1985-02-25

GOVERNMENT ORDERS


[Stage Direction]
The House resumed from Friday, February 15, consideration of the motion of Mr. Bissonnette that Bill C-23, an Act to amend the Small Businesses Loans Act, be read the second time and referred to the Standing Committee on Regional Development.
Mr. George Baker (Gander-Twillingate):: Mr. Speaker, I have a few words to contribute to this debate regarding the Small Businesses Loans Act. I want to indicate the negative impact that this Bill will have as it relates to high unemployment areas in Canada.
In order to facilitate loans to businesses, whether it be a Government program or strictly a bank program, one must realize that various areas of Canada have different needs. When considering the Federal Business Development Bank or the Small Businesses Loans Act, one must realize that there are certain areas of Canada that need that legislation in place in order for them to deal with the banks or with the federal bank itself. While it may be feasible to discontinue the operation of the Federal Business Development Bank in certain parts of Canada-there appears to be an opinion in the Chamber that the bank may have outlived its usefulness in certain parts of this country-I can assure the House that that is not the case in the high unemployment areas of this country. Due to the attitude prevalent among the banks and private lending institutions in those areas, it is very difficult for a businessman to obtain loans at various times for various businesses.
The same is true of the Small Businesses Loans Act. I believe it is a step backward for the House to pass legislation that imposes restrictions on the granting of those loans and the cost of those loans to a small businessman. I refer specifically to the provisions of this Bill which will impose a fee on the bank to pay the federal Government for issuing the loan.
The representations made to the standing committee by both associations that represent small business in this country have suggested that that mechanism be transferred to the lender. I believe this suggestion goes back to associations that
look at business on a national scale, that average it out across the country, whether or not the area is rich or poor, whether or not business opportunities exist, and more importantly, what the attitude of the lending institutions is in that particular area of the country.
According to this Bill, the Government will no longer allow a 100 per cent guarantee on the loan issued by the bank. Instead, there will be a retraction to 90 per cent of the total value of the loan. Again, this presents a flaw for the business community in eastern Canada, specifically in Atlantic Canada.
We should remember that when a businessman obtains a loan under the Small Businesses Loans Act or from the Federal Business Development Bank, it is only for a portion of the total amount needed for that business. I am not aware of any loan program that is guaranteed 90 per cent, 100 per cent or even 75 per cent by any Government agency in this country. In other words, even under the Small Businesses Loans Act the businessman must contribute a portion of the total cost depending on the type of business he is expanding or setting up. It can vary from 10 per cent to 20 per cent according to the Small Businesses Loans Act.
The small businessman has an investment that he must protect. It is not, as the two organizations representing small business in this country have improperly stated, a give-away to the businessman at all because he is taking the risk and if he does not pay up he will lose his investment and perhaps his entire life savings to that business expansion or creation. We should remember that when dealing with this legislation.
The two main aspects of this Bill include the fee which is imposed on the bank in order to utilize the Small Businesses Loans Act and the reduction of the Government guarantee from 100 per cent to 90 per cent. There is a third factor to this Bill that I do not believe has been referred to by parliamentarians so far. It is that the regulations under this Act as they relate to the fee and to the very mechanism of the Small Businesses Loans Act can now be changed by the Minister through Order in Council, through regulations. That should be a primary consideration for Members of the House when this Bill goes to committee in attempting to determine whether or not it is beneficial for the Minister to have ultimate power with respect to future changes to this legislation.
[DOT] (U10)
When you look at a Bill such as this one before the House of Commons, Mr. Speaker, you tend to think that perhaps the Government is doing something for business in all areas of this country. That brings to mind the fact that there are regions that are different. There are businesses present in certain areas and in certain provinces that are not present in other areas. I

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give as an example the Atlantic Provinces. Sometimes the presence and encouragement of small business is not paramount in the minds of Governments when they make decisions, and it should be. For instance, I was very pleased recently to see an agreement signed between the federal Government and the Government of Newfoundland regarding offshore resources. I was pleased to see that because it brought to an end years of wrangling, years of political argument-and I say political because it was more politics than anything else. I did not really become involved in this political argument up until now because I did not really believe it would have any great impact on my district on the northeast coast of Newfoundland. I believed it to be more politics than anything else.
When I looked at the Atlantic Accord-and it is interesting that it is called the Atlantic Accord and not the Newfoundland Accord-which was signed by the two Governments, I noticed that the one grave error in the agreement was that it neglected to recognize the importance of business being established in the Province of Newfoundland as a result of the utilization of that natural resource. That is a tragic error, Mr. Speaker. It is an error which I believe in 20 years' time will probably be seen to be the greatest error in Newfoundland's history.
I have a reason for saying that. Section 54 of that Agreement says that that natural resource, offshore oil, will be treated as if the natural resource were on land. But then Section 54 says that that resource must go first to existing industries in eastern Canada that utilize oil. Then it says that in excess of that a new industry will be allowed to be established in the Province of Newfoundland. It goes on to say in the agreement that Newfoundland will receive x number of dollars into the provincial treasury, which is a good thing for the operations of the Newfoundland Government and in providing services to the people of Newfoundland. That is what all the hoopla was about. That is what all the press conferences were about. That is why the Prime Minister (Mr. Mulroney), the Minister of Energy Mines and Resources (Miss Carney), the Premier of Newfoundland and the Government of Newfoundland were so happy.
But hidden in that Accord was that one clause that discriminated against business. It discriminated against business and it discriminated against future small business that could be established in the Province of Newfoundland. I say it is an error because no matter how much money you give to a Government it all boils down to how much money is in circulation with business in that province; because that is what determines the prosperity of that province in jobs. I say that because when I look at the Province of Alberta, the Province of Saskatchewan or the Province of Ontario, one can see how a natural resource then leads to the establishment of small and big business relating to that resource if it is utilized in the proper way. I am referring specifically to the petrochemical industry and to the chemical industries which are primarily offshoots of oil refineries in the country. This is where we see the jobs. This is where we see small businesses and big businesses setting up.
[DOT]	0115)
The Minister of Energy says that after eastern Canada is taken care of we will have businesses operating in the Province of Newfoundland and utilizing that offshore resource. Then I read in the statement that there was perhaps a billion barrels of oil in eastern Canada off the coast of Newfoundland. That sounds like a lot. That sounds like businesses could establish in Newfoundland. However, a billion barrels of oil is only a thousand million barrels of oil; that is all it is. When we look at the production in Alberta and at Canadian production, which runs over 300,000 cubic metres per day, and we multiply that by 365 days, and when we look at approximately 1.3 million barrels per day being consumed in the country, we quickly realize that at best, so experts claim, with the one billion barrels of oil we can take care of Canadian needs for about 2.2 years or 2.4 years, no matter how we look at it.
Then if we examine eastern Canadian consumption in the refineries in the petrochemical industry in the Province of Quebec-and I am thinking about Petromont which is in the area represented by the Hon. Speaker who is in the chair today-somehow we believe that under this agreement we were more concerned as a national Government about the future of Petromont than we were about the establishment of new business in Newfoundland.
There is a reason for saying this. I should like to deal with capacity in eastern Canada because that is the only thing to which Hon. Members can relate as far as refineries are concerned. When we look at the capacity, it works out to about a third of the total capacity for all Canada.


Mr. Dick:: Small Businesses Loans Act!


George Baker: I hear the Hon. Member. I am developing an argument here that the Government should pay more attention to the establishment of business than to its own coffers and the collection of money from the Small Businesses Loans Act.
When we look at the total consumption, a third of Canadian production, we see that Hibernia will last for about six years if we use the total consumption. That is not counting the petrochemical industries to which I referred earlier in the Speaker's riding. That is not referring to the 16 petrochemical plants in the Province of Quebec. That is not referring to the refineries which have been moth-balled in Montreal and in Point Tupper, Nova Scotia. At a very conservative estimate, for six to eight years we would just maintain the consumption capacity of refineries in eastern Canada. If we suppose they operated at 50 per cent capacity, then we would be looking at 12 or 14 years to support eastern Canadian oil refineries. As I said, that does not take into account Petromont or the other 16 petrochemical plants in Quebec. It does not take into account their consumption or the consumption of moth-balled refineries in eastern Canada. When we add it all up, it comes to a bad deal.
[DOT]	(1120)
Perhaps I am the only politician from Newfoundland who would say that it is a bad deal. In fact, in discussing the Small Businesses Loans Act, I would have to say that it is probably
February 25, 1985

the biggest rip-off in the history of Newfoundland. In dealing with the Newfoundland offshore resources, you cannot lay down in the Accord to be passed in legislation in this Chamber and in the Newfoundland legislature that for all time you are not allowed by law to have a business operate in the Province of Newfoundland utilizing the resource from offshore Newfoundland. That is Section 54 of that Agreement, in case the Minister of Energy, Mines and Resources is listening or is at all interested in what I am talking about.
Section 54 of that Accord has to be changed. If the Government of Canada is really interested in business, that section will be changed. I do not believe it will be though, because the Accord has received general support in the Province of Newfoundland and from the Newfoundland Government. When you look at actions of Government that support and encourage the establishment of a small business, perhaps you should look at the actual impact of large decisions made by this Government concerning agreements reached with provincial governments.
Supposing a law were passed in this Parliament forbidding the Province of Alberta from developing any more oil refineries or petro-chemical industries using its own oil. There would be an outrage; it would not be allowed by the Alberta Members of this Chamber. But that is exactly what has happened in Newfoundland. I notice that you indicate I have only a minute left, Mr. Speaker. I have not yet got around to actually discussing the Bill.
In conclusion, the Bill before us today is a concoction of a national mind that is centred somewhere in a rich province in this country or was judged on the national average of the needs of small businesses. I do not doubt that it is good for certain provinces, but it is not good for the provinces of eastern Canada. The banks will now have to pay a fee to the federal Government when granting a loan. The loan guarantee will be reduced from 100 per cent to 90 per cent of what the bank loans to the businessman, which is not the total value of the loan. The regulations and basic changes to the Small Businesses Loans Act will now be made by the Minister without having to come to this Chamber. I encourage the Government to realize that there are various regions in this country and that the regulations concerning those three points should be changed when the Bill gets to committee.


Mr. Gagliano:: Mr. Speaker, I have a question for the Hon. Member for Gander-Twillingate (Mr. Baker). The statistics on small business loans show a large increase in use since 1978 with the more appealing interest rate following the change from fixed to prime plus 1 per cent. Can the Hon. Member comment on the proposed change of a 1 per cent user-fee and also the change to the 90 per cent guarantee? Will those proposals have the same good effect that they had in 1978 or will it be the opposite?


George Baker: Mr. Speaker, obviously it would have a detrimental effect on those people who are seeking loans from the banks. It will certainly be a hindrance in the area of Canada that I represent.
Small Businesses Loans Act
It has just come to my mind, Mr. Speaker, since I really did not have time to deal with the Bill, that under the Small Businesses Loans Act and other legislation concerning the Federal Business Development Bank it is quite unfortunate that there is really no provision to help a small business over a rough time. A business could be a sound business during the summer months. We can think of many businesses like that. Then along comes the wintertime and perhaps business drops. The businessman gets into trouble, perhaps because of another problem he has, in the month of January or February.
That is where these loan programs fall down. For businessmen looking for operating capital, there is no legislation on the books to really help them in that kind of a tight situation. That is indeed unfortunate when one considers that this man has put his life savings into this business as the 20 per cent investment he must make according to the Act.


Mr. Crosby:: Mr. Speaker, I have a comment and a question for the Hon. Member. In his address this morning to the House, and also last week, he has criticized the Accord reached between the Province of Newfoundland and the Government of Canada. He knows more than any of us the difficulties which have occurred in the development of offshore resources in Newfoundland over the years because of the inability of the previous Government of Canada to reach an agreement with the Province of Newfoundland.
In his criticism the Hon. Member keeps harping on one particular clause, being Clause 54. He evidences again the attitude of friction created between Newfoundland and the previous federal Liberal Government. The Hon. Member should consider the need for recognition of the fact that in all of these matters there must be balance. That is to say, we have to balance the national interest with that of the provincial. In this Accord we have seen that balance reached to the satisfaction of both parties.
Therefore I ask the Member whether he, in the interests of the one provision of the Accord which he finds offensive, would destroy the whole agreement reached between the Government of Canada and the Province of Newfoundland? Would he put the province and people of Newfoundland in the position they were in for so many years under the federal Liberal Government of not knowing how or when their resources were going to be developed, at a great loss to the people of Newfoundland in terms of jobs and economic development of all kinds? I would hope he would see the light now that the Accord is in place. I would hope that he would look at it with a positive frame of mind, try to determine how it can be improved, and not reject it because of one provision to which he has some minor objection.


George Baker: Mr. Speaker, it is rather interesting to listen to the Member who represents Nova Scotia. I would say he represents Nova Scotia before he represents any other place in this country. He knows full well that that very clause is in the Nova Scotia Agreement. But the difference between Nova Scotia and Newfoundland, the difference between New Bruns-

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wick and Newfoundland, Quebec and Newfoundland, is that Newfoundland does not have an operative refinery at this moment. Nova Scotia has in Dartmouth and Halifax. The refinery in the general area the Hon. Member represents is undergoing extensive renovations and upgrading and expansion, waiting for the offshore oil from Newfoundland. There is a refinery in Port Tupper which was moth-balled in 1980.
It is fine for that kind of a clause to be in an agreement with Nova Scotia or Quebec or New Brunswick, or any of the other provinces with refineries or petrochemical industries. The Hon. Member even has Esso Canada and a petrochemical industry located in Halifax. But Newfoundland is signing an agreement with nothing in place it can take advantage of. I would like to have two hours to explain why it is an incredible error.
The point is that we do have two refineries. The refinery at Holyrood was dismantled by Ultramar. It was a small operation of 1,900 cubic metres per day. The other refinery, in Come-By-Chance, is owned by Petro-Canada. Petro-Canada wants to dismantle that refinery. Perhaps the Minister of Energy, Mines and Resources can save some face by telling Petro-Canada to reopen the refinery in Come-By-Chance. She should tell them to reopen the refinery to get at least some spin-off from offshore oil.
To answer the question of the Hon. Member, the point is that if I were in his boots and represented Nova Scotia I would say that clause was marvellous. He knows that in Halifax, Dartmouth and Point Tupper there is enough capacity to take all the offshore oil in the Province of Nova Scotia.


Mr. Deputy Speaker:: I will recognize the Hon. Member for Carleton-Charlotte (Mr. McCain) on debate.


Mr. Fred McCain (Carleton-Charlotte):: Mr. Speaker, it is too bad the Hon. Member for Gander-Twillingate (Mr. Baker) mixed a few rotten apples in the barrel of his otherwise relevant speech as it related to Atlantic Canada. I have certain points in common with him, and we have often found ourselves supporting the same idea. However, during the last ten years the Hon. Member has not spoken with the same strength and conviction, on behalf of Atlantic Canada, which was found in his remarks today and in other remarks which he has recently made. Whether the remarks were related to fishery, small business or the general economy of Atlantic Canada, often ideas which were not productive or helpful to Atlantic Canada slipped through without the negative comments which were made today.
No matter what may be said about the Bill, at least it recognizes that the Act was outdated, and the definition of small business was not relevant to today's needs. Those problems have been addressed. However, there was no recognition of the good points of the Bill by the Hon. Member, nor of the oil agreement in Newfoundland.
Prior to the oil agreement which was made by this Government there was no hope or opportunity for Newfoundland in obtaining any reasonable benefit from the extended 200-mile
limit. We must recognize the value of good things and not be totally negative, as the Hon. Member for Gander-Twillingate was in his remarks. It is not typical of him. However, he might have changed his ideas because he is now sitting on the other side of the House.
Small business in Atlantic Canada is the lifeblood of that economy. No matter where we may be in Canada, in the main we depend upon the natural resources of the area-the fish, the forest and the farm. Small business, as it was and as it is defined, may not have a high enough limit with the $2 million limit in sales. I can think of one company which employs 16 or 18 people and probably has $2 million in sales. How are those sales to be measured? Are the sales to be measured as part of the increased value which is added by the assembly of parts, or are the sales to be estimated by the total sales going through the door of the business, including the prepared components which were assembled into the sales unit? If it is the total components of the sale, then too many small businesses will find themselves in a very disadvantaged position. I sincerely hope that the regulations under this Bill will enable the $2 million to be value-added rather than the total sale of the components which are purchased and resold by small business operations.
I am very disappointed in the attention which the former Government paid to tourism. I hope the small business people of Atlantic Canada will have the benefit of promotion by the Government of Canada to enable them to utilize the present value of the dollar. When the dollar dropped to the 80-cent level, it was seen by most Canadians as deplorable and a reflection of the economic health of the nation. At that time tourism in Canada should have been a competitive and attractive market for foreigners travelling to Canada. There was a time when it was rumoured that the Liberal Government, over the past 15 years, did not choose to advertise Canada as having a cheap dollar and that tourism should have expanded as a result of that dollar. Therefore, the brochures and the publicity which were distributed by Canada made no effort to exploit the value of the Canadian dollar versus the U.S. dollar.
The biggest potential source of business for Canada is in the United States. There are other important sources, one of which was choked off from Japan by the elimination of certain VIA Rail routes. That was a major choke on the tourist industry in western Canada. However, the U.S. dollar, which at present will cost Canadians approximately $1.35, puts Canada in a position of attracting people for vacations, whether in summer or winter. We are not giving enough promotion to the small businessmen in the tourist industry. However, I wish to compliment the Minister of State for Tourism (Mr. McMillan) who has made it clear that he will go to the world market to attract people to Canada. Small business can be addressed. Perhaps this Bill will be helpful to those people in the tourism industry.
I am concerned about the attitude which has been taken by the Federal Business Development Bank. The policy of the FBDB has not changed as much as I had hoped. I see the bank as one which should be prepared to take some risk. It should
February 25, 1985

be a bank which is available to borrowers in order that they can expand their businesses. For example, I know of a gentleman who approached the FBDB having been recommended by a credible accountant and the development council of his community. He also had the support of the Province of New Brunswick, which indicated that if the bank would give him the loan it would support the loan with a grant. Before the election last summer, after encouraging the man, the bank virtually said that he would get the loan. Now the bank has refused the loan and has refused to meet with the accountant, the applicant and the representative of the industrial development structure in the provincial Government. The opinion was that the risk was too high, yet that gentleman would have employed 20 people in an area where employment is virtually unavailable to the category of people whom he would employ.
I think the FBDB must be channelled in a direction in which there will be more risk taken. Of course, it requires an element of skill and supervision capability. In other words, it should keep an eye on the business to which it lends the money to determine whether the borrower is in fact operating efficiently, effectively and exploiting the market opportunities which are available to the business. We require more competence in that regard.
There are a good many small-businessmen in my community, Mr. Speaker, which rely on the forest. I am probably repeating what I have said more than once over the last 12 years in this House, but I must say that one of the small business groups which is in the most serious trouble is that small guy who may have a woodlot and earns his living cutting wood for market. This small-businessman is being put out of business because of an inadequate policy on forest protection in this land. That does not only apply to Atlantic Canada but across the board.
I want to say to you, Mr. Speaker, that I feel that if this small business development structure is to be pursued, the protection of our primary industry must be addressed. Every province in Canada needs the highest possible competence and capability in the protection of our forest industry, an industry in which so many of the people of Atlantic Canada are employed. One-third of all new employment in New Brunswick is reputed to be attributed directly or indirectly to the forest industry. Yet we are going into the woodlots and Crown lands of New Brunswick and instead of preserving them green, we are trying to salvage what we can of dying or dead forests. This is something which every Government must address in a proper way. I have every respect for the environment of this country and I believe, Sir, that the multitude of products which science has developed should be evaluated to determine what is the safe way to go about forest protection as it relates to the budworm and other insects.
1 am concerned about the farmer. While he has limited access to small-business loans, he does not have adequate borrowing capability in order to make his operation a success and the interest rates on his loans are absolutely killing him,
Small Businesses Loans Act
particularly old mortgage loans which have not been renegotiated and are excessive in their costs to the farmer.
This problem was addressed by the former Government by saying that these small-businessmen should be paying their own way on a user-pay basis. We are now looking again, I understand, at the possibility of agricultural inspection fees, food inspection fees being assessed on a user-pay basis. This is an industry which has already had a declining net income, has had that problem nearly every year for the last five years, and the imposition of a user-pay structure is not in the best interests of those small business people. Perhaps it cannot be addressed in this Bill but it is a subject matter which at some time has to be addressed.
The productivity of the people of Canada does not compare with that of other nations. I say to you, Mr. Speaker, that we must do what can be done to encourage increased productivity at all levels. I was very concerned when I read in The Financial Times of Canada this morning that our productivity was not going forward because at this moment in time we do not have the upsurge in the economy which would encourage expansion which, in turn, would encourage increased productivity. While I am quite prepared to say that foreign economies do have an impact on Canada, I am not prepared to say that foreign economies should be considered to have the impact upon our productivity which would not allow it to go forward as it should. This is something which I feel we have to address.
The Hon. Member for Gander-Twillingate addressed the plight of Atlantic Canada. Atlantic Canada was very pleased when the frigate program was awarded to the Saint John Shipbuilding & Dry Dock Co. Ltd; it appeared to be a great bonus for Atlantic Canada. But after the award was made, it was then that the nitty-gritty negotiations began to take place, and even though the prime contractor is located in Saint John, New Brunswick, we find that only 28 per cent of the man-days which will be required in the construction of those frigates will remain in the Province of New Brunswick. The former Government found every possible way to spin off every possible advantage to other sectors and other provinces in the Canadian economy. I say to the Hon. Member for Gander-Twillingate that, while he may not like the oil deal, there are certainly a lot of Atlantic Canadians who are very disappointed in the situation we now find ourselves in as it relates to the building of the frigates for the Canadian Armed Forces.
I would like to read part of a letter I received which I think indicates both the ability of small business to take advantage of the legislation which we are now discussing, and as it has been in place historically. I think it also places a very major emphasis on the need for this new legislation and perhaps a reconsideration of some of its aspects. The letter was written by a gentleman from Hartland, New Brunswick, Mr. Gary Foster, who is a member of a family which has developed a very important employment structure in our province and who has at the same time succeeded as a small-businessman in a very major and admirable way. I quote just one paragraph:
As you are aware, I have had considerable success in the operation of a linehaul truck brokerage company. Much of the success of this corporation has
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resulted from its ability to utilize the small business deduction and a conservative dividend policy which permitted reinvestment in the business. The profits kept in the Corporation created employment, and increased the over-all economic well-being of Carleton County. The tax incentive created by the small business deduction has worked optimally both in theory and in practice in the development of my business.
That man, Mr. Speaker, led by his father initially, has made as much progress in the trucking business as anyone could ever hope to make. He is employing well over 100 people in the County of Carleton and its surrounding areas. The importance of this Bill, its expansion and the change in its regulations, are of very major concern to our community. I think we have to give more incentive to small business because small businesses in Atlantic Canada are, in the main, of the family and local type. With the exception of the large pulp and paper companies and perhaps the Irving Oil structures, the vast bulk of business in Atlantic Canada has been created by family-operated businesses, whether it be the Ganong Brothers in St. Stephen with their chocolate product, the McCain Brothers in Florenceville with their food processing industry, or any number of others I could mention. It has been the family operation which has created business and employment and which has been the initiator of all the main and important business in our area. But they can only go forward if there is an element of tax advantage.
Something else these people need is a complete knowledge of the marketing of the product which they produce. It is unfortunate that the small business guy does not know where his market may lie or what its potential might be. I would like to see the circulation of information on our market capability so that we could reach a point at which a manufacturer of a particular product can be listed and all of the producers in Canada could in fact be circularized as to what is the potential market for that product. I am absolutely convinced that we do have the imagination, the investment capability,-the workforce and the productivity potential in Altantic Canada to be an important contributor to the small business sector of Canada. However, the small business sector does need leadership. It does need this legislation which expands the opportunity to keep the profits in the company so that the company in turn can expand.
Three things are needed. The first is the circulation of information to small businessmen to enable them to understand the market potential outside the community. The second is for this Act to receive quick passage. The third is for the Government to study the capacity of the Federal Business Development Bank making more credit available. The Canadian banking system today does not lend itself to recognition of the potential and capability of the small businessman. Hundreds of millions of dollars, or maybe even a billion dollars, will be lent to an organization such as Dome. However, $50,000 for a small businessman in rural Atlantic Canada is considered excessive.
Let us establish a credit line. Let us establish the small business structure under this Act. Let us attempt to feed them
the market capabilities as well as giving them a credit line to enable them to get the business in the first place.


Mr. Henderson:: Mr. Speaker, I enjoyed the speech of the Hon. Member for Carleton-Charlotte (Mr. McCain). Over the past number of years I have served on Fisheries committees with the Hon. Member. On many occasions I found that we shared some of the same problems, as we both come from Atlantic Canada. I know of the interest of the Hon. Member in the areas of agriculture, fisheries and forestry.
The small business sector in my constituency is possibly even smaller than that of the Hon. Member. However, we do have an agricultural community. I am sure the Hon. Member would agree that there are tremendous problems in the agricultural industry today. Prices in the potato industry were extremely depressed again this year. Producers tell me that they are selling potatoes at more than one cent a pound below the cost of production. There are severe problems in the pork industry. The only sector of agriculture which is doing reasonably well is the milk industry.
The Hon. Member mentioned user-pay on inspection. From what farmers tell me I believe that the user fee for potato inspection will be extremely detrimental to the industry at this time. Producers believe, and I agree, that inspection is a protection to the consumer and should be paid for out of general revenue. Would the Hon. Member like to comment on that? It is a problem which is very serious for potato farmers in Prince Edward Island and is probably equally as serious for the potato producers of New Brunswick. Would the Member comment on whether he and other members of his caucus from Atlantic Canada feel that there should be any kind of inspection fee imposed on the potato industry?


Fred Alward McCain: Mr. Speaker, I share the concern expressed by the Hon. Member for Egmont (Mr. Henderson). Considering the evolution of government and policies over the years, I am very concerned about the change of priorities which has taken place in government expenditure during my lifetime. There was a point when there was no consideration given to the idea of user-pay for government services. The Government of Canada felt that was its responsibility for the protection of consumer and producer as related to food. Even in the 1930s when money was scarce there was no charge for potato seed inspection. There may have been a registration fee for the applicant, but that was minimal. There was no charge for meat inspection in the abattoirs.
I ask all Members of the House what has happened to our priorities in this country. We have moved ourselves so far in our field of expenditures that we can no longer treat the citizens of Canada in the primary fields of production, and particularly in the area of food, with the same protection for the same fee that was applied in the 1930s. As a matter of fact, it was not until 1968 that our budget expenditures got so out of control that in total desperation the economists, the Cabinet, and the Department of Finance as a whole, began to look for ways to raise money to operate the oligopoly of government which is so huge that it is no longer in control.
February 25, 1985

I am very concerned about the charges which were imposed before 1984 and are still under consideration in 1985. In some way or another the thinking of government and its finances has lost sight of the services which were basically assumed, whether the repair of small craft harbours, the supervision of bud-worm spray, or the inspection fees for food products in all of Canada in all its spheres. We seem to have lost sight of the capability that we had to extend services at a reasonable fee. We seem to have lost control of our expenditures to the point where we are desperate. We were desperate before September 4, 1984, and there are signs of desperation in 1985. It is a chronic problem. How do you get the balance of expenditures into place in order that the proper services can be rendered?


George Baker: Mr. Speaker, I have a question for the Hon. Member in relation to his reference to me at the beginning of his address. Aside from yourself, Mr. Speaker, and the Member for Halifax (Mr. Mclnnes), the third person in the Chamber who would be very happy about the offshore agreement and the possibility of guaranteed oil supply for years to come would be the Hon. Member who just spoke. The largest oil refinery in this country is not to be found in Alberta or Saskatchewan. The largest oil refinery in the country, with a capacity of 37,000 cubic metres or 220,000 barrels a day, is in Saint John, New Brunswick. The hon. gentleman made reference to it in his speech. I can see why he is very pleased with the offshore agreement, although I am not.
The hon. gentleman made another statement concerning the fact that I now appear to be outspoken. He intimated that I previously was not. The most outspoken person in this Chamber for the past six to eight years on forestry policy is the hon. gentleman who just spoke. He was at complete odds with government policy as it related to budworm spraying and the forest industry. Does he still hold those views as firmly as he did when he was in opposition? Has he seen the light and changed his mind?
I completely disagree with him on the method of his forestry policy. Is he opposed to the present Minister of State (Forestry) (Mr. Merrithew) or is it too early for him to take a public position on the question of spraying with Matacil and Feni-trothion and other chemicals?


Fred Alward McCain: Mr. Speaker, I have not changed my position at all. The Hon. Member can speak to the Minister responsible for forestry and other Ministers if he doubts that.
My position was that North America could not feed itself from its agriculture without the chemical advances that have been made. Canada and particularly Atlantic Canada cannot provide employment and a viable economy without a productive and viable forest. We are very dependent on that sector. The Hon. Member's constituency is no different from mine and may even be more dependent on forestry than my constituency.
There is a safe way to protect the forests and we should find it, because if we wait much longer there would be a 10 per cent
Small Businesses Loans Act
reduction in employment in that area of New Brunswick along with a very rapid escalation of unemployment as a result of improperly nurtured, sprayed and harvested forests across Canada. I have not changed my position and I will continue to pursue it as much as I have in the past.
Finally, the largest refinery in Canada is operating at a very low percentage of its production capability because the Liberal Government pictured Canada as an unreliable source of energy. Its markets on the eastern seaboard of Canada were cut off, as they were for Come-By-Chance-


Mr. Hopkins:: That is absolute nonsense.


Fred Alward McCain: It is not nonsense. There is no question that the Come-By-Chance refinery was built to export oil to the United States. The Hon. Member will not argue with that. But the market was lost, as it was lost to the refinery in Saint John.


Mr. John Parry (Kenora-Rainy River):: Mr. Speaker, I rise today with no great sense of enthusiasm or moment as regards the contents of Bill C-23.


An Hon. Member:: Why did you get up at all?


John Edmund Parry: My hon. friend asks me why 1 bother to get up at all. Let me tell him that at least I will be able to set a standard of relevance better than the 5 per cent that was voluntarily confessed to by my friend to my right. I trust that he will not unduly embarrass his colleagues by keeping such a high standard of relevance in his future contributions in this Chamber.
I believe that the proceedings we have witnessed this morning indicate what I believe to be a major flaw in Bill C-23. Although I support the Bill in principle, the debate we have heard not only from the Official Opposition but from the Government clearly indicates to me that Hon. Members would much rather be discussing substantive questions of economic development and concerns for the future of this country's energy industries than discussing a Bill which merely papers over cracks, tinkers, embellishes and makes minor changes to the substance of long-standing legislation.
While I intend to discuss the merits of the Bill, its very presence in this Chamber indicates a certain lack of initiative and commitment on the part of the Government to introduce legislation that would seriously address the problems facing our country.
My Party can support the majority of changes made by this Bill in the existing regime of small business development assistance in this country. I have had some first-hand experience with that assistance regime and 1 must say that I find it inadequate. After six years as a small business proprietor and another two years as a partner in a small business enterprise, I can say that the assistance that was offered left much to be desired. This was also the impression of my clients and my colleagues in the small business sector with whom I dealt.
The election campaign of last summer and the rhetoric we have heard resounding across the floor constituted the million

February 25, 1985
Small Businesses Loans Act
dollar wind-up. Indeed, Bill C-23 is the 10-cent pitch. Let us never forget that the small business sector in this country employs more workers than large corporations and more workers than governments at every level. Unlike many large corporations, 98 per cent of the small businesses in this country are Canadian owned and the profits, by and large, are used for new investment and job creation in Canada.
The last four or five years of unlamented maladministration by my colleagues to my right took a serious toll on Canada's small businesses. In 1981 and 1982 over 20,000 of Canada's small businesses went bankrupt, with an estimated loss to the Canadian economy of approximately $3.5 billion. Of course, nearly all the businesses that went bankrupt were small businesses. In the case of small farm businesses, bankruptcies continued at record levels through 1983.
We have an image of a sector that is under siege. Does the Government do anything to lift that siege as a result of this Bill? I think not. Rather, I believe the Government has taken the existing Liberal program and has chosen to make minor amendments to the details. Of course, we do not know if the blood on the floor after the execution of "Erik the Red" will include the blood of small business.
The small business sector is one which has potential and vitality and has contributed enormously to Canada's development in the past. It is always said that the railroads built Canada, but we should remember who built the railroads. While the CPR and the precursors and predecessors of the Canadian National railroad built Canada to a point, let us not forget that small contractors logged off the right-of-way, contractors brought in the labour, often with a tragic toll due to accidents and disease. They built the roadbed, sometimes with contracts for a mile at a time. Entrepreneurs undertook the blasting, crushing and cutting of ties and indeed the haulage of many of the commodities that served the construction of the railroad. We should also remember the supply chains that were set up on a private basis to build those railroads that tied our country together.
While that participation has obviously changed form, we must ask to what extent that participation has been recognized by the Government as we debate this legislation. The recognition has been scanty indeed. The Minister of Regional Industrial Expansion (Mr. Stevens) shed a "tier". He shed tier one of the IRD program. He cut off a large number of small businesses that could have used that program for further development. Let us simply hope that the Minister has no more "tiers" left to shed.
Let me review the deficiencies as well as the substance of the Bill. We have an additional $300 million granted to the total amount of loans permissible, and that we can all applaud. We have a new lending period and new limits established with the administrative facility to amend those without bringing them back to the House. We have a fee of 1 per cent of the value of the loans imposed. That is certainly something of questionable merit which must be debated at the committee
stage. On the one hand it is the recognition of the $43 million lost over the last financial period and the Government's need to ensure that the banks are simply not giving out the Government's money without any recourse or comeback under the Bank Act.
We also have the proposal to change the underwriting from 100 per cent to 90 per cent. I think that is something reasonable and supportable. After all, the current experience surely indicates that some money has been going out of this program to projects which the banks would not be caught dead looking at if they were looking at them with a view to lending their own money.
The definition of small business is adjusted routinely to account for inflation. The other amendments, after all, are largely of an administrative and detailed nature.
The benefits of this program we feel do indeed outweigh the costs. Let us look at some of the benefits which the Government could be giving to small business if it were prepared to make a serious effort to support the small business sector of this country and to give it the support that would reinforce its strength and enable it to grow further.
Let us look at the possibility of providing stable interest rates. I was practising as an accountant and small business consultant in the years of the last depression, 1980 through 1983.


Mr. Turner (Ottawa-Carleton):: "Recession."


John Edmund Parry: Depression. My hon. colleague says recession. I am sad to hear him defending the Liberal Government's record like that. It was a depression. If it was't in his riding, it certainly was in mine.


John Napier Turner: I am sorry.


John Edmund Parry: Apology accepted. I would have to say that there was no single cause of difficulty, no single cause of small businesses going out of business in that period, other than the cause of the instability of interest rates which left small businessmen in a state of shell-shock in many cases. They saw interest rates rise in a matter of months from perhaps 15 per cent of their total overhead, below the top-line expenses, to 30 per cent. They saw their profits, their capital available for reinvestment, swallowed up by the increase in interest rates. This really did not affect large business to anything like the same extent. Large businesses were financed generally much more on a long-term basis, using fixed interest rates. Some were spectacularly over-financed, in collusion with and with the assistance of the Government, and did indeed get into trouble. It was trouble they should have been able to foresee. They certainly had the resources to do so.
Let us look at what the Government could have done had it been fully committed to the support of small business in terms of ensuring that credit was available to small business on an equal basis. My colleague, the Hon. Member for Kamloops-Shuswap (Mr. Riis) mentioned many programs in other countries. I will not take the time of the House to reiterate them
February 25, 1985

other than to say the stipulations in the United States of America that a certain percentage of lending must be to small businesses I think is one that merits examination. We should look at that very hard to see if it would benefit Canada as I believe it would.
Small business procurement is another matter on which we should seek initiative and action from the Government to ensure that a certain percentage of all Government acquisitions, procurements, purchases and contracts go to the support of the small business sector. My own experience indicates that the Government could do a lot more with the chartered banks to improve small business financing. My own experience indicates that programs are generally inadequately advertised, that banks have very little initiative or incentive to promote those programs other than to lend their own money. My belief is that in many ways small business, though perhaps not large, is as well served through the American system of community, town, and statewide banking than it is through the oligopoly which Canada's chartered banks have in our country.


Mr. Nickerson:: You want to socialize the banks.


John Edmund Parry: I am sorry I used a word that my hon. friend cannot understand, but oligopoly does, after all, refer to the control of a business sector by only a few players.
Let us have the Government examine that lack of advertising and ensure the banks are used as a point of sale for the sort of assistance the Government can and should provide under an enhanced regime of assistance to small businesses.
Let us look at the failure of these programs to serve women. Let us not forget that a very high proportion of new businesses in Canada today are started by women. Let us remember that women should and must, if we are to express a commitment to an equal society, have equal access to programs designed to help people get started in business and to help them continue and make a success in business.
Let us have the Government bring forward some sort of measure to provide stability and predictability in interest rates that small businesses must pay instead of continuing to follow the line of the Governor of the Bank of Canada and the trends of our massively strong neighbour to the south in setting those interest rates which are so central to determining the future of small businesses in this country.


George Baker: Mr. Speaker, I have a question for the Hon. Member for Kenora-Rainy River (Mr. Parry). 1 would like him to clarify one point and I shall predict what his answer will be before he gives it.


John Edmund Parry: I rise on a point of order, Mr. Speaker.


George Baker: Is the Hon. Member in support of the provision in the Bill that imposes a fee on the lender to be paid to the federal Government for lending the money? Is the Hon. Member in support of the reduction from 100 per cent to 90 per cent of the guarantee on the loan which the businessman is going to get, given the fact that the imposition of the fee on the bank will be passed on to the customer? Do you think the
Small Businesses Loans Act
bank, Mr. Speaker, will just assimilate that loss? No, it will be passed on to the customer.
I would like the hon. gentleman to answer yes or no. Is he in support of those two provisions, the two anti-small business provisions, in this particular legislation?


John Edmund Parry: Mr. Speaker, when I heard the Hon. Member say that he would predict my response, I awaited with some eagerness. This is why I attempted to rise on a point of order, though of course I know enough that it would not be accepted as such. However, since he is both directing a question to me and then suggesting that he could answer it but declining to do so, I am left in some doubt as to what are his intentions. Is the idea that he would elicit some response from me or simply try to confuse me by indeed misrepresenting one of the segments of the Bill?
Had he read it-I do not doubt that he has dipped into it, because of course one must know something about the Bill to take one whole minute out of the 20 allocated to him-he would have seen that the fee is in fact imposed upon the bank. After all, I do not believe, like the Hon. Member, that the bank will take that fee and clutch it fondly to its bosom and let it percolate through to the bottom line.
We know that banks have profit centre accounting and that they are very readily able through their information system to determine the level of those fees over a particular year or a given fiscal period. It is my belief that banks, by virtue of this fee, will become somewhat more careful in the way in which they use small business lending provisions.
I will give the Hon. Member an example of that so that he will know I am not merely trifling with his intervention. My experience was that banks would seek to channel loans through the provisions of the Small Businesses Loans Act which they were not only quite capable of financing on their own account but in many cases should have financed on their own account. My experience was that clients for whom time indeed was of the essence, as in remote and seasonal economies it very often is, were kept waiting with proposals that, if they had access to better sources, or to more than one source in many cases, they would have taken elsewhere because of the desire of banks to have a particular loan guaranteed through the small businesses loans process.
Therefore I say to the Hon. Member that my belief is that this amendment would indeed have a beneficial effect. I do not pretend that it will completely have a beneficial effect for small business, nor do I pretend that small business will not end up bearing some of the costs of that 1 per cent commitment fee. Because the bank will have to pay the fee and because the bank will be undertaking 10 per cent of the responsibility for any losses itself, it will indeed ensure that some loans which the bank should finance directly get financed directly and are therefore handled in a much more expeditious and timely fashion.

February 25, 1985
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George Baker: Mr. Speaker, I will complete my first comment. I knew he would say that he agreed with those provisions of the Bill. I should like to put a follow-up question to him. He claims that banks want to take advantage of the loans of the federal Government when they should have been granting those loans under their normal banking program and therefore we have a fee on the backs of the banks. The hon. gentleman is also saying that now they will grant loans under their normal lending program.
There is nothing in the Bill which makes banks give loans to anybody. That is where the fallacy of his argument falls down completely. What has happened is that the New Democratic Party has taken a position on the Bill, as stated by its spokesman, which it now knows is wrong. Now it has to try to justify it; but it cannot be justified with that kind of argument.
Again I ask the hon. gentleman where in the Bill it says that banks have to loan that same money to small-businessmen, which he claims in some cases was a give-away, was not really a good loan, and should have been administered under their normal lending program. How does it now protect businessmen who would normally have received the loan but probably now will not receive it under the normal banks' programs?


John Edmund Parry: Mr. Speaker, I believe that question is answerable. I am glad the Hon. Member said that my fallacy fell down. The Liberal tendency with fallacies is, of course, to erect them into principles.
What I am talking about is the higher grade of loan applications which bank managers encounter. Under the old regime of 100 per cent responsibility on the part of the federal Government, the tendency was that the banker took in an application which looked pretty solid but said, bankers going on conservatism as they do, that maybe he would write the loan under the Small Businesses Loans Act and cover a portion of his anatomy with his head office, his regional office. Therefore, as I said, many loans were written under the Small Businesses Loans Act which in a system that perhaps had a little more initiative and daring would have been written on the bank's own loan portfolio.
If those loans go from the Small Businesses Loans Act portfolio into the bank's general portfolio, of course there is room created within the fund's limits for the consideration of other loans which might be of a riskier, more speculative nature. Therefore bank managers can spend their time on, and regional offices can give their consideration to, other proposals which may indeed have merit.
There seems to be an assumption on the part of my hon. friend that once an application has been condemned as speculative it is of no further use; but it may have merit and could be assessed under this type of financing and, if found viable, financed.


Mr. Bob Horner (Mississauga North):: Mr. Speaker, it gives me great pleasure to rise and speak on Bill C-23, an Act to amend the Small Businesses Loans Act. It is very fitting that it is on this Bill that I am making my so-called maiden speech as
a Member of the House representing the constituency of Mississauga North.


Some Hon. Members:: Hear, hear!


Robert Nesbitt Horner: There exists within the Bill far-reaching benefits. It will bring a better future for both Mississauga North and Canada. It has often been said in the House and elsewhere that business, particularly small business, is the engine of the Canadian economy. Nowhere is this more true then in the riding of Mississauga North. A Bill such as this one will do much to improve the environment in which these very important firms thrive and prosper. It will bring great benefits to all Canadians.
I wish to inform the House as to why I see so many benefits forthcoming, not only from the Bill but also from that which it represents-a new attitude, a new direction by government in the country. The riding I represent is very much like this great country of ours. Mississauga North is a young riding. Like Canada, its greatest days lie ahead. The energy and enthusiasm of youth is evident everywhere. Our role as a Government is to ensure that our future remains bright.
Growth is the byword to describe Canada, a relatively young country which has leaped into the forefront as one of the leading nations of the world. Sometimes for better, sometimes for worse, we have experienced tremendous growth. Mississauga North epitomizes that growth. Having only come into existence in 1976, my riding has already exploded to the point where at the next election its population will exceed 300,000 people. The huge potential that exists for both Mississauga North and Canada is truly the key to realizing our goals. We must learn to live together and to work together so that we can achieve our great potential to the benefit of all Canadians.
Mississauga North consists of people from all corners of the globe, and they have found a way to live together in harmony that benefits all. In the short time that I have been in office serving the people of Mississauga North, we have had over 2,000 new Canadians welcomed into our community. I, for one, take great pleasure in meeting these new Canadians, in talking with them, and hearing of their dreams and goals for the future.
New Canadians perhaps most clearly reflect that which is so promising about our great nation. They wear on their sleeves the dreams of a better life for themselves and their children. 1 know that the potential for a better life exists in Mississauga and I know that it exists in Canada. I am sure that with the introduction of legislation such as Bill C-23 and with the direction that the new Canadian Government has shown, these people will be able to fulfil their dreams and reach their goals.
I would like, if I may, to talk for one minute about the reasons why the riding I represent has experienced such phenomenal growth of late and why it is one of the most successful communities in our country. As I said earlier, Mississauga North is relatively new. In fact, the City of Mississauga has only recently celebrated its tenth birthday. It has, however,
February 25, 1985

taken advantage of the opportunities presented to it. With great energy, coupled with co-operation, consultation and consensus, people came together and planned a community that would turn rapid growth to advantage.
In my riding there are over 6,800 small businesses that fall under the definition laid out by Bill C-23. These small businesses are the backbone of our community. Small businesses are also the backbone of Canada. We in the federal Government must create the environment that encourages Canadians to start their own businesses. People who have dreams and ideas must have an environment that is friendly, an environment that is co-operative and a Government that wants them to succeed. We must give them the opportunity to pursue their dreams. I know that, given that opportunity, they will succeed and Canada will grow with them.
I, as a small businessman who started out in Mississauga some 20 years ago, have seen a tremendous, exciting growth and I have been fortunate enough to benefit from it, to benefit from an enlightened local government that strives to help businesses in whatever way it can. Just as in small business, the most important ingredients of a successful government are good planning, co-operation and employing the consensus approach to take advantage of the opportunities that arise.
I see the new Canadian Government following this plan and I am pleased, as I know my constituents are. People in Mississauga North know through experience that good government is a government that listens. I am pleased to see a program of consultation being undertaken by the Canadian Government to learn what the people want, to learn where the people want to go, to learn how we can best help them reach their goals.
The comparisons between Canada and Mississauga North are many. Mississauga, like Canada, is young with tremendous potential and resources, a bright light that attracts people. Often I feel that we who live in Canada forget how great our country is. Luckily our new Canadians can remind us that there still exists the potential for all our people to pursue their dreams and reach their goals.
In the community of Mississauga government has played its part. There has been a need to design a framework. They have, with consultation and consensus, done so. They have provided the structure so that the citizens can work to achieve their goals. I am proud to be able to say about the community in which I live that local government has been there to lend a helping hand, but it has never let that hand lie too heavily on the shoulders of its citizens.
I come from one of the few communities in this country that faces a substantial surplus in its treasury. This position has been achieved while the members of the community have benefited from some of the finest social services and community facilities that are available anywhere in this country.
How, we may ask, has a community that is so young been able to achieve such remarkable results? The key lies in its ability to understand the needs of its people, to work in unison with the factors of growth and to harness in a constructive way
Small Businesses Loans Act
the tremendous energy of a booming small business base. The people of Mississauga North have learned that the way to get the most from their engine of growth is not to drive it but to ride along with it, to be there, to offer help and guidance when required but to keep their hands off it so it is given the freedom it requires to reach its maximum potential.
The proposed amendments in this Bill, which I want to go quickly through, will do much in a very real sense to improve the operating capacities of small businesses in this country, while at the same time ensuring that the partners involved in the loans are all responsible. The increase from $1.5 million to $2 million for the upper eligibility limit to qualify a firm as a small business under the definition as laid out by the Act makes complete common sense. With high inflation under the last Government, many companies that are still of a relatively small nature exceeded the $1.5 million ceiling. This increase to a $2 million limit is very necessary.
The new liability loss-sharing ratio of 90 per cent to 10 per cent is a step in the right direction so far as the responsibility aspects of lending are concerned. It is essential that the business involved in the loan transaction be responsible for at least part of the liability under the loan. This Act is to enhance and encourage the establishment of a small successful business. It is not meant to be a vehicle to give away money at the taxpayers' expense to businesses that cannot accept some responsibility for their own funding.
Another amendment within this legislation is the fee to be paid by the lender in the amount of 1 per cent of the total loan. Again it only makes sense that the banks, which to date had been profiting in a no-loss situation, should have to contribute so that the Canadian public is not left to shoulder all the responsibilities. In our conversations with banking institutions they expressed a willingness to share in this 1 per cent fee, especially when you consider that they will generally get all other loans from the same firm as it grows in size and success in the years after the initial Small Businesses Act loan was extended. These major amendments are all steps in the right direction so far as placing responsibility and safeguards for public funds hand in hand with encouraging the entrepreneurial spirit.
It is essential we understand that for people to be truly successful and for businesses to be successful, there must also exist the possibility for them to fail. If we spend all of our time legislating, controlling and directing our small businesses, then they will spend all of their time responding solely to us, channelling their creative energies away from growth into activities that merely deal with an overwhelming bureaucracy. We must be there to help them when the idea has been sparked, but we cannot expect small business to be successful if we continually insist on dictating the directions they should take.
The people of Mississauga North know this, and that is why my riding has one of the highest standards of living in this country. That is why my riding, although it has people from many backgrounds with many ideas and beliefs, is relatively strife-free. That is why unemployment and violence are both

February 25, 1985
Small Businesses Loans Act
extremely low and that is why the family unit and community spirit are so alive.
I suppose it would hardly be fitting as the Member for Mississauga North if in my maiden speech I did not make mention of our infamous train derailment. Perhaps I can use it to illustrate the true character of my community. My own business is located within walking distance of where that train derailed so I, as so many of my fellow residents in Mississauga, was deeply involved in the evacuation of our city. The evacuation was conducted and co-ordinated by various levels of government and is considered the world over a model of how evacuations of this size should properly be undertaken. This success was possible because there has always existed in Mississauga that co-operation between private citizens, businesses, governments and all involved organizations in our community. The doors have always been open in Mississauga to better understand what each of our residents wants, and because of open communication we have been able to grow together in such a successful way.
I want to parallel that to Canada itself, for I feel that the New Conservative Government is demonstrating, through legislation such as Bill C-23, that it wants to work together with Canadians. It does not want to burden them. I know that Canada too can experience the success that comes through consultation and co-operation.
I am pleased that so many of the residents of Mississauga applaud the new Government's decision to work together with all sectors of our society. I am proud to represent Mississauga North in this House and in this Government. I will continue to work in the spirit of co-operation exemplified not only by Bill C-23 but also by all of the activities of our new Government to date so that all Canadians can achieve their dreams and goals.


Mr. Deputy Speaker:: If there are no questions or comments, we shall continue with debate.


Mr. Maurice Foster (Algoma):: Mr. Speaker, I am happy to join in the debate on Bill C-23 because it relates to the Small Businesses Loans Act, and the small business sector is obviously one of the most important sectors of our economy today. However, before I do I want to congratulate the Hon. Member for Mississauga North (Mr. Horner) on his maiden speech this afternoon. It is obviously a very intimidating experience for any new Member and he acquitted himself very well. I compliment him on the speech he has made here, not only for emphasizing the importance of this legislation, but also for telling us a little bit more about his own constituency. Members of this House are always interested to learn about various parts of our country, all of which fit together to make up the 282 seats of this Chamber.
This legislation, Mr. Speaker, does some very good things in that it extends the Act for another five years. I think everyone in the House would agree with that. It also increases the total lending ceiling from $1.5 billion to $1.8 billion, which will allow that many more loans to be made. The Government is to
be commended for bringing in this kind of legislation at this time because I know of hardly any small businessmen who are not looking for a lower rate of interest such as is made available under this Act, when and if it is possible to get a loan under this legislation.
I am less impressed, Mr. Speaker, with the fact that the limit on individual loans is being raised from $1.5 million to $2 million. There may be instances where that is valuable, but in looking through the history of the Act, in most cases loans are of the order of $25,000. So it does not strike me that there is a great need for this increase, although it certainly falls in line with the increased needs of business due to inflation.
I think the real concern we have about this legislation, and the greatest problem with the Small Businesses Loans Act, is that the banks seldom want to make the loan. In 1984 there were some 31,000 loans under this Act, which was a record. Going back to, say, 1977 there were only 4,800 loans under the Act. If you divide that into 282 constituencies, and of course it is not divided up that way, there have been very few loans made.
My constituency covers some 13,000 square miles and I suppose there are 50 or 60 bank branches serving the area. But in the average town or community there are practically no small business loans available. You really have to know your banker very well; you really have to fit into the area he wants to look after. A lot of the loan decisions are made in Toronto, Montreal or Vancouver, the regional centres in the country, and these loans tend to be to preferred customers.
I fear, Mr. Speaker, that there are two provisions in this legislation which reduce the effectiveness of the Act to what it was in 1977 when there were only about 4,000 loans made across the country under the Act. The legislation requires that the bank assume 10 per cent of any loss. Given that, certainly the availability of loans will drop dramatically when what we want to do is encourage the banking institutions to provide more small business loans, not less.
Often I have people come to me and say that they are starting a new business or expanding their existing business and they ask what is available in the way of financing. I tell them there is the Federal Business Development Bank, but they say no, interest rates are very high there and they have to be turned down by at least two banks and so on. Then I suggest the small businesses loans program, but their response is that the bank is not giving any of those loans in their area. It is a good program with interest rates at 1 per cent above prime, but the banks will not give them out.
When you look at the figure of 31,000 loans across the country, you have a sneaking suspicion that a lot of those loans are going to areas like Mississauga North which are rapidly expanding. There is tremendous growth and there has been for the last 30 or 40 years. But if you get out into the rural communities of Algoma or the Manitoulin district, or the Sudbury district where there is slow economic growth, the small business loans just are not available. If they were not available many times in the past, then how much more are they going to be available when the banks have to assume 10
February 25, 1985

per cent of the loss? I am not saying banks should not assume 10 per cent of the loss; it is just that banks make these loans as a sort of favour to their best customers. They give out very few of them and I am afraid that with this provision the result will be that few loans will be available and we will go back to pre-1978 days when there was only a smattering of 4,000 or 5,000 loans made across the country.
As well, as I read the legislation, the Bill provides for a 1 per cent fee charged to the bank or credit union by the federal Government on the loan. That happens to be the same percentage as the 1 per cent above prime that the bank is earning. That is a further disincentive to the banks in granting loans. The incentive of expanding the program, with the new ceiling of $300 million in additional funding to small local businesses and industries, is in fact a disincentive for the banks to grant loans. I hope that when the Bill goes to committee we either do away with the 1 per cent fee or the 10 per cent pick-up charge that the banks will have to absorb, or that the chartered banks will be required to provide a specified amount of funding across the country so that loans which are beneficial to small business will be made more available.
Essentially the Bill provides a blank cheque for the Government. By Order in Council the Government will be able to change the charge which will be imposed on the banks. That will further deter banks from making loans available.
The other aspect of the Bill which I would like the Government to consider in committee is the extension of the program from a 10-year repayment period to a 15-year repayment period. When I was in my constituency last week I spoke with a young couple who were interested in buying a motel business. The Manitoulin district of my riding has one of the best tourist industries in Ontario. However, the couple who wanted to purchase the motel were unable to convince the owners to take back a mortgage and, therefore, they wanted to borrow money. There was some pressure for the business to be purchased and one or two banks were willing to give the couple a mortgage under the Small Businesses Loans Act. The couple had approximately 40 per cent of the equity, so it was a very healthy situation.
The problem is that the tourism industry tends to be seasonal. Although the summer months are very profitable, the winter months tend to be lean. Because of that, the couple could not cope with the charges over a 10-year period. If the Act could be amended to provide for a 15-year pay-back period, the couple would be able to cope with that loan and the bank would be willing to give it. However, under the present provisions of the Act, the couple will not be able to purchase the motel business. I suggest to the Minister that when the Bill goes to committee serious consideration should be given to extending the loan period from 10 to 15 years. It will be much more advantageous to small businesses, especially in the rural areas of Canada.
We should make the legislation more applicable to the vast rural areas of Canada. Decisions which are of any magnitude
Small Businesses Loans Act
in the banking business in the Ontario region are made in Toronto. Possibly decisions for eastern Ontario are made in Ottawa, but I am not certain of that. Clearly, for 88 per cent of the land mass of the Province of Ontario, banking decisions are made in Toronto. I am concerned that the over-all approach of the Government is to enrich and reward the more populous, powerful and rapidly expanding parts of the country, and not provide as much to the rural and far-flung frontier areas.
Over the last ten years the loans have been rapidly expanding under this program. In 1977, 4,894 loans were granted and that number increased to approximately 31,000 in the 1984-85 fiscal year. The program has been filling a tremendous need. Therefore, I would like the Government to consider removing the 1 per cent service charge and the 10 per cent pick-up charge.
There will be a loss to the Government, however, if that is not done. I feel that the program, which has been going in the right direction over the last seven years because of the number and size of the loans, will suddenly dry up. Instead of having a program which will benefit small business, a program which has been doing a great job with expanded funds, we will have a program with restrictions which will result in the money not being available, especially in the rural parts of Canada.
The Liberal critic is very conscious of the provisions of the Bill and he will be proposing amendments in committee. I hope the Government will seriously consider the proposed amendments, especially as they relate to small businesses in the outlying areas and providing longer term loans which can be extended to a 15-year period.
Obviously, the Bill has several advantageous provisions. For example, the increase in the over-all ceiling from $1.5 billion to $1.8 billion. I understand that provision is required because of the large number of loans which were made in the 1984-85 fiscal year. That is an important provision. I am less impressed by the need for the maximum loan to be increased from $1.5 million to $2 million. If we look at the basis for the $1.5 million and at the inflation which has taken place since that figure was put in place, it is probably justified. However, I am concerned about the average loan of $25,000, $50,000 or $100,000 which allows small-businessmen to start businesses, expand existing businesses and, most importantly, provide jobs. Small business has been providing the greatest growth in jobs for Canada over the last several years.


Mr. Deputy Speaker:: I would advise the Hon. Member that there is one minute remaining in his time for debate.
It being one o'clock, I do now leave the chair until two o'clock this day.
At 1 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.

[Stage Direction]
February 25, 1985

Hon. Andre Ouellet (Papineau):: Mr. Speaker, the Canada Post Corporation announced not long ago that the National Post Museum will be closed. This decision is not only regrettable, it is also unacceptable. Every postal administration worthy of the name has its postal museum. It is difficult to understand why the Museum should close its doors on March 1, while it could continue to occupy the premises in the Wellington Building until the first of July. The Minister responsible for the Canada Post Corporation has a responsibility to philatelists and collectors of Canadian stamps. With a minimum of goodwill on his part and on the part of the Minister of Public Works, other premises could be found in downtown Ottawa-perhaps even on Wellington Street-to house the National Postal Museum.
I therefore urge the Minister to take immediate action and make it clear to Canada Post that it has no right to close the National Postal Museum and that it cannot do so.


THE SENATE
Mr. Bill Gottselig (Moose Jaw):: Mr. Speaker, it is quite obvious that the message given by the Canadian people to the previous administration on September 4, 1984, has not registered with the Liberal camp followers and former bagmen who now occupy the Red Chamber.
Led by the infamous former Minister of Finance, Allan J. MacEachen, whose Budget of November, 1981, was one of the most divisive and detrimental ever foisted on the Canadian people, and followed eagerly by others who would not dare to seek a seat in the elected House, these Liberal Senators have, for the past month, been holding up the business of the Government of Canada.
It is a well known fact that the Liberal Party had pork-barrelling and patronage down to a fine tuned art, but the action of these Senators has hit a new high of arrogance, even for Liberals. Clearly these appointments made by Mr. Trudeau were his final insult to the Canadian people-


Some Hon. Members:: Order.


William (Bill) Gottselig: -and in view of the fact the Liberal leader has no control over this bunch of political hacks, I call upon all elected Members of this honourable House to join-


Mr. Speaker:: With great respect, I am interrupting the Hon. Member's statement here because the Hon. Member is
new enough that he may not know the tradition of making no such aspersions with regard to the other place. I will simply end it at that.


Mr. McKenzie:: Well done, Bill.


NORTH AMERICAN AIR DEFENCE
Mr. Derek Blackburn (Brant):: It is time to puncture another Tory myth, Mr. Speaker. We all know the one about how Canada had to test the Cruise missile to prove we are loyal to NATO. That myth was laid to rest when Australia withdrew its support for MX missile testing. The American Secretary of State then pointed out that missile testing had nothing to do with its military alliance. Now we have the Secretary of State for External Affairs (Mr. Clark) saying that Canada should support the American Strategic Defence Initiative. He says star wars is only prudent research to keep up with the Soviet Union. That's nonsense.
The U.S. Undersecretary of Defence Policy now admits that star wars is "the very core of our long-term policy. It's central," he says. In the face of this revelation, the Secretary of State for External Affairs doesn't lose his head. He keeps it firmly planted in the sand. Meanwhile, Canada is getting sucked deeper and deeper into defensive weapons. This new strategy is reshaping our northern defences. The Minister says we are only talking about a warning system.
Military experts say star wars weapons would have to be based in Canada. The Minister says: "We'll wait and see". Canada's Chief of Defence Research says star wars would be controlled by NORAD. The Minister says: "We'll wait and see". What are we waiting for? The Minister has the right and the obligation to consult with the Americans about future activities of NORAD. That duty is explicit in the 1981 NORAD renewal agreement. The Minister is ignoring that responsibility to the Canadian people.


THE SENATE
Mrs. Mary Collins (Capilano):: Mr. Speaker, the events of the past few weeks have taken many of us back to our basic political texts, such as Corry and Hodgett's Democratic Government and Politics, to reflect on what role the Senate should play in our system of Canadian government. As we met with our constituents last week, we heard of the bewilderment and annoyance of the Canadian public with a system which allows a group of non-elected men and women to frustrate the will of a Government which received an overwhelming mandate from across the country for change and renewal.
February 25, 1985
COMMONS DEBATES_________________
I can assure this House that the people of British Columbia are deeply concerned and are asking: "When are you going to do something?" We have had many studies about how changes can be made to provide for a more responsible and representative Upper House which could play a valuable role in reviewing and originating ideas and legislation. We have had a lot of talk, but little action.
The events of the last week show that a process of real reform must be started as soon as possible. I hope other Members of this House will join with me in support of calling a constitutional conference on Senate reform as soon as possible. Only then can the federal and provincial Governments, working together, put in place the constitutional amendments which are long over due and badly required in order to ensure that representative and responsible democracy continues to flourish-


Mr. Speaker:: I regret to advise the Hon. Member that her time has expired.


HUMAN RIGHTS
Mrs. Lucie Pepin (Outremont):: Mr. Speaker, in recent weeks there has been considerable criticism of the detention centres for applicants for refugee status. These centres are used for people who claimed refugee status but have been denied such status by officers of the Department of Employment and Immigration at one of Canada's points of entry. Pending a final decision on their case, these people are sent to detention centres.
In Toronto, refugee status applicants were not informed about the existence of volunteer, church and humanitarian organizations that would be prepared to provide legal aid. Sometimes they are given the Yellow Pages. A number of applicants were questioned by RCMP officers without being given access to a lawyer. The Charter of Rights and Freedoms is being violated, but officials of the Department of Employment and Immigration have stated that the Charter does not apply since the claimants are not Canadian citizens. There is a double standard being used here, one for Canadians and one for non-Canadians. We must not forget that this, too, is racism.
Conditions are sometimes worse than they are in prison. For instance, the UN rule of one inmate to a cell is not always observed. Canada is very far from living up to its humanitarian reputation. I think an investigation is urgently required with a view to remedying-


Mr. Speaker:: I regret to inform the Hon. Member that her time has expired.


THE ECONOMY
Mr. Don Ravis (Saskatoon East):: Mr. Speaker, I had the privilege of attending the First Ministers' Conference on the Economy in my home province of Saskatchewan as an official observer. Today I wish to share with the House some of my observations.
It was the beginning of a new era of First Ministers' conferences. The conference sessions were conducted in a positive atmosphere of co-operation, a refreshing change from the past. Moreover, this harmonious atmosphere extended beyond the reach of the cameras and microphones; it also characterized the working relations between the federal and provincial officials.
At a time of scarce financial resources it was apparent that all First Ministers were prepared to rise to the challenge of sharing their expertise and experiences, in trying to avoid the wasteful duplication of the past. Co-operation and consultation are fundamental to this Government's mandate and were clearly apparent in the conference initiatives and discussions. Employment, trade, investment, and interest rates were discussed objectively and without bitterness. For the first time we saw 11 First Ministers of all political persuasions working toward a goal of economic recovery.
We cannot expect that all the intergovernmental differences will be solved in one two-day session. We can and should expect continued joint efforts by all First Ministers in resolving differences in order to achieve the best solutions for all Canadians. That takes genuine trust and mutual respect, and I observed both among all the participants in Regina. I heartily applaud the Prime Minister (Mr. Mulroney) for initiating a new era-


Mr. Speaker:: I regret to inform the Hon. Member that his time has expired.


CANADIAN POST CORPORATION
Mr. Cyril Keeper (Winnipeg North Centre):: Mr. Speaker, at the beginning of February, Canada Post announced that the National Postal Museum would be closed as of March 1 and sent notices of termination of employment to the Museum's employees. Although Canada Post has known for over two years that the Museum's lease in the Wellington Building was a temporary one, and that the Museum would have to move as of June 30, it did nothing to find other suitable premises that would be available before that date.

February 25, 1985
Mr. Speaker, last week I attended a meeting with the President of Canada Post, my colleague from Ottawa Centre (Mr. Cassidy), Shirley Carr of the Canadian Labour Congress and councillor Marlene Carterill of the City of Ottawa. We suggested that Canada Post postpone closing the National Postal Museum and join an action group that would try to keep the Museum in its present premises or find other suitable accommodation.
I am sorry to inform the House that Canada Post refused outright to participate in such efforts. I would appeal to the Government to have Canada Post join an action group to ensure the Museum remains in existence instead of letting it disappear, for all practical purposes, for a period of three years or more.


THE SENATE
Mr. Clement M. Cote (Lac-Saint-Jean):: Mr. Speaker, like all Canadians, the people of the riding of Lac-Saint-Jean are very disappointed, and I would even go so far as to say that they are disgusted with the systematic obstruction being indulged in by the Opposition in the Senate which is refusing to approve a Bill that was adopted unanimously in this House. Mr. Speaker, this is being done by individuals who did not even have the courage to run in the last election and who are living off the largesse of previous prime ministers. In addition to causing considerable harm to the operations of the present Government, these Members are damaging the reputation of a Senate that is already-


Mr. Speaker:: Order. Members know that members of the other place are Members of Parliament as we are. The same respect must be given them as is appropriate for members of this House.


ENVIRONMENTAL AFFAIRS
Hon.   Chas. L. Caccia@Davenport: Mr. Speaker, this item is about unanswered letters. In Edmonton and Toronto last week a large number of individuals and organizations advised me of their frustrations at not receiving replies to letters they had written to the federal Minister of the Environment (Ms. Blais-Grenier).
This lack of response by the Minister of the Environment is in sharp contrast to the promises of an open Government and of good communications with the public, made by the Prime
Minister (Mr. Mulroney) last summer. I bring this matter to your attention, Mr. Speaker, with the knowledge that Canadians and environmental groups across the country would really appreciate receiving a reply to their letters when they write to the Minister of the Environment.


INDIAN AFFAIRS
Mr. Nelson A. Riis (Kamloops-Shuswap):: Mr. Speaker, on behalf of 36 Indian bands whose reserves will be seriously affected by CN's twin tracking program in central British Columbia, I urge the Minister of Transport (Mr. Mazankow-ski) and the Minister of Indian Affairs and Northern Development (Mr. Crombie), along with the Transport Committee Chairman and the Chairman of the Fisheries and Forestry Committee to do whatever is necessary to stop CN from proceeding with its present double tracking plans along the sensitive Fraser-Thompson River corridor.
Since the Committee plans to hold hearings into the twin tracking program in mid-March, the Minister should postpone approval of the project at Mile 59-69 of the Ashcroft sub-division, considering that CN plans to begin dumping ballast into the Thompson River on or about March 1. The Native Alliance on CN Double Tracking believes that a one-year delay is needed to assess many unresolved environmental, social, and economic issues relating to the program properly, as well as time to determine whether the project is required by the western Canadian transport system, and to determine why the two railways cannot co-operate in this area and obtain a twin tracking option as a result.
While approval of the project is likely in the best interests of the CN corporation, it is certainly not in the best interest of the native people who live along the tracks in this area, and of the West Coast salmon fishery. The Government surely has a responsibility to put the needs of native people and a major fishery before a Crown corporation. Postponing this project would demonstrate its correct priority.


THE SENATE
Mrs. Pauline Browes (Scarborough Centre):: Mr. Speaker, for the past 118 years Canada's Senate has evolved to meet the needs and wishes of the Canadian people. The Senate has acted as a supporting body, complementing, but not competing with, the popularly elected House of Commons. Canadians believe in a parliamentary democracy where the will of the people rules rather than the will of a select few.
Last September Canadians elected a Government to act in their interest and to respond to their concerns. As elected

February 25, 1985
representatives we must recognize this fact and govern accordingly. The same follows for those in the other place. They too must recognize the fact that the Canadian people spoke last September and chose a Government.
When the work of the House is unduly obstructed or delayed by the other place, the will of the people is not served, and neither is the will of democracy. In short, when a popularly elected Government cannot properly carry out its duties, I say that democracy has been shunned.



ORAL QUESTION PERIOD


John Napier Turner: Mr. Speaker, my question is for the Minister of Finance. In the last 10 days before the weekend the Canadian dollar dropped dramatically from 74.6 cents U.S. to 72 cents U.S. At one-thirty this afternoon it apparently stood at 71.35 cents U.S. Mr. Speaker, 80 per cent of the money that moved across our border against the Canadian dollar was moved by corporations doing business in this country. That reflects the confidence that the business community has in the Canadian economy.
The Wall Street Journal, which reflects the trends of the Prime Minister, says that the "Conservative Government has shown little resolve in dealing with Canada's financial problems". This is a matter which deals with confidence, Mr. Speaker.
In order to make the Minister's answer more relevant, I would like to recite words which the Government usually loves to hear, words of the Prime Minister. These words appear in an article in Fortune magazine which hit the stands this afternoon. This shows why there is little confidence in this country when the Prime Minister himself has no confidence in the Canadian business community. He said:
We do not have a very good track record. Our products have not been of the highest quality. Our deliveries have been lacking in reliability. Our expertise has been in large measure borrowed. Our technology has been purchased. What the hell makes us so special?
This is the Prime Minister of our country, in an American magazine, lauding the Canadian business community.
My question for the Minister of Finance is-


Some Hon. Members:: Hear, hear!


John Napier Turner: I thought, since the Prime Minister was absent on business, they would like to hear his words in absentia, words which the Canadian people are going to learn to treasure.


Mr. Wilson (Etobicoke Centre):: This is a four-minute question.
Oral Questions


John Napier Turner: Mr. Speaker, I have followed the length of the answers in this Chamber since Parliament assembled and I have not pressed that.
Would the Minister of Finance describe the conversations he has had recently with the Governor of the Bank of Canada relating to the situation of the dollar crisis? What is the position of the Bank? Is it trying to support the dollar? Has it made a decision that the dollar should fall? What is the position of the Bank as conveyed to the Minister?


Some Hon. Members:: Hear, hear!


Michael Holcombe Wilson: Mr. Speaker, 1 see by the clock that that was a four-minute question. I assume I have four minutes to answer it.


Some Hon. Members:: Hear, hear!


Michael Holcombe Wilson: I would like to respond to some of the matters which the Leader of the Opposition has pointed out. First, I would like to draw his attention to the facts to which the Prime Minister was responding in the Fortune article. He was setting out a litany of the problems that the business community had been encountering and had been responding to under 15 or 20 years of Liberal rule. It is those matters that we are trying to turn around. We made a first step on that on November 8, a very good first step according to the commentary that I have been reading. It is that new economic policy which is designed to stabilize the situation in the exchange markets and give lead to a period of longer term strength in the performance of the Canadian dollar. It is a performance that has dropped from 103 to the current level during most of the time that the previous Government was in power.
Let me respond specifically to the question that the Leader of the Opposition posed about my discussions with the Governor of the Bank of Canada.


Some Hon. Members:: Order.


Michael Holcombe Wilson: I have regular discussions with the Governor, as I am sure the Leader of the Opposition did when he was the Finance Minister. Surely he should understand that those discussions between the Governor of the Bank and myself are confidential. I have stated the policy of the bank previously outside the House. We are in an international situation-


Some Hon. Members:: Oh, oh!


Michael Holcombe Wilson: Members on the other side are laughing. Surely they understand-


Mr. Chretien:: Read back what you said last year about the same thing.


Michael Holcombe Wilson: If they are interested in hearing the answer I will tell them that we are in a situation

February 25, 1985
Oral Questions
that is world-wide in its implications. All currencies are suffering a period of weakness against an extremely strong U.S. dollar.
If we were talking about a bilateral relationship it might be a different situation, but we have the situation in which a number of currencies are extremely weak against the dollar. We are trying to moderate those changes, both in the exchange markets and in the interest rate markets, to introduce a degree of stability and rebuild confidence in the Canadian dollar. That is the policy of the Government.


Some Hon. Members:: Hear, hear!


REQUEST FOR STATEMENT BY BANK OF CANADA GOVERNOR
John Napier Turner: great deal of the Minister's problem is that the confidence of the business community in the Government has been slipping radically, affecting the Canadian dollar.
In his next conversation with the Governor of the Bank of Canada, would the Minister ask him to make an early statement on the role of the Bank in intervening in the foreign exchange and whether the Bank is deliberately letting the dollar fall in an attempt to stabilize the interest rate structure in this country? Would the Minister ensure that the Governor make that statement, either before the committee or publicly?


Michael Holcombe Wilson: Mr. Speaker, let me respond to the preamble to the question about less confidence here. Let us review what has happened to the level of the Canadian dollar in the last few months. The U.S. dollar has appreciated against the Canadian dollar by 7.4 per cent since September 4. The Deutschmark has depreciated by 17 per cent against the U.S. dollar, the pound sterling 20.9 per cent, and the French franc 16.5 per cent.


Some Hon. Members:: Order.


Michael Holcombe Wilson: Surely there is not a degree of weakness in the Canadian dollar. Surely the Leader of the Opposition should see that there is a significant degree of strength against the U.S. dollar when compared to these other
currencies.


Mr. Speaker:: Order. Thank you. Supplementary.


John Napier Turner: If 71.35 cents is strong, then we are in for trouble under this Government.


REQUEST THAT MINISTER MAKE STATEMENT
John Napier Turner: the hon. gentleman is not willing to persuade the Governor of the Bank of Canada to make a statement, and since he obviously will not bring in an early Budget, for extraneous reasons that I won't mention again, will he make an early statement to the House about the Government's position on the exchange, on interest rates, and the effect this is having on
unemployment and the loss of jobs? Will he make that statement in order to restore some confidence to the foreign markets, as they affect our currency?


Michael Holcombe Wilson: Mr. Speaker, one reason why we found ourselves with a weaker Canadian dollar over the past seven or eight years is the size of the federal government deficit, which the Leader of the Opposition should understand. He was the father, and the Member for Saint-Maurice was a contributing member in that little fraternity of Liberal Finance Ministers who were increasing the size of the deficit.
I have made the policy of the Government and the Bank of Canada quite clear in dealing with this international phenomenon, the unprecedented strength of the United States dollar. It is to try to moderate those changes both in interest rates and the exchange rate.
I would welcome sitting down with the Hon. Member at his convenience to get the benefit of his great experience-


Some Hon. Members:: No, no!


Michael Holcombe Wilson: -to hear any points of view he would like to give me and contribute to the discussion.


FINANCE
Mr. Raymond Garneau (Laval-des-Rapides):: Mr. Speaker, my question is directed to the Minister of Finance. I think the Minister will have to admit that during the election campaign, his Party proposed solutions to the problems we were facing. Today, our dollar is at its lowest level ever, and interest rates have increased by 130 percentiles within two weeks. My question is therefore quite simple: What is happening? Has the business community lost confidence in the Government or does the Minister of Finance perhaps not agree with a statement made last June by his colleague, the Minister of Justice, who said:

"A lower dollar will not help the economy despite its beneficial effect on exports. We cannot afford to have a dollar that is continually sinking."


Michael Holcombe Wilson: Mr. Speaker, i think the suggestion by the Hon. Member and his Leader that the business community has lost faith in this Government is totally ridiculous. I believe that the business community, according to the comments that I have received from it, is delighted that there is a Progressive Conservative Government in office today dealing with the very severe financial and economic problems that were left to us by previous Government.
February 25, 1985


Joseph Jacques Jean Chrétien: You are losing too often, Mike.


Michael Holcombe Wilson: I suggest to the Hon. Member that he should look around him to see who is losing.
I have made the policy of the Government quite clear, and I would also welcome any suggestions from the Hon. Member as well.


OPPORTUNITY TO DEFINE GOVERNMENT'S BUDGETARY POLICY
Raymond Garneau: Mr. Speaker, the business community may have confidence in the Government, but it was responsible for 80 per cent of the trading of Canadian for U.S. dollars last Friday. I do not know whether that can be called confidence. Considering the fact that the Canadian economy is losing on two fronts, namely interest rates are rising and the dollar is dropping, does the Minister of Finance not think it would be appropriate to define his budget policy as soon as possible by bringing down a budget very shortly?


Michael Holcombe Wilson: Mr. Speaker, may I take a minute to explain to the Hon. Member why the Canadian dollar is falling? When there is this significant pressure from the world-wide strength of the U.S. dollar, investors will back away from the weaker currency. The investors will push up interest rates. The Bank of Canada has been trying to moderate those interest rates by following a very delicate balance which it has been undertaking over recent weeks.
I can say to the Hon. Member that interest rates would be higher today had it not been for the policies that have been followed by the Bank of Canada and the Government in the past two or three weeks.


THE SENATE
Hon. Edward Broadbent (Oshawa):: Mr. Speaker, now that we have passed the period for Statements on Motions, I will ask the Deputy Prime Minister a question. He is aware that the Senate is blocking passage of a Bill that has already been passed by the House of Commons. Considering that this action, by an undemocratic body that is responsible to no one, is costing Canadians millions of dollars, will the Deputy Prime Minister tell us what the Government plans to do about this deplorable situation?


Mr. Speaker:: Order. I will allow the question, but before the Deputy Prime Minister answers I would remind Members of the traditions of not commenting upon and discussing matters that are before the other place. I will allow the question and one answer, but I am watching the questions very carefully.
Oral Questions


Hon. Erik Nielsen (Deputy Prime Minister and President of the Privy Council):: Mr. Speaker, as the House is aware, the Report on Senate Reform was published just prior to the recess last summer. My latest information is that the action of the other place in considering the borrowing legislation that passed this House unanimously has already cost the taxpayer some $9 million in increased commitments, as a result of a rather silly action.


Some Hon. Members:: Shame.


Erik Nielsen: It seems to me that the Leader of the New Democratic Party makes a good point. Perhaps the Senate would be fulfilling a far more fruitful role if it examined and acted upon the report of the Senate Committee on Reform rather than holding up the legislation as the Senate is doing now on the borrowing measure passed by this House.


REQUEST THAT GOVERNMENT ACT ON ABOLITION OF SENATE
John Edward Broadbent: Mr. Speaker, without reference to anything that is now before the Senate, I would like to ask the Deputy Prime Minister, considering what this happy hunting home for former Liberal hacks-


Some Hon. Members:: Hear, hear!


Some Hon. Members:: Oh, oh!


John Edward Broadbent: -is likely to do next month, two months, or six months from now, and is now doing, to frustrate the will of the democracy, will the Government do the correct, democratic thing, and bring in steps that will lead to the early abolition of this abominable institution?


Some Hon. Members:: Hear, hear!


Hon. Ray Hnatyshyn (Minister of State (Government House Leader)):: Mr. Speaker, once in a while we very much appreciate suggestions made by members of the New Democratic Party.


Some Hon. Members:: Hear, hear!


John Edward Broadbent: I will take it back.


Ramon John Hnatyshyn: Let me say I appreciate also the standing ovation I received from members of his caucus when I stood up to answer.


Some Hon. Members:: Oh, oh!


Ramon John Hnatyshyn: I can only say to the Hon. Leader of the New Democratic Party that it seems to me, when the will of the House of Commons is being thwarted by Liberal members of the Senate, and the Leader of the Opposition has been called upon by correspondence, from myself and from the Prime Minister, to take a position of leadership in this country and not let himself be run by the Liberal majority in the Senate-

February 25, 1985
Oral Questions


Mr. Speaker:: No. With due respect-


Some Hon. Members:: Hear, hear!


Ramon John Hnatyshyn: -it is time he acted.


Mr. Speaker:: Precisely because I was worried about certain comments being made, I indicated these questions are on slippery ground, and I rose. I say again to the Members, that just as Members in this House are entitled to respect so are members in the other place.


REQUEST THAT NO FUTURE APPOINTMENTS BE MADE TO SENATE
John Edward Broadbent: Mr. Speaker, my supplementary question concerns constitutional reform affecting the other body.


Some Hon. Members:: Oh, oh!


John Edward Broadbent: The question I have for the Government House Leader is simply this. Since he seems to be in accord with the view held by some that the other institution, with which we are associated from time to time, is something less than totally desirable-


Some Hon. Members:: Oh, oh!


John Edward Broadbent: -would he agree that a Senate dominated by Conservative appointees will be no better in the future than one dominated by Liberals now?


Some Hon. Members:: Oh, oh!


John Edward Broadbent: If so, will he promise the House and, more important, the people of Canada, that the Conservatives will not appoint any more Senators and will bring in major reform soon?


Erik Nielsen: Mr. Speaker, the Leader of the New Democratic Party as a Privy Councillor knows full well that the appointment of Senators falls within the exclusive prerogative of the Prime Minister.


Derek Nigel Ernest Blackburn: Unfortunately.


Erik Nielsen: I reiterate that it would produce far more fruitful results if the Senate, instead of engaging in its present exercise, would get down to reviewing the Report on Senate Reform so it can look into that as well as several other questions that will come to mind immediately upon reviewing that report.


PRESENCE IN GALLERY OF NORWEGIAN PARLIAMENT'S COMMITTEE ON DEFENCE
Mr. Speaker:: May I interrupt the proceedings to advise the House of the presence in our gallery today of the Norwegian Parliament's Defence Committee led by its Chairman, Mr. Knut Olav Frydenlund.


Some Hon. Members:: Hear, hear!


THE ECONOMY
Miss Aideen Nicholson (Trinity):: Mr. Speaker, my question is for the Minister of Finance. Economic growth in Canada will be severely hampered if the present combination of decreasing dollar values and increasing interest rates continues, especially if our manufacturers continue their present reliance on imported components. Does the Minister of Finance have any plans to protect Canada's competitive position so that no further jobs are lost in the manufacturing sector?


Michael Holcombe Wilson: Madam Speaker-Mr. Speaker-


Some Hon. Members:: Oh, oh!


Michael Holcombe Wilson: Through you to Madam Member-


Some Hon. Members:: Oh, oh!


An Hon. Member:: It must be the beard.


Michael Holcombe Wilson: I thought your back was turned, Mr. Speaker.


Some Hon. Members:: Oh, oh!


Some Hon. Members:: Hear, hear!


Michael Holcombe Wilson: Let me respond to the Hon. Member, Mr. Speaker, the question of higher interest rates is not something that we on this side of the House like to see. As I explained in response to one of the previous questions, it is something that is not totally within the control of the Government. Investors are backing away from the weaker currency. That in turn is pushing interest rates up. The Bank of Canada is trying to moderate that increase in interest rates, and has done so in recent weeks.
The question of the exchange rate is a mixed blessing. Some industries are very pleased to see the lower level of the dollar because they are able to export more, at greater profit to them. Others which are importers are obviously adversely affected. The balance there is a difficult one to judge as to which way
February 25, 1985

we are better off. I think it is a decision that individual investors are going to be making.
I point out to the Hon. Member that the direction of the November 8 statement is designed to improve the competitive position of Canadian industry. I would hope that Hon. Members would give more support to that economic statement, because that is a clear sense of direction-


Mr. Speaker:: Order.


CREATION OF JOBS
Aideen Nicholson: Mr. Speaker, the Government was quick to take credit for the 100,000 jobs created in the early part of its mandate, but the Minister does not seem to be prepared to take any responsibility for the 170,000 jobs lost more recently. I repeat, since this Government promised jobs, jobs, jobs, based on increased business confidence, when are we going to see the jobs?


Michael Holcombe Wilson: Mr. Speaker, I think the direction of the Government is totally unchanged in that regard.


Some Hon. Members:: Oh, oh!


Michael Holcombe Wilson: We have set out very clearly the policies in the November 8 statement, which observers right across Canada say will result in a stronger economy, a more competitive economy, and more jobs being created.
I do not like the increase in interest rates, as I said in my previous answer. Once we have achieved some stability in the current situation in the exchange markets, I hope that we will see those interest rates decline.
 * *


THE SENATE
Mr. Rod Murphy (Churchill):: Mr. Speaker, my question is for the Deputy Prime Minister. It involves a subject raised by our Leader. We want to know whether the Government is going to introduce reform of the other house, the place with the largest Liberal caucus in this country, or are we going to continue to be one of the few nations in the world where an unelected body can thwart the will of the majority?


Erik Nielsen: I believe, Sir, I have already answered that question. Perhaps the Hon. Member is not aware or has not read the report of the Special Joint Committee on Senate Reform, which was published just prior to our summer break last June. In it there are several worth-while recommendations which should be considered. I have suggested that a good place to start that consideration would be in the other place itself,
Oral Questions
but then the Leader of the Opposition there is not overly known for his reformist characteristics.


REQUEST THAT GOVERNMENT ACT
Rodney Edward Murphy: Mr. Speaker, 1 refuse to enter into a dialogue over whether or not the body which has to reform itself should do the investigation, but I would say that if the Government is willing to introduce legislation to abolish the Senate, this Party will reverse its position on capital punishment in order to expedite that action.


Some Hon. Members:: Oh, oh!


Rodney Edward Murphy: Will the Government introduce legislation itself, or will it leave it up to the Senate to reform itself?


Mr. Axworthy:: A Party of great principle, that is what it is.


Joseph Jacques Jean Chrétien: You are on the ropes.


Mr. Speaker:: Order, please.


An Hon. Member:: Is he speaking for his Party?


Mr. Speaker:: Order, please.


An Hon. Member:: Order.


Mr. Speaker:: I take it Hon. Members are ready to return to the House of Commons.


Ramon John Hnatyshyn: Mr. Speaker, I think I can answer that question with a sense of dispassion that only a son of a Senator can address in this particular instance. However, I assure the Hon. Member that, notwithstanding my heritage, and the fact that at one time I was employed in that august institution, when the initiative of the Government in this regard is taken, and if that initiative will be taken-


Some Hon. Members:: Oh, oh!


Ramon John Hnatyshyn: -the matter will be discussed with Opposition House Leaders. I can only tell the Hon. Member that actions by the Hon. Senators at this time are lending themselves to a groundswell with respect to the whole question of Senate reform.


ADMINISTRATION OF JUSTICE
Mr. John Nunziata (York South-Weston):: Mr. Speaker, my question is directed to the Deputy Prime Minister and it concerns the fairness of our criminal justice system. Last Thursday the Minister of Justice finally saw the light. He joined with us and every major newspaper in the country in condemning the Solicitor General for his abysmally poor judg-

February 25, 1985
Oral Questions
ment in meeting with Premier Hatfield on October 7 at the Chateau Laurier. The Minister of Justice said, and I quote: "if I was in opposition, I would have asked for his immediate resignation". He went on to say that it was politically unwise of the Solicitor General to meet with Premier Hatfield.
I should like to ask the Deputy Prime Minister whether he agrees with his Minister of Justice that it was politically unwise to meet with Premier Hatfield at the Chateau Laurier, and consequently that a resignation should be forthcoming.


Erik Nielsen: Mr. Speaker, without in any way accepting the hidden premises in the preamble to the Hon. Member's question, and answering the general thrust of the question, that has been done by me on several occasions in the past three weeks. The answers have been recorded in Hansard. I have no reason now to alter the views I have expressed and which are of record.


JUSTICE DEPARTMENT MEETING
John V. Nunziata: Mr. Speaker, I find it somewhat difficult to get answers out of the Government on this particular issue. I should like to ask the Deputy Prime Minister about a particular incident. On October 23 it was reported that Premier Hatfield was in Ottawa, and in view of the fact that there was a high level-


Mr. Speaker:: With due respect, I would like a question, please.


John V. Nunziata: In view of the fact that there was a high level meeting at the Justice Department on October 24, and at that meeting it was decided-


Mr. Speaker:: Order. The Hon. Member for Scarborough Centre.


Some Hon. Members:: Hear, hear!


Some Hon. Members:: Oh, oh!


CORPORATE AFFAIRS
Pauline Browes: Mr. Speaker, my question is directed to the Minister of Consumer and Corporate Affairs. It concerns the Eastman Commission of Inquiry on the Pharmaceutical Industry. Could the Minister tell the House the progress of that inquiry and whether the Commission will be reporting to Parliament this week?


Hon. Michel Cote (Minister of Consumer and Corporate Affairs):: Mr. Speaker, I wish to thank the Hon. Member for her question. I can assure her that the Eastman Commission's
report is expected by February 28, and unless we are otherwise notified, we are still expecting the report on that date.


INCOME TAX
Mr. Vic Althouse (Humboldt-Lake Centre):: Mr. Speaker, my question is directed to the Minister of Finance whose recent white paper on farm tax matters is being interpreted by the press as having indicated that farmers earn twice as much as average Canadians and that they pay only a quarter as much income tax as average Canadians. Since this conclusion was based upon the assumption that inflated land values should be imputed as taxable income, could the Minister assure the House that it is not his intention to move off taxing on a cash basis and to an imputed value basis of income?


Michael Holcombe Wilson: Mr. Speaker, I have read the media reports to which the Hon. Member referred, and I would say that there has been some misinterpretation of those media reports. We set out, in the tax discussion paper, a series of statistics which were the latest ones we had. We were anxious to get the whole report into committee-and I am hopeful that that will happen in a very short period of time-so that individuals in the farming community could come forward and give us the current state of the farming industry. We are very much aware of the downturn in the farming economy, but before I make the judgments which will be necessary for a Budget, I want to get up to date information from the farming community.


NET INCOME LEVELS
Victor Fredrich (Vic) Althouse: Mr. Speaker, since the Minister has talked about up to date information, would he supply the committee, when it is struck, with the information on 1984 returns, where I understand net income will turn out to be very similar to 1974 net income, yet there is a loss in land value approaching $4.5 billion? Will he bring that up to date for the committee?


Michael Holcombe Wilson: Mr. Speaker, I think I answered that question. We do not have those statistics in a compiled form. There has been some work done by the Farm Credit Corporation, and there has been some work done by the banking industry, on the current state of the farming community. We want to get that information before the committee, again to provide me with the information on which to make the judgments in a Budget. However, I would hope that when the reference comes forward-and I gather it will come forward today-Hon. Members opposite will support a quick reference of it to committee so that we can get on with the job.
February 25, 1985


ADMINISTRATION OF JUSTICE
Hon. Bob Kaplan (York Centre):: Mr. Speaker, my question is directed to the Deputy Prime Minister. I have given him notice of it in the hope of getting a real answer to the question. Weeks ago the Commissioner of the RCMP ordered an internal investigation of the Hatfield affair. I want to ask the Deputy Prime Minister when that report will be completed and whether he will agree now to make the substance of that report public, whether or not it serves the political interests of the Solicitor General?


Erik Nielsen: Mr. Speaker, I should like to thank the Hon. Member for informing my office that he intended to raise the subject this afternoon. This has given me the opportunity of discussing the matter with the Commissioner of the RCMP who informs me that the internal review now under way, is being pursued vigorously, and the expectation is that it will be completed very shortly, perhaps as early as this week. With respect to the second part of his question, I am sure he would not expect me to say that a report will be made public before it is even completed let alone read.


U450) REQUEST FOR PUBLIC INQUIRY
Robert Phillip Kaplan: Mr. Speaker, I would remind him of the practice in the past of announcing in advance when a report would be made public. I have a supplementary question. Knowing how the reputation of the RCMP has been damaged by the allegations of a provincial Premier-the Mounties are out to get them, they lied in court, they are out to bring down a provincial Government-and that these allegations are contradicted before the internal report is even completed by the Minister of Justice, does the Acting Prime Minister not realize the importance, with that background, of having a full, independent public inquiry into this entire mess?


Erik Nielsen: Mr. Speaker, I have said before in response to similar questions that any consideration of a public inquiry now would be premature until such time as the internal review has been completed and the Government is seized of it. With respect to the reputation of the RCMP, we on this side need take no lessons whatsoever from those over there who made it almost a life's work to denigrate and destroy the reputation of the Force.


FORESTRY
Mr. Jim Fulton (Skeena):: Mr. Speaker, my question is directed to the Minister of State for Forestry. On Thursday, in
Oral Questions
Vancouver, the federal Minister of State for Science and Technology stated that, rather than use federal dollars to replant trees in British Columbia, those same federal dollars should be diverted and used to develop new products and to improve productivity. Is that now the view of the Minister of State for Forestry and of the new Government?


Hon. Gerald S. Merrithew (Minister of State (Forestry)):: Mr. Speaker, there is nothing wrong. We made the statement collectively before that there is a need to develop higher value added products in the industry. There is nothing wrong with saying that. There will be some dollars allocated for just that kind of thing in research and development. What is important is that at this time planting trees, silvaculture, and forest management, are the priority of the Government.


NEGOTIATION OF AGREEMENT
James Ross Fulton: Mr. Speaker, now that we know that the Minister of Science and Technology does not know what he is talking about, I would like to ask the Minister of State for Forestry a simple question. Last year his officials were negotiating with British Columbia for $60 million a year for the Canada-B.C. reforestation agreement. It is now $30 million. Why the 50 per cent cut to British Columbia?


Gerald Stairs Merrithew: Mr. Speaker, obviously the premise is wrong. Nobody has ever suggested a figure of $30 million per year. It has been mentioned in this House on several occasions by the Minister of Finance, the Prime Minister, and the Minister of Regional Industrial Expansion, that an agreement will be signed. It will be a very good agreement, certainly a lot better than that which was signed by the previous Government.


AUTOMOTIVE INDUSTRY
Mr. Joe Reid (St. Catharines):: Mr. Speaker, I have a question for the Minister for International Trade. The current quota program against the importation of Japanese automobiles ends next month. The whole of Canada's automobile industry, manufacturers, parts suppliers, and labour, say that thousands of Canadian jobs are at risk if the import quotas are not continued. My question to the Minister is simply this: Will the import quotas be continued?


Hon. James Kelleher (Minister for International Trade):: In
reply to the Hon. Member, Mr. Speaker, I would advise him that we are aware of the expiry date. We have had discussions with the various officials in the Ministries involved. The matter is under review. We hope to announce what our policy will be before March 31.

February 25, 1985
Oral Questions
[ Translation]


REGIONAL INDUSTRIAL EXPANSION
Mr. Alain Tardif (Richmond-Wolfe):: Mr. Speaker, in the absence of the Minister of Regional Industrial Expansion, my question is directed to the Parliamentary Secretary.
Taking advantage of the fact that Parliament was not in session, the Minister announced last week that the Government has decided to turn down a $100 million grant for Domtar. Since this Government has emphasized many times the importance of proper forest management and of our exports, what are the reasons behind this decision which may cause Quebec's economy to lose as many as 4,000 jobs?


Hon. Tom McMillan (Minister of State (Tourism)):: Mr. Speaker, in the absence of the Minister, who is out of the country on government business, I might tell the Hon. Member that the company which has made the application is essentially sound, as is the application itself. The Government, however, in its wisdom, has thought it important to decline money at this time on the grounds that to fund the application would be disruptive of the market. There are five other major companies waiting in line with similar submissions. To give the money that is requested to Domtar would be to place the Government in an almost impossible position to decline the requests of the other companies. I might say that the company in question has already received some $20 million from the Government under different auspices, and at different times. The final consideration, which the Hon. Member might also want to take into account, is the possibility that the Government of the United States would consider any subvention from us for this purpose a contravention of GATT type agreements.


INQUIRY WHETHER QUEBEC GOVERNMENT CONSULTED
Alain Tardif: Mr. Speaker, could the Minister inform the House whether the Government consulted with the Government of Quebec which has already paid out $85 million, and does the Government realize that without its contribution, this project may have to be cancelled?


Thomas Michael McMillan: Very briefly, Mr. Speaker, the Government did deliberate very carefully on the application. The Government viewed the plans of the company in question as sound, and recognized the contribution that would be made to the relevant province and to the economy as a whole should the project go ahead. However, after a lot of consideration, it thought it not desirable to approve the application and the funds in connection with it. Instead, it recommended very strongly that the company might wish to seek other sources of funds available in the private sector.


CANADIAN COMPANY'S INVESTMENT IN UNITED STATES
Mr. Iain Angus (Thunder Bay-Atikokan):: Mr. Speaker, I have a question for the same Minister. In his response the Minister mentioned the Government of the United States and the possible reaction by that body to an investment by the Canadian Government in the Domtar Mill. Last December, Great Lakes Forest Products of Thunder Bay announced that it was building a major pulp and paper mill in Washington State to compete directly with paper mills in British Columbia. Can the Minister advise this House how, on one hand, the Government is prepared to allow a Canadian company, which has received a lot of money from the taxpayers, to invest in the United States to take away our jobs, and is not prepared to support a company in Canada to build in Canada to protect existing jobs?


Thomas Michael McMillan: Mr. Speaker, I think the premise of the question is wrong, as is the conclusion. This Government has been more generous in funding legitimate applications in a short period of time, something like 25 weeks in office, than the previous Government was in any comparable period. We have considered each application on its own merits. In the case of Domtar we found it inadvisable that the Government of Canada should spend the kind of funds that were requested, given the market conditions that prevailed both in Canada and abroad.


REQUEST FOR RECONSIDERATION
Iain Francis Angus: Mr. Speaker, on one hand a number of pulp and paper companies in Canada have received those kinds of grants in the past. There is no question that help was not needed because of the way the Liberals wanted to deal with things. Will the Minister advise the House whether he will now reconsider the Domtar application and look at the Great Lakes Forest Products investment in the United States and tell that company to bring its money back to Canada?


Thomas Michael McMillan: Mr. Speaker, I think the Hon. Member will appreciate that circumstances in the marketplace change. At a time when the Government of Canada, including the previous administration, looked kindly on certain applications, market conditions were very different from those that prevail now. The Domtar application was viewed in light of circumstances now, not in light of circumstances that prevailed two or three years ago.


RAILWAYS
Leonard Donald Hopkins: Mr. Speaker, I have a question for the Minister of Transport. The 27 cars of a freight train derailed at Petawawa yesterday morning has once again focused the serious attention of
February 25, 1985

Canadians on the transportation of dangerous goods. While local police, the fire department, and ambulance services were on the job and efficient, I ask the Minister how many more accidents will have to take place before he vigorously applies the regulations of the Transportation of Dangerous Goods Act passed in the last Parliament?


Hon. Don Mazankowski (Minister of Transport):: Mr. Speaker, I am pleased to receive the representations of the Hon. Member. He will know that the regulations for the transportation of dangerous goods have just been promulgated and they will take effect in stages over a period of time. There has been some resistance within the transportation sector, but I am pleased that the Hon. Member, and I assume he is speaking on behalf of his Party, will support that.
With respect to the specific accident in question, 1 am pleased to advise the House that the CTC is investigating the situation and I expect a report will be handed down in due course.


RAIL INSPECTIONS
Leonard Donald Hopkins: Mr. Speaker, why has the Minister allowed a shoddy standard of maintenance on the railways such that a broken rail caused 27 cars, three of which burned, to go off the rails on the CP main line?


Mr. Deans:: Since September, why have you allowed this?


Leonard Donald Hopkins: Will the Minister give a personal undertaking to see to it that all the rails are thoroughly inspected at all times and special emphasis is placed on the inspection of bridges during flood conditions such as these?


Ian Deans: Up until September it was maintained thoroughly.


Donald Frank Mazankowski: Mr. Speaker, I am sure all Members would agree that it would be rather presumptuous for me to accept the findings of the Hon. Member unless he has been monitoring the track during this period of time. If he has been, he should have reported such to the CTC.
I will certainly await the report of the CTC. I think they are perfectly qualified to conduct the investigation, and, whatever corrective action is required, this Minister will take such action.


CLERK OF PETITIONS' REPORTS
Mr. Speaker:: I have the honour to inform the House that the petitions presented by Hon. Members on Wednesday,
Petitions
February 6, 1985, meet the requirements of the Standing Orders as to form.


PRIVILEGE
Mr. Speaker:: When the House last adjourned a question of privilege had been raised by the Hon. Member for Renfrew-Nipissing-Pembroke (Mr. Hopkins). I am prepared to hear the Government House Leader (Mr. Hnatyshyn) on the same question of privilege.


Ramon John Hnatyshyn: Mr. Speaker, I understand that on February 15 the Hon. Member for Renfrew-Nipissing-Pembroke rose on a question of privilege with respect to remarks attributed to me at page 2349 of Hansard of the previous day. Mr. Speaker, I had not intended to cast any reflection on the Hon. Member, who is an honourable Member. I take this opportunity to unequivocally and absolutely rescind, revoke and expunge from the record any attribution with respect to the character of the Hon. Member.


Mr. Speaker:: I presume that ends the matter.


Leonard Donald Hopkins: Mr. Speaker, I would just like to compliment the Government House Leader on his retraction. That is the way this House should act and I thank him.



ROUTINE PROCEEDINGS


Mr. Neil Young (Beaches):: Mr. Speaker, I have a petition signed by a substantial number of concerned Canadians with respect to Canada's National Postal Museum being scheduled to close on March 4 of this year. The petitioners ask the House of Commons to use its legislative authority to assure that Canada's National Postal Museum will not be closed as scheduled, and that a permanent site be found where these postal artifacts will continue to be available for the enjoyment of the Canadian public and international visitors.


Nelson Andrew Riis: Mr. Speaker, I have the honour to present a petition on behalf of Project Plowsharks signed by many people from the Kamloops-Shuswap area commending the Secretary of State for External

February 25, 1985
Government Notice of Motion
Affairs (Mr. Clark) and encouraging him to continue with his Government's policy of no nuclear weapons stationed on Canadian soil, and of having no plan, current, pending or anticipated, that would have the Government of Canada involved in any way with the Star Wars scheme.


Nelson Andrew Riis: Mr. Speaker, 1 also have the opportunity to present another petition on behalf of a substantial number of individuals from the Kamloops area, protesting Canada's continuing participation in the arms race, particularly its support of the Star Wars proposal of the American Government. They suggest that the Cruise missile in fact is not a defensive weapon by its very nature. They encourage the Prime Minister (Mr. Mulroney) to follow the words of John Paul II when he said: "Do not follow leaders who train you in the ways of death; love life, respect life, in yourself and in others". They call upon their fellow citizens of Canada to hear these words and for their political leaders-


Mr. Speaker:: With great respect, the Hon. Member is going a little longer than one should go in the presentation of a petition.


Mr. Mike Cassidy (Ottawa Centre):: Mr. Speaker, I have a petition signed by a number of members of the Federal Superannuates National Association expressing concern at the entry of CNCP into the long-distance telephone business because of its potential impact on a comprehensive and moderately priced telephone service for all Canadians, particularly retirees. They petition Parliament to deny CNCP's application to permit its entry into the long-distance telephone business.


Alfonso Gagliano: Mr. Speaker, on behalf of my constituents, I have the honour of presenting a petition to this House requesting that all single persons between the ages of 60 and 64 and who are in need receive the same benefits as those provided under the Spouse's Allowance Program.


Ramon John Hnatyshyn: Mr. Speaker, there have been consultations with the Opposition House Leaders and with the agriculture critics of the respective Parties. I think you will find an inclination to accept a draft order which I will now read for
presentation as the first item an Orders of the Day following Routine Proceedings. I think this would be the correct procedure to follow, although I will accept your advice. I believe there are some Members who want to address this particular motion before it is passed. There is an agreement to pass this discussion paper to the Standing Committee on Finance, Trade and Economic Affairs, and my understanding is that there will be no more than two speakers from the Liberal Party, one speaker from the New Democratic Party, and we will possibly have one speaker in reply.


Mr. Speaker:: If I can interrupt the proceedings, I take it the Government House Leader (Mr. Hnatyshyn) is seeking unanimous consent for the introduction of a motion and, in effect, a unanimous House order that the matter be scheduled as the first item for debate. I must now, I think, treat it as a Government Notice of Motion for today, in effect, but introduced by unanimous consent. Is there unanimous consent for the introduction of the motion?


Some Hon. Members:: Agreed.


Mr. Speaker:: Can we now have the motion and I think I know what to do with it then.


Ramon John Hnatyshyn: The draft order is as follows:
That the discussion paper entitled Tax Issues in Agriculture, tabled January 31, 1985; be referred to the Standing Committee on Finance, Trade and Economic Affairs;
That the Committee examine and report on the proposals contained therein and, in particular:
(i)	the need for limitations on the deductibility of farm losses against non-farm income for part-time farmers and the appropriateness of the current limitations under Section 31 of the Income Tax Act;
(ii)	the appropriateness and consequences of relieving the farm community of the general requirement to include one-half of capital gains on the sale of farm land in income for tax purposes; and
(iii)	the appropriateness of using the tax system to provide assistance through an agri-bond mechanism and the implications related thereto; and
That the Committee report its findings no later than April 1, 1985.


Mr. Speaker:: There being unanimous consent for the introduction of the motion, the motion is thereby introduced and transferred to Government Orders for debate under Orders of the Day.


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Paul Wyatt Dick: Mr. Speaker, I am delighted to be able to make my reply today, as there are some 15 questions which are being answered.


Some Hon. Members:: Hear, hear!
February 25, 1985


Paul Wyatt Dick: It will bring it up to 46.2 per cent of the questions which have been asked to date. That is 15 per cent more than the last Parliament.

Mr. Speaker, the following questions will be answered today: Nos. 57, 66, 70, 120, 121, 122, 139, 140, 171, 173, 174, 177, 189, 199 and 226.


Mr. Howie: What are the (a) names (b) positions of the persons who occupy positions on the Executive and Board of Directors of Loto Canada Inc. and, in each case, what amount was he/she paid in respect of that position in the fiscal year ended March 31, 1984?
Hon. Otto Jelinek (Minister of State (Fitness and Amateur
Sport)): During fiscal year 83/84, and until December 31, 1983, the members of the Board of Directors of Loto Canada Inc. were: Ms. Danielle Desbiens, Mrs. Dorothy Pratt and Mr. Gordon Kritsch. Mrs. Pratt and Ms. Desbiens each received an amount of $250 per day for attendance at board meetings. As a public servant, Mr. Kritsch received no stipend. During that period, there were a total of seven one-day meetings. As a result, Mrs. Pratt and Ms. Desbiens received a total of $1,750. The general manager of the Corporation during this period was Mr. Gordon Kritsch, who was on loan from the Department of Labour and thus not paid by Loto Canada Inc. In December, 1983, Mr. John Gow and Mr. Andre F. Lizotte were appointed directors of Loto Canada Inc. As these individuals were also directors of the Canadian Sports Pool Corporation, they received no stipend from Loto Canada Inc. for attendance at meetings. In November, 1983, Mr. Kritsch became an employee of the Canadian Sports Pool Corporation but continued to act as general manager of Loto Canada Inc. without compensation from that corporation.


Mr. Nunziata: 1.	How many determinate and indeterminate employees are currently working in the (a) Department of the Solicitor General (b) RCMP (c) National Parole Board (d) Correctional Service?
2.	What is the percentage of male to female employees in the senior and middle management categories in the (a) Department of the Solicitor General (b) RCMP (c) National Parole Board (d) Correctional Service?
3.	What is the percentage representation of handicapped and native persons in the (a) Department of the Solicitor General (b) RCMP (c) National Parole Board (d) Correctional Service?


Hon. Elmer M. MacKay (Solicitor General of Canada):: 1. (a) Ministry Secretariat: determinate 73, indeterminate 227.
*(b) Royal Canadian Mounted Police: determinate 263, indeterminate 2995.
(c) National Parole Board: determinate 21, indeterminate 242.
Order Paper Questions
(d) Correctional Service of Canada: determinate 553, indeterminate 10,621.
2. (a) Ministry Secretariat
	Percentage-Male	Percentage-Female
Senior Management Level	87%	13%Middle Management Level	54%	46%[DOT](b) Royal Canadian Mounted Police	Percentage-Male	Percentage-FemaleSenior Management Level	100%	0%Middle Management Level	57.69%	42.31%(c) National Parole Board	Percentage-Male	Percentage-FemaleSenior Management Level	77.8%	22.2%Middle Management Level	63.2%	36.8%(d) Correctional Service of Canada	Percentage-Male	Percentage-FemaleSenior Management Level	94.2%	5.8%Middle Management Level	85.2%	14.8%3. (a) Ministry Secretariat	Percentage representation of handicapped	2.3%	Percentage representation of natives	1%	[DOT](b) Royal Canadian Mounted Police	Percentage representation of handicapped	3.2%	Percentage representation of natives	1.5%	(c) National Parole Board	Percentage representation of handicapped	4.6%	Percentage representation of natives	.8%	(d) Correctional Service of Canada	Percentage representation of handicapped	1.8%	Percentage representation of natives	.1%	
Please note that the information provided in 1(b), 2(b), and 3(b) applies to the Public Service component of the Royal Canadian Mounted Police (excludes members).


Mr. Nunziata: 1.	Within the correctional system, how many offenders are currently on (a) mandatory supervision (b) temporary release (c) parole?
2.	For each of the categories in part I, how many were originally convicted for crimes of violence?
3.	(a) As of April 1, 1984, how many institutions within the correctional system were equipped to accommodate conjugal visits and what are their locations (b) for the Fiscal year 1984-85, what is the total forecasted cost of each (c) how often are they used?
4.	What is the average age and level of education of correctional officers at (a) Archambault Penitentiary (b) Millhaven Penitentiary (c) Saskatchewan Penitentiary?


Elmer MacIntosh MacKay: 1.
(a)	2090. (b) The following information on temporary release is for unescorted temporary absences only. At the present time the offender information system does not store actual release data on day parole releases. On November 13, 1984, there were 34 inmates under unescorted temporary absences into the community, (c) 4111.
2.	(a) 1064. (b) Of these, 19 had a major offence of violence, (c) 2365.
3.	(a) and (b) As of April 1, 1984, 22 family visiting units were in use at 17 institutions.

February 25, 1985
Order Paper Questions
Institutions
	Where Units Are Located	Cost*	
Atlantic	Dorchester Penitentiary	$83,000.	Region	Springhill	53,300.	Quebec	Archambault	32,598.	Region	Laval (2 units)	49,684.	(per unit)Leclerc	68,000.	Ontario	Prison for Women	50,000.	Region	Millhaven (2 units)	41,267.	(per unit)Joyceville	46,100.	Kingston Penitentiary	44,100.	Collins Bay (2 units)	60,500.	(per unit)Prairie	Stony Mountain	52,810.	Region	Edmonton	65,183.	Saskatchewan Penitentiary	52,476.	Drumheller	60,500.	Pacific	Kent (2 units)	85,258.	(per unit)Region	Mission	56,687.	Matsqui (2 units)	35,798.	(per unit)
* The costs provided are for the units and their installation. Details on operation and maintenance costs are not retrievable since they are merged with general institutional expenses such as heat, hydro and laundry.
Please note that the variance in the initial cost of certain units depended on whether part or all of the work was done by contract, casual labour or inmates: whether the project was designed by consultants or by Public Works Canada; the distance required to bring in essential sanitary and water services, whether, in the case of a family visiting trailer, it had to be hoisted over the institution's fence or wall; the length of fencing required; and, the quality of furniture, accessories and amenities provided.
(c) Each family visiting unit is used on a regular basis except for one day during the week when it is closed for maintenance purposes and in the case where a cancellation occurs.


Mr. Robichaud: 1.	Will the $75 million cuts in the CBC budget affect the Moncton area and, if so, in what way?
2.	Will they affect French programming and, if so (a) who is responsible for allocating cuts throughout the network (b) what will be the percentage of cuts in the Moncton area (c) will French culture in New Brunswick be affected and, if so, are alternatives planned for Acadians?


Hon. Marcel Masse (Minister of Communications):: I am
informed by the Canadian Broadcasting Corporation as follows:
1.	Yes. In Moncton, the Corporation operates French radio and television and English radio facilities. The $75 million budget cuts have meant that the total CBC establishment in Moncton will be reduced by eight positions out of 172.
2.	A few regional French radio and television programs will be affected. In television, the Monday to Friday 5-minute newscast at 1.05 p.m. and Au gre des vents will be cancelled. No immediate changes are planned in local radio programming. In both radio and television, programs that may be vulnerable have been identified, but the full impact of the cuts will not be known for some months.
(a)	The Board and the President on the recommendation of the appropriate officers of the Corporation.
(b)	The reduction is 5 per cent of the Moncton French services budget.
(c)	Every effort will be made to minimize the effects of the budgetary reductions.


[Stage Direction]
Normally, approved inmates are allowed visits of up to 72 hours at S3-S5 (medium security) institutions and up to 48 hours at S6 (maximum security) institutions. The Warden may grant a longer visit if warranted by exceptional circumstances. Until October, 1984, an inmate was limited to one family visit every three months. Now, if the number of participating inmates and the facilities permit, a private family visit may take place every two months.
The national utilization rate, derived from the number of days that available units are actually in use, was 70.59 per cent during the third quarter of 1984. Regionally, however, the figures vary considerably. A number of factors, including the ease and frequency with which visitors can reach institutions, affect the utilization rate in different areas.
4.	(a) Archambault
Institution
(b)	Millhaven institution
(c)	Saskatchewan
Penitentiary
Average Age 38 years 44 years 34 years
Average Level of Education 13.43 years 10.98 years 11.50 years
Mr. Robichaud: 1.	Did the Ministry of State for Tourism establish an advertising plan in order to promote Canada's arts and various cultures (a) in Canada (b) abroad and, if so (i) what is it (ii) at what cost?
2.	Was the contract awarded to an advertising firm and, if so (a) to whom (b) on what date will the ads appear?


Thomas Michael McMillan: 1. No. 2. Not applicable.


Mr. Robichaud: 1.	Did the Department of Employment and Immigration abolish the Summer Canada Program and were there any consultations and, if so (a) with which individuals or organizations (b) on what dates?
2.	How many (a) young persons were employed through the program (b) work weeks were allocated to the program?


Hon. Flora MacDonald (Minister of Employment and Immigration):: 1. As part of the expenditure reductions announced in the November 8, 1984, economic statement, the Summer Canada program was terminated, with the exception of Canada Employment Centres for Students. Consultations
February 25, 1985

did not form part of the Government's decision to terminate Summer Canada, (a) Not applicable, (b) Not applicable.
2. (a) Approximately 85,000 students were employed under Summer Canada 1984. (b) Approximately 930,648 workweeks were created by Summer Canada 1984.


Mrs. Pepin: Did the Government ever prohibit the import of pornographic material and, if so (a) how many times (b) were legal proceedings taken and was the Government successful?


Hon. Perrin Beatty (Minister of National Revenue):: Yes, the Department of National Revenue has prohibited the importation of pornographic material.
(a)	Totally accurate statistics are not available. Approximately 4,083 seizures and detentions of prohibited pornographic materials were made by National Revenue-Customs and Excise in fiscal year 1983-84.
(b)	Section 50 of the Customs Act allows for an importer to appeal a Deputy Minister's decision to a court for a re-determination. Over the past three years, National Revenue- Customs and Excise has been involved in 23 court proceedings. Nine were abandoned by the appellant. Five are still outstanding. Of the remaining nine, five were rejected and four were found in favour of the appellant.


Mrs. Pepin: 1.	Did the Minister of Employment and Immigration take action on the grievances of the Bangladesh Refugee Action Committee concerning hundreds of persons who applied for refugee status and who live in the Montreal area and, if not, does she intend to make a decision concerning some 20 to 25 applicants who have been ordered deported and, if so, on what date?
2.	Will the Minister wait for Rabbi Gauther Plaut's document before taking action?
3.	Did a Sikh applicant for refugee status submit his case to the Supreme Court and, if so (a) what is the status of the case (b) pursuant to what clause of the Canadian Charter of Human Rights and Freedoms was the case submitted?


Flora Isabel MacDonald: 1. No. The essence of the "grievances" raised by some citizens of Bangladesh and members of the community who support their requests is that approximately 1,000 of them who are here without legal status should be allowed to remain in Canada even if their claims to refugee status are determined to be unfounded by the Minister of Immigration and the Immigration Appeal Board.
The Minister has considered this request and has advised all who have approached her office on this subject that blanket exceptions to immigration law and regulations are not justified. Those persons who have valid reason to fear persecution were they to return to their country will be proteoted in Canada. Those who do not will be expected to leave.
Order Paper Questions
No. There is no provision in the Immigration Act for the Minister to intervene in cases once a removal order has been issued.
2.	No.
3.	The Supreme Court of Canada granted leave to appeal in seven cases (involving six Indians of Sikh origin and one Guyanese), which cases were argued in late April and early May, 1984. The appellants argued s. 7 of the Canadian Charter of Rights and Freedoms. The court in December asked the lawyer for the appellants for additional representations with respect to the Canadian Bill of Rights, which it is now awaiting.


Mr. Stackhouse: In 1983, how many inmates of federal penal institutions were allowed to be temporarily absent on a regular basis and, of these, how many had been (a) parole violators (b) convicted of (i) murder (ii) manslaughter (iii) armed robbery?


Elmer MacIntosh MacKay: Information provided for unescorted temporary absences only. At the present time the offender information system does not store actual data on day parole.
In 1983, 3,116 inmates received unescorted temporary absences, (a) 220. (b) (i) 122, (ii) 124, (iii) 427.


Mr. Stackhouse: 1.	In (a) 1980 (b) 1981 (c) 1982 (d) 1983, how many divorces were granted and how many couples had been married less than (i) two years (ii) five years?
2.	For the same years, how many individuals (a) were awarded maintenance and child custody and how many had to have court enforcement of these orders (b) do not receive maintenance payments because their former spouse moved out of the province?


Ramon John Hnatyshyn: I am informed by the Department of Justice and Statistics Canada as follows:
1. The following table displays the number of divorces granted in 1980, 1981, 1982 and 1983, how many of these couples had been married less than two years and how many less than five years.
Number of Divorces by Duration of Marriage, Canada, 1980 to 1983
1980	1981	1982	1983Duration of	Num-	Percent	Num-	Percent	Num-	Percent	Num-	PercentMarriage	ber	of Total	ber	of Total	ber	of Total	ber	of TotalMarried less than 2 years	1,276	(2.1)	1,445	(2.1)	1,598	(2.3)	1,468	(2. 1)Married less	than 5 years Total	11,024	(17.8)	11,645	(17.2)	12,102	(17.2)	11,629	(17.0)Divorces	62,019	67,671	70,436	68,567	
February 25, 1985
Order Paper Questions
2. (a) and (b) It is not possible to provide an accurate response to this question on a national or provincial basis because the necessary statistical information is not available.
However, the Final Report of the Federal-Provincial Committee of Enforcement of Maintenance and Custody Orders in Canada describes the types of statistics that are gathered by province. Copies of this report can be obtained by contacting Margo Haug, Department of Justice, at 993-5139.


Mr. Stackhouse: 1.	In 1983, how many victims of crime claimed compensation from the Ontario Criminal Injuries Compensation Board?
2.	What amount of compensation was awarded in total?
3.	What is the government's present contribution to the Board?


Hon. John C. Crosbie (Minister of Justice):: 1 and 2. The
subject matter of these parts falls within the administrative responsibility of the Province of Ontario.
3. The federal contribution to the Board in 1983-84 was $881,590.


Mr. Stackhouse: 1.	In 1983, what government assistance was given to day care programs?
2.	What is the (a) current cost of day care (b) total amount of federal-provincial funding of day care facilities?


Hon. Jake Epp (Minister of National Health and Welfare):: 1. Under the Canada Assistance Plan, which is administered by the Department of National Health and Welfare, the federal Government shares 50 per cent of eligible costs incurred by provinces and their municipalities in providing day care programs. Canada Assistance Plan expenditures in support of day care services totalled an estimated $75 million in 1983-84.
Through the National Day Care Information Centre, the Department of National Health and Welfare also provides consultation and information services to interested individuals and groups.
2. (a) Only a rough estimate is available which suggests that the cost of day care in Canada is approximately $400 million.
(b) In 1982-83, the latest year where figures are available, total provincial and municipal expenditures for day care approximated $214 million. Of this amount for 1982-83, $70 million was reimbursed by the federal Government through the Canada Assistance Plan. Federal sharing is less than 50 per cent because the Canada Assistance Plan does not provide for sharing of all types of costs nor does it share on behalf of all users of day care programs.


Mr. Stackhouse: In 1983, what types of training programs were offered by federal penitentiaries and what was the cost?


Elmer MacIntosh MacKay: Training programs consisting of basic literacy, life skills, elementary, secondary (vocational and academic), accredited vocational and college level courses and university courses were offered to federal inmates in 27 institutions ranging from minimum security (S-2) to maximum security (S-7). Native inmates also benefited from such specialized courses as native language and native cultures, and inmates at the Prison for Women were allowed access to academic/vocational programs offered at Bath Institution.
The total cost for education and training in fiscal year 1983/84 was $22,175,420. This included staff and contract teachers' salaries, operating costs and inmate pay.


Mr. Stackhouse: What percentage of Canadian lakes (a) have been affected by acid rain (b) are nominally dead due to acid rain?


Hon. Suzanne Blais-Grenier (Minister of the Environment):: At present, research is concentrated on the phenomenon of acid rain in eastern Canada where acidic precipitation is having its greatest effects:
(a)	Estimates of the number of lakes in eastern Canada highly sensitive to acid rain and likely to be affected by current acid rain levels, are as follows: Ontario, 27 per cent; Quebec, 37 per cent; New Brunswick, 42 per cent; Nova Scotia, 47 per cent; and Newfoundland, 54 per cent.
(b)	Estimates of acidified lakes which no longer support a fish population are as follows: Ontario, 5 per cent; Quebec, 15 per cent; New Brunswick, 6 per cent; Nova Scotia, 40 per cent; Newfoundland, 0 per cent.


Mr. Howie: In 1984 (a) how many female workers were employed by the government, excluding Crown corporations (b) what was the total number of persons employed by the Government?


Mr. Doug Lewis (Parliamentary Secretary to President of the Treasury Board):: The following table shows the total employment and the number of females employed in that part of the Public Service for which the Treasury Board is the employer (PSSRA 1, 1) for 1984:
Total employees*	Females
December. 1984	236.185	98.703
* These numbers do not include Crown corporations, agencies with separate employer status (such as National Research Council, National Film Board), RCMPor military personnel.
February 25, 1985

These data reflect simply a count of the number of employees at one point in time. The Treasury Board controls the size of the Public Service by means of person-years, which represents one full-time person for 12 months or any equivalent such as 12 persons for one month.


Paul Wyatt Dick: Mr. Speaker if question No. 81 could be made an order for return, this return would be tabled immediately.


Mr. Speaker:: The questions enumerated by the Parliamentary Secretary have been answered. Is it the pleasure of the House that question No. 81 be deemed to have been made an order for return?


Some Hon. Members:: Agreed.


Mr. Angus: For the past ten years, what was the total average administrative cost for the delivery of $100 of income support for each program administered, in whole or in part, by the government, including but not restricted to, such programs as provincial welfare, municipal welfare, Canada Pension Plan, CPP disability, old age pension, guaranteed Income Supplement, spouse's allowance, veteran's pensions, family allowance, unemployment insurance, manpower training allowance?
Return tabled.


Paul Wyatt Dick: 1 ask, Mr. Speaker, that the remaining questions be allowed to stand.


Mr. Speaker:: The Hon. Parliamentary Secretary has responded to the questions which have been enumerated and entered his political asides.
Shall the remaining questions stand?


Some Hon. Members:: Agreed.
____________________________________________2459
Tax Issues in Agriculture



GOVERNMENT ORDERS


Ramon John Hnatyshyn: That the discussion paper entitled Tax Issues in Agriculture, tabled January 31, 1985, be referred to the Standing Committee on Finance, Trade and Economic Affairs;
That the Committee examine and report on the proposals contained therein and, in particular:
(i)	the need for limitations on the deductibility of farm losses against non-farm income for part-time farmers and the appropriateness of the current limitations under Section 31 of the Income Tax Act;
(ii)	the appropriateness and consequences of relieving the farm community of the general requirement to include one-half of capital gains on the sale of farm land in income for tax purposes; and
(iii)	the appropriateness of using the tax system to provide assistance through an agri-bond mechanism and the implications related thereto; and
That the Committee report its findings no later than April 1, 1985.


Maurice Brydon Foster: Mr. Speaker, I appreciate that the Government House Leader (Mr. Hnatyshyn) has Finally put this matter before the House for debate. I believe the agriculture paper which was tabled by the Minister of Finance (Mr. Wilson) three or four weeks ago is a very important document. I assume that the motion which the Government House Leader read to the House is the same motion as that which was in the preliminary draft which he gave to our House Leader a few days before the recess. At that time our House Leader indicated that we wanted a short debate with one or two speakers from our Party. Therefore, I appreciate that I have been provided with that opportunity this afternoon. However, in the future I wish that a motion such as this would be put on the Order Paper as that is the proper parliamentary procedure. If that is done, unanimous consent will not have to be sought as it was this afternoon, although that procedure works fine as long as everyone agrees.
The paper which was tabled by the Minister of Finance has raised a great deal of concern in the agricultural community. If we look at the press reports about the paper we would realize the reason for the concern. The press report of The Gazette on January 14 outlined the commitment which the Conservative Party made during the election campaign, which was to "establish an agri-bond program to provide loans at reduced interest rates to agricultural producers".
The article continued:
A tax exemption for earned income on these bonds will be provided to attract investment capital to this program.
The Conservative Party during the election campaign also indicated:
-tax rules for part-time farmers would be changed "to reflect the principles of equity, neutrality, simplicity and certainty" and arbitrary actions by the Revenue Department will be abolished.
The discussion paper which is now before the House makes no reference to the campaign commitments. It makes one

February 25, 1985
Tax Issues in Agriculture
wonder whether the campaign commitments have been totally forgotten by the Government. It is disturbing that the paper went on to point out that farmers pay some 4 per cent of their total farm income in income taxes. The paper goes on to suggest:
The proposed changes in the taxation of capital gains and the agri-bond concept raise questions about unfair competition, the potential for upward pressure on farm land prices and fairness vis-a-vis other taxpayers.
It continues:
Changing the $5,000 limit on farm losses a part-time farmer now can claim could jeopardize the position of full-time farmers-
That press report was of some concern to farmers across the country, but the press report of The Globe and Mail on February 23 gave them greater concern. The headline of the The Globe and Mail article read: "Study shows farmers earn twice as much as average Canadian". The Globe and Mail article outlined the white paper, which suggests that farmers are well off, that they have special tax concessions and that they do not pay their fair share of taxes.
I believe the allegations which were made in the newspaper reports and in the white paper are completely false and will not stand up to a close examination of the facts which exist in the agricultural community today. I would be surprised if the Minister of Agriculture (Mr. Wise), who unfortunately is not with us this afternoon, would want to adopt this paper as it now stands. If he does, it will be apparent that he has lost the battle in Cabinet on this paper to the Minister of Finance and the Department of Finance. The paper obviously reflects the view of the Department of Finance more than the view of the Minister of Agriculture and certainly of the agricultural community across the country. We could compare it with the battle which was waged at Meech Lake over the consultation paper that the Government drafted on social policy. In that case the Minister of National Health and Welfare (Mr. Epp) clearly won the day and the Minister of Finance lost. If we looked at this paper we would see that the Minister of Finance and his Department controlled the battle which took place over the drafting and writing of the white paper on farm taxation issues. The paper does not reflect the true financial difficulties which farmers face today.
If we looked at the income situation for farmers over the last 10 years, from 1974 to 1984, we would see that net farm incomes in 1974 were almost $3.6 billion. Ten years later, in 1984, the net realized farm income is $5.8 billion. For a document which has the Minister of Finance's name on it, and which is supposedly supported by the Minister of Agriculture and the Tory caucus, to suggest that farmers earn twice as much as other taxpayers and have an exceptionally good position in the income scale of the country does not square with the facts which are evident in the agricultural community. We have only to look back at the Farm Credit Corporation report of last fall. It indicated that 39,000 farmers were in serious financial difficulty. That does not mean that those farmers are having trouble buying a new car. We are talking about people with equity which is less than 15 per cent. That is the criterion of the study. They are paying over 40 per cent of
their gross income to meet their debt payments. They were borrowing more than they were investing in capital expenditures.
This paper does not really reflect the tough financial situation about which many farmers complain. As a matter of fact, when one looks through the paper one sees that the calculation of income is based on capital gain. How can a farmer take a capital gain which might exist on his property and go out and buy seed, fuel or fertilizer? That is just ridiculous. If there were a sharp capital gain during the mid-1970s, there certainly has been a dramatic, precipitous and disastrous capital loss in the last two or three years, and that is reflected in the Farm Credit Corporation report which was published in November of this year.
Therefore, I would point out to the Minister of Finance and the Minister of Agriculture that this report really does not accurately reflect the income or the tax position of many farmers. For instance, it is pointed out that the income of full-time farmers in 1982 was $16,000 and the income of all non-farm tax filers was $16,732. On the previous page it points out that the average farmer in Canada has an equity investment of $416,000. When there is an equity capital investment of that amount and the farmer works 16 hours a day along with his wife and family, and he ends up with a net income of $16,000, he really is not even getting a decent return on his investment. He gets nothing for his labour, his wife's labour, and in many cases the labour of family members. So I feel that this report of the Minister of Finance is most unfair and does not accurately represent the financial situation of the farm community.
I talked to several farm families over the weekend who are really appalled at the way the Government has presented the position of farm families in this country. The report indicates the return on investment, including debt, in the years 1977 to 1983 varied between 2.4 per cent and 0 per cent. This provides practically nothing for wages and very little for the investment which the average farm producer has made.
I feel that we will need to have a very good discussion in the standing committee. We will want to know what kind of a tax expenditure the Minister of Finance is willing to commit to Canadian agriculture under an agri-bond system. We will want to know whether the Government really wants to keep its campaign commitment to abolish capital gains on farm land which continues to be used for agricultural purposes. But this document, at first blush, appears to be trying to do one of two things, or perhaps both; either it is a way to start the ball rolling for the Government to welsh on the three commitments it made during the election campaign, or else it is trying to present a rosy picture of the agricultural scene today in order to try to cover up the Government's lack of action on the farm debt crisis.
Clearly, one cannot read the Farm Credit Corporation report on the financial debt crisis of this country without coming to the conclusion that it is a very serious problem.
February 25, 1985

Farm properties have dropped anywhere from 25 per cent to 50 per cent in value. In many areas like northern Ontario or Timiskaming there has been a serious drop in farm value. This is not something which has just happened in this country. The United States is facing the same kind of problems. The only difference is that the United States has taken action and put in place various programs for their farmers where 25 per cent of a farmer's debt is set aside for a period of up to five years. Farm interest rates have been written down to 7 per cent or 5 per cent, and providing that puts the young farmer into a positive cash flow position, these benefits will be extended. But the United States has even gone beyond that in providing a loan guarantee system for finances which will assist its farmers.
I believe this paper is really designed to do one of two things; either to start in train a process so that the Government will be able to welsh on its campaign commitments relating to these three items, or to cover up as a smoke and mirrors show its lack of action for the serious financial debt crisis which is facing much of Canadian agriculture.


Mr. Deputy Speaker:: Are there questions and comments on the Hon. Member's speech? If not, we will resume debate.


Mr. Don Boudria (Glengarry-Prescott-Russell):: Mr. Speaker, I welcome this opportunity to take part in the debate on a motion to refer the report on tax issues in agriculture, published by the Government in January 1985, to the Committee on Finance, Trade and Economic Affairs.
Mr. Speaker, first of all, having listened to and read the speech made by the Minister of Agriculture (Mr. Wise) in this House more than a week ago, on February 15, I feel some trepidation with respect to the Minister's attitude. The Minister, in this very House, accused Opposition Members of not wanting to refer this paper to the Committee on Finance, Trade and Economic Affairs, and I quote from Hansard at page 2402, Mr. Speaker:
It dumbfounds me to witness this continuing reluctance on behalf of the Official Opposition to give us an opportunity to refer these three items to an appropriate standing committee.
Mr. Speaker, as you know, and we know the Chair does not take sides in the House, the Minister misled us, probably involuntarily, but just the same, we must admit the Minister was not being entirely frank, not quite honest when he told the House that it was the Opposition's fault if this Government was refusing to go ahead and help farmers, because the exact opposite is true.
Mr. Speaker, the discussion paper was not published until January 1985. I think this is rather strange, considering the fact that last summer, in July and August, the Government seemed to be willing to help farmers at any level.

I would just like to remind you, Mr. Speaker, of some of the campaign promises which the Tories made last summer. No
Tax Issues in Agriculture
doubt like us Liberal Members, Mr. Speaker, you have had to listen to that litany of campaign promises which bored you as much as it bored us, I am afraid. However, you will recall, Mr. Speaker, that there were specific promises made at that time to abolish the capital gains tax on the sale of farm property. There was no question then of issuing a document which would attempt to do the opposite or which would at least suggest that abolishing the capital gains tax would be difficult if not impossible.
The Tories also promised to allow the Farm Credit Corporation to offer agri-bonds. I have read this document, Mr. Speaker, and I can tell you that I am not convinced that the Government wants an issue of agri-bonds at all. I wonder why the Conservative Government during the election campaign could not have prepared a document which looked at the possibility of offering a program before they promised it to the public. It should have done that instead of offering the program and then going back to the electors of this country some four or five months later and accusing the Opposition of dragging its feet. It is the Conservatives who took four months to issue a document which they apparently were ready for in the month of August of last year, and in that same document they attempt to welsh on their promises.
This Government cannot have it that way, Mr. Speaker. Either it makes promises and intends to live with them, or just maybe those Hon. Members should stand up in this House and apologize to the Canadian public and tell the people of Canada: "We are sorry; we made 338 promises but we can only live with about four or five of them. Perhaps we didn't think about them properly". Maybe they should admit the mistakes they made last summer. They should not stand in the House intent on accusing the Opposition of dragging its feet and take five or six months to issue a consultation document when they claimed they were ready to implement a document of consultation last summer as well as to proceed with the legislation. This leads me to believe that when the Conservative Party was in opposition it thought that governing this country was a far easier job than it now finds it to be. That is probably because the Government did not think through its promises before making them.
The people of Glengarry-Prescott-Russell do not agree with the government reports we have been seeing in the last few weeks that farmers are in as good as or better a financial situation than others in the country. Our experience in Glengarry-Prescott-Russell has been quite the opposite. We have read in documents that the income of the average farmer is somewhat higher than that of people in business. The documents indicate that this is so as regards a full-time farmer versus people in business. They do not even specify whether the people in business are full-time or part-time. It could very well be that the people in full-time business of any kind make more than those who are not full-time. That still does not mean that the agricultural sector does not have a problem. The agricul-

February 25, 1985
Tax Issues in Agriculture
tural sector of Glengarry-Prescott-Russell has very serious problems.

Let me name just a few. Hog producers, in the riding of Glengarry-Prescott-Russell have suffered serious losses in recent years. In one community in my riding, twelve hog producers went out of business because of bankruptcy. Their production represented 8,000 slaughter hogs per year. Six more producers went out of business voluntarily, as opposed to going bankrupt, representing a total production of 2,000 slaughter hogs per year. Add to this several fires during the last four or five years as a result of which we lost five more producers who had an annual production of 2,400 slaughter hogs.
Mr. Speaker, I think it is clear that the position of farmers in Glengarry-Prescott-Russell is not that good. On behalf of my constituents, I want to say that we are waiting for the Progressive Conservative Party to come through with the promises it made during the last election campaign.

During the last election campaign the present Government, which was then the Opposition, proposed that it was going to extend and expand the Farm Credit Corporation special interest rate subsidy, that it would revise Section 31 of the Income Tax Act and do a variety of things for the farmers of the country. The people of my riding may not have voted Tory, but the day after the election they still expected the Government which had been elected to live up to the campaign promises it had made. But the Government did little or nothing. It only cut back. It made a series of cuts in agricultural programs. It has increased charges to the farmers of the country. The farmers of the country have been treated with very little respect.
One example of this lack of respect is that the Government has appointed a committee. In his speech to the Canadian Club of Toronto on February 13, the Deputy Prime Minister (Mr. Nielsen) announced the names of certain individuals who would be part of a study team on the agricultural program review. It is very important to outline this because it describes the attitude of the Government toward agriculture. I could not believe my eyes when I saw the list of the nine people appointed to this study team. None of them were farmers. None of the members were from western Canada. None of them were from the Maritimes. There were no women members and only one francophone. That is the type of committee the Government was in the process of establishing to review agricultural programs in the country. If those are the kind of people who are preparing Government programs, it is small wonder that they think everything is all right and that nothing needs to be improved. However, that is not the attitude of the farmers of the country. They require assistance from the Government.
It is our hope that sending this document to committee will persuade the Government to listen to the people of Canada. We hope the Government will listen to the farmers when they
send delegations to appear before the committee to tell the Government that its campaign promises should be respected. The farmers of the country need assistance. They need agribonds. If the Government did not intend to deliver on its promise of agri-bonds maybe it should not have made that promise.


Victor Fredrich (Vic) Althouse: Mr. Speaker, we are prepared to agree with this motion to strike a committee in the Department of Finance to study the question of capital gains tax, agri-bonds, and Section 31 of the Income Tax Act as they affect farmers. We are somewhat curious as to why it has taken three or four months from the time the Minister announced such a decision and what the reason for the delay was. Apparently the Minister would like an answer very quickly in order that some of the recommendations can be incorporated into his Budget. I am not sure that that will be possible.
If that is the Government's intention, I think it is regrettable that the basis of the discussion in the finance committee will be this white paper prepared by the Department of Finance. I say it is regrettable, Mr. Speaker, because while the methodology of the study is reasonable in part, the Government did not take a very broad look at the issue. The data that it uses is from 1971 to 1981. It is a fact that it takes much longer than 10 years to understand agriculture. Some of the numbers generated in that particular period of time will be highly skewed in a particular direction.
I hope that this study will not be viewed as the Bible on the issue by those members of the committee who make the final decision. I hope they will recognize that some of the land value figures that are used start in 1971, which was one of the most depressed periods of time for agriculture, and end in 1981, which was the time when the peak in agriculture was just coming to an end. I hope the committee will remember that in 1984 preliminary figures show that rather than there being an augmentation in the value of farm assets, we lost between $4 billion and $4.5 billion worth of assets in the value of land and building of Canadian farms. This is because land values are now beginning to taper off. It is estimated that land prices dropped by 16 per cent last year. That was the first year in which we had such a tremendous downturn. It is expected that the downturn in land values will continue in 1985. If the committee makes recommendations based on some of the assumptions in this white paper, which indicates that farm incomes are very good if one takes into account the value of farm assets, the committee will be operating on some very questionable assumptions and will obviously make some wrong recommendations.
However, the data generated some interesting questions. I am sure that it has already been noted that according to the Statistics Canada census there are some 318,000 farms in this country. However, since Section 31 permits farm losses to hobby farmers or those trying to begin a farm operation, when it comes time to file income tax with Revenue Canada sudden-
February 25, 1985

ly there are 450,000 Canadians who claim to be farmers, which is an extra 132,000 farmers recognized as such for income tax purposes. I believe the committee should conduct more research to determine who these farmers are, because the only information we have is from Table 13 of the white paper. It gives us an idea of the type of farmers some of these people are. For example, Table 13 from the white paper points out that 105 of these so called farmers have an average net off-farm income in excess of $400,000. Their farms must be moderate in size because they generate approximately $ 120,000 in sales. While these farmers with large incomes generate an average amount of farm sales it is particularly interesting to note the amount of their average farm loss. In this particular category it is $187,000 as opposed to the $120,000 worth of goods that they produce.
According to Table 13, there are some 1,643 taxpayers who are operating farms essentially to dispose of some of their off-farm incomes. They have off-farm incomes in excess of $100,000 and their farms produce approximately $22,000 worth of gross sales. These farms lose $32,000 each.
It is only when we see the Figures for relatively low off-farm incomes that we get to the category in which the farm is earning more than it is losing. I suggest the committee should review carefully the figures for these farm incomes and farm losses.
The farms of those whose farm incomes are between $25,000 and $35,000 are the farms with greater sales than losses. These are usually young people who are beginning a farming operation. These farms are not being used simply to generate a big loss and avoid income tax. However, it is apparent from the manner in which Revenue Canada has been assessing part-time farmers that it is that lower income group that has given the most trouble. There does not seem to be any problem with so-called farmers whose average off-farm income is in excess of $400,000 but who show a farm-loss of $187,000 on a farm that produces approximately $120,000 of income. Presumably one can obtain a very good accountant with $400,000 of off-farm income in order to continue to write off those losses.
I raise this concern now, even before the committee begins its work, because I do not see any intention on the part of the Government to consider those people with large farm incomes. The Conservatives' campaign promise was to eliminate Section 31, which essentially legitimizes those very large non-farm incomes and permits those operations to take place without any restrictions. Those operations seem to take place in spite of Section 31. It is only those who earn below $35,000 in off-farm incomes who are affected by Section 31.
The question of capital gains tax has been debated in the House a number of times. The study paper rienforces some of the comments I made about the capital gains tax. Let me review those points very quickly. The current capital gains tax regime which permits an in family roll-over enables the very large farms to roll over within the family on a corporate or non corporate basis. These very large farms are able to generate enough farm income to allow the parents to retire without
Tax Issues in Agriculture
taking back their farm investment. That investment can simply be rolled over to the next generation.
Small and middle-income farmers can only retire upon recovering their lifetime investment in order to buy a retirement house and have enough income on which to retire comfortably. Therefore they must get money from the sale of their farm and subject themselves to some form of capital gains tax. The current tax system is inequitable because it has the effect of permitting some classes of farmers to avoid capital gains tax while taxing lower and middle income farmers, just as Section 31 does.
The Minister of Finance (Mr. Wilson) has asked the committee to make some recommendations as soon as four weeks from now. I have grave reservations about its ability to deal adequately with this particular problem in that time, and I merely raise it now so that government Members who will dominate that committee are aware of the present inequities as well as of those that will be created by adopting the white paper recommendation or eliminating the restrictions altogether, according to their campaign promises.
These would have a negative effect on lower and middle-income farmers. I hope the committee will be very sensitive to the special needs of Canada's 318,000 legitimate farmers. We should clearly identify the loopholes which have attracted the approximately 132,000 people who claim to be farmers when it comes time to file income tax.
I think the tax system has failed miserably to carry out the mandate it was given back in 1917 when the then Minister of Finance, Thomas White, said that he hoped the Tax Act would always take account of the difference between what he called "real" farmers who tried to make money and the "fancy" farmers who tried to lose it. I hope that the committee will pay special attention to the 8,200 farms which, for tax purposes, lose vast quantities of money, according to Table 13. Those losses are losses from the pockets of other taxpayers, some of whom are farmers. I hope that those anomalies will be corrected and a proper study can be generated in the few weeks we have to do so.
I am not optimistic that four weeks is enough time. I hope the committee will recommend to the Minister that more time is needed, otherwise farmers will be short-changed. They will have a quick-Fix solution similar to what was offered during the campaign, and that quick-fix solution will affect negatively small and medium-sized farmers who are trying to make a living farming instead of going into farming to show losses so they can avoid tax on their off-farm income.


Hon. Charles Mayer (Minister of State (Canadian Wheat Board)):: Mr. Speaker, I appreciate the opportunity to participate in the debate this afternoon. I am very happy to see that this Order will now be referred to committee. The Hon. Member for Humboldt-Lake Centre (Mr. Althouse) made a good point when he said that he wondered why it had taken so long. No doubt a lot of us would have liked to have seen this

February 25, 1985
Tax Issues in Agriculture
issue in committee sooner. Had it not been for the Official Opposition, the Order would have been referred to committee a week ago last Friday and it would have been under way a little sooner. The Hon. Member for Humboldt-Lake Centre makes a good point in that more time is needed. I am sure his comments will be listened to. When we get to committee with the Order, that will be the time to make those comments known.
Let me address briefly some of the concerns raised by the three speakers. First, the official spokesman for the Opposition, the Hon. Member for Algoma (Mr. Foster) raises some points to which I would like to respond. He wonders about the position of the Government on this matter. If he looks at the paper put out by the Minister of Finance (Mr. Wilson) entitled "A Discussion Paper", on page 1 he will find that it states, "This paper provides information and analysis to assist in consultation on these issues". The three issues are the ones referred to, namely, capital gains, Section 31, and agri-bonds. This paper is exactly what it says, a discussion paper. It is there to provide information and analysis to assist in consultation on these issues. It is nothing more than that. A lot of people would take issue with some of the points raised in the discussion paper. A lot of people would agree with people who take issue with some of the points in the discussion paper. It points out to me, that this Government recognizes that there are some concerns in agriculture and that we are willing to address them.
To be fair about this, we have been in office not quite six months but a number of things have been done. Let me name a few. Two weeks ago we had an Opposition Day on agriculture and many other things were referred to.
Let me outline what has been done. FCC rates were lowered for people in the unfortunate position of having interest on loans as high as 16.75 per cent. Tobacco legislation was put through to allow the tobacco industry, if it chooses, to move a marketing board situation which may help them with problems in marketing. The FCC has set up appeal boards on an experimental basis. They are under way. Very quickly the Minister of Agriculture (Mr. Wise) moved to provide drought assistance to livestock producers in the areas in the prairie provinces affected by drought.
Flood agreements were signed with Quebec, Saskatchewan, and Manitoba. The Minister of Finance reduced the tax on farm fuels. Again, a week ago Friday-and I have to thank all the Parties involved-we passed amendments to the Western Grain Stabilization Act that are very useful. For a Member to stand up and say that this Government has not done anything or does not recognize the problems associated with agriculture, certainly belies the record of this Government so far on agriculture.


Mr. Thacker:: Contrast that with the Liberals. They did nothing for years.


Charles James Mayer: The Member from Algoma said, and I think I quote him accurately, that some of these reports are "completely false and won't stand up to the facts". If that is the
case, then we need to have this discussion paper at committee so that the farmers themselves can point out if in fact what the Hon. Member for Algoma says is true. He went on to say that the position as laid out in the discussion paper does not accurately represent the situation. Again, if that is the case, Mr. Speaker, let us hear about it. Let us hear from the farmers, the farm organizations and the groups involved.
It is unfortunate that the Hon. Member for Glengarry-Pre-scott-Russell (Mr. Boudria) had to be so strident in some of the comments he was making. It is too bad the Member was not around when the previous Government was in office. He would know, when he is talking about capital gains tax, that it was a Liberal Government in the first place that was responsible for bringing in capital gains tax in 1972.


William (Bill) Gottselig: Absolutely right.


Charles James Mayer: It is too bad the Hon. Member for Glengarry-Prescott-Russell is not around now to hear what is going on. I can point out that we do not need to take any lessons on the farming community from the Member for Glengarry-Prescott-Russell when the Liberal Party does not have one farmer in its caucus. We have a tremendous number of farmers in our caucus. We understand and we will be able to deal as best we can with the problems facing agriculture. I have already pointed out that the Minister of Agriculture has dealt with many of them already. As I said, it was a Liberal Government that brought in capital gains tax in 1972. The Member for Glengarry-Prescott-Russell would also know that in 1981, after the disastrous Budget of Mr. MacEachen, who is now reposing in another confine in this building, that Government abolished what we call the interest averaging annuity accounts. They were brought in to recognize some of the problems that capital gains tax made in the first place. That was replaced with what was called forward averaging, something no one could understand. Some reasonably knowledgeable mathematicians said that that was one of the most complicated taxation schemes ever designed by man, one that nobody could figure out. This Government's record in five months in terms of what we have done for agriculture should be compared to what the previous Government did, especially regarding capital gains, and I think it is a very unfortunate position for the Member to put himself into.


Some Hon. Members:: Hear, hear!


Charles James Mayer: When you look back at the last 15, 16, or 17 years of virtually unending Liberal rule, Mr. Speaker, you realize what a disaster that was on the economy. One of the reasons we have so many part-time farmers in Canada who come under Section 31 is the disastrous state of the farm economy which came about as a result of what the previous Government did.
I would say, in referring to the Hon. Member and his comments, that he should at least give us credit for recognizing the problems in the first few months in office and being prepared to deal with them at committee.
February 25, 1985

The Hon. Member for Humboldt-Lake Centre pointed out that the current system of taxation is inequitable. A lot of people would agree with him. If there are some inequities in the taxation system, and he raised an important one today in Question Period concerning the possibilities of farmers going from a cash system to an accrual system, then let us get this issue to committee and get those things aired and aired by the people who have to live with them every day.
Let me close by making reference to the whole consultation process. One of the reasons so many people in the country are concerned about the consultation process is that they think about it in terms of the previous Government. Whenever they heard anything as a suggestion or a possibility, they always feared the worst because usually that is what they got. They got things without any kind of previous consultation. They got things which they did not necessarily want. They got them without having any input into them. When they see a discussion paper with figures in it which many people do not believe reflect the actual situation, they should take it for what it is- a consultation paper to start the discussion. This does not mean that everything in the paper will end up being part of the recommendation coming from the committee; it simply means that it is a consultation process.
If we think about referring this matter to committee in terms of genuinely trying to hear from the people who will be affected in order to obtain their points of view and to come up with the best possible solution, it is a very useful and helpful way to think about consultation. That is exactly what it is intended to do.
Again I refer to something which was said by the Hon. Member for Humboldt-Lake Centre. There is no doubt that the Government will have the vast majority of Members on the committee. He should take some solace from the fact that many Members on the committee will be either farmers like himself or will have a genuine and very thorough knowledge of the farming industry. That is what we should look at in terms of what comes out of the committee. Those are the people who will be looking at the recommendations. I hope-and at least I can speak for Hon. Members on our side-that the committee will work in a very non-partisan way. For a long time the tradition in this House-and I think it still exists-has been that the agricultural committee functions as one of the most non-partisan committees. It is genuinely interested in the well-being of Canadian agriculture. That committee recognizes how important agriculture is to the whole economy of the country. The best of that showed up a week ago Friday when we put through amendments to the Western Grain Stabilization Act in one day. That was very much appreciated. It sends out a very healthy, stable and worth-while signal to the farming community in western Canada that there will be an interim payment prior to spring seeding.
There are no legislative impediments. I am assuming that there will be no hold-ups as far as the Senate is concerned. Surely to goodness the occupants of the room for sober second
Tax Issues in Agriculture
thought over there will not see anything wrong with the Western Grain Stabilization Act. I am assuming that they will pass that legislation, but the main point is that it was dealt with very quickly in the House on a non-partisan basis. I appreciate that, as does everyone in the House and the entire farming community in western Canada.
If we can look at referring this discussion paper to the finance committee on that kind of a basis, with the idea that we will do something in the best interests of Canadian farmers from coast to coast on those three issues, it is the proper way to proceed. If more time is needed and that argument is made in committee, I am sure the Minister of Finance will have an open ear. If we deal with it on that basis, not on the basis we heard from the Hon. Member for Glengarry-Prescott-Russell (Mr. Boudria), many of us in the House will be much better off and will be able to look forward to some worth-while recommendations from that committee to the Minister of Finance.
In conclusion, I thank Hon. Members for referring the matter to the Finance committee. I wish them well in their deliberations and my hope is for speedy recommendation to be made to the Minister of Finance so that he will be in a position to deal with some of them in the coming Budget.


Some Hon. Members:: Hear, hear!


Maurice Brydon Foster: Mr. Speaker, I have a couple of questions for the Minister of State for Canadian Wheat Board (Mr. Mayer). The response of the House on many Bills has been one of co-operation. For example, I could refer to the National Farm Products Marketing Act relating to tobacco and to the Western Grain Stabilization Act.
The motion before the House was first presented to the Official Opposition about three days before the mid-winter break. Reference was first made to it in the economic statement of the Minister of Finance (Mr. Wilson) on November 7 or November 8. At that time the House Leader of the Official Opposition told the Government House Leader that we wanted to have a brief debate in the House. We waited for 10 or 11 days, and we still do not have a motion on the Order Paper. We have the motion before us and the matter is under Orders of the Day by unanimous consent, but does the Minister think that dealing with a matter like that and expecting the Standing Committee on Finance, Trade and Economic Affairs to come up with a report in a month is realistic? He is portraying it as if we did not normally put motions on the Order Paper. If we want to make a reference to committee, the proper parliamentary procedure is to place it on the Order Paper. That still has not been done to date. Does he really think that that is co-operation on the part of the Government?
In view of the wording of the motion, is the Government really committed to the campaign promises of abolition of the capital gains tax, of the implementation of a system of agribonds, and of lower interest rates and long-term funding for agriculture? When one reads the white paper, the press reports on it and the motion, one cannot but think that there is a negative attitude toward these issues. The Minister says that
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February 25, 1985
Tax Issues in Agriculture
he is keen to hear from farm groups. If my sounding of farm groups is representative of the representations which we will hear from them in the Standing Committee on Finance, Trade and Economic Affairs, they will not be very laudatory of this particular white paper.


Charles James Mayer: Mr. Speaker, with regard to the first comment of the Hon. Member for Algoma, he talked about motions on the Order Paper. What he said is strictly true. Everyone appreciates that by unanimous consent we can virtually do almost anything in the House. Perhaps notice on the Order Paper, as far as the Hon. Member is concerned, would have been more appropriate. However, the important point is that we have it done today. Many times I have had discussions with him in the past on the Western Grain Stabilization Act. As long as there is an attitude and a willingness to co-operate, the most important thing is to get the job done. With regard to whether there is enough time, basically we have five weeks. Certainly more time would be useful and helpful. I do not think anyone would disagree with that, but it is better for us to have five weeks prior to April 1 than no time at all. As I said in reply to the Hon. Member for Humboldt-Lake Centre, if the committee feels that it needs more time, that would be the point at which to decide it and make such views known. Certainly five weeks in terms of hearing the concerns is better than no time at all.
With regard to the third part of his question as to whether we are committed to the three areas-Section 31, capital gains and agri-bonds-the mere fact that we are referring them to committee gives an indication of the Government's intention. To be fair about it, there are also farm groups which are concerned about the removal of capital gains tax and what it can do to the price of farm land. I am not saying whether I agree or disagree with them. However, the point is that there is not unanimity in the farming community. They are concerned, just to make the case which I understand they make, that if we remove capital gains tax we allow people to come in who want to speculate on land and hold it against inflation. That in fact causes problems for people who want to buy land and want to farm it. There are points of view. It is worthwhile during committee stage to take a look at those various concerns. This is exactly what I hope will happen in committee. We will certainly be looking at those three issues in committee.
In conclusion, if we look at some of the things the Minister of National Revenue (Mr. Beatty) has been doing in terms of the way Section 31 has been administered, I think he is making some strides in having his Department better understand exactly what makes a farmer or what constitutes a genuine farmer and what does not. In my constituency, I know of cases that have been sorted out since the Minister of National Revenue has been there. That has gone a long way, or at least a partial way, in addressing some of the concerns that we have over Section 31.


Mr. Hovdebo:: Mr. Speaker, I have a question for the Minister. Can we expect a certain amount of backup in the
form of research? For example, 175,000 Canadian farmers are classified as part-time farmers. They lost $619 million, one-third more than the 48,000 full-time farmers. That kind of information is very important. The farmers who are classified in these areas constitute very important information. It is not the kind of information that we as committee members can get.
Can the Minister indicate what kind of research backup we can expect? Could someone from Revenue Canada give us an analysis of that particular issue under Section 31 as to who those farmers are? Do we want to find ourselves in the position of the United States where a section comparable to Section 31 was removed? That resulted in wealthy investors making it a way of losing or getting rid of some of their money for tax purposes. Can we expect considerable assistance?


Charles James Mayer: Mr. Speaker, the Hon. Member for Prince Albert (Mr. Hovdebo) raises a very valid point. When we go to committee, many of us feel sometimes as if we were captives of the people who are there because we do not have the same kind of background and knowledge. I cannot in good conscience answer the question and say what the committee will or will not be able to do. As the Hon. Member can understand, basically committees are master of their own direction. If we look at the powers available to committees, committees in this House are able to do a lot more things that they are generally believed able to do. There are powers there that committees do not make use of.
In this case, one of the first things the committee will want to do when it convenes is to invite the Hon. Member to put those questions and make those concerns known. I would suspect that he would get a very favourable response. If the committee is going to do a proper and a thorough job, one of the basic things it has to work with is information, particularly the background and the raw data used to compile the discussion paper. I would encourage him to raise this issue at the committee. Based on my knowledge of being in committee and having sat on the committee that looked at the reform of Standing Orders and Procedures in this House, and having some knowledge of the power the committees have and can exercise if they decide to do so, I do not think he would have any problem getting his hands on the information which he refers to in his question.


Mr. Deputy Speaker:: Is the House ready for the question?


Some Hon. Members:: Question.


Mr. Deputy Speaker:: The question is as follows:
That the discussion paper entitled "Tax Issues in Agriculture", tabled January 31, 1985; be referred to the Standing Committee on Finance, Trade and Economic Affairs;
That the Committee examine and report on the proposals contained therein and, in particular:
(i)	the need for limitations on the deductibility of farm losses against
non-farm income for part-time farmers and the appropriateness of the current
limitations under Section 31 of the Income Tax Act;
February 25, 1985

(ii)	the appropriateness and consequences of relieving the farm community of the general requirement to include one-half of capital gains on the sale of farm land in income for tax purposes; and
(iii)	the appropriateness of using the tax system to provide assistance through an agribond mechanism and the implications related thereto; and
That the Committee report its findings no later than April 1, 1985.
Is it the pleasure of the House to adopt the motion?
Some Hod. Members: Agreed.
Motion (Mr. Hnatyshyn) agreed to.


SMALL BUSINESSES LOANS ACT
[Stage Direction]
The House resumed consideration of the motion of Mr. Bissonnette that Bill C-23, an Act to amend the Small Businesses Loans Act, be read the second time and referred to the Standing Committee on Regional Development.
Maurice Brydon Foster: Mr. Speaker, I understand that when we talked about the Small Businesses Loans Act this morning my time had almost expired. I just want to emphasize the problem that I see, especially with regard to outlying areas in this country, under Bill C-23. It will impose an additional service fee on the banks, which will ultimately be reflected in the value of the loan. More important, it will probably reduce the availability of loans for small businesses. I hope the Government will take action to ensure that adequate funding is made available.
No one quarrels much with the interest rates of the small businesses loans, but people do quarrel with the fact that all too often the loans are just not available to small businessmen. I hope the Government does not adopt a policy which will result in a reduction of the amount of loans available. There certainly seem to be two deterrents in the Bill which move in that direction, namely the loan fee and the 10 per cent of the loan guaranteed by the bank. It is very important that the Government take action to ensure that that adverse effect, which we on this side of the House believe will happen, does not happen.


Mr. Deputy Speaker:: Questions and comments on the Hon. Member's speech? If not, we will resume debate.


Mr. Don Blenkarn (Mississauga South):: Mr. Speaker, I was interested in the Hon. Member's speech. I want to assure him that in proposing this legislation this Government has cleared the question of availability of money with the banking institutions. I think the Hon. Member will find in committee that the banking institutions are quite prepared to accept the situation whereby the banks are only guaranteed to the extent of 90 per cent of the loan at a rate of 1 per cent over prime.
In that regard, it is important to put on the record some of the advantages of the Small Businesses Loans Act and how it has progressed over the many years. The House will be aware that this Act was first put forward by the Government led by
Small Businesses Loans Act
the Right Hon. John Diefenbaker in 1960. The first year of operation of the Act was in 1961. The Act has been used by business considerably over the past years, particularly since 1978 when amendments were made to the Act to allow banks to charge 1 per cent over prime.
Last year, the amount of money lent was very close to $1 billion in over 30,000 small businesses loans. Comparing that activity to the activity of the Federal Business Development Bank, Members will note that activity under the Small Businesses Loans Act in terms of numbers of loans was 15 times the activity of the Federal Business Development Bank. This Act and the procedure to finance small business capital requirements has been most successful. The average loan is in the neighbourhood of $25,000, so we are getting at the relatively small, new, starting businesses in this country.
What we are doing under this statute is making it possible for people right across Canada to borrow money to start a business and to buy some equipment. This is not an Act to help large businesses, although the Act does change the situation and allows businesses which have a volume of up to $2 million to take advantage of the statute.
There have been some losses in past years, but they are similar to the losses the banks have suffered generally because we have had problems in the economy, problems with interest rates, problems with insolvencies and so on. We can expect periods like that. In speaking to the small business community, I have found that it is prepared to shoulder its responsibility in terms of paying for the cost of the insurance. Small businessmen can take advantage of a government-insured loan. The small businessmen who cannot get a loan otherwise, are able under this statute to get a loan to buy equipment. We have probably the best system of financing for small business available in any part of the country.
While I think this is an important statute, I am a bit disappointed in the Act as presented. Under the current Act, there is an over-all loan guarantee limit of $1.5 billion, and we have already reached that limit. Indeed, right now it is pretty hard to get a loan under this Act because the limits have been reached. This Bill extends that limit only to $1.8 billion, which I think is too little. I think that is a bit of a failure on the part of the drafters of the Bill. I hope that through discussions in committee the Government will be persuaded to extend that limit. The Government must realize that this has been the most successful form of financing small business.
Members of the committee will obviously take heed of the discussion paper produced by the Minister responsible for small business with respect to financing and the like. Perhaps that discussion paper might be put before the committee.
Sir, this Bill extends the Small Businesses Loans Act for five years. In the past we have had one and two-year extensions, but it seems to me there should be no time limit on the Act. If it should happen that the Act no longer serves the purpose of small business, then it can be terminated. But it seems to me rather ridiculous to continue to put time limits on this Act. It

February 25, 1985
Small Businesses Loans Act
is time we started realizing that small business is probably going to need some type of long-term financing guarantee now and into the indefinite future. So I recommend to the committee that it seriously consider this question. The Government, influenced by the committee's decisions, might bring forward amendments to alter that portion of the Bill.
As I mentioned already, the total loan guarantee limit of $1.5 billion has now been used up. Therefore, it is important that this debate be terminated and the Bill sent to committee, because we have to make sure that entrepreneurs in this country who want to buy equipment for their businesses are not hamstrung by the fact that this House of Commons cannot get its work done. We have already seen how one portion of Parliament has held up the Government of the country in getting its work done. We have seen that in the borrowing authority Bill. There is no reason why that same thing should happen in this Chamber. Therefore, I say to you, Sir, it is important that this House vote on the Bill and get it into committee where the necessary amendments can be made.
There was a suggestion that the banks should pick up the cost of the guarantee. I suggest to you that a rate of 1 per cent over prime is a very favourable rate. Remember, we are dealing with relatively small loans. The average loan size is about $25,000 up to a maximum of $100,000. All small loans require the same administrative detail as large loans. If a bank lends you $1 million, it does not need any more clerks than it does for a $15,000 or a $20,000 loan. The result is that the overhead on the small loan has to be borne by someone, and I think it is wrong to suggest that, in addition to the 1 per cent margin, the bank be required to pay a 1 per cent insurance fee out of its end. I think small borrowers would be quite prepared to pay a placement fee on a capital loan of this nature, particularly in view of the fact that such fees are common in the industry. If you want to place a long-term loan in the normal course without insurance, you often have to pay a placement fee. A fee of 1 per cent to cover the guarantee is not at all out of line and should be borne by the borrower.
Sir, this Act is working so well that we have used up the maximum amount available. It is working so well that this Parliament should get the Bill before committee so it can be passed and made into law.


Mr. Deputy Speaker:: Questions or comments?


Maurice Brydon Foster: Mr. Speaker, I would like to know from the Hon. Member whether, in his constituency, he does not find that the problem with this Act is that there are just not enough loans available. Unless you are a very good friend of the banker, or unless you fit in some pre-selected mould that the banks or credit unions have for their individual customers, there are just not enough loans available. I would be very interested to hear his views on whether, by imposing a 1 per cent charge on the bank, combined with the 10 per cent loss guarantee, the banks will make progress in granting loans.
Clearly, from 1977 to 1984, under the guidance of a strong Liberal Government in Ottawa, except for nine hiccupping months, the number of loans made under this Act went up
from 4,800 a year to some 31,000 a year. Given these two additional conditions, does he really believe that we are going to have as many bankers agreeing to make these loans? Clearly, the Hon. Member has some concerns about his Party's position on the length of this program and he wants to extend it indefinitely. I understood his Party's policy was always to have sunset laws in all Bills, but in any event there is a fibe-year sunset law here and he wants to see it extended indefinitely.
My concern is for the less affluent areas of the country, areas less affluent than the one which the Hon. Member represents and has represented for a number of years. Does he think there is really going to be a large number of loans available under this Act when you impose a 1 per cent fee on the bank as well as require them to assume 10 per cent of all losses under the program?


Donald Alex Blenkarn: Mr. Speaker, I would like to assure the Hon. Member that before this Bill was introduced, conversations were held with the major banks in connection with the lending policy with respect to the 90 per cent guarantee instead of the floating 100 per cent guarantee. As the Hon. Member will know, the present guarantee situation is that the banks will not have a 100 per cent guarantee unless the ratio of bank losses is such that it will give them a 100 per cent guarantee. The present system is rather convoluted with respect to guarantees. This legislation has simplified the system so that each loan will be guaranteed to 90 per cent instead of providing a 90 per cent guarantee on a portfolio. I understand that has been discussed with the bankers and that they are quite delighted with it.
With respect to the question of fees, there is some concern which has been expressed by the Canadian Federation of Independent Business and the Canadian Organization of Small Business. Both of those organizations have consulted extensively with the banking community. Both are convinced that borrowers should pay a placement charge rather than the placement charge being taken out of bank revenues, in view of the narrow revenue which the bank receives. I believe that if that evidence is brought to committee the regulations might well be altered. The regulations must be altered to make that provision.
There is amazing growth in this program. Since the banks were allowed to charge 1 per cent over prime on a floating basis rather than a fixed base, this program Act has grown dramatically. Indeed, this year it amounts to almost $1 billion. The figures in the annual report are quite astounding. The amount of money which has been lent and the number of loans which have been made have grown dramatically.
The Hon. Member said that in some areas small-business people cannot get a loan. I would suggest to him that a loan could be obtained a lot more easily from the banks under the Small Businesses Loans Act than could be obtained from the Government of Canada through the Federal Business Development Bank. The number of loans indicates that the loans are very widespread. Indeed, if the Hon. Member would look at
February 25, 1985

the tables and the financial statements, he would realize how much the loans are spread across the country and how various banks and institutions have taken advantage of the Act in making loans to their customers. There is no reason to believe that this change will affect that situation. However, it will mean that the Government will only be involved as an insurer. The Government is taking an insurance premium to guarantee a loan, the same as the Government takes an insurance premium to guarantee a mortgage under the Canada Mortgage and Housing Corporation. There is no reason for business to have a free ride. Indeed, the day of the free lunch is over. Business can afford to pay its cost. The Government is here to assist as an insurer. That is the way it should be. The banks are taking 10 per cent of the risk and the Government is guaranteeing 90 per cent. It will mean that the loans will have to be supervised by the bank in the same way as if it were lending its own money. Because the loans are guaranteed to 90 per cent, we know the banking community will do things that it would not do normally. Certainly, it will lend at a lower rate of interest than it would normally lend, which in this case would be 1 per cent over prime.
I say to the Hon. Member that this is a good statute. It should not be held up by Parliament. It should move to committee as quickly as possible. There are a number of amendments which should be made and I suggest that they can be made as evidence is brought before committee. That is where the legislation should be.


Mr. Orlikow:: Mr. Speaker, I would like to direct a question to the Hon. Member for Mississauga South (Mr. Blenkarn). We support this Bill because we consider it to be a small step in the right direction. However, what will happen if interest rates substantially increase as they did a few years ago? What will be the effect on small business? The loans are being made at 1 per cent over prime, but prime has increased 1.5 per cent in the last few weeks and it is likely that it will increase further in the next few weeks.
In the early 1980s when interest rates were at 18 per cent and 20 per cent, there was a tremendous increase in the number of bankruptcies. The large corporations did not go bankrupt because the banks could not afford to let them go bankrupt. Therefore, the large number of bankruptcies were primarily in the small business sector. What will happen if the prime rate of interest-and therefore the rate of interest which business will have to pay-increases substantially?


Donald Alex Blenkarn: Mr. Speaker, the Hon. Member for Winnipeg North (Mr. Orlikow) will realize that the prime rate has increased by half a per cent in the past week. That is unfortunate, but it has not increased anything like the underlying rates of interest in Treasury bills, both here in Canada and in the United States. Obviously, we cannot guarantee everyone happiness and prosperity forever. When we realize that Parliament cannot make those guarantees, we will start legislating more for the sensible needs of the country.
It would be nice if we could guarantee fixed-rate lending, but the banking system does not work that way. Depositors
Small Businesses Loans Act
will not invest their money for long periods of time at a fixed rate. They want the current rate on deposit. Therefore, borrowers must pay the current rate on their borrowings. There is no way around it. One per cent over prime is a pretty good rate. I know long-term money can be found. It can be found in the mortgage market at 14 per cent or 14.5 per cent, which is 3 per cent over prime. I suspect we could find long-term business money at 3 per cent or 4 per cent over prime. But businessmen want to borrow money as cheaply as possible. This legislation will let them borrow money at a floating rate as 1 per cent over prime. Whether the Government should guarantee longterm rates on a fixed rate is another matter of consideration. I do not know how we could write the Bill to provide for fixed rate margins, because fixed rate margins are always dramatically higher than floating rate margins.
This legislation is working at 1 per cent over prime. Obviously businessmen like it. The number of dollars which have been borrowed and the number of loans which have been made has escalated dramatically. We ought to support the Bill, get it immediately into committee and, if necessary, make amendments so that it will work even better.


Mr. Deputy Speaker:: The period for questions and comments is over.



PROCEEDINGS ON ADJOURNMENT MOTION


Mr. Deputy Speaker:: It is my duty, pursuant to Standing Order 45, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the Hon. Member for Notre-Dame-de-Grace-Lachine East (Mr. All-mand)-Employment-Student	summer jobs-Program
announcement, (b) Scope of program; the Hon. Member for Algoma (Mr. Foster)-Agriculture-Review of programs, (b) Agenda of First Ministers' conference; and the Hon. Member for Mississauga South (Mr. Blenkarn)-Parliament Hill- Request that Peace Camp be removed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Bissonnette that Bill C-23, an Act to amend the Small Busi-
[Stage Direction]
February 25, 1985
Small Businesses Loans Act
nesses Loans Act, be read the second time and referred to the Standing Committee on Regional Development.
David Orlikow: Mr. Speaker, as my colleagues have already indicated, we support the Bill because it is a small step in the right direction. We recognize the fact that there are close to one million small businesses in Canada. These businesses are 100 per cent Canadian-owned. They almost always buy from other Canadians and sell to other Canadians. Because they are Canadian, they are interested in seeing their community, their city and their province develop. They are not, like many of the large corporations, particularly the multinational corporations, so determined to make a profit that they will move their business from their community, their city, their province and even from their country in order to receive a substantial increase in profits. In recent years more than two-thirds of all the jobs which have been created in this country have been created by the small business sector.
So it is for this reason, Mr. Speaker, that we support this Bill. We recognize that this Bill will make it easier for small business people to get needed funding. While we support the Bill for that reason, we realize that, like other federal legislation which assist farmers and fishermen, this assistance is largely directed toward capital improvements. In effect, it allows small businesses to get into deeper debt in order to continue to operate. It does not necessarily mean they will prosper because they often must compete with far larger corporations with much better access to capital and better tax treatment. Small business people, like the consumers they serve, are largely price takers of the goods and services they require. They do not have the market power to force their own purchase prices on suppliers as do, for example, the large food chains which demand their own volume rebate, which often leaves the farmer in a very bad situation. Instead, these small business people usually pay the going rate and even after they get the kind of credit they need because of this Bill, they will still get hit by inflationary costs. We saw that happen in the early 1980s when interest rates escalated very sharply. Tens of thousands of small businesses were forced into bankruptcy because the premise on which they had based their borrowing and the premise upon which they made arrangements to get loans from the bank, was that much lower interest rates would prevail than those they had to pay two or three years later. So we saw tens of thousands of small business people forced into receivership by the banks as a result of huge increases in interest rates.
It was interesting but sad, to put it mildly, to see the difference in the way the banks treated large corporations as compared to small businesses. There were in past years, Mr. Speaker, and still are today, outstanding, unpaid loans to the bank. These loans are called non-performing loans, that is, loans on which the borrowers pay neither the interest nor the principal, and which today total over $8 billion. Those loans were made almost exclusively to large corporations which borrowed money for takeovers. This added nothing to our
productive capacity and created nothing in the way of jobs. Those loans are still outstanding and in many cases are not even being serviced. Those corporations are not paying interest and are not paying anything on the principal. The reason that the banks are carrying those loans, Mr. Speaker, is that they cannot afford to call those loans in. If those borrowers were required to meet their obligations the financial situation of the banks would be very adversely affected. The banks not only treated the large corporations differently, but they increased the interest rates which the small companies had to pay on their loans. The banks were imposing the kinds of rules on the small companies which frequently forced them into bankruptcy. Banks not only increased the interest rates which small business had to pay but also increased the banks' service charges. In fact, bank charges for the services which they provide have doubled in recent years despite the fact that they have automated and computerized so many of their operations. Banks have recently subjected their smaller accounts to profitability analysis in order to ensure that they make sufficient profit, which will take the form of higher fees or higher service charges.
The Consumers' Association has argued, and, I say, correctly, that these fees should only cover the cost of inducing the consumer to make use of them and that other overheads which are built in should be covered by the spread between the loan and savings deposits rates. Since these charges are often waived at the discretion of the bank, certainly those with the biggest account will wind up getting the best deal. The banks have increased these charges despite the fact that our major domestic banks have operated at profit levels of SI.5 billion or higher in each of the last four years. They have increased these charges despite the fact that other business people have suffered through recessions which have not affected the banks.
We find it interesting that the provisions of this Bill, and other Bills and programs of the Government, bring relatively little benefit to the small business community, certainly as compared to the large corporations of this country. Large corporations have too many friends in important places: the Government, the banks, even public opinion which is manipulated through mass media reporting. For example, in recent years we have seen the Government of Canada ensure that the Chrysler Corporation survived with Government assistance. I am not saying that the Chrysler Corporation should not have been helped, but the fact is that many Chrysler dealerships in that period when the auto industry was in trouble were forced into bankruptcy by the banks. We have seen the Government and the banks carry Massey-Ferguson. I am not suggesing for a moment that the Government should not help important companies which employ large groups of Canadians and which produce products which are needed by Canadians. I am not saying that companies like Massey-Ferguson should not have been helped, but the fact is that Massey-Ferguson dealerships, small business operations, were forced into bankruptcy while the company itself was helped to survive by the banks and the Canadian Government.
February 25, 1985

We believe that small business needs the same kind of support and assistance from Governments which is given to the large corporations, but they do not get that. We have seen large corporations not only receive special assistance, special loans and guarantees-and I am thinking of companies like Dome Petroleum-but we have seen large corporations benefit from a tax system which provides for overly generous deferred corporate taxes. Many corporations in fact pay no real tax at all. Indeed, I believe it was an official of Domtar who, when asked when he thought Domtar would actually pay corporate taxes, replied very simply, "Never". That company is always involved in expanding and improving its facilities, so it pays no corporation taxes. So are small business people, but they are not able to benefit from the deferred corporation tax system we have in this country under which almost exclusively large corporations have now benefited to the extent of $30 billion in deferred taxes which have not been paid.
Similarly, we have permitted a system under which thousands of people with incomes of $50,000 a year or more have simply paid no taxes at all. Indeed, there are more than 250 Canadians with incomes of $250,000 a year who pay no income tax at all. When one compares that with the almost one million small business people who are attempting to get established in a viable small business, we can see the way in which the tax system has been skewed to benefit those who have rather than those who are just beginning.
While we support this legislation, Mr. Speaker, we recognize that of the 900,000 businesses in this country only 25,000 have been or will be helped by this legislation. While this legislation is helpful, it will be seen by some not to provide too much assistance for small business. We are concerned because we believe that this kind of loan system was not really help small business people. Rather, it will make things worse for them if, as happened in the early 1980s, the interest rates on the loans taken escalate very quickly. In that situation those people will be worse off than if they had not received the loan at all.
We have long advocated that the banks of Canada owe it to those who are the source of their profits, to a large extent the small business people of the country, to lend the money at affordable interest rates. That is an interest rate below the prime rate rather than the prime rate plus 1 per cent as provided for in this Bill. That is not a pie-in-the-sky proposal. That is the way in which small businesses are treated in countries such as New Zealand, Denmark and Japan, to mention only a few. In those countries small businesses are able to borrow money at less than the prime rate. They are able to do that for a number of years, particularly in the start up years when they are working the hardest to establish themselves.
We believe that the Bank Act should be amended to force the chartered banks to lend money to small businesses at rates comparable to those offered to big corporate borrowers. We believe that there should be more real risk and venture capital
Small Businesses Loans Act
provided for small business people. We believe that the Federal Business Development Bank should provide more money to small businesses at lower interest rates. We believe that there should be a more aggressive buy Canadian program. Government tendering practices have to be reformed. The Government of Canada and the provincial Governments are among the biggest purchasers of goods and services in the country. Their system of purchasing should be changed to encourage small businesses to participate in supplying the needs of governments. If that were done, if we had a real buy Canadian program and encouraged small business to participate in that program, a big part of the ability of small business people to survive and grow would be realized.
We believe that the corporate tax system should be reformed so that small businesses will not be forced to pay a higher effective tax rate than large corporations, which they are now required to do. We believe that small business people cannot survive and grow in this country unless we have an independant Canadian interest rate policy. That policy would dramatically cut the cost of borrowing for the average small business person by ensuring that the Bank of Canada rate is no more than 1 per cent above the rate of inflation. We pride ourselves on the fact that the interest rate is down dramatically. It is not at 20 per cent or more as it was a few years ago. However, if one looks at the spread between the rate of inflation and the interest rate, we see that the real interest rate is almost as high as when it was at 20 per cent plus.
We believe that we must protect the Canadian dollar from the kind of swings which are taking place right now, fueled in part by speculators. We need to protect the Canadian dollar by coupling an independent interest rate policy with a tax on speculative capital leaving the country. That speculative capital is not leaving the country because small business people are involved in that kind of speculation. They are too interested in just surviving to get involved in that kind of thing.
We need more than just this Bill which we are discussing today, Mr. Speaker. We need to work for changes in the Bank Act which will require the banks to lend a Fixed percentage of their money to homeowners, farmers, and small business people at the same rate as that enjoyed by big corporate borrowers. We are going to support this Bill, but we think it goes only a small way to meeting the needs of the small business community. We believe that unless the Government can divorce itself from American fiscal policies, and unless we can get a lower and stable interest rate, small business people will not get real benefits from this Bill but will, rather, suffer all the evil consequences they suffered in recent years when interest rates were very high and swinging up and down very quickly.


Stanley J. Hovdebo: Mr. Speaker, one of the clauses in the Bill imposes a user fee on the small business borrowing with the guarantee of the Small Businesses Loans Act. Would the Hon. Member comment on that particular clause? Does he think it is worth-while, or should we be attempting to remove it at committee stage?

February 25, 1985
Prairie Farm Rehabilitation Act


David Orlikow: Mr. Speaker, 1 think the important question which must be resolved is whether the user fee is going to inhibit the borrower or the banks from extending the loans which are required. 1 think we must hear representations from the small business community and the banks before we make a final decision as to what we should do about that user fee.


BUSINESS OF THE HOUSE
Ramon John Hnatyshyn: Mr. Speaker, I rise on a point of order to indicate that the business of the House for tomorrow will be the Bill that we are now considering. When we complete consideration of this Bill tomorrow, we can move on to Bill C-24 dealing with CHIP and cost programs. As I announced prior to the recess, the business for tomorrow will be in the same sequence as was the business for today.


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



PRIVATE MEMBERS' BUSINESS-MOTIONS

['Agreed.']
The Acting Speaker (Mr. Paproski):: Is there unanimous consent for the House to proceed to Item No. 136?


Some Hon. Members:: Agreed.



Mr. Stan Schellenberger (Wetaskiwin) moved:: That the Standing Committee on Agriculture be empowered to study and report on the advisability of amending the Prairie Farm Rehabilitation Act, to allow expansion of the Act into a National Farm and Forest Rehabilitation Act which would administer co-ordination of national action with respect to both wet and dry-land management; and making the Minister responsible for the consideration and implementation of the best methods to be adopted to secure the rehabilitation of farm and forest areas throughout Canada; and bring new technology into the hands of individual farmers and foresters and to coordinate national action with respect to drought/water/soil management as well as conservation, wet-lands management (including wildlife preservation), and the general enhancement of the quality of our rural heritage; and that the Administration of the National Farm and Forest Rehabilitation Act be granted the power to make, administer and supervise farm and forest loans to help operators recover from natural disaster conditions and that such loans be granted at reduced rates of interest for short periods of time to ensure rapid restoration of the operations in question.
He said: Mr. Speaker, it is a pleasure to see so many Members in the House today. I have been a Member in the House for some 13 years and it is because I have such a high regard for Private Members' motions that I have put forward this motion. As well, I have such high regard for the good work that the standing committees have been able to do that rather than recommend that the Government take this motion into consideration, I have recommended that the Standing Committee on Agriculture take into consideration the revision of the Prairie Farm Rehabilitation Act.
This organization has been in place for almost 50 years and has served the prairie farmers of Manitoba, Saskatchewan and Alberta honourably over those years. It has built an excellent reputation among the rural communities of the Prairies.
When it began in the 1930s, it dealt with drought and soil erosion. It moved on to provide guidance on irrigation, shelter belts and new farm practices that have served the rural communities in the Prairies very well.
It is my intention that the standing committee look at this organization after 50 years of service to see whether now is the time to expand it so that its expertise can be used in other regions in the country.
Soil erosion is not just common to the Prairies. The Senate committee has pointed out that soil erosion is now a problem in the whole country and something about which we should be concerned. As well, it has the ability to study wet-land management, as this organization has been involved in the drainage of areas and the establishment of shelter belts to encourage wildlife sustenance in the prairie region.
I have been advised that the expertise could also be used in the management of small woodlots and shelter belts across the country. It is my intention, and I hope that of the House, that we pass this motion to the Agriculture Committee for study and recommendation to the Government for action.
Let me elaborate on some areas that I think the committee should study. The Prairie Farm Rehabilitation Act should be changed to reflect the national perspective. I suggest that it be called the National Farm and Forest Rehabilitation Act. Its mandate should be expanded to include water management and conservation throughout Canada and soil conservation and management. Soil deterioration and degradation is still a very serious problem in this country and is costing us hundreds of millions of dollars.
The present Act should be expanded to include forest management specifically concerned with the preservation of small woodlots such as the maple sugar woodlots that are operated by small entrepreneurs. It would not in any interfere with the management of our large forests for which the Minister of State for Forestry (Mr. Merrithew) is responsible.
This organization, which is already working in co-operation with Ducks Unlimited, should become involved in wet-lands management, including wildlife and particularly waterfowl management. It should revive the cultural aspects of rural life that it was originally set up to include. I suggest that policies that are established to enhance rural life be part of the work of
February 25, 1985

this organization, along with soil and water management. The PFRA allowed that aspect to diminish as it dealt more with the research aspect of agriculture. However, Agriculture Canada has allowed that aspect to slip as well as a result of its concentration on new crops and crop management over the years. 1 think it is important to revive the cultural aspect of the Act.
I hope that the PFRA can be expanded to administer farm and small woodlot loans to help operators recover from natural disasters by obtaining low interest loans. We experienced such a disaster in the Prairies this year. Although the Governments of the provinces and the federal Government responded reasonably quickly, I believe it is important to have an organization of Government that can respond immediately to a natural disaster, no matter how large or small. I hope that an organization such as the one that is proposed could have that opportunity.
It is important that we do not leave the impression that by moving this motion we are taking anything away from the Prairies. The prairie provinces are very proud of this institution and do not want to have its importance in that region of the country diminished. Therefore, I believe that it is important to have the support for this suggestion of the Departments of Agriculture in the Prairies and of the prairie Premiers. It is my opinion, after talking to the staff in PFRA, that they would welcome this new challenge and welcome the new guidelines to take them into the next 50 years of operation.
I believe there are available the co-operation and ability necessary to permit this organization to expand into regions other than the Prairies if those regions wish to use that expertise. It would only be done on that basis so that we do not in any way encourage the centralization of this organization. If there is a need for this expertise, it should be expanded on a regional basis so that we in no way diminish the importance of the organization that was built up to which there was such good response on the Prairies.
This organization presently has a trained and capable staff. I believe that it would not be necessary to have a large increase in staff since it already has the potential to expand its work load and provide that expertise. In fact, some expertise could be borrowed from other government Departments to meet certain requirements at particular times, with the exception of the natural disaster aspect of the program. It would not require a large increase in staff. We now have existing in this organization a silviculture operation at Indian Head, Saskatchewan. It has been very successful in dispersing trees capable of lining property lines, enhancing the farm, homestead, or the farmstead of an entrepreneur. This program and the people who have been part of establishing this program are in place. This expertise is available not only to the Prairies but it could be made available to other areas.
I anticipate the maritime region of Canada and British Columbia would be very interested in having assistance from this organization. As I said before, the PFRA has not in the
Prairie Farm Rehabilitation Act
strictest sense been involved in wet-land management in the past. It has been involved directly in drainage programs and in taking farm land out of production which should ever have been in production in the first place and re-establishing it into community pastures or back to its natural state. I believe this is an area into which PFRA could expand, to assist in the preservation of wildlife with the co-operation that is in place with Ducks Unlimited. They have the experience in establishing dug-outs and in establishing shelter belts. This kind of management is very important to the natural wildlife of many regions, particularly the Prairies. There is a natural ability to expand in these areas if we find a need.
I believe this program should be studied intensively. I believe the Standing Committee on Agriculture has the ability to do that. We are not suggesting that it be passed and implemented tomorrow but that we look at the positive aspects of making this a national organization. I anticipate that we should take some time to do that and we should not rush into establishing a new mandate for an organization that has operated very well in the past.
As far as the natural disaster aspect of the proposal is concerned I believe a dire need exists in Canada today. If we look at our neighbour to the south, the United States of America, we find that it has had in place for some time an organization called the Farmers Home Administration. It has the ability to lend funds for a short period of time to farmers who find themselves the victims of natural disasters. These loans are only for emergencies. Farmers can receive loans at interest rates of 5 per cent on the first $100,000 and 8 per cent on the remainder. Loans are limited to $500,000. They must be repaid as quickly as possible or turned back into the established credit arrangements as quickly as possible. This allows the farmer to secure cash quickly at low rates in order to recover from a natural disaster. I would like to see the same kind of assistance offered to our farmers in rural communities who may find themselves victims of such things as tornadoes.
We never had such things as tornadoes in Canada at one time but we have had three or four in my constituency in the last five years. Weather patterns are changing and natural devastation is a possibility. We have lived with drought for many years. This is the reason for this organization to be established. As a Member of this House I suggest we seriously look at increasing the mandate of this excellent organization that has been successfully established on the Prairies for 50 years. We should expand its mandate to the entire country and allow the expertise that has been built up to be used by Canadians no matter where they are participating in rural life.


Maurice Brydon Foster: Mr. Speaker, I am pleased to join with the Hon. Member for Wetaskiwin (Mr. Schel-lenberger) in speaking on his motion this afternoon. It relates to a proposal to amend the Prairie Farm Rehabilitation Act. I want to congratulate the Hon. Member for the ideas behind his motion. Of all the issues facing agriculture in the long term, the whole issue of conservation and soil degradation, will perhaps be the most important in the future. That is not in any way to discount the short-term problems of marketing, of the

mentioned that the utilization of conservation practices by the majority of farmers could be encouraged by the availability of more funds through programs which are seen to be fair and non-restrictive. Cost-sharing programs, tax credits and capital cost allowances were the most frequently proposed incentives in the hearings the committee held across the country, while it was suggested that other financial assistance measures should be carefully studied.
What we have to consider in the motion today is whether or not we really have a Government which is prepared to provide that kind of financial assistance, in view of the response to the debt crisis facing some 17 per cent to 20 per cent of our farmers and the move to put half the cost of disaster funding on to the agricultural producers of the country, while not requiring the provinces to make any commitment at all. What we are really asking is whether there is the political will to implement a program such as the one the Hon. Member for Wetaskiwin has put before us. If there is, obviously the exercise of a committee report would be very beneficial from that point of view. We should move ahead with it and see it go to committee. Those of us who represent rural areas know that the rural farm population represents only 4 per cent or 5 per cent of the total population. Obviously it is not a very loud voice in the over-all spectre of political power, yet this issue is very fundamental to the long-term benefits of the rural areas of Canada.
During the years I worked as a veterinarian in western Canada and then in northern Ontario and for the past 16 years as a Member of Parliament working in the rural areas of the Algoma, Manitoulin and Sudbury districts of northern Ontario, I have certainly had a chance to see the very serious problems facing agriculture. There is a need to impress upon the Government the fact that there should be a commitment to rural areas. I would like to see as part of the Hon. Member's motion mention of the quality of life, general development and a commitment to rural areas.
In the Senate committee report Soil at Risk, one of the main items was that there be on the agenda of the meeting of First Ministers' soil conservation and soil degradation. A First Ministers' conference was held in Regina a week or so ago. Clearly that item was not there. That does not mean that we should not move ahead as a committee of the House to try to deal with this motion to see if a national program can be fashioned to meet the needs recognized in the Senate committee report and determine whether there is a commitment by the Government to implement such a policy. Clearly there is a need.


Victor Fredrich (Vic) Althouse: Mr. Speaker, it is a pleasure for me to participate in this debate to discuss the proposal put forward by the Hon. Member for Wetaskiwin (Mr. Schellenberger) to refer to the Standing Committee on Agriculture the power to study the amendments to the Prairie Farm Rehabilitation Act. He has a number of proposals that that administration might carry on as part of its expanded
Prairie Farm Rehabilitation Act mandate. During the course of my remarks, I would like to add to such an expanded mandate one or two other items that I think might be legitimate.
It is an extremely important topic both for Canadians and other residents of North America and we should address this problem now. With its advent in the 1930s, the PFRA showed that it was able to bring back some land that had gone beyond use. Some of the lands that were brought back into production were, granted, as grass-lands and pasture lands. They had degenerated to the point where they were little more than sand dunes. The activities of PFRA brought those back.
Vast areas of the Prairies that were devoid of any water, through the actions of PFRA had small dams and drainage systems installed. Fair amounts of water were trapped for the use of the human population, the livestock and waterfowl that passed through that region. It may not be well known in the rest of Canada, but most prairie people know that approximately 50 per cent of the waterfowl that exists in North American migrate through the prairie region. Approximately 50 per cent of that waterfowl are hatched, grow up and become usable as birds for the hunt in that part of the country.
I have noted a number of disturbing things that are happening to the wet-lands, woodlots and farm-lands of our country. The problems have not been adequately addressed, in part because of our Constitution where the responsibility lies with both the federal and provincial jurisdictions. The genius of PFRA was the fact that it succeeded in getting provincial and federal co-operation and that it channelled the job that needed to be done through that particular administration.
The Hon. Member who introduced this motion is absolutely right. We need to have an expanded and new mandate for either PFRA or some new administration which would have both federal and provincial co-operation and financing. It could be mandated by both federal and provincial governments. We should not rule out the possibility of financing from our neighbours to the south since a great deal of the benefits from the wildlife, and certainly from the water and fisheries, shifts to them.
If we properly manage our forest lands so that the silt from the mountains stops washing into the rivers, the salmon beds will be clean. We can again have salmon using the rivers and hatching. We will again get to the point where we will have full utilization of all the fishboats on both our coasts. We will not have the continuing argument and litigation between our two countries as to who is fishing how many salmon and who is responsible for dividing the salmon. We have allowed our forests to deteriorate to the point where our spawning grounds for those salmon are no longer capable of supporting fish.
I alluded briefly to the role that the Prairies play in supplying waterfowl for both nations. We sometimes forget the problems in attempting to save our waterfowl, forests, fisheries or the land over-all. It is a very complex question. Our farmers and foresters look after the land as they see fit by the rules that they have to work by. Sometimes, while they may be doing things that are considered to be very good management for their particular industry, the long-term effect may be very

February 25, 1985
Prairie Farm Rehabilitation Act
expensive for the rest of us. We always have the question as to who will pay the cost of conservation. We can get general agreement that conservation is good for this and future generations, but when it comes to who will lay out the money or who will put up with the problems that accrue when you try to conserve natural resources, that is something we have not be able to address properly. In part, that is because of the split jurisdiction. There are other problems, some of which I will allude to.
As an example, I will take my own area. Most of us are most comfortable talking about our own area. Where I live in Saskatchewan, the land was originally covered by fairly heavy forests, poplar and spruce. Underneath the good forest was some very good farm land. Otherwise, it would not have produced good forest. For three generations, farmers in my corner of the country have considered themselves successful if at the end of the year they could say they have cleared so many acres. We fought the forest, got rid of it and have now turned it into farm land. That is considered a measure of success.
We have reached the point now where most of the farm land is clear. A lot of fencelines were left, growing up into tall trees, which slowed down the winds both in summer and winter and provided habitat for some of the smaller wildlife, including deer. As farmers began to use larger and larger equipment and were pressed economically, they began to look at those fencelines as if they were enemies rather than friends.
The farmers began to pull out the fencelines. It does not cost much to knock down a mile or a mile and a half of fenceline. They found that they could get on their fields two or three days earlier than their neighbours who had left the fencelines up. They had no birds and no wildlife. However, they were a couple of days earlier and they avoided the frost. It did not take long for the neighbours to see that the "successful farmer" did not keep tree lines. So my part of the country, which was once verdant with trees, is now laid bare, and you can see a distance of five or six miles just as though you were on the Prairies. Of course, the winds blow through and the snow does not stop in the middle of the fields and we are having attendant problems with water in the spring. The snow melts very quickly, creating erosion as it goes. Some farmers consider that erosion helpful because it clears out the water courses and allows the water to escape even more quickly so that they can get their crop in a few days earlier. But in the longer term the next generation in that part of the country may find themselves faced with a shortage of water. We know from experience on the Prairies during the 1930s that once you dry out the land too much, the rains stop coming. We may be having some influence on the weather patterns in that part of the world. In the long term it may be a very costly exercise of these very efficient farmers to have made the best economic use of their resources.
We know from observing monoculture, not only in our region but in other regions, that the results can be quite
hazardous in a period of only 10 or 15 years. Sometimes it takes as long as one or two generations, but the result is always quite visible. I know from having visited the single-crop potato area of New Brunswick that erosion is a much larger problem there than it is even on the Prairies. The water courses wash great gouges in the soil each spring. They are filled in, planted over, no fibre is put back into the soil and the process continues again the next year. We have no way of saying to farmers that these water courses should be seeded with grass to hold them in place. We have no agency which could point out the advantages of keeping trees as part of the ecology of our farm areas. We have no one selling the advantages of trees except for some people who are now getting old, having started out back in the thirties. They did a good job of explaining why we needed tree-lines and trees on the Prairies, but the message did not sink in, not in those areas where there were trees to begin with, and we now seem to be doomed to making the errors that our prairie farmers made.
In his motion, the Hon. Member for Wetaskiwin has set out to have the new farm and forest rehabilitation agency co-ordinate national action with respect to both wet and dry-land management. He wants new technology placed in the hands of individual farmers and foresters, and I think some environmentalists and wildlife managers as well. Along with that- and perhaps this agency is the one to do it-there has to be an organization to do genuinely innovative research, an organization that would investigate quite new ideas, some which might be considered to be whacky, but which might have an impact on the over-all environment.
To give you one example of that, Mr. Speaker, most Members of the House will realize that there is a big salinity problem in a lot of prairie soils. We do not have anyone who has done anything more than just determine that if you keep plants growing on those saline spots, the problem gets somewhat better. Farmers have noticed that if you just abandon those areas in some parts of the Prairies to the kochia weed, gradually the area seems to shrink in size and again become available for agricultural production. The suspicion is that this weed may have some ability to reduce the amount of salt in those areas, but there is no one doing research to identify that.
I know, for instance, that there has been research in similar areas which has arrived at surprising results. The National Research Council had a research centre in Saskatchewan some six or eight years ago, when I was on the Science Council of that province, that had done some research with cattails and bullrushes. They found that those particular shallow-water plants had the uncanny ability to take heavy metals out of sewage and sludge, both in the water and in the soil, and seemingly get rid of it from the environment. At the same time, they produced a plant which was usable for livestock feed. I think that that researcher should be tracked down and he should do some similar work on the kochia weed, which seem to be able to absorb some salt from the saline spots which are a growing problem on prairie soils.
Another proposal is to have a research unit do truly innovative research which our plant breeders and agriculturalists
February 25, 1985

cannot get the money to do. This would have an effect on the over-all ecology of our country and would improve the management of our wildlife.
I should not have to remind the House, but some may have forgotten, that our fur industry, which started this country, is still a very important industry. It is considered a sideline perhaps more than it should be. Approximately $900 million worth of furs are taken by trappers and farmers and they provide a sizeable addition to the income of people who live in forested areas. There is, as well, the management of our water resources in order to assist in the growth of migratory wet-land birds. That should be part of the authority as well, because it contributes markedly not only by way of meat for native hunters, but it is also a very large draw to the tourist industry and it can be one of the larger industries in the more remote parts of our country.
I think the idea is a good one and its scope could be extended beyond the very broad terms of reference that the Hon. Member has presented to us. I would be quite pleased to see this idea go to committee for further study, and our Party will support it.


Mr. Fernand Jourdenais (La Prairie):: Mr. Speaker, in the report prepared by the Senate entitled "Soil at Risk", the authors described the state of agricultural soil across Canada. They point out that soil degradation is a serious problem throughout the country. Although there are some similarities, there are enough differences from region to region to require specific corrective action.
Soil management must deal with the problems of erosion and compaction caused by potato farming in the Maritimes, with floods and erosion by water in Quebec and Ontario, with salinization and erosion by water and wind in the Prairies and water erosion and river sedimentation in British Columbia. Widely differing problems require as many different solutions.
The time has come for the Government of Canada to review its activities with respect to soil, forests, waterways and wet lands, and the preservation of our rural heritage. It is clear that the end of the eighties and the beginning of the nineties mark the beginning of an era when developing the land and nothing more will no longer be acceptable. We will have to manage the resources we have to ensure our economic and general well-being.
Our water resources are unevenly distributed among the various regions. Ontario and Quebec often suffer from problems caused by spring floods or torrential rains. Soil erosion is one of the most serious problems, and the increase in row crops such as corn makes a serious situation even worse. In some areas, it costs between $100 and $600 per hectare to correct these conditions.
Prairie Farm Rehabilitation Act
Another example, and I am still referring to central Canada, is that wind erosion is getting worse on sandy soil because of a movement away from cover crops to single crop culture.
And what about soil compaction as a result of repeated plowing in wet soil? This could be just as damaging as flooding and erosion, depending on the area.
Urban expansion in Ontario has meant that agriculture is losing its best arable land. The same phenomenon exists, to a lesser degree, in the Maritimes. In Quebec, strict zoning laws applied since the end of the seventies have helped stop excessive urban expansion, but good farmland remains a rare and high-priced commodity. In the Prairies, water is a particularly unreliable resource, and it has always been difficult to remedy this problem.
Canada's economic development depends on control and effective use of our water resources. Increased use puts greater pressure on our water supply and increases the probability of pollution. Only through effective management and use can we ensure long term availability of our water supply.
When we travel across this country of ours, we can see the incredible diversity of our forests and how they contribute to the well-being of local communities: woodlots and maple bush in the East, the pulp and paper industry in Quebec and Northern Ontario, and British Columbia's vast forest resources. Over the years, we have developed forest resources across this country. Our forests must provide sustained production if we want them to continue to contribute to our prosperity and wellbeing. We should develop and implement a new technology aimed at encouraging conservation, developing reforestation and promoting a more effective management.
Wetlands also play a major role. Compared with the economic roles of our agriculture and forests, that of wetlands is more germane to our environment, way of life, culture and heritage. These areas contribute to the maintenance and enhancement of water quality, the preservation of wildlife habitat, as well as the development of tourism through outdoor activities such as hunting, fishing and nature interpretation centres. They attract those who are eager to educate themselves and contribute to the ecological diversity of our landscapes. They play a part in flood control by holding back the water in times of heavy rainfalls and allowing it to flow during the following months. And they are the depositories of a great many renewable resources such as fur animals and wild rice.
Many wetlands have been drained or greatly modified through the development of up-stream basins. Canadians are becoming increasingly more aware of the extensive damage resulting from the interference with the ecosystems within wetlands. These must be preserved, given the part they play in the use of lands.
Soils, forests, water, humid zones and people are all part and parcel of our rural heritage. The agricultural community

February 25, 1985
Prairie Farm Rehabilitation Act has found ways to protect and improve the environment, be it through upgrading farms by tree-planting, maintaining ecosystems to protect wildlife, or furthering its cultural charateristics to make rural life more rewarding. Communities are part of that heritage and the quality of their social life must be improved.
What is the common link between those natural resources? The provinces look after their development because it is their constitutional responsibility.
Besides, the federal Government has a direct interest in those fields. Soils and forests do contribute to our international trade. Agriculture accounts for one-sixth of all Canadian economic activities. Last year, retail sales of food products were worth nearly S60 billion. In 1983, agricultural exports were valued at $10 billion and boosted our trade surplus by $4.3 billion. This industry directly employs 1.4 million Canadians and creates 3 million jobs all told.
The forest industry ranks first in export trade since it brings in over $11 billion each year. It directly employs more than 300,000 Canadians and indirectly about 700,000 additional workers in related industries.
The federal Government has every interest in making sure that those resources are properly administered since they stand as a guarantee of economic stability and jobs for future generations. The provinces as well as all men and women who use those resources share the same interest. We have seen to what extent the quality of such resources can vary from one region to the next, and that explains why each provincial Government has developed its own management strategy in those fields.
In the past, the federal Government has launched a variety of programs. Research has always been a priority with respect to soils, forests and water. Now and again, it has also involved the provinces through short-term financing programs under the Agricultural and Rural Development Act, through the Department of Regional Economic Expansion or again, more recently, through regional and economic development agreements. In addition, the Prairie Farm Rehabilitation Administration (PFRA) plays an active role in Western Canada as a federal body which provides direct services.
It is imperative that we foresee our needs for 1990 and years beyond, decide what must be done and how to do it. So far, we have been acting as we saw fit, but time has come to make sure that our resources produce sustained yields through more effective administration.
Mr. Speaker, I am looking at the clock and I feel that Hon. Members are getting nervous. We have very little time left and we do want this motion to be adopted, convinced as we are that action must be taken in those fields. We support the motion to refer this matter to the Standing Committee on Agriculture. We are anxious to hear its recommendations and, if need be, to make the right decisions and take the appropriate steps.


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

It has been moved by Mr. Schellenberger, seconded by Mr. Nickerson:
That the Standing Committee on Agriculture be empowered to study and report on the advisability of amending the Prairie Farm Rehabilitation Act, to allow expansion of the Act into a National Farm and Forest Rehabilitation Act which would administer co-ordination of national action with respect to both wet and dry-land management; and making the Minister responsible for the consideration and implementation of the best methods to be adopted to secure the rehabilitation of farm and forest areas throughout Canada; and bring new technology into the hands of individual farmers and foresters and to co-ordinate national action with respect to drought/water/soil management as well as conservation, wet-lands management (including wildlife preservation), and the general enhancement of the quality of our rural heritage; and that the Administration of the National Farm and Forest Rehabilitation Act be granted the power to make, administer and supervise farm and forest loans to help operators recover from natural disaster conditions and that such loans be granted at reduced rates of interest for short periods of time to ensure rapid restoration of the operations in question.
Is it the pleasure of the House to adopt the motion?


Some Hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

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

[Stage Direction]
Hon. Warren Allmand (Notre-Dame-de-Grace-Lachine
East): Mr. Speaker, on February 5, for the third time in this House, I asked the Minister of Employment and Immigration (Miss MacDonald) when she would announce the summer employment program. I asked that question in December, in January and also in committee. I pointed out to the Minister that it was customary to announce the summer employment program in December in order to give enough lead time to potential employers and applicants so that they could put together worth-while programs to hire students in the summer.
When I asked the Minister a third time on February 5, she said that the program would be announced the next day. In fact, the program was announced on February 6.
I might say that the two-month delay in announcing the program did not give justice to the program because, while it was worth $205 million, as a result of the rate of inflation it would be worth less real money than in the previous year, and it had no specific allocation for community services. It also
February 25, 1985
[Stage Direction]
had a different name, I suppose because the Conservative Party, after delaying for two months, wanted to put its own stamp on it. Instead of calling it "Summer Canada", it was called "Challenge '85".
When the Minister announced the program on February 6, she gave the impression that the program was ready to proceed. I am raising this matter again today because she misled the House on that date. When the Minister announced the program on February 6 she gave a certain number of details, and we had the impression on that date that finally the program was ready to go ahead. However, as of last week- two and a half weeks after the announcement-the program was still not ready.
It had not been decided by many of the provinces whether the program would be a joint program, or that there would be two separate programs, federal and provincial. As well, the provincial insert sheets for the application forms were not ready for potential applicants. Furthermore, the deadlines and the selection processes were not clear. For example, last Friday I was told by one of the officials of the Department of Employment and Immigration in Montreal that the program would be constituency based. But another official from another office told me that it was going to be regionally based.
This is another example of Conservative incompetence, Mr. Speaker. The Government cancelled the Summer Canada Program on November 8. It bumbled and fumbled for three months. Finally it announced a program on February 6 even though it was not ready, and it was not ready because the details had still not been worked out. I presume that the announcement of February 6 was simply to put off people like myself and other Hon. Members who have been asking the question over and over again, "When are you going to announce that program?" I called again today and I was told that finally the application forms are being sent out to the people in the Montreal area. I don't know what the experience is in other parts of the country but I am told that in Toronto last week they still did not have the Ontario insert forms for the application forms. It is regrettable, Mr. Speaker, that the Government, having played politics with this matter, now leaves students holding the bag.
I must say that my complaint is not so much against the program but against the process, against the administration. During the election campaign the Conservative Party gave the impression that it had all of the answers to unemployment in this country and that if the Conservatives were elected those problems would be solved. Once the election was over, the Conservatives announced that they were going to consult with that group, or this group, with the provinces, with labour, with big business, with little business and with community groups and so on. It then became fairly evident that they were looking for a program. If the Conservatives had said that in the first place, before the election, we would have accepted that as reasonable. But, no, they gave the impression that they had the answers and then started looking for the answers; in effect, trying to reinvent the wheel.
Adjournment Debate
In a statement by the Minister of Finance (Mr. Wilson) on November 8 cancellation of Summer Canada was announced. It was later announced that the Government was going to look for a new program, or consult on a new program. The new program was finally announced on February 6, two months late. It would have been bad enough had the program started from that date but, as I pointed out, it is just now getting ready. I feel that is a terrible condemnation of the Government on its approach to the very serious problem of unemployment among our students.
Let us hope, Mr. Speaker, that despite these unpardonable delays, the Minister and the Parliamentary Secretary, and those who support the Government, will listen to these pleas, not only from the Opposition, as we are only 70 in number, but from the many student groups and community groups across the country. The government should finally get this summer program fully under way as soon as possible to make sure that students are working by at least May 1, 1984 in order that they can earn enough money to pay for their tuition and other expenses next year.
Mr. Jean-Guy Hudon (Parliamentary Secretary to Minister of Employment and Immigration):: Mr. Speaker, on behalf of the Minister of Employment and Immigration (Miss MacDonald), I would like to respond to the question asked by the Hon. Member for Notre-Dame-de-Grace-Lachine East (Mr. Allmand) in this House on February 5, 1985, concerning the announcement made by the Government of its summer employment program for the young, and to his request for information on the nature of those initiatives.
On February 6, 1985, the Minister of Employment and Immigration and the Minister of State (Youth), (Mrs. Champagne) announced the program Challenge '85, a summer employment program for students, with a $205 million funding. That program should not only give students an opportunity to earn money to pay for their tuition fees, but also create jobs that will promote their career goals and a better preparation for their future participation in the labour market.
The Hon. Member is under the impression that the delay in announcing the program is a serious insult to the Canadian students. On behalf of the Minister, I would point out that any program hastily introduced, without specific planning, without input from the regions and without taking the time needed to obtain a commitment from our economic partners, including the Provinces, the private sector and others, would be a still more serious insult.
Challenge '85 is a totally new approach to job creation for students. Instead of offering students pre-organized federal projects that would simply give them an opportunity to earn money to pay for their tuition fees, we in the Government are challenging our economic partners to work with us for the creation of meaningful jobs that will enable students to opti-

February 25, 1985
Adjournment Debate
mize their contribution both to the Canadian society of today and that in which they will be living in the years to come.
Challenge '85, a multisided initiative, illustrates the Government's conviction that the students of Canada and our economic partners have the ingenuity, the desire and the will needed to carry on a successful program, and that they can very well at the same time play their rightful role in rebuilding a healthy Canadian economy.
Challenge '85 will provide $163 million for the Summer Employment/Work Experience component. With respect to that component, the federal participation will take the form of wage subsidies for jobs not only in the private sector but also in municipal goverments and community service organizations.
In all these sectors, priority will be given to applicants offering jobs to students while giving them the opportunity to acquire more knowledge, job experience and training in a future career. Mr. Speaker, this should alleviate the fears of the Hon. Member for Notre-Dame-de-Grace-Lachine East that groups such as community non-profit organizations will be left out next summer. Our second priority will be for jobs where students will be able to acquire some work experience.
In addition, Mr. Speaker, the federal Government in cooperation with the provinces is willing to make $30 million available in the form of loan guarantees and loans for those wishing to go into business.
The Minister sent out an invitation to large corporations and business organizations, which have already suggested that they would gladly promote student hiring in the private sector.
Mr. Speaker, in closing, I would like to mention that, with this program and the involvement of the provinces and the private sector, the Government is confident that Challenge '85, an inspired and audacious new approach to student hiring, will be of great help to thousands of students both next Summer and in the near future when they will enter the labour market for good.


AGRICULTURE-REVIEW OF PROGRAMS. (B) AGENDA OF FIRST MINISTERS' CONFERENCE
Maurice Brydon Foster: Mr. Speaker, on February 14 I put a question to the Deputy Prime Minister (Mr. Nielsen) who had made a very grand presentation to the Canadian Club of Toronto about two days before that. On that occasion in his speech entitled "Agenda for Change", he outlined study teams in the various sectors of the Canadian economy whose job it was to cut out, eliminate, reduce and consolidate programs. I asked him why there was no representation on the study team on agricultural programs from the agricultural community itself, that is agricultural producers and farmers. I asked him why there was no representation from eastern or western Canada. I asked why was there no representation from rural Canada, and why was there no
representation from women involved in the agriculture industry?
When you look at the study team you will see that most of its members are from multinational corporations, banking institutions or the federal Government. The team leader is a past president of St. Lawrence Sugar. The private sector people come from the large multinational corporations or banks. The other five come from the Public Service. Surely it would have been reasonable to expect that there would be representation from western Canada on a study team that will be reviewing some 90 Government programs relating to agriculture, programs which involve some 14,000 jobs and an expenditure of $1.5 billion. Surely there should be some such representation.
The response from the Deputy Prime Minister was that the private sector advisory committee members are broadly representative of all regions of this country, business and labour. That is totally wrong. It is questionable whether the Deputy Prime Minister read his own speech. When he was replying to a question by the Hon. Member for Trinity (Miss Nicholson) he did not seem to know what he said in his speech. It is as if he just read the speech without really understanding what he was saying.
I fear for the agricultural community. Let us look through the list of programs. It seems to me that on the committee studying livestock and farm input supply there could have been a livestock producer from western Canada or eastern Canada. Having regard to programs such as the Seed Potato Export Promotion Program, one might consider having a representative from New Brunswick or Prince Edward Island on the committee.
Rather than having this collection of people from Montreal, Toronto and Ottawa consider programs under the Agricultural Products Co-Operative Marketing Act, it seems to me there should have been members from co-ops in Manitoba, Saskatchewan or elsewhere on the committee. That would be more sensible than having a few former presidents of big multinational corporations and some civil servants deciding which Government programs will be maintained.
It is most disturbing to find upon reading the published documentation that the committee has already made its report. The interim report apparently was made on February 15, two days after the Deputy Prime Minister made his fateful speech to the Canadian Club in Toronto. It would have been interesting if he had made that speech to the Canadian Club in Winnipeg. I have a press clipping from Manitoba which is highly critical of the Deputy Prime Minister. Not only was there no representative from Manitoba on the study committee on agricultural programs, there was no such representation on any of the approximately 12 committees the Deputy Prime Minister set up. I am sure that in response to every program that gets chopped, not only in Agriculture but Transportation and Health and Welfare, the people in Manitoba will ask what is happening.
February 25, 1985

The Prime Minister (Mr. Mulroney) comes from West-mount, the Minister of Finance (Mr. Wilson) and the Minister of Regional Industrial Expansion (Mr. Stevens) come from Bay Street. It appears that they, along with civil servants from Ottawa, are the only ones who will have representation on the committees. The sad part is that this has been done secretly and behind closed doors. Apparently the recommendations are in now. When the Budget comes down we will find that various programs, in agriculture and other aspects of our economy, have been wiped out without there having been representation from the private sector in any part of our country, with the exception of those from Toronto, Montreal, and the civil servants in Ottawa, who make all these decisions behind closed doors.


Paul Wyatt Dick: Mr. Speaker, it is unfortunate that the Hon. Member asking the question not only has his facts wrong, but has drawn wrong conclusions from those facts that he had available in front of him.
The Ministerial Task Force on Program Review is examining all the programs of the federal government to achieve better service to the public, less red tape and greater efficiency. Programs in support of the agricultural sector are one of the priority areas for review, to ensure that they are truly contributing to the stability, growth and competitiveness of the agri-food sector.
In this Field of joint federal and provincial jurisdiction it is important to examine potential areas of duplication in federal and provincial programs. A study team comprised of private sector individuals and public servants has been formed to examine the results of federal programs. These people are consulting with groups benefiting from the programs. They are trying to determine whether there are any clear overlaps.
The study team has met with the Minister of Agriculture (Mr. Wise), the Minister of Transport (Mr. Mazankowski) and the Minister of State for the Canadian Wheat Board (Mr. Mayer). Members of the study team have met with the Deputy Minister of Agriculture and all senior officers of the Department to understand their view on the effectiveness and efficiency of their programs.
The team is also meeting with knowledgeable people in the private sector in both western and eastern Canada who can give first-hand knowledge and advice on areas of duplication or overlap, or where programs simply do not contribute to the strength of a dynamic agri-food sector which is so important to Canada's future economic prospects.
The study team indicates that it has received the fullest co-operation from all those contacted, from Ministers to officials to private individuals. Clearly all of them are enthusiastic about the future growth prospects of the agri-food sector, and want to see federal programs playing the most productive role possible to bring about that future.
Adjournment Debate


PARLIAMENT HILL-REQUEST THAT PEACE CAMP BE REMOVED
Donald Alex Blenkarn: Mr. Speaker, on November 13, five days after this House commenced, I asked the Minister of Public Works (Mr. La Salle) a question with respect to the peace camp that he has located on Parliament Hill. The Minister replied:
I have the impression that my colleague is asking me to do in a few weeks something which the previous government failed to do in 18 months.
That was a few weeks then, Mr. Speaker; but that was November 13 and we have seen December 13, January 13, February 13, and soon it will be March 13. The Minister does nothing. This is a trespass on the lawns of Parliament Hill. Here we have the property of the people of Canada being used in a fashion that is not complimentary to this cherished place, the House of Parliament here in Ottawa.
Not only has this Minister refused to do something about that which is his responsibility to guard, the efficacy of this Parliament, but he refuses to come to grips with the problem. He says "Oh, they will move away when winter comes". That was on November 13. Winter has come and winter has just about gone and the peace camp still has not moved away. It has been here now for nearly two years. It will soon be past its second anniversary, yet the matter stays the way it is.
In a question I placed on the Order Paper I asked the Minister whether he intended to set up fees for those who would like to establish further protest camps on Parliament Hill. The Minister responded that the Government had no intention of setting out a new fee schedule. Presumably it is the intention of the Government to allow anybody-everybody and sundry-who wishes to protest to set up a camp on the lawns of Parliament.
Where is this Government going with respect to its responsibilities to guard Parliament? I say seriously that the Government has an obligation to bring forward a Bill, if necessary, in order to charge the users of the front lawns of Parliament Hill with trespass and move these trespassers from the front lawns of the Parliament Buildings. In spite of everything which has been done to bring the matter to the attention of the Government, nothing has happened.
I have been approached by not only citizens generally, but by people who work in the House who are concerned about the way the House is being denigrated by the existence of that camp on the front lawn. If something is not done very soon, other groups around the country will be setting up tents. Is it the intention of the Government to continue to allow this? If that is the intention, to continue to allow protests on Parliament Hill-something which does not exist in any other civilized country in the world-then let the Government say so, and let us have a debate in the House with respect to such camps. Surely somewhere along the line Parliament Hill has to be given some degree of respect. This camp is a disrespect of Parliament, and a disrespect of the democratic process.

February 25, 1985
Adjournment Debate
I do not know what reply the Ministry has given to the Parliamentary Secretary, but I certainly would not want to be in his position. There are all sorts of questions which could be asked with respect to the camp, but it must come down to this; if we are to continue to allow this type of thing to take place, Parliament will lose the respect the people should have for this institution. It is high time that the Government and the Minister faced their responsibilities in this regard.


Douglas Grinslade Lewis: Mr. Speaker, before getting into my formal reply, I should like to suggest that the Minister has in no way located the peace camp on Parliament Hill, as the Hon. Member unintentionally implied in his remarks.
The Minister of Public Works (Mr. La Salle) has replied to questions both oral and written on the subject of the peace camp, and the Minister does not intend to legislate the peace camp off the grounds of Parliament. This remains the policy of the present Government of Canada. Hon. Members on all sides of the House and the people of Canada support the notion of peace and those efforts made in the pursuit of an enduring peace throughout the world. This Government is committed to that goal.
What the Hon. Member raises is a question of a totally different nature. The Government and the citizens of the country must ask themselves whether the peace camp is setting a precedent which may be followed by other groups, and to what extend this should be allowed when in fact this action may impede access by all Canadians to the grounds and institutions of this Parliament which rightfully belong to them. There have been editorials and letters in newspapers across the
country which have either applauded or denounced the presence of the peace camp on Parliament Hill. What is most unfortunate is that the physical presence now becomes the issue rather than the quest for peace. We are focusing on this physical presence rather than the moral presence.
Our responsibility as a Government is to maintain Parliament Hill for all Canadians, as a space for all Canadians to enjoy-Canadians from every region and with different political viewpoints who wish to visit Parliament Hill. We as a Government wonder at what point the peace camp people will understand that they have made their points, and that by remaining there they will not change this Government's resolve to work hard for global harmony. What its physical presence does is spark a controversy over the physical presence rather than drawing attention to the point they want to make.
The Hon. Member has referred to the possibility of other groups setting up. We suggest that would be an unfortunate scenario, because that would really begin to hinder the ability of all Canadians and people from other countries to enjoy Parliament Hill. The grounds have long been of social pride for all Canadians and for people from other countries. They are a focal point of this nation's capital. We intend to see that they remain so.
In closing, I am informed that the Minister is continuing to study this issue and will make a statement in future weeks.


The Acting Speaker (Mr. Paproski):: The motion to adjourn the House is now deemed to have been adopted. Accordingly, this House stands adjourned until tomorrow at 11 a.m., pursuant to Standing Order 2(1).


[Stage Direction]
The House adjourned at 6.26 p.m.
[Stage Direction]
Tuesday, February 26, 1985