1986-06-02

[Stage Direction]
FIRST SESSION-THIRTY-THIRD PARLIAMENT 35 Elizabeth II

[Stage Direction]
Published under authority of the Speaker of the House of Commons by the Queen's Printer for Canada
Available from Canadian Government Publishing Centre, Supply and Services Canada, Ottawa, Canada K1A 0S9.
[Stage Direction]
Monday, June 2, 1986


Mr. Jim Hawkes (Calgary West):: Mr. Speaker, pursuant to Standing Order 101, I have the honour of tabling, in both official languages the report of the official parliamentary delegation that visited Belgium from May 11 to May 17, 1986.


QUESTIONS ON THE ORDER PAPER
Mr. Doug Lewis (Parliamentary Secretary to President of the Privy Council):: Mr. Speaker, I ask that all questions be allowed to stand.


Mr. Speaker:: Is it agreed?


Some Hon. Members:: Agreed.



GOVERNMENT ORDERS


Hon. Barbara McDougall (Minister of State (Finance)) moved: that Bill C-86, an Act to amend the Canada Deposit Insurance Corporation Act, be read the third time and passed.
She said: I am pleased to be present in the House for third reading of this Bill. I do want to thank Hon. Members who brought the Bill through report stage with responsibility and speed.
As we all know, the Canadian financial system withstood a series of major shocks over the past several years and this has caused concern for many Canadians with savings in financial institutions. Hon. Members are aware that the Government is committed to a revitalization of the economy and that an important aspect of our agenda in this regard is the comprehensive reform of financial institutions legislation. The Government's Green Paper on financial institutions and the
parliamentary reports on financial institution legislation are very important elements of this process. While we are continuing our efforts to develop a broad public policy response to these issues, we must act without delay in dealing with certian specific problems.

The amendments to the Canada Deposit Insurance Corporation Act contained in Bill C-86 are aimed at protecting small depositors, while the proposed regulatory powers would directly contribute towards stabilizing the financial system. In addition, the Bill before the House today increases the number of members of the board of directors of the Canada Deposit Insurance Corporation, which will have up to four additional members from outside the public service. This amendment is the result of a recommendation by the Wyman Committe which suggested increasing the number of private sector representatives on the board of directors of the Corporation.

The proposal that there be private-sector representation on the board was also supported by the reports prepared by the Senate banking committee as well as the report of the House finance committee. It is anticipated that the private-sector board members will complement the existing public-sector representatives by bringing to the board a wide range of expertise.
As a result of the failure of several financial institutions, the deposit insurance system has experienced substantial losses. The extent of the losses that CDIC absorbed are such that its accumulated financial resources were depleted. Moreover, these losses will continue to impede the restoration of the deposit insurance fund. Indeed, without an increase in insurance premiums, the deposit insurance fund's deficit would continue to increase. This would be true even if the CDIC did not incur any additional losses in the future since funds still have to be borrowed to finance past deficits.
It is my view, and I hope all Members of the House support me in this regard, that the deposit insurance system is far too important an instrument of government policy and public protection to have its ability to meet its mandate threatened. For this reason, Bill C-86 raises the premiums paid by member institutions of the Canada Deposit Insurance Corporation from the present level of one-thirtieth of 1 per cent to one-tenth of 1 per cent of insured deposits. This increase in premium levels would begin the lengthy process of reducing the size of the CDIC deficit.

June 2, 1986
Canada Deposit Insurance Corporation Act
[DOT] (mo)
The Senate report on the deposit insurance system, the House finance committee report, and the Wyman report all recognized the importance of ensuring that the CDIC has adequate financial resources. Consequently, it was recommended that CDIC premiums be increased.
At the same time, however, the Government agreed that any increase in CDIC premiums should be on an interim basis, pending a full review of the deposit insurance system. For this reason, the premium increase in Bill C-86 expires at the end of the 1986 premium year. The Government is presently conducting a comprehensive review of the deposit insurance system, and additional legislation will be forthcoming.
The Government has benefited greatly in this review process from the various reports which have been prepared, most particularly by the House. I thank Members of the House finance committee, of the Senate banking committee, and of the Wyman committee for their valuable contributions to this very important public policy debate.
Given the importance of the deposit insurance system in maintaining public confidence in the financial sector, I ask all Members of the House to support the legislation as expeditiously as possible.


Some Hon. Members:: Hear, hear!


Miss Aideen Nicholson (Trinity):: Mr. Speaker, the Bill before us is a simple one. It does two or rather three things with which no one would have much disagreement. However, it is also remarkable for what it fails to do.
The Bill increases the premiums paid by the member institutions of CDIC, which is clearly needed and to which I will return later. The Bill also adds up to four private sector directors to the board and has provision for conflict of interest guidelines to be established by the board.
As I said, it is a simple Bill but perhaps it is remarkable at this stage, almost two years into the Government's mandate. The Government had the advantage of a private sector consultation committee set up by the previous Government which had worked for a year. In effect, after almost three years of work we have very little before the House to strengthen our financial institutions.
The Canada Deposit Insurance Corporation, generally known as the CDIC, was established in 1967. All chartered banks and federally incorporated trust, mortgage, and loan companies must be members. In addition, provincially incorporated trust and loan companies can apply to be members. The main purpose of the corporation is to maintain an insurance fund as a protection for the savings of Canadians held in member institutions. I do not have up-to-date figures, but at the end of 1983 there were 137 federal member institutions and 51 provincial member institutions. By law, members of the corporation, having become members, must
remain members. If they are undergoing a difficult time, they cannot simply withdraw.
The CDIC now insures savings to a maximum of $60,000 per depositor per institution. That ceiling was introduced in the last Parliament. It was raised from $20,000 in response to failures of trust companies in Ontario. Since its enactment in 1967, the CDIC has stipulated that deposit instruments for periods of longer than five years are not protected by deposit insurance. Deposits in non-Canadian funds are also not protected.
Recently we had at least one situation where depositors who had certificates with a six-year or seven-year term thought they were insured and found to their distress that they were not. The by-laws of the CDIC stipulate that uninsured instruments should be clearly marked on their face, "this is not an insured deposit as defined by the Canada Deposit Insurance Corporation Act". Unfortunately the Act does not impose any penalty for non-compliance with the by-laws, and noncompliance occurs. This is another issue which was not addressed in the Bill before us.
Member institutions contribute to the insurance fund based on the amount of insured deposits they hold. This has created some tension among member institutions in recent years. The banks complain that they make the largest contributions while the trust companies create the problems which result in a drain on the insurance fund. That argument is not so easily made now that we have had two banks fail. However, they were small regional banks. Many financial institutions continue to say that across the board arrival at a premium rate is not fair and that there should be a system of relating premiums to risk or to performance. This is another issue which was not addressed in the current Bill.
When the Government of Ontario took over three Ontario based trust companies, Crown, Greymac, and Seaway, CDIC decided to wind the companies down slowly instead of closing them and liquidating their assets. This may have been a good decision for those who eventually would receive some of the assets. It obviated the risk of a "fire sale". It may have protected the shareholders' interest, but other problems were created as a result. In the case of those three Ontario based trust companies, the CDIC made loans of almost $950 million, and I understand the losses were somewhere around $650 million.
On March 25, 1985 there were further demands on the Canada Deposit Insurance Corporation because of the bail-out of the Canadian Commercial Bank. The CDIC contribution to that rescue package at that time was $75 million. Subsequently, when the decision was made in September to wind up the Canadian Commercial Bank and Northland, of course there were further demands on the CDIC.
The legislation governing the CDIC gives it a $1.5 billion line of credit from the Government of Canada, so there is no current threat to its ability to guarantee savings deposits. However, obviously a solution had to be found to make it more
June 2, 1986

viable. The question of premiums and the question of membership are closely related, but the Bill before us addressed only the question of premiums. It increased the premiums from one-thirtieth of 1 per cent of insured deposits to one-tenth of 1 per cent.
The Minister appointed a private sector committee in January, 1985 which examined the CDIC and had many far-reaching proposals. It examined the question of disclosure, requiring member institutions to disclose accurately to customers what is insured and many other issues which were not covered in the legislation. We continue to have problems with people who somehow do not know they were not insured.
For example, in the case of Pioneer Trust, in or around April or May of 1985 many of those customers claimed they did not know that some of their deposits were not insured. We have also had a financial institution in Vancouver which failed and the Members did not realize that their deposits were not insured. The institution was simply not a member institution of CDIC, nor was it even eligible for membership. There is a great need for more disclosure on the part of financial institutions-for more information to be available to depositors-but none of that is addressed in this Bill.
The Canadian Bankers' Association last June in responding to the Wyman committee, the private sector committee which the Minister had established to look at CDIC, recommended a principle of co-insurance. I must confess that this is something I have difficulty with because CDIC is primarily meant for the small unsophisticated investor.
While many people claim, particularly in the financial institutions, that co-insurance would introduce market discipline, it seems to me unfair and unrealistic to put that responsibility on the shoulders of the small investor who may simply have deposited the proceeds from the sale of the house or the family farm. The small investor should not be required to be knowledgeable.
The Canadian Bankers' Association has another recommendation that I think merits more careful study, namely, proposals to establish minimum standards of financial performance and disclosure in order to qualify for federal deposit insurance. The question of disclosure continues to be a very important one for consumers. For the consumer to protect his or her interest, he or she must have full information. There are many questions and many proposals for achieving regulatory uniformity and compliance which need action. In the last two years we have had a tremendous amount of study. We had a Green Paper on financial institutions. We had the Wyman study on the Canadian Deposit Insurance Corporation and we have had two reports from the finance committee of this House. We have had Senate committee reports. We now have the Estey commission almost ready to turn in its report. It is important that we now act.
Canada Deposit Insurance Corporation Act
As I said at the outset, Bill C-86 is a very simple Bill. It proposes an increase in the premium level paid by the CDIC member institutions from one-thirtieth of 1 per cent of their insured deposits to one-tenth of 1 per cent, but this is for one year only. The question of the long term financing of CDIC still remains to be decided.
I have mentioned the demands on CDIC as a result of the failure of many trust and loan companies since 1982 and also that in 1985, as part of the Canadian Commercial Bank bailout, the CDIC committed $75 million. According to its annual report, the CDIC had not been making any provision for loss as it expected to be fully reimbursed. Later when CCB went into receivership followed by the Northland Bank, the Government announced its intention to reimburse all depositors in both institutions, even those whose deposits exceeded the $60,000 limit. In so far as insured deposits are concerned, CDIC paid out $250 million to Canadian Commercial Bank depositors and $170 million to Northland Depositors. The uninsured deposits came to $430 million for the Canadian Commercial Bank and $470 million for Northland.
Apart from the financial stresses imposed by the failure of financial institutions in recent years, there is also the burden of administrative work with which CDIC was not designed to deal. I do not think it was even anticipated that the CDIC would be so involved in liquidation. Also, it has been drawn into a new and unaccustomed monitoring role for which there still is no legal framework because CDIC is the insurer and not the regulator. We have a separate Bill before the House which will increase somewhat the powers of the regulator of banks and of insurance but the whole question of regulation still has to be dealt with in a substantial way.
The CDIC is having to make much use now of consultants providing information and analysis with regard to the institutions being wound down, agents on long-term contracts to look at particular problems, and private sector committees set up to deal with such things as the disposition of real estate assets on their books.
Currently the CDIC has at least $1 billion in real estate financed by 18 failed institutions all across Canada. This is a situation that was never envisaged, for which no provision has been made and CDIC staff resources have been stretched very thin by the circumstances. It is clearly necessary to have review and change in a system that has through force of circumstances exceeded its operational bounds and evolved beyond its original purpose. Again we have a Bill before us that does not address any of these matters.
We are in a period where we all know that basically Canada's financial institutions are strong and healthy, but there have been serious problems which are causing concern. Surely the sooner these problems are dealt with and the sooner legislation is updated, the sooner our financial institutions can get back to doing what they do well and what their basic purpose is rather than constantly having to respond to criticism in this House and in the media. For that reason we on this side of the House urge the Minister to come forward soon with

June 2, 1986
Canada Deposit Insurance Corporation Act
comprehensive legislation rather than these small band-aid programs that we are seeing as with the present Bill.
Bill C-86 simply increases the premiums for one year. The whole question of the long-term financing, the long-term purpose of the CDIC is left unanswered. The question of the role of CDIC in regulation, if any, is left unanswered. The question of staff resources for CDIC in response to the many new roles CDIC is carrying out is also left unanswered.
The Bill adds up to four private sector board members. Hitherto the chairman was the only private sector board member and the other members were public servants: the Governor of the Bank of Canada, the Deputy Minister of Finance, the Inspector General of Banks and so on. I think the addition of private sector directors is a useful step forward, although it raises questions of conflict of interest. The Bill does not deal in a substantial way with that. It simply requires the board to put together some guidelines for conflict of interest. The guidelines were tabled with the legislative committee which examined the Bill. It would have been more satisfactory to have had some standards included in the Bill itself, but an amendment to that effect was defeated in this House.
On the question of public service directors, the Bill allows for substitutions. In other words, if the Deputy Minister of Finance does not wish to attend a meeting of the CDIC he can send an alternate. This was discussed at the legislative committee. I do not think that most of us were very satisfied with the idea of rotating membership. We would really prefer the public service members to be constant, just as the private sector members are constant. However, that remains in the Bill for now. It is perhaps something we can return to when dealing with whatever the Government offers by way of substantial legislation on CDIC.
I would like to conclude by speaking again of what the Bill does not do. All of us in the House are concerned about ownership restrictions on financial institutions. It does not seem likely that the Government is prepared to deal with that question up to this point. If the Government opts for no ownership restriction in financial institutions, which looks to be the way things are going, surely there should be some related changes to Canada deposit insurance legislation. The President of Canada Trust suggested that in this event no deposit gathering institution with individual direct or indirect ownership of over 10 per cent should be allowed to have its deposits covered by federal deposit insurance. He said:
If "individual trust company owners" really deem themselves beneficial to the economy, they should stand tall and let the public decide if it wishes to have deposits on an uninsured basis with institutions controlled by one or a few individual owners.
There was a tremendous amount of evidence before the finance committee that linked self-dealing or related party transactions that were not in the best interests of the financial institution with limited ownership. Institutions that are broadly owned and well capitalized seem to be able to provide
their depositors with a degree of assurance that does not exist where ownership is highly concentrated. Yet, the Government is not prepared to move on the ownership question. It has been pointed out that the companies which have failed in Canada as well as in the United States and Europe have almost always been closely owned. In a speech given by the President of Canada Trust in February, 1985, he said:
If the federal Government opts, as we judge it will, for no ownership restriction, there is one change which we believe should be made to Canada Deposit Insurance legislation.
No deposit gathering institution with individual, direct or indirect ownership over 10 per cent should be allowed to have its deposits covered by federal deposit insurance... Had such a law been in effect over the last ten years Canada Deposit Insurance Corporation losses would likely have been minimal. We don't believe that the Astras, Greymacs, Seaways, Fidelities, etc. could have put their hands on very much "other people's money" without the umbrella of federal deposit insurance.
That is the issue, Mr. Speaker. If the Government is not prepared to move on ownership generally, there is a case to be made at least for limiting deposit insurance to broadly held institutions and making this very well known to the public. The consumer has been at risk through lack of information. However, I am not advocating this narrow course of action because I have not yet given up hope that the Government will move on the ownership issue.
I noticed the chairman of the finance committee busily making notes so I assume he is going to speak. I hope that he, too, is going to address the ownership question.


Mr. Simon de Jong (Regina East):: Mr. Speaker, I, too, wish to participate in the discussion on Bill C-86 which makes two major amendments to the Canadian Deposit Insurance Corporation Act. One is to increase the premiums charged to the member institutions for the insurance of deposits up to $60,000 from one-thirtieth of 1 per cent to one-tenth of 1 per cent. This is necessary because of the big deficit position which CDIC has found itself in. It is a necessary move and we have no objection to it.
The other major amendment to the Canadian Deposit Insurance Corporation Act which Bill C-86 brings forward is to change the majority on the board of directors of CDIC to the private sector. Presently CDIC has a board of five members, the chairman coming from the private sector and the four members being the Governor of the Bank of Canada, the Superintendent of Insurance, the Inspector General of Banks and the Deputy Minister of Finance. As a result of Bill C-86, through Orders in Council the Govenment will appoint five additional members from the private sector.
The concern we have is that the CDIC Board will in essence become like The Canadian Bankers' Association. We are concerned that the majority of people on a public board with responsibility to supervise deposit taking institutions will be from the private sector. We have the concern as well that with this specific provision the majority position will in the future be held by private rather than public sector people. While the
June 2, 1986

former may well have more hands-on experience, so long as CDIC has access to the Consolidated Revenue Fund it cannot be construed as a private sector organization. It amazes me that the majority of people on a board with access to the fund should be from the private sector. I strongly believe the board should continue to be mainly from the public sector. Personally I would like to see someone on the board from the Department of Consumer and Corporate Affairs. Certainly the consumers of the services offered by financial institutions are not represented and they should be, because the Department can provide some expertise to the board which I think is important.
My Party is also concerned about conflict of interest. We do not believe the government amendments are strong enough. It strikes us as somewhat odd that the one thing required of the one private sector person, namely, the chairperson of the board, was not extended to other private sector members of the board. Indeed, the Government dropped the provision which requires that they be Canadian citizens ordinarily resident in Canada. One can only conjecture why the Government failed to apply that criterion as a disqualifier for all private sector members of the board, not just the chairperson. In other words, a person can be a member of the CDIC Board and still not be a Canadian citizen ordinarily resident in Canada. In other words, again Canadian citizens spending most of their time in the United States can end up being members of the board. Personally I do not think that is a desirable situation at all.
I am surprised as well that the Government did not see fit to disallow public sector members of the board naming alternates to sit at board meetings. Studies from quite a few organizations, including parliamentary reports, have recommended that alternates not be allowed, whether private or public sector. The Wyman report of April, 1985, the Senate banking committee report of December, 1985, the Standing Committee on Finance and Economic Affairs report on financial institutions of November, 1985, the Ontario task force on financial institutions, December, 1985, and the Senate banking committee report on financial institutions in May of 1986 all recommended against public sector members being allowed to name alternates to the board. Our beloved chairperson of the committee made a strong presentation on this subject. After I questioned Mr. Sommerville, a representative from the Trust Companies Association who were also opposed to alternates, he stated:
You have so many substitutes that you do not have a responsibile or representative board. The board should be governed the same as any other board, and you should have to have a quorum present-
He goes on to say:
So 1 am totally opposed to giving any alternatives.
The chairperson of the committee interjected his own thoughts at that point. They were rather colourful but to the point:
I have to agree with Mr. Sommerville on this matter. 1 have never heard of a situation in a board of directors where you can send your brother or your donkey or whomever you want to represent you. You maybe could do that at a
Canada Deposit Insurance Corporation Act
shareholders' meeting with proxies. But being a director is something more responsible than just being able to send some friend.
I think the general feeling of members of that committee was in agreement with the chairperson. The Canadian Bankers' Association had this to say about alternates and I quote Mr. Macintosh:
To have alternates present in the case of the public sector has already been a problem, because there were many cases when the named members on the board were not present during the discussions of the CDIC in the last few years. There was a high absentee rate of the directors.
I am surprised the Government has not accepted our amendments and insisted that all members of the board operate under the same rules, that is, being unable to send alternates.
We have noted in the past as well that the board itself has been relatively weak. The following example illustrates the authority of the board, especially the current public sector members. The participation of CDIC in the March bail-out of the CCB came about when, according to Ronald McKinlay, the current chairperson of the corporation, the directors of the corporation participated in the attempt of the federal Government to rescue the CCB. The CDIC was authorized by the directors to make available $75 million in that effort. When officials of the corporation were asked whether a representative from the corporation was present at the decision, the reply was that there was not. According to one of the officials appearing before the legislative committee on Bill C-79, while the board of directors were attending a single meeting they were doing so in their capacity as the Inspector General of Banks, the Governor of the Bank of Canada, and the Superin-tendant of Insurance. Later Gerald Bouey, Governor of the Bank of Canada, minimized the participation of the corporation in the March bail-out. He said: "I do not think at this stage we can call that Government money although the corporation has borrowed from the Government." He was referring to the $75 million from CDIC.
The Wyman committee was of the opinion that CDIC should have a greater degree of independence than it currently enjoys. The decisions of the board of directors should be made with the interests of the corporation in the forefront rather than the interests those board members may have outside the corporation. There should be no inference of any conflict of interest as one might find when examining the decision to involve the corporation in the March bail-out of the CCB.
The difficulty with the majority of people being from the private sector arises from the potential for conflict of interest. The manner in which public service directors involved CDIC in the bail-out of the CCB can be seen to have been the result of a conflict of interest on their part. The corporation did not have any independence of action once that decision had been made. By merely changing the majority on the board from public to private sector without articulating strong conflict of interest guidelines will in no way diminish the possibility of a conflict of interest.

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Canada Deposit Insurance Corporation Act
First of all, Clause 1 provides for additional members to be appointed by the Governor in Council. There is no reference to the qualifications appointees must have. There is no reference to whether or not they would have to present themselves before a parliamentary committee so that their qualifications might be scrutinized. The process could become carte blanche for a Government wallowing in the patronage trough. That is why we are concerned with the whole question of conflict of interest and why we feel this Bill deals inadequately with that potential problem.
On numerous occasions the Minister has promised us further legislation. We know CDIC has been totally incapable in the past of dealing with the many problems which have befallen financial institutions in the last number of years. Since the beginning of December, 1984, while this Government was in office, we have seen the following institutions collapse: North Guard Mortgage, Pioneer Trust, Western Capital Trust, London Long Limited, Canadian Commercial Bank and the Northland Bank.
I am not for one moment suggesting it is a lack of policies or the wrong policies of this Government that has resulted in the collapse of these major financial institutions. The rot has existed for a number of years. Certainly the Liberal Government must take a fair amount of responsibility for the rot that has existed for quite some time.
When you look at the resources that CDIC has had over the last number of years it is just totally amazing that the CDIC, like the office of the Inspector General of Banks, while having a vital role to perform in the regulation of a deposit taking institution, has never been considered until very recently as an essential service. Previous Governments, and to some degree the present one, have not demonstrated an attitude which would indicate that these bodies were so regarded.
In 1980, for example, when the recessionary period was beginning to take hold, CDIC had a total of five employees. In 1984 after eight trust companies had either collapsed or been in some way taken over, the corporation staff stood at 16. Even when compensating for the difference in size one is struck by the fact that the Federal Deposit Insurance Corporation in the United States has a staff of 1,500, who only deal with the liquidation of failed institutions.
I understand at present we have some 30 to 32 employees with CDIC. Yet with the number of financial institutions that they are called upon to supervise and to inspect, 32 is not an adequate number, especially when we are calling upon CDIC to play a much stronger role. We have to give them the resources in order to fulfil their mandate.
While the Minister promised legislation that would strengthen CDIC's powers, we are still waiting. I do not know how long this Government is going to continue to wait. Are we going to need further crises in the financial institutions before we see some action?
In conclusion, the Wyman committee was of the view that the primary objective of CDIC required a fundamental realignment. Not only should it insure small unsophisticated depositors against loss, but it should more prudently "administer the deposit insurance fund". The increased private sector participation in CDIC is perceived as the most appropriate means by which the fund will be replenished and managed.
However, while the Bill seeks to increase the control which the private sector has over this regulatory body, there is no corresponding increase and specific obligations of the corporation. For example, there is no emphasis placed on the corporation's responsibility to inform its member institutions as to what is and is not insured. As CDIC's legal counsel explained it "Whether or not there is an obligation on the part of the corporation I know of none that comes from the Act".
At present there are no sanctions which could be imposed on member institutions which mislead the public as to what is insured. A case in point is the Pioneer Trust case where the company was selling income averaging certificates with the CDIC stamp prominently displayed for amounts and for periods of time which were not insured.
Bill C-86 requires some fundamental changes before we will support it. In principle, we acknowledge that CDIC and the entire regulatory apparatus which controls the financial institutions operating in Canada must be reformed and reformed radically. The provisions contained in this Bill do not address the reforms needed in the manner which the collapse of the CCB and the Northland, plus the numerous trust companies, requires. It is a weak argument that to merely hand the majority control of CDIC over to the private sector members of the board of directors in the hope that, because they are from the private sector, they will know better how to manage the interests of the corporation. There must be a clear recognition that the CDIC is not to be seen as a new equivalent of the Canadian Bankers' Association or the Canadian Medical Association. It is, and should continue to be, an integral element of the regulatory system, which is separate from those whom it is to regulate, and from those in government and other agencies who would manipulate it to serve the purposes of the Government, or the other agencies or their directors, as has occurred.
While we look forward to further legislation from the Government we must register our concerns about Bill C-86. We must register our concern about placing this institution into the hands of the private sector by giving the private sector the majority over its board. We must as well express our concern that we see a trend towards greater and greater concentration of economic and financial power in this country, leading to tremendous possibilities of all sorts of self-dealing and non-arm's length transactions. This could hurt many of the institutions that CDIC is insuring and has some regulatory responsibility for. While on the one hand the need for greater regulation and control is there, on the other hand the Government has not acted in a manner that would give CDIC the
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power and the resources to carry out its mandate in a proper forum.
In principle, for the arguments and the reasons I have outlined, we have great difficulty supporting Bill C-86.


Mr. Bienkarn:: The Member from Regina East, who I consider a very valued colleague, I think has misplaced the concept of the CDIC, which is really an organization to pick up the chips and clean up the mess after the corporation pays off the uninsured depositors. I was wondering, that being the case, where he saw the huge problems with conflict of interest? After all, it is the member institutions that pay the costs eventually of the losses. It would seem to me that there may be a conflict of interest consideration in even having government members there, because the Government has in many cases stuck the CDIC and, therefore, stuck the member institutions with liabilities, perhaps they might not have had to pay.
I point out that the Bill following the Greymac, Crown affair, where the Government unilaterally without changing premiums or anything just increased the liability of CDIC from $20,000 to $60,000, left the CDIC with all sorts of liabilities that it would not have had to take up. I wonder why he feels there is a conflict of interest?
Perhaps the whole operation should not be private in the sense that the private operators are paying the cost and, therefore, the private operators ought to be out there in the street finding a way to minimize their costs by liquidating in a more effective fashion the assets of CDIC, and so as to recapture not only the money advanced by the Government but the money they have advanced themselves are going to be obligated to pay in premium?


Simon Leendert de Jong: Mr. Speaker, the Hon. Member makes some valid points, some of which I believed I addressed in my remarks. I pointed out that in addition to the conflict of interest by the public representatives, there was no member of the corporation present when the decision on the CCB bail-out was made. The Hon. Member pointed out other examples.
I was calling for a board of directors whose primary concern is to act in the interest of CDIC. I am as critical of past appointees from the public sector as I am in expressing my fears about the appointees from the private sector. The primary concern of the board of the directors of CDIC should be the well-being of that institution, so that it is not used to pick up the pieces after the fact. It should play an active role in preventing failures and preventing self-dealing which could lead to financial failures. Its function should be similar to that of the cop on the block, so to speak, whose directors are strong enough and have the authority to withstand the pressures of Government and to use the CDIC for government purposes that might not be in the interest of the corporation itself.
The Hon. Member believes that the private sector should be in charge of controlling CDIC since the premiums come from the private sector. That is where I differ from him. First,
Canada Deposit Insurance Corporation Act
CDIC has access to the Consolidated Revenue Fund. Second, I believe that the Government's role is to act as the protector of the public. The money does not belong to those financial institutions that pay those premiums. The money belongs to the depositors and there should be representatives on the board of directors who have the interests of the small depositors and unsophisticated depositors at heart. If I had my way, the majority of members on the board would be acting in the interest of the public because it is their money that is at risk, not the bank's, the trust company's, or the government's. Therefore, those small depositors should be represented and CDIC should be the guardian of their interests.


Donald Alex Blenkarn: Mr. Speaker, I suggest that the Hon. Member for Regina East (Mr. de Jong) is confusing the problem. The finance committee believes there should be active involvement, with better inspection, supervisory and clean-up provisions associated with the CDIC. One of the recommendations of the national financial adminstration agency is that CDIC would be a fund of that agency. If we follow that recommendation, of course what he says is exactly the case.
However, he will appreciate that this Bill has nothing to do with that, but is essentially a temporary clean-up Bill to pump some money into the coffers of CDIC. It has nothing to do with addressing the real problems to which the Hon. Member alludes and with which I agree.
In view of the fact that this Bill is essentially a one-year clean-up Bill in order to put some money into CDIC and help pay some of the deficit that already exists and is increasing, why will he not agree to pass this Bill? Not only is it a shortterm Bill, the passage of it alone puts the Government under the gun to take action quickly.


Simon Leendert de Jong: Mr. Speaker, I recognize that the purpose of part of the Bill is to pump more money into CDIC. I indicated that we have no problem with that portion of the Bill. However, the Bill also addresses the question of the board of directors and that is where we have some difficulty, because in addition to increasing the premiums, the Government has opened the door to what type of direction CDIC will take in the future. Part of my criticism of this Bill is that it is not accompanied by other Bills which the Government has promised. For instance, we want to see the legislation that the Minister promised last fall.
Part of my criticism involves what is missing from the Bill, rather than its contents. I am concerned about the majority on the board being given to the private sector. I do not believe that the rules concerning conflict of interest are strict enough, or that public sector members of the board can send alternates. I do not like the fact that private sector members of the board can live most of their lives in the United States. Therefore, I am opposed to this Bill because of those several aspects which I do not like.

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Canada Deposit Insurance Corporation Act


Donald Alex Blenkarn: Mr. Speaker, essentially this is a band-aid Bill designed to cover the financing problems of the Canada Deposit Insurance Corporation from now until April 30, 1987. In that sense, while it is not substantial legislation, it is necessary because it increases the premium being charged to banks and trust companies on their insured deposits. It increases those premiums from one-thirtieth of one per cent to one-tenth of one per cent, which reflects the recommendations of both the Wyman report and the Standing Committee on Finance and Economic Affairs in its report of November 6, 1985. In that sense, the Bill is following the recommendations of our parliamentary committee and therefore should be supported.
Indeed, the Bill ought to be supported because it at least tries to deal with the matter in a temporary way until the Government can come forth with comprehensive financial institutional legislation. It is with respect to the need for comprehensive legislation that I want to address the House this morning.
First, it is well known that the Canada Deposit Insurance Corporation was run by part-time directors who alternated from time to time and operated essentially as an arm of the Government, which could direct the corporation to pay on claims that may or may not have been proper. As a result, the corporation has been placed in a financial box. I expect that after the smoke clears from the defaults of the Northland Bank and the Canadian Commercial Bank, the outstanding losses of this corporation will exceed $1.5 billion at the very least. In view of the rather poor prospects for improvement in real estate values in western Canada, it may be that there will be little if any recovery from the assets of those banks. It has been suggested that because of the rather poor economic climate in western Canada the sale of assets in western Canada from the Northland and Commercial banks will result in the Bank of Canada losing money on its pay-outs and advances to those banks prior to their collapse.
One of the problems dealt with by the finance committee in organizing its report on financial institutions was the question of who should be covered for insured deposits and uninsured deposits. You will know, Mr. Speaker, that the Committee on Finance and Economic Affairs endorsed the continuation of the $60,000 limit for insured deposits and made a suggestion that there be an arrangement whereby those who were uninsured might be able to receive an advance payment of the anticipated liquidation value of the financial institution.
In that sense, the finance committee suggested that the Canada Deposit Insurance Corporation change to become a Canada deposit insurance fund, managed by a combined private sector-public sector board of directors under an organization called the National Financial Administration Agency which would include, if necessary, and properly so, perhaps, provincial directors, certainly directors appointed by the Government of Canada through its Public Service, and
directors appointed and elected on the recommendation of various organizations whose involvement in the financial industry is to be supervised. The National Financial Administration Agency would be a comprehensive organization looking after the inspection and supervision of life insurance companies, property and casualty insurance companies, banks, trust companies and, perhaps at some time far in the future, security dealers.
It was felt by the finance committee that there is really no distinction in the absolute between any of the four pillars of financial responsiblity-or, perhaps, five, if one includes the credit unions-and that in the supervision of those institutions, which all invest essentially in the same type of security, there ought to be the same class and kind of inspection. That is where some of the difficulties arise with respect to who should be on the board of directors. While there is a very strong public interest to protect, and that public interest must be protected by public sector people on the board appointed by Ministers of Consumer and Corporate Affairs and Ministers of Finance, and so on, there has to be a strong private sector group on the board representing the various organizations being inspected.
What we have to understand is that part of the problem we have run into with financial institutions, particularly the trust companies and banks, is that we have not had the input from the steet which is so important in determining whether there is likely to be a default, what companies are getting into trouble and where we are in fact going in the administration of these institutions. There is not much point in having an inspection system or a board of directors system centred here in Ottawa when there is no head office, except for one life insurance company, in this city. Where we have to have our inspection and our street "smarts" is on the street. Those streets on where the financial business of this country is conducted are in Halifax, Montreal and Toronto, perhaps in London, Ontario, and certainly in Calgary, Winnipeg and Vancouver.
That these organizations should all be supervised, inspected and looked at by people who operate strictly out of Ottawa is one of the major reasons for the financial problem from which this corporation presently suffers and, indeed, the country, as we have had to pay out vast sums of money to protect uninsured depositors. In that sense, it is important that we change our whole attitude towards the inspection and management of deposit insurance and the inspection and management of trust companies, banks and other financial institutions, financial intermediaries generally.
First, as a principle, we must understand that the financial industry is not very much different from any other industry and that the people in the industry know the business. They know who are the bad actors and who are operating sensibly and prudently. They have the ability, with their knowledge, to make sure that those who are not acting prudently are brought into line. When it is just "big brother" looking after things, no one blows the whistle or calls the cops. But if we are looking
June 2, 1986

after it ourselves, we blow the whistle and do something about it.
It is the closeness by which the inspection system in the Province of Quebec operates with respect to the markets which has enabled the Quebec regulators to point out to the finance committee that no Quebec company, despite downturns and financial problems, has run into difficulties because, having the street knowledge they do, they were able step in early before problems got to the point where they had to bail out the uninsured, the insured and run a large draw on the public account.
It is this whole necessity to be close to the market that demands we have the financial industries themselves represented in the management of deposit insurance, and generally in the management of the inspection system. The knowledge of those organizations which are picking up the freight in terms of the cost of insurance should be there to ensure there is no loss or damage. Second, if the organizations themselves are well represented on the boards, then they will ensure that one of their numbers picks up assets which are perhaps not too marketable in order to fund the organization so it will not continue to have to look to members for losses. It is important in a financial guarantee system which the Canada Deposit Insurance Corporation offers to depositors that the system be managed, directed and inspired by people who know what is going on so that the costs to the public, generally, are not too great.
People mention conflict of interest. Let me point out to you, Sir, that the real conflict of interest is in what the Government and the industry want. The Government and the industries want the public to be protected, otherwise we would not have a deposit insurance scheme and the stockbrokers would not have a scheme to protect those who lose money in the market as a result of the defalcation of a broker; otherwise the general insurance people and the property and casualty people would not be talking that way, and nor would the life and health people. The industries themselves want that protection available because it means they can sell their intermediary activities easier to the public. Consequently, intermediary financial protection, such as the CDIC offers to banks and trust companies, is important and necessary for financial intermediaries in order for them to deal with the public. Therefore, they themselves need the Canada Deposit Insurance Corporation far more than anyone else, because they could not get along without it. The consequence is that they have the real interest to ensure that Canada Deposit Corporation is healthy and well managed.
Often the conflict, if there is one, is with Government which wants to use the money for social purposes, wants to bail out people who perhaps should not be bailed out. So that is a conflict. When we talk about conflict of interest, let us understand what we are into. It is in the interests of the financial intermediaries to ensure that a sound deposit insurance system works. It is in the interests of the property and casualty companies to ensure that when one buys an
Canada Deposit Insurance Corporation Act
insurance policy and the company by misfortune goes bankrupt one is covered. These companies want to be able to sell confidence. They want to be able to have that confidence which makes our financial system work. Those in the business, more than anyone, want that confidence there. To suggest they are somehow going to learn things and do things and act against their own self interest is not to understand where the self interest lies. I can assure you, Sir, that self-interest is making the system sound.
Lawyers understand the importance of self-interest to the law profession. They have a Law Society with teeth that can disbar people who do not act properly. Even chiropractors have an arrangement to make sure that when chiropractors act improperly they may lose their licences. Surely to goodness bankers ought to have the same confidence and ability and the same control over how their organization's work and how the public interest is protected. If the public interest is not protected, bankers are out of business pretty quickly, so their prime interest should be to make sure that those in the field operate with discretion and honesty for the benefit of all.
Very rapidly, we must develop a new financial administration in Canada. We cannot carry on much longer with an Inspector General's Office which has only three people working outside of Ottawa while the other 70 are employed in Ottawa. There is no sense in that. We cannot work much longer with an office of the Superintendent of Insurance of which only 55 of 256 employees are stationed out of Ottawa. The financial deals of the country are not made in Ottawa, they are made on the streets, in the business districts and in the banks and trust companies across the country. That is where the defalcations occur, that is where the directors are, that is where the employees are stationed and that is where it has to happen.
The present system leads with its chin. It is a system pointed toward problems. While the offices of the Inspector General and the Superintendent of Insurance are working to try to straighten matters out, without proper legislation and direction, without a new organization and a refurbished Canada Deposit Insurance Corporation and without a central inspection system, we are asking for further problems no matter how hard Bob Hammond and Don McPherson work.
Last, the Canada Deposit Insurance Corporation, which indeed provides premium insurance protection and insurance against the defalcation of life insurance companies and the like, is very important. It is the kind of thing we need to reestablish confidence in our financial system.
Our financial system was damaged badly last year with the defalcation of a number of trust companies and the two western banks. After reading financial publications from around the world and speaking to senior bankers, it is surprising to discover how hurt our international financial reputation was by the problems of the Northland and Canadian Commercial Banks. Perhaps this was even intensified by the dragged

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Canada Deposit Insurance Corporation Act
out investigation of this matter by Mr. Justice Estey and the Estey Commission. Indeed, almost every day or every week the financial pages of the newspapers across the world report something about the investigations into the problems of Canadian financial institutions.
We have been a great exporter of financial services. In 1984 the Canadian Bankers' Association indicated to us that their international operations brought into Canada $.5 billion in profits. We have to sell a lot of wheat to make a S.5 billion profit. Canadian life insurance companies told us that 55 per cent of their business came from foreign sales of life insurance product. The management of foreign business represented 27 per cent of their employment in Canada. Foreign financial services are important to us. We cannot carry on without some direct new legislation and some direct new confidence. We were damaged badly last year and we cannot wait and wait for new legislation. This Bill ought to pass immediately, but that should not excuse the Government from getting down to business and producing proper new legislation to cover the entire financial system.


Mr. Gauthier:: Mr. Speaker, I agree with what the Hon. Member said last, that it is time we got this legislation passed by the House. It was reported back to us last February and has been on the table for four months without being called by the Government.
As an informed Member, is the Hon. Member aware if the Government is planning to come forward with the further legislation soon? He and I both know that this Bill is to be in effect for only one year and we are about halfway into that year, because the Bill is retroactive to February 1, 1986.
Before the new measures are in place, I take it there will be some reflection by the Hon. Member, his caucus and Members of the House. We will all be thinking about this. Does the Hon. Member have any advance notice of pending discussions or legislation on this matter? If so, could he tell us so that we may all think about this matter over the summer and possibly come forward in the fall with a more thorough and comprehensive approach to the problem?


Donald Alex Blenkarn: Mr. Speaker, I thank the Hon. Member for the question. I have heard of rumours of Bills but I have not seen them nor have I been allowed to be privy to any discussions leading to those new Bills, nor has the finance committee received a comprehensive response from the Minister of Finance (Mr. Wilson) or the Minister of State for Finance (Mrs. McDougall) to the finance committee's comprehensive report on financial institutions of November 6.
It would seem to me that there is a need for new and comprehensive financial legislation Bills, but that does not excuse the Government from coming to grips with this matter. I appreciate that the Government would like to have the report of Mr. Justice Estey, but how long can we wait and wait and leave the financial condition of the country at risk? That bothers me.
I am surprised that the Government has not replied to the finance committee's report, to the Senate report, to the Dupre report from Ontario, to legislation now before the Quebec Legislature, or indeed to legislation before the provincial Legislature of Ontario. The Ontario legislation will give Ontario trust companies broad lending powers that will almost make them banks, yet the CDIC will still insure those institutions.
I would not fault the Hon. Member for being critical. I know that the financial community is critical, and I say publicly right now that I think it is imperative that the Government get down to business and produce some legislation.


Mr. Mike Cassidy (Ottawa Centre):: Mr. Speaker, my colleague, the Hon. Member for Regina East (Mr. de Jong), has indicated that members of the New Democratic Party will be opposing this Bill. We are not satisfied with the fact that the Government and its predecessor, the Liberal Government, failed to act, though they should have realized what was happening to the financial institutions. We now have before us an interim Bill, which is a paltry, insignificant, and inadequate response to the very serious problems of financial institutions.
I commend the Hon. Member for Mississauga South (Mr. Blenkarn) in terms of the concerns he expressed. I also commend the finance committee which has taken the issue seriously and has not been prepared to accept the positions put forward by the Minister of State for Finance (Mrs. McDougall) in the Green Paper of a year or so ago. It has also been applying a good deal of pressure on the Government in order to get some more effective action.
However, I point out to the Hon. Member for Mississauga South that sooner or later he will have to make a decision on whether to go along with a Government which refuses to take these problems seriously or to take some other action. Despite his conscientious and very significant hard work in this particular area, the Government has not awakened to the very serious problem. If he takes the latter course, we might see for almost the first time in the history of this Parliament, but certainly since the establishment of the new committee system, a Member of Parliament who concludes that on policy grounds, because of efforts to obtain policy from the Government, he has no choice but to sit as an independent in the House and continue his work there. I would welcome the Hon. Member if he chose to do that. Because of his views on other subjects, I am not sure whether I would totally and immediately welcome him into our caucus, but we would consider it, if he wished to submit his application.
The Board of Directors of the Canada Deposit Insurance Corporation consists of the Governor of the Bank of Canada, the Superintendent of Insurance, the Inspector General of Banks, and the Deputy Minister of Finance. What a chronicle of losers! These people were instrumental in getting the Government to advance $1 billion or more to the two western
June 2, 1986

banks which failed. These people were in positions of responsibility as public servants and failed to see what was happening, the fundamental change that was taking place in terms of standards of ethics and responsibilities of financial institutions beginning about six years or seven years ago. These people failed to provide the proper advice or, if they did, they should have indicated it publicly. I think one or two of them should have had the guts to resign for the failure of the previous Government and this Government to take their advice when the Crown Trust-Greymac-Seaway fiasco occurred in the Province of Ontario.
During the course of the subsequent investigations of that fiasco, in which I was involved as a member of the Ontario Legislature, we found that the Ontario Superintendent of Insurance, who was also responsible for loan and trust companies in the province and was registrar for loan and trust companies, was a total nitwit. He was dealing with total nitwits at the federal level in the Canada Deposit Insurance Corporation. They could not get to the point of picking up a telephone and talking with each other, let alone meeting and considering serious and growing problems during 1982 and 1983.
I recall during that time that it was common parlance on Bay Street in Toronto the way in which those financial institutions, particularly Greymac and Seaway, were finding ways of getting around normal commercial practice. They were doing such things as bumping up the value of loans, selfdealing, lending to each other, and getting phoney appraisals. God knows why the Appraisal Institute of Canada has not taken disciplinary action against some of its members, because they were clearly complicit in actions which have to be qualified as fraud.
However, when all that started to unravel was any action taken? Did CDIC wake up to what was happening and the potential risk at which its insured deposits were being put by these actions? The answer is, not at all. They simply stayed asleep at the switch. They were so asleep at the switch that when Crown Trust was taken over and very quickly raped, no one within Crown Trust had the wit, the courage, the tenacity, or the fortitude to blow the whistle on what was taking place. The investment of the lending committee in that particular institution was not even discussed or consulted. All that took place in the case of the quick-flips, and all that took place in the collapse of Crown Trust which followed the flip over the Cadillac Fairview properties was nothing-nothing took place. The same techniques which had been pioneered in Greymac and Seaway were simply replicated or repeated in the case of Crown Trust. The individuals responsible took billions of dollars in profits out of that, and the public was left holding the bag.
Subsequently the Government has gone from disaster to chaos to further disaster in terms of the bail-out of western banks, which in many cases were using the same kind of so-called creative financing, financing which is creative at the expense of taxpayers ultimately. Despite what happened in
Canada Deposit Insurance Corporation Act
1982 and 1983, and despite the clear evidence of 1983 and early 1984 when the Ontario Legislature was considering a report on the mismanagement, not only of its own officials but the mismanagement of federal officials who should have had a piece of this particular problem, I find it inconceivable that no action was taken as far as the federal Government was concerned.
One cannot blame the fact that we were going into an election in early 1984; one cannot say that that was responsible. It was open to federal officials who saw what was happening, or should have seen what was happening, to have taken that to the new Government and to have said: "We need action, and we need action now". They could have taken it to the old Government and said: "We need action now". They could have warned the new Government when it was contemplating the bail-out of the CCB and Northland about what happened in those particular cases, to try to ensure that it did not happen again.
Did those things take place? Not at all. If they did, we have not been made aware of them. Instead we have this sorry tale of disaster which has been unfolding over the past few months before the Estey Commission.
The new Government has not taken the necessary measures in order to reinforce the Canada Deposit Insurance Corporation. At the most recent count it had only 23 employees. In 1984, after the collapses in Ontario, it had only 16 employees. If 23 people who, among other things, were responsible for collecting $100 million or more of premiums every year and administering relations with some 150 financial institutions across the country can also adequately oversee the liquidation operations and agency agreements involving $5 billion worth of assets, which are currently in one way or another affecting the future of the CDIC, they have to be superhuman. I do not believe that is the case.
Where have the new Government and this vaunted Minister of State for Finance been in not ensuring that a more effective job was being done to protect the interest of taxpayers in the case of the liquidation of these particular assets? Do we know that we are getting a fair deal? I suspect not. Can 23 people, most of whom have to do other things, adequately oversee the work? I suspect not. Do we know for sure that the liquidators are doing a decent job? I suspect not, because liquidators have a reputation for being ham-fisted, for doing a lousy job, and for often costing a great deal of money or often walking off with huge fees in the process.
We have already been told that the liquidation of one institution which went down in 1970 has taken some 14 years. Time means lost money. A 1 per cent difference in the effectiveness of the recovery of $5 billion of assets would be equivalent to some $50 million, and this is an agency which is currently facing estimated losses of perhaps a billion and a quarter of the $5 billion in assets under administration. In other words, it makes a very material difference in what either the institutions and the depositors will ultimately have to pick up or we as taxpayers will ultimately have to pick up if the

June 2, 1986
Canada Deposit Insurance Corporation Act
CDIC is given the resources and the mandate to do the particular job which is meant to be done.
There is also the question of social impact. This may be a matter where there is some conflict between getting the top dollar and looking at the social impact of liquidation practices. I know as an Ontario politician that there are some 15,000 apartment units which are under the control of liquidators because of the collapse of Crown Trust. These are the apartments which were in the Cadillac Fairview rental empire before they were eventually flipped into the hands of the federal Government.
Is it appropriate social policy, for example, for the federal Government to be doing as it is doing now, seeking to drive a hole through the rental accommodation policies of the Government of Ontario by trying to obtain various kinds of condominiumizations of those 15,000 properties and thereby very substantially increasing the rent levels on those properties and rent levels within the Metropolitan Toronto area generally, at the expense of the rent review policy in force in the Province of Ontario right now? I have a suspicion that it is not, and I have a suspicion that we may have to look at some other policies. If nothing else, maybe the Cabinet should be called upon to judge between top dollar for CDIC and the social impact of getting top dollar in that particular case, but that question is not being addressed either, Mr. Speaker.
The Hon. Member for Mississauga South, who said that we have $162 billion at risk, said it very well. You have an organization which does not have even a Scout's guard located here in Ottawa. CDIC does not know what the devil is going on. When the Bank of Canada, the Superintendent of Insurance and the Inspector General of Banks were not doing the job, where was the CDIC? Was it off, as any institution or organization should be, defending its vital interests? No way, Mr. Speaker. Was the CDIC even consulted or involved when $75 million of the CDIC's assets were committed to the CCB bail-out? No, they were not. It was simply done by the Governor of the Bank, I suppose, who said: "Well, we will get the CCB to give a bit of money from the pot." He assumed he could treat that almost as a personal treasury.
The change that is being proposed in the board of directors would change that position slightly. It would not be possible, I presume, to do that without reference to the Board of Directors, given that the board will have a majority not from the private sector. There is no mandate in the CDIC to start to act in order to ensure that it does not have premiums which are excessively high because it failed to do the job or because the Government failed to do the job. There is a very severe conflict of interest there.
I recognize that part of the premium income from the CDIC comes, as probably should be the case, from the profits of financial institutions. A lot of it comes from the pockets of ordinary depositors who get a slightly less substantial return from their deposits because a certain amount is taken off the
top to pay the premiums to the CDIC, but the depositors get something very valuable in return. They get the assurance that, if their deposits are less than $60,000, they will get repaid. That is good for them, but at the same time it seems to me that the depositors on whose behalf CDIC may presume to be acting have the right to ensure that CDIC is trying to make a point of not taking a higher premium than it has to.
This Bill is ridiculous. It raises the premiums by a three fold margin but only for one year or two years. After that it reverts to a level which cannot even cover the interests on CDIC's current outstanding losses. Goodness knows what CDIC is going to do about that. We have seen no policy enunciated from the Government, nor has CDIC taken any independent action on that measure. For God sake, Mr. Speaker, why can we not get these problems solved rather than deferred?
It reminds me of other people who have been prominent in Government under the previous regime who used to skip gaily on to another Ministry just before the next disaster struck. I do not know how "Billion Dollar Barbara" gets away with it, but she has been the Minister responsible through this fiasco. She has yet to come up with a coherent and acceptable policy. She has not yet come to terms in recognizing the concerns ably expressed by members of all Parties from the Commons finance committee on these issues, and yet in a few months she is likely to be promoted to some other position and will go, presumably, with halos of glory around her, despite the wreckage she will have left.
I want to suggest that the changes needed are a great deal more substantial and are needed more quickly. One thing we need to look at is whether the concept of insurance has gone too far. We have "quick buck" operators out there, and God knows, the ethics and the morals of a lot of people running our financial institutions would make the average alley-cat blush with shame. There is a profound absence of morality and ethical conduct on the part of people who like to preach to ordinary Canadians because they are running financial institutions. Some of those "quick buck" artists have been able to get total guaranteed repayment if they happen to blow $60,000 in deposits which were put with their institution because of CDIC. That concept very sincerely needs to be reconsidered.
Perhaps we could insure totally $10,000 worth of deposits and then give 90 per cent or 85 per cent of insurance on the next $90,000. I believe there has to be some risk. I suspect there has to be some kind-and I am a New Democrat saying this-of a market test in these cases so that "quick buck" operators who are offering interest rates 1 per cent, 2 per cent or even 3 per cent higher than the established institutions with total guarantees would have to face a market discipline, because people would say: "Look, we love your interest rates but we are not sure about your standards. We will look at you a lot more closely than we have in the past." We have to avoid that. Maybe the only way is that people who want to behave that way with low standards will find out they cannot get the necessary money to handle what it is they are meant to do.
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This concept of outside directors will not be effective if you simply have a few people who come from outside financial institutions. There should be some people who represent consumers, and maybe who represent labour, on the CDIC board of directors, not just a few patronage friends of the existing Government. I would like to have had a commitment, which I understand has not yet been given, from the new Government.
This is an inadequate Bill, and that is why we are opposing it. If a Government cannot learn from the errors and the problems of the past few years it will never be able to learn. The Neanderthal, the troglodytes, the people whose lack of comprehension has cost the Canadian taxpayer more than $1 billion in the case of the collapse of two western banks, are currently in office.
We were promised a breath of fresh air, a new approach when the new Government came to power. That has not occurred. We have had delay following obfuscation following delay. One cannot help feeling that the Governor of the Bank of Canada, the Inspector General of Banks, the Superintendent of Insurance and the Deputy Minister of Finance or their successors have been trying to cover their own rear ends. They have been bedazzling the appointed political Ministers with all of the problems of taking the necessary action in order to get tough and ensure that we really have effective regulation.
It has been pointed out that the agency in the United States which is responsible for looking at deposit insurance has something like 100 times the staff of the Inspector General of the CDIC. I am not sure whether those proportions are entirely justified; some of the responsibilities are different. It seems to me that an agency which in the past has been cocooned in an office building in Ottawa, whose directors have also been cocooned here, who seemingly heard no evil, spoke no evil, saw no evil and blinded themselves to what was going on in the financial market, is not an adequate agency.
These reforms in Bill C-86 are so paltry, picayune and inconsequential that I do not know why the devil the Government even chose to take up the time of the House of Commons in this debate or of our Commons committees in putting these amendments through. These reforms could possibly and conceivably have been handled, in my opinion, at a time when the Government came along with the fundamental reform needed. As far as I am concerned, deposit insurance today is as weak as it was when the CCB and the Northland Banks went down. It is as weak as it was when Crown Trust, GreyMac and Seaway went down. It seems as though this is a Government, like its predecessors, that has learned nothing from the sorry and very expensive experience.
Speaking on behalf of ordinary taxpayers in Ottawa Centre, and on behalf of many people across the country who are ordinary taxpayers as well, I am fed up with that approach. I think it is about time that we had a Government that paid more regard to the needs of ordinary Canadians and less regard to the special pleadings of the financial institutions.
Canada Deposit Insurance Corporation Act


Mr. Raymond Garneau (Laval-des-Rapides):: Mr. Speaker,
I have a few comments to make on Bill C-86, and I may say the subject addressed by this Bill is of considerable importance, when we look at the total deposits held by credit unions, banks and trust companies in Canada, as indicated in the Wyman report published at the end of December 1984. These deposits totalled $400 billion, of which $161 billion were ensured by the Canada Deposit Insurance Corporation.
Mr. Speaker, when we look at these figures, we realize the impact this Bill can have on so a great many Canadian men and women.
Bill C-86 is a temporary Bill. It is valid for only one year, and it is also a money Bill, for all practical purposes, because it is essentially aimed at raising the premium to be paid by the institutions to the Canada Deposit Insurance Corporation, in order to cover part of the deficit.
Mr. Speaker, we have had the Wyman report, which the Government has had in its possession for many months. As far as the House is concerned, we have had hearings on the Green Paper tabled by the Minister of State (Finance) (Mrs. McDougall), hearings that were held across the country, with the committee travelling from place to place. The Standing Committee on Finance, Trade and Economic Affairs submitted a report to the House last year, and today, we have before the House a Bill that is no more than a bandaid solution. The fundamental questions are not addressed, and basically, all this Bill does is raise the cost of the premiums paid by the companies, including the banks and lending institutions. The increase is quite considerable because the premiums have tripled, which means the total premium amount paid by financial institutions, which is now $54 million, will have to be multiplied by three, and if we also consider the increase in deposits in 1985 over 1984, we are talking about an increase from $54 million to $174 million.
Mr. Speaker, I would have hoped that the Government, after receiving reports or comments from the financial institutions and from Members of this House through the Committee on Finance and Economic Affairs, and after receiving suggestions from the committee that tabled a report on the Canada Deposit Insurance Corporation, I would have hoped for a more definitive solution. We still do not know who in the public sector is to be responsible for inspecting financial institutions according to the following criteria: legal aspects, financial soundness and capitalization.
The Standing Committee of the House on Finance and Economic Affairs suggested an approach with which we of the Liberal Party could not agree. But at least a proposal was made.
I was listening earlier to my hon. friend from the New Democratic Party who suggested that the CDIC should have an extensive staff to carry out inspection activities.

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Mr. Speaker, it is my humble opinion that vastly increasing the number of inspection offices is not going to enhance the quality of inspection itself. Hiring more staff is not necessarily going to improve the quality of inspection. Nor are we going to do that by establishing the CDIC's office in Toronto or Montreal or Halifax or Vancouver.
I would suggest that a whole series of questions comes to mind: What role are the external auditors expected to play? What kind of mandate will the deputy minister and the officials responsible for inspecting the institutions be given under the Government legislation? What kind of mandate will they be given by the Government? What kind of mandate will they give the external auditor so as to fulfil the various requirements to achieve adequate funding and sound management of the financial institutions, and to avoid bankruptcies such as we had last year in the case of the Northland Bank and the Canadian Commercial Bank, the two western financial institutions that went belly up and gobbled up millions of dollars of taxpayers' money?
Mr. Speaker, Bill C-86 will triple the premiums, and 1 have some questions pertaining to the idea behind this measure, for instance whether this might not be the quickest way to make up for the Canada Deposit Insurance Corporation deficit.
Pursuant to the Wyman report recommendations, increasing premiums in two stages and less drastically than what is being proposed here would have eliminated the Canadat Deposit Insurance Corporation by 1990.
In the realm of insurance I have no idea whether it is advisable to proceed so quickly to wipe out the deficit because, obviously, today's depositors will be expected to run risks incurred by yesterday's depositors who might well become tomorrow's depositors as well. This is why I find rather strange that the Government would choose to raise premiums without making any changes likely to improve the financial institution inspection system. Seen in this light the Bill amounts to nothing more than a band-aid operation which does not solve anything; all it does is guarantee additional funding.
The way I look at it, the Government is not proceeding with sufficient dispatch nor with enough sense of responsibility, given the many recommendations made and numerous reports drafted not only by members of the industry but also by observers and various interested parties that submitted briefs to the Standing Committee on Finance, Trade and Economic Affairs.
And then there is the other aspect of this Bill which more specifically relates to the make-up of the board of directors of the Canada Deposit Insurance Corporation.
In my opinion, Mr. Speaker, it is extremely dangerous that the possibility of conflict of interests be included in the Bill as a matter of principle. In other words, just imagine the turn of events had the Canada Deposit Insurance Corporation been governed by Bill C-86 and listed the president of the Canadian Commercial Bank or of the Northland Bank on its board of
directors! I think this amounts to putting people in an unacceptable conflict of interests position. In this sense Bill C-86 leaves the door wide open for that eventuality since it provides that the board should include people from the industry. True enough, in her remarks the Minister did seem to indicate she would give preference to competent people who have retired and are no longer tied in with a financial institution as such. Should that turn out to be the case, then of course my remarks may not be quite as relevant. However, in its present form, the Bill allows the Government to appoint to the Board of the CDIC people who might one day have to make decisions about their own financial institutions.
This is why we believe that Bill C-86 was prepared too hastily and that it does not meet the expectations of the financial institutions, of consumer groups, of the depositors, and of the Members on this side of the House. This is why, while we may agree with the principle of the Bill, it will be agreed to on division. What we have to point out is the inability of the Government, the Minister of Finance (Mr. Wilson) and the Minister of State (Finance) (Mrs. McDou-gall) to settle a matter which has been dragging on for months and on which there have been all kinds of reports.
Mr. Speaker, it should also be pointed out that there is a relation between the ownership of financial institutions and the way that Bill C-86 will protect consumers. I think that it is about time for the Government to make up its mind and to present much more comprehensive legislation than Bill C-86, which provides only a temporary solution, over a period of one year, to a financial problem which deserves much more attention than that.


The Acting Speaker (Mr. Charest):: Order, please. It being one o'clock, I do now leave the chair until two o'clock this day.
At one p.m. the House took recess.


[Stage Direction]
AFTER RECESS The House resumed at 2 p.m.

Hon.   Chas. L. Caccia@Davenport: Mr. Speaker, 10 days ago, when the U.S. announced a 35 per cent tariff on shakes and shingles, threatening 4,000 jobs in British Columbia, the Prime Minister (Mr. Mulroney) and his Secretary of State for External Affairs (Mr. Clark) huffed and puffed, sent off a telex to President Reagan, threatened retaliation, and talked about a range of economic responses if the U.S. would not back off. Then the Government talked about compensation by
June 2, 1986

the U.S. Everybody held their breath, until Canadian officials came back from Washington empty-handed. Today we know that there is no retaliation, no compensation, and no removal of the tariff.
What happened to the Prime Minister's special relationship with President Reagan? Does it really exist or is it tacky Tory public relations? Another page of incompetence and ineptness in the history of the Government was written over the past 10 days. What a sham.


EXTERNAL AID
Mr. Jim Manly (Cowichan-Malahat-The Islands):: Mr. Speaker, last week Canada played a helpful role in the UN Special Session on Africa. The Minister for External Relations (Mrs. Vezina) set a good tone when she announced a 15-year moratorium on the debt of sub-Saharan countries. Our Ambassador, Stephen Lewis, chaired a special committee which worked night and day to produce a document which "recognized the magnitude of Africa's debt and the severe and restrictive burden this has placed on many African countries". However, there are no dollar figures attached to that vague commitment to help.
In the face of African need, Canada cannot rest content with a minimal program, even if that program looks good in comparison to the programs of such bush league countries as Albania and the United States which were long on analysis but short on funds.


CURRENCY
Mr. Bill Vankoughnet (Hastings-Frontenac-Lennox and Addington):: Mr. Speaker, in January of 1987, 300 million new one dollar coins will be struck by the Royal Canadian Mint at its Winnipeg facility. They will then be distributed throughout Canada. The bronze-plated nickel coin will have 11 sides, be slightly larger than a quarter, and last 19 years longer than the dollar bill. The traditional dollar coin voyageur design will be imprinted on one side, while the other side will picture Queen Elizabeth II.
As a descendant of United Empire Loyalists, and as one who takes pride in our country's history and heritage, I am pleased to know that our Queen is represented on this new coin. This country was built by our forefathers who were loyal subjects of the Monarchy. It is only fitting that our history be preserved and represented on our currency. I urge all Members of
Parliament to support the continued use and portrayal of our Queen on Canadian coins.


ENVIRONMENTAL AFFAIRS
Mr. Stan Darling (Parry Sound-Muskoka):: Mr. Speaker, this is Environment Week in Canada. It falls in the wake of the World Commission on Environment and Development hearings held last week in Ottawa. Canada's Minister of the Environment (Mr. McMillan) opened the Commission hearings with a rousing speech last week and appeared on The Nation's Business last night, as well as officially opening Environment Week on Parliament Hill this morning. The Commission, composed of representatives from around the world, was chaired by Norway's new Prime Minister, Mrs. Gro Harlem Brundtland.
The World Commission on Environment and Development may constitute the last international hearings of this nature before the turn of the century. It is most fitting that Environment Week in Canada should immediately follow these important hearings. Every Canadian must become involved in securing a more wholesome environment for ensuing generations. For the common good the Government must forge ahead and push for greater environmental and developmental security world wide.


CANADIAN NATIONAL RAILWAYS
Mr. Fernand Robichaud (Westmorland-Kent):: Mr. Speaker, CN announced on Friday that 105 jobs will be lost in the Atlantic provinces. Sixty-two of these jobs will be lost in New Brunswick. This is in addition to the 225 persons who were laid off at the CN shops in Moncton last fall.
These 105 jobs are lost because CN is in the process of consolidation and rationalization of its system. The end result of this process is that we are losing more jobs in New Brunswick than anywhere else in the country. What kind of rationale is this? How much more will we have to endure? Is that a reflection of the kind of presence we have in the Cabinet? Why does someone not react and say "Enough is enough"? I call on all the New Brunswick Members, and especially the Minister of State for Forestry (Mr. Merrithew), to stand up and reject this unfair rationalization.

June 2, 1986


EDUCATION
Mr. Howard McCurdy (Windsor-Walkerville):: Mr. Speaker, Chief Justice Brian Dickson took the convocation platform Friday at the University of British Columbia to implore Governments to save the higher education system before it begins producing second-class teachers, students, and, ultimately, a second-class nation.
He went on to note that while education may be too important to leave solely to educators, it is also true that education is too important to be left to Ministers of Finance.
The wisdom offered by Chief Justice Dickson should be heeded by the Government. The judge was speaking directly to the federal Minister of Finance (Mr. Wilson) who has taken over the post-secondary education portfolio and introduced legislation that will devastate the system. When a Chief Justice deems it necessary to speak out against Government policy the Government would do well to listen and, in response, provide with the provinces resources to post-secondary education commensurate with the key role they must play in ensuring Canada's economic, political and social future.


VETERANS AFFAIRS
Mr. John A. MacDougall (Timiskaming):: Mr. Speaker, on May 31, in the Town of Latchford, in my riding of Timiskaming, I joined, with over 2,000 people, to honour the memory of Sergeant Aubrey Cosens.
A bridge spanning the Montreal River, along with a cairn and park, were dedicated in Sergeant Cosens' name to pay tribute to his outstanding efforts during the Second World War.
It was in Germany in 1945 that Sergeant Cosens led an attack against three enemy strong points, which he eventually captured. He was later awarded the Commonwealth's highest declaration for valour, the Victoria Cross.
To honour this native son the people of Latchford went out of their way to make these dedication ceremonies a success. I also want to mention Branches 629 and 344 of the Royal Canadian Legion which played a major role in organizing this event. Their combined efforts to honour the memory of Sergeant Cosens made this day a special one.


Some Hon. Members:: Hear, hear!


HELP GIVEN TO FIGHT FIRES IN ABITIBI
Mr. Guy St-Julien (Abitibi):: As a result of an intense forest fire, Mr. Speaker, a state of emergency was declared in Abitibi on Thursday, May 29, 1986, namely at the Waswanipi Cree village and the Shortt Lake Falconbridge Mine. Winds are strong in the region and the flames nearly reached the village. All residents were urgently evacuated to Lebel-sur-Quevillon and Chapais. Chief Abel Kitchen, Jean Blouin and I flew over the region on Friday, and more than 50,000 hectares of forest timber have been destroyed. Day and night, workers fought the fire under trying conditions.
Mr. Speaker, personally and on behalf of Great Chief Ted Moses and Chief Abel Kitchen I want to thank the Government of Quebec, the Quebec Police Force, the Lebel-sur-Quevillon Civil Protection, the towns of Chapais and Lebel-sur-Quevillon as well as the Domtar Company and our courageous Canso water bomber pilots who fought the flames calmly and skillfully. The fire was brought under control yesterday, and today the Waswanipi Cree Amerindians and the Shortt Lake workers are back home.


ENVIRONMENTAL AFFAIRS
Mr. Alan Redway (York East):: Mr. Speaker, this week, Environmental Week, is a time for all Canadians to focus on the grave environmental problems threatening our air, our water, and our health.
Unfortunately some of these problems are clearly beyond our control. We can shout, scream, and threaten, but realistically there is no way Canada can force the United States to clean up their acid rain or their waste chemical dumps.
Many of these problems, however, are within our own control. We have imposed new emission controls on automobiles and started to phase out leaded gasoline. But much remains to be done.
We need a new Environmental Protection Act. We need new penalties, including jail terms for polluters, and we need to spend the $150 million we promised to spend on cleaning up acid rain sources in Canada. It is time to get on with it, and Environmental Week is a good time to start.
June 2, 1986


CHILD CARE
Mr. Sergio Marchi (York West):: Mr. Speaker, I believe a special note of recognition from the House id deemed for our Canadian national soccer team. As Members know, our country has qualified to play in the prestigious World Cup for the first time in our history. However, one would not have known this from our first match yesterday against France. While we came out on the losing end in the scoring statistic, our players played with great heart, determination, and skill. They gave the French, a leading team in the tournament according to all reports, a most challenging opener.
Their efforts were truly reflective of the spirt and determination that drove this group of Canadians to achieve this very historical milestone. In short, they are deserving of our fullest support, as are the game and development of soccer in this country.


Some Hon. Members:: Hear, hear!


CANADIAN ENVIRONMENT WEEK
Mr. Gabriel Desjardins (Temiscamingue):: Mr. Speaker, the June 1-June 7 week has been proclaimed Environment Week in Canada. Under the theme "It's up to all of us", all Canadians are invited to participate in activities related to the protection and improvement of our environment.
Needless to say, Mr. Speaker, environmental problems are a major concern of the residents of Temiscamingue. This week therefore is a golden opportunity for industries which pollute our air, our forests and our rivers to become fully aware of their responsibilities, and I would urge them to react by taking the steps required to put a stop to this harmful pollution.
I also urge my fellow Canadians and community organizations to continue to make representations to and put pressure on the authorities involved and, especially this week, to undertake embellishment projects in their immediate neighbourhood. And then, why not park the car and ride a bicycle or take a walk, or even quit smoking if only for one day?
This way, Mr. Speaker, we would all be doing our share to improve the quality of life for all Canadians.


PUBLIC FUNDING COMMITMENT SOUGHT
Mr. Neil Young (Beaches):: Mr. Speaker, today the National Action Committee on the Status of Women, representing over 3 million women in this country, asked the Government for a commitment to direct funding for a comprehensive publicly funded child care system for Canada. They asked that the Government put child care on the agenda of the upcoming First Ministers' Conference. They asked that the Government recognize that child care has been adequately studied and that it adopt the most recent recommendations put forth by the task force on child care, chaired by Katie Cooke.
They were told that the Government will not adopt the recommendations of the Katie Cooke task force because the Government is not committed to public funding.
Without public funding, child care services will continue to be in crisis. Eighty-one per cent of the children of Canada needing child care will continue to receive unlicensed, unmonitored care. The Government is making a mockery of its equality promise to women.


U.S. TARIFF ON CANADIAN CEDAR SHAKES AND SHINGLES- POSITION OF UNITED STATES PRESIDENT
Mr. Gerry St. Germain (Mission-Port Moody):: Mr. Speaker, I rise today in the House on behalf of the shake and shingle workers of British Columbia. I draw special attention to the area of Mission-Port Moody. This past weekend I spoke to labour and industries on the West Coast and they clearly enunciated that they support our Government's tireless efforts to handle the cedar shake and shingle issue.
I want to say before the House that I offer my wholehearted support for President Reagan's statement to the American Manufacturers' Association last week. He told this group: "Protectionism is destructionism." It is important that the President sit back and look at the issue of the cedar shake and shingle tariff in this light.
To date, the President's statements and his actions have been highly contradictory. I only hope that President Reagan lives by his words, that "Protectionism is destructionism", as we reach a critical stage in the softwood countervail petition.

June 2, 1986
Oral Questions PENITENTIARIES


COSTS OF KEEPING INMATES IN PRISONS
Mr. Reginald Stackhouse (Scarborough West):: Mr. Speaker, for many years Canada has spent more on prison inmates per capita than on any other individuals in the country, and with fewer results. The average cost per inmate is $62,000 a year, and 70 per cent of inmates are repeaters. Our
2,000	minimum security inmates, for example, cost $40,000 a year to be kept under lock and key, even though they are not considered dangerous on the outside.
Alternatives to incarceration for some offenders should be found. I am greatly encouraged by the progress being made by our Solicitor General (Mr. Beatty) in taking a lead in this field.
The State of Georgia, for example, has experimented successfully with the kind of program that should be considered here. The offenders are self-supporting throughout the program which provides for much better development for returning to society. This program has an 85 per cent success record, in contrast to Canada's 70 per cent failure record. This is the direction in which our country should be heading in the treatment of offenders.


PRESENCE IN GALLERY OF NEW BRUNSWICK MINISTER OF FISHERIES
Mr. Speaker:: I wish to draw to the attention of Hon. Members the presence in our gallery of the Hon. James Tucker, Minister of Fisheries for New Brunswick.


Some Hon. Members:: Hear, hear!



ORAL QUESTION PERIOD


Right Hon. John N. Turner (Leader of the Opposition):: Mr. Speaker, my question is directed to the Minister of External Affairs. I believe we were all affected by Bishop Desmond Tutu's appeal to Canada, asking this country to show its moral leadership in order to put an end to the plague of apartheid.
Mr. Speaker, I realize that Canada has already introduced a number of sanctions, but I wonder whether the Government is prepared to respond to Bishop Tutu's request and do even more.
Is the Government prepared to order full sanctions against South Africa and break off diplomatic relations with that country?


Right Hon. Joe Clark (Secretary of State for External Affairs):: Mr. Speaker, this is a very important question.
I was in Toronto Friday night with Bishop Tutu, and I heard his speech. The Canadian Government's position is quite clear. As the Leader of the Opposition just said, we have already taken certain measures. We have shown leadership, not only by our actions here in Canada but also through the Commonwealth. One result has been to form a group of eminent persons who are to try, on behalf of the Commonwealth, to find an approach that might be effective. This group intends to go on working on its report. I believe it is in Canada's interest as one of the countries that helped to create this Commonwealth group, to respect its work. There will be a report at the end of June, which will give us a chance to decide what kind of action could be taken by Canada-


Mr. Speaker:: Order! Supplementary question.


CANADIAN POSITION IN ADVANCE OF COMMONWEALTH MEETING
John Napier Turner: Mr. Speaker, Bishop Tutu, in his address in Toronto, did not have too much confidence that the Group of Eminent Persons still had legitimacy with the Union of South Africa. I can understand that the Government may not at this stage be willing to impose total sanctions, wishing to wait for some joint action by the Commonwealth. Would the Minister not think it appropriate to respond to the suggestion of the Rev. Bishop Tutu that, in order to show leadership, Canada might move toward a more definitive and firmer action in order to set a tone for that Commonwealth meeting?


Charles Joseph Clark: Mr. Speaker, most commentators, I think, would agree that the actions taken by the Government of Canada over the last year to cut off the Export Development Corporation applicability, to end our double taxation agreement, and actions taken on a wide range of other fronts, not only inspired other countries to take similar actions but created a climate in which it was possible for the Commonwealth, when it met in Nassau, to establish the Eminent Persons Group.
I agree with the Right Hon. Leader of the Opposition that we should wait the remaining 29 or 30 days for the Eminent Persons Group to have the opportunity to report. Canada has made it clear that while it would not be our preference to disrupt economic and diplomatic relations with South Africa, if other alternatives do not work then we will do that. Canada will also maintain on this issue the active leadership we have demonstrated since the election of this Government.
June 2, 1986


SUGGESTIONS MADE BY BISHOP TUTU
John Napier Turner: Mr. Speaker, I want to recall to the Minister the strong rhetoric of the Prime Minister before the United Nations six months ago. He said the Government was ready to impose total economic sanctions and, if necessary, break off diplomatic relations with the Union of South Africa. Would the Minister not agree that, because of the worsening situation in South Africa, the Bishop had a good suggestion, that either Canada ask for the acceleration of the Commonwealth Heads of Government meeting to be held in August, moving it up to June, or set a moral tone and some leadership before that meeting is held?


Charles Joseph Clark: Mr. Speaker, Canada has been setting precisely that moral tone and that leadership by way of the actions and statements by the Prime Minister and our Ambassador, Stephen Lewis, at the United Nations, by way of the role we have played in the Commonwealth, and the work of Archbishop Ted Scott, the Canadian member of the Eminent Persons Group. That group is in place. It faces a prospect that is much less optimistic than all of us had hoped. Nonetheless, the group is preparing a report as quickly as it can. This morning I was informed that it expects to have the report ready by the end of June.
I think that would then be an appropriate time for us to consider what other timetables would be followed and if it makes sense to move ahead the meeting now set for August 3 to 5. In my judgment it would most unfortunate for us to take the Eminent Persons Group, which has worked so hard and effectively to this point-


Mr. Speaker:: Order, please.


Charles Joseph Clark: -and cut off its work before it has been concluded.


Mr. Speaker:: Order, please.


EMPLOYMENT EQUITY
Mrs. Sheila Finestone (Mount Royal):: Mr. Speaker, my question is directed to the Minister of Employment and Immigration and it is about the Prime Minister's firm commitment made during the women's debate of August, 1984, to protect the equality rights of women by including provisions of equal pay for work of equal value in contracts
Oral Questions
granted by Government to the private sector, and his further undertaking of affirmative action as the highest of priorities. These promises are not being met by Bill C-62 as it has no mandatory application.


Mr. Speaker:: Order. That is a long preamble. Question, please.


Sheila Finestone: Mr. Speaker, why will the Minister not listen to the women of Canada who say that the Bill has no teeth, and bring the Bill back to the House amending it through the Senate before it passes into law, thereby fulfilling the Prime Minister's promises to the women of Canada?


Hon. Flora MacDonald (Minister of Employment and Immigration):: Mr. Speaker, the Bill on employment equity, the first such piece of legislation ever introduced in Canada, provides for a mechanism to enforce the rules of the Bill. That mechanism, as suggested by Judge Rosalie Abella in her report, is the Canadian Human Rights Commission. It will be provided with information as a result of this legislation which will enable it to initiate action to eliminate systemic discrimination in a way that has not happened before. The other night before the committee, the Commissioner of the Human Rights Commission asked that this Bill proceed with all speed.


INQUIRY WHY GOVERNMENT WILL NOT AMEND PROPOSED LEGISLATION
Sheila Finestone: Mr. Speaker, why, during the famous debate on women and women's issues, did the Prime Minister claim the political will to improve the status of women? This is not reflected in the Bill. There is no mandatory application. There is simply window dressing instead of legislation with teeth which could really improve the situation of women, minorities and the handicapped.
Can you tell me why you do not want to amend the Bill in the Senate and refer it back to the House?


Flora Isabel MacDonald: Mr. Speaker, obviously we have a disagreement. Of course we had a disagreement when the Liberal Party voted against employment equity. That does not surprise me.


Some Hon. Members:: Oh, oh!


Flora Isabel MacDonald: For 14 years, Liberal Members did nothing about employment equity. I am not surprised that they are still arguing against it. I want to assure you, Mr. Speaker, that we are implementing employment equity under the Canadian Jobs Strategy, and already we have seen that 46 per cent of the positions under the Job Development Program have gone to women.

June 2, 1986
Oral Questions APARTHEID


SOUTH AFRICA-REQUEST FOR MEETING OF COMMONWEALTH LEADERS
Hon. Edward Broadbent (Oshawa):: Mr. Speaker, I have a question for the Secretary of State for External Affairs and it is also on the subject of South Africa. The Government of South Africa not only insulted the Eminent Persons Group by attacking countries on its borders while the commission was in South Africa, but it has subsequently not met a deadline proposed by the Eminent Persons Group, and as recently as 48 hours ago it launched a police attack on white students exercising their civil liberties. In short, the situation in South Africa has intensified and worsened. Will the Government publicly acknowledge that, and make a very specific request to all other leaders of the Commonwealth to have a meeting at the leaders' level before the end of June rather than waiting until August?


Charles Joseph Clark: Mr. Speaker, I will certainly agree to half of the request made by the Hon. Leader of the New Democratic Party, and that is to express not only the grave disappointment but the growing sense of pessimism about a constructive result in South Africa as a result of the behaviour of that Government. I think all of us who are looking for a solution which respects peace, let alone human dignity, are depressed by the response of the Government of South Africa.
With regard to the second part of the Hon. Member's question, the Eminent Persons Group is in place. I am advised, as recently as this morning, that it will take them until near the end of June to submit their report. They have been the most effective instrument found, albeit their results have not been what we would have wished. I think we owe it to that group to let them continue their work, and then proceed as speedily as we can once the report is in.


Mr. Speaker:: Order, please. Answers and questions are long today.


REQUEST THAT FURTHER SANCTIONS BE IMPOSED
John Edward Broadbent: Mr. Speaker, I am sure the Secretary of State for External Affairs would recognize not only the eminent moral authority but the sound sense of judgment of Bishop Tutu on such matters. In my discussions with him on the weekend, I proposed in the context of the Eminent Persons Group recommendations that Canada show some leadership by calling for a meeting in June instead of in August and by announcing some sanctions now. He was in agreement that such leadership in concrete form was desirable. Why would the Secretary of State for External Affairs not now join with Bishop Tutu in taking this concrete action which
could force that racist Government in South Africa finally to respond?
Right Hon. Joe Clark (Secretary of State for External
Affairs): Mr. Speaker, I am not surprised that Bishop Tutu would respond in that way. He has lived through an almost unendurable set of circumstances and is making his case very compellingly. The issue before us is how we best respond as a nation, and as a nation which is part of the Commonwealth, to try to bring an end to that regime which we all revile. That is the issue for us.
In our judgment one component of that response must be to encourage and give heed to the strong recommendations of people like Bishop Tutu. The other part is to try to make the most effective use we can of the instruments open to us, whether they are economic sanctions which Canada might continue to apply or bring pressure to bear on the Commonwealth. We will continue to do that in a steady way. We have made clear that if these other steps do not work, Canada will ultimately-


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


GOVERNMENT ACTION
John Edward Broadbent: Mr. Speaker, I understand the Government's desire in its original schedule to meet the proposed scheduling of events of the Eminent Persons Group. Since that was established, the Government in South Africa has become worse, if I may put it bluntly, not better. Since racial tensions have worsened instead of improved, does the Government not see some urgency to act now? If so, will the Government now show some leadership by calling for an early meeting of Commonwealth leaders and demonstrating action by Canada, by announcing prior to that meeting some concrete sanctions by our own Government?


Charles Joseph Clark: Mr. Speaker, there have been a number of concrete sanctions by the Government. In many ways we have led the western world in terms of the concrete sanctions we have brought in.
We are talking about two timetables here. One is the timetable of the Eminent Persons Group, which is preparing a report. It is their own judgment that it will take them toward the end or near the end of June to finish that report. We want that report to be thorough, not to be rushed. The other timetable is how quickly will the Heads of Government meet after the report is in place. That is a matter which I think it would be wise to consider when we have a clearer idea of the nature of the report. We are talking here about a matter of 30 days to 35 days. We are talking about that matter in the context of a Canadian Government which has already shown leadership and has indicated that we intend to show leadership against apartheid toward the end of having it removed as a system.


COD EXPORTS TO EUROPEAN ECONOMIC COMMUNITY
Mr. George Baker (Gander-Twillingate):: Mr. Speaker, after talks with the EEC Trade Commissioner, the Minister for International Trade said: "As a result of that trawler problem, we are having a problem on cod with the EEC. They are blocking the sale of our headless cod". Could the Secretary of State for External Affairs inform the House on the accuracy of the Minister's statement, since the EEC denied today having taken any such action against our headless cod? Perhaps it is the Minister who has lost his head.


Charles Joseph Clark: Mr. Speaker, we have been making representations to the European Community in respect to the question of cod for some time. We are continuing those representations. There is no doubt at all that the incident with regard to the Spanish trawlers has aggravated the sense of relations between Canada and the European Community en gros in respect of fisheries issues, including the cod issue.


GOVERNMENT POSITION
George Baker: Mr. Speaker, if the EEC moves to block any of Canada's cod exports to EEC member countries, will the Government take the logical action and cancel the entire EEC cod-fishing quota in Canadian waters?


Hon. Thomas Siddon (Minister of Fisheries and Oceans):: Mr. Speaker, in answer to the Hon. Member I can tell him that we have at this point no evidence that the EEC is blocking the importation of cod from Atlantic Canada, nor under the rules of GATT would it be able to do so. I can only say to the Hon. Member that if he is suggesting we should not enforce our Canadian fishing zone to the extent of the 200 mile limit then he should go home and say that to the people of his province.


Jean-Robert Gauthier: That is a red herring.


Some Hon. Members:: Oh, oh!


Some Hon. Members:: Hear, hear!


APARTHEID
Howard Douglas McCurdy: Mr. Speaker, my question is for the Secretary of State for External Affairs who, as did I, heard Bishop Tutu on Friday night making an urgent plea for help for white and black South
Oral Questions
Africans, a plea for help which is supported by tens of thousands of Canadians and the NAC delegates meeting here today. The Secretary of State for External Affairs has said that Canada has inspired others to invoke sanctions. Is it not time for inspiration again by immediately imposing an embargo on agricultural shipments into Canada that the rest of the Commonwealth will emulate?


Charles Joseph Clark: Mr. Speaker, indeed one clear lesson that was taught us in the context of the Commonwealth years ago in 1979, when the question of Zimbabwe was resolved, was that if there is a chance for the Commonwealth to act together it is in the interests of the world that we build toward that common action, and not resort simply to individual actions by states that others might not follow. We are trying to ensure that the Commonwealth can be effective in 1986 as the Commonwealth was effective in 1979. It may not work, but we want to give it a chance to work before Canada takes independent actions that would undercut the agreement to which we subscribed at Nassau.


CANADIAN LEADERSHIP
Howard Douglas McCurdy: Mr. Speaker, may we have the assurance of the Secretary of State for External Affairs that it will be our standard of leadership that applies, not the kind of leadership that is implied by an agreement with Great Britain not to act in advance of August, and to have another meeting next year sometime, while people are dying in Africa? We should be taking decisive action which would be a model for the Commonwealth.


Charles Joseph Clark: Mr. Speaker, the agreement at Nassau was not with Great Britain alone. The agreement at Nassau was with all the members of the Commonwealth. Canada, India, and Australia were instrumental in establishing that agreement at Nassau. We intend to honour it as the best means of ensuring that the Commonwealth might be able to move effectively in the future. Obviously that would require some movement on the part of the Government of Great Britain, as it would on the part of other countries.


COD EXPORTS TO EUROPEAN ECONOMIC COMMUNITY
Hon. Lloyd Axworthy (Winnipeg-Fort Garry):: Mr. Speaker, my question is for the Deputy Prime Minister. We have just had a statement by the Minister of Fisheries and Oceans that there is no evidence there is any problem at all with the EEC in relation to the cod fishery, yet the Minister for International Trade has said that, as a result of the trawler problem, we are having a problem with the EEC on cod. Do you think the Deputy Prime Minister might arrange a meeting

June 2, 1986
Oral Questions
between the two Ministers, so they might decide which evidence and which facts are correct, considering that this is a $55 million export market bearing very heavily upon the economic well-being of the area? Do you think they might try to arrange to get their act together, Mr. Speaker?


Charles Joseph Clark: Mr. Speaker, the Hon. Member's hearing is perhaps failing.


John Napier Turner: You just read the story.


Charles Joseph Clark: The facts as they have just been indicated in this House are that there has been discussion for some time with the European Community with regard to the cod question. Any discussions regarding fish with the Community, of which Spain is a member, are naturally going to be exacerbated by the controversy over the trawlers. That is the case that was alluded to by the Minister for International Trade.


GOVERNMENT POSITION
Lloyd Axworthy: Mr. Speaker, we have now had a sort of confusion compounding the complexity. We now have a third version. The Minister of Fisheries has said there is no evidence. The Secretary of State for External Affairs has said there is evidence to compound the problem. What action does the Government intend to take when the Minister for International Trade returns so that we can make a properly unified case to the Europeans to stop any harassment or any action that they are taking to stop our fish exports to the European Economic Community?


Charles Joseph Clark: Mr. Speaker, we are taking a unified approach.


Some Hon. Members:: Oh, oh!


Mr. Nystrom:: It is fishy.


Charles Joseph Clark: The Hon. Member is trying by introducing information that is not true into this House to suggest that there is confusion here, when the only confusion, as usual, resides in what some would call the mind of the Hon. Member for Winnipeg-Fort Garry.


Some Hon. Members:: Oh, oh!


U.S. TARIFF ON CANADIAN CEDAR SHAKES AND SHINGLES
Mr. Jim Fulton (Skeena):: Mr. Speaker, my question is for the Minister of State for Forestry regarding the shake and shingle matter. As the Minister knows, the issue of compensation was always a non-starter. Unfortunately, there has been no request from the Prime Minister to lift the 35 per cent duty
which comes into effect on Friday, and retaliation is about to be taken. Does the Minister not agree that there should be fast track negotiations undertaken right now regarding market share, which could lead to the lifting of that duty and save the B.C. shake and shingle industry?


Charles Joseph Clark: Mr. Speaker, the whole country was shaken by the decision-if I may use that term-


Some Hon. Members:: Oh, oh!


Lloyd Axworthy: We have a bad case of shingles, too.


Charles Joseph Clark: -made by the President of the United States with regard to the 35 per cent tariff. We have been following steady and strong action since that tariff was announced to see if there were some remedy available. The Minister of Finance will be making a statement later today, I would hope if the New Democratic Party agrees, in this House of Commons, indicating the economic response by Canada to the United States in consequence of that action.


SOFTWOOD LUMBER EXPORTS
James Ross Fulton: Mr. Speaker, the actions taken to date have done nothing to preserve the shake and shingle industry.
Could the Secretary of State for External Affairs give us the name of any person in his Government who sent, and the date on which any kind of a response was sent to Secretary of Commerce Baldrige regarding today's deadline in relation to the forthcoming countervailing action against Canadian softwood? Has the Minister done anything on that or is that just another case by which he is going to be shaken?


Mr. Blackburn (Brant):: And shingled.


Charles Joseph Clark: Mr. Speaker, that question, among others, was raised by me in my meetings on Friday with Secretary Shultz in Halifax. The question with regard to the proposed countervail has been raised on innumerable occasions by Members of this Government. I would suggest to the Hon. Member that he should not so quickly give up hope of action proving effective on the shakes and shingle question, nor should he cast such an atmosphere of despair on the question of softwood.


An Hon. Member:: Keep scratching.


Charles Joseph Clark: These are difficult questions. They demonstrate, among other things, how essential it is that we have a better trading arrangement with the United States to protect Canadians against this kind of action.


CANADA-UNITED STATES NEGOTIATIONS-POSITION ADVANCED BY NOVA SCOTIA
Mr. Dave Dingwall (Cape Breton-East Richmond):: Mr. Speaker, my question is for the Secretary of State for External
June 2, 1986

Affairs regarding the free trade issue. The Minister of Development in the Province of Nova Scotia stated:
We want negotiated immunity from U.S. trade law for resource industries and other sectors benefiting from regional development and other government support programs.
Would the Secretary of State for External Affairs inform the House whether or not the Government of Canada is in agreement with the position being advocated by the Province of Nova Scotia, and if he is in agreement, has he communicated that agreement in writing to the Government of Nova Scotia?


Charles Joseph Clark: Mr. Speaker, as I think the House knows, there will be a meeting later today involving the First Ministers of the provinces with the Prime Minister of Canada to discuss the quite substantial progress that has been made in federal-provincial co-operation on trade matters and to carry that cooperation forward. It may well be that the Government of Nova Scotia will raise that question during those discussions.


FEDERAL POSITION
David Charles Dingwall: Mr. Speaker, that answer is totally unacceptable. By virtue of its incompetence and flip-flopping on the free trade issue the Government is jeopardizing the very, very fundamental principle of national unity in our country. Where does the Government of Canada stand with regard to the request being made by the Province of Nova Scotia? Is it for it or against it?


Mr. Berger:: Yes or no?


Lorne Edmund Nystrom: Both.


Charles Joseph Clark: The request was made by the Government of Nova Scotia. The answer will be given to the Government of Nova Scotia. As someone who saw this country very nearly torn apart during the long constitutional debates by that Member and the Party with which he is associated, I am not going to accept lectures from him as to aspects of national unity. That Party nearly destroyed this country. This Government is bringing it back together.


Some Hon. Members:: Hear, hear!


Mr. Rossi:: Your own Members gave you a good lesson a few years ago.
Oral Questions AIR CANADA


SUSPENSION OF FLIGHT ATTENDANT
Mr. Les Benjamin (Regina West):: Mr. Speaker, fair-minded Canadians realize that Toni Corrado, the flight attendant suspended for answering questions concerning politics from one or more of a group of Tory delegates, has received special treatment by way of a 30-day suspension for not breaking any known rules.
I would like to direct my question to the Minister of Transport. Is it true that the original letter of complaint beginning "Dear Don", was from a member of the executive and secretary of the Conservative constituency association of Williams Lake and was written on Conservative Party stationery? Will he show us the original of the letter of complaint?


Hon. Don Mazankowski (Minister of Transport):: Mr. Speaker, I first want to take issue with a couple of statements that have been made in the House with the implication that I had personally instructed Air Canada to take this kind of action.


Leslie Gordon Benjamin: Nobody said that.


Donald Frank Mazankowski: Well, it has been referred to time and time again. I categorically deny that.


Mr. Rodriguez:: Nobody said that.


Donald Frank Mazankowski: If the Member has any proof to substantiate that, I wish he would present it.


Leslie Gordon Benjamin: Nobody said it.


Donald Frank Mazankowski: Mr. Speaker, I have before me the letter which was received, along with the instructions. For the benefit of all Hon. Members I would be prepared to table it so that Hon. Members can see precisely what actually took place.


Leslie Gordon Benjamin: Is that the original?


Donald Frank Mazankowski: They are photocopies. I will check to see if there is an original around. I will find out. I usually stick to my word.


John Edward Broadbent: Right, right.


Some Hon. Members:: Hear, hear!


Mr. Speaker:: Order, please.


Donald Frank Mazankowski: This is not a matter of freedom of speech.


Mr. Speaker:: Order, please! The Minister is being a little long.


Leslie Gordon Benjamin: Mr. Speaker, I want to assure you that no one in this House that I am aware of ever said that the Minister politically interfered. Certainly I did not.

June 2, 1986
Oral Questions


Some Hon. Members:: Oh, oh!


PROCEEDINGS DURING DISCIPLINARY HEARING
Leslie Gordon Benjamin: Mr. Speaker, I would like to remind the Minister that I asked for the original of the letter. In view of the fact-


Mr. Speaker:: Order, please! Does the Member have a question, please?


Leslie Gordon Benjamin: Of course, Mr. Speaker, of course. The Minister says that this is an internal matter for Air Canada management. Therefore, why was it that during the disciplinary hearing for this flight attendant, in the presence of two members of the union the meeting was recessed and Air Canada management went to another room and viewed tapes of the House of Commons and the Minister of Transport in particular?


Donald Frank Mazankowski: Mr. Speaker, obviously the Member must have had someone in attendance because he has more information than I have. I choose not to interfere with that process. There is a collective agreement. There is a multifaceted grievance procedure, and I am surprised that the Hon. Member would take it upon himself to interfere with the collective agreement.


Some Hon. Members:: Oh, oh!


Donald Frank Mazankowski: Furthermore, to respond to the first part of the question, I will accept the Hon. Member's suggestion that he did not imply that I intervened directly. In consideration of that element of fairness, he might want to ask his House Leader to consider withdrawing the statement he made as reported at page 13768 of Hansard. He said:
It wouldn't have happened if it had not been for Maz.
If that is not laying the complaint on the shoulders of the Minister of Transport, I'm not sure what is.


Some Hon. Members:: Hear, hear!


REFUGEES
Mr. Bob Pennock (Etobicoke North):: Mr. Speaker, my question is for the Minister of State for Immigration. On May 6 in response to a question the Minister said that there are security measures in place to detect potential terrorists and that they would not receive the same treatment as bona fide refugees.
Could the Minister explain why, since 1981, Canada has been the refuge of an individual wanted by the Italian Government in connection with the kidnapping and murder of
Premier Aldo Moro and for allegedly being a Red Brigade terrorist? Can the Minister assure the House that our new refugee determination system will deal with this particular case promptly?


Hon. Walter McLean (Minister of State (Immigration)):: Mr. Speaker, I want to assure the Hon. Member that the aim of the immigration program and the particular reforms which are being brought to the refugee program are designed to ensure that there is a fair as well as speedy determination of cases. The Hon. Member raises an embarrassing situation in which, because of the present system, people abuse the situation. One hopes that, particularly in the refugee stream, these matters will be able to be dealt with fairly but more speedily.


AIR CANADA
Mr. Brian Tobin (Humber-Port au Port-St. Barbe):: Mr. Speaker, my question is for the Minister of Transport. Air Canada claims it suspended flight attendant Toni Corrado not because of what she said but because of the tone of her remarks. Is the Minister aware that Nova Dickie, an assistant to the Conservative Member for Cariboo-Chilcotin, witnessed the Air Canada discussion and describes Mrs. Corrado's manner as neither abusive nor rude?


Donald Frank Mazankowski: Mr. Speaker, the Hon. Member is expecting us to get involved in the grievance procedure on the floor of the House of Commons.


Mr. Deans:: You are involved.


Donald Frank Mazankowski: I choose not to do that. There is a collective agreement in place. There is a process in place. It is an Air Canada decision and there is a grievance procedure which is to be followed. I do not know why one would want to engage in interfering with that process which has been agreed to through the collective bargaining process.


Brian Vincent Tobin: Mr. Speaker, the Minister is already involved when his office sends a copy of a letter it received to Air Canada.


Some Hon. Members:: Hear, hear!


REQUEST THAT MINISTER INTERVENE
Brian Vincent Tobin: Mr. Speaker, will the Minister use the power which he has over Crown corporations under Section 99 of the Financial Administration Act to intervene and instruct Air Canada to reinstate Toni Corrado and to see that she is compensated for
June 2, 1986

this injustice which has been perpetrated upon her? Will he do the right thing now?


Donald Frank Mazankowski: Mr. Speaker, I hope the Hon. Member will reflect upon just precisely what he is requesting me to do. He is asking that a Minister of the Crown become involved in the day-to-day management operations of a Crown corporation. He would be the first one to cry "foul" if that were to be the case. There is a clear arms length relationship. As I said in the House earlier, we receive many, many letters of complaint and many, many letters of commendation which are forwarded by the Department of Transport correspondence unit. That involves Members of Parliament and everyone.
The issue is not freedom of speech or whether a flight attendant has the right to criticize me or not. I do not mind that at all. I have taken lots of criticism. I have talked about working conditions and about the operations of Air Canada with many flight attendants and many pilots, and I will continue to do that.


Mr. Speaker:: Order, please.


LETTER ADDRESSED TO MINISTER
Ian Deans: Mr. Speaker, I also have a question for the Minister of Transport. Does the Minister not realize that when the Minister or his staff sends a letter which is addressed personally to him, "Dear Don", to Air Canada, that the immediate inference would be drawn that the Minister would have known about and been involved in the matter?


Donald Frank Mazankowski: Mr. Speaker, if the Hon. Member is suggesting that every time he writes me a letter addressed "Dear Don", I am supposed to ignore it, I would not do that.


John Edward Broadbent: No, just the opposite.


Ian Deans: I will point out to the Minister that I address all my letters to every Minister "Dear Mr. Minister".


Charles Joseph Clark: Surely not to Flora.


TERMS OF SUSPENSION
Ian Deans: Mr. Speaker, does the Minister not think that 30 days without income is a very severe penalty for having criticized the Government?


Donald Frank Mazankowski: Mr. Speaker, I am not sure whether the Hon. Member is privy to all the details-


Ian Deans: Are you?


Donald Frank Mazankowski: No, I am not.


Ian Deans: Well, answer my question. Do you think that's a fair penalty?
Oral Questions


Donald Frank Mazankowski: There is a multifaceted grievance procedure which has been agreed to and negotiated under the collective bargaining arrangement which is part of the collective agreement. As far as we are concerned it is a matter between Air Canada and its employees. It is interesting to note that the unions are not expressing a point of view on this particular issue, at least not publicly and officially.
I just want to say one thing. Hon. Members across the way-


Mr. Speaker:: Order. This is too long.


EXTERNAL AFFAIRS
Gabriel Desjardins: Mr. Speaker, my question is for the Hon. Minister for External Relations.
Following the extraordinary session of the United Nations last week to examinie the emergency situation in Africa, how does the Minister evaluate the consensus reached last weekend and the role of Canada?


Hon. Monique Vezina (Minister for External Relations):: Mr. Speaker, Africa made a giant step forward last week. The action program accepted yesterday morning by the 159 countries is a historical event. The international community has accepted to look lucidly and frankly at the problems facing Africa. Canada played an important role in this issue thanks to the special attention brought to it by our Prime Minister during the months before the Tokyo Summit.


FEDERAL-PROVINCIAL RELATIONS FISCAL AGREEMENTS WITH PROVINCES-GOVERNMENT POSITION
Raymond Garneau: Mr. Speaker, my question is for the Minister of Finance.

Last Friday Chief Justice Brian Dickson deplored the disastrous cuts proposed by the federal Government in transfer payments to the provinces which will severely damage Canada's universities. Does the Minister agree with Chief Justice Dickson who said that second class funding of universities will inevitably lead to second class teachers, second class students and, ultimately, a second class nation?

June 2, 1986
Oral Questions


Hon. Michael Wilson (Minister of Finance):: Mr. Speaker, federal government transfer payments to the provinces are growing at one of the fastest rates of any element of federal government spending. The increase in the next five years over the last five years is going to be $25 billion. It will increase from $65 billion to $90 billion over the next five years. That is a very, very substantial increase and will provide the provinces with a good deal of funding in order to assist them in their responsibility for financing post-secondary education.


REQUEST THAT GOVERNMENT WITHDRAW BILL C-96
Raymond Garneau: Mr. Speaker, Chief Justice Dickson obviously disagrees with the Government, as do all those who appeared before the Parliamentary Committee on Finance and Economic Affairs. Will the minister meet the wishes of everyone involved and will he withdraw Bill C-96 and undertake real consultations with the provinces about the financing of universities and postsecondary education in general?


Michael Holcombe Wilson: Mr. Speaker, I have discussed this matter with provincial government representatives on, I think, four separate occasions. I can understand the position the provinces might take. However, they also understand very clearly that we have a very, very serious financial problem. We are not backing away from it, we are dealing with it in a broad way. This is one element of the over-all program to get the debt under control so we can have lower interest rates, create more jobs, and have a healthier economy. That is the policy of this Government and we are going to hold to it.


NUCLEAR ARMAMENTS
Derek Nigel Ernest Blackburn: Mr. Speaker, my question is directed to the Secretary of State for External Affairs. Is the Government of Canada prepared to cancel Cruise missile testing in Canada if the U.S. violates SALT II by deploying the air-launched Cruise on B-52s later this year?


Charles Joseph Clark: Mr. Speaker, we are very concerned, as I indicated in the House the other day, about the implications of President Reagan's most recent statement. Insofar as the scrapping of two Poseidan submarines is concerned, that is a very helpful development. He has indicated that unless there is some response by the Soviet Union to indicate they are finally prepared to begin to respect SALT II, then it may no longer be possible for the U.S. to respect the limits set out in SALT II. We would hope that the President's statement on May 27 is not the last word on this subject and that we will hear from
both the Soviet Union and the U.S. that they intend to respect the limits under SALT II.


CANADIAN POLICY
Derek Nigel Ernest Blackburn: Mr. Speaker, if Canada continues to develop the air-launched Cruise, regardless of what transpires in the meantime, is it not supporting the Reagan administration's policy that SALT II should not be considered in determining deployments?
Right Hon. Joe Clark (Secretary of State for External
Affairs): Mr. Speaker, the short answer to that is no, because the ultimate decision on SALT II limits has yet to be taken. If I may just underline, on behalf of those Canadians who are genuinely interested in having the SALT II limits respected, the importance of making the case to both the Americans and the Soviet Union, there is an expectation on the part of Canadians that both of them will respect the treaty. The Americans have, the Soviet Union has not. We should be making the case to the Soviet Union, on questions such as, for example, the way they are encrypting telemetry and on the way they have moved into a second system, that they are in violation of the SALT II limits. If they believe they are not, they should respond to the representations of Canada and other countries and make that evidence clear.


ENVIRONMENTAL AFFAIRS
Mr. Pat Nowlan (Annapolis Valley-Hants):: Mr. Speaker, my question is directed to the Minister of the Environment. Can he bring us up to date on the unfortunate and suspicious fire which caused the evacuation of the village of Canning, Nova Scotia, in my riding?


Hon. Tom McMillan (Minister of the Environment):: Mr. Speaker, the federal Government is treating the chemical fire in Canning with the utmost urgency. Some six Departments or agencies of the federal Government are involved, including my own Department, the Department of Fisheries and Oceans, Agriculture Canada, right through to the National Research Council. They are involved in analysing soil, water and food samples, providing decontamination equipment to the province of Nova Scotia, monitoring local fish populations, and generally giving whatever backup we can to the lead Government which, of course, because of jurisdictional considerations, is the Government of Nova Scotia. The situation is totally under control largely because of the co-operation of all concerned, including the Hon. Member who has taken a special interest in this issue.
June 2, 1986

Business of the House


SALE OF U.S. SUBSIDIZED BARLEY TO SAUDI ARABIA
Mr. Maurice Foster (Algoma):: Mr. Speaker, my question is directed to the Secretary of State for External Affairs. On May 23 he told me that he would raise the matter of the U.S. grain bonus program with Secretary Shultz at a meeting in Halifax last weekend and the question of the U.S. withdrawing its subsidy on 500,000 tonnes of barley sold to Saudi Arabia, a traditional Canadian market. Did the Minister get agreement from the U.S. Secretary of State to withdraw the U.S. subsidy on this sale of grain?


Charles Joseph Clark: Mr. Speaker, I raised that matter, as did the Prime Minister in Tokyo, and as this Government has been raising the question of the impact of the U.S. Farm Bill on Canadian producers with regularity. We both raised it specifically and I indicated to Secretary Shultz that I would want to have a specific response. We raised it in terms of the need for countries like Canada to begin to take action which will allow us to break the cycle of subsidy which is causing so much damage in the Canadian agricultural industry. My colleague, the Minister of State for the Wheat Board, will be meeting with grain producers from other contries this week in Vancouver to carry forward this Canadian Government initiative to try to create better conditions for Canadian farmers.


CANADA-UNITED STATES NEGOTIATIONS
Maurice Brydon Foster: Mr. Speaker, if the Minister is not able to get the U.S. to stop raiding our traditional grain markets, how does he plan to get an agreement for a fair deal for Canadian farmers in the Canada-U.S. free trade discussions?
Right Hon. Joe Clark (Secretary of State for External
Affairs): Mr. Speaker, I thank the Hon. Member for raising the question because I think what is happening in agriculture indicates the very real degree to which Canadians with vital interests to protect are to some degree at the mercy now of international trading arrangements. We are threatened now by the practice of subsidies in the U.S. and the European Community which are making it very difficult for our producers to stay in business. We need some changes in those international arrangements. The Prime Minister worked on this at Tokyo. We are working now in trade negotiations with the world through GATT, and with the U.S. through discussions which began two or three weeks ago, to put a better system in place. The one thing that is clear is that the system in place now does not work to help Canadian farmers. We need one and are working towards one that will.


POINT OF ORDER
Mr. Speaker:: I was going to make a ruling today but I gather the Minister of Transport (Mr. Mazankowski) wishes to say something before I do.


Donald Frank Mazankowski: Mr. Speaker, I have had the opportunity of reviewing your comments and comments of other Members on May 28 at pages 13722 and 13723 of Hansard, and I gather from the thrust of the comments that some Members appear to have drawn an implication that I was accusing another Member of deliberately misleading the House. I want to assure you, Sir, and all Members of the House that I meant no such thing. In order to clear the matter, hopefully once and for all, I will unequivocally withdraw any such implication.


Mr. Speaker:: I thank the Hon. Minister. I had intended to rule with regard to both matters, but I have been waiting until both Members were present. I thought they were both going to be present today. I will wait one more day and see if the Hon. Member for York South-Weston (Mr. Nunziata) is ready to hear the ruling. I think that is the only fair way to do it.
[DOT] * *


BUSINESS OF THE HOUSE
Philip Derek Lewis: Two items, if I may, Mr. Speaker. First, I would advise the House that it is the intention of the Government to designate Tuesday, June 3 as an Opposition Day.


PROPOSED STATEMENT BY MINISTER OF FINANCE
Philip Derek Lewis: There have been discussions among the Parties, and I believe if you put the following draft order before the House you would find that there is unanimous consent.
That notwithstanding any Standing or Special Order of this House at 4.30 o'clock p.m. this day the Flouse shall revert to Tabling of Documents for the purpose of permitting the Hon. Minister of Finance to lay upon the table and immediately thereafter shall proceed to Statements by Minsiters for the purpose of receiving a statement by the aforementioned Minister. Provided that Standing Order 19(6)(a) shall be deemed to be in force for the purpose of this order.


Ian Deans: Mr. Speaker, I am pleased to confirm that there were, in fact, the discussions that the Parliamentary Secretary indicates. I can hardly wait to see the Minister of Finance laying on the table.


Mr. Gray (Windsor West):: I can confirm that there were consultations and the order in question will be accepted if it is moved.

June 2, 1986
Canada Deposit Insurance Corporation Act


Mr. Speaker:: The House has heard the terms of the proposal. Is there unanimous consent for the motion?


Some Hon. Members:: Agreed.


Mr. Speaker:: Agreed and so ordered.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mrs. McDougall that Bill C-86, an Act to amend the Canada Deposit Insurance Corporation Act, be read the third time and passed.
Mr. Speaker:: Is the House ready for the question?


Some Hon. Members:: Question.


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


Some Hon. Members:: Agreed.


Some Hon. Members:: On division.
Motion agreed to and Bill read the third time and passed.


INCOME TAX ACT
Donald Frank Mazankowski: that Bill C-109, an Act to amend the Income Tax Act, as reported (without amendment) from a legislative committee, be concurred in.


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


Some Hon. Members:: Agreed.


Mr. Speaker:: When shall the Bill be read a third time; by consent now?


Some Hon. Members:: Now.
Hon. Don Mazankowski (for the Minister of Finance)
moves that the bill be read the third time and passed.


Mr. Pierre H. Vincent (Parliamentary Secretary to Minister of Finance):: Mr. Speaker, I am pleased today to speak again on the subject of Bill C-109, an Act to amend the Income Tax Act.
As you know, when this Bill was introduced for first reading only a few short weeks ago I emphasized the importance of a speedy passage of this Bill. I am pleased to note that already this Bill has been approved by the legislative committee and has reached report and third reading stages today. I am encouraged by this quick progress, and I look forward to early passage of this Bill in order that this unjustified potential revenue drain may be stopped.
Bill C-109 relates to the controversial Scientific Research Tax Credit Program introduced by the previous Government, and which was designed to allow corporations to transfer the benefit of tax deductions and credits to outside investors. A special tax equal to the SRTCs sold is payable by corporations which have utilized this measure and is refundable as the corporation actually performs research and development. This tax is provided for in Part VIII of the Income Tax Act and is payable 30 days after the end of the month in which the SRTCs were sold.
The intention of the Part VIII tax is to protect the Government from corporations which would drain the public purse without actually doing any research and development. I agree with the purpose behind these provisions.

As you know very well, Mr. Speaker, the purpose of Bill C-109 is not to change the original intent of the legislation. I think it is important to emphasize this because on several occasions in the House Members have tried to say that such was the purpose of Bill C-109. The main purpose of Bill C-109 relates to scientific research assistance and nothing has changed.
As I said a few minutes ago, Mr. Speaker, Bill C-109 will enable us to stop the senseless redistribution of public funds. This was legal since the legislation was so drafted but, in practical terms, what I would call almost illegal is the fact that, as some Opposition Members have noted, the previous Government had not intended taxpayers to receive huge amounts of money without abiding by the provisions of the scientific research and development tax credit.

As I have previously informed this House, however, this intention has been undermined by recent and conflicting case law. Notwithstanding the fact that Part VIII tax is payable within 30 days after the end of the month in which an SRTC is issued, a court decision has held that the tax cannot be collected as it becomes due but, rather, may be collected only after the corporation has filed its income tax return for the year in which the SRTC was issued. This could be well after the corporation's year end.
[ Translation]
I repeat, Mr. Speaker, I have no intention of dwelling on the abuses of this program which led to its abolition in the May 1985 Budget. Still I might remind the House that the temporary relief provisions which were implemented after the
June 2, 1986

program was abolished did allow for some scientific research tax credits until the end of 1985. It is therefore imperative that Bill C-109 be passed quickly. I think I should emphasize again that this will make it possible for the Government to avoid refunding taxes collected pursuant to Income Tax Act Part VIII and which might be rather difficult to recoup later on.
The House will recall from my earlier comments in support of this Bill that in the absence of these amendments, $225 million of Part VIII tax previously collected as the result of 576 audits-mainly by legal action, seizing assets or accepting security-may have to be refunded by Revenue Canada. In addition, Revenue Canada cannot proceed with collection of 866 additional assessments now being monitored, nor can assessments be issued for approximately 100 SRTC designations received since the court decision.
These amendments do not change the intended application of the Part VIII tax as approved by the House, as I just mentioned, nor are they the subject of any difference of opinion in this regard.

Mr. Speaker, these amendments should have the support of Hon. Members because they are in line with the objectives stated when Income Tax Act Part VIII was adopted by the House of Commons.

The amendments in the Bill also exclude the Part VIII tax from the taxes in dispute legislation contained in the Income Tax Act. The taxes in dispute legislation was introduced as one of the first acts of the Government in order to protect taxpayers who have legitimate disputes with Revenue Canada as to the amount of regular income tax owing.
As I have indicated to the House in the past, however, these provisions are not appropriate in the case of the Part VIII tax which merely offsets credits already issued by the corporation, and which the Government is bound to honour.
Bill C-109 ensures that corporations cannot delay the recovery of Part VIII tax by the simple act of filing a notice of objection to an assessment. As I assured the House before, however, Revenue Canada's practice is to collect Part VIII tax during the course of a corporation's taxation year only when it has reason to believe that the SRTC funds will not be expended on research and development. Accordingly, the provisions of this Bill will in no way hamper the business operations of legitimate research and development performers.
The amendments proposed in this Bill are not retroactive but are effective for assessments made after March 28, 1986, the day on which these proposals were announced. Nevertheless, in cases where Government funds are at risk, new assessments can be issued and Part VIII taxes collected as soon as it is appropriate in the circumstances.
Income Tax Act
I need not dwell on the abuses that have been reported to this program. It is for this reason that the SRTC was discontinued in the May, 1985 Budget. Nevertheless, under transitional relief provisions, it was possible for some SRTCs to have been issued up to the end of 1985.1 cannot overemphasize that it is imperative that Bill C-109 be implemented quickly in order that the Government not find itself in a position of having to refund taxes collected under Part VIII which may be in danger of being subsequently uncollectable.
I look forward to the co-operation of all my colleagues in the House for speedy passage of these important measures.


The Acting Speaker (Mr. Charest):: Questions or comments? Debate.

Debate. The Hon. Member for Laurier (Mr. Berger).


David Berger: Mr. Speaker, this Bill was adopted at the committee stage, without study, because it is a technical Bill that deals with monitoring and is aimed at authorizing Revenue Canada to go and get money owed under the Scientific Research Tax Credit, or rather, to protect the public interest when taxes may be owed under Part VIII of the Income Tax Act.
Today, I simply want to point out our concern. At the second reading stage, I already said that abuses of the scientific research tax credit program should not be allowed to affect other programs aimed at increasing or promoting research in Canada.
Mr. Speaker, I would like to comment more specifically on the guidelines Revenue Canada is formulating. A few weeks ago, the Standing Committee on Research, Science and Technology heard representatives of the Canadian Advanced Technology Association. These representatives from the hi-tech sector informed us they had not been asked to help develop these guidelines. It seems this task was given to experts who may not have the requisite practical experience to understand the impact these guidelines could have on the industry. To date, the Minister of National Revenue (Mr. MacKay) has refused to release the preliminary version of these guidelines.
Once again, I would like to ask the Minister today to release these guidelines so that all parties concerned can examine them and comment accordingly.
Another concern expressed by the Association's representatives who appeared before our committee was that Revenue Canada, under the new program providing a refundable tax credit on research and development, wanted to proceed with an audit of all requests for refundable tax credits prior to any payment of the tax credits. We were told this might delay payment of credits to small companies whose survival is at stake here.
So we see that because of the abuses that have been mentioned here in the House several times, because of past
13868

June 2, 1986
Income Tax Act
abuses the Government and Revenue Canada are perhaps going too far in the other direction by imposing measures or controls unjustified under a new program that is entirely different from the program the Government terminated in its Budget of May 1985.
Mr. Speaker, after these comments I wish to express the support of my party for the Bill before the House today. I hope we will have a chance to get back to the new points I have raised very shortly, because we must ensure, Mr. Speaker, that we get more research in Canada and not less.


Simon Leendert de Jong: Mr. Speaker, I will also say just a few words on third reading of Bill C-109. I believe most of my comments were made during the debate on second reading.
Let there be no doubt, Bill C-109 is an affront to justice. It admits that the policies regarding the SRTC were a mistake, that the whole episode was a tremendous blunder and that major Government revenues were hemorrhaging out of the public treasury. Estimates run to well over SI billion of revenue which should have gone to research and will not go to research.
Why I say this Bill is an affront to justice is because all the things the Conservative Party, when in opposition and since forming a Government, have claimed it was doing on behalf of taxpayers is just wiped out by Bill C-109. Clause 1 will permit the assessments of Part VIII taxes prior to the filing of a return. The Revenue Department will do the assessment prior to the company filing a return. Clause 2 will permit the collection of assessed taxes prior to the filing of a return. The Government will be able to collect the assessed taxes even before a return has been filed. Clause 2(2) will permit action to be taken to collect taxes within the 90 day period usually accorded taxpayers who consider filing a notice of objection. As of March 11, 1986, 53 corporations owing $266 million have filed notices of objections to the asssessments. In other words, the taxes will be collected within that period which normally a corporation or individual has a right to file notice of objection. Clause 2(4) will permit the collection of Part VIII tax regardless of an appeal by the taxpayer to the tax court or federal court.
The Conservatives in their task force on Revenue Canada demanded a different code of conduct. They said that when an assessment is issued a taxpayer should not have to pay taxes which are in dispute until the time for a formal objection has past. If the taxpayer appeals, no payment of those amounts should be required until the appeal is finally resolved. That is what the Conservative task force stated before the election. What Bill C-109 does is wipe it all away.
The Government feels it has to act, and in this sense I do not disagree-it does have to act. Many unscrupulous operators in the corporate sector took advantage of the scientific research
tax credit and fleeced the public treasury of hundreds of millions of dollars. It was the stupidity of the Liberal Government which conceived this concoction in the first place. It was one of those billion dollar mistakes for which the Liberals were noted. On the one hand the Liberal Government cut back on old age security pensions, unemployment insurance benefits and social programs and, on the other hand, it doled out billions of dollars to its corporate friends.
We now have the Conservatives who came in in 1984. They were going to rectify this. In fact, on October 10 they issued a moratorium on the scientific research tax credit scheme. By that time it had become obvious what an unforgiveable scam the SRTCs had become. So the Conservative Government decided it would put a stop to it. On October 10, 1984 the Conservative Government introduced its moratorium but left a loophole. It allowed a grandfathering clause. In other words, if you and I, Mr. Speaker, had an agreement on the back of an envelope that we were going to do some dubious research together the Government had to honour that as a contract.
What we find is that after the October 10 moratorium introduced by the Government an additional $3 billion in SRTCs received approval. Of these moneys, $1.8 billion was submitted to the Department of Revenue by various corporations to ensure that they met the grandfathering provision of the moratorium. One of these SRTCs was going to study whether red and brown Holsteins gave more milk than white and black Holsteins. There was one outfit approved by the Government to research miniature submarines. It turned out that these people were in fact a group of drug smugglers and gun runners who knew nothing about researching miniature submarines. Yet, they were able to fleece the Government out of a few million dollars under the SRTC program.
The Government claims it closed one of the major loopholes and abuses of our tax system. It should hang its head in shame because the abuse under this program continued well into 1985 and even into 1986. When the Government finally decided it could not control this program any longer, it finally shut it all down, but it was a program which should never have seen the light of day. By the time the federal election was over in 1984 it had become obvious it was a scam and should have been closed down right at that time.


An Hon. Member:: It was.


Simon Leendert de Jong: It was not. The Government allowed the loophole, the grandfathering clause, which allowed more abuses to continue. The shame, of course, is that while the taxpayers have lost hundreds of millions of dollars in revenue, research and development is crying for funds. Our universities are in a deplorable state. Equipment is totally outdated. There are no proper scholarships in place to encourage students to take graduate studies. Outfits like NSERC and the National Research Council are starving for funds. They are being asked to cut back and cut back. Legitimate research is suffering while we have squandered hundreds of millions of dollars on this program.
June 2, 1986

It is not surprising at this time that the Government asks for really extraordinary powers in an attempt to recoup some of these lost millions of dollars. I am sure there must be the odd Member of the Conservative Government who is somewhat embarrassed because, after all, the Conservative Party made a big to-do about the injustices and inequities of some of the tactics being employed when the Liberals were in power. I think a fair number of them want to see some honest reform and changes in Revenue Canada and in the tax collection procedure. With this particular Bill, they have had to revert to some of the Gestapo tactics used in the past.
I understand the Government needs some extraordinary powers in order to save some of those lost revenues. Every day we read about another scandal. In today's Globe and Mail there was an article about two computer companies. One company was apparently from somewhere in the United States. It set up a dummy company in Canada with a Canadian front person and was able to collect millions of dollars in tax credits from the federal Government. Apparently, the whole thing was a total scam. The Government wants these extraordinary powers in order to be able to go out and collect as much of that money it can before the money flees the country. We cannot oppose the Government on that. The more money the Government can recover from that program, the better it is. However, the point I want to make is that it was a scandalous program to begin with. The Tory half cure of October 10, 1984, did not help matters at all. We are now faced with giving the Government in this particular instance those extraordinary powers. It is a sad situation. It is sad for the Government, it is sad for Parliament and it is sad for the country. I do not think there will be much debate on this matter nor do I think there will be much disagreement, but I did feel it important that these points be raised in debate.


The Acting Speaker (Mr. Charest):: Questions or comments? Debate? Is the House ready for the question?


Some Hon. Members:: Question.


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


Some Hon. Members:: Agreed.


Some Hon. Members:: On division.
Motion agreed to and Bill read the third time and passed.


COMPETITION TRIBUNAL ACT
[Stage Direction]
The House proceeded to the consideration of Bill C-91, an Act to establish the Competition Tribunal and to amend the Combines Investigation Act and the Bank Act and other Acts
Competition Tribunal Act
in consequence thereof, as reported (with amendments) from a legislative committee.
The Acting Speaker (Mr. Charest):: As Hon. Members are aware, there are 14 report stage motions on the Notice Paper in amendment to Bill C-91, an Act to establish the Competition Tribunal and to amend the Combines Investigation Act and the Bank Act and other Acts in consequence thereof. Motions Nos. 1, 2 and 6 were moved and negatived in committee. After reviewing the committee proceedings, the Chair will select Motion No. 6 and Motions Nos. 1 and 2 will be dropped from the Notice Paper.
Motions Nos. 4 and 5 attempt to reach into the parent Act and appear to be beyond the scope of the Bill. It would be my intention to rule these motions out of order. Therefore, Motions Nos. 1 and 2 are not selected. Motion No. 3 will be debated and voted on separately. Motions Nos. 4 and 5 give the Chair procedural difficulty.
Motions Nos. 6, 7 and 8 will be debated and voted on separately. Motions Nos. 9 and 10 will be grouped for debate but voted on separately. Motions Nos. 11 and 12 will be debated and voted on separately. Motions Nos. 13 and 14 will be combined for debate. A vote on Motion No. 13 will be applied to Motion No. 14.
If Hon. Members wish to make procedural arguments on Motions Nos. 4 and 5, it would be my intention to hear such arguments when those motions would otherwise be called.
Mr. John R. Rodriguez (for Mr. Orlikow) moves:
Motion No. 3
That Bill C-91, be amended in Clause 21 by striking out lines 33 to 35 at page 9 and substituting the following therefor:
"persons but not in respect of commercial activities engaged in by the corporation that are subject to specific regulation under federal or provincial
statute."
He said: The purpose for introducing this particular amendment is to ensure that operations that fall under provincial regulatory bodies would remain outside the purview of this Act. When the Bill was in committee, it was suggested by departmental advisers that the existing jurisprudence with respect to this matter supported the view that provincial regulatory bodies would be outside the Combines Investigation Act under the regulated conduct exemption. We accepted the Government's legal opinion, but why not put in writing what the Government so obviously intends?
We have attempted to put forward an amendment that spells out the intentions of the Government. Our amendment would ensure that provincially or federally-regulated Crown corporations would continue to answer to their own regulatory authorities as it pertains to competition issues. For example, the Manitoba Telephone Company is regulated by provincial regulations and by federal regulations. Therefore, this particular Act ought not to supersede those regulations that are in force and provide protection for consumers.

June 2, 1986
Competition Tribunal Act
We have heard a lot about the Government respecting the rights of provincial jurisdictions. Government Members are great on provincial rights rhetoric. They should accept the right of the provinces to continue to regulate their own public utilities and agencies. In fact, the amendment does respect the right of the provinces to regulate their own public utilities and agencies, so that there would be no requirement for the provisions of this Act to apply. It seems to us that if it were to apply, it would interfere in provincial jurisdiction. That certainly was the view of the New Brunswick Telephone Company, for example, which wrote to the committee.
At the moment, a court case on this very issue is proceeding. Is it really wise at this point in time to push ahead with this intrusion when the courts have not yet ruled on that case? It seems to me that that is another reason for this amendment to be supported by the Elouse. We would urge Hon. Members to support Motion No. 3 which clearly respects provincial jurisdiction over regulatory authority for public utilities and agencies under their jurisdiction.
Mir. Bill Domm (Parliamentary Secretary to Minister of Consumer and Corporate Affairs and Canada Post): Mr. Speaker, there is absolutely no need for this proposed amendment to Clause 21. Clause 21 only provides that Crown corporations engaged in commercial activities in competition with other firms will be subject to the competition Act.
I can assure the House that regulated or regulatory bodies acting pursuant to valid federal or provincial legislation will continue to be exempt from competition law. The proposed motion runs the risk of bringing a great deal of uncertainty to this important area, and therefore I recommend that it be rejected.


Michael Morris Cassidy: Mr. Speaker, I heard the Parliamentary Secretary's point, and I do not think that his defence of Clause 21 is at all convincing. The Act, as it is proposed right now, would create the kind of uncertainty about which he spoke. The proposed clause would make the Act binding upon Crown corporations "in respect of commercial activities engaged in by the corporation in competition, whether actual or potential, with other persons". How can that be defined? In fact, it is similar to asking how many angels can stand on the head of a pin. Is a Crown corporation, which currently occupies some form of monopoly and therefore is not in competition at this time, not in potential competition should rules and regulations change to allow competition in the future? Is it perhaps not in competition because it is providing goods or services which are competing for the dollars of consumers in a particular province, dollars which might be spent on some other products, goods or services?
For example, let us look at Ontario Hydro and Hydro Quebec. We could start by saying that those corporations are not in competition with other persons, neither actual nor potential, because of the monopoly over hydroelectric generation in those provinces. On the other hand, looking at it from a
different perspective, hydroelectric energy is in competition with every other factor in the energy field. It is in competition with diesel oil for bus transportation in the cities. It is in competition with gasoline for the generation of power in rural areas. It is in competition with gasoline, potentially, if we consider the development which is now taking place in the area of electric automobiles. Certainly it is in very vigorous competition with natural gas and fuel oil in the case of home heating. Therefore, what is being stated here is that the federal Government is seeking to pass a Bill which would put it in a position to regulate, to prosecute, to fine heavily, and to influence otherwise the activities of Crown corporations such as Ontario Hydro and Hydro Quebec which have never come under combines regulations before because they have in fact been Crown corporations and have not been treated in the same way as private sector corporations.
We could put together quite a strong case. We are talking about the largest Crown corporations which in Ontario, for example, come under the regulation of the Ontario Energy Board. Quebec has its own mechanisms, and I am sure other provinces have similar mechanisms for controlling their hydroelectric utilities.
We are talking about businesses which are in the public sector for reasons every Canadian knows. We are talking about businesses which are extremely close to provincial Governments and are reviewed and surveyed very closely by provincial Governments since their heavy borrowings form a charge on the borrowing capacity of provincial Governments. For example, there are precedents in Ontario where the provincial Government has stepped in on the hydroelectric utility and said that it must cut back because it would not be given the borrowing authority at which it was looking. Now the federal Government is saying that it does not care about that. It does not have confidence that provincial Governments will be responsible in these particular areas. Therefore it intends to bring in another layer of regulation, and this will be regulation through the courts.
In view of the fact that they exercise a monopoly power, it can and may well extend to such things as whether or not the prices charged by a monopoly or by a corporation are in restraint of trade, are unconscionable or are unreasonable. We have a situation where potentially the federal jurisdiction could poke its nose into a very important area of rate regulation which has in fact been left in the hands of the provinces. If we are to do that, I would suggest that the Government, which talked about reconciliation with the provinces when it assumed office just two short years ago, had better sit down and start talking with the provinces. The Government should tell them that through the back door it is now giving the federal authority the power to interfere in rate setting by provincial utilities, be they telephone utilities in the western provinces or hydroelectric utilities in Ontario.
Let us take the telephone utilities in Manitoba and Saskatchewan as an example. Are they not in competition, either actual or potential, with CNCP Telecommunications for long
June 2, 1986

distance services? Are they not in competition with some of these other value added services which are now offering long distance services to corporations or are allowing companies to use American long distance networks to get around Canadian long distance rates? In other words, competition exists there as well. Are telephone companies not in actual or potential competition with messenger services, with telegraph services, with people going down the street and knocking on their neighbours' doors, or with somebody in an office going down to the next floor to talk with a business supplier rather than getting in touch with him by telephone? Are they not in competition, for that matter, with Canada Post which also offers many services in that particular area?
We do not know what definition the courts might apply to this particular area, but competition, either actual or potential, exists. The Parliamentary Secretary and the Government are opening this particular area of uncertainty with a vengeance. I have an explanation for that. I believe that the Government quite deliberately and quite ideologically is out to do everything possible to frustrate public enterprise. I believe that if there is a hidden agenda, it is in the fact that the Government has systematically shown that it will not deal equally with corporations which happen to be publicly owned if they are Crown corporations of a province. We saw that earlier on in the life of the Government.
[ Translation]
We saw that very early in the life of this Government, following the September 1984 election, in the way the Department of Regional Industrial Expansion dealt with the Domtar company in the province of Quebec. After having granted all sorts of supports to private pulp and paper companies in the province of Quebec, the Government refused to provide the same treatment to Domtar. Why? Because Domtar was controlled by the Quebec Government, either through the Societe generate de financement, the Caisse de depot et placement, or the Caisse de retraite.
We are left wondering, Mr. Speaker, why this Government is so prejudiced against Crown corporations or commercial corporations controlled by a provincial Government. I believe it is because of their ideology and that through Clause 21 of Bill C-91, the Government demonstrates once again that it is prejudiced against Crown corporations, because this Clause, as introduced by the Government, threatens provincially-controlled Crown corporations or commercial corporations with all sorts of uncertainties, because it will affect all corporations controlled by Her Majesty in right of a province where there is actual or potential competition with others, supposedly the other corporations of the private sector and even perhaps other Crown corporations.
And as I said, Mr. Speaker, this actual or potential competition probably exists for all Crown corporations and all corporations controlled by a provincial Government. I suggest, therefore, that this is a measure deliberately introduced by the Government to allow the Federal Government to come in through the backdoor in an operational area which has been
Competition Tribunal Act
traditionally a provincial responsibility. If you, as a Conservative Government, really meant what you said when you promised a reconciliation with the provinces, you will have either to accept the amendment moved by my friend the Hon. Member for Nickel Belt (Mr. Rodriguez) or give up this Clause altogether.


Mr. Cyril Keeper (Winnipeg North Centre):: Mr. Speaker, I must say that the clause before the House disturbs me. I am glad my colleague brought forward an amendment to clarify it. What I find disturbing about the application of federal competition legislation to Crown corporations is illustrated by the example of the Manitoba Telephone System.
We are all aware that very large communication companies want to open up the field of communications, particularly in the area of telephone services, to competition. They promise as a result of this lower rates and better service. We know that this type of move to competition has already taken place to the south of us in the United States.
What we in the New Democratic Party are disturbed and worried about is that, if this area were opened up to competition, you would have increased rates and fragmented and less service for ordinary people in the city and towns. Right now Manitoba Telephone System, by virtue of the fact that it has a monopoly, is able to use some of the revenues from long distance calls which are undertaken and paid for by large companies to subsidize the local service. This means that a local telephone service is able to supply service at a much more reasonable rate than if those revenues were lost through opening it up to greater competition. This has real implications, particularly for those people on low incomes. Many people cannot afford to have telephones. Many people on social assistance cannot afford to have telephones, yet telephones are a basic necessity in a modern society. Any action taken by the Government that may lead to greater competition in this sector could and probably would result in increased rates thus making it much more difficult for poor people to have this basic service.
We received a copy of a letter which was sent to the Minister of Consumer and Corporate Affairs (Mr. Cote) which outlines the concerns of the Manitoba Government. I want to put this letter on the record. The Minister in Manitoba, in referring to the legislation before the House, said that he was concerned with two aspects of the Bill. In part his letter reads:
1.	The legislation does not ensure that the regulated activities of Crown corporations such as the Manitoba Telephone System (MTS) are adequately protected from review under this Act.
2.	The legislation provides a mandate to an agency of your department- That is the federal Department.
-to intervene on its own initiative on policy matters before federal and provincial boards and commissions.

June 2, 1986
Adjournment Debate
With regard to exempting regulated business activities from the purview of this Act, I am aware of your department's opinions that existing jurisprudence will provide this exemption, but this is merely a legal opinion-
Let me emphasize that the Minister said "this is merely a legal opinion".
-based on current jurisprudence. If the federal Government believes that the regulated industries should be excluded, the legislation should be explicit in this regard. To avoid possible litigation over competition issues within regulated environments, the Act should include a new section which would exempt regulated activities in general, or at the very least, section 2.1 should specify that regulated business actitivies undertaken by Crown corporations are explicitly exempt.
This has aroused the concern of the duly elected Government of Manitoba and it has been brought to the attention of the federal Minister of Consumer and Corporate Affairs. I would hope the amendment we have put forward will be accepted so that the concerns raised by the Government of Manitoba could be addressed by the Government.
[ Translation]
Mr. Speaker, this provision of the Bill worries me because there is a danger that it would open telephone services to competition. Experience has shown that a monopoly in this sector of our economy is more appropriate to meet the needs of our population than a competitive system. We have seen in Manitoba, with the Manitoba Telephone System, that we can provide a good service and use the revenues from the profitable part of these activities to subsidize other activities. It is important to maintain a good telephone service at very low rates so that everyone will be able to afford the telephone.
Mr. Speaker, my colleague has proposed a very important amendment to clarify this section so that the Competition Tribunal Act will not apply to crown corporations and telephone services in Manitoba.



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mr. Charest):: 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 York East (Mr. Redway)-Consumer and Corporate Affairs- Profits of wheat millers; the Hon. Member for Don Valley East (Mr. Attewell)-Government Expenditures-Monitoring of examination of task force options; the Hon. Member for York West (Mr. Marchi)- Refugees-a) New determination process, b) Portuguese visas inquiry.



GOVERNMENT ORDERS


The Acting Speaker (Mr. Charest):: I would also like to call the attention of the House to the fact that, as most of you know, tomorrow will be an allotted day and we had anticipated to debate a Bill standing in the name of the Hon. Member for Algoma (Mr. Foster). As tomorrow will be an allotted day, this Bill will be put back on the Order Paper in its proper order.


COMPETITION TRIBUNAL ACT
[Stage Direction]
The House resumed consideration of Bill C-91, an Act to establish the Competition Tribunal and to amend the Combines Investigation Act and the Bank Act and other Acts in consequence thereof, as reported (with amendments) from a legislative committee; and Motion No. 3 (Mr. Orlikow) (p. 13869).
Donald Alex Blenkarn: Mr. Speaker, the section to bring Crown corporations under the provisions of the Bill is one of the most progressive sections in the Bill. The amendment made in committee has met the approval of the provinces of Manitoba, Saskatchewan and Alberta. The provinces, generally speaking, are content to have their Crown corporations-and we are dealing with those Crown corporations that deal in the market-place-be subject to the strictures of this Bill. In the normal course to suggest, for example, that there is something peculiar about a Crown corporation that suddenly does not have to worry about competition legislation surely is not appropriate.


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


Some Hon. Members:: Question.


The Acting Speaker (Mr. Charest):: The question is on motion No. 3. Mr. Rodriguez, for Mr. Orlikow, moved:
That Bill C-91, be amended in Clause 21 by striking out lines 33 to 35 at page 9 and substituting the following therefor:
"persons but not in respect of commercial activities engaged in by the corporation that are subject to specific regulation under federal or provincial statute."
Does it please the House to adopt the motion?


Some Hon. Members:: Agreed.


Some Hon. Members:: On division.


The Acting Speaker (Mr. Charest):: Agreed to on division.
June 2, 1986


Mr. Ouellet:: Just as a point of clarification, have we approved Motion No. 3 or rejected it on division?


The Acting Speaker (Mr. Charest):: That is a very good point. The motion has been rejected on division.
Motion No. 3 (Mr. Orlikow) negatived.


The Acting Speaker (Mr. Charest):: I will recognize the Hon. Member for Papineau (Mr. Ouellet) to make representations on Motions Nos. 4 and 5.


André Ouellet: At your request, Mr.Speaker, I may explain that Motion No. 4 to amend the Combines Investigation Act would have the effect of providing that victims of offences under the Combines Investigation Act are awarded triple damages. The main purpose is of course to discourage companies and individuals from adopting policies that prevent competition.
Motion No. 5 is a motion that would allow for class actions. In other words, a group of people who have suffered damages as a result of an action to prevent competition could get together and sue as a group under the provisions of this legislation.
It is too bad that in Bill C-91, the Government failed to include this aspect which I feel is absolutely essential to discourage companies that may have an anti-competitive bias.
The problem we have at the practical and procedural level is that Section 31.1 of the Combines Investigation Act was to be amended by Bill C-91, but the Government informed us in committee that through an oversight, Section 31.1 of the Combines Investigation Act had not been amended.
I therefore submit, Mr. Speaker, that if we adopt Bill C-91, we will have new legislation which creates a tribunal. This Bill is quite clear in that its purpose is to establish the Competition Tribunal.
However, we will have a text that refers Section 31.1 to a commission, while there will be no reference to the commission in the rest of the legislation.
Mr. Speaker, I therefore submit that the Commission referred to in Section 31.1 is the Restrictive Trade Practices Commission, which is repealed by Bill C-91 and replaced by the new Competition Tribunal.
Mr. Speaker, we believe it is absolutely essential the Governement amend Section 31.1 so that it no longer refers to a non-existent commission.
In any event, I can understand that this is embarrassing, probably a mistake on the part of the Government, but if the Parliamentary Secretary wants to I am sure he will obtain the unanimous consent of the House to make this minor amendment to section 31.1 of the Act. Then it will be possible for me
Competition Tribunal Act
to move my two amendments, one concerning triple damage, the other concerning class action.
I expect the full co-operation of the Government to seek the unanimous consent of the House to amend section 31.1 as it should be amended.


Mr. Domm:: Mr. Speaker, that was an admirable try, but I remind the Hon. Member for Papineau (Mr. Ouellet) that we spent considerable time in the legislative committee dealing with Bill C-91 changing definitions within the Bill from "commission" to "tribunal". We have, in effect, a tribunal which replaces many of the responsibilities of the former commission. For that reason, I support the position taken by the Chair that these matters refer to Section 31(1) of the Combines Investigation Act which is not part of Bill C-91.1 do not see how an amendment to a section not open for discussion can be debated in the House. I apply the same rationale to Motion No. 5. Section 31(1), to which the proposed motion refers, is not part of Bill C-91 and I, therefore, question whether such a motion is receivable by the Chair.


The Acting Speaker (Mr. Charest):: The Hon. Member for Papineau (Mr. Ouellet) asked for unanimous consent to introduce Section 31(1) and the Hon. Parliamentary Secretary has answered that there is not unanimous consent within the House. The rationale is that a part of the Bill which is not before the House cannot be amended. Therefore, Motions Nos. 4 and 5 will be rejected.
Motions Nos. 6, 7, and 8 will be debated and voted upon separately.


André Ouellet: Motion No. 6.
That Bill C-91, be amended in Clause 47 by adding immediately after line 14 at page 41 the following:
"(7) For the purposes of subsection (4) in its application to market restriction, where there is an agreement between the "first" person and the "second" person, both defined in subsection (6), whereby these persons are deemend to be affiliated for the purposes of subsection (6) in respect of food or drink, and where the "first" person supplies or causes to be supplied to the "second" person food or drink in a packing or container other than a packing or container produced or made by the "second" person in his own plan and where this food or drink is distributed in this packing or container by the "second" person in association with the trade mark mentioned in subsection (6), the "first" person and "second" person are deemed, in respect of this distribution, to be affiliated."
He said: Mr. Speaker, I want to move this amendment because I think that the survival of a very important industry, the Canadian Soft Drink Association, may be at stake if we ignore the representations made to the parliamentary committee.
In a way the amendment I am proposing completes the 1976 amendment made to the competition legislation which indeed enabled this highly specialized industry to continue to survive in small villages, small communities, and remote areas of Canada.

June 2, 1986
Competition Tribunal Act
It is a rather special industry. The Canadian Soft Drink Association membership is made up of 149 owners-bottlers and 67 industry suppliers. In fact it is a federation of provincial associations which operates throughout Canada, particularly in remote areas. They are small businessmen, entrepreneurs who, although they do not employ thousands of people, as our major Canadian industries do, provide something like 10, 15 or 30 jobs. But being located as they are in small towns or villages, those 30 or 15 jobs are just as important, if not more important, than a larger industry employing 2,000 people in Montreal or Toronto.
I cannot understand why the Conservative Government has not as yet accepted the representations made by those Canadian bottlers. Indeed, to quote from the brief submitted by that association:
"The Canadian Soft Drink Industry consists of local independent bottlers and franchise houses who face intense inter-brand competition and who provide the consumer with a wide range of soft drink choices. The territorial limitations have provided incentives to bottlers to make investments for production, distribution and marketing. These have resulted in substantial and effective inter-brand competition".
I am quoting from a brief that was submitted to the Committee.
"The members of the industry, to quote the brief, are proud of this competitive performance".
The proposed addition of clause 49.(7) of Bill C-91 is merely remedial in its scope. If adopted, the amendement-and the amendment I am putting forward, Mr. Speaker, is word for word the amendment that was suggested by that association- it would preserve and strenghten the territorial provisions and ensure the further growth of the community-based soft drink industry.
Such is the gist of the message-to maintain at the local level small industries that offer stable employment in a number of Canadian regions. Coming as you do from the Eastern Townships, Mr. Speaker, you know there are bottlers who provide meaningful jobs in your own area.
The association came here to suggest that if this amendment does not pass, their industry could disappear. Why is that?
I am still quoting from their brief to point out why conditions in that industry could take a turn for the worse.
"In local markets, the franchise bottler competes with other local bottlers of other national trademarked soft drinks as well as with regional brands and private labels such as Loblaws' No-Name."
And the representative told us:
"-drawn up in Ontario." He is thus referring to Loblaw's. However, we have been told that we could also mention Sobies, Steinberg, Provigo, or even Safeway and SuperValu in Western Canada. Competition also exists with many other beverages, for instance, various types of milk, and fruitflavoured milk, juices, fruit juices, powders and crystals, mineral water and iced tea.
Now then, the association wanted to point out that there is some very strong and powerful competition in that area. And the amendment, the proposed addition of Clause 49(7) would warrant the injection of new capital and would prevent the erosion of savings and energy which the bottler has invested in his business during his lifetime. By strengthening Clause 49(7),the proposed amendment would enable to maintain the deconcentrated local structure of the soft drink industry, and would prevent a high concentration following the upstream integration of a small number of national corporations in the manufacturing sector and the downstream integration of large national chains of grocery stores at the retail level.
Clearly, those small businessmen, those small bottlers are concerned that large foodstore chains like Steinberg's, Provigo, Sobeys, Safeway or Loblaw's, because of their great purchasing power, may obtain reductions either from Coca Cola or Pepsi Cola or other companies and get all their supply let us say from Toronto, and so by pass local trade in all parts of the country. This would mean that the bottler in Sherbrooke, or Chicoutimi, or Saint-Hyacinthe, or whatever, will no longer bottle his usual soft drinks because there will be no local soft drink market in Sherbrooke, or Chicoutimi, or Saint-Hyacinthe, for the soft drinks will be shipped on a massive scale from Toronto, and the large food chains will truck them to their subsidiaries to be put on their shelves in all the small communities, in all the small centre across the land.
I feel this is a genuine concern for our soft drink bottlers, and if we are not watchful enough to give them adequate protection, it will lead to the disappearance of those small dealers we are familiar with in our respective areas, who earn a decent living and who provide locally decent jobs to scores of workers. They will simply be engulfed by big business and a few years down the road will no longer be able to survive.
Among the people who came here to meet us was Mr. Rene Tremblay, whose firm "Liqueurs Saguenay Ltee" was established in Chicoutimi by his father in 1927. He submitted it is clear that his business can be very seriously endangered in the Saguenay-Lac-Saint-Jean area if this amendment is not accepted by the Government.
I know that the bottlers'problem is a very limited one when you relate it to the overall problems addressed by Bill C-91. However, it remains an important business sector in Canada, an important association which deserves to be maintained and protected and I call on the Government to open its eyes, to recognize the danger and avoid the destruction of such an industry by agreeing to the amendment.


William Henry (Bill) Domm: Mr. Speaker, I would like to assure the Hon. Member for Papineau
June 2, 1986

(Mr. Ouellet) and others that a great deal of time was spent on the subject of soft drink bottlers and distributors in Canada. However, the motion now before us concerning the extension of the current market restrictions which appears in Clause 49(7) of Bill C-91 is unchanged from Section 31(4)(7) of the Combines Investigation Act. What does market restriction mean? Well, this practice could take away forms, but it normally describes situations where a manufacturer grants exclusive territorial rights to each of its customers who, as a result, do not compete with each other. I would note the practice of market restriction is only prohibited where it substantially lessens competition. An exemption known as the bottlers exemption, which is Clause 49(7) applies to agreements between a supplier and another person whereby the latter is supplied with ingredients that he processes by the addition of labour and material into an article of food or drink sold in association with a trademark.
Bill C-91 does not propose to change the existing legislation on this matter. However, the Canadian soft drink association made representations before the legislative committee to the effect that the law should be amended to extend the exemption to articles not processed by the second person, a bottler. The existing exemption was put in place in 1975 because it was deemed necessary to preserve the marketing system which had prevailed in that industry for many years, and that is in the bottling industry.
However, the Government does not believe that it would be appropriate to broaden the existing exemption. Broadening the current exemption would have an anti-competitive effect on the market, which is obviously contrary to the objectives of an effective competition act.
Although in a given territory bottlers that are associated with different soft drink companies compete against each other, competition between franchise bottlers marketing the same trade name has traditionally not existed. In recent years new competitive forces have emerged in the market-place. Food wholesalers and retailers and chain stores have sold canned soft drinks at very low prices. This has resulted in intra-brand competition at the wholesale and at the retail level.
If the current exemption was to be broadened the law would allow exclusive territorial agreements to apply to canned soft drinks that the bottlers do not process themselves, but only distribute. Such agreements could prevent wholesalers from obtaining canned soft drinks directly from the manufacturers, and could effectively increase the price at which such distributors are able to obtain the product. This would reduce the overall level of price competition in the market leaving consumers to pay higher prices for soft drinks.
I believe these developments would be prejudicial to the interests of the other distributors of soft drinks and to the interests of consumers. For these reasons this Government believes that in the context of a law designed to promote
Competition Tribunal Act
competition the broadening of the current market restriction exemption would not be appropriate.


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


Some Hon. Members:: Question.


Mr. Speaker:: The question is on Motion No. 6 standing in the name of Mr. Ouellet. Is it the pleasure of the House to adopt the motion?


Some Hon. Members:: Agreed.


Some Hon. Members:: No.


Mr. Speaker:: All those in favour please say yea.


Some Hon. Members:: Yea.


Mr. Speaker:: All those opposed please say nay.


Some Hon. Members:: Nay.


Mr. Speaker:: In my opinion, the nays have it.
And more than five Members having risen:


Mr. Speaker:: Pursuant to Standing Order 114(11) the record division on the proposed motion stands deferred.

The discussion is now on Motion No.7


André Ouellet: That Bill C-91, be amended in Clause 47 by adding immediately after line 11 at page 42 the following:
"(i) restriction, by a supplier, of the available margin to his customers ("intermediate customer"), by inciting, requiring or compeling an intermediate customer to resell the products bought by an intermediate customer from a third party ("last favored customer"), under arrangements or terms resulting in discounts, rebates, allowances, price concessions or other advantages ("bonuses") offered directly or indirectly to a last favored customer for purchase of identical products intended to be resold to other third parties that are not favored."
Mr. Speaker, I should like to explain briefly why I think that Bill C-91 should be amended. Indeed, by way of this motion, I would like to add another business practice under the clauses dealing with the abuse of a dominant position.
The reason why I am an introducing this amendment which will provide, if passed, for another abusive practice on the part of a firm in a dominant position is that we have become aware that in dealings between large automobile manufacturers and their authorized dealers, the latter were unfairly treated considering the special treatment granted to vehicle leasing firms.
The low-purchase cost of vehicles for what are commonly referred to as fleets, and I am referring to car rental companies, is an incentive for these companies to purchase vehicles above and beyond their needs and to sell them at the retail level, where they are competing directly with the dealer.

June 2, 1986
Tabling of Documents
The car rental owner does not have the same constraints as the dealer, who has to consider the fact he has a very substantial inventory. He needs employees to operate his business, and he has a substantial capital investment in land, buildings and equipment.
I was informed that the typical dealer has an investment of three or four million dollars, and on top of that, he has to follow the orders of the car manufacturer, otherwise he is guilty of breach of contract.
The individual who purchases cars has neither these expenses nor the constraints related to the expenses I mentioned earlier. He does benefit from all kinds of advantages and subsidies, such as discounts on the purchase price, which in some cases may vary from $500 to $800 and at times even exceed $1,000 for luxury cars.
He also has access to free optional equipment or protection of purchase value, guaranteed resale value, and finally, shared advertising costs.
Obviously, dealers do not have access to such benefits.
In committee we listened to a submission presented by the Federation of Automobile Dealer Associations of Canada, which proposed an amendment to Bill C-91. In fact, the wording of Motion No. 7 you have before you, Mr. Speaker, follows word for word the recommendation made by the Federation.
I think we should emphasize that as a result of this favourable bias towards companies that purchase car fleets, the consumers suffer because they do not receive the subsidies they should receive.
A U.S. study of the cost of subsidies to rental companies established that the average unit price of vehicles sold in the United States could have been reduced by U.S. $265 in 1985 and by U.S. $243 in 1984.
Mr. Speaker, I think that at this point I will have to interrupt my speech. I believe that an Order of the House provides that the Minister of Finance (Mr. Wilson) is to speak at 4.30 p.m. I have not finished my comments on this amendment, but with the Chair's permission, I will get back to this later during debate.


Mr. Speaker:: It being 4.30 p.m., pursuant to order made earlier this day, the House will revert to tabling of documents. Prior to recognizing the Hon. Minister of Finance (Mr. Wilson) who is to table a document in accordance with that order, I have received a request from the Hon. Minister of Transport (Mr. Mazankowski) that he would also like to table a document at this time. The earlier order was specific. Therefore, at the Minister's request, I seek consent of the
House that the Hon. Minister of Transport be allowed to table a document at this time.


Some Hon. Members:: Agreed.



ROUTINE PROCEEDINGS


Donald Frank Mazankowski: Mr. Speaker, I thank all Hon. Members for allowing me this opportunity. Earlier this afternoon a question arose in the House about the original letter that was sent to my office from a Mrs. Donna Ford. I have the original here.
While I would be prepared to table it, there are some difficulties because in the event that this may be required as an exhibit for legal purposes, it would be difficult to extract. I have the original copy in my hands and anyone who is interested can look at it. I am prepared to table certified copies of it and it can become part of the sessional papers of the House.
Furthermore, on May 30, the Hon. Member for Regina West (Mr. Benjamin) raised a question about there being three documents that were forwarded as part of the package for a response from Air Canada. He indicated that one was missing and wanted to know what that document contained. That too is included in the package of documents. I would be prepared to table them now and offer all Hon. Members an opportunity to witness the original letter which I have in my hands.


Ian Deans: Mr. Speaker, I rise on a point of order, not with respect to the Minister's tabling of documents. I want to make it clear to him that at no time did I express any concern about his having known about the documents in advance or having personally intervened.


WAYS AND MEANS
Michael Holcombe Wilson: Mr. Speaker, pursuant to the provisions of Standing Order 84(1), I have the honour to lay upon the Table copies in both official languages of a notice of a Ways and Means motion to amend the Customs Tariff.


Mr. Speaker:: Pursuant to order made earlier this day, we will proceed to Statements by Ministers.
June 2, 1986


U.S. TARIFF ON CANADIAN CEDAR SHAKES AND SHINGLES- GOVERNMENT RESPONSE
Michael Holcombe Wilson: Mr. Speaker, on May 22, the United States Government moved without prior notice to protect American shakes and shingles producers by imposing a 35 per cent duty on imported shakes and shingles. This action was taken in full knowledge that Canadian producers were competing fairly, without subsidy, and that a major factor in the decline of the American industry was a lack of red cedar logs.
As the Prime Minister (Mr. Mulroney) stated, the Canadian Government finds this action unjustified and unacceptable. It flies in the face of past commitments to refrain from discretionary protectionist actions and to consult in such situations.

It runs counter to current attempts to liberalize trade between our two countries.

We have made a determined effort to regain full access to the U.S. market and we will continue those efforts. At the same time, over the past few days, the Government has examined its legal options for redress. As is customary under international practice, we have approached the United States Government to find out whether it was prepared to remove the restriction, or to offer compensation to redress the imbalance in conditions of trade caused by the United States' action.

The U.S. administration has made it clear that it is not prepared to remove the measure, to compensate Canada or to take other measures to ensure that Canadian shakes and shingles manufacturers maintain reasonable access to the U.S. market.

In the circumstances, we have decided reluctantly that an appropriate and measured response is required now. Our objective is to bring home to the United States the costs of protectionism, while avoiding measures which will only worsen our own situation.
The Government will implement the following measures which will take effect on June 6, the effective date of the United States' tariff increase on cedar shakes and shingles.
First, on a number of tariff items relating to certain books, certain periodicals and other publications, Canada for several years has allowed duty-free entry. The rates that would otherwise apply for the most important items are at a maximum of 10 per cent. Nearly 90 per cent, or approximately $360 million of Canada's imports under these tariff items in 1985, originated in the United States.
We eliminated the duty on these items on the understanding that the United States would exempt Canada from the
Statements by Ministers
application of the so-called United States manufacturing clause of the U.S. Copyright Act. This provision of United States law requires that any material written by a U.S. national or resident must be printed in the United States to benefit from U.S. copyright protection. As a result of complaints from the European Community, the manufacturing clause has been found by the GATT to be inconsistent with the United States' GATT obligations.
In these circumstances, the Government will be moving to restore the tariff items in question to their previous levels, effective June 6. The reimposition of the rate of duty will result in the collection of about $36 million in additional duties. I see no reason why we should continue to provide compensation for relief from a measure that was wrongfully imposed.
I should note that the U.S. legislative authority for the manufacturing clause expires at the end of June this year and that, given the GATT finding, the administration would be expected to veto any proposed extension. However, should it be extended, we will join with the EEC in pressing for compensation. Should it not be extended, we will seek other ways to ensure the integrity of our response to the U.S. action on shakes and shingles.
Second, the Government will reimpose duties on computer parts imports and on imports of semi-conductors of types made in Canada. At the United States' urging, Canada recently joined a trilateral agreement with that country and Japan to allow duty-free entry of such goods. Import values of these goods from the United States are very high. By withdrawing from that agreement and by reimposing the rates of duty which previously applied, $41 million in extra revenues from the United States imports would result.
Third, there is also a range of other unbound products in which the trade is not large but which, if duties on them were raised, would make clear to the U.S. administration, the Congress and various interest groups, however small, that yielding to protectionist pressure is not without cost. These rates are being raised.
To give effect to these tariff rate increases, I have just tabled a notice of Ways and Means. Amendments will be introduced to legislation currently before Parliament and the necessary recommendations will be made to Governor in Council to ensure that all the actions in our response to the United States tariff become effective on June 6.

The government takes no pleasure in implementing these actions.

But legitimate Canadian interests must be protected and nations which resort to unjustified protectionism must be made to realize that trade is a two-way street.
As Hon. Members know, Government representatives met last week with management and labour representatives of the

June 2, 1986
Statements by Ministers
shakes and shingles industry who are aware of our concern and our effort to restore normal access to the U.S. market for their products. We intend, as of June 6 when the United States' measure takes effect, to monitor closely its impact on Canadian exports. We will meet with industry representatives shortly thereafter to assess the impact and decide what measures might be necessary and appropriate to assist the industry to adjust. There are those who suggest that this American action provides sufficient cause to suspend or even to cancel the overall Canada-United States trade negotiations. We must not heed this counsel of despair. The shakes and shingles incident underlines the need for us to persist in our efforts to secure and enhance our access to the U.S. market.
There are also those who seek to link the shakes and shingles dispute with the ongoing issue of softwood lumber exports to the United States. They will try to make the case that our response to the shakes and shingles dispute will precipitate a U.S. decision to launch a countervailing duty investigation into Canadian softwood lumber exports. There is simply no basis for linking the two issues. I believe it is important for Hon. Members to recognize the fundamental difference between the two issues. On the one hand, the recent 35 per cent duty on shakes and shingles was imposed by the U.S. administration to protect an industry unable to compete with fairly traded imports. It was a blatant protectionist act. On the other hand, the softwood lumber case is one of a number of cases involving a complaint that Canadian producers are competing unfairly in the American market.
We reject the allegation of unfair subsidy, just as the appropriate American tribunal rejected the same charge in 1983. We will, therefore, continue to challenge the right of American lobby groups to harass Canadian producers with the same charge of subsidization. We are confident that Canadian producers will ultimately be vindicated should they be subjected to double jeopardy in American trade tribunals. I should add that there are other Canadian products facing allegations of unfair trade practices and we will be watching developments in those cases very closely.

Mr. Speaker, I have today outlined the Canadian response to this unhappy event. It is a measured response-one that recognizes that a trade war between Canada and the United States would serve no useful purpose.

We have long said that trade means jobs, not only for Canadians but for Americans as well. It is our hope that with these actions, our two countries can begin to put this unfortunate episode behind us and get on with the job of ensuring greater certainly and stability in the relationship so that trade can continue freely and fairly between our two countries.


Lloyd Axworthy: Mr. Speaker, in rising in response to the Minister of Finance (Mr. Wilson), I want first to express two notes of sympathy. My sympathy goes to the over 4,000 workers in British Columbia who have been given absolutely nothing today by the Government of Canada. They are the ones for whom we must really feel sorry. They have been abandoned by their Government and left out to hang by the lack of any effective or useful response. Second, I must express my sympathy to the Minister of Finance who, once again, has been the sacrificial lamb for his Government after the keystone cops who put this whole process into place abandoned him, leaving him to "rag the puck" as my colleague, the Hon. Member for Saint-Henri- Westmount (Mr. Johnston), said the other day. He said the Minister of Finance was sent out as a penalty killer. I suggest there is another definition. He will now be widely known throughout the land as the "mouse that roared". The only difference is that the present Minister of Finance has succeeded in making the late Peter Sellers look like a sobersides statesman by comparison.
One can only ridicule and laugh at the measures brought forward today as the so-called "tough response" which was promised 10 days ago by the Prime Minister (Mr. Mulroney). The Minister has referred to an "unfortunate episode". All along the Government has said this is a "singular accident", it is only something which is isolated in the American mind. Yet this afternoon we have a report from Washington that the United States has now imposed the ruling of the International Trade Commission, a 41 per cent tariff on Canadian imports of steel related to the gas and oil manufacturing industry. So much for the isolated incident. The people in the riding of the Minister for International Trade (Mr. Kelleher) and in Regina will now face the full vent of another American action, again prompted by its sense that it knows this Government will not respond in a tough, effective way.
The Prime Minister once said: "If the winds of protectionism ever blow over Canada, they can cut me up into little pieces". The pieces are scattered all over the floor. The Prime Minister has been cut to pieces by his so-called close friend, the American President.
This is not an effective reaction to an isolated incident. It is a consistent, coherent strategy on the part of the United States to impose a series of trade reactions against this country, obviously prompted by the fact the Americans have seen a group of pussycats in the Conservative Government who have not been able to win American respect because they have given up and conceded on everything else up until now.
The Government is going to be very brave. It is going to reimpose a tariff on books and publications, except that there is a little caveat which says "until the end of June". That is 24 days of tough action. That is really going to have President Reagan shaking and shingling in his boots. After 24 days it may not matter any more. Furthermore, the Government is going to impose a whole new set of tariffs. It is really going to get after a lot of people. There will be a new tariff on porridge, on Christmas trees and on tea. It is bad enough that it is putting 4,000 people out of work in British Columbia but now
June 2, 1986

they will not even be able to enjoy Christmas, their kids will not have their porridge and their grandmothers will not be able to drink their tea without paying a higher cost. This is the Brave New World of this Government, and that is the end result of what it is doing.
How could anyone take this action seriously? How could anyone accept that this will provide the appropriate response from the Americans so they will say: "Oh, boy, those Canadians can really get tough when they want to"? The Government is going to put a little more tax on rolled oats. Our horses and those who want a little gruel in the morning are going to have to pay a higher cost for it.
Another very brilliant stroke of genius on the part of the Minister and his Government is to reimpose a tariff it just took off in January on computer parts. The Government is always talking about the need for more productivity, the need to be more competitive and to be able to provide a higher level of efficiency in that industry. But what does it do now to Canadian manufacturers? It will impose a tariff on a range of computer parts which are necessary to keep the manufacturers going. And it is going to review that again. So no one knows what the Government is doing. Everyone is full of uncertainty.
In the meantime, what about the workers? What about those people who demonstrated last weekend to save their jobs? We have asked all along why the Prime Minister does not use his so-called vaunted special relationship with the President of the United States. He has worked 15 months at the job. He said: "I alone am able to provide for an open sesame to the White House". But the first time that is tested, the very first time Canadians depend upon the Prime Minister to pick up the telephone and open up a special line of communication with the President, he is afraid and will not do so. After 15 months of giving away on FIRA, the NEP, pharmaceuticals and publications, all those matters of importance to this country, at the very time we should call in our chips, what does the Prime Minister do?


André Ouellet: Disappear. He is not here today.


Lloyd Axworthy: He is at home counting his chips, I suppose. Another matter of great principle stated by the Prime Minister on trade is that he is going to consult with the Premiers. This is the new world of conciliation and consultation. Tonight the Prime Minister is meeting with the Premiers of the provinces but what happens this afternoon? A number of measures are brought in without his even bothering to raise these matters with the Premiers. Does the kind of position taken by the western Premiers in their weekend communique not make sense? They said: "Look, we have had enough. We think the real answer is to either ask for a standstill on all countervailing actions or suspend the talks".
The Minister of Finance (Mr. Wilson) refers to the provincial Premiers as counsels of despair. He is using the same
Statements by Ministers
language the Government used a week ago against the President.


Michael Holcombe Wilson: You used it.


Lloyd Axworthy: I do not know. I saw Premier Getty on television on Sunday saying: "If we don't get a standstill on countervail, then I want a suspension of the talks". The Minister of Finance has now totally given away Premier Getty's position and has said that he is a counsel of despair. He may be a lot of things, but in this case, the provincial Premiers came here to bargain and negotiate in good faith. They have had that good faith turned on its head. They are not being dealt with in good faith. They are simply being given a whole series of unrelated, erratic actions fuelled by panic and fear.
There is no coherent strategy dealing with trade. The Government really does not know what it is doing. It reacts differently from one day to the next, trying to find out the most expedient method to use to get by in the next 24 hours.
When it comes to real support for those B.C. workers who have now been abandoned by the Government, we have to ask why the Minister of Finance is not bringing in the provisions of the Employment Support Act. In 1971, when President Nixon brought in a 10 per cent surcharge, the previous Liberal Government brought in the Employment Support Act which fulfilled the promise of keeping those industries affected by the surcharge in business. The people were able to maintain their jobs and their industries. That sent the strongest message of all to the Americans that we were not going to give in and that we were not going to let our workers and institutions go down the drain.
Where is the Government's action on this particular matter? Why is it not setting up a board to ensure, through proper consultation with the industry and workers, that the Government will provide them with the ability to maintain their livelihoods? There was none of that in the Minister's statement. Instead, he is the tea, porridge and Christmas tree man. That will be his valiant response to this American matter. That is the way the Government thinks. It does not really think at all for the long term; it simply things about how it can deal in panic to get matters on the table today and then change its mind tomorrow.
It is perhaps most damaging that the Minister also argued in his statement that there is not a link between this action and the countervailing actions we are facing on softwood lumber, a $3 billion to $4 billion industry involving tens of thousands of workers, not just the 4,000 who are now losing their jobs. If that is what the Government thinks and if that is the kind of leadership we are receiving, then God help Canada.
Obviously there is a connection between the two moves. Obviously a relationship is being seen by the Americans. Obviously the Government should be taking action on this immediately and it should provide an insistent, continual demand that the President make public a rejection of the petition for countervail on softwood lumber. Yet that was

June 2, 1986
Statements by Ministers
ignored in the Minister's statement. He simply says that it does not exist. He is hiding his head in the sand and he is not providing the kind of response that that industry requires. We simply say that this is not good enough and we must do something about it.


John Edward Broadbent: Mr. Speaker, for many months now Canadians, and indeed Americans, have heard from President Reagan that he is a man who is committed to free trade and free competition unimpeded by any artificial barriers. Among other sectors in Canada there is one sector, the shakes and shingles sector, which met those requirements completely. It was competitive, efficient, modernized and was doing a good job. Some 4,000 men and women employed in that sector in British Columbia had done a good job competing in the U.S. No subsidies at all came from any part of the Canadian economy or from the Canadian taxpayers. Just about 10 days ago, the same President completely hypocritically took personal action to destroy 4,000 Canadian jobs. To us, that was unacceptable then and it is unacceptable today.
At the time this decision was made in the United States, we were hoping for the Prime Minister (Mr. Mulroney) to do what President Reagan has not hesitated to do since the Conservatives came to power, and that is, to use the telephone. On numerous occasions when it was in his country's interest, President Reagan phoned Mr. Mulroney and said: "Brian, would you please do this?"


Some Hon. Members:: Order!


John Edward Broadbent: If you would prefer, he said to the Prime Minister: "Sir, would you kindly comply with our request?" The Prime Minister invariably did so.
The men and women affected by the imposition of the 35 per cent tariff were hoping that the Prime Minister would get on the phone to the President when this happened and say to the President in no uncertain terms: "This tariff is unacceptable and should be removed right away". That is what ought to have been done. No phone call was made at the time. A cable was sent, but we have been waiting for days to see if the Prime Minister intervened in what he himself described in rather colourful rhetoric the day after it happened as being an unacceptable act. However, according to the Prime Minister, this horrific act taken by the President was not sufficient to justify a phone call.
Instead of a phone call, we heard the announcement made by the Minister of Finance today. As I am sure many Canadians who will be following this debate with considerable interest did, I noted that at the end the Minister said that he thinks this announcement will put this whole episode behind us. All the Minister has done is to put 4,000 Canadian jobs behind us. He has not put the issue of unilateral action on tariff matters by the United States behind us at all.
As the Minister knows, we heard just this afternoon of an additional 41 per cent tariff being imposed by the United States on Canadian steel, another industry that receives no
subsidies in Canada, has modernized and is at the top in terms of international efficiency and competence. I regret to say that what we have heard today is not action that will help the men and women of British Columbia who want their jobs preserved, not hand-outs. Instead, we heard an announcement that puts another nail in the coffin of that industry. That is the reality of today.
The Minister is shaking his head. When the spokespeople for the industry were in town not many days ago, the trade union representatives sat on one side of the table and the four spokespeople for the business sat on the other side. They agreed very strongly on one point, and that was that their jobs were going down the tubes. I specifically asked the head of each company if their companies would go down the tubes as well, and each of them replied: "Yes, and by the end of June". He shakes his head, but I hope he will give them a phone call.


Michael Holcombe Wilson: I shook my head at the distortion you made.


Lloyd Axworthy: You could hear it all the way from here, Mike, when you shook your head.


John Edward Broadbent: Instead of a decision that will restore jobs to Canadian workers, an action is being taken that will punish Canadian consumers for the loss of Canadian jobs. That is the essence of this Conservative response and it is one that is unacceptable to people on this side of the House and to Canadians all across the land.
The range of tariff actions being taken is ultimately sad for those who are concerned with their jobs, but there is also an unintended element of black humour involved. Picture this: We have put duties on Christmas trees and porridge. The next thing the Minister will announce is a duty on hockey pucks and snow-shoes. That will be the major retaliatory action that we will hear about in response to steel. There is not even a commitment to use any of the funds the Government will receive from these special tariffs in a way that would facilitate the maintenance of those jobs in British Columbia.
OO)
The principle of trade talks is involved here, but the immediate concern of my Party is with those 4,000 jobs in British Columbia which ought not to be lost.
In response to another claim by the Minister, I want to say that our view is that he is dead wrong when he contends that there is no linkage between this and what will happen in a matter of days on the question of tariff action or countervailing action taken by the United States against Canadian softwoods. The Minister says that there is no linkage, but many Canadians saw on the television news, on the night the American action on shakes and shingles was announced, an industry spokesperson in California saying that the decision by President Reagan would indeed be very useful for Americans who wanted action taken against our softwood producers. There may be no linkage in the Minister's mind, but I can tell
June 2, 1986

him that there is linkage in the minds of Americans who will be using President Reagan's precedent as part of their argumentation to take action against Canadian softwoods. This could affect some 300,000 men and women directly who are employed in that sector and many other Canadians indirectly.

Mr. Speaker, 1 would like to say that the basic point for us is that we do not accept this approach. We would rather not wage a tariff war with the Americans because that is a war we cannot win. Today we put a tariff on selected Canadian products, perhaps on other goods tomorrow, but after that the Americans will decide to slap tariffs on other Canadian products. The solution is not to increase costs for Canadian consumers.

I want to say in summation that our approach to this is to see this decision in the context of the ongoing trade talks. We happen to agree with the western Premiers. For very good reason we said before they did that there is indeed a linkage, as the Americans see it, between this action and the ongoing trade talks. If we are serious, we should now be saying to the Americans, as good neighbours but as very tough economic bargainers, that we do not accept this kind of unilateral action in the context of these talks. I go further. As long as this kind of tariff remains in place, and as long as there is unilateral action on subsequent decisions on agriculture or another part of the steel industry tomorrow, we should be saying that we will not continue to participate in these trade talks. That is what the Minister should be saying. I say to the Minister that the fundamental goal, or the first item which should be discussed in these talks if he continues with them, is to obtain agreement on a mechanism which will put an end to unilateral tariff action by either country in the future. If we do not get agreement to put an end to the unilateral process which is now in place-


Michael Holcombe Wilson: Are you sure you want that, Ed?


John Edward Broadbent: I know what I am saying, and I would be happy to explain it to the Minister later. If we do not get that agreement, what point is there in continuing trade talks in the future where we could lose thousands of other jobs when the American Congress will always retain its right to take countervailing action unless it is negotiated away right now?


Some Hon. Members:: Hear, hear!


Brian Vincent Tobin: Mr. Speaker, I rise on a point of order. I wonder whether the House would give unanimous consent to allow Hon. Members to pose questions to the Minister of Finance (Mr. Wilson) who just brought down this very important statement.


Some Hon. Members:: Agreed.
Equality Rights


Some Hon. Members:: No.


Mr. Speaker:: The Hon. Member has heard the response of the House to that suggestion.
It being 5.05 p.m., the House will now proceed to the consideration of Private Members' Business as listed on today's Order Paper.


PRIVATE MEMBERS' BUSINESS-MOTIONS   EQUALITY RIGHTS ADVISABILITY OF IMPLEMENTING SUBCOMMITTEE'S RECOMMENDATIONS
Mr. Svend J. Robinson (Burnaby) moved:: That, in the opinion of this House, the Government should implement the recommendations of the subcommittee on equality rights of the Standing Committee on Justice and Legal Affairs:
(1)	That all trades and occupations in the Canadian Armed Forces be opened to women.
(2)	That Canadian Armed Forces practices relating to the employment and promotion of women be monitored by the Canadian Human Rights Commission and that progress in revising policies in the manner we recommend be evaluated by the Commission at regular intervals.
He said: Mr. Speaker, it is an honour for me to rise to participate today in the debate on an important motion respecting the rights of Canadian women. On April 17 of last year, Section 15 of the Charter of Rights and Freedoms came into effect. That section ensured equality for all Canadians and put an end to discrimination on the basis of sex. However, there is one major bastion which remains within the federal Public Service that quite explicitly continues to discriminate against women, that is, the Canadian Armed Forces.
Effectively the motion before the House today reiterates the unanimous recommendation of the Subcommittee on Equality Rights on which I had the honour to serve as a member. That committee heard representations from women within the Armed Forces and outside the Armed Forces from right across Canada in respect of the role of women and the doors which remained closed to women within the Armed Forces. We heard very clearly a sense of common concern that our overriding objective as Canadians clearly must be the pursuit of peace and putting an end to the madness of war. As well, I believe it is very important to recognize the fundamental right of conscientious objection. Those people who feel through deep personal belief that they are unable or unwilling to serve in time of war or time of combat should have the right to exercise that through conscientious objection. As members of the Subcommittee on Equality Rights we heard from many women who wanted an opportunity to serve at all levels within the Canadian Armed Forces, women who are currently denied that right. I should like to give a couple of examples of the effect of this discrimination.

June 2, 1986
Equality Rights
For example, we heard from a woman named Linda Long who has been associated with the military for more than 10 years of regular and reserve forces service. She said:
I am a military woman, I am loyal to the service, the service I still love-The reason 1 came is my depth of love for my military service and my feeling that a disservice was being done to my personal tradition in uniform and to those honourable women who yet are serving and cannot speak for themselves.
They cannot speak for themselves because unfortunately the Minister of National Defence (Mr. Nielsen) issued an edict which effectively denied Canadian military women the right to appear before our committee and testify in respect of conditions within the Armed Forces. It was with a feeling of pride in the Armed Forces, tempered by a sense of anger in the face of such blatant unfairness, that a number of former service women described to the committee the treatment of women by the Department of National Defence. Colonel Shirley Robinson, who deserves credit for having put a tremendous amount of energy and dedication into this question after having served in the Canadian Armed Forces for more than 30 years, set it out very clearly in her submission to the committee. She said:
If the Canadian Forces gain exemption from the Charter of Rights and Freedoms, a dangerous precedent will be set; for it will signal to the people of Canada that women can continue to be excluded from certain employment simply because men don't want them there. For that really is the bottom line, isn't it? And all the arguments, excuses and blame directed against women have been built upon this appalling fact. The fulfilment of our military requirements rests on the creation of an armed force adequately endowed with the necessary person power and technological skills; and motivated by the belief that the military establishment embodies the values of society from which it originates.
She concludes by saying:
Equal employment opportunities for military women are much more compatible with this objective than the preservation of a backwards, machismo ethos.
That sets it out very clearly, Mr. Speaker. At the present time, over 70,000 jobs within the Canadian Armed Forces are effectively denied to women. The rationale for this is completely unacceptable. It all boils down in most cases to a suggestion that women as a group are somehow inferior to men and unable to serve with distinction in the Canadian Armed Forces. Of course, this is the antithesis of the Charter of Rights and Freedoms because the Charter of Rights and Freedoms requires that people be judged as individuals, and there is no doubt whatever that there are many individual Canadian women who are quite able to meet the most rigorous qualifications for the Canadian Armed Forces in every sense.
The Canadian Human Rights Commission has recently asked the President of the Human Rights Tribunal panel to appoint an independent tribunal to look into the Department of National Defence's policy of excluding women from combat positions. One of the examples given in this area is a women from Valleyfield, Quebec, who was refused entry into a DND sponsored course for naval mechanics solely on the basis of her sex. Not only did the Subcommittee on Equality Rights make strong recommendations with respect to this matter, but the Canadian Human Rights Commission itself has launched an investigation. As long ago as 1971 the Royal Commission on
the Status of Women recommended that all trades and occupations be open to women.
The Government, on March 4 of this year, responded to the unanimous recommendations of the Equality Rights Subcommittee, but it appears that once again the male generals, because of course there are no female generals, are attempting to sabotage equality within the Canadian Armed Forces. They are using delaying tactics and weasel words. What do they say, Mr. Speaker? They say that this must be done in a way-and no one can disagree-that is compatible with operational effectiveness within the Canadian Forces. They say that there is a conflict between operational effectiveness and equality and that one must not yield to the other. That is simply not true. Equality for women within the Canadian Armed Forces can be achieved at the same time as full operational effectiveness is guaranteed.
The group that has been working long and hard to promote full equality within the Canadian Armed Forces, a group known as the Association for Women's Equity in the Canadian Forces, has made a number of specific recommendations in this area. It acknowledges that the number one priority of the forces must be to maintain operational effectiveness. The group points out that operational effectiveness would not in any way be jeopardized by the introduction of women into all occupations as long as the introduction is done in a manner which is informed, fair and efficient. They point out the need for a change in attitudes and for education, particularly among senior male personnel within the Department of National Defence.
The association recommends leadership training programs and calls as well for the establishment of an external review process which would involve perhaps former members of the Canadian Armed Forces. As well, review and redrafting must be undertaken of all policies and practices prejudicial against service women. An example of that is the current policy to accord women leave without pay with the associated loss of benefits and seniority rather than sick leave during the period when a servicewomen is unfit for duty during and after pregnancy. This is blatantly unfair to women who become pregnant while in the Armed Forces, and certainly that is one of the areas that is a denial of equality as well. There must be selection standards and procedures that are based on bona fide occupational requirements. Obviously there must be a recognition of the concept of reasonable accommodation as well.
Monitoring by an outside independent body of experts is essential to ensure that the Armed Forces do not delay in the implementation of full equality. The committee has noted that there is an excellent precedent for this with the Defence Advisory Committee on Women and the Services in the United States.
I want to note as well that while the Government has made a commitment on paper, that commitment falls far short of action. General McLellan has been asked to undertake a review of this commitment, and there is to be further delay
June 2, 1986

while yet another task force studies the matter. Because I have a very short time to promote this motion, let me conclude by once again recognizing, as Adell Karmas pointed out very eloquently:
War is terrible and loathsome. No one truly wants to be part of war and the bloodshed and misery it entails, but the reality is people fight to protect a country, a system of beliefs, a valued way of life.
It is insulting to all Canadian women that they are denied the right to participate fully in all trades and occupations in the Canadian Armed Forces.
I call upon the Government to accept in reality, not just on paper, the important recommendation that all trades and occupations be open to women and the implementation of this important principle be monitored by an external review agency. Equality must come at last to the Canadian Armed Forces.


Reginald Francis Stackhouse: Mr. Speaker, I welcome the opportunity for the House to debate this issue, partly because of its significance in principle. If it were just a matter of principle, I think I would want to support the motion. As one who cast his vote to open up a formerly all male profession to give women an opportunity to enter it, as one who had a leadership role in opening up an all male college to become a co-ed institution, I could welcome the opportunity for taking an advance in the direction this motion calls.
I am more impressed that this is a matter of practice, and ironically were we to adopt this motion and put it into practice it might work counter to the interests of the very people for whom the Hon. Member is seeking to be an advocate, and rightly so. I think the focus of our attention should not be the theoretical consideration, important as that may be in certain circumstances, but, rather, the practical effect that this motion could have on the women who would want to participate in the Armed Forces and advance their careers in the military. I am going to suggest that, ironically, were we to adopt this motion we would work against the interests of the very women whose interests we seek to serve.
Let us recognize that right now Canada has a very impressive record in terms of making the military service accessible to women. Canada has the third highest ratio of women in its Armed Forces, with 8.9 per cent of the full-time professional personnel of the Canadian Armed Forces being women. Israel has 10 per cent and the United States 9.5 per cent. We are close behind. The United Kingdom is a distant fourth with 5.1 per cent and Belgium with 3.8 per cent. Our record is impressive and we have nothing to apologize for. As well, we can take encouragement from the way in which the Canadian Armed Forces over the past 15 years have steadily increased the positions open to women, the percentage growing from 19 per cent to 65 per cent, 29,000 positions now being opened to women candidates.
If we were to move beyond the present policy and make mandatory as a matter of policy the unlimited deployment of women in all positions in the Armed forces, we might well find
Equality Rights
that the unintentional result was the reduction of the percentage of women in the Armed Forces. That has been perhaps the result of certain countries practising unlimited deployment. For example, of the three countries that practise unlimited deployment of women in their Armed Forces, each one is well behind Canada in the proportion of women in its armed personnel: Belgium with 3.8 per cent, the Netherlands with 1.4 per cent and Norway with 1.2 per cent. As well, those countries have few women in what the Canadian Armed Forces would call combat roles. When we speak of those three countries permitting women to undertake combat service we may conjure up images of rows and rows of female regiments and divisions, but that is not the case. There are only 18 to 30 in actual combat roles in those countries, with another 65 serving actively with combat units having non-combat roles. It is also significant that some countries which had women in combat service in the past, including Israel, Yugoslavia, and the Soviet Union, have withdrawn that policy.
We must consider very seriously the practical implications of what this motion recommends. We must recognize that Canada now has a larger percentage of women in its Armed Forces than have any of the countries which practise unlimited deployment. The actual implementation of deploying women in combat roles in those countries is very limited with regard to the numbers concerned. According to our present policies, we are actually giving women far more opportunities to serve their country in the military than are the other countries which I have mentioned.
If we were to change courses radically and admit women to all roles including combat roles, the unintentional result might be to reduce the number of women in our Armed Forces. One reason for that is that they would have to meet the same medical standards imposed upon men in combat service. It is estimated by some experts in the field that this could reduce the number of women in our Armed Forces to 2 per cent, which is far below the present ratio.
I would hope, therefore, Mr. Speaker, that in the interest of women we would give priority to the practical implications of this motion. We should increase opportunities for women in the military by continuing with the present policy and, in keeping with the Charter of Rights, studying the various positions which are presently closed to women candidates to discover how many can be opened to them. As well, we should give priority to advancing women within the ranks of the Armed Forces. There are presently no women generals. That is a lack which we would want to make up for at the earliest opportunity. As soon as a position is open for which a woman is eligible we should give that promotion priority.


Michael Morris Cassidy: Empty words.


Reginald Francis Stackhouse: The appointment will not be empty and the position will be full. That would give full recognition to the leadership capabilities of women in the military, which

June 2, 1986
Equality Rights
capabilities have been demonstrated in so many areas of our national life, including the House of Commons.
Let us not be panicked by this motion and the understandable desires of the mover and the seconder. We must recognize that at the present time the Armed Forces of Canada have a far larger percentage of women serving in various positions than do other comparable forces in the country. For example, the police forces of Canada have only 3.1 per cent of women in their ranks. Fire fighting organizations have only 1 per cent.
The Canadian Armed Forces have made impressive progress in opening up their ranks and officer positions to women to a degree equalled by very few organizations and activities in our society. We should want to keep the Armed Forces moving in that direction. We should attempt to increase the number of women serving in the Armed Forces and to advance them to positions of seniority, including the rank of general, so that their voices can be heard at all levels and their thinking can be influential up to the highest level. I hope that that day is not far away. We would be very happy to see a woman general at the top level of our Armed Forces. Women have achieved generalship in other countries and we would like to receive the benefit of their leadership in our military service.


Svend Johannes Robinson: That's tokenism.


Reginald Francis Stackhouse: Anyone who has served as a general will never regard it as a token. I consider that last remark reflective of the depth of debate on the other side.


Michael Morris Cassidy: Look in the mirror, Reg.


Reginald Francis Stackhouse: The best interests of the women involved are served by continuing and advancing the policy now in effect.


Mr. John Reimer (Kitchener):: Mr. Speaker, I, too, would like to add a few comments to this debate on the motion before the House. This is a motion to open all of the occupations and trades in the Canadian Armed Forces, particularly those of a combat nature, to women. I cannot help but wonder why anyone would want to enter into a combat role. Surely our prime objective is to ensure that neither males nor females would have to fight in a war. I do not know why anyone wants to get involved in this in the first place.
I would like to comment specifically on some of the points contained in this motion. We must use a large measure of common sense and pay attention to the basic principles of the Armed Forces when discussing this motion. What in the world do the Armed Forces exist for in the first place? They are not there to provide employment opportunities or to be in the forefront of social change. They are not there to hold little sensitivity groups talking about human rights. The purpose of the Armed Forces is to be there with one single, over-riding objective, that being to protect the security and sovereignty of Canada and to protect the rights and freedoms enjoyed by all Canadians. Everything the Armed Forces does must be directly related to that one over-riding objective. Therefore, we
must ensure that all of the trades and occupations within the Armed Forces serve that one over-riding objective.
Whenever a trade or occupation can be open equally to men and women, we obviously want to do that, as the Canadian Armed Forces are doing today. That is what the Government is committed to. The Government is committed to expanding the role of women in the Armed Forces by ensuring that women will be able to compete for all of the trades and occupations within the forces. The Government has committed itself to pursuing this policy only in a manner consistent with the requirements of the Armed Forces to be operationally effective in the interests of national security.
We must consider some of the facts. My colleague who just spoke mentioned some of these and I would like to reiterate some of them. Canada is already a leader in the western world in the employment of women in the Armed Forces. Today 8.9 per cent of those employed in the Canadian Armed Forces are women. Of the 29,000 positions open to either men or women, 7,400 are occupied by women. Only two countries in the world have a higher proportion of women in their Armed Forces than does Canada, those being Israel with 10 per cent and the United States with 9.5 per cent. Within the next few years the rate of increase of female trainees will put Canada ahead of some of these other nations.
Constant review within the Armed Forces has resulted in an increase in the proportion of occupations in which women participate from 19 per cent in 1971 to the present 65 per cent, resulting in some 29,000 positions now being available to women. As vacancies occur and suitable applicants become available, there will be considerable scope for expanding the present strength of 7,400 women. As a result of the present Charter of Rights, a task force is studying how to implement that within the Department of National Defence today. The result will be that the number of occupations open to women will undoubtedly increase.
Last fall I was a member of the Standing Committee on External Affairs and National Defence which held hearings across Canada concerning renewal of the NORAD agreement. We listened to briefings from various Armed Forces personnel at bases across Canada. I talked with many officers and they were very interested in the equality report, but their interest focused on two topics. One was sexual orientation in the Armed Forces, and the other was women in combat. On the first point all of the officers I talked to were unanimously opposed to the recommendation to prohibit discrimination on the grounds of sexual orientation. I totally agree with them. On the second point, they were also unanimous that women should never be placed in infantry units or in combat roles where their lack of upper body strength and physical stamina would detract from the mission given to the unit concerned. However, they said that more trades and occupations should be opened to women wherever men and women could compete
June 2, 1986

equally and meet all the qualifications and physical requirements. This is exactly what the Government is doing as I indicated earlier.
I would like to comment now on a fallacy which is argued by some people. It is that all future wars will be push button wars. The experience of the war in the Falklands should teach us some facts. I think that that war clearly indicated that physical fitness and strength was perhaps even more vital than in the past. In the Napoleonic wars, in the early 1800s, Wellington's troops carried packs weighing around 80 pounds. In the Falklands war the British soldier carried a 120-pound pack from San Carlos to Port Stanley. Strength and endurance was as important then, if not more so, than in the past. In that war the world witnessed the terribly destructive force of a small missile when it hit a ship. Once those missiles fired by push buttons hit a ship, physical strength and stamina were as vital as ever to keep the ship afloat and save lives. In that respect we have to pay attention to both common sense and the facts.
Why do the Armed Forces exist in the first place? Whatever the goal of the Armed Forces is, everything that serves to accomplish the goal must be funnelled in that direction. Wherever men and women can serve that goal, fine. Where a lack of physical strength and stamina impede achieving the goal, then that should be the limitation. Where facts tell us otherwise, we have to maintain some measure of objectivity and not allow our feelings or the desire for rights to obliterate common sense completely. We have to let facts teach us. The war in the Falklands clearly suggests that we have to keep physical strength and stamina uppermost in our mind.


Svend Johannes Robinson: Women have that.


John Henry Reimer: I am also reminded of the Israeli experience. At one time they had to employ anyone they could, both men and women, to assist in their fight. Yet they also learned that when they placed men and women together in infantry units, the men would sometimes ignore the mission and attempt to protect the females beside them. The woman in charge of women in the Israeli Armed Forces commented that they had forgotten 5,000 years of experience and simple facts of human nature. I hope we will not forget those facts or the 5,000 years of experience. Therefore, yes, let us open up all of the trades and occupations in our Armed Forces to women so long as it is consistent with common sense, with the facts, and with the Armed Forces requirement to be operationally effective in the interests of national security.


Sheila Finestone: Mr. Speaker, I am pleased to rise and speak to the motion of the Hon. Member for Burnaby (Mr. Robinson) which reads as follows:
That, in the opinion of this House, the government should implement the recommendations of the sub-committee on equality rights of the Standing Committee on Justice and Legal Affairs:
(1)	That all trades and occupations in the Canadian Armed Forces be open
to women.
(2)	That Canadian Armed Forces practices relating to the employment and
promotion of women be monitored by the Canadian Human Rights
Equality Rights
Commission and that progress in revising policies in the manner we recommend be evaluated by the Commission at regular intervals.
It was my privilege to serve on the equality rights task force along with six other members of this House. Of the many issues we addressed, the primary one was of blatant discrimination based on sex. As we all well know, that is illegal under Section 15 of the Canadian Charter of Rights and Freedoms. The law says that people shall be treated equally. It is true that that is qualified for a justifiable reason. There must be an intelligent approach to decision-making, but it cannot be based on sex. It must be based on sound, reasoned arguments.
Before I go further on the question of women in the Armed Forces I must respond to the Hon. Member for Burnaby. I am sure he will agree that women pointed out time and time again during the committee hearings that their interest was in peace. They were against nuclear proliferation. They looked to this world for peace and security for all men and women. The view of most men and women in Canada is that we do not want to have to face the ongoing concern over conflicts around the world. We would like a peaceful world for our children and their children, where respect for differences is such that they are accommodated in a peaceful way, not with armed confrontation. However, it would be unreal for me to say that that is the picture of the world as it exists today. Therefore, as a sovereign nation we have an obligation and a responsibility to protect ourselves with properly equipped Armed Forces. We must participate in world peace-keeping forces and meet our moral and legal commitments to our allies around the world. In doing so we have to look at the world as it is and learn the lessons of history.
What have women been saying about their responsibilities as full partners in this society? The issue of women in combat roles was addressed in 1970 by the Royal Commission on the Status of Women. That commission recommended that all trades in the Armed Forces be open to women. After reviewing the recommendation, the forces set out to expand the role of women. The limit involved in a fixed numerical list was removed but employment restrictions were maintained for primary combat roles, remote locations and seagoing service. I know that many of my colleagues across the floor feel that those restrictions should be maintained, but that is not the wish of the women with whom we met. In 1979, the military colleges were open to women. In addition a series of trials were initiated to assess the effect that employment would have on service women in near combat or isolated units putting women into an operational capability. The results of those trials are still not in, but to date the Swinter trials indicate that women met all those obligations in a fine and upstanding manner.
I would like to know how many men would have done so in such difficult circumstances where there were so few women in these large masses and they were being examined through a microscope. I think any one of us would have been very disconcerted and uncomfortable if put in such a situation.

June 2, 1986
Equality Rights
My colleagues across the floor have gone to great lengths to tell us what is happening in other countries of the world, the percentages of who has what in what measure. I could give you all those measurements, all those numbers, all those statistics, but that is not the interest which I have with respect to women's rights and the equal access to job opportunities. The Liberal Party endorses the report's recommendations with respect to women's participation in all trades and all occupations in the Canadian Armed Forces. It is my Party's belief that sexual discrimination within the Armed Forces is unacceptable.
During our committee hearings we were told by the opponents of female participation that there was potential for adverse social and sexual relationships. Such arguments are highly reminiscent of the reasons used formerly to justify keeping women out of the paid workforce, and they were not valid then and they are less so now. What is needed is clear job definition, job description by unbiased leaders who understand how and what the Armed Forces have become in today's society.
I find it astonishing that the arguments on the limitation of the role of women in combat are based on such notions that combat is man's work. This is just the pattern of thinking that our Charter was intended to displace.
We are appalled by the arguments raised which justify sexual discrimination in the Armed Forces. That argument is that a potential enemy may regard mixed forces as less capable. That is completely hypothetical and undeserving of attention.
The problems that commanders, generals and senior army people have, or might have, with the uneven performance is absurd. I would suggest to you that either they are poor managers or they do not recognize that the same kind of uneven and inadequate performance is found in the males who also participate in the Armed Forces. That is a fallacious and specious argument. None of these arguments which they have used in the past are buttressed by evidence, but appear to stem from a bias against women and a desire not to disturb the status quo. I would suggest to you that those are not reasonable undertakings.
We find it astonishing that limitations on the role of women in combat are supposedly based on accepted social and cultural patterns which embrace the idea that combat, as I have said, is strictly a man's job. It is just such patterns of thinking that our Charter, and particularly Section 28, was intended to displace. If cultural acceptance is the litmus test for enforcement of a right, no one has any rights except at the discretion of the majority. That is not what was the intention of our laws of this land. Women are in combat roles in other countries, and they have proven that they can do the job.
I would like to point out that to deny women the right to combat is also to deny them the right to valuable employment opportunities, training and education, and promotion within the Armed Forces. I believe that view is totally unjustifiable
and does not allow women the right as citizens to protect their country.


Michael Morris Cassidy: I have to say I am surprised and upset by some of the comments made by the Progressive Conservatives in this debate, particularly since the wording of the Private Member's motion of my hon. friend from Burnaby in fact specifically repeats the recommendation which was unanimously put forward by the Subcommittee on Equality Rights, which was endorsed by five Progressive Conservatives, by the Liberal and by the New Democratic Member.
I draw to your attention the regrettable response of the Government which said, first, that it will ensure that women will be able to compete for all trades and occupations. It then undertook to pursue this policy vigorously, but then the weasel words were that it would be done in a manner consistent with the requirement of the Armed Forces to be operationally effective in the interests of national security.
We have heard apologies for the present policies of the Armed Forces, which are in contravention of the Charter, which are not sustained by any legislation, nor by an application before the courts for an exemption. We have heard those apologies from the Government Members, and I would say they do not hold water.
I am not sure whether I would encourage a daughter of mine to take a combat role in the Armed Forces of Canada if she desired to go into the Armed Forces. That is not the issue we are looking for. We are looking at the question of whether women will be treated as a group and stereotyped views, prejudgments will be made about what they should or should not do in the Armed Forces, or whether they should be treated as individuals.
If a woman lacks the necessary strength or other job skills or qualifications for a particular trade or occupation in the Armed Forces then she should not get it. Nobody is saying otherwise. What we are saying is that where a woman wishes to qualify, or take a particular trade, she should not be excluded from that trade because that trade is indirectly linked to combat, as is the case of some 30,000 positions in the forces right now. If a woman wishes to take a position which potentially could be combat related, she should be able to have that opportunity as well.
For many, many years people who trained for combat, in fact, functioned in the Armed Forces in peacetime conditions. They have to be prepared for combat, that is part of the job. They have to demonstrate their capacity for leadership, their courage, their ability to be promoted by what they do in both combat and non-combat roles.
When you deny women access to 70,000 positions in our Armed Forces, and that is some 70 per cent of the positions, which is the situation today, effectively they have nothing approaching equal rights in the Armed Forces of Canada.
If women were treated as individuals, you would then get a situation where a woman who was particularly tough, strong,
June 2, 1986

aggressive and motivated might decide that she wished to go into a combat role. Likewise, you might find a male in the forces who, perhaps, with other characteristics, wished to qualify as a cook or as a personnel officer or in some other position that perhaps was not related. The situation now is that women fill 25 per cent of the positions in the forces for which they are permitted to compete. We are creating, in other words, a job ghetto for women because before very long women will have filled all of the positions open to them and then they will no longer be able to increase their participation in the forces at all.
I would remind Hon. Members that in the RCMP where officers must constantly face the risk of danger, of violence on the part of criminals, we make no such distinction between women and men. Women officers take the same roles as males and, therefore, run the same risks of violence or injury as male officers in the RCMP. That is also true of women in the provincial and municipal police forces up and down this country. I would remind Hon. Members that there is no nuclear free zone in Canada where women might be hurt by the fall of a nuclear bomb. Therefore, as far as peacetime exposure to injury as a result of violent combat is concern, women are as vulnerable as men and civilians within Canada.
It seems to me that what is occurring here is that the Government is going to go along with the prejudices of people who are already in the Forces. The analogy has been given of the resistance of the American forces, perhaps ours too, to the integration of blacks into those forces after and during the Second World War. That was difficult at the time. It may be difficult to integrate women into certain roles in the Armed Forces today. Nonetheless, their success in the Armed Forces, and the fact that they are a relatively high proportion as compared to other Armed Forces indicate that this country has been a pace setter. Therefore, I ask why we must stop being a pace setter when it comes to giving equality rights to women in the Armed Forces of this country?
I suggest that the resolution put forward by my hon. friend, the Hon. Member for Burnaby (Mr. Robinson), is strong and positive. It has already been endorsed by Members from all Parties who have studied this issue closely. I would ask that all Parties support this resolution and allow it to become the declared policy of the House and of the Parliament of Canada.


Mr. David Daubney (Ottawa West):: Mr. Speaker, I am pleased to take part in this debate on the motion of the Hon. Member for Burnaby (Mr. Robinson), my colleague on the Justice and Solicitor General Committee. I am also pleased to speak as a result of my experience as a member of the former Standing Committee on External Affairs and National Defence. During our cross-country hearings last fall, when we went from one end of the country to the other, we had occasion not only to hear witnesses speak to the issue before our committee, we had occasion to visit a number of military bases in Canada as well as NORAD bases in the United States.
Equality Rights
From time to time, as part of the informal meetings with military personnel at those bases, I would ask both male and female members of the Armed Forces about this issue of women in combat roles. Frankly, I was surprised by the unanimity of opinion that was very much against any change in the status quo.
Therefore, I think it is important that we in the House examine the history and present status of women in combat roles in other jurisdictions when considering this motion.
The only modern experience of women being employed in combat in war was in the Soviet Union and Yugoslavia with the partisans during the Second World War and in Israel in the late forties. In all three cases, we were talking about a defensive situation. There was an enemy in the homeland and an over-all shortage of people to face that enemy.
In the case of Israel in 1948, women were withdrawn from combat after only three weeks. At the end of hostilities, the other countries withdrew women from combat without explanation, and that restriction still stands.

Today in the Soviet Union it is estimated that women make up less than .5 per cent of the armed forces, all in non-combat roles.

Armed Forces throughout the world, without meaningful exception, do not employ women in combat roles. Belgium, the Netherlands and Norway are the only three countries in the world known to profess unlimited employment of women in their Armed Forces. The percentages of women in the Armed Forces in these countries, interestingly enough, are respectively only 3.8 per cent, 1.4 per cent, and 1.2 per cent. These countries maintain their Armed Forces with compulsory military service, but, paradoxically, this conscription applies only to men. In June, 1985, in all three of those countries, there were only 18 to 30 women in what the Canadian forces would classify as combat occupations. Another 65 or so were serving with combat units but in non-combat occupations such as radar operators with artillery units.
Studies are presently under way in our country to determine the standards for performance of duties within each military occupation. These tests, and data from other Armed Forces, indicate that about 90 per cent of male applicants meet the most demanding physical requirements for combat, but that only about 2 per cent of women applicants would qualify physically. If women were required to serve in all areas of the Armed Forces, it would be necessary to impose gender-free physical selection standards on all members since both men and women would have to perform all of the military tasks in the Canadian Armed Forces, including the most physically demanding. While gender-free physical selection standards would broaden the scope of roles for women who could meet these higher standards, it would certainly result in a military career being denied to the majority of Canadian women.

June 2, 1986
Adjournment Debate
Under these circumstances, it is estimated that the total number of women in the forces would decrease by up to 75 per cent. This estimate is consistent with the data from Belgium, Holland and Norway, which have only about a quarter of the proportion of women in their Armed Forces that Canada has.
As other Members have indicated during this debate, the push-button war concept is a fallacy. Modern technology has not reduced the physical demands of warfare. In fact, in many ways those demands have been increased. Strength and endurance are more important than ever and medical information indicates that there are significant differences between genders in physical endurance and body strength. Thus, it would be difficult for most women to meet the physical standard requirements for duty in combat units.
Today, the modern soldier may be transported more quickly to his operational zone, but once there he must physically operate a wide range of weapons unheard of in former wars. As well, he must carry equipment that would enable combat operations to continue throughout hours of darkness, resulting in sustained high intensity operations with little respite. There were many cases in the Falklands where the ability to endure prolonged physical stress placed victory within grasp.
There are many non-combat trades which serve in combat units. Everyone must be able to perform the most physically demanding tasks. As the Hon. Member for Kitchener (Mr. Reimer) pointed out earlier this afternoon, the Falklands campaign showed the devastating effect of modern missiles. These missiles caused unexpectedly serious damage, which, in turn, increased the physical demands on the crews who had to deal with damage control. Every sailor, regardless of his trade, had to be physically able to contribute to the ship's survival. Operational effectiveness must remain the primary consideration in military personnel management. Failure to perform these physically demanding tasks could result in the loss of the ship and the lives of the entire crew.
There is no indication of significant interest from women for service in combat roles. Applicants have been a rarity. As I indicated in my opening remarks, women now in the forces demonstrate little desire for transfer to combat units. Women who served in non-combat field trials were unanimous in concluding that women should not serve in combat. As well, it should be noted that no witnesses who appeared before the Equality Rights Subcommittee did so to seek entry to a combat role for themselves.
Having said that, I want to address the motion of the Hon. Member and say that I personally have difficulty in supporting paragraph 1 of his proposal for the reasons I have outlined. However, I have no difficulty in supporting the second paragraph which calls for the employment and promotion practices of the Canadian Armed Forces to be monitored by the Canadian Human Rights Commission and that progress in revising policy in the manner recommended by the committee be evaluated by the commission at regular intervals.


Svend Johannes Robinson: Mr. Speaker, I rise on a point of order. In view of the fact that this Private Members' hour started after five o'clock as a result of ministerial statements, might it be appropriate to seek unanimous consent to extend the time so that there will be a full hour of debate and Canadians can hear the arguments being made by Members on the other side of the House? I would welcome that.


The Acting Speaker (Mr. Charest):: The Hon. Member for Burnaby (Mr. Robinson) is seeking unanimous consent.


Some Hon. Members:: No.


The Acting Speaker (Mr. Charest):: There is not unanimous consent.


Cyril Keeper: Mr. Speaker, I rise on a point of order. On a number of occasions when ministerial statements have been made in the House, the day has been extended. I understood that when a ministerial statement displaced Private Members' hour, the day would automatically be extended accordingly. Could you advise us about that, or consult with the Clerks?


The Acting Speaker (Mr. Charest):: Thank you for the great confidence in advising me to consult the Clerks.


Cyril Keeper: Excuse me.


The Acting Speaker (Mr. Charest):: It is my understanding that there was a special draft order for the statement that was made this afternoon by the Hon. Minister of Finance (Mr. Wilson) which referred to Standing Order 19(6) (a) but not to Standing Order 19(6)(b). My interpretation of that special draft order is that it did not provide that we extend hours. In this specific case, it is not my intention to extend hours.


An Hon. Member:: Good interpretation.


The Acting Speaker (Mr. Charest):: Order. It always embarrasses the Chair when one side of the House seems to want to give it its approval.

The hour allotted for Private Members' Business has now expired. Pursuant to Standing Order 42(1), this item shall be dropped from the Order Paper.



PROCEEDINGS ON ADJOURNMENT MOTION

[Stage Direction]
A motion to adjourn the House under Standing Order 66 deemed to have been moved.
June 2, 1986

Alan Redway: Mr. Speaker, as you are well aware, my constituency is an urban one. It is a constituency which one might describe as being located in the geographic heart of Metropolitan Toronto. Therefore, it is not a constituency in which there are farms or rural areas. Having said that, I want to make it quite clear that I and my constituents have a great deal of sympathy for the present-day plight of Canadian farmers. We are only too well aware of the great problems facing Canadian farmers and we understand, for instance, that western Canadian wheat farmers, in particular, but also Ontario wheat farmers, have to compete in the international wheat market with producers of wheat around the world, particularly producers of wheat in Europe and in the United States. We understand as well that the Europeans and the Americans subsidize their wheat. We know that as a result of those subsidies and that competition, the world price of wheat has fallen to something like $3.54 a bushel, which is approximately the price of wheat in 1974.
We know as well, and we have heard many times from Canadian western farmers, that the price of $3.54 a bushel does not cover their production costs. It is no wonder, then, we have farm bankruptcies of a very substantial nature. Understanding all these things, we sympathize as consumers and urban dwellers with the plight of the western farmers and believe there must be some aid and assistance for western farmers.
Having said that, I want to ensure that you, Mr. Speaker, and other Members of the House, understand that I and my constituents, as consumers, are also concerned about what impact aid for farmers may have on the consumers. We have just gone through a period of very substantial inflation. It seems to be over for the moment, thank goodness, but it was in the double digit range for quite some time, in fact, two or three years. Inflation is now below 4 per cent. It is a more stable inflation than at any time since 1971. However, when my constituents go to the stores, they find that prices are still going up. It is not a question of prices rising at the same rate as before. They do not go up every day the way they once did. However, there is still an inflation rate and prices are still rising.
Those price increases impact most severely on people with very modest incomes. My constituency is one in which the income levels range from one end of the scale to the other. I have a quite substantial number of very modest income earners in my constituency, so it is of particular concern that the price increases impact on people with small and modest incomes more severely than they do on others. It is also of particular concern that increases in the price of staple products, such as bread and white flour, impact most severely on those people with modest incomes. That is because they do not have a discretionary income which they can choose to spend or not spend on staple items.
Adjournment Debate
Having said all of that, we still understand and share the concerns of our western farm neighbours with the plight of raising wheat and trying to sell it at a lower cost than the cost of production. However, some of the suggested solutions cause us concern because we know that if we raise the domestic price of wheat, as has been suggested as a solution to the farmers' problems, that will impact on us as consumers, particularly because of the import restrictions on foreign flour imported into Canada. Because of those restrictions, the international price of wheat and flour cannot have any moderating effect on domestic prices in Canada.
As well, we have heard comments from the Canadian Federation of Agriculture, which assures us that a modest price increase in the domestic price of wheat will not impact severely on the price of a loaf of bread. In fact, it says that a $1 per bushel increase will mean only a 1.5 cent-increase on a 24-ounce loaf of bread and that a $3 per bushel increase will mean a less than 5-cent increase on a 24-ounce loaf of bread. At the same time, we also hear from the bakers that that will not be the case. They say that if the price of a bushel of wheat goes up by $1, it will cost almost five cents more to buy a loaf of bread and, if the cost of a bushel of wheat goes up by $3, it will cost some 15 cents more to buy a loaf of bread. There is a difference between the story we are hearing from the wheat farmers and the story we are hearing from the millers and bakers.
What is the reason for that difference? What is the answer? Obviously the answer is the middlemen, including the brokers, millers, bakers and retailers. We have a number of concerns about the middlemen. There are only a limited number of these people and, therefore, there is corporate concentration. There is a lack of competition in this area and that is reflected by the fact that Canadian millers' profits are 7.6 per cent of sales while U.S. millers' profits are only 1.8 per cent of sales. As well, we are concerned with the fact that when the price of wheat goes up, charges for middlemen increase on a percentage basis and not a flat rate basis. That may have been satisfactory in the past, but it is not satisfactory at the present time. You and I, Mr. Speaker, know that in many cases lawyers have had to give up percentage charges in favour of flat rates. It seems to me it is time the middlemen between the producers of wheat and the consumers of wheat do that as well.
I think there are answers to this problem. For instance, a special committee that is now studying the matter has before it an array of things that may be done. It may place controls on the situation, but there has to be an answer, and I am looking for that answer from the Parliamentary Secretary. I am looking for an answer that is fair to farmers but at the same time will not gouge consumers.


William Henry (Bill) Domm: Mr. COMMONS DEBATES
June 2, 1986
Adjournment Debate
Speaker, as the Hon. Member is aware, a special parliamentary committee has been appointed to consider wheat pricing. This committee is holding public hearings across the country at the moment. I would like to take this opportunity to urge interested citizens to make their views on possible impacts known to the committee and Members of Parliament.
The report of the committee is due on June 6, only a few days away, and I would not wish to prejudge the outcome of the very thorough investigation now being undertaken. Nevertheless, some very general comments on the issues raised by the Hon. Member's question are perhaps in order at this time.
The cost of raw materials has a limited weight in determining the final retail price of wheat-using products. The cost of flour itself has been estimated to be only 70 per cent of the value of bakery products, 8 per cent of biscuits, 30 per cent of dry pasta and prepared flour products, and only 5 per cent of breakfast cereals. However, due to the mark-up policies at each stage of production, price increases at the farmer level in certain circumstances can be passed on and exacerbated as they move through the processing retail chain. It is important for consumers, particularly low-income earners who are higher consumers of bread and cereals, that mark-ups be kept to reasonable levels. I am pleased the Hon. Member is conscious of that fact. It is also in the interests of wheat-using industries themselves which must compete in domestic and international markets.
The particular study which the Hon. Member quoted referred to the existence of a problem of concentration and hence excessive profit taking in the milling industry. It is my information that the data used in that study may not have been appropriate for this type of financial analysis and that consequently the level of profits in the Canadian industry may have been substantially overstated. Analysis undertaken on the basis of alternate data is available. It indicates profit levels in the milling industry which appeared to be much more in keeping with the rest of the food industry as a whole.
The Director of Investigation and Research under the Combines Investigation Act is also aware of the reports concerning profit levels in the milling industry. He will look into any information that its performance reflects conduct contrary to the provisions of the Act. I am confident that any Member of the House who receives information of such conduct in the flour milling industry would bring it immediately to the attention of the director.


GOVERNMENT EXPENDITURES-MONITORING OF EXAMINATION OF TASK FORCE OPTIONS.
Mr. Bill Attewell (Don Valley East):: Mr. Speaker, on April 28, 1986, I asked the Minister of Finance (Mr. Wilson) a question regarding Government expenditures and, in particular, how the process of examining the Nielsen task force options and recommendations would be monitored. After all, a
colossal amount of work was put into that project and it is essential that we reap the benefits.
The Nielsen task force, initiated on September 18, 1984, faced a gargantuan task in reviewing 989 programs and services in the federal Government, reflecting annual expenditures of more than $92 billion, including tax expenditures. Despite the complexity of its task, the task force had one year in which to complete its mandate. The huge report, tabled in the House on March 11, 1986, was the first ever attempt to present a comprehensive overview of what the federal Government actually does.
One of the most interesting elements of the study team report was that each team, whatever program area it was examining, identified several broad patterns which recurred frequently. These generic issues, as the report identified them, offer an interesting and at times rather disheartening view of how the federal Government has worked to date. The universal subsidy is a recurring theme in the study team reports, that is, subsidies through both tax provisions and direct expenditures. The study teams found that many subsidies were not warranted on economic grounds, aside from political considerations.
Another problem the study teams identified in respect of universal subsidy was that a vast array of Government programs had been developed which subsidized effort rather than success. Another generic issue identified by the study teams dealt with what they called the fiscal totality; in other words, a comprehensive overview of the total impact of expenditures.
New program proposals have not been examined within the broader context of Government expenditure. Therefore, government spending expands exponentially as new programs are added to old, and it becomes well nigh impossible to determine the precise financial interrelationships of new programs and old programs. I think these programs need some sunset provisions.
This has contributed to the view that government spending was out of control. Closely related to this lack of comprehensive overview of government programs and their impact is the lack of institutional memory. This can result in unnecessary duplication of programs and efforts and programs continuing after their usefulness has passed.
The study teams also identified other generic issues, such as inadequate program evaluation, shortcomings in the personnel system which provide few incentives to reduce organization size, and the pervasive force of the status quo. In all, the study teams identified issues which are pervasive throughout the federal Government and which seriously need addressing. The prevalence of subsidies and programs which reward effort rather than success is another element in federal programs areas which requires action.
The Nielsen task force has done a fine job on a difficult and complex task within a very short time frame. Not only did it identify specific program areas where changes can be affected,
June 2, 1986

but it identified the broader themes which underlie the specifics and which cannot be addressed by just one department, but which need the commitment of the whole Government to bring about the substantial changes in attitude and profit so desperately required to make the federal Government's programs and programs delivery more efficient, more effective and more responsive to the people of this country.
Some specific findings of the study teams, in addition to the more pervasive issues, included procurement. The study team noted that the federal Government spends more than $9 billion a year on procurement. This study team concluded that the Government can "spend smarter" by better managing the system currently in place and by increasing competitive tendering and promoting contracting out initiatives. The study team which examined services and subsidies to business subtitled their report "giving with both hands". This refers to an overly rich, overlapping industrial incentive program. This study team undertook 140 program reviews, encompassing 218 separate federal programs costing $16.4 billion in 1984-85, and involving more than 68,000 public servants.
The study team found that this incentive program needed rationalizing to allow Government input to be better targeted and to require sufficient private sector input. For example, federal assistance for any private investment from tax expenditures, ERDAs and grants should not exceed 50 per cent of a project's cost. These are just two of the hundreds of program areas examined by the study teams.
The many recommendations and options put forward by the task force deserve serious examination. The appropriate standing committees will be examining these options and, indeed, the Government had put into effect some recommendations prior to the publication of the full report. It is vital, however, now that we have a comprehensive overview of government programs, that the examination of the recommendations be monitored correctly, that the appropriate changes, especially with regard to the pervasive attitudinal ones, be made as quickly as possible. This should be done in order to improve services to the public, promote more efficient management, lighten the burden of bureaucratic regulations on all of us and, most important, lighten the load of the taxpayers in Canada who are sick and tired of a high taxation level on the one hand and poor programs on the other.
While I commend the efforts of everyone involved in this task force, I now strongly urge the respective committees to get on with dealing with those substantial recommendations and options so that we can save the people hundreds of millions in tax dollars.


Pierre H. Vincent: First, Mr. Speaker, allow me to thank and congratulate the Hon. Member for Don Valley East (Mr. Attewell) for his interest in following up the outstanding report
Adjournment Debate
tabled by the Deputy Prime Minister (Mr. Nielsen) and his team last March 11, as you know.
When tabling the 20 studies the Deputy Prime Minister had given-and the House followed that recommendation: each study was referred to the appropriate standing committee of the House. So the report on the study on agriculture was referred to the Standing Committee on Agriculture- transport, finance, consumer and corporate affairs, forests, environment, culture, and so forth. As you know, Mr. Speaker, each standing committee will hear witnesses, consider the studies in question, and eventually table in the House its major conclusions on the study.
A number of committees, including that of Agriculture, have already started and, as you know, each House Standing Committee has its own working schedule. It is the committee itself which will decide when it will hear the various witnesses, and on what it will report to the House of Commons later on.
In my opinion, Mr. Speaker, this is marvelous. It was part of the program which the Government had in mind, when elected on September 4, 1984, to make sure that all Members of the House are involved in the decision making process of all the policies involving Canada nationally.
Mr. Speaker, the Minister responsible for a particular dossier is only one of many parties involved and will have to follow the procedure established and the decisions made by the Standing Committee.
Mr. Speaker, I think therefore that we should be satisfied with the work that will be made by each of the Standing Committees, following the 20 studies tabled, and by the Standing Committee on Finance and Economic Affairs. I am sure that the Committee will make proper and timely decisions and then report to the House, and that both the Minister of Finance (Mr. Wilson) and its Department will consider the various recommendations with utmost interest.


REFUGEES-NEW DETERMINATION PROCESS. (fl) PORTUGUESE VISAS INQUIRY
Sergio Marchi: Mr. Speaker, I am pleased to pursue in this adjournment debate a question which I asked of the Minister of State for Immigration (Mr. McLean) on May 22, the day immediately following his announcement on the refugee determination process which he plans to establish. The Minister's announcement was followed by immediate criticism from the community.
I feel that the Minister and the Government betrayed the constituency, which led to the consultative process on the evaluation and establishment of a new refugee determination process. The failure was largely in three monumental areas. The first was the right of legal counsel to refugee claimants, the second on the question of universal accessibility which

June 2, 1986
Adjournment Debate
should exist for all refugees, and the third was the failure to provide a strong, effective and specialized appeal body.
On the weekend immediately following the announcement by the Minister in Toronto, the Standing Conference of Canadian Organizations Concerned for Refugees, which represents about 100 organization across the country, met to discuss the new policy. They passed a resolution which declared "non-confidence in the Government for its failure to respect the fundamental principles unanimously recommended by non-governmental groups across Canada-and for its failure to adhere to the rule of law as required by the Charter of Rights and Freedoms." The Standing Conference in Toronto was an example and a reflection of how most of the organizations, and indeed the Liberal Party, reacted to the question of the new refugee determination process.
On May 22 I asked the Minister specifically to give us his assurance and the assurance of his Government that these three areas which failed miserably to address the fairness and effectiveness in the system would be looked at once again in preparation for the legislation which the Minister intends to table in the House in the fall. Rather than having an arduous debate in the House and the country, we feel that these elements, which are nearly unanimously agreed to by the organizations, service clubs and churches serving the refugees, should be incorporated in the legislation before the Minister introduces it in order that it will be relevant and will be approved more quickly than it would be if a prolonged debate were required.
I want to speak briefly on three issues, the first being the right to legal counsel. At present the policy announced by the Minister is silent on this question. Nowhere in his statement or briefing notes does the principle become evident. There is a lot of concern and there has been a lot of criticism over the fact that presently a claimant does not have the right to legal counsel from the initial stages. This is wrong. It flies in the face of the Charter of Rights and our judicial system.
It is inconceivable that individual claimants can have used against them information they have given to immigration officers without the benefit of legal counsel. It was recommended by those groups which appeared before the standing committee that a claimant have the right to legal counsel from the beginning. The claimant would pay for counsel, but he or she had to have legal counsel available.
The second issue concerned the appeal procedure. The Minister recommended that the Federal Court of Appeal be the body of appeal. However, the Minister knows very well that the Federal Court lacks expertise in refugee law and an understanding of the situation in individual countries. As well, the mandate of the court precludes it from receiving new evidence, or reassessing the individual involved. In addition, the Federal Court of Appeal looks only at perhaps 7 per cent to 8 per cent of all cases. That is a minute number, and most of them end up being paper decisions. The Liberal Party, along
with other organizations, has called for a specialized refugee appeal board so that the individuals concerned might have the benefit of the doubt. If we do make a mistake, we would not be sending the individual back to the country where he was persecuted. Rather, we would have a specialized board to deal with the situation in a very humane way.
The last point deals with accessibility. Universal accessibility does not exist, and we hope the Minister will address that point as well as the others I have raised. I notice you are telling me that my time is up, Mr. Speaker. I look forward to the Parliamentary Secretary to the Minister assuring this House and the community at large that this review will take place and be reflected in legislation.


Pierre H. Vincent: Mr. Speaker, I am pleased to deal with a subject which differs slightly from those with which I deal usually. If I may, before I address directly the issue raised by the Hon. Member for York West (Mr. Marchi), I should like to point out that in its remarks, he mentioned that the Liberal Party of Canada had made a number of recommendations, done this or that over the past two years. If only the Liberal Party of Canada, while in power, had done something about this issue, it might not have today to take its current position.
Mr. Speaker, the right to counsel is already provided for under the current procedure for claiming refugee status and will be reconfirmed in the legislation dealing with the new refugee determination process. This is a matter that is more concerned with immigration procedures than with recognition of refugee status. The point the Hon. Member for York West is concerned about is the right to counsel at a secondary examination, that is, before the inquiry. The Hon. Member is concerned about having counsel present at the examination at port of entry, which examination is aimed at determining, for Immigration purposes, the eligibility of any person seeking to enter Canada. At this stage no counsel is permitted to be present, since claimants are sent all the information collected at that time so they can tell their side of the story if the information is used against them at the Immigration inquiry.
The matter of unrestricted access to a hearing did not meet with unanimous consent. However, nearly all observers agreed that matters of credibility should be assessed at the end of a hearing by the adjudicator. However, we have no obligation to allow access to individuals who do not require protection and when there is no need to evaluate the facts on their credibility. Two of the proposed restrictions on access-in the case of individuals who submit the same claim again and those who are under a removal order-are now in effect as part of an access system that is considered to be universal. The two other restrictions would apply to individuals who have exceeded the prescribed period or are already protected by another country. These criteria can be applied objectively on the basis of documentary evidence. However, there is provision for hearing these claims in cases where the situation changes. In addition, the right of access to the new refugee determination process
June 2, 1986

will be explicitly provided in the legislation for people arriving at entry points and who might need Canadian protection.
In its fifth report, Mr. Speaker, the Standing Committee on Labour, Employment and Immigration concluded that a second review of the merits of the application is not necessary. The superior quality of the hearing on the merits of the application, a hearing generally favourable to the claimant, makes a second review redundant. Instead, any person whose application is rejected by the refugee determination committee will have the right, if so authorized, to appeal to the Federal Court of Canada. Mr. Speaker, quality rather than quantity ensures fairness.
The current process does not work out well precisely because it provides for too many review levels. The proposed process will be far superior to the current practice and will be second to none worldwide. In addition provisions are made to re-open the case of people whose situation has changed. Finally, we must keep in mind that this refugee determination process will not be the only recourse available. This process has been established to take into consideration the generous provisions concerning the special re-examination of cases for humanitarian reasons, and Canada's policy is not to deport applicants to countries which are experiencing serious troubles or which violate human rights.
Adjournment Debate
Finally, as concerns visas for the Portuguese, a decision to remove the dispensation from a visitor's visa in the case of Portuguese citizens must not be taken lightly. The requirement for a visa is imposed only when we are convinced that there is no other solution.
After careful study of this problem with members of Cabinet and representatives of the Portuguese community, it was decided that it would not be appropriate to require a visa for the moment. There is no need for the Government to apologize for action which was never taken. Following discussions with representatives of the Portuguese community, a pilot project was implemented to help the immigrants to become more familiar with the process and reduce the risk of exploitation. The Government will continue to monitor the situation closely and will take other action if required to put an end to the abusive utilization of the refugee determination process. Thank you for your understanding, Mr. Speaker.


The Acting Speaker (Mr. Charest):: 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 6:34 p.m.
[Stage Direction]

Tuesday, June 3, 1986