1986-05-22

QUESTIONS ON THE ORDER PAPER


[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. Doug Lewis (Parliamentary Secretary to President of the Privy Council):: Mr. Speaker, Question No. 548 will be answered today.


Mr. Speaker:: I have the honour to lay upon the Table the 1982 report of the Electoral Boundaries Commission for the Northwest Territories and the report of the commissioners in relation to the deliberations of the Standing Committee on Elections, Privileges and Procedure.



PETITIONS


Philip Derek Lewis: Mr. Speaker, pursuant to Standing Order 106(8), I have the honour to table in both official languages the Government's response to the following seven petitions: Nos. 331-421, 331-426, 331-477, 331-480, 331-482, 331-495 and 331-497.


CANCELLATION OF UI BENEFITS TO ARMED FORCES
Mr. Ray Skeily (Comox-Powell River):: Mr. Speaker, it is a pleasure to present before the House today a petition concerning the Government's withdrawal of unemployment insurance benefits to members of the Armed Forces and a request that the Government consider reinstating these benefits as soon as possible.


DECOMMISSIONING OF LIGHTHOUSES
Raymond John Skelly: Mr. Speaker, I have a second petition which involves a large number of individuals from the coast of British Columbia who request that the Government not automate lighthouses but leave crews in place to provide communication services, search and rescue and accurate weather forecasting and reporting to ensure that safety will prevail on the coast of British Columbia for marine and air transportation.


THALASSIC DATA
Mr. Caccia: 1.	In the past six months, has the Department of Environment had any contact with Thalassic Data and, if so (a) on what dates (b) with whom (c) on what subjects?
2.	Does the Department have a professional assessment of information that Thalassic Data has regarding the St. Clair River and, if so, what is their assessment?
3.	Since March 18, 1986, have there been contacts between Thalassic Data and the Department and, if so (a) who represented the Department (b) how many meetings were held (c) what was the end result with regards to the information Thalassic Data has (d) will the information be used by the Department or further data collection pursued and, if not, are future meetings planned?


Hon. Tom McMillan (Minister of the Environment):: 1.
Yes.
(a) Dates
(b) Contacts	(c) Subjects
On or about	Mr. P.L. Brander
November 10, 1985
November 14, 1985 Mr. P.L. Brander
Thalassic Data's seismic survey capability Department of Environment program in the St. Clair River
Organization of government programs for the St. Clair River study
Arranged a meeting for technical discussions
Technical specifications of Thalassic Data's capability
Deferral of discussion with Mr. E. Myers of Thalassic Data until he was available to explain its methods
November 14, 1985 Mr. P.L. Brander Confirmation of above stated technical meeting Possibility of funding by the Department of Environment
Declaration by Thalassic Data that it would proceed with survey at its own expense
November 24, 1985 Mr. P.L. Brander Presentation of raw original records obtained by & Mr. T.M. McGee Thalassic Data on the St. Clair River
Thalassic Data's intention to write up a report Request that Thalassic Data advise the Department of Environment or the Ontario Ministry of Environment on its report
Mr. P.L. Brander Draft report by Thalassic Data
Intention of Thalassic Data to apply for exploratory drilling of the river bottom Confirmation of Thalassic Data's consultation with Ontario Ministry of Environment on its report Potential advertisement by Thalassic Data of its results
On or about January 17,1986

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On or about	Mr. T.M. McGee Technique being developed by Thalassic Data
February 14, 1986
March 20, 1986 Mr. T.M. McGee Details of a meeting that took place between
Ontario Ministry of Environment and Thalassic Data
2.	No. However, the Department of Environment, with the assistance of the Geological Survey of Canada, is undertaking a professional assessment of the Thalassic Data information.
3.	Yes, by telephone, (a) Mr. K. Shikaze, Regional Director, Environmental Protection, Conservation and Protection, Department of Environment, (b) None, (c) N/A. (d) N/A.


Philip Derek Lewis: Mr. Speaker, I ask that the remaining questions be allowed to stand.


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


Some Hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed from Wednesday, May 21, consideration of the motion of Mrs. McDougall that Bill C-109, an Act to amend the Income Tax Act, be read a second time and referred to a legislative committee.
Mr. Stan J. Hovdebo (Prince Albert):: Mr. Speaker, I take this opportunity to say a few words about the great Liberal research scam. In January, 1984 the then Liberal Government made amendments to the Income Tax Act, providing a scientific research and development tax credit program. The program was introduced to make tax incentives of more immediate value to companies performing research and development and to facilitate the financing of research and development. The program was specifically designed in such a way that investors were able to realize quick no risk profits by a procedure known as the "quick flip". This caused a significant overrun in the cost of the program.
I agree the Bill needs to be put in place and it should be supported, and that it should not take too long to pass through the House, but we need to have learned a lesson from the program. This scientific research tax credit program is only part of a $30 billion to $50 billion tax expenditure system being delivered through the tax system. The program is an example of the problems of tax expenditure in general.
The Auditor General in his statement to the Standing Committee on Public Accounts on May 30 suggested that this program was something the Government should be looking at
and that there was a great possibility for misuse of taxpayers' money by the particular process of tax expenditures. It is the method by which the corporations in most cases, individuals in some cases, are given tax relief. This is money which is not collected by the Department of National Revenue but left with the taxpayer without a great deal of accountability.
Under these programs you get relief from taxes and can spend money which you never have to account for. This is another way of passing out funds to corporations. Normally if an individual or organiztion receives funds from the Government they are expected to account for how those funds are spent. If they are spent incorrectly, they would be asked to make restitution for the expenditures. Under the tax expenditure program, that is not necessary. When you get a grant from the Government through a tax credit there is no way the Government can check on how that money is expended. In fact, the Income Tax Act protects the spender from being publicly investigated.
In his 1984 report the Auditor General pointed out that the scientific research tax credit program had been implemented without adequate safeguards over public money. I will spend a few minutes explaining the history of this.
In April of 1983 the Hon. Marc Lalonde, then the Minister of Finance, indicated that the cost of this program would be approximately $100 million in the first year and probably an equal amount in the second year. That was to be an expenditure through foregone taxes rather than actual grants paid by the Government. That is what makes this particular type of expenditure so insidious. It does not appear as an item in the Estimates. It does not appear as an expenditure of the Government. It is foregone income which the people of Canada are passing out to corporations and individuals which take advantage of it.
We have been told that foregone taxes to date amount to $2.8 billion. The $100 million program which the Minister of Finance announced in 1983 is already up to $2.8 billion. In addition, there is the cost of administering the program. The Minister of State for Finance (Mrs. McDougall) told the Public Accounts Committee recently that the cost of administering, investigating, and taking the necessary actions to collect some of the $2.8 billion would be at least an additional $12 million.
There are some very interesting facts with regard to this particular grant. For example, 1,810 corporations filed designations for these tax credits. Of these, 1,204 were involved in the "quick flip", a procedure by which they could get the money very quickly without actually expending any funds for research. Those corporations "flipped" more than $5.6 billion. In the process of this "flip" they pocketed $2.2 billion. In other words, of that $2.8 billion of funds foregone by the people of Canada, $2.2 billion was retained by the corporations which had committed themselves to do research. That left a shortfall of $3.4 billion. In other words, the

May 22, 1986

commitment to do $5.6 billion worth of research was entirely lost because $2.2 billion went into pockets and there was a shortage of $3.4 billion which had been committed to do research. A good portion of those corporations took the money and left the country. They sold their commitment to do research and left the country.
I can give you examples of things which have happened. Many Members may have seen The Fifth Estate last week. It was about a corporation called Canada's Tomorrow which established itself to do some research. It collected $25 million from the Government to do research in oceanography in Chile. There are now 67 students stranded in Chile because the money is gone and the Chilean Government will not allow them to go home until the costs they incurred there have been paid.
There is also a local research program which is causing a considerable amount of controversy. This is the so-called Dreamstreet program which is supposed to research the difference in productivity between red and white holsteins and black and white holsteins. The provincial Ministry of Agriculture in Ontario and the federal Ministry of Agriculture have indicated that this is absolutely useless research, but it got money through this program.
It seems incredible that any government could be so inept as to allow this kind of legal scam to be perpetrated on the people of Canada. There was no suggestion of the type of research to be done under this three-year program. Although the program was cut off last year, it is still costing us money. There is nothing in place to monitor the quality of the research to be done. The Dreamstreet program and the Canada's Tomorrow program are two examples which are producing nothing.
This also brings into focus the need for information to be given to the Cabinet for it to make its decision. Information should be available to the people of Canada and the Members of this House. In that way, when a decision is made to establish this kind of program, we can question the decisionmaking.
I questioned the quality of the advice given to the Hon. Marc Lalonde when he made the decision to put this program in place. People should have questioned that and the extent to which the effects of this program had been researched. Someone should have questioned how a so-called $100 million program suddenly costs $2.6 billion. Someone should have questioned how people who took part in this program could make money without any effort at all. The quick flip allowed at least 5 per cent of the money supposed to be used for research to be pocketed by someone who had no intention of doing any research in the first place. If it increased the amount of research done across Canada there might be some justification. However, StatsCan informs us that the amount of research done in Canada over the three years covered by this particular scam did not increase to any justifiable extent.
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This program has cost the taxpayers of Canada $2.6 billion plus. It will probably be closer to $3 billion by the time we are through. The present Government, of course, took fairly quick action to eliminate the program but it was also grandfathered so that anyone who had established a program could continue. Neither was a monitoring system put in place which would allow the Government to stop the program if necessary.
It is good that we are finally doing something that will allow the Government to recover some of the money that has been fraudently taken from the pockets of Canadian taxpayers. At present there are some 55 projects under investigation for fraud. Only 172 audits have been completed so we have a very limited understanding of the size of the program and how badly it has been used. We have taken just a small look at it. The approved value of research is over $7 billion and the value of the quick flips was $5.6 billion. That left a real shortage in the amount available to be spent on research.
I can only suggest from that, that when this type of program is established, the information put before Parliament should be adequate for us to judge properly. Obviously we cannot trust the quality of the advice given to the Minister. Therefore, someone or something else should have a look at it, and that should be the House of Commons. We should take a good look at the whole process involving tax credits.
The Auditor General has estimated tax expenditures at somewhere between $30 billion and $50 billion. That is money delivered to corporations and individuals in the form of tax credits. It is not $32 billion or $36 billion, but somewhere between $30 billion and $50 billion. That is a broad gap. It shows the inability of the Government to determine exactly how much is being delivered in the form of tax credits. As the Auditor General has suggested, we should put in place a system of reporting the tax credits being collected by people, not only in this research and development scam but in all other areas as well.
This Government has spent a lot of time, as have other Conservative Governments across the country, talking about the amount of welfare given to people out of work. They have talked about how unemployment insurance should be cut back because people will then try harder to find jobs. However, there is another kind of welfare, corporate welfare. Corporations get taxpayers' money and do not have to account for it. We do not even know if they need it. They get money through the system without having to convince anyone that they need it.
We need to look at the whole structure of tax expenditures through these credits. We need to put in place an evaluation system. During his appearance before the Standing Committee on Public Accounts the Deputy Minister of Finance, Mr. Cohen at the time, suggested they had no real system in place which evaluated the effect of tax credits. He also admitted that they had no real evaluation of the amount of research this particular program was going to provide. In fact, the Government, before it put this program in place, did not have any indication of how effective it was going to be.

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As I said before, the program was announced in April of 1983 and passed in January of 1984. However, in the fall of 1983 the accounting profession had already recognized this was going to be a scam and were publishing information on how to take advantage of it. This was already common knowledge across Canada in October and November of 1983, a couple of months before the Bill was passed. When that was brought to the attention of the Hon. Marc Lalonde, he decided to go ahead with it anyway and it was passed in January of 1984.
We support this Bill, Mr. Speaker. It needs to be put in place. However, we hope the Government recognizes the lessons learned here which have cost us something over $2.6 billion with very little return. We hope the Government has some understanding of how the taxpayers of Canada were ripped off by a procedure which was not researched well enough. The Government did not know what the effects were going to be and was unable to stop the ripoff even after they recognized it. I hope the particular subject of this Bill will bring to Canada a better financial structure for these kinds of taxations in the future.


Hon. Donald J. Johnston (Saint-Henri-Westmount):: Mr. Speaker, I welcome this opportunity to take part in this debate, because when the Bill in question was amended by Mr. Lalonde, I was the Minister responsible for Science and Technology.
I have a rather special interest in this Bill. I would caution my friends on all sides of the House in their use of hindsight in terms of criticizing and attacking the provision as it was introduced in 1983.
We all know that the Income Tax Act suffers from a number of serious weaknesses, complexity and inequity. I had hoped that during our period in government we might have made more progress in bringing some coherence to this tax system in this country, but, caught up as we were with the worst recession since the 1930s, inflation, high interest rates, constitutional debate, the Government can only take on so many major issues in the course of its mandate.
We attempted in a number of areas to improve the tax system, but did not have the opportunity of coming to grips with the tax system as a whole. Hence, efforts were made in specific discreet areas, such as scientific research and development, to meet the needs, the challenges of particular sectors.
Now we have a Government with 211 seats that is engaged in tinkering with the system, that has done very little, in fact nothing to improve the system, which has added complexity, and added inequity. I need only refer to the $500,000 lifetime capital gains exemption. I am reminded, when I look at this Government, of the statement of some wag, "You know, if Thomas Paine thought taxation without representation was
bad he should see it with representation", because that is what we have today. We have over representation and the tax system continues to deteriorate. The great tinkerer, as he is becoming known, the Minister of Finance (Mr. Wilson) has not helped.
All that being said let us put partisanship aside for a moment and look at Bill C-109 and the background of this provision. The ingredients of economic growth have changed dramatically over the last century. When some of us were young, I suppose even before most of us were young, growth in an agricultural economy-and I grew up on a farm, Mr. Speaker, as perhaps you did-was brought about by the marriage of those three classical elements, land, labour and capital. As we moved into the industrial age the accent moved more to technology and to resources. Labour became as significant, and capital became particularly significant during the smokestack industrial generation of industries.
Now we have moved into the so-called post-industrial period. The accent is on knowledge-based industries. Growth is brought about by the marriage, primarily of capital and technology. Labour has assumed a lesser role. Land and resources, of course, have also assumed lesser roles. Witness the remarkable growth of Japan after World War II, a country effectively without a natural resource base, but money was placed in developing intellectual capital, developing technology and in applying technology. Most of it, in fact, in the case of Japan was foreign technology.
The Government in the early period of the 1980s, as I mentioned earlier, was fighting on many fronts, wrestling with the worst recession since the 1930s. As we began to emerge from that recession there was a recognition that to spur the growth, to build on the economic recovery it would be necessary to take certain steps to, if you like, have an accelerated recovery, to absorb those jobs that had been lost during the recession. That meant, and in recognition of the evolution that I referred to, the accent had to be on technology, and to ride the great wave of the technological revolution that was sweeping through our society.
Mr. Lalonde, in 1983, in consultation with the business community of the day determined that it was important to facilitate that marriage between entrepreneurs, who are the catalysts between technology and capital.
We hear much about the fact that there is a lot of capital available, and that Canadian savings were running at the time around 12 or 13 per cent. The high interest rates, of course, had driven people largely into debt instruments, as you will recall. Of course, while those savings were high and remained high, in this country, unfortunately, they are largely institutionalized, Registered Retirement Savings Plans, for one, in pension plans and so on.
Where does the entrepreneur, that great catalyst that brings about the marriage, if you like, between capital and technology find the mate. If the technology is there and more research and development is required to build on that technology, or to
May 22, 1986

create technology, where does he find the mate in that marriage, namely, the capital? It was that challenge that Mr. Lalonde faced in 1983, and that is why the scientific research tax credit was introduced. It was to allow individuals and investors to go out to the community at large and attract capital for the purposes of research and development in this country by permitting a flow-through of credits to those individual investors.
Now, we have heard of abuses and, indeed, I would be the first to condemn those abuses. Perhaps the program had not been adequately developed by officials. In fact, again with the benefit of hindsight, it seems clear that it was not. There were benefits derived from that program. We have testimony to that effect. I understand that the Canadian Advanced Technology Association made a pre-budget submission to the Minister of Finance in December of 1985 and stated the following:
-it is clear, therefore, that markets are responsive to government incentives to encourage risk taking.
This can be illustrated by reference to the SRTC program. While this program was seriously abused, and we are not in any way trying to defend those abuses, the ability to flowthrough R and D tax benefits to individual investors did result in considerable scientific research spending in Canada that would otherwise not have taken place. The same association recommended that some flowthrough mechanism be developed in order to encourage such research and development, of course in the absence of the abuses to which I have made reference.
[ Translation]
I may add, Mr. Speaker, that at the time, the Conservatives supported this policy and the amendment proposed by Mr. Lalonde. And as I said before, it is easy to criticize with the benefit of hindsight. Nevertheless, the association acknowledged this measure had a beneficial impact, and now we have eliminated the abuses, and we have also eliminated the beneficial impact. We must find other ways to stimulate research and development in this sector.
I suppose the comment I have made invite the question, where do we go from here? I ask my colleagues on the Conservative benches how we solve the problem of the basement entrepreneur who finds technology, must conduct further research and development but has no capital? Where will we find the risk takers and what incentives will be offered to them? I am talking about companies in their embryonic stage which have the potential of becoming a Mitel or a Gandolf. What kind of mechanisms do our friends on the Government benches suggest would be appropriate to supply capital to those companies? Of course, Members who live in the Ottawa region are especially familiar with the successes that have been brought about by operations which began in a garage or a basement.
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I talk about these garage and basement operations to underline the fact that there may not be any one approach to this problem. The capital needs of corporations, businesses and individuals who are involved in research and development vary to a great extent.
The Government must address the issue of grants versus tax credits. For years, arguments have been made that tax credits are more beneficial because they give more play to market forces and enable businesses and entrepreneurs to make their own decisions. It is also argued that tax credits do not discriminate among recipients of the taxpayers' largess, if you like, as do grants if they are delivered in a discretionary fashion.
All of those are legitimate arguments, but it seems to me that the Government must bring forward some rational approach to solve the problems of those research and development enterprises that begin in the garage or basement and move on to become slightly larger firms that can attract money from individual professionals, co-workers or other small entrepreneurs or adventure capital firms. This rational approach is needed to allow those firms to move on to become threshold-sized firms, as they are sometimes called, with established management procedures and relatively good financial connections but which are not yet in the position to tap major Canadian capital markets in the intermediate stage or, as in the case of Northern Telecom, tap world-wide markets.
There are risks in this whole area of research and development. How do those investors hedge against those risks and what kind of incentives should those investors receive? At the same time, how do we eliminate the abuses of the kind we have witnessed in the case of the scientific research tax credit? Those are the challenges facing the Minister of Finance (Mr. Wilson). We on our side of the House will be bringing forward ideas and suggestions both here and in committee as to how these objectives may be accomplished.
Make no mistake, the future of this country lies very much in the marriage of technology and capital. The Government has brought forward some provisions to monitor this process and some provisions to stop it, in the case of the SRTC, but it has yet to bring forward anything to facilitate that marriage. It has not yet shown us how it will play the role of matchmaker in this very important relationship.


Mr. Orlikow:: Mr. Speaker, in the more than 20 years I have been here there has not been one year in which the Government of the day has not set forth in its Budget plans the notion that providing another tax break, another concession or another loophole to the private sector will somehow persuade it to put more effort into research and development. Yet, in 1986, we still have the second worst record of any country in the OECD in terms of percentage of our Gross National Product being devoted to scientific research and development.
I have several questions for the Hon. Member for Saint-Henri-Westmount (Mr. Johnston). Mr. Lalonde, who brought this proposal forward, was supposedly one of the best

May 22, 1986
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Finance Ministers we ever had and the Deputy Minister, Mr. Mickey Cohen, rated on a par with our "great" free trade negotiator, Mr. Reisman. When this proposal was brought forward by the Hon. Member's Government in Mr. Lalonde's Budget, they told the people of Canada and Parliament that we would lose $100 million in revenue a year for three years. However, now we are told that it will cost the taxpayers of this country $2.6 billion. Will the Hon. Member explain to the House how the Department headed by Mr. Lalonde and Mr. Cohen could have been so wrong?
Second, why were the tax lawyers and tax accountants of this country able to find so quickly holes in the tax system that were so wide one could drive a tank through them? They were able to advise their clients-those who had money-how to use this tax loophole to save that huge amount of $2.6 billion. Furthermore, not only did they save that money,in the process very little of that $2.6 billion really went to scientific research and development. Surely the Hon. Member's Government and the Department of Finance should have been able to Find a system that would ensure that if people received tax advantages by putting money into such a project the money actually went into scientific research and development rather than into their own pockets.


Donald James Johnston: Mr. Speaker, I appreciate the intervention by my hon. friend, the Member for Winnipeg North (Mr. Orlikow). I do not think I detected tongue in cheek when he referred to the qualities of Mr. Lalonde as Minister of Finance, or the quality of Mr. Reisman, interestingly enough. The Hon. Member asked why the estimate was so wrong.


Mr. Blaikie:: It is a good question.


Donald James Johnston: It is a very good question and I think we should get to the root of it. Why has the Deparment of Finance and the Econometric projections been so wrong in many instances? Why have we worked on misinformation in many instances? I can assure my hon. friend that Mr. Lalonde was not in a position as Minister of Finance, to sharpen his pencil and go through the Income Tax Act and all the related provisions of other laws related to it to determine what kind of abuses might take place. That is the job of officials. That job requires analysis. With the benefit of hindsight, it is perfectly clear that the projected revenue losses were wrong by a degree which is staggering to behold. I accept that and I am sorry about it.
With respect to why tax practitioners and others find these tax loopholes so quickly, it is an unfortunate consequence of our tax system that we have effectively given birth to a generation-succeeding generations, if you like-of experts who spend their time saving money through the arrangement and rearrangement of assets and taking advantage or provisions of the Income Tax Act. That is totally unproductive time.


David Orlikow: Maybe we should hire some of them.


Donald James Johnston: We have hired some of them. That goes to the point I raised during my comments. Our tax system has to be simplified, rendered less complex and equitable. Until that happens we are going to continue to see the kind of unproductive activity which is brought about by these people, who I do not criticize. I was one myself for many years. It just seems to me when we look at the record of Japan in terms of the ratio of lawyers to engineers and scientists as compared to U.S. and Canada ratios, something is seriously wrong. I accept that as well. Why these people find the tax loopholes so quickly is because they are competent and they get at it immediately. Their job is to basically advise their clients as best they can and devise techniques to take advantage of the provisions of the law, which is a legitimate tax avoidance.
I do think the Hon. Member has been somewhat unfair in his assessment of this situation. First, approximately two thirds of the funds invested, we understand, went to valid research. Second, I would point out to the Hon. Member that during our tenure we tried to move to a research and development figure of 1.5 per cent of GNP. We had moved from 1 per cent almost to 1.5 per cent when the Government changed. If we fall off now, please do not point your finger at Liberal Governments. We have a strong commitment to research and development in our Party-


The Acting Speaker (Mr. Paproski):: I am sorry.


Donald James Johnston: Can I finish?


The Acting Speaker (Mr. Paproski):: Go ahead and finish. You still have a couple of minutes.


Donald James Johnston: I would just like to make one last point, namely, that we stand on that record. There are a lot arguments we can get into here, such as, wouldn't it be great to be 3 per cent of GNP, but there is the issue of how it is spent. The quality of research and development spending is more important in many respects than the quantity. There is no point in throwing money at things. The issue that the funds, which the Hon. Member argued, have been squandered in fact demonstrates that point. To a degree they have been squandered. But a very substantial portion of the funds did find their way into important research.


The Acting Speaker (Mr. Paproski):: I believe the Hon. Member for Prince Albert (Mr. Hovdebo) still has a very short question and I am sure the Hon. Member for Saint-Henri- Westmount (Mr. Johnston) would like to rebut.


Stanley J. Hovdebo: Mr. Speaker, I would like the Hon. Member to justify the statement he just made, because in 1983, $4.8 billion was spent in research. In 1984, $5.5 billion was spent in research. That is an increase of $700 million. In 1985, $5.8 billion was spent in research, an increase of $.3 million over the year before. If we assume the research stayed the same, there was an increase of $1 billion in research over those two years. That cost the taxpayers $2.6 billion and a good portion of it went down the drain. The kind of research which was
May 22, 1986

counted was of little value. I think the Hon. Member's suggestion that it increased the flow of money into research is for the birds.


Donald James Johnston: Mr. Speaker, the Hon. Member takes issue with the assocation which testified to the effect-


David Orlikow: It has an interest in protecting itself and its members.


Donald James Johnston: The Canadian Advance Technology Association has numbers which say it was valuable. However, the Hon. Member just underlined the other point I made, on which I thought he was going to comment. In 1983 it was $4.8 billion. In 1984 the Government empowered, I think it was September 18, $5.5 billion, and then under a Conservative Government we moved from $5.5 billion to $5.8 billion in a period of strong economic growth. Measure that as a percentage of GNP, Mr. Speaker, and see where it gets you.


The Acting Speaker (Mr. Paproski):: I believe the Hon. Member for Stormont-Dundas (Mr. Warner) had a short question.


Mr. Warner:: Mr. Speaker, I have a very brief comment. The Hon. Member for Saint-Henri-Westmount (Mr. Johnston) is an acknowledged tax expert and I was surprised at his remarks with respect to the equity of the capital gains tax exemption. He knows this initiative is certainly one which is encouraging people to invest in high risk areas. He has identified scientific research as an area which does involve a higher degree of risk than most investments. I am also surprised that the Hon. Member would suggest that this has a certain amount of inequity when most of the capital gains over the last two or three years have been really inflation and very little has been real income. I would suggest that perhaps this initiative not only serves investment well in high risk areas but also provides a much higher degree of equity to our tax system.


The Acting Speaker (Mr. Paproski):: Does the Hon. Member have a rebuttal?


Donald James Johnston: Just a comment, Mr. Speaker. I believe my friend is the victim of his own propaganda. He is an experienced businessman. He knows the capital gains tax exemption is applicable to assets sold anywhere in the world. It is completely unfocused. I know many people who have taken advantage of it. They have sold assets, they have gotten out of the market, and some have sold out of the Canadian market and moved into the United States market. What that does for Canadian research and devlopment is indeed a mystery to me.
I believe it is one of the silliest, most counter-productive measures, and it is complex as one can see from the new bulletins which have been introduced-which we said would be the case-to prevent abuses arising. There are things to do on the capital side, I acknowledge that, but this is certainly not the answer.
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The Acting Speaker (Mr. Paproski):: The period for questions and comments is now terminated.


Mr. Simon de Jong (Regina East):: Surely Bill C-109 stands as an indictment, first, against the former Liberal Government for the program it introduced, the sloppy way in which it was thought through and its inability to control and stop the hemorrhaging of public funds even though that became known before the act was actually proclaimed. It stands as well as an indictment against the present Government which sought to stem the hemorrhaging of funds shortly after it got elected when it introduced a moratorium on, I believe, October 10, 1984, and yet allowed a grandfathering clause where continuing cases of abuse occurred.
As well, Bill C-109 stands as an indictment against the "free enterprise" notions of this and the former Government. It is the notion that if we just shovel money to the private sector it will know what to do with it, will put it to good use and everyone will benefit. As well, it is an indictment against the Government's attempt to reform the tax regime in Revenue Canada.
What does Bill C-109 allow the Government to do? It allows the Government to perform assessments and collections immediately as they relate to deductions made under the scientific research tax credit scheme. The rights of those involved not to pay the taxes until their return is filed, and the right to have their cases heard are being removed. In other words, the whole question of the taxpayers' bill of rights is disappearing.
Bill C-109 is being introduced in order for the Government to have the full legislative authority to assess and collect immediately taxes owed from those who have made use of the scientific research tax credit program which is Part VIII of the Income Tax Act. The need for this was expressed in the Department's press release of March 26, 1986, which referred to two circumstances which have prompted this legislation.
The first circumstance concerns two Federal Court cases which have resulted in conflicting decisions. The first case involved Bechtold Resources which had objected to the ability of Revenue Canada to assess and collect some $16 million in Part VIII tax prior to the filing by the corporation of its tax return. The court found in favour of Bechtold. The second case involved Western Technologies Inc. On this occasion the Federal Court found that the Department of Revenue was within its rights to both assess and collect Part VIII tax prior to the filing of a return. Both cases are currently under appeal.
The second reason cited in the March 26 press release was the evidence that individuals who controlled corporations utilizing the SRTC program were immigrating with those funds without paying the Part VIII tax owing. Once out of the country it is impossible for Revenue Canada to collect the taxes. In other words, Bill C-109 is an attempt by the Government to capture some of those revenues which have been lost

May 22, 1986
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because of this program. In the process of so doing it is certainly contradicting past-stated Government intentions to reform Revenue Canada and tax collection in Canada.
What is being set aside in Bill C-109 constitutes one of the basic principles which the Conservatives fought to have enshrined in legislation namely, the right of taxpayers prior to the payment of any taxes they may dispute to have access to a fair and impartial hearing and to the courts if necessary. The need to collect as much of the taxes owed from this program has become paramount to the rights those involved would normally enjoy under the Income Tax Act.
What we find here is that the Conservatives in their task force on Revenue Canada prior to the election demanded a different code of conduct. I would now like to quote from the Conservative's task force report which states in part:
When an assessment is issued a taxpayer should not have to pay taxes which are in dispute until the time for a formal objection has passed. If the taxpayer appeals, no payment of those amounts should be required until the appeal is finally resolved.
The declaration of taxpayers' rights issued by the Government declares: "You are entitled to object to an assessment or re-assessment if you think the law has been applied incorrectly." It goes on to state that the individual has the right to withhold amounts disputed in formal objections until an impartial review by the Department or the courts has been completed.
Bill C-109 clearly violates the letter and spirit of these commitments and is therefore testament to Government inaction which extends back to the time the legislation proclaiming the SRTC program was put in place. The present Government certainly has nothing to be proud of with respect to cleaning up this program, and certainly not for this Bill.
I would now like to deal with some of the history of the Bill. It was introduced in the Lalonde Budget. It was meant as a quick fix in order to obtain an instant infusion of capital funds into research and development projects. In many ways the intent of the legislation is noteworthy. To attempt to encourage research and development through the taxation system certainly created some problems for smaller firms. To give special deductions and encouragement through the taxation system to those doing research and development only helped those corporations which had income on which to pay tax from which they could deduct these tax credits. Thus the Government of the day devised a scheme by which it could sell these tax credits so that small research and development companies could sell their losses to other companies and other business people, therefore gaining some revenue for themselves with which to finance part of their research efforts.
What the business community found was the attractiveness of the "quick flip". Perhaps the best description of how the "quick flip" works was given by the CBC's Fifth Estate on January 26, 1986 which provided the following description of the program:
Let's pretend a scientist has a $100 project but no money. What he can get is a $50 tax credit from Ottawa just for his $100 idea. But our scientist doesn't have any money. So he goes to a rich guy, or a big company. The credit's worth $50 at Revenue Canada when it comes time to pay your tax. The scientist sells the credit for $40. So after the quick flip of the tax credits, the scientist does have $40 for his project-all Ottawa's. And the big guy has saved $10 or maybe $10 million on his taxes without any real investment in the project at all. With alchemy like that, who needs science.
Were the "quick flip" provisions foreseen? The Auditor General stated the following in answer to this question:
-we were told by the Department of Finance that the 'quick flip' arrangement was clearly envisioned from the outset of the program to make the incentives of immediate benefit to firms.
This was later confirmed by Finance officials who appeared before the Public Accounts Committee. So there was an awareness that the "quick flip" would be in operation.
In fact, first reading of the Bill was given in December of 1983 with Royal Assent being given on January 19, 1984. As of December 31, 1983, the program had become so popular that $542.3 million in tax credits had been claimed even though the original intention of the program was a loss of some $100 million in tax revenues to the Government. By the end of 1983, before the Bill or this provision had received Royal Proclamation, $542.3 million in tax credits had already been claimed.
The concern about the excessive use of the program prompted the Department of National Revenue to issue a statement on January 30, 1984 which stated that along with the Department of Finance "monitoring of the effectiveness of these new SRTC provisions to ensure that the intent of the legislation would be achieved and there would be no abuses."
Yet when the issue was raised again in the House by my Leader on June 4, 1984 the program had now cost the taxpayers 10 times what had been estimated-$1 billion. The Minister of Finance at the time, Marc Lalonde, interpretted this financial loss to the taxpayers as an indication that R and D was being heavily financed. Even at this point there was no way of telling if any R and D was being done.
The next day, June 5, the Department of National Revenue issued yet another press statement indicating that it was going to "establish an appropriate monitoring system". In other words, on January 13, 1984 the Departments of Finance and Revenue had stated that they would begin monitoring the program. We found out on June 5 that they did not even set up a monitoring program.
This brings us to October 10, 1984 the old Government having been defeated and the new one put in place. The Minister of Finance (Mr. Wilson) rose in the House of Commons and introduced a moratorium on the "quick flip" provisions of the program. However, much to the objection of members of my Party he allowed and provided for a convenient loophole; that is, a grandfathering clause for those still interested in the "quick flip". The press statement at the time had this to say:
May 22, 1986

In order to ensure a fair transition, agreements in writing entered into on or before October 10 or arrangements evidenced in writing and substantially advanced before that date would be allowed to proceed.
In other words, agreements in writing on backs of envelopes would qualify under these terms.
Later on the Calgary Herald of October 29, 1985 reported the following:
As a result (of the moratorium) accountants, lawyers and freelance money men worked through the night to substantially progress or work up agreements on millions of dollars worth of issues on the East Coast-where midnight strikes earliest-and working west.
The lack of meaning of the moratorium imposed by the Government on October 10 becomes evident when one examines how many SRTC designations were approved and to whom they were given after the October 10, 1984 moratorium. Before the moratorium, some $4 billion in transactions had been approved. After October 10 an additional $3 billion received approval. Of these, $1.8 billion worth was submitted to Revenue Canada by various corporations to ensure that they met the grandfathering provision of the moratorium. The remaining $1.2 billion were ultimately approved without having been submitted for security.
Even after the program was terminated on May 23, 1985, $600 million of the $3 billion in designations were approved. In other words, after the moratorium of October 10, 1984, $3 billion in transactions were still being approved. The Government claimed that it plugged up the loophole but it plugged it up with a sieve. It still allowed some $3 billion in designations to be approved.
The level of losses compared to recoveries is indeed quite staggering. Of the 1,810 corporations filing 8,872 designation applications, the total taxes foregone are estimated at $2.8 billion to $3 billion. Of the 1,810 corporations filing for SRTC designations, 1,204 were involved in the "quick flips". Only 75 corporations have voluntarily paid their Part VIII taxes, amounting to only $63 million. Another 35 corporations have had taxes collected as the result of legal action, amounting to some $55 million. Another 15 corporations have provided security voluntarily, amounting to $76 million. Fourteen corporations have had their assets attached, amounting to $34 million. The total Part VIII taxes recovered or secured amounts to $228 million.
The Department of National Revenue now estimates that the $900 million owed by 313 corporations will likely have to be written off as being uncollectable. Of the 172 corporations already audited, 55 have been referred to the Department of National Revenue's special investigation unit. Within that group of 55, there is about $500 million worth of tax at risk, included in the uncollectable estimate of $900 million. This is according to the Public Accounts of March 11, 1986.
Which corporations took advantage of the SRTCs and the "quick flips"? Dreamstreet Holsteins of the U.S. received some $10 million in tax credits to compare red and white and
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black and white Holsteins. The Government gave that company $10 million in tax credits to compare red and white and black and white Holsteins. That is a great piece of research that certainly deserves some $10 million in tax credits.
International Electronics received tax credits of some $34 million for energy projects. Funds were spent on real estate and on a $2-million mansion. Apparently Imperial Oil thought it had a pretty good project going because it made a fast $2 million profit from the quick flipping of the money. In fact, Imperial Oil flipped about $400 million, thus helping the corporation reduce its own taxes.
Fitch Research Corporation received $5 million in tax credits for computer chip development. In fact, real estate was purchased and the company president is now a promoter in Hong Kong. Bechtold Industries received $16 million in tax credits. It made massive real estate purchases with that money. Inex Technologies Inc. received $32.5 million in tax credits and bought condominiums and a $55,000 Lotus sports car along with other real estate purchases.
DWS Naval Research & Design received $2.7 million. I raised this matter earlier in the House of Commons. This corporation was supposed to be making miniature submarines. In fact, it was demonstrated that the chief promoters of that program were drug smugglers and gun-runners and in no way were they capable of producting miniature submarines. Yet DWS Naval Research & Design got its SRTC approval after the moratorium of October 10, 1984. In other words, it was the Conservative Government that thought this company was okay and should get those tax credits to develop miniature submarines. Those are the horror stories. These horror stories were initiated by the Liberals and fumbled by the Conservatives.
Finally today we are being asked to approve a Bill that breaks the Government's own commitment to tax reform and a taxpayers' bill of rights. Now, after the horse has left the barn, the Government is very anxious to get back as much of the money lost to begin with as possible. The Department of National Revenue will now be allocating some $12 million to audit and collect the taxes owing from the SRTC program. By next year, some 115 person-years will be dedicated to achieving this end. This allocation does not include the additional costs resulting from eventual court challenges which will not be resolved for up to four years.
There have been some pretty brazen acts on the part of Revenue Canada. Earlier this year I raised in the House the case of Vancouver revenue collections officers seizing the very bed of a woman who was recovering from surgery. I understand that the bed has now been returned to that woman. So desperate is Revenue Canada that its officials went to the house of a woman who was in bed recovering from major surgery, propped this woman up in a chair against the wall and took the bed away. That is how desperate the Government is now to collect back on what it lost on the SRTCs.

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It is with great regret that we will support this motion. We know that there has to be some damage control. The amount of revenue being lost is just staggering. Unfortunately, what is being lost as well is the whole principle of the taxpayers' bill of rights.


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


Mr. Parry:: Mr. Speaker, I wonder if I could ask my learned colleague, the Hon. Member for Regina East (Mr. de Jong), to outline for us the way in which the Government has breached its taxpayers' bill of rights in the case of the scientific research tax credits.


Simon Leendert de Jong: Mr. Speaker, very simply, the essential notion of the taxpayers' bill of rights is that a taxpayer is innocent until proven guilty. In other words, if the Department reassesses the taxpayer, he does not have to pay that reassessment if he is going to appeal it. He will go through the due process until a final decision is made. Of course, Bill C-109 does not provide for that.
Bill C-109 assumes that the taxpayer is guilty until proven innocent. Bill C-109 will have Revenue Canada do the assessment and collection of taxes before the company files its income tax return. It is in fact the very opposite of what the Government had proposed in its taxpayers' bill of rights. It is the opposite of what the Progressive Conservative Party had promised during the election campaign and had outlined in its tax report prepared after Conservative Members went all across the country investigating abuses by Revenue Canada. It goes against everything the Progressive Conservative Party had claimed it stood for before the election and when it was involved in the task force on Revenue Canada. Now we see the heavy hand of Revenue Canada under a Conservative Government throwing taxpayers out of their beds in order to claim those beds. This is as bad as anything the Liberals did in their day.
While I have the opportunity, and I know it is not directly connected to my colleague's question, but I wanted to put on record the comment of the Minister of Finance in response to a question by me in the Finance Committee on April 22, 1986. Remember, Mr. Speaker, that the Minister of Finance and the Government are great champions of the free enterprise system. What an indictment in the sadness of the Minister's tone and voice when he told me:
I see this whole SRTC episode, particularly after we made the change, as an area where the private sector was its own worst enemy-we tried to make the amendment on the basis that only permanent capital would come into the company-the private sector then proceeded to do things under the guise of it being permanent capital, but in essence a quick flip.
The Minister was really disappointed in the workings of capitalism. He was surprised and hurt that people interested in profit would go out and try to maximize their profits. What a
discovery that must have been for the Minister of Finance. In the lessons that we learned from the SRTC, and there are many, I hope that the Minister of Finance has a little less naivety about the workings of the market-place and that the golden rule of maximization of profit still exists, regardless of the Government's best intentions.
[ Translation]


Mr. Alfonso Gagliano (Saint-Leonard-Anjou):: Mr. Speaker, I would like to take this opportunity to comment on Bill C-109. First of all, I do not intend to talk about the Bill as such and about the Scientific Research Tax Credit, since my hon. colleague from Saint-Henri-Westmount (Mr. Johnston) has already covered the ground very well. I would like to start by expressing my apprehension about the impact this Bill will have on the tax system in this country. Now, in order to grasp what the ultimate impact of this Bill will be, we must realize that the Canadian tax system is based on the voluntary filing of returns by each taxpayer, and once the returns are filed, the Department of National Revenue issues an assessment, and it may then claim amounts payable or amend the return, while the taxpayer is entitled to appeal procedures at various stages.
Last year, the newly elected Conservative Government- after all its rhetoric, and I think many Canadians still remember the Conservative Party's task force on the tax system and how to collect our taxes-the new Government announced the declaration of taxpayers' rights. At the time, that was a step ahead, involving voluntary returns with assessments, notices of appeal, and so forth. According to the declaration of taxpayers' rights, a taxpayer is innocent until proven guilty. So he could appeal the department's notice of assessment without paying the amount assessed, while previously, the taxpayer had to at least make arrangements for paying the amount or actually pay the full amount, and of course if the taxpayer won his appeal, the department had to refund the amount, with interest.
Mr. Speaker, there is not necessarily unanimous support for the new charter of taxpayers' rights. The fact is, Mr. Speaker, that hardly a year ago, the Conservative Government, claiming that it was faced with this situation-I know there have been a number of problems as a result of this program, there has been some serious abuse, but the Conservative Government is totally ignoring, not just taxpayers' rights but it is going even further, because now it can claim amounts payable and seize assets even before the taxpayer has filed his return. And that is what we must watch out for, Mr. Speaker. We are about to introduce new provisions in our tax system which, through Bill C-109, at least once the Bill is enacted, will give the Government, the Department of National Revenue, the authority to collect taxes and even to seize assets before the taxpayer has filed his return. That is the problem.
Of course during the election campaign, the same party that has now formed the Government made it quite clear. It promised that a taxpayer would always be innocent until proven guilty. And to keep that promise, it announced and
May 22, 1986

proposed and put into effect a charter of taxpayers' rights, and now, a year later, it has decided to go in the exact opposite direction and has taken a very extreme position, Mr. Speaker, and now we have a situation where the Government, the Department of National Revenue, will actually be able to demand that taxpayers pay these amounts and do so even before they have had a chance to file their returns. So there is an immediate presumption of guilt, and the case is closed. Mr. Speaker, the situation is the exact opposite of what it should have been according to the charter of taxpayers' rights.
Mr. Speaker, as a result of abuses in the case of this particular program, the people at National Revenue have taken a position which I consider to be absurd. Under Canadian legislation and in keeping with our customs and traditions, one is always presumed innocent until proven guilty. True enough this program was seriously abused but now all businessmen, corporations and individuals that have filed applications under the scientific research tax credit program are automatically deemed to be guilty. Mr. Speaker, I think this is a regressive step. Until now every individual case has stood on its own merits. Each case was just that, one case, but now they are going to be lumped together by sector. That is bound to create problems because good and bad apples alike will be thrown into the same basket. That is a warning I would like to sound, Mr. Speaker, and I hope that once this Bill becomes law-unfortunately, we must support it because there have been abuses-the Government will not blindly wield the axe and will continue to examine each individual case.
Mr. Speaker, I should like to refer to the case of a Canadian taxpayer whom I would rather not identify because his family has already had to put up with enough prejudice. I simply read one paragraph from his letter dated April 9, 1986:

I am forwarding information concerning SRTC and as well as conduct of the Department of the Revenue Canada.
It is my intention to pursue both issues to the end. There is no doubt that I have been done wrong and my family has suffered a great deal as a result of the actions of National Revenue. The conduct and personal behaviour of some of the agents of this Department have been abusive and intimidating.
I would also like to report the abuses in the SRTC and the fraud committed by the accountant who put together my contract.

Mr. Speaker, my colleague from Saint-Henri-Westmount did point out that such was the very commendable purpose of this program. But as it turned out a few unscrupulous professionals who had immediately spotted the loophole advised a number of people to take advantage of the system, to the extent that we are now grappling with a thorny issue and being forced to amend the Income Tax Act, change our traditional and time-honoured Canadian approach whereby everybody is innocent until proven guilty.
Mr. Speaker, those unscrupulous professionals ended up making more money than the corporations or businessmen that simply wanted to benefit from the program.
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And now those professionals are getting away scot-free, not even subject to a department audit. Yet there are people like this man who just wrote a letter to tell me he lost his house and everything he owned, his family is in the street because Revenue Canada officials simply assumed that all cases are identical. The moment a company or individual applied under this program, it, he or she was deemed to be guilty.
Mr. Speaker, I do not want to prolong the debate, for I know the Government wants this Bill passed as soon as possible. But I also know that abuses by certain individuals have created emergency situations, so I hope that once the Government is empowered to act under this legislation it will review each case with understanding and compassion.
Mr. john Parry (Kenora-Rainy River): Mr. Speaker, in addressing ourselves to Bill C-109 today we are esentially participating in the final burial of one of the worst boondoggles which Canada's income tax system has ever seen. I dare say that if we set aside those which are openly and intentionally instituted and which function in a simple and understandable fashion, even though it might be unfair, this probably is the worst boondoggle that the Canadian income tax system has ever faced.
It might be out of order for me to comment, but I find it interesting that we are discussing this measure in the entire absence of any representation from the Liberal Party.


The Acting Speaker (Mr. Paproski):: It is improper.


John Edmund Parry: Oh, it is. Thank you, Mr. Speaker. I think that is entirely appropriate under these circumstances. The Liberals would have done well had they deliberately absented themselves entirely. Frankly, they should collectively and individually blush with embarrassment at what their measures inflicted on the country and the mischief that was done to Canada's tax system, the compromising of what remnants of integrity that tax system still possessed. Frankly, the institution of this type of system could only be described as rewarding misbehaviour and providing quite modest rewards for correct behaviour.
I think it is a sad comment on what sometimes happens in this country when we see misbehaviour and error so richly rewarded. After all, where today is the Prime Minister under whose regime this boondoggle was introduced? Where today is the Minister of Finance who introduced it? They are both comfortably and happily practising law in Montreal at elevated salaries which we can only suppose are even higher than those they received as Ministers. Meanwhile, the Canadian taxpayer is bearing the brunt of the billions of dollars of foregone taxes which their miscalculations have added to the country's national debt.
I think it is passing shameful that we do not have in front of the bar of this House the real culprits in this measure to examine on what they inflicted upon the Canadian public.

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Instead, we now have a former Deputy Minister of Finance in charge of free trade talks, for those who believe that free trade is anything different than a free lunch. He is being paid $1,000 a day. Let us just hope that that unit, with its incredible expense, luxurious office space, chauffeurs and cars, comes up with something better than a vast give-away of the Canadian economy, as was the scientific research tax credit a give-away from the exchequer.
The Government has had the sense to move to eliminate the Scientific Research Tax Credit and the widespread abuse of it by killing off the entire program. The way in which the Government moved was unfortunate and certainly less drastic than we in the New Democratic Party would like to have seen. Bringing in a Bill which has as its basic premise the idea that those who have used the program cannot be trusted to stay in Canada with the funds is probabably sound under the circumstances, but I think it should give the Government cause to consider some of the fulsome rhetoric which the Government employs when addressing itself to innovation in the private sector. I hope it will serve notice on the Government that reasonable care must be exercised and that the private sector, while it is of course the engine of the economy, and while the small business sector is the major creator of jobs in this economy, is not something which we can put on a pedestal on the assumption that everyone operating therein, whether from inside or outside Canada, is functioning in a completely straightforward and honest fashion.
I guess that one of the reasons we have this measure is the conflicting judicial decisions in this matter, both of which are under appeal at the moment. I would like to pick up the question of the moratorium which preceded this legislation. Of course, the moratorium was very necessary. I would like to echo the comments and, indeed, the very trenchant and telling criticisms of my colleague, the Member for Regina East (Mr. de Jong), who mentioned the way in which the so-called grandfathering provision was introduced. That, as we now know, set the stage for an incredible flurry of applications for the scientific research tax credit. It is very clearly arguable that because of the moratorium the purse of the taxpayers of Canada has been burdened with an even higher proportion of questionable, and some fraudulent, applications during the post-moratorium period than was the case even during the premoratorium period.
I have noticed that when a member of the Government is under attack during Question Period the Prime Minister (Mr. Mulroney) is very quick to criticize the practice of pretrial hanging. This Bill, of course, does the same thing, although not in a context of which I would be outwardly critical because there is obviously a need for drastic action in this particular case.
I think one of the saddest, most reprehensible and most regrettable aspects of the scientific research tax credit was the "quick flip". Perhaps the worst of the many negative aspects of
this practice of quick flipping was the fact that the Government had apparently foreseen the way in which the "quick flip" could be used to provide a quick profit.
I have a little chart which is very enlightening. It provides a telling indictment of the hell for leather sloppiness which the previous Liberal Government practised when it designed this program. According to this chart, and I am sure it is correct, the investment of that $1,000 produced an immediate $50 profit to the investor. As soon as it utilized the $500 tax credit the company ended up receiving $450 with which it was supposed to perform the $1,000 research. That, after all, is a subsidy rate of 45 per cent which is not at all unreasonable. However, there was so much chicanery and so many loopholes built in on top that many companies must have ended up with their research being subsidized on even more favourable terms. That is talking about only the companies which actually did the research. They really had a very good ride at the expense of the taxpayer.
Now we come to the "quick flips". I have a couple of quotations here which I think are exceedingly enlightening. This is the Deputy Minister of Finance in front of the Standing Committee on Public Accounts on May 30, 1985. He said:
The basic concept of the SRTC program was that it would be "pre-funding" arrangement for R & D. "The policy judgment was-let us put that credit up front so if you went to the bank and borrowed 50 cents and asserted that you were going to do the R & D you would get 50 cents of tax credit and then you had $1 to go out and do the R & D."
He conceded that it was the pre-funding mechanism that really, in some sense, opened up the abuse. Well, it opened up the abuse on a scale totally unprecedented in the history of our country's tax system, on a scale which I think frankly scandalized every thinking Canadian, certainly those who follow the tax system, and called that system into disrepute.
I spoke earlier about the moratorium. I heard my colleague from Regina East mention some of the more fanciful examples of applications under the SRTC. What they really show, is that officials in Revenue Canada who were reviewing the applications really had no power to reject any scheme on the basis that it was illusory or simply a tax avoidance or tax elimination mechanism. They did not have any power to reject any scheme on the basis of it being fanciful, unscientific, duplicating previous research, or simply set up to syphon money out of the country. No, the certificates were docilely signed and we know the results.
I think the Dreamstreet Holstein project was mentioned, that being the comparison of milk production from red and white Holsteins with that of black and white Holsteins. That apparently was little more than an attempt by a fairly large U.S. corporation to penetrate the Canadian market. There might indeed be a difference in the milk productivity of those two kinds of animals, but that of course was not the objective of this particular SRTC boondoggle.
May 22, 1986

The U.S. Senate is a real, live, elected and democratic Senate, in marked contrast to the institution with which we are encumbered. There is a senator there who has something known as the "Golden Fleece Award". He makes the award to companies or individuals who produce mostly research proposals into things that he feels have very little need of research. While we should always be aware that today's conventional wisdom can be tomorrow's folly and that research done with very little apparent hope of learning anything useful does sometimes turn up something, in the manner of wildcat-ting for oil and random prospecting for gold, I think if we were to document all the schemes funded under the SRTC we would give that U.S. senator some very telling ammunition to use for weeks and months on end.
Given the Lotus sports car, the Mercedes Benz that were purchased, I think four or five by one company, the real estate that was purchased and the residences of the people who acquired these tax credits and cash bonuses, frankly I think I should contact the Government in order to obtain the film rights. It is too good a story. I hope the NFB will make it into a tragi-comedy, because that is what it is. It is a comedy of errors upon errors by the previous Liberal Government. The amount of money syphoned out of the Canadian Government, and therefore out of the pockets of Canadian taxpayers, by this tax credit scheme is a tragedy. None of us, certainly no Member of the two Parties represented in this House right at this moment, would want to forget this scheme. It is an object lesson on the way in which hastily drafted schemes designed to meet political rather than national policy goals can go astray and result in the people of Canada being held to ransom.
Since I am sitting down anyway, I say shame on that Liberal Government, shame on those Liberals who are not here at the moment. Shame on them. As the Hon. Member for Regina East said, we do not feel the Government handled the shutting down of this scheme properly but we are glad to see it nevertheless.


The Acting Speaker (Mr. Paproski):: Questions or comments.


Simon Leendert de Jong: Mr. Speaker, I listened with great interest to the comments by my colleague. I share many of the concerns he raised. Perhaps the hub of the problem here is that the SRTC really sort of exemplified the attempt to institute social and economic policy through the tax system. The Government of the day thought that research and development needed a sort of quick fix, an infusion of capital. It wanted to see private capital doing that. It realized that many of the smaller firms did not have great amounts of taxable income, so giving tax deductions to them did not mean very much. What they needed was new capital. The Government devised this scheme through the tax system so that small firms would be able to pick up, through these tax credits, some instant cash, so to speak.
The problem, perhaps, is one of inflexibility of income tax systems. When you implement social and economic policies
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through a tax system you are never quite certain that you are going to do what you intend to do. There are all sorts of improbables and unpredictables which come into play. Once you create a certain tax provision, anyone and everyone can apply. All at once you have tax experts and tax lawyers coming at it from all different directions and different companies trying to find ways to use a given new provision. No government bureaucracy can totally foresee all the possiblities once you introduce this kind of tax scheme.
It has been said that there are really only four people in Canada who understand the Income Tax Act. They are two tax lawyers in Toronto who find the loopholes, and they are most probably brothers or sisters to tax experts in the Department of Finance who are always trying to plug up those loopholes. It goes back and forth and we end up with a very complicated tax regime. Part of the problem is in using the tax system to help finance research and development, rather than giving direct grants to companies where it was appropriate, the way the National Research Council does, with a very successful program. In that way you can customize where your support is going to be. You can minimize the types of abuse.
This is the question I wish to address to my colleague. Are his comments and his thoughts in favour of using the tax system for social and economic policies, or policies like the SRTC for encouraging research and development, as opposed to a granting system.


John Edmund Parry: Mr. Speaker, I am always tempted when I am addressing any income tax measure to get into the theoretical side of income tax and embark on an examination of the effects and also the principles which either do, or in many cases fail to underlie the measures that are being proposed.
I think what I would say to my colleague from Regine East regarding the applicability of the income tax system for the pursuit of social and economic goals is that in order for any income tax system to function effectively it has to function in a universal manner. It has to function in a manner that is perceived by the vast majority of taxpayers as being fair. It has to function in a manner which is understandable. When we have an income tax system we do need people to apply it, and we do, after all, need the understanding of the taxpayer of the way in which the income tax system functions in order to have some degree, I guess we could call it, of allegiance from the taxpayer to the tax system.
In many ways the Canadian income tax system is a good, such as the self-assessment principle, which is after all absent in many other countries, the manner in which allowances are granted to assist the individual in pursuing those goals, not only individual goals but also societal goals. For example the raising of children and the support of a spouse who is not employed outside the home for that reason are worthy goals and ones which are pursued by individuals, and are of course, endorsed by society. I think the key thing to remember is the

May 22, 1986
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way in which those goals and those measures can be related to very objective criteria.
For example, it is fairly easy to verify whether or not a particular taxpayer is supporting a spouse who is not gainfully employed outside the home, if that particular taxpayer is supporting children or donating to charities, which are goals approved by society.
Where the tax system starts to come apart is when there is no consensus within society, or even within the Government, as to the goals that are being pursued by the tax system. That is where the SRTC surely did come unstuck, because there was no consideration given, when this "quick flip" was introduced, to the degree of acceptance of the so-called research, even to the degree of acceptance within the scientific community of what might be legitimate research and what might not be legitimate research.
The results are obvious. We had a lot of research that really could not, by any stretch of the imagination, be dignified with the appellation of scientific research. It obviously was not, in small, if any tangential way, related to research or scientific research at all.
There are other examples of tax exemptions, tax loopholes in the system, which really are quite flagrant and notorious. A little while back I recall that my colleague from Kamloops- Shuswap (Mr. Riis) was reading portions of Canada's Income Tax Act in this House for the edification of Members, and to illustrate to them the convoluted language, and if I could use the term, gobbledegook, that Act is made up of in many particulars. I recall that by doing so my hon. colleague from Kamloops-Shuswap was driving the poor translators to tears because they did not have the French version in front of them, and it was, therefore, totally impossible for them to translate past the first clause because of the nested, convoluted and reversed nature of the phrases employed.
My colleague from Regina East was very generous in his assessment of how many people understand Canada's Income Tax Act. His estimate was four. I am not sure; but I think perhaps I should be calling upon him to justify why his estimate was that high. So far as I am concerned I could not say with any certainty that I could identify four people in Canada who fully understood the Income Tax Act. It is hard enough, after all, to master the basic principles upon which the Income Tax Act is predicated, and those principles which this scientific research tax credit-


The Acting Speaker (Mr. Paproski):: I regret that the Hon. Member's time has expired. Questions and comments are now terminated. It is debate. The Hon. Member for Vancouver East (Mrs. Mitchell).


John Edmund Parry: No Liberals?


The Acting Speaker (Mr. Paproski):: Order, please. There are other Members than those belonging to that Party in this House. The Hon. Member did the very same thing three times during his speech. He knows he should not comment on who is
in the House and who is not in the House. I will leave it at that.


Ms. Margaret Mitchell (Vancouver East):: Mr. Speaker, I had not intended to speak on this Bill, and I have been so involved in social policy areas that I must confess that I have not really studied it. After hearing the debate this morning I must say that I think there is a very definite relationship between the very negative impacts of the scientific research tax credit, which costs Canadians so much money, and the fact that we have not had adeuate funding for social programs. In the few minutes that are left before lunch I would like to mention two or three things.
Many Members, and you, Mr. Speaker, will know that the child care task force, a special committee, has been travelling across Canada over the last few weeks, and we have several weeks to go. We have heard from hundreds and hundreds of witnesses. I think all of us, regardless of our political biases, have a very deep concern about what is happening to Canada's children. This is happening because our whole family structure has changed. The economy of Canada and the cost of living in many cases is forcing two parents to work. In many other cases there is only a single parent in the home. As a result of there not being adequate affordable child care for these families children are being left in very precarious situations, at considerable risk. I would not be exaggerating to say a very major proportion in the next generation could be damaged by very negative child care arrangements.
The reason I wanted to raise this is that, as I understand it, close to $3 billion have been literally wasted over the past two to three years through the SRTC under which a bonanza was given to entrepreneurs supposedly for research. There was no guarantee that research would be carried out or that this research would be of benefit to Canada. We want to put a stop to that kind of thing. Both the Liberals and Conservatives bear a responsibility for this extremely irresponsible kind of tax policy.
What I want to advocate though is that if we are going to save $3 billion by changing this policy, why could we not take this money and invest it in children, which is a true investment in the future and would begin to provide over the next ten years, the kind of viable child care system Canada needs.


The Acting Speaker (Mr. Paproski):: Before I call it one o'clock I would like the Hon. Member to know that she has 17 minutes remaining for debate, plus ten minutes questions and comments. It being one o'clock, I do now leave the chair until two o'clock this day.
At 1 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.

**
May 22, 1986


Mr. Len Hopkins (Renfrew-Nipissing-Pembroke):: Mr. Speaker, the Associate Minister of National Defence (Mr. Andre) is presently conducting an inquiry into the failure of the search and rescue operation to locate a Kitchener, Ontario couple, Arthur Simmons and Julie Schneider, after their boat capsized on Lake Huron last November.
This investigation will not deal with the real issue in this tragedy, which is the role of the Minister of National Defence (Mr. Nielsen) and the judgment exercised by him. The Minister of National Defence remained passive, unbending, and unmoved in the face of pleas from the family, the Minister of State for Immigration (Mr. McLean), and other Conservative back-benchers that the search be continued. The search was reopened for a brief five hour period two days later and only after a Liberal Member of the Ontario Legislature joined in the outrage.
The judgment call made by the Minister of National Defence is the real issue here. I call upon the Prime Minister (Mr. Mulroney) to initiate a full and complete inquiry into the manner in which the Minister of National Defence handled or mishandled this entire and most unfortunate incident.



INDIAN AFFAIRS


John Edmund Parry: Mr. Speaker, last night in committee the Minister of Indian Affairs and Northern Development (Mr. Crombie) informed Canadians about the progress being made in processing reinstatement applications for those now eligible for Indian status under Bill C-31. If the Minister's figures are correct-and I assume they are-it will mean delays of between four and six years for those who have already applied for reinstatement. With current staffing levels, it means that the Department may even be falling behind further as new applications arrive.
Many native people have waited a long time for their rights to be recognized through Bill C-31 and they do not deserve to be kept in the dark for another half decade due to insufficient staffing in Ottawa. We do not expect pensioners, the disabled, the sick or unemployed in Canada to wait for four or five years for the Government to process forms, and Indian people do not deserve to be subjected to those delays either.
On behalf of the approximately 50,000 native people who are in one of the longest line-ups in the Government's history, I call upon the Government to commit the additional resources
necessary to ensure speedy reinstatement for these native Canadians.
* *
*



PRESENCE OF WOMEN AT ALL POWER LEVELS

Mrs. Lise Bourgault (Argenteuil-Papineau):: Mr. Speaker, a number of recent articles have pointed out the absence of women on the steering committee of the office of trade negotiations with the United States.
The presence of women at all levels of power is not an exclusive concern of Governments, for it relates to the attitude and behaviour of each individual. Apparently the views of women do not carry much weight. Yet, Mr. Speaker, the feminine outlook does strike a proper balance in any discussion. A committee such as Mr. Reisman's will sorely miss the contribution of women.
In this day and age, Mr. Speaker, women have very few incentives to share power with men. Be it in the family, at school or in their own environment, women are often cast as stereotypes which confine them to traditional roles that the majority finds reassuring. The few women who do manage to achieve power are nothing more than the alibi of a system geared to a man's viewpoint. Women epitomize emotion and sensitivity, values which do not quite go hand in hand with firmness and negotiations.
No, Mr. Speaker, our society still cannot adequately prepare women to assume power. So we should not wonder if some of them would rather not contribute under such conditions, and if a few like Mrs. Sylvia Ostry must bear alone-


Mr. Speaker:: Order, please. Sixty seconds.



REFUGEES


Mrs. Pauline Browes (Scarborough Centre):: Mr. Speaker, throughout our nation's history, millions of men and women have come to Canada from troubled lands to begin a new life in peace and freedom. In the past few years, however, our system of refugee determination has become backlogged, inefficient, and often unfair. Therefore, I congratulate the Minister of State for Immigration (Mr. McLean) for initiating a new refugee determination process that will uphold the principles of justice and compassion that all Canadians share.

May 22, 1986
Canadians feel a profound sense of responsibility for genuine international refugees. However, our country has lost patience with the current system that encourages false claims and damages our reputation as an international safehaven. We need a refugee system that is fair, fast, and effective. That is precisely what the Government is proposing.



CANADIAN RADIO-TELEVISION AND TELECOMMUNICATIONS COMMISSION APPLICATION TO CHANGE OWNERSHIP OF TORONTO TELEVISION STATION

Mr. Sergio Marchi (York West):: Mr. Speaker, MTV, the full-time multicultural and multilingual television station, is the only multicultural and multilingual television station in Canada and operates from Toronto.
Since its inception MTV has successfully offered leadership and given practical and valuable application to our country's multicultural policies. The station is presently applying for a national multicultural network which would be an historical and cultural achievement in the field of television broadcasting. However, the possible acquisiton of MTV by Rogers Cable Television which is presently before the CRTC offers some concern. It is incumbent, therefore, upon the Government, particularly upon the Minister of Communications (Mr. Masse) and the Minister of State for Multiculturalism (Mr. Jelinek), to ensure that multiculturalism programming will not suffer in any transfer of ownership.
It is clear that this assurance must be given strongly so that Canadians from one coast to another will not lose what has taken a great deal of work, effort, and sacrifice to build up over the long years.



CHILDREN


Mrs. Mary Collins (Capilano):: Mr. Speaker, Sunday, May 25, is Missing Children Day. Voluntary organizations across the country will be undertaking activities to highlight the social tragedy of the thousands of children who go missing each year through kidnapping, parental abduction, or as runaways.
Our Government has undertaken strong initiatives to support these community efforts. On July 15 the RCMP Central Registry will come into operation so that police across the country can get the information they need on missing children. At the First Canadian Forum on Missing Children,
sponsored by our Solicitor General (Mr. Beatty) in April, over 200 interested individuals came together to share information and they resolved, with the help of the federal and provincial Governments, to establish a National Missing Children Information Centre.
As a mother I know the fear and tragedy which are felt each time a child goes missing. I, and all Canadians, salute those who are making the commitment to find each missing child and to safeguard our children from becoming victims.



BIRTH CONTROL PRODUCTS

Margaret Anne Mitchell: Mr. Speaker, while Canadian women travel to the United States to obtain abortions, U.S. women come to Canada for IUD contraceptives, which demonstrates the primitive and unconcerned attitude of both Governments toward the need for safe, effective methods of birth control. Our Minister of National Health and Welfare (Mr. Epp) leaves it to multinational corporations to provide evidence that birth control products are safe, while in the U.S. these risky products are withdrawn.
The Minister has shown no concern for reproductive health and the need for sound, safe family planning in Canada. His personal biases overrule sound health policy. He has slashed funding for birth control research and has cut funds to planned parenthood while increasing funding to an organization which teaches only natural birth control methods.
The Government is doing a great disservice to Canadian women and potential families by undermining positive family planning and safe methods of birth control.



FREE TRADE NEGOTIATIONS

Mr. Marcel R. Tremblay (Quebec East):: Mr. Speaker, yesterday marked the beginning of negotiations on the most important issue of the '80s, free trade. I have every confidence in the Canadian team whose leader is a very skillful and competent negotiator. You know, Mr. Speaker, free trade detractors will simply have to coin new expressions, for otherwise their negative approach will confine them to repeating themselves. As a rule, their judgments are not very constructive and will not promote Canada as a viable competitor on international markets.

May 22, 1986



Completion of a successful new trading agreement with the United States will be an important step for Canada, important not just for protection of where we are, but for where we as a nation must go. Our destiny is to be a peaceful and prosperous country.

-a country in a strong enough position economically to ensure the continued evolution of a prosperous society, of a unique and vibrant cultural identity, and of an autonomous and respected national sovereignty.

We are behind you all the way.



THE ECONOMY


Mr. Reginald Stackhouse (Scarborough West):: Mr. Speaker, the Bank of Canada has just announced that the bank rate this week will be 8.43 per cent.


Some Hon. Members:: Hear, hear!


Reginald Francis Stackhouse: That is a drop of 16 basis points, despite all forecasts of the opposite. It is recognition of the strong Canadian dollar, which has been constant and firm. It represents a drop of 4 per cent in the bank rate since the Government was elected in September, 1984, and fulfils the commitment of the Government to lower interest rates as one of the four pillars of economic policy.
This drop in interest rates will lead to economic growth and increased employment. Once again it is being shown that economic growth, not government growth, is the way to prosperity.



AGRICULTURE


Mr. Fernand Robichaud (Westmorland-Kent):: Mr. Speaker, I would like to inform this House of the contents of a letter I received from the Maritime Farmers' Council.
Please be advised that the following resolution has been unanimously adopted by the 1986 annual meeting of the Maritime Farmers Council-
WHEREAS during the past year the Federal Government instituted a policy of "cost recovery", and
WHEREAS part of this cost recovery program has resulted in potato producers paying a major portion of inspection services, as well as additional costs to producers for inspection of meat and dairy products, fertilizer and seed inspection, ice-breaking and harbour dredging, etc., and
WHEREAS these additional expenses are very unfair
Be it resolved that the Maritime Farmers Council strongly recommend to our Members of Parliament that steps be taken immediately to remove this additional burden on our farmers' production costs.



THE ECONOMY


Mr. Jean-Guy Guilbault (Drummond):: Mr. Speaker, our Government's economic renewal program has led to a drop in interest rates and an increase in business investment. Since the February Budget, interest rates and five-year mortgages dropped 1.5 points. The bank rate has fallen 3.1 points and interest rates on five-year loans from the Farm Credit Corporation 7/8 of a point. For the first time in years, the deficit is going down, and by 1990, the Government's financial requirements will have been reduced by two-thirds. Furthermore, the job creation rate in Canada is higher than in any other major OECD country. During the past year, jobs were created twice as fast in Canada as they were in the United States. In fact, 630,000 jobs have been created since we were elected in 1984, and in April, the unemployment rate was 9.6 per cent, the lowest rate in four years. Finally, our Government intends to pursue its action plan which, need I say it, has brought economic stability and progress back to this country.



AUTOMOTIVE INDUSTRY


Mr. Howard McCurdy (Windsor-Walkerville):: Mr. Speaker, the Prime Minister (Mr. Mulroney) has returned from his vaunted Asian tour involving consultations with the Japanese and South Koreans from which there is little evidence of accomplishment. While the Government has failed to respond to the concerns of the Canadian Motor Vehicle Manufacturers' Association about the unrestrained growth of the offshore auto industry, it flaunts the establishment of Japanese and South Korean assembly plants in Canada. Yet these assembly plants will bring in only 3,500 jobs while taking 30 per cent of domestic sales, which could effectively kill the Canadian auto industry which counts for upward of 200,000 jobs, since estimates indicate that as many as 10 times as many

May 22, 1986
Oral Questions
jobs are provided by domestic manufacturing as are provided by assembly plants.
The Government's behaviour is idiotic and damning when one considers that Government claims of job creation and export growth are almost wholly attributable to domestic auto production under the Auto Pact from which offshore companies are unfairly exempted. When will the Prime Minister come to his senses, put jobs above short-term politics, and implement a level playing field for the entire Canadian automobile industry?
It is not as if permits for muzzle loaders or FN FAL rifles are going to encourage crimes. Neither of these guns would be used by criminals because of their size and weight. They are of interest for recreational purposes only. I recommend that the House work toward the decontrolling of-


Mr. Speaker:: Order, please. Sixty seconds.

* *



ENVIRONMENTAL AFFAIRS


Mr. Alan Redway (York East):: Mr. Speaker, the Opposition and many members of the press and the public were quick to ridicule the agreement which was reached by President Reagan and our Prime Minister (Mr. Mulroney) last March on the subject of acid rain. Now, two months later, a subcommittee of the United States Congress has approved a Bill to control and reduce acid rain. No other congressional subcommittee has ever approved an acid rain Bill before. "It's history in the making," said one Congressman. "It's a very important hurdle to clear and the size of the vote in favour is cause for optimism," said Michael Perley of the Canadian Coalition on Acid Rain.
No one would suggest that the problem has been solved, but this is another giant step forward. I personally believe that our own Prime Minister deserves an awful lot of credit for it.
* *
*



FIREARMS


Mr. Jack Shields (Athabasca):: Mr. Speaker, Canada's recreational firearms community has been ignored in decisions affecting firearms control. All measures which have been taken seem to be designed to make it more expensive and more difficult to own or deal in recreational firearms. Even gunsmiths have been refused permits to take restricted firearms to a range for test-firing or sighting-in, or to pick up firearms for repair under warranty.
People who own muzzle-loaders or FN FAL rifles for recreational purposes cannot organize "shoots". Some small advances have been made. For example, late in September of 1985, owners of MG42's held a legal shoot in southern Alberta for the first time in two years. It seems that for every small advance, however, the recreational firearms community must take a step backward.



PRESENCE IN GALLERY OF LUXEMBOURG MINISTER OF SOCIAL SECURITY

Mr. Speaker:: May I bring to the attention of Hon. Members the presence in our gallery today of Mr. Ben Berg, Minister of Social Security for Luxembourg.


Some Hon. Members:: Hear, hear!



PRESENCE IN GALLERY OF NORTHWEST TERRITORIES LEGISLATURE'S SPECIAL COMMITTEE

Mr. Speaker:: I also wish to recognize the presence in our gallery of members of the Special Committee on Rules, Procedures and Privileges of the Northwest Territories Legislature, led by Mr. Ted Richard, Chairman.


Some Hon. Members:: Hear, hear!



ORAL QUESTION PERIOD


Right Hon. John N. Turner (Leader of the Opposition):: Mr. Speaker, my question is for the Secretary of State for External Affairs and concerns the release of the Government's so-called background documents on our negotiations with the United States. For one, bright, shining moment, I thought that the Government of Canada was finally going to be open and honest with the Canadian people. However, before publication the background studies were culled, clipped, and cooked.
Canadians cannot have an informed opinion about the free trade negotiations with the United States unless they have the benefit of the full facts. Why did the Government even bother releasing the documents if the documents were not going to be open, clean, and uncensored?
Right Hon. Joe Clark (Secretary of State for External
Affairs): Mr. Speaker, let there be no doubt about what the Right Hon. Leader of the Opposition is proposing. He is
May 22, 1986

proposing that, as we enter negotiations with the United States, we should publish and hand directly to the Americans all of Canada's confidential information. That would mean that Canada would be bound to lose in these negotiations. Perhaps that is the way he negotiated for the leadership of the Liberal Party of Canada. That is not the way we intend to negotiate a trade arrangement that will bring benefits and job security to Canada.


Some Hon. Members:: Hear, hear!


John Napier Turner: Mr. Speaker, I can assure the right hon. gentleman that I am not going to negotiate myself out of the leadership of the Party like he did.


Some Hon. Members:: Oh, oh!


Mr. Axworthy:: Remember Winnipeg, Joe?


John Napier Turner: Mr. Speaker-


Mr. Speaker:: Order, please. Supplementary question.


GOVERNMENT POSITION
John Napier Turner: Mr. Speaker, I know the precedents to follow and the precedents not to follow. We do not want to know the Government's negotiating position. We do not want to know about the cards in the Minister's hand, if he thinks he has any. However, Canadian people are entitled to know the basic underlying facts. They are entitled to know about the cost-benefit studies. They are entitled to have the benefit of an enlightened public debate on the advantages and disadvantages of the negotiations. That is all we are asking of the Minister. Will he come clean with the Canadian people?


Right Hon. Joe Clark (Secretary of State for External Affairs):: Mr. Speaker, with regard to the first part of the response of the Right Hon. Leader of the Opposition, I will wait to hear it from the Hon. Member for York South- Weston.


Some Hon. Members:: Oh, oh!


Charles Joseph Clark: With regard to the second part, serious requests were put forward in the House by the House Leader of the New Democratic Party that we make available, on the same basis as we had to the provinces, information that would inform debate in the House and allow informed consideration in the country of aspects of the trade negotiations. We have done that.
I must say that when the Minister of International Trade and I first began to look at these questions, there was a relatively small group of documents which the Public Service, in its traditional way, was prepared to put forward. We went through them paragraph by paragraph, word by word, and we made available to the House of Commons everything we could that would not be prejudicial to the interests of Canada in the
Oral Questions
negotiations. We have respected Parliament and we have respected Canada.


John Napier Turner: Mr. Speaker, I have looked at these documents-perhaps we ought to table them- but they are just a series of blank pages. This is what the Canadian people have been given by the Hon. Minister.


Some Hon. Members:: Oh, oh!


John Napier Turner: They are blank pages from an empty Government.


INQUIRY WHY GOVERNMENT CENSORS CERTAIN DOCUMENTS RELATING TO FREE TRADE NEGOTIATIONS
John Napier Turner: In
any case, the trade documents released by the Government are worthless. I want to ask the Minister: Why the censorship? Why the paranoia? Why are Canadians being denied the right to know the cost and the benefits of free trade talks with the United States? I shall wait until the Prime Minister has had time to advise the Minister on his reply.

Right Hon. Joe Clark (Secretary of State for External
Affairs): Mr. Speaker, I presume the blank pages are part of the continuing saga by the now Member of Vancouver Quadra on how he kept Canada out of the G-7.


Some Hon. Members:: Oh, oh!


Some Hon. Members:: Hear, hear!


Charles Joseph Clark: Mr. Speaker, today we released a major part of the studies carried out by the Canadian Government, in order to provide Canadian citizens and the Members of this House with a broader knowledge of all the details and implications of a truly historic and important undertaking. We have not released documents that might help the United States in these negotiations because, to us, the country to be helped with these negotiations is Canada.


Some Hon. Members:: Hear, hear!


PROJECTED JOB LOSSES
Lloyd Axworthy: Mr. Speaker, I have a question for the Prime Minister. A little fact that was stuck in between the blank pages highlights that between now and the year 2000, 112,000 net jobs will be lost in the manufacturing sector.
Has the Government prepared a strategy to offset those job losses? Is it looking at the proposal made by the Macdonald Commission for a foregoing dollar transitional adjustment
;

Oral Questions
program, something that would help workers in those communities which will be drastically and devastatingly affected by his proposed free trade negotiation?


Right Hon. Brian Mulroney (Prime Minister):: Mr. Speaker, already 630,000 new jobs have been created since this Government came to office.


Some Hon. Members:: Hear, hear!


Martin Brian Mulroney: This very afternoon the bank rate was down again. It is now at its lowest level since April, 1978.


Some Hon. Members:: Hear, hear!


Martin Brian Mulroney: The trade initiative is designed to create a climate within which new wealth and new jobs can be created. Obviously there is going to be some dislocation as you examine something this complex. There will be safeguards built into the process, but this is designed and will bring about new wealth and new economic opportunities for Canadians to enhance the growing strength of the Canadian economy.


FIRST MINISTERS' CONFERENCE
Lloyd Axworthy: Mr. Speaker, as a supplementary question to the Prime Minister, his own studies by his own Government indicate over 112,000 jobs will be lost to manufacturing alone. In view of the call made publicly today by Premier Getty on behalf of the provincial Premiers that there be a First Ministers' Conference within the next two weeks, can the Prime Minister tell us whether he has agreed to that conference, and will he ensure this question of major job loss in every part of Canada will be the number one item on the agenda for that meeting?


Martin Brian Mulroney: Mr. Speaker, I think the hon. gentleman has his facts wrong. I suggested the conference in a call to Premier Getty. We are arranging now to get together in a meeting. There is your policy adviser, up there in the gallery.


Some Hon. Members:: Oh, oh!


Some Hon. Members:: Hear, hear!


Mr. Broadbent:: Mr. Speaker, that had to be one of the more informed answers we have had from that side of the House.


Some Hon. Members:: Oh, oh!


Some Hon. Members:: Hear, hear!


John Napier Turner: That was very helpful.


GOVERNMENT POLICY
John Edward Broadbent: Mr. Speaker, I have a question for the Secretary of State for External Affairs. Will he confirm that even the heavily censored studies which have been released today show that between now and 1995 we will have a net loss of 131,000 jobs in Canada, the powers of the
May 22, 1986
Wheat Board will be gutted, that we will lose millions in tax revenue and, to top it all off, the power of the United States to take countervailing action against Canadian exports is almost certain to remain? When the Minister confirms all this, will he also explain to the House of Commons and Canada why he is getting us into this incredible mess?


Charles Joseph Clark: Mr. Speaker, I do not know if this is allowed under the rules of the Canadian Labour Congress, but I would hope that the Leader of the New Democratic Party would read and cite all of the information that was released today rather than trying to mislead people-


John Edward Broadbent: What was misleading?


Charles Joseph Clark: -by references which are out of context. We have published the information. We hope it will be used broadly across the country to inform Canadians about the debate.


Mr. Fulton:: You're the one who is misleading, Joe.


Charles Joseph Clark: We believe that is a substantial step toward ensuring that there is informed public debate in the country. I hope the Leader of the New Democratic Party will also do what he can to contribute to informed debate and not misstate facts.


John Edward Broadbent: If the Minister is saying that I have misled the House, he should get up and say that. Everything I quoted to the Minister was out of the reports.


Mr. Fennell:: And out of context.


POSSIBLE LOSS OF 130,000 JOBS-GOVERNMENT POSITION
John Edward Broadbent: Mr. Speaker, I have a supplementary question.
Everybody knows that economic forecasts, particularly the long-term variety, are practically always risky.
Is the Government telling Canadians that it is prepared to live with the loss of these 130,000 jobs, naively hoping that more jobs will be created in the long run?


Charles Joseph Clark: Mr. Speaker, the New Democratic leader ... Should one say New Democratic or Neo-Democratic?


An Hon. Member:: Old Democratic-


Charles Joseph Clark: Yes, Old Democratic, they are indeed of the last.
Mr. Speaker, what he has just done was to quote figures out of context, and I regret that. As far as the objective of the Canadian Government is concerned, we are here to create jobs
May 22, 1986

in Canada. Since this Government was elected we have already created over 600,000 jobs in Canada.
I can tell the Leader of the New Democratic Party that this Government is prepared to sign an agreement with the United States, on the one condition that the agreement will create employment in this country.


John Edward Broadbent: Mr. Speaker, this is rather bad for the former leader of the Conservative Party.


U.S. POWER TO IMPOSE COUNTERVAILING DUTIES
John Edward Broadbent: The Government has rested virtually its whole case, whether with regard to softwood exports, pork exports, or fish exports, on removing the U.S. power to take countervailing action against Canada. The documents which the Government released said that almost certainly the U.S. will never give up that power, which is exactly what we have been saying for months. Therefore, will the Minister guarantee Canadians across the land who are concerned about their future that the Government will not accept any deal with the U.S. on free trade unless that countervailing power is gotten rid of by the United States?
Right Hon. Joe Clark (Secretary of State for External
Affairs): Mr. Speaker, on the question of the predictions of the New Democratic Party, on November 8, 1984, the Member for Oshawa-


John Edward Broadbent: Answer the question.


Charles Joseph Clark: -suggested that the economic program brought in at that time would result-


David Orlikow: Answer the question.


Charles Joseph Clark: -"in a net loss during the next fiscal year from this program of between 50,000 and 100,000 jobs". In fact-


Some Hon. Members:: Answer the question.


Charles Joseph Clark: -we have created more than
600,000	new jobs.


Some Hon. Members:: Hear, hear!


Lloyd Axworthy: That's disgraceful.


John Edward Broadbent: Deal with the question. Get out of here.


Charles Joseph Clark: That indicates how unreliable the projections of the New Democratic Party are. What we have done here-


Mr. Speaker:: Order, please.


John Edward Broadbent: What about countervail?
Oral Questions


Charles Joseph Clark: -as well as taking an historic-


Mr. Speaker:: Order, please. Order!


CONSEQUENCES FOR CANADA OF FREE TRADE
Mr. Raymond Garneau (Laval-des-Rapides):: Mr. Speaker, according to a study by the University of Maryland that was released yesterday, Canada may lose as many as 131,000 jobs as a result of free trade, and owing to its industrial structure, Quebec will be the biggest loser among the provinces. Furthermore, the President of the Union des producteurs agricoles in Quebec pointed out a few days ago that accepting free trade would, to all intents and purposes, spell the doom of Quebec agriculture. Do you have to-


Mr. Speaker:: Order, please! A question.


An Hon. Member:: Oh, oh!


Charles Joseph Clark: I could understand the Member from la Mauricie, but I am afraid I did not quite get the Hon. Member's question.


POSSIBLE LOSS OF 131,000 JOBS-GOVERNMENT POSITION
Raymond Garneau: It was my first question. What action does the Government intend to take to prevent this impending loss of 131,000 jobs, most of which will be in Quebec as indicated in the studies?


Charles Joseph Clark: Mr. Speaker, there will be no such loss. And if the Hon. Member wants to read part of the document... He has an obligation to the House and the people of Canada to read the whole document. Because it is quite clear.


John Napier Turner: It's censored.


Charles Joseph Clark: I understand why the Right Hon. Leader of the Official Opposition is nervous, but it is still quite clear. Yes, the Leader-


Mr. Speaker:: Order, please. I think it would be better if we stuck with questions and answers. The Hon. Member for Skeena.


Raymond Garneau: Mr. Speaker-


Mr. Speaker:: Order, please. The Hon. Member had two questions.


Some Hon. Members:: Sit down.


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

May 22, 1986
Oral Questions


LUMBER EXPORTS TO UNITED STATES
James Ross Fulton: Mr. Speaker, my question is directed to the Prime Minister. In committee this morning the Department of External Affairs Director for U.S. Trade agreed with the conclusions reached by Dr. Michael Percy for the Economic Council of Canada that the effects of countervailing duties on softwood lumber will be devastating for British Columbia. Mr. Waddell confirmed that the U.S. duty could be in place by July 4. Knowing that, and knowing that only one-half of the duty applied for would cost 130,000 British Columbians their jobs, what steps will he be taking in getting in touch with the President of the United States to stop this action?


Charles Joseph Clark: Mr. Speaker, first of all the Hon. Member knows, and we all know he knows, that this action has not been launched by the U.S. Government but by the U.S. lumber industry. Secondly, he knows that our case is strong. Thirdly, he knows this Government has indicated that it intends to defend Canadian interests in every way available to us.


REQUEST THAT PRIME MINISTER CONTACT UNITED STATES PRESIDENT
James Ross Fulton: Mr. Speaker, my supplementary is directed to the Prime Minister because only he can do something about it. The only political window open to stopping this action is the one between now and June 2. The duty could be in place by July 4. Will he be contacting the President of the U.S. before June 2, or does the B.C. softwood industry not matter?


Martin Brian Mulroney: Mr. Speaker, there is one thing that is absolutely certain. No one in Canada, the Government or anyone, needs any direction at all from a bunch of socialists on how to protect jobs in this country.


PRICE OF DRUGS
Ms. Sheila Copps (Hamilton East):: Mr. Speaker, my, the Prime Minister is corny! My question is directed to the Secretary of State for External Affairs.

Can the Secretary of State for External Affairs explain how, two months ago, he told this House there was no relationship between free trade talks and a possible Canadian move to hike drug prices in Canada when documents released yesterday show that one year ago his own Department had commissioned a study to examine the relationship between, among other things, drug prices and free trade?


Some Hon. Members:: Oh, oh!


Charles Joseph Clark: Mr. Speaker-


Howard Douglas McCurdy: Just say "They are a bunch of Liberals" and sit down.


Charles Joseph Clark: No, I will try to make a serious question out of it and answer it. The Hon. Member, I believe, is confusing-


John Edmund Parry: Try and give a serious answer, you patronizing-


Charles Joseph Clark: Mr. Speaker, if I-


An Hon. Member:: A patronizing what?


Mr. Speaker:: Order, please. I am prepared to let the Minister answer, but it would be helpful if I could hear it, too.


Charles Joseph Clark: Perhaps I would be better off just publishing my answers, Mr. Speaker.
The Hon. Member for Hamilton East is, I believe, confusing a relation between two matters in a trade negotiation which I said does not exist, and a study into a relation which she is quoting.


UNITED STATES POSITION
Sheila Maureen Copps: Mr. Speaker, is it not true that another document in this same package showed that the U.S. has refused to sign a bilateral agreement with Mexico until drug profits for American multinationals are improved? Is it not also true that another price for the so-called Canada-U.S. free trade agreement is going to be the gouging of Canadian consumers to pay off American multinationals, as indicated by the Minister's own study?


Charles Joseph Clark: Mr. Speaker, that is not true and it is irresponsible in the extreme for the Hon. Member to use her position to create false fears among the people of Canada.


Some Hon. Members:: Hear, hear!


FORECAST OF JOB LOSSES
Mr. Steven W. Langdon (Essex-Windsor):: Mr. Speaker, I would like to quote to the Secretary of State for External Affairs directly from his own report which indicates: "Thus, the net employment loss attributable to the complete removal of the post-Tokyo round tariff rates by both Canada and the U.S. amounts to 131,000 jobs by 1995." Is the Minister even aware of that conclusion in his own report? If so, why is he prepared to take us on this course of ridiculous, risky, potential job loss for thousands of Canadians?
Right Hon. Joe Clark (Secretary of State for External
Affairs): Mr. Speaker, I am not only aware of those reports, I am aware of where the figure came from and how it was qualified in the report. It was qualified by the report making very clear that that might be the result if there were no adjustment policies, and if there were no phase-in policies. I think the Hon. Member, knowing there are going to be
May 22, 1986

adjustment policies, knowing there is going to be a phase-in program, owes in simple honesty to the House of Commons to quote the whole document, not parts of it.


Steven W. Langdon: Mr. Speaker, the Minister might well have won the respect of this side of the House if he had released the paper on adjustment which was part of that package. It was not released.


UNITED STATES COUNTERVAILING POWER
Steven W. Langdon: Mr. Speaker, is the Minister also aware of the conclusions of his Department's study concerning countervailing action which said it is very unlikely that the U.S. would accept a blanket exemption for Canada from its countervailing duty and anti-dumping processes?


Mr. Speaker:: Order, please.


Steven W. Langdon: If he is aware of it, why-


Mr. Speaker:: Order, please.


Some Hon. Members:: Sit down.


Charles Joseph Clark: Mr. Speaker, the part of that question I heard was: Was I aware of it? Yes, I am aware of what was in the documents we released. The Hon. Member will know that the question of countervailing action is one of the matters which will be at issue during the negotiations with the U.S. I hope he will also agree that it is very much in the interests of informed public debate that we not only publish information but that it be quoted accurately and not in a way designed to mislead.


SOCIAL PROGRAMS INQUIRY
Mr. George Baker (Gander-Twillingate):: Mr. Speaker, presumably by now Mr. Reisman and Mr. Murphy have determined the shape of the table. They have suggested some of the things on the table, but what Canadians are worrying about is what is under the table.


Some Hon. Members:: Liberals!


George Baker: So I ask the Secretary of State for External Affairs what these negotiators mean when they say "Only social programs that affect trade will be on the table"? What social programs are they talking about? Surely it is not Mr. Reisman's Canada pension?


Charles Joseph Clark: Mr. Speaker, the other day in committee we had a Member of the Liberal Party leaping over the table.


Some Hon. Members:: Hear, hear!


Charles Joseph Clark: Now we have a Liberal Member of Parliament who wants us to conduct negotiations under the
Oral Questions
table. All I can tell him is that, as he knows, he is misquoting the statement by Mr. Reisman.


CONTENT OF NEGOTIATIONS
George Baker: Mr. Speaker, we have to accept the word of the Secretary of State for External Affairs. We conclude the gentleman who was on television on Sunday night was, in fact, an imposter who called himself Simon Reisman, looked like him, and spoke like him. The Minister of Justice should find out who that imposter was.
Are any of the income support programs that are given to Canadian fishermen, which formed the basis of the duties imposed by the United States over the past year on fish, are any of these income support programs, like unemployment insurance, on the table, under the table-probably we need a glass table?


Charles Joseph Clark: The Hon. Member lives in a glass house. The answer is no.


CANADIAN CULTURE
Ms. Lynn McDonald (Broadview-Greenwood):: Mr. Speaker, my question is directed to the Secretary of State for External Affairs and concerns studies prepared by the C.D. Howe Institute on the subject of culture and free trade. Why did the Government order these partisan studies on free trade and culture if it does not intend to conduct negotiations in this area? And why does the Government agree to consider the broadcasting and publishing industries only when the industries or the Americans want to take a bigger share of our market?


Charles Joseph Clark: Mr. Speaker, if the studies published today were written for partisan purposes, I fail to understand why the anti-democratic party is raising these questions about the documents. As far as culture and cultural industries are concerned, we have said many times that cultural issues are not on the table in our negotiations with the United States.


REQUEST THAT STUDY'S CONCLUSIONS BE REJECTED
Lynn McDonald: Mr. Speaker, will the Minister declare a total rejection of the conclusions and the premises of this study, including the position that Canada cannot ask for a blanket exemption of culture from free trade discussions but would have to negotiate each item separately, items such as advertising for our magazines, Canadian content in television, advertising content,

May 22, 1986
Oral Questions
Telefilm Canada, and the possibility that there would be an exemption for French films but not for English films?


Charles Joseph Clark: Mr. Speaker, the position of the Government of Canada is clear with regard to cultural industries. The question of culture is not at issue in the negotiations. We have had some studies conducted. We believe in making available to the Parliament and people of Canada as much information as we can that will not prejudice the negotiations with the United States. The point is quite clear. Those studies represent the opinions and the advice of consultants with whom contracts have been entered into by the Government of Canada. They do not reflect the position of the Government of Canada. What they reflect is a determination to try to contribute to an informed debate. I would hope that Hon. Members, when looking at this, would cite the whole report and not just the parts they prefer.
Mir. Speaker: Order, please. This is long.


INDIAN AFFAIRS
Mr. Lome Greenaway (Cariboo-Chilcotin):: Mr. Speaker, my question concerns my three-and-a-half-year-old quest for papers relating to the operation of the West Bank Indian Band in British Columbia. In view of the fact that an extremely reliable source in the Department has informed me that these papers were translated and ready for me in January of 1985, and in view of the fact that the Minister, on six separate occasions, has promised me these papers, why have I not received them?


Hon. David Crombie (Minister of Indian Affairs and Northern Development):: Mr. Speaker, I am glad to receive the question. It gives me an opportunity to answer it. I want to assure the Hon. Member that the information is available. Some information has already been sent to the Hon. Member, and more is coming. I will see to it that it is sent to him as soon as I receive it.


PROVISION OF INFORMATION
Lorne Everett Greenaway: In the words of the Minister of Justice, I have not received one jot or one tittle from the Minister. When can I expect to receive some information on this very critical issue?


David Edward Crombie: Mr. Speaker, I had been advised that some information had already arrived. I think that I can assure the Hon. Member that the information will be there, jot, tittle, and all.


REFUGEES
Sergio Marchi: Mr. Speaker, my question is directed to the Minister of State for Immigration. The consultative process on a new refugee policy was virtually unanimous in proposing that claimants have a right to legal counsel, unrestricted access, and a fair and specialized appeal process.
Given that yesterday he announced a system that fails miserably on all three counts, I would like to ask him why he betrayed the volumes of unanimous submissions from church and community groups on these three grounds? Will he not agree to reconsider the proposals in these three areas so that Canada can have a refugee determination process that is fair, effective, and humane for refugees?


Hon. Walter McLean (Minister of State (Immigration)):: Mr. Speaker, I want to assure the Hon. Member that with the policy which I announced yesterday we are fulfilling the fundamental principles as outlined by Rabbi Gunther Plaut in his report, and the fundamental principles of the Standing Committee.
There is at the present time, as the Hon. Member will know, counsel available which is subsidized by the federal and provincial governments. Second, there will be provision in the new guidelines for counsel to be available. The Hon. Member's fears in this regard are not founded.


PORTUGUESE VISAS INQUIRY
Sergio Marchi: Mr. Speaker, the Minister is talking through the top of his hat and he knows it. He should give answers that reflect reality.
Yesterday he claimed that slapping visas on Portugal was only an extreme and last resort. I would like to ask the Minister how he can explain that in his original text at eleven o'clock in the morning he and his Government were prepared to put visas on Portugal effective May 26, and why did they risk an international and political embarrassing position vis-avis a NATO ally and a western European country?


Walter Franklin McLean: Mr. Speaker, I would have thought that the Hon. Member would have been joining others across the nation in saying this Government is dealing with 20 years of Liberal neglect.


Walter Franklin McLean: We have inherited a backlog. We have inherited a system which was not overhauled and was open to abuse by the previous Government. Let the Hon. Member ask his colleagues why did they not, when they were in Government, act on these matters. Let him ask his colleagues where were their plans in this regard.


Some Hon. Members:: Hear, hear!


Some Hon. Members:: Hear, hear!
May 22, 1986


Mr. Speaker:: Order, please. The Hon. Member for York West, order, please.


AGRICULTURE
Mr. Lome Nystrom (Yorkton-Melville):: Mr. Speaker, my question is directed to the Secretary of State for External Affairs. I was able to confirm this morning through the Washington office of Senator Robert Dole of Kansas that the United States is seriously considering lowering, once again, its loan rate under the U.S. Farm Bill, which, in effect, is the world price for grain. It is considering lowering it from $2.40 a bushel to $2.10 a bushel. Is the Minister aware of this, and has he made representations to Senator Robert Dole and Agriculture Secretary Lyng of the United States, saying that this will be devastating for the farmers of western Canada if it is dropped by another 12.5 per cent?


Hon. Charles Mayer (Minister of State (Canadian Wheat Board)):: Mr. Speaker, we were aware of many of the .provisions in this U.S. Farm Bill long before it became law in December of last year. The Member should know that those provisions will not come into effect unless the administration decides. There are some parameters and percentage considerations under which the Secretary of Agriculture in the United States can act. We are aware of those concerns and are addressing them by staying in constant touch with the U.S. administration, letting them know our views in this matter.


Lorne Edmund Nystrom: We cannot afford another drop of 12.5 per cent in the price of grain.


EFFECT ON CANADA'S TRADITIONAL MARKETS
Lorne Edmund Nystrom: Mr. Speaker, is the Minister also aware of the talk in grain circles in the United States that they may also use their export enhancement program of export subsidies to cut into two of our traditional markets, namely, feed grain in Mexico and feed wheat in South Korea? Is he raising that issue with the United States by telling them to keep their hands off our traditional markets?


Charles James Mayer: Mr. Speaker, we are aware of and have been raising those issues for a long time. If the Hon. Member has those concerns, I would have thought he would be congratulating the Prime Minister for raising those issues at the Tokyo Summit.


Some Hon. Members:: Hear, hear!


Charles James Mayer: I would have thought he would be congratulating Canada for calling together the five major grain exporting
Oral Questions
countries and hosting a meeting in Vancouver in June. He should be congratulating us for doing some of those things, instead of getting up and complaining all of the time.


ENVIRONMENTAL AFFAIRS
[Stage Direction]
DAMAGE CAUSED IN RIVl£RE-DES-PRAIRIES NEIGHBOURHOOD OF MONTREAL-GOVERNMENT POSITION
Ms. Carole Jacques (Montreal-Mercier):: Mr. Speaker, this week, the neighbourhood of Riviere-des-Prairies in my riding has been seriously affected by the discovery of a large tar spill covering an area of 40,000 square meters, which has caused considerable damage to property and to the fauna and flora. Mr. Speaker, my question is as follows:
Does the Department of the Environment intend to get together in some way with the provincial government in order to clean up the spill?


Thomas Michael McMillan: Mr. Speaker, the Hon. Member has a right to be concerned. The Municipality of Montreal is the jurisdiction that has the primary responsibility for this particular pollution matter. I have had an indication from the Province of Quebec that, for its part, the province will invoke the relevant environmental quality law to take any necessary action against the polluters. As a result of the Hon. Member's early expression of concern about the problem, I, for my part, have given all the relevant jurisdictions an indication of my Department's full technical and scientific support.


CHALLENGE '86 EMPLOYMENT FUNDING FOR COMMUNITY PROJECTS
[Stage Direction]
Hon. Warren Allmand (Notre-Dame-de-Grace-Lachine
East): Mr. Speaker, my question is directed to the Minister responsible for summer employment. Yesterday, after the Minister said there were no quotas limiting community service projects, she went on to say that 36 per cent of the budget would be allocated to the private business sector. If that 36 per cent is not a quota, how would she describe it?
Hon. Andree Champagne (Minister of State (Youth)):: Mr. Speaker, I said that among the projects which have been accepted so far only 36 per cent were submitted by private interests and 64 per cent were projects related to other sectors, meaning municipalities and non-profit organizations.

May 22, 1986
Oral Questions


GOVERNMENT POSITION
[Stage Direction]
Hon. Warren Allmand (Notre-Dame-de-Grace-Lachine
East): Mr. Speaker, I will restrain myself, but how can the Minister justify that this set percentage, whatever she wants to call it, must go to the private business sector when it is being used to deny essential community services while business activity, which would have gone ahead anyway, is being funded? How can she justify that?
[ Translation]
Andrée  Champagne: Mr. Speaker, I was referring to things that have been done, not objectives that have been achieved. I find it rather deplorable that the Hon. Member for Notre-Dame-de-Grace-Lachine East should be against jobs for ergotherapy students, for Concordia University physiotherapy students, among others, for Henri Bradet Centre gerontology students in his own riding. He is against that? I fail to understand.


CONSUMER AND CORPORATE AFFAIRS
David Orlikow: Mr. Speaker, my question is directed to the Minister of Consumer and Corporate Affairs. Although the Bank of Canada interest rate is the lowest since 1978-


Some Hon. Members:: Hear, hear!


David Orlikow: I am happy to hear that applause because it leads right into my question. The holders of bank credit cards continue to pay 18 per cent to 21 per cent for Visa and Master Card charges. If interest rates on bank cards dropped 3 per cent as other interest rates have dropped, these consumers would have saved $200 million on their cards. When will the Minister take steps to ensure that this $200 million rip-off of bank card holders will stop?


Some Hon. Members:: Hear, hear!


Hon. Michel Cote (Minister of Consumer and Corporate Affairs and Canada Post):: Mr. Speaker, I answered the question before, and I said that the interest charges billed by these financial institutions also included service charges, and that more than half of Canadian credit card users pay the charges on these cards on a monthly basis. Consequently, this becomes an area where there can be more competition among
these financial institutions. The department's monitoring of the situation is quite adequate.


INCREASE IN VISA CARD INTEREST RATE
David Orlikow: Mr. Speaker, of course middle-income and upper-income Canadians can afford to pay their bills every month. It is the lower-income people who cannot afford it. Will the Minister tell the House why the Royal Bank has increased its Visa card rate by 1.2 per cent to 18.6 per cent when interest rates are coming down? Will he tell the House why bank card rates are so market insensitive, or does the Minister not care about these kinds of credit costs that are hurting so many Canadians?


Michel Côté: Mr. Speaker, I think I could add to this that credit card fees have also dropped somewhat in recent months, thanks of course to the economic policies introduced by this Government which have had an impact on our financial institutions as a whole.


EXTERNAL AID
Reginald Francis Stackhouse: Mr. Speaker, my question is directed to the Secretary of State for External Affairs. The head of Ethiopia's relief and rehabilitation commission has defected to the United States. In a telephone conversation he claimed that Ethiopian government policies, as much as drought, were responsible for the food crisis last year. In view of that, what action can the Minister take to be sure that future Canadian development policies in Ethiopia will listen to the voice of dissent as well as to the Marxist government line?


Hon. Monique Vezina (Minister for External Relations):: Mr. Speaker, I wish to thank the Hon. Member for his continued concern for Ethiopia and the difficult situation confronting the people of that country. We know for a fact that the present famine is due to drought and weather conditions generally. I agree that a number of governments have not helped to improve the situation. That is why two weeks ago, I launched the Africa 2000 operation, because we want to help find a solution to these problems. I am ready and willing to hear from any agencies that can advise me on the subject. We will listen, and we will try to find the right solutions.
May 22, 1986


AGRICULTURE
Mr. Maurice Foster (Algoma):: Mr. Speaker, my question is directed to the Secretary of State for External Affairs. It concerns our trade relations with the United States. Members of the western wheat pools have expressed extreme concern about the action by the United States Government to sell
500,000	tonnes of barley to Saudi Arabia, a quarter of which is provided free by the U.S. bonus program. Is the Minister prepared to meet with Secretary Shultz on this matter in order to have the U.S. withdraw this subsidized sale of grain to Saudi Arabia, Canada's traditional market for grain?


Charles James Mayer: Mr. Speaker, the Hon. Member should know that the reason why Saudi Arabia was targeted by the BICEP program in the United States is not because of Canadian sales but because of a very recent sale there by the European Community. That issue will be raised when our Secretary of State for External Affairs meets with his American counterpart.


Maurice Brydon Foster: It seems to me that that will be a little late.


CANADA-UNITED STATES TRADE NEGOTIATIONS-MARKETING BOARDS
Maurice Brydon Foster: Mr. Speaker, in January the Secretary of State for External Affairs said that marketing boards like the Canadian Wheat Board would not be on the free trade negotiating table. In light of the documents which were released yesterday, will the Minister assure our farmers that the Canadian Wheat Board and other marketing boards in Canada will not be included in the free trade negotiations?


Charles Joseph Clark: Mr. Speaker, just to alleviate any concern about lateness, I will be meeting Secretary Shultz and other foreign ministers when they come to the NATO meeting we are holding in Halifax next week. I will certainly raise that matter with him, and not for the first time. We have raised it on a number of occasions.
The Hon. Member will know that the Minister of State for the Canadian Wheat Board has convened a meeting of major grain producing countries precisely to begin dealing with these questions. Our assurances with regard to marketing boards stand.
Business of the House


POINT OF ORDER
Mr. Speaker:: I am in receipt of a notice of a point of order from the Hon. Member for Essex-Windsor (Mr. Langdon) for three o'clock.


Steven W. Langdon: Mr. Speaker, during Question Period, I believe the Minister of State for External Affairs stated that the quotation I used in my question was misquoted and designed to deliberately mislead the House. I can give you the quotation, exact as it is, Mr. Speaker. If my hearing was correct, I believe the Minister should withdraw those words.


Charles Joseph Clark: Mr. Speaker, I will check Hansard, but certainly I can assure the House and the Hon. Member that if I did inadvertently suggest he was deliberately misleading the House, I would withdraw that. It is an unparliamentary term.


BUSINESS OF THE HOUSE
Hon. Herb Gray (Windsor West):: Mr. Speaker, I would like to ask the Government House Leader, or in his absence the Parliamentary Secretary, about the business the Government intends to call. If he is not ready, I am sure we can ask the question later in the afternoon.


Philip Derek Lewis: Mr. Speaker, there were discussions yesterday during the House Leaders' meeting, and tomorrow, as the House knows, has been designated as an Opposition Day. We will be back to the House Leaders of the two other Parties to advise them as to the business to be called on Monday and Tuesday.


Mr. Deans:: Mr. Speaker, I want to put on the record a problem which is starting to develop for which I earnestly seek a solution. This is now the second Opposition Day which has required the cancellation of Private Members' Business. On two of those days the Private Members' Business to be considered were motions by Members of the New Democratic Party which were votable motions. To this point there does not appear to be any satisfactory way of getting that Private Members' Business back before the House of Commons expeditiously. As we know, this is now the end of May and the House rises at the end of June. We will not, therefore, be able to deal with what was drawn as votable motions in the draw for Private Members' Business.
I am not laying the blame at anyone's feet. However, I am asking quite earnestly that an accommodation be found to allow Hon. Members, who had the good fortune of having

May 22, 1986
Income Tax Act
their private business drawn for debate and vote, to be given the opportunity to have that done.


Philip Derek Lewis: Mr. Speaker, the House Leader for the New Democratic Party is absolutely right. There have been certain kinks, one might say, in Private Members' Business which have caused problems such as referred to by my hon. friend. There is no question that Hon. Members on all sides want to see some adjustments to the rules which will take care of that problem. I can assure the House Leader that we are drafting some suggestions which will be made available to the House Leaders of both Parties so that this inconvenience will be overcome. We will definitely make sure that the problems to which he refers are looked after. There is no question about that.


Mr. Speaker:: May I simply say to the House, because the House should know it, that the Chair is hoping, as the Parliamentary Secretary has indicated, that this matter can be worked out through consultation. That seems clearly the preferable route.


Ian Deans: Mr. Speaker, it is indeed the preferable route. I am willing at any time to sit down in order to find a way to deal with the problem. You can appreciate, Sir, that it would be possible for Private Members who went into the draw in good faith, and who were fortunate enough to have the business they were promoting called as a votable item, to lose that opportunity in any session of Parliament by virtue of the way Opposition Days happen to fall. I do consider that that would not be consistent with the new reform or with the will of Parliament.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mrs. McDougall that Bill C-109, an Act to amend the Income Tax Act, be read a second time and referred to a legislative committee.
Mr. Speaker:: The Hon. Member who had the floor when the House rose at one o'clock is not here. Resuming debate?
Is the House ready for the question?


Philip Derek Lewis: Question.


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


Some Hon. Members:: Agreed.


Some Hon. Members:: On division.


Mr. Speaker:: I declare the motion carried. Accordingly, the Bill stands referred to a legislative committee.
Bill read the second time and referred to a legislative committee.


YOUNG OFFENDERS ACT, CRIMINAL CODE, PENITENTIARY ACT AND PRISONS AND REFORMATORIES ACT MEASURE TO AMEND
[Stage Direction]
The House resumed from Wednesday, April 30 consideration of the motion of Mr. Beatty that Bill C-106, an Act to amend the Young Offenders Act, the Criminal Code, the Penitentiary Act and the Prisons and Reformatories Act, be read a second time and referred to a legislative committee.
Mr. Gordon Towers (Parliamentary Secretary to Solicitor General of Canada):: Mr. Speaker, I am pleased to have the opportunity of leading off the debate on a very important Bill. A number of Hon. Members are very interested in this Bill and a lot of questions have been asked by the Hon. Member for York East (Mr. Redway), the Hon. Member for Mississauga North (Mr. Horner) and the Hon. Member for Don Valley East (Mr. Attewell). It is the Minister's hope and trust that the Bill itself will be handled very quickly in the House of Commons as well as in committee.


The Acting Speaker (Mr. Paproski):: Order, please. If there are conversations, I would appreciate they take place behind the curtain or in the lobby, where they should be at this time. I am trying to listen to our colleague, the Hon. Member for Red Deer (Mr. Towers), the Parliamentary Secretary to the Solicitor General. I would appreciate if Hon. Members would listen to him.


Thomas Gordon Towers: Thank you, Mr. Speaker.
The Young Offenders Act is the product of a lengthy and detailed examination of juvenile justice. When proclaimed in force some two years ago it saw the repeal of the 75 year old Juvenile Delinquents Act and the introduction of wide ranging reforms in juvenile justice. The principles on which this new legislation is founded reflect our contemporary social values and aspirations rather than those of the Canadian society at the turn of the century.
At the turn of the century it was recognized that children and adults who committed crimes could not be handled in the same manner. It was believed that the young required special treatment consistent with those values. Accordingly, Parliament adopted legislation in 1908 which required the court system to deal with juvenile delinquents as children in need of society's protection, not as criminals requiring punishment. Today we recognize that young people, although they may not be fully adult, are not innocent of their illegal behaviour.
May 22, 1986

In 1982, Parliament in passing the Young Offenders Act declared as a matter of principle that adolescents are responsible for their behaviour and accordingly should be held accountable for those acts in a manner appropriate to their age, maturity and independence.
Not only does the Act give recognition to the principles of responsibility and accountability, it has clearly acknowledged the irrefutable right of society to protection from illegal behaviour. The interests of irresponsible individuals cannot supersede the fundamental rights of society. Society must ensure its integrity and security.
In recognizing the rights of the community and the responsibility of young people, the Act has maintained the balance which is vital to our concept of justice, the commitment to fairness and justice which serves as a hallmark of free and democratic societies. In protecting itself, society must also protect the rights of those individuals who are suspected of crimes and deal sensitively with the special needs and circumstances of youth, youth who are in the process of transition from childhood to full maturity.
When the Hon. Member for Wellington-Dufferin- Simcoe (Mr. Beatty) assumed the responsibilities of Solicitor General of Canada he was already aware that this new legislation had been widely criticized. To examine those criticisms in detail the Minister consulted with Canadians who daily face the challenge of dealing with young people who have offended our laws, as well as with representatives of the communities that are affected by both crime and the criminal justice system. These consultations, and others which he had with his provincial colleagues, confirmed that the principles upon which the Young Offenders Act had been founded are widely supported. In fact, the Solicitor General found that the most adamant critics of this legislation were often equally as firm in their commitment to its basic principles. It is apparent that police, correctional authorities, citizen groups, youth service agencies, and many others, are not opposed to the Act. Rather, they are anxious to ensure that it functions in the way that Parliament intended.
Concerned professionals and citizens have identified a variety of problems and offered suggestions for change. The Solicitor General has been impressed that these actions have been taken with the hope that changes will aid us in achieving the goals of the Act's declaration of principles. It is in this same spirit that the Minister has tabled for the consideration of Hon. Members a series of proposals for amendments, amendments which will serve to enhance the ability of the juvenile justice system to meet demands for public safety and reinforce the values that are fundamental to the high standards for which we strive, including the full recognition of the special needs and circumstances of youth in contemporary communities.
The Solicitor General urges the House to support these amendments. They will modify existing provisions that limit
Young Offenders Act
the ability of law enforcement and justice agencies to achieve the principles of the Act. They will not alter the principles but rather ensure their proper administration.
Among others, the amendments which have been proposed, if adopted, will accomplish the following. The Juvenile Delinquents Act, the predecessor of the Young Offenders Act, established principles which resulted in the juvenile justice system being treated as private and confidential, with no publicity of any aspect of the process permitted. Two provisions in the old Act accomplished this. The first required that all juvenile court hearings be held in camera with no public participation. The second banned the publication of the name or identity of any child who was accused of a crime.
By comparison, the Young Offenders Act has brought the juvenile justice system into public view, opening the courts to public attendance and broad media coverage. However, the Act has continued to prohibit the identification of young people in published reports. In the past year many people have urged that the absolute ban on publication be modified to permit police authorities to seek public assistance in the apprehension of dangerous young people who are at large and a threat to community safety.
In response to this concern the Bill which the Solicitor General has tabled makes provision to permit the police, with the prior authorization of a youth court judge, to release for publication the name of or the identity of a young person who is at large and dangerous to public safety. The amendment also provides young people who are offenders, victims or witnesses appearing in youth court, with an opportunity to request that the court remove the ban on publication in their own cases if they wish to make themselves known publicly.
The amendments will also introduce changes which will enable authorities to deal effectively with young offenders who violate probation orders or other non-custodial dispositions. Currently, the Act relies on a review process to deal with breaches of such court orders, a process which has been found to be generally inadequate. The amendments will streamline the process and allow quick police and correctional intervention by way of arrest and detention where there has been a breach of a non-custodial disposition. The modifications will mean that the juvenile justice system and the adult system will deal with probation breaches in the same way. When young people are involved in street crimes, drug abuse, prostitution and the like, the ability of police to arrest may be a crucial factor in preventing crime and in ultimately helping a young person to achieve a different lifestyle.
The amendments will address concerns that the Act's records provisions are excessively cumbersome and restrictive, thus impeding the adminstration of justice. Specifically, they will ensure that the management of young offenders who are acquitted by reason of insanity will not be hampered by the lack of records. The new records provision will also ensure that police are not prevented from discharging their responsibilities for law enforcement and investigations.

May 22, 1986
Young Offenders Act
There has been a fear that the so-called "Fagins" will be able to commit crimes and avoid prosecution by using children. An amendment to the Criminal Code will ensure that individuals who counsel or aid children under the age of 12 to commit crimes will be liable to criminal prosecution. While there is no evidence that there has been any increase in the incidence of crimes in which children are abused in this way by adults, the Solicitor General wants to ensure that it will not happen. Similarly, proposals to enhance the protection of children who are victims of pornography and prostitution are being examined by the Government.
There is no doubt that the commission of serious crime by young persons, indeed, by people of any age, is a cause of concern to Canadians. In responding to concerns and criticisms of the Young Offenders Act, however, we should note that the majority of young persons dealt with by the Act are not involved in the type of serious criminal activity which has dominated juvenile justice headlines from time to time. There are a number of options open to courts faced with youth who have been charged with such offences.
For the most serious of cases the Act permits the court to transfer charges to the adult court. Where a transfer is ordered, the accused will be subject to all of the penalties that an adult would face, up to and including life imprisonment. This provision, when applied for, has proven to be an effective means of dealing with serious, violent criminal acts, without requiring that we abandon the hope that should motivate juvenile justice.
Generally, the sentencing options available to the youth court appear more than adequate. In the past, 16 and 17-year-olds rarely received sentences of imprisonment longer than two years; and the average sentence was less than five months. Most important, the youth court can exercise considerable flexibility in imposing sentences which reflect the necessity of protecting society. The significant difference is that those sentences will be served in a correctional system which is separate from the adult system and composed of programs designed to respond to the particular needs of young people.
However, in one set of circumstances the provisions of the Act were found to be inappropriate and ineffective. An Ontario court found that a young man who had escaped from prison and committed a series of offences could not be given a proper sentence for the escape and new crimes. The reason was that the Young Offenders Act imposed an upper limit of three years on any aggregate sentence. Obviously, this is contrary to public interest and the Solicitor General is proposing an amendment which would allow courts to impose consecutive sentences for new crimes committed prior to the end of a disposition for an earlier offence. This new measure will result in an aggregate sentence of more than three years in some cases, thereby ensuring that the youth court is able to order appropriate sanctions under certain circumstances. In other cases, the new crimes may justify the transfer of individuals to the ordinary court.
The changes introduced by the Minister will help resolve difficulties in the custody provisions and emphasize that custody is a disposition of last resort intended to enhance the protection of society. Similarly, a general restructuring of the pre-trial detention Sections will resolve procedural problems that have imposed unnecessary burdens on police and in some cases have caused difficulties for young people.
These changes will continue to adhere to the principle that young people and adults should be kept separate and apart from one another in detention and custody. However, the amendments will provide for extended periods of time during which an accused may be kept in the hands of police authorities and will provide for other procedural improvements.
While the Young Offenders Act is sound legislation which enjoys broad support, it is, unfortunately, a law that has been found wanting in several ways. The problems are sufficiently large that a failure to respond to them quickly and seriously will impede the flow and effect of implementation of otherwise praiseworthy concepts. These amendments speak directly to the legislative weaknesses and limitations that have caused frustration among Justice officials and deep concern among citizens across Canada. The Solicitor General hopes that these necessary changes will enjoy speedy passage so that the benefits of the Young Offenders Act can be quickly and more fully enjoyed by Canadian communities.


Hon. Bob Kaplan (York Centre):: Mr. Speaker, I am glad that the Government has finally chosen to call this Bill for second reading. I wish it had done so weeks ago, particularly since the Government is asking us to proceed with it quickly. It is hard to understand why this legislation was not brought forward a month or even longer ago, and I will illustrate that in points I wish to make. Bringing the legislation forward sooner would have allowed for the kind of hearings at committee stage which would assist us in dealing with all of the problems that have been raised during the course of the rather short life of this very important piece of legislation.
I take a particular interest in this legislation and the amendments that are now before the House because, as Hon. Members are aware, I was the Solicitor General who introduced this legislation and defended it on second reading, although I had an excellent Parliamentary Secretary like the Parliamentary Secretary to the present Solicitor General (Mr. Beatty). I came to the House to present the Bill myself and I regret that the Minister is not here himself to do so. However, his place has certainly been very well filled by his Parliamentary Secretary.
I thought that the legislation had a very healthy birth. It was one of the few pieces of legislation that had the unanimous approval on third reading of all Hon. Members of the House of Commons. I considered that to be an excellent launch for an important piece of legislation that represented a major reform of the juvenile justice system. However, very soon that piece of legislation nearly became an orphan. Its difficult period lasted
May 22, 1986

until very recently. I put a certain amount of the blame, though not all of it, for the lack of support the law had at the time it needed it on the present Government.
The former Solicitor General who is now the Minister of National Revenue (Mr. MacKay) signalled in one way or another that the Bill was back on the table and that its fundamental philosophy, the age limits, the various dispositions provided and virtually every aspect of the Bill were under consideration and that in fact it might be repealed. This had a very troubling effect on the application of this law throughout the country.
For one reason or other a few provinces were urging the Government to take precisely the step indicated, and in the hope the Government would do so they were failing to make some very fundamental decisions that were required so that the Bill would have a healthy introduction into the Canadian criminal justice system. Complementary provincial legislation was needed and some provinces did not pass it because of the signals they received from the first Solicitor General of the Conservative Government. The decisions about which Departments inside the provincial Governments were to take responsibility for the various features of the legislation were not made, again because of the signals that were being received indicating that the legislation might be repealed. Forms that needed to be printed were not being printed. Educational programs that were largely paid for by federal taxpayers were not being delivered, again because of the uncertainty the Government created by indicating that the Bill might be completely abandoned.
I do not want to harp on that. I am glad at the result, that the Government decided that the Bill is essentially a sound one, that its philosophy is correct, that the age limits are proper and that it should be uniform across the country. In other words, after a period of mixed signals and wrong signals the Government is now back on track and wants to make the Young Offenders Act work. I am very happy about that because we in our Party supported the Bill as did the present Government and we want it to work as well.
We turn now to the next chapter in the life of this legislation. What has happened since the Government made the decision that the Bill was basically sound but that some fine tuning was required? No one recognizes more than I that fine tuning of this legislation is required. In fact, when some early decisions were made that put the effectiveness of the Bill in jeopardy, I was perhaps the first person who rose to ask the Solicitor General to quickly bring in amendments to the very legislation that I had taken through the House. I wanted to see the Bill corrected so that the problems that were appearing would be solved, and so that those problems would not continue unduly and thus damage the effectiveness of the legislation. The Government refused to respond in that way. I received a good, smart-alecky put down. I was asked why I was complaining when I was the one who brought the Bill forward. However, that was not my point. My point was that the
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legislation existed and the courts and officials were interpreting it in a way that limited its effectiveness. I felt that we should correct it and get on with it.
The Government said it wanted to have a period of consultation so that it could hear from all of the sectors of Canadian society affected by the legislation, and then it would bring in a package of amendments which corrected the Bill and set it on a proper course for the future. If that had been done, I would be agreeing to the Government's timetable. I would be saying, "The Government has consulted, it has put forward amendments, let us get them into law and let us get on with it".
However, I have learned that those consultations have not really taken place and that the amendment package which the Government has brought forward is only a very small part of the story that needs to be told in the House of Commons and in the parliamentary committee before we can really do the job of fine tuning that is required to make this legislation work for the future of the criminal justice system. In saying this, I am recognizing something that I was always prepared to recognize, and that is that the legislation is not perfect and that in the two years it has been working we have learned a lot about its problems.
Why would I challenge the Minister on his claim that full consultations were held? I have been invited to speak on the Young Offenders Act at many conferences around the country. I have spoken to more than 10 groups from one coast to the other and I have done so at the invitation of a great variety of groups. I have spoken to Family Court judges and to assessment officers, the ones who write the assessments that are submitted to a judge when there is the issue of a young person having psychological problems. I have spoken to gatherings of police across the country about how the legislation is going and what the police think should be done to make it work more effectively. I have talked to youth groups about this legislation. For example, I spoke to a very interested group of Boy Scouts in my constituency. They made it a project to study the Act and how it would affect them, their classmates and friends. Like the claim of the Minister, I have tried to get to the grass roots and to all levels of the community affected by this legislation.
As far as the Minister's so-called consultation is concerned he has only talked to the provincial Governments and to the police to a certain extent. Beyond that there has been very little consultation which has been confirmed by some of the groups to whom I have spoken. I asked groups the Minister should not have missed whether they had been given any opportunity to send in an account of their experiences to the Solicitor General, whether they had heard from them and did they know an amendment package was being prepared. It came as news to quite a lot of people. I fault the Minister for limiting his consultation to the provincial Governments, as important as they are, and to some of the leading spokesmen for the police across the country. Those consulations have been
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Young Offenders Act
pretty good. The amendments that have come forward, which the Parliamentary Secretary described very adequately, covering their concerns are good amendments. By and large we on this side intend to support them.
I am not saying we are going to support all of them or that we do not have some further amendments to make to try to make them more effective. I am sure the Government will accept our amendments in the spirit in which they are intended to improve the legislation, as the Government said, to make sure that the philosophy with which the Government agrees, as we do, is reflected in the way in which the Act is going to work.
Many more aspects of the legislation need to be looked at. I shall not give a long list of them. I will cite just one. Then I will propose a formulation to the Government as to how we might proceed in committee. I hope there will be some favourable response so we can get on with doing what is necessary to the Bill so that it will work.
The one example to which I thought I would refer in some detail is the problem that has arisen with the requirement of Section 22(1) of the Act, namely, the requirement that before treatment is ordered by the court, the young offender having been convicted, has to give his consent to that treatment.
A group of family court judges took me aside, not to discuss a particular case but to discuss the way in which this requirement was going. They told me that it is a very poor idea to ask the young person for his consent. Contrary to the system under the old Act where treatment could be ordered by the judge and a fair number of young people were ordered to have treatment, this is not so under this legislation. The consultation I had was in London, Ontario. The judges said that in some courts the number of cases for which treatment is ordered is down to less than one-tenth of what it was under the old Act.
I know the Parliamentary Secretary and the Solicitor General (Mr. Beatty) would agree that treatment is a highly desirable disposition for young people in conflict with the law. If there is a recommendation that there be treatment and a capacity of the provincial Government and the court officials to deliver that treatment, surely we ought to do everything we can to encourage the young person to submit to that treatment.
What kind of a handicap or bar does consent present? Young offenders tend to come in groups. They know the court is open. In a lot of cases friends are present. I am told by the judges in the family and the youth courts who deal with these cases that young people do not want to acknowledge in front of their friends that treatment is an appropriate solution. When I was preparing this legislation and the policy issue arose, it seemed to me like a good idea to require the consent of a young person. I thought, and this was the argument of my officials at the time, that if the young person does not consent to the treatment, it is a waste of money and effort. Without a person's consent to being treated, it is obvious that treatment will not work. I agreed with that line of argument, but in light
of the experience with the Act I would like to see a change. I would like to see that provision removed.
I know some argument will be raised about the rights of the individual in connection with this issue of treatment. Should a person not have the right to refuse to have treatment if they do not want it? I think that is a misapplication of the issue of the rights and wrongs or the legal rights of a young person in court. After all, if the judge is going to sentence a young person to be incarcerated for a year or sentence a young person to pay a fine of $1,000, the judge does not ask the young person whether he consents to that disposition. The young person is obliged to accept the disposition whether he likes it or not. It is the judgment and the order of the court. We have, however, built into the law a requirement of consent for treatment. I think that consent should be eliminated. I do not have any hang-up that eliminating it removes some freedom or right a young person has. A young person should not be able to pick and choose among the dispositions that the court, for the person's good, imposes. With the two years of experience we have had to the effect that treatment is being neglected because young people do not agree to it or are unwilling to agree to it in front of their friends, and given the kind of values that gangs of young people in conflict with the law have, I think it is time for us to look at this requirement again.
You may ask how the treatment will work, Mr. Speaker. This is what I asked the judges. How can a treatment work on a young person if that person does not consent to it? Incarceration works because there the person is. A fine works because the bailiff or the sheriff is there to collect the money. The argument is that the treatment will not work if a young person does not consent. Here is where the wisdom of the people working in the field is very useful. They say that eventually young people will want to contribute to the treatment, that young people will want to make the therapy and treatment work. If only you can get them started on it, in most cases or in enough cases they will quickly come to recognize that this is something with which they should play ball, that it is something of which they should try to make a success so as to get themselves into a better value system and into a better lifestyle.
I feel that a mistake was made and experience has shown it. The Minister did not look into this aspect in the course of his consultations, from what I can see, and I think we should not let pass this opportunity to look into measures like this. Perhaps as many as a dozen others might be brought forward, looked at by the committee, witnesses called and the measures included in the amending package. I want to put it to the Government that there was a limited nature to the consula-tions in which it engaged, and let us as a committee hear from all of those who work with the Act, not just provincial Governments, and of course the police but not just the police, to try to iron out a lot of little difficulties, such as the one I have just described.
May 22, 1986

I have limited myself to one example, but if I did speak about another one, I would talk about the review of dispositions problem under Section 33. I talked to people about that in Alberta, Ontario and Quebec. I found a different application in all three provinces, which is normal in a country like Canada, but in some of the provinces it is not working. Provinces are urging us to make an amendment so that an alteration or review of dispositions will not be, as it is becoming in some places in Alberta, for example, a whole new trial of a young person when you are really just seeking a review of dispositions.
I could go on at great length about the kinds of areas not addressed by the Bill that should be addressed by the Bill, but I won't. I wanted to mention the one I have because I am anxious to demonstrate to the Government that there are serious non-partisan reasons for us to slow down in the committee. We should look at a number of concerns and make the amendment package into a really good and useful one.
As an expert on the rules, Mr. Speaker, you know better than any of us that the Opposition will require the Government's support to deal with issues that are not addressed in the series of amendments which we have been given. The chairman of the committee is responsible for ensuring that the committee deals with the measures presented by the Government, and not with measures around it. Therefore, I must ask for the support of the Government for all members of the committee to allow us to widen the scope of our consideration to include all the other questions which I know are important. I think I can convince the Government Members of that if we are given the opportunity to allow these witnesses to speak. Many of these witnesses have not come forward because they did not know that the committee would be holding hearings right now.
That is my position and plea on the Bill. I want to add only one other point. I am not the spokesman for our Party on this legislation. My colleague, the Member for York South- Weston (Mr. Nunziata), is the spokesman but, like the Minister, is not able to be present in the House for this important stage of the legislation. He has some specific concerns about some of the amendments which are actually in the Bill before the House. I do not want to create the impression that the amendments which are there are perfect. I want to hear from the Minister about the provision which can result in a youth court giving sentences of longer than three years. I realize that the background for concern is that in a certain Ontario case a young person drew only a three-year sentence for the crime of murder which was the maximum a youth court could impose.
I do not think that that regrettable result is a bad reflection on the legislation. It was a result of the way the case was handled. The Minister knows about the case and has talked about it. To try to remedy the non-problem by giving the youth court the power, in certain circumstances, to impose longer sentences violates a fundamental principle of the legislation,
Young Offenders Act
that cases of serious criminal activity which require long sentences should not be dealt with in youth court at all. I am afraid that if we put the accused in front of youth courts into the jeopardy of receiving a very long sentence, the youth courts will lose some of the informality and therapeutic dimension which now distinguishes them from adult courts.
After all, if you are a lawyer appearing for a young person who could receive a sentence of seven, eight, or nine years, which is pretty serious, even though you may feel that the young person could benefit from some of the treatment which he would receive in a disposition like that, you would handle the case differently than if you knew that the maximum possible sentence was much less. I think that every aspect of the court procedure would be affected by this measure of providing for very long sentences.
As I said, I am not unwilling to listen to the arguments. I thought the Parliamentary Secretary gave a very good reason for handing down a sentence of longer than three years in the circumstances which he gave. If an individual who is serving a three-year sentence escapes and is brought back to the youth court, he cannot be given any additional time because he is already serving the maximum sentence. Obviously some amendment ought to be introduced to deal with that particular case. However, I would worry about a change in the law which would give a youth court the power to impose such a terrible sentence on a young person. As I said, it might change the way in which the court operates.
I think there are many young people who should receive long sentences for the things that they have done. There are a lot of hardened criminals in the 15 to 17 year old age category. However, the solution within the law, which is quite a good solution, is to transfer that case to adult court. That is almost invariably what happens. It did not happen, although it should have, in the case which the Solicitor General put on the record. I would rather have a solution to that problem than change the whole basis of informality and therapy, which is such a strong, important, and useful characteristic of the youth court as we have continued it under the Young Offenders Act.
I can tell you the good news, Mr. Speaker, that we are only going to have one speaker on second reading of this Bill. I have spoken for my colleague as well as myself. We are anxious to have these amendments passed. We regret that the Bill has been held up like this for no good reason until the last minute. We have been given a short deadline. We do not accept the deadline, but we certainly do accept a limited second reading debate in the hope that the Government and the members of the committee which is to be struck will agree to inviting witnesses to come and tell us how they feel about the whole law rather than just about the particular amendments which the Minister has been persuaded to bring forward at this time.


Mr. Svend J. Robinson (Burnaby):: Mr. Speaker, I am pleased to rise to participate in this very important debate on the Young Offenders Act and the amendments which have been proposed to it by the Government. I had the privilege of

May 22, 1986
Young Offenders Act
participating in the debate at both second and third reading stages of the Young Offenders Act when it was originally proposed as Bill C-61 in 1981 and 1982. I also took part in the proceedings and deliberations of the Standing Committee on Justice and Legal Affairs before which the then Solicitor General, the Member for York Centre (Mr. Kaplan), appeared to defend the legislation. We had a very thorough opportunity in the course of those hearings to make improvements to the legislation.
I would remind Members of the House that the legislation, as originally presented to the committee, did not make provision for a uniform upper age in the definition of a young offender. I give credit to the Member for York Centre for having brought forward an amendment at an early stage in the committee proceedings to provide for a uniform maximum age of 18.1 think that was an important concept and we supported it. I am pleased that the Government has resisted pressures from some provinces to lower that uniform age to 17 or even to 16. That is particularly important when one considers that in the Provinces of Quebec and Manitoba the maximum age has been 18 for a number of years. Were that maximum age to be lowered, the attempts of those provinces to deal with young people within their jurisdictions under that special regime would have been subverted.
I want to indicate my concern that second reading of this legislation has been delayed until this late date when there is less than a month until the House rises for the summer recess. At the time that the Minister introduced this Bill for first reading in the House I and my colleagues in the Official Opposition indicated that we were prepared to give the Bill careful study but certainly not to delay in any way committee study of the legislation. Having left second reading of the legislation until this late date, it is quite clear that the chances of the Bill being dealt with before the summer recess are very, very slim indeed. It will certainly take some time to give the opportunity which we must give to groups which are active in the field of juvenile justice and should be consulted. We will have to make the time in order to carry out those consultations properly. As I said, Mr. Speaker, that does not mean undue delay. It means doing our job properly as Members of Parliament to give an opportunity and a forum to those groups which are interested in and concerned about this legislation.
I say that partly because it is quite clear that there are a number of concerns which have been raised by these groups and by individuals who are active in the field of juvenile justice which have not been reflected in the amendments which were tabled by the Minister. My colleague, the Member for York Centre, has raised a couple of these concerns. I would like to touch on two or three other areas of concern as well. For example, the Young Offenders Act does not allow for the disposition of a conditional discharge with a probation order. That is a denial of equality to young people because it is available to adults charged under federal statutes, including the Criminal Code. I suggest that in the course of our deliberations we remedy that oversight. As well, we have to look very
seriously at Section 22, the treatment section. Members of the Standing Committee on Justice and the Solicitor General have received representations from the London family court clinic. They indicated that the provision with respect to consent of a young person before treatment can be ordered is one which has not worked out in practice. We are going to want to hear very careful evidence, not just from that London group but from others who are knowledgeable in this field, particularly those who made submissions to the committee three years ago urging that there be a requirement for consent. My recollection is that the Canadian Psychological Association urged that treatment not be imposed but ordered with the consent of the young person. This provision has not worked in practice. In Ontario, for example, during the first two years of implementation of the Young Offenders Act, only six young people consented to their own treatment needs, which allowed the court to provide them with the most appropriate court intervention. There were only six people. Clearly it was not the intent of the legislation to reduce the number of people who receive treatment. I say "treatment" because that can apply to a whole range of concerns, whether it be learning disabilities or psychological or psychiatric disorders. Those are areas in which proper resources should be devoted, and clearly we are going to have to examine with care the representations made on that particular point.
As well, there have been some court decisions which have brought into question certain provisions of the legislation. For example, in Manitoba a court held that a young person was not able to instruct counsel independently of his or her parents. That decision has been criticized by many people involved in juvenile justice as being unreasonable. An example might be that of a 17-year old charged with impaired driving. To suggest that that individual is not free and able to instruct counsel is not reasonable. Yet there is no provision in this amending legislation to deal with that concern.
Those are some of the areas faced by individuals in the field which have not been addressed by this legislation. Certainly there are others which have been addressed. In some cases we are going to oppose provisions in this Bill vigorously. They are a step backward. For example, while the adoption of the Act in 1982 represented a significant step forward, and it was unanimously approved by all Parties in the House, there were a couple of areas in which we actually moved backward from the days of the old Juvenile Delinquents Act. I want to give a couple of examples because it is precisely in those areas where the Government is suggesting that we further weaken the protection for young people. Under the provisions of the Juvenile Delinquents Act, enacted in 1908, it was impossible and illegal for young people aged 12 or 13 to be locked up with adult prisoners. It was recognized that it would be fundamentally wrong to mix young people at that age with adults in adult prisons. The Young Offenders Act, in Section 7, allowed that to take place. Many witnesses spoke against it. I proposed an amendment to the earlier legislation, but it was defeated. In
May 22, 1986

the Bill now before the House the Government would go even further to dilute the protection available to young people and allow even more of them to come into contact with young adults. We believe that is a regressive step.
As well, the Juvenile Delinquents Act made no provision for transferring young people over the age of 18 from youth correctional facilities to adult jails. The former Minister, in his wisdom, decided to erode those provisions of that Act, so in 1982 he allowed young people originally sentenced as young offenders to be incarcerated in adult jails. That again was a step backward. What the Government is now proposing in this amending Bill is to allow young people to be incarcerated not just in provincial jails but in federal penitentaries. Surely that is not a move we can accept as being a step forward for young people and juvenile justice in this country.
Many of us were relieved when we saw that the Government did not attack the fundamental principle of the legislation. The underlying philosophy of the Young Offenders Act was an enlightened and progressive one. However, as the head of the Criminal Lawyers Association in Toronto, Earl Levy, said, it has its warts. All of us recognize that there is room for improvement. One of the major areas of concern, one which has been of greatest concern to those involved in the field, is the extent to which custodial sentences have greatly increased under the Act. Instead of this Act resulting in a reduction in the number of young people sentenced to custody, whether it be secure or open, we have seen a quite dramatic increase in young people subjected to custodial sentences. In Ontario there was an increase of some 200 per cent.
Another disturbing trend in this legislation is that 16 and 17-year old offenders are getting longer sentences now as young offenders than they would have received in an adult court for the same offence prior to the adoption of the Young Offenders Act. Ironically, legislation intended to reduce the jailing of young people and encourage the provision of alternatives has resulted in a dramatic increase in the number subjected to custodial sentences. One of the amendments proposed by the Government attempts to address this problem, but there is a more serious and fundamental reason for the imposition of these custodial sentences which I would like to address at this point. The scheme of this Act relies very much on provincial co-operation to provide alternatives to incarceration. Those alternatives have simply not been provided. The resources so essential to ensuring that imprisonment is only used as a last resort, in order to ensure that it is effective, have not been made available to the juvenile justice system. When a judge is faced with a young person charged with an offence under the Act, in many cases he has the alternative of either sentencing the person to custodial care or releasing him on probation. That subverts the underlying philosophy and intent of this legislation. That is a very, very serious condemnation of the legislation, one which cannot be addressed directly by this House or the federal Government. Certainly I hope the Government would recognize this problem and work in concert with the provinces and territories in putting additional
Young Offenders Act
resources into alternatives. In too many cases lip service is paid to the rule of custody as a last resort.
Another concern is the very heavy workload of probation officers. This really precludes effective intervention in economic, social and family problems. The underlying concern, however, is that the provinces are not yet offering a range of alternatives aimed at the rehabilitation of young people.
I would note as well that it is essential in this whole area of juvenile justice that we not deal just with the front end of the system, as it were, but that we recognize the essential objective in the area of young people and the law, and young people in conflict with the law, which is to prevent them from coming into conflict with the law. We recognize, as a society, many of the reasons for which young people break the law. Yet we refuse to take action and to deal with those concerns. We refuse to take the preventive steps, which have been identified time and time again, to prevent crime among young people.
There have been many studies done. I would point to one, the study of the Senate Committee on Health, Welfare and Science, which produced a report called Child At Risk. It identified a whole series of steps which we could be taking to prevent crime among young people. It notes, for example, that we have to look right back to the prenatal stage. We have to look at malnutrition of the pregnant mother, the question of intrauterine abuse, the fetal alcohol syndrome, the effect of smoking, the effects of prenatal emotional stress and, of course, diet and possible metabolic disorders.
It is also essential that we examine carefully the resources that are available to deal with learning disabilities. How many young people who are incarcerated in youth custodial facilities are there because no one has detected a learning disability which has driven them, in many cases, to the point of frustration and despair, and finally lashing out and breaking the law?
The Senate study documented very clearly the effects of emotional deprivation. Study after study of adult offenders has shown that, almost without exception, violent offenders have been shuffled between foster homes, have come from broken homes and simply have not had adequate resources when they were young. They were unwanted at birth in many cases, they had frequent placements in infancy, and in almost all cases they graduated from minor offences to major crimes.
There is the whole question of child abuse and how we as a society deal with the sexual and physical abuse of young people. We put totally inadequate resources into identifying child abuse and, having identified it, into treating it. Our resources in the area of child care are grossly inadequate. I know my colleague from Vancouver East, who is in the House today, has been doing an outstanding job in urging the Government to move forward to recognize the implications of a lack of resources in the area of child care for our young people, and ultimately for our juvenile justice system.

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What about the whole question of violence in the media, violence on television, and violence in video games? 1 am sure that the Speaker has been into these video parlours where young people stand in front of machines and mindlessly shoot away like young Rambos at other human beings. What kind of example does that set? Surely to goodness we have to recognize that these machines, which award bonus points for bonus deaths, should not be encouraged in our society, but rather should be discouraged.
It has been estimated that an average child, during his or her childhood, will see on television some 13,000 or 14,000 deaths, whether it be on cartoons or other television shows. I was shocked recently to see the so-called professional wrestling on television in which big hulks take great pleasure in jumping up and down on one another and battering their heads into submission and beating one another up. What kind of example is that kind of mindless violence to our young people? Is it any wonder that there is a great deal of violence in our society when that is promoted on prime time television?
Finally, we have to look at the underlying economic causes of crime, particularly crime among young people. There is no doubt whatsoever of the link between poverty and juvenile delinquency. I could give many illustrations of this, but I would like to quote from a report called Poor Kids. I cited from this in my speech at second reading of the original Bill on April 15, 1981, as reported on page 9319 of Hansard. It states the following:
To be born poor is to face a greater likelihood of ill health-in infancy, in childhood and throughout your adult life. To be born poor is to face a lesser likelihood that you will finish high school; lesser still that you will attend university.
To be born poor is to face a greater likelihood that you will be judged a delinquent in adolescence and, if so, a greater likelihood that you will be sent to a 'correctional institution'. To be born poor is to have the deck stacked against you at birth, to find life an uphill struggle ever after. To be born poor is unfair to kids.
Truer words have never been spoken. We talk about reducing the level of violent crime among young people, and yet we refuse to attack the causes of that crime. We refuse to recognize that poverty itself is a crime which is being inflicted on the poor of this country.
I want to make particular note of the appalling conditions facing native young people in this country. Members of the Standing Committee on Justice and the Solicitor General received a letter from Chief Edward Anderson who is the Chief of the Anishinaabe Child and Family Services Inc. in Manitoba. Chief Anderson points out that native young people are disproportionately represented among the ranks of the accused and the incarcerated, both within the juvenile justice system and, of course, in the adult correctional system. Youth correctional facilities, jails and penitentiaries are filled with Indian people. As Chief Anderson points out, very few people relate these disproportionate levels of incarceration to the history of Indian peoples.
The chief notes that during the last four generations Indian children in large numbers have been placed in residential
schools, medical foster homes, group homes, child care institutions and detention centres. It is time that we dealt with realistic alternatives for native young people. Native people, when they come into contact with the justice system have to deal with non-Indian prosecutors, non-Indian lawyers, nonIndian judges, and non-Indian probation officers. Then they are sent away to non-Indian open custody and closed custody institutions.
As Chief Anderson points out, too often these institutions, instead of instilling a sense of respect for law and order in native young people, engender bitterness and hostility. Over the years native people have made numerous requests for more culturally appropriate agencies and services, but so far those requests have been ignored. I believe it is essential that we hear from Chief Anderson and other representatives of native people in Canada to express their concerns about the failure of the justice system towards native people in this country.
There are other areas of concern that have been raised by some of the major groups that are active in the field of juvenile justice. The Canadian Council on Children and Youth, while it has expressed qualified support for the amendments to the Young Offenders Act, has recognized a number of serious concerns. They suggest, for example, that we have to look very seriously at this question of the right of a young person to retain counsel without the intervention of an adult. They have voiced concerns as well about the lack of adequate programming for young people, particularly to deal with the special problems of female offenders.
The John Howard Society has noted a couple of areas of concern with respect to this legislation, while once again supporting, in principle, the over-all thrust of the Bill. They have raised concerns about the provisions that allow consecutive sentences totalling more than three years to accumulate for a young person who commits subsequent offences while still subject to an earlier sentence. The John Howard has expressed concern about the direction to determine more formally which young offender cases should be reviewed to assess the need to try the young person in adult court.
One of the other concerns which I would like to raise, which does not flow directly from the legislation but, rather, from the administration of the legislation, is the practice of at least two provinces, the Province of Ontario and the Province of Nova Scotia, to separate the treatment of young people aged 16 and 17 from the treatment of young people below the age of 16. That has given rise to two standards of justice for young people. Once again, that subverts the principle and the objectives of the legislation.
There are other specific concerns with this legislation that certainly the committee will be dealing with in greater depth once we hold hearings. I want to put the Government on notice very clearly that it must get rid of the very offensive provision in the legislation that would do away with the requirement that a young person must waive in writing his or her right to counsel. According to the present wording of the amending legislation, that basic protection of the rights of young people
May 22, 1986

is being eroded. Certainly that is a provision that we will strenuously resist.
I want to note as well that we are pleased that the Government has brought forward an amendment that would remove the requirement for corroboration of the evidence of a child under the age of 12. Of course, that requirement is not one which applies in the case of adult offenders under the provisions of the Canada Evidence Act. This can and indeed has given rise to problems in the case of a young person who may be charged with an offence against a person under the age of 12. In the absence of any medical or other evidence to corroborate the child's story, the case had to be thrown out of court. For example, if a young child 10 or 11 years old is sexually molested by a teenager, in the absence of any corroborating evidence there is absolutely no opportunity for a conviction in those circumstances. Therefore, I am pleased that the Government has moved forward with an amendment in that area.
Finally, our Party calls on the Government to make adequate resources available to the provinces to ensure that there are real alternatives to incarceration. As I have said, the underlying philosophy of the legislation, which would effectively reduce the number of young people who are incarcerated, has been subverted by provinces that are not prepared to put funds into resources. I reiterate the concern that we must deal with prevention and must not take steps that effectively would undermine the over-all principles of the legislation, which is basically progressive legislation.
There is provision to deal with young offenders who have committed very serious offences, who are not appropriately dealt with under the Young Offenders Act, for transfer to an adult court. In effect, that is the safety valve of the system, and it has not been suggested that this safety valve in any way be removed. Certainly for those young people who are being dealt with under the provisions of the legislation, we do not want to erode the protections.
Another concern about the legislation is that the record keeping provisions, which already were heavily criticized in the previous legislation, are being eroded even further, such as in the area of fingerprints and photographs. We will want to hear evidence on that point as well.
I cannot think of many pieces of legislation that are more important or have a more significant impact on the people of this country than the Young Offenders Act. For decades, indeed hundreds of years, there has been concern about crime among young people. I note that as long ago as 2,000 years, Socrates wrote:
Our youths now love luxury, they have no manners, they have disrespect for authority, disrespect for older people. Children generally are tyrants. They no longer rise when adults enter the room ... They gobble food and tyrannize their teachers.
These concerns have been expressed for a long time. I hope that as Parliament and as a country we recognize that there
Young Offenders Act
can be no task more important than dealing with the priorities of our young people. We in this Party will do everything we can, in the review of these amendments now before the House, to bear that objective in mind. Certainly, we will be proposing amendments in order that that objective can be realized.


The Acting Speaker (Mr. Paproski):: Before I call the question-



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mr. Paproski):: It is my duty, pursuant to Standing Order 66, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the Hon. Member for Kenora-Rainy River (Mr. Parry)- Mines and mining-Griffith Mine closure-(a) Invitation to Minister to visit Ear Falls (b) Employment prospects in area; the Hon. Member for Bow River (Mr. Taylor)-Road safety-School bus equipment and standards; the Hon. Member for Algoma (Mr. Foster)-National Revenue-(a) Holstein research project expenditures (b) Approval of project.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Beatty that Bill C-106, an Act to amend the Young Offenders Act, the Criminal Code, the Penitentiary Act and the Prisons and Reformatories Act, be read the second time and referred to a legislative committee.
The Acting Speaker (Mr. Paproski):: Is the House ready for the question?


Some Hon. Members:: Question.


The Acting Speaker (Mr. Paproski):: Is it the pleasure of the House to adopt the motion?


Some Hon. Members:: On division.


[Stage Direction]
Motion agreed to, Bill read the second time and referred to a legislative committee.
Philip Derek Lewis: Mr. Speaker, I rise on a point of order. There have been discussions among the Parties with respect to the balance of the day. All those interested have been notified. I suggest that if you were to seek unanimous consent to call it

May 22, 1986
Farm Credit Act
five o'clock, we could move to Private Members' Business and proceed thereon.


Robert Phillip Kaplan: Mr. Speaker, it appears that the Government is giving a higher priority to Private Members' Business than has been done in the past. Here we are at 4.15 p.m. proceeding to Private Members' Business.
It is interesting that the reason we are proceeding to Private Members' Business is that we have run out of government business. With all of the things-


Some Hon. Members:: Order.


Robert Phillip Kaplan: -that the Government said it would do when it came to power, here we are in the middle of a good working day with no matters on the legislative paper that the Government is prepared to bring forward. I provide my unanimous consent, Mr. Speaker.


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


Philip Derek Lewis: Mr. Speaker, with respect, we have dealt with two items of business today; the Income Tax Act and the amendments to the Young Offenders Act. We could have debated it at length, but we felt it was important to get that legislation to committee.
We were prepared and are still prepared to proceed with Bill C-98, the duties relief Bill. However, we thought it was fair to consider the two Bills today and not call that legislation because it requires someone with a knowledge of that area of the law. We did not want to abuse our privilege by doing so. That is why we are moving to Private Members' Business.


The Acting Speaker (Mr. Paproski):: Is there unanimous consent?


Some Hon. Members:: Agreed.


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


PRIVATE MEMBERS' BUSINESS-MOTIONS   FARM CREDIT CORPORATION
[Stage Direction]
ADVISABILITY OF RESTRUCTURING DEBT LOAD Mr. Albert Cooper (Peace River) moved:
That, in the opinion of this House, the Government should consider the advisability of amending the Farm Credit Act to allow the Farm Credit Corporation to restructure the debt load of those Canadian farmers, that can be shown to be good managers, and who are facing difficult times because of acts of God or because of extreme economic conditions beyond their control, by:
1. Allowing the Farm Credit Corporation to set aside a portion of the debt held by the Corporation, of proven farm managers, for a set period of time without interest or charges; and
2. Allowing the Farm Credit Corporation to issue loan guarantees to private lenders, provided the private lender writes off a certain minimum amount of the debt it holds and can show the farmer's cash flow is sufficient to meet the new lower payments that result from the lowered principal.
He said: Mr. Speaker, I am pleased to have the opportunity to participate in this debate on my motion, which primarily is designed to deal with one element of the agricultural problem, namely, the whole area of farm debt. I brought this motion forward because the agricultural sector, certainly in the Peace country and, I know, in much of Canada, is facing very serious difficulties. These difficulties can be roughly divided into four causes. First, we recently had a drought in the Peace country and parts of western Canada. The farmers in that region had very poor crops. Their cash flow and income was down, leaving them in a rather naked position.
The federal Government has taken steps in this area and has provided assistance on an acreage basis to many of our farmers in the Peace country. While that aid has been of great assistance, it could have been more. Personally, I would have favoured more assistance, as would the farmers. I know that the Government would have liked to give more assistance. The fact is that the farm community recognizes that the Government has been concerned about these problems and has been taking steps to address them.
The second problem facing farmers in my area and elsewhere is somewhat more difficult because it involves the whole question of international prices. The problem essentially involves the current battle taking place between the European Economic Community and the United States Government over subsidies for agricultural producers. The net result has been that the prices of agricultural commodities have plummeted and, once again, our farmers are faced with a very serious situation. Last year they had the drought. This year they have a problem with prices. Obviously, that paints a picture of a very serious situation for many of our farmers.
The third element which comes to mind is in the area of input costs. Farmers have been faced with rising costs for fertilizers, chemicals and various pieces of equipment and machinery. If we take the whole series of input costs, add it to the international prices and then add it to the drought conditions we experienced last year, the bottom line is a very difficult situation for many of our farmers. In the Peace country, in particular, we find that indeed to be the case.
The fourth element I want to touch on is the issue with which my Private Members' motion really deals, that is, the whole problem of the debt load of many of our farmers. Just a few years ago, in the late 1970s, in my region we found prices were going up quickly. The picture looked very good. As a net result, many of my farmers were asked to expand their operations. There was no shortage of money. The banks and the Farm Credit Corporation were there with funds available. As a result, many of our farmers proceeded to expand their operations, get themselves into a pretty heavy leverage situation with a very high proportion of debt, which I suppose
May 22, 1986
[Stage Direction]
would have been fine if inflation had continued and prices of farmland had continued to grow. The farmers could have continued on with life as it had been with probably not too many serious difficulties. But shortly after 1980, prices took a dramatic downturn. Instead of the prices continuing to climb, as many of our farmers had gambled they would do, prices began to drop. So there were dropping farm prices, high input costs, which were continuing to rise, and international prices which have dropped recently. What we end up with is a very serious situation which threatens many of our farmers.
There is no doubt that the Government has attempted to address the problems we are facing. It has talked about drought assistance. In addition to that, the Prime Minister (Mr. Mulroney) recently raised the matter of international prices as his topic at the summit meeting, which, of course, was the first time, to my knowledge, that this has ever been done. As a result, we are seeing the whole profile of agriculture raised in this House and in the minds and hearts of Members of Parliament and the Government of Canada. That is encouraging. It is the kind of thing I certainly want to see continue.
The Government as well has tried to deal with the whole matter of input costs. It announced as recently as last month the elimination of the federal sales tax and the excise tax on fuels. That is a buffer for the farmers. Essentially what we have is a Government which is attempting to address a serious problem. It is moving in a number of directions. It is trying to address input costs and international prices. It is trying to deal with acts of God, as it did recently with the drought program. In addition to that, the Government is now looking at the whole business of crop insurance and trying to make adjustments there. We know that those discussions are going on with federal and provincial Governments as well as with the farm community.
That leaves one area about which I am concerned, and that is the whole area of farm debt. That is the reason I came forward with this particular motion. We can address some of the causes and some of the problems, and we can move in different directions with solutions, but, unfortunately, what we are faced with is a large number of farmers who still will be saddled with tremendous debt and in the present circumstances will continue to look at a very bleak future. They will take advantage of some of these programs which will help them to a certain degree. However, as long as they have these massive debts, they will continue to be locked into a very difficult situation and many of them will likely face bankruptcy, receivership or, in some way, be forced off the farm.
What I have presented to the House today is a motion which really has two elements. The first element is essentially a system of set-asides which would kick in in certain cases. I specified those cases. The reason I did so is that I do not think any Government should be involved in looking after a farmer who is not managing his operation properly, who is not doing what he should do or that which is necessary to accomplish a turn-around. But that kind of individual is in the minority. The
Farm Credit Act
truth is that the vast majority of our farmers are good managers. They are hard-working people who are doing the best they can to get their operations going in spite of difficult circumstances. Essentially what I propose is that the Farm Credit Corporation be allowed to set aside a portion of the debt it holds for a particular farmer for a period of time with no interest and without any carrying charges until the farmer's situation improves. That set-aside amount of money then comes back into the formula and the farmer begins again to pay interest and charges and so on which are incurred on his debt.
My motion reads in part that the Government allow the Farm Credit Corporation to restructure the debt load of those Canadian farmers who can be shown to be good managers and who are facing difficult times because of acts of God or because of extreme economic conditions beyond their control. So it is a fairly limited exposure. The reason for that is that it is not the Government's business to get involved with farmers who are not managing their own affairs.
The second element is that many of our farmers do not deal exclusively with the Farm Credit Corporation or do not have knowledge of farm credit but are still faced with the same debt situation. What I have proposed that the House should consider is that the Farm Credit Corporation come up with a form of loan guarantee to allow private lenders to enter into the same sort of arrangement. The reason for this motion is very simple. We face a difficult situation. Farmers are being hit on all fronts. I know the Government is addressing as many of these fronts as it can and it is doing a good job. However, there are still a couple of areas which I would like us to give a hard look, and one of those fundamental areas has to be the whole area of farm debt.
I see my time has expired. I want to make sure that other Hon. Members have a chance to participate in this debate. I am pleased to have had the opportunity to put forward a proposal which I think will provide some help and assistance to many of the farmers in our area and, in fact, across western Canada.
Mr. Don Boudria (Glengarry-Prescott-Russell):: Mr. Speaker, I am pleased to participate in the debate this afternoon on the motion before us as proposed by the Hon. Member for Peace River (Mr. Cooper). There are two items in the motion, first, to allow the Farm Credit Corporation to set aside a portion of the debt held by the Corporation. I am sure you will recall, Mr. Speaker, that the Hon. Member for Algoma (Mr. Foster) brought a very similar motion to the attention of the House some time ago. Unfortunately, it was talked out by the Conservative Party. We hope the motion before us today indicates a change of heart on the part of the Government and that, indeed, the Hon. Member's Conservative colleagues will not do what they did then and will allow this very good motion to come to a vote so that we will be able to pursue this matter further.

May 22, 1986
Farm Credit Act
The second item in the motion is to allow the Farm Credit Corporation to issue loan guarantees to private lenders for private lender write-offs of a certain minimum amount of the debt, and so on. Although this seems favourable as well, there are a few problems I would like to place before the House. First, we should all remember that the Minister of Finance (Mr. Wilson) not that long ago brought in a Budget in which he introduced what he considered to be a revolutionary measure known as "the commodity-based mortgage". We can all recall that during the budget debate, when the Minister of Finance announced that there would be a measure known as the commodity-based loan program and that it would solve a whole number of agricultural problems, all the Tory Members applauded. I am sure that Your Honour must recall that day. As it turned out, the commodity-based loan program was a flop. I think I am being complimentary when I say that. Because of the rules concerning parliamentary language I cannot use the term it appropriately deserves.
The Canadian Federation of Agriculture published a backgrounder with respect to the commodity-based loan program. It is a very complete document. I would like to tell Hon. Members that the federation does not deal favourably with this measure. I would like to read a few sentences of the backgrounder to Hon. Members. It states:
-the Commodity Based Loans program is not really a form of debt relief to the least privileged farmers.
That is funny since that is what the Minister of Finance said it was. Finally, the backgrounder states:
The funds provided in the February 26, 1986 budget for the FCC program, in reality, hardly provide farm financial assistance. The system contains a loan program within a loan program, where in all other but the worst scenarios, the debts are called in at the FCC rate plus 2 per cent.
I have reached the conclusion this afternoon that the Hon. Member for Peace River is totally repudiating the commodity-based loan program since it was supposed to solve all the problems outlined in the Hon. Member's motion. I am glad to see that it was not only members of the Opposition who had the foresight to call this commodity-based loan program what it really was-a whole bunch of hot air and not much else- but that the Hon. Member for Peace River agrees that the measure is totally unsatisfactory. I am glad he shares that view with my colleagues and me.
Mr. Speaker, you will probably recall that the Leader of the Opposition-


Mr. Cooper:: Mr. Speaker, I rise on a point of order. The Hon. Member for Glengarry-Prescott-Russell (Mr. Boudria) and I work together on a regular basis. He is a very capable individual. My concern is that what he is now doing is adding to my words much more than what I have put into them. I wish to bring that to the attention of the Chair and to the attention of the Hon. Member. He is really taking the words I have used and adding just a little bit of distortion to them.


Mr. Clark (Brandon-Souris):: A very liberal interpretation.


The Acting Speaker (Mr. Paproski):: I will leave the matter at that.


Don Boudria: I am sure Your Honour recognizes that the point the Hon. Member raises is not a point of order, although it is an interesting point. I gather he is saying that he is not totally dissatisfied with the commodity-based loan program. I contend that he is not totally supportive of it since he thinks we need all these new measures which he has brought to our attention today in the form of his motion. I agree with him; we need the measures which he suggests. The reason we need them is that the Minister of Finance failed so miserably in his Budget to address those selfsame problems.
Hon. Members will probably recall that last year the Leader of the Opposition formed the National Liberal Caucus Task Force on Agriculture. The task force, under the very able leadership of the Hon. Member for Algoma (Mr. Foster), toured the country and made some reports. I would like to share with Hon. Members the report of the Ontario section of the task force wherein it states:
The majority, or 16 farm groups, recommend low and/or stable long term farm loans as the solution to the large farm debt problem. County Federations of Agriculture comprise the majority of the groups that specifically recommend low and stable rates. Another three farm groups recommend that the term of farm loans be required to match the time and length of the associated production period.
So in spite of the fact that the Minister of Finance has brought in two Budgets and has patted himself on the back, with a little help from Tory back-benchers, the measures he introduced did not solve the financial problems of the farm sector. Members of the Opposition are not the only ones who think that much more needs to be done, since what the Government has done is clearly insufficient. We are glad to see that the Hon. Member for Peace River is on our side in stating that the Government's actions have been insufficient thus far. We really hope that he will have better luck than we have had at convincing the Government to do what it should have done a long time ago.
Hon. Members will probably remember that in January of 1985 the Department of Finance published a document entitled Tax Issues in Agriculture. In that document the Minister of Finance stated that farmers were receiving a lot of breaks, that they were not really in much more difficulty than anyone else and that they were doing quite well, thank you very much. This is a policy paper with which many of my colleagues and I strongly disagree. From what I know, many Conservative back-benchers also disagree with it.
The Standing Committee on Finance, Trade and Economic Affairs presented a report to the House in which we responded to the Department of Finance document. In the report of the committee, of which I was a member as were many other distinguished Members of the House, some of them Conservative, we unanimously recommended that some farm debt relief measures be introduced. Several pages in the report are devoted to the measures which we feel are necessary to deal
May 22, 1986

with the situation. For instance, we suggested that we need an agri-bond program to solve the farm debt crisis and to assist farmers in difficulty. The Government did not listen to that recommendation. It did not listen to the members of the committee. We see that some very distinguished Members of the House, some of them Conservative, and others, were not listened to by the Government. We certainly hope that the Hon. Member for Peace River will have better luck than did his colleagues who tried to convince the Government that we need help for agriculture. Unfortunately, our report was not listened to by the Minister of Finance. I wish better luck to the Hon. Member for Peace River. I certainly hope that he will be successful in convincing the Government to do the things which it has so badly neglected thus far.


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


Stanley J. Hovdebo: Mr. Speaker, first, I must congratulate the Hon. Member for Peace River (Mr. Cooper) for recognizing that there is a problem. In the process of recognizing that there is one, he has put his name on record to suggest that the Government do something about it. However, I must also suggest that his is not a serious motion. What he states in his motion is mere rhetoric. He places before the House and before the people of Canada a motion stating in effect that he recognizes the fact that the Government is not doing enough about financing in agriculture. It is not a serious motion in any way at all.
The first part of his motion requires a set-aside provision, which is already part of the Act. This is something which the Farm Credit Corporation already has the right to do. The legislation allows the Farm Credit Corporation to set aside a portion of the debt of proven farm managers held by the corporation for a period of time without interest or charges.
The second part of the Hon. Member's motion is with respect to a write-down provision, which is not a guarantee to farmers and which is something which may not even help them. It is a guarantee to private investors. I must suggest that although the Hon. Member recognizes the problem, he does not recognize that the solution he is putting forward is not a serious one at all and cannot be of value to the farmers of the country.
There are solutions that would help. The Hon. Member's suggestion deals with only one of the causes of the disaster in the farming community and does not really deal with one of the causes at which we must look the hardest. There is no good solution to the problem of farmers other than the establishment of commodity prices which pay the farmer for the cost of production, the land, labour and machinery. Such a parity price structure would make it possible for any farmer with management skills to survive and prosper. The Hon. Member
Farm Credit Act
very carefully worded his resolution to mention farmers who have shown themselves to be good managers.
A parity price structure does, of course, ignore some of the situations which have developed in Canada and the world over the last few years. There is the problem of the world market and of other countries subsidizing products and dumping them on the world market at prices too low to enable a farmer to raise grain. The fact that there is intermittent over-production in the world drives the prices down. These are situations with which we are faced today and with which we should deal.
I wish the Hon. Member luck in sensitizing his caucus colleagues to the problems of the farm structure. As well, I wish him luck in his attempt to stabilize farm input so that farmers will know that we are looking at the structure of farm financing.
If the Government were to guarantee all of those loans, it would cost the Government something like $28 billion, and to some extent, that is what the Hon. Member is suggesting if he is suggesting that all private loans be backed and guaranteed by the Government. With wheat on the Prairies going for $3.50, there is not a bank in the market that will back a loan but will not accept the backing which is suggested here.
The Hon. Member makes good management a condition of the resolution. I wonder if he would want to be the judge of good management. If a farmer who has been farming for five years has not had a crop for five years and consequently goes out of business, does that mean he is a good manager if his neighbour went out of business one year earlier? If he has survived at all, does that mean he is a good manager? How exactly do we decide which farmers are going under because of bad management and which are going under because of other factors over which they have no control?
The Hon. Member is challenging the financial structure of the country. That needs to be done, and I congratulate the Hon. Member for doing so. The financial system skims off the top of the fruits of labour and productivity. The financial system does not contribute to the process of farming. Financial institutions put nothing into farming, no labour, no sweat, no seed, no machinery. They just skim off the top through interest rates. One of the greatest reasons for the elimination of producers in the farming industry right now is the financial structure and the fact that financial institutions are skimming off the top when no one else is getting any profit from farms.
It has always been a mystery to me that we in Canada have allowed a situation to develop which would make money the most important input in the production of grain and food. It is more important than fertilizer, chemicals, seeds, machinery or labour. The most important factor seems to be the money that is lent and the interest on that money. That is the only thing that is guaranteed. The financial structure ensures that the person who lends money will collect his interest on it.
The Hon. Member is shaking up the financial structure by suggesting that there be write-downs, even if the write-downs are to protect the investor and not the farmer, and that there

May 22, 1986
Farm Credit Act
be set-asides as far as interest rates are concerned. Both of these are foreign to the financial structure which this Government and the previous Government have gone to great lengths to protect. Consequently, I hope that he is sensitizing his caucus colleagues to this particular problem.
On March 6, 1986, I asked a question of the Minister of Agriculture (Mr. Wise) about the need for establishing a debt review which would allow for write-downs and eliminations. He promised, as he did before Christmas, after Christmas and at Easter, that he would do so. However, when I suggested that the Bill he was to bring before the legislative committee would have no teeth, he said, "There will be teeth in it, just wait and see. We are doing just that." It seems inadequate to suggest that a motion put before the House at this time will replace the legislation we have been promised four times in the last year.
[ Translation]


Mr. Gabriel Fontaine (Levis):: Mr. Speaker, I am pleased to take part in the debate on the motion introduced by my colleague from Peace River (Mr. Cooper) who advocates more flexible financial structures to help farmers.
It is easier to appreciate the gist of this issue if we consider the role played by the Farm Credit Corporation, namely to provide funds and financial advice to farmers to help them build up economically sound businesses. Such has been its role since it was created in 1959. Never in 27 years did the Farm Credit Corporation have to face the kind of challenge now confronting it. Never before have its human and financial resources had to cope with so many help requests from the farming community.
Low prices paid for agricultural products, declining land values, drought conditions, and the impact of American policy and high interest rates all represent as many obstacles to be overcome. The Government is fully aware of the daily struggle of cash-starved Canadian farmers trying to stay in business.
Through the Farm Credit Corporation the Government has approved interest deductions for 5,600 FCC borrowers who were paying between 14 and 16.75 per cent interest on longterm loans. These borrowers were saddled with loans maturing in 25 years or more at unprecedented interest levels. Their interest rates have been lowered to 12.75 per cent over five-year terms.
We have also widened the mandate of the FCC appeal boards so they might review the cases of farmers against whom the FCC was about to initiate liquidation proceedings.

Last September, the Minister of Agriculture (Mr. Wise) announced a moratorium on farm foreclosures by the Farm Credit Corporation. That moratorium remains in effect today until programs are in place to assist these financially distressed farmers. One of the programs is already in operation. The commodity-based loan program which was first announced in the February Budget was launched two weeks ago. This is a new approach to farm financing which could help between
4,000	and 5,000 Farm Credit Corporation borrowers who are unable to meet their financial obligations. It will give those in low equity positions another chance to rebuild their businesses. Under the program, loan payments are tied to the farmer's ability to pay and borrowers can pay as little as 6 per cent interest.
The unique feature of these loans is that payments will vary according to what happens to commodity prices. If commodity prices decrease, the principal owed by the farmer will also decrease, as will the payment. If prices increase, greater revenues will be generated and the farmer will be in a better position to handle increased payments. If a borrower stays in this program for the full 10 year term and commodity prices do not improve substantially, the total amount he or she pays will be less than under a conventional mortgage.
If a borrower decides to opt out of the program, the difference between what has been paid under the commodity-based payments and what would have been paid under a conventional mortgage will have to be repaid. However, there is a cap which limits the amount borrowers would have to pay if they choose to opt out of the program or if commodity prices increases sharply during the term of the loan. The cap is 2 per cent above the 10 year rate, which means that at current rates a farmer would never pay more than would be required under a 13 per cent mortgage. In effect, commodity prices would have to increase 7.5 per cent every year for 10 years to reach this cap over the 10 year period of the loan.

It is a program that is not easy to explain, but the Corporation has organized information sessions across the country for groups of producers and representatives of the media. As more people understand how the program works, they will be in a better position to appreciate its merits.
We have received some very encouraging and very positive comments from farmers who initially had some reservations. We think that at least 5,000 borrowers from the Farm Credit Corporation should be able to benefit under this program.

Commodity-based loans will help farmers deal with the risks involved in commodity price fluctuations.
A year ago the corporation introduced another program which was intended to help farmers deal with the risk of interest rate fluctuations. That was the shared risk mortgage program, and it has proven to be very popular with FCC clients. In fact, 20 per cent of the FCC loan approvals during the 1985-86 fiscal year were under this program. Interest rates for the shared risk mortgage are adjusted annually. Increases or decreases are shared equally with the corporation, but clients would never have to pay more than a 2.5 per cent increase during the six year term of the loan. These two programs are indications of the efforts the Farm Credit Corporation is making to provide lending programs that help
May 22, 1986

farmers deal with risk. Two fronts have been addressed: commodity prices and interest rate fluctuations. On other fronts, the questions of crop insurance and stabilization programs have also been addressed.
The Farm Credit Corporation is also monitoring its loans closely so that problems can be identified and solved before they become serious. As well, close to 3,000 borrowers are taking advantage of the advisory services program under which they receive regular financial counselling to help them establish viable farm businesses.

The purpose of these measures is to help FCC borrowers succeed. The effort being made by the FCC is considerable: it is currently carrying more than 17 per cent of these accounts in arrears. Meanwhile, the FCC grants loans for debt consolidation and reschedules others when this can help farmers.
We are aware that the farming community is going through a very difficult period, and the time has come to take a different approach to the problem. That is what we have done, and that is what we intend to go on doing, as long as the situation has not improved. Simplistic answers, such as subsidized interest rates and indiscriminate partial write-offs, would provide only temporary relief for those who really need help and might worsen their position in the longer term.
What we need are long term solutions that will strengthen Canadian agriculture.


Mr. Terry Clifford (London-Middlesex):: Mr. Speaker, apart from the question of debt set-asides, which the Hon. Member for Peace River (Mr. Cooper) has introduced today, the FCC has served farmers well. FCC was created to help all farmers, not only those in extreme financial difficulty. I believe the Farm Credit Corporation has done its share to help most of its borrowers to succeed, and FCC pays special attention to the needs of its borrowers in financial difficulty. I know farmers in London-Middlesex on FCC borrowing will be pleased to see the reduction in the interest rate this week for the second time in two months.
As we are speaking today, I have no difficulty in believing that FCC is doing all it can under the circumstances. Over 17 per cent of FCC accounts are in arrears at this moment. It means that those farmers are facing real difficulties. The private lending institutions are reporting that the number of their non-performing loans has increased 100 per cent to 6 per cent.
I think FCC shows a lot of flexibility when it carries a farmer in arrears for a long period of time. When the debt structure of a borrower is not adequate, FCC does not hesitate to help out and reamortize what needs to be and can be reamortized.
There is more than one way to help farmers facing financial difficulty. Not being in a position to allow debt set-asides, FCC had to rely on its ability to manage in a very innovative
Farm Credit Act
and empathetic way. When a farmer has some equity left and when he or she works out a repayment program that is realistic, FCC tries to accommodate that borrower. This approach is successful in many cases. Unfortunately, when it is not, the corporation has to take a greater loss. That is a chance FCC is willing to take to help a farmer on an individual basis.
The Hon. Member for Glengarry-Prescott-Russell (Mr. Boudria) should know, and he did not say it today, that since last year FCC has come up with very innovative ways to work as a lender in the agricultural field. I am thinking here about the shared risk mortgage that was introduced in April 1985. The objective of this type of loan is to lessen the impact of volatile interest rates on a farming business. It was designed to share the risk equally between the farmer and FCC. It was new, it was different, and it was innovative.
There is a market for this kind of program. It was well targeted and it paid some dividends for farmers. During the 1985-86 fiscal year, more than 20 per cent of all FCC loans were shared risk mortgages. The farm community responded very well.
This month, FCC introduced its commodity-based loan. Here again is an attempt to serve the farm community better by offering a program that meets the specific demands of a well defined group. There was a lot of criticism of this program due to misunderstandings about its real value. It is now on the market. It seems that many farmers think that this program can help them.
FCC employees came up with innovative programs and they are still testing new ideas. Equity financing is one of them. Many groups in the farming community had a chance to offer their opinions in this area. As I said earlier, the Government will make some funds available to FCC so it can work with the debt review boards. This decision is the result of many discussions and consultations with farm organization. In my home province of Ontario, the Grey-Bruce county had debt review board experience.
On December 10, 1984, the Minister of Agriculture (Mr. Wise) supported the debt review board pilot project that was established in Bruce-Grey counties in Ontario. He fully supported the participation of FCC on this project. In May of last year, the debt review board presented its report. While the experience provided us with a very interesting insight on how such a process could work, it failed to establish a consensus among its participants. The concern of the board was to help farmers stay in business if they thought there was a chance for survival and financial recovery. This exercise was not done in vain. In fact, the report of this pilot project and the discussions the Minister had with FCC's appeal board chairman served as a basis for the introduction of what was announced by the Minister of Finance (Mr. Wilson) in his February 26 Budget.
The Budget included $65 million this year and $130 million next year for a total of $195 million over two years to help

May 22, 1986
Farm Credit Act
Canadian farmers. We think that this is quite an allocation. It included provisions to allow FCC to launch its innovative commodity-based loan program that will help up to 5,000 Canadian farmers. It also addressed the question of those having to phase out of agriculture to seek alternative employment. This program has been very useful in the farming of tobacco in London-Middlesex.
The Government is committed to introducing legislation to establish farm debt review panels to provide advice and assistance in restructuring farmers' debt. We also think that this will have an effect on private lenders. So far the complaint has been that nothing could be done because FCC would not move and would not accept any compromise. Now it will be different.
FCC has a lot of experience in working with independent groups like the debt review boards. FCC has its own network of appeal boards. Those boards are composed of farmers and they can make recommendations to FCC about specific cases which are presented to them. Working with debt review boards will put FCC on the same footing as other lenders. I think its influence will be positive on the over-all process of debt revision. FCC will be able to accommodate all sorts of recommendations from these boards and set-asides are only part of what can be suggested to lenders. I am sure that the Hon. Member for Peace River will be happy to hear that.
There are also write-offs, debt forgiveness, interest reductions and anything positive that is acceptable to both lenders and borrowers. Debt review boards will greatly help farmers facing insolvency. If there is a realistic and feasible solution, they will try to use it. This is very important because the farmers of the country know that the Government is developing plans and wants to listen to them. They will be looking for voluntary arrangements between farmers and their creditors. The Farm Credit Corporation will lend its full support and expertise to this new process to ensure its success.
I thank you very much, Mr. Speaker, for this opportunity to speak today on behalf of the farmers of Canada who know that the Government is providing leadership for them.


Mr. Rossi:: Mr. Speaker, I would like to draw the attention of the House to the fact that the Hon. Member for London- Middlesex (Mr. Clifford) probably, but not intentionally, misinformed the House when he stated, while reading his text word for word, that the Hon. Member for Glengarry- Prescott-Russell (Mr. Boudria)-

-whom he hasn't seen in the House today-

-was present-


An Hon. Member:: He isn't in the House.


Carlo Rossi: This is a point of order, Mr. Speaker. It's in the blues.


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


Carlo Rossi: Just ask the Member if he said it. Ask the Member.


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


Carlo Rossi: The Member for Glengarry-Prescott-Russell (Mr. Boudria) was here and he spoke during Private Members' Hour, too. He was not absent all day. The Member said that he had not seen him all day.


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


Carlo Rossi: Check the "blues".


The Acting Speaker (Mr. Paproski):: If the Hon. Member for London-Middlesex (Mr. Clifford) did say that, it is improper. However, I will check the "blues" and I am sure that we can resolve this.


Terrence (Terry) Clifford: I did not say that.


The Acting Speaker (Mr. Paproski):: I will recognize the Hon. Member for Humboldt-Lake Centre (Mr. Althouse) on debate.


Mr. Vic Althouse (Humboldt-Lake Centre):: Mr. Speaker, Private Members' Hour is a time when private Members bring forward ideas on which they hope the Government will pick up. That is what the Member for Peace River (Mr. Cooper) has done today through the motion which we are debating. The motion has two parts and I would like to review them. The first part is asking that amendments be made to the Farm Credit Act to allow the Farm Credit Corporation to set aside a portion of the debt held by the corporation, of proven farm managers, for a set period of time without interest or charges.


The Acting Speaker (Mr. Paproski):: Order, please. The day was wonderful until just a few minutes ago. I do not know what has happened. I hope that the House will listen to the Hon. Member for Humboldt-Lake Centre (Mr. Althouse) who, 1 know, has a few choice words to contribute to the debate.


Victor Fredrich (Vic) Althouse: Thank you, Mr. Speaker. This is a two-part motion, as I was saying. The first part calls for an amendment to the Farm Credit Act to allow the FCC to set aside a portion of the debt held by the corporation, of proven farm managers, for a set period of time without interest or charges.
I have some doubt that this kind of amendment is necessary. Section ll.(l)(e) of the Farm Credit Act provides that the Farm Credit Corporation may:
-make compositions or schemes of arrangement, grant extensions of time, accept other security in substitution for any security held by the Corporation and revise, amend or re-negotiate any mortgage or other agreement;
I think that in those broadly stated objectives, purposes, and powers, the corporation already has the power to do the kind of
May 22, 1986

thing which the Hon. Member for Peace River indicates in his motion he wishes it to be enabled to do. However, the Minister of Agriculture (Mr. Wise) and the Cabinet have not seen fit to provide, by regulation, the power to carry out that part of the corporation's mandate. That is really what is at issue. In fact, that is what has become the issue throughout the farm financial crisis in Canada for those farmers who are borrowing money from the Farm Credit Corporation. The fact is that the Government has not lived up to promises as expected. It has not provided the services which it promised during the election. It has not put real action behind its words.
We were promised that there would be debt review boards. There was a debt review process in Bruce County and, as a result of that, we discovered that lending institutions could not agree on what sort of debt review process should be followed. As a consequence, nothing has happened. According to the Act, the Minister could provide regulations to enable the corporation to make compositions or schemes of arrangement, grant extensions of time, accept other security in substitution, etc. The Minister prefers, instead, to do nothing.
A very good job has been done of making politics out of the issue. Some 40,000 farmers in Canada are under the gun, being faced with foreclosure or being pushed off the farm. FCC has been instructed by the Minister to put a moratorium on those foreclosures pending the action of the Minister and the Government. In several speeches the Minister promised action on the debt review process. He promised that the legislation would be before the House and dealt with before Christmas. That was in the now famous speech in which he said that it would be good legislation, that it would address the problem, and that it would be legislation with teeth.
The Minister of Finance (Mr. Wilson) took up the clarion call when he brought down the Budget. He said that it is the intention of the Government, under the Budget, to put before the House a system of debt review panels to handle the problem of farmers facing bankruptcy and to provide for composition of debt, etc. That was part of the budget statement. So we had the Minister of Agriculture and the Minister of Finance both reiterating a campaign promise. At the end of April we had the Prime Minister (Mr. Mulroney) jumping into the act with his now famous agricultural statement which included a promise that the legislation would be in place not before Christmas but before June. Today we are debating a motion presented by an equally frustrated Member of Parliament, another private Member of this House, a Member from Peace River who is, as we are, getting a little tired of waiting. I think he hopes that with his motion he might twist the tails of the three very reliable gentlemen I have just mentioned so that we will have legislation in time to act before the end of June.
It is not that the House is overburdened these days. We are going to be running out of business some three-quarters of an hour before the normal time today. However, it is very difficult
Farm Credit Act
to deal with a piece of business that has not yet been drafted and placed before the House. If the Bill is going to be drafted properly to deal with the whole range of financial problems farmers face, it will have to deal with much more than just farmers who have loans from the Farm Credit Corporation. It is going to have to deal with farm loans from all kinds of credit institutions. It is going to have to treat farmers in a manner not too much different from the way it treats the rest of society so that we do not have unnecessary conflict between sectors. It has to be fair and presented in time for a thoughtful response, not only from Parties in the House but from the farmers affected and the lending institutions as well.
This issue has been before the House for the last six or seven years. A couple of Ministers responsible for consumer and corporate affairs were going to include a system of handling debt review for farmers and fishermen as part of the new revised bankruptcy law. An agreement was reached just before the last Parliament ended which seemed to have the acceptance of the financial community and others concerned. However, that legislation has not been reintroduced and I think we would be better served, even though I understand the frustration of the Hon. Member for Peace River, by some real draft legislation presented to the House in time for us to give it the thoughtful consideration it needs so we can act instead of continuing to talk about this particular issue.


Mr. Roger Clinch (Gloucester):: Mr. Speaker, the motion put forward by the Hon. Member for Peace River (Mr. Cooper) reflects his great interest in the farming community, not only in Peace River but across the country. His motion calls for amendments to the Farm Credit Act to allow the FCC to set aside a portion of the debt owed to it by farmers. Farm finance, as you know, has been a priority for the Minister of Agriculture (Mr. Wise) since he took office. His actions have been a reflection of this concern. The FCC will be given the ability to set aside a portion of debts.
On April 30, the Prime Minister (Mr. Mulroney) himself stated the Government's commitment to the question of farm bankruptcy. He said the Government would introduce legislation on this matter. The same day the Minister of Agriculture emphasized that commitment and added that he was determined to get Royal Assent for this legislation before the end of June.
This legislation, which has been worked out in co-operation with the Minister of Consumer and Corporate Affairs (Mr. Cote), will allow for the creation of debt review panels across Canada. Those panels will be composed of financial and agricultural experts. They will advise farmers on the reduction of their debt and help them make alternative arrangements with their creditors. Estimates are that between 4,000 and
8,000	farmers will benefit from the establishment of such farm debt review boards.
There are many other things I would like to add in this debate but my time is very limited. In closing I will add that the FCC will not only be able to set aside a portion of these

May 22, 1986
Adjournment Debate
debts, but it will also be able to accommodate most of the recommendations made by the debt review boards. The FCC will not act alone, but its ability to meet the recommendations may be an incentive for private lenders to be more flexible.


The Acting Speaker (Mr. Paproski):: The hour provided for the consideration of Private Members' Business has now expired. Pursuant to Standing Order 42(1), this item is dropped from the Order Paper.



PROCEEDINGS ON ADJOURNMENT MOTION

[Stage Direction]
A motion to adjourn the House under Standing Order 66 deemed to have been moved.

John Edmund Parry: Mr. Speaker, my submission in the adjournment debate today arises from a response by the Minister of Finance (Mr. Wilson) to a question I posed to him on April 28. Before I go into the specific points of dissatisfaction with this response, I think it will be valuable to place on the record the background and subject matter of my question.
Briefly, it concerns the denial of a tax remission to the laid-off workers of the Griffith Mine, particularly those living in the Ear Falls area. The fundamental dissatisfaction those people have lies with what the Government had promised, quite unsolicited, and which is now being left undelivered in this particular case. I would like to quote a couple of statements by the Minister of Finance because I think they are germane to the matter and relevant to a full understanding of it. In the November 8, 1984 Economic Statement, at page 101 of Hansard, the Minister of Finance stated:
The consequences of closures are particularly severe for workers in communities where alternative employment opportunities are limited or simply do not exist.
We intend to offer tax relief for termination benefits in these circumstances and will consult with those affected before determining the precise form of assistance.
Further to that, on November 16, 1984, I directed this question to the Minister of State for Mines (Mr. Layton):
If in fact the mine does close, will the Government ensure that assistance similar to that given to the mines recently closed in Quebec will be given to this area?
The reply by the Minister:
Without question, Mr. Speaker!
Quoting now from the Budget Speech of May 23, 1985, the Minister of Finance reiterates the basis for granting tax remissions in closure situations of isolated communities. At page 5017 of Hansard he said:
Tax relief for severance compensation will be offered on a case-by-case basis, to employees affected by a company closure in isolated communities.
This was essentially a reiteration in a slightly different form of the Minister's previous commitment. Late in March of this year, when in Hamilton in the middle of a media scrum, the Minister was asked by a CBC reporter as to whether the Government was granting the tax remission to the laid-off Griffith Mine workers. The Minister stated, in that most inappropriate forum, that no, the Government had no plan to grant such a remission.
Following that surprising revelation, which went completely contrary to everything that the Minister's officials had communicated to myself and to my office up to that time, I attempted on, I believe, three occasions to get a commitment from the Minister to reconsider that decision, as it apparently was, in light of the facts. I had great difficulty securing that commitment, and, in fact, only yesterday did I secure the commitment from the Minister in a meeting.
The reply of the Minister to a question by my colleague, the Hon. Member for Nickel Belt (Mr. Rodriguez) contained some enlightening statements. The Minister cited Campbell Red Lake Mines as being an employer in the area that could be expected to employ people being laid off at the Griffith Mine. The fact was that, having done a survey of the major employers in the area, we found that Campbell Red Lake Mine was planning to employ, at most, two people in the next year or so.
That indicated to us that the Minister had been misinformed as to the facts. After a question in the House, and after questioning the Minister at committee, he finally did put down the criteria under which he rejected a remission for the housing compensation at Ear Falls. It was in the form of a letter to me, and not in the form of a copy of any policy or regulation formally adopted by his Ministry.
Understandably, people do, in good faith, rely on statements made by Ministers. The people at Red Lake and Ear Falls were very angry about the refusal to grant this submission. They sent an invitation to the Minister to come and see their area and to point out to them where the employment opportunities were. I think they have been as irritated, as I have, by the Minister's refusal on two occasions to answer the particular question as to whether he would accept an invitation, and also by the feeling that misleading information was given concerning employment prospects in the area. That is what we would like an answer to.


Mr. Pierre H. Vincent (Parliamentary Secretary to Minister of Finance):: Mr. Speaker, in response to the Hon. Member for Kenora-Rainy River (Mr. Parry), perhaps we should look at the situation from a different angle. First of all I would point out that earlier this week the Minister, along with the Hon. Member, spoke to some of the employee representatives about tax remission for severance benefits.

May 22, 1986

Mr. Speaker, let there be no misunderstanding about the situation of the Griffith Mine as compared with what happened in the town of Gagnon, and about what the Hon. Member said a moment ago. We indicated in various documents and publications that a community widely affected by economic woes might be eligible for tax relief for severance benefits. And the town of Gagnon, as the Hon. Member for Kenora-Rainy River certainly knows, was destroyed not by fire, but by bulldozers. In my opinion, this is completely different from the situation, which is nevertheless unfortunate, of the workers of the Griffith Mine.
In December 1985, 66 employees of this mine had already found work either in Ear Falls or in neighboring communities. The economy of those municipalities is healthy. The situation of the Griffith Mine workers is therefore completely different from what was expected and described in certain documents in November 1984 or at other times.
Mr. Speaker, I think that we have to differentiate between the two situations. The Income Tax Act already contains specific provisions for severance benefits.
You are indicating that my allotted time is over, Mr. Speaker, and I thank you.


ROAD SAFETY-SCHOOL BUS EQUIPMENT AND STANDARDS
Mr. Gordon Taylor (Bow River):: Last April 8 I asked the Hon. Minister of Transport (Mr. Mazankowski):
What part does the federal Government play with regard to the safety of equipment on school buses which carry Canada's greatest treasure, namely, our girls and boys? Is any co-ordination being carried out leading to uniformity in equipment and operations in the provinces?
The Hon. Minister of Transport replied:
-Transport Canada provides the design, manufacturing and functioning standards for school buses in Canada. There are some 35 standards. They are monitored and inspected on a regular basis by the Transport Canada Road Safety Directorate. As far as provincial safety equipment is concerned, that is coordinated under the CCMTA-
I commend Transport Canada on the standards for design and manufacturing of school buses in Canada. The Canadian system of federal standards for bus construction is the envy of our neighbours in the U.S.A. where standards are set state by state. As a matter of fact, accident data indicates that school buses are the safest means of transporting students to and from school. The latest available Canadian analysis entitled "School Bus Accident Study" concluded that a student is eight times more likely to be injured while travelling to and from school in a vehicle other than a school bus.
The 35 federal safety standards referred to by the Minister include the assurance that the school buses are constructed with increased body joint strength, improved window retention, better fuel system integrity and improved occupant protection.
Today, however, I would like to deal with the other aspect of school buses, namely, their operation and what happens outside of the school bus: things like the best known method of loading and unloading school children, school bus driver
Adjournment Debate
training and optional safety lighting systems that would enhance the safety of school children and the drivers who drive in front of or behind school buses. Every province has its own method of protecting the boys and girls who ride in school buses. In Alberta, school jurisdictions have autonomy in public transportation. Some other provinces have a central authority with a mandate to address school bus safety. Consequently, there is a lack of uniform operating procedures within the provinces. This is in contrast to the United States where there have been several federal initiatives to standardize bus operations and to institute driver training programs.
Standardizing bus operations is at least as important as standardizing bus construction. U.S. accident statistics show that for every child killed as a bus occupant, three children are killed outside of the bus, either by the bus itself or by a passing motorist. Canadian accident data collected by an organization known as "Bus Us Safely" show that on a percentage per capita basis, Canadian school children have twice the fatality rate of their American counterparts.
Our provincial Governments are doing something about this; for instance, in Alberta the Hon. Marvin Moore, Minister of Highways, gave notice in 1985 that while the school bus driver improvement program was voluntary, it would be made mandatory if sufficient numbers of drivers do not receive the training. It is already mandatory in Ontario, Manitoba and Saskatchewan, and perhaps in other provinces. The Department is examining the proposal of a film to increase the awareness of the student's responsibility while a passenger on a school bus and when leaving a bus.
The penalty for offences relating to school buses varies in Alberta and in other provinces. It is the Government's intention to ensure that the penalties for infractions are realistic. There is also a requirement that a school bus operator, wherever the bus stops to load or unload passengers, must activate the flashing lights, and the only exception to this is in large cities where the matter is under the jurisdiction of the city council. A number of provinces only have the four light system.
While the Canadian Conference of Motor Transport Administrators endeavour to co-ordinate matters, there is a limit to their authority. There is a place for the federal Government to provide leadership by co-ordinating the areas of operations as has been done in the area of construction.
As I said at the beginning, our school buses carry the most valuable cargo in Canada-our boys and girls-and we should go the second mile to make sure that not one of these children is killed or injured unnecessarily.


Mr. Bernard Valcourt (Parliamentary Secretary to Minister of National Revenue):: Mr. Speaker, the expression of concern about this important area of safety is appreciated. The opportunity to report on the status of school bus safety is most timely in view of current public interest in this subject.

May 22, 1986
Adjournment Debate
Accident data indicates that school buses are the safest means of transporting students to and from school. The 1978 Transport Canada report entitled "School Bus Accident Study", concluded that a student is eight times more likely to be injured while travelling to or from school in a vehicle other than a school bus.
There are, at present, a total of 35 federal safety standards which are applicable to school buses. New safety standards for school buses were introduced in 1980. These ensure that school buses will be constructed with increased body joint strength, improved window retention, better fuel system integrity and improved occupant protection. Because of the special nature of the passengers, that is the physical size range, the protection of children in an accident is accomplished by passive means and depends on high, padded, energy absorbing seats to provide a safe compartment for the child. It should be noted that the safety standards apply to new school buses at the time of their original manufacture.
The on-road use of the buses comes under provincial jurisdiction and usually encompasses items such as driver training, bus maintenance and loading and unloading procedures. Federal and provincial school bus regulations are coordinated through the Canadian Conference of Motor Transport Administrators. This organization formulates policy recommendations for adoption by the Council of Federal and Provincial Ministers responsible for Transportation and Highway Safety.
The safety of school children while riding a school bus is of the utmost importance. Transport Canada continually reviews and revises, when necessary, any regulations that could improve this safety. The Department is also conducting research programs, including full scale crash tests, to investigate potential means of upgrading the safety of school bus occupants.


NATIONAL REVENUE-HOLSTEIN RESEARCH PROJECT EXPENDITURES. (B) APPROVAL OF PROJECT
Maurice Brydon Foster: Mr. Speaker, on May 16 I put a question to the Minister of National Revenue (Mr. MacKay), asking why the Government of Canada continues spending $10 million through the Scientific Research Tax Credit to Dreamstreet Limited, a group of wealthy Wall Street investors.
This research project has been soundly condemned by the Holstein Friesian Association of Canada which says that it is not acceptable. The University of Guelph has turned it down. I have a letter signed by Dr. Kenneth E. Leslie, the Ontario Ministry of Agriculture Food Dairy Co-ordinator. He reviewed the Dreamstreet Redgen project for determining the physiological differences and profitability of the red and white Holstein 1986. He said:
Generally, the protocol has poorly defined objectives, superficial background documentation, inadequate experimental methods and an ambiguous approach to analysis.
He goes on to say:
The motives of this project clearly extend beyond the objectives of the study and the methods are very suspect.
Beyond that, the Co-ordinator of Research for the Government of Canada has condemned the project as being something from which people would only walk away. The Ontario Minister of Agriculture and Food has also condemned the project as useless. The question is who has put the pressure on the Minister of National Revenue and the Minister of Agriculture (Mr. Wise) to cause the Government to continue the spending of $10 million? By some reports it may be as high as $50 million over the next 10 years for this project, which seems to have no scientific benefit. People in the dairy industry are offended. They just cannot believe that at the same time the Government is making cut-backs on scientific research by the Agriculture Canada Research Establishment, it is doling out at least $10 million to a group of wealthy investors, supposedly for some purpose, perhaps to raise operating funds for Dreamstreet International, which seems to be having some financial cash flow problems.
I tried to find out from the Minister of National Revenue who is putting the pressure on the Government to keep this thing going and who put the pressure on the Government to get the project approved in the first place. The information we have is that the project was turned down by the Department at least three or four times before it was finally approved by the Minister last November. There seems to be a great deal of political pressure either from the Minister's Office, or from some place, but the Minister essentially just stonewalled. He said he could not give me the information because of the confidentiality of the Income Tax Act. We are not asking about the financial details. We are asking about the scientific value of this project.
The Canadian dairy industry, especially in southwestern Ontario, is really getting fed up with the way in which the Government is handling this affair. It is doling out millions of dollars for a research project which is of no scientific value, yet it is cutting back on Government-sponsored research. The Standing Committee on Agriculture has decided to proceed with hearings. We hope to subpoena Frank Wood, the head of Dreamstreet, who is obviously running this project, as well as other Government officials. I hope in responding tonight the Parliamentary Secretary will be able to clarify these points.
Why does the Government support this project? Why is it spending millions of dollars to establish the largest dairy herd in Canada, which will be paid for by the taxpayers of Canada and ultimately owned by a group of wealthy investors in New York City? It just does not make sense for our Government to do this. The farmers in southwestern Ontario are very upset when they see these moneys being spent for some purpose, we know not what, other than scientific research and the production of dairy cattle.
It is up to the Parliamentary Secretary to lay it all out, to explain exactly who put the pressure on the Minister to get this
May 22, 1986

project approved originally and who keeps the thing going. Obviously the scientific community and the dairy industry are very unapproving of this project, yet the Government continues to spend taxpayers' money on it.


Bernard Valcourt: Mr. Speaker, it takes some gall for a Member of the Liberal Party to rise in this House today and criticize the Government for having to apply the SRTCs which have ripped off Canadian taxpayers of hundreds of thousands of dollars. If the farmers of southwestern Ontario are upset about this research, perhaps the Hon. Member for Algoma (Mr. Foster) could tell those people that it was his Party, while in Government, which introduced those SRTCs. That is the short answer to the Hon. Member's question.
The long answer is this. There is no one placing pressure on the Minister. The point is that when we took office, we had to deal with this terrible and incomprehensible device of the Liberal Government.
With respect to research being conducted under the SRTC program, it was not possible to cut off that research and grandfather the program for those conducting legitimate research. The way the Hon. Member speaks, it is as if he wishes to undermine this program. That is what he seems to be saying. The Hon. Member knows full well that provisions of the Income Tax Act preclude the Minister, or anyone in his Department, from talking about individual taxpayers. Therefore I cannot say that what the Hon. Member suggests is in fact happening. It is not a matter in the public domain.
Adjournment Debate
What I can tell the Hon. Member is that under this program which the Liberals devised, and which we had to stop, it was not necessary for taxpayers to seek approval for projects, although they could request an opinion or a binding advance income tax ruling based upon plans prescribed by them. Such requests would be dealt with on an impartial basis between the taxpayer, or his representatives, and the Department. I must stress that the program was structured to encourage research without pre-approval by any ministry.
In the great wisdom of the Liberal Party, it should have foreseen this when we established such a law. To ask today that we put an end to it completely and thereby punish legitimate researchers is something we cannot do.
When the Deputy Minister, Mr. Rogers, appeared before the committee, he explained what had been done in terms of the measures taken to protect Canadians. That includes placing funds in escrow, since these matters will keep cropping up in years to come because research is still being carried out.
The short answer to the question is that there is no one putting pressure on the Minister. We just have to live with this Liberal strategem which has ripped millions of dollars off Canadian taxpayers.


The Acting Speaker (Mr. Paproski):: The motion to adjourn the House is now deemed to have been adopted. Accordingly, this House stands adjourned until tomorrow at 11 a.m., pursuant to Standing Order 3(1).


[Stage Direction]
The House adjourned at 5:43 p.m.
[Stage Direction]

Friday, May 23, 1986