1985-11-27

Mr. Don Boudria (Glengarry-Prescott-Russell):: Mr. Speaker, a few days ago the people of Canada discovered that the Minister of Finance (Mr. Wilson) spent their hard-earned tax dollars to discover what he was supposed to do as the Minister of Finance. He conducted a public opinion poll to find out what his job was. Today, of course, Canadians discovered an even more astounding revelation. They discovered that Crest Toothpaste is indeed toothpaste. For all of us who thought all this time that Crest Toothpaste was foot-powder or shaving cream, we need not worry any more because we know that, indeed, Crest Toothpaste is toothpaste.
It cost $50,000 of taxpayers' money to make this brilliant discovery on the part of the Minister of Finance. Having made that discovery, the Minister of Finance tells us that, indeed, it cannot be used as a precedent to determine that most Canadians know that toothpaste is toothpaste. The only thing we know is that the 500 people who were interviewed were of that opinion, and not necessarily everyone else.
My constituents who are unemployed could tell you, Mr. Speaker, no charge, that Crest Toothpaste is indeed toothpaste. There is no doubt about it on their part. Therefore I encourage the Government to spend the taxpayers' money in a more productive way. If it ever wants advice in the future on whether or not toothpaste is toothpaste, or whether foot-powder is foot-powder, or anything else, it could consult the opposition-


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


CN MARINE
Mr. Ernie Epp (Thunder Bay-Nipigon):: Mr. Speaker, the Minister of Transport (Mr. Mazankowski) appears to be losing the battle with CN Marine. A year ago the Minister of
Transport promised there would be an additional three new vessels on the Gulf service and one new vessel on the New-foundland-Labrador coastal service, vessels of the latest state of the art. He declared that this would have a tremendous impact upon the shipbuilding industry and, therefore, would create jobs.
In the last weeks the Minister of Transport has been backing away from this splendid pledge. My questions and those of both Government and official Opposition Members about a second Caribou-style ferry have led the Minister to talk about cost. CN Marine is clearly arguing it can buy more cheaply abroad than it can in Canada, and the Minister is being pressed to forget his promises of November 14, 1984.
The Clark Government broke promises to the Canadian shipbuilding industry in 1979 by allowing CN Marine to buy abroad. The Conservatives forgot then that Canadian shipbuilding pays big in wages and in purchase of materials. They forgot that Government gets a good chunk of these expenditures in taxes.
I challenge the Government to recognize these economic and fiscal realities and enable the Minister of Transport to keep his year-old promise of work for Canadian shipyards and their workers. To think only of the initial cost of purchasing a second-hand vessel, while ignoring the economic spinoffs and tax revenues that Government receives from Canadian shipbuilding, is what we are coming to expect from the Government. It's a shame that such shortsightedness will leave the Minister of Transport holding a tattered promise.


SPACE RESEARCH
Mr. Barry Turner (Ottawa-Carleton):: Mr. Speaker, last night, with a hundred people from the National Capital Region, including senior management of the National Research Council and Telesat Canada, the staff of L'Ecole secondaire Charlebois, the students and also some very proud parents, I witnessed the twenty-third launching of a space shuttle, telecast live from Cape Canaveral.

As with Marc Garneau, our first Canadian astronaut over a year ago, who also attended, the shuttle Atlantis carried another Canadian first into outer space. Jean-Franfois Des-

November 27, 1985
chenes and Daniel Rey, two Charlebois graduates under the supervision of their teacher, John Audcent, won a national competition out of 290 entries sponsored by Telesat Canada in 1983 to place an experiment aboard the shuttle. Their experiment will test whether mirrors made in the near zero gravity of space have a smoother reflective surface than mirrors made on earth.

To quote the principal of the school, Mr. Jean-Marc Major: "This is a unique opportunity to show students across Canada that dreams can become reality."

Success in this experiment may not only give Canadians and the world a new way to look at ourselves, but will be a true reflection of the potential of our young scientific minds. I ask the House to join me in congratulating these two young Canadians on this historic achievement.


Some Hon. Members:: Hear, hear!


Mr. Speaker:: Order, please.



CANADA POST CORPORATION


Mr. John Reimer (Kitchener):: Mr. Speaker, the recent housing construction boom in Kitchener and Waterloo has created a class of home owners who have fallen victim to Canada Post's freeze on extending home delivery. This freeze applies to new subdivisions and even to new homes recently added to streets which have always received home delivery.
Some of these homeowners must now use neighbourhood group boxes. Others, lacking even this necessity, must drive to their nearest post office and wait in long lines at inconvenient hours, often during work, in order to collect their mail. Furthermore, I am told that Canada Post proposes to continue this trend as cost saving measure.
While the end may be laudable, the means is unjustifiable. Perhaps a modest reduction in petty grievances, days absent, and strike activity amongst Canada Post personnel, coupled with an increase in their efficiency and productivity, would achieve the same end without forfeiting service. Therefore I call upon the Government to ensure that Canada Post provides all new home owners with the same level of service presently accorded their fellow taxpayers elsewhere.
Let me add that I welcome the Marchment Committee's report on the mandate and productivity of Canada Post Corporation. I trust that this report will act as an impetus for Canada Post to work toward a level of service with which its Canadian consumers can be satisfied and in which its employees can take pride.



FIELD HOCKEY-REPORTED CANCELLATION OF ARTIFICIAL TURF FACILITY

Mr. Sergio Marchi (York West):: Mr. Speaker, only a few weeks ago the Minister of State for Fitness and Amateur Sport (Mr. Jelinek) blatantly interfered in the internal affairs of the National Women's Field Hockey Association over the selection of its national coach. The incident has left many serious and permanent scars. Now the Minister has dealt another more serious blow to the field hockey movement.
It has been learned that the Conservative Government will not honour a $1.3 million commitment made by the previous Liberal Government toward the establishment of an artificial turf installation at the University of British Columbia. This would have provided amateur sports with a permanent and much needed training centre. The previous Government was prepared to recognize the need for such a world class facility. The Conservative Government, however, seems to be completely indifferent. To make matters worse, on November 7, over CBC radio, the Minister promised to keep all sports commitments made by the previous Government.
As a result of Tory double-talk, Canada was forced to relinquish the hosting of the women's World Cup tournament scheduled to take place in Vancouver next year. This is a serious embarrassment in the eyes of the international sports community. In addition, of course, our amateur athletes will lose out on a very necessary and competent training centre. 1 therefore call upon that Government and that Minister to honour the former Government's financial commitment and be sensitive to the deficiency of such facilities available to our amateur sports and amateur athletes across the country.



BANKS AND BANKING


Mr. Rod Murphy (Churchill):: Mr. Speaker, on October 19, and again on November 2, Ontario NDP David Reville took part in demonstrations in Canadian Imperial Bank of Commerce banks on behalf of striking CIBC workers. The bank retaliated by writing to tell him it was closing his accounts and calling in his mortgage. Although the bank has now backtracked on its action against Reville, this demonstrates the abuse of power that bank workers endure on a regular basis. It also demonstrates the power that banks have at their disposal and which they are not above exercising.
The treatment of bank workers and bank customers comes under federal legislation. The banks have used their power in an abusive manner in the past and it is time the Government moved not only to protect the workers but the customers. I might add that the power of banks in single industry towns
November 27, 1985

with only one or two banks is ominous, and something has to be done to protect their customers.



TRANSPORTATION OF DANGEROUS GOODS


Mr. Dave Nickerson (Western Arctic):: Mr. Speaker, in an effort to keep our environment clean and prevent spills of toxic or polluting substances, not only have we been imposing more and more restrictions on the users and transporters of these substances, but we are also in our laws imposing penalties, especially fines, of ever-increasing severity when dangerous or unsightly substances are intentionally or even accidentally discharged into the environment. One result of this policy is that transporters and users of these substances, which might be as common as fuel oil, are finding it prohibitively difficult to obtain environmental insurance for their operations which are often essential to our industrial activity and domestic well-being.
Underwriters are refusing to insure, or they are charging such heavy premiums that the effect is the same. In the Northwest Territories, where, because of the lack of roads, it is necessary to truck petroleum products over frozen lakes and rivers, this problem is doubly severe.
Let us therefore remember that there must always be a balance between protecting the environment and those human activities without which we could not enjoy the good things of modern life.

[ Translation]



EMPLOYMENT


Mr. Gilles Bernier (Beauce):: Mr. Speaker, since the 1984 election, one of our main concerns, as Members of the Quebec caucus, has been to create jobs for Quebecers.
You are probably wondering why Liberal Members from Quebec are so upset about our successes in this area. They are upset because between February 1980 and September 1984, a period of 55 months, 37,000 new jobs were created under the previous Liberal administration. This is an average of 673 jobs per month.
However, since Quebecers elected a Progressive Conservative Government fourteen months ago, more than 89,000 new jobs have been created in Quebec, an average of 6,846 per month. You heard me correctly, Mr. Speaker: 6,846 per month. Ten times the Liberal average! That is real leadership, performance and efficiency. No wonder the Liberals are embarrassed! If I were in their shoes, I would be positively red-faced. We are now creating more jobs with Hyundai and
Presence in Gallery
other companies, and they are still complaining. To the workers of Quebec, I say that they will be able to exercise their own judgment in three years' time.
Mr. Speaker, I visit my riding regularly. People are happy and they are working. We have created jobs and we will continue to do so, and that is our mission as Conservatives.



SPACE RESEARCH


[Stage Direction]
TELESAT CANADA COMPETITION WON BY JEAN-FRANQOIS DESCHfeNES AND DANIEL REY
Mr. Jean-Robert Gauthier (Ottawa-Vanier):: 

PRESENCE IN GALLERY OF PRINCE EDWARD ISLAND AND NORTHWEST TERRITORIES SPEAKERS

Mr. Speaker:: May I indicate to Members the presence in our gallery today of two Speakers, the Hon. Marion Reid of Prince Edward Island, and the Hon. Donald Stewart of the Northwest Territories.


Some Hon. Members:: Hear, hear!

November 27, 1985
Oral Questions



ORAL QUESTION PERIOD

[Stage Direction]
[ English]

Right Hon. John N. Turner (Leader of the Opposition):: Mr. Speaker, my question is directed to the Secretary of State for External Affairs. Despite his assurances to the House on Monday and yesterday, there has apparently been an official request from the United States Government that we reopen, with that country, the issue of our softwood lumber exports to the United States as a precondition to general discussions on freer trade with that country.
Would the Secretary of State for External Affairs repeat the assurance that he gave to my colleague, the Member for Winnipeg-Fort Gary, on Monday, that in no case would there be a linkage between those two issues and that the Government of Canada will refuse to reopen negotiations affecting softwood lumber exports from British Columbia and other provinces to the United States?


Hon. James Kelleher (Minister for International Trade):: Mr. Speaker, Mr. Yeutter has been in touch with me personally several times during the past week, and again last evening. He advised me that indeed the United States would like to have some talks with Canada on the lumber issue. He personally assured me that in no way whatsoever will these discussions be tied in as a precondition to the Canada-U.S. talks. We are not held hostage to these talks. There is no time limit for their completion, and they have nothing whatsoever to do with the Canada-U.S. talks. These talks will stand on their own merits.


ROLE OF UNITED STATES CONGRESS
John Napier Turner: Mr. Speaker, I suspect the Hon. Minister is being somewhat naive in his approach to this issue. Mr. Yeutter, of course, has to seek congressional approval before general trade negotiations can begin with his country. There are members of Congress in both Houses who seek to impose a condition upon the U.S. Government to settle this so-called irritant for them of the export of softwood lumber to their country from Canada.
We have received categorical assurances from the Secretary of State for External Affairs that there will be no linkage. Why would Mr. Yeutter be approaching Congress and yielding to it on this subject if this were not going to be a precondition to general negotiations with Canada?


James Francis Kelleher: Mr. Speaker, again I advise the hon. gentleman that these talks are not a precondition. As far as the Government is concerned, Mr. Yeutter and the Americans are honourable people and we have no reason to disbelieve them. The Government approaches them as neighbours, good trading partners and friends, which is something the former Government never
did and which led to the deterioration of the relationship between our countries.


Some Hon. Members:: Hear, hear!


John Napier Turner: Mr. Speaker, the House will want to recall those words and the words of the Minister's colleague, the Secretary of State for External Affairs, if there is a congressional condition put upon our negotiations with that country.


REQUEST FOR PRODUCTION OF GOVERNMENT STUDY
John Napier Turner: Apparently there is a series of secret documents affecting sectors of our economy that are vulnerable to negotiations with the United States. Will the Minister publish the document relating to the forest industry? Either that document exists and the Government is not coming clean, or, if it does not exist, the Government is not doing its homework. Will the Government produce that document so we can begin to know what is on the table and what is not on the table, who will be heard, and who will not be heard?


Right Hon. Joe Clark (Secretary of State for External Affairs):: Mr. Speaker, naturally, documents have been prepared, and naturally there has been close discussion with the provinces which are involved and, and in some cases, with the industry that is involved. With regard to the findings of any studies that we might undertake, there is the closest possible co-operation in any talks that we might have, whether they are in the context of negotiations with the United States or on the quite separate and unrelated question of discussions that might affect timber that are being circulated between federal and provincial Governments.
I think that the Right Hon. Leader of the Opposition should stop trying to stir fear and should come into the House of Commons with some real questions other than these rather reckless fishing expeditions.


Some Hon. Members:: Hear, hear!


BANKS AND BANKING
Miss Aideen Nicholson (Trinity):: Mr. Speaker, my question is directed to the Minister of State for Finance. A few days ago a member of the Ontario provincial Legislature and four other individuals had their banking arrangements with the Commerce Bank cancelled, solely because they exercised their democractic rights to participate in a demonstration.
Will the Minister undertake to ensure immediately that such similar abuses of power will not happen again? Will she also require that the bank concerned give a full apology to the
November 27, 1985

individuals concerned and reinstate their banking arrangements?


Hon. Barbara McDougall (Minister of State (Finance)):: Mr. Speaker, I am quite prepared to indicate my concern about this both publicly and privately. When I ascertain the total facts of the case I will be discussing it with the bank.


VISA LABOUR RELATIONS DISPUTE
Aideen Nicholson: Mr. Speaker, my supplementary question is directed to the Minister of Labour, to whom I wrote about this matter three weeks ago. Since the dispute with Visa is becoming increasingly bitter, will the Minister intervene to bring about a settlement?


Hon. Bill McKnight (Minister of Labour):: Mr. Speaker, the Hon. Member should be aware, as are other Members of the House, that Labour Canada is monitoring the situation. Labour Canada mediators and conciliators are available at request from either party for intervention and we are there to help. However, we can only help if a request comes forward from individual parties.


CANADA-UNITED STATES NEGOTIATIONS-NEGOTIATOR'S VIEWS ON WATER EXPORTS
Mr. Bill Blaikie (Winnipeg-Birds Hill):: Mr. Speaker, my question is directed to the Secretary of State for External Affairs. It deals with the concern over the appointment of Mr. Reisman as negotiator for Canada in the free trade negotiations with the United States.
Will the Minister indicate to the House whether he is aware that Mr. Reisman is an enthusiastic proponent of the Grand Canal scheme and the export of water and that he has said on occasion that he believes the export of water, in this way is a possible key to a trade agreement with the United States? If so, will the Minister take this opportunity to tell the House and the Canadian people, as well as Mr. Reisman, through the House, that Canada's water is not on the table in the upcoming negotiations with the United States?
Right Hon. Joe Clark (Secretary of State for External
Affairs): Mr. Speaker, I am aware of the positions taken by Mr. Reisman on this question. I am also aware of the answer that was given by the Minister of the Environment, in the House, when he made it clear that those are separate questions, that they are not related.
I take this opportunity, since it appears that we must put things in Hansard twice to draw them to the attention of the New Democratic Party, to say that the question of Canada's water is not involved in these negotiations.
Oral Questions GOVERNMENT POSITION


William Alexander (Bill) Blaikie: Mr. Speaker, if that is in fact the position of the Government, in telling Mr. Reisman that, will the Government be as forthright with respect to other matters of concern to Canadians about what is on the table? If the Government can be forthright in this instance, why can it not be forthright with respect to culture, the Autopact, and other issues about which it should be honest with the Canadian people?


Charles Joseph Clark: Mr. Speaker, if we are speaking about points in time, the Hon. Member is backward because I have already conveyed that view to Mr. Reisman and he understands, as he understands that his role in these negotiations is to carry out the policy of the Government of Canada-


John Napier Turner: Whatever that is.


Charles Joseph Clark: -which will be developing the trading mandate, monitoring the negotiations and instructing him as to what he should be saying.
With regard to openness, there has never been a negotiation undertaken by a Government of Canada that has involved more extensive consultation than the consultations that have evolved as we prepare for potential negotiations with the United States.


PUBLISHING INDUSTRY
Hon. Lloyd Axworthy (Winnipeg-Fort Garry):: Mr. Speaker, I would like to raise a question with the Secretary of State for External Affairs. We are obviously pleased to hear his confirmation today that water will not be part of the negotiating agenda with the United States on comprehensive free trade.
If that is the case, I would like to ask the Minister whether he is prepared at the same time to state categorically some other issues which are causing great anxiety among Canadians that should not be on the table and say that the Government will not put forward or accept any negotiation relating to Canadian content, ownership of the Canadian publishing industry, Bill C-58, or the issues related to the ownership problems for Canadian magazines? Are those off the table as well as the isue of Canadian water?


Charles Joseph Clark: Mr. Speaker, I did not make the statement with regard to water now.


Some Hon. Members:: Oh, oh!


Charles Joseph Clark: The statement with regard to water was made in this House some weeks ago. It is time Hon. Members woke up.

November 27, 1985
Oral Questions


Some Hon. Members:: Oh, oh!


Mr. Speaker:: Order, please.


STATEMENT ATTRIBUTED TO HIGH COMMISSIONER TO BRITAIN
Lloyd Axworthy: Mr. Speaker, once again the Minister has succeeded in confusing himself and everybody else.
I want to ask the Minister a related question. In a report from London, our High Commissioner, Roy McMurtry, a gentleman well known to the Minister, was quoted publicly as supporting a takeover of Copp Clark of Canada by the British publisher, Longman's.
Why does he tolerate senior diplomatic representatives deliberately contradicting a stated Government policy concerning Canadian ownership? Is he prepared to rebuke Mr. McMurtry, or is Mr. McMurtry simply forecasting a proposed change in Canadian policy?


Mr. Crosbie:: Let's get Tom back.
Right Hon. Joe Clark (Secretary of State for External
Affairs): Mr. Speaker, it is my view that the backbench of the Liberal Party could do considerably better than that in putting questions in the House of Commons.


Some Hon. Members:: Hear, hear!


Mr. Broadbent:: The backbench over there can do better too.


Charles Joseph Clark: The views expressed by Mr. McMurtry were personal views. I have written him today-


Lloyd Axworthy: He is a representative of this Government.


Charles Joseph Clark: Does the Hon. Member want to continue the debate from his seat, or has he the courage to stand up?


Some Hon. Members:: Oh, oh!


Lloyd Axworthy: He speaks for you. Why do you not answer the question? All right, okay.


Some Hon. Members:: Oh, oh!
Mr.Speaker: Order, please. The Hon. Member for Oshawa.


CULTURAL INDUSTRIES
John Edward Broadbent: Mr. Speaker, the Minister should pay due regard to the people in the backbenches on his side of the House as well.
The Minister has said, both today and in the past, that Canada's water is not on the negotiating table. Since he is prepared to do that for water, and since he met leaders of Canada's cultural industries last night and they made the request that our cultural industries not be on the table, why does he not show the same concern for Canada's cultural
industries as he does for water, and say to the Americans that they are not negotiable?
Right Hon. Joe Clark (Secretary of State for External
Affairs): I think the Hon. Member, Mr. Speaker, if he wants to make inquiries of the people who were at the meeting will find that while there was a disagreement about what should be negotiated there was a very real welcoming on the part of the Canadian artistic community and the Canadian cultural industries. Instead of being used as a political football for partisan gain, they were, in fact, being consulted directly by the Government of Canada as they have never been before.


Mr. Deans:: And ignored.


JOB IMPACT STUDIES
John Edward Broadbent: I say to the Minister, Mr. Speaker, that Canadians are tired of simply being consulted. They want to be listened to, for example.


Some Hon. Members:: Hear, hear!


John Edward Broadbent: Because data have been made available by the Government of Ontario showing that up to 281,000 jobs could be threatened in the Province of Ontario alone by entering into a comprehensive free trade agreement with the United States, let me ask a simple question of the Minister.
Has the federal Government, in its responsibility, made studies of the job impact of free trade and, if so, will it make those studies available to the people of Canada so that we will know what we are getting into?


Charles Joseph Clark: Mr. Speaker, of course the Government of Canada is carrying out studies into the implications of any trade negotiations into which we might enter. Those studies, many of them, have already been made available to most of the provinces-


An Hon. Member:: Most of the provinces?


Ian Deans: What about us?


Charles Joseph Clark: Most of the studies have been made available to the provinces and to others with whom we are working in the negotiation.


Ms. Copps:: What about us?


Charles Joseph Clark: Some of those studies will become public in the normal course of events.


An Hon. Member:: Leaked.


Charles Joseph Clark: No. They will become public by the deliberate decision of the Government in due course-


Mr. Rodriguez:: In due course.
November 27, 1985


Charles Joseph Clark: -because the Government has started the practice of carrying out the most extensive kind of consultation prior to negotiations which has ever been seen in our country before. We intend to continue that way.


Mr. Chretien:: No respect for Parliament.


REQUEST THAT STUDIES BE RELEASED
John Edward Broadbent: Mr. Speaker, the people of Canada heard rhetoric before the election about consultation and they want-


John Carnell Crosbie: That is all they ever heard from you.


John Edward Broadbent: The Minister's colleague says: "That is all they ever heard".


Charles Joseph Clark: From you.


John Edward Broadbent: That is all they are getting right now from the Government. That is the problem. They have had consultation, but if it is to be relevant to decision-making, does the Minister not agree that they should have studies, in particular job impact studies, at which they can look before the Government reaches a decision? If he agrees with that, why does he not make them available?
Right Hon. Joe Clark (Secretary of State for External
Affairs): Mr. Speaker, the Leader of the New Democratic Party, not long ago, said that the people of Canada want to be not simply consulted but listened to. I remember very well the position which the Leader of the New Democratic Party took on the constitutional question when most Canadian people who voted for him wanted him to stand up on behalf of a federal Canada.


Some Hon. Members:: Oh, oh!


Charles Joseph Clark: Instead, he caved in because of an intellectual agreement which he made with the then Prime Minister of Canada.


Some Hon. Members:: Hear, hear!


Charles Joseph Clark: We are carrying forward not simply extensive consultations. We are, as we demonstrated yesterday, working closely with the people who are directly concerned, to ensure that any negotiations which ensue will be in the interests of the country.


FINANCE
Hon. Donald J. Johnston (Saint-Henri-Westmount):: Mr. Speaker, my question is directed to the Deputy Prime Minister. I am sure he would agree that it would be quite improper
Oral Questions
to use senior public servants for partisan political purposes. Does he not consider it improper that the people invited to meet with Mr. Hartt, the Deputy Minister of Finance, were all members of the $1,000 PC exclusive club?


Hon. Erik Nielsen (Deputy Prime Minister and Minister of National Defence):: Mr. Speaker, that question was answered fully and completely yesterday by the Minister of Finance.


Some Hon. Members:: Repeat it again.


PARTICIPATING DINERS
Donald James Johnston: Mr. Speaker, the question was not answered yesterday. The question was put in the context of the answer of a general consultation which was presumably available to many members of the public. However, it turns out-and I suggest that the Deputy Prime Minister should satisfy himself on this- that these were all members of a very exclusive group of PC contributors. Would he confirm that to the House at the first opportunity and ensure that it will not happen again?


Joseph Jacques Jean Chrétien: And release the list of the names.


Erik Nielsen: Release the list of the names!


Some Hon. Members:: That's right.


Erik Nielsen: Mr. Speaker, it was the same-


An Hon. Member:: Take your time, Erik.


Charles Joseph Clark: Maybe they will buy a book.


Erik Nielsen: Straight From The Heart.


Some Hon. Members:: Hear, hear!


Erik Nielsen: It was the same question and the same answer. The Minister of Finance answered the question yesterday fully and completely, and I do not want to take up the time of the House by rereading it from Hansard.


CANADA-UNITED STATES NEGOTIATIONS-AUTOPACT'S FUTURE
Mr. Steven W. Langdon (Essex-Windsor):: Mr. Speaker, my question is for the Secretary of State for External Affairs. This week Simon Reisman has been reported in The Financial Post as telling a Cleveland symposium this year that he no longer believed the Autopact was necessary, and that he had fought in 1971 to have Cabinet end the safeguards which protect Canadian jobs. How can Canadian auto communities have any confidence in the Government's promises, when yesterday secret studies leaked out which indicated that the ending of the pact was being considered, and today it has

November 27, 1985
Oral Questions
become clear that the chief negotiator in our trade negotiations is prepared to give up these crucial safeguards which protect-


Mr. Speaker:: Order, please.


Charles Joseph Clark: Mr. Speaker, if there was a question there, I missed it.


Ian Deans: You missed it, because there was a question.


Charles Joseph Clark: Oh, there was a question.


Ian Deans: Try listening.


Charles Joseph Clark: The House Leader of the NDP assures me that there was a question. I presume, given the standards of the NDP, that it was the repetition of a question. I presume it was about the Autopact. The Government has given its assurances on the Autopact. They stand.


REQUEST THAT NEGOTIATOR BE DISMISSED
Steven W. Langdon: Mr. Speaker, I have a supplementary question. Given Mr. Reisman's statements, given the provincial opposition which has been expressed to Mr. Reisman, given these heretic views-


Mr. Speaker:: Order, please. With great respect, the Hon. Member was quite long the first time. Could he just come to his question?


Steven W. Langdon: Is the Secretary of State for External Affairs now prepared to dismiss this chief trade negotiator whose views are so out of touch with the realities of our country and the hopes of our community?


Some Hon. Members:: Oh, oh!


Charles Joseph Clark: Mr. Speaker, the first tactic of NDP Members was to seek to have us publish our negotiating position to the United States so that we would be sure to lose in the negotiations. That is how they first began to serve Canada. Their second position, now that we have appointed a distinguished and competent Canadian to serve as our negotiator, is to seek every opportunity on the floor of the House to blackguard the reputation of that individual. I think that that shows a very distorted view of the responsibility of Members of the House of Commons.


Some Hon. Members:: Shame! Shame!


AIR SAFETY
Hon. Andre Ouellet (Papineau):: Mr. Speaker, my question is directed to the Minister of Transport. Does he agree with me that light should be shed on the Air India tragedy? Does he agree that the responsibility for the breach of security in relation to the incident should be made public and thoroughly investigated? Could he explain to the House why the lawyer representing the Canadian Government at the inquiry seems to take a position that he wants to cover up something?


Hon. Don Mazankowski (Minister of Transport):: Mr. Speaker, 1 am surprised that the Hon. Member would want me to comment upon the proceedings currently going on in New Delhi which are taking into account all the facts associated with the Air-India incident. Surely the Hon. Member would want to wait until that report is finalized. When it is finalized, we can look at it and act accordingly.


AIRPORT SECURITY MEASURES
André Ouellet: Mr. Speaker, could the Minister explain why the lawyer representing the Government-in fact, he is representing the Ministry-is asking the inquiry not to go into the details about security at Canadian airports? Is it because the security measures announced by the Minister last June are not yet in force, and is it because there is a great lack of security at our airports?


Donald Frank Mazankowski: Mr. Speaker, the Hon. Member knows very well that security in our airports has been beefed up considerably. An additional $6 million has been allocated. Some 27 new X-ray machines have been put in place to check baggage. Some 26 explosive vapour detectors are either in service or on order. We are really trying to reverse the concerted effort of the previous Government to reduce the amount of moneys spent on safety and security at our airports which occurred over the last five or six years.


Some Hon. Members:: Hear, hear!


Mr. Speaker:: The Hon. Member for Churchill.


FEDERAL-PROVINCIAL FISCAL ARRANGEMENTS GOVERNMENT POLICY
Rodney Edward Murphy: Mr. Speaker, my question is directed to the Deputy Prime Minister. In response to the previous question-


Donald Frank Mazankowski: You spent all your money on your staff.


Lloyd Axworthy: Nonsense. Not as much as you are spending right now.
November 27, 1985


Donald Frank Mazankowski: You spent $1,057,000 on consulting contracts.


Lloyd Axworthy: Let's ask about the Via Rail task force.


John Carnell Crosbie: Largest staff in history.


Mr. Speaker:: Order, please. Order on both sides, please. The Hon. Member for Churchill.


Rodney Edward Murphy: Thank you again, Mr. Speaker. My question is directed to the Deputy Prime Minister. In response to the last question asked of him, the Secretary of State for External Affairs said that his Department did not want to publish its position on free trade because it might lose. Is that the same rationale the federal Government is using in its progress report on federal-provincial relations when there has not been one word on what the federal Government is doing to transfer payments to the provinces?


Charles Joseph Clark: Mr. Speaker, let me answer that since the premise of the question was based upon a clear distortion of what I said. The Hon. Member's accusation is as inaccurate as his preamble.


William Alexander (Bill) Blaikie: I wish I could learn repartee like that.


John Edward Broadbent: Attaboy!


FEDERAL PAYMENTS TO PROVINCES
Rodney Edward Murphy: Mr. Speaker, I suppose I am only inaccurate when I quote the words of the former Prime Minister. My question is directed to the Acting Prime Minister. Why has there not been one word on transfer payments in the document published by the federal Government, when almost every Premier has said that that is a crucial issue?


Barbara Jean McDougall: Again, let me assure the Hon. Member, whose arithmetic is almost as thick as his head-


Some Hon. Members:: Oh, oh!


Mr. Speaker:: Order.


Ian Deans: He doesn't have two black eyes.


Mr. Oberle:: Quit giving these fellows compliments, Barb.


Barbara Jean McDougall: The House has been assured time after time that there will be an increase in payments to the provinces, an increase that is faster than the rate of inflation and will meet the needs, given the negotiations and discussions that are ongoing between the Minister of Finance and the provinces. Those payments will continue to increase.
Oral Questions TAXATION


TAX REFORM-GOVERNMENT PRIORITY
Mr. Bill Attewell (Don Valley East):: Mr. Speaker, my question was for the Minister of Finance but in his absence I would like to direct it to the Minister of State for Finance, it concerns tax reform. Many Canadians are disappointed,, disillusioned, and confused at our current tax system. It is too complex, it is unfair in a number of respects, and it is being abused by a number of individuals and corporations. Does the Government still consider tax reform a high priority? Second, if it does, when will we see a major comprehensive initiative in this regard?


Barbara Jean McDougall: Mr. Speaker, I think our comprehensive view of the subject can be seen in the steps that we have taken so far, including the Ways and Means Motion introduced by the Minister of Finance yesterday designed to deal with the tax arrangements around trusts with regard to Genstar. The SRTCs were removed. We will be introducing the minimum tax legislation. We do not regard tax reform as a one-shot effort. It is a constant process and there will be more coming.


SHIPBUILDING
Mr. Dave Dingwall (Cape Breton-East Richmond):: Mr. Speaker, my question is directed to the Minister of Transport. Yesterday he quite rightly stated that Transport Canada is responsible for approximately 95 per cent of the work in the Canadian shipbuilding industry. He forgot to tell Canadians that that was as a result of the Special Recovery Program of the previous administration. I, on behalf of the workers of the shipbuilding industry, seek a commitment from the Minister of Transport that he will not allow CN Marine to purchase two ships offshore or to build two ships offshore but that they will be built or purchased in Canadian yards.


Donald Frank Mazankowski: Mr. Speaker, when one recognizes that the Canadian shipbuilding industry must rely upon the Government of Canada for 95 per cent of its work, that might suggest that perhaps it is being less than competitive in some of its transactions. I think we should clearly recognize that fact.
As I said to the Hon. Member yesterday, as Minister of Transport I also have an obligation to ensure that we provide the necessary transportation services in a safe and efficient manner at the lowest possible cost. All of these things will be taken into consideration during the evaluation process that is currently under way.

November 27, 1985
Oral Questions GOVERNMENT POLICY


David Charles Dingwall: Mr. Speaker, my supplementary question is directed to the same Minister. The Minister must know that every other industrialized country in the world has a subsidy program for its shipbuilding industry. Why should Canada be different? Will the Minister please explain to the House and to the shipbuilding industry why it has taken in excess of 400 days for the Government and the Minsiter's colleagues to come to the House of Commons with a shipbuilding policy? Why the delay?


Donald Frank Mazankowski: Mr. Speaker, the Hon. Member should know that if there was a lack of a shipbuilding policy it was probably due to the inaction of the Government of which he was a member and a supporter. There is no question about that. The Hon. Member is asking me to enunciate a shipbuilding policy and that is something that-


David Charles Dingwall: You promised one a year ago. Where is it?


Mr. Speaker:: Order.


David Charles Dingwall: Don't mislead the House.


Donald Frank Mazankowski: That is a question that would be more appropriately addressed to the Minister of Regional Industrial Expansion.


REGIONAL INDUSTRIAL EXPANSION
John R. Rodriguez: Mr. Speaker, my question is for the Minister who is replying on behalf of the Minister of Regional Industrial Expansion. I believe that is the Minister of Energy, Mines and Resources. In the spring the Government promised that Phase 2 of Sysco would be ready soon. In September the Government indicated that an answer would be given by the end of October. It is now almost the end of November. Will the Minister take this opportunity to tell the people of Cape Breton when they can expect a decision on the modernization of Sysco?


Hon. Pat Carney (Minister of Energy, Mines and Resources):: Mr. Speaker, as the Hon. Member well knows, the Minister in charge of that aspect is unavoidably absent from the House. I will take the Hon. Member's question as notice and make sure that the Minister responds to it.


ANNOUNCEMENT OF DECISION
John R. Rodriguez: Mr. Speaker, that answer is not appropriate for the Association of Mayors and Wardens of Cape Breton and it is not appropriate for the unemployed of Cape Breton. Does the Minister think that it is
right and just for the unemployed of Cape Breton, an area with the highest unemployment rate in the country, to wait until the Minister has been rehabilitated? Does she not think that it is appropriate for the Cabinet to make that collective decision and let the people of Cape Breton know now?


Pat Carney: Mr. Speaker, the people of Cape Breton are well aware that the Minister responsible has done more for Cape Breton than any Liberal Minister has for generations. The Hon. Member asked if it is well worth waiting. I would suggest that it is well worth waiting for the Minister to return to the House to answer the question.


EXPO '86 VANCOUVER INTERNATIONAL AIRPORT FACILITIES
Mrs. Mary Collins (Capilano):: Mr. Speaker, my question is for the Minister of Transport. As the Minister knows, we are inviting the world to visit Vancouver and Expo during 1986. I hope some of our U.S. friends who are watching Question Period this week will take us up on this invitation.
Some concerns have been expressed about the adequacy of services at the Vancouver International Airport to deal with the growing passenger loads expected during Expo '86. Could the Minister advise what efforts he is making to ensure that physical changes are made? Has he, or will he, meet with his colleagues responsible for immigration and for customs to ensure that appropriate and co-ordinated procedures-


Some Hon. Members:: Order!


Mary Collins: -are put in place to meet the needs and make sure that visitors are left with a positive impression when they arrive in Canada?


Donald Frank Mazankowski: Mr. Speaker, a number of initiatives have been undertaken. Some $17.7 million worth of capital improvements has been earmarked for the Vancouver International Airport.
[DOT] (M50)


Mr. Rossi:: That is the same answer you gave her at lunch.


Donald Frank Mazankowski: Improvements have been made to accesses, such as the on and off ramps associated with the Laing Bridge. The capacity of the Canadian Inspection Services will be increased by 50 per cent. There are to be additional public elevators and accesses for the disabled-a whole host of things.


Mr. Speaker:: Order, please. Perhaps the Minister might like to continue this later.
November 27, 1985


CANADA ASSISTANCE PLAN
Mr. George Baker (Gander-Twillingate):: Mr. Speaker, my question relates to a statement made by the Minister of Employment and Immigration in the House yesterday concerning the Harvey Hawkins case. She said:
-arrangements have been made for his family to be brought to Toronto to be with him.
That would certainly have been a compassionate move if it were not for the fact that his family has been in Toronto for the past three weeks.


Some Hon. Members:: Oh, oh!


George Baker: Will the Minister inform the House which family she is talking about and for whom she made arrangements two days ago to be brought to Toronto to be with him?


Hon. Flora MacDonald (Minister of Employment and Immigration):: Mr. Speaker, since the Hon. Member was not here he obviously did not hear the whole statement. As I mentioned yesterday, arrangements had been made. I may say that the arrangements to bring his wife and children to Toronto were made by a private donor, someone who assisted them to come.


Jean-Robert Gauthier: Some one who had heart.


Flora Isabel MacDonald: The arrangements for his parents to come to Toronto were made by the Government of Newfoundland.


George Baker: Perhaps the arrangements made two days ago can now be cancelled.


INCOME ASSISTANCE
George Baker: Mr. Speaker, during her statement yesterday the Minister also said that the provincial Governments and the Canada Assistance Plan would provide payments at least equal to the amount he would have received on unemployment insurance while he is sick. Does the Minister not realize that the maximum amount that he and his family will qualify for when he returns to Newfoundland to recuperate will be in the area of $400? Who will make up the difference? Who will pay the money? Has the Minister again misled the House?


Some Hon. Members:: Hear, hear!


Flora Isabel MacDonald: Mr. Speaker, seldom have I seen a more shameful exploitation of the difficulties of a family.


Some Hon. Members:: Hear, hear!


André Ouellet: Who planted the question yesterday?


Flora Isabel MacDonald: Here is an individual who, in fact, made a very courageous move. We made the effort to be in contact
Oral Questions
with the provincial Governments of both the Province of Ontario and the Province of Newfoundland in order to assist him through this very difficult time. As I said yesterday, the amount of income he will be receiving under the Canada Assistance Plan and the provincial plans will be equal to, and I could say more than, he would be receiving through the unemployment insurance plan. I regret that I cannot say what those amounts are since they are confidential under our legislation.


BANKS AND BANKING
Mr. Nelson A. Riis (Kamloops-Shuswap):: Mr. Speaker, my question is for the Minister of State for Finance. Yesterday we learned from sources in Los Angeles that the Canadian subsidiary of an American bank, the Security Pacific National Corp. of California, has decided to purchase the western-based Morguard Bank. Did the Minister approve this transaction or does she intend to approve of it? Why is it that we have to wait for American sources to tell us what is going on in the Canadian banking industry?


Barbara Jean McDougall: Mr. Speaker, the announcement was made from an American source because this is a merger among consenting adults in the private sector.


Some Hon. Members:: Oh, oh!


Barbara Jean McDougall: It was their announcement. I think the Hon. Member should be delighted with the announcement which is an expression of confidence in the banking institutions of western Canada.


Nelson Andrew Riis: Mr. Speaker, I do not think I will touch that line.


FUTURE PROSPECTS
Nelson Andrew Riis: Mr. Speaker, it is a very serious situation. Never before has there been a need for Canadian regional financial institutions to be so sensitive to the economic needs of the regions of Canada. Is this an indication of what is likely to come as we enter into the free trade era where large American banks and financial institutions will be coming and gobbling up some of our more stable and secure Canadian banks, particularly small regional financial institutions?


Barbara Jean McDougall: Mr. Speaker, this is not a case of the gobbling up of an institution. This is a strengthening of two existing Canadian institutions whereby there will be a Vancouver head office with a Toronto branch, whereby the bank will be managed by western Canadian management, and whereby the middle market of western Canada will be better served.


John Edward Broadbent: You can sell the whole country that way.

November 27, 1985
Oral Questions


Barbara Jean McDougall: I think this is something about which the Hon. Member should be very pleased.


ENVIRONMENTAL AFFAIRS
Mr. Alan Redway (York East):: Mr. Speaker, in the absence of the Minister of the Environment my question is for his Parliamentary Secretary. The Law Reform Commission of Canada has recommended that the Criminal Code be amended by including crimes against the environment, and also by having penalties which are not just fines but orders for restitution and jail terms. Can the Parliamentary Secretary advise us if the Department of the Environment agrees with these recommendations? Will his Minister be urging the Government to adopt them?


Mr. G. M. Gurbin (Parliamentary Secretary to Minister of the Environment):: Mr. Speaker, in response to the Hon. Member's question I can advise him that the report of the Law Reform Commission on the environment has been received. It is being given careful attention by both the Department and the Minister. We will be able to provide a response in the reasonably near future which I hope will be in keeping with the hopes of the Hon. Member.


SOCIAL SECURITY
Mr. Jean-Claude Malepart (Montreal-Sainte-Marie):: Mr. Speaker, my question is directed to the Deputy Prime Minister. The day before yesterday, the Minister of Finance and his Deputy Minister, Mr. Hartt, attended a privileged gathering of people who had contributed $1,000 or more to the treasury of the Progressive Conservative Party. Could the Deputy Prime Minister give the House the assurance that the Minister of Finance and his Deputy Minister, Mr. Hartt, would agree to meet the members of the Confederation des organismes familiaux and the Coalition des families du Quebec who are opposed to de-indexation of family allowances? The Deputy Prime Minister knows as well as I do that these people cannot afford to contribute $1,000, but would he agree to attend a $4 or $5 dinner?


Erik Nielsen: Mr. Speaker, they seem to be insisting. As reported at page 8814 Hansard for November 26 the Minister of Finance stated:
It was a matter of a dinner that was not partisan in nature at all. It is consistent with the attempt of the Government to discuss with some of the business leaders the policies of the Department of Finance, and to develop a greater degree of understanding of the policies of the Department of Finance.
He continued:
-it is consistent with a range of dinner meetings which Mr. Hartt has had, and proposes to continue to have, that will move in this same direction.
[ Translation]


INQUIRY IF ORDINARY CITIZENS WILL HAVE SAME PRIVILEGES AS BUSINESSMEN
Jean-Claude Malépart: have a supplementary, Mr. Speaker. The Deputy Prime Minister did not get my point. If businessmen can express their views on the Government's policies, could the Deputy Prime Minister give the House the assurance that ordinary citizens like members of the Confederation des organismes familiaux will have the same privilege at a $5 dinner instead of a $1,000 dinner? Does the Deputy Prime Minister go along with that?


Erik Nielsen: Mr. Speaker, I think what is eating the Hon. Member is the fact that they could not get 37 people together for a dinner.


Some Hon. Members:: Hear, hear!


UNEMPLOYMENT INSURANCE
Ian Deans: Mr. Speaker, my question is for the Minister of Employment and Immigration. Does the Minister agree that the Government's decision to include holiday pay in the recent changes to legislation with respect to unemployment insurance payments detrimentally affects and hits construction workers and longshoremen hardest? Will she order a review to determine the effect of the change and take whatever action is necessary to correct it?


Flora Isabel MacDonald: Mr. Speaker, I have met with representatives of the construction trades, longshoremen, and stevedores. I understand the difficulties which they have expressed with regard to holiday pay and, in particular, with regard to holiday pay under trust funds. As a result of that, I have written to Claude Forget, the Commissioner of the Inquiry into Unemployment Insurance, asking him to review specifically this particular aspect of payments.


Mr. Speaker:: One question.
November 27, 1985



TRANSPORT


Mr. Neil Young (Beaches):: Mr. Speaker, my question is addressed to the Minister of State for Transport. I wonder if the Minister could advise the House whether she has reconsidered her decision and would now agree to include disabled groups as experts in the conference she is going to convene next year to discuss issues affecting the disabled population in Canada?


Hon. Suzanne Blais-Grenier (Minister of State (Transport)):: Mr. Speaker, I thank my hon. colleague for his question and for advising me of this matter. I explained just before Question Period that it was an oversight that disabled persons were not included in the groups which would meet during the international seminar which will be held at Expo. It was in the previous text but I just didn't mention the disabled persons. However, obviously they will be in the middle and very importantly so, of everything we do and will do in relation to them.



CLERK OF PETITIONS' REPORTS

['Pursuant to Standing Order 87(2), it is my duty to lay upon the Table extracts of the Minutes of Meetings of the Board of Internal Economy approving budgets of certain standing, special and legislative committees.']
Mr. Speaker:: I have the honour to inform the House that the petitions presented by Hon. Members on Tuesday, November 26, 1985, meet the requirements of the Standing Orders as to form.



Mr. Speaker:: Pursuant to Standing Order 87(2), it is my duty to lay upon the Table extracts of the Minutes of Meetings of the Board of Internal Economy approving budgets of certain standing, special and legislative committees.



ROUTINE PROCEEDINGS


Hon. John Wise (Minister of Agriculture):: Mr. Speaker, I would just like to begin by saying that in keeping with this Government's long-standing commitment to support and give assistance to the agricultural industry across this country, it gives me a great deal of pleasure today to announce the federal Government's decision to commit up to $150 million toward
Statements by Ministers
the Crop Disaster Assistance Program in order to assist crop producers in the southern Prairies and the Peace River region.


Some Hon. Members:: Hear, hear!


John Wise: This program will complement the efforts being made by the provincial Governments of British Columbia, Alberta, Saskatchewan and Manitoba to relieve the financial crisis in western Canadian agriculture.
Our plan is to make a yield deficiency payment to farmers in the areas where cumulative crop losses, primarily due to drought, have been the worst over the past three years. These areas would be determined based on crop insurance records and county or rural municipality yield records. We expect that some 30,000 farmers would be eligible for a share of this assistance. Administrative details, including where farmers can get application forms, will be announced in the very near future. I can assure Hon. Members that these farmers will be dealt with with dispatch.
Of the federal Government's $150 million contribution, $95 million will be provided this fall and the remaining $55 million will be paid in April in time for next year's seeding.
As Hon. Members of the House know, our Government has been and continues to be extremely concerned about the impact of successive droughts on prairie grain and livestock farmers. In fact, in the fall of 1984, we provided a $30 million federal contribution to help livestock producers retain their breeding herds over the winter. Subsequent to that, we made a $123 million final payment under the Western Grain Stabilization Plan. In addition, we amended the Western Grain Stabilization Act in order to make an interim payment prior to seeding this spring and that contribution amounted to $450 million.
Recently, my colleague, the Minister of State for the Canadian Wheat Board (Mr. Mayer), made an announcement of the final payment under the Act of an additional $72 million. Incidentally, those cheques are now in the hands of western farmers.
We again responded to the plight of the prairie livestock producers with a $48 million federal drought assistance package announced in August. We recently announced interest free cash advances of up to $3,000 per producer to assist in drying tough or damp grain. As well, the Minister of State for the Canadian Wheat Board earlier indicated we would be prepared to make cash advances for unharvested crops, and today I want to assure all farmers that these advances will in fact be offered to those who are unable to harvest their grain.
While the crop insurance under the Western Grain Stabilization Program has paid out nearly $2 billion in the past two crop years, the successive years of drought, severe grasshopper infestations, poor harvest weather and low commodity prices have left a great many farmers with insufficient cash flow to meet their expenses and to continue to produce crops. The $150 million program we are announcing today will provide immediate relief and we will continue our efforts to develop a long term approach to emergency funding.
8870

November 27, 1985
Statements by Ministers
There is no question about the fact that there are many western farmers, good farmers, who, through no fault of their own, need special assistance measures at this time. That is what we are providing today. But we all appreciate that ad hoc measures and programs are not an ideal solution. It is disruptive to producers to live with the uncertainty of not knowing what back-up assistance they will receive when natural disasters occur. Nor is it easy for the federal Government to take on substantial new financial commitments which have not been previously budgeted. That is why we are viewing the Crop Disaster Assistance Program as a field test for a permanent emergency assistance program which could be offered to farmers as a complement or extension to the current Crop Insurance Program. I believe it is incumbent on us to revise the Crop Insurance Program to allow producers some additional protection. We hope to be able to work out these details with the provinces in time for the 1986 crop year.
The federal Government now contributes over $200 million annually to the Crop Insurance Program across Canada and I believe about $160 million of that is directed to western Canada.
I would also at this time like to thank my colleague, the Hon. Member for Assiniboia (Mr. Gustafson), the Parliamentary Secretary to the Prime Minister-


Some Hon. Members:: Hear, hear!


John Wise: -and in addition to the Parliamentary Secretary, I want to thank all the Members of the federal-provincial task group which he chaired for their very valuable assistance in advising the Government on the drought problems in western Canada. I believe all Hon. Members of this House recognize the personal commitment and, indeed, without exaggeration, the hundreds of man-hours which the Hon. Member for Assiniboia dedicated to this work. The Crop Disaster Assistance Program I am announcing today has been made possible in no small measure by the Hon. Member's unceasing efforts to assist western farmers.
This program should help farmers in the drought area overcome the economic hardship which prolonged periods of drought have created. This is important to all Canadians since prairie grain and oilseed production is worth about $7.5 billion a year at the farm gate and provides the base for an estimated $35 billion a year in economic activity. This tremendous agricultural resource must be protected during these difficult times so that it may continue to enrich Canadians for generations to come.


Some Hon. Members:: Hear, hear!


Mr. Maurice Foster (Algoma):: Mr. Speaker, I am glad to see that the Minister of Agriculture (Mr. Wise) had the hallelujah chorus lined up behind him this afternoon as he made his announcement. We are pleased to see that the Minister finally made the announcement. We wish that he had made it back on September 10 when this House commenced
its fall sitting because the situation on the Prairies was desperate. That has been apparent since mid-July. 1 know the Minister visited Assiniboia and other places, as did I and many other Members of this House back in July. We saw a crop three or four inches high and absolutely devoid of any seed. We have seen the situation exacerbated over the fall months with young farmers losing their farms and being refused welfare. We are also glad that he reversed himself on the position he took on December 19, 1984 when he said that never again would a Conservative Government make a payment of this type for crop disaster. However, this decision could just as easily have been made in early September. The cheques could have been in the farmers' hands by now. Given that the mechanics involved in paying this money, the application forms and the criteria, have not even been worked out, very few payments will be made before January of next year. At that, only about two-thirds of the payment will be made, with the rest being paid next May or later on.
Some may think that an announcement of $150 million for crop disaster assistance in western Canada is a great deal of money. However, when we look at the disaster itself involving $2 billion to $3 billion, it does not look very large. We are dealing here with a massive disaster. In Saskatchewan alone it is estimated that 8.2 million acres were affected by severe drought, with 6.3 million acres less severely affected, and some
14,000	farmers severely affected. As one of the people from the Wheat Pool said, this seems to be less than a token gesture because, unfortunately, the Minister has not announced what the maximum benefit will be. It is probably so small that he was afraid to put it in the announcement because of the derision he would face from the thousands of farmers facing the most serious financial difficulty in the history of this country.
Using the Minister's own figures of 30,000 farmers who will benefit, and assuming that the average farm is 1,000 acres, we come up with a figure of $5 per acre. That is about what it costs to spray one application of pesticide to control the grasshoppers which infected many of these areas last summer. Some farmers had to make two or three applications and even then lost their crop because of the drought. Compare this amount of $5 per acre average to the amount recommended by the Saskatchewan Wheat Pool which represents some 60,000 farmers. They recommended a maximum of $50 per acre or 10 times what the Minister appears to have offered today. Compare the amount the Government was prepared to spend with the bank failures which has cost us at least $1 billion. Compare this amount offered today with the assistance provided by the Province of Alberta, a total of $800 million this year. Last weekend that province announced a special program involving $200 million to assist these people. However, the federal Minister announces today immediate assistance of $95 million, or less than half, with additional funding next spring of $55 million. Obviously this, when put in its true perspective, is incredibly small.
The Minister spent most of his time today talking about crop insurance and western grain stabilization payments which
November 27, 1985

had been made. I appreciate his applauding these programs which were put in place by a Liberal Government, but these are insurance programs. You pay your premium and if you have a loss, you get the benefit. Therefore, he should not be talking about these programs as if they involved some benevolence on the part of the Government itself.
The Minister also paid great tribute to the Parliamentary Secretary to the Prime Minister, the Hon. Member for Assiniboia (Mr. Gustafson), for all the work he has done. 1 wish the Parliamentary Secretary would table his report. I cannot believe that he recommended this level of assistance. I am sure it must have been two or three times this amount, and to be paid immediately, not in January or May or whenever.
In light of falling land prices, low commodity prices, international predatory pricing by the EEC and the United States, there is great concern in western Canada about the Government's commitment to agriculture. This statement today, although providing some small relief, will not lift that concern.


Mr. Vic Althouse (Humboldt-Lake Centre):: Mr. Speaker, this announcement today finally lets farmers in western Canada know where they stand with this Government. The statement is nine pages long, but the Minister said it all in the first line. He is saying that his Government has now decided to commit up to $150 million towards crop disaster relief in the drought affected areas of western Canada. The rest tells us nothing. He says the program complements the efforts made by the provincial Government, but I think that is what a lot of producers are going to be wondering and worrying about.
The political attitude that the Minister seems to be taking is borrowed to some extent from that of the first Prime Minister of this country who was called colloquially "Old Tomorrow". Our "New Tomorrow" works by delay, delay, delay. This is a sort of follow-up on an infamous politician from my Province of Saskatchewan whose call words are deny, deny, deny. He is providing bits of policy as he goes along with a peekaboo approach to agricultural policy. Even though the Member for Assiniboia (Mr. Gustafson) began his consultations on August 9, the Minister of Agriculture (Mr. Wise) delayed making any announcement on a cattle payment until after the provinces had acted. Saskatchewan residents will recall that a week later the Government of Saskatchewan said that there would be $60 per head available to people who kept their cows over the winter. The federal Government then announced a $30 payment, which came very close to what the group bargaining on behalf of farmers had asked for. They had asked for $100 a head and everyone felt reasonably good about having achieved close to 90 per cent success. They then discovered that the $30 was not additional to the provincial program but was simply complementary to it, and it was eaten up by the provincial Government on the way through the delivery system as the full $30 stayed in provincial hands.


Mr. Gustafson:: That was your statement, not ours.
Statements by Ministers


Victor Fredrich (Vic) Althouse: The producers understood from the statement that was made by Ottawa that they would be getting an additional $30. Today they expect to be getting something in the order of $50. They were firm on that figure which was taken into negotiations with the Member for Assiniboia.


John Wise: Never, never.


Victor Fredrich (Vic) Althouse: That program would have cost in excess of $500,000, so we can be pretty certain that what is being offered here is something less than a third of what was put on the table by the farmers. We are not told what that amounts to on a per acre basis. With only a mere three and a half months to put the program together we could not expect the Minister and his people to put together a firm proposal. It has been before Cabinet for more than five weeks-seven weeks if you count from the time that the Member for Assiniboia made his statement in Regina. After all of that time they have not put a program together. We are told that it will "complement" the best efforts of the provinces.


Leonard J. Gustafson: It is well received by the farmers.


Victor Fredrich (Vic) Althouse: It does not say that it will supplement the best efforts of the provinces. A supplemental program would have been additional to that. What does "complementary" mean? Does it mean it is going to be eaten up in the same way as the livestock program was eaten up? Why did the Minister not make that clear in the succeeding eight pages instead of talking about other programs which have nothing to do with the original announcement and nothing to do with drought assistance? This is just filler to use up the time of the House and the press.


John Wise: Do you have something against the PFRA, Vic?


Victor Fredrich (Vic) Althouse: The Minister mentioned something about the PFRA. That was one of the things he did not mention in his nine-page statement. Perhaps he is going to supplement that, too, and there will be a policy statement in coming weeks about the PFRA or the PFAA.
The delay has allowed the Minister to follow the same route as he took with the cattle payment. He waited so long that the provinces started to put forward acreage proposals of their own. In Saskatchewan there has been a proposal of $25 per acre and of a loan at 6 per cent over three years for up to 1,200 acres. I am not sure whether some of this money will be used to pay the cost of that. That is not clear. I hope the Minister will clarify that when he leaves the Chamber. The rules of the House no longer permit us to get such answers.
On page 6 of his statement the Minister went to great pains to point out why he backed off from his position of last December 21 when he made a pay-out to farmers in northeastern Saskatchewan who had been flooded. He said at that time that that would be the last of the ad hoc programs. He said that after December 21, 1984, crop insurance would be expected to cover these types of things and that if producers did not have crop insurance they would not be covered. At least he saw the problem with that when faced with a disaster such as that

November 27, 1985
Statements by Ministers
which occurred in southern Saskatchewan and Alberta this year and he has backed off, to a very small extend, and has announced another ad hoc program. Elowever, listen to the way he describes it. He said: "It is disruptive to producers to live with the uncertainty of not knowing what back-up assistance they will receive when natural disasters befall them". That is very true. He continues: "Nor is it easy for the federal Government to take on substantial new commitments that have not been previously budgeted". Substantial new commitments? One hundred and fifty million dollars is a substantial amount of money, but not compared to the substantial commitments we made to the banks or compared to some of the tax remissions we gave oil companies. In those cases decisions were made over a weekend to spend billions of dollars, yet farmers waited three and a half months to get $150 million.


Some Hon. Members:: Hear, hear.


RESEARCH AND DEVELOPMENT
Frank Oberle: Mr. Speaker, it is my pleasure today, as Minister of State for Science and Technology, to table the new long-range plan of the National Research Council of Canada called A Practical Perspective. This plan began to take shape under the direction of my predecessor, the Hon. Minister of Fisheries and Oceans (Mr. Siddon) after last November's economic statement and took further direction from the full Budget of last May.
The NRC is the Government of Canada's principal agency for new research and development. Over the years it has adapted well to Canada's R and D needs. Today A Practical Perspective details the NRC's adjustment to our most pressing problems. We all know of the huge national debt and unemployment in all sectors. The country needs economic stimulus which creates jobs and I believe that a wise use of scarce resources in the science and technology fields holds the best promise for future growth and stability in the job market.
Unfortunately, we now find ourselves in a squeeze. Just when we need to develop new technologies we also need to limit our spending. Unless the Government keeps to its own Budget, it may worsen the very problems it tries to solve. We must solve our R and D problems with brain power since we cannot solve them through brute financial force. The National Research Council already knows this. A Practical Perspective is a deliberate reorientation by the NRC and it is consonant with government policy. It has new ideas and new directions, but none require a budget over that which has already been considered by Cabinet. The plan has my support and, I am sure, that of my colleagues in Cabinet.
Over the next year the NRC will increase its work in generic research, which work has practical applications in more than a single sector. The NRC will increase its focus on technology
transfer and diffusion, an area in which the NRC already leads the nation's research organizations. Only last month the NRC shared the Award of Excellence Gold Medal for Technology Transfer with Lumonics Inc. Some years ago the NRC made basic breakthroughs in understanding high-powered lasers. Lumonics, now one of the world's most successful laser manufacturers, then put those basic principles to use. This followed last year's success when the NRC shared another gold medal with Sciex Inc., a Toronto-based maker of mass spectrometers.
All research and development is an exercise in risk. In fact, there is only one certainty in R and D: not performing it is the worst thing a country can do in today's environment. However, for R and D to succeed it needs more than good ideas. It must also have an established long-term scientific expertise or infrastructure. I believe that the percentage of the Gross National Product which Canada spends on R and D is far too low, but in the present tight fiscal situation we must ensure that what is spent is put to optimum use. Quality more than quantity must be our guide. I think that the country has yet to extract full value from the R and D results it has already produced. Therefore, in the short term our task is to use more effectively the resources we already have.
R and D is complicated, not only in what it studies, but in how it is done. It involves our industry, our financial and business institutions, our universities and all tiers of Government. We feel its effects in our living standard, our unemployment rate and our trade balance. R and D is so vital that it must be managed properly. This is not to say there is no more room in Canada for pure research that seeks to satisfy human curiosity. But Government research laboratories must be relevant to the industry's needs in the short term. Their programs must be sensitive to the market. The plan given to us by the National Research Council will continue to give Canada its vital base for long-term research. But for the next few years, it will put more emphasis on development and diffusion, the "D", so to speak, in R and D.
We must not aim merely at yet another stockpile of new data. Any knowledge must quickly get to those who can turn it into economic growth and prosperity. Government alone cannot and should not do all the research that this country needs. However, we do want to create a climate that favours someone doing it. To create this climate, Government must find the right mix of markets, basic knowledge, locale, national needs, and most important, people. It should identify opportunities for Canada in emerging research fields. It should get Canada into the new technologies as early as possible and so pave the way for industry later to reap advantages.
As an example, let me mention Canadarm. None of its spectacular success would have been possible unless the National Research Council had a basis of expertise and had already proven able to manage advanced aerospace projects. NRC is now seeing to it that Canadarm technology finds wider use on earth, in such practical fields as machine visions
November 27, 1985

and robotics. This one advanced technology may one day let us venture safely not just into space, but beneath the seas and mountains, into nuclear reactors and toward next decade's automated factories as well. The money we invested in Canad-arm will certainly come back to us greatly multiplied over the next 20 years.
The same pay-off also happens elsewhere. Government investment in telecommunications and satellite development has put Canada on the leading edge of these technologies. Our space industry has found a lucrative niche in international markets. In fact, it sells more than its national Government spends on its entire space program, a claim that few nations can make.
The Government will do more than encourage and sustain R and D; however, we will perform R and D directly, ourselves. Our Government laboratories exist to do long-term research on Canada's national priorities. This long-term work is a kind of unseen wealth. With it in our national bank account, Canada has the basis to exploit lucrative new technologies as they appear on the horizon and will not have to start from scratch each time.
In turn, the National Research Council is indispensable to Canada's long-term R and D. It covers many disciplines and research approaches from hard technology transfer to the curiosity that gives rise to new discoveries. Some work represents both fields. For example, current NRC research in a field called "micro-propagation of conifers" promises to give us forests full of "alpha trees" that are straight, tall, healthy, quick-growing, and resistant to threats as diverse as insects and acid rain-a concern that is dear to our hearts.
There are many other major programs being planned or already under way at the National Research Council. One of these will make it easier for us to live and work in our cold oceans. Another will explore the powerful new techniques called biotechnology. Yet another will uncover useful new materials and ways of using them. The list goes on. The National Research Council laboratories are there for the nation; for business people to test products and for Government, university and industrial researchers to unlock the doors of new goods and services. Many NRC laboratories are there because they would be too costly for any single company to build and maintain. However, once in place for every company in Canada, they have proven indispensable.
Another aspect of R and D that is sometimes taken for granted is up-to-date scientific and technical information. The National Research Council distributes this to all Canadians through its national science library, because technical information cannot give full value until it is in the hands of those who can apply it. The idea holds true for every other aspect of R and D as well. It is at the centre of the National Research Council's new plan. This is why the NRC has recently built up the programs of its industry development office. The strength and effectiveness of these programs comes from the full resources of the NRC's hundreds of scientific and technical personnel. As Canadian corporations know, these programs deliver not just the latest technology but help in funding
Statements by Ministers
in-house research projects as well. The National Research Council's industrial programs offer advice on problems from small-scale production lines to the largest projects in our country.
The programs work because people can reach them. There are now over 160 NRC technology advisers in major centres in our country. Each adviser puts industrial clients in touch with the full range of federal programs and services. Each can approve most industry assistance projects with minimum delay. Over the next two years, the National Research Council will broaden and improve these successful programs. Special funds will cover the cost of studies to measure how well a proposed product might do and how best to market it. Through these programs, as well as its actual research, the National Research Council will reach every technical and business audience in Canada. It will lead and co-ordinate the effort of Canadian R and D, building the team spirit that is vital to our success.
Leadership is now the most challenging task for Canadian R and D, but also offers the greatest rewards. It involves bringing together those who actually do R and D; the universities, the provincial research organizations, the federal laboratories and industry. It must include the users and the supporters of research and development; the policy makers, the venture capitalists and other investors, the business managers, the whole Canadian workforce. All these groups stand to profit from a strong national research and development program. None can afford to work in isolation from the other any longer.
Since Parliament founded the National Research Council in 1916, it has grown from 9 advisers to 3,000 scientists, technologists, managers and support staff. These men and women link many times their number in members of Canada's scientific and technical community. For example, over 100 professionals from all fields serve as members of the NRC's various associated and advisory committees. Even more people in Canada's industrial sector rely on NRC programs for financial and technical assistance.
The National Research Council will continue to build on the respect it has earned as a leader of Canada's research and development community. It will work even harder and bring together the producers and end users of the research data. The National Research Council's regional offices will be points of contact where key people can meet. The NRC will establish a Technology Assessment Office helping Canadians to keep up with new technology beyond our borders. The NRC's associate committees will let Canada's scientists, technologists and industrialists have a direct say in national R and D policy. In short, the National Research Council will continue to be the breeding ground for excellence in Canadian science, technology and commerce. This is its natural role both in history and today.
I wish to take this opportunity to congratulate the many people in the National Research Council who have served us so well over the last 70 years. Of course, I want to congratu-

November 27, 1985
Statements by Ministers
late them for the preparation of this document in helping us to achieve the objectives that we have set.
It is my pleasure to table the document from the NRC which is entitled A Practical Perspective. I ask, Mr. Speaker, that you seek unanimous consent to return to Tabling of Documents in order to permit me to table these documents under Standing Order 47(2) in both official languages.


The Acting Speaker (Mr. Charest):: Is there unanimous consent to revert to Tabling of Documents?


Some Hon. Members:: Agreed.


Frank Oberle: Mr. Speaker, it is my pleasure, pursuant to Standing Order 47(2), to table a document called A Practical Perspective, the NRC Plan 1986-1990 in both official languages.


Some Hon. Members:: Hear, hear!


Mr. David Berger (Laurier):: Mr. Speaker, I would like to congratulate the Minister on his appointment to this vital portfolio and to wish him well in his endeavours. I want to thank him also for the courtesy he extended to me by sending a copy of the plan and his statement yesterday which enabled me to prepare my remarks.
I might say at the outset that I know he is not responsible for the plan because it was printed before he was named Minister. I hope he will perhaps take into consideration some of my remarks today in seeking to improve the plan. [Translation]
Mr. Speaker, I welcome this opportunity to comment today on the new plan for the National Research Council. It is a plan we have been expecting for some time, and it contains a number of interesting proposals with respect to innovation in Canada's private sector.

I cannot help but feel that it is the plan of an agency in trouble, an agency whose status has yet to be resolved by its political masters. Nowhere in the plan, Mr. Speaker, nor in the Minister's statement, is there a reference to the Nielsen task force and the recommendations that were tabled with the Budget last May.
The activities and recommendations of the task force and, in particular, the secretive manner in which it has conducted its work, have raised deep concerns and frustrations in the scientific community across Canada. Scientists need to have adequate resources and a positive climate in which to work. I sincerely hope that the new Minister will clear the air as soon as possible regarding the status of the Nielsen task force.
Second, when one looks at the single page in the plan devoted to funding, it is apparent that the plan can only be viewed as a plan of austerity. There is no increase in the NRC's budget in 1986, the first year of the plan and only a 2 per cent increase in 1987. Spending levels for years three, four
and five are yet to be determined. It is a five-year plan which is a two-year plan. There seems to be no provision for an increase to keep pace with inflation, which means that spending will actually decline in the next two years. This decline comes from a Government and a Prime Minister (Mr. Mul-roney) that promised increased spending on research and development.
From where will the money come to support the new initiatives, Mr. Speaker? What will be cut? There is not a word about this either in the plan or in the Minister's statement. Where is the money for Science Place Canada in Winnipeg or for the biotechnology centre in Montreal? [Translation]
Mr. Speaker, where is the money for the Institut d'optique in Quebec City?
Today I spoke to a reporter from Quebec who told me that the project was at a standstill.

The Government, Mr. Speaker, has been playing games with Canadians. It has been talking about involving the private sector and the provinces but it has not yet put a penny on the table for these important projects.
I would like to contrast this plan with NRC's long-range plan presented in 1979. In the plan called The Urgent Investment the president stated at the time that the NRC had "an major role to play" in meeting the goal of spending 1.5 per cent of Canada's Gross National Product on research and development. The President of the NRC stated that the immediate and central target of the Council was to stimulate the technology-intensive industrial sector to increase its contribution to the gross domestic product from $20 billion at that time in 1979 to $40 billion by 1990. Exports should increase had this plan been carried out and imports reduced, with a net effect of up to $12 billion on our balance of payments. Additional employment of 650,000 jobs should result, said the President of the National Research Council in 1979. Boy, could we use those 650,000 jobs. The achievement of this target, concluded the President of the NRC, would have significant effects on some of Canada's economic problems.
To achieve this objective, the NRC's expenditures under its long-range plan in 1979 would have increased to $1.25 billion by 1990 under the preferred alternative presented by the Council. There was a second and a third alternative, albeit less ambitious than the first. The NRC observed, in particular, that the third alternative assumes the gloomy view that the economic and other objectives of the NRC long-term plan must be significantly reduced.
Under the Liberal Government, Mr. Speaker, great progress had been made in achieving the preferred objective. Expenditures in 1984-85 reached $501 million. We know what has happened since the day the Conservatives were elected. Since that election, that sorry day last September, significant cuts have been made in NRC's budget so that the Government's Estimates for spending this year, in 1985-86, are below the level of the gloomy third alternative of the previous long-range
November 27, 1985

plan. With a record like this, is it surprising that there is such widespread disappointment in the Government's record concerning research and development?
Yesterday I read that the President of MacDonald Dettwil-er, one of Canada's most important and dynamic high-tech companies, said that he would like to hear the Prime Minister make a firm statement that science and technology is important to the Government and the country. He said-and this is most important because we have heard a lot of blarney for the last number of years-that he would like the Prime Minister to put his money where his mouth is.
Another question which is unanswered in the plan or in the statement of the Minister is the budget proposal to consolidate NRC's Industrial Research Assistance Program with the innovation section of the Industrial and Regional Development Program administered by the Department of Regional and Economic Expansion. Is the responsibility for this plan to be transferred to the NRC or to the Department of Regional Industrial Expansion? If there is to be a transfer to the NRC, how much is to be transferred? Will additional resources be provided to the NRC for the basic research which supports the IRAP? There is no indication in the Minister's statement or in the plan about these vital questions.
There is nothing either about the external review proposed by the Wright task force. True, the NRC proposes an expansion of its associated committees and boards on which there are outside representatives. I do not fault the Minister for this, perhaps it is the fault of the previous Minister. However, the Minister has not said whether he agrees with the advice which the previous Minister asked for and received from the NRC, namely, that an arm's length agency should conduct an external review.
I also note that there is only one strong statement in the plan about basic research. That contrasts with the many strong statements about basic research in the original long-range plan tabled in 1979. A single page, which seems unrelated to the rest of the document, deals with basic research. On page 55 we find the heading: "One Analysis". The heading itself suggests that it does not belong, that it is not in keeping with the rest of the plan. The person who undertook the analysis for the NRC was a member of the Council, a D. J. Doyle of Doyletech Corporation. The conclusion of his study indicated the following:
-that Canada would best be served by an NRC that had greater funding and a larger proportion of its efforts devoted to long-term basic research. Doyle's argument was that a long-term commitment to basic research provides the continuity, breadth of vision, and forecasting ability that leads to the generation of new technologies. A single-minded devotion to short-term exploitation of technological knowledge imposes a restricted view.
It seems clear that Mr. Doyle disagrees with the basic orientation of the plan, namely, an increased focus on applied research. There is nothing wrong with that, as long as resources are provided for the additional applied research, as long as resources are provided for the additional efforts to be made in development, and as long as basic research does not
Statements by Ministers
suffer. The only conclusion to be reached is that basic research will suffer from the Government's emphasis upon applied research and development.
I have been warned time and time again by scientists in universities and the private sector that Canada must contribute to the general advancement of knowledge in the world, or we will be shut out by our competitors and forced to buy their discoveries on their terms, after they have taken the first steps in exploiting the commercial potential of the discoveries. This is the kind of world into which the Government is blindly leading us.

Mr. Speaker, it is highly irresponsible of the Government to leave the National Research Council more or less in limbo and fail to give it the resources it needs to carry out the urgent investments proposed in 1979.
For a year and a half, Government cutbacks and the work of the task force headed by the Deputy Prime Minister (Mr. Nielsen) have given rise to considerable uncertainty about the future of the NRC's programs.
We must put an end to this uncertainty and do so quickly, if we want a climate that is conducive to research in Canada. [English]
This plan is nothing other than a disappointment. It does not answer many important and serious questions. It leaves a cloud hanging over the NRC. It is not the kind of bold blueprint for the future which our country desperately needs.


Mr. Lome Nystrom (Yorkton-Melville):: Mr. Speaker, first I want to congratulate my long-time colleague from British Columbia on becoming the new Minister of Science and Technology. I know him well. I wish him well. I am sure he will be a very competent Minister. I am sure the House wishes him the best. In some ways I feel a little sorry for him today because he is the delivery boy for the former Minister. The statement before the House is not something upon which we can judge the present Minister. It is not a reflection of his ideas. It is a reflection of the ideas of the former Minister. He has had to come to the House with the former Minister's bad news and ideas, ideas which have seen many cut-backs in and a wrong orientation toward the NRC. I would hope-and this is my one wish for today-that the new Minister will be a better advocate of the scientific community and the aspirations of that community than was the former Minister, who underwent much criticism from scientists from one part of the country to the other. I wish him well and look forward to some innovative ideas in the future.
The most important sector in the country-and we often tend to overlook it-is the scientific sector involved in research and development. In the world of the future, what we do in terms of scientific research and development will be very important for jobs in the country, for the standard of living of our people and for the whole future of Canada.
Many years ago it was said that the muscular power and the financial power of people were important. I suggest that today

November 27, 1985
Statements by Ministers
knowledge is the most important. Knowledge is power. Countries, sectors and communities with knowledge are the ones which will have power and influence in the world of the future. That in itself is very, very important.
Today we have had the tabling of a new five-year plan for the National Research Council. It is a second five-year plan. It is a lot less comprehensive in nature and in terms of details, as anyone can see by reading through it, than the original plan of some five years or six years ago. The old plan was more detailed. We can see this from its sheer volume. It contained many more statistics, details and idealistic ideas on where we wanted to go. We have had first year and second year reports on it. The second five-year plan does not contain the same detailed information.
During the 1984 election campaign-and this is something which the new Minister understands very well-his Party and his Leader promised to double Canadian spending on research and development over the next five years. That was a doubling in five years, from 1984-85 to 1989-90. That was a promise made by the Prime Minister (Mr. Mulroney), and now the Minister has the difficult mandate of fulfilling it. In the statement before us today there is no reference to that promise. Instead of a fulfillment of the particular promise, we see a cut-back in spending at the National Research Council. In year one, 1986, according to the plan, there will be a zero increase in the budget. In 1987, year two, there will be an increase of 2 per cent. This means that in 1986 because of inflation, there will be a cut-back of 4 per cent or 5 per cent. In 1987, because of an increase of only 2 per cent in spending, there will be another cut-back, since inflation is likely to be more than 2 per cent. In years three, four and five, 1988, 1989 and 1990, the increases are to be determined.
Perhaps we can hope that the Minister, in the cabinet room, carries a big stick and is able to get a bit of money out of those tightwads, the Minister responsible for finance, to finance scientific research and development as they should be financed. In that I wish him well.
Certainly the previous Minister failed. Last November, in the statement of the Minister of Finance (Mr. Wilson), there was a cut-back in spending of $70 million for the NRC. In fiscal year 1985-86, its budget is to be $419.1 million, whereas in 1984-85, its budget was $478.2 million.

As I said before, Mr. Speaker, during the 1984 election campaign, the Prime Minister promised to double spending on research and development in Canada. This was a very important promise involving a very important sector. However, as I said earlier, in November 1984 the Minister of Finance (Mr. Wilson) cut $70 million from the NRC's budget. I think the science sector is so important it cannot afford budgetary cutbacks of $70 million per year.
Mr. Speaker, Canada's science sector holds the future of this country, of our young people, and of agriculture, fisheries, forestry and our natural resources. It is vitally important.
Mr. Speaker, I wish the new Minister the best of luck.
However, there have been cut-backs. The Energy Division itself which is responsible for alternative energy research has been cut, as has been the Environmental Secretariat. Also dumped was a manufacturing technology centre in Winnipeg even though the construction of the building had already begun.
The National Research Council's five-year plan does not anticipate any increase in spending because of inflation and actual roll-back over the next few years. In the five-year plan for 1980 to 1985, the first produced by the current President, Mr. Kerwin, a very large role was envisaged for the NRC in both basic and applied research.
The old five-year plan presented three funding options. The first option proposed a greatly enhanced role for the NRC and very hefty spending increases by the Government of Canada. Naturally, funding was not found to be anywhere near as much as was needed and the option was dropped. The third option, the low cost option, was not even realized by the NRC. The NRC did, however, receive budgetary increases from the previous Government in the last few years.
It can be said that the NRC engages in two different kinds of research although the distinction between basic research and applied research is often blurred. Scientists often say that basic research is pure scientific inquiry. Its results may never prove to have a commercial application and often a commercial application, if there is one, may take years to have effect on the economy. On the other hand, applied research, at least at the NRC, has a close relationship to industry. Basic research at the NRC has always been short changed, although Option 1 of the 1985 year plan would have greatly enhanced this endeavour. Applied research has for some time predominated at the NRC to the extent that some 90 per cent of its research activity has been closely tied with industry.
The second five-year plan being unveiled today will take the NRC even further down the path of industrial research at the expense of basic research. It is this trend that disturbs many Canadian scientists. As I said before, the plan is not that detailed in terms of numbers but one could quote from the plan the intentions of the council to go more and more down the path of more basic research.
No doubt private sector technological leaders will be very pleased. What happened to the Tory belief in the discipline of the market-place? It would seem that there are very few risks to be faced by these companies. The taxpayers will be picking up the tab. Will this be a replay of the old Liberal research and development tax credits about which members of this Government complained when they were in opposition?
By diminishing even more the role of basic research, can we expect the slack to be taken up elsewhere? Canadian universities have done much of the basic research in recent years and have done well despite a shortage of money. Many of those
November 27, 1985

universities have been struggling with cut-backs brought on by provincial Governments and by a federal Government determined to reduce its share of post-secondary funding. Some predict that basic research will suffer even more. Furthermore, Canada does not have outstanding research institutions whose research capabilities match those of MIT or CalTech.
In the 1980 five-year plan, the NRC dreamed of making a greater contribution to the world's pool of scientific knowledge. The thrust of the new five-year plan will not allow the NRC to be a greater contributor to this pool of knowledge. As the Council's President Mr. Kerwin, says, the NRC will not abandon its essential role of developing expertise for the nation by encouraging long-term research. What he does not say is that this role is already very small and we cannot expect it to grow.
I am sure many Members of the House know that Canada does less than 4 per cent of the scientific research and development in the world. With the budget restrictions and cut-backs, that percentage is shrinking at an ever-expanding rate.
One of the problems in not contributing to the pool of scientific knowledge is that Canada will be left further and further behind because of the cut-backs. We already purchase a considerable amount of technology developed elsewhere. One of the reasons for that is that so much of Canada's economy is foreign-owned. There are many branch plants in this country. If we do not enhance our basic research at a world class research station like the NRC, we will surely have to buy even more technology from elsewhere in the future. We should also worry about the brain drain. Many world class Canadian scientists may take their skills and experience to an environment that welcomes them and their families.
One should support applied research for the benefits it can deliver. Many jobs are created directly, and of course there is much spinoff. Canada's R and D performance is not exactly stalwart when compared to that of other countries. As noted before, the lack of emphasis on basic research support is shameful.
In conclusion, I would like to say that I do have a tremendous concern about the general cut-backs in the funds given to research and development and the trend lines one sees when looking back over the last number of years.

And in the R and D sector, Mr. Speaker, both private and public spending as a percentage of our Gross National Product has gone down. In 1981, for instance, 1.6 per cent of our GNP was spent on research and development. In 1985, this was 1.3 per cent, which means a drop from 1.6 to 1.3.
Federal participation is going down as well. Twenty years ago, between 1963 and 1967, 47 per cent of total funding in the R and D sector came from the federal Government. In 1983, the last figure I have here, it was only 38 per cent, so that the federal contribution went down from 47 to 38 per cent.
Petitions

With those kinds of figures, we can see very, very clearly that we are spending less and less on research and development, both as a percentage of the funding that comes from the federal Government and the funding of research all together. I think that is not a very good signal for the future of Canada, for jobs in the year 2000 and beyond and for our standard of living. I plead with the new Minister to use whatever clout he has to get a bigger share of that budget dedicated toward getting the NRC back to doing some good long-term research that will pay dividends for Canada in the years that lie ahead.


PETITIONS
Nelson Andrew Riis: Mr. Speaker, it is my pleasure to present a petition on behalf of a number of residents of western Canada who are concerned about the Government's decision to deindex family allowances. They are calling upon the Government to reinstate full indexation of the universal family allowance and to give second thought to the unfair tax increases that were imposed in the last federal Budget.


Mr. Cyril Keeper (Winnipeg North Centre):: Mr. Speaker, I have a petition from a number of residents of the City of Nepean who live in a new sub-division at Knoxdale and Woodrofe Avenues. Since February of this year, those living in this sub-division have received no postal service, not even community mail boxes.


Mr. McDermid:: Where?


Cyril Keeper: In Nepean.


John Horton McDermid: You should come to Brampton.


Cyril Keeper: 1 hear from the other side of the House that the same deplorable situation exists in Brampton. The purpose of this petition is to bring this matter to the attention of the House and the Government.
This community receives no postal service, but a nearby sub-division has already been given postal service even though it was built at approximately the same time. The petitioners from the City of Nepean who live in the new sub-division call upon the Government to instruct Canada Post to provide immediately community mail boses to the Knoxdale sub-division and that Canada Post be required to replace community mail boses with door-to-door delivery service in all new sub-divisions.

November 27, 1985
Motions for Papers


Mr. W. C. Scott (Victoria-Haliburton):: Mr. Speaker, 1 wish to present a petition today signed by 20 members of the Victoria County Chapter of the Registered Nurses Association of Ontario.


The Acting Speaker (Mr. Charest):: Introduction of Bills. The Hon. Minister of State for Finance (Mrs. McDougall).


Barbara Jean McDougall: Mr. Speaker, I am pleased today to speak on the second reading of Bill C-84-


The Acting Speaker (Mr. Charest):: As usual, the Hon. Minister of State for Finance is ahead of her time. Introduction of Bills.



STRIKING COMMITTEE


Hon. Charles Mayer (Minister of State (Canadian Wheat Board)):: Mr. Speaker, there has been consultation with all three Parties and, as a result, you will find that the motion which I wish to propose will be accepted by unanimous consent for adoption without debate. The motion reads as follows:
That the order of the House made on Monday, November 5, 1984 concerning the composition of the Striking Committee of the House of Commons be amended by substituting the names of Messrs. Fennell and Lewis for Messrs. Cook and Dick respectively.


The Acting Speaker (Mr. Charest):: Is it agreed?


Some Hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

John Horton McDermid: Mr. Speaker, I ask that all questions be allowed to stand.


The Acting Speaker (Mr. Charest):: Is it agreed?


Some Hon. Members:: Agreed.


John Horton McDermid: Mr. Speaker, I ask that all
notices of motions for the production of papers be allowed to stand.


The Acting Speaker (Mr. Charest):: Are all Notices of Motions allowed to stand?


Some Hon. Members:: Agreed.



GOVERNMENT ORDERS


Barbara Jean McDougall: that Bill C-84, an Act to amend the Income Tax Act and related statutes and to amend the Canada Pension Plan, the Unemployment Insurance Act, 1971, the Financial Administration Act and the Petroleum and Gas Revenue Tax Act, be read the second time and referred to a legislative committee.
She said: Mr. Speaker, I am pleased to speak today on the second reading of Bill C-84, an Act to amend the Income Tax Act and related statutes. These include the Canada Pension Plan Act, the Unemployment Insurance Act, 1971, the Financial Administration Act and the Petroleum and Gas Revenue Act.
This Bill contains measures proposed in two notices of Ways and Means motions tabled in the House earlier this year, one a general Ways and Means motion tabled on May 23 and the other a detailed notice of a Ways and Means motion tabled on November 21.
The Bill represents a substantial and integral component of the Government's program to secure durable economic renewal for Canadians. Members will recall that we established the broad framework for that strategy in November of last year. Since then we have moved clearly and consistently to develop and implement specific initiatives-the building blocks for durable economic renewal.

The Bill represents a substantial and integral component of the Government's program to secure durable economic renewal for Canadians.
Members will recall that we established the broad framework for that strategy in November of last year. Since then we have moved clearly and consistently to develop and implement specific initiatives-the building blocks for durable economic renewal.

We know the policies of the Government are already bringing about very positive and encouraging results. For example, the inflation rate is the lowest since 1971. The prime rate is
November 27, 1985

down 3.6 per cent from where it was a year ago when we launched our initiatives for economic renewal. Also, bank rates and mortgage rates are at the lowest levels they have been in seven years. These indicators are indeed important building blocks in the Government's strategy to bring lasting economic prosperity to the people of the country.
I wish to point out to Members opposite that with interest rates at the levels I have just mentioned this means the average Canadian farmer or business person with liabilities of $100,000 will save $3,000 a year. With mortgage rates at today's levels, it means a young Canadian couple buying their very first home with a $50,000 mortgage will pay $8,000 less over a five-year term and save $125 per month.


Some Hon. Members:: Hear, hear!


Barbara Jean McDougall: I might add that this young couple will have a far better chance of owning their first home because since the Government came to office a year ago I know the House will be pleased to note that new housing starts are up by almost 50 per cent.
The renewal strategy is designed to create steady and sustained improvement in the basic conditions for economic growth. This growth will be powered by the dynamism of the private sector and supported by a federal Government which recognizes not only its responsibilities but its proper limitations as an economic regulator and participant.
The Bill proposes to continue our strategy for far-reaching and wide-ranging economic renewal. Therefore, it is appropriate to review briefly the cornerstones of the strategy. First, the Government is determined to reduce the federal deficit and bring the growth of the public debt under control. By putting our fiscal house in order we are ensuring that the private sector has the scope for revitalized growth. I am pleased to report that our rigorous yet responsible efforts to date have made positive headway with the debt problem. We are presently seeing the slowest growth in Government spending in 17 years and apart from servicing the national debt Government spending is rising by only 2 per cent. The deficit is $500 million lower now than it was a year ago. This is an achievement which no Liberal Government could muster in the last 15 years.
The Government is cutting $4 billion this year, $6.1 billion next year and by 1990 the national debt will be $75 billion lower because we are working deligently to ensure Government works efficiently and without waste. We will continue to build on this success.
A second cornerstone of our renewal strategy is the direct encouragement of private initiative as the key to productive growth and job creation. Since we established our framework for economic renewal last November, we have also moved clearly and consistently to develop and implement specific initiatives that bring employment opportunities for Canadians. My colleague, the Minister of Employment and Immigration (Miss MacDonald), has worked closely with our provinces and
Income Tax Act
with the private sector to develop a strategy of jobs for Canadians. We have seen the national unemployment rate decline 1.3 per cent and the youth unemployment rate drop by 2 per cent since September 1984, and we have seen 333,000 jobs created within the private sector since September 1984. Our policies and commitment are fostering higher investment, greater innovation, increased international competitiveness and a positive climate for the birth and growth of new enterprise. The clear signals we have given the private sector and initiatives we have taken to date have already borne fruit in the form of greater private sector activity and improving economic performance in almost all sectors of our economy.
Third, we are improving the efficiency and effectiveness of Government by cutting waste, by removing obstacles to economic growth and by making better use of scarce and precious resources. We are ensuring that Government assumes a less intrusive place in the lives of Canadians.
Finally, we are bringing about all these vital changes in a manner that is as fair as humanly possible. In acting to improve the climate in which our private sector in Canada can excel, we are building on the basic sense of compassion, tolerance and justice that is the essence and the character of our Canadian people. The Bill we are considering today is firmly and squarely based on three cornerstones of our economic renewal strategy.
The Bill will implement many significant measures that my colleague, the Minister of Finance (Mr. Wilson), introduced in this Government's first full Budget. These measures have attracted widespread support and are eagerly awaited by Canadians. The Bill that we are considering amends the Income Tax Act in significant ways. Measures contained in the Bill include: a lifetime $500,000 capital gains tax exemption for individuals-and that includes small capital gains as well; capital tax on larger financial institutions; modifications to the rules governing investment in small business by pension and other retirement income plans; rules to prevent taxpayers from splitting income among family members just to reduce tax; and changes to review Revenue Canada's powers to audit and examine taxpayers' books and records, including its powers of search and seizure. These measures touch on a wide variety of issues including tax fairness, fiscal responsibility, taxpayers' rights and efficiency of government programs.
I have indicated that this Bill provides for a maximum half-million dollar personal lifetime capital gains exemption. This is perhaps the most significant measure in this Bill and is one which changes both the direction and character of the Canadian tax system in a positive way. The capital gains exemption recognizes that the Canadian economy can be dynamic and productive when the successes Canadians achieve are rewarded.
Canada has been described as a nation of savers. With measures such as the lifetime personal capital gains exemption, Canada will, I believe, become known as a nation of aggressive entrepreneurs who reap the rewards of their success and hard work from a thriving and prosperous economy.

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1 spoke also today of tax fairness. This Bill contains measures which will prevent the use of income-splitting trusts to gain tax advantage. It is high time that the tax law is amended to correct this defect which has allowed those most able to hire tax advisers to take advantage of the tax system. I am pleased to note, as well, that this Bill promotes fairness in the tax administration. New measures defining the powers of search and seizure will ensure that the administration of the tax law complies with the Canadian Charter of Rights and Freedoms.
We recognize that small business is the engine of economic growth. This Bill contains innovative measures allowing small businesses to tap into new sources of equity investment. These measures, which allow access by small businesses to funds of retirement savings plans and pension plans, will benefit both pension plan administrators and small businesses. They are progressive ideas whose time has come.
This Government recognizes as well the importance of consultations in developing and refining policy initiatives. As evidence of this, I would point to the announcements already made regarding adjustments to budget proposals. This Bill provides for these as well as other modifications made in the detailed Ways and Means motions tabled last week.
The May Budget proposed that, as a result of the introduction of the capital gains exemption, capital losses incurred after 1984 would be deductible only from future capital gains. This Bill, however, allows net capital losses realized before the May Budget to be deducted from other sources of income to the extent of $2,000 per year. This, in effect, continues the pre-Budget treatment for capital losses realized before the Budget.
The lifetime capital gains exemption is a generous measure and is intended to encourage risk-taking by Canadians. It is not intended to diminish the fairness of the tax system by allowing transactions which, in effect, convert normal income into capital gains. Accordingly, various specific anti-avoidance rules have been added. These rules will counter the conversion of business or property income into exempt capital gains and the conversion of corporate capital gains into exempt capital gains of individuals.
In addition, special rules have been introduced to prevent the flow of capital gains, through conduits such as mutual funds, to individuals, and to prevent taxpayers from deferring gains through option agreements so as to avoid the transitional phase-in of the capital gains exemption. A specific anti-avoidance provision has also been introduced to prevent the shifting of exempt capita! gains from one person to another through the use of stock dividends, generally in private family corporate arrangements.
Two modifications have been made to the May Budget proposals with respect to investment tax credits. First, 1 know that Hon. Members will welcome the fact that the Cape Breton investment tax credit rate has been increased from 50 per cent to 60 per cent. Second, those taxpayers who do contract work for other taxpayers will not be entitled to investment tax credits on their contract work effective for contracts after November 21, 1985. This will not in any way
affect research and development companies in Canada carrying on research and development work on their own account or through contractors. It will, however, stop the double claiming of incentives.
The May Budget proposed a capital tax to be levied on large financial institutions. To confine its application to the very largest banks and trust companies, the threshold for this tax has been increased to $300 million of capital employed in Canada.
In conclusion, Mr. Speaker, this Bill provides for a new direction for the Canadian income tax system. It provides for new measures such as the $500,000 lifetime maximum personal capital gains exemption to encourage small and medium size investors, small businessmen, farmers and all Canadians to invest their savings in productive economic activity and to take the risks that our business climate needs. The Bill also improves the fairness of the tax system by removing some of the unintended ways in which advantage may be taken of the system. Finally, this Bill removes the controversial scientific research tax credit and replaces it with a refundable mechanism which is less open to abuse but which will continue to encourage legitimate research and development.
This Bill increases the effectiveness of Government programs by reducing the basis for investment tax credits where other grants or assistance have been received or expenditures made. This Bill increases the fairness of the tax system by introducing change of control rules to prevent unacceptable sales of unused tax credits. These changes are long overdue and we know that Canadians share our objective and desire to improve the economy. We know Canadians are willing to share some of these burdens so that we all share in the triumphs and in the forthcoming prosperity.
I do want to share with you as well some of the comments that my colleague, the Minister of Finance and I have received since we introduced this Budget. We have been told that it was the most encouraging Budget in the past decade. Canadians have written and telephoned to tell us the measures to encourage investment in small and medium-sized business are good for them and good for Canada. Canadians wrote to say that the capital gains tax exemption is a clear message to invest.
This is a major Bill. It is a complex Bill. However, such complexity is unavoidable where measures such as those contained in the Bill affect the fundamental principles of our tax system and where we are unwinding some of the problems we faced in the tax system before. The new direction this Bill provides and the benefits Canadians will gain more than justify these changes. I recommend Bill C-84 to this House. I look forward to speedy passage of these measures because they are so instrumental to economic renewal and prosperity in this country.


The Acting Speaker (Mr. Charest):: Before giving the Hon. Member for Saint-Henri-Westmount (Mr. Johnston) the floor,
November 27, 1985

I would like to advise the House that owing to the two Ministers' statements we have had today, consideration of Government Orders will be extended by 64 minutes. The Hon. Member for Saint-Henri-Westmount.


Donald James Johnston: Thank you, Mr. Speaker. First of all, I would like to say that the Minister had the courtesy to warn me she would have to leave the House before the end of my speech or comments.

You said at the outset, Mr. Speaker, that the Minister was ahead of her time. As I reflected on that I thought she must be talking about some other Budget, perhaps one in the future; certainly not this Budget or the tax Bill which has been presented to us in this House. The Minister made a number of references to the Government's record. I cannot help but note en passant, with all the objectivity I can muster, that the low interest rates and low mortgage rates to which she refers, the new housing starts which she is so proud of, are all the result of previous Liberal Budgets.


Some Hon. Members:: Oh, oh!


Donald James Johnston: They have nothing whatever to do, not even remotely, with any policies introduced by this Government since it assumed office in September of 1984.


Mr. Gormley:: How can you say that with a straight face?


Donald James Johnston: I see the Hon. Member for Brampton-Georgetown (Mr. McDermid) expressing some cynicism about that remark.


John Horton McDermid: Yes.


Donald James Johnston: However, anyone who knows anything about Budgets in the Canadian economy will recognize that the period in which this Budget will have an impact will be next year and the year after. The Government has done nothing to bring about the positive results to which the Minister made reference.
The Minister also referred to the issue of economic recovery, the importance of reducing the deficit and putting our fiscal house in order. Pardon me if I have trouble suppressing a grin when I hear that coming from a Minister who has presided over the failure of two chartered banks at a cost of as much as $2.8 billion.


Mr. Andre:: That had nothing to do with the Liberal Budget?


John Horton McDermid: Oh, yes!


Donald James Johnston: She has the extraordinary gall to come in here and talk about putting our fiscal house in order.
Then she offered us a number of quite remarkable statements. She talked about clear messages which this Government is delivering to the Canadian public and the private sector; like, for example, a $1.5 million advertising budget to
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convince people to stop smoking and $97 million to support tobacco growers. These are the kind of clear signals which the Government sends to the Canadian people.
Then she talks about compassion, tolerance and justice. It is wonderful rhetoric and she may well have these sentiments herself, but they certainly were not to be found in the Budget tabled by the Minister of Finance (Mr. Wilson) last May. Of course he recognized, along with the Prime Minister (Mr. Mulroney) and others, that deindexation of Old Age Security had to be withdrawn along with the absolutely unacceptable taxes on certain health products. These are examples of the sentiments of compassion, tolerance and justice to which the Minister referred. She also talked about the widespread support for this Budget. I do not know what kind of mail Conservative Members are getting, but we on this side of the House certainly have been hearing an awful lot which I would not interpret as widespread support. I will deal in a moment with some of those people who are complaining quite legitimately.
The Minister also tells us that the Government has taken steps to reduce tax avoidance such as family members being able to take advantage of transfers and trusts in order to split income. However, she is a Member of a Government which, at the same time, approved a tax ruling concerning Olympia & York which will cost taxpayers approximately $1 billion, almost the full budget for social housing costs in this country last year. Then we have the case of Genstar and others as well. All of this could add up, I suggest, to as much as $2 billion. Throw in another $2.8 billion for the banks and another $500 million for ice-breakers, and we have the kind of fiscal constraint which this Government pretends to be practising. It is too bad that the actions do not match the rhetoric.
Then the Minister tries to tell us about a capital gains exemption which will do all kinds of wonderful things. I see the Chairman of the Standing Committee on Finance, Trade and Economic Affairs, the Hon. Member for Mississauga South (Mr. Blenkarn), here. I see the Hon. Member for Ontario (Mr. Fennell) here. I see a number of Members who know better but they will not say anything. They know it is one of the stupidest tax provisions to ever be introduced in the history of income tax legislation. This is true for so many reasons, technical and equitable, that it boggles the mind.
She talks about small business being able to tap new sources of funds. Yes, 1 believe that is important and I must say that I am pleased the Government at least sought to tap these sources of funds, things like RRSPs and pension plans. However, once again it is the wrong approach to try and induce plans to invest in Canadian small business in order to free up money to invest elsewhere.
Let me try to be constructive, Mr. Speaker. I threw those comments out because it is difficult to sit in my seat and listen to the stream of self-congratulations coming from the Minister. That being said, let us try this afternoon to put some of the partisanship behind us and invite Members of the House to

November 27, 1985
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discharge their responsibilities to their constituents. We all want to have a better and more equitable tax system. We are all here to achieve that end.
We waited nine months for the Budget to appear. Now, we have waited almost six months for the tax Bill to appear. One would have hoped that the fundamental flaws in the Budget could have been addressed during the intervening period. Well, they have not been. Unfortunately, as we all know, you cannot make a silk purse from a sow's ear. Nevertheless, the Budget could have been dramatically improved through some sensible modifications in the Bill which the Minister put before us. That has not taken place. She did tell us, of course, that the tax credit in Cape Breton has been increased from 50 per cent to 60 per cent. If that is going to make a major difference in Cape Breton, so be it. I do not think it will make any contribution whatsoever.
In any event, the Budget was unfair. Members on all sides of the House recognize that. It widens the gap between the rich and the poor in the country. Well, Mr. Speaker, the Budget remains unfair. The Budget suggested that there would be complex provisions introduced into the Income Tax Act. We have seen complex provisions introduced into the Income Tax Act through this tax Bill. I am glad to see that we now have the wisdom of the Minister of Transport (Mr. Mazan-kowski) because I know he will be able to make a contribution to this discussion in Cabinet and in caucus to try to bring some common sense to this piece of legislation before it is too late.
Notwithstanding what the Minister has said, we know that the Budget is economically unsound. We on this side of the House are not alone in saying that. Economists are saying it and the Institute for Policy Analysis at the University of Toronto has said it. In fact, some of the internal departmental analyses which have leaked out in one manner or another have also said it. Most important of all, instead of sending a clear message, the message is very ambiguous. There is almost no coherent thread of thought running through the various measures found in the various statutes to which the Minister made reference. Everyone knows that this is a bad Budget and the Government now has to put its best face on it. Having retreated-thank God-on a number of issues, it does not now want to retreat any further. However, retreat it must, because if it does not retreat now it will have to retreat in the next Budget at a cost of much time and expense in the private sector as well as in the House, in committee, and in various Departments.
Tax, of course, is a very complicated matter. I confess to you, Mr. Speaker, that I wish the Liberal Government had done a lot more to improve the taxation system in the country. There was a tax reform initiative by a Conservative Government in 1962; the Carter Commission. The Liberal Government followed that. I was not here at the time that the tax reform Bill was introduced in 1971. Frankly, I thought that was a bad piece of legislation and I still think so. Now, instead of taking advantage of the golden opportunity of having 211 seats in the house to bring forward sensible tax reform and give Canadians the kind of coherent, fair and equitable tax
system which would contribute to economic growth and which they deserve, our tory friends are in the process of making the situation even worse.
I would like to refer to a statement made by the Carter Commission with respect to what a tax system should achieve. I would then like to measure certain components in the budget and in the tax bill against the system as described. Carter said:
A tax system can be judged from different points of view. Is the system fair? Does it contribute as much as possible to the growth and stability of the economy? Are the rights and liberty of the individual protected? Does it help strengthen the federation? These questions reflect not only the many facets of taxation but also what we believe to be the principal objectives that Canadians wish to realize through their tax system. They want equity, more goods and services, full employment without inflation, a free society and a strong, independent federation.
Although these words were written almost 20 years ago, I suggest that Canadians feel the same way about their tax system today as they did then. They have been hoping, somewhat futilely, for the kinds of changes that are essential to give them the tax system which they deserve.
Does this tax Bill contribute as much as possible to the growth and stability of the economy? The Budget extracts billions of dollars from consumers, ordinary men and women, middle and lower income Canadians. They are being asked to foot this tax Bill. Drawing upon the famous document which is the estimates of the Department of Finance, if we take out the tax loss from the capital gains tax exemption, of which the Minister and the Government appear to be so proud, we find that direct tax on persons in the year 1990-91 will have increased by $5.2 billion. Can anyone in any of the Parties which sit in the House suggest that this will contribute to the growth and stability of the economy? Add to that the indirect taxes. Again I am going to take out the oil export charge because I do not think it is appropriate. No one knows where that tax falls. If we take that out and add the additional fuel taxes which are to come into effect in January to help replace the revenue lost by backing off from the deindexation of Old Age Security, we find that an additional $4.6 billion will be paid. Excluding corporate taxes and other taxes which are passed on, direct taxes on persons and indirect taxes which individuals have to bear, all of which are regressive, will amount to a grand total of almost $10 billion by 1990-91. The Minister is telling us that that will contribute to the growth and stability of the economy. It certainly does not meet the test which was laid down by Carter in his statement delivered in 1967 which I read to you a moment ago.
The impact of these various taxes is only beginning to be understood. We know what the impact is likely to be in the construction industry. Is the Government listening to the construction industry? Is the Government paying attention to the impact that this may have on the housing starts of which the Minister is so proud? Does anyone know what is going to happen to the trucking industry when a tax is put on distance in the country, which tax must be borne by the receiver of produce, whether food or clothing?


Mr. Blenkarn:: We are talking about the Income Tax Act.
November 27, 1985


Donald James Johnston: That is not in Mississauga South, but especially in the remote areas of the country.


Donald Alex Blenkarn: That's the Excise Tax Act.


Donald James Johnston: Exactly, it is all part of the Budget.


Donald Alex Blenkarn: You have your speeches mixed up.


Donald James Johnston: That is a typical example, this time from the Chairman of the Standing Committee on Finance, of the failure to understand that the tax Bills have to be taken as a whole. There is no one tax Bill which can be read without another. I am coming to that point. If the Member will pay attention he may learn a little about the problems with the tax system, which problems he should be taking before his committee for study. The fact of the matter is that these are the numbers and the Minister says that this Budget will contribute to the growth and stability of the economy. I do not know if the Member was here for the Minister's speech. As Members may or may not know, there are three sources of taxation. There are taxes on income, which are normally progressive in this country. There are taxes on consumption which are inevitably regressive under our system. Those are the taxes to which I just referred. Finally, there are taxes on capital. In Canada, I believe we have never successfully found the appropriate balance between these three sources of taxes.
Of course, the mosts visible tax is on income. Taxes on consumption are much less visible and the Government has tried to get away with a great amount of apparently invisible taxation. Retail sales taxes are more visible because they are applied to the retail level.
The manufacturer's sales tax and the customs tariffs are regressive. They fall equally upon the rich consumer of goods and the poor consumer of goods. There will be a change in the capital tax because the threshold has been raised. However, I have often argued in the House that a capital tax applied to a corporation is not paid by the corporation. Since it must be paid by someone else, I am not sure in any of these cases where that tax will fall. That tax is levied under Part VI of the proposed Bill.
That brings me to the issue of transparency to which we must pay close attention. It is necessary for us to know who is actually stuck with the tax bill. For example, the Government has applied a sales tax to pet food in the Budget. That tax is to be borne by the pet owner. However, when a tax is put on the profits of a company which manufactures pet food, it may be borne in part by the pet owner, the shareholder and by the employees who receive less wages. The fact is that is has to be passed on somewhere. This is where the problem of less transparency arises especially with respect to corporate taxes which many people, especially my friends in the NDP, regard as some sort of panacea to taxation. However, corporations do not pay taxes. As a matter of fact, I have heard that when the United States Treasury hires new tax experts fresh from
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university, the first question they are asked is who pays the corporate tax. If the person has an answer they are not hired.
Transparency of taxes is essential. I can go to any restaurant in Ottawa, Montreal or Toronto where people are dining in a luxurious restaurant. Who is paying the bill if it is tax deductible? Is it the partners, the shareholders or the Government? I suggest that nine times out of ten it is not the person dining. This introduces inflation into our system and makes many of the services unattainable by ordinary Canadians.
Canadians are tired of being screwed by the tax system. The Government is squandering its opportunity to do something about it. It has produced an inequitable Bill that is complex and simply builds on a system which is already inadequate. My friends opposite know that.

They know perfectly well this is a very bad Budget and that the Bill before the House is unsatisfactory. But they are going to vote for the Bill just the same because of the tradition of party discipline.

I am convinced that our electors including those represented by 211 Tory Members, roughly 75 per cent of the population or 18 million people, expect more from them than to simply stand up and vote for this Bill with all of its obvious flaws simply because the Minister of Finance and the Government do not want to reconsider this legislation. It makes a mockery of the process if we are trapped into an attempt to fight a Bill that has irresistible momentum because of 211 Members.
It is true that the Government backed off on the pension question last spring and reconsidered other matters, but it was not as a result of Members of the House who were able to bring pressure to bear on the Government. It was not as a result of what happened on the back-benches. The opposition, playing its role by raising the issues, had to have the support of Canadians. It was referred to by some as "grey power", when that group of Canadians came here to say that pension deindexation was unacceptable. When it became apparent that votes were at stake, the Government reacted. That is not what should happen. Common sense should make us react. We have enough collective brain power in the House of Commons to improve this legislation but I fear, having listened to the Minister, that it will be very difficult to make that change.
We were sent here to do a job for the people of Canada. I suggest that we cannot let this notion of party discipline allows us to railroad a piece of legislation through that is obviously as bad as this. While I do not believe Canadians have the respect they should for this place, how can they have that respect when they know that this is becoming a House of voting robots.


John Horton McDermid: You let us improve the National Energy Program when you were in power.


Donald James Johnston: The Member for Brampton-Georgetown is criticizing our attitudes in the past and what was or was not accomplished by us. I accept that. I recognize that criticism

November 27, 1985
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and I am not happy about all of the legislation that has gone through the House in the past, under whatever Government.
A committee has come forward with some good recommendations and I think the time has come for change. Canadians want a change. Canadians voted for change but it is not happening. All 211 Tory Members will get up to vote for this Bill which is so obviously wrong in so many respects. While portions of the Bill have been changed, much work remains to be done in order to have legislation which provides economic growth, equity and satisfies Canadians that parliamentarians are providing true input into legislation.
Let us use the capital gains tax provision as an example of what is wrong with this Bill. The Minister praised this provision, saying that it would encourage investment and so on. Beginning in 1985, Canadians will be exempt progressively from paying tax on $500,000 of capital gains over their lifetime. This provision was said to be designed especially with a view to encouraging investment in small-and medium-sized businesses. The Member for Mississauga South agrees with that, as do other Members of the House.
We have been told, and I agree from my own study of the matter, that jobs-
[ Translation]
-the jobs will be created in small- and medium-sized businesses across Canada.
So it makes very goods sense to try and attract investment to this sector.

That being said, what about the provision? The provision effectively applies to all capital property. There are a couple of exceptions with respect to employees' stock options and so on. We have heard that this capital property can include condominiums in Florida, yachts in the Caribbean, stamps, coins, jewellery, foreign securities or any assests on a world-wide basis. This is intended to encourage investment in the small and medium-sized business sector.
Mir. Gormley: Lots of farmers. Lots of fishermen.


Donald James Johnston: The Member to my right is being provocative. I think that a little ad libbing and a little fun in the House is sometimes good.


John Kenneth Gormley: A little truth wouldn't hurt.


Donald James Johnston: He is a sensible person. He knows that the way this provision is drafted is dumb. It is stupid. It does not bring money to the small and medium-sized business sector. The Minister has stated that people are excited about this formula and will invest. However, that is not what I hear. I am told they want to dispose of their assets quickly, take their money and run because they know this provision will not be in effect for very long. It fails the very basic test of economic growth and economic stimulation, which is fundamental. But it also miserably fails the test of equity.
We know from statistics that 4 per cent of Canadian taxpayers have income in excess of $50,000. We also know that 63 per cent of all capital gains go to those people with $50,000 and over. There is no equity. It does not accomplish its purpose in terms of creating investment in the small and medium-sized business sector. What does it do, Mr. Speaker? It costs one hell of a lot of money, money that could be better spent elsewhere.
If we look again at the Department of Finance's numbers which, I understand, are probably being revised because they are understated, we see from this document that was released, leaked, whatever on or about budget night, that in 1985-86- by those conservative estimates-it was going to cost $300 million, next year $600 million and by 1990-91, $1.25 billion. I repeat for those members who are getting used to these big numbers being thrown around in their caucuses, $1.25 billion. I suppose $1.2 billion does not sound much beside $2.8 billion but it is a lot of money. I suggest too that that money is not going into any productive pursuits whatever. That money is being blown. Yet we hear at the same time the importance of deficit reduction, about the banks, the ice-breakers, the tax rulings, and here we have $1.25 billion blown by this provision in the Budget with no focus and no job creation that is guaranteed at all.
I said I would not go on long this afternoon because my colleagues will be following up themes in this Budget, if there are themes. There are certainly no coherent themes, but my colleague will be following up themes of waste, of complexity of inequity and so on.
I want to leave my fellow parliamentarians with one thought. I want to come back to it once again because I feel it is terribly important. I hope, I have always hoped, and I hope people in this Chamber share my hope that we will some day discharge those responsibilities which our electors have given to us here on the floor of the House of Commons. 1 do not think any of us can be satisfied we are discharging our responsibilities if we allow this tax Bill to pass in the form presented to us by the Minister.
I hope, and I see my friend the Hon. Member for Mississauga South, that he in his role as Chairman of the Standing Committee on Finance will make every effort to ensure that an opportunity is given to Members to make sensible amendments, to hear witnesses and to have a full understanding why the capital gains tax exemption is bad law. Do not take my word for it, but the word of people in the private sector-


The Acting Speaker (Mr. Charest):: Order.


Donald James Johnston: -take the word of the people in the investment community if you like. Listen to those people who recognize it is not a benefit accruing to Canadians.


The Acting Speaker (Mr. Charest):: Order. Order.


Donald James Johnston: I am sorry, Mr. Speaker.
November 27, 1985


Donald Alex Blenkarn: Mr. Speaker, I rise on a point of order. The Hon. Member for Saint-Henri-Westmount (Mr. Johnston) is of the opinion that I will be the chairman of a committee reviewing this Bill. I wish it were so. Unfortunately, his Party and the New Democratic Party did not make an arrangement with the House Leader to have this transferred to the House accounts committee.


The Acting Speaker (Mr. Charest):: Order.


Donald Alex Blenkarn: Consequently I will not be the chairman.


The Acting Speaker (Mr. Charest):: Order, please. We have difficulty with discipline today.


Donald James Johnston: I am sorry to hear what the Hon. Member for Mississauga South has said. I think we should have the opportunity in that committee to examine this Bill in some depth. Perhaps it is not irretrievable. Perhaps it is possible to make some arrangements. I have spoken to my own House Leader about it. I am not sure where that dialogue has moved in terms of the various House Leaders. Perhaps the critic for the New Democratic Party will have a comment to make during the course of his remarks.
Let me conclude by saying to you, Mr. Speaker, and not pleading, but appealing to the good sense of Members of this House that we accept our responsibilities, that we work together to try to make this an acceptable Bill that will be more equitable and will make more of a contribution to sustain economic growth and build an economy that will provide the jobs we so desperately need.
We do not see it in the Bill at the present time. I hope we will be able to see some glimmer of that, at least, when the Bill is finally adopted on third reading.


Nelson Andrew Riis: Mr. Speaker, I almost have tears in my eyes. I guess it is appropriate to have tears in one's eyes to rise on Bill C-84. We have 235 pages of revisions to the Income Tax Act of Canada. I do not know how many Members of Parliament have had an opportunity to look through these 235 pages. Quite frankly, I would be surprised if anyone has. Let us assume that two, three or five people in the House have actually sat down and attempted to go through this document.
We get into discussion in the hallways and in the coffee shops on Parliament Hill but it is time that we stop the nonsense of Bills containing 235 pages. Here we are discussing in principle Bill C-84, an Act to amend the Income Tax Act and Related Statutes, an Act to amend the Canada Pension Plan, the Unemployment Act, 1971, the Financial Administration Act and the Petroleum and Gas Revenue Tax Act. We are amending all kinds of things in all kinds of ways and nobody knows what it is all about.
We have had a chance to look at some of the highlights. Normally if the Finance Department were serious about having Members of Parliament and others analyse what the Department is doing, it would have sent out an explanation
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paper as it has in the past to explain what on earth all this legalese gobbledegook means.
The Government tabled an explanation document yesterday, but we are talking about 235 pages of tax changes. This is now like a tragic comedy. I think it is time, and I suspect Members of the House will agree, that we stop this. When we are dealing with such a complicated matter that has horrendous implications a Bill like this should be sent to the appropriate committee well in advance for discussion, so we can hear witnesses and experts in the various sectors. It should be analysed for a number of weeks, a number of months if necessary so we can understand what the Government of Canada is doing.
There are hundreds of Finance Department officials sitting somewhere in mystical offices near Parliament Hill, who, I guess, all year long with furled brows and pens, draft changes to the Income Tax Act based on suggestions by Members of Parliament, by the Minister of Finance (Mr. Wilson), the Minister of State for Finance (Mrs. McDougall) and perhaps others. No one knows who these people are, what they are doing and why they are doing it.
Here in the last dying days before the Christmas recess we as parliamentarians are asked to rule and to decide on this incredible range of implications that will touch the lives of every Canadian for decades to come. It is not being done with proper analysis or with proper study. In fact it is not being done properly. Quite frankly, the process is totally unacceptable. I know the Government's Finance Committee Chairman will rise in his place shortly. I hope he will have something to say about this meaningless and silly process which is continually perpetuated year after year. It has to be changed, and that initiative for change has to come from the Government. It ought to come from the Minister of Finance, but I am not sure whether we have one any more. At least it could come from the Chairman of the Standing Committee on Finance, Trade and Economic Affairs. I appeal to him to use his good offices in order to try to bring some sense into the process so that we can at least deal with this Bill as responsible and sensible parliamentarians, as opposed to being forced into this charade.
When we talk about changing the Income Tax Act of Canada, it has to be discussed within some kind of context. We will not simply be making a few changes to a few pages in the Act. There is a number of processes going on at the same time. Another set of tax regulations is also being changed in the excise tax Bill which is presently before the House.
The Government has decided in its wisdom that it should now place a special sales tax on all transactions which take place in the country. It wants to add another 1 per cent to the sales tax, one of the most regressive and punitive taxes which a country can have or a Government can impose. However, that is what the Government is doing. When one buys a set of winter tires, whether one is from a poor family or an extremely wealthy family, one pays the same sales tax. That is a very regressive, unfair, inappropriate, callous and uncaring action

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to be taking. As well, there will be increased taxes on diesel fuel, aviation fuel and gasoline per se. As many Hon. Members have indicated over past days, it is really a tax on distance. It adds one cent per mile to the costs faced by truckers. Every commodity transported in the country will cost consumers more. The trucker or someone will have to take less profit. By and large it will be passed along to consumers. This discriminates against northern Canadians who have to fly in all their goods. With an increase in aviation fuel, it will cost them much more to live. Western Canadians who have to transport goods over vast distances will be paying more for their goods. It is discriminatory against them as well. The same could be said about people living in Atlantic Canada.
The Government decided to impose more taxes upon construction materials, affecting the people who build the country. They are the ones who build our houses and buildings. They create and leave clear evidence of what they contributed to society. Construction materials will be taxed.


Mr. Orlikow:: It is already in difficulty.


Nelson Andrew Riis: Yes, that industry is already in difficulty. It provides employment and assists many other sectors, it is in difficulty at the present time, and now the Government is imposing a further levy.


John Horton McDermid: We cannot get bricklayers in our community.


Nelson Andrew Riis: I ask my hon. friend to travel to western Canada and ask about how healthy that industry is. He will get an ear full, because it is an industry which is on its knees today in western Canada. To impose a tax on construction materials is a very regressive step for the Government of Canada to take at this time.
Also the Government will impose taxes on pop, chocolate bars and all sorts of other confectionary items, as well as on dog food, cat food, canary food and goldfish food, and on pharmaceutical supplies. The list goes on and on, but I will not take up the valuable time of the House to indicate all the new taxes which will be imposed. That is the context within which we are discussing changes to the Income Tax Act today.
As a result of these taxes which I have just mentioned, as well as a few others, $2.5 billion per year will be extracted from the pockets of ordinary citizens and put into the coffers of Ottawa. Why is there this tax grab? Why is the Government so bloody desperate to cause hardship for the average Canadian household? Why does it want to bleed away $2.5 billion in increased excise taxes? I will tell the House why. If the Government bails out a bank for $1 billion, $2 billion or nearly $3 billion, if it gives a tax remission to Syncrude which might amount to $1 billion, if it gives another $1 billion to O&Y, if it makes a tax ruling on Genstar for tens of millions of dollars or perhaps more, and if it gives vast amounts of moneys to selective corporations, it has to come up with money from some place.
Therefore, the Government of Canada makes a desperate grab for money out of the pockets, wallets and purses of Canadians who can least afford any increase in taxation, let alone an increase on all these particular items. We will have to wait and see, but I know that those minions in the Department of Finance are drafting legislation for value added taxes. They have their forms put together. They have their papers drafted. They are talking to people across the country. We have been getting dribs and drabs of information in this regard. I do not know how many of us in the House care one hoot about giving serious consideration to a value added tax, which will result in billions and billions of extra tax dollars coming into the Ottawa Treasury from the taxpayers of Canada.
We do not really know what is going on. We do not know what finance people are doing in the back rooms, drafting up new ways of gouging the people of Canada. Government Members have to accept their responsibility. It is time that we pulled off the veils and opened up the doors of that place to find out what is going on in our tax system. I appeal to Hon. Members on the government benches to give the Finance Committee a special reference to look into the whole tax business and to stop perpetuating this continual hardship on people for questionable reasons and because of questionable motivation. What we are seeing here is really quite scandalous. There are incredible implications as the tax system is changed and altered. Quite frankly, there are some good changes. I have to be fair and responsible and say that there are some good tax changes, but most of them are not good. Most of the major boondoggles in the system do not appear here. They have not been touched; the Government has not laid a hand on them. By and large, this will make the Income Tax Act of Canada more biased, more unfair and less equitable than ever before. It will be biased in favour of certain wealthy Canadians and certain large corporations. That is what is being done. Let there be no doubt about it.
The problem is that our tax system is a voluntary compliance system. It relies upon Canadians being honest on their tax forms. It relies upon Canadians listing their incomes and paying a reasonable tax. However, when people are reminded day in and day out of the unfairness, bias and discriminatory aspects of the tax system, they lose faith. They have lost faith in the system, which consequently encourages more and more honest, law-abiding Canadians to seek out ways and means of avoiding or deferring tax.
Just this morning I read an article in the newspaper. I should like to refer to it for the particular benefit of Liberal colleagues to my right who brought in a tax loophole just before they left office whereby people could purchase luxury yachts and houseboats and almost get them free. It indicates that $165,000 can be deducted as a result of Canada's last great tax break, but that it has to be done quickly because it will finish by the end of December. It indicates that if one's annual taxable income is over $70,000-and that is a very select group of Canadians-one can deduct up to $165,000 over the next four years and own an income producing hard asset with 100 per cent borrowed funds. It goes on to indicate
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all other advantages attached to buying a nice big yacht. We can thank the Liberals for introducing that loophole and thank the Minister of Finance for having the sense to close it off just after Christmas. There again, they can rush in and take advantage of that one.
I just noticed another little advertisement in this morning's paper. It talks about tax sheltered real estate here in the nation's capital. For a down payment in 1985, projected reduction in taxable income for the next number of years will total something in the neighbourhood of about $30,000 if one puts down $1,000 and arranges one's funds in a certain way. That is not a bad deal. These little notices have appeared in today's paper. In the next little while, they will start to flood into the newspapers as people adjust and become creative in their accounting before the year end in order to take advantage of all these loopholes.


John Horton McDermid: Are you going to get in on that one?


Nelson Andrew Riis: Perhaps you can get in on it before it is too late.
We do our best to remind people that there are still many, many Canadians who are upper-income earners or are wealthy and who year after year do not pay any income tax. They do not pay $1,000, $100, or $1, they pay no income tax year after year.
The other day, I received a letter from a constituent who said he was really interested in all this unfairness. He asked me to give him a list of all the loopholes these people used. He said that he was in the $100,000 per year bracket and wanted to know these things.
The other day, in a comment to an Ottawa Citizen reporter, a Revenue Canada official had this to say:
A Revenue Canada official said the deductions that allow high-income earners to pay no income tax are available to anyone in theory but in practice only to those who are able to "arrange their affairs" in the right way.
He went on to say that the 178 people earning more than $250,000 who paid no income tax used the following deductions: the dividend tax credit on 50 per cent of dividends paid by Canadian corporations, interest dividends and capital gains deductions, charitable donations, interest and carrying charges on borrowed investment funds, petroleum exploration venture investments and the Canadian motion picture film investment. They also claimed deductions for Canada Pension Plan and unemployment insurance contributions, Registered Pension Plans, et cetera. This gentleman was kind enough to list for this reporter's benefit some of the more obvious and popular loopholes that people who were making $250,000 per year were using to pay not one single penny in income tax.
Another group composed of 176 Canadians made $100,000 in the last tax year. They paid no income tax, not one single penny. There were more than 8,000 people whose income was in excess of $50,000 per year who paid no income tax. The numbers are getting larger and larger each year. I have been commenting on this for nearly six years. At first the numbers were small and I was just making the point that we needed
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some kind of change to the tax system. The situation is getting more interesting and more unbelievable as the years pass. Every year the numbers are infalted. Why is this? Because more and more loopholes are provided in the tax system. More and more opportunities for those who can use creative accounting techniques are now available in the tax system.
As we perpetuate a system that is now understood by everyone to be grossly unfair, biased and discriminatory against ordinary Canadians, more and more people do not pay taxes at all. Ordinary law abiding Canadians decide that if everyone else is taking advantage of loopholes of which they cannot take advantage, they will do a little bartering and will use cash for transactions. The tax man will not know about that. More and more of the economy moves underground all the time. People estimate that between $30 billion and $50 billion worth of transactions per year are operating underground, unknown to the tax man. This means that the entire tax system begins to crumble. If ordinary Canadians have no faith in the tax system, it bodes very poorly for the future of Canada.
Ordinary Canadians look not only at the upper-income earners who do not pay tax but at those incredibly large corporate citizens. The small business people, the farmers, the fishermen and the corner store operators are struglling just to make ends meet these days.


John Horton McDermid: How many farmers paid income tax?


Nelson Andrew Riis: Farmers as well. They pay all of the taxes. They have to fill out all of the forms and even collect taxes in areas which impose sales taxes. Then these ordinary Canadians read articles hidden in the back pages of the newspapers indicating that companies like the Royal Bank of Canada, the Bank of Montreal, Shell Oil, Hudson's Bay and Genstar, companies that are making profits in the hundreds of millions of dollars, pay no corporate income tax at all. These companies are not so fortunate year after year. Sometimes they get caught out and have to pay a little bit in corporate income tax. When those companies pay no income tax in certain years while the struggling entrepreneur pays every year, something is desperately wrong with our system.
The other day, a friend of mine, a rancher, and 1 were sitting in a restaurant. It was not a fancy restaurant but more of a run of the mill restaurant. A number of business people were sitting at the table beside us. Both tables finished at about the same time and we were both deciding who should pay for the cheque. We overheard the conversation at the next table. One of them said: "I'll take the cheque, don't worry. It will go on my expense account". What is available to a certain select group of people in society is not necessarily available to others. I am not saying that that is not good. I am simply saying that it discriminates against the people who work in certain kinds of occupations.
Shucks, let us move right into the capital gains tax area. When Carter held a tax commission a few years ago, he said that it was time we called a buck a buck. He said that if we make a dollar, we should pay a fair tax on that dollar. This

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Government does not believe in that philosophy, it believes that the system should treat differently those folks who make money as a result of obtaining capital gains. That would include people who sell condominiums in Maui, buy and sell luxury yachts in the Caribbean or do other interesting things outside of Canada. If those people make money from those transactions, they do not pay any income tax whatsoever. Why on earth does the Government think this is a great bloody idea? The Government tells those who make money through investments and receive capital gains by doing work outside the country that they do not have to pay any income tax at all and that over the years they can accumulate up to $500,000. What does it tell the poor guy who is on the fish boat, the person in the coal mine and the person struggling to make a living when they find out that these folks do not pay any income tax because they have white collar jobs?
For certain areas of agriculture, the capital gains tax exemption makes sense. It makes sense for certain small businesses. I will listen carefully to my friend, the Hon. Member for Mississauga South (Mr. Blenkarn) who will speak next. I will ask him to do me the favour of explaining why someone who is selling a condominium in Jamaica, Miami or Maui should not pay income tax on the money he or she derives from that transaction. I for the life of me cannot figure that out.
If the Government is interested in helping Canadians and wants to have a capital gains tax exemption, why should it not at least restrict it to operations within Canada? If we are interested in creating jobs and helping people to reinvest, let us at least ask people to reinvest in our own country. I will be looking forward to hearing my friend explain that one a little later.
We have a system which treats certain kinds of income differently from other kinds of income. If that is not discriminatory, I do not know what is. That is like saying we will immediately favour people who derive their incomes from selling dividends, or from capital gains, or whatever, and we will discriminate against the people who are the real hard working Canadians who normally pay their taxes at source. It is a very unfair situation. I suppose the Minister of Finance is living out his goal. Not many months ago in a speech to the Canadian Economics Association in Montreal he said: "No matter how we define the term Canada has an acute shortage of rich people." He is doing his best to assist those who are nearly there by bringing in a whole new set of tax loopholes which will again assist the very wealthy in our country.


Mr. St. Germain:: He wants to make more poor ones rich. He wants to build up the poor; you want to tear down the rich.


Nelson Andrew Riis: One of the things the Government has held up as a major initiative is with respect to capital gains exemptions. I wish to remind my hon. friend opposite that when we look at the number of tax Filers, let us say in the $50,000 range, they amount to a very small percentage of all taxpayers. Yet, they account for nearly 65 per cent of the total benefits accruing
under the capital gains provision. It is clear that this particular item which the Government holds up as a major initiative will help a select number of Canadians. Of course, it will cost us. In other words, when one does not pay tax on capital gains it will cost the people of Canada. It will cost the people of Canada $1 billion over the next two years. That is contained in the Government's own fiscal plan. We know who will make up the difference. I know that you are a very knowledgeable and wise man, Mr. Speaker, and that you know when these folks are not paying their $1 billion that the ordinary Canadian must pay more than they should to make up the difference. Yes, they sell Texas oil wells and condos in Maui.
There is something good in the tax paper, that is, the proposal to allow a tax credit of $700 to accrue to an individual investing in a labour-sponsored venture capital organization. It is designed to assist small and medium-sized businesses. That is a positive initiative. Some 20 per cent or $700, which ever is less, will be allowed as a tax credit. That is an encouraging development, particularly with respect to the development of venture capital.
I do have some concerns with the Bill. I am concerned about the increase in the Registered Retirement Savings Plan and the registered pension plan regarding non-taxable contribution limits. The new limits will be increased to $7,500 next year, $9,500 the year after, $11,500 the year after that, and up to $15,500 by the year 1990. What does this mean? It means that if a person has $15,000 in loose change at the end of the year he can put it into a retirement pension plan and not pay any tax on it. I ask Hon. Members: How many people at the end of the year end up with $15,000 in change which they can invest in a retirement pension plan? That is what is provided here. How many people can really take advantage of this great provision? Quite frankly, the people who will take advantage of it are those people who do not need it.


Gerry St. Germain: Small-businessmen and women.


Nelson Andrew Riis: I do not know many small-businessmen in my constituency who have $15,000 lying around which they can invest directly into retirement savings plans at this point in time.
I would like to consider a few other aspects of the Bill. Today, we are just talking about the principle of the Bill; we are not getting into a thorough point-by-point analysis of the Bill. That will come somewhat later. There is a proposal with respect to investment in small business by pension plans. The proposal is that pension funds be allowed to establish small business investment corporations to direct funds into the small business sector. Let us consider the definition of the small business sector. I see that the Minister of State for Small Businesses (Mr. Bissonnette) is in the House. A small business is defined as a company with assets up to $35 million. That is a fairly small company! I do not know if these are the types of companies which really need assistance at this point in time. They have other sources of capital upon which they can draw, ample sources. The family-structured businesses, the very small businesses which are trying to open up new areas, new
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ventures and which are trying new ideas will not qualify. There are some difficulties with respect to the Bill. It states that as an incentive pension funds will be allowed to invest $3 outside of Canada for every $1 which is invested in this type of venture. That is a peculiar way to show a commitment to assisting and developing activity here in our own country.
1 now wish to tak about the deindexing of personal exemptions and tax brackets. We know what happened when the Government tried this same thing on OAS. It saw the illogic of such an approach and it backed off. I am pleased the Government did that. However, it is now going to eliminate the full indexation for the basic personal exemption on the tax form and the personal tax brackets. These exemptions will trip in only for increases above 3 per cent. What this means is that individuals will be paying more tax each year. They will not be able to deduct as much from their taxable incomes as their incomes increase from year to year. They will be pushed into higher tax brackets, even if their real income does not change a bit. This will cost Canadians about $650 million. Who are these taxpayers? These are ordinary Canadians who will, once again, have to pay an extra $650 million over the next two years as a result of this deindexation proposal.
The $50 tax reduction used to reduce taxable income has been eliminated. That is another $600 million out of the taxpayers' pockets. The ones who will feel this most acutely, and let there be no question about it, will be the low and middle-income Canadians. They will be the ones who will feel this proposal. If a person is in the $200,000 a year bracket he will not worry much about his ability to deduct $50 off his taxable income.
I would now like to deal with the temporary surtax on upper income earners. When one looks at all of the so-called fairness provisions introduced by the Minister today one will see that they are all temporary. All of the ones which will hit normal, ordinary middle and low-income Canadians are permanent. However, the corporate changes, the 5 per cent corporate surtax, that is temporary. It will be off in a few months. The temporary tax on the large financial institutions is a temporary tax. I am sure they will have trouble affording that 1 per cent!
There is a provision for the extension of the Small Business Bond Program. It was a nice gesture. I have yet to find a single person who has ever found a small business bond out there. Again, it is temporary. So these so-called extra charges for the corporate sector and on the banks are all temporary. They will be off in a few more months while the punitive ones for ordinary Canadians are on forever.
The Minister of Finance in a speech to the Canadian Tax Foundation had this to say:
Our recent figures indicate that the effect of tax incentives has been to reduce the average federal corporate income tax rate from 36 per cent to 15 per cent... When the benefits from special tax incentives are added together we are looking, in some instances, at an extraordinarily generous level of assistance.
In plain language that means we are trying our best to provide more and more corporate loopholes so that the large corporate sector will pay less and less tax. That is what the Minister is really saying. Of course, when the large corpora-
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tions pay less the small businesses have to pay more. When the upper income earners pay less, or pay nothing, then the ordinary Canadian taxpayer has to pay more and more and more. They have had it. The ordinary Canadian taxpayers cannot pay any more. They are being gouged because the tax system is unfair.
Let us take a look at some of the child benefits. I think this is one of the more interesting aspects of Bill C-84 as it refers to the children of Canada.


Mr. Rompkey:: It was not even mentioned by the Minister.


Nelson Andrew Riis: My hon. friend from Newfoundland indicates that when the Minister of State for Finance made her comments about this very complicated legislation she failed to mention any of the benefits for children. I suspect that might portray a good deal more than what many of us may think.
This particular proposal is concerned with a gradual reduction in the regressive child tax exemptions while the child tax credit is being increased. Of course, the family allowance is being deindexed from the cost of living. We in this Party are strongly opposed to the deindexing of the family allowance. As for the other changes, the National Council on Welfare has observed something which I think is worth restating for Members of the House. I know that most Members will have been informed of this particular reaction of the National Council on Welfare to the May Budget. It had this to say, and I quote:
After the various changes are phased in-raising the child tax credit, lowering the turnover point for the child tax credit... reducing the children's exemption to the annual family allowance, and partically deindexing all child benefits- even the poorest parents will receive less than they would from the existing child benefits scheme.
This is a thoughtful statement which really deserves the reflection of all Members of the House. Time and time again various Members have stood and said: "In the end the poor families are going to get a benefit, after all of these various programs are phased in". That is not the case at all. Again, the low and middle income families will be getting short shrift.
The Standing Committee on Health, Welfare and Social Affairs after its hearings and the Government's consultation paper on child and elderly benefits concluded that any change in child benefits would result in substantially higher benefits for lower income families and benefits comparable to existing ones for middle income families. In other words, any changes must improve the situation for lower income families and not touch what is going on now for those families with middle incomes. However, Bill C-84 will produce very small improvements in child benefits for the poorest of families and progressively greater losses for all other Canadian families.
In summary, I think it is fair to say that once again we are presented with a set of major changes to our tax system, dramatic changes, which by and large tend to build in more discrimination than ever before. These are changes which make our tax system more biased than ever in favour of the large corporate sector and upper-income earners. I appeal to

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my colleagues. This silly process through which we are moving today, and in the subsequent days between now and Christmas when the Government hopes to have Bill C-84 passed through all stages, should stop in the future. We should take this matter much more seriously than we have up to this point. I am criticizing the present Government as well as the past Government for rushing legislation through and for asking Members of Parliament who are all serious about the implications of such drastic and dramatic legislation, to pass the legislation before we have an opportunity to digest and understand it.
As a last ditch effort, however, this will be referred to a legislative committee and 1 am hopeful that the members of that committee will see fit to welcome and to incorporate amendments to Bill C-84 in order to make it fair, more equitable and just so that we can start building in a small way, at least, confidence in the tax system of this country. If we fail to do that, if this Bill is not significantly altered in its composition, we will build in more cynicism and convince more and more Canadians that the tax system is unfair and biased. We will drive more and more honest law-abiding Canadian citizens into seeking out more and more ways to avoid paying tax. We will be moving more and more money underground, resulting in fewer and fewer taxes which will mean, as an immediate reaction, the need to raise taxes again for those people which Government can most easily grab from, the ordinary Canadian citizen.
We have a real opportunity here to move and reverse this process. We have an opportunity to move this process to one which would be much more progressive. I look forward to hearing some comments from my learned friend, the Hon. Member for Mississauga South, as to ways and means of improving what has to be not only a silly piece of legislation but an extremely silly process.


Donald Alex Blenkarn: Mr. Speaker, 1 ran in the election campaign of 1979. The Marxist-Leninist candidate who ran against me had signs posted across Mississauga which said: "Make the rich pay". As I listened to my friend, the Hon. Member for Kamloops-Shuswap (Mr. Riis), I wondered what political Party he belongs to.


Some Hon. Members:: The same one.


Donald Alex Blenkarn: He said something about all of these people who are going to make a fortune buying and selling condominiums in Jamaica. The Hon. Member does not know anyone buying and selling condominiums in Jamaica. The only Canadians I know who ever bought anything in Jamaica lost their shirt.


An Hon. Member:: Or their wardrobe.


Donald Alex Blenkarn: I want to tell you, Mr. Speaker, that it is a hoax. That Party is trying to portray to the people of this country that somehow this Government is going to help people make a fortune buying and selling condominiums. The Hon. Member for Saint-Henri-Westmount (Mr. Johnston) says it
would be in Florida. Do you know anyone, Mr. Speaker, who has made a fortune buying and selling condominiums in Florida? The whole purpose of the capital gains allowance is to make this country grow and I will be dealing with that later. It is unfortunate that the opposition should spend most of its time dealing with the principles of Bill C-80, now in committee, when not one Member of the opposition was there to deal with the difficult problems of an excise tax Bill. Those Members of the Opposition come into the House and talk about pet food, construction companies, ashphalt problems and steel construction, but they don't even bother going to the committee meetings.
The Hon. Member for Saint-Henri-Westmount complains that the Minister of State for Finance (Mrs. McDougall)- who had to leave earlier-left. But what does he do? He makes a speech and runs.


Gerry St. Germain: Shame!


Donald Alex Blenkarn: Surely we are entitled in this House to some sensible and honest opinion on a very, very complicated matter, that is amendments to the Income Tax Act. It is not the time for rhetoric. It is time to deal sensibly with this Bill. This Bill has two principal thrusts. First, it is the question of fairness. This Bill could easily be categorized as the "loophole closing Bill". Hon. Members will recall the income tax provisions put through with respect to ISIP only two years ago by the Liberal Government. That was a wonderful scheme. The Government made it possible for people to make a pot-full in wheeling and dealing in share options. They cannot do it any more because this Bill closes that loophole. The Liberal Government made it possible for people to wheel and deal in scientific tax credits. There is some provision for research, but those things cannot be dealt with the way they were before. One really has to do the research and after one does the research, and after one does the development and after it is approved, one will get some financial backing from the Government in terms of a tax credit. That is the way it should have been in the first place and that is the way this Bill is changing things, by closing loopholes. We ought to be given the credit for that, but what do we hear from the Hon. Member for Saint-Henri-Westmount? We hear conversation about pet food which is not even in the Bill. He ought to be ashamed of himself and he ought to be here tonight to stand up after I have finished speaking and ask me questions about pet food, then perhaps we could talk about income tax.
Let me now talk about fairness and the right, if you are forced to move because of your job, to deduct something in terms of the cost of additional interest you may have to pay on a mortgage up to $25,000. That was fairness taken out by a former Liberal Government. That is fairness put back in. We have the right to better RRSP and pension deductions. That is fairness put in to make sure that people can provide for their own retirement. We now have rights for artists. Do you know what the Liberal Government did to our arts community, Mr. Speaker? It assessed artists on an accrual basis. It said their art was worth so much because they wanted to sell it for so
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much and therefore they must pay tax on it. If you cannot sell your art, too bad! We had artists in British Columbia threatening to burn their work rather than pay the tax. This Bill puts them on a cash basis and we should be congratulated for that. Fairness is what this Bill is about. This Bill eliminates that fancy income splitting rule provided for in past legislation, and that is fairness. I could go on and on about the fairness of this Bill. That is why it is important to this country. However, do we hear anything about that from the other side? Not on your life!
This Bill is also about growth. A great deal has been said by the other side concerning the capital gains tax exemption. I am told this is a terrible rip-off of the national treasury. Well, did our friends on the other side bother doing any elementary research? The other day we all received the 1984 taxation statistics from Revenue Canada. Those statistics show that taxable capital gains amounted to $2.2 billion. From that you have to deduct capital losses which leaves about $2 billion in taxable capital gains. At a 30 per cent tax rate the total tax, both federal and provincial, for that year was about $600 million. That is not just federal tax, that is federal and provincial. The Hon. Member for Kamloops-Shuswap knows that this Bill gives farmers the right to make $500,000 in capital gains tax free when they want to retire and sell their farm. That is fairness, honesty and decency. He will remember hearing from departmental officials that the total revenue for all Governments, federal and provincial, from corporate and personal capital gains taxes in 1982 was less than $1 billion.
This Bill phases in the capital gains tax exemption over the next few years. It limits the taxable income saving to $250,000. Remember, you do not pay in tax 100 cents of every taxable dollar. If you invested and followed the very strict rules concerning calculation of capital gains, at a 50 per cent tax rate every year, and no one pays at that rate every year of their life, you could conceivably save $125,000 in income taxes. You might. If everything worked well for you. However, very few taxpayers pay that kind of a rate. So what are we really talking about? Very little. What kind of a tax break? Not much. What we are doing, however, is encouraging people to make this country grow. We are encouraging entrepreneurship, the kind of thing we must have in Canada. We are a developing country. We are not a fully-developed nation. We have frontiers everywhere in this country. Every day, even in my City of Mississauga, new streets are being opened up, new buildings built, and new enterprises started. We need people to do that, to employ our kids and the immigrants who come to Canada because we have the greatest country in the world. Well, we will only have the greatest country in the world if we build it.
I want to say to the Hon. Member for Kamloops-Shuswap who is worrying and crying and saying, let the rich pay, that unfortunately we do not have enough rich in this country.


David Orlikow: We have too many poor.
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Donald Alex Blenkarn: I do not know 32,000 millionaires but the total wealth of those 32,000 millionaires would be required just to cover last year's deficit. All Members of this House put together do not know 32,000 millionaires. We do not have enough wealthy people, but this Bill does not create wealthy people. It creates national wealth. It creates jobs, opportunities, growth, and that is what it is all about.
Members opposite said that because we eliminated RHOSPs, we were stopping people from saving money to buy a home. However, we are forcing that money back into the mainstream of the economy today. That is important because when we put savings back into the economy it can be used for new investment. The same thing applies to investment tax credits. There is an investment tax credit of 60 per cent for investment in Cape Breton. Every day we hear Members on the other side tell us about the terrible problems they have there. We are saying to people that if they want to invest in Cape Breton not only do they get a 60 per cent tax credit, but, by George, if they make a capital gain they will not pay tax on it either. That is the kind of attitude and those are the kinds of incentives we should have because investment will then take place. We believe that. We honestly believe that Canadians will show faith in Canada. It is too bad that Members on the other side of this House have not shown some faith in Canada.
I have to make clear as well that there have been circumstances in the past where the Government of Canada has been a bit heavy-handed in the collection of taxes. It has broken into people's houses without notice. It has taken people's property without a court order. This Bill corrects that situation and brings the Income Tax Act into line with the Charter of Rights and Freedoms. That is an important matter which was raised by Members of this Party while we were in Opposition. Members of this Party travelled from coast to coast in Canada to deal with that issue. We talked to people about the unfairness of the system. That unfairness, that brutal attitude, has been changed, not only in legislation, but in the administration of revenue collection.
I make no bones about it, Sir, but this Bill also increases taxation. It eliminates or reduces the indexation on personal exemptions. In future we will have to absorb the first 3 per cent of inflation. This Bill puts a surtax on high personal income earners.


Nelson Andrew Riis: For how long?


Donald Alex Blenkarn: I am surprised that the Member for Kamloops-Shuswap did not say "shame" at that. This Bill puts a surtax on corporations.


Nelson Andrew Riis: For a few weeks.


Donald Alex Blenkarn: He has not said "shame" on that either. It puts an extra tax on the big banks and big trust companies. We have to do that because we do not have scads of money. He said that this was a desperate grab for money. Well, it is a bit desperate. We do have to do something about a deficit that

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threatens to destroy the prosperity, life, and future of Canadians. We all have to pay our share. That means that high income earners will have to pay a surtax. That means the banks will have to pay an extra charge. That means the corporations will have to pay more. That means that all of us will have to absorb some of that inflation because we are the cause of inflation. We ask for more than we are prepared to put in. We are going to have to discipline ourselves to ensure that we have no inflation in our economy. Thank goodness, over the past year we wound down on inflation. We are coming to grips with that economic concern but it is not gone yet. This reduction in tax allowance will, to some extent, cut back on inflationary demands.
I commend this Bill to the House. I think it is important, as the Member for Kamloops-Shuswap said, that the Bill be examined in detail by committee. I think it is important that Members of Parliament go over the Bill clause by clause with the assistance of competent people who understand the complexities of various parts of the Income Tax Act who can help Members understand in detail what we are doing. I hope that this Bill goes to the committee on finance, but if it must go to a legislative committee, so be it. It is an important piece of legislation. It does require detailed work and it does require that Members of the House pay attention to their responsibilities in committee and do some work.


Some Hon. Members:: Hear, hear!


David Orlikow: Mr. Speaker, the Hon. Member for Mississauga South (Mr. Blenkarn) began his speech by telling us that the Marxist-Leninists had slogan to the effect of "make the rich pay". He associated my colleague, the Member for Kamloops-Shuswap (Mr. Riis) with that kind of thing because he was critical of the $500,000 capital gains exemption which the Minister of Finance (Mr. Wilson) proposed.
It just happens, Mr. Speaker, that The Financial Post of November 30 came today. On the front page of The Financial Post which is certainly not a very radical or a Marxist-Leninist newspaper, there is an article headlined: "Gains tax exemption hits heavy weather". The article reads in part:
William Lawlor, national tax partner with Ernst & Whinney, sparked the debate-which has spilled over into hallways and hospitality suites-by saying the exemption "will have a disastrous effect structurally on the tax system."
Who is William Lawlor, Mr. Speaker? He is a former official in the Department of Finance's tax policy division and a technical adviser to the Conservative task force on Revenue Canada in 1984. By quoting from the article I will list for the Member for Mississauga South some of the criticisms and observations about this capital gains exemption which Mr. Lawlor makes. I will put them on the record and perhaps the Hon. Member for Mississauga South can deal with them because they come from a much more respectable and business-oriented point of view. Mr. Lawlor said:
Its scope is too broad. Although many would support lower taxes from the sale of Canadian common stock, practitioners fail to see how tax-free gains on the disposition of jewellery, summer cottages, or Florida condominiums provide much benefit for the economy.
The article continues:
The exemption destroys the neutrality which has existed between the taxation of dividends and capital gains.
Lawlor says this neutrality is vital to the successful integration of corporate and personal income taxes.
It goes on:
Individuals' tax returns will become much more complicated because of Ottawa's need to monitor the extent to which they have used up their lifetime gains exemption.
The exemption runs directly counter to the spirit and intent of another Mulroney government proposal, the minimum income tax.
This, to be launched in 1986, will reduce the impact of various tax shelter deductions claimed by well-off individuals.
I would appreciate it if the Hon. Member for Mississauga South would deal with some of these criticisms and objections to the $500,000 exemption on capital gains which comes from a source to which I think he would have to pay a great deal of respect.


Donald Alex Blenkarn: Mr. Speaker, I have not had an opportunity to read Mr. Lawlor's dissertation, but there is no question that we have some concerns with respect to the neutrality problem. Those concerns are addressed in part in the rather complicated provisions that deal with ensuring that a person does not convert, improperly, what would otherwise be income into a capital gain. I think that if Mr. Lawlor would analyse the Bill rather than just writing articles, he might have a little different attitude. I hope that the Member will be on the committee. Perhaps he can ask the committee to bring Mr. Lawlor forward as a witness because I think we would all like to hear his views.
With respect to the minimum tax matter, that, of course, will be dealt with by the Minister of Finance (Mr. Wilson). However, a great deal of the problem in connection with the minimum tax is eliminated by this Bill because, as I pointed out in my first remarks, this Bill materially cuts out the more heinous of the loopholes which existed in the Income Tax Act. Therefore, the effect is very much to reduce the need for minimum tax provisions and, therefore, the number of people who would be caught in a minimum tax position.
In any event, Mr. Speaker, the view with respect to jewellery is most interesting. I do not know of anyone who recently purchased jewellery at a jewellery store and was able to make a capital gain on it. Perhaps my friend does. When I am winding up an estate or something of that nature I am usually surprised at how little you can get for the stuff. I do not know of anyone who has made any money on Florida real estate and condominiums, but perhaps Members of the New Democratic Party do. I usually find that Florida real estate has a very high capital cost or depreciation allowance in it. My own experience as a lawyer in winding up affairs for people usually indicated that on the death of a person the real estate had a realizable value of less than one-third what was paid for it. However, it is conceivable that someone may have made a gain. I think we all ought to realize that these humorous suggestions of people making money offshore with all sorts of wheeling and dealing
November 27, 1985

in yachts and the rest make interesting telling, but really are not factual.


David Orlikow: Will the Hon. Member comment on Mr. Lawlor's suggestion with regard to the capital gains proposal that instead of what the Government is doing, it narrow the eligible assets for the exemption to shares of Canadian public and private companies and farmland in Canada which is actively worked by the taxpayer or his family? Would he agree that the 5 per cent surtax on income tax will not bring in any money from the more than 8,000 Canadians who have incomes of $50,000 or more and paid no income tax?


Donald Alex Blenkarn: My only comment about people who have all this income and pay no tax is that it has always struck me that you pay no tax because you have no taxable income. If we want to make sure that people have taxable income, we amend the Income Tax Act to make sure they are hooked. That is what this Bill does.
With respect to narrowing the base and those things on which capital gains can be realized, the Member did not include small business. He did not include construction activity and property of that nature.
We had very extensive hearings in the Finance Committee with respect to capital gains tax relief on farmland. It is virtually impossible in this country to determine what is farmland and what is land held for some other purpose. I suggest to the Member that we have analysed that. This Bill deals with it effectively.


Jean-Claude Malépart: Mr. Speaker, I would like to ask the Hon. Member how he can possibly feel comfortable with a Bill whose purpose is clearly to take money from poor families and give it to the rich?
Let me explain. In this Bill and the changes it makes in the child tax credit system, we see the Government has decided that a middle-income family with a salary of $26,000 is now considered as a wealthy family, since the ceiling has been dropped to $23,000. Furthermore, the Government has even de-indexed the child tax credit for the poorest families, while the rich get a capital gains tax exemption of up to half a million.
How can the Hon. Member take pride in this measure? [English]


Donald Alex Blenkarn: If the Hon. Member cares to read the "blues", perhaps he can read my remarks. Unfortunately, the Member was not here when the remarks were made.


The Acting Speaker (Mr. Charest):: The period for questions and comments has expired. Resuming debate.


Aideen Nicholson: Mr. Speaker, the Budget measures in Bill C-84 include some which can be readily supported. For example, there is some modest assistance to the
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disabled, coming from the groundwork of the last Parliament's special committee on the disabled and handicapped. There is also assistance to artists, again based on recommendations of a committee that sat in the last Parliament, the subcommittee on taxation of visual performing artists and writers.
However, these are overshadowed by two poorly conceived and patently unfair Budget measures. The $500,000 lifetime capital gains tax exemption will reward a wealthy minority without any requirement for benefit to the Canadian economy while the deindexation of the personal income tax system will take progressively larger tax bites from low and middle income earners who are least able to afford it.
The capital gains tax exemption is a no-strings gift, with 63 per cent of the benefit going to the 4 per cent of Canadian taxpayers earning over $50,000 a year. The measure is complex and cumbersome to administer and, despite the Government's assumption, there is no evidence that Canadian businesses will benefit since any investment anywhere in the world qualifies for the exemption. There is no requirement that it create one single Canadian job.
On the other hand, the deindexation of the Canadian personal income tax system means a steep tax increase for the majority of Canadians who cannot afford to invest much of anything. Over the next four years, those with an annual income of $15,000 will have a cumulative tax increase of 36 per cent, while those earning $100,000 a year will have an increase of only 4 per cent. Deindexation, coupled with the Budget's move to increase sales and excise taxes on a wide range of consumer goods, puts an inordinately heavy burden on low and middle income earners. They are the very people who would strengthen economic growth through consumer spending were it not for the dampening effect of these inequitable proposals.
What deindexation means is that full indexation of the basic personal tax exemption, set at $4,140 for this year, is to be ended. Instead of keeping pace with inflation, the basic exemption will be indexed only to increases in the consumer price index exceeding 3 per cent. Of course, this effectively amounts to a tax increase because as a person's exemptions decrease, the taxable income increases and he or she is pushed into higher tax brackets. Therefore, a person on a fixed income or whose salary remains virtually unchanged will pay more and more tax due to deindexation of the personal tax exemption.
Deindexation has been described by some as a sneaky and clandestine tax increase. The language may sound harsh, but I fear that it is accurate. The sneaky aspect of this measure comes with the cumulative effect it will have. In its first year, deindexation of the personal tax exemption is expected to yield $570 million. However, by 1990-91, it will extract eight times this amount, or $4.4 billion from taxpayers. This amount will be extracted mainly from low and middle-income earners because the affluent will be able to use the capital gains tax exemption to reduce their personal taxes.
There is a double whammy effect for taxpayers from the deindexation. Since provincial personal income taxes are a percentage of the federal basic income tax, Canadians will end

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up paying more provincial taxes. For every extra $2 Ottawa collects, the provinces will get $ 1. The combined federal-provincial personal income tax increase in 1990-91 will exceed $4.8 billion. Deindexation will also have the effect of adding on to the income tax rolls, those people who are not currently paying tax because their incomes are too low. If their incomes manage to keep pace with inflation while exemptions and tax brackets remain stable, they will find themselves having to pay income tax.
For those individuals and families of modest means, the deindexation proposal is harsh. Clearly, the Government knows this. The Budget did not contain any long-term projections of the billions of dollars it expects to get through deindexation, although such forecasting is a normal part of all Budget planning and is normally available in Budget documents. However, it was not available in this Budget.
The Government was not proud of what it was doing and was not prepared to be open with taxpayers about the cost five years from now. However, the insidious effect of deindexation is such that by 1990, a family earning $15,000 a year will pay 36 per cent more in taxes. A family with a total income of $30,000 annually will have by 1990 a 16 per cent increase while the minority with $100,000 annual income will have an increase of only 4 per cent.
Another measure that has been called unfair and sneaky is the elimination of the $50 tax reduction as of the 1986 tax year. This was a tax break that primarily benefited low and middle income earners for whom $50 is not a small sum. Eliminating it will bring the Government $650 million. Singles with annual incomes under $30,000 will pay $50 more tax, while couples with incomes under $40,000 will pay $100 more tax.
In sharp contrast to these measures, which whittle away small amounts from each of the large number of low and middle-income Canadians, is the generous treatment given to the affluent by means of the capital gains tax exemption. The Budget proposes a change in capital gains exemption so as to give individuals a lifetime tax exemption of $500,000 for gains realized after 1984. The Government's stated hope is that this measure will encourage investment in Canadian businesses. There are no requirements to enforce that in the Bill before us.
The capital gains tax exemption will be an important influence on who pays and who benefits from the tax measures in the Budget. Starting at an income level of $50,000, the income tax load begins to diminish considerably because of the capital gains tax exemption. Obviously it is affluent Canadians who are best able to take advantage of this tax break and to plan their affairs so as to take advantage of it. The affluent are a minority in Canada. Based on 1982 statistics, only 4 per cent of Canadians have incomes of $50,000 or more, yet about 63 per cent of the benefits of the capital gains tax exemption can be expected to accrue to this 4 per cent. Capital gains tax exemption is expected to save investors $ 1.25 billion a year by 1990. It means that Canada will tax its wealthy more lightly
than any other industrialized country. Affluent Canadians will be paying for the same increases in sales tax, excise tax and deindexation as low and middle-income earners, but the affluent will have the option of offsetting this many times over through the capital gains tax exemption.
The capital gains tax exemption clearly favours the affluent on the assumption that their investment will contribute to economic growth. I repeat, Mr. Speaker, there is no evidence that this will happen. The capital gains tax exemption is not targeted to Canadian investment. In fact, it is completely open. There is no requirement that it create a single Canadian job. Not only is this proposal unfair to the majority of Canadian taxpayers, but it makes no sense economically.
In the six months since the Budget was introduced, the Government seems to have quailed in the face of criticisms of the proposed capital gains tax exemption. The Government has remained silent on the issue, failing to produce any further information for practitioners in the financial community. The latter says the measure is complex, cumbersome to administer, an interesting observation that reminds us the proposal came from a Government that promised tax simplification.
We will not consolidate economic recovery or promote growth without consumer demand. I suggest that business needs customers more than it needs tax incentives, but prospects for a consumer-led recovery are seriously impaired by this Budget.
The heavy burden imposed by this Budget's tax increases and deindexation will drastically reduce consumer expenditure. Low and middle-income earners, who have to spend most of their disposable income on the necessities of life, will have less to spend because they will be paying more in taxes. These Budget measures are not such as to create a favourable climate for economic growth. Regressive tax and expenditure measures will take billions out of the economy, out of consumers pockets at a time when consumption is key to sustaining economic recovery.
In 1990, Budget measures will extract over $4 billion in income tax, over $2.6 billion in sales and excise taxes. The Government appears to be banking heavily on a rise in confidence to spur economic growth yet the Budget measures do little to help and a great deal to hurt confidence.
Taxpayers were promised a tough but fair Budget. If a family of four with a $20,000 income loses over $900 by 1990 due to the many taxes and reduced inflation protection imposed by this Budget, that is tough for families, but is it fair? If three-quarters of a million Canadians fall below the poverty line by 1990, that is tough for disadvantaged Canadians, but is it fair?
It is no wonder that confidence is wanting when the Government promised fairness and then proceeds to implement a barrage of new taxes, increasing taxes while stripping protection against inflation from low and middle-income earners, the very people who would otherwise because of their large number be at the forefront of a consumer-led recovery.
November 27, 1985

The prospects for economic growth out of this Budget are not encouraging. This is bad news for the unemployed who have been waiting a long time for the jobs, jobs, jobs to materialize. There has been some job creation in the last year, but mainly part-time jobs without standard pay and benefits. There has not been a concomitant increase in permanent full-time jobs. What are the unemployed to make of a budget that ignores them completely and, which we are told, is meant to reward achievement not subsidize effort?
For all those who are victims of this Budget, low and middle-income earners and families, pensioners, people hoping to purchase homes, consumers, the unemployed for all those who may be striving or on their way to achieving what they want from life, this Budget is saying: "There are no breaks for you. We will reward the well-to-do". Most of the population which is not in any such privileged position will pay the price. While we are discussing Budget measures in this Bill here in Ottawa, Mr. Speaker, the Minister of Finance (Mr. Wilson) and the provincial Finance Ministers are preparing to start meetings in Halifax tomorrow to deal with the Government of Canada's plan to renegotiate Established Programs Financing and some transfer payments.
The May Budget papers indicate that the Minister of Finance is looking for $2 billion in savings in 1990 to 1991. That figure hides greater cuts. Cutting back on support for health and post-secondary education to achieve the $2 billion target in 1990 means the Government also makes cuts in the intervening years, and the reduction over five years could be nearer $6 billion. The Government was elected on a promise that it would create jobs. Thousands of jobs, the Prime Minister (Mr. Mulroney) said.


Donald Frank Mazankowski: Three hundred and thirty-three thousand, it is.


Aideen Nicholson: But the best way to stay employed is still via education. In 1984, the unemployment rate for the entire labour force, that is everyone from age 15 to 63 either working or actively seeking work was 11.3 per cent. However, it was 5.3 per cent for university graduates. Unemployment rates today for those without post-secondary education are twice as high as for those with university degrees or community college diplomas. This is most noticeable among the young. As people grow older, sometimes experience is equated with post-secondary education. However, for the young, where unemployment is highest, there is a very definite correlation between education and escaping the worst ravages of unemployment. Yet, the Government proposes to reduce funds for post-secondary education at that same time as it takes money out of the hands of low and middle-income families. This Budget makes it harder for parents and students alike to meet their goals of a better education and better job opportunities.
The Government says that it is focusing on rewarding achievement, but it is making achievement more difficult to come by.
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Gerry St. Germain: Mr. Speaker, I have a lot of respect for the Hon. Member for Trinity (Miss Nicholson). I have worked with her on the Standing Committee on Public Accounts, but I find it very surprising that she would rise in the House today and not assume some of the responsibility for what is being cast on Canadians now. It was her Party and the group with which she participated that led to the problems and to the action we have had to take.
She spoke about increasing taxes. I can assure the House and all Canadians that the last thing in the world we would want to do is raise taxes if we had an alternative. However, that Government, that group of individuals, that Liberal Party, went on a $200 billion spending binge at the expense of Canadians. That is what we are facing today. It is a sorry situation.
Also she talked about jobs and said that we were elected on the promise to create jobs. We have created jobs. We have created 33,000 jobs for Canadians. We intend to create thousands more and we will. Canadians have confidence in the Government of Canada which they did not have under the previous Liberal administration. Her Government, through the national energy policy, virtually devastated western Canada, the part of Canada which 1 represent. We have changed that national energy policy.
She also spoke about the taxation that came about because of the regressive steps they took when in Government, such as providing massive loopholes under SRTCs and PIP grants under the national energy policy.
I have only one question. How can the Hon. Member possibly stand in the House and be critical when we are trying to service the debt which was incurred on behalf of every Canadian by her administration? I repeat that I have respect and know she was not part of the Cabinet at that particular time. However, she was part of that Government and she must assume responsibility. 1 would like to have her reaction as to how she expects us as Canadians to repay that $200 billion debt incurred under her administration?


Aideen Nicholson: Mr. Speaker, I am pleased to respond to the Hon. Member's questions, because I know that he asks them not out of the desire to have a partisan advantage but out of genuine conviction. There are different points of view. My point of view and my explanation of the issues which he mentioned will be quite different from his, but it is a matter of two honestly held points of view.
The Hon. Member said that he considered the Liberal Government to be a spendthrift Government, in effect. As I see it, the last Liberal Government helped to protect Canada by reasonably prudent measures against the effects of the most damaging world-wide recession which had been known in many years. The increase in the deficit was primarily a result of the recession. It was primarily loss of revenue because of high unemployment, loss of people's personal income tax, loss of corporate taxes when business was in trouble, and of course the enormous increase in unemployment insurance. This har-

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rowing recession was one the whole world went through. In fact, Canada survived it better than many other countries.
On the question of employment, the Hon. Member pointed to the number of jobs which are now being created. Yes, indeed, as we are coming out of recession more jobs are being created. However, I repeat that I find it worrisome that the increase in jobs is in part-time jobs, not in full-time jobs. In Ontario alone, in the last year, about 10,000 jobs have been lost in the manufacturing sector. I do not point the finger at former Governments or present Governments for that, but it is an issue which affects us all as Canadians. It is part of the very rapid change in the world with which we have to deal.
Likewise with the NEP, it is a program about which people feel very strongly. I am sure we will never agree on that. However, I will say that there were certain advantages to the NEP, which I think will become more apparent over time. The failure of the NEP was a result of the collapse in world demand and world prices. The NEP had been postulated on the assumption that demand and prices for oil would remain high. The Hon. Member is quite right if he says that the last liberal Government did not anticipate a collapse in both demand and prices. No one else read it very well. Many other countries and many private sector forecasters did not read it right either.


Alan Redway: Mr. Speaker, I was interested in the Hon. Member's comments relating to proverty and the increase in poverty. A report was released just a few weeks ago on poverty which pointed a finger at the causes of the increase in poverty being unemployment, and that the unemployment created during the regime of the last Government, of which the Hon. Member was a supporter, was increased and exacerbated as a result of its high interest rate policy. In fact, the report indicated that the recession in Canada was made much worse as a result of the high interest rate policy, which the report described as an improper, incorrect and wrong policy, than it was in other parts of the world.
The Hon. Member referred to the fact that there was a world-wide recession and that Canada survived it much better than did other countries. However, according to the report on poverty, the main cause of poverty was unemployment, unemployment which was increased by the iniquitously high interest rate policy of the Liberal Government. You will recall, Mr. Speaker, that those interest rates reached over 20 per cent. It was as a result of that policy that there was the increase in poverty in Canada. As the Hon. Member also mentioned, we are now beginning to come out of the recession as a result of the policies of the present Government. As a result of those policies, we are seeing a fall in unemployment and interest rates. All of that will have the effect of decreasing poverty in Canada. I would like the Hon. Member to comment on those facts, bearing in mind the recent report on which she relied when she indicated that poverty was increasing.


Aideen Nicholson: Mr. Speaker, I would differ with the Hon. Member when he says the previous Government had a high
interest rate policy. I would say that there were high interest rates; it was not a matter of a deliberate policy.
I can certainly remember that while many people recommended that Canada have an independent interest rate policy, I never heard that suggestion from members of the Hon. Member's Party. The argument that was always made was that we could not separate our economy from that of the United States, and that if we paid lower interest rates than the Americans we would see a massive outflow of capital. That, I believe, was also the position taken by the brief Conservative administration of 1979.
High interest rates were set in the United States and were followed in this country. While there were certainly, from time to time, suggestions that Canada could somehow insulate itself against the U.S. by having a separate policy for interest rates, I did not hear those suggestions being taken very seriously.


Alan Redway: Mr. Speaker, I appreciate the opportunity to speak in connection with Bill C-84, an Act to amend the Income Tax Act, the Canada Pension Plan, the Unemployment Insurance Act, the Financial Administration Act and the Petroleum and Gas Revenue Tax Act.
This is the main Bill being brought forward by the Government to implement the provisions of the Budget brought down on May 23 of this year. There have been other Bills presented to the House already and there will be further Bills presented to the House. You will recall, Mr. Speaker, that we have already dealt with an excise tax Bill, a Bill which made changes in the sales taxes and in the taxes on alcohol and tobacco among other things. Many of the comments we have heard this afternoon have been relevant to the excise tax Bill rather than to the Bill to amend the Income Tax Act which is before us this afternoon.
In addition to those two Bills, the family allowance Bill provided for changes to the family allowance system. That, too, was brought forward to help implement the Budget provisions. The family allowance Bill was one part of a three-part package of changes referred to in the Budget affecting family benefits.
I was rather pleased to hear the Hon. Member for Kam-loops-Shuswap (Mr. Riis) indicate that part of today's Bill dealt with changes to the family benefit package. That is the first time I have heard any Hon. Member from the opposition side indicate that there were other parts of the family benefit package other than the family allowance Bill which was before the House earlier and will be coming back shortly for third reading.
Bill C-84 contains the other two parts of the family allowance package. This Bill provides for the increase in the Child Tax Credits. It will increase the current 1985 base of $384 per year to $454 per year in 1986, $489 per year in 1987 and $524 per year in 1988. All of those increases to the Child Tax Credit provision apply to people who earn incomes under $23,500 per year and, of course, the increases are reduced as one's income climbs.
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The third part of this over-all package of family benefit changes is also contained in this Bill, and that is the child tax exemption. This Bill reduces the child tax exemptions in the Income Tax Act. They will stay constant in 1985-86 at $710; in 1987 they will go down to $560 and in 1988 they will go down to $470 for families with children under the age of 18.
The combined effect of the changes to the family allowance system, the changes in the Child Tax Credit and the changes in the child tax exemptions under the Income Tax Act will be that lower income families will receive higher family benefits than families with higher incomes. That is a change from the situation as it exists right now. At this time, a family with an income of $30,000 per year gets more benefits under the three-part family benefit package than a family earning only $10,000 per year. In fact, this Bill will ensure that lower-income families will receive more benefits than higher income families. That is one of the great benefits of this Bill, a benefit to which our friends in the Opposition have not referred. They have not referred to it because this Bill actually provides greater fairness for lower-income families than was the case under the legislation in effect under the former Government.
The second aspect of this Bill on which I would like to comment is its fairness to middle-income earners. I notice that members of the Opposition seem to be getting restless. I can understand their restlessness. They are upset that they did not introduce changes like this.


Jean-Robert Gauthier: Tell the whole story.


Alan Redway: They are very jealous that these changes that will create more fairness for lower-income families and middle-income families were not introduced by them long ago.
Middle-income earning families are interested in seeing a general fairness in our tax system. They are interested in seeing an elimination of the tax loopholes about which the NDP like to talk. In fact, this Bill does just that. A vast number of those loopholes are being done away with by this Bill. One such loophole is the Investment Tax Credit. Among other things, that loophole provides for the carrying forward and carrying back of business losses from other years. The provision in this Bill will limit and restrict the carry-over provisions of those business losses. That provision plugs one of the loopholes to which members of the Opposition have referred.
There now exist tax shelters for the purchase of yachts and for the purchase of or investment in hotels. There are tax shelters for investment in recreational vehicles. All of these are being eliminated under this particular Bill. These are matters which I am sure members of the Opposition are envious of and wished they had thought of and eliminated when they were in power.
Next, there is the question of income splitting. This is a practice which has been engaged in for many, many years whereby high income families lend money, either at no interest or at low interest rates, to other members of their families in order to get around the attribution rules in the Income Tax
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Act. If they were to give that money away, or if they were to give investments away, the income produced from that money and those investments would be taxable in the hands of the person who gave the money or investments away. However, the courts have held that while one cannot get around the income tax attribution rules by giving away money and investments, one can get around them by loaning the money either interest-free or with a low interest rate. This Bill plugs that loophole as well. There is another loophole which members of the Opposition wished they had plugged. They had 20 years to do it and they did not.
Next, there are increases in taxation on high income people. In fact, there is provision for a surtax of 5 per cent on people with tax payable from $6,000 to $15,000. That impacts on people with an over-all income of about $40,000.
In addition to that, there is a 10 per cent surtax on those income earners who have an income tax payable of $15,000 or more. This measure impacts on people with incomes in excess of $60,000. This is something else which I am sure members of the Opposition wished they had put into effect while they were in government.
In addition, there are further tax increases on those who have not been paying their fair share. In fact, there is a surtax on corporations. It is a 5 per cent surtax on federal income tax payable to be effective in the coming year under the provisions of this legislation. This additional tax will impact on some
60,000	corporations.
In addition, there is another tax, a capital tax on larger financial institutions. There is a 1 per cent capital tax on institutions, banks and similar institutions with capital in excess of $300 million.
There are a variety of new special taxes on high income people and high income corporations which will generate new taxes while at the same creating an element of fairness. This is an element which was lacking under the tax provisions put in place by the former Government, tax provisions which have been in place for some 20 years.
In addition, there is another aspect of the Bill which has been greatly criticized by members of the Opposition for some reason or another. I refer to the provisions in the Bill which are aimed at trying to stimulate economic growth and job creation in the country. The particular one of greater interest is the one concerning the capital gains tax exemption. I am referring to the $500,000 lifetime capital gains tax exemption. We have heard a great deal of criticism with respect to this measure from members of the Opposition. However, they were present when the Finance Committee of the House examined this piece of legislation-


The Acting Speaker (Mr. Charest):: The Hon. Member for Saint-Denis (Mr. Prud'homme). For questions?


Mr. Prud'homme:: I could raise a point of order under Standing Order 6, but I will refrain, for the very simple reason that I think some serious consideration is necessary, and I am

November 27, 1985
Income Tax Act
referring to parliamentary reform, because I think all this is really getting out of hand. I am not referring to my hon. friend, obviously, but really, the fact that we are still in the House at 6:55 p.m. as a result of a New Standing Order ... 1 think that when we ask to have the Standing Orders of the House "changed back", Hon. Members will realize that this evening we could have abused the Standing Orders, which of course we will not do, but I think this should serve as fair warning for the future!


The Acting Speaker (Mr. Charest):: The Hon. Member for York East.


Alan Redway: Mr. Speaker, as I was saying before the Hon. Member's point of order, I have heard a great deal of criticism this afternoon with respect to the provisions dealing with the capital gains tax exemption. These provisions are specifically aimed at stimulating the economy and creating jobs. We have heard from members of the Opposition from time to time that they believe one way we can stimulate the economy is through tax cuts. Here is a tax cut which we feel confident will generate a great many jobs. However, for some reason or other, members of the Opposition continue to criticize this provision, probably because they wish that they had implemented it while they were in Government.
Another provision of the Bill aimed at creating jobs is the provision allowing pension funds to invest in small businesses. This, combined with the capital gains tax exemption, is aimed at stimulating the economy and creating jobs. That is exactly what they will do.
Of course, there are many other aspects of Government policy, Government agreements and Government legislation which have been introduced to stimulate the economy, measures such as the Atlantic Accord, the Western Accord and the Canadian Jobs Strategy. All of these provisions were aimed at stimulating the economy. They go hand-in-hand with the provisions of the Bill, provisions such as the capital gains tax exemption. These provisions will allow pension funds to invest in small businesses.
All in all, there are three very beneficial provisions in this legislation to which members of the Opposition have not referred at all this afternoon. This Bill is an Income Tax Act amendment. However, we all know that there are provisions in the Bill which will increase taxes. Nobody likes to see taxes increase-not you, Mr. Speaker, and not any Member of the House. Certainly, no one across the country likes to see taxes increased.
However, at the same time, Canadians are realists. They realize that when there is a deficit of some $35 billion in the current fiscal year someone has to pay for it. As well, they realize that if they are earning 65 cents a week and they spend $1 a week they have to go out and borrow the extra 35 cents. When they realize that part of that 35 cents, in fact about 23 cents, is being spent to pay for the interest on money they have borrowed in order to spend that extra $1 each week they realize that cannot go on for very long. It cannot go on for long
in their own households, just as it cannot go on for long in the country. So they are realistic enough to know that tax increases provided for in this Bill will benefit them, their children and their grandchildren, whether they like and enjoy the tax increases or not. They do not, and we understand that.
The Bill really has three provisions, as far as 1 am concerned, which the people of Canada are looking for in a Bill dealing with income tax. The first is the provision of fairness to low income earners. I am referring to the provisions relating to family benefits, changes to the child tax credits, changes to child tax exemptions under the Income Tax Act and changes to the Family Allowance Act. All of these changes create more fairness for low income people in the country.
They are looking as well for fairness for middle income people. They want to make sure that there is going to be a fair tax system in place with no loophole from which other people can benefit and they cannot. This Bill does just that. It closes up some of those tax loopholes, eliminating the whole question of income splitting. They are also looking forward to the minimum tax law provisions which we expect to have in about two weeks' time. This Bill does provide fairness to middle income families. It does create a fairer tax system than we have had before.
Finally, Canadians are looking for an Income Tax Act which will help to stimulate the economy and create jobs, and that also is right here in this Bill. This Bill contains the three main features for which Canadians are looking and I hope that the House will consider it quickly and pass it before the Christmas break.


The Acting Speaker (Mr. Charest):: Questions and comments. The Hon. Member for Montreal-Sainte-Marie (Mr. Malepart).


Jean-Claude Malépart: Mr. Speaker, since the Hon. Member attended a number of the Committee's sessions, I would like to ask him two questions, one about the deficit and the other about changes in the income support program for families with children.
As far as the deficit is concerned, I imagine everyone is in favour of reducing the deficit but we do not all agree on how it should be done. As for the example the Hon. Member gave of someone who has only 65 cents and spends a dollar, how can the Hon. Member justify his Government's spending one billion dollars to bail out the rich who have $60,000 or more in their accounts?
How can the Hon. Member justify the two billion dollars' worth of income tax exemptions, and so forth, granted to the oil multinationals? How can the Hon. Member justify wasting $56 million just to change the colour of our military uniforms? How can the Hon. Member justify spending $100 million a year, $400 million to send an additional 1,000 soldiers to Lahr
November 27, 1985

in Germany? Instead of spending their salaries in Canada, in Quebec or in one of the other provinces, these soldiers are going to spend their money in Europe and automatically create jobs. If we must reduce the deficit, how can the Hon. Member approve his Government's granting $800 million worth of tax shelters to the Reichmann brothers in the Gulf deal?
Mr. Speaker, I think the Hon. Member is honest and that he is an administrator, so as an administrator, how can he tolerate a situation where we have a high deficit and his Government is wasting taxpayers' money in such a dumb and dishonest fashion?
My second question was about changes in income support for families with children. The Hon. Member will recall that
Income Tax Act
the figures 1 am about to quote were released by the Department of National Health and Welfare and have been confirmed. The figures clearly show that the Government will recover $15 million at the expense of families with children in 1985-86 alone, and $80 million in 1986-87-


An Hon. Member:: Enough, enough!


Jean-Claude Malépart: Mr. Speaker, would you call the Hon. Member to order?


The Acting Speaker (Mr. Charest):: That will not be necessary since it is 7:04 p.m., and this House therefore stands adjourned until tomorrow at 11 a.m., pursuant to Standing Order 3(1).


[Stage Direction]
The House adjourned at 7.04 p.m.
[Stage Direction]
Thursday, November 28, 1985