1985-02-07

Hon. Andre Bissonnette moved: , for the Minister of Regional Industrial Expansion, that Bill C-23, to amend the Small Businesses Loans Act, be read the second time and referred to the Standing Committee on Regional Development.


Mr. Speaker:: Is it the pleasure of the House to adopt this motion?


André Bissonnette: Mr. Speaker, it is a great honour for me to table in the House today, on second reading, on behalf of the new Progressive Conservative Government, Bill C-23, to amend the Small Businesses Loans Act. Hon. Members will not be surprised that one of the first steps taken by this Government at the beginning of a new year should be to table an extension to this legislation.
In 1961, the Small Businesses Loans Act was passed for the first time under the Government led by the Right Hon. John Diefenbaker. Hon. Members will therefore note that it was a Progressive Conservative Government that initiated this action to protect the interests of small businesses in Canada.
The legislation is a clear example of a policy aimed at establishing a favourable climate for the generation and growth of small businesses in Canada, a vital sector of our economy too often neglected by the previous Government.
Mr. Speaker, this Government intends to enable small business to play its role as one of the key factors of economic growth and job creation. The Government is firmly resolved to support small businesses and to do so through consultation, not confrontation, by providing assistance and support instead of raising barriers, and by restoring hope to those who had lost confidence in the future.
Canadians expect their Government to lead the way towards economic renewal. This Bill is one step, and an important one, in this national process, because it will help small businesses participate in our economic recovery.
In April 1983, Parliament provided for a two-year extension of the SBLA, the Small Businesses Loans Act, setting the lending ceiling at $1.5 billion. Unfortunately, as a result of the rapid and sustained rate of increase in the number of applications under the Act during the past year, the ceiling was reached at the beginning of January, two months before the previous extension was due. This means that unless the ceiling is raised immediately, the Government will have to stop approving loans. The lending institutions have been informed of the new approach where lending ceilings are concerned and of the Government's intention to table as soon as possible a Bill that will raise the lending ceiling for the current period as well as extend the legislation for a subsequent period.
I would therefore ask Hon. Members to show their co-operation and make an effort to have this Bill passed as soon as possible. The legislation before the House will make it possible to raise the present lending ceiling by $300 million, thus bringing it up to $1.8 billion, from $1.5 billion. Thus financial intermediaries will be able to provide loans under the Act until March 31, 1985, the date on which this lending period expires. Furthermore, the Bill provides that the lending period will be extended by five years, starting on April 1, 1985 and ending March 31, 1990.
This Government is engaged in a process aimed at creating a favourable climate for the generation of new businesses. The new lending period which is to extend over an unprecedented five years will give entrepreneurs and lenders greater stability for planning purposes, in line with the Government's new approach to providing for this country's economic renewal.
The period of time covered by the new extension clearly demonstrates this Government's commitment to help small businesses. It will also mean a considerable reduction in the departmental and parliamentary resources that would otherwise be involved if the Act were extended for several shorter periods. The lending ceiling for the next period will be set initially at $1 billion. However, it will be changed in accordance with the Appropriations Act.
[DOT] (mo)
Consequently, Parliament will still carefully review the loan ceiling throughout the estimates preparation process. Instead of trying to forecast the total loans over a five-year period, this amendment will provide the Government with more leeway in fixing the ceiling because, under the program, loan rates fluctuate along with the vagaries of the economic situation. Henceforth lenders and borrowers will no longer be uncertain about the loan ceiling.

February 7, 1985
Small Businesses Loans Act
The existing legislation provides that eligibility under this program is restricted to businesses whose annual sales are less than $1.5 million. The Bill contains an amendment aimed at raising the eligibility limit to $2 million. This amendment is our response to requests from lenders and interest groups that have taken up the cause of small businesses. The eligibility limit has remained unchanged since 1977 and the increase I am proposing today will partly offset the impact of inflation since that time. The $2 million limit will also keep the definition of small business more in line with the one used by Statistics Canada and the small business secretariat. The amendment will therefore make it easier to reconcile the statistical profile of businesses which take advantage of the Small Businesses Loans Act program with the basic data used by Statistics Canada and the small business secretariat; thus we will obtain a more accurate statistical analysis of that sector.
According to the existing legislation, a borrower may apply for loans whose overall amount must not exceed $100,000 at any time. Consideration was given to a higher limit, but since the average loan in 1984 was only $28,888, such an initiative does not seem to be justified for the time being. However, an exemption concerning that limit is provided under the Bill should a group of borrowers decide to amalgamate. If at least two businesses with outstanding loans under the Act opt for amalgamation and their aggregate loans are over the $100,000 limit, a new clause stipulates that, in such a case, the Minister will not reject any request for repayment by arguing that total loans outstanding under the Act exceed the $100,000 limit, which would be the case of a single borrower.
The amendment also provides that those amalgamated businesses will again be eligible for additional loans under the existing program as soon as the total of outstanding loans drops below $100,000, with the understanding, of course, that the annual sales of the amalgamated business are not more than $2 million and that it does not contravene the other provisions of the Act. This legislative amendment will eliminate an anomaly in the existing program.
Businesses which have received loan assistance and expanded through amalgamation are often small businesses on their way to becoming medium-sized or large companies. This Government is committed to promote the expansion of small businesses and, thanks to the proposed amendment, such growing businesses will no longer be penalized.
With a view to explaining the latest amendments featured in this Bill, Mr. Speaker, I should like to describe briefly the various loan activities since the Small Businesses Loans Act became law. Before 1978, borrowers could ask for an interest rate which was set twice a year and which was often lower than the prime rate.
In 1977, all loans totalled some $96 million, while all claims paid by the government to financial institutions because of losses incurred following defaults totalled $600,000. In 1978, the formula for determining the interest rates lenders were allowed to charge was changed from a fixed rate to that of the prime rate plus 1 per cent. Following the application of this new formula, the number of loans made available under the Small Businesses Loans Act increased tremendously, for it made it more financially interesting for banks and lenders to participate in this program. The actual loans made available increased from $96 million in 1977 to $180 million in 1978. Following this amendment, the claims paid by the government also increased tremendously. In fact, they more than doubled in one year to reach $1.4 million.
Since then, both loans and claims have been on the increase, so that some $900 million were made available in 1984 under this program. The government received that year claims totalling $43 million. Moreover, even if the program was cancelled now, we would still have to compensate lenders in the months and years ahead for losses incurred due to defaults in the past few years. The greatest flaw of the Small Businesses Loans Act, in its current form, is that the government assumes full and complete responsibility for the losses thus incurred. The government is satisfied with the way financial institutions have administered the program, but the tremendous increase in loans as well as good sense seem to dictate that lenders should assume part of the risk they are willing to take. Lenders have an edge now because they are being paid interests of 1 per cent over the prime rate on these nearly risk-free loans and participate in a program which is a precious marketing vehicle.
Originally, the program had been established as an incentive for chartered banks to offer term loans. Here is why. In 1961, chartered banks did not have the power or authority to lend money on mortgages or against the various instruments of today. Because lenders are now competitive enough in this area, they should naturally be willing to assume part of the risk. Accordingly, the bill which I introduced today provides for the sharing of losses between the government and various lenders and will apply naturally only to loans granted after April 1, 1985. It suggests a 90-10 government-lender loss-sharing ratio.
Our aim in drafting this bill was to establish an equitable and fair loss-sharing ratio which would not jeopardize the program while transferring part of the responsibility for the losses incurred to the lending institutions. Mr. Speaker, it is of utmost importance to continue offering incentives to private lenders to encourage them to offer voluntarily this program which promotes a climate which is conducive to the creation and development of new businesses in Canada.
February 7, 1985

Like the loan ceiling, the cost-sharing ratio will be amended pursuant to the Appropriation Act. This way, the Government will be in a position to readjust the ratio, subject to parliamentary approval, based on the changes in the economy and the financial needs of businesses.
The last major amendment to the Small Businesses Loans Act provides for only one fee equivalent to one per cent of the amount of the loan allowed under the Act. Let me explain. When a business borrows $50,000, the bank or lender will have to pay one per cent just once, upon granting the loan and applying to the Government for a guarantee. That fee will cover part of the cost of the program to the Government and will ensure that the program is continued in the private sector. It is quite reasonable to ask for a fee on a loan guarantee, and the Small Businesses Loans Act is one of the few such programs not requiring a fee. That one per cent fee will not be prejudicial to the small businesses which take up loans under the program. They will still be paying the same rate of interest as provided for in the Act, namely one per cent over and above the prime rate. Assuming that the loans level stays at its current figure at about $900 million a year, that fee will bring in some $9 million a year to the Government, to cover for loan losses. The overall impact on the lenders' rate of return over that period or over the term will be minimal. The volume of loans should not therefore experience a significant decrease.
The review made by the Department before the drafting of the amendment pointed to certain small administrative problems in the Act. Accordingly amendments are proposed in order to clarify the registration requirements for loans and payments in respect of applications, and to give the Minister the authority to make regulations as needed for the proper administration of the Act.
Mr. Speaker, Members from every party in this House are aware of the importance and of the significant contribution of small businesses in the Canadian economy. Further more, 95 per cent of Canadian businesses have a yearly turnover of less than $2 million and they contribute one-third of the private sector's gross national product. They also account for 25 per cent of jobs in Canada. Between 1978 and 1982, they created just about all the new net jobs in Canada. A large number of small businesses are owned and operated by Canadians. Therefore, they do create economic activity in every city, town and village and make a major contribution to regional economic development and to import replacements, to local economy diversification and to innovation. Also, we feel that the growth and vigour of small businesses are essential to the long-term viability of the overall Canadian economy. The provisions in the Bill I am introducing today make up the most complete overhaul of the Act since it came into force some 25 years ago.
The $300 million raise in the loan ceiling for the current period will ensure that loans are granted until April, when the new loan period begins. The new loan period will extend over
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five years, as of April 1st. This proves this Government's commitment to the needs of small businesses. Moreover, raising the maximum qualifying turnover figures will allow a larger number of small businesses to obtain loans under the program.
The new rules dealing with joined borrowers will remove an artificial obstacle to the growth of small businesses. Moreover, a ratio for the sharing of losses and low security costs will reduce the total costs incurred by the government and will more equitably divide loan losses while maintaining that efficient and popular program in the private sector. The minor amendments will make for a more rational management of the program by spelling out more clearly the Minister's responsibilities and powers under the legislation.
Considering that the loan ceiling and the ratio of loss sharing will be established under the Appropriation Act, the government will have more discretion to alter the parameters of the program and submit them to the approval of Parliament.
The traditional commitment of the Progressive Conservative government to small business is once again clearly shown in a spirit of co-operation and consultation with all Canadians.
This new national government has made a clear choice to give Canada a renewed prosperity, Mr. Speaker. It has also initiated an economic renewal and a new prosperity for all Canadians in November last, when my colleague the Minister of Finance (Mr. Wilson) introduced some measures to simplify the income tax of small businesses and today with the bill now under consideration.
Mr. Speaker, I encourage all hon. members to support our policy aimed at bringing about the changes demanded by Canadians on September 4 last and more particularly I ask them to pass swiftly that timely and necessary legislation which will be of direct benefit to small businesses and the Canadian people.
[DOT] (U25)


Mr. Alfonso Gagliano (Saint-Leonard-Anjou):: Mr. Speaker, the Conservative Government has introduced a Bill, allegedly to extend financial support for small businesses. Yet, Mr. Speaker, the provisions of this Bill go against the very spirit of a statute which for many years has contributed to the development of small businesses in Canada.
This legislation, which was tabled without any real consultation or concern for the needs of small and medium sized businesses, is another example of the mismanagement and irresponsibility of this Government, which manages the nation's business by approximation rather than with the ability required to govern a country such as ours.
Although the Government keeps on telling us that it believes is consultation, it had no hesitation in introducing in the House

February 7, 1985
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a Bill which is obviously ill-designed and which does not meet the needs of small businesses.
Consultation with whom? What does the word "consult" mean for the Conservative Government? For the Liberal Party, it has always meant that the input should come from the users who benefit from the services provided by legislation.
This Government seems to prefer working in secret, behind closed doors.
The Bill to amend the Small Businesses Loans Act is a measure which will make the Canadian economy move backward and cause many problems and headaches to small businesses while, in theory, it should be promoting the development of our industries and businesses.
Mr. Speaker, this ill-designed Bill should simply be withdrawn if the objective of the Conservatives is really to promote the growth of small businesses in Canada. The amendments which the Government wants to make to the Small Businesses Loans Act are clearly unacceptable to our Party and to the organizations representing the small business community.
Let us consider one by one these amendments stemming from a simplistic analysis of the situation of small businesses. Even though the $1.5 million ceiling for the yearly gross revenue has not been increased since 1977, this Government, in what it calls a major review of the Act, increases the ceiling only by half a million dollars in Clause 1. As for Clause 2 of the bill introduced by the Government, it goes against the spirit and the letter of the existing Small Businesses Loans Act whose purpose was to encourage lenders to grant term loans to small businesses thus allowing them to upgrade and modernize their equipment and facilities and ultimately increase their productivity. Mr. Speaker, it seems that this Government wants to discourage any new loan by creating unacceptable new requirements for lenders. We must ask ourselves whether the Conservative Government does not simply want to ruin the Small Businesses Loans Act by making it unacceptable for lenders. Such a strategy, camouflaged in provisions which any serious analyst would obviously find unacceptable, would cause serious harm to the Canadian economy.
We cannot believe that, to keep the unrealistic promises it made during the electoral campaign, any Government would dare sabotage deliberately a piece of legislation which is one of the cornerstones of Canadian economic development. However, Mr. Speaker, if this is not a manoeuvre aimed at making the law inoperative, nothing justifies the provisions contained in the various sub-clauses of Clause 2. In view of the guarantees required from lenders and the essential purpose of the legislation, the new loss-sharing ratio seems simply aimed at limiting the number of loans. While basically the Government participation under this legislation must be to stimulate the economy by encouraging the granting of loans to develop small businesses, this will create a climate in which the lenders will become suspicious of businesses. It is obvious that this Act was passed in 1961 to encourage lenders to finance businesses
which could not otherwise afford certain other programs usually offered by lenders. By using an extremely cautious formula and by taking into account the maximum losses sustained in a year, the Government can expect to recover a maximum of 0.7 per cent of the total value of loans thanks to the new loss-sharing ratio proposed in the bill.
A cost-benefit analysis of this bill would establish that potential revenue is insignificant since hundreds of millions of dollars in loans will probably be refused to small businesses by lenders who will worry about the appearance of the loss-sharing ratio. The refusal of 10 per cent of loan applications would mean a loss of investment capital for small businesses. It seems obvious that, at a time where economic growth is essential, the legislation proposed by the Conservative Government is irresponsible and dangerous for the Canadian economy. In addition, the clause requiring the banks to pay a premium of 1 per cent on the total value of each loan granted is also unacceptable.
Moreover, representatives of small- and medium-sized businesses have made it clear that this obligation will destroy the legislation and make it inoperative. Mr. Goeffrey Hales, vicepresident of the Canadian Organization of Small Businessmen stated in response to this Bill, and I quote: "If lending organizations have to pay such a premium, they will withdraw altogether from the program provided under the legislation." In the same spirit, John Bulloch, president of the Canadian Federation of Independent Business, said recently that it would be foolish to charge such a premium to banks. Whom did the Conservative Government consult before introducing such amendments to the legislation which are totally unacceptable to all partners in the business world?
We have seldom seen such a consensus against a provision in a bill. Once again, we have to ask the following question: Is the Conservative Government trying to destroy the Small Businesses Loans Act by imposing unacceptable conditions? If so, it is taking the necessary means to that end.
Is the Government really so unaware of present economic conditions in Canada that it is ready to put aside an act which has promoted the growth of our small businesses for 23 years? The Liberal Party will never allow the Conservative Party to hinder the development of our small businesses. Through its legislative program, our Party has always encouraged their growth. The Liberal Party knows that strong small- and medium-sized businesses are essential to provide sustained job creation and economic growth in Canada. We know that this sector has provided 70 per cent of jobs in Canada between 1979 and 1980 and practically all jobs created between 1979 and 1982. The Liberal Party knows that at least 90 per cent of businesses in Canada are small- or medium-sized and that they account for more than 30 per cent of the Gross National Product.
February 7, 1985

Faced with such an irresponsible piece of legislation as this Small Businesses Loans Act, it might be appropriate to remind to Conservatives of the measures which a competent Government responsive to the needs of small- and medium-sized businesses has introduced in the past years. From 1980 to the 1983 budget, the Liberal Government has taken many steps to help the small business sector:
Program to promote subcontracting with Canadian companies (August 1980): The purpose of this program is to provide greater opportunities for small Canadian businesses to bid on subcontracts for major projects awarded to the federal Government's main suppliers.
Lower tax rate for small businesses: Small businesses are taxed at a rate lower than the rate applicable to major companies.
Small businesses investment grants: This measure was announced in the June 1982 budget. Grants were made to cover 4 percentage points over a two-year period and paid to the financial institutions by the federal Government on behalf of the borrower.
To promote even further the expansion of small- and medium-sized businesses, the Liberal Government gave them priority in the budgets of April 1983 and February 1984.
In April 1983: Investment Tax Credit: The budget provided a special refundable tax credit for small businesses investment recovery. In addition, companies that made investments and issued new equity shares were authorized to transfer to the purchasers any investment tax credit earned after April 19, 1983.
Research and Development Tax Incentives: The budget provided for the replacement of the 50 per cent tax deduction for increased research and development by an additional tax credit of 10 percentage points for all research and development expenditures, up to 30 per cent for the Gaspe area and the Atlantic provinces, 35 per cent for small businesses and 20 per cent for other businesses.
Carry over of losses to past or future years: The budget allowed for an extension of the period for carrying back or forward losses other than capital losses so as to reduce taxable income for past and future years.
Recovery Export Fund: The budget established a $180 million special recovery fund and an additional $20 million to be administered by the Export Development Corporation to help small- and medium-sized businesses win larger export contracts.
Shared wage costs: According to the budget, the new NEED program and the Youth Internship program of wage subsidies were to enable businesses to hire the required staff and share the cost with the Government.
Then, Mr. Speaker, we find the following in February 1984: Simplifying taxes for small businesses: the Budget contained
Small Businesses Loans Act
proposals to simplify and shorten the tax form for businesses, to reduce the costs of applying the tax rules, to increase tax savings and to cut the small business tax legislation by two thirds.
Improving the fairness of tax administration: The Budget proposed a number of immediate initiatives to lighten the administrative burden of taxpayers and make the tax system fairer.
Employee profit-participation plan: The Budget proposed a maximum credit of 10 per cent of profits as an incentive for employee profit-participation plans.
Aid-Trade Fund: The budget proposed the creation of a fund to ensure closer coordination of development assistance and export financing policies.
While, throughout the years, we were able to propose measures to promote the development of small businesses, the Conservative Government, after all its promises, can only introduce in this House a bill which, according to small business representatives themselves, will, in effect, simply sabotage the Small Businesses Loans Act. The irresponsibility of this Government is such that it jeopardizes the development of many small businesses. Ladies and gentlemen on the other side, we suggest that you do your job, that you examine all these Liberal initiatives which were able to meet the needs of small businesses and that you come back to the House with a realistic bill which will truly meet the needs of Canadian small businesses. As we say, Mr. Speaker: "Do your homework." The Canadian people have a right to expect their representatives to show a modicum of ability. You have no alternative but to withdraw an irresponsible and harmful bill. The Liberal Party will never agree to legislation which would harm the economic development of our country.
Mr. Speaker, in the few minutes which I have left and I should like to mention the confusion created by this Government. We now have before the House a bill which, in practice, could slow down the activities and the development of small businesses because of the two provisions dealing with the 10 per cent share which the banks or lending institutions must guarantee, and the fact that these institutions must pay a fee of 1 per cent of the loan when the loan is registered.
Mr. Speaker, I read with surprise the following excerpt from the speech which the Hon. Minister of Finance (Mr. Wilson) delivered on January 28 before the Canadian Club in Toronto. I quote from page 7:
Nobody can contribute more than the small business to the recovery of the economy and the creation of new opportunities. It has created most of the new jobs in Canada over the past few years. What is more, it has the greatest potential for creating new jobs over the next few years. If we really want to entrust the private sector with the economic growth of our country, we must see to it that entrepreneurs are rewarded for their spirit of enterprise and risk-taking. We must also take every possible step to eliminate all obstacles to the development of the small business.

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This means seeking ways and means to ensure small businesses have access get the capital they need, especially when starting operation.
It is not a backbencher who said that, Mr. Speaker, but the Hon. Minister of Finance (Mr. Wilson). He said that small businesses need loans and capital to pursue their development; and yet, the Minister of State responsible for Small Businesses introduced today a bill which for the most part will cause problems for small business people who statistics indicate are those who avail themselves most of this program.
Mr. Speaker, another fact remains: Since mid January, small businessmen have been unable to obtain loans because the maximum ceiling has been reached.
I ask the Hon. Minister of State (Small Businesses) (Mr. Bissonnette) to divide this bill in two, so that banking institutions may continue right away to grant loans until March 31 and we can continue to examine his proposed amendments to the Small Businesses Loans Act.
If the Hon. Minister believes in the development of small businesses, Mr. Speaker, he must divide this bill and amend it so that small businesses in Canada may plan their operation and requirements.


Mr. Iain Angus (Thunder Bay-Atikokan):: Mr. Speaker, it is with great pleasure that I rise today to lead off my Party's participation in the debate on the Small Businesses Loans Act. I want to say at the outset that I find it interesting that the Conservatives in government are acting no differently from the Liberals in government. They are bringing in a Bill in a rush and saying that they have to have it passed now. The Conservatives have known for quite some time, I am sure, that funds might not be available and that there was a need to top up the amount of loans available.
I want to say to the Minister responsible for this Bill that we will be supporting it reluctantly. I say that because we think it is an imperfect vehicle to support small business, but it is the only one available realistically this day nationally. We will support it and we will support the fine-tuning of the Minister.
I find it interesting that the Liberals, on the other hand, are trying to have it both ways. First, the Liberals want to have the Bill withdrawn but then maybe they want it split, I am not sure. Perhaps the Minister is not even sure what exactly the Government wants to do with this Bill.
I am quite happy to speak up in support of small business. As we all know, small business is the only sector creating real jobs in Canada today. Small business is the only sector that is creating jobs in our smaller communities. Small businesses are the only ones who are able to respond to changing economic situations in a way which protects themselves and their communities. They are the sector which tends to buy Canadian, to do its work in Canada and to share its profits in Canada. I think we have to support them. They also tend to be Canadian controlled and locally controlled so that whatever decisions they make are important to neighbouring communities. They do not, with the viciousness we have sometimes seen on the
part of large corporations, make arbitrary decisions which eliminate the jobs and livelihoods of many people in smaller communities. They deserve to be supported in a non-interventionist manner.
Governments do not have to own small businesses, but we as legislators have a responsibility to ensure that we establish a climate which allows them to survive, to grow, to create wealth and therefore to share wealth within the context of Canadian society. We have seen that happening. We have seen in the last number of years that the only growth in employment has been in the small business sector.
The Canadian Federation of Independent Business, in a submission to the Macdonald Commission, showed very clearly that the percentage increase in employment was greatest in the smallest firms. Those firms with from zero to four employees had an increase of almost 76 per cent in the period from 1975 to 1982; those with five to nine employees, 28 per cent; those with 10 to 19 employees, 19.1 per cent; those with 20 to 49 employees, 9 per cent; and those with 50 to 99 employees, about 2 per cent. However, those firms with over 100 employees saw a decline of almost 3 per cent in jobs available, and big business saw a decline of 2.5 per cent.
When we look at the future, we see that between the years 1983 and 1990 there will be very little growth in the large corporate sector and that there will be no growth in the public sector. But there will be considerable growth, projected to 1999, in small- and medium-sized enterprises in the country. We have to foster that.
The Small Businesses Loans Act which we are debating today is one such vehicle. At least it is a vehicle which is in place. With the improvements being made by the Government, these loans will be more appropriately used. May I say that the banks accept, at least in part, their responsibility for the provision of capital to the small business community.
As I said before, we should be doing all we can to direct government assistance to the private sector and orient it toward the small business community. The amendments proposed in this Bill are definite improvements. The topping up by $300 million for this fiscal year to allow the program to continue is clearly an excellent move. Perhaps I would have been happier had this Bill been presented to us in the fall instead of demolishing the Foreign Investment Review Agency, because it is something we can support and work toward. We are now in a catch up situation. We are trying to put money in place because we have run out. We reached our ceiling two or three weeks ago, according to the Minister. It is clear that we should have been doing this last fall. We on this side of the House would have been happy to insist and ensure that the money was in place when it was needed.
The extension of the new lending period from two years to five years makes much more sense. We on this side have always demanded that the Government extend its sights beyond a year or two and develop some long-range plan. While there has to be a yearly allocation of the ceiling, it makes more
February 7, 1985

sense to have the Act in place for Five years. I caution the Minister that perhaps some of the things he is doing in the Act should be tied in some way to the cost of living.
For instance, in terms of the definition of small business, the Minister admitted in the material which he distributed that the increase to $2 million will partially deal with inflation. It would make more sense to build into the Act some inflationary component so that two or three years from now, if we have an accumulation of 10 per cent or 15 per cent inflation, we do not have to come back to make an amendment. It should be a mechanism which automatically works its way along and reflects conditions in the market-place.
It will also allow for more stability in the small business sector. Applicants will know that for five years the funds will be there, assuming the Government is prepared to ensure that the ceiling is high enough. However, we question whether the legislated SI billion limit is adequate. We are clearly reaching $900 million per year now, and with the improvements in the Bill there may be further demand. I would appreciate hearing from the Minister later as to the annual indication of how much the ceiling will be so that we will know whether or not $1 billion in terms of a legislated floor is something which perhaps should be improved now rather than finding out a year or two from now that there is a problem with it.
One aspect which we on this side of the House really like is the fact that finally the banks of the country will be forced to take their responsibility for supporting small businesses. In terms of the 90-10 split, perhaps we would have used a different ratio; perhaps it would have been 80-20 or 70-30. However, I think the principle is important. Although they accept their share of the responsibility, they are demanding collateral from applicants. In effect, they are being insured twice-once by the Government and once by the applicant. I recognize that there is a need for collateral. Perhaps the Minister could address this subject at a future point, that is, the relationship between the Government insurance aspect and the kind of collateral which the banks are demanding. Sometimes I think they demand too much and put small business persons in the situation of not being able to take advantage of other aspects of the market-place because they have had to lock up everything with banks for capital expenses even though they are insured by the Government. Then they do not have any equity to acquire operating or inventory financing which they may desperately need in order to survive. I encourage the Minister to look at that to see what impact it has and whether or not an improvement could be made in committee.
The most controversial aspect of the Bill is the user fee. The Minister proposes that the banks should pay the Government a fee to help offset the cost of defaults which may occur. The Canadian Federation of Independent Business and the Canadian Organization of Small Business have both suggested very strongly that that change will give the banks an excuse not to play ball or to avoid using the Small Businesses Loans Act. While I share their concern-and I have spoken to the Minister about this-we have to ensure that they are not allowed to withhold their funding under the Small Businesses Loans Act.
Small Businesses Loans Act
However, I disagree with the suggestion by those two organizations that the small business people should be paying the fee. The last thing they need is yet another expense on top of the cost of borrowing and the cost of running a small business in this day and age. They do not need a fee of 1 per cent or 1.8 per cent up front on their total capital request to add to their economic burden.
I encourage the Minister not to accept the arguments of the two small business organizations in the context of not placing the burden on the applicant. It rightfully belongs with the banks. As I indicated before, they have to accept their responsibility as well. If we were debating amendments to the Bank Act as opposed to the Small Businesses Loans Act, we could suggest mechanisms that would require the banks to set aside a chunk of their capital, earmark it for the small business sector and make it available at realistic rates of interest and on realistic terms. That Bill is not before us so we have to work within the context of this Act.
We did a quick survey of the co-operative financial institutions of this country. Although they are not exactly excited about the prospect of having to pay this fee, they did indicate quite clearly that they would not use it as an excuse not to participate. They believe that the Small Businesses Loans Act is a good vehicle for them to support people who come to them.
I suggest that the Act should be broadened. It now restricts the availability of capital to acquisitions and, therefore, cannot use capital for operating or inventory. As my colleague from Kamloops-Shuswap (Mr. Riis) indicated in this House quite some time ago, we would be pleased to see that provision changed so that they could use the insurance aspects to gain access to operating capital.
There is something else we would prefer to see. I am in a quandary because I will have to say glowing things about the Conservative Government of Ontario in doing so. What is worse, it was the Hon. Claude Bennett who initiated this program. The Ontario Development Corporation with branches of the Eastern Development Corporation and the Northern Ontario Development Corporation provides funding to small and medium size enterprises throughout the province. One of its key programs is the provision of financial assistance at a fixed rate of interest for a fixed period of time, that is, 15 years. The rate established is the going rate of the day, but they can guarantee those small businesses that for the next 15 years they will not have to pay anything more than the market rate of the day. There is that long-term planning capability. They will know from today until 1999 or 2000 what the payments will be.
The other positive aspect of that program is that if the market rate drops below what you are paying, you have the option to pay off the loan with no penalties. That is in Tory Ontario. As part of the discussions we will be entering into with the discussion paper the Minister will be presenting later today, we should look at that option as a means of supporting the small business sector of this country. During the recession a lot of businesses went under, not because they were poor

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Small Businesses Loans Act
managers or because the market disappeared, but because the banks told them they could no longer afford the new high interest rates that they were having to pay either for capital or for operating.
No one knows what the future will hold in terms of interest rates. This Government and the previous Government would not take the necessary steps to intervene directly in the interest rate sector to ensure that rates stay down. We have to provide some protection for the small business community to ensure that they remain viable and have a long-term planning capability.
Something we would want to address if one of the other Acts were before us-this is something a number of us have been encouraging the Government to do-would be the matter of taxation, how we tax the small business community on one hand and inappropriately tax the large corporations on the other. No matter how often we raise that question in the context of making sure the big corporations pay their fair share, Ministers who respond suggest that we want to tax the small business sector at a higher rate. Nothing is further from the truth.
Small businesses in this country now pay more than their fair share whereas the corporate sector, the big companies, pay much less. It is the big corporations which get the tax breaks. They have billions of dollars of deferred taxes outstanding. Not many small businesses have deferred taxes outstanding. They do not get those kinds of breaks. We should look at how we deal with that.
There was an excellent editorial in the January 30 edition of The Toronto Star which 1 want to enter into the record. It deals specifically with tax breaks for the corporate sector. The editorial is entitled "Wasteful corporate tax breaks". I quote:
According to the Income Tax Act, corporations are supposed to pay 36 per cent of their profits in federal income tax. In 1980 the corporate sector actually paid about 18 per cent. The difference-accounting for more than $8 billion in lost federal revenue in 1970 alone-was the legacy of years of corporate income tax breaks.
This $8 billion price tag represents a 400 per cent increase in federal tax breaks for the corporate sector since 1972-the year in which Canadians first heard the slogan "corporate welfare bums." This suggests that in producing corporate tax "incentives," the federal Department of Finance has itself been running one of the growth industries in Canada for the past several years.
But in strengthening our economy and promoting job creation, are corporate tax expenditures really effective? Was the $8 billion spent in 1980 a down payment for the resiliency and the technology that our economy so desperately needs? Study after study has shown that on both count, the answer is: probably not.
In a 1980 Canadian Tax Foundation study, for example, Richard Bird, Director of the Institute for Policy Analysis at the University of Toronto and one of Canada's leading authorities on tax incentives, concluded that "we know amazingly little about the efficiency and effectiveness of the investment incentives we employ so profligately. What little we do know suggests that these incentives are neither efficient nor effective in achieving most of the objectives for which they were supposedly introduced."
One of the most popular tax breaks of the 1970s-super-depletion-underscores how inefficient tax expenditures can be. With super-depletion, for every $100 companies spent searching for oil, the government paid $105. As a result, super-depletion was less notable for the energy finds it financed than for the profits that were made. If the government had so allowed, it would have been profitable under this scheme for oil companies to drill at Bloor and Yonge.
Since tax expenditures improve the "cash flow" of business, they are supposed to provide a key source of funds for expansion. But in examining the effects of cash flow on investment, a Carleton University study of 70 manufacturing firms found that where demande for the output of the firms was strong, the lack of cash flow did not impede investment; where demand was weak, additional cash flow was not channelled into plant and equipment. In other words, for these firms, tax breaks had little to do with investment.
It is ironic, but at the same time as corporate tax expenditures were proliferating in Canada, they were being significantly curtailed by the Japanese. In describing this trend, Keimei Kaizuka of the University of Tokyo pointed to his findings that "we could not find evidence demonstrating the effect of tax preferences on economic activities. We could only mention the undesirable consequences of eroding the tax base."
Why have tax expenditures become the principal fiscal instrument for economic development in Canada? Most, if not all, corporate tax expenditures are a testimony to the good intentions of the governments which introduced them. In budget after budget, one finance minister after another has used them to pursue such laudable goals as increased employment, investment, productivity, international competitiveness, modernization, research and technological progress, in addition to more balanced regional development. Perhaps the unassailability of these objectives has served as an impediment to the scrutiny which these tax expenditures deserve. Perhaps it is the administrative simplicity with which they can be introduced.
But more likely, the steady proliferation of corporate tax expenditures has to do with the "politics of appeasement"-finance ministers are supposed to keep the business community happy. The aftermath of former finance minister Allan MacEachen's November, 1981 budget bears witness to this rule. After Mac-Eachen launched his assault on tax preferences, business coalesced and Mac-Eachen was through. In an effort to make peace with the corporate sector, Mr. MacEachen's successor at Finance, Marc Lalonde, introduced in his first budget almost $1 billion in new corporate tax breaks.
The essential problem with tax expenditures is that there are just too many of them. Each tax expenditure was introduced to encourage a particular type of activity. But the effect of any tax expenditure dissipates when many activities are rewarded at the same time. In his study of tax incentives, Bird concluded that "The more incentives are given, the more are needed to achieve the differential impact presumably sought in the first place."
With $8 billion in corporate tax concessions, the time has come for a major review. Since it is business that so desperately wants to see government spending cut, it is business that should be encouraging Finance Minister Michael Wilson to re-examine the effectiveness of each of these hidden "spending" programs. Instead of pointing to social programs, the corporate sector should begin scrutinizing its own set of books.
Those are very thoughtful words, Mr. Speaker, words which we should heed and look to as a method of bringing economic fairness to this country. We must foster the business community. In part, that means taxing it fairly.
There have been suggestions of allowing legitimate new small businesses-and we must be careful because often a business simply changes its name and starts all over again-to go for one or two years with a reduced tax rate or even with no effective tax rate as a means of allowing entrepreneurs to get established. It is worth looking at.
I think there are a number of other possible ways we can deal with this situation. However, I think the important thing is that we look at this Bill to see if we can improve it further. We should look to see if we can firm up its support and put in place mechanisms that will ensure that the concerns of the small business community regarding the banks avoiding the use of this program are met. Perhaps the Minister already has some mechanisms in mind in terms of regulations. We should make sure that that support exists and that the small business
February 7, 1985

community has access, not just in the major centres but in the smaller communities throughout our hinterland, to those mechanisms. We should make sure that a delivery system is in place.
As well, following a full discussion of the options that the Minister will place before the people of Canada in his discussion paper, the Minister should make a commitment to bring the Bill back to the House within the next six months to a year if there are some indications of further changes that could be made to the Small Businesses Loans Act. If that were to happen, then we would finally have a vehicle that is all-encompassing and will ensure the continued growth and survival of the small business sector in the community.
I thank you for your patience, Mr. Speaker. I look forward to the continuation of the debate and we will see what the final product will be.


Some Hon. Members:: Hear, hear!


Mr. Weiner:: Mr. Speaker, I would first like to compliment the Hon. Member for Thunder Bay-Atikokan (Mr. Angus) on his very excellent presentation. As a small businessman, having been involved in retail pharmacy for the last 20 years, it is very heartwarming to hear of the kind of support that we are getting in the community. As well, it gives me an opportunity to say how thankful I am to the Minister of State for Small Business (Mr. Bissonnette) for his efforts in helping me survive as a small businessman.
I have one or two small items to raise with the Hon. Member for Thunder Bay-Atikokan. I would like to know whether or not the user fee will act as any kind of a deterrent to the bank. My own experience with bankers has been that a small business loan is primarily offered to the bank's regular customers, the people they already know and with whom they already do business. It is a no-risk loan because, as you know, Mr. Speaker, it is not only guaranteed 100 per cent and even 90 per cent by the Government but is also secured on the other end because that is one of the requirements of the law. Prime rate plus 1 per cent is not a bad fee to be charging because that easily gives the banks a four or five point differential over what they are paying for their money.
As for whether or not this measure should apply to inventory or operations, those of us in business traditionally have a line of credit which is pegged to the inventory which is then pegged to the operation. If we are at all successful, we can certainly operate and live within those constraints. We get ourselves in a bind when we want to purchase, build or modernize premises, if we want to buy land for expansion or if we want to get involved in any capital improvements. We then find that the banks' very stringent requirements do not allow additional capitalization. The availability of a small business loan is what gives us the assurance that we can proceed.
I remember very fondly the year 1963 when I opened my first pharmacy in Dollard des Ormeaux. I practically had to mortgage my family's and my wife's family's assets to be able to raise any money with the bankers. I then saw a development that began during the time of the Hon. John Diefenbaker in
Small Businesses Loans Act
1961. At that time, small businessmen could go to the banking system almost like their big business brethren could and ask for a certain type of consideration. At the beginning that consideration was perhaps only $25,000 but today it can go up to $100,000.
We have come a long way and I will probably make a few more comments regarding that later. However, I would like to say that I am very thankful for the comments made by the Hon. Member. I have noted them very carefully. Again, I thank him for his consideration.


Mr. Deputy Speaker:: I now recognize the Hon. Parliamentary Secretary for debate.


Gérard (Gerry) Weiner: Mr. Speaker, it gives me great pleasure to speak today on the Small Businesses Loans Act. This Act is important to the unknown number of small businesses that need a little extra help as they expand and adapt to the needs of the market-place. No sensible person can deny the success rate attributed to this Act in the past. Over the years from 1961 to 1983, this Act has enabled 140,380 small businessmen to expand their facilities, to purchase equipment and to modernize their plants. In my own particular case, it allowed me to go from partnership in one drugstore to a small chain of six, each and every time with the assistance of the Small Businesses Loans Act.
Indeed, this happened with a success rate of 98 per cent, there being only 2,878 claims paid in that 22-year history. This only offers further proof of the reliability of small businessmen and their tenacity if one looks back at the difficult period they have come through over the last 10 years or so.
Significant changes have been made in the past, changes that highlight not only the need for this Act but the need for us to be flexible. We must adapt the conditions of the legislation, the terms which we impose on the borrower, so that they are realistic and meet the needs of today's small-businessmen. I heartily endorse the proposal to increase the gross revenue allowed from $1.5 million to $2 million, because there has not been an adjustment since 1977 and there have been considerable periods of inflation. That increase will not only permit an additional number of small businesses to apply, but it will ensure that those businesses which need that kind of volume in order to survive will be able to qualify. In addition, it will not penalize the small businesses which have been successful and exceeded the old limits. I believe that small business is and will continue to be the engine of economic growth. We must continue the process of strengthening the small business sector and the Canadian economy.
This program has a successful track record yet, in cases where a claim is made, it is most unfair to expect the Canadian people to absorb 100 per cent of the losses. Instead this legislation proposes a 90:10 Government-lender loss-sharing ratio. Lending institutions should be made to share some of the

February 7, 1985
Small Businesses Loans Act
responsibility for the loans which they have approved, since they are profiting from them.
At the same time, while we demand some accountability from the lending institutions, we are not being unreasonable because the Government will not reject a bank's claim in cases where Small Businesses Loans Act borrowers amalgamate and their combined loans exceed the $100,000 limit. Accountability is important, as it should be whenever public funds are involved. As such, it is perfectly natural and just for Government, as guardian of public moneys, to insist that a lender respect and comply with the regulations or be liable for the full claim.
Dollard riding contains one of the most heavily industrialized cities in the Province of Quebec-Ville Saint Laurent. The city has a population of 65,000. It has 3,900 businesses, 1,800 of which can be construed as small businesses in the confines of the legislation. Overall, the businesses employ 78,000 workers. In addition to that, there are many other ancillary businesses and services which have been built up and which will continue to build because of the energetic leadership of Mr. Charles Robitaille, who is the Director of Economic Development for Saint Laurent. Through his leadership, Saint Laurent has been able continually to attract new industry and businesses, which gives small business an opportunity to flourish. The regulations which this legislation contains will provide more money to business so that they can locate close to the industries. Major industries cannot exist alone in a vacuum. Sustaining them and their employees are a myriad host of service industries which account for 40 per cent of the loans.
At the same time, the riding of Dollard has a broad multicultural base. Fifty per cent of the population comes from visible minority groups from various multicultural backgrounds. The Bill of Rights has enshrined true equality in Canada, but we need only examine the upper strata of big business, both in the public sector and the private sector-be it at the municipal, provincial or federal level-to discover that ethnic representation is practically non-existent. It is obvious to people who have businesses in Canada that the ethnic community still has not taken its rightful place in our society.
However, the ethnic community does play a very important role in small business. There have been a number of instances in the last few weeks in which members of the ethnic community have come forward with applications for small businesses. One case involves a man who owns a garage which employs five people. He wants to modernize and expand that facility and in doing so he will be able to create an additional five jobs. Another case involves a man who owns a cleaning establishment. That man also wants to expand his facility and create another five jobs. That type of activity makes up the cornerstone of our community. The majority of the jobs which are created in my area are created by small-businessmen.
From these communities have come a new generation of small-businessmen. They are hard-working and dedicated to their dream of building a new and prosperous life in their chosen home, Canada. They often require financial assistance
when initiating their new enterprises. Those enterprises are creating new jobs for Canadians and this legislation offers them the assistance which is needed to purchase equipment or expand their premises.
I support this Bill. It will encourage the entrepreneurial spirit, aid some of our most progressive and innovative businessmen, and help to ensure more jobs for Canadians and a successful economy. No greater powerhouse for economic renewal than the small-businessman exists. We must remove the obstacles and permit small-businessmen to grow.
The Hon. Member for Thunder Bay-Atikokan (Mr. Angus) has already mentioned several instances upon which I would like to expand. We could look at simplifying the tax and regulatory environment. Small-businessmen are burdened with paperwork which has become an unsurmountable obstacle. Small-businessmen should insist that the Government reduce the amount of paperwork. Small business must have access to the necessary equity capital, and this legislation will provide that. As well, I hope the Government will look at the effect of unemployment insurance premiums. It is a contentious issue; however, it is a payroll tax and a deterrent to job creation.
Canadians must expect less of Government and more from the private sector. There must be a better balance in the Canadian economy between the public sector and the private sector. We must restore confidence and commitment to sustain economic renewal, and it must begin with the small-businessman.


Some Hon. Members:: Hear, hear!


Mr. Deputy Speaker:: Are there questions or comments on the speech of the Hon. Member?


Mr. Riis:: Mr. Speaker, I appreciated the speech which was made by the Hon. Member for Dollard (Mr. Weiner). He said that we must separate business from government and, in essence, get government off the back of business. Could he explain the type of government which should be taken off the back of business? Could he be precise as opposed to general?


Gérard (Gerry) Weiner: Mr. Speaker, it is an interesting concern. In many instances government has become an active competitor with small business. For example, the recent takeovers in the oil and gas industry. In one case, Petrofina became an active competitor with small business. Sometimes that is done with practices and methods which are not available to small business, such as marketing and the costs which are disbursed through bureaucracy. That is one particular instance but I believe there are many others to which I could refer.


Nelson Andrew Riis: Mr. Speaker, the Hon. Member made a variety of points in his speech and often referred to the fact that more emphasis must be placed on the private sector. I think that people would generally agree with that. He mentioned the fact that there were too many government restrictions and that we should look at the unemployment insurance premiums issue. Is he suggesting that Petrofina should be eliminated? Can the Hon. Member give us two or three examples of present
February 7, 1985

government programs which in one way or another affect business and should be eliminated?
*


Gérard (Gerry) Weiner: There are a lot of Crown agencies in this country and there are a lot of businesses which the Government is now running and administering. Parts of those businesses were previously in the hands of private entrepreneurs. I know that we have now reached the point where the whole situation should be discussed and looked at carefully. I do not want to simplify it. I will just say that it should be the object of a more careful examination, just to make sure that those areas where private and small-businessmen have flourished and have given adequate and proper service remain their exclusive domain. I believe care should be taken before those areas are removed from them.
In terms of the small-businessman, I was also referring to the amount of red tape with which we are involved. The forms and paperwork are really on top of us. I know that the Minister of National Revenue (Mr. Beatty) has already taken some steps to put small businesses in a position where, even if there is going to be an audit, it can be construed that they are innocent until proven guilty.
I can tell the Hon. Member that a few years ago when our family business had an audit, a team of people came in in September and stayed with us until Christmas. They were with us from 9 a.m. to 4 p.m. daily except for the hour and a half or two hours when they went to lunch. During the four-month exercise they found absolutely nothing. I am not saying that the Income Tax Department was wrong to request the information, but I think it was abusive. With the type of requests it made and information it wanted it just sat on top of the situation. I think we have to find ways of putting across the idea that small business is innocent until proven guilty with respect to tax situations. Small businesses are ready to give us all the information we require but I think we have to be less oppressive in the way we handle their tax matters.


Mr. Orlikow:: My colleague, the Hon. Member for Thunder Bay-Atikokan (Mr. Angus), has already indicated that we support the major principles of this Bill. I would like to ask the Hon. Member a question with regard to what seems to me to be the main problem of small business.
In recent years, because of the recession and because of the high interest rates charged by the banks, when small-businessmen want to borrow money either for operating expenses or for expansion the banks have dealt in a very tough way with them. If we look at the large number of bankruptcies in recent years, we find that it is the small-businessman who has been forced into that situation. I compare that with the very generous treatment given to large businesses, some of which have borrowed hundreds of millions of dollars from our banks and have not been able to pay either the interest on their loans or the principal. We have over $8 billion in non-performing loans, mostly to the large corporations. I wonder if the Hon. Member would tell us whether the Government is giving some consideration to this problem, not in the sense of passing legislation but
Small Businesses Loans Act
in discussing with the banks the idea that they should be much fairer and easier on the small-business person and treat him in the same way as they treat the large corporations?


Gérard (Gerry) Weiner: Mr. Speaker, I thank the Hon. Member for the question because it is certainly an issue which is very real and alive in my thoughts. The feeling I have is that there is a different kind of pressure and regulation exerted on the small-businessman. We are almost on our knees with our hats in our hands in discussions with our bankers. We do not have the same familiarity with the boardrooms and the first-hand contact which has been developed because, as the Hon. Member knows, very often loans are made on the tip of a hat or a nod. We can have a document as thick as our hand but if we don't get the right nod, we don't get the right approval.
I recognize the kind of pressure which is put on the small-businessman because he has no other option. He has no other method of financing his operation. On the other hand, the big-businessman has other means of raising capital and cannot be blackmailed in the same way. I am concerned with that attitude. I do not know how to answer it.
As recently as last Tuesday morning, I had the pleasure of visiting the head office of one of our banks. It was a very friendly meeting. I have been less than actively involved in a business since September because the electors of Dollard have given me another job and, happily, the Government has also asked me to be the Parliamentary Secretary to the Secretary of State for External Affairs (Mr. Clark). However, my brother still runs the family business. The meeting at the bank was frank and open but I felt that the bank was exerting a pressure which was not as applicable to big business. It still went along with most of our suggestions. We asked for a little more time to provide the documentation, and so on, which big business would have at its fingertips. It is a real problem and I don't know how we are ever going to solve it.
With respect to the usury kind of interest rates, I can remember the day when, if we wanted to buy equipment, the bank would not finance it so we would do it through the company which was selling the equipment. Of course, we ended up paying at least double the interest rate, which meant that at the end of a three-year or five-year period we probably paid three times the price of the equipment.
What is done now with the Small Businesses Loans Act is that small business can buy the equipment at a rate which is even better than the regular rate that it is paying the bank because normally the small-businessman is paying prime lending rate plus two. He does not get the prime rate plus one-quarter as does the big guy. So we are making it easy and giving the businessman a rate at prime plus one with a five-year to ten-year pay-back. That makes it very easy for him to expand or modernize his business. It makes him better able to handle the market-place and to become more successful in what he is doing.


Ms. Mitchell:: Mr. Speaker, I notice the Hon. Member and other Hon. Members of this House are referring to business people as "businessmen" very consistently. I would like to ask

February 7, 1985
Small Businesses Loans Act
the Hon. Member if he has any comments on the fact that not only are more women going into small businesses, but, indeed, they have a very good success rate. Yet they often find that there is much more discrimination, if you like, or difficulty in getting loans or financing from the banks. I wonder if the Hon. Member would care to comment on those points?


Gérard (Gerry) Weiner: Mr. Speaker, I thank the Hon. Member for the question. I do want to comment. First, I hope the Hon. Member will excuse my use of the term "businessman". I do it without any malice, in the same way as I might refer to a "chairman" when I should refer to a "chairperson". Perhaps we should have a new vocabulary which incorporates those terms.
I would like to relate a true story. My wife is an active member of the business community. She is a very successful businesswoman in her own right. She runs a very large travel agency in Dollard-des-Ormeaux. But I do have the feeling that in any relationship she has with her bankers, there is still that unspoken suggestion: "Well, why don't you drop in with your husband? Why don't you show me your husband's statement at the same time? Why don't you use his assets as a back-up for what you are asking?" She does not want to do that. She has made it in her own right. She has her own assets and her own equity to show. She is able to stand on her own feet.
I think this is a problem somewhat similar to that which my ethnic constituents are facing. We have to come to grips with the reality that we still do not have true equality, that we must continue to work for it. The positive and affirmative action which we need in that sense, with proper incentives and initiatives, must be taken here as well. I can only say that I have not yet had the pleasure of dealing with a female bank manager. Perhaps they exist, but they too, like the ethnics, must have their rightful place in this society.


Mr. Deputy Speaker:: We shall now resume debate. [Translation]


Mr. Don Boudria (Glengarry-Prescott-Russell):: Mr. Speaker, I am pleased with this opportunity to speak briefly in the debate on Bill C-23.
Mr. Speaker, I am rather surprised the Government should have waited so long to table Bill C-23 in the House. I see the Minister across the way and I am sure he would have preferred to table the Bill before the "well ran dry". I am positive, Mr. Speaker, but I suppose he does not have enough influence on ... He may not have enough money either-I do not know since I am not familiar with his personal finances. But he definitely does not have enough influence on his colleague, the Government House Leader, because we know, Mr. Speaker, that the well has run dry, as I mentioned earlier, and that instead of tabling this Bill at an earlier date and helping small businesses, this Government preferred to help the big U.S. multinationals by spending much of this session on the Investment Canada Bill. Why set a higher priority on Investment Canada when we could have been helping small businesses?
I would like the Minister to answer that later on, Mr. Speaker, because it is very important for us to know what the Government's commitment is to small business.
Perhaps the Minister could also indicate why the Government is so keen on having the Investment Canada Act, which I think will reduce opportunities for small business. When small businesses, with their very limited resources, must compete with the multinationals, obviously things are going to be very difficult for them. I am convinced that my Progressive Conservative colleagues in the House will agree, since they see themselves as the friends of small business.
However, Mr. Speaker, we know this is not so. They are friendly with big business, with the big U.S. corporations, and especially with the U.S. Government, and, as we know, they have very little concern for Canadian small businesses.
Mr. Speaker, while we are on the subject, I think we should remember the promises this Government made during the election campaign, promises with respect to small business.
I have with me a document, Mr. Speaker, containing promises made by the Conservative Party. I am sure you will recall that the Conservative Party made quite a few promises during the last election campaign. We in the Liberal Party have tallied up some 338 promises, but of course we know there are far more, such as the bouncing rubber cheques to producers of Quebec and so forth. If you add them all up there are probably 500 promises.
I have here a list of Conservative promises to the small business community. It is an authentic list because it was prepared by the Prime Minister's office. I am sure you will agree that it is a very authentic document, as authentic as the Prime Minister (Mr. Mulroney) would like it to be. Let us review this list in order to familiarize ourselves with all the promises the Conservatives made to the small business community, recognizing that five months later, once the funds had run dry under the Small Businesses Loans Act, only then did the Government choose to introduce a Bill in this regard. It chose first of all to help out its big business American friends with the Investment Canada Bill and worried about small business much, much later. Of course, that is not what they said during the election campaign. Here is what the Government said. It was going to reduce the burden of excessive regulation and reporting requirements. I do not know what the Tories have done yet to satisfy that particular election promise, which was made on July 26 by the Prime Minister himself, then Leader of the Opposition.
The Tories also said they would rationalize and improve access to a variety of small business assistance programs offered by the federal Government. Again, nothing done. They would review Government purchasing policy and ensure that small and medium size enterprises obtain a fair share of government business. Another empty Conservative promise. They would encourage capital investment in small and
February 7, 1985

medium size enterprises and improve financing options for small business. That one is rather interesting, Mr. Speaker, in view of the amendments we have to the Bill today. I would like to know from the Government how reducing the component from 100 per cent to 90 per cent is going to satisfy the promise of improved financing options for small businesses. Obviously it is not going to do that, it will do the opposite.
Would you believe it, Mr. Speaker, the Conservatives are going to actually break a promise. This is the first time it has happened in the last 15 minutes. It is something like breaking patronage appointment promises. They are known to have done that once or twice in the last 24 hours. Once or twice every day since they were elected, in fact.
However, let us follow through on more promises. I notice I am starting to wake up some of the Tory back-benchers and the book-ends. That is a good thing. Let us review some more promises. This seems to be grabbing the attention of some Conservative Members.


An Hon. Member:: Stick to the Bill.


Don Boudria: Well, we are discussing small business and this Government's commitment to small business. Maybe the Minister of Agriculture (Mr. Wise) and others are not interested in the commitments they made to small business, but I am. The small business community of this country is interested in their promises, especially the ones which have not yet been fulfilled. That is to say, exactly 100 per cent of the promises to small business have not been fulfilled. Let me continue.
They said-"they" being the Conservative Party, which I am sure you will recognize, Mr. Speaker, being the non-partisan person you are-they would increase the amount of management assistance to small businesses through such vehicles as the Counselling Assistance to Small Enterprise programs. In other words, the CASE program. What is going to happen with that program? What will happen when this Government abolishes the Small Business Development Bank, as we know it is proposing to do? That is no secret. We know the Tories want to abolish the SBDB. We know this is another promise that will be broken again. That is two promises they have broken in about 30 seconds. They do not have a very good batting average, you must admit.
They said they were going to broaden and better define the role of the federal Government to lending institutions, to augment and complement the role of private financial institutions serving small businesses. What are they augmenting? Since when does reducing from 100 per cent to 90 per cent augment anything? Would you believe it, Mr. Speaker, they have again broken another promise to the Canadian people. It is a very sad state when we have a government which is really not interested in observing the commitments it made. But we have to enumerate these promises to the people. They need to be reminded of the broken promises of this Government. I see this is waking up some of the Members across the way again.


Mr. Gormley:: You are reminding them of why they voted you out.
Small Businesses Loans Act


Don Boudria: Listen to this promise: to facilitate the introduction and adaptation of new technology and encourage the spread of technical knowledge in businesses through adequate information and training programs and so forth. Well, I think it is about time we looked at the Government's cut-back book to see what it has done to fulfil that particular promise to small business. I venture to bet we are going to have another broken promise very shortly.
Let us look now at a $4.4 million cut-back in research and technology. Would you believe it?

Mr. Speaker, this Government, which has just promised us it is going to help small business, has just cut $4.4 billion from the research, science and technology program and a program that was providing support for research projects by small businesses. It is hard to believe that the Government has once again broken a solemn commitment, a sacred trust as a well-known Progressive Conservative has been heard to say. It is hard to believe this could happen and that this Government could renege on its commitment.
I have here a document from the Prime Minister's Office which contains the reply Ministers were supposed to provide in response to the budget cuts announced on November 8. Somebody drafted some nice little replies, so that when a certain question is put to a Minister, all he has to do is consult this document. The paper is called "Announcement of expenditure reductions", Ministers' document, secret, and so forth. This document was prepared by the Prime Minister's Office and provided to Members of Cabinet so they would know what to say.
It is important that the Ministers should know what to say, Mr. Speaker, or more important still, what to read when they do not know what to say. The Minister opposite seems a bit concerned, but I must tell him that he himself has no cause for concern, because he was expected to say nothing. The document makes no reference to that, so it is clear the Minister was expected to say nothing on that.
But I would like to refer to the next matter. Here is a question, a "potential" question that a reporter was supposed to ask the Minister. "With the increase in fees for small inventors' patents, are these people expected to disappear?" The minister is supposed to answer this: "No, the fees will be significantly reduced in some cases". And then: "How much will be the increase?" Then the Minister would answer: "The increase will be from $550 to $4,000. This is a Conservative bargain for small businesses. Patent costs will be increased to $4,000 from $550 to $4,000." I wonder how the Minister (Small Businesses) could explain this bargain which he is offering the small enterpreneur who wants to register a patent. I am anxious to hear his answer.


An Hon. Member:: You will not have to wait for 20 years!

February 7, 1985
Small Businesses Loans Act


Don Boudria: No, I know we will not have it in the next 20 years, because we never get any answer from the Tory Government on almost anything, Mr. Speaker, and I am in total agreement with my colleague here who just said the Conservative Government offers nothing and answers nothing.
Mr. Speaker, I have another question which was supposed to be asked and it reads as follows: "How can you justify the increase in incorporating fees, when your Government boasts of supporting small businesses?" This is what the reporter is expected to ask, and the Minister should answer: "Fees have not been increased for years, and in any case incorporating fees are but a small fraction of the costs of doing business".
Mr. Speaker, since our small entrepreneurs have that much difficulty right now, I wonder whether the Minister personally feels-and I am confident he will say frankly in a few minutes whether he is personally in favour of increasing those fees, the incorporating fees-whether he feels that such an increase is reasonable, and whether it is by overburdening small businesses that we are going to help our small Canadian entrepreneurs.
Mr. Speaker, along with my colleagues, I think that this Government since it came to power has proved to be totally unconcerned and unwilling to help our small businesses. They have had five months to do so, and to this day they have done just about nothing.

I am glad I woke up another Hon. Member on the other side who is asking me what the Liberals have done for small business in 20 years. I am glad to hear the question. I am glad that the New Democratic Member praised the Ontario Development Corporation. As the Hon. Member knows, that was a joint federal-provincial program begun six years ago. I would like to thank the New Democratic Member for mentioning that. I am sure that all my Liberal colleagues will be pleased to read that in Hansard.
I will indicate some of the improvements that Liberals made to the law. The law was established in 1961 and was improved in 1971. The amount that could be borrowed was increased from $25,000 to $50,000. In 1977 the amount was increased to $75,000. Those are major strides made by Liberal Governments. I am glad that my colleagues in the Conservative Party asked what the Liberal Government did. We Liberals are proud of the things we have done for small business. We did not wait until the very last hour and then try to slip the Bill under the door with regressive clauses in it in order to get our way. We introduced those Bills in due time and we will continue to do so.
[ Translation]


Mrs. Mailly:: On a point of order, Mr. Speaker. I think the Member for Glengarry-Prescott-Russell (Mr. Boudria) mentioned a Bill or a change in the legislation passed in 1961-


Don Boudria: The answer is no.


Claudy Mailly: -because in 1961, the Government-


Mr. Deputy Speaker:: I am sorry to interrupt the Hon. Member but this is not a point of order.


Mr. Rossi:: On a point of order, Mr. Speaker. There is a ten-minute question period provided after the Hon. Member's speech, so I think she should save her question for those ten minutes.


Mr. Deputy Speaker:: I told her it was not a point of order, and neither is this a point of order. The Hon. Member for Glengarry-Prescott-Russell (Mr. Boudria).


Don Boudria: Mr. Speaker, as usual you are absolutely right. Not only was there no point of order, but the point was not a good one.
What I said was, that the legislation was passed in 1961 and improved subsequently by various Liberal Governments. Now that we have established that, I imagine the Hon. Member for Gatineau (Mrs. Mailly) will get her facts straight next time.
I got as far as 1978, when further Liberal improvements were made to this legislation, Mr. Speaker.

In February of 1978 the formula establishing the maximum interest permitted was changed from a fixed rate and established semi-annually at the prime rate of the chartered banks plus 1 per cent. In April of 1978 the responsibility was transferred from the Department of Finance to the Department of Industry, Trade and Commerce. In July of 1980 the maximum total indebtedness outstanding was increased form $75,000 to $100,000.
As you can see, Mr. Speaker, the Liberals have a very good record of assisting small business and a very good record over-all for governing the country. The record of the Liberal Government is much better than the Conservative Government's will be after four years.
The issue which affects small business in the country the most right now is the price of gasoline. The increases which the Government has perpetrated on the small businesses of my riding are nothing short of scandalous, as my colleague, the Hon. Member for Montreal-Sainte-Marie (Mr. Malepart), so aptly said. Those issues are very important to the small-business people in my riding. They are very concerned with the price of gasoline. The Tories want to increase the price even more, Mr. Speaker. How will this assist small business?
The Government has not earned the trust of small business and will not do so in the next few months when it gives priority to large businesses instead of small ones. It has not acted in a proper manner to gain their confidence. The small-business people of my constituency are not pleased with the Government. I would venture to say that small-business people across the country do not like the Government. It has led the population of the country into error. It has made promises which it is not fulfilling.
February 7, 1985



I mentioned several promises that this Government failed to keep. I should add that not one of the promises made to small business has been kept, and this after more than six months. On the other hand, it is surprising that big business and the President of the United States and others were promised that we would have an Investment Canada Bill, that it was put first on the priority list and that small business was moved down to second place.
A Government that has betrayed small business does not deserve its support.
Mr. Speaker, may I call it one o'clock?


Mr. Deputy Speaker:: There will be a period for questions and comments after Routine Proceedings. Order please. It being one o'clock, I do now leave the chair until two o'clock this afternoon.
At 1 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.


Mr. David Dingwall (Cape Breton-East Richmond):: Mr. Speaker, recently the National Pensioners and Senior Citizens Foundation, representing some 400,000 pensioners and senior citizens, presented a brief to the Prime Minister (Mr. Mul-roney), the Minister of Finance (Mr. Wilson), and the Minister of National Health and Welfare (Mr. Epp), with a number of recommendations of interest and concern to senior citizens.
Some of the important points raised, which I believe are worthy of support by this Chamber, are that the Government should provide adequate and equitable pensions for all Canadians and increase the guaranteed income supplement benefits; that recipients of old age security on limited incomes be exempt from having to forward income tax quarterly; and that the Government, in co-operation with the provincial Governments, build small, accessible, publicly-owned rental developments, with tenant participation in the management process.
I would ask the Government to give favourable consideration to these and the other recommendations as they represent the views of the vast majority of Canada's senior citizens. This body has represented the seniors well in the past, and if
these recommendations are adhered to by the Government, I am certain that it will be for the benefit of all Canadians.



UNEMPLOYMENT INSURANCE COMMISSION


Mr. Alan Redway (York East):: As you know, Mr. Speaker, the Unemployment Insurance Commission is seeking the repayment of alleged overpayments of unemployment insurance benefits made to approximately 350 Canadians, not because of any fault or dishonesty on their part, but rather because the retroactive effect of an income tax court decision to which they were not parties and at which they were not represented.
In one of these cases an unemployment insurance board of referees has stated that the Commission's efforts to recover $21,120 from a constituent of mine offend the principles of natural justice. Notwithstanding that, the Commission has appealed the board of referees' decision.
There are three solutions to this problem. First, the Unemployment Insurance Commission can withdraw the appeal and not proceed with any appeals on similar cases. Second, under Section 60 of the unemployment insurance regulations, the Commission has the right to waive any attempt to collect overpayments in cases of undue hardship. Third, the Unemployment Insurance Act itself can be amended.
I know that the Minister of Employment and Immigration (Miss MacDonald) is most concerned about this very disturbing problem. I am sure all Members of the House will co-operate with her in dealing with it in a just, reasonable, and compassionate manner.


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



EMPLOYMENT


Mr. Ian Deans (Hamilton Mountain):: Mr. Speaker, I want to raise some concerns with regard to the Government's youth employment program announced yesterday. I want to suggest that it is entirely possible, with sufficient lead time and somewhat improved economic conditions, that the direction in the program the Government has announced could work. I do not think anyone would deny that that is a possibility. I do, however, believe that there is not sufficient lead time to allow for that program to work effectively this year. I think if it were announced now for next year, and the private sector, which the Government is calling upon to respond, had enough time to work the program into its hiring practices and to look at projects, it would be possible that by next year it might in fact prove to be effective.

February 7, 1985
I want to suggest to the Government that it should go back to the job creation type of programs to which we have been accustomed, for two reasons. One, because they have worked and they have provided job opportunities for many young people. Second, because they have provided opportunities for municipalities, community groups, and voluntary organizations to provide a service to their communities a service that otherwise would not have been provided. The Government, therefore, would do better this year recognizing that is so, that it is not Fictional or fictitious, and that if the Government would leave in place the program which it now has, and then work toward a greater degree of involvement from the private sector-


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



HARBOURS


Mr. Lawrence I. O'Neil (Cape Breton Highiands-Canso):: Mr. Speaker, in my constituency we have one of the finest ice-free harbours on the eastern seaboard of North America. I am speaking of the harbour at the Strait of Canso. Into this harbour have sailed the largest ships afloat. The Port of Mulgrave has been used over the last 15 years at various times to service off-shore rigs. The entrance to the harbour is Chedabucto Bay. This Bay is busy with marine traffic, including deep sea trawlers, freighters, barges, and other marine traffic.
This harbour is one of our greatest resources. It is an important part of our effort to attract employment related initiatives.
It is therefore with concern that I learned of the decision to close the Eddy Point Marine Centre. I want to call upon the Minister of Transport (Mr. Mazankowski) to review this decision by departmental officials, with a view to continuing this important service to the marine traffic that uses this high traffic area. Such a decision by the Minister would be a strong vote of confidence in the area and would ensure the continuation of a valuable service to our marine industry.



EMPLOYMENT


Mr. Raymond Garneau (Laval-des-Rapides):: After hesitating for a long time, Mr. Speaker, the Government has finally made public its student summer employment program.
My first comment about it is that the Province of Quebec got the short end of the stick.
In 1984, the Liberal Government had allotted $44.5 million to create summer jobs for Quebec students-$36.8 million for community projects and $7.7 million for the "Career-Access" summer program.
According to the decision announced by the Conservative Government, $41.9 million will be set aside for Quebec, a cutback of a little over $2.5 million. While the Quebec budget is slashed, Alberta's has gone up by $5.5 million. I commend the Members from the Province of Alberta for looking after their own, and I would urge the Quebec Conservative Members to do the same thing and make sure that Quebec students are not penalized this year and, if possible, that Quebec's budget for this program be increased on a par with the higher funding granted to the Alberta students.
My second comment has to do with the so-called "Student Entrepreneurs" project.
Does the Minister of Employment and Immigration have the legal authority to administer such a program? If not, which federal department will be responsible for the administration of those loans and through which agency?
I would also urge the Minister to make public as soon as possible the application forms to be used by municipalities and community organizations and, finally, to establish clearly the rules of the game and the selection standards.
Hardly ten weeks remain until students complete their school term, so it is imperative that all administrative details be made public if we want-



ENVIRONMENTAL AFFAIRS


Mr. Stan Darling (Parry Sound-Muskoka):: Mr. Speaker, I want to express my delight at the recent agreement between the federal and provincial Governments regarding acid rain.
The provinces affected by this environmental brute are closer than ever to actual pollution cut-backs. We must be sure to follow through the proposal to cut back harmful emissions by 50 per cent in the next 10 years.
Our new Minister of the Environment (Mrs. Blais-Grenier) has shown her mettle in dealing with her provincial counterparts at the Montreal talks.
I sincerely hope the cost of this important initiative will be treated with some priority by the Government. Few investments this decade will yield greater benefit to the people of Canada. The federal-provincial agreement is the cutting edge for negotiations with the United States.
I would ask the Minister of the Environment and the Minister of Transport (Mr. Mazankowski) to redefine the standards for automobile emissions in Canada to meet the current, harsher standards used in the U.S. It would be
February 7, 1985

nothing less than politically prudent to have a commitment in place prior to President Ronald Reagan's visit in March.
Let us give our Prime Minister (Mr. Mulroney) the bargaining power to ask the President for cut-backs in the country he represents. We must have our own house in order before we ask others to do the same.



CONSUMER AFFAIRS


David Orlikow: Mr. Speaker, increasing numbers of tax discounting operations are preying on low-income Canadians by offering refunds on income tax returns in advance, at annual interest rates of more than 60 per cent.
Representatives from organizations such as the Quebec Association for Family Economy, and the National Anti-Poverty Organization have continually told the Minister that the tax refund business has grown by more than 600 per cent since 1981, that two-thirds of persons using discounters have average incomes of $8,000, and that 40 per cent of all users receive federal government child tax credits.
The Government intends to increase child tax credits substantially. This will only increase those exorbitant profits. The only way to stop the rip-off of low-income Canadians is to ban tax discounting and substantially speed up the processing of tax refunds.
We regret that the Minister of Consumer and Corporate Affairs (Mr. Cote) has not acted on this urgent matter, and further regret reports that his staff is promoting alternatives, such as a sliding scale interest rate charged on the size of the refund. It is time for the Minister to stop, to study, and to take some action.



POLITICAL PARTIES


Mrs. Barbara Sparrow (Calgary South):: Mr. Speaker, we must have pity on members of the Liberal Party. Not only have they lost their long-time Leader, their personal "PET", and the federal election, but yesterday they discovered that the Hon. Minister of Employment and Immigration (Miss MacDonald) could do something that they couldn't. The shock must have been totally devastating, because last night they couldn't even hold on to the puck. Yes, they lost that too, six to one. However, I noticed that by the end of last night's game a part of their anatomy was turning blue. Since they are now adopting the right colour, maybe there is hope for them after all.
Last night the PCs replaced the Liberal six and five program with our six to one victory. Maybe now they can see the light.
On behalf of all my colleagues I should like to extend our sincere appreciation and thanks to the National Capital Commission, and to the students of Carleton University, for a wonderful evening and a delightful reception.


Some Hon. Members:: Hear, hear!



THE ADMINISTRATION


Hon. Andre Ouellet (Papineau):: Mr. Speaker, there is often quite a difference between what the Prime Minister says and what he does.
Last July, the Conservative Leader pretended to be shocked by the appointment of a Liberal minister in Rome. Today, he is appointing a former Conservative minister, Roy McMurtry, in London.
Last July, he promised to put an end to political appointments especially in Crown corporations. But now he appoints a defeated Conservative candidate, Mr. Lawrence Hanigan, Chairman of VIA Rail. That last appointment, Mr. Speaker, is pure patronage. The man who has succeeded in inflicting 20 strikes in 10 years to the Montreal Metro users will take the place of Harold Renouf, a competent and unbiased administrator who had managed within two years an important recovery at VIA Rail.
I say to the Prime Minister that he has failed to honour his election promises and is guilty of very bad patronage.



EMPLOYMENT


Mr. William G. Lesick (Edmonton East):: Mr. Speaker, yesterday at the Terry Fox Centre I had the pleasure of meeting and talking with about 75 young students from across Canada. These students are here in Ottawa as part of a continuing program to make our young people more aware of the machinery of government and of the people behind the scenes operating our many Departments and agencies. I was struck by their devotion to Canada, their nationalism, their understanding of and their appreciation for our national institutions. They represent the future of our country, and I truly believe that Canada will be in good hands.
Yesterday the Government announced a program which recognizes the industriousness and spirit of our young people. I commend the Minister of Employment and Immigration (Miss

February 7, 1985
Oral Questions
MacDonald) and the Minister of State for Youth (Mrs. Champagne) for the innovative program which they have jointly developed. The Government has proven in this program that it wants to nurture and develop the entrepreneurial spirit of our young people, rather than simply devote dollars just to keep them busy for two or three months.
Young Canadians want to develop their skills. It is time that both government and the private sector co-operated together to ensure that the qualities which I recognized in the students I met yesterday will be developed and applied to their future careers.



ORAL QUESTION PERIOD


Hon. Donald J. Johnston (Saint-Henri-Westmount):: Mr. Speaker, I am pleased that the Minister of Finance has arrived. He knows that the Statistics Canada leading indicator has declined now for three consecutive months. He also knows that the employment Figures of which the Prime Minister has been so proud are in fact not 100,000 but considerably less. Even with arithmetical acrobatics, they cannot be rounded up from 88,000 to 100,000. He knows that the dollar has weakened. He knows that interest rates are moving up and, to top it all off, we find a waffle about the budget date. We suspect that it has to do with the provincial elections-perhaps Mr. Miller's, Mr. Lougheed's, Mr. Buchanan's-


Some Hon. Members:: Question.


Donald James Johnston: I hope the Minister of Finance-and this is my question-will confirm the statement made in the House by the Right Hon. Prime Minister on January 30 when he said "-the Minister of Finance will bring down a Budget towards the end of April, as agreed". That statement is from Hansard of January 30. Would he confirm that it is still operative?


Hon. Michael Wilson (Minister of Finance):: Mr. Speaker, I wondered if the question was ever going to come.


An Hon. Member:: Now answer it.


Mr. Wilson (Etobicoke Centre):: I will give an answer. I do not have anything different to say from what the Prime Minister has said on previous occasions in the House. As the Hon. Member knows, we are going through a very extensive consultation process. There will be the First Ministers' Conference next week. The following month will be the National Economic Conference in Regina. As soon as we are able to digest the multitude of good ideas which come out of those meetings, I will be bringing forward a Budget. I am still aiming for some time toward the end of April.


REQUEST FOR ECONOMIC STATEMENT
Donald James Johnston: Mr. Speaker, I am relieved, and I hope Canadians are relieved, to hear that. The country needs a Budget. If there is any change in plan, would the Minister of Finance undertake-and even in the absence of a change in plan-to bring forward an economic statement at an earlier date?


An Hon. Member:: Not another one!


Donald James Johnston: Clearly circumstances have changed
dramatically from what was put forward in November. Along with that economic statement, would he undertake to introduce some immediate steps to control interest rates and to stimulate employment?


Geoff Wilson: Mr. Speaker, I would like to bring forward an economic statement, but I don't think it is quite appropriate to have an economic statement followed very shortly with a Budget. However, I might tell the Hon. Member that, if I did bring forward an economic statement, it would show an improvement in the economic forecast for this year. Interest rates are lower, economic growth is higher, and we are expecting that unemployment will be lower in 1985 than we had anticipated in the economic statement last November.


THE ECONOMY
Donald James Johnston: Mr. Speaker, the Minister ought to share his personal forecasts with the Members of this House. I therefore would like to put the following question to the Minister: The Canadian people gave this Government an overwhelming mandate to govern, to make decisions and to provide leadership for this country, none of which has materialized to this day. Is he really proud of his Department's performance, of his own performance and the performance of a Government that has done nothing about the economy or the direction that should be taken with respect to economic issues?


Geoff Wilson: Yes, Mr. Speaker, I am very proud of our Government's performance, and when I bring down my budget in April, I think all Canadians will be proud of the decision they made on September 4.
Canadians have given us a mandate, and we have a mandate to consult with the Canadian people before we make any decisions, and that is what our Government intends to do.



February 7, 1985


EMPLOYMENT
David Charles Dingwall: Mr. Speaker, my question is for the Minister of Employment and Immigration. It is noteworthy that the Minister is advancing a new theology. Yesterday she advocated and extolled the virtues of the wage subsidy program. In fact 72 per cent of the money under Challenge '85 is directed toward wage subsidy programs. Will the Minister explain why, all of a sudden, a wage subsidy program will be the panacea for creating thousands of jobs among our young people when in fact, in this House on May 24, 1984, the Minister said, and I quote:
Wage subsidies and employment tax credits will be of little value in these economically depressed regions.
Will the Minister explain this obvious contradiction?


Hon. Flora MacDonald (Minister of Employment and Immigration):: Mr. Speaker, the question of wage subsidies in economically depressed areas is something that the Hon. Member should really know all about because the wage subsidies in economically depressed areas will go to community organizations. This will go to support those groups and organizations that can produce community work, and they will be 100 per cent subsidized.


ALLOCATION OF FUNDS
David Charles Dingwall: Mr. Speaker, this is an obvious about-face by the Minister. It is very obvious. Will she explain to the House why, in real dollars, the people of Newfoundland, Nova Scotia, Prince Edward Island, and Quebec are receiving less money than they did last year? Will she explain to the House why?


Flora Isabel MacDonald: Mr. Speaker, I understand that there would be a certain amount of sour grapes on the part of the Opposition. I am sorry about that because, except for the 70 Members sitting on opposition benches, there has been positive response to this program all across the country, including the Canadian Federation of Independent Business, student groups, chambers of commerce, and labour unions all across the country. I invite him, as I have done other Members, to get in and work at it, and try to make this program successful from his point of view as well.


THE ECONOMY
Hon. Edward Broadbent (Oshawa):: Mr. Speaker, I have a question for the Prime Minister. At noon today we learned that the Canadian dollar dropped to its lowest level in history.
Oral Questions
About 18 minutes ago we discovered that interest rates jumped a full half percentage point, and more than 1.5 million Canadians remain unemployed. Considering that the Prime Minister was elected to get rid of the problems created by the Liberals instead of perpetuating them, what does the Government plan to do now to begin to bring confidence in the economy to the people of Canada?


Geoff Wilson: Mr. Speaker, I think that the economic program that we set out last November will clearly bring the results that both the Hon. Member and we want, more jobs for all Canadians who were put out of work as a result of policies brought in by the previous Government. Yes, there has been an increase in the interest rate today, but I should point out to the Hon. Member that the interest rate went down for 20 or 21 weeks straight, mortgage rates came down, and about 100,000 jobs were created.


REQUEST FOR ACTION
John Edward Broadbent: Mr. Speaker, the Minister cannot have it both ways. He took credit when interest rates went down in the fall. He now has to accept responsibility when the interest rate is going back up. He said in a speech he made in the House of Commons last fall that high interest rates lead inevitably to increases in unemployment. We have been saying that day in and day out, in fact year in and year out, on this side of the House. Now that the Minister has responsibility and can do something about interest rates, why is he not keeping them down and generating growth and confidence in the Canadian economy?


Geoff Wilson: Mr. Speaker, we are talking about two weeks of increases against a background of four months of decreases. What has happened now is that we have record highs of the U.S. dollar against all industrial currencies. The Canadian dollar, unfortunately, cannot be immune from that. That has caused, unfortunately, an increase in the bank rate today, but we believe that the policies that were set in train back in November will, over a period of time, lead to a drop in interest rates, as has clearly been demonstrated since September 4.


GOVERNMENT POLICY
John Edward Broadbent: Mr. Speaker, Marc Lalonde and Allan MacEachen could not have said it better. In fact, they used to say it just the same way.
My question is to the Prime Minister, if he is going to accept his responsibility and answer some questions about the economy. If not, I will direct it to the Minister of Finance. During the election campaign the Prime Minister said that he would not move to increase the interest rate in order to deal with the falling dollar because, as he pointed out, that leads to increased unemployment. Why has the Prime Minister reversed his policy? Why is the Government of Canada still pursuing the old Liberal policy of jacking up interest rates?

February 7, 1985

Oral Questions
Why does the Government not accept its responsibility to get growth in our economy?


Right Hon. Brian Muironey (Prime Minister):: Mr. Speaker, we do accept our responsibility for creating growth in the economy. I suppose that I am no less concerned than my hon. friend when interest rates, notwithstanding an important and encouraging pattern over the last four and a half months, do increase. Any increases in interest rates, even for the valid reasons mentioned by my hon. friend, such as the record strength of the American dollar, inhibit economic growth, particularly for small business.
I know my hon. friend will remember that, apart from the ongoing circumstances with which we are called upon to deal, we also must in a parallel way, deal with 20 years of profligacy and the heritage left us by the Liberal Party. We have to introduce policies to deal with these structural deficiencies in the economy. I think that begins with a rebirth of confidence for consumers in the private sector and the labour movement, and that is going to create the strength we need in this country.


Some Hon. Members:: Hear, hear!


ADMINISTRATION OF JUSTICE
Hon. Bob Kaplan (York Centre):: Mr. Speaker, my question is for the Attorney General of Canada. In view of the assurances that the Attorney General gave last October that there would be no government interference in the Hatfield police investigation, and that he would follow the long-established practice in federal cases of leaving it to the RCMP to decide whether to lay charges, when to lay charges, and what charges to lay, did he, any law officers of the Crown, or any government officials outside the RCMP, give instructions to the Mounties about what charges to lay, when to lay them and, indeed, in front of which New Brunswick Judge to appear to lay those charges?
Hon. John C. Crosbie (Minister of Justice and Attorney
General of Canada): Mr. Speaker, in connection with the charges that were laid in the Hatfield case, these matters were dealt with in the normal way by the Department of Justice and the RCMP. The RCMP consulted the Department of Justice because this is a federal matter under the Narcotic Control Act. They proceeded in the normal course of events. They were instructed by me that I expected the case to be dealt with on the same principles that would be applied to any similar case. They assured me that they had arrived at their conclusion on that basis, and I accepted their advice and conclusions. That is how the matter was conducted. I can assure the Hon. Member that the integrity of the system of justice in this country was preserved absolutely in the matter of the prosecution of Mr. Hatfield. On the basis that I know the man and am a friend of his, I am happy that he was found not guilty.


INSTRUCTIONS INQUIRY
Robert Phillip Kaplan: I do not have any difficulty with the idea of the RCMP getting legal advice or consulting senior officers about the question of whether or not charges should be laid before making its own decision. I am asking the Minister to confirm, for the sake of the integrity and credibility of the RCMP, that no instructions were given to the force from outside sources, including the Department of Justice officials who should not do so. I am asking the Minister to confirm that they did not give instructions about what charges to lay, when to lay those charges, and before what judge to appear to lay them.


Hon. John C. Crosbie (Minister of Justice and Attorney General of Canada):: Mr. Speaker, I have just told the hon. gentleman that the normal course of events was followed in this case. The RCMP, as it is entitled to do, sought the advice of the Department of Justice. The RCMP was not instructed by the Department of Justice to do anything. Members of the RCMP asked advice as to what they should do and how they should do it. They asked for the legal direction to which they are entitled from the legal officers of the Crown who, in every case, give them that advice with great propriety and a sense of responsibility, and without any interference at all on the political level.


THE ECONOMY
Nelson Andrew Riis: Mr. Speaker, my question is directed to the Minister of Finance. In Winnipeg on June 25, 1984, the Prime Minister said that if he were forced to choose between higher interest rates and a lower Canadian dollar, he would take a lower dollar. The Prime Minister promised the people of Canada that that was what the Government's policy would be. Is that in fact the policy of the Government?


Geoff Wilson: Mr. Speaker, there has been no reversal in government policy from that which I set out on November 8. It was very clear, and has been very clear, that within the last four or five months we have had falling interest rates. I would expect that the Hon. Member would be congratulating us for our achievements during that period of time.


John Edward Broadbent: What did you do for five months?


Michael Holcombe Wilson: The Leader of the New
Democratic Party cannot have it both ways. He says that I cannot take credit for the lowering of the interest rates but that now I must take full credit for the rising interest rates.


Some Hon. Members:: Hear, hear!


February 7, 1985


Michael Holcombe Wilson: In the past four or five months, there have been 22 weeks of falling interest rates and two weeks of rising interest rates. Surely the Hon. Member should be pretty pleased with that performance.


ELECTION STATEMENTS
Nelson Andrew Riis: Mr. Speaker, the rise in interest rates today was a substantial rise in interest rates. There is now an uncertainty in the country. The investment community and the consumer community are very concerned. They are hearing different signals.
The Prime Minister said that if he were forced to choose between higher interest rates and a lower Canadian dollar, he would take the lower dollar. The Minister of Justice said that they as a Government would opt for a lower Canadian dollar and not higher interest rates which would ruin economic growth. That is what the Government indicated its policy would be. Is that the policy of the Government today?


Geoff Wilson: Mr. Speaker, I simply repeat the answer I gave the Hon. Member a minute ago. We cannot run economic policy in this country by looking at two weeks as the measure of the success of that policy. We have seen a policy which has brought interest rates down every week, week in and week out, since September 4. We have had two weeks of increases. Surely the Hon. Member can show a degree of patience and encouragement, and see that that is a good performance. He should be encouraging us to continue with that performance over the weeks and months ahead.


ADMINISTRATION OF JUSTICE
Mr. John Nunziata (York South-Weston):: Mr. Speaker, my question is directed to the Right Hon. Prime Minister, and it too concerns the Richard Hatfield marijuana case. I would like the Prime Minister to advise the House of the exact date on which he first became aware that marijuana was found in Premier Hatfield's luggage. I would also like him to advise the House what instructions, if any, he issued concerning the case. Finally, can the Prime Minister indicate whether or not he or members of his staff communicated, either directly or indirectly, with Premier Hatfield regarding the discovery of the marijuana in his luggage?


John Carnell Crosbie: Mr. Speaker, I can deal with these questions because I am the Attorney General and I-


An Hon. Member:: Are you the Prime Minister?


Some Hon. Members:: Oh, oh!


John Carnell Crosbie: Are you a sleaze bag just like the other Hon. Member? An absolute sleaze bag.
Oral Questions


Mr. Gauthier:: Withdraw that!


Some Hon. Members:: Oh, oh!


Mr. Speaker:: I am sure the Hon. Minister did not mean to use the word he used, and would perhaps withdraw it now.


John Carnell Crosbie: Yes, Mr. Speaker, if that is what you direct, I will withdraw it.
Dealing with this question, which is a sleazy question-


Some Hon. Members:: Hear, hear!


John Carnell Crosbie: -at no time in the conduct of the matter involving Premier Hatfield of New Brunswick has the Prime Minister communicated with me about the matter, nor have any of the people in his office. However, I of course have kept the Prime Minister advised at the proper time as to what was happening as is my duty.


INQUIRY OF PRIME MINISTER
John V. Nunziata: Mr. Speaker, with all due respect, my question was directed to the Prime Minister. Surely Canadians have a right to answers from the Prime Minister. I would repeat my question and put it to the Prime Minister.
On what date did the Prime Minister first become aware that marijuana was found in Premier Hatfield's luggage? Was the Prime Minister aware that a meeting took place between the Solicitor General and Mr. Pat Ryan, the ATV correspondent, in Halifax, prior to charges being laid? Was a member of the Prime Minister's staff present at that particular meeting?


Martin Brian Mulroney: Mr. Speaker, I have no idea of the second part of that lengthy statement. I suppose the Hon. Member would have to ask the Solicitor General in regard to that. I have no personal knowledge of the matters suggested by my hon. friend.
I may tell the Hon. Member that, to the best of my recollection, the Minister of Justice and Attorney General for Canada took me aside prior to a Cabinet meeting to advise me that a charge would be laid in the matter of the Queen and Mr. Hatfield, either that afternoon or the next morning. That was the first and only advice that I received of the fact that the matter would go ahead.


Carlo Rossi: That's all you're supposed to know.


EMPLOYMENT
Mr. Howard McCurdy (Windsor-Walkerville):: Mr. Speaker, my question is directed to the Minister of Employment and Immigration who, after months or procrastination, prevarication and puffery, has produced a masterpiece of sleight of

February 7, 1985
Oral Questions
hand, in which her hands never even left her arms and, indeed, no new money left the treasury. Will the Minister admit that the new $205-million youth employment program represents nothing more than the reallocation of funds cut from previously existing youth programs such as Katimavik and Environment 2000?


Flora Isabel MacDonald: Mr. Speaker, the amount of money that was allocated to the summer program came from the $1-billion fund that was saved from government expenditures last autumn and reallocated to the job creation, training, and human resource development, on which this Government places a very high priority.


PRIVATE SECTOR ROLE
Howard Douglas McCurdy: Mr. Speaker, I suppose the answer to my question is yes. I will ask the Minister a different question.
Is the Minister of Employment and Immigration at all concerned about what she has heard today about the effect of high interest rates on small business, and the effect that that will likely have on this ambitious dependency upon the private sector and particularly small business, to create jobs, considering not only the short time period in which to implement the program but the deep concern on the part of potential employers about their own survival?


Flora Isabel MacDonald: Mr. Speaker, I know the Hon. Member is concerned. But I want to tell him that representatives from the Canadian Federation of Independent Business said today that they would play their part in making this program successful. Chambers of commerce across the country have said that they would play their part in making the program successful. I can tell him that the President of the Student Administrative Council at the University of Toronto said that the $205 million program was fantastic. He is one of a number of student presidents who have welcomed this approach.


Some Hon. Members:: Hear, hear!


Flora Isabel MacDonald: I would ask the Hon. Member to have as much faith as the students.


PROVINCIAL LEVELS OF FUNDING
Hon. Lloyd Axworthy (Winnipeg-Fort Garry):: Mr. Speaker, I would like to direct a question to the same Minister, which concerns a region of the country where her reviews are not nearly as favourable. During the course of her press conference and in her statements in the House she said that no province or region would receive less funds than it did in the previous year.
The Province of Saskatchewan will have 1,000 fewer summer jobs than it did last year, and the Province of Manitoba will have 700 fewer jobs because of substantial cut-backs in the level of funding which was provided last year in the summer youth program. Obviously, the Minister has made a mistake. Will she now say that she is prepared to restore that funding so that the students will have the same jobs which they had last year?


Flora Isabel MacDonald: Mr. Speaker, when the Hon. Member was Minister of this Department he did not think to take into account the co-operation of the provinces and the private sector, and look at what their contributions could be, over and above that of the federal Government. When the program is fully funded, he will see that every province will do extremely well, and better than last year.


ROLE OF PRIVATE SECTOR
Lloyd Axworthy: Mr. Speaker, I regret very much that the Minister refuses to increase the level of funding to those two provinces so that the students in those provinces will have the same chance as they had last year.
Is the Minister aware that since last summer in the city of Winnipeg alone there have been up to 1,000 lay-offs in various plants? How does she expect the private sector in that area to respond to-


Mr. McKnight:: They were from your office.


Lloyd Axworthy: It is because of the cut-backs of this Government. We know the reason for the lay-offs. It is because this Government does not have the representation from Manitoba to bring in the kind of investment it needs.
Because of the inability of the private sector to provide that kind of response, will the Minister not reconsider and bring about a revision of her funding arrangements so that those provinces and their students will have the same chance, and the fair chance, that they had in previous years under Liberal Governments?


Flora Isabel MacDonald: Mr. Speaker, I have said before that we will be working with the private sector. The private sector has given us a great deal of assurance that it will play its part in the program. The private sector was not prepared to play that part with the previous Government, simply because the private sector did not trust the previous Government.


Some Hon. Members:: Hear, hear!


Flora Isabel MacDonald: That was evidenced on September 4, and it was evidenced in the latest Gallup poll which showed where the Hon. Member's Party stands. We will not use the funds in the way that the previous Government did to create a huge slush fund which could be handed out to Liberal Party friends.


Some Hon. Members:: Hear, hear!
February 7, 1985


AGRICULTURE
Mr. Pat Binns (Cardigan):: Mr. Speaker, my question is directed to the Minister of Agriculture. The Department of Agriculture has proposed cost recovery in inspection services for vegetables. Prince Edward Island potato producers could face major increases if the proposals which were recently announced by the Department are implemented. Combined inspection charges could cost a producer over $90 per acre or, put another way, over $18,000 for a 200-acre farm.
Since the potato industry has been facing severe financial difficulties, and since implementing these proposals, as is, would be a hardship which producers cannot withstand, will the Minister have his Department review the proposals, through consultations with the industry, and make changes with which both the Government and producers can live?


Hon. John Wise (Minister of Agriculture):: Mr. Speaker, I welcome the Hon. Member's question and, indeed, I want to make it very clear to Members of the House that I share his concern.
1 want to make it perfectly clear that the cost recovery results from our responsibility to make a contribution to the deficit reduction program of the Government. We are presently communicating with about 60 groups, and I want to make it clear that we are in no way advising these groups. We are now studying proposals. I share his concern and recognize that there are certain areas which are far more sensitive than others. We will consult and negotiate to arrive at a mutually satisfactory decision which will benefit all concerned parties.


KATIMAVIK PROGRAM-GOVERNMENT POSITION
Mr. Lome Nystrom (Yorkton-Melville):: Mr. Speaker, I too have a question for the Minister of Employment and Immigration about the Katimavik program. Could she tell us what criteria justify cutbacks from $50 million to $19 million in the Katimavik program? That is a very specific question.


Hon. Andree Champagne (Minister of State (Youth)):: In
my opinion, Mr. Speaker, saying that there has been a cutback from $50 million to $19 million is an erroneous statement. The truth of the matter is that, in its 1983 budget, the previous government had set up a special additional fund of $40 million broken down as follows: $10 million for 1983-84 and $30 million for 1984-85. Since we do have to keep budget restrictions in mind, Katimavik will simply have to manage with its previous basic budget, something which Katimavik's executive director has been aware of for quite some time now.
Oral Questions EMPLOYMENT


YOUTH-GOVERNMENT POSITION
Lorne Edmund Nystrom: A supplementary question, Mr. Speaker.
Mr. Speaker, the Minister is aware of the fact that the new program announced by the Minister of Employment and Immigration is obviously designed for students. Here is my question.
Since the 4,500 Katimavik youths had already quit school- therefore they are no longer students-what new program did the Minister of Employment and Immigration or the Minister of State (Youth) establish for those young people who no longer attend school?


Flora Isabel MacDonald: Mr. Speaker, the Hon. Member has raised the question of other young people who are no longer in school and who are unemployed. It is true that the program which was announced yesterday addresses itself to young people who will be returning to school. I can also tell him that the programs on which we have been working, both in my Department and in Cabinet, address themselves to the over-all $1 billion fund for human resource development and training. Coming from that, announcements will be made concerning other measures which will be taken to address the needs of the young people to which he so rightly referred.


EMPLOYMENT
Mrs. Sheila Finestone (Mount Royal):: Mr. Speaker, my question is directed to the Minister of Employment and Immigration. The Minister must realize that students need to count on a certain income to be able to go back to school. In her program announcements of yesterday she gave us no clarification as to the time deadlines. I would ask the Minister to give the students of Canada three dates: the deadline for private sector business to produce the job creation programs and projects; the deadline for students to apply; and the start-up date and the duration of the projects. When will the Minister give us those answers?


Flora Isabel MacDonald: Mr. Speaker, I will be sending the details to the Hon. Member in a very short time. I hope that she will then undertake to communicate those details to all students in her riding, as I hope all Members will.

February 7, 1985
Oral Questions


REQUEST FOR DETAILS OF FUNDS DISTRIBUTION
Sheila Finestone: The Minister said that the funds would be distributed at the provincial level, then she said it would be done on a regional basis. How will she make sure that there is fair and equitable use of the funds in our ridings? What does she mean by region. How will she make sure?


Flora Isabel MacDonald: Mr. Speaker, as I informed the Hon. Member yesterday, as well as other Hon. Members of the House, the distribution of the funds will be allocated based on unemployment figures in regions and in provinces. The funds will, therefore, go to those who need the help most, to the place where there is the highest concentration of unemployment amongst student groups. I believe the Hon. Member would agree with me that that is fair.


TRUST COMPANIES
Mr. Simon de Jong (Regina East):: Mr. Speaker, my question is directed to the Minister of State for Finance. In view of the fact that published reports have indicated that Pioneer Trust Company of Regina is in a financial situation serious enough to warrant the Government of Saskatchewan guaranteeing the purchase of some $30 million worth of preferred shares, will the Minister first confirm that an investigation by the Department of Insurance is under way? Second, will the Minister tell us if that report will be made public?


Hon. Barbara McDougall (Minister of State (Finance)):: Mr. Speaker, I am aware of the situation about which the Hon. Member has asked. I appreciate his concern. My officials have bee monitoring this situation and, if there are any further developments, I will be happy to inform the Hon. Member.


PROTECTION OF INVESTORS AND DEPOSITORS
Simon Leendert de Jong: Mr. Speaker, there is a tremendous concern in Regina as well among my constituents. The city is rife with rumours. Would the Minister guarantee that, whatever the findings are, those findings will be made public so that both the investors and the depositors in Pioneer Trust will be fully protected?


Barbara Jean McDougall: Mr. Speaker, I am sympathetic to the Hon. Member's question. I have already informed him that I will let him know of any further developments.


INCOME TAX ACT
Mr. Ken James (Sarnia-Lambton):: Mr. Speaker, I would like to address my question, through you, to the Minister of Finance. Would the Minister consider reviewing the legislation governing the use of funds saved under RHOSP, specifically the articles outlined in Part I of the Income Tax Act which define "owner occupied homes"? I have had a number of inquiries from elderly constituents who have been offered accommodation in a co-operative on a long-term lease basis. The terms of the lease would run 21 years and the complete term rental is payable in advance. This represents an immediate capital outlay of $55,000. These constituents have learned that their RHOSPs cannot be applied to this lease-purchase nor can they be converted into RRSPs, thanks to the legislation put in place by the Liberal Government.


Some Hon. Members:: Oh, oh!


Mr. Speaker:: I believe that is the question. I have already heard at least one question.


Mr. Blackburn (Brant):: He has already heard the answer, too.


Geoff Wilson: Mr. Speaker, I thank the Hon. Member for his question. He poses a very complex question, one which I would be pleased to discuss with him at some length. I think the Hon. Member should realize, though, that this is a matter which is the subject of a Budget. If any changes were to be made in the RHOSPs, they would be brought down in a Budget.


EMPLOYMENT
Hon. Jean Lapierre (Shefford):: Mr. Speaker, I have a question for the Minister of Employment and Immigration. As we known, this Government's password seems to be "consultation", but we saw yesterday that those who are most concerned with summer employment, the students, the Canadian Federation of Students, had not been consulted by the Minister.
There is now another very important aspect to the program. This year municipalities will have for the first time to assume 25 per cent of the cost of students' salaries, plus 15 per cent for social benefits.
Before announcing the program, did the Minister consult, as she is committed to do, the Federation of Canadian Municipalities?


Flora Isabel MacDonald: Mr. Speaker, I think it is recognized that I
February 7, 1985

consulted quite widely with student groups across the country, many of whom I heard from today, and I have consulted with individual municipalities such as the Municipality of Gander which is not one of, perhaps, the most affluent municipalities in the country. I was told that it would be pleased to put up 25 per cent of the cost if the federal Government was able to deliver 75 per cent. It is a response like that which I think is encouraging as far as this program is concerned.


Jean-C. Lapierre: Mr. Speaker, the Minister may try to delude us here in this House, but I will tell her that the Federation of Canadian Municipalities were not consulted, and it is now realized that her program will not work. I just spoke to them about the 25 per cent she is asking them to contribute, along with the 15 per cent for social benefits. Municipalities have already voted their budgets, Madam Minister, and at this point it is too late to add anything for this coming summer. Students will be paying for your failure to consult. I ask the Minister: Will she increase the federal contribution, to make sure that municipalities can participate? If not, her program is liable to fail, as 1 am told by the Federation of Canadian Municipalities.


Flora Isabel MacDonald: Mr. Speaker, I simply do not accept the statement that this program is doomed to failure. People from across the country have been getting in touch with my office today to ask how they could take part in the program, how they could become involved, and how they could be assured that they will receive some of the subsidy which the program produces.


CONSUMER AFFAIRS
David Orlikow: Mr. Speaker, my question is directed to the Minister of Consumer and Corporate Affairs. The Minister received a brief yesterday from the Quebec Association for Family Economy which pointed out to him that there has been a tremendous increase in the number of low-income families who have gone to tax discounters to get their income tax refunds paid in advance. The Association recommended that the Minister stop the discounting and repeal the legislation which permits it. Would the Minister tell the House when he is going to respond to that kind of proposal?


Hon. Michel Cote (Minister of Consumer and Corporate Affairs):: Mr. Speaker, I have already indicated, I believe, that we are now consulting. We had intended to meet with our representatives from the Provinces over the coming weeks, and also with the discounters. As soon as we have completed those
Oral Questions
consultations and received those recommendations, we will take the necessary action.


COMMITTEE RECOMMENDATIONS
David Orlikow: Mr. Speaker, this question has been brought before Governments for the last two or three years. We understand that the former Minister of Consumer and Corporate Affairs appointed an interdepartmental committee and that it has made recommendations that this process be stopped. Would the Minister table the recommendations made by the interdepartmental committee so that Hon. Members of the House, and the people affected, can see what those officials are recommending?


Michel Côté: To our knowledge, Mr. Speaker, the only recommendation or statement made under the previous administration was a statement in this House made on April 2, 1984 by the then Minister. It quite simply implied that there were to be meetings with the Minister of National Health and Welfare, after which recommendations, new provisions and amendments to the Act would be proposed.


AGRICULTURE
Mr. Arnold Malone (Crowfoot):: Mr. Speaker, my question is directed to the Minister of Agriculture, despite the fact that the Hon. Member for Regina West is sitting beside him. My question falls on the heels of the initiatives taken by the Minister of Consumer and Corporate Affairs which would make the metric system more palatable in Canada. Would the Minister now cause an action which would bring it about that manufacturers of herbicides, pesticides, farm chemicals, and fertilizers would use dual labelling? Because of the fact that the average age of farmers in Canada is nearing 50 years, labels in both imperial and metric would be advantageous to them.


John Wise: Mr. Speaker, I certainly welcome that question because I am indeed receiving a number of similar inquiries from other Hon. Members of the House, as well as from those members of the agricultural community. I would just like to indicate to the Hon. Member, and to Hon. Members of the House, that the policy of the Government, which was enunciated by my colleague, the Minister of Consumer and Corporate Affairs-the policy which brought to an end the confusion and chaos of the food and petroleum industries-will apply to the agricultural industry as well-


Some Hon. Members:: Hear, hear!

February 7, 1985
Business of the House


John Wise: -in that we are currently looking to see whether or not it is necessary for us to change the regulation which would allow for manufacturers of chemicals and fertilizers, and the like, to provide the imperial nomenclature as well.


Mr. Speaker:: One question, the Hon. Member for Eglinton-Lawrence.


EMPLOYMENT
Mr. Roland de Corneille (Eglinton-Lawrence):: Mr. Speaker, my question is addressed to the Right Hon. Prime Minister, and I am sure he will understand the reason for it. He is very aware of the very worthy and uniquely established program, Katimavik. This is a bilingual program which has been a great success and acclaimed by many people throughout the country. He knows that, with the present cuts taking place, some 2,700 students and 400 group leaders will be losing their jobs. Will the Prime Minister himself personally give consideration to continuing this program during this International Youth Year?


Andrée  Champagne: Mr. Speaker, the Katimavik program has not been terminated, has not been cut. It has been brought back to its normal basic budget. The Secretary of State and myself are very well aware of this marvellous aspect, but we both feel there will be more effective and cost-efficient ways to make young Canadians bilingual than adding another $30 million this year.


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


BUSINESS OF THE HOUSE
Hon. Herb Gray (Windsor West):: Mr. Speaker, I would like to ask the Government House Leader what his plans are for the business of the House for the coming week.


Hon. Ray Hnatyshyn (Minister of State (Government House Leader)):: Mr. Speaker, I thank the Hon. House Leader of the Opposition for the usual Thursday question. I want to advise the House that I would like to designate Tuesday,
February 12, as the fourth allotted day in the current supply period.
With respect to the business for tomorrow and the coming days, it will be as follows: First, Bill C-26. When debate is concluded on that we will resume consideration of Bill C-20. Following that we will begin consideration of the Bill which my colleague, the distinguished Minister of Veterans Affairs (Mr. Hees), will be introducing in the next few minutes to amend the Pension Act. Once the House has completed consideration of that Bill, we will begin the debate at second reading of the Bill to establish the International Centre for Ocean Development. If the House has not completed consideration of second reading stage of the Small Businesses Loans Act amendments today, we will then resume consideration of Bill C-23.


HEALTH, WELFARE AND SOCIAL AFFAIRS REFERENCE TO STANDING COMMITTEE OF CONSULTATION PAPER
Ramon John Hnatyshyn: Mr. Speaker, there have been consultations among the House Leaders of each Party and I believe you will find there is unanimous consent for the presentation and passage of the following motion without debate. The draft order is as follows:
That the document entitled "Child and Elderly Benefits-Consultation Paper", tabled on January 28, 1985 be referred to the Standing Committee on Health, Welfare and Social Affairs;
That the Committee examine and report on the issues raised therein; and
That the Committee report its findings no later than April 1, 1985.


Mr. Speaker:: Does the Hon. the Government House Leader have unanimous consent for the introduction of his motion?


Some Hon. Members:: Agreed.


Mr. Speaker:: The House has heard the terms of the motion. Does the House agree to the motion?


Some Hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.


André Bissonnette: Mr. Speaker, pursuant to Standing Order 46(2) I am pleased to table in both official languages a copy of the Government's consultation with small business paper.
February 7, 1985


NAZI WAR CRIMINALS
John Carnell Crosbie: Mr. Speaker, I wish to address a question of major concern to Canadians everywhere and which has been the subject of much controversy over recent days. I refer to the question of Nazi war criminals and the possibility that some of these war criminals may have entered or attempted to enter Canada. After working with the Solicitor General (Mr. MacKay) on this problem as directed by the Prime Minister (Mr. Mulroney), who is extremely interested in the question, we have reached certain conclusions.
We are all aware, Mr. Speaker, of the concerns recently expressed about the possibility that one particularly notorious war criminal, Josef Mengele, may have entered Canada or attempted to do so. The Government is very mindful of the atrocities alleged to have been perpetrated by this particular individual and is most anxious that if anything can be done within Canada to bring this individual to justice, that it be done immediately.
There have also been statements by a number of associations and their representatives interested in the bringing to justice of war criminals that there are indeed within Canada a considerable number of such criminals who may have escaped to this country in order to avoid prosecution for the crimes they committed or to avoid punishment for such crimes. It is stated by these associations that many war criminals have entered Canada through a variety of illegal or fraudulent means, and that many are still resident here and continue to avoid justice.
Mr. Speaker, these statements do not accord with the information that the Government has respecting these matters. The Government has the results of a number of comprehensive investigations into the activities and background of individuals either now or previously in Canada and suspected of having been involved in the commission of war crimes related to the activities of Nazi Germany during World War II.
In so far as the Government's knowledge extends, we understand from the Royal Canadian Mounted Police that there are relatively few persons living in this country alleged to have been involved in war crimes as described by some of the associations and groups I have referred to. These cases have been the subject of careful investigation by the Royal Canadian Mounted Police in co-operation with law enforcement authorities in other countries. The House will recall the extradition of Helmut Rauca to the Federal Republic of Germany. Other cases are under continuing investigation.
The Government has nevertheless concluded that statements by some of the groups and associations I have referred to pertain to matters of such importance that we must go to the very depths of the questions posed so that we may be assured that we are not, unknowingly, harbouring within our midst some of the individuals guilty of committing the horrible Nazi war crimes of World War II. These individuals must be brought to justice and to the extent that the Government can
Nazi War Criminals
act to assist in attaining that purpose, we will do so to the fullest extent.
Therefore I wish to announce today the establishment of an independent Commission of Inquiry under Part I of the Inquiries Act to conduct such investigations regarding war criminals in Canada as are necessary in order to report to the Governor in Council upon recommendations and advice relating to further action that might be taken in Canada to bring such war criminals to justice. The terms of reference of the Commission are:
To conduct such investigations regarding alleged war criminals in Canada, including whether any such persons are now resident in Canada and when and how they obtained entry to Canada, as in the opinion of the Commissioner are necessary in order to enable him to report to the Governor in Council his recommendations and advice relating to what further action might be taken in Canada to bring to justice such alleged war criminals who might be residing within Canada, including recommendations as to what legal means are now available to bring to justice any such persons in Canada, or whether and what legislation might be adopted by the Parliament of Canada to ensure that war criminals are brought to justice and made to answer for their crimes.
This Commission will have full power of access to personnel and all relevant papers, documents, records and books of any kind in the possession of departments and agencies of the Government in order fully to review and consider the information as it is presently known to the Government. The Commission will have the power to proceed as it may deem expedient for the proper conduct of the inquiry and it will receive sufficient staff and resources as it may require to meet its responsibilities. It will have the power to sit at such times and at such places within or outside of Canada as it may decide, and it is anticipated that its research and investigations will require it to undertake a considerable amount of work not just in Canada but also in other countries, and particularly those in which the activities of war criminals were carried out.
I would also refer at this time to the publication today of a working paper by the Law Reform Commission dealing with extraterritorial jurisdiction. In that paper it is stated that Canada's war crime legislation is outdated and ripe for review. The Commission will, in the course of discharging its mandate, consider this question very carefully and make appropriate recommendations. The Government will wish to proceed promptly on all phases of the recommendations and advice ultimately offered by the Commission. This, together with our wish to deal as soon as possible with the issues already raised pertaining to the presence of war criminals in Canada, has led the Government to stipulate a reporting date of December 31, 1985 for the Commission's findings and recommendations. We believe that time frame will meet the immediacy of the situation and permit the inquiry sufficient time fully to carry out its mandate.
I am pleased to announce the appointment of the Honourable Mr. Jules Deschenes, a Justice of the court of Appeal of Quebec and former Chief Justice of that province, as the Commissioner responsible for conducting an inquiry on war criminals. He is an exceptional jurist who, throughout his professional life as a counsel and Justice of the Court, has

February 7, 1985
Nazi War Criminals
earned the admiration and respect of all those who know him and his work. He has already rendered many years of service to Canada through his work in the Court of Appeal of Quebec. The Government is grateful that he has accepted this important challenge represented by the mandate that he is about to undertake. I am certain that all Members of the House will join me in wishing him well in the discharge of his responsibilities. We shall all anxiously await the results of this historic inquiry.


Some Hon. Members:: Hear, hear!


Robert Phillip Kaplan: Mr. Speaker, like the Minister of Justice (Mr. Crosbie), I have very great respect for Mr. Justice Jules Deschenes. I am sure that he will conscientiously do the job assigned to him by the Government.
I am bound on behalf of my Party to express the concerns I feel about the course of action proposed by the Government at this time. In the statement which the Minister just made he drew a conclusion. He said:
In so far as the Government's knowledge extends, we understand from the Royal Canadian Mounted Police that there are relatively few persons living in this country alleged to have been involved in war crimes as described by some of the associations and groups I have referred to.
The Government conclusion to which he is referring is drawn from a very considerable amount of work already done by the Government of Canada under the direction of the former Government. I am concerned that this inquiry will be a substitute for action by the Government for one full year, to December 31. I know that during the time of the former Government only one war criminal was extradited; only one trial occurred. I would like to remind the House that although only one was extradited, as the Minister indicated, there was a very considerable amount of work done by the Government to carry out investigations and to examine all of the Government policies and past practices to which the Minister referred.
I would like to suggest to the Government that it would have been more appropriate to have action. It would be more appropriate to continue in the direction of the former Government and to make public the information which the Government already had that I have discussed with the Hon. Minister and that he knows was more or less in a shape that, with very little additional time and effort, could have been made public. That information should be made public now rather than simply being given to the Commissioner and delayed for another year.
In addition, there were a number of investigations under way. Any one of them might have resulted in a case of extradition. Those should be continued. I do not think there should be a delay in extraditions during the course of this royal commission. I would like to remind the Minister and to tell the House that the former Government was prepared to begin a process, under the successive Citizenship Acts of Canada, of taking away the citizenship of war criminals who had come to Canada having misrepresented their pasts. I urge the Government not to wait until this royal commission is concluded to carry those matters forward.
There are other theories available for dealing with war criminals in this country and bringing them to justice. Last week a group sought to appear before the Justice Committee while we were amending the Criminal Code. They wished to propose to us a method by which war criminals could be brought to justice in Canada. The Government blocked the appearance of those witnesses before our committee on that question. I think they should have been allowed to appear. I think that the report of the Law Reform Commission should be referred to the Committee on Justice and Legal Affairs now while we are amending the Criminal Code to enable us to do these things now. I would have welcomed a commission like this years ago when there was an absence of information and an absence of a strategy for dealing with war criminals.
In closing, I would like to remind Members of the House and the Justice Minister that the horrors of World War II, the holocaust to which this policy is addressed, is not quite history yet. It is not history as long as there are still fugitives from justice at large in our country. It is not history as long as there are still victims in Canada of the crimes that were committed during World War II. However, it is rapidly becoming history. There are not very many more years in which it will be legally possible to bring these war criminals to justice. The matter is urgent. I think that a year is too long for inaction. I think a year is too long for study.
I would urge the Government to continue the policies that have been begun, to continue the prosecutions, to continue the investigations, and to examine all of the amendments that have been proposed by eminent jurists and by the Law Reform Commission for improving the laws we have now so that war criminals can be brought to justice at this time rather than in 1986. In 1986 it will be too late for many cases that could be brought in 1985. That should not be forgotten. The Government should continue to press forward with policies that will bring war criminals to justice now.


Mr. Svend J. Robinson (Burnaby):: Mr. Speaker, 1986 is too late, 1985 is too late, and I must say that 1984 was also too late.
I would like to begin by commending the Minister of Justice (Mr. Crosbie) for taking the action he has announced today establishing a commission headed by a very respected judge to study all aspects of this very important and difficult issue. At the same time I would like to note that this opportunity must not pass without recognizing that it was the inaction of previous Liberal Governments which led to the admittance of Simon Wiesenthal on to Canadian soil. I need not remind the House as well of Canada's shameful record with respect to the immigration of Jews who were seeking to escape the tyranny of Nazism before and during World War II. I need not remind the House of who was in government at that particular time.
It is important, Mr. Speaker, that the commission which has been established by the Minister of Justice not be seen in any way as a substitute for speedy action by the Government. The Government must not put on hold the actions which have been started. Indeed, I would urge that the investigative unit of the RCMP, which has been established, be strengthened and that
February 7, 1985

its resources and staff be increased. Indeed, the Minister should consider the possibility of a special unit such as has been established in the United States to attempt to identify Nazi war criminals in Canada.
We must address another very fundamental question in the context of this issue. Having identified the possibility of Nazi war criminals on Canadian soil, there must surely also exist a mechanism in Canada to ensure that those war criminals who cannot be extradited to other countries, for whatever reason, do not escape their day of reckoning for the crimes that they are alleged to have committed.
For that reason I would strongly urge the Government to consider seriously implementing the recommendations of the Law Reform Commission on this question. We must establish a means of trying, with all of the legal safeguards which exist in the Canadian judicial system, those individuals in Canada who cannot be extradited to other countries. In that regard I regret the decision of the Government not to permit the possibility of an amendment to the Criminal Code which would have facilitated such trials in Canada.
It has been noted already that the passage of time cannot in any way erase the enormity of the crimes that we are dealing with here, and this has come into sharp focus recently. Many of the victims of the holocaust and their families are still alive. The trial in Israel has clearly documented the atrocities committed by Dr. Mengele. This Commission of Inquiry must have full access to all documents, including immigration documents, records of refugees who have come to Canada, and indeed must be able to look at Cabinet documents to ensure that there is no stone left unturned in our pursuit of justice.
Today there are those in Canada who would deny that the holocaust occurred, who would deny that six million Jews died. We in this Parliament must take every possible step to ensure, first that the perpetrators of those crimes are brought to justice; second, that there is an environment in this country which will lead to justice and not perpetrate the kind of anti-Semitism which was the seed of Naziism in Germany. When we see the burning of synagogues in my own area of Vancouver, when we see denial of the holocaust in courtrooms in this land and when we look at the possibility of Canadian Government complicity with respect to Josef Mengele, these are all questions that must be addressed by this Commission.
1 welcome the decision of the Government, Mr. Speaker, as do members of my Party, to establish this Commission. I certainly hope that at the same time as the Commission is studying various alternatives the Government would press forward to examine carefully whether these Nazi war criminals are in Canada and to look at the possibility of prosecution of those individuals in Canada.
In closing, I would note, as has already been stated, that not only are the perpetrators of these atrocities still alive in many cases but so also are their victims, and not just in Canada but everywhere. It is our obligation, as citizens not only of Canada but of the world, to ensure that crimes against humanity are
Nazi War Criminals
not left unpunished. To the extent that the establishment of this Commission will help to achieve this objective, we welcome it.


Mr. Speaker:: Are there any questions?


John Carnell Crosbie: May I respond, Mr. Speaker?


Mr. Speaker:: No, it is not possible.


Mr. Hawkes:: Mr. Speaker, Members will know that this past fall I had the honour of representing the Government at the United Nations as a member of the Canadian delegation. On the floor of the Third Committee I made a statement at one point which invited all member nations present to send to Canada and to the Canadian Government any information that might be in their possession on the subject of Nazi war criminals who might be resident in Canada.
May I ask the Minister of Justice (Mr. Crosbie) whether, if that information comes to the Government of Canada at this point or in the next few months, it will be passed on to the Commission? Second, does the Government of Canada or the Commissioner in his instructions have any intention of writing to other governments which might be in a position to provide information and advice to us on how best to proceed? Is there anything in those terms of reference that would broaden that inquiry in a deliberate way to seek information from other nations?


John Carnell Crosbie: Mr. Speaker, the terms of reference of the inquiry are quite broad. There is nothing in the terms of reference that will prevent the Commissioner from seeking information from other countries. In fact, we contemplate he will visit other countries and authorities in other countries to see what further information he can obtain. If he finds that some alleged war criminals are present in this country, he will then follow up as to how they go into this country, and then naturally he will have to ask questions in other countries.
I am glad the hon. gentleman has asked me this question. He, at least, indicates that he approves of this inquiry. The Hon. Member for York Centre (Mr. Kaplan), who had been in government for four years, had the audacity to try to blame us for taking no action. For only nine months in 1979 and 1980 and for the past five months the Progressive Conservative Party has been in power, whereas for 22 years the Liberal Party was in power. For four years the Hon. Member for York Centre was in office. And he gets up today to criticize us for not taking action!


Ian Deans: Ignore him.


John Carnell Crosbie: I will pass that by because the critic for the New Democratic Party rectified his own sins of error and omission by welcoming the inquiry. I believe this is the way we can establish the facts. We can find out who is responsible for allowing alleged war criminals into Canada since 1945. We do know that of the 40-year period that has expired, 33.1 years were a period of Liberal government, four of them a period of time during which the Member for York Centre was Solicitor

February 7, 1985
Nazi War Criminals
General. I am glad the hon. gentleman is taking some interest in this matter because the Hon. Member for York Centre spoke and left. That is the extent of his interest in this question.


Some Hon. Members:: Hear, hear!


John Carnell Crosbie: The answer to the Hon. Member is yes, we are expecting him to make inquiries abroad and if the Commissioner has any difficulties with the terms of reference we will amend them so that he will indeed have ample scope to look from 1945 onwards to see how the present situation happened to arise.


Svend Johannes Robinson: Mr. Speaker, I would like to ask the Minister a question with respect to those individuals who are alleged to be Nazi war criminals in Canada but who are not subject to extradition. During the previous Government's term, the Member for Saint-Maurice (Mr. Chretien) in 1981 said in the Standing Committee on Justice and Legal Affairs:
I do not think, personally, it would be advisable to start having trials in Canada on actions that occurred in other nations-
I do not intend to introduce a piece of legislation in Canada to deal with crimes committed in other nations some 35 years ago.
That, Mr. Speaker, was the position of the previous government. Is the Minister prepared to assure this House that he will consider as an option, as recommended by the Law Reform Commission, the possibility of trials in Canada, with all of the legal safeguards that exist with trials of other criminal offences, for crimes against humanity, bearing in mind the fact that the Charter of Rights does permit such trials in Clause 11 of the Charter?


John Carnell Crosbie: Mr. Speaker, the Hon. Member has correctly pointed out that the Government of which the Member for York Centre was a part took the position that legislation to make war crimes, crimes against the laws of Canada, would be retroactive legislation and that his Government would not support it. That was the position when the Hon. Member for Saint-Maurice was the Minister of Justice and Attorney General. It was the policy up until that Government was defeated in the election on September 4, 1984. Members of that same Government are chastising us today for not taking action, after they failed to do anything in this direction for the last 30 or 40 years.
The answer to the Hon. Member is that I am prepared to consider the suggestion that there should be legislation of that type passed. It is one of the matters on which this Commissioner has been asked to advise us-as to whether he thinks legislation would be desirable and proper. When we receive his report we will make a final decision.
I am willing to listen to arguments for and against. There is the objection that this would be retroactive legislation in the criminal field, but because it is an extraordinary area and the nature of the crimes are so heinous, we certainly have to consider it. That is one of the tasks of the Commissioner, who will be reporting by the end of this year. We will act quickly once this report is before us. That is my answer to the hon.
gentleman's question. The policy of the Hon. Member for York Centre (Mr. Kaplan) and his Government was that that could not be done. We will look at it with an open mind, and we hope to have the assistance of this Commissioner's report.


Herbert Eser (Herb) Gray: Mr. Speaker, I should like to ask the Minister of Justice (Mr. Crosbie) some questions arising out of his statement. There is no doubt that Members on all sides of the House are very concerned about, in fact, we are very desirous of, having prompt and effective action taken to deal with the possibility that there are in Canada people who have been involved in Nazi war crimes. For that reason I want to ask these questions of the Minister of Justice.
Will his Government allow to continue in existence the special unit in the Royal Canadian Mounted Police which was created by the Solicitor General who is now critic for the Official Opposition, the Member for York Centre (Mr. Kaplan), during the time of the previous Government? I am referring to the special unit of the RCMP which was given responsibility for investigating the possibility of there being people in this country who committed war crimes as part of the activities of Nazi Germany during World War II. I want to remind the House that it was the activities of that unit which enabled the successful extradition to Germany of Albert Rauca. Will the Government not only allow that special unit created by the former Government to continue in existence but in fact strengthen it and add further resources to it?
During the term of the royal commission which the Minister announced today, will the work of investigating cases which may lead to the extradition of other people resident in this country for prosecution in other countries for Nazi war crimes, be continued? Will the Government carry on the work already under way and begun by the previous Government of investigating the possibility that there are people in the country whose citizenship could be removed because they did not truthfully answer questions when they entered into Canada about their activities in connection with Nazi war crimes? Finally-


Mr. Speaker:: With great respect, I have now heard approximately one question and seven supplementary ones. Therefore I ask the Hon. Member if he would allow the Minister to answer. There are other Hon. Members who wish to ask questions as well.


Herbert Eser (Herb) Gray: Mr. Speaker, I expressed my remarks in the form of questions. I could just as well have expressed them as a statement.


Mr. Speaker:: No, with great respect, the Hon. Member could not have done so, since this is a time when Ministers may make statements and their critics may respond, following which all Hon. Members of the House have the right to indulge in a question period with the Minister. Given the Hon. Member's position in the House, I allowed his question and supplementaries, but I must ask him to allow the Minister to
February 7, 1985

respond at this point, given the number of questions he has asked.


John Carnell Crosbie: Mr. Speaker, I should like to answer the Hon. Member's questions, as far as I can remember them. This unit in the Royal Canadian Mounted Police is still operating. We intend for it to continue operating. The Solicitor General (Mr. MacKay) and I have met several times to review its activities. Where matters now stand, there are active investigations under way. As the Hon. Member knows, there are many difficulties in respect of what kind of prosecutions can be launched. We are looking at any situation which involves the possibility of extradition. We are looking at possible deportation. One of the difficulties in that connection is that the records are not always available to show what answers certain people who landed in Canada made at the time.
There is one particular case where we may well be able to initiate a prosecution in that direction. Hopefully we will get the remaining necessary evidence in the next several weeks.
This work is continuing. It is our intention that this unit continue to operate. If satisfactory evidence is obtained, prosecutions will be launched while the present commission carries on its functions. There is no reason that that should not be the case. We are not proposing that the commission proceed and that all other activities cease. They will go on apace. Of course they will also assist the commission and turn over to him all information they have on hand. I assure the hon. gentleman that that work will continue unimpeded.


Mr. Speaker:: The Hon. Member for Hamilton Mountain (Mr. Deans) is next, and then I will recognize the Hon. Member for Windsor West (Mr. Gray) for one further question.


Ian Deans: Mr. Speaker, I have two very brief questions. First let me say to the Minister that I applaud the actions of the Government today. I think it is well past the time when the Government of Canada should have acted in this regard.
Is it the intention of the Governdment to give the commission full access to Cabinet documents in order that it can have all the relevant information it requires?
Also, how does the Government propose to maintain the confidentiality of information which may be forthcoming from citizens with regard to other citizens of Canada and their alleged involvement in Nazi war crimes? We must recognize that we are not only talking about matters which will turn out to be real but about the possibility of matters which may turn out to be inaccurate, information that in fact may not be accurate and could destroy the lives of people.
I think the Minister could tell me fairly quickly how we propose to ensure the necessary degree of confidentiality to enable people not to be victimized by what I suppose could be vindictive actions taken by others against them.


John Carnell Crosbie: Mr. Speaker, these are sensible questions; it is a refreshing change.


Ian Deans: Do you never give up?
Nazi War Criminals


John Carnell Crosbie: Those comments were not for the hon. gentleman; just refreshing generally. With respect to the question concerning full access to Cabinet documents, the Commissioner will have full access to whatever documents a commissioner with the power of subpoena and so on is entitled to have. I cannot say that he will have full access to all Cabinet documents.
We all know the present contretemps. We all know the situation where one Prime Minister in a former administration agrees and some difficulties may arise. If the Commissioner says to us that he needs access to certain Cabinet documents because he thinks they may reveal x, y or z, then we will endeavour to give him access to them and do what we can to assist him.
I cannot commit myself more than that because there are some problems with Cabinet documents. However, he will have full access to all other government documents, such as immigration records, citizenship records, External Affairs records, Department of Justice records, RCMP files and personnel records.
The Hon. Member pointed out a real danger. We do not want people such as John X, an alleged war criminal, exposed in public when no one knows whether or not he is one. This could present a danger such as we saw in the Grange Commission. Of course the terms of reference direct the Commissioner that the proceedings of an inquiry be held in camera on all matters where the Commissioner deems it desirable, in the public interest or in the interest of ensuring the privacy of individuals involved in specific cases which may be examined.
The Commissioner will have to use his own good judgment and good sense in determining how he will deal with specific cases of individuals to protect their privacy. He will have to decide what criteria he will use. We certainly want him to be very careful in that respect. That is all that I can tell the hon. gentleman. A great deal will depend upon how the Commissioner decides to proceed in that regard.


Mr. Speaker:: As I said a moment ago, I will recognize one supplementary question from the Hon. Member for Windsor West and then end it.


Herbert Eser (Herb) Gray: Mr. Speaker, I will be very brief. In view of the Minister's comments about not having matters slowed down which would otherwise continue while the royal commission is in operation, would he instruct his Parliamentary Secretary to propose at the next sitting of the Justice Committee a motion to reverse the decision taken by the Conservative majority in that committee not to hear Professor Irwin Kotler, past President of the Canadian Jewish Congress, and representatives of the Network Canadian Jewish Student Movement? These two groups were recommended by the steering committee to the standing committee as witnesses to be heard on the matter of amendments to the Criminal Code Bill before the committee, dealing with the issue of trying war criminals in Canada for activities which had taken place outside the country.

February 7, 1985
Pension Act


John Carnell Crosbie: Mr. Speaker, the hon. gentleman is not properly representing what happened in that committee. The committee has not decided not to hear Professor Kotler and to deal with this issue. The committee has decided, as guided by the law clerk of the committee, that the matter is not relevant while considering the present Criminal Code amendments before the committee. It is going to hear interest groups, Professor Kotler and whoever else wants to be heard later, I think on some date in March.
I am astounded at this continous sniping partisanship which is a part of the Liberal approach to our trying to deal with this problem, which they failed to deal with for the last 40 years. It is a partisan, narrow attempt to get some little advantage, as they perceive it, for their Party by asking such silly and partisan questions in such an unfair, jejune and juvenile manner.


PETITIONS
Mr. Andrew Witer (Parkdale-High Park):: Mr. Speaker, I have the honour of presenting to the House a petition on behalf of the Canadian Ethnocultural Council. The petitioners call upon Parliament to enact employment equity and contract compliance legislation on an urgent basis and urge that employment equity planning in departments begin without delay, and that Parliament support the Abella recommendation for language training and those recommendations directed at the other designated groups, women, the handicapped and the native people.



PENSION ACT


Hon. George Hees (Minister of Veterans Affairs) moved: for leave to introduce Bill C-28, an Act to Amend the Pension Act.


Mr. Speaker:: Shall the Hon. Member have leave to introduce the Bill?


Some Hon. Members:: Agreed.


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

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. Ron Stewart (Parliamentary Secretary to Minister of Public Works):: Mr. Speaker, the following question will be answered today: No. 198.


Mr. Stackhouse: In the past fiscal year, have any loans to foreign governments been converted to grants and, if so, what was the total amount?


Barbara Jean McDougall: There were no cases of loans to foreign governments being converted to grants in the last Fiscal year.


Don Boudria: Mr. Speaker, I rise on a point of order. On December 5 I placed a question on the Order Paper asking very specifically what contracts had been let in the riding of Manicouagan since the election. One would think the Government would at least know what it was doing in the riding of the Prime Minister (Mr. Mulroney) and would have the decency to respond after two months. I wonder if you, Mr. Speaker, could assist Members in trying to get some answers from this Government, which is just not very forthcoming.


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


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


Some Hon. Members:: Agreed.



GOVERNMENT ORDERS


[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.
Mr. Speaker:: At this point I am advised that the Hon. Member for Glengarry-Prescott-Russell (Mr. Boudria) had completed his speech but that the 10 minute period for questions and comments remains.


Mr. Lewis:: Mr. Speaker, I listened with great interest to the comments of the Hon. Member for Glengarry-Prescott-Russell (Mr. Boudria). He rambled quite a bit, but he did touch on one very important point. I want to ask him a question since he is obviously very knowledgeable about these kinds of things. He will know that for some years the Small Business Develop-
February 7, 1985

ment Bank has caused problems in business circles. When a small business gets too big, it has to transfer its accounts to the Federal Business Development Bank, and when a big business gets too small, it has to transfer from the Federal Business Development Bank to the Small Business Development Bank. Has the Member given any consideration to an amalgmation of the Small Business Development Bank and the Federal Business Development Bank?


Don Boudria: Mr. Speaker, as interesting as this question may be, it has nothing to do with the Bill before us, as you have probably recognized, nor does it have anything to do with what I said in my remarks this morning.


Douglas Grinslade Lewis: Mr. Speaker, the reason I raised the question was that the Hon. Member mentioned the Small Business Development Bank in his remarks. Did the Member realize there is no Small Business Development Bank?


Don Boudria: No, Mr. Speaker. I talked about the Federal Business Development Bank and the campaign promises in the document which I have in my hand. It came from the Prime Minister's Office. I would assume that the information in it has at least some semblance of truth in view of the fact that it comes from his own Leader's office.


John Kenneth Gormley: Mr. Speaker, many of us sat through the Hon. Member's speech this morning and heard him allude to the fact, as improbable and impossible as it would be, that this Government would somehow be reneging on its promises to business. As this Government is truly the representative Party in Canada, and I think that is beyond dispute, I would like to ask the member of a political Party which brought us FIRA, the National Energy Program, and the untold havoc they created, 22 per cent interest rates, 12 per cent inflation, an Income Tax Act that went to over 1,000 pages, excessive government regulations, 1.5 million people unemployed and other such economic indicators, if he can claim in fact any sort of commitment as a Liberal to small business or, in this case, the amendment to the Small Businesses Loans Act.


Don Boudria: Mr. Speaker, I am proud to answer the Hon. Member's question. I can certainly say that the Liberal Party has indeed always been committed to small business. I will even take this opportunity to provide you with a few examples.
First of all, in August 1980, the government established a sub-contracting promotion program for Canadian corporations. It also reduced the tax rates applicable to small businesses. These steps were initiated by a Liberal government in 1972 and improved upon in 1981. The Liberal Party also created the small business advisory council in 1982. Moreover, there have been small business investment grants provided for in the June 1982 Budget which reduced interest rates by as much as 4 percentage points. There has been also the 6 and 5 per cent committee for small businesses. The April 1983 budget also established an investment tax credit.
Small Businesses Loans Act
Mr. Speaker, I believe my hon. colleague asked me the following questions: What action has the Liberal party ever taken for, or what commitment has it ever made to small business? I am in the process of answering his questions. And as you certainly realize, Mr. Speaker, I will need a long time to do so, because the Liberal Party has done quite a lot for small business. I continue.
The April 1983 budget provided also for a research and development tax credit, as well as the forward and backward averaging of losses. There have been also the Export Development Fund, the sharing of labour costs, the amendment to the Federal Development Bank, and I am now coming to the February 1984 budget and all the measures that were taken at that time to improve the small businesses' lot. There have been the streamlining of the tax system for small businesses, a more equitable administration of taxation, the profit sharing program, the changes to the sales tax and, finally, the international trade assistance fund.
Yes, Mr. Speaker, in reply to my hon. colleague, I can say that the Liberal Party has done quite a lot for small business, and as soon as we return to power, we will continue to demonstrate to the Canadian people our commitment to small business.


The Acting Speaker (Mr. Paproski):: Questions! The Hon. Member for Gatineau (Mrs. Mailly) has the floor.


Claudy Mailly: Yes, I would like to make one comment in particular, Mr. Speaker.
In his review, the Hon. Member for Glengarry-Prescott-Russell (Mr. Boudria) overlooked the MacEachen budget which almost destroyed private enterprise. He also neglected to mention the legal action taken by the Department of National Revenue which involved putting a freeze on bank accounts of small businesses. He also forgot to mention the pressure of interest rates as high as 23 per cent felt by small businesses, especially during the summer of 1982. He also neglected to mention the fact that the small business development bond was a measure introduced by the Clark Government in 1979.
We have been in power only four months and we have achieved two very important goals. We introduced a measure which has improved the situation under the previous Government with respect to assistance to widows and widowers and old age security pensions. We also introduced the small business development bond which the Liberal Government, in an absent-minded moment of wisdom-and there certainly was not much of that during its 1980 mandate-included in the MacEachen budget, the only measure that was not changed, Mr. Speaker. There were forty-one measures in the MacEachen budget, and I think thirty-five were changed because

February 7, 1985
Small Businesses Loans Act
they turned out to be harmful, not only to small business but also to the average Canadian.
I therefore have a question for the Hon. Member for Glengarry-Prescott-Russell (Mr. Boudria).
He was employed by the House of Commons under the previous Government. I remember him as the friend of the average Canadian. This was a man who was interested in the average person and who showed concern and sympathized with other people's problems. I think that what I want to say should be seen as a comment rather than a question. I would like to say to the Hon. Member that we admire him for what he is today, a Member of this House. We share his concern as a Member of Parliament who wants to represent his constituents, and we like to see his enthusiasm for defending his constituents. However, we are disappointed that he should be using methods that are perhaps not quite as honest as those he used to help his fellow Canadians when he was an employee of the House of Commons. For instance, at the very beginning of our mandate, in September, he asked this Government for a plaque to commemorate employees of the House of Commons who were killed in the Second World War, and we helped him in this endeavour. I remember that I offered him my support. So I just want to give him some friendly advice, as a fellow Member.
We want to improve the situation of small businesses because it is a sector that will have generated at least seventy per cent of employment over the last five years including this year. It was the only sector to do so because big corporations are struggling with spending problems and lack of capital. They have suffered tremendously as a result of the federal deficit-a deficit we inherited from the previous Government-which made it impossible for them to raise capital on Canadian money markets and forced large corporations to borrow abroad, with a weakened dollar. Government and business were facing major problems. Small businesses were-


The Acting Speaker (Mr. Paproski):: I am sorry to interrupt the Hon. Member but the time for questions and comments has expired. Debate. The Hon. Member for Kamloops-Shus-wap (Mr. Riis).


Nelson Andrew Riis: Mr. Speaker, it is a real pleasure to have the opportunity to rise this afternoon to make some comments regarding the Bill before us, a Bill to amend the Small Businesses Loans Act of Canada. At second reading, it is customary that we discuss the Bill in principle only, and that is what I will do this afternoon rather than look at the various parts of the Bill and deal with specific amendments to it. That will be done in committee.
I would like to say at the outset that the New Democratic Party feels that this particular Bill is an appropriate one and that it will provide some assistance to the small business community of Canada. We will support it in principle and we
will have a number of comments to make and amendments to put forward when it reaches committee stage.
I would like to indicate first that we are talking about what is possibly one of the most important topics that we could be discussing in the House of Commons. It is important in the sense that we are talking about 900,000 businesses in Canada that are referred to as small businesses and are defined as small businesses by the Government of Canada. These businesses are 100 per cent Canadian-owned. Not only are these companies 100 per cent Canadian-owned, their commitment is 100 per cent to Canada. In fact, their commitment is usually 100 per cent to the community in which they are located. These are the businesses that cater to the minor hockey teams and various community organizations. These are the firms that source their products locally wherever possible. These are the firms that are represented on the local chambers of commerce and the local business associations.
The small business sector is the sector of our economy that is committed to Canada and to Canadians. This is also the sector that has created most of the new jobs which have been created in this country in the last five or six years. In excess of 70 per cent of all the jobs created in the private sector have come from the small business sector. I suspect that in the next decade, a full 90 per cent or more of the new jobs created in the private sector in Canada will come from the small businesses of Canada. In terms of finding ways to put 1.5 million people back to work, it is the small business sector to which we must look for that action. The small business sector must be assisted, encouraged and nurtured in every way possible to enable it to grow, to expand and to create those much needed jobs.
I think it is important that when we are talking about businesses that are 100 per cent Canadian, we are also talking about businesses that do the majority of the research and development that has occurred in Canada over the last few years. Not surprisingly, that research and development has come not from the large corporate sector but indeed from the small business sector. It is within the small and medium-sized business sector of Canada that the research and development through to production is being carried out. It is not being carried out in the large corporate sector because most of the large companies are branch plants by definition and their research and development is done back home at the parent company in a country other than Canada.
The important thing is that the small business community of Canada represents the dreams and aspirations of Canadians everywhere. In the large metropolitan areas, in the small cities, in the small communities and indeed in the rural areas, we find that small business person. I say "small business person" because all too often we refer to small business men. We do not mean short business men. However, today, most of the new businesses being created in Canada are being created by women who have entrepreneurial aspirations, dreams and ideas about opening up new ventures. They also have experience. Indeed, not only are most of the new businesses in Canada created by women but more of the successful small
February 7, 1985

businesses in Canada are headed by women. Interestingly, it has become clear that women are the successful business persons of the country and form the sector in which most of the energy is being focused in terms of creating new business opportunities.
When we talk about the small business community, we talk about the very life-blood of the community itself. I do not suppose that there are many people in the House of Commons today or many people who are watching the proceedings today who have not opened up a small business themselves in the past, who are in the process of doing so, or who dreamed of that day when they may open up their own independent business. It is part of the fabric of Canadian society. It is what built Canada.
I would totally eliminate what Liberal Members have said about small business in this debate. If we looked at what Liberal Governments did year after year, decade after decade, to support and encourage small business and the number of programs which were designed to cater to business, we would realize that there were only three programs out of 200 which were designed to help small business. The remaining programs were designed to help major business. It is clear by that where the Liberal priority has been.
During the past year, something in the neighbourhood of $30 billion was lost to the federal Treasury as a result of business tax breaks. We could talk about whether or not tax breaks are serving their appropriate role, but nevertheless $30 billion was spent to provide incentives to business. Of that amount, 80 per cent goes to the large corporate sector, which represents 1 per cent of all the businesses in Canada. That 1 per cent receives 80 per cent of the corporate tax breaks. So if we talk about the efforts of Liberal Governments it is clear where the priorities have been.
I suspect it is too early to criticize the present Government about the extent to which it will support the small business sector. However, I am concerned that the first major piece of legislation which was introduced by the new Government was the Investment Canada Bill. The Government told outside investors and foreign companies that Canada was open for business, even though Canada has more foreign control and ownership in its economy than any industrialized country in the world. That means that the large corporate institutions will move into Canada and provide more competition to existing small business firms. We could debate the merits of that and whether more of our economic future will be determined in Hong Kong, Houston, Texas, and New York. We could also debate the fact that, as a result of more foreign control and investment in our economy, more sourcing of goods and supplies will come from outside Canada. Small business in Canada buys locally and inevitably Canadian, but multinational or transnational corporations which operate in Canada by definition source from their parent companies in other lands or where their major interests lie, which, of course, is not Canada. The Investment Canada legislation indicates where
Small Businesses Loans Act
the priorities of this Government lie, and it would seem that once again those priorities are not necessarily with the small business sector. However, as a caveat, I would suggest that it is still too early to say.
There is another indicator about which I am very concerned. If we want to provide support and assistance to small business, the most appropriate action the Government could take would be to reduce interest rates. It should forget the dozens of programs and the tax incentives which are of little value to the small business sector. After all, we could throw all the tax incentives we wanted at that sector, but for the first few years of a new venture no profits are realized. We want to encourage the new small business sector and the creative aspect of business. If small businesses do not make any profits, tax incentives will be of little interest to them. However, I suspect that the Government will provide tax incentives to those small firms which cannot use them.
Of course, the banks and the large corporate sector can use those incentives. Today it was indicated that oil company profits are up 50 per cent and that the banks had an 18 per cent return of equity this year. They can use the tax breaks, but the small business sector will not be able to. The way to assist the small business sector is through interest rates.
Today we witnessed a very disturbing fact. At two o'clock it was announced that interest rates in Canada had jumped substantially for the second week in a row. I suspect there is not an honest financial analyst in the country who would say that interest rates are not likely to continue to increase. Not only are increasing interest rates the sort of thing which will dampen small business expansion in the country, but it is the uncertainty of those interest rates that will have a major effect. This Thursday interest rates are a little over 10 per cent. What will the rates the next Thursday, five Thursdays from now or 16 Thursdays from now? It is that uncertainty which makes it difficult-and I suspect some would say impossible-for most small businesses to begin or to expand. If we are to assist the small business community, we must have stability in order that people can predict with some certainty what will happen in the next few months. If a small entrepreneur has no idea what the interest rates will be next Thursday, let alone six months from now, it makes it impossible to make predictions and do the necessary financial planning.
Other countries assist the small business community, and particularly the small businesses which are just starting up. I think it is fair to say that we do virtually nothing. Granted, we are talking about the Small Businesses Loans Act and the fact that the Government will provide more money. However, out of the 50,000 new businesses which started last year and the
900,000	businesses which already exist, only 25,000 made use of the Act. That is a small but important proportion.
However, the point is, are any changes really being made? We are not really making any big changes but two small changes are being made. One is that the government guarantee will be reduced from 100 per cent to 90 per cent. Over the years this legislation, which was introduced by the Liberal

February 7, 1985
Small Businesses Loans Act
Government, has been a money-making machine for the banks of Canada. The previous Government allowed up to $100,000 to lent to anyone who was starting a business and guaranteed that the bank would get paid. It did not matter if it was the goofiest idea in the world or if there had been any past experience or confidence in the business, the lending institution received a 100 per cent guarantee from the Government. We can imagine what the banks must think of us as legislators. I sometimes feel that we give a lot to the banks, but I suspect that if they were to pick a target, they would say that this is an I unbelievable piece of legislation because the Government guarantees 100 per cent of any loan which is written under the Act. Obviously, it is something which had to be changed. Bringing the guarantee down to 90 per cent may be the proper route, but it could also be brought down to 80 per cent or 70 per cent. The banks must be assured that the Government is paying attention to a particular small business and that it will be making some effort to encourage and advise that small business on financial matters, but, with a 100 per cent guarantee, it does not matter if the business fails because the banks will get back the money.
Another aspect of the Bill which concerns me is the imposition of the user fee of 1 per cent which we are asking banks to pay. I am not suggesting that we should not ask the banks to pay that 1 per cent. The Canadian Federation of Independent Business and the Canadian Organization of Small Business have both said that the banks should not be asked to pay that. They feel it is unfair. If it is not enticing for the banks to assist small business, the banks will not do so. That is what those organizations are saying.
I think it is time that Parliament sent a very clear message to the banks of Canada telling them that they have a responsibility as privileged financial institutions which are operating under the Bank Act. Our banking system is such that five large banks control 90 per cent of the banking in the country. I would not say that it is a cartel, but it is close to that. We should be telling the Royal Bank of Canada and the Canadian Bank of Commerce, and so on, that we expect them to set aside a portion of their loan money for the small business sector. I think it is time that we as a Parliament said to the banks and trust companies that we expect them to assist that growing small business sector. This is where the jobs are going to be created and this is where we should expect them to co-operate. Other countries do that, Mr. Speaker. Other countries tell their banks that they must set aside money at an 8 per cent guaranteed interest rate for assistance to family businesses over a 25-year period, and they must do that for family homes as well and in some cases for small family farms. And the banks do it, Mr. Speaker, and they still do very well. It is time that Canadians started to make some of these same kinds of demands on our chartered banks.
West Germany, for example, Mr. Speaker, in order to assist its small businesses which are just starting out but are viable, provides for the first few years a subsidy of between 6 per cent and 15 per cent of the total investment. It gives an outright
subsidy for the first few years in order to allow the small businesses to get their operations underway. In New Zealand, the Government provides interest-free loans for each business for every job which is created. If a business creates 15 jobs or 35 jobs, it receives interest-free money to reflect that. In Ireland, low interest financing is available. In Denmark, cash grants of up to 25 per cent of the initial startup cost is available, plus 15-year fixed interest loans. Japan puts out a book two inches thick listing all the ways in which it assists small businesses. Japan assists small businesses by having an interest rate set at 5 per cent. Japan, one of the countries in the world which is most tied in to the international money market, says, "We can have a 5 per cent interest rate because that is what is going to stimulate our economy and that is what is going to motivate those people who saved to invest their capital in the small business sector and elsewhere". It is time that we started to lower interest rates in order to assist the small business sector. It is time that we altered the Bank Act to make it very clear to the banks that we expect them to assist the small business sector in a direct way by fixed low interest small business loans. It is time that this Government introduced by buy-Canada policy so that when government supply and services are being sourced in this country, they are being sourced from Canadian suppliers first. I am suggesting that we have to be competitive in terms of pricing but we must, as our first priority, assist our own businesses.
I would also like to make the point that this should be developed equally across Canada. When we look at where government sourcing takes place today, we find that the overwhelming sourcing takes place in central Canada. Ten per cent of supply and services is sourced in western Canada. That is a disgrace, Mr. Speaker. Less than 10 per cent is sourced from Atlantic Canada. Those are the two parts of Canada where we need to do everything possible in order to get their small businesses back on track. Government sourcing from those two areas would certainly be an appropriate step and one which the Government could introduce almost immediately.
We must look at a variety of ways to assist the small business sector. Something that we could do is to provide some seed money, some small financing to those business groups which are working together in an effort to combine their creative and manufacturing talents and their efforts in terms of seeking out new markets and developing new products. I refer as an example to a group in my own community, the Thompson-Nicola Manufacturing Association, a group of manufacturers which came together as an association to find out, by combining their efforts, talents and the equipment available, how much more could be produced and how many more markets they could access. It is that kind of co-operation, Mr. Speaker, that deserves assistance.


The Acting Speaker (Mr. Paproski):: I regret, but the Hon. Member's time has expired.
February 7, 1985



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mr. Paproski):: 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 Ottawa-Vanier (Mr. Gauthier)-Public Service-Auditor General's report-Job classifications, (b) Contract negotiations; the Hon. Member for Mount Royal (Mrs. Finestone)-Employment-Summer jobs for students, (b) Request for announcement of plans; and the Hon. Member for Swift Current-Maple Creek (Mr. Wilson)-Income Tax Act-Provision affecting land purchases.



GOVERNMENT ORDERS

[Stage Direction]
[ Translation]

[Stage Direction]
The House resumed consideration of the motion of Mr. Stevens (York-Peel) 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.
Alfonso Gagliano: Mr. Speaker, I would like to ask a question to the Hon. Member which might make him more realistic. I can understand the problems with the banks, but unfortunately, we still do not control the banks and it is up to them to decide whether a loan will be approved or not.
If my hon. friend looks at the statistics collected up to now, he will see that the majority of jobs have been created by small businesses. I think that everyone will agree with that. This morning, everyone said that, during the last few years, 80 or 90 per cent of all jobs created were in the small business sector.
If we look at the statistics, as I understand what the Hon. Member was saying, 50 per cent of all small businesses have used the programs offered under the Small Businesses Loans Act. If we look at the figures, as I was saying, we can see that these are all new businesses. Naturally, the first time a Canadian businessman goes to the bank and asks for a loan, he does not have any experience. It is therefore very difficult for the banks to give him a loan.
Under the Small Businesses Loans Act, the Government guarantees 100 per cent of the loans, which will make the bank more willing to grant a loan to newcomers in business than if, as provided by this bill, the amount of the guarantee goes
Small Businesses Loans Act
down to 90 per cent, in addition to the 1 per cent user fees. In practice, I can assure you that many banks will refuse loans, which means that we shall lose jobs because, usually, every new business creates four or five new jobs.


Nelson Andrew Riis: Mr. Speaker, I am not certain I understood the exact question. I believe the Hon. Member was saying that the Small Businesses Loans Act does enable a new firm to obtain money because of the guarantee, and he asked if that was a good thing. I would have to say, of course, that it is. That is why we are supporting this particular Bill going into committee. However, I believe 100 per cent is a little too much to ask while expecting the banks not to get involved in any serious way themselves. A 90 per cent guarantee in this day and age, I suspect, is about as much as we can expect.
But I do want to say, Mr. Speaker, that the problem I have with the Small Businesses Loans Act is that it is the prime rate plus 1 per cent. Interest rates are going up again. They are higher today than they were a year ago. I think we need to make that point. A year ago today, interest rates were lower in Canada than they are now, and now they are on an upward track. Let us hope that this does not continue, but as I said earlier, all the financial analysts suggest that this is what is going to happen. The prime rate today, Mr. Speaker, plus 1 per cent works out to something like 12.5 per cent. A small business which is expected to pay back a loan at 12 per cent, 13 per cent, 14 per cent or 15 per cent is going to have difficulty doing so. As a matter of fact, it may even be an impossibility. So while it is a step in the right direction, I must say that it is a tiny step. Certainly, much more must be done in terms of changing the Bank Act to require banks and other financial institutions to set aside a certain portion of their loan portfolio for small businesses at a lower rate than prime. That should be an expectation and a requirement under the Bank Act. Perhaps a step in that direction would be for the Minister of Finance (Mr. Wilson) to sit down with the chief executive officers of Canada's banks and ask them at least to shoulder their responsibility during these difficult times and encourage and nurture the small business community.


Frederick James (Jim) Hawkes: Mr. Speaker, it is always a joy to listen to the Hon. Member for Kamloops-Shuswap (Mr. Riis) speak on behalf of the New Democratic Party. Today he spoke some truth when he indicated that the most significant thing which could happen for small business in this country is a low interest rate. I am pleased to see that a sense of enlightenment has come to him and to his caucus. I wonder whether or not the Hon. Member is signalling to the House, on behalf of his Party, the fact that in the future we can anticipate the same support for the Government's effort to reduce its borrowing requirements as we are receiving today for this particular piece of legislation? This is a very significant factor in interest rates in this country. Will his Party support our efforts to reduce those borrowing requirements? Likewise, will his Party support our initiatives which are designed to bring into this country from abroad equity capital as well as skilled entre-

February 7, 1985
Small Businesses Loans Act
preneurs? By doing that, we can signficantly reduce interest rates and create jobs. Can we expect that kind of support from his Party? Is his desire to lower interest rates really genuine?


Nelson Andrew Riis: Mr. Speaker, we say those are our intentions. We are the only political Party for many years which has said that we should direct the Governor of the Bank of Canada to start enacting a made-in-Canada interest rate policy and start moving interest rates down. We are the only political Party which has said that that ought to be the case. But what we do not support is the Governor of the Bank of Canada, today and every other day, going out and spending millions, nay, hundreds of millions of dollars in some weeks to buy our own currency to keep interest rates up. That we consider to be folly.
I respect the Hon. Member's question and I understand the point he is making, but I want to say to him that we in the NDP do not feel it is necessary to go to Japan, Europe, the United States or Southeast Asia to find capital and creativity and entrepreneurship to develop the Canadian economy. We are convinced it can be done right here in Canada. We are convinced that we have enough capital to start. We have the creativity, energy, talents and resources right here in this country. What we lack is the will. As long as Members opposite can send out a signal to Canadians that they do not have enough faith in Canadians so that we have to bring in foreign citizens to solve these economic problems, Canadians are going to be reluctant to take this Government into their confidence.
Interest rates at present levels are an incentive for Canadians and others to save. When you have a choice to invest in a secure term deposit and obtain 12 per cent to 15 per cent return with no effort, no work, no worry and no risk, or take the same money and put it into a business venture in Canada today, what would you do as a sensible investor, Mr. Speaker? With interest rates as high as they are, savings are encouraged and the entrepreneurial spirit, willingness and ability of people to invest is discouraged. So we say, let us have confidence in Canada. The best way to do that is to stop looking outside Canada for answers and take steps to mobilize the capital we have in our country.


The Acting Speaker (Mr. Paproski):: Questions and comments are now over. The Hon. Member for Guelph (Mr. Winegard).


Mr. William C. Winegard (Guelph):: Mr. Speaker, I wish to speak about small businesses in relation with Bill C-23. [English]
However, before beginning my introductory remarks, may I make some comments on the speech this morning made by the Hon. Member for Glengarry-Prescott-Russell (Mr. Boudria). I enjoyed the slap and dash and flash of that speech. It reminded me a little bit of the hockey game last night: lots of fire and flash, but unfortunately they kept losing sight of the goal.


Ms. Copps:: But who has the trophy?


William C. Winegard: Since I have now heard, as usual, from the Hon. Member for Hamilton East (Ms. Copps), may I say on this particular subject, Mr. Speaker, that I hope she will immediately move into a small business enterprise because her salary from this Chamber will certainly not pay the hospital bills to which I intend to subject her for falling on my shoulder last night.
This area of our economy, namely small business, is one that former Liberal Governments have never really understood. It is an area, as we heard earlier today, which has been hampered by red tape, excessive government interference and a tax system that even the Ministry of National Revenue did not understand. The current Government is taking and will continue to take all the steps necessary to ensure that small business is able to generate the jobs so badly needed in this country. This Government understands that private enterprise creates wealth and jobs, not the Government. When small business flourishes, Canada flourishes. What this country needs is more small business people making more money through their own endeavours and enjoying the fruits of their labour as they bring Canada back to prosperity.
Things have changed in the last 30 or 40 years. There was a time when people did not need so much government help in starting a business. I would like to relate my personal experiences in small business and how things have changed. Immediately after World War II, my father, my brother and I began a small business, which still continues. When we opened that business in 1945, we had some veterans' allowances to contribute, but the most important thing is that we opened with 500 gallons of gasoline-the oil companies were prepared to give you credit in those days-one tire, I think one patching kit and three orange crates for chairs. Now you know and I know, Mr. Speaker, that we cannot start a business like that today. It costs you hundreds of thousands of dollars to move into such an automobile business because you need to have a large stock of parts, the best equipment and so on. It is very difficult for someone in the early stages of setting up a business to accumulate that kind of capital. Indeed, it is difficult for someone to go to the bank without any collateral and seek that kind of money. They must have an ironclad opportunity.
Bill C-23, this Act to amend the Small Businesses Loans Act, as the Minister of Regional Industrial Expansion (Mr. Stevens) said just the other day, demonstrates the federal Government's recognition that small business is the engine of growth and that the changes we propose, following consultation on the future of the Small Businesses Loans Act with business, are the first results of that continuing process of consultation aimed at strengthening the small business sector and, as I said earlier, thus strengthening the Canadian economy.
Who is eligible? When I think of small business, I think immediately of the service industries, the retail industry, small manufacturing. Of course, they are the ones that are eligible.
February 7, 1985

The purpose of this Act is to provide for the purchase of equipment, which is so expensive and difficult to come by, the improvement or modernization of equipment and plants themselves, and even the purchase or construction of premises. Those are all necessary to run a small business today. The last report on the Small Business Loans Act indicates that 40 per cent of the authorized amount was taken up by the service industries, 26 per cent was taken up by the retail industry, and 10 per cent was taken up by the manufacturing industry. Others were, of course, significantly lower. That may be the only thing that one can credit the Liberal Government for in terms of small business. The rest of its policies have been a disaster. The group which I have just named will strengthen the economy.
This Bill increases the existing two year loan ceiling by $300 million to $1.8 billion. To a Conservative, $1.8 billion is a lot of money. No further proof is needed of the success of and need for this program than the response of business people. Quick passage of this Bill will provide people with the funds they need to develop the engine of growth in this country.
I would like to reiterate the remarks made by the Hon. Minister of State for Small Business (Mr. Bissonnette). He said that the efficient private sector delivery of the Small Business Loans Act is one of its most attractive features. The program's simplicity of delivery and lack of red tape have contributed greatly to its popularity with lenders and borrowers alike. Government helps the private sector to help itself. We should have had that kind of philosophy for the last 20 years.
The interest rate on these loans is reasonable in today's terms. The sharing of the risk by the financial institutions is also an important element of the modified program. The lenders are part of our free enterprise system. It is appropriate that they share the risks as well as the benefits of our system.
I have no quarrel with the definition of small business in this Bill. I think that the eligibility limit of under $2 million is a good compromise. On average, the larger corporations have more resources, both financial and human, to use to find ways to finance their operations. Small businesses, however, are often owned by a family or a small group of people whose expertise is in operating the business rather than in trying to find money to keep it going. The Government is prepared to help small business people get a start, to modernize their plants, and to obtain better equipment in order to compete. When they work, the country works. I am pleased to support this Bill, Mr. Speaker, because it is one way to help return the country to prosperity.


Nelson Andrew Riis: Mr. Speaker, I listened with a lot of interest to the points made by the Hon. Member. If he is really interested in helping small business, would it not be most appropriate to take action to reduce interest rates in the country and to establish a made-in-Canada interest rate policy as opposed to a made-in-America interest rate policy?
Small Businesses Loans Act


William C. Winegard: Mr. Speaker, I think we are taking action. We have had an economic statement, which will indeed revive the spirit of the country. We can expect a budget in April, which I hope will signal once again that we mean business in terms of reducing government expenditures so that we do not borrow so much that our interest rates will go up. We need to turn business loose, particularly small business. This particular Act is a small measure. As the Hon. Member said in his speech, there is much more we can do and I hope we will do it.


Alfonso Gagliano: Mr. Speaker, I would like to thank the Hon. Member for giving credit to the Liberal Government. This morning I said exactly what the Hon. Member has said now. I asked the Minister of State for Small Business (Mr. Bissonnette) whether he would split the Bill in two in order to allow us to give speedy passage to the part to which the Hon. Member referred.
What is the Hon. Member's opinion of the 90-10 per cent ratio guaranteed between banks and the Government and the 1 per cent user fee? Does he think that these two amendments will reduce the lending activity between banks and small businesses?


William C. Winegard: Mr. Speaker, I do not believe the fee will reduce the lending activity at all. That kind of deterrent is not going to be very significant when money is available. I certainly do approve of the 90-10 split. In fact, I might have gone even further because I believe that the lending institutions should accept some of the responsibility and risk in return for the benefits they enjoy in this free enterprise system.


Mr. Baker:: Mr. Speaker, I have a very short question relating to the answer which the Hon. Member for Guelph (Mr. Winegard) gave about the 90-10 split. Could he elaborate on his answer? The previous speaker for the New Democratic Party said that he is in agreement with that because the banks should be taking some of the risk. Two organizations representing the small business community in Canada have voiced support for that particular measure. I cannot understand why everyone who has spoken on the Bill supports this measure. Would this not cause the banks to have a second look at that loan? Would this not discourage the banks from actually giving the loan? Would this not make them think twice, as the fee would make them think twice? Why are these organizations, representing small business in Canada, saying it should be more difficult for the small businessman to get a loan? I do not understand it.


William C. Winegard: Mr. Speaker, I do not believe it will be more difficult for the small businessman to get a loan. The banks in this country, not as much as the banks in the United States, I grant you, are used to taking risks. They need to take more. I am delighted that even 10 per cent of this risk will now reside with the lending institutions of this country. I would have gone further but I am at least content with that, unlike the previous Bill which was for 100 per cent and you had Government once again believing that it must do everything.

February 7, 1985
Small Businesses Loans Act


Mr. Hicks:: Mr. Speaker, I discovered that the Hon. Member for Guelph (Mr. Winegard) and myself have a great deal in common. He and his father went into the garage business many years ago. My father and I did the same. I wish to make it clear to him, however, that his operation was extremely luxurious in comparison with ours. We could not afford the orange crates.


Some Hon. Members:: Oh, oh!


Henry Davies Hicks: The specifics of the Bill that are being debated probably will not alone create a great deal of jobs. The specifics of any proposal being put forth by this Government will probably not create, in themselves, a specific number of jobs.


Nelson Andrew Riis: Lower interest rates would.


Henry Davies Hicks: What I see happening is confidence, a great deal of confidence, being instilled across the country, because actions such as this are contagious. Does the Hon. Member agree with what I have just said?


William C. Winegard: Mr. Speaker, I never disagree with the Hon. Member who has just spoken. I have to tell him that the orange crates were given to us. I think my younger brother had some kind of an in with the grocery store at the time.
As always, I am delighted to find that the Hon. Member and I are in complete agreement with what has to be done in this country.


Mr. McKenzie:: Is there still time for a question, Mr. Speaker?


The Acting Speaker (Mr. Paproski):: Yes, a short one.


A. Daniel McKenzie: The Hon. Member mentioned that years ago he was able to operate and survive because we had stability in the country, Mr. Speaker. I remember at that time that interest rates were 3 per cent and 4 per cent. We lost all stability in this country when we had the Liberal-NDP coalition from 1972 to 1974.


Nelson Andrew Riis: What a confidence builder! You keep whining and whining.


A. Daniel McKenzie: In complete co-operation with the New Democratic Party, the Liberal Government of that day inherited a $673 million surplus and turned it into a $4 billion deficit.


Nelson Andrew Riis: You never say anything positive.


A. Daniel McKenzie: And the NDP boasts that minority governments-


Sheila Maureen Copps: There he goes.


Nelson Andrew Riis: Do we have to have more?


The Acting Speaker (Mr. Paproski):: Order, please. If the Hon. Member wants to ask a question, I will try to recognize
him, but now the Hon. Member for Winnipeg-Assiniboine has the floor.


A. Daniel McKenzie: I realize the truth hurts, Mr. Speaker, only too well.


Nelson Andrew Riis: There he goes again. Do you eat nails for breakfast?


Margaret Anne Mitchell: No, I think it is garbage.


A. Daniel McKenzie: Would the Hon. Member for Guelph (Mr. Winegard) agree with me that this enormous debt which the Liberal-NDP coalition ran up in that period when our debt payments ran at something like 28.4 billion, which was an increase of 50 per cent in that period, was the start of the economic chaos in this country and the destruction of the free enterprise system? It was in that period with that coalition that the downfall of this country started. We had increases in inflation and increases in interest rates. Would the Hon. Member agree or disagree with me on that?


Nelson Andrew Riis: Are you bringing it up again?


A. Daniel McKenzie: I will bring it up every time, you phoney. We have had enough of that b.s.


Some Hon. Members:: Oh, oh!


The Acting Speaker (Mr. Paproski):: The Hon. Member for Guelph for a very short reply.


William C. Winegard: How could I disagree with such wisdom, Mr. Speaker?


The Acting Speaker (Mr. Paproski):: The time for questions and comments has now been terminated. Is the Hon. Member for Hamilton East rising on debate?


Sheila Maureen Copps: Mr. Speaker, I rise on a point of order. I understood the Hon. Member for Winnipeg-Assiniboine (Mr. McKenzie) to say he had had enough of that. We had been lectured yesterday-


The Acting Speaker (Mr. Paproski):: Order, please.


Sheila Maureen Copps: We had been lectured yesterday by the House Leader on the government side-


The Acting Speaker (Mr. Paproski):: Order, please.


Sheila Maureen Copps: -about civility. It seems to me-


The Acting Speaker (Mr. Paproski):: Order, please. We are now on debate. Is the Hon. Member for Hamilton East rising to debate this Bill?


Sheila Maureen Copps: Yes, Mr. Speaker. It is oftentimes said that to the victor go the spoils. I am sure a number of the government Members have been gloating over that particular premise since September 4. I just want to respond very briefly to the comments made by the very able hockey player from the riding of Guelph by saying that
February 7, 1985

although the Government won, it was the Opposition that took advantage of the spoils. We will be happy to present the trophy to its rightful owners in the House tomorrow. The trophy is currently in the possession of the opposition Parties. To the victors did not go the spoils. I know that the medical bills-


Some Hon. Members:: Oh, oh!


Sheila Maureen Copps: Those of you who did not participate will know that we all had a lot of fun last night in a very non-partisan way, and I am sure we would love to see that spirit flow over into the House today.


Some Hon. Members:: Oh, oh!


Sheila Maureen Copps: I know that the medical bills that I will be receiving from the Member for Guelph (Mr. Winegard) will be very high. This Government has closed its eyes, as have the provinces across this country, to extra billing. Knowing the number of opted-out physicians in the City of Guelph, I am sure the opted-out bill that I am going to receive will be very high, but it will be paid accordingly.
On a serious note, Mr. Speaker, I was intrigued by the comments of the Member for Winnipeg-Assiniboine (Mr. McKenzie) who pointed to the demise of the modern economic system as dating back to 1972. First, I think he gave us a decade of good government on the Liberal side of the House, and for recognizing that I would like to congratulate him. I would like to make sure he stands up and clarifies that in the House. Second, and it is a point that I would like to relate specifically to this Bill, is his comment regarding the alleged Liberal-NDP coalition. We have heard the comments from the spokesperson for the New Democratic Party with respect to this Bill. They follow very closely along the position taken by the Government. I refer to the decision of the Government to introduce a Bill that will force small businesses into a position of not being guaranteed 100 per cent but simply 90 per cent liability. Anybody who has been in business will know that one of the greatest difficulties in establishing and maintaining a business is the problem of venture capital and cash flow. It seems to me that in this particular measure the Government is not going to back up small businesses 100 per cent. The Government is saying that it will only back them up 90 per cent. I have seen friends in my own constituency who have gone to their bank managers pleading for an extra month's extension on a payment. I have seen people trying to juggle the kind of cash flow between receivables and payables that can make or break a small business.
I would like to point out in passing that a number of Members in this House have referred to the difficulties faced by small businessmen. Of the new businesses generated in Canada last year more than 50 per cent were created by a new level of enterpreneurs, namely, by women of this country. I think it is about time that we excised from our vocabulary the notion that the only people who could be interested in business are businessmen. It has clearly been shown through past history that women, being the frugal sort that we are, have a greater opportunity to succeed in starting a small business.
Small Businesses Loans Act
That is certainly showing itself in the successful record of women in business which is beginning to emerge across Canada.
I cannot understand why the NDP supported the Government in what I perceive to be a very regressive measure, in particular as it relates to lending practices for small businesses seeking venture capital. They need the kind of loan guarantees which may in fact make or break them.
I am happy to see the Minister of Labour (Mr. McKnight) here today. In terms of the housing industry, CMHC does not only say that it will guarantee a percentage. It says to the bank that if the borrower is prepared to put up a certain percentage, it will provide a 100 per cent guarantee from that point forward. I cannot understand why the Government is suggesting that the same financial incentives should not be provided to the small business sector.
I should like to take this opportunity to remind government Members of the promises which were made to the small business sector prior to the last election. There were a number of promises. We know they numbered in the three hundreds across all areas, but I will not debate that at this particular time. However, in the area of small business there were in fact 12 promises, most of which led to the idea of developing more accessible capital, in particular development and venture capital for small business, as well as reducing bureaucratic red tape and the difficulties currently being faced by small business people who expect to obtain loans. I should like to cite them for the record.
The first promise was to reduce the burden of excessive regulations and reporting requirements with which small business has to cope.


An Hon. Member:: It has been done.


Sheila Maureen Copps: What has happened with that regulation? I am sorry the Hon. Member for Saskatchewan has not had a chance to read the Bill. If he had read it, he would know that in Clause 5 the Conservative Government is saying that from now on the Governor in Council will be allowed to change by regulation all registration of loans, procedures for submission, processing and payment, the fee, and the payment and calculation of the fee. The Government is taking a Pontius Pilate approach to streamlining small business loans. It is now saying, as of this clause, that it will wash its hands of any responsibility and that it will be the Governor in Council who will have the opportunity to do so through regulation which will not even be examined in the House by Members who were duly elected across the country. It will now be the responsibility of the Governor in Council to design regulations relating to small business loans.
There is nothing written in this Bill which will guarantee that the Governor in Council in fact will move to streamline the process. Rather than seeing an attempt to show some leadership to take economic matters in hand and to cut down on red tape, the Government is saying that it cannot do it and

February 7, 1985
Small Businesses Loans Act
is passing that responsibility over to the Governor in Council. If the Governor in Council decides in the future to decrease the availability of loans, to increase the amount charged in terms of interest rates, or to increase the amount of regulation required, it can be done without any reporting to the House. Notwithstanding any other provisions of this particular Bill, the fifth provision is a clear abdication of the responsibility of the Government to live up to the promises it made to taxpayers on September 4.
In a similar vein, the third promise was to reduce the level of taxation facing small business and the complexity of the tax system with which it must cope. We do not see a move to reduce the level of taxation, but in fact there is a move to increase it by imposing a 1 per cent user fee on all people who are currently able to take advantage of the provisions of the Small Businesses Loans Act at no charge. While the Hon. Member for Guelph (Mr. Winegard), who has been in business for a long time, may feel that a 1 per cent deterrent-and he did call it a deterrent in the House-may not be very large, I can tell him on behalf of all new and struggling businesses, and those businesses that in fact create new jobs for Canadians, that a 1 per cent surcharge on a loan which can potentially be in the hundreds of thousands of dollars can be a very severe detriment. Not only is the Government suggesting that 1 per cent surcharge or that 1 per cent user fee, which even government Members decried in the Chamber today with respect to the Government's decision to start charging user fees in the agricultural sector, it is also suggesting that it is not prepared to stand behind the small businesses of the country by offering 100 per cent loan guarantees.
I do not know how many Members of the House have had dealings with banks. I am surprised to see that the NDP has not taken a more progressive attitude in this particular respect. Anyone who expects that banks will not look harder and approve fewer loans as a result of this measure is simply not in tune with the realities of cash flow difficulties currently facing small businesses. I am sure there are Hon. Members on all sides of the House who could rise and indicate the problems which small businesses have with banks. They have been well documented. I am sure they could attest to personal difficulties or recount personal horror stories in which they or their constituents have been subjected to great difficulty.
Banks are not prepared to take risks. If we reduce by 10 per cent the amount of government guarantee for banks, we will find ourselves in a situation where the already squeezed cash flow, which is currently not being made available on an equitable basis to small business in comparison with large business in the country, will in fact be even further reduced, coupled with a 1 per cent user fee. This basically tells Canadian small business people-


Nelson Andrew Riis: Banks pay the user fee.


Sheila Maureen Copps: I understand that. Just as the Hon. Member for Kamloops-Shuswap (Mr. Riis) said with respect to CMHC, eventually it is the consumer who pays, whether he be a borrower in terms of a house or a borrower in terms of a
business. Surely the Hon. Member does not think that banks will give a free ride on the actual user fee. Of course banks will pass that particular cost on to borrowers. If the Hon. Member thinks that banks will pick up this particular 1 per cent fee without passing it along in terms of increased charges to consumers of lending services, he does not understand the way in which banks work or he has not looked at a bank service charge lately.
I should like to refer to another promise-

-made by the Government before September 4. They said they would improve the financial options for small businesses. But now we see what they are doing with this Bill. They are doing exactly the opposite, because what they are asking for is more than simply giving all responsibilities to the Governor in Council. Henceforth, the Government will no longer prescribe regulations governing loans made under this Bill. According to Clause 5, it will be up to the Governor in Council to decide whether the regulations should be changed, whether the rate of interest ought to be lower or higher.
Even if we were to agree to the rest of the regulations, Clause 5 makes it quite clear that regulations governing small business loans will no longer be made by this House of Commons. The Governor in Council will change anything at any time at will, and that is why, Mr. Speaker, I am saying that this Government has adopted this kind of Pontius Pilate approach, contrary to the promises made during the last election campaign, before September 4.
Well, Mr. Speaker, I am waiting for questions-


The Acting Speaker (Mr. Paproski):: I regret to interrupt the Hon. Member.

I regret to interrupt the Hon. Member, but I should like to advise her that it is now five o'clock and we have to go on to Private Members' Business. Before doing so, however, I should like her to know that she has five minutes remaining as far as her speech is concerned and the 10-minute question and comment period will follows when the Bill comes back to the House.

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

["Order, please. The hour provided for the consideration of Private Members' Business has now expired."]
The Acting Speaker (Mr. Paproski):: Is there unanimous consent for the House to proceed to Item No. 126?


Some Hon. Members:: Agreed.



[Stage Direction]
The House resumed from Tuesday, December 11, 1984, consideration of the motion of Mr. Lopez:
That, in the opinion of this House, the government should consider the advisability of amending the Income Tax Act in order to eliminate reassessments and legal actions for the payment of income tax in arrears in cases where errors or omissions happened in taxpayers' income tax returns for the pre-1984 fiscal years.
The Acting Speaker (Mr. Paproski):: The Hon. Member for St. Catharines (Mr. Reid) had 15 minutes remaining. Is he going to participate? He is not here. The Hon. Member for Simcoe North (Mr. Lewis).


Douglas Grinslade Lewis: Mr. Speaker, I rise to continue the debate on this motion made by my colleague, the Hon. Member for Chateauguay (Mr. Lopez). I suggest to the House that it serves a very useful purpose today. I compliment the Hon. Member for taking the time to become involved in the process so early in his career. Having read his speech, I believe he put some thought into what he is trying to do. Now I want to pose some questions on the other side of the issue and expand it.
The debate on this motion gives us an opportunity to examine some of the important issues that are involved in our income tax system. It gives the Members of this House an opportunity to reflect on the many changes which have been introduced by our Government respecting the administration of the Income Tax Act. I hope that through this debate we will increase public awareness and the understanding of some of the problems that exist.
I suggest that our experiences during the past year, especially of those who were here in the last Parliament, demonstrates the axiom that perhaps we do not realize the value of an institution until it starts to develop problems. For half a century the federal Government has relied heavily on income tax revenue to finance the many services and social support systems on which Canadians count. Not only does it generate a large part of the revenues needed, but the tax system is used by Governments to further economic and social goals. Through its array of deductions, exemptions and tax credits, it provides an incentive to economic activities that we want to encourage,
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tax relief in certain circumstances and income support to others such as low income parents.
There is no question about it, the tax system is a vital part of our Canadian community, but it is also a system that has to be handled with some care. We cannot forget that the tax system is based on self-assessment. The Government relies on Canadians to make out their own tax returns, to report their incomes fully and to compute their own tax bill. Obviously that kind of a system demands a mutual trust and respect between the taxpayer and the Government. It is equally obvious that under the previous Liberal administration, the system developed severe problems.
In recent years, the amount of tax arrears owing to the Government rose to $3.5 billion. There were probably many reasons for that, including the economic recession under the former Liberal Government, which placed severe pressures on the financial positions of Canadians. There was an inability to pay taxes incurred in previous years. There was a need for liquid cash on the part of the person who owed the money. Aside from that, there arose during that period growing difficulties in relations between the taxpayer and the Government. Instead of the relationship continuing to be one of mutual trust, it became very adversarial, not at the tax appeal court level, but at every level.
Under the Liberals, the practice grew of various income tax offices using quotas to judge the performance of tax assessors. Any chartered accountant, of which I am one, can tell you that you cannot base the tax you are going to assess on how long it took you to assess it. There is absolutely no relationship whatsoever between the two. It was the practice of the former Government which allowed that to happen. It then became undue pressure as well as a quota system.
As a result of that terrible abuse of the rights of Canadian taxpayers, the Progressive Conservative Party set up a task force on Revenue Canada under the chairmanship of the present Minister of National Revenue (Mr. Beatty). That task force travelled not just to Toronto and Montreal, but to smaller communities across Canada. It heard depositions from the people who were being abused by the tax system and the assessors. As a result, we produced 72 or 73 recommendations within three months of the formation of that task force, at a time when the consultant hired by the former Liberal Government was still trying to hire his staff. We had made our recommendations long before the Liberal Government's consultant was able to get off the ground. We are now in the process of implementing those reforms, some in the form of legislative amendments to the Income Tax Act and some through administrative improvements.
Let me go back to November 8 when the Minister of Finance (Mr. Wilson) made very clear to the Canadian people the serious consequences of the escalating deficit under Liberal Governments and our huge national debt. When more and more of our financial resources are required just to carry the cost of servicing the debt burden, the Government's ability to meet the economic problems of the country are restricted.

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The effect of the proposal before us, despite its good intentions-and no one doubts the good intentions of the Hon. Member-would run counter to the Government's effort to start putting our financial house in order so that we can better promote economic renewal and job creation. That is the background and the context from which we have to look at this motion of the Hon. Member for Chateauguay.
A recent experience under the Liberal Government proves that it is important to create and maintain a policy of treating taxpayers with fairness, sensitivity and respect. Revenue Canada has the legal responsibility of enforcing the tax laws which this House passes, and so it must be firm. We all realize that. However, as well as being firm, it has to be fair. The two must go hand in hand in any taxing authority. Frankly, it is not clear from this motion that by its passage we would be firm and fair. It would have the Government abandon any effort to collect taxes that are legally owing for past years in cases where the taxpayer has made an error or omission in his or her return. It is not clear whether or not the sponsor of this Bill means that that is to cover only inadvertent errors or omissions or deliberate ones. On the face of it, the wording of the motion would include deliberate attempts to falsify returns or the omission to report income which should be taxable. I am not saying for a minute that there is a great deal of that, but this motion would have the effect of including deliberate attempts. I suggest that that is a large amnesty to be handing out under the Income Tax Act given the financial situation in which we find ourselves.
[DOT] (mo)
I would also note that the motion would not seem to provide the same amnesty to taxpayers who have declared all their income and whose tax returns are in dispute but who are simply, because of their economic circumstances, unable to pay the taxes owing. It would, however, provide amnesty for an unknown but very large amount of taxes owing on money from the so-called underground economy.
I suggest that the motion does not provide for fair and equitable treatment among those groups to which I have referred. It would certainly not be seen as fair by the vast majority of Canadians who have been paying their taxes fairly and fully, people who have been keeping their side of that unwritten social contract that exists between the Government and the citizens.
During the time of the MacEachen Budget of November, 1981, I found out from my colleagues in the accounting profession that there was a very real concern among the accounting firms of the country that by being unfair with taxpayers, the Government would drive the honest Canadian taxpayers, of which the vast majority of them are, into dishonesty. They felt that there would be a breakdown in the self-assessment of farmers, fishermen, lawyers, accountants, doctors and school teachers, and that breakdown would reach all the way up to the largest corporations in the country. The people in the profession were very much bothered by the fact that unfairness on the part of the Government would drive
businesses, quite frankly, to cheat. That would lead to a breakdown and to chaos in our tax system.
I must caution the House against doing anything which would seriously damage the fabric of the income tax system, that very important system that transcends all political Parties. The income tax system has nothing to do with political philosophy. The fact is that Canadians can be proud that we have a good system of self-assessment. That trust exists. We cannot afford to lose it.
There is a danger that there would be a feeling of unfairness and betrayal of confidence among those taxpayers who paid their taxes in full. That would be increased by the realization that an amnesty such as the one the Hon. Member suggests in good faith would mean writing off hundreds of millions of dollars of revenues owing to the Government. The lack of that money would increase the national debt. It would increase the deficit of which we are trying so hard to gain control and which weighs so heavily on the Canadian taxpayers and the federal Treasury.
If I may, I would like to return to the matter of the $3.5 billion in overdue taxes which is owing to the federal Treasury. The Government is making efforts to reform the tax collection system along the lines of further fairness and firmness. The House will know that the Minister of National Revenue has put forward initiatives which will increase the collection staff of the Department and make a reasonable effort to collect more of those unpaid taxes. That is in the interest of all of us.
The total of that $3.5 billion represents taxes that are not disputed. What we must do is to increase the number of collectors but also to increase the fairness with which taxes are collected. By increasing the number of people available to collect money, we will take the pressure off those who are there. That will give the tax collectors an opportunity to sit down with taxpayers who may very legitimately be short of funds and see if they could find a way for them to pay their taxes through a mutually acceptable method. We hope that this initiative will bring in an extra $400 million in revenues that would not otherwise have been collected. We hope that by doing this, the revenues will be collected in a way which treats all taxpayers more fairly.
The Minister is insisting that taxpayers who are in real financial difficulty should be treated with compassion and decency. It goes without saying that under the Liberal Government, there was no compassion and decency when dealing with the Canadian taxpayers. Canadians are becoming more and more aware of the reforms that are being brought about in Revenue Canada's operations. It is our feeling that this is bound to give the taxpayers the feeling that they are being treated fairly and that they are not being asked to carry an unfair share of the burden.
I would point out that one of the single most important changes in the Income Tax Act will recognize the rights of taxpayers and will alter the Department of Revenue's collection procedure for the collection of disputed taxes. It is a reform that is long overdue. It is not something about which the former Liberal Government cared. The Ways and Means
February 7, 1985

motion which was tabled by the Minister of Finance will go a long way toward providing protection for the basic civil liberties of taxpayers. When a tax assessment is in dispute, a taxpayer will no longer be required to pay the disputed tax first before the appeal is heard. "Pay now and justice later" was the Liberal way. Our way is "Justice now, and if you are found to be owing, you pay later". I think that is the way we should go.
The old rules led to a feeling among taxpayers that they were guilty until they could prove their innocence. Under the Liberal Government, they did not receive that opportunity for a long time because the system was bogged down. I used to tell my constituents not to fuss around with the assessors but to file notices of appeal to force their hands. Because of the delays, that is what we did. My constituents filed notices of appeal which I kept in my office. We forced the Liberal Government to pay attention to the taxpayers.
This new law will make the tax system fairer for all Canadians. Another thing we will do is to allow the Tax Court of Canada to award costs to taxpayers who are appealing their cases. That brings more fairness to Canadians who win their cases when their assessments are brought into question. They will get their costs when the Government is in fact wrong.
There will be a whole series of administrative changes designed to improve the working of the tax assessment and collection system and to make sure it works in a fair and open way. There will be many more instances of tax assessors checking first with the taxpayers before making changes in their returns. Assessors will ask for information first before sending out notices of reassessment and having the taxpayers file notices of appeal. Notices of appeal were filed quickly when I had the opportunity to do so, but we are now forcing the assessors to ask before they reasses. I think that that is another improvement.
In closing I would like to say that I appreciate the intent of the Hon. Member's motion. However, the Government is making every effort to restore fairness and firmness to the tax collection system in Canada.


Mr. Patrick Boyer (Etobicoke-Lakeshore):: Mr. Speaker, I should like to say a few words about the motion of the Hon. Member for Chateauguay (Mr. Lopez). Mr. Speaker, his motion provides:
That... the Government should consider the advisability of amending the Income Tax Act in order to eliminate reassessments and legal actions for the payment of income tax in arrears in cases where errors or omissions happened in taxpayer's income tax returns for the pre-1984 fiscal years.
In my opinion, Mr. Speaker, however challenging and important this proposition may be, it is altogether unacceptable at this time, for reasons which I will explain.
Still, I do want to congratulate my colleague the Hon. Member for Chateauguay (Mr. Lopez), for he is doing our country and Members of the House a great service by giving
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us today another opportunity to debate once again the values underlying our tax system.
In his motion, the Hon. Member for Chateauguay (Mr. Lopez), is in effect proposing an amnesty for people who made errors in their tax returns which were filed before 1984. I do not want to repeat what has already been said so well in the House by a number of other Members, but I would like to add a different perspective by turning briefly to the very basic point which this motion raises, and that has to do with the value system on which our tax system is based.
Historically, the Income Tax Act was introduced as a temporary measure during World War I to raise revenue for the war effort. Like so many temporary measures, it is still with us today. However, it is not the same statute which was passed during World War I. That was an Act which was purely and simply a revenue-raising statute. Since that time, Parliament has seen fit time and again to add social and economic policies to the tax legislation. It has become the vehicle through which government has continued. Is income redistribution a public goal? Achieve it through the Income Tax Act. Is it desirable to stimulate the Canadian film industry or oil and gas exploration offshore? Achieve it through the Income Tax Act. So it goes, in a saga which is familiar to all Members of the House. The end result is the development of a statute which, as the Hon. Member for The Battlefords-Mead-ow Lake (Mr. Gormley) previously stated, is now over 1,000 pages long. It should not be surprising to anyone to find that the taxpayers of Canada, in completing their tax returns, from time to time commit innocent errors. I think that is the most important thing which was on the mind of the Hon. Member for Chateauguay. If innocent errors have been made, certainly no one is looking to address that point in any kind of punitive fashion.
I do not think that we can stop the analysis there. I would like to return to the first speech which I made in this Chamber. At that time I stated that my credo in politics is simple and clear-I believe in fair shares for all and special privileges for none. I fear that this motion, though it be well intended, would in fact accord special privileges to some taxpayers of the country who submitted their returns prior to the cut-off date with some error who are now going to be forgiven. However, the other taxpayers of the country filed their tax returns according to law, in good faith, and paid their rightful share of the burden. I do not see that it would be fair to accord that kind of amnesty which would give a special privilege to some and deny it to others.
However, we are not stalled in dealing with this problem. There are other ways to deal with it. The Government has already indicated that, through a program of tax simplification, a number of problems which have occurred when taxpayers previously completed their returns will be abolished. There will be a greater simplicity in the Income Tax Act.

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Another value which is very important and which has been brought to sharp relief by this motion is the one to which my hon. colleague from Simcoe North referred-that the very basis of our tax system is one of self-assessment. It is an honour system. Granted, it is an honour system which is fortified by severe legal sanctions, but it proceeds on the premise that taxpayers will be honest in declaring their income and paying the amount of tax which they owe on it.
We have seen a very disturbing phenomenon develop in the country over the past decade. We have seen that men and women who are wage earners and have their tax deducted at source pay their fair share. In addition, the medium- and small-sized businesses have made their deductions and remitted their fair share to Revenue Canada. However, the very wealthy and the large corporations have taken advantage of the provisions which are in the legislation and, with the benefit of well-paid legal and accounting advice, the end result is that the amount of tax which they pay cannot be called their fair share. The Government has indicated that it will respond to that situation in the upcoming budget and that those provisions in the Act which now lawfully permit people to have exemptions and to take the benefit of programs, and as a result pay little or no tax, will be eliminated. I think it is high time for that to happen. When the working men and women and the medium- and small-sized businesses of the country pay their fair share and others do not, it is not hard to understand their feelings. It is like 12 people going into a restaurant and having a great lunch. We all eat our share of the meal, but when the waiter brings the bill, two or three people walk out without paying. The rest of us are left to pick up the tab. On a grand scale, that is what has been going on in Canada. It has been going on for too long, and that is part of the reason there was a change in government. It is also the reason there will be changes made to the tax legislation in the next budget. I would not have campaigned as hard as I did to be in this Parliament and I would not be a strong supporter of this Government if that were not the case.
I believe there is a problem at the other end of the economic scale in Canada, as far as collecting income tax is concerned. It has been referred to as the hidden economy. It is the thousands of transactions which take place every day when someone renders an extra service and gets $20 or $100, whether it be moonlighting or an extra job on the side. It is income which is never reported and tax is never paid on it. Amounts are estimated, but even the most cautious and low estimates of the value of that hidden economy are truly staggering. We would have a fair lower deficit today if the people who are earning that income would "fess up", declare it and pay their fair share of the tax.
I sound one note of caution, Mr. Speaker, and that is that until we restore integrity to government spending and get value for the dollars which are spent, we should not judge too quickly those who are reluctant to send their tax dollars to Ottawa. When a person works long and hard in order to earn a livelihood in this country, and then sees the kind of prolific waste and runaway spending which went on in Ottawa and
realizes the state of almost despair it has caused in the last few years, it is hard to blame that person for being reluctant to send hard earned dollars to Ottawa to be poured into that big hole in the ground.
I believe, therefore, that we have a very special duty, as part of our mandate, to get the finances of this country back on a sound footing. We must also convince Canadians that they are getting value for dollars spent by the Government, thereby restoring the belief that each citizen not only has the great benefit of living in this country but should in fact also share the burden of paying part of the overhead. It is the first duty, perhaps, of a citizen to elect a Government for himself or herself, and that being so, the second duty is to pay a share of the cost of that Government.
I have heard a lot of people say, "Why should we be paying taxes? What are we getting for it?" It does not take long in this country to begin to put together a list itemizing the many things rendered through government programs which are of tremendous benefit. We are truly the envy of other countries in the world. If we have immigration problems, Mr. Speaker, it is because there are so many people around this globe who would love to live in this country. Canadians, in moments of realism, do not deny that fact. But the other side of the coin is that they must accept the responsibility of paying their fair share. That is why I believe that to proceed with this motion to give amnesty to some taxpayers who, through error or whatever other reason, did not pay their little share of the over-all load, is not perhaps appropriate in terms of the message it would send to the rest of the population.
Through our efforts we must ensure that there is not only fairness in the tax system but that it is seen to be fair. That is why the Minister of National Revenue (Mr. Beatty) has earned such respect in this House and indeed across the country. He has brought a clarity and sense of purpose to his Department in fulfilling his mandate as Minister of National Revenue.
There are a number of Hon. Members in this House who recall the task force which the Progressive Conservative Party sent from coast to coast a year or so ago. It talked to taxpayers about their legitimate grievances under the Liberal Government in the way in which the tax branch operated. It is truly incredible how badly off the rails that system went. The result of the task force was to yield up some 70 recommendations on how the position of taxpayers in this country could be made more fair. We are now in the process of seeing positive and prompt action being taken in implementing those common-sense recommendations, those ideas of fairness.
Just last week in this House, Mr. Speaker, notice was given that we will be changing the laws so that taxpayers will not be required to pay income taxes in dispute until a court has made a ruling on their appeal. They will be innocent until proven guilty, and it is high time that happened. Under the new legislation, Revenue Canada will not institute formal collection proceedings against a taxpayer during the 90-day period in
February 7, 1985

which the taxpayer is entitled to file an objection of the amount of the tax assessment. If the taxpayer files such an objection, formal collection proceedings for amounts in dispute will be delayed until 90 days after Revenue Canada has formally responded to the taxpayer's objection. If the taxpayer appeals that decision to the courts, collection proceedings will be further delayed until a court renders its decision. That is the new procedure which will be followed as a result of legislative changes now proposed by our Government. That will introduce a sense of fairness into the tax system and a sense of fair play among the taxpayers.
Under this proposed tax change, if the taxpayer loses his first appeal to the courts, he will then be required to pay the disputed amount or at least to post security for it. Even though an appeal is carried to a higher court, where an amount of tax which is in dispute has already been paid by the taxpayer, the new legislation will provide for its repayment to him, pending the court's decision. Again, that is a major change and an important one.
I believe the Minister of National Revenue has on occasion spoken in ways which would be relevant to the motion here today. He has tried to distinguish between taxpayers who try to escape payment of their taxes and people who are in financial difficulties which make it impossible for them to pay. In the moments remaining, I would like to mention some of these points because they are fundamental and must not be misunderstood in the context of this motion. Our Government is determined that Revenue Canada will treat people in need with compassion and decency. We have seen from past experience how an adversarial approach by Revenue Canada can lead to mistrust, frustration and most certainly to tax evasion. It is important in tax matters to be both firm and fair. Today, Revenue Canada, under the Minister of National Revenue, is acting promptly to improve the collection process. It is appointing additional staff which will give collectors more time to work with taxpayers who have difficulty in paying their taxes. The goal is to work out with the taxpayers mutually agreed plans for delayed payment. The target of the Department is to collect $400 million in additional revenue to that which would have normally been collected from tax accounts owing to the federal Government.
The Minister has also addressed the problem of those Canadians who have been hiding unreported income in the so-called underground economy. Last fall in Toronto, the Minister spoke to the Canadian Tax Foundation and appealed to the taxpayers who have failed to disclose or declare all of their income so far to come forward now and pay up without fear of prosecution under the Department's procedures for voluntary disclosure. That, I think, Mr. Speaker, is the kind of amnesty which is appropriate in the present context of tax collection in this country.
On the collection side, the Department of National Revenue, 1 understand from my inquiries, will be doing a fair and more thorough job of collecting unpaid taxes. When a tax becomes overdue, the Department-and I think this procedure will be interesting to Hon. Members of the House because it
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affects many of our constituents-will send out a series of collection notices which more clearly outline departmental policy and the rights of the taxpayer. Then, before taking legal action, the collection staff will be required to make every effort to contact the delinquent taxpayer by telephone so as to give him or her every opportunity to settle the debt short of legal process.
Other amendments to the Income Tax Act aim at the same goal of treating taxpayers with fairness, sensitivity and respect. It is because of that approach, and with those goals in mind, that I think that finally across this country Canadians have the sense that once again there is a Government on the banks of the Ottawa River that truly cares, one that is bringing a sense of fairness, firmness and compassion to the important task of raising the revenue so necessary to pay for the services which have given us such a high standard of living and a special position for this country.


Mr. Howard Crosby (Halifax West):: Mr. Speaker, let me begin my remarks on the motion on the Hon. Member for Chateauguay (Mr. Lopez) by indicating that, while I may not agree entirely with the substance of the motion and the measure it proposes, I certainly agree with the underlying spirit of reform which I am sure prompted the Hon. Member to present this motion to the House of Commons. It has been pointed out by many that the spirit of reform is what the Minister of National Revenue (Mr. Beatty) has in mind as he approaches the task presented to him by his Ministry. I think the Hon. Member for Chateauguay, by presenting this motion, advances that process of reform, whether or not the specific proposal is consistent with the policies the Government may wish to pursue.
Before I continue my remarks, may I take this opportunity to record the fact that this is my first opportunity to address you as Speaker of the House in your occupancy of this famous chair. I have watched you in the House and on television and I am impressed by the high level of the demeanour you present to the House of Commons. I know it is no less than one can expect of you in the future.


Some Hon. Members:: Hear, hear!


Howard Edward Crosby: I know the constituents of Edmonton North will miss your interventions in the debate in the House, but nonetheless they will be well represented by the influence you have and will continue to exercise in this House and Parliament. It is a testimonial to your record of public service in the past, and I am sure that I and all Members are very pleased that you are in this position today. We know you will conduct the proceedings of the House with the measure of good faith and fairness which you have always exhibited in the past.
With respect to the motion, Mr. Speaker, again may I say that we are more interested in the reform of the tax system in general terms than we are in the specific measures presented from time to time. We have to face the fact that specific measures in tax law are the duty and responsibility of the

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Government. The decisions have to be made by the Government and presented to the House of Commons. I am sure it is a duty and responsibility which is accepted by the Minister of National Revenue and the Government because it certainly was an issue we brought before the Canadian public continually prior to and during the election campaign. Tax reform has to be at the heart of the initiatives which the New Conservative Government presents to the House of Commons.
As other Members have pointed out, this spirit and desire for reform is evidenced by substantive and concrete measures. We have already had before the House of Commons Bill C-70, which was adopted on November 29, 1984. It contained a number of amendments and new provisions which indicate the concentration on the area of tax reform. More important, we have the new initiatives such as the Ways and Means motions which have been introduced in the House, in particular the proposal for Section 225.1 of the Income Tax Act which deals with the collection process. Just to underline once again the importance of that new provision, let me say that it takes the burden off the taxpayer in that it does not penalize the taxpayer for resorting to the appeal process. The taxes are held in abeyance until the appeal is determined. I think that kind of measure indicates the sympathy of the Government for the taxpayer, and it is in marked contrast with the attitude of successive Liberal Ministers of National Revenue.
It has been pointed out many times, but it is always worth underlining again, that our taxation system in Canada is a self-assessment process. There has to be faith in the system and faith in the officials who administer the system or you will not have a proper attitude on the part of the taxpayer. They want to have faith in the system and the people who administer the system and it is our duty and our challenge to create that faith so that the taxpayers of Canada will file their annual returns confident that they will not be treated unfairly by the system or its administrators.
I want to deal generally with the subject of tax reform, Mr. Speaker, since I believe that is really the subject raised by the motion before us. I want to begin by referring to November of 1981 and the infamous Budget presented to this House by the Hon. Allan MacEachen, then Minister of Finance. For those Liberals brave enough to recall it, he presented to the House a Budget which he said would bring about equity in the tax system. The then Minister of Finance actually stood in this House and said he was single-handedly going to bring equity to the tax system. But what did he do? He introduced a number of measures, some of which I think bear detailing again, even though I fortunately had the opportunity on many occasions in the House to detail those measures which the then Minister said would bring equity to the tax system.
One measure was to tax employer contributions to health plans. Some seven million Canadian workers would have been taxed on their health plans. It would have virtually destroyed the employer-employee health system in Canada. It would have imposed taxes which had no relationship to the earning ability or ability to pay taxes of seven million working Canadians. Mr. MacEachen and the Liberal Party said that that was bringing equity to the tax system.
The Minister also proposed to tax senior citizens by removing the $1,000 exemption on pension income. There are literally thousands and thousands of Canadians who have been forced into early retirement from their careers in the Public Service, the Armed Forces and a number of other areas. They had to provide for their old age by working after they were forced into early retirement. But the Liberal Minister of Finance proposed to remove the benefit they received in respect of pension income if they were paying into another pension plan.
I could go on with a number of the proposals contained in that Budget, but let me conclude that aspect by saying that whatever the intentions of the Minister in November of 1981, he certainly advanced the cause of equity in the tax system to no extent of which I am aware. However, he did do a service to Canadians. He focused more attention on the various measures which make up our tax system. He made Canadians, or at least the Progressive Conservative Opposition made Canadians aware of the degree to which they are affected by their tax system and the degree to which that system can be changed overnight by an act of government. In other words, by his failed attempt at tax reform he at least caused Canadians to realize and recognize that we did have it in our capacity and power to reform the tax system. As time went by the attention of the Progressive Conservative Opposition of the day was concentrated on that. We must give full credit to the present Minister of National Revenue who focused attention on this aspect of opposition activity. We were then able to deal with the matter of tax reform in such a manner that the public reacted to it.
Following the 1981 Budget of Mr. MacEachen, we set up a task force in the Progressive Conservative Party to allow Canadians across the land an opportunity to comment on that Budget. It was very successful. Canadians across the country were very pleased with the opportunity to come before that group of opposition parliamentarians to express their concerns about the Budget. That tax force, on which I was proud to serve, was able to formulate the concerns of Canadians in a report on the Budget. It was as a result of that report and of our continued activity of pressing the then Minister of Finance in the House of Commons that many changes were made to that Budget.
When we focused the attention on the need for tax reform through the same process, we were able to establish the tax force on Revenue Canada under the current Minister of National Revenue. That task force again gave Canadians an opportunity to appear before a group of parliamentarians to express their general and specific concerns with respect to the income tax laws by which they were governed. That tax force on Revenue Canada resulted in a report which received a great deal of public attention at the time.
February 7, 1985

I would like to refer specifically to the aspect of the report which proposed a Bill on taxpayers' rights. The recognition that taxpayers have rights too focused attention on the heart of tax reform. The Income Tax Act imposes obligations and responsibilities on Canadian income earners and specifically imposes the responsibility to pay tax in respect of that income. However, the Income Tax Act does not give any rights to those taxpayers in relation to the responsibilities. That results in a lack of balance in our tax system. The equity which Mr. MacEachen claimed to be creating in his 1981 Budget was not there because he did not give any rights to taxpayers which could be balanced against the responsibilities under the Income Tax Act. That is exactly what the Minister of National Revenue proposes to do through the Ways and Means motions to which I have referred and other reforms within Revenue Canada. They are really carrying out the promise of Mr. MacEachen to bring equity to the tax system.
There is an interesting article in the Financial Post magazine with respect to the Minister of National Revenue. Mr. Speaker, I would like to call your attention and that of Members of the House to some elements of the article because it puts in very clear terms the challenge of the Minister of National Revenue and the Progressive Conservative Government to bring about equity in the tax system. As indicated in this article, the challenge to the Minister is to humanize the tax system and the tax department. That puts the matter very clearly. It must be recognized that the taxpayers and the persons upon whom responsibilities are imposed by the Income Tax Act are citizens of Canada. They are the same people whom we were trying to protect in the Canadian Charter of Rights and Freedoms. They are the same people whom we are trying to benefit in many other legislative measures. It never made sense to me, Mr. Speaker, when it comes to taxation and measures such as the Income Tax Act of Canada, that we then try to deprive those very Canadians of the rights that we were so proudly conferring upon them in the Canadian Charter of Rights and Freedoms.
It is as simple as that. We must humanize the tax laws and recognize the balance that ought to have been maintained between responsibilities and rights, because there can be no separation of Canada from the people of Canada. Our nation is the conglomeration of everyone in Canada. All Canadian citizens share the burden of the tax system. There is no authority to impose anything other than fairness in taxation of the Canadian populace.
There are, however, many practical aspects of the matter, as we all recognize. The ability of the Government of Canada to carry out the many programs that are required to benefit Canadian people must be financed. The principal method and technique of financing is the personal and corporate income tax imposed by the Income Tax Act of Canada. We must be realistic about this. Over and above the necessity of demanding revenues necessary to carry out government programs is the requirement for fairness. It is to that element of fairness that we must direct the parliamentary mind. The Member for Chateauguay has proposed one specific measure. He has
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indicated that it is an amnesty. I am impressed by his words. He says that it is a fresh start for taxpayers. I think there is a great deal of merit in taking that approach. A fresh start always has advantages, particularly in the light of 16 years of unfair administration of the tax laws by the Liberal Government. It would be nice to have a fresh start, but at the same time there may be an element of financial responsibility that prevents the Government from giving that kind of carte blanche. It would not be fair to those Canadians who have assessed themselves and paid taxes over the period prior to 1984. While the idea has merit and application to economic renewal, I do not think that in terms of financial responsibility it can be employed. That does not take away from the desirability of having that and other reform measures brought before the House of Commons for discussion and consideration.
Much has been said about the amount of $3.5 million which remains uncollected in the tax system. I understand that the Minister of National Revenue has taken steps to ensure that that debt to Canada is collected. I want to be assured, as I am sure all Members of Parliament do, that the debt will be collected fairly. One of the specific programs undertaken by the Minister of National Revenue is to employ more personnel for tax collection in order to be able to give taxpayers the proper consideration in determining a fair method of collection of outstanding taxes.
I am greatly taken with the idea presented by some Members that if there is to be amnesty in respect of back taxes, those taxpayers ought to be given an opportunity to come forward, admit their tax liability, and arrange some sensible and fair method of collecting the taxes. The point is, Mr. Speaker, that there is a great deal that can be done. We compliment the Member for Chateauguay for bringing forward this measure for discussion.


The Acting Speaker (Mr. Paproski):: Order, please. The hour provided for the consideration of Private Members' Business has now expired.



PROCEEDINGS ON ADJOURNMENT MOTION

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

Jean-Robert Gauthier: Mr. Speaker, on February 4 of this year, I asked the President of the Treasury Board (Mr. de Cotret) a question about the serious problem regarding public service job classifications. This is a

February 7, 1985
Adjournment Debate
very complex subject which nevertheless requires special attention, since in his 1983-84 annual report, the Auditor General of Canada referred to the problem and even pointed out that 79 per cent of public service positions were overclassified.
This implied that incumbents in these positions were receiving remuneration in excess of that justified by the duties they were performing. It also meant that one out of five public servants was overclassified and receiving a salary that was too high, compared to what his fellow public servants were being paid. It also meant additional costs for the Canadian taxpayer, and my interest in the matter became such that I put a question to the President of the Treasury Board to find out what he was doing in the way of taking corrective action and remedying this problem.
Mr. Speaker, I realize that the issue of job classification is a very technical one, but I would like to give a definition used by the Auditor General himself, and I quote:
Job classification is an integral and important part of employee compensation in the federal public service.
It is a process by which the relative worth of federal public service jobs is determined and through which each job is assigned to an occupational group and level.
He goes on to say, and I quote:
The actual rates of pay and other terms and conditions of employment for a particular occupational group and level are determined either through collective bargaining or unilaterally by the employer, the Treasury Board.
The Auditor General also mentioned in his report that the classification system used today covers about 222,000 employees. The system is characterized by extensive delegation of authority to deputy heads of departments and heads of agencies to classify jobs. It is therefore very decentralized.
In several occupational groups there seems to be a noticeable shift-that is, noticeable to the Auditor General as a result of his examination-towards upward reclassification of jobs to higher paying levels. Overclassification was therefore being used in a number of cases to promote public servants.
The Auditor General of Canada also pointed out deficiencies in management controls over job classification. He said there were no official mechanisms obliging those responsible for classification decisions to account for the manner in which they exercised that responsibility.
In April 1984, and I mentioned this to the Minister in my question, my colleague from Windsor West, the former President of the Treasury Board under the Liberal Government, reacted to this criticism by the Auditor General and introduced corrective measures to remedy misclassification.
My question to the present President of the Treasury Board was simply: Was he prepared to inform the House about what he had done to date to try and remedy this problem and was he prepared to share his views with the House?

I was not surprised but somewhat taken aback by the answer of the Minister which exceeded my expectations. He told me some wonderful things. First, he told me that he had come close to negotiating contracts with Public Service unions in matters which dealt with job classifications and several other issues. In fact, he referred to six issues on which he apparently had been negotiating with staff associations. He did not give me a direct or precise answer to my question, but he talked about interesting progress and about the six issues which I just mentioned.
After he left the House, the Minister became highly original. He talked about, at least of the issues which are currently being discussed with the associations, a master contract and more political rights for public servants. That is wonderful if it is true. I should like to refer to The Citizen of February 5, the day before yesterday, in which he was quoted as follows: "We hope to have an agreement on the totality of the package in a very short time". This originality came as a complete surprise to staff associations, as it did to myself. They had been taking part in the negotiations and were not aware that the Minister had come to a conclusion. They were on radio this morning saying how surprised but how pleased they were that the Minister was agreeing with them. I see you rising, Mr. Speaker, so I will conclude.


Douglas Grinslade Lewis: Mr. Speaker, I cannot help but register my interest that the Hon. Member has been able to ask his question during the "Late Show" so quickly and also pull into his remarks the questions of The Citizen, et cetera. I agree that he got them in, but I do not think they have any relevance to the question which was asked.
I am pleased to note the Hon. Member's compliments to the President of the Treasury Board (Mr. de Cotret) on how forthcoming he was. I think that should be noted on the record. Obviously the Member will agree with me when I say that that is the record of the entire Government. I am pleased that he recognized it.
The Hon. Member was right. The problem of misclassification was identified by Treasury Board audits. It was also remarked upon and reported upon by the Auditor General. However, corrective action was taken by the last Government and, to a greater degree, by this Government. I should like to review what has happened.
The corrective measures announced by the former President of the Treasury Board last April covered such items as restrictions on salary budgets to control more closely funds available for reclassification and a requirement to pre-audit any reclassification to ensure that the work being performed actually coincided with that described in the job description. This is what the classification level is based upon. Some 23 per cent of the misclassifications were in cases where that relationship was lacking. In addition, a review of the job classification standards for groups in which significant numbers of misclassifica-
February 7, 1985

tions were evident in the audits is under way. These groups are administrative services, primary products inspection and social science support.
The Government is taking even further steps to correct the situation, and I should like to take this opportunity to review some of them. There is a revision and enhancement of the classification monitoring and audit system to provide systematic and integrated information on the relative performance of the classification system down to the departmental level. Information such as this has not been available previously, except in cases where a central audit, with an attendant high resource level, was conducted. Thus, there will be information available not only to pinpoint problem areas where improvement is required but to remove restraints to managerial flexibility where a continuing and sustained high level of performance in job classification is demonstrated. I could go on-


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


EMPLOYMENT-SUMMER JOBS FOR STUDENTS. (B) REQUEST FOR ANNOUNCEMENT OF PLANS
Sheila Finestone: Mr. Speaker, on December 211 asked the Minister about her plans for a youth summer works program. I asked her how many jobs, what opportunities and how much money, et cetera, would be available for young students, but I did not receive an answer then. I anxiously awaited the announcement yesterday by the Minister of Employment and Immigration (Miss MacDonald) and the Minister of State for Youth (Mrs. Champagne). I thought the Ministers would give me the opportunity to accord them accolades personally and politically if new and more jobs for youth had been announced. I thought these Ministers would seize an opportunity to enhance their credibility and prove their concern for the crucial problem for our young people. Instead, their announced program attempts to pull the wool over the eyes of our young people and tries to convince them that they are getting a better deal.
"Let's make a deal" may be a game between government officials and private business, but it certainly is not one the youth of this country want to play. Liberal Governments made every year one commitment in which young Canadians were treated as a priority for they are the future of this country, and we intend to follow that tradition. The present Government has shown no such commitment.
Last year the Liberal Government set aside $200 million for summer employment programs. The Minister of Employment and Immigration knows full well that the $85 million summer budget she keeps referring to represents the A base figure, the starting point of departure to which each year we added increased funds.
An increase of 30 per cent was announced for 1985, increasing the program from $157 million to $200 million. Given the
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inflation rate, but also given the fact that even with the Liberal program allocations last year, 180,000 students still could not find employment, the Conservative budget of $205 million is even more grossly inadequate. These are simple facts which are obvious to students and to the Canadian public. Who is the Government trying to fool? Since coming to power five months ago, the Prime Minister (Mr. Mulroney) has all but ignored the plight of our unemployed youth.
During the election campaign, youth were one of his top priorities. He then proceeded to appoint a Minister of State for Youth to act as their spokesperson and he gave her authority as Minister of State for untroubled youth. His Minister of Employment is great at consultation, but when it comes to positive action, she falls short.
What this Government is good at is cutting budgets. In the Treasury Board expenditures and programs statement, there were cuts to Canada Student Loans. The General Industrial Training program, the Young Workers exchange program, Summer Canada, Environment 2000, Young Entrepreneurs, Katimavik, and Parks Canada were cut. If you add it all up, it is over $215 million.
In the Challenge '85 summer Canada work project for our youth, the provincial allocations represent cuts in comparison to last year's budget in terms of real dollars.
To cite just one example, after taking into account the 30 per cent increase proposed by the Liberal Government for Summer Canada, Newfoundland was going to receive $2.4 million more than proposed this year, while Alberta, where unemployment is lower, would have received $5 million less. Her allocations are based on unemployment rates, yet the figures contradict this. In addition, she proposes putting $10 million into federal agency budgets. Considering these are the same budgets which were cut in November, it appears she is trying to replace fired and laid-off staff with cheap student labour.
Moreover, even as late as this morning's Canada AM program, the Canadian Federation of Students was not consulted beforehand. First the cuts, then the announcements of new programs were made. Students are outraged and disappointed, and rightly so. Students are concerned about planning their academic and career futures. They have been told, and it is a well-documented fact, that to increase their chances in a future job market, education is vital. Yet without sufficient employment programs, they can scarcely afford to finance their studies. Students need to work a minimum of 16 weeks to cover tuition costs. The programs announced will, therefore, have to be in place, with all the forms completed and processed, interviews finished, staff hired, and materials purchased by the end of April. The forms will not even be in Employment Centres before the end of February. The Minister for Youth stated earlier that she could not perform magic, but that is what will be needed to pull off this program.
Students are receiving negative signals concerning continuing their education. The Bovey Commission has recommended tuition hikes and the budget for Canada Student Loans has been frozen. The dismal scenario is such that, if the summer

February 7, 1985
Adjournment Debate
job programs fall short of meeting the number of jobs needed and therefore fall short of the dollars needed for tuition fees, loans will be necessary. However, since the loans budget has been frozen, fewer students can be helped financially. Accessibility to education, vital to securing a job, is blocked on not one but three counts: first, summer job programs have not been created to meet the current needs given the inflation and unemployment rates; second, tuition costs are rising; and third, it is more difficult to borrow money to meet these escalating costs.
I find myself asking, as I am sure young people are wondering, if this is the way we should celebrate International Youth Year. In my address to the announcement of International Youth Year on January 21, I mentioned the results of the Bovey report and the Project Teen Canada survey. This poll, the most comprehensive survey of teenagers' attitudes and opinions ever made, destroys our conventional stereotypes of youth and characterizes young people as responsible, thoughtful people who are desperately worried about their future. The Government has yet to give them any reason for hope. The very day the story broke detailing the results of the report, the Minister of State for Youth announced that there would be no special, massive funds allocated to provide jobs for youth in 1985. On the eve of the Summer Canada Program, we learned about the Katimavik cuts.
The Tory Government is clearly not prepared to follow through on its promises; neither those made during the election campaign nor those made since September 4. As long as the Government sticks to consultation, things are fine. It is in committing itself to action and taking that next step that the problem starts. I again applaud the consultation undertaken by the Government. I agree that consultation is a necessary first step. However, I urge the Government to continue, to take the next step, to be true to its commitment and to act.
The Tories have indeed created a new vocabulary. Gone are the three "Rs". Instead we have the three "Cs": consult, cut, challenge. Young Canadians and all Canadians-


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


Sheila Finestone: I am sorry, Sir. I have half a minute and exactly four sentences left.


Mr. Jean-Guy Hudon (Parliamentary Secretary to Minister of Employment and Immigration):: On behalf of the Minister of Employment and Immigration (Miss MacDonald), Mr. Speaker, I am pleased to respond to my colleague from Mount Royal (Mrs. Finestone) concerning this year's youth programs as announced on February 6 last.
Perhaps it is an overstatement to say that there are no programs, and I think that young people need to work to plan their future. It is a worthwhile concept, and that is why the
federal Government, through the Minister, has unveiled a $205 million program geared to student careers, including Challenge '85. Students do need summer employment to prepare their career. We are prepared to give them grants, and the focus will be on three specific sectors. No one can disagree with that, after all we are talking about $163 million. It is easy to claim that we have no programs, that we have no money, that we are cutting, consulting or what have you, but there is really no need to exaggerate. I read the question asked on December 21, something about putting an end to consultations and delivering the programs. Well, the programs have been announced and they have nothing to do with cutbacks. Quite the contrary, they will be an inspiration for students who want to further their career. Some $163 million will be allotted to that end in the public sector, in private industry and in community organizations.
Our second priority is to make it possible for students to gain work experience in a field unrelated to their studies and prospective career, and some of those can be a challenge indeed.
In addition, Mr. Speaker, $30 million will be earmarked for projects designed to help students create their own jobs. We intend to cooperate with the provincial Governments to make loans available for such projects. All we need do now is to set up the machinery, and that will be done soon because we are more than prepared to show leadership in those endeavours. There will be $10 million used to create jobs with the federal Government; $13 million at the National Defence level; $1.2 million for hiring special officers of the Royal Canadian Mounted Police; and $0.5 million to help job preparation shops, pilot projects, as we are now doing in Ontario and all across Canada. In addition to that, $13.6 million must be added for the operation of 400 Canada employment centres for students across the land.
Mr. Speaker, the Government is convinced that next summer several thousand students will derive maximum benefits from that and from their future participation in the labour force, in their own fields of expertise. We are in the process of launching an appeal to the private and public sectors, and I am convinced that-


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


INCOME TAX ACT-PROVISION AFFECTING LAND PURCHASES
Geoff Wilson: Mr. Speaker, last week I raised some concerns in Question Period regarding the treatment of replacement property, under Section 44 of the Income Tax Act, by Revenue Canada officials. Section 44 enables the vendor of land to defer capital gains arising from the sale to the extent that the vendor reinvests or
February 7, 1985

ploughs the proceeds of that sale into new land within certain time limits.
It should be expressed at the outset that farmers in western Canada are continually buying and selling land. It may be that a piece of land becomes available closer to home, and in order to acquire that land the farmer may sell other land to finance the purchase. Or an older farmer may retire and a young person may decide to purchase the land and dispose of other ground. Indeed, neighbours may decide that it would be mutually advantageous to exchange parcels of land. In any event, there are countless situations and innumerable transactions.
The farm community understand in a general way that if land is sold, no capital gains will be payable as long as replacement property of equal or greater value is acquired. That is what the farmers understand, and I suggest that is the spirit and intent of Section 44.
The problem arises in the handling of that section by Revenue Canada officials. Like most sections of the Act, Section 44 is rather difficult to read. However, the key operative words are: "If he so elects". The taxpayer is given credit for the replacement property "if he so elects". Unfortunately, neither the Income Tax Act nor its regulations provide for an election form-a form on which whatever information Revenue Canada requires about the sale and replacement purchase could be detailed.
There are other elective sections in the Income Tax Act. Section 85 is a good example. That section provides for tax-free roll-overs of assets from individuals to the holding companies. There is a form prescribed for that election by Revenue Canada, and all practitioners adhere to it.
However, in Section 44 we have a vague and undefined situation. At the very least it creates doubt. I would suggest that that doubt should be resolved in favour of the taxpayer.
It appears that the previous Liberal Government, in its lust for money, instructed Revenue Canada to persecute those unfortunates who sold land after 1978 and replaced that land but did not file a sufficient election that is, an election sufficient in the minds of Revenue Canada officials. Today, most tax practitioners are tuned into Section 44. They know that some piece of paper should be attached to the vendor's income tax form whereby he would claim to elect that the new land would replace the old. Unfortunately, six or seven years ago that requirement was not as well known. Many tax practitioners, like their clients, simply understood the basic intent, that there would be no taxable gain on the sale if land of equal or greater value was purchased. Surely, the vendor of land elects, within the spirit and intent of Section 44, when in fact he replaces the land he sold with other land. When legal agreements are signed, when transfers of title are registered, and when cheques for the purchase price are issued, surely the taxpayer has elected in no uncertain terms.
In any event, it appears that part of the hidden agenda of the MacEachen Budget of 1981 was the instruction to Revenue Canada officials to grab as much tax money as possible
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without having regard to any standard of fairness or decency. By way of example, and there are plenty of examples, I would like to cite the circumstances of Jacob Schroeder of Gould-town, Saskatchewan. He is a farmer in his fifties who in 1979 sold two parcels of land for $172,000. In the same year, he purchased replacement land for $226,000. Mr. Schroeder and his tax preparer quite reasonably assumed that the purchase of the new land would wash out any capital gains on the sale. But that was not to be. In March of 1983, Revenue Canada reassessed Mr. Schroeder's 1979 tax return to include additional taxable income of $58,000 for the capital gains. Revenue Canada refused to give him credit for the purchase of land because it said he did not file a sufficient election. He did not elect to its satisfaction. Mr. Schroeder, who made $417 in 1980 and who lost money farming in 1981 and 1982, was faced in 1983 with a bill of some $25,000 for income tax and another $10,000 for interest. That amounted to a bill of $35,000 to a man of modest means who simply sold land and bought some other land.
In its zeal to collect these funds, and in spite of a notice of objection having been filed, Revenue Canada served 21 third party notices-which are the same as garnishee summonses- to every bank, credit union, grain buyer and livestock buyer within 60 miles in every direction. The Schroeders could not even buy heating fuel. The man had to go to the credit union and take out a second mortgage in order to pay Revenue Canada. He suffered ill health as a result of this kind of persecution.
I am relieved that this kind of mean, nasty, aggressive and confrontational collection procedure is being replaced as a resulted of the attitude of our new Government and that the Minister of National Revenue (Mr. Beatty) also understands these things. However, Mr. Speaker, Revenue Canada rejected Mr. Schroeder's notice of objection on grounds of insufficient election. It is evident, therefore, that Revenue Canada officials still refused to place a fair and reasonable interpretation on the Section 44 election. They refuse to look at the facts and refuse to rebate the funds to Schroeder and other people who were similarly affected. Surely the fact of concrete evidence of repurchase of land, the land title transfers, the issuance of cheques, does constitute an election. Simple justice and common decency, Mr. Speaker, dictate that the benefits of any doubt be extended to those who in good faith have actually replaced their property. There is no magic to it.
I simply want to appeal to the Minister of National Revenue to do three things; first, to redress the wrongs done to those already affected; second, to instruct Revenue Canada officials to take a different attitude to Section 44 elections and, third, to recommend to the Department of Finance that this particular section of the Act be amended.


Mr. Pierre H. Vincent (Parliamentary Secretary to Minister of National Revenue and Canada Post):: I would like to thank the Hon. Member for raising this important issue before the House, an issue, Mr. Speaker, which is of particular

February 7, 1985
Adjournment Debate
importance to farmers and to the Hon. Member from Swift Current-Maple Creek (Mr. Wilson).
My hon. friend asks the Department of National Revenue to accept that the purchase of replacement property in itself constitutes an election to defer capital gains. I must point out, however, Mr. Speaker, that the Income Tax Act requires taxpayers to elect for the deferral of capital gains at the time of filing their annual income tax returns. The Act provides a similar deferral of the recapture of capital cost allowance where depreciable properties are disposed.
I am very pleased to report that Revenue Canada, Taxation has, as a long-standing practice, granted administrative relief to certain taxpayers who have not made a timely election but where an examination of the facts shows that relief is fair and equitable under the circumstances. I would also like to point out, Mr. Speaker, that some of these circumstances are outlined in one of the Department's published Interpretation Bulletins, IT-259R. Examples of administrative relief being granted to taxpayers who have not filed the election as
required by the Income Tax Act are the following: There is a documentation on a tax practitioner's files showing a calculation for the relevant taxation year confirming that the intent of an election was demonstrated; the taxpayers claim that they prepared their own income tax returns on the basis of insufficient information supplied by the Department; the taxpayers have purchased the farm land in the subsequent year and continued farming after acquiring the replacement property and would have qualified under the Act; the taxpayers are aware that the disposition would have an impact on the adjusted cost base of their land and they may have been misled that when they purchased a property in the subsequent year they had elected and complied with the provisions of the Act-


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 6.29 p.m.
[Stage Direction]
Friday, February 8, 1985