1986-10-30

Mr. Scott Fennell (Ontario):: Mr. Speaker, I have the honour of tabling the third report of the Striking Committee.
[Editor's Note: For above report, see today's Votes and Proceedings.]


ORDERS IN COUNCIL
Hon. Don Mazankowski (Deputy Prime Minister and President of the Privy Council):: Mr. Speaker, there have been discussions with the opposition Party House Leaders and with the chairmen of committees and clerks involved in respect of the necessity of a few changes to Orders in Council, which orders have been referred to specific committees. There will be unanimous consent of the House to put a motion to correct these discrepancies. Also included were two judicial appointments which are beyond the scope of the routine procedure. The motion that I am proposing would serve to withdraw that. Accordingly, I move:
That Orders in Council P.C. 1986-1958 and P.C. 1986-2209 concerning certain appointments made to the Canada Post Corporation, tabled in the House on Thursday, October 16, 1986 and referred to the Standing Committee on Consumer and Corporate Affairs, be deemed to have been withdrawn from the said Committee and referred to the Standing Committee on Government Operations;
That Order in Council P.C. 1986-2302 concerning certain appointments made to the Canadian Human Rights Commission, tabled in the House on Friday, October 17, 1986 and referred to the Standing Committee on Justice and Solicitor General, be deemed to have been withdrawn from the said Committee and referred to the Standing Committee on Human Rights;
That Orders in Council P.C. 1986-2040 and P.C. 1986-2041 concerning certain appointments made to the judiciary, tabled in the House on Thursday, October 16, 1986 and referred to the Standing Committee on Justice and Solicitor General, be deemed to have been withdrawn from the said Committee and that the tabling of the Orders in Council be declared null and void; and
That, the thirty sitting day period for consideration of Orders in Council P.C. 1986-1958, P.C. 1986-2209 and P.C. 1986-2302 by the respective committees.
under the provisions of Standing Order 103(1), shall be deemed to have commenced upon the adoption of this Order by the House.


Mr. Speaker:: Shall the Minister have leave to present his motion?


Some Hon. Members:: Agreed.


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


Some Hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

[DOT] (UI0)

Mr. Doug Lewis (Parliamentary Secretary to Deputy Prime Minister and President of the Privy Council):: Mr. Speaker, I ask that all questions be allowed to stand.


Mr. Speaker:: Shall all questions be allowed to stand?


Some Hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed from Wednesday, October 29, consideration of the motion of Mr. Hockin that Bill C-14, an Act to amend the Excise Tax Act and the Excise Act, be read the second time and referred to a legislative committee.
Mr. Speaker:: Before recognizing the Hon. Member for Regina East (Mr. de Jong), I should like to advise him that it is the understanding of the Chair that he has 11 minutes remaining.


Mr. Simon de Jong (Regina East):: Mr. Speaker, I wish to continue my remarks on Bill C-14. As Hon. Members know, the Bill is an outcome of the Budget presented by the Minister

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of Finance (Mr. Wilson) earlier this year. It seeks to increase the sales and excise taxes on numerous items.
In my remarks last night I detailed at some length where the increases were applied. I also noted that since taking office the Government has dramatically increased sales and excise taxes. It increased as well the numbers of items on which sales and excise taxes are placed. Because of the Conservative Government, we now pay increased taxes on soft drinks, fruit juices, chocolate bars, vitamins, insulation material, gasoline products, construction materials, and other manufactured products.
I enumerated as well the regressive nature of the sales and excise taxes. They are essentially hidden taxes. When a consumer or taxpayer purchases an item, he or she does not see the percentage being paid in taxes-the nickels and dimes and very often dollar bills. As opposed to the provincial sales tax which is added on to an item when it is purchased, federal sales and excise taxes are hidden in the cost of the item purchased. Therefore we call it a back-door tax. It is a tax which takes money out of the back pockets of taxpayers. They are not aware that they are paying it. The average Canadian family pays hundreds of dollars every year in these taxes. In fact, since the Government was elected, the average Canadian taxpayer pays some $800 more per year in hidden taxes.
Of course the Government has justified Bill C-14 and other measures which increase the tax load of the average Canadian on the basis of fighting the deficit. In my remarks last night I stated that we in the New Democratic Party are also concerned about the deficit. The amount spent every year just to service our accumulated debt is money which cannot be used for other purposes. We disagree with the Government, as we did with the Liberal Party when it was in power, that Canadians are living beyond their means and that we are spending too much money on social programs. I take issue with those remarks. Compared with other industrialized countries, the percentage of our Gross Domestic Product spent on social programs is one of the lowest. It is lower than that of Italy, Ireland, Holland, Denmark, England, Germany, Sweden, Norway, and France. When I refer to "social programs", I mean pensions, family allowances, education, health, and income support programs. As a percentage of everything produced in Canada, we spend less on these programs than other OECD countries. It is not that we are living beyond our means, certainly not compared with other industrialized countries.
Why do we have the present deficit? In my remarks last night I suggested the reason for the deficit of today was that we have not had a fair taxation policy. We have not been taxing in a fair way large corporations and wealthy individuals who can afford to pay taxes. Those who are able to pay taxes have not been paying their fair share. Billions of dollars have been lost because we do not have a fair taxation policy in Canada.
One example I used was that of a teller with the Royal Bank of Canada. In 1983 that teller would have paid more in actual dollars and cents in taxes than did the Royal Bank of Canada,
although it made over $300 million. To rub salt into the wound, the Government of Canada gave the Royal Bank of Canada over $6 million in tax credits that same year. Not only did it have a profit of over $300 million and did not pay one cent of tax on it, it in fact received money from the Government. I just use it as one example. One could examine the taxes paid by all banks and find that they were certainly not carrying their fair share of the load.
Another example is the youth who pumped gasoline for Shell Oil in 1983. He paid more in dollars and cents in taxes on his meagre income than did Shell Oil in the same year. Had we had a fair taxation system, we would not have the deficit of today.
We can lay blame on the Liberal Government of previous years. Indeed it must accept a large amount of responsibility. However, the Government changed in 1984. Canadians were expecting a different direction, but all they have seen is a continuation of the same direction of philosophy, that is, the trickle down theory. That theory indicates that if corporations such as Shell Oil and the Royal Bank of Canada are doing well, eventually the profits will be recirculated in terms of new investment and new capital equipment, the creation of more jobs, and so on. However, we have seen that the trickle down theory in fact has not worked. The extra profits, tax breaks, and loopholes given to large corporations have not produced the types of jobs they were supposed to produce. Much of the extra profit went into corporate takeovers and mergers. The Canadian economy today is one of the most centralized and concentrated economies in the western world. In large part corporate takeovers are financed by the existing tax regime. In other words, they are financed, aided and abetted by Canadian taxpayers. We in the New Democratic Party not only point to the unfairness and inequities of the system but demand change or genuine tax reform.
The Minister of Finance rose in the House and presented a paper on tax reform. We certainly welcome this move toward tax reform. If there is a genuine desire on the part of the Government to institute a fair and equitable tax system, it will have our full and total support. Unfortunately, we suspect that the Government will be playing a shell game.
Indeed, the Minister will present a tax reform package that will do away with some loopholes, that will attempt to simplify the tax system and indeed that might even reduce the tax rates ordinary Canadians will pay. However, we strongly suspect that while the Minister of Finance will reduce tax rates for ordinary Canadians, he will increase, as he has in Bill C-14, the amount of taxes average Canadian families will pay out of their back pockets in hidden sales taxes.
This Government has relied more than previous Governments on hidden sales taxes as a source of revenue. In fact, the Government has suggested that it will soon introduce a form of a value added tax or a business transfer tax. We are awaiting the Government's proposals in this area. Previously the
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Minister of Finance stated to us in the Finance Committee that he would have a paper ready as of April of last year. April has come and gone. Then the paper was to be ready in September. September has come and gone.
We suspect that there will be dramatic increases in sales taxes while there will be some small decrease in the amount of income tax Canadians will pay. It will be a shell game designed to confuse Canadians so they think they are paying less in taxes when in actual fact they are paying more. We in the New Democratic Party opposed Bill C-14 for the reasons I have enumerated and for other reasons that my colleagues will mention in the debate on this Bill.


Mr. Jean-Claude Malepart (Montreal-Sainte-Marie):: Madam Speaker, Bill C-14 before the House today arises from the budgetary measures of the Minister of Finance (Mr. Wilson), and its purpose is to amend the Excise Act and various taxes in this country. To rephrase this for our listeners, it means tax increases for all Canadian taxpayers.
Madam Speaker, when introducing this Bill, the Hon. Member for Trois-Rivieres said that its purpose was to reduce the deficit. Later on I will explain and show how the Conservative Government should have proceeded to reduce the deficit, but first I would like to consider the general aspects of this Bill and how they relate to the May 1985 Budget speech and the February 1986 Budget.
Let us consider all those other taxes the Government has decided to impose and what the consequences will be for Canadians. First of all, I think we all remember that this Government has decided to modify the indexation of the basic deduction for dependents, and this applies to all taxpayers. After trying to subtract 3 per cent from the indexation of Old Age Security benefits and family allowances, it proceeded to do the same for the tax tables, thus affecting both the taxpayer and his family.
On February 26, the Government changed the rules for the married exemption in the year the marriage takes place. In the Budget Papers tabled by the Minister of Finance in February 26, we see that the Government has just saved $20 million. This means taxpayers are paying 320 million more to support the Conservative Government's wasteful spending.
In 1986, we also had a 3 per cent surtax that was expected to produce $550 million and will cost taxpayers $1.2 billion in
1987,	$1.26 billion in 1988, $1,325 billion in 1989 and $1.4 billion in 1990, and all because of the 3 per cent surtax.
Madam Speaker, if we consider the increase in federal sales tax in the February 26 Budget, taxpayers will be paying $700 million more in 1986, $1.05 billion in 1987, $1,125 billion in
1988,	$1.2 in 1989 and $1.3 billion in 1990.
Raising the tax on tobacco will give the Government about $150 million more annually between 1986 and 1990. Then we have the changes in the airport tax, another increase, and there
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again, the Government expects to collect about $15 million annually over the next five years.
Madam Speaker, we recall that in the 1985 Budget, this Government started to attack the people of Canada, our families and our senior citizens. First, it decided to tax candy and softdrinks. It went on to tax pet food and was adamant in its refusal to grant exemptions for guide dogs for the sight-impaired.
At the same time, the Government decided to take advantage of illness in this country and tax drugs in Canada. I am referring to over-the-counter drugs like aspirin and cold remedies. The Government decided to tax them all. When children get sick, the Government is delighted, because it gets more tax revenue.
The same applies to surgical and dental instruments and X-ray machines, so that when Canadians go to the dentist, they will be paying more as a result of the taxes levied by this Conservative Government.
Wood stoves, the entire building industry, solar heating systems, insulation panels and tubes ... Madam Speaker, about the only thing that has not been taxed by this Government is the air we breathe, and that is only because it has not yet found a way to do it.


Mr. Prud'homme:: But it will soon happen.


Jean-Claude Malépart: My colleague for Saint-Denis (Mr. Prud'homme), who has a long experience of the House of Commons, tells me, and he is certainly right, that it will soon happen. Our own Brian will soon find a way to tax the air we breathe.
Madam Speaker, taken all together, the two fuel tax increases, two tobacco and alcohol tax increases, and two sales tax increases on soft drinks, food products and health products have had an enormous impact on the purchasing power of Canadian men and women.
The figures I am going to quote show the impact of the two Budgets of the Conservative Governement. A family with an income of $15,000 will see its taxes or purchasing power increase by 23 per cent. However, a family with an income of $200,000, who must have friends somewhere, will have a tax increase of 1 per cent.
Madam Speaker, is it any wonder that the Governement has lost so much ground in the polls? Why is it that the public has no confidence in the Prime Minister (Mr. Mulroney)? It is very simply because of this inequity, incompetence and social injustice.
If we look at single parent families with two children and an income of $15,000, we see that, as a result of the two Budgets, they will have to pay $248 more in taxes. For a family with an everage income of $200,000, the increase will be $418. As for

October 30, 1986
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taxpayers with an income of $150,000, their tax increases will be proportionally much lower in view of their ability to pay.
We have been told that the purpose of this Bill is to reduce the deficit. Everyone in this House, whatever his party, agrees that the deficit must be reduced. However, we disagree about how to do it.
Madam Speaker, it would be appropriate to remind the House about the scandalously wasteful spending of the party opposite. While this Government was asking Canadian families to accept lower than anticipated increases in their family allowance cheques, it was spending $55 million to change the colour of the Armed Forces uniforms. The difference between the Conservatives and the Liberals is a matter of priorities. All the Conservatives said: We prefer to have lower family allowances and spend $55 million to get a blue uniform for our soldiers; this will make them better. We, Liberals, say: It is better to maintain our family allowances; our soldiers are competent enough and they will not improve because of the colour of their uniforms. It is only the Prime Minister (Mr. Mulroney) who believes that appearances are all important, but the Liberals disagree.
There is also the matter of the additional $400 million spent by the Government to send more Canadian soldiers to Europe. This is again a matter of priorities. I am not against our participation in NATO, but I do disagree with the priorities of this Government since this happened at the same time that the Governement wanted to de-index old Age security pensions. That is the difference between a Liberal Government and a Conservative Government. A Liberal Government wants to protect Canadians. A Conservative Government wants to reward its wealthy friends. We can understand why. In all our history, the Conservatives have not been in power very long, and when they have formed a Government, they have taken whatever they can get. We have only to recall the former Minister of Regional Industrial Expansion. He was doing quite well for himself!
If we want another case of wasteful spending, Mr. Speaker, and the Minister of Employment and Immigration (Mr. Bouchard) is now in the House, the Governement took away $30 million from 50,000 Canadian workers, including 21,000 in Quebec, people who had paid unemployment insurance premiums for 20 or 30 years and who had accepted early retirement so that younger workers could get a part-time job, and in other areas, such as Trois-Rivieres, where companies closed down and laid off their employees, these workers were entitled to benefits from their pension plans, to which they had contributed, in addition to unemployment insurance benefits, but the Conservative Government took away their cheques every month without any warning and with the support of the Minister of Employment and Immigration. It has been estimated that these people are losing $10,000 a year because of the Conservative Government policy, yet at the same time the Reichman brothers used these funds to buy Gulf with Petro-Canada. This is where Quebecers in Montreal East were taken to the cleaners-$800 million worth of tax havens.
As you can see there is no limit for the rich, but as far as the Conservatives are concerned no such preferential treatment can be extended to most poor people and middle income families. Their motto is: The rich will get richer, the poor will get poorer. So much for the Conservative Government strategy.
I just referred to the case of the Montreal East Gulf refinery where we were taken for a ride, where Conservative Members had to give up in frustration after openly admitting they had been hoodwinked by their Prime Minister and others. So now we learn that the Government wants to spend $80 million to operate yet another refinery in the Maritimes. In this case they claim the American market is there to be tapped, but when Gaz Metropolitain was prepared to re-open a refinery with a minimum grant the then Minister of Employment and Immigration flatly refused. They said no at the time, but now they sing a different tune because the refinery is located in another province. Some $80 million right down the drain!
The collapse of banking institutions has to be the unparalleled precedent: roughly $1 billion was handed out to 200-odd depositors, including ten or so with investments of at least $2 million. They got their money back straight from cut-backs in family allowances paid to mothers. Their allowances were slashed just so the Government could come up with $ 1 billion cash for depositors who had at least $60,000 in these banks, not for taxpayers with a mere $10, $100, $500 or $1,000 to their names. At least $60,000 is the amount all Canadians had to pay to make up for the mistakes and blunders of this Conservative Government, they have had to make do with smaller family allowances, pay taxes on drugs and a sales tax on materials. That is where money could have been saved in order to reduce the deficit, rather than coming up with a bill that strikes at the whole Canadian people.
It was recently reported-and the scandal is getting bigger and bigger that the Prime Minister (Mr. Mulroney) himself helped waste another $41 million simply by transferring, to his own constituency, a penitenciary that was to be built in the constituency of Drummondville, and the cost is to be $41 million. At the same time, the Minister of Employment and Immigration (Mr. Bouchard) will not refund the $30 million to Canadian taxpayers who paid unemployment insurance premiums. That is a scandal. Will you call that sound management? Instead of introducing with Bill C-14, they should have prevented that squandering of money.
We could talk about the cost of receptions given by the Prime Minister, about his travelling expenses, about the cost of caviar. If the Prime Minister likes to eat caviar, let him pay for it. But making taxpayers pay for his caviar receptions in Europe, that tops it all. He could share the eating habits of Canadians in other areas. At his own expense, he may well treat himself whenever he wishes, but on the backs of the Canadian people he should exercise more restraint.
Remember the wasting of money when the Prime Minister was master of ceremonies for the President of the United States. He stated then: Let the party, let this reception cost
October 30, 1986

whatever it may. But that was the taxpayers' money. And now, in order to pay for all those errors, those blunders, as we recall that famous consultation he had with business people, labour unions, at an astronomical cost, and then the Government turned around and did the opposite of what those people had recommended. Well now, they have to introduce legislation to increase the taxes to be paid by all Canadians, thereby strinking at everybody. We know very well that some people do smoke. Those people are taxed to the hilt, having to pay a bundle in order to cover the $41-million cost of transferring the Prime Minister's penitentiary. People who drink alcohol, liquor also pay a heavy cost for this Tory Government's squandering of money.
Our unemployed who lost those $30 million also pay a high price for the foolish actions and the boobs of a Government anxious to salvage failed banks, something that could have been foreseen with a better administration and better managers.
There is something else that should also have been discussed instead of having this Bill to reduce the deficit, rather than hitting the whole population with indirect taxes-Madam Speaker, I have two minutes left-the changes to the RRSPs. We know that in 1983, RRSPs cost $4.9 billion to Canadian taxpayers, and who in the population can save the nicest amount of money for their retirement? Will it be a family earning between $15,000 and $20,000 with 2 or 3 dependent children? This is a regressive measure.
Madam Speaker, in view of my limited time, I would like to show Hon. Members what will be the consequences of the new changes to RRSPs, as proposed by the Government, changes that raise the ceiling. The way the Government went about it-and this reminds me, since the Minister of Employment and Immigration (Mr. Bouchard) is here, of the amendments to prevent workers from benefitting fully from their unemployment insurance-it was indeed the scheme in which the money was paid by middle-income people, by workers. But if you withdraw the money from your tax-exempt RRSP, because you earned a lot of money, you can withdraw the full amount, and you are still entitled to unemployment insurance benefits. That is Tory justice. But to come back to this new measure, and I would like to conclude with a few words on RRSPs, when someone with an $8,000 taxable income contributes $1,000 to an RRSP, thereby decreasing his tax liability, this costs the taxpayers $346. But when someone earning $80,000 contributes the $5,500 maximum, it will cost the taxpayer $3,323.
Madam Speaker, I conclude on that, and this shows clearly that this Prime Minister, this Tory Government are there to favour the rich. They have no understanding whatever of the less privileged people, they have no appreciation, no compassion whatsoever, for middle-income people.
Excise Tax Act


Mr. Orlikow:: Madam Speaker, I would like to ask a question of the Hon. Member for Montreal-Sainte-Marie (Mr. Malepart). I agree with most of his criticisms of the tax proposals of the Government. However, I would like to remind the Hon. Member that for 42 of the 49 years between 1935 and 1984 we had Liberal Governments. It was Liberal Governments which really developed, expanded and refined our tax system to its present state. The Conservatives are making it worse.
The Member has criticized the Conservative Government because the tax changes which it made benefit the rich at the expense of the poor. The Liberals were in power for three and a half of the years between 1980 and 1985. The following corporations paid not one cent in corporation taxes in at least one of those years: the Royal Bank; the Bank of Montreal; the Argus Corporation; the Power Corporation headed by that great friend of the Liberal Party, Mr. Desmarais; Investors Group, also headed by Mr. Desmarais; and the Roman Corporation, that giant corporation headed by that great Conservative who came here as a poor immigrant and is now a multimillionaire. How does the Hon. Member explain the failure of the Liberal Government to ensure that those and many other corporations paid their fair share of taxes?


Jean-Claude Malépart: I am quite pleased with the question asked by the Hon. Member because the more often the NDP Members rise, the better they show that they have never been in power. They remind me of the days I was sitting in the Quebec Legislature when Opposition Members belonging to the Parti Quebecois appeared to be the purest ones but when they came to power, they were the most insensitive towards the people. Moreover, I am pleased to answer the Hon. Member's question, because it gives me the opportunity to recall the great achievements that came to be in the social area under the previous Liberal government. In the first place, we should not forget old age security pension, the guaranteed income supplement, the spouse allowance in 1975, the income tax exemption for older people in 1948, the Canada Pension Plan and the Quebec Pension Plan in 1965. We also introduced public housing in 1949 as well as family allowances in 1945, the tax credit in 1978, the child tax exemption in 1978, the public assistance scheme in 1966, unemployment insurance in 1940, health and postsecondary education funding in 1957 and 1951, personal income tax exemptions in 1917, indexation of income tax for individuals, indexation of social programs as enacted under the present Leader of the Official Opposition, our future Prime Minister after 1988.
I am pleased that the Hon. Member is clearly asking what should have been done today. Why should a reform be undertaken today? In the first place, social programs-We started just as in the case of tax shelters or taxation, to bring in improvements year after year to social programs, to the
894

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income security program, to health care and so on and so on. Like any other organization, now that we have created a whole series of programs, we must pause and take stock of the situation. If we are to provide a guaranteed annual income program, I agree that we should reevaluate all social programs and figure out their cost. There are about twenty of them, and we should establish their administrative costs, find a way to streamline the bureaucracy involved and to give better services to the people.
The NDP should be congratulated for the research it has done on corporations that do not pay any income tax. The same concern should apply to the individual taxpayers. Tax shelters piled up for years, some of them going back to the Diefenbaker years. They served a useful purpose in their time, but a reassessment is needed now. It is important in my view that changes be made through a tax reform. First of all, there should be a minimum tax for corporate and individual taxpayers. I also think that tax exemptions for corporations or individuals which are regressive and more useful for the rich, as I demonstrated was the case of RRSPs, be changed. When specific groups of people need help, we should use direct payments or tax credits. I suggest it is important that this kind of work be done. The Government will invite us to do it. I must confess a bit of apprehension in that regard because when you examine programs through a consultative process-


The Acting Speaker (Mrs. Champagne):: The Hon. Member does not further the questioning by turning each answer into a speech. I think other people might want to ask questions and that is why I take the liberty of interrupting the Hon. Member. The Hon. Member for Winnipeg North (Mr. Orlikow).


David Orlikow: Madam Speaker, obviously the Hon. Member has used his time without answering my specific question.


Mr. Gauthier:: There was no question. You did not have a question.


David Orlikow: Of course I had a question. I would be pleased if the Hon. Member for Ottawa Vanier (Mr. Gauthier) would make his own speech.
My question was very simple. How can the Member for Montreal-Sainte-Marie (Mr. Malepart) criticize the Conservatives for the tax breaks they are giving to the wealthy when, as I pointed out, his Party's tax system evaluated-


Jean-Robert Gauthier: It was very progressive.


David Orlikow: I say to the Hon. Member, as I said to the Hon. Member for Montreal-Sainte-Marie, that there are hundreds of corporations, some of which are the largest in the country, which did not pay a penny in corporate tax.
The Hon. Member was critical of the increased tax breaks that the wealthy will get because of changes in the RRSP
regulations. I remind him that the RRSP system was developed by the Liberal Government and cost Canadian taxpayers hundreds of millions, in fact billions, of dollars.
I suggest that rather than having the RRSP system it would be much better to use the money which we have lost to increase the old age pensions for everyone. That is what the Liberals should have done but did not.


The Acting Speaker (Mrs. Champagne):: Order. The Hon. Member for Montreal-Sainte-Marie (Mr. Malepart) for a brief comment in order to allow one more question.


Jean-Claude Malépart: Madam Speaker, the Hon. Member has asked the same question and I gave an answer. I fully agree that the matter has to be reviewed.
Why did I launch an attack against the Conservative Government? Simply because we are now considering a Bill which, instead of being aimed at reducing the wasteful expenses I mentioned earlier, will force all Canadians to pay for the mismanagement of the banks and the $41 million the Prime Minister (Mr. Mulroney) wants to blow away.
I think I singled out a few sectors where the Government could have tightened the screw to lower the deficit. As to the tax reform, you may rest assured that as usual the Liberal Party will be very vigilant to make sure that middle and low income Canadians are adequately protected.


Mr. Hudon:: Mr. Speaker, I have a question for my colleague on the other side. With respect to the banks' collapse I might suggest he would be well advised to read the latest decision. We had to pay up, sure enough, but the Government has not been held responsible for this fiasco.
My colleague stated that Members on this side are wondering why they have fared so badly in recent polls. Yet he had just finished saying that indexation has to be restored. Does he think people are stupid, or is he suggesting that the polls will be more favourable if we start handing out money to the people? Is that the kind of logic he wants us to endorse?


Jean-Claude Malépart: How sad, Madam Speaker, how very sad. At first when I went to his riding I thought the Hon. Member had more judgment, but every time he takes the floor he shows his lack of calibre. A five-year-old child would have gotten the message. I am sorry to say that the Hon. Member is stupid but, Madam Speaker-


The Acting Speaker (Mrs. Champagne):: Order! The Hon. Member for Beauharnois-Salaberry (Mr. Hudon) on a point of order.


Jean-Guy Hudon: Madam Speaker, I wish to remind my hon. colleague that he should answer the question without trying to deride people. Let him just answer the question. I am going to ask a question, and if he thinks it is a dumb one, let him rise and say: That is a dumb question, and let him resume his seat. That is all.
October 30, 1986


Jean-Claude Malépart: He understood nothing-


The Acting Speaker (Mrs. Champagne):: Order please. The time for questions and comments is now over. Is the House ready for question?


Some Hon. Members:: No.


The Acting Speaker (Mrs. Champagne):: Debate. The Hon. Member for Ottawa Centre (Mr. Cassidy).


Mr. Mike Cassidy (Ottawa Centre):: Madam Speaker, I had anticipated that some Conservative Members would want to defend the tax increase proposed in the Bill under consideration, Bill C-14. I am deeply disappointed that not one of those Members, not even the Secretary of State of Canada and Minister for Multiculturalism (Mr. Crombie) is willing to assume the task of defending a tax hike.
I wish to remind all Hon. Members that the sales tax is going to be raised once again by 1 per cent. This means that the new rates will be 8 per cent for building materials and cable television services, 15 per cent for alcoholic drinks and tobacco and 12 per cent for other taxable goods.
Madam Speaker, last week, the Minister of Finance (Mr. Wilson) promised in his speech that he would make some changes in the fiscal reform so as to make it more progressive and fairer for ordinary Canadian families. Unfortunately, the Minister of Finance (Mr. Wilson) did not comment on any of the actions of his Government since the September 84 election. As a matter of fact, during those first two years of the Conservative Government, instead of introducing a fairer tax system, they have implemented a tax system which is less fair, very much so, than the previous one. And clearly, Madam Speaker, there were quite a few problems already with the existing system when they came in power.
Madam Speaker, we have mentioned the fact that the various changes brought about by the Conservatives have resulted in a tax increase of $1,300 a year for the average Canadian families in September 1984. And where has this tax burden been mostly applied? The tax burden was weighted heavily towards excise and sales tax, instead of using personal and corporate income tax. This new emphasis means that most of the new taxes are regressive.
Madam Speaker, I can give you the exact figures, the figures we arrived at during the tax inquiry we started early this year.
The November 1984 economic statement increased sales tax and excise taxes for the average Canadian family to the tune of $350 per year. In the May 1985 Budget, the Government again imposed a 1 per cent increase in sales tax, which cost the ordinary Canadian family an average of $325 per year. Finally, in the February 1986 Budget, another $170 per year, so that we now have a total of $845 per year. And all this in only two years' time, Madam Speaker! During that same period, income tax increases which, as everybody knows, are more progressive and more equitable for families whose
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financial circumstances may vary, these increases totalled only $385 per year, so that 69 per cent of our tax increases were covered by excise and sales tax and only 31 per cent by income tax.

I raise that because I believe these heavy tax increases are a preview of what the Government intends to do in the future. Last week the Minister of Finance (Mr. Wilson) stood in the House, as his colleagues are not prepared to do now with Bill C-14, to tell us that great days are ahead. He rose to make a promise that I am sure we will hear often between now and the 1988 or 1989 election. The Conservatives will say: "We will cut taxes, is that not wonderful?" Let me tell ordinary Canadian taxpayers, including those in the Niagara Peninsula, that they should hang on to their wallets. They may find a few dollar bills in their front pockets, but they had better watch what the Conservatives are taking from them as a result of the increases in sales taxes that the Government is contemplating.
The Government is anticipating a new form of sales tax called the business transfer tax. Western Europe and other countries which have used this kind of tax have found it very costly in terms of what it takes out of the pockets of consumers. The advantage to the Government is that it can bring in a new tax while cutting the tax rate and appearing to reduce taxes. However, the tax base is spread at the same time, until far more is being taken from that particular source of taxes than before.
Our tax probe inquiry last spring took me and my colleagues from the New Democratic Party to every corner of the country. We went as far as Yellowknife, Yukon, Newfoundland, Vancouver and Victoria. We went to every part of the country to talk to people about their concerns about the tax system. We talked to small business people, consumers, trade unionists, business people, tax experts and people in municipal and provincial Governments. They told us what should be no secret, that is, there are real problems with our tax system. The present sales tax is a bad system and should be abolished. We should be looking for alternatives. I accept that one alternative is some form of value added tax such as is being proposed by the Minister of Finance. However, that said, let us be very specific and not use it as a Trojan horse, that is, take an enormous amount of new revenues from families on ordinary incomes who are having a heck of a time surviving in today's economic environment. Yet that appears to me to be what the Government has in mind.
The Government is saying it is going to plug loopholes and cut personal income tax rates. People in low income brackets do not have a lot of loopholes. On the other hand, they are not going to get many cuts because the cuts the Government has in mind, in terms of marginal tax rates, are the rates of 43 per cent, 48 per cent and 54 per cent which, in gross terms, between federal and provincial Governments, are charged on upper income tax earners. There is not much benefit for people

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with ordinary incomes. They may receive a few dollars but nothing much more than that.
In terms of corporate tax, the Minister has made some ineffectual suggestions, dare 1 say, about perhaps increasing the tax on corporations. We know the Government has now begun to realize that Canada, like the United States, has to plug corporate tax expenditures and if it does so, it can reduce the rate of tax on corporations. That in itself is not necessarily objectionable. What is objectionable is the Government's suggestion, and it was quite explicit in the budget paper of May, 1985, that it wants a corporate tax reform which will be revenue neutral.

To be revenue neutral means that instead of increasing its revenue through corporate taxes, the Federal Government will take no additional revenue from the corporate sector. Certain loopholes will be eliminated. Corporate tax expenditures will be eliminated or else limited or reduced, but generally, businesses will be compensated by such a reduction of their tax rates that they will not pay any more taxes than they do now.

We have seen, and we have cited these figures in the House on many occasions, just how little increased revenue the Government anticipates from the corporate tax side over the course of the next few years until 1990 or 1991. As I recall, it is something in the order of about $2 billion. We are faced with the heavy expenditures of the Government of Canada, with the difficult situation with regard to the deficit and we have a situation where tax expenditures, many directed to the corporate sector, are currently worth about $28 billion a year. If these tax expenditures were eliminated today, it would virtually wipe out the deficit. Therefore, it seems irresponsible to me for the Government to say, as it said in May, 1985, from which it has not backed away, that it is going to get rid of tax expenditures to corporations, but instead of using the money to limit the tax burden on other Canadians or using it to cut the deficit, it is going to turn around and give back the money to the corporations.
What the Government is saying, and it is quite clear, is that the Minister of Finance and his colleagues now look on the business transfer tax, on a reform of the sales tax, as a great big cash cow which it can milk in order to get new revenues to plug the deficit or to do other things it feels are important, such as putting prisons in the Prime Minister's riding.
It is clear that although this tax is to be called a business transfer tax, there is no mistaking who will pay. The consumers will pay in the first place because more than half of final demand obviously comes from consumers buying goods and services. Second, it will be paid for by consumers because, to the extent the tax is paid by businesses buying goods or services from each other, they will pass on those costs to the consumer in the end, and in the end it is the consumer who will pay.
Let us take the example of a bushel of wheat which is grown in western Canada. It sells at a domestic price of $5.50 or $6. It is then shipped to central Canada and milled into flour. Perhaps as flour it is worth $12. Then it is taken to a bakery and turned into bread and in the form of bread it may be worth $30 or $35. It is then shipped to the foodstore where it is finally sold to the consumer and that $6 worth of grain winds up as $50 worth of bread which is purchased by the consumer. On the value added at each stage, no matter how the calculation is made-and I accept the business transfer tax is slightly easier than the proposals for value added tax on the European model-there will be a tax at a certain rate on the farmers' sale, on the value added by the farmer in taking a bit of grain, fertilizers and so on, and turning it into wheat. So there is value added on the miller, on the baker, on the wholesaler and, quite possibly, at the retail level, although I am not sure whether that is contained in the proposals of the Minister of Finance because we have not seen them as specifically as we might. Therefore, the rate of tax at the end is going to be equivalent to a hidden sales tax on either the wholesale or the retail value of the entire commodity, and any transactions between businesses will still result in an increase in tax which will ultimately be paid for by the consumer.
The question then is, what will the rate be? Will there be any kind of diminution for people who are on lower and modest incomes? We have to look at Bill C-14 and what the Government has done in order to see just what its current stance is on this very important issue. In the first place, as I said a few moments ago in French, since 1984 the Government has increased taxes on the average family by $1,300, and 70 per cent of that increase has come from increases in sales and excise taxes. That is an increase of $845 a year. Has the Government done anything in order to lighten the burden of those increases on people in modest circumstances so as to make it a more progressive system? The answer is, virtually not at all.
I want to draw to everyone's attention that a sales tax by its definition is proportional to what people spend. If we have large exemptions, such as the current exemption on food and other necessities of life, then in fact it does tend to deal more with the disposable income of people after they have met the necessities of life and, therefore, it is to that extent somewhat more progressive. A future business transfer tax, if the base is going to be broadened, I presume is likely to touch such things as rent, food, fuel oil or other basic necessities of life. We are going to have to wait and see. It is difficult to judge the Government's proposals until we get that far.
But let us take that $845 increased tax burden in sales and excise tax on the average family and ask what the Government has done in order to try to moderate that. What it has done is to bring in a sales tax credit. That sales tax credit is, if I recall correctly, worth $150 a year to a family, and the value to a single person or single mom is worth $100 a year. That is not a heck of a lot of relief when we look at the average bill of $845. In fact, what we find when we look at the figures is that the
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impact of the sales tax increases has been relieved by up to about $1,500 a year for people with very modest incomes. Beyond that point we see that this is not a proportional tax. It is a regressive tax. A regressive tax is a tax which hits more heavily those in modest circumstances than it does those in better circumstances.
The following are figures which have been drawn from the report of the National Council on Welfare. It must be noted that we are looking only at the impact of the increases in sales tax and not at the over-all impact of sales tax, which I believe we should be doing. According to the National Council on Welfare, the cost of the tax increases in 1985 and 1986 on a couple with two children at the $15,000 level will be an increase of $215. However, after the sales tax credit is taken into consideration the net cost as a percentage of family earnings will be 0.4 per cent. In other words, the sales tax credit is relatively effective in ensuring that those people at that income level, which is below the poverty line, are not heavily hit by this new tax. However, the sales tax credit expires just above that income level. When we consider a family with an income of $20,000, we see that the tax increases are estimated to be $269. I think that is a bit low. There is no relief from the sales tax credit at all for such a family. Therefore, the net cost is the same as the gross cost, which amounts to 1.3 per cent of the family's earnings. As we move into higher income brackets, for instance the $30,000 bracket, the sales tax increase is equal to 1.2 per cent of family earnings. At $40,000 it is equivalent to 1.1 per cent of family earnings; and at $100,000 it is equivalent to 0.9 per cent of family earnings.
I wish to say, Madam Speaker, that with your knowledge- [Translation]
With your knowledge of Quebec society, for instance, you will see that it is much easier for someone with a family income of $100,000 a year to pay .9 per cent more of his income in sales taxes than it would be for someone with a yearly income of $20,000, just above the poverty line, with a wife and two children, to pay 1.3 per cent more of his income in sales taxes.

That is the problem we face. By its actions the Government has brought in a sales tax credit which is so paltry that it does not do anything to stop the regressivity of the current sales tax increases which were levied in 1984 and 1985, except for those people with incomes below the poverty line.
If the Minister had said last week that a major change in the sales tax credit, or an equivalent measure, was needed to ensure that on all incomes up to, let us say $40,000 or $45,000, the net impact was progressive as opposed to regressive, then I, as a New Democrat on behalf of my Party, would have said that we will seriously look at the measure. However, that was not done. Instead, the Minister has come forward with some
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bold words about tax reform on the one hand. On the other hand, as a result of his actions in Bill C-14, he is taking us in a direction which is the exact contrary. Bill C-14 is nothing but a hangover from the last Budget.
In terms of this value added tax, the business transfer tax which we will have, the Canadian federal sales tax currently taxes only 30 per cent of the potential base in terms of private consumption. In Denmark, for example, the value added tax is imposed on 80 per cent of private consumption. In France and West Germany the figure is 29 per cent, and in the U.K. it is 60 per cent-


The Acting Speaker (Mrs. Champagne):: I am sorry to interrupt the Hon. Member, but his allotted time has expired.


Michael Morris Cassidy: I was quite prepared to keep on, Madam Speaker. I hope that members of the Government will actually stand up and defend this intolerable measure which is being imposed on the ordinary taxpayer.


Mrs. Sheila Finestone (Mount Royal):: Madam Speaker, it is with a great deal of interest that I look at the items which fall under the Excise Tax Act being presented in Bill C-14.
Over the last two years the Government has imposed the largest tax increases ever upon Canadians. The Government promised fair and equitable measures. It promised to be open and to listen to the people and reflect their concerns. Unfortunately, the Government has been a great disappointment to many Canadians.
When Members are out in their ridings, and as we talk to our constituents, many of us sense their great unhappiness, their cynicism and their lack of trust in legislators. Money is tight and jobs are scarce. Students do not know how to make decisions with respect to their futures because the whole situation is so unstable. The concerns of the people being expressed in the ridings as we meet them, whether we are Conservative, Liberal or New Democratic, indicate a great sense of instability.
What accounts for this instability? We need to look no further than the Government of Canada. Many people watch the proceedings of the House, especially during that silly period between two o'clock and three o'clock. They think that is all we do here. The ridiculous comportment of many people in the House has left the Government in general, and the public in particular, very disturbed. It is the job of the Opposition to test and check, to ensure that we are responding in our proper role. All the ordinary people see is the external behaviour. They do not appreciate that we also work at this hour in the House to study the Bills the Government presents. If members of the public were to think about what the Government is proposing to do in Bill C-14 they might become even more cynical. The Government has literally emptied the pockets of the low and middle income people of Canada. The disposable income available to make the wheels go round, the

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money people need to spend on goods is no longer there. We are seeing a slow-down in the economy. What I am saying sounds simplistic. I want it to be simple because I want those who look at the bottom line of budget sheets to stop and realize that these figures represent actual dollars in the pockets of everyone. The tax dollars which are being pulled out of these pockets, most of it in hidden taxes, is disconcerting to these people.
It is simplistic of the Government to say that it has modified the indexation of the tax table by 3 per cent. This will not look like much in the ordinary person's pocket as they go to fill out the required forms. When we look at what that does in terms of the nation we see that it is taking $570 million out of the collective pockets of taxpayers. We must also consider the 5 per cent and 10 per cent surtaxes which were imposed in the November and May Budgets respectively. They represent another $550 million which will be taken out of the pockets of taxpayers.
The Government eliminated the 1973 federal tax reduction which cost the taxpayers another $490 million. The Government levied a 1 per cent increase in the sales tax rate in November of 1984 which removed $1 billion from the pockets of taxpayers. That is $1 billion in taxes on goods on which people were not used to paying taxes previously. It was increased again in May, 1985 to the tune of $990 million. In fact, we do not even seem to care where we put our zeros at this point. The poor taxpayer is hounded and he does not know where to stop or start.
The Government put a sales tax which was broadened across the spectrum to include pharmaceutical products and consumer products. This included construction goods, cable and pay-TV services, alcoholic beverages and tobacco. On construction, taxable goods were increased from 7 to 8 per cent; cable and pay-TV from 7 to 8 per cent; alcoholic beverages and tobacco from 14 to 15 per cent. On other taxable goods, the increase was from 11 to 12 per cent. The sum total is billions of dollars.
When I talk about those kinds of taxes and we look at the 1986 Budget with an additional 3 per cent surtax, the additional 1 per cent sales tax, the alcohol and tobacco excise tax, it amounts to close to $5 billion of taxes taken out of the economy, which is the highest in our entire history.
Yet we were able to find a billion dollars of relief for the banks. We were able to find practically $1 billion in tax concessions to Gulf. We were able in many ways to cut back the middle and lower income people and to give bonuses to the well to do. I agree that incentives for productivity in our society are very important. But there is a need for fairness and equity. Canadians want, deserve, and expect fair play from their Government. This is not what they have received. The right to increase RRSP limits from the original $5,500 to $7,500, which is going up to $15,500, will cost a $40 million loss to the Treasury this year. It is very nice for people in the upper income tax bracket who can take out savings and protect
themselves for their older years in life. It is very important that we allow for that, but we have to allow for it on an equitable basis. We have to start looking at how we cover everyone with proper pensions that are portable and vested and have a cost-of-living adjustment. This applies to not only those who presently have pensions, but also to those who are not covered.
The capital gains exemption now covers art, boats, and apartments in Florida or Paris. There is a capital gains protection of up to $500,000, which is half a million dollars. That is five times $100,000. There are people who do not even know how to write these kinds of figures, and they are the largest percentage of the population. In this Chamber we were elected to represent all strata of society, not just upper income earners. This Budget is a Budget for upper income earners. It is true that the argument is that you must protect those upper income earners because they are the people who make the wheel go round. Do they really? Who is the mass of society going out and purchasing the goods and the services? It is not the small 3, 4, or 5 per cent at the top of the scale. It is the majority of Canadians.
I would like to suggest that this is a totally unacceptable Budget, with five billion dollars more in taxes with still no control of our deficit. The Minister of Finance (Mr. Wilson) has announced that he will be $2.5 billion short of the target, so there is something wrong with the planning that we see in front of us. The Government talks with a great sense of pride about what it has done in the communications and the cultural field. The Prime Minister's (Mr. Mulroney) Government has feebly attempted to place this high priority, but it has forgotten a few of the things it has done. In the Government's first Throne Speech there was absolutely no mention of Canadian culture. In the 1984 Economic Statement and in the subsequent May Budget of 1985, we witnessed cut-backs to the cultural industries of a grand total of $122 million. The Government felt guilty over its previous cuts, and in February of this year it allotted $75 million to fund a number of cultural initiatives. I am pleased that it did that. It was just including and increasing some of the work that we had already started. Even with that addition there was a shortfall of $47 million. In July the cultural community again shuddered as there were rumours of more cuts. This was to correct an error in the Minister of Finance's budget calculations. There were cuts of $10 million to the CBC; $210,000 to the National Art Centre; $1.6 million to the National Film Board; and $1.95 million to the Canada Council. That adds up to an additional $13.7 million. All the hopes of February had been dashed. This week we heard that the CBC in its upcoming Budget for 1987-88 may be cut an additional $50 million. In this light, the Government stands there and says that it is committed to the cultural industries, it is going to protect our cultural sovereignty, and it is going to see that Canadians can stand proud and tall and count themselves in the cultural stream. I would suggest that actions speak louder than words. This Government has been very famous for shaking your hand happily beforehand and then finding ways to apologize in a backhanded way.
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I alluded to the sales taxes, excise taxes, alcohol and tobacco taxes, and manufacturing taxes. Many people in Canada travel by air. Effective May 1, 1986, there will be a tax on domestic air travel, which will be limited to a maximum of $50, while the tax rate will increase from 9 to 10 per cent. The tax will be extended to tickets sold outside of Canada on or after August 1, 1986. That is very good for our tourist industry. But at least we avoided the major part of Expo. Expo was a great success for which we can all be grateful.
On the telecommunications side, there has been added a telecommunication programming service tax called the TPST tax. This tax applies to television equipment provided to customers of cable and pay-television services. It also applies to equipment used by hotels and other closed-circuit broadcasts. The TPST was increased by 1 per cent to 7 per cent in the 1985 Budget. The proposed legislation will increase this tax by another 1 per cent to 8 per cent effective April 1, 1986. The Government is certainly finding many ways to enable the Minister of Finance to reduce the deficit effectively. The only problem is that he has not controlled it yet, even with all these excessive taxes.
The 1985 Budget may be perceived as having changed the method by which federal sales tax is levied on motive fuels. There is a sales tax which continues to be imposed as an ad valorem tax, that is, 12 per cent after April 1, 1986. But it is calculated as a specific amount per litre. The specific amount is adjusted quarterly, according to the industry's selling price index as published by Statistics Canada.
The Ways and Means motion to Bill C-14 is intended to clarify how the sales tax calculation is to be made. We can see some very significant increases in here through the federal excise tax on non-commercial motive fuels which will be at 1.5 cents per litre. The 1985 Budget increased the excise tax on gasoline and aviation gasoline by 2 cents per litre effective September 3, 1985. This tax is scheduled to increase to 4.5 per cent on January 1, 1987. We are looking for ways to discourage tourism. When you look at the cost of gasoline, tourists must receive an incredible shock when they find out how much it costs to fill their tanks. I wonder if these costs do not offset some of the difference in our dollar calculation. They are a disincentive. I would suggest that the tourist industry has to work twice as hard to attract tourists because of our hidden taxes. They return home and wonder what happened to their money.
I am not pleased with the way in which the Government has chosen to direct this piece of legislation. I speak on behalf of the people in my riding of Mount Royal. They are concerned about jobs, the future, and the ability to live on a decent scale. In order for them to do that, they require justice and equity in the tax system.
I encourage government Members to examine their budgets and the way they are levying taxes, in the interest of everyone, not just the well to do.
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Mr. Suluk:: Madam Speaker, the Hon. Member for Mount Royal (Mrs. Finestone) made reference to the CBC in such a way that she implied the Government created some difficulties for cultural groups by its cut-backs to the CBC. It is my understanding that the CBC received in the last one year period almost $1 billion.
In addition, the CBC is the only major communications network in the North. Almost half its programs are in the Inuktitut language, the main language of northern residents.
With a situation such as this, as well as the earlier one to which I referred concerning the CBC receiving almost $1 billion from taxpayers, how could the Hon. Member honestly believe that cutting a few million dollars from the budget of the CBC would undermine the cultural identity of Canadians? Would it not be fairer to tell the CBC to trim some of its more exotic expenses?


Sheila Finestone: Madam Speaker, I thank the Hon. Member for his question. It provides me with an opportunity to say a few things which I think need to be said.
Very few of us realize the very difficult management task of the CBC. If one stops to think about the CBC, one realizes that it is quite an extraordinary national expression of Canadians. It expresses our diversity, as well as the beauty and grandeur of our country. It certainly has some problems. Nothing in Canada is perfect; nothing in Canada is totally beautiful. However, we should stop to think about the activities of the CBC. It broadcasts in French and in English across the land, from Newfoundland to B.C., from Cap d'Espoir to Vancouver Island; from the U.S. border to our friendly borders in the far North. Its services cover the Inuit and other native peoples, as well as our diversities in major regions, both in radio and in television. We should also think about the fact that on the international scene the CBC is an instrument of Canadian national policy of which we should be extremely proud.
There has been a $75 million cut to the CBC plus $10 million in new equipment which was required, for a total of $85 million in the November statement. There was an additional $10 million cut when the Minister of Finance made a mistake and announced $500 million. He was short and went to find places to cut, so he cut the CBC again. He has now cut another $50 million, or it is an anticipated increase. Therefore we are talking about $145 million in cuts.
Let us also look at a serious matter which is of concern to everyone in the House. I am referring to the $57 million which we cannot find and has not been accounted for. The Auditor General is concerned about it, as is the President of the CBC, Mr. Juneau. Mr. Dye and Mr. Juneau are trying to locate that money. The problem in terms of its loss was the institution of a new budgeting procedure.
My answer to the Hon. Member would be a return question to him. What right had the Government in 1985 to allow the CBC to go into a very complex budgeting procedure, a new fangled highly complex system, without ensuring that a back-

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up system was in place or that the Department of Communications was doing its proper job in supervising the CBC?
We must be very cautious when we talk about the CBC and in a sense protective, but at the same time we must demand the kinds of answers we as legislators require.


Mr. Foster:: Madam Speaker, I listened to the Hon. Member for Mount Royal (Mrs. Finestone) and thought she made an excellent speech. She outlined the very regressive nature of the taxes which are being heaped, with each succeeding Budget, upon low and middle income Canadian families. It is certainly not the progressive taxation regime about which most Hon. Members talk. She dealt with the matter in great detail by indicating the increases in excise and sales taxes and so on.
However, I would be interested in her view of the speech of the Minister of Finance (Mr. Wilson) a week or so ago. He talked about tax reform and trying to reduce income tax scales. I am wondering whether she finds the same conflict in her mind which I find in mine. One economic statement and two Budgets, all of which contained devastatingly regressive taxation measures, have affected average Canadian families of four with incomes of only $30 per year to the tune of an additional $630. However, the Government talks about tax reform in terms of lower income scales for lower income families.
The first two Budgets of the Government seemed to be geared toward reducing taxes for large multinational oil companies, increasing taxes for low income families, deindexing the income tax scale for families, deindexing personal exemptions, deindexing the family allowance, and so on. Does the Hon. Member see the Government making a 180-degree turn on its taxation policy? Because the Minister talked about reducing income tax levels-and I believe it was modelled after the American system-I would be interested in hearing the Hon. Member's comments.


Sheila Finestone: Madam Speaker, I do not have much time to answer the Hon. Member as my time limit is coming to an end. However, I should like to make three observations. First, whatever happens, the purchasing power of the dollar left in an individual's pocket will be reduced. As we near Hallowe'en, the trick or treat is that personal income taxes will go down and corporate income taxes will go up. That is how the Government blows a smokescreen, because in essence, there will be more taxes of a hidden nature through the business transfer tax. The food bank that presently exists in the riding of Mount Royal, a total shame, will simply have a longer line of people who are waiting to get one decent hot meal per day. I would suggest that things will get worse if the measures outlined by the Minister in his speech, as I understand them, come into action.


Mr. Dave Nickerson (Western Arctic):: Madam Speaker, it is my intention to speak very briefly and only on one aspect of Bill C-14, that being the excise tax imposed on airline tickets.
The point I wish to make is that the Government of the day is responsive to the representations of the citizens of Canada.
Some time ago, the excise tax on airline tickets was 7 per cent, I believe, or perhaps 8 per cent, and there was a cap on it, a maximum tax payable of $35. About a year ago, or perhaps a little more, changes were made to that excise tax in order to generate more revenue. Of course, the Government had a very good point when it argued that additional revenue from aviation was required because the amount of money that was being collected was nowhere near enough to provide the necessary services to aviation.
At that time, the excise tax was raised to 9 per cent, but the cap of $35 maximum was removed. This resulted in taxes on an airline ticket from the town in which I reside, Yellowknife, to Frobisher Bay on the other side of the Territories of about $150. This, of course, was ridiculously high. The airfares in that area are high to begin with and to put a $150 tax on top of that is ridiculous. The situation was the same for all long distance transportation in Canada. In those areas where ticket prices on a per mile basis are higher, the northern and remote areas of the country in particular, the removal of the tax cap was particularly onerous.
As a result of the removal of this cap, many representations were made to the Minister of Transport of the day, the Hon. Member for Vegreville (Mr. Mazankowski), by chambers of commerce, municipalities and even the Province of British Columbia. I was worried for a while because I thought that the Government might not do anything about this. However, it did turn out well. The Minister of Transport was responsive to the wishes of the citizens and so was the Minister of Finance (Mr. Wilson).
The legislation that is before us, Bill C-14, increases the excise tax to 10 per cent but reimposes the cap. This is what the people wanted. They did not mind paying their fair share in taxes on airline tickets, but they did not want to pay $100 or $150 in taxes on expensive tickets. They wanted the cap reinstated, and that is what Bill C-14 has done. Therefore, I would like to take this opportunity to thank both the former Minister of Transport and the Minister of Finance for acceding to the wishes of Canadians and in particular those who live in the far reaches of the country.


Michael Morris Cassidy: Madam Speaker, the Hon. Member knows that one of the reasons for the increase in revenues sought by the Government through the increase in the excise tax on airline tickets of 1 percentage point in the 1986 Budget is that it will be used to pay for the exemption on capital gains which will shortly rise to $500,000. Of course, every resident of Western Arctic will be paying some increased amount of money because of the increase in the sales tax. I would ask the Hon. Member to estimate what proportion of the residents of his constituency, particularly among the Dene and the Inuit, will be in a position actually to benefit from the exemption on capital gains in any meaningful way. His answer is likely to be darn few because we know those capital gains exemption
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benefits will go to wheelers and dealers, people who drive BMWs and Porches and who live in Montreal, Toronto and Vancouver. Very few people who live in the vast expanses of Canada such as those which lie within his particular constituency will benefit.
Given that very few if any of the Hon. Member's constituents will benefit from the capital gains tax exemption and given that those few who will benefit will be those who were in the upper income brackets to begin with, where is the justice in raising the sales tax paid by all residents including trappers, miners, hunters, truck drivers, construction workers, housewives and day care workers in his constituency? This will be done in order to give a tax exemption to a very small proportion of people in the country and an even smaller proportion of people in his own constituency.


Dave Nickerson: Madam Speaker, first I think the Hon. Member is wrong to assume that the increase in excise taxes will only pay for the exemption on capital gains. That, of course, is wrong. Excise taxes come in and go out of general revenue. One could equally argue that a tax of this nature will pay for old age pensions or will go into the unemployment insurance fund. The Consolidated Revenue Fund receives money from many sources and there is a number of ways the money goes out of the fund.
The exemption on capital gains has been very well received in my riding as it has right across Canada as far as I can see. I do not know the exact proportion of people who can benefit from it, people who cannot benefit from it or people who can benefit from it in the future in any one riding. The capital gains tax exemption is an incentive for people to invest, start small businesses or begin to farm with the expectation that they will be able to benefit from it in the future.
Since the capital gains tax exemption has been in effect, I have noticed a resurgence of small business investment in my riding. People are getting involved in agricultural pursuits. I am sure the exemption is one of the underlying reasons for this. People now have an incentive and can see a future advantage. The measure has been well received in my area and if there has been any criticism of it, it has been that it has not gone far enough.
A great many of my constituents would argue that there should not be capital gains taxes at all. One group in particular feel a little left out in the cold, and that is, prospectors. Sales of their properties are not treated as capital gains. They argue, and I certainly support them in their argument, that we should go back to the old rules which were that capital gains applied to prospectors.


Mr. Parry:: Madam Speaker, I would like to comment on the discourse of the Hon. Member for Western Arctic (Mr. Nickerson). I too am glad, as one who represents a northern riding with many far-flung communities, that the Government made a wise decision to put the cap back in place on the excise tax on airline tickets at a level of, I believe, $50. That is somewhat higher than the previous level but certainly better
Excise Tax Act
than the example the Hon. Member gives. It was an extreme example, of course, but then we live in a country where the geography is extreme. In order to go from one half of the Northwest Territories to the other it is often necessary to travel via southern Canada and via more than one airport.
That brings me to a point which I had hoped the Hon. Member for Western Arctic was prepared to address, that is, the double taxation which falls very heavily on residents of his riding by virtue of the excise tax on motor vehicle and aviation fuels, and refined petroleum products of all sorts. As the Hon. Member well knows, gasoline used to fuel a flight from, say, Baker Lake through Churchill or from Pine Point to Yellowknife, bears a tax because of the cost of transporting it to those communities. There is presently no arrangement, mechanism or scheme to eliminate what is in its ultimate effect a measure of double taxation of northern residents. In many remote communities, for example, a litre of gasoline requires the burning of a quarter litre of gasoline to transport it to the community in which it is going to be consumed, and that quarter litre is taxed at the same rate. Therefore, I would like to ask the Hon. Member, particularly given his role, unless it has been superseded, as Chairman of his Party's northern caucus, if any consideration has been given to some measure to adjust these inequitable effects of the excise tax.


Dave Nickerson: Madam Speaker, the Hon. Member certainly brings a very good point to light. My colleague from Nunatsiaq has spoken about this on several occasions. The question is much more important in his part of the country than it is in mine.
It would be nice if we could do something to alleviate taxation. I am sure, Madam Speaker, you do not like paying taxes any more than I do. I must confess that I have not given a great deal of thought to the point raised by the Hon. Member but I certainly will in the future. The question which immediately jumps to mind is how you would administer such a plan. Would you have a blanket exemption for the fuels used in the transportation of other petroleum fuels or for all commodities? What would the effect be on revenues?
It is interesting to point out that for the territorial Government, sales taxes on transportation fuels are a pretty sizeable source of revenue. It is sometimes hard to accept that when you drive across the border from Alberta, where there is no provincial sales tax on fuels, and you get north of the 60th parallel, you are faced with a pretty hefty increase in the price of gasoline and diesel fuel because of the tax levied by the territorial Government. Of course, that is their decision to make.
I would like to thank the Hon. Member for his valid observations.


John Edmund Parry: Madam Speaker, we have before us a Bill whose life was somewhat interrupted. Bill C-14 implements changes to sales and excise taxes

October 30, 1986
announced in the Budget Speech of February 27, 1986. I think a brief resume of the nature of these changes will be instructive to understanding the effect they will have on the Canadian economy and the Canadian taxpayer, particularly those at a lower level of income, on whom this tax will bear regressively.
The 1 per cent sales tax increase applies to a number of essential goods and services, for example, construction materials, where the rate goes from 7 per cent to 8 per cent. On other taxable goods it goes up from 11 per cent to 12 per cent. While neither I nor my Party need shed too many tears over the increase in taxes on alcoholic beverages and tobacco, both of them destroyers of human life and longevity and both, after all, the popularly styled sin taxes, which frankly are set at a level which might easily be increased with over-all benefit not only to the exchequer but also to the health of the nation, yet they are taxes people pay. When we look at the over-all impact of the excise tax and federal sales tax increase, we cannot believe it will be anything but negative. The increase in these indirect, hidden taxes, as they are sometimes known, is part of the Government's strategy of increasing taxes. Indeed, it makes a very powerful contribution to the implementation of that strategy.
My Party has calculated that the tax burden on the average family since the Progressive Conservatives came to power has increased in the order of $1,300. That is based on an annual income of $35,000 for a family with two dependent children. It is useful to contrast the level of increase in taxes on the average family with the level of increase in taxes on the average corporation. Here the disparity is quite dramatic. I frankly believe that when the history of the 1980s is written, unless there is some dramatic move by the Government, something rather more than what was promised in the recently tabled proposals for tax reform, this decade will go down as the period in which the average family in Canada was called upon, and called upon disproportionately, to shoulder the burden of deficit fighting. That will be seen as a sad commentary on the orientation of the Progressive Conservative Government.
The increases which have taken place already, together with that proposed by this measure, constitute $845 of the $1,300 figure I referred to. The November 1984 Economic Statement adds approximately $350 a year. The May 1985 Budget adds $325 a year. The February 1986 Budget adds $170 per year for the average family. Because of the ratcheting effect of successive increases, this is beginning to take me back to my point about taxes being paid on taxes. So we have a situation where the average family in Canada is being called upon to bear the burden of this Government's deficit fighting initiatives.
At this point I wonder if I might call it one o'clock, Madam Speaker.


The Acting Speaker (Mrs. Champagne):: It being one o'clock I do now leave the chair until 2 p.m. this day.
At 1 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.


Mr. Gabriel Desjardins (Temiscamingue):: From November 1 to November 6, Mr. Speaker, Rouyn-Noranda will be the site of the fifth International Film Festival in Abitibi-Temis-camingue.
Over the years, this has become a long-awaited major cultural event which is the pride of our people and which has an impact far beyond our regional boundaries.
About ten countries will be represented at the festival this year and we will have the privilege of attending the world premiere of a few films.
Mr. Speaker, we owe the resounding success of this international film festival primarily to the enthusiasm and dedication of the organizing committee, and also to the calibre of international cinematographic productions, the generous cooperation of the media and, of course, the ever growing participation of the people of Abitibi-Temiscamingue.
So movie fans of Abitibi-Temiscamingue, Quebec, Canada and the world, will be meeting in Rouyn-Noranda from November 1 to November 6 next.



AUTOMOTIVE INDUSTRY


Mr. Dave Dingwall (Cape Breton-Richmond East):: Mr. Speaker, today I would like to speak in support of General Motors of Canada and its efforts to maintain its automobile plant in Sainte-Therese (Quebec). The many years of service of some 4,000 employees in Sainte-Therese symbolize their hard labour and their loyalty. We must also note that the Sainte-Therese employees are ready to compromise.
The Government of Canada must help General Motors maintain that plant in operation. A committment should be made to General Motors of Canada so that it can keep the
4,000	jobs and ensure the future of that plant.
I therefore encourage the Minister of Regional Industrial Expansion (Mr. Cote) to do everything that is needed to protect the 4,000 jobs at the General Motors' Sainte-Therese plant.
October 30, 1986

The Province of Ontario has received from General Motors 17(6) and (7) of the Unemployment Insurance Act remain in a $2-billion committment. It is now Quebec's turn.	force.
In conclusion, fishermen, peat moss workers and others have
reason to welcome as I do a very heartening announcement by
this Conservative Government.



SITUATION IN OIL INDUSTRY

Mr. Ian Waddell (Vancouver-Kingsway):: Mr. Speaker, Canada lost its real Energy Minister yesterday-Sheikh Ahmed Zaki Yamani of Saudi Arabia. No longer will a Canadian Prime Minister, in the immortal words of the Member for St. John's West (Mr. Crosbie), "dance sheikh to sheikh in the desert" with one of the world's most powerful men. Canada once tried to have its own national energy policy but the Liberals retreated from it and the Conservatives completely dismantled it, making us totally reliant on the so-called free market of international prices.
There is no real free market for oil. In the politics of oil we have only a choice of who is going to call the shots-the Sheikh and his successors, the large international oil companies or, so far as it is able, the Canadian Government with a real energy policy. That would mean a Canadian energy policy with made-in-Canada gasoline prices and Canadian control, both public and private, over our most important energy resource, namely, oil. The alternative is once again to leave the choice of our next Energy Minister to King Fahd and the Councillors of Riyadh.
* *
*
* *
*



RELIGIOUS LEADERS' PRAYERS FOR PEACE

[Stage Direction]
Hon. Warren AUmand (Notre-Dame-de-Grace-Lachine
East): Mr. Speaker, on Monday of this week religious leaders from many faiths met in Assisi to pray for peace. It is essential that Governments listen to these prayers and do something concrete to assure peace.
Since the end of World War II in 1945 there have been 120 regional wars throughout the would, resulting in 19 million deaths, 11 million civilian and 8 million military. In 1986 Governments in the world spent over $900 billion on arms while 15 million children died of hunger. According to the Thorson Report in 1983, it would require $18.5 billion to provide food, shelter, education, and health care to the world's poor.
How can we justify $900 billion for arms, which goes far beyond what is required for defence and security and which does nothing to deal with the causes of conflict? When will we stop this madness?


Mr. Andre Plourde (Kamouraska-Riviere-du-Loup):: Mr. Speaker, I was most happy to see the Minister of Employment and Immigration (Mr. Bouchard) table the legislation to extend until January 4, 1988, the 10-week standard qualifying period in the of Kamouraska-Riviere-du-Loup riding.
This proves once again that this Conservative Government responds to the employment needs of areas that are particularly underprivileged. This means that in my constituency, the qualifying period for unemployment insurance remains 10 weeks.
That Bill tabled by the Minister of Employment and Immigration goes to prove that my representations, those of Action-chomage and of the Mouvement Chambre de commerce de Riviere-du-Loup-Kamouraska did not remain unheeded. During September 1985,1 formally approached the Minister of Employment and Immigration asking that Sections



THE PERFORMING ARTS


Mr. A. H. Harry Brightwell (Perth):: Mr. Speaker, I am very pleased that within my riding we have a great cultural industry called the Stratford Shakespearean Festival Foundation. October 31 marks the end of their fiscal year. It has been a great year, with improved finances, but they still need much more public support.
The festival receives the least percentage of government support of any major artistic institution in Canada. The hundreds of thousands of people who come to it spend another $50 million in the surrounding area, and the Governments of Ontario and Canada have a spin-off benefit of about $5 million in taxes.
I am very pleased that a troupe of the festival actors is presently in Ottawa presenting the play "A Man For All Seasons" at the National Arts Centre. I know that you have

October 30, 1986
enjoyed this play, Mr. Speaker, and will agree with me that this troupe has wonderful artistic talent and is a great asset to Canada.



NATIONAL DEFENCE


Mr. Bill Blaikie (Winnipeg-Birds Hill):: Mr. Speaker, yesterday I protested the way in which Winnipeg is being downgraded by the Tory Government, referring to the new subordination of the Winnipeg office of Statistics Canada to Edmonton. Last night it was widely reported that the Prime Minister (Mr. Mulroney) is arguing for the CF-18 contract not going to Winnipeg on the grounds that western Canada recently received $1 billion in aid to grain producers. If the Prime Minister actually used such an argument, let me tell him that the $1 billion program is a national program, only a fraction of which goes to Manitoba. Furthermore, are we to take it that the $1 billion, which was a special response to a special need, is to be constantly held over the heads of western Canadians?
Until now, Manitobans from all parties chose to trust the Government to respect the tendering process, to have confidence in the merits of the Winnipeg bid, and not be the first to politicize this issue. If the Prime Minister actually intends to use the national farm aid program against Winnipeg, then such an approach is completely unwarranted.
Finally, could it be significant that the contract favoured by the Prime Minister might also be favoured by the Deputy Prime Minister (Mr. Mazankowski), because 400 jobs will be created in Edmonton by that contract?



CANADA POST CORPORATION


Mr. Bill Gottselig (Moose Jaw):: Mr. Speaker, Canadians who have had to become accustomed to the high-handed attitude used by officials of Canada Post when dealing with the taxpaying public have yet another surprise in store, courtesy of the board of this Crown corporation.
Not only is Canada Post denying second-class mailing privileges to Canadian religious publications, the chairman's recent ruling on an appeal by a religious publication that this publication was insufficiently religious in content and not to be classed as a religious publication, must be considered bordering on the sublime, even for Canada Post.
I do not subscribe to this publication but I doubt that Canada Post has either the criteria or the qualifications to make this judgment call.
Not only do I urge him, I beg the Minister in charge of Canada Post to take control of this monster before it devours us all. The mandate of Canada Post is to deliver the mail on time.

[ Translation]



INTERNATIONAL PEACE WEEK


Mrs. Lucie Pepin (Outremont):: Mr. Speaker, during the International Peace Week, close to 200 students of the Paul-Gerin-Lajoie Secondary School in Outremont have written to the Minister of National Defence (Mr. Beatty).
I am pleased as their representative here to convey to this House the concerns and views of these young people aged 11 to 16 about world peace.
These children prompt us to reflect on the arms race, nuclear tests, hunger and poverty as well as stresses and conflicts which now prevail throughout the world.
These students are suggesting among other things the use of funds earmarked for arms for humanitarian purposes, research, education and job creation. They ask the Minister of National Defence to take concrete steps to maintain peace in Canada and to promote it elsewhere in the world.



MEMBERS OF PARLIAMENT


Mr. Bob Horner (Mississauga North):: Mr. Speaker, it is a clear case of the pot trying to call the kettle black. The Hon. Member for Glengarry-Prescott-Russell (Mr. Boudria) has consistently raised spurious accusations against government Members for supposed conflict of interest violations. Now we find out that the Member himself reeks of patronage.
It has come to light that the Member, in his previous capacity as a municipal councillor for Cumberland Township, voted to award $82,000 in construction contracts to his brother-in-law's firm.
[DOT] (N10)


Mr. Speaker:: Order. The Chair has had to rule already, and most recently yesterday, on the use of Standing Order 21 for
October 30, 1986

what amounts to a personal attack. I would ask Hon. Members to conform to the ruling the Chair made yesterday. The Hon. Member for Kenora-Rainy River (Mr. Parry).

[ Translation]



TAXATION


John Edmund Parry: Mr. Speaker, I wish to announce today that the company getting our award as an untaxed corporation is the Canada Trustco Mortgage Company. Canada Trustco has benefited from loopholes provided by successive Liberal and Conservative governments and obtained tax credits in 1979 and 1980 in spite of profits amounting to $52.4 million. If we had a fair taxation system in Canada and if Canada Trustco had paid a 25 per cent rate on its profits, Canadian taxpayers would have had their own taxes reduced by $13.1 million because of that company alone. It is high time for the Government to introduce measures for a comprehensive tax reform.



MEMBERS OF PARLIAMENT


Mr. Gerry St. Germain (Mission-Port Moody):: Mr. Speaker, the chickens are coming home to roost. One of the Hon. Members of the Liberal Party has constantly abused members of my caucus with derogatory and wild accusations and now we find he is no stranger to the public trough-


Mr. Speaker:: Order. I think Hon. Members are bound by the ruling I made yesterday. I would ask Hon. Members to abide by it.
The Hon. Member for York Centre (Mr. Kaplan).


Gerry St. Germain: Order.



NATIONAL RESEARCH COUNCIL


Hon. Bob Kaplan (York Centre):: Mr. Speaker, a few days ago I attended a public meeting in my riding. A number of people were there to talk to me about the government cutbacks at the National Research Council. They brought to my attention an advertisement published by The Professional Institute of the Public Service of Canada on the subject of
these cut-backs. The ad notes that since 1984 the budget of the National Research Council has been reduced from $.5 billion to $400 million and the number of employees has been reduced from 3,600 to 3,100. The ad notes there will be a further loss of 200 positions.
This group calls upon the Government, particularly the Prime Minister (Mr. Mulroney), to honour the promises made during the last election campaign and not only stop the cutbacks of these programs but increase the over-all spending on research and development, especially at the National Research Council.
The signed cut-outs addressed to the Prime Minister do not comply with the rules for presenting petitions, and I wanted to take this opportunity to put these views forward. I intend to send them to the Prime Minister and express my own hope that these cut-backs will be reversed and that the NRC budget will be increased.



UNEMPLOYMENT INSURANCE


Mr. Marcel Tremblay (Quebec East):: Mr. Speaker, yesterday the Government introduced a bill amending the Unemployment Insurance Act to extend the variable admissibility criteria and maintain present contribution rates foi unemployment insurance for a year. The new legislation will be beneficial to small and medium-sized businesses as well as to workers in Quebec East. The Governement intends to maintain contribution rates at their present level for 1987. With this decision, Mr. Speaker, we will avoid a substantial increase in contributions paid to the unemployment insurance fund.
Once again, Mr. Speaker, our representations were successful. Our arguments and our ideas on the matter were rewarded with a favourable response from the Minister. I am sure that such good news will be welcomed by my constituents of Quebec East. I urge the House, Mr. Speaker, to pass this legislation as soon as possible .



INSURANCE


David Orlikow: Mr. Speaker, I rise to urge the Government to take immediate steps to end the

October 30, 1986
Oral Questions
liability insurance crisis which is threatening organized sports and community services. Persons participating in sports such as hockey, football, and skiing are finding it almost impossible to afford liability insurance.
The Minister of State for Fitness and Amateur Sport (Mr. Jelinek) should immediately consider the recommendation of his own commission on the subject which recommended establishing a self-insurance scheme for these sports, as has been done by the school boards in Ontario. It is time the Government took a stand against the international insurance companies which are forcing Canadians off the playing-fields and out of the arenas while fleecing the public.



PRESENCE IN GALLERY OF CHAIRMAN AND MEMBERS OF SELECT COMMITTEE ON AGRICULTURE OF UNITED KINGDOM

Mr. Speaker:: I would like to draw to the attention of Members the presence in the gallery of members of the Select Committee on Agriculture of the United Kingdom under the chairmanship of Sir Richard Body.


Some Hon. Members:: Hear, hear!



ORAL QUESTION PERIOD


Mr. John Nunziata (York South-Weston):: Mr. Speaker, my question is addressed to the Minister of Public Works. It concerns the prison at Port-Cartier. Yesterday in the House the Minister referred to a letter from the Auditor General dated October 27, in spite of the fact that it was not addressed to him and in spite of the fact that the Auditor General stated in the letter that it would be prudent to avoid discussion of the matter until the issue has been investigated. The Minister said at that time: "-it was admitted by the Auditor General that he had made a mistake in his report." That is not the case. It is not true. It is not what the Auditor General said in the letter.


Mr. Crosbie:: Does he have a question or not?


John V. Nunziata: Will the Minister stand up today, admit that he was wrong yesterday regarding the letter from the Auditor General, apologize to the Auditor General, and apologize to the House for a blatant misrepresentation of this letter?


Some Hon. Members:: Hear, hear!


Mr. Speaker:: The Chair is reluctant to interfere with the lead question when it is posed by a member of either opposition Party. I would ask the Hon. Member to rise again and put the last part of his question in words which are less inflammatory.


John V. Nunziata: Mr. Speaker, in view of the fact that the statement of the Minister would appear to contradict the contents of the Auditor General's letter, is the Minister prepared to stand up today, admit he was wrong yesterday, apologize to the Auditor General and apologize to the House?


Hon. Stewart Mclnnes (Minister of Public Works):: Mr. Speaker, I did indeed raise a letter from the Auditor General dated October 27 that had been in circulation. In it he indicated, and I quoted the first sentence of it, that indeed there was a possibility of a mistake. We have checked with various officials and confirm that in our view there is a mistake. I am very happy to note that in today's paper it is reported that the Auditor General has seen fit to recheck the situation and verify the information in his report.


John V. Nunziata: Mr. Speaker, on three separate occasions yesterday in the House the Minister of Public Works said that the Auditor General was wrong. I spoke to the office of the Auditor General today and was told that, in fact, that was not what the Auditor General said in his letter.


NEED FOR PRISON
John V. Nunziata: Mr. Speaker, my supplementary question is for the Solicitor General. In paragraph 7.89 of the Auditor General's Report the Auditor General stated that the prison could not be justified based on need. In the House on October 22 the Solicitor General said that, in fact, there was a need for the prison.


Some Hon. Members:: Come on!


Some Hon. Members:: Order!


Mr. Speaker:: 
John V. Nunziata: The Solicitor General has contradicted the Auditor General in his finding that there was not a need for a prison at Port-Cartier. Will the Solicitor General stand up today, admit that he was wrong, and apologize to the Auditor General and the House?


Hon. James Kelleher (Solicitor General of Canada):: Let me
reiterate that I have never contradicted the Auditor General. Indeed, I agree with his tables. I refer the Hon. Member to paragraph 7.51 of the Auditor General's Report where he says that there will be a surplus of 30 protective custody beds. That figure includes the Port-Cartier beds of 250. If Port-Cartier is not built, the 30 surplus must be subtracted which leaves a
October 30, 1986

deficit of 220 beds. That proves that we need the building of this prison.


Some Hon. Members:: Hear, hear!


John V. Nunziata: The Solicitor General once again contradicts the conclusions drawn by the Auditor General.


Some Hon. Members:: Order.


TREASURY BOARD DECISION
John V. Nunziata: My second supplementary question is directed to the President of the Treasury Board. In view of the fact that the Auditor General stated at paragraph 7.99 of his report that the Treasury Board did not have all the facts when it approved the relocation of the prison, and in view of the fact that the President of the Treasury Board said in the House on October 21 that he did have all the facts when he approved the relocation, will the President of the Treasury Board stand up today, admit he was wrong, and apologize to the Auditor General and the House for undermining the authority and integrity of the Auditor General of Canada?


Hon. Robert de Cotret (President of the Treasury Board):: am happy to stand up in the House today and reaffirm the statements I made when I answered the question. I would like to indicate to my hon. colleague opposite that in no way was I questioning the validity, the judgment, or the right of the Auditor General to make that statement from the point of view of the Treasury Board. I felt that the Treasury Board at that point had the required information. He obviously felt otherwise. It is a legitimate difference of opinion, and I stated that, and I stand by my statement.


PENITENTIARIES
Mr. Don Boudria (Glengarry-Prescott-Russell):: Mr. Speaker, my question is directed to the President of the Treasury Board. Yesterday, following questions from the Opposition about the awarding of contracts for the Port-Cartier penitentiary, the Minister said, and I quote: "The contract was given to the firm which was judged the most competent to give the best value for the money of Canadian taxpayers." In the light of this statement, could the Minister inform the House why the firm that designed the penitentiary at Donnacona was not chosen and was not even considered, although the same plans and specifications are being used to build the penitentiary at Port-Cartier? How come?


Robert René de Cotret: Mr. Speaker, I think I made it quite clear to Opposition
Oral Questions
Members yesterday that the usual procedures were followed in awarding the contract. An evaluation was made, the company that won in the bidding was given a rating of 110.5 by the officials of the department concerned, compared with ratings of 98.5 and 93.5 for the two other companies. I also offered to be available for questioning by Members in committee, when I would be delighted to provide more details, something question period does not allow me to do.


POSSIBLE APPEARANCE OF PRIME MINISTER BEFORE PARLIAMENTARY COMMITTEE
Don Boudria: Mr. Speaker, I have a supplementary for the Minister, who may wish to take this opportunity to table the relevant documents in this case. I want to ask the Deputy Prime Minister, considering the fact that a committee of this House has asked the Prime Minister to appear before it to justify the statements made and the action taken with respect to Port-Cartier, whether he is prepared to make a commitment today and inform the House that the Prime Minister will appear before a committee of this House as soon as possible, to provide the desired justification?


Donald Frank Mazankowski: Mr. Speaker, that statement is totally untrue. There is no committee that has called for the appearance of the Prime Minister. I understand there has been a recommendation put forward by a steering committee, but that would have to be ratified by the Standing Committee itself.


AUDITOR GENERAL'S LETTER
Mr. Nelson A. Riis (Kamloops-Shuswap):: Mr. Speaker, my question is directed to the Minister of Public Works. Yesterday, in trying to weasel out of a question regarding-


Some Hon. Members:: Order. Order!


Nelson Andrew Riis: Yesterday, in an attempt to avoid a question dealing with government patronage and contracts at Port-Cartier, the Minister hauled out a letter from the Auditor General. What was the intention of that particular move?


Stewart Donald McInnes: Mr. Speaker, very clearly the intention was to put before the House all relevant information which formed the basis of all the inquiries of last week. Additional information, through the letter of the Auditor General, came to our attention, and it was important that Canadians knew of that information immediately.


MINISTER'S STATEMENT
Nelson Andrew Riis: Mr. Speaker, the questions posed yesterday dealt with the architectural contracts and the tendering of those contracts at Port-Cartier.

October 30, 1986
Oral Questions
The letter of the Auditor General dealt with the management project, a totally unrelated set of contracts. When the Minister of Public Works said that the Auditor General admitted he had made a mistake and that he had confirmed the Auditor General had made a mistake, had he actually spoken to the Auditor General to ensure that was the case?


Stewart Donald McInnes: Mr. Speaker, I believe my words were that the Auditor General indicated the possibility of a mistake. We have checked our records. We know the situation. We confirm that a mistake had been made. Now the Auditor General is to check out the actual facts.


INTEGRITY OF AUDITOR GENERAL
Nelson Andrew Riis: Mr. Speaker, the Minister's comments yesterday in the House that the Auditor General had admitted that he had made an error were regarding a set of contracts totally unrelated to the questions being posed about architectural services. Was the Minister, in his response yesterday, simply trying to evade questions about the Government's integrity by casting doubt on the integrity of the Auditor General of Canada?


Stewart Donald McInnes: Absolutely not, Mr. Speaker. I think some question about the integrity of government practices had been put in issue. Indeed, a question about that issue had been raised by the Auditor General. Now he has agreed to go back and verify the basis of his information. This is appropriate, and we applaud this initiative of his.


COME-BY-CHANCE OIL REFINERY-ANNOUNCEMENT OF SALE
Mr. Brian Tobin (Humber-Port au Port-St. Barbe):: Mr. Speaker, in the absence of the Minister of Energy, Mines and Resources I will direct my question to the Deputy Prime Minister. On Monday of this week the Premier of Newfoundland, Brian Peckford, and the Hon. Member for St. John's West jointly announced the sale of the Come-by-Chance oil refinery to a Bermuda-based company called Newfoundland Energy, for $2. Yesterday the Newfoundland Premier confirmed that the refinery had still not been sold. Why did the Minister of Transport, representing the federal Government, participate in a press conference with Premier Peckford announcing the sale of the Come-by-Chance oil refinery when Petro-Canada, the owner of the refinery, advised both the Premier and the Minister in advance of the press conference that no deal had been concluded for the sale of the refinery?


Donald Frank Mazankowski: Mr. Speaker, the Acting
Minister of Energy is the Hon. Minister of State for Forestry and Mines, and he will take that question.


Hon. Gerald S. Merrithew (Acting Minister of Energy, Mines and Resources):: Mr. Speaker, I assure the Hon. Member and all Members of the House that the people of Newfoundland certainly welcome the opportunity to have additional jobs and economic activity in that province.


MINISTER'S PARTICIPATION IN PRESS CONFERENCE
Brian Vincent Tobin: Mr. Speaker, the people of Newfoundland welcome that kind of opportunity, but they are not willing to be participants in The Gong Show. 1 will repeat my question. Why did the Minister of Transport, representing Her Majesty's Government, participate in a press conference with the Premier of Newfoundland announcing the sale of the Come-by-Chance oil refinery when Petro-Canada, the owner of the refinery, advised-and they told me so this morning-both the Premier and the Minister that there had been no sale?


Gerald Stairs Merrithew: Mr. Speaker, I am awfully sorry the Hon. Member does not share the happiness of the people of Newfoundland in having those new jobs in that area.


REQUEST FOR BAN ON CIGARETTE ADVERTISING
Ms. Lynn McDonald (Broadview-Greenwood):: Mr. Speaker, my question is for the Minister of National Health and Welfare. I suspect he will know that Steve Fonyo's father has said that he wished someone had warned him of the hazards of cigarette smoking when he was young. Of course he will know that Mr. Fonyo is now dying of lung cancer. Will the Minister respond positively to Mr. Fonyo's appeal? Knowing that tobacco companies are spending $200 million a year to undo any good that the Minister's pro-health campaigns are doing, will he respond positively by putting an end to the disinformation campaigns, with a total ban on cigarette advertising?


Hon. Jake Epp (Minister of National Health and Welfare):: Mr. Speaker, I think all of us received the news of Mr. Fonyo Senior's illness with deep regret. Regarding the ban on advertising, as I told the Hon. Member earlier, that issue has many more implications. It is not simply a matter of banning advertising so that people will no longer smoke, thereby ending lung cancer. Obviously that which the Hon. Member continually puts forward is not the complete answer.
October 30, 1986


PLEA BY PHYSICIAN'S ORGANIZATION
Lynn McDonald: Mr. Speaker, will the Minister not respond favourably to the latest campaign of Physicians for a Smoke-Free Canada? As the Minister knows, Members of Parliament will receive black-edged cards when their constituents die from tobacco-related diseases. Will the Minister respond favourably to the plea Physicians for a Smoke-Free Canada made this morning when they stated that they are tired of government inactivity, and specifically requested a ban on advertising as a first step toward controlling smoking in Canada?


Arthur Jacob (Jake) Epp: Mr. Speaker, regarding the argument that there has not been government activity in the last two years, I really do not think I have to defend that once again in the House of Commons. The Hon. Member knows as do most Hon. Members that, from my perspective, if it were possible, the route I would like to take would be to ban cigarette advertising. I constantly hear the argument that Finland has done so. I spoke to the Minister for Social Security of Finland two days ago. The Finns had to amend their Constitution in order to ban cigarette advertising so that it would not be an abrogation of press rights. I would suggest to the Hon. Member that, when she wants to put facts before us, she should put the entire package before us so that we can look at it in that sense.


COME-BY-CHANCE OIL REFINERY-ROLE OF PETRO-CANADA
Mr. George Baker (Gander-Twillingate):: Mr. Speaker, two weeks ago Premier Peckford promised Newfoundlanders that he would "blow their minds" with an announcement. The announcement was made. It did not blow their minds, it boggled them. The Premier announced the sale of the refinery but Petro-Canada said that it was not sold. However, the Minister promised us today that jobs will be created and we thank him for it.


Some Hon. Members:: Hear, hear!


Mr. Speaker:: Order. I hesitate to interrupt the extensive applause with which some Hon. Members are greeting the preamble to the question of the Hon. Member for Gander- Twillingate. Perhaps if the Hon. Member would proceed with his question there might be more applause.


George Baker: I am sure there will be, Mr. Speaker. Since Newfoundland Energy Limited is so keen and is putting up $20 million to reopen the refinery, could the Minister tell the House what he thinks is wrong with Petro-Canada? Why
Oral Questions
could Petro-Canada not do what this company says it will do with the refinery?


Gerald Stairs Merrithew: Mr. Speaker, I think the people of Newfoundland are very, very happy that this company will try to find markets and make things happen in Come-by-Chance, something which the Hon. Member's Government could not do.


NORTHEASTERN UNITED STATES MARKET
George Baker: Mr. Speaker, the projected market is in the northeastern United States and the refinery in the riding of the Minister used to supply that market until it got cut off, as did refineries in Quebec and Nova Scotia, and jobs were lost. What guarantees do we have now that the Come-by-Chance oil refinery will not also be cut off from this same market at the very time it is opening? We do not want Come-by-Chance to go by chance again.


Gerald Stairs Merrithew: Mr. Speaker, the Hon. Member can be assured of one thing: there were more jobs lost in Saint John, New Brunswick, by the former Liberal Government's policies. The opportunity for new jobs and economic development is welcomed by the people of Come-by-Chance. They are the ones who will be the net beneficiaries of this, and the Hon. Member should be very happy about it.


FREE TRADE WITH UNITED STATES-POSSIBLE EXCLUSION OF AGRICULTURE
Mr. Lome Nystrom (Yorkton-Melville):: Mr. Speaker, I have a question for the Minister of State for External Affairs.
Yesterday, the Union des producteurs agricoles du Quebec met with the three political parties in Ottawa to object to the inclusion of the farming industry in the free trade discussions with the United States.
My question is this: Can the Minister now assure us that agriculture will not be included in the free trade negotiations between Canada and the United States?


Hon. Pat Carney (Minister for International Trade):: Mr. Speaker, the question of the Hon. Member surprises me. Is he suggesting that agriculture should not be part of the free trade negotiations?


Mr. McKnight:: Remember the leadership in Saskatchewan, Lome.

October 30, 1986
Oral Questions


REQUEST THAT MINISTER GIVE COMMITMENT
Lorne Edmund Nystrom: Mr. Speaker, the answer is yes. The UPA has said that the dairy industry and sectors such as poultry and pork production would be destroyed by a free trade agreement between Canada and the United States.
Can the Minister tell us once and for all whether or not the farming industry will be on the negotiation table, because the UPA would like an answer now.


Pat Carney: Mr. Speaker, there are a number of elements involved in the negotiations. I would like to point out to the Hon. Member that a poll released today showed that 57 per cent of Canadians support the free trade initiative of this Government.


FINANCIAL INSTITUTIONS
Mr. W. Paul McCrossan (York-Scarborough):: Mr. Speaker, my question is for the Minister of State for Finance. Last night before the Finance Committee, the Chairman of the Continental Bank stated that in order to preserve the jobs of his employees he had no option but to seek a merger with a foreign controlled bank since, without legislative changes, large Canadian non-bank financial institutions such as Sun Life and National Trust could not acquire the Continental Bank. Will the Minister bring in changes to the ownership provisions for Canadian financial institutions in order to enable control to remain in Canada should a similar situation develop in the future, or is he satisfied that the loss of Canadian control is the only way to save jobs in Canada?


Hon. Tom Hockin (Minister of State (Finance)):: Mr. Speaker, the Hon. Member is asking about a future policy about which he is curious. I can guarantee him that in the next month or two we will bring forward our policy which will endeavour to maintain Canadian control as best we can, create jobs, and increase the further competitiveness of our banking system.


EXISTENCE OF NEW MARKETS FOR PETROLEUM PRODUCTS
Jean-Claude Malépart: Mr. Speaker, my question is directed to the Deputy Prime Minister or the Acting Minister of Energy, Mines and Resources.
Last year around this time, Gaz Metropolitan and the Quebec Government were asking the Conservative Government for assistance, in keeping the Gulf refinery open in Montreal East. The Energy Minister at the time answered that there was no market.
Could the Minister inform the House today how he was able to find an export market when a year ago, there were no markets to keep the Gulf refinery in Montreal East operating?


Gerald Stairs Merrithew: Mr. Speaker, it should be noted that in the ongoing negotiations for the Come-by-Chance refinery, no federal moneys are directly required. All of the output of this particular refinery will go to the United States thanks to very good negotiations by the Province of Newfoundland.


EVOLUTION OF MARKET
Jean-Claude Malépart: Mr. Speaker, the Minister doesn't have his facts straight. The Government is going to sell at a discount price of less than $2. And besides, Gaz Metropolitan was merely asking for permission to purchase the Gulf refinery.
Could the Minister explain what has changed in the energy sector to make him say today there is a market in the U.S., while a year ago, the Energy Minister at the time told us there were no markets?


Gerald Stairs Merrithew: Mr. Speaker, it should be well known that the purchasing company will purchase the entire output of that particular plant. We think it has found its own market niche and we welcome that kind of opportunity for economic activity in Come-by-Chance.


ENVIRONMENTAL AFFAIRS
Mr. Jim Fulton (Skeena):: Mr. Speaker, my question is directed to the Minister of the Environment. The Haida people and Canadians from coast to coast want to know if the federal Government is prepared to offer fair compensation to the
October 30, 1986

loggers and logging companies on Lyell Island and in South Moresby so that the area will be protected. Can he tell this House, the Haida people, and the people of Canada, whether or not he is prepared to make that offer today?


Mr. Blackburn (Brant):: Good question.


Hon. Tom McMillan (Minister of the Environment):: Mr. Speaker, it is a good question. I provided the answer in this House some weeks ago when I said to the House and, through it, to Western Forests Products Ltd. that the Government of Canada would be very predisposed toward sitting down with them to negotiate the value of the timber licences and to reasonably compensate the company for them.


POSITION OF BRITISH COLUMBIA GOVERNMENT
James Ross Fulton: Mr. Speaker, I thank the Minister for that answer. However, as he knows, logging is going on on Lyell Island today in areas under negotiation for designation as Canada's highest priority national park. Is the Government going to take the necessary steps to get the cooperation of the B.C. Government to stop that logging before it becomes the South Moresby National Slash Park?


Thomas Michael McMillan: Mr. Speaker, the situation is delicate. I do not think one needs to resort to exaggerated rhetoric to underscore the problem. The Government of Canada is deeply concerned about what is happening in the South Moresby area. I do not think it would be an overstatement to say that violence, even death, is possible if this thing gets out of control. We are working behind the scenes, quietly, reasonably and co-operatively, with the Government of B.C. and the Haida themselves to see whether we can avert disaster.


TAXATION
Mr. Robert Toupin (Terrebonne):: Mr. Speaker, my question is for the Minister of Finance, or in his absence, for the Minister of State (Finance).
The Conservative Governement has imposed a minimum personal income tax, but not a minimum corporate income tax when we know that thousands of profitable corporations pay no taxes in Canada.
Must we conclude, Mr. Speaker, that the Minister of Finance was not aware of certain figures which are essential to prepare any budget or implement any major tax initiative? Or must we conclude, Mr. Speaker, that the Minister of Finance and his Government deliberately and unduly favour these companies, some of which are very large?
Oral Questions


Thomas Hockin: Mr. Speaker, the issue of a minimum tax for corporations is of course being examined in the ongoing consultations on tax reform. I will tell the Hon. Member that 13,000 Canadian corporations paid tax last year that had never paid tax before.
I will also tell him that the American system of a minimum corporate tax is not working very well and produces trivial amounts. We have to look at this carefully because there is no easy answer.


CONSUMER AFFAIRS
Mrs. Therese Killens (Saint-Michel-Ahuntsic):: Mr. Speaker, my question is for the Minister of Consumer and Corporate Affairs.
Last Spring, when the price of crude oil went down by 60 per cent, the Government was very slow to react. Canadians had to wait three months before noticing any change in the prices at the pump.
According to a Canadian Press release from Calgary, there will be an increase in prices within a month.
Can the Minister assure us that the Canadian consumers will have the same three months of grace before there is any increase at the pump?


Hon. Harvie Andre (Minister of Consumer and Corporate Affairs):: Mr. Speaker, as the Hon. Member knows, there is no constitutional authority for the federal Government to set prices. We can only try to ensure that the market-place is truly competitive. In that regard, the Director of Investigation and Research in the Competition Branch is monitoring petroleum markets directly. If the Hon. Member has any evidence of efforts to manipulate the market to the disadvantage of consumers, she should let us know and we will take action immediately.


GOVERNMENT MEASURES TO GIVE EQUALITY OF TREATMENT TO CANADIAN CONSUMERS
Marie Thérèse Rollande Killens: Mr. Speaker, my supplementary is for the same Minister.
Last Spring, the Minister of Energy, Mines and Resources became involved by sending a short and weak telex to the oil giants pleading for lower prices at the pump.
Can the Minister state what action he plans to take to provide Canadian consumers with equality of treatment?

October 30, 1986
Oral Questions


Harvie Andre: Mr. Speaker, I just became aware at lunchtime that in the Niagara Falls region right now gasoline is selling at 32 cents a litre as a result of a price war. We are trying to promote as much competition as possible so we will have price wars as frequently and as widely spread as possible. That is the best way to get the best results for consumers-good healthy competition.


ENVIRONMENTAL AFFAIRS
William Alexander (Bill) Blaikie: Mr. Speaker, my question is directed to the Minister of the Environment. In order to avoid the possibility of violence and death, which the Minister referred to a moment ago, will he stand in his place today and publicly ask the Government of British Columbia to stop the logging on Lyell Island until such time as successful negotiations can be concluded?


Thomas Michael McMillan: Mr. Speaker, the Hon. Member will know that I was in Vancouver a few weeks ago to meet with my provincial opposite number, Austin Pelton, to make a request similar to that which the Hon. Member calls upon me to make now. I can assure him that we are pursuing the matter with vigour. The position of the Government of Canada is clear and it has been conveyed clearly to the Government of B.C.


OBSTACLES TO SETTLEMENT
William Alexander (Bill) Blaikie: Mr. Speaker, if that kind of representation has been made privately, I again ask the Minister to make it publicly here. I also ask him, if the federal Government is prepared to put up money, what is the problem? If the money has been offered and the federal Government is willing to negotiate, who is standing in the way of a successful negotiation of that problem?


Thomas Michael McMillan: Mr. Speaker, I think one of the things standing in the way of progress is the grandstanding which the Hon. Member is wont to do from time to time. I say that with reluctance because it is not characteristic of his personal style. I draw to his attention a sentence from a letter written by his colleague, the Hon. Member for Skeena, to the Prime Minister, in which he said: "This issue transcends partisan bickering".


William Alexander (Bill) Blaikie: Indeed.


Thomas Michael McMillan: I commend it to the Hon. Member.


NATIONAL DEFENCE
Mr. Len Hopkins (Renfrew-Nipissing-Pembroke):: Mr. Speaker, my question is directed to the Associate Minister of National Defence. Yesterday it was revealed that the U.S. Navy overcharged Canada and Turkey by more than U.S. $14 million on the sale of torpedoes. As most of this sale was to Canada, our share of the overpayment could be Can. $18 million, plus interest. Can the Minister inform the House what measures his Department is taking to retrieve the overpayment?


Hon. Monique Vezina (Minister of Supply and Services):: Mr. Speaker, I want to advise the House that we have no reason to believe that Canada was overcharged since the final cost of the contract will not be known until the expiry date, 1988 in this case.


MONITORING OF CONTRACT
Leonard Donald Hopkins: Can
the Minister assure this House that ail contracts of this nature are monitored, from the manufacturing stage to the middleman, to the final purchaser? Will that be done in this case, and will she give us a report on the final outcome?


Monique Vézina: Mr. Speaker, of course I can give the assurance that we will follow the competitive procedure and that further information will be made available in due course. It may be that the allegations we have been hearing are unfounded.


CANADA POST CORPORATION
Mr. Cyril Keeper (Winnipeg North Centre):: Mr. Speaker, my question is directed to the Minister responsible for the Post Office. According to newspaper reports the Post Office is planning a major publicity campaign to sell the idea that mailboxes are better than door-to-door delivery. Is the Minister now in a position to confirm that the Government has decided against door-to-door delivery in new communities?


Hon. Michel Cote (Minister of Regional Industrial Expansion):: Mr. Speaker, the Government has not decided on anything.


Some Hon. Members:: Oh, oh!


Mr. Axworthy:: Truer words were never spoken.
October 30, 1986


Michel Côté: We have been presented with a corporate plan which we are examining and, when we are ready, we will make the announcement at the appropriate time.


Cyril Keeper: I take note of the fact that the Minister has not denied that he has decided against door-to-door delivery.
[Translation)


COST OF PROMOTING IDEA MAIL BOXES BETTER THAN DOOR-TO-DOOR SERVICE
Cyril Keeper: A supplementary, Mr. Speaker. Is the Minister prepared to tell the House how much money Canada Post officials will spend to promote the idea that mail boxes are better than home delivery, and why should this money not be used to expand the services people want, which is door-to-door delivery?


Michel Côté: Mr. Speaker, I can only answer that Canada Post have considerably reduced their deficit since 1984-down to $ 184 million from $347 million-precisely as a result of sound corporate administrative decisions. Naturally we will weigh the representations and recommendations made by Canada Post and respond in due time.


INDIAN AFFAIRS
[Stage Direction]
REQUEST THAT GOVERNMENT INTERVENE TO REINSTATE j DEMOCRATIC SYSTEM IN KANESATAKE INDIAN BAND
Mrs. Lise Bourgault (Argenteuil-Papineau):: Mr. Speaker,
I have a question for the Minister of Indian Affairs and Northern Development. The Kanesatake Band Council is elected for life, under the Customs Hereditary Chief system. Many members of that band, who do not agree with that system nor with the policies or philosophies developed by the Kanesatake Band Council, submit that their rights are flouted since they cannot get information and no public meetings are held, and because of their disagreement, they have become second-class band members. Can the Minister, under the authority that is vested upon him, intervene in order that the democratic system that existed before 1979 be reinstated?


William Hunter (Bill) McKnight: Mr. Speaker, I appreciate the Hon. Member's interest. She is correct that the Oka Band has election by custom, that being the Mohawk custom. It would be totally inappropriate for the federal Government or this Minister to interfere with the elections or customs of the Indian government of the Oka Band.
Oral Questions


NATIONAL RESEARCH COUNCIL
Mr. David Berger (Laurier):: Mr. Speaker, my question is directed to the Minister of Science and Technology. The Minister of Science of British Columbia has called the Government's plan to shut a radio observatory a "dereliction of responsibility". He has also expressed a "lack of confidence" in the leadership of the federal Government.
Given this damning indictment of his policy from a respected scientist and a Minister of the B.C. Government, will the Minister of Science and Technology immediately agree to reverse his plan to cut the budget of the National Research Council?


Hon. Frank Oberle (Minister of State for Science and Technology):: Mr. Speaker, I, too, monitored the statement of the Minister of Science in the former B.C. Government. It made reference to the closure of one or the other of the observatories in British Columbia. There is no intention of closing those observatories.


David Berger: Mr. Speaker, it is not a specific observatory that is being criticized, but the Minister's policy.


REQUEST THAT MINISTER TABLE STUDIES
David Berger: Mr. Speaker, will the Minister table in this House the analyses upon which he based his decision to cut the budget of the National Research Council, the list of groups which he consulted, and the recommendations and advice he received from members of the National Research Council?


Frank Oberle: Mr. Speaker, as I said the other day, I spent three hours in the Standing Committee tabling and offering all kinds of information to Members. Unfortunately, this Hon. Member did not see fit to attend the meeting. He can read the record of it and he has access to all the information I tabled.


FISHERIES
Ms. Pauline Jewett (New Westminster-Coquitlam):: Mr. Speaker, my question is for the Minister of Fisheries and Oceans. Since last Saturday the Kerkhoff-Hyundai consortium has been raising polluted debris from the bottom of the Fraser River near the Pattullo Bridge and dumping it just over the edge of the pilings into the flowing river, thereby seriously endangering the fish habitat.
Why is the Department of Fisheries permitting this dumping when no environmental impact studies have been done and no public hearings have been held?

October 30, 1986
Oral Questions


Hon. Thomas Siddon (Minister of Fisheries and Oceans):: Mr. Speaker, I have not yet received a report from officials on the West Coast about the problem raised by the Hon. Member. If there is any evidence of contraventions of Sections 31 and 33 of the Fisheries Act, appropriate action will be taken immediately.


Pauline Jewett: Mr. Speaker, I am shocked. This has been going on since Saturday and the Minister does not know anything about it.


REQUEST FOR INSPECTION
Pauline Jewett: Will the Minister take immediate action by having his inspectors go to the site and immediately begin to conduct the necessary tests to protect the fish in the Fraser River?


Thomas Edward Siddon: Mr. Speaker, if practices are occurring which are contrary to the habitat provisions of the Fisheries Act, immediate actions will be taken if they have not been taken already.
Every incident is not brought to my attention immediately, but I certainly take seriously the necessity to act immediately upon receipt of evidence. The only evidence I have heard is the allegations of the Hon. Member.


Pauline Jewett: Go check it out. That is really shocking.


MARKETING OF FRESHWATER FISH-SENATE COMMITTEE REPORT
Dave Nickerson: Mr. Speaker, my question is also directed to the Minister of Fisheries and Oceans. What is the Government's response to the September report of the Senate Fisheries Committee on the marketing of freshwater fish in Canada? Will the Minister now allow competition with the monopolistic Freshwater Fish Marketing Corporation?


Thomas Edward Siddon: Mr. Speaker, I am very cognizant of the Hon. Member's interest in the freshwater fishery in the western Arctic. I visited the Hay River plant of the FFMC with him and met fishermen there some years ago. Indeed, about a month ago we received a report from the Senate Committee on the Freshwater Fish Marketing Corporation. That report is being reviewed with provincial and territorial officials and officials of the corporation. Improvements will be made to the corporation which will benefit the fishermen and employees of the plant in the Hon. Member's riding. The suggestions which are viable will be initiated.


CANADA POST CORPORATION
Mr. Alfonso Gagliano (Saint-Leonard-Anjou):: Mr. Speaker, my question is directed to the Minister responsible for Canada Post. I have a copy of the 60,000 advertisements which were distributed to postal employees advertising the new Tory buzzword, "super mail box" which is to replace home delivery in new residential districts.
Is this part of the postal business plan which the Minister is supposed to announce? If not, what is in the plan? Canadians want home delivery rather than a "super mail box".


Michel Côté: Mr. Speaker, as I have said earlier, I think the Post Office has improved tremendously since we came into power.


David Orlikow: You're kidding.


Michel Côté: The super mail boxes will upgrade service for rural and urban customers. This will have no impact on customers currently being served by letter carriers.


Cyril Keeper: You'll get to them later.


REQUEST THAT GOVERNMENT ANNOUNCE INTENTIONS IMMEDIATELY
Alfonso Gagliano: Mr. Speaker, why is the Minister not announcing his plan immediately instead of leaving Canada Post reduce its services and increase postal rates?
Why not say exactly what you are going to do, instead of letting Canada Post do your work for you?


Michel Côté: Mr. Speaker, again, Canada Post is a Crown corporation that operates and has to make corporate decisions.
I have indicated that many improvements have been made by this Government, and the matter of superboxes is something else that involves the management of the corporation and that is part of its plan.
As far as we are concerned, we are still assessing the plan that was submitted to us, and when our decision is made it will be announced.
October 30, 1986


NATURAL GAS INDUSTRY DEREGULATION-GOVERNMENT POLICY
Ian Gardiner Waddell: Mr. Speaker, my question is directed to the Acting Minister of Energy and is with regard to natural gas deregulation. The Conservative Party's policy in its handbook reads as follows: "We will adopt market sensitive pricing for exported natural gas while ensuring that Canadians always pay less than their American neighbours". Is that still the policy of the Government of Canada?


Gerald Stairs Merrithew: Mr. Speaker, at this very time my colleague, the Minister of Energy, Mines and Resources, with his colleagues, the other Energy Ministers of Canada, are making a statement in Calgary with regard to this matter. I think the statement will be well received by the producing provinces, the consuming provinces, the distributors, and the pipeline companies. I can assure the Hon. Member that the agreements that were made by the participants will ensure that the consumers and producers are protected.


EXPORTS TO UNITED STATES
Ian Gardiner Waddell: Mr. Speaker, the recent announcement made by the Minister of Energy, Mines and Resources in Calgary is the opposite from the previous Conservative policy that surplus tests and the adjacent border tests will disappear for natural gas. Why is the Government sacrificing our precious gas resources to give Americans cheaper gas than Canadians? Why are you following that idiotic policy?


Gerald Stairs Merrithew: Mr. Speaker, perhaps I could quote what the Minister said:
We can and will, however, carefully monitor domestic and export prices to ensure that Canadians are not placed at a disadvantage.
Surely that is clear enough.


MEMBERS OF PARLIAMENT
Right Hon. Joe Clark (Secretary of State for External Affairs):: Mr. Speaker, I rise on a point of order. May I extend to you and other distinguished Members of the Class of '72 the congratulations of the House on the fourteenth anniversary of your election to Parliament.


Some Hon. Members:: Hear, hear!
Excise Tax Act


BUSINESS OF THE HOUSE
Hon. Herb Gray (Windsor West):: Mr. Speaker, when the Secretary of State for External Affairs (Mr. Clark) rose on his point of order, I could not think of what would surpass in importance the weekly question as to the business the Government will call for the next seven days. However, now that I have heard his point of order, I entirely agree that it was a worthy one in this case.
I would like to ask the Government House Leader what business he intends to put before the House in the next seven days.


Donald Frank Mazankowski: Mr. Speaker, today we will continue with second reading of Bill C-14, the Excise Tax Act. If that is concluded, we will proceed to Bill C-17, concerning the PGRT. Friday is an allotted day. I understand the Liberals will be presenting a motion in that regard.
On Monday we will return to Bill C-17, and on Tuesday we will move to Bill C-15, the amendments to the Criminal Code and the Canada Evidence Act, standing in the name of the Hon. Minister of Justice (Mr. Hnatyshyn).



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Hockin that Bill C-14, an Act to amend the Excise Tax Act and the Excise Act, be read the second time and referred to a legislative committee.
Mr. Speaker:: When the House rose at one o'clock, the Hon. Member for Kenora-Rainy River (Mr. Parry) had the floor.


John Edmund Parry: Mr. Speaker, I am glad to reclaim the floor, even in the somewhat disruptive aftermath of Question Period, because it gives me the opportunity to emphasize again to the House the way in which the Progressive Conservative Government is garnering its increased taxes principally upon the backs of ordinary Canadians and at the expense of the budgets of ordinary Canadian families.
Before we rose for lunch I was at the point of coming to the division of increased taxes under the Government. The figures are instructive and I hope the Government will observe and absorb them because they are surely a signpost showing the principles the Government is following in its tax gathering campaign.

October 30, 1986
Excise Tax Act
There has been an increase of $6.7 billion in sales and excise taxes since the Government took power, compared to $3.3 billion in personal income tax increases, and a meagre $1.4 billion in increases in the corporate income tax. The only conclusion one can reach when considering these increases together is that they are regressive.
We know that the sales and excise taxes that go into the purchase cost of most goods that are purchased in Canada- apart from food and refreshments obviously-are taxes that are paid in a much more equal fashion by the poor and the wealthy than any other form of tax. Not only have repeated studies analysed this tax as being regressive, I have not even heard anyone on the government side contradict this analysis. Unlike the personal income taxes which are progressive in the sense of being paid at a higher rate as one's income increases, sales and excise taxes are regressive.
For example, if a person with an annual income of $15,000 buys the same mix of taxable goods and services as someone who earns $75,000 a year, they pay the same amount by these indirect taxes. It should also be pointed out how these taxes are concealed from the taxpayers, namely the consumers. Unlike the provincial retail sales taxes which are added as a percentage of the price and are visible to the consumers, except in the case of beverages in some provinces, federal sales taxes are hidden from the consumer because they are included in the final price of the item. For example, families with an income of $20,000, who are not eligible for the so-called refundable sales tax credit which the Government has introduced, are the ones who will be hit hardest by this combination of sales and excise tax increases.
It is worth-while calling the Government's bluff on this question of the refundable sales tax credit. Our Party is not against such a tax credit and believes it does something to offset the increased taxes, but let me point out the analysis of the National Council of Welfare which has calculated that while this form of tax relief reduces the over-all burden considerably, it does not fully offset the cost of that increase. The $50 and $25 for each child will offset most of the increase, perhaps, for families who are in the $10,000 to $15,000 income range, but those with incomes below even $20,000 will be paying more in tax even after the refundable sales tax credit has been factored in.
It is no secret to those who study economics that this diverts money from consumer spending. Indeed, the Conference Board of Canada has calculated that the increases will assist in slowing down personal expenditures by Canadians-that is, no expenditures-from a growth rate of 5.2 per cent in 1985 to 2.7 per cent in 1987. The National Council of Welfare has pointed out that over the last five years, with the exception of the wealthy and, gratifyingly, the very poor, on the average Canadians have experienced a decline in their purchasing power. I believe this is a trenchant criticism of this increased tax measure. When this is allied with the fact that over the last eight years Canadians have experienced a drop in their real
wage income, their real available spending power is also declining.
This must also be juxtaposed with statements by the Progressive Conservative Government concerning the need for economic growth. The restrictive effect that these increased taxes have on consumer spending will, of course, have an adverse effect on economic growth over-all.
I want to relate what we have seen the Government table in Bill C-14 to its suggested plans for tax reform and point out some of the inconsistencies. It is not my purpose to deny the possibility that the Government may indeed have had a change of heart or, perhaps as some of its back-benchers might say, suffered a change of heart. The fact is that there is a clear divergence between the actions of the Government in tabling Bill C-14 and its stated intentions, at least in the statement by the Minister of Finance (Mr. Wilson) on October 23, 1986. The statement that the Government needs more consultation time was instructive. Perhaps the Government wanted more time to elapse so it could garner tax at higher rates before introducing any measure which might lead to some loss of tax revenue in one of the three major tax accounts.
The Minister of Finance stated that he intended to reduce the rate of personal income tax in relation to over-all revenue. He felt that this could be done by seeking higher revenues from the corporate and sales tax systems. We can applaud an increase in the corporate taxes as a means of ending some of the outrageous selective tax preferences which my Party is now daily highlighting in the House, and with very good response from Canadians, I might say. Those measures have enabled many corprorations to avoid completely the payment of tax at the same time as their income statements and balance sheets are showing their increasing health. At the same time the stock market is showing in the clearest way possible that these corporations, which are in fact flourishing and prospering, are failing to make a contribution to the tax system.
Looking again at the sales tax system, it is difficult for my Party to see where further increases can be imposed without further increasing beyond the degree to which we are presently condemning the regressivity of that system. I think there is some fear of the imposition of a business transfer tax, a modified version of the value added tax, now endemic in other jurisdictions and, indeed, generally adopted within the European Economic Community, because that is in the statement as well. Similar products should bear the same rate of tax and the sales tax burden should be spread more equally across goods and services. We have here what has been referred to as "smoke and mirrors" and what has been referred to as "front-pocket donations and back-pocket extractions". As we have seen in the past, and as a well known satirical piece points out, the net result is that lower and middle income tax payers in Canada are going to pay. It is they who will make up the difference.
October 30, 1986

The over-all unfairness of the system is bolstered by the increase in sales and excise taxes, the hidden taxes, more regressive taxes which are difficult to administer, inflationary and, frankly, it is difficult to see how any business transfer tax could be introduced without essentially spreading some of the negative characteristics we have pointed out in the federal sales and excise taxes with, of course, the exception of the positive aspects the "sin taxes" have of discouraging the use of those products which are obviously harmful to all of us.
With respect to the business transfer tax, a value added tax by any other name, we have not seen anything concrete proposed, so perhaps it would be appropriate to leave that tax, even though it might cause an increase in the number of companies collecting by fifteenfold, and return briefly and finally to the federal sales and excise taxes. By 1988, revenues from the federal excise taxes and duties will have risen over 1984 by almost 90 per cent. That, I think, in a word, sums up the degree to which the Government is shifting to a form of tax which has been condemned by commentators right across the ideological spectrum in terms of economics, as a tax which is really counter-productive to the economy and one which is less than fair to those people who bear the largest share of the tax burden, and those people we must be concerned with, the ordinary Canadian family.


The Acting Speaker (Mrs. Champagne):: Questions or comments? Debate.

Questions or comments.
Is the House ready for the question?
Resuming debate. The Hon. Member for Ottawa-Vanier (Mr. Gauthier).


Jean-Robert Gauthier: Madam Speaker, I am pleased with this opportunity to speak on Bill C-14, an Act to amend the Excise Tax Act and the Excise Act. The purpose of this Bill is to increase certain taxes, which means that Canadians will again have to pay more for certain consumer goods, including manufactured goods and petroleum products.
To find out what might be of interest to Canadians in a Bill, you read what the Minister or his Parliamentary Secretary had to say about it. 1 will therefore refer to yesterday's Hansard at page 878, where the Parliamentary Secretary, speaking on behalf of the Government, introduced this budgetary measure.

I found it interesting that the Parliamentary Secretary for the Minister of Finance (Mr. Vincent) spoke for exactly 10 lines on the Bill itself. He said the Bill arose out of the Budget of February, 1986 and from the Ways and Means motion tabled on June 11 of this year. The essential and substantive part of his speech reads:
Excise Tax Act
The purpose of this Bill is to increase federal sales tax in certain areas. An increase of 1 per cent will raise sales tax on construction materials from 7 to 8 per cent, on alcohol and tobacco from 14 to 15 per cent and on other commodities from 11 to 12 per cent.
That is all we heard about Bill C-14 because for the rest of his speech he, true to form for a real good Tory, made political and partisan comments. I read it twice and underlined it trying to find further comments on Bill C-14, and there was nothing.
To be fair to the Parliamentary Secretary, perhaps he did not want to, or was not capable of doing what he should have done, and that is explaining what Bill C-14 was all about, the principle of it. But his speech was all style and little substance. So I will try, with all humility, to cover what the Bill intends to do. I will try to go along with my usual parliamentary habit and clarify somewhat what is in this Bill.
First, the Bill is a federally manufactured sales tax increase. This tax of 1 per cent will add tremendously to the costs of manufactured goods. I want to give to the House an appreciation of the impact of this tax. In his speech, I must admit, on page 879 in Hansard, the Parliamentary Secretary said:
-this Conservative Government and their Prime Minister are acting in a responsible manner, that we know where the money we spend is going.
That is fine, but he says further on that the Government announced in its last Budget that:
A family of four earning less than S15,000 will get $ 150 tax credit.
He enlarged on the great generosity of the Government and how lucky Canadians were to be allowed to receive $150 tax credit if they earn less than $15,000. I looked at my notes, which were quite substantial, to see what the facts are. What are the cumulative effects of the main tax measures introduced by the Tories since they took power in 1984? To find out one must go back to the November 1984 Economic Statement, and the respective Budgets of May 1985, and February 1986. If one goes through that exercise one will find that increases in taxes have been substantial.
However, for the couple with two children earning $15,000, the family to which my hon. friend referred yesterday, we find that because of the modified indexation of 3 per cent, because of the additional 5 per cent and 10 per cent surtaxes, because of the elimination of the 1973 federal tax reduction, because of the modification of child benefits, the family allowance, the tax credits, the exemptions-all those matters put together- that family will have to pay $190 more in tax than it paid in 1984. This shows that, indeed, the $150 is not sufficient even to cover these costs.
If we look further we will see that there is a 1 per cent increase in sales tax rates effective November, 1984; a 1 per cent increase in sales tax rates effective May, 1985; and an increase in the so-called sin taxes on tobacco and alcohol levied in the same Budget. The sales tax base was also broadened by that Budget. There were increases in the RRSP limits, and there was the famous capital gains exemption from which, we know, a family with an income of $15,000 does not profit very


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much. When we add all of this together we find that the result comes to an additional $175 for these items minus, and I must be fair, $10, which is a possible deduction on capital gains that a family earning $15,000 may have. That is a hypothesis which I put out.
With respect to the February, 1986 Budget, there are additional measures. We see that there is a 3 per cent surtax which adds $10 to the tax bill of this same family. It takes care of the $10 they gained on the capital gains exemption. Then there is the refundable sales tax credit which was mentioned by the Parliamentary Secretary. There are increases in the tobacco and alcohol excise taxes which will cost this family another $40. When we add up all these figures, this family will pay $255 more than they paid in 1984, even taking into account the $150 sales tax credit. That is not what I call fair, equitable or responsible, which are the words used by the Parliamentary Secretary. I think they are unfortunate words. So much for the federal manufacturers' sales tax increase and its impact.
The next item with which I wish to deal is the alcohol and tobacco excise taxes. I think people who use alcohol and tobacco should be paying additional taxes because they add to our national health bills. They eventually cost us more money. We should try to capture this money from them so that we can look after their health if they do not wish to look after it themselves.
The next item I would like to refer to is the air transportation tax. Effective May 1, 1986, the tax on domestic air travel will be limited to a maximum of $50 while the tax rate will increase from 9 per cent to 10 per cent. The tax will be extended to tickets sold outside Canada on or after August 1, 1986.
The fourth item with which I wish to deal is the telecommunication programming services tax. This tax applies to television equipment provided to customers of cable and pay-TV services, and to equipment used by hotels and other closed circuit broadcasts. The TPST was increased by 1 per cent to 7 per cent in the 1985 Budget. The proposed legislation will increase the tax by another 1 per cent to 8 per cent effective April 1, 1986.
Then we come to the fifth item in the Bill which deals with the motive fuel tax. Members will recall that in the 1985 Budget the method by which federal sales tax was levied on motive fuels was changed. As a result, the sales tax continues to be imposed as a percentage or ad valorem tax. It is calculated as a specific amount per litre. The specific amount is to be adjusted quarterly according to the industry selling price index as published by Statistics Canada. Clauses 6, 7 and 8 of the Ways and Means motion to Bill C-14 are intended to clarify how this sales tax calculation is to be made. We all know that additional sales taxes were added in 1985 to the order of .32 cents per litre for regular gasoline; to .35 cents per litre for unleaded gasoline; to .36 cents per litre for premium gasoline; and to .29 cents for diesel. We also know that the sales tax increase as per the Budget of April 1, 1986, will be increased
by .329 cents for regular gasoline; .36 cents for unleaded gasoline; .37 cents for premium gasoline; and .302 cents for diesel.
The next item with which the Bill deals is with respect to tourist literature. The 1985 Budget exempted government-sponsored tourist literature from federal sales tax. Effective February 27, 1986, the legislation proposed here would extend the exemption to tourist literature acquired by boards of trade, chambers of commerce, municipal and automobile associations, and similar organizations. The exemption applies only to material that is of general as opposed to specific commercial nature and that is distributed to the public at large free of charge. I think this is a plus in the Bill.
The next item with which I wish to deal is the refunding of sales and excise taxes on motive fuels to diplomats. The Secretary of State for External Affairs (Mr. Clark) will decide who will receive such refunds. This Bill proposes to refund sales and excise taxes on motor gasoline and diesel fuels to eligible diplomats from countries that provide similar relief to Canadian representatives.
The eighth item in the Bill deals with tax collection by Revenue Canada. As an aside, I am going through the Bill in this way because I think that yesterday most of us missed the principle at hand here. I am trying to be as brief and as specific as I can. Therefore I hope Hon. Members will excuse me if I do not go into too many examples with respect to each one of these items. According to existing legislation, Revenue Canada officials can demand payment of taxes owing for an unlimited amount of time. The Ways and Means motion to Bill C-14 proposes to allow Revenue Canada to collect only that amount of tax that will be paid or will become payable within 90 days after Revenue Canada serves the taxpayer notice of its intention to collect.
The ninth item deals with a motive fuel tax rebate to farmers. This is a measure in which a great many Members are interested, and justifiably so. It is a measure which has been mentioned by many Members in their speeches yesterday and today. The 1986 Budget extended a three-cent-per-litre fuel tax rebate to primary producers for another year, or until January 1, 1988. Then, on April 30, 1986, the Prime Minister (Mr. Mulroney) announced that effective May 1, 1986, the tax rebate would be increased by another 2.5 cents per litre, for a total rebate of 5.5 cents per litre. The Government, and justifiably so, estimates that this measure will save farmers an aggregate $165 million over the next two years.
This is a laudable move, and something which is justified. I only wish that the trappers had been included in the same measure. There are quite a few people who make a living from trapping in Canada, and they should be allowed the same rebate and receive the same consideration from the Government. As was mentioned before in debate, unfortunately this has not come about yet. Being an optimist, I am hoping that
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some day the Government will see fit to allow people who make a living from trapping to be eligible for this rebate.
The only difficulty is that the $165 million over the next two years is based on an estimate. It assumes that the rebate program will be fully subscribed. However, previous experience will show that this is a questionable assumption. Not all people are aware of the rebate and, therefore, not all farmers claim it. The Government, therefore, gets away with not having to pay it all. Nevertheless, it is there and people should know about it. It is a good measure and we applaud it.
The last and final item is the impact of this sales and excise tax Bill on federal Government revenue. According to the Government's figures, this increases and extends the fuel tax rebate to farmers over the next two years. It will cost $65 million in lost revenue for 1986, and $100 million for 1987. This is in addition to the $120 million of lost revenue indicated in the years 1986 to 1990 under the commodity tax measures. Those items will be shown in the eventual cost to the Government, and, therefore, will have to be authorized by the House.
I wish to end my few remarks by saying that we deplore the fact that Canadian consumers are again being asked to pay increased sales taxes and will have to bear the brunt of these measures. I plead with the Government that it not use these regressive tax measures to try to expunge the national deficit. The $150 sales tax credit is a good measure. It is not sufficient to allow those in the low income groups to really be protected from these additional measures. This reduces their take-home pay and their capacity to keep up with both inflation and the demands of their families. If the Government wanted to be fair, equitable and just, it should have come in with a sales tax credit of a great deal more than $150 for those families. That would have given them a little more relief and would not have used what I would define as very regressive measures in terms of their revenues.
I end my remarks on that note. I hope that the Government will be responsive to expanding that sales tax credit, which I think is a good measure, and will allow for those with low and moderate incomes to protect themselves against inflation and increasing taxes.
Don Boudria: I congratulate my colleague, the Hon. Member for Ottawa-Vanier (Mr. Gauthier) for his usual eloquence and objectivity in his remarks.
Does the Hon. Member think it is fair-and I know he will have considerable comment about this-that a married couple with two children, whose income is $15,000, will have to pay an increase in taxes of $255 as a result of the economic statement of November, 1984, and the Budgets of 1985, and 1986. Does he think it is fair that the Tories want to go through with this regressive tax measure which will inflict that sort of pain on ordinary and low income Canadians?


Jean-Robert Gauthier: Madam Speaker, I thought I made this quite clear in my comments, but I want to thank the Hon. Member
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for giving me a chance to repeat what I thought I said in my speech, namely that it is unfair, regressive and lacking in any equity whatsoever to force these families where four people have to live on a very low income of $15,000, an income that is below the poverty line-we recognize that today-and in absolute terms, below the poverty line means that they are constantly having a hard time making ends meet and even putting food on the table. God knows that the definition of poverty... We should make a distinction here between absolute and relative poverty. Without wishing to seem frivolous, absolute poverty-intellectually speaking-may be what the Conservatives are suffering from, but as far as ... Yes, you Tories are absolutely incapable of any kind of original thinking. But absolute poverty, aside from the Tory connotation, may mean being unable to support one's family. Relative poverty means one is poor compared with other people in the same environment. Someone can be poor, meaning that he is unable to keep up appearances.
I realize that the Hon. Member-


Don Boudria: Beauharnois-Salaberry!


Jean-Robert Gauthier: -for Beauharnois-Salaberry (Mr. Hudon) has a good definition of poverty, but I was not referring to intellectual poverty. I was referring to poverty-


Don Boudria: Not Conservative poverty!


Jean-Robert Gauthier: -as an economic concept, and not as a lack of intellectual capacity or initiative. He is an expert as far as that goes. Initiative just may be something which helps people make progress. A Conservative does not have initiative and stays put, he does not move at all. Therefore it is not very hard to define.
I would like to tell my colleague from Glengarry-Prescott-Russell (Mr. Boudria) that I am very sorry indeed to see this regressive measure under which the Government will tax two-child families, couples with income as low as $15,000. I said in my remarks that the Government was supposed to use this sales tax credit measure to boost the income of those people and give them the money they need to make ends meet. That is all.


Don Boudria: A supplementary question, Madam Speaker. I thank my colleague for giving such a clear answer to my first question. Since he gave a very good explanation in answer to the first question I put to him, I should like to ask him whether he can understand why the Progressive Conservative Party on the other side continues to introduce such regressive measures-against a couple with two children, earning $15,000 a year, therefore already below the poverty level as my colleague from Ottawa-Vanier (Mr. Gauthier) so eloquently put it a moment ago-whether he can understand why the Conservatives would want to promote this kind of tax measure.


Jean-Robert Gauthier: Madam Speaker, the explanation is fairly simple. All we need do is look at the tables and figures to appreciate that poor and middle income families are hit

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hardest by sales taxes and regressive taxes. Couples with two children and an annual income of $30,000-let us refer to figures which are not quite as dramatic as the $15,000 mentioned earlier-did suffer as well because of the 1984-85 and February 1986 Budgets. Again I might enlighten the House with a series of figures I have here. A couple with two children and an income of $30,000 has to pay $245 more than in 1984 as a result of the 1984-85 Budget which reduced indexation by 3 per cent, added 5 and 10 per cent surtaxes, did away with the 1973 tax reduction, and changed family allowances, the tax credit. In addition, they have to pay $280 more because, as you will recall, the sales tax went up by 1 per cent in 1984 and by another 1 per cent in 1985 and the tax base was enlarged, which means another $280, and when we add to that the impact of the 1986 Budget and the 3 per cent surtax, the 1 per cent increase in the sales tax and what we call the sin tax on alcohol and tobacco. We end up with $630 more a year for a couple with two children and a $30,000 income.
If we look further-and this is the funny thing-if we look at a family with an income of $50,000, we see that, because of the capital gains tax exemption, these people are paying only $575 more. With an income of $50,000, they are therefore paying less than a family with an income of $30,000.1 wanted to point this out because when I mentioned this fact recently in a speech, a reporter told me that I had made a mistake. I replied that I had not because, according to the figures, a family with two children and a $50,000 income pays less in taxes today than a family with a $30,000 income.


Don Boudria: Incredible!


Jean-Robert Gauthier: It is indeed incredible. I repeat that a family with a $30,000 income pays $630 more while a family with an income of $50,000 pays $575 more.
When I look at the Tories, Madam Speaker, I tell myself that they are right to look embarrassed. Is it not embarrassing to be taxing the middle classes more than the rich?


The Acting Speaker (Mrs. Champagne):: Questions and comments. Debate. The Hon. Member for Kamloops- Shuswap (Mr. Riis).


Nelson Andrew Riis: Madam Speaker, I realize that we are anxious to get this Bill into committee for thorough examination, but this is an opportunity for Members of Parliament to discuss Bill C-14 in principle. The Bill we are debating today imposes a whole set of new taxes upon Canadian citizens. When they purchase soft drinks at the end of the day, they will pay more federal taxes. When they pick up chocolate bars or packages of gum, they will pay more federal taxes. When they fill up their gas tanks on the way home, they will pay more federal taxes. If they purchase some food for their pet cats of budgie birds, they will pay more federal taxes. I could go on and on, but we are
actually discussing a new regime of taxes being levied by the federal Government upon Canadians.
Not only are these taxes vast, comprehensive, and all encompassing, they are sneaky. They are hidden taxes. People do not understand and recognize them unless they have listened intently to the proceedings in the House of Commons, read Hansard or read carefully some of the financial pages in our national publications. Average Canadian citizens are unaware of the sneaky attempt to levy additional taxes.
This comes at a very peculiar time. I listened with interest to the comments of the Minister when he introduced Bill C-14. He went on at some length about the need for the Government to obtain more revenue. Of course he was concerned about the deficit, as we all are. We are all deeply troubled by the size of the deficit facing Canada. He went on to explain that this was why the Government had to go to Canadian citizens-rich or poor, middle or low income earners, easterners or westerners, men or women- and ask them to pay more taxes. I make that point for the following reason. It is the most regressive form of taxation anywhere in the taxation regime.
Living in a northern climate, most Canadians will be purchasing winter tires or heavy duty winter batteries; most Canadians will be winterizing their automobiles and so on. They will be required to purchase these materials and therefore pay sales taxes. Everyone pays the same amount of sales tax on a set of snow tires which costs $150, for example. Whether they are very wealthy or poor, whether they are low or middle income earners, it is irrelevant. Therefore it is perfectly clear who is penalized most by these taxes-low and middle income Canadians. The same amount of money is levied upon everyone.
When corporate presidents earning $200,000 to $300,000 per year purchase snow tires, they will pay a few extra dollars as a result of Bill C-14. They will not notice it. It will not have a significant impact upon their lifestyles; as a matter of fact, it will probably have no impact whatsoever. However, when low income earners who are heads of households with two children and annual incomes of $15,000 purchase the same snow tires for their automobiles or trucks, they also have to pay a few extra dollars as a result of Bill C-14. It will have a significant impact upon those families. This is why we in the New Democratic Party will oppose Bill C-14 at every stage. If there is a need to raise money or revenue, there are more appropriate ways of doing it.
Why do I say "if there is a need"? It is because in introducing this piece of legislation the Minister made a point about the deficit. It is not surprising that we have an increasing deficit. When we look at the tax system, we find that there are tens of thousands of profitable Canadian corporations which pay no income tax to the federal Government year after year. As a matter of fact, in 1983 there were 79,196 profitable Canadian companies which did not pay a single penny in federal income tax at the corporate level. By the way, their profits combined were some $13.3 billion. In 1983, $13.3 billion went untaxed.
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I suppose one of the reasons for the present deficit-and unfortunately it appears to be an increasing one despite the comments of the Minister of Finance (Mr. Wilson)-is that our tax system is so incredibly inept, biased, and unfair that it allows $13.3 billion to go untaxed. This is not my figure. This is not our figure. Figures such as this one were brought to our attention as a result of our 1986 tax probe. Various organizations across the country provided us with information. In fact, the federal Government provided the information indicating that 79,196 profitable corporations paid no income tax to the federal Government in 1983.
We should also consider the fact that 64 of the companies which paid no federal income tax in 1983 had profits in excess of $25 million. These are not corner stores or small Canadian companies; their profits in 1983 were in excess of $25 million. It is not surprising the Government has trouble in terms of collecting revenue.
May I make a rather humble suggestion. Rather than penalizing Canadian citizens by increasing sales and excise taxes or by imposing what is being called a business transfer tax, which will be even more oppressive, the federal Government ought to give serious consideration to an immediate overhaul of the tax system at both the corporate and personal levels and ought to determine to what extent it needs to continue to raise more revenues on the backs of Canadian taxpayers.
I do not have to remind Hon. Members of the SRTC boondoggle. It was an attempt by the Liberal administration to encourage Canadian companies to participate in research and development. Because of its ill-conceived nature, this cost Canadian taxpayers somewhere in the neighborhood of $2 billion to $3 billion. I do not have to remind you, Madam Speaker, of the billion dollar bank bail-out or of the billions of dollars that have now been given to the multinational oil companies as a result of the removal of the PGRT. It has been estimated that as a result of that decision, billions of dollars will not be going to the federal Treasury over the next few years.
I suppose the most stinging indictment of all is the continued support of the Minister of Finance for the $500,000 capital gains exemption. There are very few countries in the world where one would find people whose incomes are derived from selling race horses, artifacts or Caribbean boats or from investing in the Hong Kong stock exchange going totally untaxed to the tune of half a million dollars. I am not aware of any country in the world which has carte blanche application of a capital gains exemption. I have never heard of such a country, but perhaps other Hon. Members are aware of other countries that have this provision.
I would like to tell the House about the general track record of the Government since it has taken office. If there is a hallmark of this Government, it would certainly be the fact that any increases in revenue tend to come by way of hidden
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taxes. Rather than making up-front increases to the personal or corporate tax levels, the Government imposes hidden taxes so that Canadians are unaware of what is going on. Now the Government is committed to introduce what would be a simply inappropriate type of tax, a value-added tax, or as the Minister of Finance has called it, a business transfer tax. It should not be called a business transfer tax because it is essentially a widening of the federal sales tax base.
At the moment, the sales tax base is restricted primarily to the manufacturing sector but the business transfer tax the federal Government will be introducing in the next few months will tax virtually every business transaction that takes place. Experts in the tax field have called this a massive tax grab. I do not know of one single tax expert who has not called it a massive tax grab, a licence to print money or another descriptive phrase of that nature.
The Government might be lowering the personal tax rate so that a few extra dollars get into the pockets of Canadians. While a few extra dollars might go into their front pockets, the Government will be reaching behind to pull a few hundred dollars out of the hip pockets of Canadians. This will be done through a hidden, sneaky tax called the business transfer tax. It is a very regressive step and one that will concern you, Madam Speaker, a great deal, unless it is introduced in the context of over-all, massive, comprehensive, total tax reform along the lines of that which occurred in the United States.
In the United States, there has been a shift away from the personal taxpayer to the corporate taxpayer. President Reagan himself has decided that $120 billion will be moved onto the shoulders of the corporate sector and off the shoulders of the personal sector. That is the kind of step that makes a great deal of sense.
The Government has been taxing and taxing Canadians. In the economic statement of November, 1984, the federal Government announced a 1 per cent sales tax increase that had previously been introduced by the Liberals. The Government also announced an increase in the petroleum compensation charge. In the May 1985 Budget, a 1 per cent federal sales tax increase was announced for January 1, 1986, and an excise tax on gasoline was to be increased by 2 cents per litre on September 3, 1985, and by 1 per cent per litre on January 1, 1986. A new excise tax of 2 cents per litre on diesel and aviation fuel was imposed. There was a broadening of the federal sales tax base to include candy, confectionary, soft drinks, pet foods, certain health foods, energy conservation equipment and pharmaceutical devices. An excise tax on tobacco was increased by 52 per cent in the May 1985 Budget and an excise tax on alcohol was increased by 2 per cent. In the February 1986 Budget, there was a 1 per cent federal sales tax increase for April 1, 1986. An excise tax on tobacco increased by 6 per cent. An excise tax on alcohol increased by 4 per cent.
Adding together all of these personal tax increases including sales tax, excise tax, gasoline tax and personal tax increases, it amounts on average to $1,350 per Canadian family. By a Canadian family, I mean a family of four with an average

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annual income of $35,000. As a result of two years of Progressive Conservative Government, each Canadian family is paying an extra $1,350 out of its pockets. That means that in every small community, whether it be Richmond, Kamloops, Chicoutimi, Carp or Hawkesbury, the average Canadian family is losing to the federal Government $1,350 each year, year after year.
What does this mean to the small businesses in those communities? It simply means that that money is not circulating in those areas. That money is down here being used for highly questionable expenditures like bail-outs to bank depositors.
I will never feel comfortable with the fact that the Government provided thousands of millions cf taxpayers' dollars to depositors like the Bank of America, Wells Fargo, the Bank of Japan, the Bank of Hong Kong, the Bank of Abu Dhabi and the Bank of Saudi Arabia. Did those banks really need to be bailed out by small Canadian taxpayers? No, Madam Speaker. As a matter of fact, this has not happened anywhere else in the world. Taxpayers' money has never been used to bail out uninsured depositors of that type before.
The record of the Government has been rather abysmal. Just the other day, I read with interest the October 1986 issue of a magazine entitled Policy Options. It would make good reading for Members of Parliament because it goes on to describe the impact of taxes in vivid detail. As a matter of fact, it almost makes one break down after finding out what is happening to the poor and middle-income families of Canada. It discusses the massive tax increases imposed on the average Canadian family. The middle-income group is being squeezed and squeezed at the same time as tax breaks are going to upper-income earners, those who are most likely to take advantage of the $500,000 capital gains exemption and the changes to the Registered Retirement Savings Plan. If a person happens to have $15,000 lying around at the end of the year, he can put it away tax free. How many of your constituents, Madam Speaker, have $15,000 at the end of the year to invest in retirement? If they do have $15,000 in cash to invest, ought we not use our tax system through a tax deferral program to assist that handful of individuals provide for their retirement?
The point I am trying to make is that at the same time as we are giving break after break to upper-income earners, we are hammering away at the middle-income earners. We are hammering away at the poor. The number of poor people is increasing while the middle class is decreasing. At the same time, when you shift your attention to the corporate side, you find the effective tax rate paid by small companies is higher than that of large companies. As a result of various tax breaks, thousands and thousands of profitable Canadian corporations do not pay tax. We have a long list of companies in the $50 million to $300 million profits range which have paid no income tax at all. That is why the Government slaps on to the backs of ordinary Canadians a whole range of new taxes such as we see in Bill C-14.
The rather sad aspect of all this is that these taxes are not out in front for everyone to see. In a sense we are not being honest. We are not being accountable. What we are levying as a result of this Bill's passage is a whole set of under-the-table, sneaky, behind-the-door taxes. The person paying the taxes is, by and large, unaware of it. If we believe in our tax system, if we want to be accountable for our deeds, it is imperative that we put in place a progressive, not a regressive, tax system. People should pay according to their ability to pay. If you have a large income, you can expect to pay a bit more tax. If you have a very low income, then in many cases you should be paying no income tax whatsoever. That is the kind of tax system a progressive country should have.
I will simply say in closing that we will continue to speak against this Bill. We will do what we can to encourage government Members to see their folly in the hope that the Government will see fit to withdraw the Bill.


The Acting Speaker (Mrs. Champagne):: Questions or comments?


Mr. Holtmann:: Madam Speaker, I would like to put a question to the Hon. Member with maybe just a short preamble. He talked about NDP principles. I think both this House and the Hon. Member need to be reminded about NDP principles as we have seen them concerning taxes. He mentioned that this was the most regressive tax in Canada. I would like to remind him that in the great Province of Manitoba, which I dearly love, an NDP Government put in place a 1.5 per cent payroll tax. He cannot stand in this House and say that was not a regressive tax by a party which says it stands for the development of small business. That Government penalized small business people.
I also want the Hon. Member to consider what happened when we had a scientific research tax credit. The first person to jump on board was a cabinet Minister in the Pawley Government. Consider the principles of the NDP and their attitude in rejecting what we are trying to do to broaden the tax base so we can carry on some of the social programs they support. If the Hon. Member wants to add to the number of social programs, how is he going to pay for them?
He knows that in Manitoba an NDP Government thinks nothing of taxing small business. Members of the NDP think nothing of jumping in to reduce their personal income tax, as was demonstrated by one of the provincial Ministers. They think nothing of doing that when they can take advantage of it. Where is the NDP's principles is the question I would like to ask the Hon. Member.


Nelson Andrew Riis: Madam Speaker, I appreciate the intervention by my hon. friend. I will do my best to respond.
There were a number of questions. The point I want to make right off the mark is that when I refer to the fact that there are 79,196 Canadian corporations not paying tax, I do not
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necessarily say those individual companies have done anything wrong at all.


Thomas Edward Siddon: Most of them are small.


Nelson Andrew Riis: A lot of them are relatively small businesses, yes. They are simply using the tax system which successive Liberal and Conservative Governments have put in place. They are not doing anything wrong by using what the duly-elected Government of Canada has given them to use. They will presumably take advantage of the $15,000 retirement program and are not doing anything wrong, just simply taking advantage of a silly program.


Thomas Edward Siddon: You would take it away from them?


Nelson Andrew Riis: What I am saying is that it is wrong in principle when we go out and gouge the taxpayer time and time again. We have done that so many times in the last two years since the Progressive Conservative Government took over-


Thomas Edward Siddon: Not true and you know it.


Nelson Andrew Riis: -more than any other time in Canadian history. Some $1,350 in increased taxes for the average family. We are simply saying that it is wrong for profitable corporations like the Bank of Montreal, the Royal Bank, Shell Oil, or the Hudson's Bay Company to not pay some tax. It could be $10, it could be $2,000. Some tax. Surely the Hon. Member is not saying on behalf of his colleagues that banks which make at least hundreds of millions of dollars should not pay any tax at all.


Thomas Edward Siddon: He did not say that.


Nelson Andrew Riis: I hope he is not saying that.


Thomas Edward Siddon: What about Manitoba?


Nelson Andrew Riis: The Hon. Member made the point that, presumably, there are some difficult times in Manitoba. If my recollection is correct, when the unemployment figures came out last month, the Province of Manitoba had the lowest level of any province in the country. There were also some statistics from the Department of Finance recently which said that there was more business investment per capita in the Province of Manitoba than in any other province in Canada. The Hon. Member stands in his place and presumably implies they are having some difficult times. They are not perfect. What I am saying is that there is more corporate investment per capita in Manitoba than in any other place in Canada and unemployment is the lowest in any place in Canada. He should be leaping to his feet and congratulating that province's Government, saying it has done an excellent job and thank you very much.
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Mr. Allmand:: Madam Speaker, this Bill will certainly not implement tax reform, as the Hon. Member and others have pointed out. However, in recent weeks the Government has spoken about tax reform. Considering what has been done over the last two years to gouge middle and low-income taxpayers, to talk about tax reform now seems a bit incongruous.
Perhaps the Hon. Member mentioned this in his speech and I did not hear it, but does he believe it would be a good idea, considering the promise of the Government to bring in tax reform, to suspend these measures altogether until we see what the Government has in mind specifically, or, as an alternative, make this a temporary Bill as from time to time some tax measures have been made. It would be timed to expire in one year's time or two years' time. We can then seriously work on tax reform. To vote for a Bill like this while there is talk of tax reform appears to be contradictory.
I would also like to know whether the Hon. Member, as a principal representative of the NDP, takes the position that before we discuss tax reform there should be some direction from the Government. It should not simply be saying, as it did in answer to a question the other day, that it is not putting any kind of paper or direction before the Canadian people as to where it would like to go. It is consulting without any paper on the table and it is just going to listen. In any case, I would like to hear the views of the Hon. Member on those questions.


Nelson Andrew Riis: Madam Speaker, I know how hard the Hon. Member works in his constituency and that he is well aware of the problems of his constituents. The people of his constituency are almost unanimously overtaxed. Whether you are a small business owner, an employee in a large or small company, or self-employed, you are overtaxed. We have taxed people too much. Therefore, I agree with the Hon. Member that to proceed with this with the promise of tax reform around the corner is inappropriate.
I am going to attempt to predict the future. I know that is a shaky business. However, I believe that you will see the biggest con job that you have ever seen in your life. The Minister of Finance (Mr. Wilson) has not called this the business transfer tax for no reason. He wants to give the impression that the business transfer tax is a tax on business. Rather than raise ' corporate rates or remove some of the most obvious corporate loopholes, he will simply say that the Government is levying a new business transfer tax which, as you well know, Madam Speaker, is not a business transfer tax but a fancy value-added or sales tax.
If the Government was committed to real and comprehensive tax reform, it would not be proceeding with Bill C-14 as it is before us today. This is one of the most regressive and backward- looking comprehensive sales taxes that has been introduced in a long time.

October 30, 1986
Adjournment Debate



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mrs. Champagne):: 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 Winnipeg North (Mr. Orlikow)-Science and Technology-(a) Request for restoration of funding, (b) Basic research funding, (c) Scientists employed by Council; the Hon. Member for Notre-Dame-de-Grace-Lachine East (Mr. Allmand)-Employment-(a) Private sector job creation-Minister's statement, (b) Training of workers; the Hon. Member for Algoma (Mr. Foster)- Agriculture-(a) Assistance for grain farmers, (b) Allocation of assistance.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Cadieux that Bill C-14, an Act to amend the Excise Tax Act and the Excise Act, be read the second time and referred to a legislative committee.
The Acting Speaker (Mrs. Champagne):: Is the House ready for the question? Debate. The Hon. Member for Glengarry- Prescott-Russell (Mr. Boudria).


Don Boudria: Madam Speaker, thank you for this opportunity to take part in the debate today. In fact, I was somewhat reluctant because I thought the Conservative Government would have realized it had to change its approach and that today in the House, we would hear Conservative Members being more straightforward about the disastrous effects these budgetary measures would have on Canadians.
I was disappointed, though not surprised, when not a word was said today by Conservative Members about this budgetary measure, and I am referring to Bill C-14.

Yesterday in the House of Commons the Parliamentary Secretary to the Minister of Finance (Mr. Vincent) presented this Bill to us. We were all here listening very attentively to him. Most of us were listening with great anticipation, hoping that the Parliamentary Secretary would present an unbiased, non-partisan view of this Bill, listing all its benefits. Instead, he spoke only very briefly about what the Bill would do. He said:
The purpose of this Bill is to increase federal sales tax in certain areas. An increase of 1 per cent will raise sales tax on construction materials from 7 to 8 per cent, on alcohol and tobacco from 14 to 15 per cent and on other commodities from 11 to 12 per cent.
He then went on to compliment the Tory Government and say all kinds of other partisan things. That is about all he said about the Bill. We are in the House again today waiting with great anticipation for another Conservative Member to explain to us in detail the positive benefits of this piece of legislation. However, that has not been forthcoming and that is very unfortunate. I would like to read some of the partisan remarks which the Parliamentary Secretary made yesterday. He said:
As you know, Mr. Speaker, last week the Auditor General presented his report in which he referred to the spendthrift habits of the previous administration and pointed out how they wasted Canadian taxpayers' money for unduly partisan ventures, but the people were not fooled and we turfed them right out.
Can you believe that a Tory made a remark like that, Madam Speaker? I am sure you are surprised that such a remark was made in this House, and I do not blame you. 1 am totally dumbfounded that a Conservative would have the unmitigated gall to make such remarks and I know you are as well. He went on to apologize for some of these taxes in his usual conservative way and said:
On one hand, we increase certain taxes in areas where it is reasonable to do so-
Please bear in mind the words "reasonable to do so". I will tell you the true story of what will really happen. I have a table in my hand which indicates the net effects of Bill C-14. A family of four with one breadwinner earning $15,000 a year will have their taxes increased by 1.7 per cent. Do you think a family of four with one breadwinner earning $15,000 a year can afford to pay any more money to the Tories? Surely not. I know that you understand that.
A family of four earning $50,000 a year will have increased taxes of 1.2 per cent. How can it be fair that someone earning $50,000 a year ends up paying a proportionately smaller increase than someone earning $15,000 a year who has the same size of family? I will now turn to another situation.

A single-parent family with two children and an income of $20,000 per year would see its taxes increased by 2.1 per cent. A single-parent family, $20,000 per year and two children.
Now consider the pitiful circumstances of a person with an income of $100,000 per year. A married couple, one breadwinner, two children, $100,000 per year. I realize the Conservatives think these people are much to be pitied. But consider. This family's taxes will increase by 1.7 per cent this year. This means that with an annual income of $100,000, you get a better deal from this Government than when you have an annual income of $20,000 as a single parent, a mother with two children. And why? Remember what the Parliamentary Secretary said.
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Remember that the Parliamentary Secretary said that "we increase certain taxes in areas where it is reasonable to do so". It is the view of the Parliamentary Secretary that it is reasonable to do that which I have just described. Let me read more of what he said. Since he is a Parliamentary Secretary, presumably what he said in the House of Commons must be Conservative policy and that he believed it to be accurate. He said:
All families whose income is under $15,000 a year will be entitled to a tax credit... A family of four earning less than $15,000 will get a $150 tax credit.
The Parliamentary Secretary congratulates himself and the Conservative Government in an attempt to have Canadians believe that the family of four earning less than $15,000 a year will get some benefit from the Government. The net effect, however, is not that a family of four will be $150 richer, it will end up $255 poorer.

Well, let me explain, Madam Speaker, because I know I am stirring your curiosity. Here we are. Here is this family of four I was referring to, if we add the 3 per cent de-indexation of income tax, the 5 and 10 per cent surtax, the elimination of the 1973 deduction, changes to family allowances, the income tax credit and the exemption, all this adds up to a $190 tax increase. The 1 per cent sales tax increase in 1984, the 1 per cent sales tax increase in 1985, the widening of the sales tax base, higher alcohol and tobacco taxes amount to a $175 increase per year for that family of four earning $15,000 a year.
As far as the capital gains exemption is concerned, I may safely say that for people with a $15,000 a year income, earning capital gains means that they have to have some sort of capital. The odds are they do not have any, but let us assume they gain $10 on that. The February 1986 Budget that increased the surtax by 3 per cent, that increased this family's costs by $10, the income tax refund the Parliamentary Secretary was bragging about yesterday, all this amounts to a $150 reduction. That is true. And, finally, the 1 percent sales tax increase in the February 1986 Budget increased the whole package by 40 per cent.


Mr. Desrosiers:: What is this guy bawling about again?


Don Boudria: I will tell the Hon. Member for Hochelaga- Maisonneuve (Mr. Desrosiers)-whom I welcome in this House, that I am glad to see him-that it costs that family of four an extra $255 what with the budget measures and Bill C-14.

There are those who believe that the Government needs the money. The Tories say that the Government needs the money because it is managing the Government properly. I hear some
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Conservative voice over there saying that they are cleaning up a mess from the past.


Thomas Edward Siddon: Absolutely.


Don Boudria: I wonder if the cabinet Minister making that remark now has told his Prime Minister (Mr. Mulroney) to stop flying around with two jets-


Thomas Edward Siddon: Don't be ridiculous.


Don Boudria: He just said he was concerned with the waste of taxpayers' money. I do not hear that partisan Minister saying that to the Prime Minister. The Prime Minister travels with five cars. Most of us can only use one car at a time, but the Prime Minister uses five to travel around Parliament Hill. He has three or four cars with flashing lights, and a big limousine. We see King Brian going all over the place when the previous Prime Minister to whom another Member is referring used to do the same with one or two cars. If the Tories are prudent with taxpayers' money, why do they waste that money in such a way? Can the Tories tell us to whom they gave the $1 billion in the bank bail-out?


Thomas Edward Siddon: The farmers.


Don Boudria: Let the record show that they do not even know to whom they gave a billion dollars of the taxpayers' money, yet the Government congratulates itself for doing what it believes is a good job.
The Government decided to build a prison and since it will use tax dollars to do so, this is relevant to the Bill we are discussing today. While a prison is usually built where it is needed, this is not necessarily the criteria that the Government used. It decided to build a prison in an area where it can get the most votes and probably decided that since the Prime Minister is in danger of losing his seat, the jail should be located in his riding. It will cost $40 million more for a prison where it is not needed and about which there is a question as to whether it is needed at all.


Thomas Edward Siddon: It is needed.


Don Boudria: The prison will open in September, 1988. While there is speculation that there may be an election at that time, I say it is merely a coincidence. In order to open the prison in September, 1988, the Prime Minister must accelerate the construction of the jail that we do not need in the location where it is not required. Therefore, the Government will bypass regular contract procedures, according to the Auditor General, bypass usual mechanisms and hand out contracts right and left. Is the Government doing this because we need the facility? No. It simply seems to be a good way to spend $41 million.
If one divided the number of votes that the Prime Minister needs to be re-elected in his riding by that amount of money, I suggest that running an election in his constituency will be very expensive. There was a very appropriate cartoon in
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October 30, 1986
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today's Ottawa Citizen which showed a prison on wheels being pulled by the Minister of National Health and Welfare (Mr. Epp) with the Prime Minister standing beside him and congratulating him for his initiative to put the prison on wheels so that it can be moved from one location to another. I hope there are wheels on the prison in Port-Cartier so that it can be moved to where it is needed because it is certainly not needed there.
I want to quote from a book entitled " Where I Stand" because it is rather interesting reading. In this book written by the Prime Minister, he states at page 44:
How can a government call on a nation to restrain itself and to be more realistic in its collective demands upon our economy when its own record is an unbroken string of fiscal excess? Canadians may be many things, but stupid we are not. We simply will not buy leadership that so blatantly has one code of conduct for itself and quite a different one for the rest of us.
That is from the book entitled Where I Stand, written by none other than the Leader of the Conservative Party. He talks about many things. He talks about legislation such as that with which we are dealing now. I will read what he said about tax bills. Presumably, it would apply to this Bill. After all, the Prime Minister said so and one assumes he would be telling the truth. He said in his book Where I Stand on page 51:
A simple procedural suggestion concerns the question of accountability. One of the most objectionable aspects of the budget process is that budget measures usually take effect the moment they are announced.
I believe it should be accepted as a matter of principle that no new budget measure takes effect until it is actually passed by Parliament and given Royal assent.
I do not know about you, Madam Speaker, but I am paying those taxes right now and they have never been passed in this House. That is contrary to what is in the book written by none other than the present Prime Minister. I can only question if the Minister of Finance (Mr. Wilson) was aware of the book Where I Stand.


Alfonso Gagliano: Or the book "Where I Stood".


Don Boudria: Or should the book be appropriately retitled, as my colleague suggested, "Where I Stood"?
Circumstances sure change and being in power sure has changed this Government. It now has a moral sense which is far different from the one it used to have.
The Leader of the Conservative Party was interviewed concerning the deficit by Jason Moscovitz, a very respected journalist, on November 9, 1984. He clearly accused the Government and the Progressive Conservative Party of being inconsistent in its policies. I would love to elaborate, and if I am asked to do so by some of my colleagues in the 10-minute question or comment period, I will do so because that is a very important point and I know that you, Madam Speaker, would want to be aware of it. I thank my colleagues for the opportunity to participate in this debate and look forward to answering questions, particularly on that point.


Mr. Thacker:: Madam Speaker, my friend opposite has a long reputation for going after patronage, saying it is improper and certainly leaving the impression that he himself is above that type of conduct. However, certain revelations have indicated that may not be so. I would like to read Resolution No. 7138 and ask the Hon. Member's view as to whether this would constitute patronage: "Moved by one Frank Kinney, seconded by one R. V. Friel that whereas the recreation building for Sarsfield and Vars were reconsidered and new submissions were presented in light of recommended changes to the building plans, be it resolved that Ron Morris Construction be accepted for both buildings at $48,816 for Sarsfield and $34,400 for Vars and that construction be allowed to proceed. The approval of the Vars building is subject to the donations being raised to $5,000. Yeas, Kinney, Friel, Boudria. Nay, Counsellor Macdonnell left his seat. Carried."


William Alexander (Bill) Blaikie: Point of order.


Alfonso Gagliano: On a point of order, Madam Speaker.


The Acting Speaker (Mrs. Champagne):: Order, please. The Hon. Member for Saint-Leonard-Anjou (Mr. Gagliano) on a point of order.


Alfonso Gagliano: Madam Speaker, I submit the question asked by the Hon. Member is not relevant to the debate. It has no bearing on Bill C-14. And if he has a question, I would like it to relate to the debate.


The Acting Speaker (Mrs. Champagne):: Order. The Hon. Member for Lethbridge-Foothills (Mr. Thacker) knows he should confine his comments or questions to the speech made by the Hon. Member for Glengarry-Prescott-Russell (Mr. Boudria). If he were to make a link, I could accept it. If not, I would have to call him out of order.


Blaine Allen Thacker: Madam Speaker, I am making the link in the sense that the Hon. Member for Glengarry-Prescott-Russell (Mr. Boudria) habitually, practically every day, preaches about patronage in the most sanctimonious terms-I guess what gets me is the fact that he's so sanctimonious about it- and then we find he is no better than anyone else.


William Alexander (Bill) Blaikie: Point of order.


The Acting Speaker (Mrs. Champagne):: Order, please. The Hon. Member should have made the link to the speech made by the Hon. Member for Glengarry-Prescott-Russell.


William Alexander (Bill) Blaikie: Madam Speaker, I rise on a point of order. I have made this point before and I make it again. The intent of the 10-minute question and answer period was to allow Hon. Members of Parties other than the Parties of the Hon. Member who just spoke to make a comment and to question. There has been a habit developing in the House of allowing Members of the same Party to rise when there are Members of
October 30, 1986

other Parties standing to question Hon. Members, and it is about time it ended.


The Acting Speaker (Mrs. Champagne):: Order, please. I had seen the Hon. Member for Winnipeg-Birds Hill (Mr. Blaikie)-


William Alexander (Bill) Blaikie: I was rising on a point of order.


The Acting Speaker (Mrs. Champagne):: -rise earlier and I did not see him rise again so I thought he had nothing to say. I will give him the floor. I agree with him that Hon. Members from other Parties should be given the right to speak and he will be next. I thought he had relinquished his wish to speak.


William Alexander (Bill) Blaikie: Madam Speaker, you misunderstood me. I was not rising on my own behalf. Earlier when you saw me rise, I rose on a point of order with respect to what the Hon. Member for Lethbridge-Foothills (Mr. Thacker) had been saying. I was not seeking the floor. The point I made a moment ago, I made on behalf of Conservative Members who were seeking the floor, not on my own behalf.


Alfonso Gagliano: Madam Speaker, in congratulating the Hon. Member for his great speech I would like to ask him a question. Since he represents a constituency that has many well-informed consumers, I would like to know if he could describe for us the consequences all those tax increases as imposed by Bill C-14 will have, and what impact these well-hidden, well-disguised taxes will have on those well-informed consumers, considering that their purchasing power has decreased since April 1st, when those taxes were introduced.


The Acting Speaker (Mrs. Champagne):: Order, please. In the circumstances I would appreciate a short answer from the Hon. Member for Glengarry-Prescott-Russell (Mr. Boudria).


Don Boudria: Certainly, Madam Speaker. 1 will be pleased to provide a very brief answer to that very eloquent question asked by my colleague the Hon. Member for Saint-Leonard- Anjou (Mr. Gagliano).
The Hon. Member asked what cumulative impact that budget measure, Bill C-14, will have on Canadians, especially those living in my riding.
I would tell him-using only a few groups, very briefly- that a family with an annual $15,000 salary will be paying $255 more. For a family earning $30,000 a year, and this I did not bring to your attention, Madam Speaker, but I know you are anxious to know, that family will have to pay an extra $630 a year. A family earning $50,000 a year will be paying $575 more. The increase is lower than for the family with a $30,000 income.
I thank the Hon. Member for asking that most pertinent question.
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Mr. Crofton:: Mr. Speaker, Madam Speaker, I followed with considerable interest the speech we heard a few moments ago. You have ruled on the relevance of certain material. The public at large and Hon. Members of the House are quite capable of reading the daily newspaper, page 18, and drawing their own conclusions.
The Hon. Member draws attention to the fact that there are people in the country who live below the poverty line and who are in difficulty. This is quite so, and no one disputes that fact. However, it is interesting to review some of the matters that have occurred which have assisted in adding to this number. For many years we have had increasing deficits. In fact, they amounted to tens of billions of dollars during the time that the party of the Hon. Member was in government. A series of reports by Auditors General clearly indicated that the financial management of the country was completely out of control. It was recommended again and again by these Auditors General that measures should be instituted to deal with this matter. Nothing was done until the last Auditor General's Report which was tabled in the House last week. In his report the Auditor General has said for the first time that Canadian people can genuinely have some hope that measures have been taken in terms of taking into account the serious situation and dealing with it.
With respect to spending, we have instituted means to get the deficit under control. However, the Hon. Member and his party have constantly complained about every effort we have taken to arrest the run-away spending and to properly manage the affairs of the country. The Auditor General quite properly pointed out that there are still a great many programs that require action. I hope that the Hon. Member and his colleagues will assist the process and help us to take the measures that have to be taken, not the least of which must be with respect to the multiplicity of a great many Crown corporations in which spending has been totally out of control.
I would now like to put a question to the hon. gentleman. Is he not in favour of arresting the deficit? Is he not in favour of getting the expenditures of the country under control? Everything I have heard the Hon. Member and his colleagues say seems to make the opposite case.


Don Boudria: Madam Speaker, I am glad that we are not marking questions this afternoon. That question would certainly not rank as one of the top questions of the day.


Gerry St. Germain: These are questions and comments.


Don Boudria: I did not tell the Hon. Member what to ask me. Perhaps he can refrain from telling me what to answer.


Gerald Stairs Merrithew: Maybe we should ask about your resolution while you were in Council.

October 30, 1986
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The Acting Speaker (Mrs. Champagne):: The time set aside for questions and comments should not turn into dialogue between Members. The Hon. Member for Glengarry- Prescott-Russell (Mr. Boudria) has the floor, and he has one minute remaining.


Don Boudria: Madam Speaker, I will answer the question very slowly so that the Minister in the front row who was heckling will be able to understand the sense of what I am trying to tell him. No one is in favour of increasing deficits unless necessary. That is a motherhood issue. What I am against is the fact that the Government is wasting taxpayers' dollars at the same time as it is hitting below the belt the poorest families in the country. I will not apologize in the House for defending the interests of the poor people of my riding and the people with lower and medium incomes elsewhere. It is about time that the Government stopped thinking only of its rich friends and started thinking about ordinary Canadians.


The Acting Speaker (Mrs. Champagne):: Since the point of order took up some time I will allow one more question.


Jean-Guy Hudon: Madam Speaker, to clarify matters I would have a question for the Hon. Member who was throwing figures at us earlier. He said we are helping only the rich, for he said earlier, as Hansard will confirm, that a single-parent family earning $20,000 will get a 2.1 per cent increase, and that, since we are helping the rich a lot, a family with a $100,000 income will get a 1.7 per cent increase. That is true. But he implied that automatically the rich were paying less because their increase was 1.7 per cent. He was saying the opposite when he stated: There is a $255 increase on $20,000 and a $630 increase on $30,000. This is helping the rich a lot. They already pay $300 more, then a $575 increase on $50,000. So he will have to repeat what he said earlier, because it is not true that with 2.1 per cent they are paying more than those with 1.7 per cent. People earning $100,000 pay much more than those earning $20,000. If he is asking for parity, let him say so.


The Acting Speaker (Mrs. Champagne):: Very briefly, the Hon. Member for Glengarry-Prescott-Russell (Mr. Boudria).


Don Boudria: For sure, Madam Speaker, the Hon. Member speaks like a mathematics wizard when he tells the House that 1.7 per cent of $100,000 is more than 2.1 per cent of $20,000. It must have taken him a lot of time, a lot of figuring to reach that conclusion, which is quite true.


William Alexander (Bill) Blaikie: Madam Speaker, I will have a word to say whenever the unofficial debate in front of me ceases.
I would like to say a few words about taxes, which is appropriate when we are debating a Bill such as we are
debating this afternoon. I thought it odd that the Hon. Member for Esquimalt-Saanich (Mr. Crofton) who, when commenting on what the Hon. Member for Glengarry- Prescott-Russell (Mr. Boudria) had to say, had the nerve to get to his feet and talk about the so-called fiscal responsibility being displayed by the Progressive Conservative Government and to refer to the Auditor General's Report in the context of the events of the last few weeks. I say that because of what the Auditor General's Report shows, among other things. I admit that it makes something of a general comment that, over-all, matters have improved, or something along that line. But surely the thing that stands out in the Auditor General's Report is the evidence with regard to the prison in Port-Cartier. So far I have not had anything to say about that issue in the House. However, the Hon. Member by raising it gives me a chance to reply to it.
Surely, Progressive Conservatives cannot maintain on the one hand that they are making substantial progress with respect to cleaning up the type of mess that was left to us by the Liberal Party while on the other hand going to great lengths to defend a decision to relocate a prison in the Prime Minister's (Mr. Mulroney) riding for really no other reason than the fact that it is the Prime Minister's riding. I do not think that there is a Progressive Conservative Member in the House who in his or her heart of hearts does not think that that is exactly the kind of thing that they entered into politics to eradicate. I am sure it must be very difficult for them to sit in their places day after day and have to listen to the defences of this action offerred, quite naturally, by their senior Members. It must be very difficult indeed. So I extend my sympathies to them on this occasion for the great misery in which they must find themselves, and continue to find themselves as long as this issue stays before the public, as indeed it will for some time yet.
With respect to taxes and the increases in taxes which Bill C-14 represents, I would like to say something about how I regret that taxes, even regressive taxes such as sales taxes, are not used more selectively and for other purposes. I am referring here to a matter I raised in the House, I believe just last week, with the Minister of Finance (Mr. Wilson) concerning taxes on leaded and unleaded gasoline.
In this Bill, as in others, there are opportunities for the Government to use the tax system as an instrument of other goals, in this case an ecological goal, an environmental goal. Personally, I cannot understand why. I cannot see the logic of why the Government has refused to equalize the price of leaded and unleaded gasoline through the tax system.
A great hurrah has been made about the goal of the Government to get rid of leaded gasoline by 1992. At the same time, it should be acknowledged that the Royal Society recommended to the Government in its study that this be done by 1990. Nevertheless, the Government has set 1992 as its goal. I wish it were earlier, but it is not. In the meantime, the
October 30, 1986

very least that could be done, which is not a big deal, is simply to reduce the incentive that exists at the pumps for Canadians to use leaded gasoline. People are misfuelling now and using leaded gasoline when they should be using unleaded gasoline in order to save the difference between the price of leaded gasoline and unleaded gasoline. I cannot for the life of me understand why the government doesn't act on this.
The Minister of the Environment (Mr. McMillan) said that the continued use of leaded gasoline-and he used the words- was like arsenic in your children's food. That is not something said by some grandstanding opposition Member. That was said by the Minister of the Environment. Surely if that is the case, and I do not think that it is too extravagant an analogy, the least we could do would be to have a tax system that discouraged people from doing that type of thing. I think it bears repeating, and 1 will repeat it at every opportunity, that I cannot understand why the tax system is not used in that way. If we must have regressive sales taxes and other hidden taxes, why can they not at least be used for some worthy social or environmental goal?
Another one that comes to mind is the tax on recycled oil. Many things are said about conservation and the need to recycle. Yet, if my memory serves correctly, at one point there was no tax on recycled oil. Now there is. I forget when that tax came into being. I cannot even say whether it was the responsibility of the former Liberal Government or the Conservative Government. This is a tax which should be lifted so that there is an incentive to make economic the reuse of certain substances, in this case used oil, so that we do not, as a result of those types of products being uneconomic, have them dumped down the sewers, or disposed of in other environmentally unacceptable ways.
I raise those two examples. I can think of other ways in which sales taxes and other taxes could be used to make cheaper those things which would be environmentally better for people to use, and to make more expensive those things which are damaging to the environment. That in the end is not the solution. I acknowledge that it simply means that those who can afford it can continue to do the environmentally damaging thing, and those who cannot will through the tax system be forced to be more responsible than they otherwise might.
I do not suggest it as a total solution, but I do suggest it as a way of doing things which a Progressive Conservative Government in particular might embrace. It is comparable to a market mechanism. It still leaves the choice with people, rather than doing what those awful socialists might do and making it impossible for people to do the wrong thing by legislating against it. I say to the Hon. Member for Lethbridge-Foothills (Mr. Thacker), who is in the chair now, who is known for his rants against the socialists, that I am making a suggestion to him and to his colleagues that I think should find some favour with them. I cannot understand why they do not take those opportunities in the tax system to do that.
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With respect to the tax system and tax reform, I wish to say that I cannot believe that we will get from a Progressive Conservative Government the kind of tax reform that I for one, and my colleagues as well, would really call tax reform in a genuine way. I will say why. It is because of the way the Conservatives believe the economy ought to be organized, and certain things that they believe about society. One of the most disappointing days of my life in the House-and I have been here seven and a half years now-was the day when the Minister of Finance introduced his first Budget. He was reading through his Budget Speech, and when he came to the point where he announced the $500,000 lifetime exemption-


An Hon. Member:: Hear, hear!


William Alexander (Bill) Blaikie: That is just exactly what I was going to refer to. The Minister of Finance announced the $500,000 lifetime capital gains exemption and the whole Tory caucus erupted into applause, as if that was the highlight of their political career, and as if that was the thing for which all of them had entered politics. Finally, the goal had been achieved. Finally, people who had $500,000 would be able to escape taxes on their capital gains.
I said to myself, what is wrong with the type of Government we have? What is so profoundly sick about the Progressive Conservative Party that that is the type of thing, out of all the other things that the Minister of Finance had to say that day, that would bring them to their feet; that would cause them to give a unanimous ovation to the Minister of Finance. People who had $500,000 in capital gains would be able to avoid paying taxes. I thought to myself, how many of my constituents are clapping at that announcement? How many of my constituents have $500,000 that they have made on some type of capital gain that they are now glad they do not have to pay taxes on? I can tell you very, very few of them. Yet, those are the people for whom the special emotion of the Progressive Conservative caucus is reserved on the day of a Budget Speech. That was the same Budget Speech in which the Progressive Conservatives announced that they were going to do away with the indexing of the Old Age Security.
That is why I have absolutely no expectation whatsoever that there will be any genuine tax reform coming out of the Progressive Conservative Party. It defies the imagination that genuine, progressive tax reform could come out of imaginations so warped and sick that they could cheer and find as the highlight of the Budget Speech the fact that people who had a $500,000 gain in capital gains were going to go without being taxed.


An Hon. Member:: Shame, shame!


William Alexander (Bill) Blaikie: The Minister of Finance said that the problem with this country is there is not enough rich people in it. You can imagine what kind of tax reform we are going to get when the Minister of Finance believes that the problem with the country is that there are not enough rich people. I say that the problem with this country is that there is a diminishing

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number of middle income people. It is also a problem that there are too many poor people. One of the problems we do not have, as far as I am concerned, is that there are not enough rich people.
We have a situation both in Canada and the United States-I think it is actually more advanced in the United States-where the middle class is declining and growing smaller through the elimination of well-paid union jobs and some of the older industries in which people were paid a fair and decent wage. What is happening now is an increase in the disparities between the bottom of our income strata and the top. That group in the middle is getting smaller and smaller.
We often hear from the Government that jobs are being created, but what kind of jobs are being created? They are part-time jobs and jobs that do not pay as much as some of the old jobs that have disappeared. We are looking forward to a time when even more of those less well paying jobs will be created as part of the free trade package and part of other so-called competitive efficiencies being introduced into our economy.
I remind the Progressive Conservative Government of the old Aristotelian dictum-if we want to prevent revolution, the best way to do it is to have a large middle class. This is an insight which goes back to Aristotle. It may not be that we are at the point of talking about preventing revolution. However, if we want to prevent disparity, tension, and social fragmentation, which will eventually come but is present to some extent as a result of the disappearance of the middle class and of the continuing and growing numbers of poor, the Conservative Government should look less for more rich people. It should look less for people with $500,000 from some kind of capital gain. It should look more to preserving the incomes and lifestyles of middle income Canadians and to increasing those of the poor.


Blaine Allen Thacker: Madam Speaker, I should like to make a couple of comments vis-a-vis the remarks of the Hon. Member for Winnipeg-Birds Hill (Mr. Blaikie) about the $500,000 capital gains tax exemption. Of course the House realizes that everything above $500,000 is taxable. What does he think a $500,000 capital gain means to Conrad Black, the Eaton family, or other wealthy people? They will pay taxes over and above that amount. Also, I would ask him what that $500,000 exemption means for people like him and I or eastern Europeans in my riding who came to Canada from countries where they were locked into an economic system, usually socialist, and a cultural system from which they could not break out? They could not purchase a piece of land or build up a small business in order to obtain their own capital. Those people know that this is the best system, what is generally called a capitalist system.
This party brought in a minimum tax for the rich, to make them pay their fair share. The significance of the $500,000
capital gains exemption is very important. It permits people to build their own pension plans. If the socialists were in power, everyone would be dependent upon and under the thumb of the Government because they would not have been provided with an opportunity to build up an estate. When young men and women reach retirement age, they can have $500,000 and they can tell the Government to get out of their life. They can say: "Stay out of my life; I will set my own freedom for myself and my family". That is why it is so important.
Also the Hon. Member talked about the middle class. I agree that the middle class has diminished in some countries. All socialist countries do not have a middle class. Some Third World countries have a small very rich class and a huge poor class. The reason for this is that they had deficits. They permitted their Governments to get them into deficit positions which led to inflation and an adjustment at the end. It is NDP deficits which lead to the loss of the middle class, and under NDP Governments they would never have a $500,000 exemption.


William Alexander (Bill) Blaikie: Madam Speaker, the theory offered by the Hon. Member for Lethbridge-Foothills would make some sense if at any time the NDP had been in power in the United States where the problem of a diminishing middle class is even more aggravated than it is in Canada. If the Hon. Member wants to maintain, as I have heard him maintain before, that everyone to the left of the Hon. Member for Lethbridge- Foothills is a socialist, the theory holds true. I know he also thinks on occasion that many in his caucus are socialists just by virtue of the fact that they are to his left. If one's imagination is great enough, one can have an internal coherence theory, and the Hon. Member for Lethbridge-Foothills has that kind of imagination.
1 will turn to the question of capital gains. Members of the Progressive Conservative Party repeatedly misrepresent the position taken by the NDP on capital gains. We have not been against people who have established the kind of estate about which the Hon. Member talked-small-businessmen and farmers. We have not argued that capital gains tax should be necessarily applied in a universal way. If the Government was concerned about giving that kind of break to people who have come to Canada-and they do not have to be recent immigrants; they can be people whose families have been here for hundreds of years-why did it not make a distinction between those people and people who make $500,000 .by investing on the stock market, selling a yacht, turning over condominiums in Florida, or various other things which are-not nation building. It has nothing to do with the Canadian economy, estate building, or thriving on the freedom of Canada which people have been glad to find when they arrive here. For that matter, it has nothing to do with capitalism. We could still have capitalism and have a capital gains tax. Let us not kid each other.
Why did the Government not make a distinction between farmers and small-businessmen who deserve a break and the
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people who are making $500,000 on the stock market, selling condominiums in Florida, or turning over their yachts?


Blaine Allen Thacker: Could I make a very brief response, Madam Speaker?


The Acting Speaker (Mrs. Champagne):: I will allow the Hon. Member a very short response.


Blaine Allen Thacker: Madam Speaker, the point the Hon. Member misses is that the right to a $500,000 capital gains is a personal right by virtue of being a citizen of Canada. When people come to Canada or are born in this country, they have a right to that capital gains. Whether they choose to use it on yachts, houses, or farms, it is a personal privilege. Everything above the $500,000 has a capital gains attached to it. It is a fundamental right acknowledged by the Universal Declaration of Human Rights. People have a fundamental right to property, and it is not a right which the NDP would give them. The NDP would take it away from them.


Alfonso Gagliano: Madam Speaker, I have a question for the Hon. Member for Winnipeg-Birds Hill (Mr. Blaikie). He mentioned tax reform in his speech, and I am very interested in it. In his announcement in the House, the Minister of Finance (Mr. Wilson) said that the scope of the tax reform was to reduce personal income taxes, to increase corporate taxes, and to increase consumer taxes. However, in the Budget of May, 1985 and the one of February, 1986 we saw the opposite-increased personal income taxes, reduced corporate taxes, and increased sale and excise taxes. Does the Hon. Member believe that the Minister of Finance is really interested in tax reform? Who is kidding whom?


William Alexander (Bill) Blaikie: Madam Speaker, I think the Hon. Member makes a good point. There is no reason to believe, on the basis of past practice, that we can count on the Government to engage in the kind of tax reform it would like the Canadian public to believe it is willing to consider.
Turning to something the Hon. Member for Lethbridge- Foothills said, he seemed to argue that a capital gains tax exemption was a basic human right according to the UN. It is interesting to hear Hon. Members on the right wing of the Conservative Party quoting the UN. Normally they see the United Nations as some kind of conspiracy for world government and other nasty things. In any event, I am told that the President of the United States just signed into law many measures to eliminate capital gains tax exemptions. I hope the Hon. Member for Lethbridge-Foothills will be using his lively imagination very soon to adjust his political vision, so that even Ronald Reagan will be found to the left of the Hon. Member and even he will have joined the socialist hordes.


Felix Holtmann: Madam Speaker, I do not know how much time is remaining in the question and comment period, but I could not help becoming involved in this discussion. If the Hon. Member for Winnipeg-Birds Hill (Mr. Blaikie) would check, I am sure he would find that there are many people in
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his riding who are very pleased by the capital gains tax exemption. Farmers did not have the same privilege as those who owned homes in urban centres and could sell their homes capital gains tax free. Over the course of 30 or 40 years, there was a fair amount of inflation in many areas. Urban dwellers had that right but farmers never did. In many cases, if a farmer passed his farm on to his son, there was nothing left for him. The capital gains tax exemption was the most welcome news for farmers. I never heard one iota of criticism about that exemption.
The capital gains tax exemption rectified a situation that was so negative before. In the past, a farmer could not pass his farm on to his son because he would not be left with enough. He would sell it to someone else who had speculative ideas or to a foreign investor because he had to calculate all the tax he had to pay after selling the farm while leaving himself enough money on which to retire. He did not want anything from the Government. He did not want social programs. He was willing to do it on his own. That is the philosophy of this Government and a lot of people believe in it.
The capital gains tax exemption was a very effective measure and I am sure the people of the Hon. Member's riding appreciated it. Perhaps one could say that the number is too high, but as my hon. friend indicated, that is the farmer's fundamental right.


The Acting Speaker (Mrs. Champagne):: Order. I will give the Hon. Member time to answer.


William Alexander (Bill) Blaikie: Madame Speaker, the Hon. Member for Selkirk-Interlake (Mr. Holtmann) has made a very eloquent defence of a measure designed to help farmers and small businessmen. He indicated himself that $500,000 was perhaps a little on the high side for such a measure. However, it is true that such measures ought to be put in place, and this is not the only one. There are other ways to ensure the survival of the family farm and the ability of farmers to turn over their land to their children. I believe that is a good idea and I have never spoken against it. I made it very clear when I responded to the Hon. Member for Lethbridge-Foothills (Mr. Thacker) that I was not against it.


Mr. Raymond Garneau (Laval-des-Rapides):: Madam
Speaker, this being my first opportunity to do so while you are in the Chair, I want to congratulate you for assuming this responsibility and wish you well in your new duties.
Madam Speaker, anyone dealing with Bill C-14 might be tempted to suggest that this piece of legislation, like so many others, will have an impact, that it has both positive and negative aspects. Still I wonder whether Hon. Members are really aware of the actual impact this Bill will have on the average taxpayer, on families, and on indivuduals. If we contrast the provisions of Bill C-14 with the figures the Minister of Finance (Mr. Wilson) gave us in his February 26

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document entitled "Budget Papers", on page 53, we can readily appreciate to what extent Canadian taxpayers will be hard hit by this legislation over the next few years.
This Bill is not even 15 page long, but do you realize the heavy load it will lay on the shoulders of Canadian taxpayers during the years indicated by the Minister of Finance? What it means is that Canadians, men and women alike, will have to pay $6 billion more between now and 1990. For this year alone, 1986, an additional load of $820 million: the 1 per cent increase in the sales tax will cost Canadian taxpayers $700 million, the increase in taxes on alcohol another $125 million, and two minor changes will translate into an additional $5 million reduction. Which means that altogether these additional taxes will amount to $820 million as a result of Bill C-14 now under consideration.
The year 1986 was incomplete from the fiscal point of view and yet we will have to pay $820 million in additional taxes. Madam Speaker, in 1987 which will be a complete year under Bill C-14, we will have to pay an additional $1.2 billion in taxes. In 1988, this amount will reach $1,275 billion and $1,455 billion in 1990 for a total of over $6 billion, $6.1 billion to be precise.
Madam Speaker, therefore to say that this bill is significant for Canadian taxpayers is obviously an understatement which goes to prove how much of an impact government decisions have upon the taxpayer.Madam Speaker, I would like to add that although Bill C-14 alone will considerably increase the fiscal burden of Canadian taxpayers, we must not forget about two other decisions taken by this government since coming to power. Based on the figures 1 have just mentioned and which were taken from page 53 of the Budget Papers published on February 26, I have been able to show that a 1 per cent sales tax increase will bring revenues in 1986 of some $700 million, and of $1 billion for a whole year.
If we add to Bill C-14 the impact of the two measures previously announced and adopted, which means another 2 per cent, as, since the Conservative Government has come into power, the sales tax has increased by 3 per cent, 1 per cent as provided in Bill C-14 and another 2 per cent of increase approved by the Conservative majority in this House, this means another $2 billion a year.
This means that in federal sales taxes alone, if we add the impact of Bill C-14 to that of the two previous measures adopted by the Conservative majority, Canadians will have to pay an additional $2.7 billion in 1986. The same applies to 1987, 1988, 1989 and 1990. According to the figures tabled by the Minister and according to conservative estimates, which reflect the Government's philosophy, for the excise tax alone, we have to add another $5 billion, or $1 billion a year multiplied by two, since there was a 2 per cent increase, which means $10 billion.
The amount of taxes, approved without any fuss in many cases, is incredible, and if the Opposition did not take the time to call the attention of Canadians to these matters, many
people would not realize what they are paying in taxes and the effect that this can have on their purchasing power. These are decisions made by the Conservative Government.
Madam Speaker, there has been a lot of talk in the last half hour about the jobs created this month. We have heard that it was thanks to the action of the Conservative Government that these jobs were created.
I would like to point out respectfully, Madam Speaker, that when the Conservative Party was elected in 1984, economic recovery had already been underway for a few years, due to a great extent to the international context. After the crisis of 1982, we were beginning to see very positive results. This was illustrated by the review used by our friends opposite and published by the OECD.
If we look at the cumulative effect of the Budgets tabled in this House in May 1985 and February 1986, we find that what we had forecast on this side of this House is now happening. In other words, the taxation activity of the Conservative Government is stifling the economic recovery which was strongly underway in late 1983 and early 1984. We have said that the combined impact of the two budgets introduced by the Conservatives would be to slow down the Canadian economy so much that it would have a hard time recovering from it. I said, in a previous speech in this House, that it took between 12 and 18 months before the effects of a budget on the economy, whether they are positive or negative, could be measured, because the economy has to absorb these kind of fiscal measures and it cannot be done overnight.
When we look at what happened to job creation since the beginning of 1986, we realize that, unfortunately, we had every right to blow the whistle, to warn the Government of the extremely serious consequences of its budgetary measures on the Canadian economy. The figures published in early September, I believe, showed that since the beginning of 1986, there had been a net loss in Canada of 17,000 jobs. The newest figures, published recently, showed some degree of recovery and, so far this year, the net loss of 17,000 has turned into a net gain of 15,000 jobs. That is 15,000 jobs for the whole Canadian economy between the months of January and September inclusively. I submit that it is largely due to these fiscal measures.
Madam Speaker, we were told, and I heard it from my hon. friends on the Government side when they talked about the deficit... You have, like myself and all my colleagues, participated in the 1984 electoral campaign. During that campaign I heard speeches from and had face to face debates with candidates. Some have been appointed president of Crown corporations and travel by rail. However, I think that he is competent and I do not want to draw any attention on this matter. I did take part in those debates. I was then told that the Government's deficit was a real one but it was immediately added that it would be entirely counterproductive to increase taxes because economic growth would be stifled.
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When I was in debates with more or less important candidates of the Conservative Party, I realized that those people were merely repeating what the Minister of Finance (Mr. Wilson) had said that is it would be counterproductive to increase taxes.
A few months after they were elected, conditions had entirely changed and taxing the Canadian economy had almost become a stimulus for economic growth. In my questions or answers and during my debates with the Minister of Finance, I was asking him: "Do you intend to tax the Canadian economy to the extent that such taxes will weigh very heavily on its development?"
Unfortunately, we realize today that we were right and that the Conservative candidates who were repeating the statements made by the Minister of Finance were indeed giving the Canadian people an entirely different direction than that taken by the Government since September 4, 1984.
Madam Speaker, the sales tax I refer to could be considered on a line with the increases for alcohol and tobacco, but as I said earlier, if we add it all up, it means $16 billion in new taxes by 1991 or 1990. For this year alone, it means $2.82 billion, just in sales tax.
Madam Speaker, I would like to compare these facts with the speech the Minister made recently in the House, where he spoke about tax reform. The Minister said that he wanted to make the tax system fairer and more equitable and so forth, the kind of scenario an academic might give you on the subject. We asked him to be more specific. Unfortunately, it was impossible to get more specific information in the House, either from the Minister of Finance or from the Minister of State (Finance).
For more information on the Government's tax policies, we have to go back to July 18 and to the beginning of September, when the present Minister of Finance made his speech in Washington. I forget the exact date, I think it was September 8 or 9. In both speeches, the message was as follows: first, increase corporate taxes and reduce personal income tax. In his Washington message, as though the Minister were afraid to tell Canadians outright from his seat in the House, on television where everyone could see him, in any event he told us, albeit in Washington, that one of the Government's tax reform proposals would be to impose a new tax, a transaction tax that would apply not only to businesses but to all manufacturing enterprises, to the whole service industry. This means paying a tax when you go to the hairdresser, Madam Speaker, or, in my case, when I get a haircut, and when your notary or lawyer or accountant provides a service, there will be a tax-


George Albert Proud: When you go to Mass!


Raymond Garneau: -as my hon. friend says, I hope they are not going to tax masses and religious services in our churches. However, this tax is intended to cover every production activity.
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If we consider the statements made to the press on July 18 and the speech made by the Minister of Finance (Mr. Wilson) in Washington-I am of course referring to the Minister of Finance of Canada and what he said in Washington-and we draw a parallel with what appears on pages 52 and 53 of the Budget Papers of February 26, Madam Speaker, I would say that even someone with the best of intentions who would set out to make a purely objective analysis of the Government's policy, well that person would be in for a big surprise, because after trying to make a completely impartial judgment of the Minister's statements, this person would fail to understand why. ever since September 4, 1984, the Government's tax measures have been the exact opposite of what was said by the Minister on July 18 and in his speech in Washington.
I have just spoken about the sales tax and the philosophy it reflects. Now, I would like to say a few words about two other matters, personal income tax and measures affecting corporations.
If we look only at the effects of the 1986 Budget-I am setting aside for now the 1985 Budget, which resulted in an increase of billions of dollars because of the partial de-indexing of taxation tables and the 5 and 10 per cent surtax applied to Canadian taxpayers-if we look only at the effect of the Budget brought down on February 26, 1986, we find that the cumulative effect of this Budget on personal income tax will be a net increase of $100 million in 1986, $700 million in 1987, $800 million in 1988, something over $800 million in 1989 and $900 million in 1990. We therefore have an increase of $3.3 billion in personal income tax.
I trust that no one will be shocked to learn by how much corporate income taxes will increase during the same period. The increase will amount to $240 million in 1986, $270 million in 1987, $80 million in 1988, $175 million in 1989, and $50 million in 1990. Here again, Mr. Speaker, the impact on corporations is not due to any change which might have increased corporate income taxes. It is due only to the structural effect of the measures announced by the Conservative Government. In other words, the 3 per cent inventory allowance was suddently removed, which represents a substantial and immediate tax increase. However, since this is compensated by a decrease in tax rates, the net effect mentioned by the Minister of Finance, either directly or through his officials, would be nil. In other words, the impact of the February 26, 1986 Budget on individuals will be a $3 billion increase, whereas in the case of corporations, taking into account the consequences I have just mentioned, will be something less than $1 billion, and in the long term it will have no effect at all. In a nutshell, here is what the Minister of Finance has done since he took over on the advent of the Mulroney Government: direct and indirect taxes on individuals have increased considerably, $3 billion in personal income tax in the February 1986 Budget alone, not to mention the share these same taxpayers have to fork over in federal sales tax when they buy Canadian made goods. In the meantime corporate taxes went down, so when the Minister of Finance

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comes into the House to make a statement on tax reform and pretends that the purpose of the whole exercise is equity, neutrality, justice and what have you-the kind of words we find in any dictionary and hear from the pulpit, on Sundays usually-we can see that it is the other way around altogether.
So why now? Madam Speaker, you will understand why we on this side of the House, and I especially, have tried on several occasions to have the Minister of Finance come clean and tell us exactly just where he is leading us with his tax reform. I asked questions about the surtax or the $500,000 capital gains tax exemption. I tried to find out which exemptions he wanted to abolish to lighten the onus of tax legislation on Canadian taxpayers. We could not get answers! How can we enter upon a loyal, bona fide discussion with this Government when the only reference we can use is the impact of the May 1985 Budget and the February 1986 Budget that are completely-as far apart as the North Pole and the South Pole, with all that difference between the two.
Madam Speaker, if you add the additional effect on personal income tax, the impact of the May 1985 Budget, the cumulative effect by the end of 1990 would not be $3.3 billion, but many more billions of dollars. This is why you will understand easily that on this side of the House we will oppose Bill C-14. We will vote against it. We are going to use all available means to draw the Canadian taxpayer's attention to the most harmful effects of this legislation. Not only are they harmful as such, but they are totally at odds with the statements made by the Minister of Finance on July 18, in his Washington speech.
Madam Speaker, you may rest assured that not only here but also in committee my colleagues will question the Government and find out the actual impact of each clause of this Bill which is of such consequence for the Canadian taxpayers.


Mr. Harvey:: Madam Speaker, fortunately the speech made by the Hon. Member for Laval-des-Rapides (Mr. Garneau) will certainly not create any upheaval in my area. This Member belongs to a party that has led this country to the brink of economic disaster over a very short period. We know full well that in 1968-1970 the national debt was about $15, $17 billion, and in a matter of years it had gone through the $200-billion mark, and after creating something like 400 Crown corporations, many of which are in financial difficulty,
I would be pleased to ask the Hon. Member for Laval-des-Rapides, in view of the fact that the Liberal Party is experiencing tremendous difficulty in reaching a consensus on important matters, on the constitutional issue on which they are so divided, on the matter of free trade talks with the Americans, where they are again deeply divided, I would like to know whether we may expect the Liberal Party to reach a consensus on the major tax reform this Government is getting ready to work on and about which it is getting ready to consult major agencies in Canada.
I would like to know from the Hon. Member for Laval-des-Rapides (Mr. Garneau) whether for once the Liberal Party of Canada, a supposedly responsible party, will find a way to write down and publish something articulated on tax reform. I would be pleased to read it, Madam Speaker.


Raymond Garneau: Madam Speaker, I indicated earlier that I was willing to approach a tax reform as fairly and objectively as I could. But I ask the Hon. Member who put the question: What should I take a stand on since nothing has been brought forward?
All we had from the Minister of Finance (Mr. Wilson) is what I would call a motherhood and apple pie statement. There was no concrete proposal.
I could return the question to the Hon. Member for Chicoutimi and ask what response could we give to the Business Council on National Issues, which recommends to the government to abolish the $500,000 exemption on capital gains tax.
Our stand has been from the beginning that this exemption is unfair.
Madam Speaker, what the Conservative have been saying about the deficit would make me laugh if it were not such a serious matter, because when I campaigned with my colleagues in 1984, we said we could not make foolish electoral promises considering the financial situation Canada was in as a result of the worldwide economic recession we experienced in 1981 and 1982. The hardship was felt not only in Canada but everywhere in the United States and in European countries, and the whole western world went through an economic crisis.
Perhaps I may answer his question with a question: Is the Conservative Party suggesting that in order to keep the deficit down during the recession in 1981-82, when thousands and thousands of workers were being affected, it would have been better for the Government to ignore these people, to make budget cuts and cut unemployment insurance and leave those unfortunates who lost their jobs as a result of the recession to their own devices? Is that their way of developing the economy and at the same time making their policies reflect a measure of social justice?
Personally, I think the decisions made in 1981-82 that had an impact on the deficit were decisions that had to be made. With hindsight, perhaps we would have done certain things differently. But the fact remains that there was every justification for government intervention.
And I would like to put the same question to the Hon. Member for Chicoutimi. Considering the economic recovery that started in 1983, halfway through 1983 and accelerated in 1984, when we had a GNP growth of 4.5 or 5 per cent, I want to ask him why, after almost three years of economic recovery, this Conservative Government which was going to solve all our problems has, in three years, managed to add $100 billion to the national debt?
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You say it was $200 billion. For the last full year under the Liberal Government, our total national debt was $160 billion, and in three years you will have added $100 billion to that amount. Which means, dividing $100 billion by $260 billion, an increase of 50 per cent. However, I think all this is beside the point, not only as far as Bill C-14 is concerned but also if we consider the realities of our economy.
Look at the United States. There we have a President who was elected in 1980, when he promised to fight the deficit. This year, the United States will have the biggest deficit the U.S. economy has ever had, namely $220 billion.
That is why I wouldn't mind getting into some of the more detailed aspects, such as free trade and the party's position, and whenever the Minister and the Hon. Member for Chicoutimi care to have a debate on the subject, I am ready and willing. For the time being, however, we are talking about Bill C-14, and its effects not just on the Canadian economy but on the taxpayer, and I am ready for any other questions within that context.


Jean-Robert Gauthier: Madam Speaker, the Hon. Member for Laval-des-Rapides referred to a document, "Business Council and National Issues", published in October 1986. I want to quote from this document because it is rather interesting, since this is not a Liberal document, but a paper which comes from a politically independent group. I quote from page 1:
"To begin with, many fear that the present tax system is having an adverse effect on job-creation and ultimately on our standard of living".

And further on:

"The current tax system was identified as an obstacle to growth and reform of the tax system was seen as an important dimension of economic renewal".

In his remarks the Hon. Member for Laval-des-Rapides described the impact of the February 1986 Budget. Of course he refrained or did not want to tack onto the economic document of 1984 and the 1985 Budget the cumulative effects of these Budgets.
I wonder if he would share his views with us and tell us what were the cumulative effects of those three Budgets, those of 1984,1985 and 1986.


Raymond Garneau: If we consider the cumulative effects, Madam Speaker, the figures are so high that an observer who has not read the small print in the legislation that have been passed and who is not familiar with the two Budgets might think that the Member of the Official Opposition is juggling with figures
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which do not make sense and are beyond reality. On the contrary, and I want to assure all those who are listening here in the House or watching television that the figures are for real. The cost in 1986-87, the cumulative effect of the two Budgets represents a little over $5 billion for Canadian taxpayers. This includes the 3 per cent de-indexation in the tax tables, the 3 per cent surplus, $570 million. There was a 5 and 10 per cent surtax which Conservative Members may have chosen to ignore and, if we combine this with the elimination of the 1973 tax exemption, we are looking at another $1 billion. Then twice there was a 1 per cent sales tax, good for something like $2 billion, and a few other changes. But if we consider the full impact of the 1985 and 1986 Budgets, along with some of the decisions announced in 1984 in the early stages of the Conservative mandate, we end up with a total of $5 billion over a single year.
When the Business Council and National Issue deals with this matter, I have to admit to the Hon. Member for Ottawa- Vanier that indeed it is quite a realistic approach. If we were to sum up this document we realize that the-and this is supposed to represent big business. The mouthpiece of the capitalists. I am beginning to wonder whether, from an ideological standpoint, the Conservative Members and the Conservative Government might not stand to the right of the major Canadian corporations.
Do you know what major Canadian corporations are recommending? That the $500,000 capital gains tax exemption be abolished, and the ones who are making this recommendation are those who could benefit from this exemption since they can make investments which will bring them capital gains. It is not someone with an income of $15,000 or $20,000 who can afford to invest in the stock market and have capital gains.
Another interesting aspect of this is that the Conservative Government has announced changes to pension plans as concerns what can be invested in registered retirement savings plans. This system is also helpful. I have nothing against investing in RRSP's. But what people tell us is that such measures benefit the wealthy more than the poor and that a policy which has just been announced should now be changed to make it more equitable. This should be replaced by tax credits.
Madam Speaker, the question asked by the Hon. Member for Ottawa-Vanier was very relevant and it gave me an opportunity to add a few comments to what I said some minutes ago.


David Orlikow: Mr. Speaker, today we are debating a set of proposals by the Minister of Finance (Mr. Wilson). It is the same Minister of Finance who is now talking about bringing in a fairer tax system.
These proposals are the latest in a series of tax measures brought in by the Government and the Minister which have

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Excise Tax Act
increased the sales and excise taxes and have cost every family in this country $1,300 since the Government took office.
Let me tell the Hon. Member for Seikirk-Interlake (Mr. Holtmann), who intervened in this debate to defend the $500,000 exemption on capital gains, that for every one of his constituents who will benefit from that measure, he has 100 or 200 constituents who cannot afford to pay that $1,305 increase in family taxes which the Government has imposed.
I want to say something to the Hon. Member for Leth-bridge-Foothills (Mr. Thacker). First, he should keep the record straight. He said that socialist countries have no middle class. I am certain that he would want to make it clear that he was talking about communist countries in eastern Europe. Countries in western Europe, beginning with Scandinavian countries like Sweden, Denmark and Norway, and going down through West Germany, Holland, Belgium, Great Britain, France, Italy, Spain and Portugal all had, have or will have social democratic Governments. All of those countries have very wealthy people and a middle class that is alive and well. All of those countries allocate a greater part of their Gross National Product to social security and health. All of them have less poor people than Canada.


Mr. Daubney:: Not true. Portugal.


David Orlikow: Just look at any of the OECD reports and you will see that except for Spain, Portugal and Italy which are poorer than Canada-


David Bruce Daubney: Okay.


David Orlikow: Those facts are correct. Spain, Portugal and Italy are doing much better than before. We should keep the record straight.
We should keep the record straight with respect to taxation. After listening to the Hon. Member for Lethbridge-Foothills I think he would call anyone to the left of Genghis Kahn a socialist. He should be current and understand what has happened in the last month in the United States, which has its most conservative president in 50 years. They have turned their tax system around and have cut the rate of corporation taxes and the rate for personal income taxes, without increasing excise taxes but by closing the loopholes on corporate taxes and personal income taxes.
The Hon. Member talked about capital gains tax. We have made it very clear that we do not oppose farmers and small business people being able to turn their farms and their businesses over to their children without having to pay capital gains tax. I point out to the Hon. Member that in its most recent tax change bills, the United States has increased rather than decreased the rate at which people pay taxes on any capital gains they make. The Hon. Member should at least be current and look for advice from the very people whom he has lauded so often.
We are opposed to this Bill because it continues the process which the Government began when it took office. In November of 1984, the Minister of Finance in his economic statement announced an increase of 1 per cent in federal sales tax. That is something the Liberals had proposed and the Conservatives had opposed when they were in opposition. The petroleum compensation charge was increased.
In his May 1985 Budget, the Minister of Finance increased the federal sales tax by another 1 per cent effective January 1, 1986. He increased the excise tax on gasoline. He implemented a new excise tax of 2 cents per litre on diesel and aviation fuel. He broadened the federal sales tax base to include candy, confectionary, soft drinks and pet food. I wonder what he has against the kids who like candy? He increased the excise tax on tobacco and on alcohol.
In his Budget of February 1986, the Minister of Finance increased the federal sales tax as of April 1, 1986 by another 1 per cent. He increased the excise tax on tobacco and on alcohol. We have calculated that those tax increases cost every family $1,305.
At the same time, the Minister of Finance was permitting, as has the United States for many years, some of the largest corporations in the United States and Canada to get away without paying any sales tax at all. The Citizens for Tax Justice in the United States has compiled its annual list of corporate taxpayers or what they call "corporate free-loaders". It is no surprise to me that not only are many of the top 10 corporate free-loaders not paying any taxes but are receiving tax rebates. They are getting money back.
The top 10 companies in the United States had a profit of $39.6 billion from 1982 to 1985 and received a rebate of $1.5 billion for an effective tax rate of minus 3.8 per cent. I would like to put on the record some of those companies. Boeing Company between 1980 and 1985 made profits of $2.25 billion. It received a tax rebate of $121 million. Pepsi Cola received a rebate of $89.3 million. DuPont received a tax rebate of $179 million. Texaco received a tax rebate of $68 million. International Paper received a tax rebate of $59.8 million.
The Government is congratulating itself because it sold-I believe it gave-de Havilland to Boeing. Boeing in the United States, as I indicated, paid no corporate tax at all. I am worried that Boeing in Canada will be permitted by the Minister of Finance and the Government to do in Canada what it did in the United States, that is pay no taxes at all.
We must ask the Minister of Finance if that is the kind of fair tax system he talks about. The illustrations I have given about what has happened in the United States can be duplicated over and over again in Canada. Our research tells us that there are a whole host of companies, some of them the largest corporations in Canada, which in the five years from 1980 to
October 30, 1986

1985 paid no taxes at all in at least one of those years. Let me detail some of these corporations.
The Royal Bank and the Bank of Montreal paid no taxes at all. There is not an employee of either of those banks who has not paid income tax, but the companies they work for have made hundreds of millions of dollars in profits and paid no taxes at all. The Hudson's Bay Company, the Thompson financial interest, is among the largest and wealthiest groups in the world. It owns oil companies, newspapers, television stations, and retail stores, yet paid no taxes at all. The Power Corporation and some of its groups, and the Investors' Group, paid no taxes at all in at least one of five years I mentioned. I could go on and on, Madam Speaker. I am sure Conservative Members of Parliament know a good deal more about the Roman Corporation and Mr. Roman than I do. He has become one of the wealthiest people in Canada. I do not object to his doing well if he is aggressive and clever and adds something, as he does, to the productive capacity of this country. However, I think that as long as ordinary citizens, some of them making very little over the minimum wage, have to pay income taxes and the kinds of sales and excise taxes I have talked about, it is only fair to say to Mr. Roman, and to the hundreds like Mr. Roman, that they should be paying their fair share of the taxes as well. We have not seen any desire on the part of the Minister of Finance or his Government to do that. What we have seen again and again is increases in taxes, many of them hidden. We are now talking about a business transfer tax, which is another form of sales tax but even more regressive than the previous sales taxes.
We have seen increases in taxes, usually hidden, as often as the Minister of Finance can figure out how to do it, which adds to the burden of the ordinary citizen, which cuts down on the real incomes and living standards of ordinary Canadians while at the same time encouraging and permitting those at the top to live ever better and better.
It is our intention, which will come as no surprise to Conservative Members of Parliament, to oppose this tax measure which we believe to be regressive and unfair, and we will continue to urge the people of Canada to demand a tax system which will be fair and one which will get the revenue the Government needs to provide the services from those who are best able to pay. The proposal contained in this Bill does the exact opposite. As we have done in the past and will do in the future, we intend to oppose and vote against passage of this Bill.



PROCEEDINGS ON ADJOURNMENT MOTION

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

David Orlikow: Madam Speaker, on October 16 I asked the Minister of State for Science and Technology (Mr. Oberle) if the $20 million being cut from the National Research Council could be restored. Many of the programs of the National Research Council have been cut because of the desire of the Government to reduce the deficit. It seemed to me to be a modest request given the significance of the work carried on by the NRC and the manner in which the Government spends its money in other areas.
One can ask which is more important, spending $41 million more to move a prison to Port-Cartier or spending $20 million to keep NRC at a minimum strength to continue its programs. This question has been asked of me a number of times in a number of different ways. Why, for example, could not $20 million be found in the $1 billion for research for the universities which the Government keeps talking about?
This is a valid question, and one which the Government should seriously answer. As more persons become aware of what is happening at the NRC, they will see that panic cuts are shutting down entire programs in which huge amounts of capital have been invested in the past. This is no way to wind down research. It severely undercuts the resources available to the nation in terms of scientific expertise.
We know already that we will be losing a world-class observatory at Algonquin Park, and that the electromagnetic engineering section of NRC is being closed down despite its clear record of achievement in health areas that the Minister of State for Science and Technology said he would protect. We will know more about the effects of these cuts in the days ahead. In fact, each day brings a new horror story of how Canada is losing out again in an area in which the Government has promised major improvements in national performance in scientific research and development. After all, the Government promised that it would move to devoting 2.5 per cent of Gross National Product to scientific research and development.
The question I asked also raised the question of Dr. John Polanyi, our new Nobel Laureate in Chemistry, who began his distinguished career in Canada in post-doctoral work at the NRC. The Minister's response to my inquiry about giving future Canadian researchers the same opportunity that Dr. Polanyi had was to beg the question by saying that Dr. Polanyi had not worked for the NRC for some time and that he is now a professor at the University of Toronto.
The facts are these. Dr. Polanyi began his career in Canada. He came from Great Britain to the NRC. His lab is now being shut down as a direct result of these cuts. Dr. Polanyi greatly enjoyed his time at the NRC. In his own words: "It was a great place to do science". Dr. Polanyi now has great doubts about Canada's will or ability to support research. He said that if he were starting today: "I think I would go to the United

October 30, 1986
Adjournment Debate
States." Nothing could be more clear-cut about our decline in the eyes of those who know research work best.
It does no good for the Minister to say that Dr. Polanyi has endorsed the policies of this Government because he has not yet moved to the United States. Other universities have felt the brain-drain acutely, and it will be accelerating. When one examines it, the Government's five-year, $1 billion plan for university research means that matching grants from industry must fund additional research, otherwise funds for research are frozen and will decline.
No doubt Dr. Polanyi will have no trouble obtaining research funding now. But what about the future Polanyi's? What private sector corporation will have the wisdom and the funds to back them when they are unknowns trying to get started, as so many of them are?
For these and many other reasons I must go back to my first question. Will the Government find a fairly small amount- $20 million-so that valuable research and development in the national interest at the National Research Council can continue? Without it we may be at a research point of no return.
It is a final irony that the one university which seems to be suffering the most from lack of research funding is the University of Waterloo, a university which entered new fields of computer technology. Yet it is the whole nation which is watching and which will suffer from the Waterloo which the Government has reached in scientific research.


Mr. Gordon Towers (Parliamentary Secretary to Minister of State for Science and Technology):: Mr. Speaker, in answer to the Hon. Member, Dr. Polanyi worked at the National Research Council for two years ending in 1954. He then moved to the University of Toronto where most of his research was performed with extensive assistance from the Natural Science and Engineering Research Council. The success of his work there demonstrates the strength of supporting pure research at the universities.
The decision to scale down the NRC laboratory dealing with photochemistry and kinetics was made by the NRC's Executive Council after careful consideration of all programs. The photochemistry program at NRC has been wound down over the last decade as the science and technology has been transferred to industry and universities. Dr. Polanyi is himself an example of this development.
It should be remembered that Dr. Polanyi's connection with the laboratory is now 32 years old. He joined the laboratory in 1952 after completing his PhD. at the university of Manchester in England and worked there for two years before moving to the University of Toronto. While there he received increasing support from government granting programs. In fact, this year with $220,000 he is the largest single recipient of a research operating grant in the whole country.
The important thing we can learn from this is that world class basic research was done at a university with government support. This demonstrates the vitality of the government approach of supporting pure research at the universities. Basic research at the universities can be effective.
The Government wants to foster basic research at the universities because the graduate students involved in this effort come away with the most up-to-date experience possible. In many ways, it may be easier to perform such research in government laboratories, but then it has proven difficult to train people to use the results. Our new thrust is to move the performance to universities where training is an integral part of their job and the knowledge of outstanding researchers like Dr. Polanyi can be passed on.
This is a healthy shift in emphasis. We are not discontinuing all basic research at NRC and other government laboratories. It has its place there. But we are pushing more of it toward the universities. In 1950 only 19 universities received research assistance from the federal Government. That number has now increased to 52. The university sector represents a rich and varied pool of talent that is well able to undertake the increased work being sent its way. That is why earlier this year the Government took steps to preserve the funding level of the granting councils for the next five years, even in the face of the need to control spending wherever possible.
I must say that the alarmist attitude of the Hon. Member opposite does nothing for the research community in Canada.


AGRICULTURE-ASSISTANCE FOR GRAIN FARMERS. (B) ALLOCATION OF ASSISTANCE
Maurice Brydon Foster: Mr. Speaker, on October 8, 1986,1 directed a question to the Minister of Agriculture (Mr. Wise) and asked him about the $1 billion assistance program to grain farmers which the Prime Minister (Mr. Mulroney) mentioned a few days before. This was an interesting announcement by the Prime Minister. In the Speech from the Throne on October 1 there was no mention of the $1 billion of assistance.
Three or four days later when the Minister and the Prime Minister spoke in the Address in Reply to the Speech from the Throne, the Prime Minister casually mentioned that the Government was going to provide assistance to farmers, that the amount of the assistance had been estimated at $1 billion, and that he was going to negotiate it with Premier Devine of Saskatchewan.
It was very interesting that that announcement came during the Prime Minister's speech. We assumed that it resulted from a sheer terror telephone conversation supposedly to the Minister of Justice (Mr. Hnatyshyn) from Premier Devine in the midst of the election campaign, and to the Minister of Indian Affairs and Northern Development (Mr. McKnight). This precipitated the casual mention of $1 billion of assistance need. The Prime Minister followed this up on about October 8 saying that this was desperately needed by western farmers.
October 30, 1986

At the same time the Premier of Saskatchewan suggested that the assistance would be in the form of a cash deficiency payment. However, the Minister of Agriculture was saying that the assistance might be in the form of a loan or some other assistance. As a matter of fact, I am not sure whether the Minister of Agriculture ever said that it would be a cash deficiency payment. Time has passed, the election has gone by, and the whole matter seems to be going into limbo.
There have been meetings of Deputy Ministers. In fact a Deputy Minister returned from a meeting in Saskatchewan and announced that the benefits would be made available on the basis of 1986 crop production, which would mean that in Saskatchewan there would be a cash deficiency payment of $457 million. Of course the office of the federal Minister of Agriculture denied it. Everyone has looked with great interest at this $1 billion of assistance. In fact, some farmers have actually called it "Brian's bogus billion". No one seems able to find out whether the money exists, whether it will be paid as a deficiency payment, whether it will be a loan, or whether it will be a loan guarantee. In any event, time goes on and the Government continues to talk about meetings and discussions.
I had an opportunity to discuss the issue with a provincial Minister. Although these supposed consultations are taking place, he certainly did not know how the assistance would be paid. In one comment to the media the Minister of Agriculture said that the $35 million self-sufficiency program in Atlantic Canada, which he announced some time last summer, might be raised to $50 million. That was the only reference to how the money would be paid, whether it exists, whether it is new money, old money or whatever. I hope the Parliamentary Secretary will be able to announce tonight that it is not "Brian's bogus billion" but in fact is a $1 billion cash deficiency payment.
In another exchange which I had with the Minister of Agriculture concerning the $1 billion assistance for Canadian grain farmers, I asked him whether it would be paid as a deficiency payment in order to reduce the obligation of the Government under the western grain stabilization fund. Knowledgeable observers of the grain trade have said that the Government would be obligated under that fund to pay about $1 billion for the 1986-87 crop year. In his report the Auditor General pointed out that the deficit in the western grain stabilization fund this year would be approximately $100 million. We were trying to clarify whether it was new money to decrease the obligation of the federal Government under the western grain stabilization fund.
The Minister said that it was not to reduce the Government's obligation under the fund. It seems that the $1 billion under this aid program will be brought in under an appropriation Bill or in some other way and will not be used to reduce the Government's obligation under the western grain stabilization fund.
Adjournment Debate
Provided that it is not a bogus offer on the part of the Government, grain farmers will be getting $1 billion of assistance as a result of the tremendous problem in national grain trading and pricing this year, perhaps the worst since the 1930s. As well, people in the western grain area or the Wheat Board area will be receiving $1 billion or whatever the western grain stabilization fund will pay out.
I know the Parliamentary Secretary, being a very illustrious Member of Parliament and having great responsibility in the field of agriculture, will want to announce in clear and decisive tones tonight exactly how much money will be paid, on what terms it will be paid, whether it will be a cash deficiency payment based upon deliveries of grain, whether it will be an acreage payment, and how it will be paid out in other parts of Canada. We look forward to his comments this evening.


Jean-Guy Hudon: Madam Speaker, on October 3 of this year, the Prime Minister (Mr. Mulroney) promised a $1 billion assistance program for grain farmers who are being affected by the subsidy war between the EEC and the United States. The measure had hardly been announced when the Hon. Member for Algoma (Mr. Foster) asked us to put the cart before the horse and announce how much farmers in his riding would receive and when.
I am sorry to disappoint him, but we want to act responsibly and consult with the main parties concerned before going any further. To this end, the Prime Minister announced in the House that the federal Government will be consulting with the farmers and the provinces before taking any action. We want to improve self-financing for farmers in the most effective and equitable way possible. I think that is pretty clear.
The so-called subsidy war between the EEC and the United States has created a national problem which requires the right national solution. Instead of going out and spend, spend and spend as the Hon. Member for Algoma would have us do, we want to consult with farmers' organizations and act in consultation with the provinces.
For some time we have been discussing with the provinces how best to help our grain farmers. In Victoria, on August 27 of this year, the Agriculture Ministers of all governments made a commitment to intervene in this area, in order to assist the agricultural sector and protect industry-related jobs throughout the country.
Following this meeting, the Ministers asked their officials to formulate recommendations on ways to assist the farmers affected by this subsidy war.
Madam Speaker, these recommendations were discussed at a meeting on October 9 in Ottawa. The provincial deputy ministers of Agriculture then pursued this task by assessing all options for countering the harmful effects of these subsidies.

October 30, 1986
Adjournment Debate
Perhaps the Hon. Member for Algoma would care to hear what the Minister of Agriculture (Mr. Wise) told them at the beginning of this meeting, and I quote:
We are not excluding any options. We are asking you to help us identify the best and most equitable ways of giving farmers the assistance they need.
Madam Speaker, the meeting was held less than a week after the Prime Minister's announcement. We believe quick action is necessary but also that we should think and consult before we spend. The Prime Minister has announced that the federal Government will increase the farmers' cash flow by about $1 billion. This new federal aid comes in addition to assistance already available under existing programs and will not involve reallocation of funds earmarked for other farm programs.
I said earlier that we are facing a problem which affects all farmers throughout this country. A national problem calls for a national response, and this is why I believe our initiative will take into account a wide range of farm products and various needs. The situation is clear and we have shown that we are prepared to take action. No option has been left aside. We are now looking at all possible solutions in co-operation with the main interest groups. Given the circumstances, this process is quite reasonable.
This week the Minister of Agriculture will have consultations with the leaders of our major farm organizations. I expect you will be there. Later on this month he will be meeting with his provincial counterparts, for the same reason.
[DOT]	0815)


EMPLOYMENT-PRIVATE SECTOR JOB CREATION-MINISTER'S STATEMENT. (B) TRAINING OF WORKERS
[Stage Direction]
Hon. Warren Allmand (Notre-Dame-de-Grace-Lachine
East): Madam Speaker, on October 7, I asked the Minister of Employment and Immigration (Mr. Bouchard) if his speech of October 6 in reply to the Speech from the Throne was a forecast of a further withdrawal from employment creation by the Conservative Government and of further cut-backs in job creation programs. The Minister did not answer my question and consequently I scheduled this debate for this evening.
[DOT]	0820)
In his speech of October 6 the Minister strongly suggested that the private sector, the provinces and individuals should have the principal responsibility for job training and job creation. That was nothing new. What was new was for the first time, at least that I recall, a Minister was saying it. Up until that time Ministers were saying that they were committed to job creation and job training but doing the opposite.
The Minister and his predecessor had already taken steps to abdicate their role in job creation. In the spending Estimates there was a reduction of $300 million from 1984 to 1986 in job creation funds, approximately 27 per cent when inflation is taken into account. The number of employment centres has
been cut, including specialty employment centres at universities. The number of people counselled by the Department has been cut. When an unemployed person seeks counselling with respect to employment, only about 20 per cent are given interviews and registered. The others are referred to bulletin boards where they are directed to look for work. There have been cuts in unemployment insurance, post-secondary education, and institutional training in the Department.
All this is happening at a time when 1.2 million people are unemployed. The Government maintains there have been improvements and of course the rate of unemployment has declined since the pit of the recession in 1983. However, it is still 9.5 per cent nationally. In Atlantic Canada it is nearly 15 per cent; in Quebec, 10.7 per cent; in the rich Province of Alberta, 9.9 per cent, higher than the national average; in British Columbia, 12.3 per cent. Youth unemployment is still approximately 15 per cent. While the Government claims it is doing well, there is still much to be done and this is no time to cut back on job-creation programs and leave it to other people.
In 1981, the year before the recession, unemployment was 7.5 per cent, and that should be the goal. In the period between 1965 and 1980, the average rate of unemployment was 5.6 per cent. That is a goal which should be pursued by the Government before it starts cutting employment programs. Part-time employment as a percentage of total employment has increased from 9 per cent in 1980 to 18 per cent in 1986. Those unemployed for more than a year is double in 1986 what it was in 1983, and four times the rate in 1981.
My conclusion is that if you look at all these statistics which I have referred to, this is no time to be cutting back on these programs. It is no time to be sloughing off the federal Government's responsibility. It is no time to tell individuals, the private sector and the provinces that this is their primary responsibility and the federal Government has nothing to do with it; or, if the Government does not go that far, that its role is not the principal role. It is, and the Government should return to the budgets and commitments it had when it came into office in 1984. This is no time to withdraw.
[ Translation]
Jean-Guy Hudon: Madam Speaker, when the Minister says that "practical training and job experience lead to permanent jobs", I fail to see what is wrong with his statement because this is what the new reality of job creation is all about.
My colleague opposite says that our job creation programs are necessarily geared to training, he claims that this is not a new approach, but he is quite wrong. It was a new approach indeed, the new job creation programs had to be geared to training, and this is how we got results. Members opposite do admit there have been results, but my colleague seems to imply that they were nothing but a by-product of improvement in the world economic situation. This is unfair, it was due to concerted action on the part of all interest groups, private and public
October 30, 1986

promoters alike, they all co-operated and managed to overcome the greatest danger we faced when we took office, a danger which is becoming smaller with time.
I agree with my colleague, we should strive for even lower unemployment rates. We all agree on that, but one thing is clear: whatever one may say or do, it is a fact that since September 1984 our job creation programs and policies have been successful, unemployment did go down. There are fewer unemployed. The unemployment rate has declined. And when people say that we pay less for unemployment insurance, it is obvious. I, for one, would like to pay nothing for unemployment insurance. That would mean full employment. Therefore, if people say that the Government is paying less, I am obviously happy. If we are paying less, it is because more people are
Adjournment Debate
working, which is what Canadian men and women want to achieve. This is why we have instituted new programs featuring compulsory training. Challenge '85 was a success, Challenge '86 was an even greater success since even student summer jobs were career oriented, and you can be sure that Challenge '87 will be better still!


@Acting Speaker: 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 6.28 p.m.
[Stage Direction]

Friday, October 31, 1986