed to imply that the Budget measures advocated by the Government would be unduly favourable to certain groups in society at the expense of others. I quite agree with all my colleagues that many of the provisions announced last week will have a very positive impact on entrepreneurs in the Canadian private sector, particularly with respect to small and medium-sized businesses. Far from feeling guilty about this favourable prejudice, Mr. Speaker, we are proud of it.
We believe that our Budget measures will prove to be a historic new trend in the Government's approach to economic
recovery and job creation. It reflects the change of attitude we promised Canadians last fall and stems from our vision of society.
The Government does not believe that the fairness of its Budget ought to be assessed only in terms of taxes imposed on a group of taxpayers or benefits given to another group. In our estimation, justice lies in the equitable sharing of responsibilities within the scope of a common objective.
The Budget incentives for Canadian businesses-the once-in-a-lifetime capital gains exemption, new pension plans provisions designed to spur investment in small and medium-sized businesses, and the small and medium-sized businesses exemption from the temporary corporate surtax, to name just a few-attest to the wide-ranging responsibilities given to the private sector. We are quite sure that the private sector will meet our expectations and that all Canadians will benefit from its contribution. In our opinion, Canadian entrepreneurs rather that Governments and public officials must channel most investments. We also believe that because they are prepared to take risks and work to achieve their goal, those entrepreneurs properly deserve to benefit from their own initiatives. It has been years and years since our business community got such a vote of confidence from Government.
In keeping with this vision of society whereby private sector interests have become partners of the State, the Government was prompted-in the Budget strategy under consideration today-to steer a new historic course in a sector which, I suggest, is just as vital to our collective existence as Canadians, namely arts and culture. This Budget marks the beginning of a new artistic and cultural era within Canadian society, not only because it offers lasting support, but rather as a result of its approach and its specific provisions. Mr. Speaker, I would be remiss if I failed to point out that, for the first time ever, a Government gives priority to this field of activity in an economic strategy document.
We formally acknowledge that arts and culture are not a negligible sector of our society and our economy, and it is that consideration which is the driving force behind all my endeavours as Minister responsible.
While it does not belittle their contribution to the quality of day-to-day life, the Budget and its provisions equate artistic and cultural activities with a genuine industrial sector. In 1980, the economic contribution of the artistic and cultural community amounted to between $14.7 and $16.8 billion and, in 1981, roughly 272,000 Canadians were gainfully employed in such activities. In terms of income, it ranked 11th among industrial sectors.
The formation of a Task Force on the Funding of the Arts is a Budget measure which faithfully reflects this new approach.
May 30, 1985

1 shall soon be able to disclose the names of the members and the terms of reference of this group. It is the first time the Minister of Finances and the Minister of Communications initiate such a joint action. The task force will submit to the Minister of Finance and to me a series of concrete recommendations on the various measures, including tax breaks, proposed to encourage the private sector to contribute more generously to artistic and cultural activities. True enough, we are looking for an increased participation by the corporations, but we must also find ways to convince ordinary Canadians to play a more active part too. Mr. Speaker, I should like to emphasize that this review and its orientation are in no way an indication of the government's intention to turn over to the private sector the main responsibility for supporting the arts, but rather a desire to increase the financial resources made available to participants within the Canadian artistic communities and cultural institutions.
As a matter of fact, the budget introduces several measures which are of immediate interest to Canadian artists. For instance, it proposes tax relief for visual artists through a change in the method of valuing their supplies, work-in progress and finished works of art. This means that when computing their income, they will no longer have to include the cost of such inventory. This change will simplify the tax affairs of individual artists and allow them to write off the costs involved in a work of art in the year they are incurred, rather than waiting until the work is sold.
We are currently considering other measures with the same outlook. Members of the artistic communities are more than creators, they are driving forces, a fact which our programs and policies should reflect. The Government wants to make sure that the financial resources whether they are provided by the public or by the private sector actually end up in the hands of Canadian men and women who can use them productively. This global approach to artistic and cultural financing is necessary in this period of budget restraint, for it will associate the public as a whole with the artistic community and extend the financial base of that industry. In my opinion, Mr. Speaker, the multiplicity of funding sources is for the artistic community the best guarantee of its freedom.
In the area of radio broadcasting and telecommunications which also are part of my responsibility, the Government has put forward several major proposals. Having identified, as early as last November, the telecommunication industry as one of the main motors of economic growth, the Government has sought in its budget strategy to favour the tax environment within which corporations involved in this industry must operate. The research and development provisions especially will have a major impact on the telecommunication industry. An easing of the rules governing R and D will encourage the corporations involved in this industry to substantially increase their investments and help maintain our industry's reputation
The Budget-Mr. Masse
abroad as a source of quality programming. The budget also provides measures to help Canadian corporations involved in telecommunications and other high-tech industries become more competitive on international markets.
In the area of radio broadcasting, the budget proposes for instance to increase from 20 to 30 per cent the rate of capital cost allowance available to cable television systems for cable TV converters and descramblers. This new rate will apply to equipment purchased since last September, the start of the 1985 taxation year for most cable companies.
In this spirit of equitable sharing of responsibilities which I described a few minutes ago, the representatives of the radio broadcasting and telecommunication industries will have to co-operate with the Government in its efforts to put its financial house in order. Thus, the budget provides that my department will implement during the next financial year a series of measures aimed at recovering the costs of a number of services. Those measures should yield additional revenues of $ 15 million for the Treasury. The broadcasting and telecommunication industries will assume the operating costs of the CRTC and relevant regulating costs. The David Florida Laboratory of the Department which has been testing satellites and advanced technological products will also review its schedules of user fees to recover as soon as possible its entire costs.
Those are examples, Mr. Speaker, of the great equity of this budget. On one hand, the government has recognized that it was essential to encourage and promote the private sector in Canada, but it also makes sure that all Canadians will not have to assume the cost of services used essentially by specific concerns.
With respect to the basic principles which are part of our socio-political fabric as those dealing with social security, arts and culture, our government provides a continuity in the spirit of Canadian traditions. However, we have undertaken since September last to find new avenues and solutions. We have chosen to break free from a past the legacy of which is a financial disaster, adversarial relations in our society and intergovernmental relations lacking a minimum of respect. In this regard, this budget breaks off with the past. It rejects the notion of a society made up of diverging interest groups intent on destroying the system and grasping privileges and benefits. On the contrary, since last autumn we are trying to abolish that adversary system and to create at the social and political levels a new spirit of association and co-operation.


Mr. Speaker:: Questions and comments. The Hon. Member for Vancouver-Kingsway (Mr. Waddell).


Mr. Waddell:: Mr. Speaker, I should like to put a question to the Minister. Why has the Government tried to control the deficit rather than unemployment? Why the fight against the deficit rather than unemployment? I think that you are putting the cart before the horse! Why has the Government decided to reduce the deficit and not unemployment? In

May 30, 1985
The Budget-Mr. Masse
British Columbia where 1 live there is 15 per cent of unemployment and we are not trying to control the deficit-


Marcel Masse: Mr. Speaker, in reply to the Hon. Member, 1 would say it is because we believe that the deficit in largely responsible for unemployment. As I told you, the public debt was $18 billion 20 years ago. The previous government, under the instigation of the NDP, decided to increase the deficit to reduce unemployment. As a result, our national debt has almost reached $200 billion. Today, almost 25 per cent of our revenues is used to pay interest. Such a policy has given us 1.5 million of unemployed in Canada. We believe that the other policy is sound, that is to reduce the deficit, to stimulate the economy while creating jobs through the private sector rather than public programs responsible for huge deficits.


Mr. Prud'homme:: Mr. Speaker, as usual I listened very closely to the Minister's speech.


An Hon. Member:: You were reading the paper!


George Albert Proud: Listen, you have to choose: either I will not listen to you or I will. I am listening carefully. I did not go to the trouble of coming here and listening to the Minister in order to shout at him. I was in my office when I saw that the Minister opposite whom I sit as a critic, was going to speak so as a courtesy I came in to listen to him and I intend to ask him questions.
I would like first to ask him about the rather troubling statement that was made by a very worthy lady, the Hon. Member for Brome-Missisquoi (Mrs. Bertrand). I do not believe that lady, a newly elected Member in this House, would indulge in pure demagogy. She made a statement 1 find quite troubling, and I am asking myself this question: Was she speaking on behalf of the Government when she stated it was not bound to all of its promises, that after all what importance does it have? Senior citizens will lose some $100 a year, which is not quite fair. And what does that amount to per day, 365 days, $100 a year? We know those are hundreds of dollars taken away from senior citizens, who are the most needy in our society, who have not enjoyed in the past all our social programs, who built this country.
Therefore, I would like to know first whether the Hon. Member for Brome-Missisquoi was speaking on behalf of the Government, since she is the Parliamentary Secretary to the Minister in charge of all those programs, the Minister of National Health and Welfare, (Mr. Epp)? And if it is true that the Government does not feel bound by its commitments, how is it then that the former Minister of National Defence, whom I still call my hon. friend, who had promised during the election campaign that no later than July there would be new uniforms-certainly a futile, needless expense-nevertheless managed to keep his promise? And we know that as early as next summer, that promise will be fulfilled at an extra cost of
$35 million for this year, and over $20 million next year, in addition to causing complete havoc in the Armed Forces.
How is it that they could find $50 million of extra money this year, and $100 million in the following years, to increase by 1,150 our troops in Germany, as of this year, at a time when troop reduction is being negotiated in Geneva? We in Canada are increasing them, and we find the money for it, but we do not have the money needed to help our senior Canadian citizens who certainly are the most in need. They certainly will not be getting from this budget unbelievable capital gains.


Marcel Masse: Mr. Speaker, I am very happy to see my Hon. colleague in this House today, rushing to his seat because the Minister of Communications is going to speak. But 1 had hoped his questions would have dealt with cultural affairs, broadcasting or communications in Canada.
But he is asking two questions. First, about election promises. The Hon. Member knows perfectly well, and his wide parliamentary experience should inspire him in that respect, that election promises made by political parties are government commitments, mandate commitments, and that it is over the whole of their mandate, when the parties go back before the electors, that the latter will pass judgment on the carrying out of their election platform. So we will see at the end of our mandate, and I can assure the Hon. Member that the commitments made by the Progressive Conservative Party before the Canadian people will have been fulfilled when we go back before them.
Second, the Hon. Member has mentioned uniforms. It is not my responsibility on behalf of the Government to engage in debate on national defence. But I would like to point out, after certain comments made by Members of his party a few minutes ago for instance concerning Government or programs in the economy, that on the one hand, members of our armed forces are entitled to programs that meet their needs, their wishes, their abilities, their pride. And second, that the implementation of that program will widely benefit the Quebec economy, because if I remember correctly, more than or close to 50 per cent of those uniforms will be manufactured by small and medium-sized businesses in Quebec. And to that extent, I do not understand why the Liberal Member indulges in demagogy when there is a real need in the textile industry in Quebec.


Arnold John Malone: Mr. Speaker, I would like to ask a question of the Minister based on his thorough and extensive knowledge of agriculture. The Hon. Member for Vancouver-Kingsway (Mr. Waddell) said the Minister in his speech had the horse before the cart. I would like to ask the Minister if that is not the right place to put the horse?


Ian Gardiner Waddell: I said the cart before the horse.


Arnold John Malone: And is it not the case that the Liberals and the New Democratic Party have had the cart before the horse for
May 30, 1985

all these years, and it is those Hon. Members who have an economic mix-up because they believe Governments can create jobs and not the private sector? Would the Minister, out of his knowledge of agriculture, tell the Hon. Member of the New Democratic Party that the horse is supposed to be in front of the cart?


Ian Gardiner Waddell: Mr. Speaker, I rise on a point of order. Perhaps there is something lost in the translation or perhaps it is my French, but I thought I said, "le chariot avant le bceuF'. That means, as far as I understand, the cart is before the horse not the horse before the cart.
[ Translation]


Marcel Masse: I do not want to open a debate on the realities of agriculture in Canada, but 1 know for a fact that in a public budget, revenues must come before deficits if jobs are to be created.


Mr. Speaker:: I must advise Hon. Members that the ten-minute period for questions or comments has expired unless the House, by unanimous consent, wishes to continue. We shall resume debate.


Mr. John R. Rodriguez (Nickel Belt):: Mr. Speaker, I have heard the Budget which was delivered here last week described as "sneaky, cruel, harsh" and "Draconian". 1 think there is another word I would use to describe this budget.


An Hon. Member:: Careful, John.


John R. Rodriguez: I would think this Budget is "crafty", Mr. Speaker.


Margaret Anne Mitchell: Crass, too.


John R. Rodriguez: Crass and crafty. It was very craftily drawn, Mr. Speaker. I am not surprised that the Conservatives would bring in this kind of Budget. Every time the Conservatives govern in this country, we hear the old saying, "Tory times are tough times". As I watched last night the trek on to Ottawa from Vancouver back to the 1930s 1 could not only see the R. B. Bennett days formulating over on the other side of the House, but I could see something much more insidious and vicious. What I see in this Budget is a reinforcing and restructuring of the class system in this country. In fact, we are going back to a very class conscious society between the wealthy and the poor.
I would tend to call this budget "the Robin Hood Budget" with a twist. Where Robin Hood used to take from the rich to distribute to the poor, this Budget, this Minister of Finance (Mr. Wilson) and this Government, takes from the poor to give to the wealthy of this country. When one looks closely at the measures in this Budget, the pension provisions, the federal sales tax provisions, the RRSP giveaways and the capital gains giveaways, the message is very clear. The Government is taking from those who have the least and giving to those who have the most. It is all based on the fallacy that when those
The Budget-Mr. Rodriguez
who have gorged themselves on the labour and fruits of those who are at the bottom end of the economic scale, somehow or other some of it will trickle down to the people at the bottom and jobs will be created.


Ian Gardiner Waddell: The trickle-down theory.


John R. Rodriguez: Trickle-down theory, and it is liquid and amber coloured and I am running for cover, brother; I am not sticking around. People had better get out their umbrellas.
Let us look at the whole question of pensions, Mr. Speaker. One of the things this Budget does is reinforce the cynicism among people about politicians; when politicians are trying to get into office they make all sorts of promises. But lo and behold, once they have achieved office, they turn around and go against the very things they promised. We have many examples of that kind of cynicism building again in this Budget. We have examples of taking from the poor and giving to the wealthy. Look at deindexing. In 1980 the Conservative Party placed ads in newspapers across the country criticizing the Liberal Government. They said:
You've heard a lot about the Constitution lately, but how much have you heard about deindexing?
Deindexing is a system to guarantee that you'll pay higher federal income taxes year after year.
Deindexing would mean a massive tax increase for all Canadians.
Deindexing would raise a lot of money. Fast, $1.6 billion in the First year alone.
Deindexing would hit people living on low incomes the hardest.
The Progressive Conservative Party of Canada is providing the opposition.
Indexing was our idea in the first place.
And we are determined that you should continue to receive this fundamental protection against inflation.
But we need your help. It's time for all Canadians to speak up.
An important message from the Progressive Conservative Party of Canada.
The Tories placed those ads pointing out the dangers of deindexing. Now that they are in Government, what have they done? They have deindexed old age pensions, and old age pensioners are being asked to take up the first 3 per cent of inflation. This contradicts what they said in their public advertising campaign. This is in complete contradiction of what the Prime Minister said when he promised "complete indexing of old age pensions to the actual cost of living". What we see here is a direct attack on the principle of universality. Because of deindexation, the old age pensioners will receive $100 less next year and that will put them even further below the poverty line. The cumulative effect will be $203 the following year, and by 1990 seniors will be $512 further below the poverty line.
As well, Mr. Speaker, de-indexation contradicts the Tory promise that as soon as the Government's financial position allows, it will provide increased financial assistance to single senior citizens whose incomes are below the poverty line. So the Government puts these people below the poverty line, takes money away from middle and low income Canadians,

May 30, 1985
The Budget-Mr. Rodriguez
increases the federal sales tax and allows the poorest of the poor to fall even further below the poverty line.


Paul Gagnon: Do you know what the word "honest" means?


John R. Rodriguez: But how does the Government treat high income earners? The Hon. Member across the floor says "be honest".


Paul Gagnon: Tell the truth.


John R. Rodriguez: He says they have kept the index on the GIS. I said that full indexing remains on the supplement. How do they treat the wealthy?


The Acting Speaker (Mr. Rossi):: Order, please. Will the Hon. Member be polite enough to listen to the comments of the Hon. Member?


John R. Rodriguez: Thank you, Mr. Speaker. How does this Government treat the wealthy? Looking at RRSPs, those who earn $86,000 a year or more will now be allowed to increase their tax deductible RRSP contributions from $5,500 to $15,500. Where is the principle of deindexation there? The $15,500 will be fully indexed. There is no discounting of the first 3 per cent of inflation. It is fully indexed. These people can sock away the $15,000 each year plus the fully indexed cost of living. Do you know what that means? It means people in the 50 per cent a year bracket can pocket $5,000 more of what they earn. That is as much as some people in my riding live on. That is the Government's view of fairness!


Mr. Thacker:: Louder, I cannot hear you.


John R. Rodriguez: What will that cost the Government? Its own figures indicate that giveaway will cost $235 million. The Tories are taking that $235 million from the poor and middle income Canadians and transferring it directly to the wealthy.
You might ask how do they treat the person earning $30,000 with respect to RRSPs? Instead of allowing them to deduct up to 20 per cent of their income, they are cutting back so that they will only be allowed to deduct up to 18 per cent. On the one hand, we give upper income Canadians a bonanza, and on the other hand the people at the middle and lower income level get cut. Is that the Conservative sense of fairness?


Margaret Anne Mitchell: Yes, it is.


John R. Rodriguez: I suspect it is much more machiavellian. Right through this Budget we see a constant shifting of income from low and middle income Canadians to upper income Canadians. If there is an honest Conservative in the House, they will admit that.
From the Government's own figures, Mr. Speaker, by March 31, 1991, the children's benefit will be $635 million less than under the present program. This has to be a Titanic Budget: it is children and senior citizens first. They are taking $635 million out of the child benefit program of this country, as well as a massive $1.6 billion less for old age pension benefits, and what are they doing with it? What are they doing
with this theft from Canada's social programs? Are they doing something creative?


Ian Gardiner Waddell: Giving it to the oil companies.


John R. Rodriguez: They say they are going to reduce the deficit. I know this Government has a fixation about reducing the deficit, just as Margaret Thatcher has a fixation about reducing the deficit, yet unemployment problems remain in Great Britain. We know that the Premier of British Columbia has a fixation with reducing deficits.


Mr. Fulton:: And they are getting bigger.


John R. Rodriguez: Deficits are getting bigger and unemployment is getting higher. There are no jobs for anyone in British Columbia. But when I hear about this fixation with deficits I am reminded of a quote by Kevin Doyle, the editor of Maclean's magazine. I would like to read that quote from the February 4, 1985 issue of Maclean's. It reads:
The preoccupation with the deficit has become a menace. The word has become a little-understood part of the jargon that men without imagination and governments without direction use to disguise their poverty of purpose. It is a blind to be drawn over any discussion of the real economic challenges that face us, as well as over any argument that threatens to disturb the comfortable, conventional maunderings of the uncaring.
I think that is a very appropriate way of describing the obsession of this Government and governments like it with the deficit. Is the most creative use that we can make of the money removed from the economy through the Budget to put it toward reducing the deficit, in spite of the fact that that completely contravenes and contradicts what the Prime Minister (Mr. Mulroney) said on November 17? He said that money saved by retargeting social programs would not be used to reduce the deficit but redistributed to the neediest. Well, it is not being redistributed to the neediest, it is being given to the greediest in society.


Some Hon. Members:: Hear, hear!


John R. Rodriguez: Another area in which they have socked it to ordinary Canadians is in the deindexation of personal income tax. By 1990, as indicated in its own figures, the federal Government will collect $4.4 billion more in income tax revenue. On the other hand, corporations will receive $540 million next year and $2.2 billion by 1990 as a direct transfer. It is taken from those who have the least and given to those who are already enjoying a very low tax rate in the economy.
When I returned to the House in September of 1984, I was struck by the proliferation of powerful lobbies on the Hill. The oil companies have one of the most powerful lobbies. They pay very little tax, only 7 per cent in 1979. The Bankers' Association has a very powerful lobby. They float around in their pin-striped suits. The drug lobbies are getting what they want now, which will sock it to individuals who have the misfortune of being sick. The Manufacturers' Association has another very powerful lobby. It is time that we considered registering the lobbies on the Hill. This might be the appropriate time.
May 30, 1985


Some Hon. Members:: Hear, hear!


John R. Rodriguez: There is no more regressive tax in any land than a sales tax because it does not take account of the ability of an individual to pay. It is a regressive tax which goes with a regressive Conservative Government. By 1990 the Government will collect $2.6 billion more in federal sales tax. Sales tax is being slapped on candy, confections, pet food, soft drinks, health goods, surgical and dental instruments, X-ray apparatus and films, wood-burning stoves, wind deflectors, heat pumps, solar heating panels, furnaces, insulating materials, wind generators, windmills, and other such goods. Having socked it to people who were trying to save on energy through the elimination of COSP, the Government has now socked it to them through federal sales tax.
The sneaky thing about this is that the federal sales tax is rolled into the price. Therefore, the provincial sales tax is applied on the total price, including the federal sales tax. We therefore have a tax on a tax. Ten per cent will be applied on those items. In fact, it increased by 1 per cent in November and will increase by 1 per cent in January. That is a 2 per cent increase in federal sales tax in the space of one year.
This Budget emphasizes and reinforces the class structure in the country. There is no minimum tax on the rich and the wealthy escape the puff-ball attempt to implement a surtax because, if they do not pay tax, they do not pay the surtax. According to the Budget, the surtax is to take in $550 million next year. However, on the other hand, through capital gains tax exemptions and RRSPs, it gives the wealthy $640 million in the same year.
A report prepared by the Department of Finance indicates that the removal of the capital gains tax means that Canada will be taxing its rich much more lightly than any other industrialized country in the world. The Government is determined to redistribute the wealth in the country from the poor to the wealthy. This Budget does not deal with the most important problem facing Canada, unemployment. In our paper Canada Unlimited, we have targeted unemployment. The Government has failed to deal with that most pressing problem. This Budget could very well add to the deficit as well as exacerbating unemployment.


Mr. MacLellan:: Mr. Speaker, I would like to comment on the Hon. Member's speech. He refers to a Robin Hood Budget. That is the quaint phraseology which the business sector used to refer to the Budget of November, 1981. As the Hon. Member says, this is different because it is taking from the poor and giving to the rich. Would the Hon. Member accept the terminology "a sheriff of Nottingham Budget"?


John R. Rodriguez: I would certainly accept that, Mr. Speaker. I recall that the MacEachen Budget was a serious attempt to redistribute wealth from the wealthy to those who needed it. We have never heard such a howling as went up across the country. The lobbies were in full bay. The Conservatives were part of that lobby group. The MacEachen Budget was forcibly put aside. This is a Robin Hood Budget with the Prime
The Budget-Mr. Rodriguez
Minister as Friar Tuck and the merry men of Nottingham. When the Budget was to be brought down, they were all in Europe. Phone calls were made to bring them back so that they could surround Robin Hood, Friar Tuck, and the merry men of Nottingham Forest. It was necessary to use the wide angle so that the folks across the country could see that they were indeed merry. Their merriment reached a peack when the Minister of Finance said that capital gains tax was being removed to a limit of $500,000. They stood to a person and applauded loudly. I think that is a fair indication of the kind of Budget this is. I think they ought to be very ashamed of this Budget.


Mr. Ravis:: Mr. Speaker, I grew up on a farm. We used to put blinders on horses so that the horses would not be able to see people on either side of them. It seems to me that the Member is taking that kind of approach to the Budget. You are not prepared to look at what is happening around Canada and what must happen on a broad base. Of course, if we use tunnel vision, we can pick out any particular item in the Budget and say that it has some serious negative impact. However, if you look at the over-all broad issues, it seems to me that with thousands of small business people in the country who employ one or two other people and others who would like to quit jobs now to enter into small business, there is a possibility and the opportunity for those people to run their own small business and take some initiative.
It seems to me that the Hon. Member for Nickel Belt (Mr. Rodriguez) is putting on blinders. He is not prepared to look at the impact of this Budget on the very small businessmen in his constituency. I have visited his constituency, and I know what kind of people live there. I ask the Hon. Member, who certainly spoke a lot about small business during the election, how he would approach the problem of trying to turn the economy around by including small business initiatives in his constituency and across the country?


John R. Rodriguez: Mr. Speaker, the Hon. Member represents Saskatoon East. As a matter of fact, I have a letter from one of his constituents. She is a 48-year old single grandmother of seven with a small business. She wrote a letter dated May 24, 1985, to the Minister of Finance (Mr. Wilson). Let me read this letter in order to answer his impassioned plea about how the Budget helps small business:
Dear Mr. Wilson:
This is a letter about betrayal-the complete betrayal of the Canadian people by you and by your Party. Your actions since the September, 1984, election and the federal budget, have put the lie to everything you campaigned on during last summer's election campaign, while using the word "sincerity" dripping through every advertisement and speech. I knew then, and you have proven since, that this was honeyed venom.
This woman operates a small business. The letter goes on to point out how the Budget very seriously affects her business:
Until you are willing to listen to logic and reason from ordinary citizens in this country, and to make radical changes in this budget, as well as many of your other policies (not just bandaid measures), I am withdrawing completely from the payment of income tax, beginning immediately. Until you assign a decent

May 30, 1985
The Budget-Mr. Rodriguez
amount of the revenue earned by your government to the wellbeing of Canadian citizens who are now suffering with unemployment, and on fixed incomes, I am conscientiously objecting and will not be able to live with myself by contributing to your cavalier attitude and actions toward those who are suffering around me.
When listened to the Budget, I hoped that it would effectively deal with creating employment in areas like mine, which is suffering from 16 per cent unemployment. We do not have a private sector base.
I questioned how the Budget would provide an incentive for Falconbridge and Inco to hire more people. It does not provide that incentive. The Budget will not motivate those who deal in RRSPs to invest in my riding, because they are highly speculative. How will the capital gains tax exemption stimulate employment in my area? Those Canadians will simply sell what they have and buy a condominium in Florida. It will not help create employment and, therefore, I honestly say that while my hopes were high, they were dashed.
[ Translation]


Mr. Leblanc:: Mr. Speaker, our country has a wealth of natural resources and an extraordinary human potential. The major problem in the past was that the Government stifled personal initiative and killed all hopes of succeeding. That is the cause of our main problem and disastrous situation in this country. It is absolutely essential to restore confidence to the people in research and development, and I wonder what the Hon. Member is trying to sell us today. He has absolutely nothing to sell since he said that we must help the poor and the needy. We have nothing against this, but if you get to the point where your only throught is of helping the poor and the needy, you disrupt the system by preventing those who are able to succeed from doing so. Then, your businesses close down, there is no more money for the Government and people stop working. When people no longer work, they cannot pay taxes to the Government. I would like the Hon. Member to tell me where we shall find all this money if businesses close down and if the people stop working. That is my question. I do not know where that reasoning can lead you.


John R. Rodriguez: Mr. Speaker, perhaps the Hon. Member did not hear me. When the Government imposes a tax on pet food, soap and shampoo, regardless of the fact that people may not be able to afford it now, it is essentially punishing poor people. A sales tax is not progressive and simply dampens demand. It does not stimulate the economy at the consumer level.
The Budget seeks to inspire confidence in the rich. It does not matter if the poor have confidence and I suspect that if the Hon. Member is really interested in stimulating the economy, he would consider that.
I also pointed out that there is a disparity with respect to old age pensions. This year, the Government is taking $100 from old age pensioners. In my riding that is the only income for many old age pensioners because they worked for companies that never had a pension plan. They depend on that old age
pension, and when the Government removes $100 this year, the cumulative effect on them becomes $512.
[ Translation]


Mr. Marcel R. Tremblay (Quebec East):: Mr. Speaker, I am very proud to have this opportunity, First of all, to offer my sincere congratulations to the Minister of Finance (Mr. Wilson) on bringing down a Budget on May 23 of this year that is realistic, effective and fair. I may add that I find it very exciting to be taking part in the Budget debate, considering its tremendous impact on job creation.
The Budget was so well received by tax experts and economists that it was even referred to by some as conservative, literally. A great deal of preparation went into this Budget, but I think that the Budget papers especially reflect some very positive aspects for small- and medium-sized businesses. This Budget has a direct impact on business people. On May 23, the Progressive Conservative Government brought new hope to small- and medium-sized businesses, and the time has come for the private sector to regain confidence in its potential. It is time for businessmen and women to show what they can do. Our party was put in power to bring about a change for the better, and that is what it is doing. As far as policy is concerned, this change represents a sizeable break with the past, and that is reflected in the Budget.
This Budget has benefitted from the most extensive round of pre-budget consultations ever held in Canadian history. Whereas before, the independence of private entrepreneurs was questionable, to say the least, they are now being encouraged to become more actively involved than ever before in increasing awareness of their strength and potential at the local, national and regional level. It is this involvement that will give our economy the clout it needs at the international level.
It would be too easy to say that the Budget is giving the private sector a chance to change the present state of affairs. However, it is challenging entrepreneurs to take the iniative. There is no longer any reason for the lack of initiative shown by business people so far in this country. Various business-oriented incentives have removed the taint from the word "profit". Creativity and innovation are high on the priority list, and productivity will at last be rewarded.
Yes, this Budget favours private enterprise. Yes, it is giving the private sector the tools it needs to overcome its economic stagnation. Yes, the entrepreneur must get involved. It is a must. It is a real must. Otherwise, the Budget will be useless.
Good intentions are not enough to bring about change. We need action! We need immediate, intelligent and genuine action. How are the measures this Budget contains going to help private enterprise prosper? Very simple: it will have to
May 30, 1985

adopt as its motto the slogan of every good manager: product, quality and price.
We must make our products competitive. Well before they become obsolete, we must already be developing new ones. The Budget has introduced changes to the definition of research and development so that more enterprises will be able to benefit. Our small- and medium-sized businesses have not lost their sense of creativity, but it must be revitalized.
If we are not active in certain areas, perhaps we should ask ourselves why. Hi-tech companies are scarce in Quebec, that is a fact. But where are the incentives for such firms? Language and fiscal barriers, for instance, have tended to discourage companies and investment in this area. Although we may not get those hi-tech companies overnight, we can at least start by creating a climate that is favourable to their growth and development.
Our firms are just as competent as others in foreign countries. We have here in Canada everything we need to compete on international markets. Our efforts must be directed towards export products, but beware, they must bear the seal of quality. We do not stand to gain much encouragement by comparing the number of American-Canadian car recalls to that of imported cars. We do know that the standards are identical in both cases.
Canadian companies have to set their own production targets and, as required, replace obsolete equipment, expand or bring in new blood. I am proud to remind the House that small- and medium-sized businesses need look no further than the Budget to find provisions under which they can obtain the funds needed for such investments.
Businessmen now see a way out of their stagnant situation. Conditions will improve, businesses will gain strength, and at last they can see the light at the end of the tunnel.
Small and medium-sized company management fully appreciate that the incentive measures announced on May 23 will improve the economic and financial outlook. Success rather than effort will be rewarded. Every businessman will be goaded into action by the new Government tax measures.
And we know what those measures are.
One. The lifetime $500,000 capital gains exemption. This additional financial input will unable management to direct those funds towards better planning of future business. Close to one million Canadians will benefit from this measure, an open invitation to invest in small and medium-sized businesses.
Two. Budget measures make it easy for pension funds to invest in small and medium-sized company capital stock. RRSPs and registered retirement income funds can also be channelled into private Canadian companies. Even the labour movement is urged to invest in businesses. This can be a reliable pool of capital for small and medium-sized businesses, a new source a capital funding.
The Budget-Mr. M.R. Tremblay
Third. The fully refundable tax credit on the first $2 million in eligible expenditures on research and development each year. As you know, Mr. Speaker, small and medium-sized companies were so far limited to 40 per cent of the tax credit and most of them could not really afford to go into research and development. The funds required to maintain day-to-day operations did not leave enough leeway to consider investment in research.
Four. The extension of the small business bond program, a readily available source of funds for companies temporarily strapped for cash.
Five. Unemployment insurance premiums will be frozen in 1986, leaving more money in the hands of companies. A thorough review of the UI program will be undertaken later.
Six. Small and medium-sized companies will be exempt from the 5 per cent corporate surtax.
Seven. Business fluctuations often made it difficult for small business owners to make regular contributions to an RRSP for their retirement years. Henceforth they will be able to carry forward unused contribution room for seven years.
Eight. A new tax credit to individuals investing in the Quebec Solidarity Fund.
Nine. The documents tabled with the Budget contain a proposition aimed at significantly reducing the basic federal tax of small companies-from 15 to 11 per cent.
The total amount of money that these measures will make available for the SMB's may help investment within the individual business in improving manufacturing processes, updating equipment, increasing production, paying interests on loans, and so on. The previous Government was unable to motivate the business community and neglected private enterprise. But this Government has brought down a political budget which by itself scorns the complexities of a strictly accounting budget.
The end result of all those measures will be a decrease in the burden of the SMB's. In turn, their financial resources will increase. New firms which to this day had difficulty attracting investment will from now on have all the support they need. The new budget will have reached its goal, which is to be a catalyst for the Canadian economy.
I for one am committed to using in my beautiful constituency of Quebec East all the energy needed to get business people involved, and I urge my colleagues to do the same, and make entrepreneurs aware that their daily involvement is vital to the success of this budget. I would even offer my support to other Hon. Members who defend that view.
Crippled businesses must be revived at all costs, business leaders must concentrate on creating jobs and carrying out the research work needed in order that the economy may go forward, for humanitarian if not philantropic reasons. Humanitarian, because even with the profit motive, a business can

May 30, 1985
The Budget-Mr. M.R. Tremblay improve working conditions and help the cause of the unemployed. Profit is defined in the dictionary as: "An increase in the goods one owns, or the improvement in status resulting from some activity". I would even suggest, Mr. Speaker, that the concept of labour should be added to that definition.
We can say that the Government has honoured its commitment to ensure economic revival and job creation. What better way of helping the SMB's generate jobs and new R&D activities than our Progressive Conservative budget? The Government has realized that the only way to give the economy a forward push was to strenghten the SMB's and avoid hindering their development. As many of us have already said in this House, I will repeat, Mr. Speaker, that the Budget brought down by the Minister of Finance is realistic, efficient and fair. The Budget does recognize that Canadians individually and collectively will be able to achieve the desired economic progress. At the same time, it does recognize that there is no wonder solution, but that a balanced program involving growth, better management, decreased expenditures, and tax increases, is a starting point for the reorganization of our finances and the nationalization of overall Government management.
The Government has put the emphasis on the private sector because it strongly believes that stable and meaningful jobs are better provided by business people. This Budget is clearly a step in the right direction towards an economic renewal.
You will note, Mr. Speaker, that in my remarks up to this point, I have dealt mainly with that aspect of the Budget that promotes private initiative. This was the first of the three areas in which the Budget proposed measures for economic renewal. The two other areas are improving Government effectiveness and controlling the national debt. The Budget will enable the Government to better manage the affairs of the state. We have dealt with a few simplifications of Government programs, and finally the Government's financial responsibility takes precedence together with its will to cut down on the huge size of Government. The Government, in its capacity as a trustee, will reduce the funding of many Departments and review several programs, in order to better allocate whatever funds are available.
Mr. Speaker, the Government also is exercizing restraint at the financial responsibility level, by proceeding to reduce subsidies, to rationalize the public service, even eliminating 30,000 jobs, to improve cash management, to dispose of surplus buildings-to close down plants manufacturing products for which there is no demand-to increase cost recovery, to move towards on improved and renewed budget process.
The reduction in the huge size of government will be achieved not only by rationalizing the public service and various Government programs, but also by privatizing Crown corporations. Thirteen of them will no longer compete against small businesses. After they are sold, disbanded or integrated into existing departments, small businesses will be better able
to develop in those specific areas. This will help restore their faith in the Government.
As much as small businessmen used to be suspicious of the Government, they will now be motivated to succeed. Their competition will no longer be subsidized by the Government. We are opening up avenues for conscientious and hard-working businessmen.
The last point I wish to raise is the matter of getting our national debt under control as soon as possible. This Budget counters the effects of the heavy legacy left by the previous Government. All those who have positive or negative reactionary tendencies should keep in mind that this Budget is only a partial aspect of the general policies of our Federal Government. However, the Budget projects our image to foreign countries. For instance, the Western Energy Accord will restore confidence in Canada at the international level. It will stimulate the flow of foreign currency into Canada. Believe me, Mr. Speaker, as far as investments are concerned, whether the bills are blue, red or green and measure 3 by 5 inches or 7 by 8 inches, we shall accept all of them equally for the simple reason that this is what we want from other countries. We do not want foreign workers who are supposedly better qualified to manage our businesses because many of our business people are said to lack intellectual vigour. We have the human resources we need. We only have to identify them, to go and get them and urge them to do their share in improving the economy.
Our Budget represents a major break with the past and gives us some hope of stabilizing our deficit. A reduction of the deficit means a decrease in interest rates for borrowers, which is economically beneficial for the Government, for businesses, and also for individuals. A reduction of the deficit also brings down inflation, which decreases the need for indexation, but let us leave this matter aside for the moment. Let us simply say that the approach chosen by the Government is a gradual one and that the Budget is the first step. However, the Nielsen Task Force is still considering ways to reduce spending.
In conclusion, I wish to emphasize that our Government is taking seriously the mandate for change it has received last September 4. Emphasis is on job creation, growth and Government responsibility. We are fighting three things: unemployment, unemployment, unemployment. Unemployment among young people, unemployment among the middle-aged and unemployment among people on the eve of retirement.
Mr. Speaker, I repeat that this Budget will prove effective by creating new jobs for Canadians. It will no longer be politicians and bureaucrats who decide for Canadians where to invest and how to create jobs. The initiative will now be taken by the people, not by the Government.
Mr. Speaker, I have the great pleasure to confirm that our Government has taken the measures required to create a

May 30, 1985
climate which will result in increased investments and more jobs. Our Budget asks Canadians to translate their ideas and energies into action in order to make of this country what we want for ourselves and our children.
Our job as Members of Parliament is clear. We, in the Government, must send to the business sector this message, on which I shall conclude my remarks: Take advantage of this opportunity! The Government has placed you in the forefront. It is up to you to put Canada back on its feet and make it competitive. You are competent, dynamic, creative, knowledgeable, proud, responsible, conservative and progressive! Finally, Mr. Speaker, I realize that they are all that as much as myself.


Ms. Copps:: Mr. Speaker, I am pleased to see that the Progressive Conservative Party has finally realized how eager Canadians are because I think that the comments which have just been made by the Hon. Member for Quebec East (Mr. Tremblay) are the exact opposite of what his leader said when he gave his famous interview to Fortune magazine stating that Canadians did not want to work, were unable to deliver on time and unproductive.
Now, since September 4, did the Prime Minister and the Government make a complete turnabout considering the contradiction between the comments of the Hon. Member for Quebec East and the comments of his own leader when he stated to the Americans that Canadians were unproductive?


Marcel R. Tremblay: Those who read the Vh lb. budget and listened to comments different from those of prophets of gloom and doom are permeated with our new spirit of growth and pride. During the weekend, 1 attended a meeting of the Chamber of Commerce in Montreal North and about a hundred businessmen confirmed that if we kept our spirit, our aggressiveness and put the emphasis on private enterprise, they would each undertake to create one job. There are some 700,000 small and medium businesses throughout Canada. If each would hire at least one unemployed, we would solve 60 per cent of the unemployment problem.


An Hon. Member:: There are also some new businesses.


Sheila Maureen Copps: Mr. Speaker, I would like to ask him .. . His comments will haunt him for years to come, up to the next elections. Does the Hon. Member for Quebec East (Mr. Tremblay) endorse the policy of the Minister of Finance (Mr. Wilson) who said to all senior citizens in Canada living under poverty level that 1.2 million of individuals will receive less to make up the deficit? Does the Hon. Member for Quebec East agree with the policy of the Minister of Finance who will take money from senior citizens under the poverty level? Does he agree with that policy with respect to the deficit issue?


Marcel R. Tremblay: Mr. Speaker, during the election campaign, I noted during my numerous trips that the prime concern of older people was not indexation but the unemployment of their grandson or their granddaughter. I repeatedly said to them that our young people were not to blame. Healthy young people have to spend their energy in some way or another. When they are not busy, we have a society such as it is today. Thanks to our spirit, our aggressiveness, our desire to succeed, and you can be assured that I am part of it, the people will again begin to look for a job and try to improve their lot.


Mr. Winegard:: Mr. Speaker, 1 want to congratulate my colleague, the Hon. Member for Quebec East (Mr. Tremblay), on his very fine address and to express my disappointment, and indeed some sadness, that our colleague from Hamilton East has joined the rest of her friends and members of the New Democratic Party in the biggest put-down of senior citizens which I have heard for some time.
In my riding, the most understanding group of this Budget is senior citizens. They know that one gets nothing for nothing. They are prepared to pay. As the Hon. Member for Quebec East said, it is not that they worry about paying a little extra or not having indexing, it is that they worry more about their grandchildren. This is what they say to me as 1 walk down the streets of my riding of Guelph.
It is difficult to sit in the House, as we have for the past few days, and listen to the denigration of senior citizens. 1 do not think senior citizens deserve it.


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


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.

Mr. Sergio Marchi (York West):: Mr. Speaker, yesterday's violent attack which led to the deaths of 41 individuals at the European Cup finals soccer game between Liverpool of England and Juventus of Italy was a brutal, savage, and barbaric act. It is an act which has, unfortunately, begun to appear on the international sports stage, particularly in soccer, with all too much frequency. This is a cause for great concern.

May 30, 1985
This violence needs to be condemned in the strongest possible terms. However, most important, such senseless and immoral events need to be brought to an immediate end. Strict and swift reprisals must be taken against any culprit wishing to engage in such perverse displays. Responsibilities on the part of sports organizations and Governments must be clearly defined and carried out.
There are those who suggest that harsh penalties might hurt the game of soccer. As a progressive society we cannot stand idly by and risk the lives of innocent individuals for the protection and sake of a soccer game on the field. Our priorities need to be clear, and vigorously pursued. Violence in the stands must be fully cleaned up before the whistle starting a game can be blown.
Canada has a unique opportunity to play a vital role in ensuring that respectability and civility are returned to sports competitions. Our record for sports-related incidents is highly envied throughout the world. Thus we can and should be sports ambassadors of goodwill.


AGRICULTURE
Mr. Vic Althouse (Humboldt-Lake Centre):: Mr. Speaker, the States of North Dakota, South Dakota, Nebraska, Iowa, and Wisconsin recently placed an embargo on Canadian hogs saying that Canadian hogs contain traces of chloramphenicol, an antibiotic which has been recently banned from use in the U.S. Despite increased monitoring, not a single positive indication of the drug has been found in Canadian meat. Canada performs monitoring interprovincially, as well, and no traces have been found, even though the drug is used on occasion under veterinary order.
This embargo, coupled with the recent tariff increase which the U.S. has unilaterally placed on Canadian hogs going to the U.S., will have disastrous effects on our pork industry. Last year 96,000 hogs were shipped to South Dakota alone.
Chloramphenicol can cause aplastic anemia. Some researchers in the U.S. estimate one in 50,000 people may be genetically susceptible to the disease if chloramphenicol is used. The incidence of anemia, however, is no higher in Canada than in the U.S.A. where the drug has been banned, so the reason for causing pork to be stopped at the border is economic rather than medical or scientific. I call into question the whole affair.
1 think it is illegal.


Mr. Speaker:: I regret to advise the Hon. Member that his 90 seconds have expired.


THE FORMER ADMINISTRATION
Mr. Ted Schellenberg (Nanaimo-Alberni):: Mr. Speaker, it is with a great deal of pleasure that I present this week's Survivor of the Week Award. Perhaps a more appropriate title might be the "S.O.W. Trophy".
Today's winner of this much-coveted award-the highlight of many a Liberal career, I am told-is Gayla Voorhees, the cousin of the Hon. Member for Winnipeg-Fort Garry (Mr. Axworthy).
Some years ago Gayla Voorhees was hired-surprise-as a secretary in the Hon. Member's constituency office on the Pembina Highway in Winnipeg. Then, in 1983, another surprise. Gayla Voorhees was appointed to the Immigration Appeal Board by the true Grits in the Privy Council. It was a 10-year appointment at a very large salary. What a survivor. She is still there.
Obviously, as the Hon. Member for Glengarry-Prescott-Russell (Mr. Boudria) has said: "Patronage is a relative affair".


THE BUDGET
Mr. Gabriel Desjardins (Temiscamingue):: Mr. Speaker, I was in the House yesterday afternoon when the Right Hon. Leader of the Opposition (Mr. Turner) delivered his speech on the Budget.
Angel-faced and sanctimonious, he made utterly irresponsible statements. Hiding behind the immunity afforded him by the Standing Orders, he was able to avoid questions which he would certainly have found rather embarrassing. Here are some of them.
Do the Right Hon. gentleman and his Party not feel ever so lightly guilty and responsible for compelling us to present a Budget which calls on all Canadians to make sacrifices?
Is the Leader of the Official Opposition honest enough to admit that the Budget is the result of the most comprehensive consultation process ever undertaken in this country, and that makes it different from budgets introduced by his Party- oftentimes slapped together in 72 hours-such as the 1981 Budget which caused irreparable damage to our economy?
During the last election campaign, did the Leader of the Official Opposition not state on several occasions that the deficit was a serious problem with which we had to come to grips? No, Mr. Speaker, not quite. Contrary to what he said yesterday, this Budget does not mislead Canadians, for they knew that a Government had to assume its responsibilities.
May 30, 1985

Fortunately for all Canadians, a Conservative Government has been given the mandate to set our economy on an even keel.


TEXTILES AND CLOTHING
Mr. Don Boudria (Glengarry-Prescott-Russell):: Once again, Mr. Speaker, I want to draw the attention of the Government to the alarming situation of the Canadian textile industry, a major employer in my constituency of Glengarry-Prescott-Russell. Many Hon. Members have received letters from textile workers who are seriously concerned about the future of Canada's textile sector.
When the Quebec Conservative caucus met in Sherbrooke last July 26, they formally undertook to bring immediate and long-term assistance to that industry. Two full pages of promises were made about this during the election campaign, yet almost a year has gone by and people are still waiting for the Government to deliver.
The last Budget did not even refer to that industry. The Government must take immediate action to make sure that an early solution will be found to solve the problems now faced by the textile industry, otherwise it will disappear.


CANADIAN NATIONAL RAILWAYS
Mr. Bill Blaikie (Winnipeg-Birds Hill):: Mr. Speaker, I would like to call the attention of the House to the layoffs announced yesterday by Canadian National Railways, where 4,100 employees out of the main shop's workforce of 5,500 will be laid off for an extra four weeks this summer over and above the usual summer shutdown.
Apart from my customary objection to this practice of the CNR, whereby it seeks to balance out its books on the backs of young workers and their families, it is interesting to note that the reason given for this layoff was flat traffic forecasts. I find it ironic, indeed, that within a week of the Budget, and some six months after the November 8 statement which was supposed to create all kinds of confidence in the economy and set the country rolling again, we have the major railway in the country laying off people because it does not expect the economy to be moving at all. It does not have enough confidence in the Government's own Budget to be putting people to work for the full year to prepare the rolling stock for the goods that will have to be moved. If the Minister of Finance (Mr. Wilson) has as much confidence in his Budget as he really says he does, then I suggest he get on the phone to the president of the CNR, Mr. LeClair, and tell him to cancel the shutdown and keep people working.


RESEARCH AND DEVELOPMENT
Ms. Carole Jacques (Montreal-Mercier):: Mr. Speaker, I want to stress the importance of the research and development measures contained in the Budget brought down last Thursday by the Hon. Minister of Finance (Mr. Wilson).
Investing in research and development is essential to economic growth and job creation. Canada must keep pace in order to compete both at home and in foreign markets. To encourage R&D in Canada, our Government is proposing to refund 100 per cent of the tax credit earned on the first $2 million of qualifying R&D each year. Furthermore, the definition of qualifying R&D expenditures has been changed in response to requests made by the industry for many years.
Mr. Speaker, this measure reflects the Government's firm resolve to provide Canadians with durable and satisfactory jobs, specially young Canadians who want jobs and need jobs.
Mr. Speaker, on behalf of the residents of Montreal-Mercier, I want to congratulate the Minister of Finance on a Budget that demonstrates the fundamental confidence of this Government in the Canadian people.

[DOT] (MIO)


SMALL BUSINESS
Mr. J. R. Ellis (Prince Edward-Hastings):: Mr. Speaker, the major thrust of the Budget in connection with employment is to encourage the creation of new small businesses and the growth of existing small businesses. The logic behind this is well known and was put forward by the Minister of Finance (Mr. Wilson) in his ground-breaking Agenda for Economic Renewal-A New Direction for Canada. The logic is that new small business has been shown to be the single most important source of new full-year jobs since 1978.
The Budget undertakes to encourage the channelling of private sector investment funds, technological support, and various other forms of start-up help, to assist the proliferation and growth of small new business. I fully endorse this approach. The previous Government would have borrowed money and hired staff to create make-believe, make-work jobs which would have added to the deficit and fizzled out as soon as the money was spent.
In my own riding I am emulating the Government's show of faith in the private sector. This summer I intend to propose a Prince Edward-Hastings bootstrap operation designed to encourage new business, using all forms of government help except tax money, plus the active help of big business, labour, and the other two tiers of government. I have the utmost

May 30, 1985
confidence that this is the kind of initiative which will bring us back to high levels of employment and prosperity.

It indicates that the Progressive Conservative Party-


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


FITNESS AND AMATEUR SPORT
Sheila Maureen Copps: Mr. Speaker, this is a great day for the citizens of Hamilton and Canadians everywhere who participated in the Great Canadian Participation Challenge. The City of Hamilton led all other communities in its population range by a wide margin. It beat out Ottawa, Calgary, and Edmonton. In fact 121,000 Hamiltonians participated in one way or another.
I have received reports of runners running at the YW and YMCAs, school children biking and hiking, senior citizens cleaning garages, and even patients in the hospital taking that extra step down the corridor. With the likes of Bobby Orr who is here in the gallery, we know that from the Tiger Cats to the Mahoney Bears, and from the Mountain Bees to the new NHL franchise, the people of Hamilton are good sports. We plead with Harold Ballard and his entire family to allow us an NHL franchise so we can allow that sportsmanlike attitude to pervade the whole country.
*
* *
[ Translation]


PARTICIPATION BY OIL CORPORATION IN IMPORTANT PROJECT
Mr. Vincent Della Noce (Duvernay):: Mr. Speaker, I welcome this opportunity to draw the attention of the House to a recent and laudable decision by the Esso Company to invest $200 million in the crude oil project at Cold Lake, which I visited not long ago with a number of my colleagues, thus creating 110 permanent jobs in addition to the 800 jobs that will be created in the construction industry.
This is one of the new investments that were planned and promised since the signing of the Western Energy Accord. These investments, representing $15 billion, will help to create 20,000 new jobs in the near future and increase oil production by 181,000 barrels per day.
Contrary to what our Liberal and New Democratic Party critics on the other side of the House have said about the impact of the Western Energy Accord, this is the direct result of an historic accord concluded by the Minister of Energy, Mines and Resources (Miss. Carney) with her Western counterparts.
* *


SWEARING IN OF NEW DEMOCRATIC PARTY GOVERNMENT
James Ross Fulton: Mr. Speaker, on May 13, 1985, Yukoners went to the polls wisely to elect for an NDP Government the first time. On Wednesday, May 29, the new Government of Yukon was sworn in. The five-member Cabinet that now governs Yukon includes Tony Penikett, Government Leader and Minister responsible for Economic Development, Finance, the Public Service Commission, and Intergovernmental Affairs. Roger Kimmerly is the Minister of Justice and Government Services. Margaret Joe is the Minister for Health and Human Resources. Piers McDonald is the Minister responsible for Education, and Community and Transportation Services. Dave Porter is the Minister of Renewable Resources and Tourism.
When they went to the polls Yukoners wanted a Government that would effectively, efficiently, and sincerely address their concerns. They have elected just such a Government. I have every confidence that the new NDP Government will develop positive initiatives to create jobs, settle land claims negotiations, and serve individual Northerners to the fullest extent. The new Government is representative of natives and non-natives together.
I would respectfully request that the Government and Parliament respond to the new Yukon Government with co-operation and assistance, and I am sure we all will. The election of an NDP Government in the Yukon has given hope to all Northerners.



ORAL QUESTION PERIOD


Right Hon. John N. Turner (Leader of the Opposition):: Mr. Speaker, I would have hoped that in the days following the first Budget of the Government we would have had the Prime Minister, the Minister of Finance, or the Minister of National Health and Welfare present to answer our questions.
It is a clear sign that the oil companies intend to meet their commitment to re-invest their new profits obtained as a result of the removal of that odious and discriminatory Liberal tax on oil and gas revenues.


Mr. Crosbie:: Where were you on Monday?


John Napier Turner: I've been right here. Mr. Crosbie: You were not here on Monday.
May 30, 1985


John Napier Turner: They are listening to you in St. John's, but you are going to have a little more trouble here.
The Government has the responsibility of defending the Budget, and the Ministers responsible should be here.
The Deputy Prime Minister and his seatmate, the Minister of Finance, have heard what we on this side of the House have had to say about the Government's decision to deindex old age pensions. By now the Minister of Finance must understand that he was wrong, particularly about the sneaky way that he did this. I would ask the Deputy Prime Minister if he would prevail upon the Prime Minister and the Minister of Finance to reconsider that decision, to have some compassion for the senior citizens, and to restore the value of the old age pensions.


Some Hon. Members:: Hear, hear!


Hon. Barbara McDougall (Minister of State (Finance)):: Mr. Speaker, this was a measure that was very carefully considered when putting the Budget together. 1 can assure the Hon. Member that the senior citizens of Canada have been very supportive, and all through the election-


Some Hon. Members:: Oh, oh!


Barbara Jean McDougall: There is a high proportion of senior citizens in my riding and they have all said to me that they are concerned about jobs for our young people because they remember the Depression. They remember what it is like not to have a job. They have been saying to all of us that they are concerned about jobs and the future of this country.


Some Hon. Members:: Hear, hear!
[ Translation]


OLD AGE PENSIONS-REQUEST FOR LIST OF PERSONS SUPPORTING BUDGET MEASURES
John Napier Turner: Mr. Speaker, in the circumstances I shall have to direct my question to the Minister of State (Finance). The Minister of Finance maintains that he spoke to many grandparents across Canada living below the poverty line, who were nevertheless in agreement with his decision to limit and devaluate old age security pensions. Within the next few days, Mr. Speaker, we intend to table in this House petitions from a great many grandparents who disapprove of this severe measure. My question to the Minister is as follows: Could the Minister, with her colleague the Minister of Finance, table the names of the grandparents, the senior citizens who spoke to the Ministers and agreed with the Government's decision to de-index pensions? Could she also table the names of young people with whom they spoke and who want their grandparents to continue to live in poverty as a result of the de-indexing of old security pensions? Table the names!
Oral Questions


Barbara Jean McDougall: Mr. Speaker, several blocks from where the Hon. Member lives you will Find a number of senior citizens' homes, and I have been in touch with all of them. The senior citizens there have been supportive of our measures.


GOVERNMENT POSITION
John Napier Turner: Mr. Speaker, I think it is absolutely ludicrous of the Minister to suggest, as the Minister of Finance has suggested, that the grandchildren of the senior citizens want their grandparents to live in a country which silently, secretly, in a sneaky way deindexes by 3 per cent per year the old age pensions of their grandparents. I just do not believe it. Will the Minister not own up to the fact that what she has really done, along with the Minister of Finance, is to provoke the most massive, hidden, sneaky, underhanded tax increase in the history of this country?
[DOT] (U20)


Barbara Jean McDougall: Mr. Speaker, if there is anything which people have asked us to do it is to get our house in order so that we can create jobs-


Mr. Deans:: Not on the backs of the elderly.


Barbara Jean McDougall: -and so that we can look after the poor pepole in this country. We have done that. We have retained the indexing of the GIS. But the best way that we can protect the seniors is to get our house in order and to keep inflation at its lowest possible point.


CANADIAN NATIONAL RAILWAYS
Hon. Lloyd Axworthy (Winnipeg-Fort Garry):: Mr. Speaker, my question is directed to the Minister of Transport. The Budget last week promised a new economic order and I think we are seeing the first practical results of that. This new economic order has resulted in an announcement by the Government's own Crown Corporation of an extended layoff of over 4,000 workers in Moncton, Montreal, and Winnipeg. At the same time the Government is extracting an extra $46 million payment from the CN, which is more than sufficient funds to keep those people working over the summer months.
Does the Minister intend to review this decision with the CN? Will he meet with the union representatives? And will he sit down and determine how he can convince his colleague, the Minister of Finance, to hold back on the extraction of $46 million so that those people can stay at work over the very vital months ahead of us?

May 30, 1985
Oral Questions


Hon. Don Mazankowski (Minister of Transport):: Mr. Speaker, first with respect to the double payment which was paid to CN by the previous Government of Canada, it was drawn to the attention of the Canadian Public by the Auditor General, and others, that that payment was improper and that arrangements should be made for the recovery of that overpayment.
Negotiations are currently under way to work out a satisfactory arrangement whereby that money will be paid back to the Crown.
With respect to the layoffs in question, I think the Hon. Member knows very well that traffic has declined rather substantially. We have no control over the weather. The amount of grain which was produced in the prairie region has dropped substantially. The forest industry is down substantially. As a result of that, traffic is down.


Mr. Foster:: It sounds like Tory times.


Donald Frank Mazankowski: I should point out as well, Mr. Speaker, that this is not the first time this kind of extended layoff has occurred. It occurred for a ten-week period in 1984, and for four weeks in 1977-


Mr. Speaker:: Order.


Lloyd Axworthy: I will just say that the Hon. Minister has given a very accurate description of the new economic climate when even his own railway is forced to lay off thousands of workers simply because of a lack of confidence in the economy.


BOX CAR REHABILITATION WORK
Lloyd Axworthy: I would like to ask the Minister about a very cruel joke which was played by one of his colleagues, the Leader of the Senate. He came to Winnipeg on the "budget sell" on Saturday and promised millions of dollars of new capital investment and new jobs in the Transcona shop. But instead of that we now have an announcement of 1,700 layoffs. When will the Government go ahead with the commitment, which was clearly made under the federal-provincial agreement, to rehabilitate 2,000 box cars and keep those 1,700 people in Transcona at work over the succeeding months?


Donald Frank Mazankowski: Mr. Speaker, it is too bad the Hon. Member doesn't follow the activities which go on within his own province-


Lloyd Axworthy: They are not working.


Donald Frank Mazankowski: -and the arrangements which are going on between the Government of Manitoba and the Government of Canada. An arrangement has been made to proceed with the rehabilitation of the box cars. These box cars may or may not be needed, but nonetheless a commitment has been made.
With respect to the Hon. Member's complaint about the economy, the country is still suffering from the aftermath of the bad economic policies of the former administration-


Lloyd Axworthy: You can't use that any more. That's all over with.


John Napier Turner: It's your Budget, your economy.


Donald Frank Mazankowski: The fact that grain sales are down and grain shipments are down-


Ian Deans: Bring back the Crow.


Donald Frank Mazankowski: -is certainly not this Government's fault. It has something to do with the weather and with the previous economic policies of the former Government.
With respect to the expansion of Transcona, the Hon. Member should know that the future for Transcona and CN in Winnipeg is very bright. If the Hon. Member will just be a little patient there may very well be some announcements which will be very positive for the future expansion of Transcona, as referred to previously by the Hon. Senator-


Mr. Speaker:: Order, please.


THE BUDGET
Hon. Edward Broadbent (Oshawa):: Mr. Speaker, my question is directed to the Minister of State for Finance. I have been trying without too much success to get the Government to be completely frank about the Budget. Yesterday a 25-year-old man telephoned the budget hot line of the Minister of Finance. I want to know if the Government agrees with the response which this man received from one of the Minister of Finance's own officials. The official said the following:
Unless you can get your boss to give you a $40,000 a year increase, I can't sit here and lie to you. Or unless you happen to own a few warehouses or something, then the $500,000 capital gains would be some help. There is really nothing in here for someone making your wage. I'm afraid there is just nothing in here for middle-income earners.
I want to know if this official in the Department of the Minister of Finance was saying what the Minister herself agrees with.


Barbara Jean McDougall: Mr. Speaker, what this Budget does is create opportunities and jobs for the middle-income people of the country.


Some Hon. Members:: Hear, hear!


Barbara Jean McDougall: It means that they will find jobs and their children will find jobs. And we think that is the most important thing we can do for Canadians, because that is what they have told us they care about the most.
May 30, 1985


John Edward Broadbent: Mr. Speaker, I wish the Government would be just half as frank as the officials who speak for the Government.


TAX PROVISIONS
John Edward Broadbent: There were two reports which came to the attention of Members of Parliament in the past 24 hours. Yesterday every Member of Parliament received a report which showed that the number of poor in Canada has increased by 24 per cent. Today tax officials have acknowledged that the rich in Canada pay a lower level of tax than the wealthy in any other industrialized country-thanks to the Liberals-


Mr. Speaker:: Order, please. It is a long preamble. Does the Hon. Member have a supplementary question, please?


John Edward Broadbent: -and that the Budget gives the rich more tax breaks. At a time when the number of poor in Canada is actually increasing, and the rich are already well off in terms of the tax system, why did the Government bring in a Budget which increases the financial position of the rich and makes everyone else, including the poor and the pensioners, worse off?


Barbara Jean McDougall: Mr. Speaker, if we don't find jobs for the poor, they will always be poor. Let me also say that some of the tax incentives in this Budget are directed at small business people. They have been asking, and asking, for consideration, and they received it in this Budget. They are the people who are creating the jobs and who are going to help us help the lower-income people about whom the Hon. Member says he cares so much.


Some Hon. Members:: Hear, hear!


GOVERNMENT POLICY
John Edward Broadbent: Mr. Speaker, will the Minister admit that she doesn't answer the question, just like the Minister of Finance and just like the Prime Minister, because she wants to use propaganda to try to convince the Canadian people-instead of admitting that this is the most unequal Budget probably in 20 years-that the Government is actually doing something for the people? Will the Government at last come clean and be frank with the people of Canada in what it is doing?


Barbara Jean McDougall: Mr. Speaker, the people in this country understand two things-


William Alexander (Bill) Blaikie: Death and taxes.


Barbara Jean McDougall: -first, that the people of this country need jobs and, second, that we have too much debt. They are prepared to assist and support us as we seek to solve those problems.
Oral Questions


SOCIETY SECURITY
Mr. Jean-Claude Malepart (Montreal-Sainte-Marie):: Mr. Speaker, my question is directed to the Acting Prime Minister.
Yesterday, the Prime Minister admitted he reneged on the promises he made to senior citizens during the election campaign. Mr. Speaker, would the Acting Prime Minister agree that his Government reneged on promises made by his Government and his Minister of National Health and Welfare in the paper tabled in January, on page 6, and I quote:
Any savings which may result from program changes will not be applied to a reduction of the deficit.
My question is as follows: Is the Acting Minister prepared to inform senior citizens that he is going to re-instate full indexation of old age security pensions, at least for the neediest in our society, in order to restore the Prime Minister's credibility?
[DOT] (M30)


Barbara Jean McDougall: Mr. Speaker, I might point out that the Hon. Member himself some time ago indicated that senior citizens were prepared to support a 6 per cent indexation with 12 per cent inflation. Can you tell me how we are letting them down when we are supporting indexation over 3 per cent with a 4 per cent inflation rate?


Jean-Claude Malépart: Mr. Speaker, I shall try and keep my temper. But obviously the Minister cannot read French, because I never approved of my party . .. My party maintained full indexation for the needy elderly. If the Minister wishes to lie, let her do it somewhere else.
My supplementary is as follows: The Minister will agree, if she read the paper by the Minister of National Health and Welfare who is here to defend the elderly, that he did not respect, and I quote on page 9: "Changes in these programs" . . . Mr. Speaker, that is my question. Why she did not respect. . . "Changes in these programs which may result from this review should improve benefits for those most in need."
I want to ask the Minister why-


Mr. Speaker:: Order, please. This question is already long enough. The point has been made.


Barbara Jean McDougall: Mr. Speaker, we have kept our commitment to the poorest senior citizens in this country.


Some Hon. Members:: Oh, oh!


Barbara Jean McDougall: We have kept the indexing of the G1S.

May 30, 1985
Oral Questions


John R. Rodriguez: Check your nose, Barbara.


Mr. Nystrom:: Your nose is growing.


Barbara Jean McDougall: Mr. Speaker, the worst thing that ever happened to the senior citizens of this country was the inflation induced by the former Government. We have kept our commitment to senior citizens, and we will continue to honour it.


PENSIONS
Mr. Neil Young (Beaches):: Mr. Speaker, my question is directed to the Minister of State for Finance. In the telephone conversation my Leader referred to earlier, the person on the other end of the line said that if there is no change in the inflation rate, that is, if it stays at 3 per cent or more, the cost to seniors will be quite substantial. Our estimate is that pensioners will have a real income loss over the next five years of something like $2,300, plus an additional loss of some $2,000 due to tax increases. Given that, would the Minister not agree that the Government is indeed putting the boots to senior citizens?


Barbara Jean McDougall: Mr. Speaker, the Opposition and the NDP like to play games with numbers. They have come up with number, after number, after number. We have laid out an agenda whereby the low income senior citizens of this country will be looked after. We have laid out an agenda which is going to reduce the deficit and bring down interest rates. That will affect the inflation rate in a positive way and they should accept that.


SINGLE ELDERLY WOMEN
Neil Young: Mr. Speaker, perhaps the Minister will listen to figures from the National Council on Welfare and their report Poverty on the Increase. Would the Minister not agree that somewhere around six out of ten single elderly women live in poverty? I ask her again whether she would not agree the Government is simply putting the boots to these grandmothers and grandfathers she likes to talk about?


Barbara Jean McDougall: Mr. Speaker, perhaps the Hon. Member has forgotten that one of the first things we did was extend the spouse's allowance to deal precisely with that problem.


AGRICULTURE
Maurice Brydon Foster: Mr. Speaker, my question is directed to the Minister of State for Finance. The Budget is
really bad news for Canada's farmers. The Ontario Federation of Agriculture finds it so bad that it has called an emergency meeting of all directors a week from today. The Budget does nothing to cover the farm debt crisis which affects 39,000 of our young farmers, those who produce half of the agricultural commodities in this country.
Can the Minister say why the Government has not kept its promise on agri-bonds? Why is it not acting on the recommendation of the Finance Committee to establish a long-term rescheduling of farm debt with loans at 8 per cent? Why was action not taken on this emergency matter for farmers?


Hon. John Wise (Minister of Agriculture):: Mr. Speaker, I am inclined to believe that the Hon. Member must be getting his information by reading old Budgets lying around in his office from the days of the Liberal Government. He is certainly not referring to the Budget brought in by this Government and our Minister of Finance on May 23. Since that time I have been in Saskatchewan, Alberta, Nova Scotia, and Ontario, and the message I am getting, on a one-to-one basis, from farmers and farm groups is that the Budget is extremely beneficial for and in the interests of Canadian farmers.


Maurice Brydon Foster: Mr. Speaker, it is obvious that he was talking to
Tories.


INCREASED INPUT COSTS
Maurice Brydon Foster: Mr. Speaker, can the Minister say why he has deepened the despair of Canadian farmers by increasing their input costs? For example, there is the 9 cent a gallon tax on gasoline which will cost $280 a year for the average farm operation. The 1 per cent sales tax increase is another example. Why is the Government cutting back $200 million over the next four years in programs of the Department of Agriculture? Why is the Government determined to destroy the agricultural community by tightening ever more the cost-price squeeze for farmers?


John Wise: Mr. Speaker, that is really nothing more than sheer nonsense. As I indicated before, there are three or four very significant measures in the Budget which will benefit the agricultural industry. Indeed, starting on September 17 we can go through a long list of measures we have taken which provide great benefit to Canadian farmers. It was only on the Friday prior to the presentation of the Budget that I received the final recommendation and report of our pilot project in Bruce and Grey County.
The message I have been carrying to Canadian farmers, and the message I want to give here in the House, is that we continue to look at ways and means in which we can address this very serious problem of farm finance which has existed in this country for a long time but has only been dealt with effectively since last September 17.
May 30, 1985


TRANSPORTATION OF DANGEROUS GOODS
William Alexander (Bill) Blaikie: Mr. Speaker, my question is directed to the Minister of Transport who will, no doubt, be aware of the recent PCB spills in Saskatchewan and Ontario. Much has been made of the new regulations coming into effect on July 1. The Minister and his officials have said in committee that those regulations with respect to the transportation of dangerous goods will only have the effect of making the response to a spill more accurate and will not prevent a spill itself because they do not deal with packaging as such. Can the Minister confirm that and, if so, when will he be about the business of bringing in a more comprehensive set of regulations so we can deal with the plethora of spills which seem to be happening all over the place these days?


Donald Frank Mazankowski: Mr. Speaker, the Government has taken a number of initiatives to deal effectively with these spills. Number one was the issuance of the protective direction concerning the transportation of dangerous goods, which provides for the process and manner in which PCBs should be transported. That direction is in effect.
Secondly, we have dispatched inspectors from the Transportation of Dangerous Goods Directorate to the sites in question in the four or five cases reported. An analysis is going on and, if there is a contravention of the protective direction, clearly there will be charges laid.
With respect to the latest spill, at this particular time that evaluation is still going on, as is the evaluation with respect to the recent spill in Quebec.


FEDERAL JURISDICTION
William Alexander (Bill) Blaikie: Mr. Speaker, I am not sure that the Minister said clearly that the regulations coming into effect on July 1 do not deal with packaging and that a more comprehensive set of regulations is necessary.
Is the Minister aware of the judgment of the Supreme Court of Ontario that, contrary to what the Minister of the Environment said some time ago when the spill occurred near Kenora, the interprovincial transportation of dangerous goods is strictly a federal jurisdiction and that there is a need for more federal involvement? If the Minister is aware of this case and accepts that jurisdictional responsibility denied by the Minister of the Environment at one point, what is the intent-


Mr. Speaker:: Order, please.


Some Hon. Members:: Order.


Mr. Speaker:: The Member has asked two questions already in that supplementary.


William Alexander (Bill) Blaikie: I had a couple more.
Oral Questions


Donald Frank Mazankowski: Without agreeing with the preamble of the question, I think the fact that we have taken a conscious decision to ensure that inspectors are on site immediately upon the report of such spills is a clear indication that Transport Canada is taking its responsibility and ensuring that all necessary steps are taken.
With respect to the promulgation of the regulations that will come into effect on July 1, they will indeed be more comprehensive. I think the Hon. Member realizes that there is joint jurisdiction involved with the provinces and industry. We are trying to work that process out in the most comprehensive and effective way possible. Clearly the combination of the issuance of the protective direction and the promulgation of the new regulations on July 1 will go a major distance to ensuring the safe transportation of these substances in the future.


SOCCER MATCH RIOT-SYMPATHY FOR FAMILIES OF ITALIAN VICTIMS
Mr. Reg Stackhouse (Scarborough West):: Mr. Speaker, my question is directed to the Acting Prime Minister. In view of the horrendous suffering inflicted upon so many innocent spectators at the international soccer match in Brussels yesterday, and in view of the large number of Canadians with Italian backgrounds, will the Acting Prime Minister, on behalf of the Government and people of Canada, send a message to the President of Italy expressing our deepest sympathies, especially for the families so tragically bereaved?


Hon. Erik Nielsen (Deputy Prime Minister and Minister of National Defence):: Mr. Speaker, I am sure that 1 speak on behalf of all Members of the House when I say that the very tragic incident that occurred in Brussels was deplorable indeed. It is my understanding, from the accounts that I have seen and read, that those who were killed and injured included nationals of several countries. I note the observations of the Hon. Member with respect to condolences. I am unaware of whether all of the surviving families have been identified, but his suggestion will certainly be taken into serious consideration.


ROYAL CANADIAN MOUNTED POLICE
Hon. Bob Kaplan (York Centre):: Mr. Speaker, my question is directed to the Solicitor General. In the report of Commissioner Simmonds on the Hatfield affair he wrote that members were all tarred by comments made by persons occupying high office in New Brunswick, and that the air of suspicion with respect to the force needed to be cleared up. On Tuesday in the Justice Committee the Solicitor General said that there was nothing he could do to clear the air.

May 30, 1985
Oral Questions
There are times when a Solicitor General should not meet with a provincial Premier, but there are also times when he should meet with a Premier. Is the inability of the Solicitor General to do this obvious thing not a sign that he is a lame duck?


Hon. Elmer M. MacKay (Solicitor General of Canada):: Mr. Speaker, my hon. friend is sadly mistaken if he thinks that any person can direct a public official, particularly an official in the administration of justice in a province, as to what he should or should not do. In committee I expressed a very clear desire, as I am sure all Canadians would have wanted me to, that both Premier Hatfield and the Acting Attorney General of New Brunswick be gracious and concede that this report indicated that the RCMP acted in an entirely proper manner throughout.


Some Hon. Members:: Hear, hear!


REQUEST THAT JUSTICE MINISTER MEET NEW BRUNSWICK MINISTERS
Robert Phillip Kaplan: Mr. Speaker, following that cop-out I would like to direct my supplementary question to the Minister of Justice. The Globe and Mail was today added to The Gazette and other dailies which are demanding the resignation of the Solicitor General. Will the Minister of Justice himself take that step with the Government of New Brunswick which Commissioner Simmonds is obviously asking?


John Carnell Crosbie: Mr. Speaker, I well recall that when the hon. gentleman was Solicitor General there were calls from every corner of the country for his dismissal from his position, which were ignored by the then Prime Minister.
With respect to the question directed to myself, I have no doubt that that matter will be dealt with in due course by the people involved. We have no authority to direct provincial government officials as to what they should or should not do.


Mr. Nunziata:: He is a friend of yours, John.


TRANSPORTATION OF DANGEROUS GOODS
[Stage Direction]
TRANSFORMERS FILLED WITH PCBs
Mr. Ernie Epp (Thunder Bay-Nipigon):: Mr. Speaker, two more spills of PCBs have occurred this week, one in Saskatchewan and one in my riding of Thunder Bay-Nipigon. My question is directed to the Minister of Transport. Why, despite his order of April 19, are trucks still moving PCB filled transformers with certificates that grossly underestimate the strength of the solution? Why are shippers not required to demonstrate in advance that the solutions are weak? Why are transformers not moved under proper escort when the contents are clearly dangerous?


Donald Frank Mazankowski: Mr. Speaker, that is like asking me why motorists speed. If the Member wants to know why they do this, perhaps he should direct his question to them. We have issued regulations governing the transportation of PCBs. We expect those regulations to be carried out under the due process of law. If there is a contravention we will certainly exercise the right of laying charges as the regulations so imply.


TRUCKING INCIDENT AT CLAVET, SASK.
Victor Fredrich (Vic) Althouse: Mr. Speaker, my supplementary question is directed to the same Minister. Would the Minister inform the House what procedures his officials will put in place at Clavet, Saskatchewan, to ensure that when that truck leaves that point it will be in no danger of spreading the high levels of PCB concentrates that it is carrying? What process have his officials put in place to ensure that that cannot happen again?


Donald Frank Mazankowski: Mr. Speaker, the protective direction which has been issued will clearly have to be-


An Hon. Member:: It's not working.


Donald Frank Mazankowski: Of course it works if it's followed.


Ian Deans: But it isn't being followed.


Donald Frank Mazankowski: In this case the truck will probably not leave until the protective direction is clearly followed.


Ian Deans: Until the next leaking truck leaves.


Donald Frank Mazankowski: As I said in response to the previous question, if there is a clear violation of the protective direction, charges will be laid.


CANADIAN BROADCASTING CORPORATION
Mr. John A. MacDougall (Timiskaming):: Mr. Speaker, my question is directed to the Minister of Communications. Two weeks ago the Canadian weightlifting championships were held in my riding and four Canadian records were set. The CBC was invited over a year ago to be present to cover this event. It did not do so.
Could the Minister inform the Canadian Weightlifting Association, and the citizens of the community hosting the event next year that he will ensure that the CBC will be there?


Marcel Masse: Well, Mr. Speaker, that is a weighty question. I will convey it to the CBC President who will certainly weigh the pros and cons of the CBC's presence at the next championships.

May 30, 1985_______________________


IMMIGRATION
Mrs. Lucie Pepin (Outremont):: Mr. Speaker, my question was intended for the Minister of Employment and Immigration, but in her absence I shall direct it to the Deputy Prime Minister.
It was learned that the Government is preparing a partial amnesty plan for refugee status applicants. Claimants from certain countries will be granted amnesty, while others will have to go through the normal procedure leading to refugee status. That sounds like discrimination on the basis of country of origin. Can the Minister enlighten us about the criteria used in choosing countries whose claimants will be granted amnesty?
[DOT] (U50)


Hon. Bill McKnight (Minister of Labour):: Mr. Speaker, on behalf of the Minister of Employment and Immigration, I take notice of the question from the Hon. Member. I am sure that fairness and the attitude of the Minister will be reflected in her answers to her.


REQUESTS FROM BANGLADESH-MINISTER'S POSITION
Lucie Pépin: Mr. Speaker, I would also like the Minister to tell us why she considers requests from Bangladesh to be frivolous and unsupported, a country under a military regime and whose constitution and legislature have been suspended?


William Hunter (Bill) McKnight: Mr. Speaker, I am sure that the Hon. Member is as aware as other Hon. Members of the attitude taken by the Minister of Employment and Immigration. Her attitude of fairness will certainly be brought to bear with respect to the questions that have been asked.


FISHERIES
Mr. Ray Skelly (Comox-Powell River):: Mr. Speaker, the United States is conducting talks with the Japanese concerning voluntary reductions of high seas salmon fishing by the Japanese off the West Coast. These talks are being held outside the bounds of the International North Pacific Fishery Commission and are as a result of the deep concern about the Japanese taking 20 million to 25 million tonnes of salmon out of the West Coast high seas fisheries.
Oral Questions
Will the Minister of Fisheries and Oceans inform the House if the Government was approached by the American State Department to participate in these negotiations, and if the Canadian Government intends to conduct such negotiations with the Japanese?


Hon. John A. Fraser (Minister of Fisheries and Oceans):: Mr. Speaker, I will inquire, because I do not have any information whether the Government of Canada was asked to participate in those conversations. I will report back to the Hon. Member as soon as I can.


Raymond John Skelly: My information is that on two separate occasions the invitation was extended to Canada to participate.


STUDIES OF IMPACT ON WEST COAST FISHERY
Raymond John Skelly: Mr. Speaker, the Japanese are not the only ones fishing in the West Coast high seas fishery. The Koreans and Soviets are taking large quantities of chum, Chinook and steelhead. Will the Minister inform the House what studies have been done to determine the impact of the current level of interception of salmon on the West Coast? Does the Government intend to begin talks with the Koreans, Taiwanese, and Soviets regarding these fisheries?


John Allen Fraser: Mr. Speaker, the question raised by the Hon. Member is of considerable importance to all of us on the West Coast. Most of the studies, if they can be called that, are several years old. I have asked the Department to concentrate on this. We know that very high numbers of steelhead which are spawned in British Columbia's streams are being taken by the Japanese. We are not as certain about the amounts of salmon. The question is appropriate and I will be discussing it further with the Hon. Member.


TRANSPORTATION OF DANGEROUS GOODS
Mr. Alan Redway (York East):: Mr. Speaker, my question is directed to the Minister of Transport. The Minister knows that the Canadian Transport Commission has just rejected a recommendation to reroute trains that carry some 1,500 carloads of hazardous materials through downtown Toronto each month, and has also refused to slow the speed of those trains. There are some two accidents on those train lines every year. Will the Minister tell the House what steps the Government will be taking in order to protect the safety of 2.5 million people who live in Metropolitan Toronto?


Donald Frank Mazankowski: Mr. Speaker, the recommendations of the Burton-Post Report calls for either the rerouting of the railway or the diversion of dangerous goods which would normally proceed through the city. The implications of these two recommendations are quite

May 30, 1985
Oral Questions
severe and there has not been a clear consensus as to which, if any, should be proceeded with. Therefore the CTC has asked for further study and examination of this issue, and has asked all interested parties to come forth by October.
I should indicate that heretofore there have been a number of steps taken with respect to the roller bearing retrofit. There has been a slowing down of trains, double shelf couplers-


Mr. Speaker:: Order. The Hon. Minister may want to finish this under Statements by Ministers.


PENSIONS
Mr. Brian Tobin (Humber-Port au Port-St. Barbe):: Mr. Speaker, my question is directed to the Minister of Finance. I wanted to ask questions about Atlantic Canada but half of the Cabinet is missing today.
My question to the Minister of Finance deals with her statements regarding the deindexing of the old age pension. The Parliamentary Secretary to the Minister of National Health and Welfare has said that they do not have to keep their campaign promises. The Prime Minister admitted yesterday that they have not kept campaign promises. The Minister of State for Finance is saying in the House today that they have kept all their promises. My question to the Minister of Finance-


Some Hon. Members:: Oh, oh!


An Hon. Member:: Sit down.


Brian Vincent Tobin: Government Members are not concerned about senior citizens. Given that she argues that senior citizens support the Government's deindexing of this program, how many hundreds, or how many hundreds of thousands of names on petitions should we in the Opposition table in the House to convince her to change her mind and restore full indexation of old age pensions?


Barbara Jean McDougall: Mr. Speaker, I welcome the question by the Hon. Member. I thought that he was out looking for a fact today. I have said in the House, and we have produced a consistent message, that we have kept our commitment to the people of this country. It is hypocritical for Members opposite, who created the problems for senior citizens in the first place, to talk to us about sneaky things for senior citizens.


Brian Vincent Tobin: Mr. Speaker, I ask the Minister again, given that her only defence for this Draconian measure-


Some Hon. Members:: Oh, oh!


Brian Vincent Tobin: -is that senior citizens want it and senior citizens support it, how many hundreds of thousands of names must we table in the House before the Government recognizes that senior citizens don't want it and it repeals this Draconian measure? We will do it.


Barbara Jean McDougall: Mr. Speaker, the Draconian measure for senior citizens in this country was a 12 per cent inflation rate and a proposal by the former Government that indexation be limited to 6 per cent. We are doing for low-income Canadians and low-income senior citizens exactly what has to be done in this country at this time, because of their policies.



THE BUDGET


Mr. Rod Murphy (Churchill):: Mr. Speaker, my question is directed to the Minister of Regional Industrial Expansion. The Minister is probably aware that the President of the Atlantic Provinces Chamber of Commerce, Robert Stuart, has criticized the federal Government's Budget. The basis of his criticism of the Budget is that the private sector fuels about 55 per cent of the economy nationally but only fuels about 20 per cent of the economy in Atlantic Canada. His complaint is that the Government is not doing anything to help the economy in that region. Will the Minister indicate anything in the Budget that will help that region?


Hon. Sinclair Stevens (Minister of Regional Industrial Expansion):: Mr. Speaker, when the Hon. Member for Churchill asks that kind of question, he obviously has not read the Budget. The fact is that the Budget will ensure more economic growth in the Atlantic region. It will ensure that the Government will continue its supportive measures in that region.


John Edward Broadbent: Especially Cape Breton.


Sinclair McKnight Stevens: It will ensure, most important, that employees who have been without work in that region will be back to work once again. 1 wish that the Party to which that Hon. Member belongs would start supporting the workers of this country instead of, through despair and doom, requiring them to remain on the unemployment lists.


Rodney Edward Murphy: I was not making my own comment. I was quoting the President of the Atlantic Provinces Chamber of Commerce.
Mr. Speaker, perhaps the Minister would respond to this comment from the Treasurer of the Atlantic Economic Council, Mr. McCulloch, who says:
-there were three paragraphs talking about the regional nature of Canada's economy-
May 30, 1985

In the November 8 "New Direction" statement:
After our first discussion with the Hon. Michael Wilson, we became convinced that it wasn't just an oversight, that that was his measure of its importance.


Mr. Speaker:: Order.


Rodney Edward Murphy: What faith can people in Atlantic Canada have in your Budget if that is what their spokesmen are saying?


Sinclair McKnight Stevens: Mr. Speaker, again in reply to the Hon. Member for Churchill who refers to an officer within APEC, perhaps he missed that the Chairman of APEC has joined our advisory group in that area. He is most supportive of the budgetary measures that have been taken-


Brian Vincent Tobin: That is a lie.


Sinclair McKnight Stevens: I think the Hon. Member will see that in due
course-


Brian Vincent Tobin: That is a lie.


Sinclair McKnight Stevens: -even the Chamber of Commerce-


Mr. Speaker:: Order, please.


Some Hon. Members:: Oh, oh!


Mr. Speaker:: Order. Order. The Hon. Member for Humb-er-Port au Port-St. Barbe will withdraw the comment please. 1 ask him simply to stand in his place and withdraw the comment, please.


Brian Vincent Tobin: Mr. Speaker, this man is not telling the truth. He is putting words-


Some Hon. Members:: Out.


Mr. Speaker:: Order please. There is nothing to be gained here, I hope, except that I trust the Hon. Member will know that the traditions of the House require an Hon. Member, when something has been said, perhaps in heat, simply to stand and withdraw the comment, please.


Brian Vincent Tobin: Mr. Speaker, the traditions of the House would require me to withdraw a statement which reflects a very accurate assessment of what is happening opposite, but I withdraw the statement nevertheless.


CLERK OF PETITIONS' REPORTS
Mr. Speaker:: I have the honour to inform the House that the petition presented by the Hon. Member for Quebec East (Mr. Tremblay) on Wednesday, May 29, 1985, meets the requirements of the Standing Orders as to form.
Order Paper Questions



ROUTINE PROCEEDINGS


Hon. J. Robert Howie (York-Sunbury):: Mr. Speaker 1 have the honour to present the first report of the Standing Committee on Privileges and Elections in both official languages.


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. Paul Dick (Parliamentary Secretary to President of the Privy Council):: Mr. Speaker, the following questions will be answered today: Nos. 224 and 325.


Mr. Howie: 1.	As of January I, 1985, or of the latest date for which figures are available, how many (a) permanent civilian (b) temporary or term civilian (c) regular force military (d) militia personnel on callout, were on strength at CFB Gagetown, Oromocto, New Brunswick?
2.	Of those military personnel who were employed at CFB Gagetown, how many were (a) in combat trades (b) in non-combat and support trades?


Mr. Robert Wenman (Parliamentary Secretary to Minister of National Defence):: (a)	Permanent civilian	- 705(b)	Temporary or term civilian	- 104(c)	Regular force military	- 3.246(d)	Militia	- 3(a)	Combat trades	(i) Regular Forces	- 1,779(ii) Militia	- 1(b)	Non-combat and support trades	(i) Regular Force	- 1,467(ii) Militia	- 2


Mr. Gagliano: What are the names of the persons on the exempt staff in the office of the Minister of State (Small Businesses) and, in each case, what is his/her salary?


Hon. Andre Bissonnette (Minister of State (Small Businesses)):: As of April 15, 1985:
Name	Salary Range
Aftergood, David	Up to $43,931
Bouthillette, J. L.	Up to $80,970
Linkletter, France	Up to $29,219
Poirier, Serge	Up to $24,395

May 30, 1985
The Budget-Ms. Copps
Name	Salary Range
Provost, A. Lise	Up to $43,931
Roy, Andre	Up to $51,591
Young, Huguette	Up to $43,931


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


Mr. Speaker:: The questions enumerated by the Parliamentary Secretary have been answered. Shall the remaining question stand?


Some Hon. Members:: Agreed.


BUSINESS OF THE HOUSE
Mr. Guilbault (Saint-Jacques):: Mr. Speaker, with regard to the business of the House, obviously we know we are debating the Budget today, tomorrow and Monday. Perhaps someone on the government side could let us know what we will be dealing with on Tuesday and Wednesday of next week, if that has been determined.


Paul Wyatt Dick: Mr. Speaker, that has not been determined as yet. We will be announcing forthcoming business on Monday.


Mr. Ouellet:: Monday?



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Wilson (Etobicoke Centre) that this House approves in general the budgetary policy of the Government; and the amendment of Mr. Johnston (p. 5043).
Sheila Maureen Copps: Mr. Speaker, I had the opportunity this morning of listening to the interventions of a number of government Members who were prepared to stand in their places and tell the people of Canada that they were elected to fight a deficit on the backs of senior citizens from coast to coast. 1 want to tell you, Mr. Speaker, that this Government has clearly shown through this Budget for the first time a kind of cold blooded, blue blooded attack, not only on the middle class but also on those in our society who can least afford to a pay.
This Government is so arrogant that when it tabled the budget documents it even thought it could turn maple leafs into blue maple leafs.


Some Hon. Members:: Hear, hear!


Sheila Maureen Copps: As far as I know, the Canadian flag is a red maple leaf representing Canada from coast to coast. The Government has even gone to the extent, in its hungry search for publicity, of turning the Canadian flag into a blue flag indicative of the blue blooded, cold hearted, iceberg approach which the Tories have taken to deficit reduction.


Mr. Stewart:: You are setting women's rights back one hundred years.


Sheila Maureen Copps: The Member has said I have set women's rights back one hundred years. 1 want to tell the Member that this Budget has set the rights of senior citizens back one hundred years because the Government has a Finance Minister who has the gall to stand here in the House and tell senior citizens that their purchasing power will be reduced by $500 a year as a result of this Government's budget cut-backs. Those are the very senior citizens currently living below the poverty line who are being expected to bear the brunt of an economy which offers tax write-offs to the very, very rich.
Congratulations. The Minister of Finance (Mr. Wilson) has now said that anybody who leaves the country at any time can now write off $100 in tax free goods. Do you think the senior citizens who are scraping the bottom of the economic barrel can afford to travel on a regular basis, Mr. Speaker? No, they cannot. The beneficiaries of that particular tax write-off will be the business people who already have enough write-offs.
The Leader of the Opposition (Mr. Turner) has quite clearly shown us how the half a million dollar capital gains tax write-off will put $125,000 into the pockets of the very rich. At the same time, the Minister of Finance and the Minister of State for Finance (Mrs. McDougall) have the nerve to stand here in the House and say that senior citizens should bear the burden of that measure.


Some Hon. Members:: Shame.


Sheila Maureen Copps: That hollow argument is somehow saying that this particular initiative will result in job creation. We know the direct impact of this Budget-we have seen some of the results in the announcement today on Canadian National-, will be to cut 125,000 to 150,000 Canadian jobs. I plead with government Members, if there is to be job creation as a direct result of this Budget, to table the documents in the House, to table the projections in the House and to table the assessments in the House. It is quite clear that the Minister of Finance has taken a Pontius Pilate approach to job creation by saying to young people, "I wash my hands of this". There are 1.4 million people who are not working, yet the Minister of Finance has the nerve to cut back on job creation protection and projections through the federal Government.


Mr. Clifford:: He is helping young people.

May 30, 1985

[ Translation]


Sheila Maureen Copps: Mr. Speaker, the Hon. Member says that he is helping young people. I am young myself, much younger than the Hon. Member who has just spoken, and I should like to ask him directly how this Budget will help in view of the 125,000 or so jobs that will disappear as a direct result of the Budget measures.
Mr. Speaker, it is clear that the Minister of Finance (Mr. Wilson) and his "true blue" colleagues of this Conservative Government-"true blue" because of their blood and because of the "Blues" they are inflicting-do not care whether our senior citizens freeze next winter, because they are more eager to fight against the deficit "on the backs" of our senior citizens than to create jobs for our young people.
On the Liberal side, Mr. Speaker, we had hoped for a Budget which would have directly resulted in job creating schemes. Alas, it was in vain. What we see here is a Government which is prepared to give a $125,000 cash bonanza to every Canadian earning over $100,000.
Mr. Speaker, it is a fact that only 4 per cent of Canadians can benefit from the Government's initiative to exempt from tax the first $500,000 in capital gains. I repeat, only 4 per cent of Canadians is able to benefit from this initiative, and it is our senior citizens, our underprivileged and middle income people who will foot the bill.
During the campaign, many Canadians believed the promises of the Government. When the Prime Minister (Mr. Mulroney) said that universality was a sacred trust, when the Prime Minister stood in the House of Commons and said that indexation would not be touched, people believed him. They thought him to be a man of his word, but the record and this Budget clearly show otherwise. They show that the Government is prepared in the most insidious way to reach out into the pockets of not only senior citizens, but of our children.
1 received a telephone call this morning from a gentleman in my riding who is very involved in a local candy factory, Allan Dancy. Most of the Members on the government side may not know that 8,000 people are employed coast to coast in the confectionary industry. Those people are facing massive layoffs as a direct result of the Government's budget initiative which will literally be taking candy from the mouths of babies.


Some Hon. Members:: Oh, oh!


Sheila Maureen Copps: Government Members may laugh, but I want to tell them that three years ago there was a man in Ontario who was laughing.


Some Hon. Members:: Who?


Sheila Maureen Copps: His name was Frank Miller. He introduced a budget which taxed candy for babies, which taxed sanitary napkins as a non-essential item, and which taxed a cup of
The Budget-Ms. Copps
coffee. Instead of learning from the Miller lesson, the Government, under the leadership of the Prime Minister, introduced a tax on soap, shampoo, candies and pet food which in the most regressive way hits out at those families that can least afford to pay. The facts speak for themselves.
Let us look at the impact of this particular Budget. GIS recipients, that is those who are in the worst position of poverty in the country, will see their own purchasing power, as little as it is, and their own income reduced by 33 per cent by the end of this decade. They will see a 33 per cent reduction in their purchasing power. In the first full year that this insidious Budget will take effect, $2.4 billion will be taken directly from the pockets of those consumers who pump money back into the economy by buying chocolate bars-heaven forbid that they should be allowed to have a chocolate bar-coffee and pet food, items which ordinary Canadians pay for on a daily and weekly basis.
This Budget is not a fair one. It cushions the rich and it says that a Canadian family of four earning $15,000 per year, which is not the lap of luxury, will be paying 36 per cent more in taxes in 1990, while a family of four earning $200,000 per year will be paying 2 per cent more in taxes. Where is the fairness in asking a family of four earning $15,000 to pay 36 per cent more in taxes at the same time as saying to a family earning $200,000 that its tax burden will be increased by 2 per cent? If we take into consideration the $125,000 cash bonus to the rich, we discover that the typical family of four earning $15,000 will be paying $413 more in taxes and the family earning $200,000 as a result of this cash bonus, this cash for life bonanza, will be paying $2,352 less in taxes than they paid before the Budget was introduced. The cash for life lottery does not only benefit people who buy tickets; the Government has given a $125,000 cash write-off to the rich. Is it fair to ask a $15,000 per year family to pay more and to give a tax break which will result in savings of more than $2,000 to a family earning $200,000?
I represent the most industrialized riding in Hamilton, the great riding of Hamilton East.


An Hon. Member:: No, no.


Sheila Maureen Copps: If the Hon. Member would like to check the figures, he can look at the latest census. Then he will be aware of the fact that the people in my riding are steelworkers; they are construction workers. Many of them are working for the minimum wage. In particular, women are working for 63 cents of every dollar earned by men. Many of those people voted for the Conservative Party because they believed the message of fairness preached by the Prime Minister. They actually believed the Prime Minister when he said that he would not touch the pensions of senior citizens. In fact, he said it right here in the House last December.
If government Members had a modicum of integrity, they would rise in their places today and dissociate themselves from this vicious attack on the pensions of senior citizens, senior citizens who are living below the minimum wage. Also, they believed the Prime Minister when he said he would reach out

May 30, 1985
The Budget-Ms. Copps
to try to develop employment equity for women. What do we see for women in the Budget? For the women of the country we see absolutely nothing, absolutely no budgetary provisions for the introduction of employment equity into the federal Public Service. On the contrary, we see by the Government's own secret Cabinet documents that it is expecting to garner a savings of almost half a billion dollars as a direct result of Public Service rationalization.
We have heard government Members speak about rationalization and say how tremendous it is that the Government will be saving almost half a billion dollars. However, rationalization means that those women currently employed in ghettoized jobs in the Public Service, those women in private companies who are currently under federal labour law that does not respect the concept of equal pay for work of equal value, will be further reduced because the federal Government has made absolutely no provision to implement the kind of employment equity which the Prime Minister promised when he spoke to the women of Canada. If we look at the figures, we discover that rationalization in federal Public Service terms means dumping those women who currently occupy the lowest rungs of employment within the federal Government. It is anticipated that more than 60 per cent of those directly affected by rationalization will be women. They will also happen to be those women who are currently at the lowest end of the federal salary scale. Last August the Prime Minister went before the women of Canada and made promises-

-that as soon as he was elected on September 4, he would start fighting to ensure that Canadian women would get equal pay for work of equal value. And now we see what happened. The Prime Minister and his Minister of Finance got together to figure out how to take money from the middle class, from Canadian women and from the elderly and hand it over to their own Progressive Conservative friends. The real meaning, the true spirit of the Progressive Conservative Party has come through in this Budget, Mr. Speaker, because it is clear to see that the Prime Minister has decided to give a bonus of $125,000 to families already earning more than $200,000, while at the same time taking money out of the pockets of families earning less than $15,000... they are going to be paying over $400 in taxes. Mr. Speaker, in addition to taking $400 out of the pockets of lower income families, they also felt they had to take money from the elderly poor in Canada.
When I have a chance to talk to senior citizens in my riding,
I find that of course they would like to work together will all Canadians to create jobs, but Mr. Speaker, it is not fair to ask our own elderly people who are already living below the poverty line to give up 3 per cent of their benefits next year and 3 per cent the year after. By the time we get to the end of the period covered by this Budget, in 1990, the elderly will have lost more than 30 per cent of their purchasing power because of these budget cuts.
Mr. Speaker, it is not just the people who are already getting other pensions. Most of these people, 600,000 to be exact, are already living below the poverty line. And at the same time, the Minister of Finance comes up with some of the most extraordinary measures for the benefit of private companies and wealthier Canadians who can use retirement savings as a tax shelter. I think that this Budget, which for the first time has really shown the true colours of conservatism in Canada, has broken promises that were made to the Canadian poeple and betrayed hopes that were raised, after September 4, before the Budget was announced.
Mr. Speaker, about employment: this Budget does not contain a single measure that will directly create jobs for young Canadian men and women. There is not a single measure that will provide for this, because the Minister of Finance has washed his hands like Pontius Pilate by saying that the private sector is going to take care of everything for Canadian men and women. I beg the Prime Minister and I beg the Minister of Finance to at least do three things: First, to re-index fully all pensions and especially those of Canadians living below the poverty line. Second, to introduce measures that will directly create jobs for ridings such as Hamilton East where the unemployment rate is already over 11 per cent. And third, to give Canadians the assurance that the next Budget this Minister and this Government will bring down will bear the hallmark of equality and that the middle class will not bear the brunt of cutbacks while the pockets of the wealthiest in Canada are being filled.
That, Mr. Speaker, is conservative philosophy. I beg the Minister of Finance to turn away from the policy of conservatism, from this policy for the rich, and to remember that Canadians elected him to represent the middle class and all Canadians on September 4, and to act accordingly.


Mr. Deputy Speaker:: Questions and comments? The Hon. Member for Mississauga South (Mr. Blenkarn).


Mr. Blenkarn:: I have a question, Mr. Speaker. I am wondering if the Member for Hamilton East (Ms. Copps) has had an opportunity to read the Ways and Means motion notation that sanitary napkins are not taxable.
I am also wondering whether she has had an opportunity to read the book written by her illustrious colleague, the finance critic, entitled How to Survive in Canada's Tax Chaos, about which the Montreal Gazette has said, "It is required reading for every Member of Parliament". The book goes into the inequities of capital gains tax and suggests how Canada should get rid of it.


Sheila Maureen Copps: 
Donald Frank Mazankowski: Answer the question.


Sheila Maureen Copps: The fact of the matter is Where I Stand is a true representation of the position of the Prime Minister. Last December he stood in the House and promised us that he would do nothing to the indexation of senior citizens' pensions. Yet, he has written in his book that it should become a priority to reduce and eventually eliminate and outlaw indexed contracts and benefits.


Donald Alex Blenkarn: Right on.


Sheila Maureen Copps: The Hon. Member for Mississauga South says "Right on" because that is the true Conservative philosophy. You want to do away with indexation. You want to attack the purchasing power of middle-income Canadians. You want to tell the poor, and especially the elderly, that they will have to pay for $1.5 million in capital gains write-offs.
Unfortunately, all Canadians did not have a chance to read Where I Stand before the Government took power. However, I am sure that over the next four years the policies of Conservatism and trickle-downism, which is telling Canadians that if enough oats get through the donkey they might make it through to the sparrows, will become clear. That is the Conservative philosophy that we will see unfold over the next four years. It is the philosophy which we in the Liberal Party will fight, and fight hard, on behalf of middle-income, ordinary and poor Canadians.


Some Hon. Members:: Hear, hear!


Mr. Deputy Speaker:: The Hon. Member for Charlevoix (Mr. Hamelin) for a question or comment.


Mr. Hamelin:: For a comment, Mr. Speaker. The motto of the Province of Quebec is "Je me souviens", that of Canada "From sea to sea". I remember, just like Canadians and Quebecers, men and women alike, remembered last September 4 that interest rates had reached 22 per cent and inflation 12 per cent, that the construction industry was at a complete standstill. Workers in your riding were probably without jobs throughout that time. I also remember-as did Canadian and Quebecers, men and women both-that if for 20 years an approach does not work it has to be changed. During 20 years you experimented with that stupid liberalism which led us to the utterly unbelievable deficit that now leaves us with practically no room to manoeuvre.
Somebody once kept telling me about his 20 years of experience. I told him: You do not have 20 years of experience because you have been making the same mistakes for 20 years. You did that during 20 years, we believed you during 20 years, but it did not and still does not work. We are using other methods, taking a new approach. I am sure this Government will be able to-
The Budget-Ms. Copps


Mr. Deputy Speaker:: The Hon. Member for Bourassa (Mr. Rossi) on a point of order.


Carlo Rossi: Mr. Speaker, I realize that the Hon. Member for Charlevoix is a newcomer in the House-sit down, please-a newcomer in the House but he has yet to say something about the Budget. Every time he gets up on his feet he keeps repeating the same thing. You have been in office for eight months, stop rehashing past events, Canadians want to hear about the Budget, Mr. Speaker.


Mr. Deputy Speaker:: That is not a point of order. The Hon. Member for Charlevoix (Mr. Hamelin) has the floor. I would urge him to be brief.


Charles-André Hamelin: In conclusion, Mr. Speaker, I believe that the concerted efforts we are asking all Canadian men and women to make to restore order in our financial affairs will bear fruit. The new programs launched by this Government have already had a positive impact in my riding, and I am glad about that.
Unfortunately, Mr. Speaker, I must say that the Hon. Member's comments are a sign of insincerity or, at least, of ignorance of the history of Canada and Quebec.


Sheila Maureen Copps: Mr. Speaker, I can understand why the Liberal Party will not go along with the policy, and the Hon. Member for Charlevoix knows what I am talking about because there are some mayors in his riding who do not share his views. And as far as the Liberal Party is concerned, we do not go along with a policy that says: You get a job because you are a Conservative, or you get a job because you are a Liberal. That is this Conservative Member's policy, and I think it is shameful and I will have no part of it.


Mr. Deputy Speaker:: The Hon. Member for Charlevoix (Mr. Hamelin).


Charles-André Hamelin: On a question of privilege, Mr. Speaker. The Hon. Member is making unfounded accusations. I have had occasion-


Carlo Rossi: Don't overdo it, fatso!


Charles-André Hamelin: Mr. Speaker, I would qualify these allegations as gratuitous. In fact, in my riding I have had occasion to respond, in no uncertain terms, to these stupid attacks by the Official Opposition.


Carlo Rossi: Look in the mirror!


Charles-André Hamelin: Mr. Speaker, we have been watching the Official Opposition for 20 years, and I believe that we are in a very good position to put our financial house in order, and, as we did for widows and widowers between the ages of 60 and 64, in our last Budget reform, to give Canadian men and women the benefit of more effective and more intelligent government.

May 30, 1985
The Budget-Ms. Copps


Sheila Maureen Copps: Mr. Speaker, to set the record straight, these were not statements by the Opposition but by mayors of his own riding.


Carlo Rossi: That is the whole point!


Donald Paul Ravis: Mr. Speaker, I am starting to feel like someone who has to apologize for the mess that was created over the last 20 years, left to us by the Liberal Party. Believe me, 1 do not want to stand here and apologize to anyone in this country.
1 visited every nursing home and every senior citizens' home in the constituency of Saskatoon East during the last election campaign. The least selfish of the entire electorate were the senior citizens of that constituency who never once asked for more for themselves, but asked for more for the youth of this country. It seems to me that more than anything else, the Budget has youth, jobs and promise for the future written all over it.
I would like to ask the Hon. Member for Hamilton East (Ms. Copps), who I think is using scare tactics in her presentation, if she can give me specific calculations for her figures indicating that there will be a tax increase of 30 per cent for a typical family earning $15,000 per year and a tax increase of 2 per cent for the typical family earning $200,000 per year. I would like to see some item-by-item calculations for that.


Sheila Maureen Copps: Mr. Speaker, unlike the Hon. Member, I have had the opportunity of reading the Budget. Those figures are drawn directly from the budget documents, directly from the Minister's own assessments and directly from the Government's decision to increase taxes, hidden and direct, on the middle class and in particular on senior citizens, and to in fact give a tax holiday to the same people on whom the Government promised to impose a minimum tax.
I am getting tired of the typical Conservative palaver on this particular subject. Conservative members seem to suggest that because senior citizens who are now living below the poverty line do not want to see a further reduction in their Guaranteed Income Supplements and their Old Age Security, they are being selfish. I am here for the future too. I want jobs for my brother, my sister, my children, my family and my grandchildren. However, I do not want those jobs to be delivered at the expense of those people who have built this country over the last 60 years.
The majority of those people living in poverty, as everyone in the House knows, are women who did not have the opportunity to accrue pension credits because they were not working outside the home. They are those people who have outlived their husbands and whose benefits from where their husbands worked have been cut or perhaps never existed. Those are the people whose pockets this Government is reaching out to pick of $30 per month. Perhaps $30 per month is not a lot to the Minister of Finance. Perhaps $30 per month is not a lot to the Hon. Member for Saskatoon East (Mr. Ravis). However, $30 per month is a lot for those seniors, and particularly women,
who are being robbed by this Budget, which is a vicious attack on the seniors of this country.


Donald Alex Blenkarn: Mr. Speaker, I would like to deal briefly with some of the concerns that exist in the country and then deal with the rationale behind the change in the tax system as regards capital gains. This last year, the debt of our country in relation to our Gross National Product reached 5.3 per cent of GNP, the highest level by far in the history of the country. That percentage is higher than it was during the Great Depression and higher than it was at any time during the war. It is a debt burden that was saddled on the country by administrations run by the now Official Opposition, administrations that created a horror show not only for us but for our children, our grandchildren and our grandchildren yet to come.
To hear the wailing, weeping, gnashing of teeth and nonsense that is coming from the Hon. Member for Hamilton East (Ms. Copps) makes me sick. Her speech was a misrepresentation right from beginning to end. Through this Budget, we have protected senior citizens who need assistance. We have protected them with the Guaranteed Income Supplement, which will be increased and will look after any pension deficiency. The Hon. Member for Hamilton East knows that, but she is making misrepresentation after misrepresentation because that is all she knows how to do.
Let us deal with the financial position of the country. Last year it was necessary for us to go to the markets to borrow $30 billion. This year we will have to borrow only $28 billion. Through this Budget, we have managed to cut back our borrowing requirements by $2 billion. More than that, in the national accounts, we showed a deficit last year of $31.1 billion. That has been reduced to $27.5 billion. There has been a reduction of $3.6 billion in our national deficit. The deficit is down $3.6 billion in cash over the year ending March 31. I suspect it has gone down even more than that.
If you look, Mr. Speaker, at the calculations for interest made in the November 8 statement, you will note that interest calculations then were less than they are forecast to be in this Budget. Strangely enough, since we were elected in September, interest rates have dropped almost 3 per cent. I suggest that as long as we are fortunate enough to be able to continue to drive interest rates down, we will be able to carry the national debt more reasonably, and it may well be possible for us to reduce the deficit by $5 billion. That is an important consideration when taking into account the problems faced by young people, businesses and home owners when trying to make our country grow.
As has been pointed out earlier today, we cannot put people to work when interest rates are at 22 per cent. That is what we got from the Trudeau Government. It is important to take a look at where we are going. Bit by bit, through this Budget and with our change in philosophy, we are going to be able to turn things around and will eventually be able to whittle away at our enormous, suffocating, totally encumbering national debt.
May 30, 1985

A number of people have indicated that we were being a bit unfair by implementing capital gains tax relief. I would like to read into the record a memo I sent to my colleagues regarding the proposed Budget prior to the bringing down of the Budget. The memo is dated March 21, 1985. I had an opportunity to analyse the returns to the country from the taxation of capital gains. Total capital gains in 1982, the last year for which figures are available, were $1.6 billion. Against those taxable gains, the deductible losses were $240 million. The actual losses were $700 million, but as you know, Mr. Speaker, under the current capital gains law, one cannot deduct all one's losses, so taxpayers were able to deduct only $240 million. Therefore, capital gains subject to tax amounted to $1.36 billion. With that background information in mind, my memo reads:
Bearing in mind that the total taxable income in 1982, up substantially from 1981, was $158.3 billion. Taxable capital gains net from deductible capital losses represents significantly less than 1 per cent of taxable income.
If one assumes that both federal and provincial taxes are averaging no more than 35 per cent-this is undoubtedly high-the maximum collected both federally and provincially inclusive is $476 million.
Those from the Finance Department might say that this was a bad year for capital gains receipts. Clearly, it was not a bad year for other income receipts. Indeed, Table 1 clearly shows the progression of tax receipts. In 1982, the over-all taxable income grew by nearly $24 billion.
May I suggest, Sir, that when we talk about abolishing capital gains, it does not mean, that much revenue will be lost. Indeed, those who claim we are losing revenue, are wrong. The revenue loss in fact is negligible. That brings me to the question of what the Budget says. There is a provision for $300 million as a tax expenditure this year for capital gains relief and $600 million next year for capital gains relief. I suggest that the budget figures are out by at least ten times. I think that we in this House ought to have an opportunity-and we certainly will when Ways and Means motions are presented to us in the Finance Committee-to cross-examine the officials of the Department of Finance. In that respect, may I remind you, Sir, that earlier this year the Committee on Finance, Trade and Economic Affairs had the opportunity to look into the whole question of capital gains taxes, particularly how they affect farmers. In that respect, the committee had before it officials from the Department of Finance. Those officials indicated that in the last year of reporting-that is the statistics for 1982-the total amount collected both corporately and personally, both by the provinces and by the federal Government, everywhere capital gains tax is collected, in any manner, anywhere, any time, was less than $1 billion.
How much real tax relief are we getting on capital gains? The figures indicate that it is pretty negligible. But it is not the relief which matters. It is the enthusiasm that capital gains relief brings to the whole community. I might point out, Sir, before I continue, that the committee report, you will recall, Mr. Speaker, recommended in recommendation No. 7 the total abolition of capital gains. The report said that "the Minister of Finance should consider the advisability of abolishing the taxation of capital gains in general". The committee's
The Budget-Mr. Blenkarn
report was a unanimous report. May I point out to you, Sir, that representing the Official Opposition was the Hon. Member for Glengarry-Prescott-Russell (Mr. Boudria) and the Hon. Member for Algoma (Mr. Foster). Representing the New Democratic Party was the Hon. Member for Humboldt-Lake Centre (Mr. Althouse) and the Hon. Member for Prince Albert (Mr. Hovdebo). The unanimous recommendation of the Standing Committee on Finance, Trade and Economic Affairs was that there be a total abolition of capital gains taxes, and when we hear members of the Opposition standing in their place and telling us that somehow there is something wrong with what we have done, may I just tell them that the committee report was tabled in this House on April 1-and that is not long ago-and that that was the position on April 1 of the delegated Members from the Liberal Party and from the New Democratic Party. To suggest for one moment that what we have done in this Budget with respect to capital gains tax is in any way not the opinion of this House is a misrepresentation of the worst kind.
The committee went on to recommend, if you will recall, that if it was not financially possible to do something in terms of the total abolition of capital gains tax, consideration ought to be given to a once in a lifetime exemption to farmers of a capital gain of up to $400,000 on farm land. The Minister of Finance, in his wisdom, saw the importance of that recommendation and said that $500,000 was appropriate. Indeed, this Budget allows for the immediate recognition of a capital gain tax exemption of up to a $500,000 with respect to farm land. It allows businesses, and particularly small businesses to which an exemption from capital gains tax is so important, to be able to benefit equally from the incentive which this capital gains tax assistance creates.
I would like now to go into the theory behind the removal of capital gains tax. I say to you, Mr. Speaker, that there is a vast difference between capital and income. Capital is something which we have acquired. Income is something which we have acquired. Income is something we earn when we do something in the nature of an adventure in trade. Capital is something we own. There really is only one form of capital which does not depreciate in the long run. A business or a building may go up in value because it is temporarily in a place where people want to rent it or own it. And some paintings, because of a shortage or the particular quality of a painting, may go up in value. But, generally speaking, everything created by man eventually becomes dust, and that includes buildings, cars, machinery, furniture and paintings. Indeed, everything ever created by man eventually becomes dust. Chattels, goods and things do not rise in value except by inflation and except if they specifically happen to be scarce, and then only for a short while.
The only thing that is permanently scarce in this world is land. It, of course, goes up in value as the number of people in the world increases along with the desire to own land, and because the land on this earth cannot be increased in amount. So land is the kind of capital which should be taxed, and we do tax capital in land. Every municipality in this country taxes capital on land on its assessed value. Every province makes

May 30, 1985
The Budget-Mr. Blenkarn
sure that land is taxed on its assessed value. We tax land on its assessed value not for the protection of the land but to do all sorts of things. The other day I received a tax bill on some farm property I own. About $400 of the $2,800 bill was for municipal services which would help the land. The other $2,400 was for schools. The land does not send anyone to school.
We have a tax on land because that is a proper capital tax. But there is no justification for capital taxes on other forms of capital. Since we have a tax on capital in land of 1 per cent or 2 per cent of the value of that land annually, surely to goodness, in the interests of justice, we have already affected those who own land. Therefore, there is really no justification for any tax on capital gains except, perhaps, that sometimes we allow people in the organization of their affairs to treat what should be income as capital.
May I point out to you, Sir, the situation of a grocer who happens to buy and sell oranges. There is no question that if he buys oranges by the crate and sells them by the dozen, it is a transaction in the nature of trade. Obviously the grocer is taxable on the profit on the oranges. Is there any reason why those who trade in stocks, houses, boats, cars, planes or whatever should not be taxed as traders? I say there is not. That is in the nature of trade and it should never be treated as a capital gain. Unfortunately, under our existing law it has been treated that way. Therefore, I propose that the Minister, when he is organizing his regulations and statutes to define what is income and what is capital gain, perhaps think about using the time test.
The suggestion I have made to the Minister of Finance (Mr. Wilson), and I intend to continue making it, is that when capital assets are sold before the end of the five year period that it be up to the taxpayer to prove it was really a capital gain. If you sell your house within a five-year period, you had better justify it; buying a bigger house or moving to another city, or something of that nature, not just turning it over to make a quick buck. On the other hand, after five years, it should be up to the Government to show that the transaction was in the nature of trade. I do not think there would be any problem with that. Most of these things are self-evident. It is important, if we are going to be fair, to make sure that transactions in the nature of trade not be disguised as capital gains. That is not the point of the removal of the capital gains tax.
Sir, removal of the capital gains tax will probably do more than any other measure to stimulate our economy. On the day of the budget speech I had an opportunity to slip out and chat briefly with a commentator from the CBC. He said that here is the day to do it, here is the day to go down to Cape Breton and start a new business. It will be tax free and look at the gain you can make. It is all tax free. Isn't that an incentive to do something? I said I had not thought of it, but maybe he and I ought to go down there together. But I say to you, Sir, that the opportunity to make a gain will encourage investment and
create jobs. That is what we are here to do. The Province of Ontario was very anti-gambling for a long time, and then it got into lotteries. Lottery ticket sales today are several times in excess of the total betting on horse racing. Canadians are not afraid to invest; they want to take a chance, they want to buy something they think will give them a return of some kind. They want the sizzle and the go that tax-free capital gains will give them. They will put their money into venture after venture, and it is those ventures that will put our people back to work.
In reorganizing the capital system of our companies, it is essential that we have more money invested through equity and less through debt. One of the problems Canadian corporations face is that they are up to their ears in mortgages. What we offer here with capital gains tax relief is an incentive to corporations and businesses generally to issue more equity. This is because dividends are still taxed, and there is then an incentive for companies to plough their profits back into the treasury and build their equity even further. As long as the shares in the company can be traded, the retained earnings in effect create a larger share value, and that value can be realized tax free if capital gains taxes are removed. That fact alone will enable all sorts of investment to take place which would not otherwise be the case. It is that new investment that will change this country around. We cannot go on any longer the way we have. We must have a new way, and that new way is the way of free enterprise, and capital gains tax removal makes that possible.


Ms. Lynn McDonald (Broadview-Greenwood):: Mr. Speaker, the Budget we are addressing today, the first Conservative Budget, is very clever, very cunning and very diabolical. There is much coming and going, pushing and shoving, pluses and minuses. There is a lot of shuffling about in this Budget, and I think it is so in order to confuse people. It is to give the appearance of something being done about everything. Then the Minister of Finance (Mr. Wilson) can say to the poor people that there is going to be a minimum tax on the rich. Unfortunately, the date and amount are unspecified. But the taxes, which affect all Canadians, and disproportionately affect poor Canadians because they spend more of their money on goods and services, start immediately, and the excise taxes start promptly. There is going to be a large tax on corporations. However, it is only for the short term. Yet the other taxes, the partial deindexing, the excise taxes, increased personal income taxes, all start immediately and continue indefinitely. There is going to be a $500,000 capital gains exemption, a new tax holiday and a shameful one.
Over the long term we can see that the slide which the Liberals started and which has been going on for a couple of decades is now being accelerated by the Conservatives, higher taxes on individuals, lower taxes on corporations. The estimates are that by 1990-91 there will be an increase of $4.1 billion in personal income tax, $2.6 billion in sales tax, and a reduction of $2.2 billion in taxes for corporations.
Lower and middle-income Canadians may be relieved that
the Minister of Finance did not go on to eliminate or substan-
May 30, 1985

tially cut the old age pension and family allowance, but what we have here is much sneakier. It is an erosion. The amount being cut this year is not large, although it is still going to hurt a number of people. But the effect is cumulative. It goes on and on and on, year after year. Families are going to be paying more, their family allowance is going to be less. A person who is 50 years old now will receive $1,500 less by the time he or she retires 15 years from now than they would have prior to this Budget. A hundred dollars a year does not sound like very much, although it is a lot for some people, but it adds up year after year after and means that people who cannot afford it are going to be forced to pay more and a large number of people are going to be badly hurt.
Perhaps it is as important to comment on what is not in this Budget as what there is, that is, tax reform. We simply do not have tax equity here, and the kind of tax reform that the NDP raised throughout the election campaign and on which we got at least some positive response simply cannot be seen here. We see a surtax, a temporary one on high incomes, but note that 5 per cent of zero is still zero. If the loopholes which allow so many people in high income brackets to pay no taxes at all are not closed, this surtax is meaningless. It is, in fact, another incentive to use those loopholes.
All of these benefits for corporations and richer individuals are not tied to job creation. There is a notion of the trickle down theory in this Budget. That is, if you throw buckets of money at the big corporations and wealthier individuals, they will do something with the money and a certain amount of it will trickle down into job creation, some of it staying in the country. Undoubtedly some of it will trickle down in Canada and create jobs, but how much? Is this a responsible way in which to use the taxpayer's money? Taxes are collected from all Canadians, although disproportionately from lower and middle-income Canadians. Yet, they are being redistributed to those who are better off with the vain hope that some of it will come back. This is an irresponsible and immoral way to use the taxpayers' money.
In the fine print of the Budget there are provisions that up to 31 per cent of pension funds can now be put into foreign investments, whereas previously only 10 per cent could be so invested. Up to $28 billion of the $90 billion in pension funds currently being held in Canada could go into foreign investment. What will that do for job creation in Canada?
This is not a jobs Budget, nor is it one that will reduce the deficit. Although there is much talk about reducing the deficit, in fact this Budget only reduces the increase in the deficit. It is not an absolute decrease in the deficit which will continue to accumulate. The deficit will not decrease until Canadians are put back to work and are earning incomes and paying taxes rather than collecting unemployment insurance. The Minister of Finance had to admit that his own figures of last fall overestimated the revenues that would be generated. I expect he will find that he continues to be overly optimistic because the revenues will not come in while we have high unemploy-
The Budget-Ms. McDonald
ment and we will not get unemployment down when the priority is this fixation with the deficit rather than with job creation itself.
This is not a fair Budget, but is it tough? Unfortunately, it is for some people. It is certainly tough for those who will lose jobs directly through reductions in the Public Service and for those who will lose jobs indirectly, particularly in small businesses because purchasing power is going to be reduced by this Budget. The increase of sales tax and income tax along with the reduction in family allowance and old age pensions means that people will have less money to spend. Therefore, small companies which are at the margin will not get enough business. Estimates are that 50,000 people the year and 100,000 next year will lose their jobs as a result of the decline in purchasing power.
This is also a tough Budget for those concerned about international development. It is shameful that a country as rich as Canada should withdraw $50 million from official international development assistance. By digging into their pockets for famine relief Canadians showed that they cared. Yet an amount comparable to what they gave is being withdrawn by the Government from international development. There is no incentive or encouragement for Canadians to give generously when the Government is cutting back on its development assistance. Maurice Strong, a noted international expert on development aid, has stressed the need for international development now. The emergency is not over. Unless there is aid for development purposes, famine will continue. We must help to build self-sufficiency in these countries. This reduction in aid is a heartless measure.
This Budget is tough on pensioners. The President of the National Anti-Poverty Organisation has stressed the hardships that this will cause. To the financially secure, $100 a year does not sound like much, but to the elderly poor, any erosion of purchasing power cuts into life's necessities. It will increase poverty in the most vulnerable people, senior citizens, who will not be able to go out and find other sources of income. It is again the sneaky cumulative effect. It is not much now, but it is adding up.
The President of the Ontario Federation of Labour spoke about the heartlessness, futility and foolishness of this Budget. He said that it is not that the deficit is no problem, because it is, but it is not the only problem or even the most pressing. This Budget will, in the long run, end up boosting instead of cutting the debt. If the Government were serious about reducing the deficit it would reduce both unemployment and interest rates, two of the heaviest contributors to the national debt.
The capital gains tax exemption is one of the most flagrant parts of this Budget. It is an outrageous example of the Conservative Government's priorities. It is a $500,000 giveaway which will overwhelmingly go to the top 1 per cent of income earners. Canada is already very generous on capital gains. They were taxed at only half the rate of other income. When the Carter Commission on taxation recommended in 1967 that capital gains be taxed at the same rate as other income, there was a tremendous outcry from the financial

May 30, 1985
The Budget-Ms. McDonald
community. That recommendation was successfully brought down and halved. A compromise was made and capital gains were taxed at only half the rate.
This matter has been explored over the years. A Department of Finance study in 1980 pointed out that Canada taxes capital gains at a lower rate than do other industrialized countries. The study concludes that even full elimination of capital gains could not be expected to have any noticeable impact on total investment. The idea that this giveaway to the rich will result in more jobs and greater investment is belied by studies of the Department of Finance itself. Other countries with economies at least as successful as ours and with lower rates of unemployment have higher rates of capital gains taxation.
There is an impact on fairness, if not on stimulating the economy. The exemption of capital gains tax would leave Canada as the only industrialized country which permitted large amounts of wealth to be accumulated and passed through generations without any tax liability. Five hundred individuals with incomes of over $100,000 derive almost all of their income from capital gains. This is flagrantly unfair, and in the last election campaign the Conservatives promised to address it. Instead, they will continue the tax holiday for these people.
Let us now consider arts and culture.
[ Translation]
I was looking forward to some provision in the Budget which would make life easier for the artistic community, not as a result of promises made by the Conservatives during the election campaign-they broke them all-but because of the strong opposition expressed by artists when budget cut-backs were announced in the November economic statement.
Admittedly, their protests were not a total loss-arts and culture are mentioned with some deference in this Budget.
There are even two tax reform proposals, but they concern unfortunately very few people. The purpose of the first one is to rectify a fiscal aberration which caused works of art to be treated just as manufactured goods for income tax purposes. It was scandalous. Artist Tony Onley had even threatened to burn his works on a beach in Vancouver. Thanks to this budget, Mr. Onley can now put away his matches and his works have been saved from destruction.
The second proposal will make it possible for artists to have deductible artistic donations just as we have deductible charitable donations. The artistic community are being asked to continue being the patrons of the arts. Although Canadian artists make up probably the least remunerated occupational group in this country, the government wants them to continue working without pay. We, on the contrary, were hoping for initiatives to raise their incomes and give them the protection of our social programs, such as Unemployment Insurance benefits and Pension Plans.
Well, the Sub-Committee on the Taxation of Visual and
Performing Artists and Writers had put forward during the
last Parliament 31 recommendations aimed at reducing the tax burden of Canadian artists. These recommendations had been supported by Progressive Conservative Party members while in the opposition. Now that they have an opportunity to follow up on those proposals, they have shelved the major recommendations.
This Budget contains nothing for musicians. Yet, the subcommittee recommended that all their expenses be deductible and that they be deemed to be self-employed because of the high expenses incurred in that profession.
Still nothing for the writers in spite of recommendations that their expenses for research and writing purposes be deductible.
Another recommendation that grants be considered as business income was ignored. This recommendation would have authorized the larger deductions which are absolutely necessary for people with a low income and substantial expenses.
For a performing artist, still nothing, neither for the deduction of expenses nor for their inclusion under the Unemployment Insurance Plan. Yet, these artists are often unemployed for rather long periods without being eligible for benefits, which would not be so bad if they were better paid, but they are not.
The third Budget proposal related to artists is that a task force be established to develop incentives for the private sector to support the arts. No one can be against measures to increase support for the arts, but the difficulties must be pointed out. First, such measures must not replace existing Government support. The Government even promised during the election campaign that its financial support would be increased according to the increase in the cost of living. These other incentives should be over and above Government support. Unfortunately, the present Minister of Communications (Mr. Masse) does not seem to be aware of those promises. He is banking on the possibility of an increase in private sector donations to justify the budgetary cut-backs. Obviously, a task force to look into a certain problem is not the answer. A task force does not put bread on the table.
The culture cut-backs are extremely disturbing. Since these are not new cut-backs in the Budget, the arts and culture community breathed a sigh of relief. However, the cut-backs continue and, for the first time in history, the Canada Council has less money to spend this year than the previous year. Although it suffered from inadequate increases in the past, it faces real hardship from a reduction.
The Budget is a severe disappointment for women. A number of promises were made to women in the course of the election campaign, including child care, credit arrangements and job training. These promises have not been fulfilled. The few measures that have been taken with respect to pensions for
May 30, 1985

women are woefully inadequate. While I am pleased that there is an end to discrimination on annuities, I point out that this had been recommended as far back as 1970 by the Royal Commission on the Status of Women in Canada. Until the Canada Pension Plan is improved and women can take part in that plan and receive adequate pensions, women will face difficulties with pensions. It is not enough merely to improve pensions in the private sector because half the women in the labour force do not benefit from pensions in the private sector.
These reforms are welcome only to those who are better off. They do not address the problems facing the vast majority of Canadians.
Let me conclude by simply pointing out the futility of the Budget. It will not reduce the deficit or create jobs. Small business will be adversely affected as a result of the loss of demand. We recommended a very different approach to get people back to work and make communities economically active again.
It is fundamentally a dishonest Budget and pretends to be what it is not. The Minister uses a combination of threat and fraud; threat that unless people bite the bullet there will be even more jobs to lose, and fraud that the rich have to be bought off by even greater giveaways to provide even a small number of jobs.
There is the illusion of fairness because some minor measures have been implemented. They are overturned by the more serious matters, which means that the rich will profit from this Budget while low and middle-income Canadians will be badly hurt.
We are seeing a massive redistribution of income in this country. It is being done in a sneaky manner, gradually, year by year. It represents a very serious betrayal of the Conservative election promises. It is a sad day when we see the true colours of the Conservative Party. I hope the population of Canada will not be fooled by the shuffling and will see where this Budget is really taking Canada.


Donald Frank Mazankowski: Mr. Speaker, will the Hon. Member explain to the House how she can rationalize her position in saying that this is an anti-small business Budget? All of the organizations representing small businesses herald the Budget as a very positive one for the small business sector, which is really one of the main engines of growth and economic opportunity in this country.
With respect to the application of the capital gains tax exemption, contrary to the Hon. Member's suggestion that it is a boon to the rich, it is considered in most corners as an excellent incentive to encourage individual entrepreneurs and families to engage in small business activites. It would be very similar to the family farm enterprise where families work together to create an investment in land, machinery and equipment that will become a retirement fund in later years.


Lynn McDonald: Mr. Speaker, a Budget that reduces purchasing power as significantly as does this Budget will be very harmful for small business which depends on the purchase of
The Budget-Ms. McDonald
goods and services. The Budget takes money from the hands of families who buy food, services and other necessities.
The Budget is reducing the family allowance and old age pension while increasing taxes. This means that people will have less money to spend. How can businesses be pleased that their customers will not have as much money to spend on their businesses? I suggest it will hurt businesses.
How will people increase their purchases? The unemployed will not be making large purchases and the Budget will not reduce unemployment. There will be direct lay-offs as a result of the Budget and indirect lay-offs as small businesses are hurt by it. A Budget that reduces the purchasing power reduces business.


Donald Frank Mazankowski: Mr. Speaker, I am not sure what experience the Hon. Member has in running a small business, but when all the leading spokesmen for the small business sector in this country have heralded the Budget as very positive, particularly as it relates to the small business sector, how can the Hon. Member stand in the House and argue against it? What rationale can she use to challenge the statements of the respresentatives of the small business sector in this country?


Lynn McDonald: Mr. Speaker, the Minister has simply not addressed the point in question, which is, how do people become customers if they do not have money in their pockets with which to buy? If you reduce purchasing power, what are people going to spend? If people do not have money, how are they going to spend it? The Minister has not answered how people are going to spend money they do not have.


Mr. McMillan:: Mr. Speaker, perhaps the Hon. Member could answer this question: is she saying that the small business sector is not happy with the Budget? Or is she saying that it is happy with the Budget but the small business sector does not know what it is talking about, that it is ignorant in its assessment?


Lynn McDonald: Mr. Speaker, I am simply pointing out one of the unhappy facts of life, that reducing purchasing power is going to hurt. I think small business will be very seriously hurt. The proof of the pudding is in the eating. Let us talk about it a year from now and see who is right, the Member or I.


Thomas Michael McMillan: Mr. Speaker, I do not think the Hon. Member answered the question. It is pretty clear from all newspaper accounts and from public statements made by John Bulloch and others representing small business that universally there has been acclaim for the Budget from the small business sector. Is the Hon. Member denying that that is true, or is she saying it is true that the small business sector does not know what it is talking about?


Lynn McDonald: Mr. Speaker, it is not true that this Budget has been universally accepted. There has been some acceptance.


Some Hon. Members:: Oh, oh!
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May 30, 1985
The Budget-Ms. McDonald


Lynn McDonald: The John Bulloch example is one significant example. It is not the only one. I go back to my point that the proof of the pudding is in the eating. Let us see what happens. In the economic statement of last year, the Minister of Finance was wrong. He was wrong on his predictions of revenue, and I think he was wrong because people who do not have money people, who are out of work, are not spending. The money is not coming back. We have a Minister of Finance who has not been in the position for a year but his first mistakes are already beginning to show. I suspect this is going to be a very sadly mistaken Budget. There is not much point in arguing about it here. We will see what those results are.


Thomas Michael McMillan: Mr. Speaker, would the Hon. Member rise to her feet and give the House, and through the House to the people of Canada, the name of one single leader of the business community who has attacked the Budget from the small business sector point of view? I ask her for the name of one person of the calibre of John Bulloch to whom I referred. Could she name one person who speaks for the business community and who is on record as attacking the Budget from the small business sector point of view, just one person, Mr. Speaker?


Lynn McDonald: Mr. Speaker, I would not be able to give the name of a small business person who has attacked the Budget.


Some Hon. Members:: Hear, hear!


Lynn McDonald: My point remains that the Minister has not been able to answer the question: How are people going to spend if they do not have purchasing power? The time to renew this debate is when we get some of the results from this Budget. I think they will be extremely unhappy results. We can debate them on the evidence when we see how the Budget actually operates. I repeat that the predictions from the economic statement of last fall were wrong. People welcomed them in the fall, and they were wrong when they welcomed them last fall.


Reginald Francis Stackhouse: Mr. Speaker, I would like to express appreciation for the Hon. Member's remarks-


Margaret Anne Mitchell: Don't be patronizing.


Reginald Francis Stackhouse: -expressing her concerns. I think we have all listened with benefit. 1 would like to thank her for the tone in which she expressed her views. She avoided some of the fabricated passion that many of her colleagues have demonstrated when speaking on the same subject.
However, I have to take issue with the Hon. Member on some of the substance of her address. I will take time, Mr. Speaker, to refer only to her references to the capital gains provision in the Budget, namely referring to it as a $500,000 giveaway. Where is the giveaway of half a million dollars? This would imply to someone who did not understand this Budget or did not understand the system of capital gains
beforehand that somehow $500,000 would actually be given away.
We know, as the Hon. Member for Broadview Greenwood (Ms. McDonald) unintentionally admitted a few sentences later in the address, that the capital gains tax is imposed on only half of the capital gains to start with. We are now talking about a tax on $250,000 not $500,000. When we get down to the $250,000, it is not $250,000 that will be made this year because the provision involves a progressive initiation of the introduction of the capital gains tax exemption. What will we have this year? We will have exemption on only $20,000 in capital gains, namely, the tax that would be imposed on $10,000 of capital gains. Where is this half a million dollar giveaway which the Hon. Member is talking about? 1 think this is alarming people. I agree that, unintentionally, there has been a kind of scare tactic used. I would say unintentionally. Nonetheless it is a scare tactic that somehow this Government is giving the rich another half a million dollars when in fact we are offering an incentive for investors to do exactly what the Hon. Member should want, and I believe does want.
We have mentioned family farms and family businesses. What we are doing is trying to accomplish the objective which the Hon. Member for Mississauga South (Mr. Blenkarn) indicated, namely the need of private business to raise more capital through equity investment rather than going into debt. Small business needs that kind of assistance. I can take the Hon. Member to a constituent, the operator of a small business, who needs to expand, who is afraid to undertake more debt even at today's interest rates, but who would like to sell equity capital in his business. This provision will encourage individual investors and the Budget will encourage pension funds and other sources of capital supply. Just a half hour before listening to the Hon. Member I talked to an associate in Metro Toronto who told me that already pension funds are making provisions to enlarge portfolios through investment in small businesses. My friend in Scarborough will benefit.


Some Hon. Members:: Hear, hear!


Mr. Deputy Speaker:: I regret to interrupt the Hon. Member. Would the Hon. Member for Broadview-Greenwood (Ms. McDonald) wish to reply?


Lynn McDonald: Yes, Mr. Speaker. I think my remarks are perfectly clear as to the nature of the capital gains exemption.
I referred and stressed the cumulative nature of the giveaway. It begins small but it goes on year after year, after year. I think this is an extremely unfortunate matter. It is perfectly true that only half the capital gains are taxed right now, contrary, by the way, to the recommendations of the Carter Commission and contrary to the recommendations of many people who see this as being extremely unfair.
Let me also point out, with regard to the Member's second point, that the incentive to invest in small business for pension funds permits investment in foreign companies. We have, on the one hand, a good measure to encourage and invest in small businesses in Canada-
May 30, 1985


Reginald Francis Stackhouse: Thank you.


Lynn McDonald: -on the other hand, it means Canadian business is going to lose other opportunities because money will flow out of the country. It is not an unmitigated good.


Mr. Bill Gottselig (Moose Jaw):: Mr. Speaker, I am very pleased to take part in this budget debate. For me it is a double pleasure because I am making my maiden speech in this historic Chamber.


Some Hon. Members:: Hear, hear!


William (Bill) Gottselig: The Budget brought down on May 23 by the Hon. Minister of Finance (Mr. Wilson) is a continuation of the direction set out in his November 8, 1984, economic statement. It is a very clear signal to the Canadian people that we are a responsible Government and that we are prepared to make the tough economic decisions which are required to govern.
It is just over one year ago that 1 was seeking the nomination in my constituency and later fighting the election campaign. The clear message given to me by the people of my constituency was "give us less government. Stop forcing things on us like metrication and introducing new Crown corporations to compete with the private sector. Instead, get the economy moving". The Minister's budget will do just that. In addition, it will start to control that monster, the federal deficit.
I would like to thank the constituents of the Moose Jaw federal constituency for doing me the great honour of electing me as their Member of Parliament. I would also like to assure my constituents that it is an honour I do not take lightly, and I will continue to represent their concerns to the very best of my ability.
I should like to pay tribute to the former Hon. Member for Moose Jaw, Mr. Doug Neil. Mr. Neil was a Member of the House from 1972 until the last election. He served his constituency and Canada well during that time. This was particularly evident in the area of rail line abandonment and in his publication known as the Neil report. Many of the recommendations made in the report were adopted by the previous Government and will continue to serve as a guide in this vital area for some time to come.
The Moose Jaw federal constituency is located in south central Saskatchewan and is made up of people of all racial extractions and a wide variety of ethnic origins. While English is the mother tongue of most of the residents, we have people of other nationalities who are also keeping their cultures alive through their own groups. We have people from the British Isles, from many European countries such as the Ukraine, Germany, Russia and Poland and from Scandivanian and oriental countries. Many of these people are descendants of the original settlers who came to Canada seeking land and freedom. They were hardy individuals who adapted to the harsh environment and prospered. By helping each other, these
The Budget-Mr. Gottselig
people built the towns and cities and laid the framework of rural Saskatchewan as we know it today.
Moose Jaw is the focal point of the riding. It was known for many years as the friendly city. However, it has more recently been referred to as the band capital of North America. The City of Moose Jaw was incorporated in 1903, and there are some very interesting legends regarding the origin of its name. One legend has it that the course taken by the Moose Jaw River resembles the jawbone of a moose. Another has it that one of the early explorers, the Earl of Mulberry, repaired his ox-cart there with the jawbone of a moose. Another myth is that the early residents, some local Indians, used to winter in that area because the weather was much warmer, and they referred to it as Moosegaw, and of course the white man changed it to Moose Jaw.
Moose Jaw is a railway divisional point on the CP Moose Jaw division. It is the largest division in the system. It has 1,873 miles of track, and last year over 75,000 loaded cars moved out of that division. Most of these were destined for Thunder Bay with grain. However, there were also cars of oil, steel and potash. CP Rail employs approximately 700 people in the City of Moose Jaw. The Saskatchewan Technical Institute in Moose Jaw has been providing training for almost 30 years. The institute offers 34 business, engineering and industrial programs to over 5,000 students. In addition, it has an extension division which delivers programs throughout the province.
CFB Moose Jaw is adjacent to this city. Over 1,200 military personnel, as well as 300 civilian employees, provide the workforce to maintain the base. It is the busiest airport in Canada with either a take off or a landing every 45 seconds. With an annual payroll of over $21 million and a further $18 million worth of purchases in the area, it contributes greatly to the economy of Moose Jaw and district. CFB Moose Jaw is also the home of the Snowbirds, Canada's aerobatic air team. They perform at the Moose Jaw Air Show as well as at many other locations in Canada and the United States. The Moose Jaw Air Show attracts over 50,000 people each year.
The constituency of Moose Jaw covers a large rural area, roughly 10,000 square miles, and has a total population of 70,000 people. It runs north from Old Wives Lake in the south, to within 30 miles from the City of Saskatoon. Much of the west boundary is made up of the mighty South Saskatchewan River and Lake Diefenbaker. The area around the City of Moose Jaw has some of the finest farm land in the west. This area is known as the Regina Plains. It is known far and wide as being a top producer of high quality bread wheat. It takes in the towns of Pense, Belle Plaine and the area south to Drink-water, Rouleau and Briercrest. West and south of Moose Jaw there are many areas of grassland where the mainstay of farmers and ranchers is beef. The Town of Caronport, west of Moose Jaw, has the Briercrest Bible College with a student enrolment of 793, most of whom reside on campus. These students come from all over Canada and the United States to take a Bible course prior to entering university and technical colleges. The east boundary runs up to Last Mountain Lake

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The Budget-Mr. Gottselig
with the Town of Simpson, south through Imperial, Holdfast and down to Lumsden, to within 10 miles of the capital City of Regina. The Trans-Canada Highway borders the City of Moose Jaw. Another important highway is No. 11 which runs from Regina to Saskatoon, through towns such as Craik, Davidson, which is known as the midway town, and Hanley.
Many of these towns and villages have annual summer events such as the Davidson Kinsmen Rodeo or the Central Butte Fair. However, the most widely known event in the province is the Moose Jaw Kinsmen International Band Festival, which is the largest band festival in North America. This three-day event, held annually on the May long weekend, celebrated its thirty-sixth anniversary this year and was the biggest and best ever. From a humble beginning with 12 bands, it has grown to over 125 bands with over 7,000 competing members. In addition, there were 25 choral groups and 15 field marching competitions. Bands were in attendance from Ontario to British Columbia, as well as many from the northern states. One band was in attendance from Switzerland.
Another well-known location in my constituency is the Gardiner Dam. This is one of the largest earth filled dams in the world. It is over 200 feet in height and stretches some three miles across the South Saskatchewan Valley. The lake formed by the dam is rightly named in honour of the late Right Hon. John Diefenbaker who had the foresight to commence construction of the dam in 1958 when he was Prime Minister. It was only after many years of work and study by many groups and individuals that the project finally became a reality. Much of the credit for the construction of the dam must also be given to the late Dr. Bill Tufts who practised medicine at Outlook for many years. Throughout the dustbowl years he recognized the need for irrigation and worked tirelessly for the project until it became a reality.
To give some idea of the importance of the dam, I should like to point out that approximately one half the irrigated acreage in Saskatchewan uses water either directly from Lake Diefenbaker itself or from adjoining water supply systems. The Town of Outlook where I make my home is known as the irrigation capital of Saskatchewan. It is the approximate geographical centre of this irrigation area. Irrigation has allowed farmers to grow a wide variety of new crops and to ensure that there will always be a good supply of fodder and grain for livestock feed even in years when we have severe drought, such as the one we experienced last summer.
In addition to irrigation, the dam is an important source of power for the province and recreation for many residents of the area. There are many provincial parks and cottage developments along the shores of Lake Diefenbaker. Water is also diverted into the Qu'Appelle River system which goes to Buffalo Pound Reservoir which in turn supplies water to the cities of Moose Jaw and Regina.
We have an abundance of migratory game birds throughout the constituency as well as good populations of white tail and mule deer which provide excellent hunting each fall.
The entire area has a solid agricultural base, and the people have become accustomed to the ups and downs of a farm
economy that is influenced to such a large degree by weather. Lack of rain during the growing season is one of the most serious concerns of the residents of my constituency. We realize that we cannot control the weather. However, another concern had been growing in recent years about the uncaring federal Government. The fiscal mismanagement of the previous Liberal Government has greatly damaged the economy of Canada, and nowhere was this more evident than in the west.
The Liberal Party was unable to elect a representative from the area west of Winnipeg and, as a result, we had no one but a tired old Senator to speak for us at the decision-making level. We now have strong voices at this level as well as strong support on the back-benches. According to the media l am a back-bencher and far removed from the decision-making process. However, I do have a chance to put forth my ideas. I can assure my constituents that the Ministers of our Government listen and respond to our concerns.
We in the Conservative Party were elected to make a fundamental change in the style of government. This Budget will bring about that change in three vital areas. First, it will encourage the private initiative of individual Canadians and they, not the Government, will decide what is best. We must manage Government more effectively. We must cut waste and trim away the fat. By putting our own house in order, we will create a healthier and more effective private sector.
Finally, we must control the spiralling national debt. We all know that we cannot borrow our way out of this deficit. The Liberals tried that for too long-with disastrous results. We have only to look at our own operations, be they running a home, a farm or a business, to see that we cannot spend more than we take in. If we, as individual Canadians, spent one-third of our income to service our debt, we know only too well what the result would be.
This Budget was formulated by the Minister after the most extensive pre-budget consultations in history. We consulted with Canadians from all walks of life and from coast to coast. As a result, we have a Budget which reflects and addresses the concerns of all Canadians.
The main thrust of the Budget is to encourage the small business sector to expand and to create those permanent jobs which are required for all Canadians. The previous Government used a band-aid approach to create jobs through make-work programs-jobs that got people off the unemployment insurance rolls long enough to qualify them for unemployment insurance benefits again. That was no solution. It was a plan designed and administered by bureaucrats because the Government was bankrupt of ideas as well.
This Budget is responsible. It will be effective. Most of all, it is fair. As a Government, we have met the challenge of the 1980s head on. We have set a new course. We have reflected faith in the drive and the ingenuity of Canadians to seize the opportunities to invest in their own futures. We are saying clearly to entrepreneurial-spirited Canadians that, once more,
May 30, 1985

there will be rewards for risk taking. We will reward success rather than subsidize effort.
Last July, in Prince Albert, we promised that when we formed the Government we would remove the very unfair capital gains tax with respect to the sale of farm land. We did just that. However, we did not stop there. We also removed the capital gains tax for the small business sector in order that ordinary citizens would be free to do what they do best. We are proposing a lifetime capital gains exemption of $500,000 for individual Canadians. For farmers, this exemption will be available immediately. We have also retained the tax-free roll-over provision for farmers. We said that we would reduce the price of farm fuel. Last fall, we introduced measures to provide this reduction.
In addition to that, we dealt with other issues vital to the farm sector. For example, our Government has taken steps in the area of western grain transportation. We are in the process of removing the very unfair volume cap of 31.5 million tonnes, which acts as a disincentive to increased production. We have preserved a number of rail lines and have reopened one in Saskatchewan which had been shut down.
We have amended the Western Grain Stabilization Act in order to put badly needed funds into the hands of producers prior to the seeding of the 1985 crop. We have made important changes to the Farm Credit Corporation Act by reducing the interest rate for over 5,000 producers, as well as introducing a shared risk mortgage program. We have allowed dual labelling in order that farmers, once again, will be able to understand the directions for the proper application of farm chemicals.
We have changed the attitude of the Department of National Revenue in order that taxpayers can be treated fairly once again. We are in the process of establishing a national voluntary tripartite red meat stabilization program.
The list of our achievements goes on and on-all of this in the short space of time since we formed the Government.
Controlling the national debt is a matter of great concern to all Canadians. It is important that Canadians understand the magnitude of the deficit and debt problem and why it poses a serious threat to our ability to achieve sustained economic growth.
The public debt is simply the sum of all past deficits. It took 100 years to accumulate a debt of $18 billion. Now, less than two decades later, the debt is approaching $200 billion. This is the vicious circle in which we now find ourselves. At some point, we must begin to pay the bills for current services and not pass them on to our children.
With this Budget, and through the actions taken in November, we have reduced every area of government spending. To spread the burden of expenditure reduction fairly, the Government believes it is fair to limit the growth of transfers to provinces as well. I said limit the growth-not reduce it.
The Government can save $2 billion by the end of the decade with no absolute reduction in federal transfers. Even after this adjustment, federal transfers to provincial Govern-
The Budget-Mr. Gottselig
ments will grow significantly over the balance of this decade. In 1990-91, this would represent about the same share of total program expenditures as they do today.
I am sure we have all seen newspaper reports which state that the Government is obsessed with the deficit. That is simply not true. We are obsesed with jobs-good, satisfying and durable jobs for Canadians. The Minister of Finance said it himself. If he believed higher deficits and a rapidly rising debt would help create jobs, then he would gladly have increased the deficit. That approach has not worked in the past and it will not work now. If high deficits and high debt created employment, then there would not be one person out of work in this country.
This Budget is about equity and fairness, private initiative and enterprise, in an environment of economic, social and cultural progress. Above all, the Budget is about jobs. It realistically tackles the problems as they exist and how the Government found them on taking office last September. The Budget is not preoccupied with the deficit; instead, it recognizes the importance of controlling our debt before it ties our hands and stops us from taking the necessary steps for Canada.
The Government has taken its mandate for change and translated it into an agenda of action. We have recognized that individual initiative provides the economic strength of Canada. This Budget builds on that strength.


Mr. Deputy Speaker:: Questions and comments? The Minister of Transport (Mr. Mazankowski).


Donald Frank Mazankowski: Mr. Speaker, first, I would like to congratulate the Hon. Member for Moose Jaw (Mr. Gottselig) on his maiden speech. It was an excellent speech which outlined the issues affecting his riding. In effect, it was a report card of some of the measures this Government has taken since it was sworn into office.
The Hon. Member made reference to the issue of capital gains. I know it was a prominent issue in the election campaign. Also, I know that he debated it vigorously on the campaign trail. Given the Hon. Member's knowledge, and for the benefit of the Members of the House, could he give us his impressions of the impact the capital gains provision in this Budget will have on the farming community which he represents? In replying to the question, could he enlighten us with respect to the position taken by his NDP opponent during the election campaign, having regard to the fact that the NDP in the House has been taking such violent exception to the capital gains provision which was included in the May 23 Budget? What was the position of his NDP opponent with respect to capital gains during the course of the election campaign?


William (Bill) Gottselig: Mr. Speaker, I would like to thank the Minister of Transport for his comments. As the Minister has mentioned, the issue of capital gains was certainly an important issue raised during the election campaign. The removal of the capital gains provision will have a long-lasting effect on the West. Farmers will now be able to sell their farms without

May 30, 1985
The Budget-Mr. Gottselig
worrying about capital gains. It will mean that the generations can move as they should in transferring their land. Retiring farmers will know what they have to deal with when they sell their land.
In addition, the business sector will be able to move and thrive once again. My New Democratic Party opponent in the last federal election campaign also spoke about removing capital gains. Members of the New Democratic Party change their tunes quite often, so I suppose that that would depend on what day it is.


Mr.   de Jong@: Mr. Speaker, I think the statement made by the Minister was somewhat misleading. As I stated in my remarks on the Budget, this Party has always supported the removal of capital gains taxes on farms. However, we take exception to the broad scope of the legislation. We take exception to the fact that people who speculate on condominiums in Florida or on stocks can have a $500,000 tax holiday.
1 would like to ask a question of the Hon. Member. He represents the riding of Moose Jaw which is right next to my riding. I know that he is as concerned as we in Regina are about getting better water. The Hon. Member mentioned that even though he is considered a back-bencher, he does exert some influence on the decision-making process. Therefore, I wonder if the Hon. Member could enlighten us on his progress in convincing the Government that it should move immediately to help finance, along with the Conservative Government of Saskatchewan, a joint venture that would allow for the bui-dling of a pipeline from Diefenbaker Lake so that the people of Moose Jaw, Regina and the surrounding areas could have good, safe, clean water. Perhaps the Hon. Member could report to us on the progress he is making in convincing the Government, of which he is a member, to do that.


William (Bill) Gottselig: Mr. Speaker, the issue of a pipeline has been debated many times in Regina and Moose Jaw. There is a new water treatment plant scheduled to open fairly soon that will greatly improve the quality of water in that area. The matter of a pipeline or an open ditch will be debated for some time to come. I can assure the Hon. Member that I am certainly taking a positive stand on this and I have mentioned it and other concerns of the constituency a number of times. I am expressing the concerns of my constituents from Moose Jaw and surrounding districts and I am doing so as a member of a Government that is very responsive to the needs of the West as well as the needs of all other areas of Canada.


Mr.   de Jong@: Mr. Speaker, I am aware that the Hon. Member represents a large number of retired people who live in the City of Moose Jaw. I wonder what he will say to his retired constituents when they find out that they will be receiving approximately $100 less from their Old Age Security this year and that by 1990 a couple will receive some $1,000 less per year in Old Age Security. How will he explain that to his constituents?


William (Bill) Gottselig: Mr. Speaker, the matter to which the Hon. Member refers should be put in the proper perspective. It works out to about 27 cents a day. I think that senior citizens are quite prepared to pay 27 cents a day in order to preserve what they have now and to have a country with a controlled deficit so that their grandchildren and their grandchildren's children will not have to pay that tax share.


Mr. Wilson (Swift Current-Maple Creek):: Mr. Speaker, I represent the constituency of Swift Current-Maple Creek, a constituency which shares some 55 miles of boundary with that of the Hon. Member for Moose Jaw (Mr. Gottselig). On behalf of my constituents I want to thank the Hon. Member for his comments. Both the Hon. Member and his constituents are very much appreciated by my constituents.
I know that the Hon. Member is a producer. He has a farm that is a going concern and, therefore, a number of the matters which were raised in the Budget are of very real concern both to the Hon. Member and to his constituents. Some concerns have been raised about the possibility of increases in fuel taxes. I wonder if the Hon. Member could enlarge on that matter from the perspective of the producer.


William (Bill) Gottselig: Mr. Speaker, there is talk of an increase in fuel prices effective September 3. We are going to have a reduction in the price of fuel of .7 cents per litre on June 1, and the increase on September 3 will supposedly be two cents per litre. Therefore, the net increase will be 1.3 cents. As we are moving to world prices and with the surplus on a world level, I expect that by September the price will be much lower than that because of the supply and demand situation.
I think farmers realize that they received a reduction of 4.8 cents per litre as a result of the actions taken last fall. We are going to institute this increase, if it is in fact an increase, on September 3 so that dry land farmers will have the benefit of buying fuel for this growing season at the lower price.


Donald Alex Blenkarn: Mr. Speaker, the Hon. Member will recall that he was a member of the Finance, Trade and Economic Affairs Committee and participated in the standing committee's study into tax issues in agriculture, capital gains tax with reference to agriculture, and indeed other matters. He will recall that the committee's unanimous recommendation was that the Minister of Finance (Mr. Wilson) consider the advisability of abolishing the taxation of capital gains in general. Did the Hon. Member not find that the Hon. Member for Prince Albert (Mr. Hovdebo) and the Hon. Member for Humboldt-Lake Centre (Mr. Althouse), who were also members of that committee, agreed to that recommendation?


William (Bill) Gottselig: Mr. Speaker, as a matter of fact, the Hon. Member for Mississauga South (Mr. Blenkarn) is correct. We had all-Party representation on that committee. Although I did not attend every meeting, each meeting that I attended was attended by a member of each Party, and each member of each Party rose to say how we must eliminate capital gains tax from farm land. A unanimous recommendation came from that committee.
May 30, 1985


Donald Frank Mazankowski: But Lynn McDonald doesn't agree with that.


William (Bill) Gottselig: Then she must not agree with what other members of her Party have said. 1 support fully the recommendation made by that committee. I was happy to be a part of it and to put my views forth. Once again, that indicates that the Minister has responded to our concerns. There is no doubt that this is a responsible Government.


Mr.   de Jong@: Mr. Speaker, I understand as well that that committee made unanimous recommendations for an agribond issue and for changes in the taxation system as it affects part-time farmers. I wonder if the Hon. Member is also in favour of those recommendations and if he is disappointed that he did not find them in the Minister's Budget.


William (Bill) Gottselig: Mr. Speaker, I would like to thank the Hon. Member for Regina East (Mr. de Jong) for raising that point. The Minister of Finance was present at the first meeting of that committee. He told us all that he would do all of these things but that within the budget restraints with which we are faced, we may not be able to do them all at one time. He asked us to priorize the issues and to tell him which ones were number one, number two and number three. We did that. All members of that committee agreed that the single most important issue was the removal of capital gains taxes from farm land. We did that, and we gave small business people a break as well. All Canadians will now have $500,000 available to them free from capital gains taxes.


Hon. William Rompkey (Grand Falls-White Bay-Labrador):: Mr. Speaker, I would like to congratulate the Hon. Member for Moose Jaw (Mr. Gottselig) on his maiden speech in the House and on the way he handled himself during the question and comment period. As I recall, I don't think I was as secure on my feet. We didn't have any question and answer period when I first came to the House. That was a long time ago, as the Minister of Transport (Mr. Mazankowski) will remember. But the Hon. Member did very well. I did not agree with everything he said, but he said it very well.
I would like to talk about the Budget from a different perspective. I would like to address the Budget from the point of view of the impact I see on the Atlantic area. When my colleague from Kamloops, British Columbia, spoke the other day, he talked about the trickle down theory. He said the Government was hoping that some benefits in terms of jobs and revenues would trickle down. He used the analogy of the horse. He said that if you stuff enough oats into the mouth of a horse so that it has difficulty digesting them, possibly some of the oats will trickle down for the birds at the end of the process. That was an interesting western analogy. But the analogy I like and apply to the Altantic is one originated by my colleague, Don Jamieson, a former Hon. Member of this House. That was the analogy of a new symbol for Canada, taking into account the regional realities of this country. He said that Canada really needs a new symbol. There should be a
The Budget-Mr. Rompkey
cow on the flag of Canada. She is feeding in the West, they are milking her in the centre, and we know what she is doing to us in the Atlantic provinces. That is exactly what is happening with this Budget. This Budget, as I see it, will cripple the economy of the Atlantic area. It is a crippling blow, and I say that in all sincerity from my perspective. I hope that the gentlemen on the other side of the House are listening. The main fact is-if this is a gamble on the private sector-that the private sector in the Atlantic area is not as strong as elsewhere in the country. For example, in the four provinces, close to 80 per cent of the gross provincial product is Government and 20 per cent is the private sector, as opposed to something like 35 per cent from Government in other parts of the country.


Donald Frank Mazankowski: I am sorry, I have to leave.


Bill Rompkey: I am also sorry the Minister of Transport is leaving because I was hoping he would listen to this. However,
I want to tell his colleagues that the main fact to recognize is that in the Atlantic area the private sector is not as strong as elsewhere in the country. If we put all the onus on the private sector, then I think we will have a great deal of difficulty, indeed. We are very heavily dependent on fisheries, on transport and on many other government Departments. If there are cut-backs in those Departments, then we have an impact on the Atlantic area. If, at the same time, the private sector is not growing as quickly as in other parts of the country, then we will have negative growth in the Atlantic area.
Our caucus heard the other day from the Atlantic provinces economic council. It has that fear as a result of its analysis and upon talking to its members. We are going to do some computer analysis, Mr. Speaker, to see if we can determine exactly what the effect is going to be, but we are afraid that the effect on the Atlantic area is going to be negative.
For example, going back to last fall, we lost $40 million a year from the fisheries budget. Another $25 million is chopped from the fisheries by the Minister of Finance in his Budget. Those funds go to build wharves, breakwaters, haul-outs and fish plants and to put in place the facilities our fishermen need. Our provinces, as you can appreciate, Mr. Speaker, are very heavily dependent upon the fisheries. In addition to that, wharfage and dredging fees will be increased. The Budget talks about rationalization. I am afraid of that word because it translates to me into a loss of jobs and a loss of business activity.
The Government needs to have within its Budget process not only a provision for making sure that the private sector is helping this country-laudable as that objective might be- but it needs to have a concern for people and, most important of all, an understanding of regional differences. There has to be an appreciation that regions in this country are different. If a policy is brought in across the board, then it has to impact negatively on those regions which are least able to bear the burden.
For example, there is a cut in the budget of the Department
of Transport of $75 million. How is that going to be trans-

May 30, 1985
The Budget-Mr. Rompkey
lated? We don't know. We have to ask questions and we will be asking questions as to exactly what areas those cuts will affect. Will they affect CN Marine? How many boats are going to go? How many ferries are going to be lost? You can appreciate, Mr. Speaker, that the only way to get to Prince Edward Island or Newfoundland is by ferry, if one is travelling by surface. If there are changes in those coastal services in terms of boats or in terms of rates, then there will be an impact on that area. Everything we use and most of what we eat in the Atlantic area is imported from elsewhere. We are an economy which is a main customer of central Canada, and those things have an impact on us.
With respect to tourism, for example, if the gasoline tax is raised or if the price of liquor is increased, it will have, it seems to me, a generative impact on tourism which, I believe, is a sunrise industry as opposed to a sunset industry in the Altantic area. We have lost the PIP grants offshore, the grants we depended upon to do the kind of drilling which was necessary in order to determine exactly what resources were there under the sea. They will be replaced perhaps. We don't know what is to come. But we know we had them and we made use of them. We discovered and proved up the oil which was there. More drilling needs to be done. We are not yet at the end of that process. The full field of oil off the Altantic coast has not yet been discovered and we will need incentive to further prove exactly what oil is there.
I recognize that there will be no diminution of transfer payments, but there will be a reduction as compared to what they would have been by 1990 because the Minister tells us we are going to lose $2 billion. So the Atlantic provinces are not going to get as much as they would have got. They are going to get more, yes, year over year, but not as much as they would have got. There will be a net reduction in 1990.
If we go back, Mr. Speaker, to the point I made earlier, that we in the Altantic provinces are dependent on government programs and on transfer payments-like it or not, that's the reality-and if we accept that reality, then we can understand the effect that any decrease in transfer payments is going to have. For example, in the Province of Newfoundland, between 50 per cent and 60 per cent of the budget of that particular province comes from the Government of Canada. So if the economy of Newfoundland is over 80 per cent dependent on government programs, then you can see, Mr. Speaker, the effect the Budget is going to have on us.
We are going to lose 15,000 people in the civil service. Where are those jobs going to be cut? How many will be cut in the Altantic provinces? I don't know. But they will certainly add to the toll of the unemployed which is already the highest of anywhere in the country. We have close to 50 per cent unemployment among those young people who are eligible to work, and that is a tragedy. These are some of the cuts.
What else is in the Budget that will have a negative impact on the Atlantic area? The sales taxes will increase. The gasoline and aviation fuel has been increased. All of those things are going to drive up costs in the Altantic area, particularly in the North. If we consider Labrador, for example, the
only way to get in and out of there, particularly during the winter months, is by air. Already it is paying the highest air costs, not just for passengers, but for freight, of anywhere in the country. This is going to raise the costs even more. It is going to have a damaging effect on the economy in those areas. Consumers in those areas, who are already going to pay more-as will all consumers across Canada-will pay an even greater amount in areas which are rural, which are distant, and which are northern.
Then I could mention the income tax increase. So there is going to be a double whammy; a right-cross in cutting government programs, and a stiff upper cut through increased taxes. Both of these things, I believe, along with many other measures, are going to have a negative impact on the Atlantic area. Yet all the emphasis is placed and all hope is pinned on the private sector.
With regard to the transfer payments, I read in The Ottawa Citizen that the Deputy Prime Minister (Mr. Nielsen) is undertaking a sweeping review of federal programs and is recommending other cuts and changes which are bound to make the provinces hurt. For example, the federal Government wants to leave the provision of tourism facilities solely to the private sector and the provinces, ending its partial funding under existing economic and regional development agreements. Whether that is true or not, I do not know, but the Minister of State for Tourism (Mr. McMillan) is here and maybe he can tell us whether the Government of Canada will continue with the existing policy or whether that sector will be dependent more and more on the private sector.
The article says also that the Deputy Prime Minister wants the Government to reduce subsidies for coastal shipping and ferries operated by CN Marine on the East Coast. These things worry not only me, Mr. Speaker, they worry the Minister of Justice (Mr. Crosbie). As I pointed out, the other day he went to the Atlantic Provinces and was less than enthusiastic about this Budget. Reading from The Evening Telegram of May 25, the Minister had this to say:
Justice Minister John Crosbie says that if the federal budget has any negative effects on areas like Newfoundland, Ottawa will take measures to deal with them.
There is a direct quote which says:
If it turns out that in any of the approaches taken in this Budget there is any possibility of any damage to regionally deprived areas, then there will be changes made to deal with that-
The Minister was not going down there with a glad heart to defend the Budget. Apart from being an intelligent and witty man, the Minister of Justice is a forthright man. What he is saying here is what he knew to be correct and what I find everyone in the Atlantic Provinces knows to be correct. He went on to say, referring to the private sector:
If they can't do it, if they can't produce the jobs and the economic growth, then we won't hesitate to go in a different direction.
If they don't perform, then big brother will have to be given the job back again-
May 30, 1985

Well, there is an underlying assumption that it is not going to work in the Atlantic area. The article goes on to say the followship:
He admitted the private sector in the Atlantic area is weaker than other parts of the country and said there will have to more government support in the Atlantic region.
Crosbie said he spends a lot of his time in Ottawa ensuring that support is forthcoming.
The Minister of Finance (Mr. Wilson) has cut government programs and government support in that area and depends on the private sector which both I and the Minister of Justice have said is weaker than that in other parts of the country. We may not like it, but that is the reality. Nor is it just the Minister of Justice who is saying that. The St. John's Board of Trade, which is not exactly a left wing organization, says, through its President:
1 didn't see sufficient job creation activity that would do much for Newfoundland's high unemployment rate.
He said there were insufficient incentives for the housing and construction industry. He is also concerned about the phase-out of the Petroleum Incentives Program because the federal Government did not announce something to replace it. He says the board will encourage the Government to bring in other tax incentives to encourage oil companies to do exploration along the coast. Well, what about those tax incentives? The tax incentives were given to Cape Breton and maybe they should be extended elsewhere in the Atlantic Provinces, but I am not sure that the tax incentives are the right way to go because you can only get tax incentives when you start to make something. What we need in the Atlantic area, in addition to improved infrastructure, is up-front grants to start businesses going. Yes, you can bring in a multinational and if it has made profit elsewhere it can invest in the Atlantic Provinces and maybe create some jobs. But a local small firm that does not have that kind of profit, or an entrepreneur who wants to start, needs the money up-front and cannot wait until he gets his profit and tax write-downs. So I think a different approach is needed in Atlantic Canada, bearing in mind the underdeveloped infrastructure and the weakness irt the private sector.
The Community Services Council of Newfoundland says that the assumption of the federal Minister that by providing private sector incentives, everyone will join in the entrepreneurial spirit, is less likely to hold true in Newfoundland than for a manufacturing economy such as it is in Ontario. That is exactly the point I make. You cannot see all regions of the country as the same. When you have a Budget which assumes that everyone is equal, then it has a negative effect on some people. It may have a positive effect on others, sure; I believe that John Bulloch says this is good for small business. He is a credible speaker for the small business community in Canada. He represents some people in my riding as well. But I believe he was speaking nationally. He was not speaking particularly for the area I want to talk about today. The President of the Chamber of Commerce in Grand Falls, which is a rural area representing a lot of small businesses, had this to say:
The Budget-Mr. Rompkey
-Chamber members are extremely concerned that the federal Government has opted to go the route it has. that being taking such a gamble with business.
In their view the cards are stacked against this area of the nation. It is a workable formula for larger businesses and in places like Central Canada. Noted is the fact that the smaller businesses such as those to be found in Newfoundland have had to rely on Government grants-
Local business just doesn't have the wherewithal to expand and create jobs as hoped by Mr. Wilson.
Even the Premier of Newfoundland, while he said as much as he could say positively about the Budget, that it seems to represent a legitimate attempt to cope with the federal Government's financial problems and to assist economic growth through the private sector, went on to say that:
It has some negative impacts on an economy such as Newfoundland's and we will enter ongoing discussions with the federal government to ensure that proper attention is paid to overcoming regional disparities.
He is concerned about the effect any decrease in transfer payments might have. As well, he suggested that the tax increases will hurt the consumers who already have low levels of disposable income. He feels Newfoundland should be given special treatment as a province with an extremely low economic base, high unemployment and increasing cost of living.
That is the point I am making and the point I want to get across to Members on the benches opposite. You have to be flexible. In answer to my question the other day, the Minister of Finance used the word "flexibility". I encourage him to be flexible and not wait for another Budget or another four years, because we will not be able to wait. Every spokesman I have heard in the Atlantic Provinces has said the same thing. Unless changes are made, there is going to be a drastic and negative impact on our economy which we will not be able to overcome for a long, long time.


Thomas Michael McMillan: Mr. Speaker, 1 want to congratulate the Hon. Member. As an Atlantic Canadian, I am always heartened when even a member of the Opposition marshals his considerable eloquence on behalf of the people of the Atlantic Provinces. However, I find that there is a tendency among opposition members from Newfoundland to suffer from an inverse relationship between their eloquence on the one hand and the validity of their arguments on the other. Nowhere is that more true than with respect to the Hon. Member's comments on tourism. I want to assure him now, since he invited me to do so, that his concerns with respect to the Deputy Prime Minister's task force are not founded. He can look forward to many years of active federal government involvement in subsidiary agreements under ERDA in the tourism field.
I have two questions. The first is with regard to his remarks on the alcohol tax. He mentioned, rigthly, that when federal taxes and other taxes on alcohol rise, the tourism industry is affected, usually adversely. However, the implication was that in the Budget brought down by the Minister of Finance (Mr. Wilson) on May 23, the relevant provision on alcohol taxes would hurt the tourism industry. If it were not for the Budget, the federal excise tax on alcohol would go up 4 per cent

May 30, 1985
The Budget-Mr. Rompkey
because the relevant tax is tied to the Consumer Price Index. There is an automatic increase in the federal tax on alcohol as the CPI increases. By deindexing the federal tax on alcohol, as contemplated by the Budget, instead of that tax going up by 4 per cent this year it will be capped at only 2 per cent above the current level. Therefore, rather than hurting the tourism industry, the relevant provision will help it. Is he aware of that fact?
The Member stated that the Budget is going to slash equalization payments to the Atlantic provinces. The Budget makes no such provision. It simply reduces the rate of increase in equalization payments to the Atlantic provinces and other provinces. It does not reduce the equalization payments. Indeed, in each fiscal year up to and including 1990 those equalization payments will actually increase rather than be reduced, albeit at a slower rate of increase. Is he aware of the two points to which I made reference?


Bill Rompkey: I thank the Minister for his comments, Mr. Speaker. With regard to his last point I would refer him to Hansard. I thought I was very clear in saying that I understood that there would be no reduction in transfer payments but that there would be an over-all loss from what the transfer payments would have been. The Minister of Finance said very clearly that there would be $2 billion less in transfer payments by 1990. They will go up, but by less than they would have. I thought 1 made it quite clear that I realized they were not going to be decreased.
With regard to liquor, I am pleased that the Minister explained about the cap. I would point out to him that, although the Government raised taxes in Newfoundland, taxes on liquor were put in abeyance for tourists only. If the same measure were taken federally, it would further help the tourism industry. Such a measure has been suggested over the years by groups and associations which are concerned with that particular industry. If he has gone so far as to put a cap on taxes, would he suggest to the Government that it go even further and put taxes for tourists in abeyance in order to bring revenue into the country? I believe, as I think he does, that that is a sunrise industry. There is money to be made in small business through tourism in this country if measures like that are taken.


Mr. Binns:: Mr. Speaker, the Hon. Member for Grand Falls-White Bay-Labrador (Mr. Rompkey) raised a number of concerns during his remarks this afternoon. I would like to speak about the other side of the issues that he commented on. He spoke about the fishery in the Atlantic area. I believe he failed to remember some very important things that have happened in recent weeks.
For example, the Minister of Employment and Immigration (Miss MacDonald) recently extended UI benefits to ice-bound fishermen in Newfoundland to ensure that their livelihood would not be lost when they could not get out to the fishing grounds. In the Bill which was recently introduced, the Minister extended the variable entrance requirement for another 19 months. Untill the end of December, 1986 the areas of the
country which are hard-pressed in terms of jobs will be eligible for unemployment insurance with as little as 10 weeks of seasonal employment. The Minister also took steps to freeze premiums for employers during the next period of time so that employers and employees would not be unduly affected. This is particularly important to the fishery.
In looking at the Budget commitments made by the Government to the fishery in Atlantic Canada, I notice that our Government has honoured the commitments of a restructuring agreement for companies like Fisheries Products International and National Sea Products, and in fact something like $138 million is being spent up until March 31, 1985. In looking at what the Government has done for the fishery in Atlantic Canada I need only look at my own Province of Prince Edward Island. The new Minister has given us the appropriate allocation of things we had asked for for years. For the first time we have been let into the Atlantic snow crab fishery. Prince Edward Island has been asking for a part of that resource for many years but was denied it by the Hon. Member's Government. Our new Minister had the foresight and wisdom to know that this resource should be shared in Atlantic Canada. He has given us an opportunity to harvest that resource.
Only several months before the last election, the former Finance Minister of the Liberal Government went so far as to say that the inshore fishery in Atlantic Canada was obsolete and should perhaps be done away with. It is no wonder that Atlantic fishermen decided it was time to make the Government obsolete and turned to a new Government to tackle the problems. Our Government is doing that with the present Budget and the initiatives it has undertaken in the last few months.
The Hon. Member suggested that we might be losing ferries from our transportation system in Atlantic Canada. Nothing could be further from the truth. The Minister of Transport (Mr. Mazankowski) is currently looking at the possibility of constructing two new vessels to serve the Wood Islands-Pictou run between Nova Scotia and Prince Edward Island. That would, of course, be a great asset to us. Through the Department of Regional Industrial Expansion the federal Government is also considering the possibility of constructing a causeway from New Brunswick to Prince Edward Island.
The Member mentioned concerns about the oil industry and said that we should be providing incentives. However, he forgot to mention the Atlantic Accord. What greater agreement than the Atlantic Accord has been signed between Atlantic Canada and the federal Government in recent times? We also met with the Atlantic Provinces Economic Council this week and were told that it was pleased with this Budget because Atlantic Canada is made up of small businessmen, farmers, fishermen, tourist operators, loggers, foresters, and so on. Those are the people who are being given the opportunity to unleash resources and create jobs and investment in Atlantic Canada. If the Hon. Member took those things into account, he would have to agree that this Budget will be great for Atlantic Canada.
May 30, 1985


Bill Rompkey: Mr. Speaker, nothing could be further from the truth. This Budget will have the most serious adverse effect of any economic measure in recent times. It will set the Atlantic Provinces back 20 years. The Government does not have any regional development policy such as has been put in place over the last 20 years in this country. That bias does not exist in this Budget.
I will deal with the specific points starting with the increase in unemployment insurance benefits for fishermen who were trapped by ice. I raised that issue at least twice on the floor of the House of Commons before the Minister eventually announced what I think was too little too late. I was pleased that she extended the variable entrance requirement. She should have made it permanent. The Minister knows that there is no way you can stipulate more than ten weeks in certain parts of the country to make fishermen qualify for unemployment insurance. It was a good idea to extend it for 19 months, but I would like to have seen it extended for 19 years.
With regard to the Government's commitments to the fishery, it is on the record, and the Hon. Member must know it, that $40 million was cut from the fisheries budget in the fall and then a further $25 was cut from the fisheries budget. That will have a negative impact on the Atlantic area.
The Hon. Member talks about the inshore fishery and how the people of Atlantic Canada dealt with this Party as a result of our treatment of the inshore fishery. In Newfoundland, we won 42 per cent of the popular vote and returned three Liberal Members to the House of Commons. That is not a bad record anywhere in the country. That is what the inshore fishermen think of our policy. Indeed, a very strong constituency of ours is among the inshore fishermen.
With regard to APEC, it is on the record and has issued press releases. What the council is saying is a matter of public record. I do not find any group in Atlantic Canada that will disagree that this Budget will have a serious impact on our economy over the next little while.


Mr. Deputy Speaker:: Resuming debate.


Mr. Norman Warner (Stormont-Dundas):: Mr. Speaker, it is a privilege to join in this debate today, especially when our Government's first Budget is emphasizing our fundamental belief that a strong, healthy and unfettered private sector will bring about economic renewal.
From coast to coast, Canadians have told us that they agree with our initiative. They are willing and able to generate new investment, new business activity and new employment. However, they also told us that they need an environment free of unnecessary government intervention; they need greater access to financial resources for expansion and they need confidence that their hard work will lead to a better life today, tomorrow and every day after.
Moreover, they must believe that their successes will be adequately rewarded. That is why our budget proposals
The Budget-Mr. Warner
emphasize the need for individual initiative and private sector innovation. They must be supported by responsible financial and economic policies that will provide a durable framework for growth.
We have issued a challenge to the thinkers, doers and innovators in the private sector to help us create the jobs that Canadians so badly need. In order to respond to this challenge effectively, an atmosphere of opportunity and stability must exist. Since September 4, the Government has been assisting in creating this environment.
There has always been a shortage of start-up capital to help entrepreneurs with their ideas and putting their ideas into real businesses. Our work with Bill C-23, an Act to amend the Small Businesses Loans Act, guaranteed the continuation of an important source of small business financing.
The life of the Act was extended to March 31, 1990. This longer term established a stable framework for the lenders and the borrowers who use this popular program. This initiative did not increase the size, the role or the power of the Government. Furthermore, our amendment to the Small Businesses Loans Act enhanced both opportunity and stability within the private sector. This is totally consistent with the theme set out in the new Budget.
A further initiative is our work to replace the Foreign Investment Review Agency by Investment Canada. Our message is clear: Canada is open for business again. The Government of Canada is there to assist, not harass, the private sector in creating the new wealth and new jobs that Canada needs.
Historically, the Canadian financial markets have been equity poor. Investment Canada is designed to improve the investment climate and to increase foreign direct investment. We are attempting to create an environment of stability and opportunity, and the injection of new foreign capital will result in new jobs.
Today's reality is that government in Canada has become much too big. It intrudes in the market-place. It inhibits and distorts entrepreneurial activity by sending out false signals to investors. Bill C-15 will reduce government intervention in the economy, an action which is consistent with one of the main objectives set out in the new Budget.
The first Budget of the new Progressive Conservative Government faces head-on the two great problems facing our country-the vicious circle of high unemployment and our spiralling national debt. High deficits constrain our ability to create jobs. High unemployment, in turn, causes even higher deficits. The Budget proposes realistic, fair and effective action to break this vicious circle.
It is centred around three fundamental ideas. First, the Government has become too big. It has become part of the problem instead of being part of the solution. That is why we have been combing Government for waste and inefficiency since September and our efforts are starting to pay off.
We will be lowering government overhead, rationalizing and
improving government programs and selling off Crown corporations which do not serve an essential public policy purpose.

May 30, 1985
The Budget-Mr. Warner
The civil service will be reduced and public sector pensions put on a sounder footing. The search is still on to ensure that we provide maximum value for tax dollars.
Second, future Governments will not be able to support growth and jobs and provide all the services we want if we do not get control of our financial affairs. It is important that Canadians understand the magnitude of our deficit and debt problem and why it poses serious risks to our ability to achieve sustained economic growth.
The public debt is simply the sum of all the past deficits. It took 100 years to accumulate a debt of $18 billion. Now, less than two decades later, the debt is approaching $200 billion and doubling every five years.
Like any borrower, the Canadian Government pays interest on this debt. Like any borrower, the Government has been affected by interest rates. Interest charges have risen from approximately $8 billion per year in the late 1970s to $22 billion last year. When compared to a business situation, it is quite obvious that a borrower such as the Government of Canada, with assets of only approximately $40 billion, is in a situation in which most businesses would be refused loans by lenders. The Government will soon be facing that situation as well if we do not take proper steps to alleviate the problem and eventually solve it. These interest charges have become the fastest growing component of our government expenditures.
Unlike most people, the Government has been borrowing additional funds to pay the interest on past debt. That is why our debt is spiralling out of sight. If we do not show the resolve to deal with this problem, the inevitable result will be paralysis of the Government of Canada.
Third, this Government wants to encourage private initiative. The new capital gains tax exemption challenges Canadians by rewarding success and not subsidizing effort. It will encourage Canadians to invest a part of their savings in new ventures. It will allow the rewards to be enjoyed by the risk takers. We are not asking that every Canadian drain his or her savings account to purchase speculative stocks. Each investor has a different perception of risk and what his or her objectives and goals are for investment. However, the prospect of greater after-tax returns will inevitably shift savings to job creating investments.
The new proposals grant individual Canadians a lifetime capital gains exemption of a half million dollars. The lifetime exemption limit will be phased in over six years beginning with a $20,000 exemption for total capital gains this year, rising to $50,000 next year. It will go up until it reaches an exemption of $500,000. All capital property will qualify for the exemption.
Some earlier speakers have suggested that only 4 per cent of Canadians stand to have capital gains. I believe this is perhaps part of a misconception that some people may have. Many low income earners have capital assets. Many could consider the purchase of capital assets, whether through an investment vehicle such as a mutual fund, through a stock broker purchasing stocks listed on a stock exchange, or perhaps in the form of a cottage or a boat. These are assets which in some cases, over a long period of time, will appreciate and result in capital gains. Whether it is $5,000, $10,000 or $20,000, these are assets already unduly taxed. This tax is a fair tax which will encourage people to invest in situations not only where the risk is relatively low, but perhaps where risk is relatively high, and we have had trouble attracting equity capital in the past.
In the United States, because of favourable capital gains tax, many blue collar workers have seen fit to increase investment in shares of companies they work for and in other shares. The same initiative, I am sure, will be taken by many of our blue collar workers. They will realize that we need more equity capital if we are going to help create those jobs which we so badly need.
The capital gains tax, allowing immediately $500,000 in exemptions for the farm community, recognizes that farmers have traditionally invested a high proportion of their income back into their farms to build up assets which, hopefully, some day they will be able to sell. This sale will provide the funds required for their pension and adequate retirement. It was not too long ago I was speaking with a farmer in my community who had to sell his farm because of health reasons. He made the best deal he possibly could. He took a down-payment and paid off some of the debts he had, but he still had some debts left. After all the paper work had been pretty well done, the tax department came along and levied a capital gains tax on him. This is a capital gains tax which he cannot finance at a bank, a capital gains tax which is jeopardizing what could be a reasonable retirement income from a mortgage that he has. This very unfair tax in a situation like this and many other situations will be terminated and replaced by an incentive which is not only fairer-
I see, Mr. Speaker, that my time has come to an end. I assume I will have a few minutes tomorrow.


Mr. Deputy Speaker:: Yes.
Order. It being 5:45 p.m., it is my duty to interrupt the proceedings pursuant to Standing Order 64(7) and put forthwith the question necessary to dispose of the amendment now before the House. The question is the following one. Mr. Johnston, seconded by Mr. Turner (Vancouver Quadra), moved:
That the motion be amended by deleting all the words after the word "That" and substituting the following therefor:
"this House condemns the Government for its betrayal of the trust of the Canadian people by producing a budget that destroys jobs, that offers neither help nor hope to the working poor and the unemployed, that brutalizes the middle class, that imposes massive and unfair tax increases on middle and lower income Canadians and that is devastating to the economically disadvantaged regions of the country."
All those in favour of the amendment will please say yea.


Some Hon. Members:: Yea.


Mr. Deputy Speaker:: All those opposed will please say nay.


Some Hon. Members:: Nay.
May 30, 1985

The Budget-Mr. Warner


Mr. Deputy Speaker:: In my opinion the nays have it. And more than five Members having risen:
Darling
Daubney
Gagliano
++NAYS
Messrs.
James
Jardine
Johnson
(Bonavista-Trinity-
Conception)
Joncas
Jourdenais
Kcmpling
Kilgour
			Della Nocc	King


Mr. Deputy Speaker:: Call in the Members. The House divided on the amendment (Mr. Johnston) which			Desjardins Dick Domm Duplessis (Mrs.)	Landry (Mrs.) Lanthier La Salle Layton Leblanc
was negatived on	the following division:			
			Ellis	Lewis
			Fennell	MacDougall
			Fontaine	(Timiskaming)
	(Division No. 28)		Fraleigh Fraser	Mailly (Mrs.) Malone
			Fretz	Mantha
	YEAS		Gagnon	Marin
			Gass	Martin (Mrs.)
	Messrs.		Gervais	Mayer
			Gottselig	Mazankowski
Althouse	Garneau	Nicholson (Miss)	Greenaway	McCainAxworthy	Gauthier	(Trinity)	Grise	McCrossanBenjamin	Guilbault	Nunziata	Guilbault	McDermidBerger	(Saint-Jacques)	Nystrom	(Drummond)	McDougall (Mrs.)Blaikie	Heap	Orlikow	Gurbin	(St. Paul's)Boudria	Isabelle	Ouellet	Halliday	McGrathBroadbcnt	Jewett (Ms.)	Parry	Hamelin	McKenzieCassidy	Johnston	Pepin (Mrs.)	Hamilton	McKinnonDeans	(Saint-Henri-Westmount)	Prud'homme	Hardey	McKnightde Corneille	Keeper	Robichaud	Hawkes	McLeandc Jong	Langdon	Rodriguez	Hees	McMillanDingwall	Malepart	Rompkey	Hicks	MerrithcwEpp	Manly	Rossi	Holtmann	Minaker(Thunder Bay-Nipigon) Marchi	Turner	Horner	MitgesFoster	McCurdy	(Vancouver Quadra)	Howie	MooreFrith	Mitchell (Ms.)	Waddell	Jacques	MurtaFulton	Murphy	Young-47.	(Mrs.)	Nicholson
(Niagara Falls) Nielsen Nowlan Oberle O'Neil
Oostrom Pa proski
Pennock
Pietz
Plourde
Porter
Price
Ravis
Redway
Reimer
St-Julien
Schellenberg
(Nanaimo-Albcrni)
Scott
(Victoria-Haliburton)
Scott
(Hamilton-Wentworth) Siddon Speyer Stackhouse Stevens Stewart Tardif (Mrs.)
(Charles bourg)
Taylor
Thacker
Towers
Tremblay
(Quebec-Est)
Tupper
Turner
(Ottawa-Carlcton) Valcourt Vankoughnet Vezina (Mrs.)
Warner
Wcnman
Wilson
(Swift Current-Maple Creek) Winegard Wise
Witer-128.
Andre
Bernier
Binns
Blcnkarn
Bourgault (Mrs.)
Cardiff
Champagne (Mrs.)
(Saint-Hyacinthe-Bagot)
Clark
(Brandon-Souris) Clifford Cochrane Comeau Cook Corbett Cossitt (Mrs.)
Cote
(Lac-Saint-Jean)
Cote
(Langelier)
Crofton
Crosbie
(St. John's West) Crouse


Mr. Deputy Speaker:: I declare the amendment lost.
It being 6.12 p.m., this House stands adjourned until tomorrow at eleven o'clock a.m., pursuant to Standing Order 2(1).


[Stage Direction]
The House adjourned at 6.12 p.m.
[Stage Direction]
Friday, May 31, 1985