1986-02-26

Hon. Bob Kaplan (York Centre):: Mr. Speaker, I want to take advantage of this brief intervention to correct an ethnic slur which I inadvertently put on the record of this House on January 13. On that day, as reported at page 9719 of Hansard, I accused the Minister of Regional Industrial Expansion (Mr. Stevens) of welching on his commitments to the country. A citizen, perhaps a member of a Welsh-Canadian community, has written to me demanding a retraction.
There is some doubt about whether the word "welch" derives its origin from the inhabitants of Wales. The pejorative use of "welch", for example, is never capitalized, and The Greater Oxford Dictionary does not associate the nationality and the pejorative. However, Webster's Third Edition suggests an association-


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


Some Hon. Members:: Oh, oh!


THE ADMINISTRATION
Mr. Lome Nystrom (Yorkton-Melville):: Mr. Speaker, each day more and more Canadians are becoming more and more disappointed with the Prime Minister (Mr. Mulroney). I have an example that I want to share with the House. Bill Neville, whom you know as a long-time Conservative Party activist, recently told Maclean's magazine: "This Government is a little unclear even on the basic direction ... the issue is, where is this Government going?" Angus Maclssac of Pictou, Nova Scotia, said: "I've voted tory all my life . . . I'll never make that mistake again." We also have the president of a large corporation who told columnist Hy Solomon of The Financial Post that the Prime Minister "is an insubstantial man ... he borders on being less than upright and forthright." Then we have the Mayor of Pictou, Nova Scotia, an area which the
Prime Minister represented at one time, who said: "Everybody's disappointed".
The list gets longer and longer every day, and with the Budget today I suspect that will continue as more Canadians regret that one-night stand back on September 4, 1984.


Mr. Speaker:: Order, please. The Hon. Member for London East (Mr. Jepson).


ADMINISTRATION OF JUSTICE
Mr. Jim Jepson (London East):: Recently in my riding of London East, a London police constable was shot in cold blood. The accused man in this incident was out on $25,000 bail on charges of possession of LSD and cocaine for the purposes of trafficking, and for possessing a restricted handgun. The accused has a criminal record going back to 1971.
It is travesties like this that we are seeing on an almost weekly basis in our newspapers and on television. They clearly indicate the need for tougher bail and parole laws for violent offenders.
On a related note, statistics show that over 15 per cent of parole and mandatory releases are revoked because of a further offence, frequently of a violent nature. It seems to me that we are living in a day and age when the rights of criminals are protected far better than the lives and safety of their victims. Mr. Speaker, this must be changed.


PAGES BEAT MEMBERS IN ICE HOCKEY
Mr. Moe Mantha (Nipissing):: Mr. Speaker, I have but a small report to make. When we played our hockey game last night against the pages, we were given a sound trashing: 11 to 10 for the pages!

Mr. Speaker, last night at the annual hockey match between the Pages and the Members of Parliament it was discovered who truly runs the House of Commons, even though as sub-servants the House of Commons Pages delivered a hard

February 26, 1986
fought defeat to the brave parliamentarians. I must say this was a case of the Tories and the Liberals getting together. I don't know about the socialists, but it seems they do not believe in sport. Despite the on-ice rivalry affection and cooperation do and always will exist between the Members and the Pages. The extreme effort put forward by the Pages to defeat us is only characteristic of the same effort they put forward to serve this House. Mr. Speaker, I will also say that the referees were good.


Mr. Speaker:: Order, please. The result was predictable.


Some Hon. Members:: Oh, oh!


Mr. Speaker:: The Hon. Member for Hamilton East.


Ms. Copps:: Mr. Speaker, my only regret was that I was wearing Jelinek skates.
(


UNEMPLOYMENT INSURANCE
Sheila Maureen Copps: Mr. Speaker, today is a day that all Canadians are going to be watching Mr. Wilson, and watching the federal Government to see what kind of relief it brings for Canadians in the form of the Budget. I want to serve notice to the Prime Minister (Mr. Mulroney), to the Minister of Employment and Immigration (Miss MacDonald) and to the Minister of Finance (Mr. Wilson) that steel workers, former steel workers, Armed Forces personnel, former Armed Forces personnel, former secretaries, and all laid-off Canadians want the Government to change the punitive regulations that it has developed with the Unemployment Insurance Commission.
Michael Wilson brought in this cruel measure in November, 1984. Today is the chance that he has to take it back. We beg you, Mr. Prime Minister and Mr. Minister of Finance, revoke these unfair measures for the sake of all Canadians.


BALTIC EVENING
Mr. Ernie Epp (Thunder Bay-Nipigon):: Mr. Speaker, tonight was to be the fourteenth Baltic Night on Parliament Hill. Michael Wilson, although Minister of Finance, continued to chair the committee that plans this annual event. He presided over the luncheon meeting on December 11 which considered arrangements for this year's dinner and entertainment. Persons resident outside, as well as in Ottawa, made plans to attend Baltic Night, only to learn last week that the event had been postponed because of budget night.
Members of our ethnoculural communities often feel neglected by Government. National policies seem to take
precedence over their own concerns, and those who appear sympathetic to them in social settings pursue the "dictates of government" with little regard for ethnocultural concerns. The postponement of Baltic Night is one more unfortunate instance of this lack of sensitivity.


Mr. Speaker:: Before we proceed may 1 remind Hon. Members that any reference to another Member by name is out of order.


THE ECONOMY
Mr. Don Ravis (Saskatoon East):: Mr. Speaker, over the last decade or so there has been a phenomenal growth in the level of deficits. The growth started under a former Minister of Finance, the Right Hon. Member for Vancouver Quadra (Mr. Turner). If, according to Liberal and NDP doctrine, deficits create jobs, why is it that we inherited almost 1.5 million unemployed when we took office? The truth is that deficits rob us of financial, social, and human resources. Moneys used to pay interest on outstanding debt are not available to create jobs or to finance social programs.
I would like to bring to the attention of the House figures released recently by the Minister of Finance (Mr. Wilson). In November, 1985, the budgetary shortfall dropped by $64 million compared to November, 1985. More important is that for the first eight months of the current fiscal year the deficit is down by $229 million compared to the same period in the last fiscal year. This represents a reversal of the trend established by the successive Liberal Governments which pushed ever increasing deficits onto the backs of Canadians and nearly destroyed our economy.


Mr. Speaker:: I would like to advise the Member his time has expired.


IMPORTANCE OF BILATERIAL NEGOTIATIONS WITH UNITED STATES TO INCREASE COMMERCIAL EXCHANGES
Mr. Clement M. Cote (Lac-Saint-Jean):: Mr. Speaker, I have difficulty understanding the attitude of Opposition members who for the past several months have been opposing the free trade negotiations which aim at creating new jobs and protecting existing ones in Canada.
Although our lumber is now entering the United States duty free, American producers tried on two occasions these past few years to convince the Congress of the need to impose countervailing duties. Hence, the importance of our bilateral negotiations with the United States on trade development.
February 26, 1986

Last year, Mr. Speaker, the Canadian production of softwood increased by 7.8 per cent to a record level and that of hardwood, by 14 per cent. It is easy to understand the importance of this market when we realize that we export 65 per cent of our sawn lumber to the United States.


SOCIAL SECURITY
Mr. Jean-Claude Malepart (Montreal-Sainte-Marie):: Mr. Speaker, the Conservative Government will know another dark hour at 4:30 this afternoon.
Everyone will recall that, less than one year ago, our senior citizens were savagely attacked by this Government and this Prime Minister. They will also recall that the sick were savagely attacked by a 10 per cent tax. In addition, mothers still remember the deindexing of family allowances and they are here to protest on the Hill before the Senate to urge the Government to reverse its decision on Bill C-70.
Mr. Speaker, I would like to assure all the Hon. Members that, this afternoon, representatives of family organizations, senior citizens and the Anti-Poverty Council will be on Parliament Hill to make sure that they will not be had by this Government as they were last year and to make comments-


EXTERNAL AFFAIRS
Mr. Benno Friesen (Surrey-White Rock-North Delta):: Mr. Speaker, 18 years ago, in the summer of 1968, the people of Czechoslovakia, particularly in Prague, were celebrating what was for them a real breath of freedom and democracy in that city.
In the name of the people, the state moved in its tanks and crushed that enthusiasm and crushed their freedom. Thousands were killed in that expression.
Two days ago, half way around the world, in the city of Manila, thousands of people were in the streets celebrating what for them was a new expression of freedom in their land. Again, the tanks moved in. But what a difference. It was not the state but people power at its best. It was people power in the wholesome and refreshing expression of freedom.
We must take note of the contrast, and give credit where credit is due, and pay tribute to the pacifist way in which the new President has expressed her view of democracy.


Mr. Speaker:: Order. The Hon. Member's time has expired.


CROWN CORPORATIONS
Mr. Howard McCurdy (Windsor-Walkerville):: Mr. Speaker, Bata Shoes Limited has been condemned for its labour practices in South Africa and for its failure to adhere to the Government's voluntary code of conduct. Now the Bata Foundation is seeking to enhance the tarnished image of the shoe company by seeking free land from Harbourfront, a federal Crown corporation, on which to erect a shoe museum.
The proposal must be rejected as the only course of action consistent with the request of the Secretary of State for External Affairs (Mr. Clark) that Canadians take their own action to express their revulsion against apartheid. For the Government, its Departments, agencies, and Crown corporations to fail to follow the same course would be manifest hypocrisy. Nor is it appropriate that a federal employee should be seconded to Bata as an advocate for a name which, in South Africa, stands for injustice.


THE ECONOMY
Mr. William G. Lesick (Edmonton East):: Mr. Speaker, today the Minister of Finance (Mr. Wilson) will bring down his second Budget. Perhaps for the first time in many years Canadians will realize that the difficult task of rebuilding our economy will take the collective efforts of everyone.
Canadians realize that there are no quick fixes. They realize that the Budget will provide an environment for building security for the future.
The Government is providing profound leadership in the affairs of our nation. Clearly, the Government has a responsibility to demonstrate serious commitment to deficit reduction, but the success of the goal is dependent upon the courage and will of Canadians to realize that everyone must play a role and take a fair share of responsibility.
The future can indeed be a bright one if all Canadians work together. Fiscal responsibility has begun under the Government, and it will continue until we have balanced our books and achieved success.


UNEMPLOYMENT IN NEW BRUNSWICK-GOVERNMENT'S DECISIONS
Mr. Fernand Robichaud (Westmorland-Kent):: Mr. Speaker, two weeks ago, I referred to the fact that unemployment in New Brunswick had increased to 15.3 per cent. There is now no indication that things will improve.

February 26, 1986
Oral Questions
Let us take for example a component of the Challenge 86 Program, namely Summer Employment Work Experience.
In 1985, New Brunswick received $4.8 million. In 1986, this province will receive only $4.2 million, or $600,00 less, which means a loss of 300 jobs next summer. I must now wait for the applause to die down-
The decisions of the Government to abolish and cut back programs do not reflect reality. It is to be expected that these bad decisions will make the under-employment problem among young people in New Brunswick even worse.



ORAL QUESTION PERIOD


Mr. Don Boudria (Glengarry-Prescott-Russell):: Mr. Speaker, my question is directed to the Deputy Prime Minister and it concerns what could be, indeed, a very serious potential budget leak. Can the Deputy Prime Minister give his assurance to the House here and now that no unauthorized persons, other than the two representatives of his caucus who are presently sitting in the lock-up, have been able to see the Budget for the purposes of preparing the communications document and the question and answer document that will be handed out later this afternoon to members of the Conservative Party sitting in this House?


Hon. Barbara McDougall (Minister of State (Finance)):: Yes, Mr. Speaker


Some Hon. Members:: Yes what?


Mr. Speaker:: Supplementary question?


Some Hon. Members:: Oh, oh!


PREPARATION OF BUDGET
Don Boudria: Mr. Speaker, I wonder whether this means that yes, everybody saw it or that nobody did.
Perhaps the Minister did not understand the question. Let me repeat: Is the Minister trying to tell the House today that this year's documents are similar to last year's, when they were about an inch thick, and that these documents were prepared by two researchers, without the help of a typist, in four hours spent in a parliamentary lock-up, and that nobody else saw these documents?
Is that what the Minister is telling us today?


Barbara Jean McDougall: Mr. Speaker, the Hon. Member has a little problem with his English. He asked if I could assure him of something and I said "yes".


Don Boudria: It's better than your French. You may want to withdraw that later.


Mr. Clark (Yellowhead):: Back to the gutter.


Mr. Speaker:: Order, please. The Hon. Member for Saint-Jacques.


Mr. Guilbault (Saint-Jacques):: 1 have a question for the Deputy Prime Minister.


Mr. Nunziata:: We don't criticize your French Members.


Mr. Speaker:: Order, please.


PUBLIC RELATIONS CAMPAIGN
Jacques Guilbault: Mr. Speaker, my question is directed to the Deputy Prime Minister. In view of reports concerning what appears to be a rather massive campaign by the Government to sell its Budget to the Canadian people, would the Deputy Prime Minister tell us how many outside consultants have been hired by the Government to help it in its job of trying to get the Canadian people to agree with the Budget?


Mr. Hnatyshyn:: The Minister of Finance.


Miss MacDonald:: All Canadians.


Hon. Erik Nielsen (Deputy Prime Minister and Minister of National Defence):: Mr. Speaker, there are in this House of Commons 211 Hon. Members who support the Government-


Mr. Blackburn (Brant):: Sometimes.


Erik Nielsen: -and each and everyone of those Hon. Members, once the Budget has been delivered, will be very active in ensuring that the Canadian public is fully informed and consequently supportive of all of its measures.


Jacques Guilbault: I, too, thought that the Tory Members would get active in trying to sell the Budget, but the Deputy Prime Minister went completely away from my question, Mr. Speaker.


CONSULTANTS INQUIRY
Jacques Guilbault: I am asking the Deputy Prime Minister whether outside consultants were hired by the Government and paid with taxpayers' money to prepare some communication scheme, perhaps to be used by Tory backbenchers? Were there outside consultants hired by the Government?


Mr. Gauthier:: Answer the question.
February 26, 1986


Erik Nielsen: Mr. Speaker, the hon. gentleman is asking me whether outside consultants were hired by the Government for the purpose of budget preparation.


Some Hon. Members:: No.


Mr. Ouellet:: Publicity. Answer the question.


Erik Nielsen: The answer is, no. The last time I can recall that having occurred, or a similar circumstance having occurred, was when Mr. Walter Gordon was Minister of Finance.


Jacques Guilbault: Mr. Speaker-


Mr. Speaker:: I cannot, 1 am afraid.


Some Hon. Members:: No.


Mr. Speaker:: The third question is usually reserved for the First speaker or the Leader, with respect. I am sorry.


André Ouellet: Is this a new rule?


TEXTILE INDUSTRY
Mr. Cyril Keeper (Winnipeg North Centre):: Mr. Speaker, my question is directed to the Minister of Regional Industrial Expansion.
On January 27 of this year, the Minister of Consumer and Corporate Affairs met with the survival committee for the textile and clothing industry in the Eastern Townships, and informed the committee that the Government was going to make a decision at the end of February, further to the report by the commission on clothing and textiles.
Considering the Government's promise, could the Minister inform the House when and in what way the Government intends to act on these recommendaitons and prevent the loss of between 50,000 and 60,000 jobs?


Hon. Andre Bissonnette (Minister of State (Small Businesses)):: Mr. Speaker, a few months ago, 1 met with people from the textile industry in Sherbrooke. I met with them here in Ottawa, 1 met with them at Saint-Jean in my riding, and the Government is very much aware and very concerned about the problems in this industry.
As you may have noticed, Mr. Speaker, in the last fifteen months we have already created 550,000 jobs in Canada,
Oral Questions
many of these in Quebec. We are going to keep on working very hard to create jobs in all areas and all sectors.


MAINTENANCE OF JOBS
Cyril Keeper: Mr. Speaker, I have a supplementary for the Minister of Regional Industrial Expansion.
Is the Minister aware of the position of the President of the Canadian Textile Industry who has accused the previous and present Governments of flagrant incompetence because they failed to use their authority under the GATT to save the jobs that were lost?
And when is the Minister going to announce quotas to save Canadian jobs?


André Bissonnette: Mr. Speaker, negotiations between the textile industry and the Government of Canada are still going on.
As the Hon. Member mentioned, we have had several meetings and we expect to have more. As soon as the policy has coalesced, we intend to make it public.


REQUEST THAT GOVERNMENT INTERVENE
Cyril Keeper: Mr. Speaker, the Prime Minister has referred to the textile industry as one of Canada's key industries.
When is the Government going to act to save the jobs being threatened in Quebec?


André Bissonnette: Mr. Speaker, when we consider the number of jobs we have created in Canada and Quebec in the last fifteen months, I think we ought to be proud we are Canadians and have one of the best economies in the world.
Mr. Speaker, it cannot be said often enough that 580,000 new jobs in fifteen months is quite an achievement.


Mr. Speaker:: Order. This is starting to sound like a Minister's statement. The Hon. Member for Saint-Maurice.


SPACE WEAPONRY
Hon. Jean Chretien (Saint-Maurice):: Mr. Speaker, my question is for the Deputy Prime Minister. The President of the United States has sold the star wars package to the Government by saying that it will make nuclear weapons impotent and obsolete. However, we have learned this week

February 26, 1986
Oral Questions
that the nuclear power and weapons research budget for star wars has been doubled to S603 million. Does the Government still support star wars, which was supposed to make nuclear weapons obsolete, but which we now learn is moving us into a third generation of nuclear weapons?


Erik Nielsen: Mr. Speaker, the position of the Government with respect to SD1 has been stated time and time again in the House by the Prime Minister, by the Secretary of State for External Affairs, and by myself. The position has not changed one iota.


GOVERNMENT POSITION
Joseph Jacques Jean Chrétien: Mr. Speaker, would the Deputy Prime Minister tell us whether the Government still considers it advisable to go ahead with the star wars program now that we have just learned with stupefaction that right now the star wars program in the United States is bringing us ever closer to a third generation of nuclear weapons and global holocaust?


Erik Nielsen: The supplementary question does not alter the answer to the first question. The position of the Government has been clearly stated repeatedly, and that position stands today.


AUTOMOTIVE INDUSTRY
Mr. John Parry (Kenora-Rainy River):: Mr. Speaker, my question is for the Minister of Regional Industrial Expansion. During my February 14 meeting with the Sainte-Therese GM workers they told me they were concerned about the possible loss of 4,000 jobs. Contrary to its position announced in January, is the Government now prepared to deal seriously with this issue in an attempt to find a solution with GM?


André Bissonnette: Mr. Speaker, the GM workers are holding consultations with the Department of Regional Industrial Expansion. As Hon. Members would know, a number of investments might be forthcoming and we hope that all GM workers will keep their jobs and, better still, that new investments will create additional jobs, as is now the case throughout Canada.


POSSIBLE CLOSURE OF GM PLANT AT SAINTE-THERESE- GOVERNMENT POSITION
John Edmund Parry: A supplementary question, Mr. Speaker. Since GM management have admitted that consideration is being given to closing down their Sainte-Therese plant, will the Government simply let them go ahead or will it take steps to protect those Quebec jobs through a fair redistribution of the automobile industry in Canada?


André Bissonnette: As you may have noticed, Mr. Speaker, the last 15 months have been highlighted by huge investments in the automobile industry. Several companies have shown interest in Canada because they believe that our country is a good place to invest. I am convinced that GM management as well will bank on Canada's brightening prospects and the know-how of our topnotch labour force.


AVIATION INDUSTRY
[Stage Direction]
Hon. Warren Allmand (Notre-Dame-de-Grace-Lachine
East): Mr. Speaker, I have a question for the President of the Treasury Board. A week ago, the Minister announced a major plan to save and create jobs in Montreal, namely 1,400 jobs at SPAR Aerospace. How does the Minister explain that since his announcement, SPAR has been laying off people, 65 since November, and 20 more in the near future? When he launched that program with SPAR, was SPAR really committeed to creating 1,400 jobs and stopping those layoffs-
Mr. Speaker:: Order, please. It is becoming a little long. [Translation]


André Bissonnette: As you may have noticed, announcement of 1,400 jobs made in Montreal by SPAR will always make Members opposite feel somewhat jealous. They ruined Montreal during the last 10 years, Mr. Speaker, and the minute we come up with any announcement that is decent, that has some drive, they try to ruin it.
The SPAR Corporation put forward a program that is spread over a few years and I am sure, Mr. Speaker, that what has been announced in terms of job creation, will be delivered.


JOB CREATION-GOVERNMENT POSITION
[Stage Direction]
Hon. Warren Allmand (Notre-Dame-de-Grace-Lachine
East): Mr. Speaker, the Government has not answered the question. Is SPAR going to lay off hundreds of workers one
February 26, 1986
[Stage Direction]
month and then re-employ them several months later and call that job creation? Is that what the Government means by job creation?
André Bissonnette: Mr. Speaker, I will not go as far as raising the issue of the way they handled the Bell Helicopter matter when they made their announcements. That is not the way we work. SPAR has announced jobs, and we will make sure that these are actually provided.


UNEMPLOYMENT INSURANCE
Mr. John R. Rodriguez (Nickel Belt):: Mr. Speaker, my question is for the Minister of Employment and Immigration and relates to the change which came about on January 5, 1986, whereby pension income is now considered earned income for unemployment insurance purposes. When this was asked before in the House, the Minister said that she was waiting for the Forget Commission-


Mr. Speaker:: This is now a second statement. Question please.


John R. Rodriguez: Will the Minister ask the Forget Commission to give an interim report on this particular issue as it is affecting many unemployed Canadians right across the country?


Flora Isabel MacDonald: Mr. Speaker, I will be glad to receive the recommendations of the Forget Commission when they are put before me.


POSSIBLE FORGET COMMISSION RECOMMENDATION
John R. Rodriguez: Mr. Speaker, my supplementary question is directed to the same Minister. If and when the Forget Commission reports in the fall and recommends that this change should not have been put into place, will the Minister assure all unemployed Canadians who are disentitled as a result of the change that they will in fact be able to collect their unemployment insurance from January 5, 1986, to the present?


Flora Isabel MacDonald: Mr. Speaker, indeed the Government will study with care all the recommendations that the Forget Commission makes to us.


Some Hon. Members:: Oh, oh!


John R. Rodriguez: That is no good.
Oral Questions


INDUSTRY
Jean-Claude Malépart: Mr. Speaker, I have a question for the Minister of Regional Industrial Expansion. When the Minister announced that unfortunate decision in Montreal to allow the transaction between Gulf and Ultramar to go through, he did not have the O'Farrell Report available. In view of the fact that the document has now been made public by the Minister, is he ready to admit that at that point he took Quebecers for a king-size ride, because it is clearly stated in the report there is a refinery under-capacity in Quebec, and the shutting down of Gulf will be affecting consumers?


Hon. Sinclair Stevens (Minister of Regional Industrial Expansion):: Mr. Speaker, I note in the various questions which have been put to us by the allied Parties over there in opposition that there has not been one mention to date of the 60,000 jobs which have been created in Montreal in the last 12 months.


Some Hon. Members:: Hear, hear!


Sinclair McKnight Stevens: In direct answer to the Hon. Member's question, the answer is an abrupt no, because that is not what the report said.


INQUIRY WHY GOVERNMENT DID NOT MAKE O'FARRELL REPORT PUBLIC BEFORE MAKING DECISION
Jean-Claude Malépart: Mr. Speaker, the Minister's defensive attitude definitely shows he feels guilty. Will the Minister tell us why his Government refused to make public that report blaming his Government, before making a decision? Why has it not bee made public?


Sinclair McKnight Stevens: Mr. Speaker, in reply to the Hon. Member, I will never feel guilty in this House or before the Canadian public for the creation of 60,000 jobs in Montreal over 12 months.


CANADIAN SECURITY INTELLIGENCE SERVICE
Abram Ernest Epp: Mr. Speaker, my question is for the Solicitor General. Undoubtedly the Minister is aware that reporters for The Globe and Mail have, several times recently, used allegations which they credited to officers of the Canadian Security Intelligence Service to make sensa-

February 26, 1986
Oral Questions
tional charges against foreign consular officials. Has the Minister authorized this release of information-or is it disinformation-to the press, without regard to its effect on good relations within as well as outside Canada?


Hon. Perrin Beatty (Solicitor General of Canada):: Mr. Speaker, first of all let me thank the Hon. Member for a very serious question. As the Hon. Member will know from reading the article in question, The Globe and Mail attributes the information to unnamed sources and not to CSIS. I can indicate that in the interview which was given by CSIS to The Globe and Mail no specific reference was made to specific embassies or consular activities in Canada of specific consulates in Toronto, for example.


MINISTER'S POSITION
Abram Ernest Epp: Mr. Speaker, the story in The Globe and Mail refers specifically to Gerry Cummings of CSIS and is quite specific in dealing with consular officials. Will the Minister put a stop to this kind of unauthorized leak of information in order to restore good relations among ethnocultural groups in the country?


Henry Perrin Beatty: Mr. Speaker, it is quite true that an officer within CSIS gave an interview to The Globe and Mail.


Mr. Deans:: Why?


Henry Perrin Beatty: What the Hon. Member will see from reading the article is that reference was made to a series of consulates within Toronto; a series of countries were mentioned. It was not the intention of CSIS to refer to specific countries, which it did not do. The information in The Globe and Mail refers to specific consular activities of specific countries. They are its choices, not those of CSIS.


INCOME TAX
Mr. Alfonso Gagliano (Saint-Leonard-Anjou):: Mr. Speaker, my question is directed to the Minister of National Revenue and concerns taxable interest income. Millions of dollars of income tax are lost because investment dealers do not include interest income from Treasury bills in the T-5 forms. Could the Minister tell the House what he is doing to correct the situation?


Hon. Elmer M. MacKay (Minister of National Revenue):: Mr. Speaker, as the Hon. Member knows, there have been consultations with the Canadian Investment Dealers' Association in an attempt to improve the situation. There is no specific legal requirement at the present time for this T-5 slip to which he referred. I am confident the situation will be improved in upcoming months.
[ Translation]


INTEREST INCOME-INCLUSION IN TAX FORMS-MINISTER'S POSITION
Alfonso Gagliano: Mr. Speaker, will the Minister give this House the assurance that for the
1986	fiscal year such interest income will be included in the T-5 statements as prepared by stockbrokers?


Elmer MacIntosh MacKay: Mr. Speaker, I have great respect for my hon. friend opposite, and I will take this as a very serious representation.


INDIAN AFFAIRS
Lorne Edmund Nystrom: Mr. Speaker, my question is directed to the Minister of Indian Affairs and Northern Development. At a meeting last September 24 with the Prime Minister and the two Ministers whom he appointed to represent him in the bilateral process, the Prairie Treaty Nations Alliance tabled a document entitled "Canada-lndian Nations Relationships" and three memoranda of agreement. Why has the Minister of Indian Affairs and Northern Development and the Minister of Justice not met with the Prairie Alliance since that time? Could he also tell us what is the status of the documents which were tabled last September 24?


Hon. David Crombie (Minister of Indian Affairs and Northern Development):: Mr. Speaker, the meeting which we had with the Prime Minister was a very good one. A number of matters were raised, and they are still under consideration.


REQUEST FOR MEETING WITH MINISTERS
Lorne Edmund Nystrom: Mr. Speaker, could the Minister tell the House when the Prairie Alliance can expect another meeting with the Minister of Indian Affairs and Northern Development and the Minister of Justice so that they can proceed as agreed with the Prime Minister last September?


David Edward Crombie: Mr. Speaker, the process for the development of the constitutional forum which is occurring in
1987	is one that involves a number of people and a number of meetings. We will begin the process involved over the year, and at the appropriate time we will meet with the Prairie Treaty Nations Alliance.
February 26, 1986


EMPLOYMENT
Donald Paul Ravis: Mr. Speaker, my question is for the Minister of Employment and Immigration. I am concerned, as we all are in the House, with youth unemployment. Could the Minister inform the House what impact the new Canadian Jobs Strategy is having on long-term jobs for youth?


Flora Isabel MacDonald: Mr. Speaker, one of the better statistics we have seen in the last year is that some 75,000 young people who were unemployed a year and a half ago have now found jobs, that is, some 5,000 jobs per month for young people are being created. The Canadian Jobs Strategy is seeking to improve that Figure even further. This year some $330 million will be directed to youth programs. One of them, Job Entry, will be directed particularly to those young people who have not finished high school and who need to improve both their education and their job experience.


Mr. Speaker:: Order, please.


RAILWAYS
André Ouellet: Mr. Speaker, I have a question for the Minister of Transport.
Will the Minister confirm that VIA Rail is taking steps to buy rolling stock in Britain? How can he justify such a decision, when workers are being laid off by the railway equipment divisions of Bombardier, National Steel Car, CSW Works, CSF Foundry and, more recently. Marine Industries?


Hon. Don Mazankowski (Minister of Transport):: Mr. Speaker, the Hon. Member should check his sources of information because he is wrong.
[Translation]	.


IMPORTANCE OF SAFEGUARDING JOBS
André Ouellet: Mr. Speaker, I am quite pleased with the Minister's answer, and I hope he will very soon announce the purpose of rolling stock made in Canada. In that respect, 1 hope he will accept the invitation sent by Mr. Francis Lamoureux, President of the Marine Industries Union, to go to Tracy, on March 8, 1986, to explain why the deficit reduction is more important to his Government than creating jobs in the railway industry.
Oral Questions


Donald Frank Mazankowski: Mr. Speaker, unlike the former Government which refused to acquire new transcontinental passenger equipment, this Government is actively engaged in the procurement and acquisition of transcontinental passenger equipment. Negotiations and discussions are going on between VIA and a consortium of UTDC and Bombardier. As I indicated to the House a couple of days ago, 1 think that we are fairly close to a letter of agreement which will be followed by a contract and, hopefully, the ordering of the equipment. I am still optimistic and confident that that can be achieved.


NORTH AMERICAN AIR DEFENCE
Derek Nigel Ernest Blackburn: Mr. Speaker, my question is for the Minister of National Defence. Could the Minister inform the House whether or not the United States Government has requested permission from the Canadian Government for low level flight tests of its B-52 bombers in the Northwest Territories sometime in 1986?


Erik Nielsen: No, I cannot, Mr. Speaker. If the hon. gentleman wishes details, I can provide those to him.


REQUEST FOR COMMITTEE REFERRAL
Derek Nigel Ernest Blackburn: Mr. Speaker, in supplying those details, which I would appreciate very much, would the Minister undertake to assure the House that in future the militarization of the Northwest Territories and of Labrador, Goose Bay specifically, would be referred to the new committee on defence, with respect to social and ecological impact studies which are extremely crucial to those two parts of Canada?


Erik Nielsen: Mr. Speaker, I have no need to give the hon. gentleman that reassurance. Under the reform rules that the House has adopted unanimously, there is no end to where the committees might take their inquiries.
I do, however, reject the notion that we are setting about the militarization of our North, as the Hon. Member puts it.
To go one step further with respect to the previous answer, if the hon. gentleman would like a briefing, I would be only too happy to supply it.

February 26, 1986
Oral Questions NUCLEAR ARMAMENTS


FAILURE OF CRUISE MISSILE TEST
Mr. Dave Nickerson (Western Arctic):: Mr. Speaker, I have a question for the Minister of National Defence. Has the Minister yet retrieved his errant Cruise missile and, if so, has he found out what was the matter with it?


Some Hon. Members:: Oh, oh!


Mr. Benjamin:: Put the Minister on the next one.


Erik Nielsen: Sir, it is not my errant Cruise missile-


Some Hon. Members:: Oh, oh!


Erik Nielsen: -although I know how it must have felt, having been the pilot of a single engine airplane on many occasions when the fan stopped.


Some Hon. Members:: Oh, oh!


Erik Nielsen: Again, I can tell the Hon. Member that the recovery operation under the command of a member of the Canadian Forces is actively engaged now in recovering the debris.


THE BUDGET
Sheila Maureen Copps: My question is for the Deputy Prime Minister. Because he did not answer the question asked by the Hon. Member for Saint-Jacques, I would like to give him a chance to answer it again.


Some Hon. Members:: Oh, oh!


Sheila Maureen Copps: Can the Deputy Prime Minister give us today an assurance that no public funds will be used for outside consultants to help Progressive Conservative Party members, caucus members, or the Government propogate today's Budget?


Erik Nielsen: Mr. Speaker, 1 can assure the Hon. Member that the Government will ensure that Canadian taxpayers' dollars are spent more wisely and with a good deal more propriety than they have been in the past.


Some Hon. Members:: Hear, hear!


MINISTER'S POSITION
Sheila Maureen Copps: In other words, Mr. Speaker, the taxpayers of Canada are going to pay for this elaborate communications strategy-


Mr. Speaker:: Order, please. Just a question, please.


Charles Joseph Clark: Throw her out.


Sheila Maureen Copps: Does the Deputy Prime Minister think it is fair that the taxpayers of Canada pay for the kind of elaborate communications strategy which was leaked in the press today, which is clearly designed not to help the Government but to assist individual members of the Conservative Party propagate their philosophy?


Erik Nielsen: Mr. Speaker, the Hon. Member may not be aware, although I would be surprised if she were not, that taxpayers support in a very substantial way the respective research departments of each of the Parties in this House of Commons.


Sheila Maureen Copps: That is not the question.


Erik Nielsen: The distinction is that when we were in Opposition we were always ahead of the Liberal's research personnel, and now that we are on this side, those excellent personnel are still ahead of those in opposition.


Some Hon. Members:: Hear, hear!


TRANSPORT
Mr. Iain Angus (Thunder Bay-Atikokan):: Mr. Speaker, 1 have a question for the Minister of Transport. What steps is he going to take to ensure that trucking companies in Canada can continue to operate, now that the Minister of State for Finance has ordered the truckers insurance company wound up while, at the same time, failing to ensure that adequate coverage at rates they could afford could be obtained?


Donald Frank Mazankowski: Mr. Speaker, the Hon. Member knows, 1 am sure, that a proposal was put on the table to the truckers to assist them in acquiring the company that had encountered financial difficulty. Because of the fact that they had difficulty in acquiring reinsurance, the deal fell through. We are prepared to work with the truckers and assist them in every way we can.


REQUEST FOR ESTABLISHMENT OF PUBLICLY OPERATED INSURANCE PLAN
Iain Francis Angus: Mr. Speaker, I have a question for the Minister of State for Finance on the same subject.
Would the Minister now take the step of either setting up a national publicly operated insurance plan or, at the very least if she does not want to take that logical step, agree to establish national standards to ensure this kind of situation will not recur?


Barbara Jean McDougall: Mr. Speaker, I think we were, as I am sure the Hon. Member
February 26, 1986

was, very disappointed when this arrangement did not work. There were the other reasons besides the reinsurance.
We are in conversations with the reinsurance industry and with the property and casualty industry to try to smooth not just that particular problem but a whole range of problems dealing with liability insurance, and I thank the Hon. Member for his question.


CROWN CORPORATIONS
Mrs. Sheila Finestone (Mount Royal):: Mr. Speaker, my question is for the Minister of Regional Industrial Expansion.
I am sure he is aware that Teleglobe is one of Canada's most profitable Crown corporations, a great high-tech success story paid for by all Canadians.
Will the Minister confirm that no foreign ownership will be permitted of our only international communications network, Canada's unique voice to the other continents of our world?


Sinclair McKnight Stevens: In reply to the Hon. Member, Mr. Speaker, I certainly agree that Teleglobe is a good company and a profitable company, but I feel she must bear in mind that when we asked for bidders with respect to Teleglobe, i 1 indicated an interest, three of which are non-Canadian companies.
I can assure the Hon. Member and Members of the House that it is certainly not our intention to allow control of Teleglobe to go to non-Canadian hands, but whether a consortium would find it suitable to include one or more of those non-Canadian interested parties is yet to be seen.


Sheila Finestone: I will come back to that, Mr. Speaker.


CONSEQUENCES OF SALE
Sheila Finestone: My supplementary question is for the Minister of Communications, Mr. Speaker. Will the Minister guarantee that, if the Government carries out its very foolish plan to privatize profitable Teleglobe, that Canadians will not have to pay higher rates for their business and personal long distance phone calls as a result of this ridiculous move?


Hon. Marcel Masse (Minister of Communications):: Yes, Mr. Speaker.
Oral Questions


INDIAN AFFAIRS
Mr. Rod Murphy (Churchill):: Mr. Speaker, my question is for the Minister of Indian Affairs and Northern Development. Last month in Manitoba he was asked by a number of northern chiefs whether he would take a major initiative to provide water and sewage treatment facilities on a number of reserves in northern Manitoba. Is the Minister at this time able to answer that request?


David Edward Crombie: Mr. Speaker, the discussion I had with the people in the northern communities was a good one. The specific request with respect to sewer and water is an important matter to them. Very shortly I will be in a position to respond, I think, positively, to them.


TIMING OF DECISION
Rodney Edward Murphy: Mr. Speaker, would the Minister like to define the term shortly?


Some Hon. Members:: Oh, oh!


David Edward Crombie: It is a word I have some familiarity with, Mr. Speaker.


Some Hon. Members:: Oh, oh!


Some Hon. Members:: Hear, hear!


David Edward Crombie: I want to assure the Hon. Member that the time taken was not any intentional delay but to make sure that we have adequate information in order to make our appropriate decision.


AUTOMOTIVE INDUSTRY
Mr. Alan Redway (York East):: Mr. Speaker, my question is directed to the Minister of Transport. He is aware of reports that he intends to delay implementation of new automobile emission standards aimed at reducing acid rain. Are these stories true and, if so, why?


Donald Frank Mazankowski: Mr. Speaker, that is not true. The new auto emission standards will apply to all 1988 model year cars and all years thereafter.

February 26, 1986
Oral Questions


UNEMPLOYMENT INSURANCE
Mr. Len Hopkins (Renfrew-Nipissing-Pembroke):: Mr. Speaker, my question is directed to the Minister of Employment. Last week some of my colleagues and I met with representatives of the Armed Forces Pensioner's Association regarding UIC regulation changes. They told us that if the Minister had been present at a meeting of theirs in Kingston last week she would have been drawn and quartered on the spot by some of the people who work for her. Will the Minister explain why she continues to feel that these cuts are fair to the annuity holders of Canada when those people are the ones who paid for the annuities? The annuities are their property, not that of the Government of Canada.


Flora Isabel MacDonald: Mr. Speaker, since 1971 the Unemployment Insurance Fund has operated on certain basic principles. One principle is that premiums are paid by all persons in the workforce. Another is that those who are entitled to draw unemployment insurance are those without jobs and without income. The changes we have made have not violated those basic principles.


EFFECT ON INCOMES
Leonard Donald Hopkins: Mr. Speaker, will the Minister explain to this House and her constituents how she can justify the fact that her measures have caused some people to fall below the poverty line? Some of them are even in danger of losing their homes. Is that her idea of sensitivity to those people who change jobs in mid-life?


Flora Isabel MacDonald: Mr. Speaker, as I mentioned previously, we are administering the program according to its basic principles.


CORPORATE AFFAIRS
Mr. David Orlikow (Winnipeg North):: Mr. Speaker, my question is directed to the Minister of Consumer and Corporate Affairs. The Eastman Commission, which looked into the price of prescription drugs, reported that the people of Canada would save tens of millions of dollars under the present laws. It also reported that the multinationals were being treated fairly with their four-year exclusive right to sell drugs they had developed. Why is the Minister saying he is prepared to give them exclusive rights for longer than four years?

Hon. Michel Cote (Minister of Consumer and Corporate
Affairs and Canada Post): Mr. Speaker, we are indeed looking at the recommendations of the Eastman Report and we are
also consulting with the various groups and provinces. I have already clearly indicated that, when a policy is introduced, it will be along the same lines as the other Government policies which have already been announced to promote job creation and new investments in Canada.


EXCLUSIVE PATENT RIGHTS
David Orlikow: Mr. Speaker, surely the Minister knows that there is no evidence that there were many jobs before or that there is likely to be even more jobs in the future if he agrees-


Mr. Speaker:: Order, please. No preamble, just a question, please.


David Orlikow: Mr. Speaker, why is the Minister reported as saying that he will agree to more than a four-year period?


Hon. Michel Cote (Minister of Consumer and Corporate Affairs and Canada Post):: Mr. Speaker, I simply said that, in my examination, I am concerned mostly with ensuring that our policy will promote job creation and new investments in Canada, and this can require a longer period of protection.


EXTERNAL AID
John V. Nunziata: Mr. Speaker, my question is directed to the Secretary of State for External Affairs. He will know that the Government of Corazon Aquino has inherited a $26 billion foreign debt, a shaky currency, increasing inflation, and widespread poverty, to name just a few problems. Will the Minister undertake a major review of Canadian aid to the Philippines and consider increasing the meagre amounts now provided, to assist the fledgling Filipino democracy?


Lorne Edmund Nystrom: Marcos was a Liberal.


Hon. Monique Vezina (Minister for External Relations):: As concerns the aid we provide to the Philippines, there is in fact a bilateral project of about $1.5 million which will end in the near future, and we work in close co-operation with non-government organizations and use the funds administered by the Embassy. These are only small projects. For the moment, that is all the assistance we provide to the Philippines.
February 26, 1986


LEVEL OF FOREIGN AID
John V. Nunziata: Mr. Speaker, can the Minister assure the House that this afternoon's Budget will not result in a decrease in foreign aid, especially to the Philippines?


Charles Joseph Clark: Mr. Speaker, as the Hon. Member spends more time in the House he will know that question is out of order.


Some Hon. Members:: Oh, oh!


Rodney Edward Murphy: Put Joe in the chair.


Mr. Speaker:: Order, please. As we all spend more time in the House I will make those decisions.


Some Hon. Members:: Hear, hear!


BUDGET FORECASTS
Mr. Jim Manly (Cowichan-Malahat-The Islands):: Mr. Speaker, my question is directed to the Minister for External Relations. In view of reports that Canada's development assistance budget is going to be slashed by some 10 per cent, how can the Minister and her Government allow such cuts to take place at the very time when developing countries have an increasing need for that funding? An overwhelming number of Canadians have said they support development assistance at least at present levels.


Monique Vézina: Mr. Speaker, I am a very new Member of Parliament, but I know quite well that such a question is not in order on Budget Day.


Mr. Speaker:: Order, please. These comments about what is in and out of order are out of order.


Some Hon. Members:: Hear, hear!


GOVERNMENT POLICY
James Douglas Manly: Mr. Speaker, this concern is not out of order. If other nations follow Canada's lead and cut their budgets as well, what will happen to people in countries such as Africa, especially to women and children? Are we going to condemn them to a repeat-


Mr. Speaker:: Order, this is too long.


Monique Vézina: Mr. Speaker, I have no intention of giving answers about
Oral Questions
hypothetical situations, but I shall be happy to reply to all these questions as early as tomorrow.


REGIONAL INDUSTRIAL EXPANSION
Mrs. Lucie Pepin (Outremont):: Mr. Speaker, my question is to the Minister of Regional Industrial Expansion and deals with the study on the role of service industry in the Canadian economy. Hon. Members are aware that four out of five women are involved in the service industry. Now, I should like to know why the Minister has awarded a $2 million contract to the Fraser Institute, an organization which is openly against the employment equality program, against minimum wages, and whose views are definitely against the promotion of women.


Sinclair McKnight Stevens: Mr. Speaker, the contract the Hon. Member refers to is, of course, with respect to an economic study. It is purely in that domain and has nothing whatsoever to do with the topic she refers to in her question.


SITUATION OF WOMEN-GOVERNMENT POSITION
Lucie Pépin: Mr. Speaker, I should like to tell the Minister that if he took the time to read the literature published by the Fraser Institute, he would realize that his information is not accurate. I should like to know why he has awarded a contract to the Fraser Institute whose bias against women is well known; is it because the Conservative Party wants to keep women in ghettoized jobs?


Sinclair McKnight Stevens: Mr. Speaker, I would have presumed that the Hon. Member would have known better. Her question is just not well-founded. The answer to her specific question is very definitely no.
*
* *


MUSEUMS
Ms. Lynn McDonald (Broadview-Greenwood):: My question is directed to the Minister of Communications who knows that the Museums Corporation is extremely worried that the new Museum of Man, as it is currently called, will not be able to open with exhibits when the new building opens because of a lack of money. Will the Minister undertake to assure the

February 26, 1986
Privilege-Mr. Allmand
House that the $50 million required for exhibits in the building as well as a building itself, will be provided in time?


Marcel Masse: Mr. Speaker, 1 can assure the Hon. Member that these matters are being considered by the Department and that it is fully the responsibility of the Department and Minister, and not the General Secretary of the Museums Corporation, to make the necessary announcements in due course.


AVAILABILITY OF FUNDING
Lynn McDonald: Mr. Speaker, my supplementary question deals with the same museum construction more generally. Will the Minister assure us that the necessary funds to complete the buildings will be there and that there will be no call for private funding and fund raising drives that will compete with museums across the country which have to go to the public for their funding?


Marcel Masse: Mr. Speaker, the first part of the question was settled a few months ago. The decisions were then made public and thus the second part of the question is not applicable.


Mr. Speaker:: Before proceeding to Points of Order and Routine Proceedings, I thought the House might be interested in knowing that in 45 minutes today we got 48 questions and answers.


PRIVILEGE
Don Boudria: This afternoon, Mr. Speaker, l rise on a question of privilege following certain comments made in the House by the Minister of State (Finance) (Mrs. McDougall) concerning the ability of Francophone Members in the second language.
After giving you the required notice this afternoon, Mr. Speaker, I have received a letter from the Minister of State (Finance) and I accept it as an apology.


RELEVANCY OF ANSWERS DURING QUESTION PERIOD
[Stage Direction]
Hon. Warren Allmand (Notre-Dame-de-Grace-Lachine
East): Mr. Speaker, Monday of this week you gave the House an extensive ruling with respect to conduct in the question period. In that ruling you gave us an indication of what you expected with respect to the length of preambles, repetition of
questions and preambles to supplementaries. You said if we abused those rules you would cut us off. This afternoon I put a question to the Government about Spar Aerospace Industries in Montreal, a very specific question, and I got an answer with respect to Bell Helicopters, which was completely irrelevant to the question I asked.
There was another question from this side about lay-offs in a very specific industry in Montreal and we got a political speech with a lot of rhetoric which was irrelevant. In view of the rulings that you have made will you cut off Ministers who give very irrelevant answers to the questions asked, just as you will cut off this side when we are irrelevant?
Mr. Speaker:: Order, please. I know that is a serious request. I think if the Hon. Member checks the tape he will find that I did rise progressively during answers today when I thought they were too long. If the Hon. Member believes that the remedy with regard to the answers that the Hon. Member believes are irrelevant-and to some degree the Chair cannot be charged with that-or feels that the late show, the only remedy I know of, is inadequate, he always has the right and recourse to the Committee on Privileges and Elections to have the matter discussed further.


ACCEPTABILITY OF QUESTION
John V. Nunziata: Mr. Speaker, during Question Period today I put a question to the Secretary of State for External Affairs (Mr. Clark). He responded by saying that my question was out order. Perhaps I can ask for some direction from the Chair. The Chair did not rise to rule my question out of order. Could you rule whether or not the question was in order?


Mr. Speaker:: Order, please. That is not a question of privilege. 1 take it the Hon. Member is rising on what he presumes is a point of order. What is admitted or not admitted by the Chair is entirely within the Chair's discretion. That is the only answer I can give the Hon. Member on that matter. Members who believe that a question or an answer is out of order have the right to rise at three o'clock and raise a point of order, as the Hon. Member has just done.


Charles Joseph Clark: On a point of order. In the matter in question, I was in procedural error.


Ian Deans: That doesn't mean you were wrong.



ROUTINE PROCEEDINGS


Mr. Speaker:: These I presume have all been certified?
February 26, 1986


Alan Redway: Yes. Mr. Speaker, it is my honour and duty to present a petition which has been duly certified by the Clerk of Petitions. It is a petition signed by some 75 residents of my riding who are members of the Holy Cross Parish, calling upon Parliament to express to the Government and the Province of Ontario our displeasure with the restrictions placed on the Metropolitan Toronto Police Department in regard to laying charges under Section 251 of the Criminal Code against the operators of the premises known as the Morgentaler Clinic.


Mr. Peter Peterson (Hamilton West):: Mr. Speaker, I rise today to present a petition on behalf of some residents of my constituency, Hamilton West, who protest the continued operation within the City of Toronto of premises known as the Morgentaler Clinic for the stated purposes of performing unlawful abortions.


Mr. Ken James (Sarnia-Lambton):: Mr. Speaker, I have the honour to present to this House a petition on behalf of 586 residents of my riding of Sarnia-Lambton. My constituents are protesting the continued operation of the Morgentaler Clinic in the City of Toronto for the stated purpose of performing unlawful abortions, which is an affront to law abiding citizens.


Mr. Elliott Hardey (Kent):: Mr. Speaker, I also wish to present to the House a group of similar petitions signed by approximately 552 people from my riding in Ontario. They ask that Section 251 of the Criminal Code be obeyed so that the continued operation of the Morgentaler Clinic in the City of Toronto may cease.


Mr. Speaker:: Pursuant to an Order made Monday, February 24, 1986, this sitting is suspended until 4.30 o'clock p.m., at which time may I remind Hon. Members the House will consider a Ways and Means Motion by the Hon. Minister of Finance (Mr. Wilson).


Ian Deans: A point of order.


Mr. Speaker:: I am in procedural difficulty in allowing a point of order, but I will hear it.


Ian Deans: Mr. Speaker, I regret that I did not catch your eye before. I just want to be clear that the bells will in fact ring in advance of 4.30 in order that Members are advised that the House is reconvening.


Mr. Speaker:: I am surprised that Members are not aware of that, but yes, the bells will ring.
At 3.08 p.m. the sitting of the House was suspended.


[Stage Direction]
_______________________________________10979
The Budget-Hon. M. Wilson


[Stage Direction]
FINANCIAL STATEMENT OF THE MINISTER OF FINANCE Hon. Michael Wilson (Minister of Finance) moved:
That this House approves in general the budgetary policy of the Government.
He said: I want to speak frankly to this House, and to the people of Canada.
My message today is a serious one, and in many ways not pleasant. But it must be said. And it must be understood.
We have made tremendous progress together in the past 18 months. Growth has been strong. Jobs are being created in record numbers. The deficit is coming down.
But the mounting burden of public debt continues to threaten our future. It is growing faster than our ability to pay. It must be controlled.
When Canadians elected this Government, our mandate was clear. It was to create jobs. But to create those jobs we had to solve the problems left by a decade of financial mismanagement.
[Stage Direction]
In November of 1984, I placed before this House a plan to fulfil this mandate. In the major document entitled "An Agenda for Economic Renewal", we set out a comprehensive strategy based on three fundamental principles.
[Stage Direction]
First, the best way to create jobs is through private initiative.
[Stage Direction]
Second, good Government does not mean more Government, it means more efficient government.
[Stage Direction]
And third, Canada's prosperity depends on restoring the health of the nation's finances.
A Record of Action
We set to work immediately. The actions we have since taken fulfil an essential part of the Agenda that we brought forward 16 months ago.
Through our first eight months in office:

We worked actively to build a constructive relationship with our provincial colleagues.

We launched the Canadian Jobs Strategy.
We reduced expenditures and improved programs.
[Stage Direction]
February 26, 1986
The Budget-Hon. M. Wilson
We signed the Western and Atlantic Energy Accords.
We established investment Canada.
We initiated regulatory reforms in the areas of transportation, telecommunications, financial institutions and competition policy.
We restored close and co-operative relations with our allies and trading partners.
In May of last year, we took further action.
We reduced the operating costs of all Government departments.
We cut industrial grants.
We closed costly heavy water plants.
We reduced transportation expenditures.

We provided major incentives for investment in small business.

We improved the pension system.
We introduced a new child benefit system to increase assistance to those most in need while reducing overall costs.
We established a program to sell surplus assets and privatize Crown corporations.
We appointed an independent commission to examine the unemployment insurance system.
And we launched a process to reform the corporate income tax.
Last May 1 said we would reduce the deficit to $33.8 billion this year. We will meet that target. I said we would control Government spending. I projected expenditures this year at $105 billion. Our spending will be more than $1 billion lower. We said we would cut spending and control the deficit. We did what we said we would do.
[Stage Direction]
Today I will announce further measures to implement the economic renewal plan set out in November 1984, measures that will restore fiscal stability by the end of the decade. This is being achieved by the most significant and far-reaching program of expenditure control ever undertaken by the Government of Canada.
[Stage Direction]
These measures, when combined with those in November 1984 and May 1985, will ensure that the federal deficit is substantially reduced this year, next year and every year into the next decade.
This budget will reduce the deficit to $29.8 billion in the coming fiscal year and, by the end of the decade, it will be cut to $22 billion.
Financial requirements - the amount we must borrow each year to pay the bills - will be cut from $28.3 billion in 1985-86 to $17.9 billion in 1987-88, a reduction of 37 per cent in just
two years. By the end of the decade, financial requirements will be down to $11 billion.*
*	This budget implements certain accounting changes recommended by the Auditor General. Details and a full reconciliation are presented in Annex 1, the Fiscal Plan. In this section of the Budget Speech, in order to facilitate comparison with Figures in the May budget, the numbers are presented on the basis of the former accounting system. In the remainder of the speech, all financial numbers are presented on the new accounting basis.
Our national debt will no longer be growing faster than the economy.
Increases in taxation contribute to this result. But fully 70 per cent of the debt reduction will be achieved by spending cuts.
The plan we set out in November 1984 is working, and working well. We are sticking to that plan.
A Stronger Economy
We set out to challenge Canadians to bring about economic growth and job creation through their own initiative and effort. Canadians have responded to this challenge.
[DOT]	0640)
Our economic performance during the past 18 months has been much better than anyone expected. In 1985, growth in Canada was far stronger than in any of the major European countries, twice as great as in the United States and equal to that of Japan.
Economic growth has also become more broadly-based. The forces that drove the economy in 1985 were generated right here in Canada - higher business investment, more housing starts and strong consumer spending.
Job creation has been vigorous. The unemployment rate has fallen from 11.7 per cent in September 1984 to 9.8 per cent today - the first time it has been below 10 per cent since April 1982.
Total Employment Gains Since September 1984
(thousands)
[Stage Direction]

February 26, 1986
[Stage Direction]
The skeptics doubted we could create tens of thousands of jobs. They said cutting the deficit and creating jobs could not be done at the same time.
Canadians have made those skeptics eat their words.
Canadians haven't created tens of thousands of jobs, they've created hundreds of thousands - 580,000 new jobs since September, 1984.
[Stage Direction]
Canadians should understand how remarkable this achievement is. During the past 18 months our rate of job creation has been more than 50 per cent higher than in the United States. Even more remarkable, Canadians have created more jobs, in absolute terms, than all the Western European countries combined - countries which together have 16 times our population.
While growth has been strong, inflation has been stable. Canadian cost performance compares favourably with that of our major competitors. Because of strong productivity growth and moderate wage increases, the competitiveness of Canadian industry has improved.
Labour-management relations have improved greatly. The proportion of working time lost through industrial disputes is at its lowest level in 20 years.
[Stage Direction]
Solving the Problems of the Past
These are all positive signs - evidence that we are on the right track. But one major obstacle remains in our path.
When the government came to office, we encountered a debt problem of massive proportions. For 15 years, successive governments financed more and more spending by borrowing more and more money. The bills were passed to future generations. The buck was passed to us.
Well, the buck stops here. It must stop here.
Let me put this in the simplest terms possible.
For years the government borrowed billions of dollars simply to pay the interest on past loans. Interest on these loans increased from $1.7 billion 15 years ago to $22 billion in 1984-85. As a country, we have been mortgaging our future, year by year, and paying the interest by taking out a new loan. Every Canadian knows that this is a recipe for disaster. This is the reality with which this government has had to deal - a reality that threatened rising debt, falling confidence, a falling dollar, rising interest rates, slower growth and even higher deficits. That is the vicious circle we had to break.
The Expenditure Record
That is why since November of 1984, we have acted to overhaul and streamline the operations of government. And none too soon.
The Budget-Hon. M. Wilson
Over the last decade, program expenditures had more than doubled. Discretionary spending - spending on non-statutory programs - had grown even faster. In the three years prior to this government taking office, discretionary spending grew by 43 per cent. Operating costs of Government departments increased by 30 per cent. Personnel costs grew by 20 per cent. [Translation]
This Government moved decisively to bring this spending under control.
[Stage Direction]
We set in place a new, disciplined approach to Government management.
We are acting to eliminate 15,000 positions from the federal public service by the end of the decade; 5,000 will be eliminated in 1986-87.
We reduced capital expenditures and closed diplomatic posts in foreign countries.
We are eliminating programs, such as the Canadian Home Insulation Program, the Petroleum Incentives Program, the Petroleum Compensation Program, Katimavik and the Shipbuilding Industry Assistance Program.
We reduced subsidies to VIA Rail, Canada Mortgage and Housing Corporation, CN Marine and the Canadian Broadcasting Corporation.
We sold de Havilland, the Northern Transportation Company, and most of the Government's interest in the Canada Development Corporation.
We wound up several Crown corporations, including Canagrex.
These are not intentions. These are concrete actions we have taken. The results are clear. In this fiscal year, our actions have resulted in gross savings of $5.8 billion - about $560 for every Canadian household.
The Government has benefited greatly from the work of the Ministerial Task Force on Program Review. Private sector volunteers worked closely with public servants in 19 study teams to examine virtually all Government programs. Their task was to improve the way Government operates and delivers services. The recommendations in their reports have prompted many specific actions which have reduced duplication, streamlined operations and led to meaningful savings. I am announcing today that all the study team reports will be released on March 11.
This expenditure reduction has involved thousands of people doing their jobs quietly and efficiently outside the glare of these television lights. And the result is that discretionary program spending this year will be held to $37.7 billion, $530 million lower than the previous year.
Total program spending, including all statutory programs such as Old Age Security, family allowances and unemployment insurance, will be held to $86.6 billion - lower than last year's spending.
[Stage Direction]
February 26, 1986
The Budget-Hon. M. Wilson
This is the first absolute decline in total program spending in over 20 years.
These actions were enough to accomplish our first objective - to halt the upward spiral in our deficit. But unprecedented as they were, they were not enough to provide assurance that our annual deficits would continue to fall. The risks to continued growth are still there and they are too high to be ignored.
New Expenditure Restraint
To reduce these risks, and to achieve our goal of fiscal stability, I am today announcing measures to restrain Government expenditures even further.
First, it is important that restraint start at the top. The Prime Minister has already taken a cumulative salary cut of $20,290 over two years. Each Minister has taken a cumulative cut of $9,440 over the same period. The Government will ask members of this House and the Senate to accept a reduction of $1,000 in their salaries this year. This $1,000 cut will also apply to the Prime Minister and his Cabinet.
I am announcing that in 1986 there will be no regular annual increase in the salaries of deputy ministers, assistant deputy ministers and equivalent political staff. For other executive levels, such increases will be held to a maximum of 2 per cent. To encourage excellence and prudent management, the Government will award pay increases to senior executives only on the basis of merit, with greater emphasis on productivity improvement.
Second, our privatization efforts are continuing.
As we identify corporations which do not meet public policy objectives, we will either close them or sell them to the private sector where they can become more competitive, lessen the burden on taxpayers and provide better service.
As announced, Canadian Arsenals Ltd. will be sold before the end of this fiscal year. We are negotiating with the territorial Governments concerning the disposition of the Northern Canada Power Commission. The remaining companies of the Canada Development Investment Corporation are still for sale. We expect to sell Teleglobe Canada in the next few months. Expressions of interest are still being received on Canadair and Eldorado Nuclear.
Third, Ottawa must become leaner and more efficient.
I am announcing a $500 million special reduction in nonstatutory spending for the 1986-87 fiscal year. This is equivalent to 2 per cent of the cost of all non-statutory Government programs, with the exception of foreign aid and defence. The President of the Treasury Board (Mr. de Cotret) will shortly announce the plan to implement this reduction. This will reduce departmental budgets on an ongoing basis.
We are implementing two other significant management measures. Operating costs in all departments will be substantially cut in 1986-87 as part of the special $500 million
reduction. Thereafter they will not be permitted to rise by more than 2 per cent per year.
In addition, Government departments will be forced to absorb increases in workload by increasing productivity or reallocating funds to higher priorities. Reserves that previously existed to fund such increases are being substantially cut. The experience gained this past year gives me confidence that these tighter operating constraints can be managed.
These spending reductions will result in savings of $850 million in 1986-87, rising to $2.8 billion in 1990-91. These savings amount to $80 per taxpayer next year.
All these actions force new discipline on the system - long overdue discipline.
[Stage Direction]
But they also expose the truth about our financial problem. The billions we can save through better management are not enough to resolve Canada's financial problems.
[Stage Direction]
We must also restrain spending in a number of specific areas.
The Government is determined to come to grips with the financial and operating problems of Canada Post. Over the past year the Corporation has made progress in reducing overhead costs, cutting the numbers of managers and staff and increasing productivity. It is clear, however, that the Corporation will not be in a break-even position by the end of this fiscal year, as called for in the five-year plan established by the last government.
The Marchment Committee has recommended another five years to reach the break-even point. This is not acceptable.
Following discussions with the President of Canada Post, the Government has requested a new operating plan to improve productivity at Canada Post so that the Corporation will reduce its operating deficit to zero by the end of fiscal 1987-88. The Government is confident that by taking further steps to improve productivity and efficiency, Canada Post and its workers can meet the objective of self-sufficiency while improving reliability of service to the people of Canada.
[Stage Direction]
The Government has also re-examined its funding commitment for foreign aid.
[Stage Direction]
This year, Canadian aid will exceed $2 billion - 0.5 per cent of our gross national product, well above the average of other major donor countries.
In my last budget, I spoke of the Government's intention to see our foreign aid spending reach 0.6 per cent of GNP by 1990. This would have required spending increases for five consecutive years considerably above the rate of growth of our economy. Had we continued on this trend, foreign aid would have grown by over 12 per cent a year on average. Growth rates of that magnitude cannot be sustained when domestic programs are being tightly constrained. Accordingly, growth
February 26, 1986
[Stage Direction]
in Canada's aid program will be reduced by $1.5 billion over the next five years. The savings will be $83 million in 1986-87 and $205 million in 1987-88. For the balance of this decade foreign aid will remain at 0.5 per cent of GNP. It will increase by 8.7 per cent per year, on average, bringing the total to $3.1 billion in 1990-91. Our objective will be to reach a foreign aid/GNP ratio of 0.6 per cent by the middle of the next decade.
But direct foreign aid is not enough. Trade is also important. Less developed countries need access to our market. That is why we have taken further steps to open the Canadian market to exports from developing countries. The decision to relax the import quotas on footwear is a measure of considerable benefit to less developed countries. The Caribbean initiative through which we extend trade and other measures of assistance to the Commonwealth Caribbean is a second example of these actions.
[Stage Direction]
Our nation's defence is another area where tough financial decisions are required.
[Stage Direction]
The Government is fully committed to a strong defence capability. This commitment has been confirmed by decisions to reinforce our military presence in Europe and to strengthen the North Warning System. It must be recognized, however, that our biggest imperative now is to reduce the deficit so that we have the economic growth and fiscal flexibility in future years to fund important programs such as defence.
To contribute to restoring fiscal balance, the rate of growth in defence expenditure will be held to 2.75 per cent, after inflation, in 1986-87. In 1987-88, and subsequent years, defence spending will grow by 2 per cent per year, after inflation. This will achieve savings of $285 million over the next two years.
Notwithstanding this restraint, expenditures on defence will continue to increase substantially each year over the balance of this decade. Annual average growth will exceed 6 per cent, bringing our defence budget from $9.3 billion this year to $9.9 billion next year and $10.5 billion the year after.
[ Translation]
Canada will continue to meet its defence responsibilities in North America and Europe and this Government will make every effort to increase our level of financial commitment as our economic and fiscal circumstances permit.
[Stage Direction]
As a result of the spending cuts this Government has made to date, expenditures on Government programs will grow by less than inflation over the next five years. By the end of the decade, Government spending on programs will fall to the same share of the economy as in the 1960s.
Over the next two years there will be virtually no growth in spending on non-statutory programs. We will spend less on
The Budget-Hon. M. Wilson
these programs in 1987-88 than in 1984-85. I am unable to find any period in Canadian history when the federal government has reduced discretionary spending on this scale.
So far I have talked of cutting spending on non-statutory programs. Let me now address the issue of statutory spending.
The Government of Canada will spend $53 billion this year on social programs. At the same time, related tax expenditures such as the child care expense deduction, the child tax credit and the age exemption total $3.5 billion.
The vast bulk of these expenditures goes to finance four major programs:
Approximately $12 billion is for unemployment insurance benefits and employment initiatives;
[DOT]	$13 billion goes to income security for the elderly;
[DOT]	$2.5 billion is for family allowances; and [Translation]
[DOT]	$12.6 billion in cash is transferred to the provinces for health, education and welfare. The total contribution, which also includes tax transfers, is about $20 billion.
[Stage Direction]
In November 1984, the Government announced its intention to reform social programs based on the twin tests of social and fiscal responsibility.
Since that time, we have taken a number of actions:
We reformed family benefits in a way that maintains the principle of universal access, targets more resources to those most in need and frees up savings for other priorities.
We restrained the rate of growth of transfer payments to the provinces for health care and post-secondary education.
We provided supplementary equalization payments for all six equalization-receiving provinces in 1985-86 and for Manitoba in 1986-87.

We appointed a commission to examine the unemployment insurance system and will be receiving its report this Fall.

We extended support to widows and widowers, aged 60-64, who are in need.
We are especially proud of the steps we have taken to improve pensions for Canadians, through the most significant reform of pension arrangements undertaken in years. The pension debate dragged on for a decade. This Government has delivered results.
We have introduced legislation to ensure for the first time that workers can take their pensions with them when they change jobs, that they can retire early if they wish and that surviving spouses will be provided for. We are making it possible for many regular part-time workers to join pension plans.
We have concluded a vitally important agreement with the provinces on the Canada Pension Plan. As a result, the financ-
[Stage Direction]
February 26, 1986
The Budget-Hon. M. Wilson
ing of the CPP will be put on a sound financial basis and its benefits expanded to meet changing needs.
We are also moving to achieve parity in tax assistance for retirement saving between employees and the self-employed, many of whom are owners of small businesses. I will be releasing draft legislation on registered retirement savings plan limits and related issues within weeks.
In this budget, I am proposing new measures to give retired Canadians who have RRSPs more flexibility in the investment management and withdrawal of their retirement savings.
Over the coming months the government will continue to improve the structure of key social programs. We will consider the recommendations of the Forget commission on unemployment insurance. We are examining the recommendations of the Macdonald commission. In my next budget, I intend to propose further measures to reform our system of social expenditures and related tax provisions. Such measures must respect several basic principles. They must maintain universal access. They must direct more resources to those most in need. They must improve the opportunities for individuals to become self-reliant. And they must reduce the after-tax value of benefits going to higher-income Canadians who do not need assistance.
Some have called for major cuts in social assistance. This Government is not prepared to dismantle social programs. The best ways to reduce the cost of social measures are to make sure that spending and tax assistance are targeted effectively and to reduce the need for such support - by keeping the economy growing and creating jobs so that greater opportunities are provided to those Canadians now in need.
Improving the Tax System
A continuing priority of this Government is to improve the tax system. Improvements are necessary to spread the tax burden more equitably, to ensure that incentives are effective and to protect Government revenues.
Since November 1984, the Government has taken steps to protect the integrity of the personal and corporate tax systems.
We ended the abuse of the scientific research tax credit. [DOT]We eliminated tax shelters based on investments in yachts,
recreational vehicles and similar properties.
We halted income-splitting through interest-free loans between family members.
We stopped the so-called "carve-out" transactions in the oil and gas sector.

We prevented the use of trusts to distribute investment income tax-free.

We terminated the use of partnerships in corporate takeovers to increase tax deductions.
We tightened foreign property investment rules to prevent abuse.
We are also implementing a minimum tax of 25 per cent to ensure that high-income Canadians pay their fair share of tax.
Last May, I issued a discussion paper entitled "The Corporate Tax System: A Direction for Change". The thrust of that proposal was to reduce selective tax preferences and move to broader-based incentives through lower tax rates.
Today, I am implementing the first phase of this restructuring. The following measures will enhance economic performance, provide incentives based on results and contribute to deficit reduction.
The 3-per-cent inventory allowance will be eliminated effective today.
The general investment tax credit will be phased out starting next year.
The 20-per-cent investment tax credit will remain to encourage investment in Atlantic Canada and the Gaspe Peninsula. This credit will be extended to include investments in adjacent offshore areas.
The Cape Breton investment tax credit will remain at 60 per cent and will be improved. Smaller investments will qualify and the rate of refundability will be increased, as recommended by the Cape Breton Advisory Committee.
The special investment tax credit for manufacturing investments in designated areas will be extended past its termination date at the end of this year at a reduced rate of 40 per cent.
Corporate tax rates will be reduced over a three-year period beginning July 1, 1987. By 1989, the basic federal corporate rate will have been reduced from 36 per cent to 33 per cent of taxable income.
Manufacturing companies will continue to have a lower tax rate, falling from 30 per cent to 26 per cent by 1989.
The federal tax rate for small business will fall from 15 per cent to 13 per cent.
[DOT]	(1710)
The effect of all these measures will be to generate an additional $765 million of net revenue during the period of transition to 1988-89. As a result of these changes, there will be an increase in the number of profitable corporations that pay tax.
These actions are the first phase of corporate tax reform. I will release a new discussion paper later this year. It will propose further reductions in tax preferences and further tax rate reductions, consistent with the principles set out in the May 1985 budget paper.
As well, I am proposing a number of other changes to corporate and personal income taxes to tighten the system and to prevent erosion of the tax base.
New at-risk rules for limited partnerships will be introduced. These rules will restrict limited partners' claims to tax credits and business losses to the amount of their investment that is actually at risk. The new rules will cut
February 26, 1986
[Stage Direction]
back tax-motivated arrangements that can lead to high-income individuals and profitable corporations significantly reducing their taxes.
New provisions governing salary deferral arrangements will be introduced to ensure that tax cannot be unduly deferred by delaying the receipt of compensation.
The ability to defer taxes by claiming deductions for unpaid remuneration will also be limited.
The married exemption claimed for a spouse will be based on the spouse's income for the whole year, rather than from the date of marriage.
Measures will be introduced to ensure reporting of treasury bill income. I will be announcing, within the next few weeks, proposals to simplify the interest accrual rules.
I am also proposing important changes in the tax treatment of dividends. The dividend tax credit will be reduced from one-half to one-third of the cash dividends received by individuals from tax-paying Canadian companies. As a parallel measure, the 12 1/2-per-cent dividend distributions tax for small business will be repealed. This will permit a major simplification of the tax system for small business. It will also preserve the integration of the corporate and personal taxes on income earned by small business corporations. These changes will be effective January 1, 1987.
The lower dividend tax credit will continue to provide a significant incentive for investment by Canadians in Canadian dividend-paying companies, but it will now ensure that more high-income individuals will pay regular tax on dividend income. Accordingly, I am also proposing that, effective this year, the taxation of dividends from taxable Canadian corporations under the minimum tax be based on the actual amount of cash dividends received.
[Stage Direction]
Turning the Deficit Corner
To this point 1 have described the Government's expenditure control record and our plans to reduce government spending further. 1 have outlined our plans to bring forward proposals for comprehensive changes to social transfers and related tax provisions. 1 have proposed the first phase of corporate tax reform and eliminated or reduced a number of tax preferences. [English]
These actions imply great change. Federal spending on programs as a share of the economy will be cut back to the level at the beginning of the 1960s - prior to the "fly now, pay later" regime of more recent years. But these measures in themselves are not enough to overcome our fiscal problem. Spending cuts alone cannot bring about fiscal stability by the end of the decade.
The Budget-Hon. M. Wilson
Budgetary Expenditures as a Percentage of GNP, 1961-62 to 1990-91
To accomplish that goal, we must start paying the full cost of present Government programs and a share of the interest burden built up over past years.
I am therefore announcing the following tax increases:
A 3-per-cent surtax will be imposed on federal personal income taxes commencing July 1, 1986. The existing personal surtax will expire as scheduled.
The current surtax on large corporations expires at the end of 1986. It will be replaced by a 3-per-cent surtax on all corporations effective January 1, 1987.
The rates of federal sales tax will be increased by I percentage point effective April 1 this year. 1 will be announcing in a few minutes details of an innovative measure which will make the effect of the federal sales tax more progressive by providing important benefits for low-income Canadians.
Finally, excise taxes and duties on alcohol and tobacco will be raised by 4 per cent and 6 per cent respectively, effective midnight tonight.
The net effect of all the tax measures 1 am announcing today will be to raise $1.5 billion in 1986-87 and $2.4 billion the following year.
These tax increases will make greater demands on Canadians. But they also put the size of our debt problem into clearer focus. In recent years our annual deficit has exceeded $30 billion. Every year the deficit remains near $30 billion another $3 billion of interest charges is added to the next year's spending. These tax increases help us hold the line. But they are only part of a comprehensive debt control program, 70 per cent of which will be achieved through expenditure reductions.
[Stage Direction]
February 26, 1986
The Budget-Hon. M. Wilson
Sources of Deficit Reduction
(per cem)
Let me now address the question of federal sales tax reform. Like the debate on pensions, discussions on a better sales tax system have been going on for a long time. The problems with the current system are well known. It results in serious inequities among competing business firms. It puts Canadian manufacturers at a competitive disadvantage relative to importers. It results in hidden taxes on exports. Canada is now the only industrialized country in the world that still imposes a sales tax at the manufacturers' level.
[ Translation]
It is time to act on this issue, to bring our sales tax system into line with today's realities.
[Stage Direction]
My officials have for some months been examining the value-added tax. They are also looking at alternative systems, including a business transfer tax, which involve less administrative complexity and paper burden.
1 expect to complete a review of the options in the very near future and put forward a paper with a concrete proposal for public discussion at an early date. Our intention is to move to a new system that will encourage growth, improve equity, and yield revenues sufficient to replace the federal sales tax, to end the surtaxes I have announced today and to provide adequate offsets for low-income Canadians.
I have already reported on the fiscal impact of the measures in this budget. The budget also implements revisions to the Government's accounting practices in response to recommendations made by the Auditor General. Details are provided in the Fiscal Plan tabled with the budget. I recommend this document to Honourable Members and all others who wish to have full details on the Government's fiscal situation.
On the revised accounting basis, the deficit next year will be $29.5 billion, a reduction of 14 per cent from this year. Financial requirements next year will fall to $22.6 billion, a decline of 22 per cent from this year's level. By the end of the decade, with moderate economic growth averaging 2 3/4 per cent per year, financial requirements will fall to $11 billion.
Reinforcing Priorities
This government has acted to restore fiscal responsibility in Canada. In many cases, we are going to spend less. In every case, we are spending smarter and making better use of scarce resources. In some cases, we must spend more, to help those in need today and to help build the foundation for a better future. In a careful and effective manner, we intend to reinforce our basic priorities.
Helping Those in Need Today
The plight of low-income Canadians is of major concern to this Government.
[Stage Direction]
Last May we increased the child tax credit to provide greater assistance to low-income families.
[Stage Direction]
Until now, our poorest families have had to wait until they receive their income tax refund to receive the credit. This has led to many of them seeking the services of tax discounters. To provide more timely assistance to low-income families and to reduce the need for tax discounting, the Government is proposing to advance payment of the child tax credit. A prepayment of $300 per child will be paid in November 1986 to families whose income in 1985 was $15,000 or less. Almost one million families will benefit from this measure.
I am also announcing a fundamental innovation to the income tax system to benefit low-income Canadians, many of whom are elderly. Commencing this year, the Government will provide a refundable sales tax credit of $50 per adult and $25 per child, for families and individuals with incomes below $15,000. About four million families and individuals will benefit from this measure. This progressive measure represents a major expansion of our refundable tax credit system and a significant improvement in our tax system.
For many months the government has been working with provincial governments to target training and employment programs to those Canadians who depend on welfare. We believe that the best assistance we can provide to such Canadians is a meaningful job. Provincial Governments share this view. As a result of our consultations the Government is committing up to $100 million a year for the next three years to a special program to help social assistance recipients find employment. These funds will be matched by the provinces.
I also propose to increase the disability deduction by $250, effective this year. This will provide increased support to 185,000 disabled Canadians.
There is another group in society which is now suffering particularly hard times and which needs our help.
Our farmers are caught in a vicious squeeze of low prices and rising costs. Many are facing an intolerable debt burden. This is not just an economic problem - it is a social problem that must be addressed. Accordingly, to preserve a viable farm
February 26, 1986
[Stage Direction]
sector, the Government is adopting a new Farm Financial Assistance Policy.
The Government will increase resources to the Farm Credit Corporation over the next two years. The Corporation will establish a new financial instrument to be known as a commodity-based mortgage. For those farmers with substantial debt problems, but with reasonable long-term prospects, this mortgage will be available at a basic interest rate of 6 per cent. The principal of these loans will be linked to farm commodity prices. The loans will offer eligible farmers long-term, stable financing at a cost related to their revenues.
The Minister of Consumer and Corporate Affairs (Mr. Cote) will introduce legislation to establish Farm Debt Review Panels to provide advice and assistance in restructuring farmers' debt.
We will also take measures to ease the transition of farmers who must seek alternative employment. A new program will offer such farmers job counselling, retraining and interim financial assistance.
These measures represent an additional financial commitment to Canadian farmers of $65 million this year and $130 million next year.
The Minister of Agriculture (Mr. Wise) will also be announcing measures to assist tobacco farmers to diversify into other crops.
The Government will extend the existing 3-cent-a-litre fuel tax rebate for primary producers for one year to January 1, 1988. Farmers and other primary producers are now required to keep detailed records of "on-highway" and "off-highway" fuel use in order to calculate their rebates. The Minister of National Revenue (Mr. MacKay) will shortly announce new guidelines to simplify the calculation so as to reduce paper burden.
[Stage Direction]
These initiatives are designed to help those in need today. But even though resources are scarce, we believe it is equally essential to make other investments now which will lay the foundation for future growth and jobs.
[Stage Direction]
Investing in the Future Trade
A major area is trade.
This Government has invited the Government of the United States to enter into negotiations toward a more secure and enhanced bilateral trade relationship. Similarly, preparations are under way for Canada's active participation in the next round of multilateral trade negotiations to commence this Fall. I am strongly encouraged by the positive response of Canadian business and industry to the trade challenge this Government has initiated. This response shows that Canadians do not shrink from fair competition. Canadians realize that trade gains lead to job gains. Today more than three million jobs are linked to our export performance.
The Budget-Hon. M. Wilson
1 cannot overstate the importance to Canada of ensuring that foreign markets remain open to Canadian exports and that Canadian companies take maximum advantage of markets abroad. Exports of goods and services account for close to 30 per cent of Canada's gross national product. We must also ensure that the Canadian market remains open and that Canadian companies are prepared to meet import competition.
To do that, it is important to ensure a fiscal environment that allows lower and more stable interest rates and a tax system that promotes competitiveness and efficiency. [Translation]
Our deficit reduction plan and proposed tax changes will support our trade initiatives.
[Stage Direction]
The reform of the corporate income tax proposed in this budget will reinforce our trade initiatives by encouraging businesses to pursue profitable opportunities on the basis of economic factors as opposed to tax considerations. Sales tax reform will remove the biases in the current tax that hinder the efforts of domestic producers to compete at home and abroad.
This budget demonstrates that our fiscal problem is now in hand. Tax reforms will be implemented over time. Similarly, trade negotiations take time and their results will be implemented only over a number of years. By beginning to act now on these three fronts we can ensure that Canadian firms will be able to take full advantage of market opportunities in years to come.
Trade in services is becoming increasingly important. Representatives from the Canadian financial community have raised with me the prospect of attracting more international banking business to Canada by designating certain Canadian cities as international banking centres.
Some time ago, the Department of Finance commissioned a study of such centres. That study, which I propose to make public shortly, drew attention to certain drawbacks to the concept of international banking centres. It also drew attention to possible changes which could enhance the international competitiveness of our banks.
[Stage Direction]
The Government is prepared to facilitate the establishment of international banking centres in Montreal and Vancouver. This would be consistent with our desire to broaden our trade and business interests in Europe and the Pacific Rim. I will be undertaking discussions with the banking community and provincial governments in order to pursue this objective.
[Stage Direction]
Research and Development
A second priority is investment in knowledge.
The crucial importance of knowledge to Canada's future requires a new partnership between the private and public sectors. The federal Government plays a major role in support-
10988
[Stage Direction]
February 26, 1986
The Budget-Hon. M. Wilson
ing university-based research and the development of highly qualified personnel in Canada. One channel for this support is through the operations of the Natural Sciences and Engineering Research Council, the Medical Research Council and the Social Sciences and Humanities Research Council. The Government proposes to provide a secure funding base for these councils by adding $300 million over the balance of the decade.
We are also prepared to increase this base funding up to 6 per cent by matching, dollar-for-dollar, private sector contributions to the councils. This could provide an additional $700 million over the next five years. But the partnership created between the private sector and university researchers is just as important as the dollars. Contacts between the business and academic communities would be improved.
[Stage Direction]
And Canada would benefit from the more vigorous and coordinated application of scientific knowledge to our industrial needs.
[Stage Direction]
Training and Adjustment
Continued economic growth also requires investment in training so that workers can adjust to new conditions and take advantage of new opportunities.
The Minister of Employment and Immigration (Miss MacDonald) is implementing the new Canadian Jobs Strategy in co-operation with the provinces and industry. This innovative and successful approach combines training and job creation to help workers adapt to a fast-changing labour market. Programs are targeted at building the skills necessary to help young people obtain a first job and to assist women re-entering the labour market. This budget allocates $800 million to the Canadian Jobs Strategy in 1987-88.
The position of older workers deserves special consideration. I am announcing federal funding of up to $125 million over a four-year period to finance a new Program for Older Worker Adjustment. This program will assist older workers who lose their jobs and who have no immediate prospects for re-employment. The Minister of Labour is developing this initiative in co-operation with the provinces and the private sector.
Small Business
Small business is the most important source of jobs in Canada today. This government has done much to support small business.
In my first budget I brought forward a number of measures to encourage investment in small business by individuals and by pension funds.
[Stage Direction]
I provided tax incentives for investments in labour-sponsored venture capital funds. 1 extended the small business bond program and increased the value of the refundable tax credit
for small firms carrying out research and development. 1 introduced a lifetime capital gains exemption to encourage enterprise and risk-taking by rewarding successful investment in Canada's future. We will continue that support.
[Stage Direction]
Several measures in this budget reinforce our support for small business. Specifically:
The tax rate on small business income will be reduced from 15 per cent to 13 per cent, beginning July 1, 1987. The tax rate on small business manufacturing income will be reduced from 10 per cent to 8 per cent.
The 12 1/2-per-cent dividend distributions tax will be repealed.
Tax rules providing deductions for allowable business investment losses will be broadened.
In the May budget I announced measures to allow pension funds to invest in small business ventures. Draft rules were made public for comment last November. The final rules to implement these changes will be available shortly and will respond to many constructive comments that have been made during the consultations.
The government also proposes to more than double the amount of guaranteed loans available under the Small Business Loans Act. This will raise the ceiling to $2.5 billion and allow small businesses even greater access to the financing they need to grow and create jobs.
Atlantic Enterprise Program
As I reported earlier, economic conditions have improved substantially in Canada. Nevertheless, certain regions of the country are continuing to experience longer-term structural economic difficulties. This is particularly true of the Atlantic region. To enhance the rate of private sector job creation in the Atlantic and Gaspe regions, I am announcing a major new initiative, the Atlantic Enterprise Program.
Under this program, private sector lenders will be encouraged to make loans for business start-up or expansion. Up to $1 billion of these loans will be guaranteed to a substantial extent by the Government of Canada. The Atlantic Enterprise Program will also provide access to lower cost financing through interest rate buy-downs. This program is another example of how the Government, working together with the private sector, can spend smarter. Together we will generate significant financial assistance so that Atlantic Canada can share in our national prosperity. The Minister of Regional Industrial Expansion (Mr. Stevens) will be announcing the details of this program shortly.
Northern Development and Indian Affairs
The Government will bring forward measures which promote northern development and encourage the economic self-reliance of our native peoples.
A new, permanent system of tax benefits for housing and travel will apply to residents of the north and isolated posts,
February 26, 1986
[Stage Direction]
effective January 1, 1987. This will achieve equity between employees and the self-employed.
In recognition of the vast distances involved in northern travel, the budget proposes a $50 ceiling on the air transportation tax on domestic flights, offset by a one percentage point increase in rates.
[DOT]	(1740)
The Minister of Indian Affairs and Northern Development (Mr. Crombie) will introduce amendments to the Indian Act which will allow bands to levy municipal-type taxes on Indian lands.
In addition, the Indian Remission Order which relieves tax on certain employment income will be extended for the 1986 taxation year.
I am also announcing that for 1986-87, the Government will allocate up to $40 million to extend the Indian Community Human Resource Strategies program into a second year.
Building a Sense of Community
These initiatives - in trade, technology, training and economic development - are designed to promote growth. But nations are not held together by dollars and cents. Nations are held together by intangibles - by shared values and experiences.
One of these values is public service through private initiative.
No Canadians share more than those in the voluntary sector. Volunteers have not only built a sense of community in Canada; they have built bridges to people in less fortunate lands.
The Government wants to encourage this sense of participation. We are continuing to examine a number of measures to encourage charitable donations and will work with the voluntary sector to find an appropriate and effective solution.
The Government also desires to help foster the arts. I am pleased to announce the allocation of an additional $75 million per year beginning in 1986-87 to fund a number of specific cultural initiatives. These will benefit people whose creativity finds expression in the motion picture and book publishing industries, in the performing arts and in the music and recording industries. The Minister of Communications (Mr. Masse) will be announcing the specifics of these initiatives.
Budget Process
I would like to say a few words about the budget process. The May budget made proposals to improve the process. This budget is being presented in February in line with my proposal for a regular budget date. A parliamentary committee has examined the budget process and made useful suggestions. I will be responding to their report in detail in due course. This Government has also enhanced the role of parliamentary committees in examining tax and budget matters and has increased consultation. All concerned share the view that legislation
The Budget-Hon. M. Wilson
arising from budgets should be available as soon as possible and be passed into law within a reasonable period of time. I will be bringing forward legislation arising from this budget expeditiously. The first item of legislation will be the Bill seeking $22.6 billion of borrowing authority for 1986-87. This amount corresponds to the financial requirements forecast for next year.
In this budget I have referred to a number of areas that form an important part of the Government's agenda for future budgets. Proposals will be developed to improve social expenditures and related tax provisions, to pursue the further restructuring of the corporate income tax and to reform the sales tax. I look forward, as these proposals are presented, to receiving comment on them from parliamentary committees and other interested Canadians.
I am tabling Notices of Ways and Means Motions covering tax and tariff measures.
Mr. Speaker, discussions among House Leaders have taken place and, further to the order adopted by the House on February 24, I understand that immediately following my remarks the House shall revert to Introduction of Bills in order to introduce the Bill outlining the Government's borrowing requirements for 1986-1987.
Economic Outlook
Let me turn now to the economic outlook for Canada.
[ Translation]
The actions we have taken and the actions we are taking in this budget provide a basis for sustained growth over the balance of the decade.
[Stage Direction]
I am projecting real growth of 3.7 per cent for 1986, one of the highest rates of growth among the industrialized countries. In 1987, the economy is expected to grow by a further 3 per cent - the fifth consecutive year of sustained growth. Inflation will remain steady around 4 per cent.
[Stage Direction]
And the Canadian economy will continue to create jobs at a substantial rate. Because of strong labour force growth, progress in reducing the unemployment rate will be steady but less dramatic.
[Stage Direction]
By the end of this year I anticipate an unemployment rate of about 9.6 per cent, falling to 9.0 per cent by the end of 1987.
Conclusion
This Government has demonstrated its resolve to restore fiscal responsibility to Canada.
We are doing this in a way that is consistent with the commitment we made to Canadians in November of 1984. Our objective, then and now, is to solve the problems of the past in order to create jobs today and into the future.
[Stage Direction]
February 26, 1986
Borrowing Authority
We are reducing the crushing burden of interest payments that has accompanied a decade of uncontrolled growth in our debt. Just as Canadians seek to pay down their personal debt to use the savings for better things, we are doing the same in government, creating room to respond to the nation's needs.
Cutting the deficit is not an end in itself. It is the means to an end. It is the means to achieve lower interest rates, higher growth and more jobs.
[Stage Direction]
The actions we have taken reflect the priorities we set out in November 1984 and acted on in May 1985:
[DOT]	to release the creative spirit of individuals from the heavy hand of Government;
[Stage Direction]
[DOT]	to enhance our capacity to compete by promoting trade, investment and technology;
[DOT]	to play a constructive role in the global community;
[DOT]	to assist individuals to adjust to a changing world;
[DOT]	to help Canadians who need assistance.
This is what we promised. This is what we are delivering. We will continue to act with consistency and determination. Canadians can look to the future with confidence.
Some Hon. Members:: Hear, hear!



ROUTINE PROCEEDINGS


Barbara Jean McDougall: for leave to introduce Bill C-99, an Act to provide borrowing authority.


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


Some Hon. Members:: Agreed.


[Stage Direction]
Motion agreed to, Bill read the first time and ordered to be printed.
Mr. Speaker:: Pursuant to order made Monday, February 24, the House will now revert to Orders of the Day.