1986-12-08

Mr. Doug Lewis (Parliamentary Secretary to Deputy Prime Minister and President of the Privy Council):: Mr. Speaker, pursuant to Standing Order 106(8), I have the honour to table, in both official languages, the Government's response to the following 29 petitions: 332-14 to 332-41 inclusive and 332-86.



INTERPARLIAMENTARY DELEGATION


Hon. Allan B. McKinnon (Victoria):: Mr. Speaker, pursuant to Standing Order 101, I have the honour to present, in both official languages, the eleventh report of the Canadian NATO Parliamentary Association respecting the participation of parliamentarians from the House of Commons and the other place in the 32nd session of the North Atlantic Assembly in Istanbul, Turkey, from November 14 to November 18, 1986.


PETITIONS
Mr. Jean-Robert Gauthier (Ottawa-Vanier):: Mr. Speaker, I have the honour to present several petitions. Whereas the Government of Canada has imposed a retaliatory tariff on imported books in the English language which has limited the access of Canadians to literature and information, and having little negative effect on the publishing industry in the U.S., yet seriously damaging Canada's consumers, book publishers, book sellers, distributors and culture, and rising book prices having placed a strain on the book acquisition programs and policies of our nation's public and specialized libraries, the undersigned petitioners humbly pray and call upon Parliament to rescind this tariff which threatens irreparable harm to the Canadian book industry and compromises federal policy on cultural industries in respect to free trade negotiations.


Mr. Cyril Keeper (Winnipeg North Centre):: Mr. Speaker, I have a petition from a number of people in my riding. They point out that government proposals on changing the Patent Act, as they affect prescription drugs, will increase drug prices for Canadian consumers. These changes are unfair to those who depend upon prescription drugs on an ongoing basis. The proposals will result in higher cost for provincial government drug programs. The changes are another example of the Conservative Government serving the interests of multinational corporations instead of those of Canadian consumers. The petitioners ask Parliament to reject these proposals.


Mr. Ian Waddell (Vancouver-Kingsway):: Mr. Speaker, I have three petitions, two of which are from my riding. They concern the Government's plan to introduce higher drug costs by bringing in the Bill we are voting on today. The petitioners say that the changes in the Patent Act are another example of the Canadian Government's concessions to the U.S. in an effort to get free trade negotiations; in other words, to cave in to pressure from American drug companies and the American Government. I am pleased to present this petition on behalf of these petitioners in my riding.


Mr. Vic Althouse (Humboldt-Lake Centre):: Mr. Speaker, I rise to present a petition sent to me by a number of residents from Wadena, Saskatchewan. They note the changes proposed in the Patent Act and they wish to oppose them because they will increase drug prices for Canadian consumers. The changes will unfairly hurt those Canadians whose health needs require the purchase of prescription drugs, result in higher cost to the provincial drug plans, and is just another example of Canadian Government concessions to the U.S. at the expense of Canadians in the free trade negotiations. They call on this House to oppose any changes to the laws and reject these proposals.


Mr. Rod Murphy (Churchill):: Mr. Speaker, I also have the honour, under Standing Order 106, to present a petition certified correct by the Clerk of Petitions. The petitioners, from New Brunswick, express their concern over the federal Government's intention to change the Patent Act related to prescription drugs. They believe this will increase drug prices for Canadian consumers and severely restrict the ability of average Canadians to buy necessary drugs. They believe this is another example of the Canadian Government's concession to the U.S. at the expense of average Canadians in the free trade negotiations.

December 8, 1986
Questions on the Order Paper


Mr. Greenaway:: Point of order, Mr. Speaker. I have delivered petitions in this House before and I was always under the impression that you had to give the very basic facts, not a lot of detail. These petitions are very detailed. Indeed, they are arguments. I ask you to consider that.


Mr. Speaker:: There has been some discussion in the Chamber with respect to the extent to which remarks are made at the time of presenting petitions. I think Hon. Members who have petitions to present will take into account the sensibility of other Members and keep their remarks short.
[DOT] (mo)


Mr. Nelson A. Riis (Kamloops-Shuswap):: Mr. Speaker, it is my pleasure, on behalf of residents of a variety of communities in Newfoundland, to present a petition to the House of Commons. These petitioners are asking the Government to reconsider its plans to change the Patent Act which they say will severely restrict the ability of average Canadians to buy necessary prescription drugs and suggest that this will result in higher costs to provincial government drug plans. For a variety of other reasons, which I will not take the time to read, they ask the Government to consider not proceeding further with this piece of legislation.


Mr. Les Benjamin (Regina West):: Mr. Speaker, it is my duty and privilege to present three petitions from an organization called Senior Power, members of which reside in the cities of Regina and Saskatoon and such villages as Milestone, Blaine Lake, Esterhazy and Unity in the Province of Saskatchewan. The petitioners humbly pray and petition Parliament to reject proposals to amend the Patent Act which they believe will increase the price of prescription drugs for all Canadians.


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Philip Derek Lewis: Mr. Speaker, the following questions will be answered today: Nos. 27, 34 and 38.


Mr. McKinnon: Is progress being made to bring into effect the provisions of the National Flag of Canada Manufacturing Standards Act, Chapter 28, Statutes of Canada, 1984 and, if so, when will this occur?


Hon. Monique Vezina (Minister of Supply and Services):: Yes. Progress is being made to revise the existing standard
CAN/CGSB-98.1-M79 as required under the Act and the following is the progress to date.
The Canadian General Standards Board (CGSB), lacking any regulatory authority, is not in a position to bring into effect all the provisions of the cited Act. At the present time it can only proceed with the development of a new National Standard of Canada to reflect current manufacturing techniques and materials.
Since the passage of the National Flag of Canada Manufacturing Standards Act, the representative CGSB Standards Committee has been reactivated to develop a new edition of the existing national standard on the national flag using the consensus process.
Outdoor life tests were conducted in the National Capital Region during the whole of a winter, but the results were not accepted by the committee. At the committee's request, arrangements were made with a commercial laboratory to supervise a more conclusive test program.
The text program has been delayed, first by physical difficulties at the test site, and second by suppliers' repeated postponements in providing specimen flags for testing. The first difficulty has now been overcome, and the second will be avoided by purchasing specimen flags in the market-place. The actual life tests, of course, cannot satisfactorily be shortened.
It is expected that a final standard for outdoor long-term flags will be available by the end of 1987, and that standards for other uses (e.g. indoor) will be available sooner.


Mr. Caccia: 1.	Is the International Standardization Branch of the Standards Council of Canada being moved from Mississauga to Ottawa and, if so, for what reason?
2.	(a) How many persons will be asked to relocate to Ottawa (b) what will be the estimated cost, in severance pay or other forms, to reimburse those persons who refuse to relocate?
3.	What will be the estimated cost of operation in the first year, and how does this compare with the annual costs of operation for the last three fiscal years in Mississauga?
4.	What criteria were used to determine if the International Standardization Branch could operate as effectively in Ottawa as in Mississauga, and how will the failure or success of this move be monitored in the future?
Hon. Harvie Andre (Minister of Consumer and Corporate
Affairs): I am advised by the Standards Council of Canada as follows:
1.	Yes. Reviews have determined that significant efficiencies can be realized as a result of consolidation of operations.
2.	(a) Nineteen. (b) $50,000.
3.	Cost of operations-International Strandards Branch
1987-88	$ 2,764,000 estimated
1986-87	3,222,500 forecast

December 8, 1986

1985-86	2,896,596	actual1984-85	2,649,740	actual4.	The criteria used was the effect the move would have on the efficiency and the effectiveness of the operations of the International Standards Branch. The success of the move will be monitored by the continuous observation of the efficiency and effectiveness of the operations of the Branch.


Mr. Gauthier: 1.	What has been the employer contribution and other payments, expressed as a percentage of payroll, that the Government has made to cover the financing of the Public Service Superannuation Act (PSSA) benefits and their indexing for each of the past 15 years?
2.	Does the Government consider that the 8.0 to 11.0 per cent of payroll employer contribution required to finance PSSA benefits and their indexing that was projected to the year 2025 in the Treasury Board's 1976 paper "Basic Facts about Pensions in the Public Service of Canada" is still a valid projection and, if not (a) for what reasons (b) what are the projected rates that the Government now considers to be a more accurate reflection of future requirements?


Hon. Robert de Cotret (President of the Treasury Board):: 1. Employer pension plan contributions and other payments, as a percentage of payroll, made to finance pension plan benefits and indexing for public servants.
Year	Percent
1970-71	10.6
1971-72	9.2
1972-73	9.4
1973-74	8.7
1974-75	11.4
1975-76	10.7
1976-77	10.3
1977-78	10.4
1978-79	11.1
1979-80	10.0
1980-81	11.0
1981-82	13.2
1982-83	10.9
1983-84	10.8
1984-85	11.0
1985-86	11.4
2. The question relates to long-term forecasts based on the present accounting system for public service pension plans. Given the intention to reform that system to conform with private sector practices, as announced by the President of the Treasury Board, it would not be appropriate to provide such forecasts.


Philip Derek Lewis: Mr. Speaker, I would ask that the remaining questions be allowed to stand.
Canadair Limited Divestiture Act


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


Some Hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Thursday, December 4, consideration of the motion of Mrs. McDougall that Bill C-25, an Act to authorize the divestiture of Canadair Limited and to provide for other matters in connection therewith, be read the second time and referred to a legislative committee.
Nelson Andrew Riis: Mr. Speaker, it is a pleasure to have an opportunity-


Mr. Speaker:: I should have advised Hon. Members that when debate ended on the last day the Hon. Member for Winnipeg-North Centre (Mr. Keeper) had the floor. Perhaps the Hon. Member for Kamloops-Shuswap (Mr. Riis) would defer to him.


Cyril Keeper: Mr. Speaker, I appreciate your intervention. Sometimes our front-benchers are carried away with enthusiasm, and I think with good reason. My colleague is well motivated to speak on this legislation.

I welcome this opportunity to resume my speech on this legislation, and I have some additional comments to make. What really strikes me in this legislation is that the sale of Canadair to Bombardier is a fire sale. Canadair is being given away to Bombardier, and this is a tragedy for Canada and Canadian taxpayers.
Mr. Speaker, a few years ago, when Canadair belonged to General Dynamics, that company was in difficulty. In order to preserve jobs in Montreal, the Canadian Government bought Canadair and started to invest in the company. When Canadair started to have problems, the Government used public funds to invest in the company and did so with good results. The most important example is the Challenger aircraft. This executive aircraft was developed by Canadair, and it is a success. For several years, Canadair lost money, and at the time, the Conservative Opposition attacked Canadair as a waste of public funds, without recognizing the investment aspect. But now, this investment is starting to show results and Canadair is starting to show a profit as a result of this investment: yet, the Conservative Government wants to sell the company. Why now, Mr. Speaker? I would think that when the company starts making a profit, it would be a good time to

December 8, 1986
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keep it in the public sector so that Canadians can benefit from their own investment. Nevertheless, the Conservative Government has decided that it wants to pursue its privatization policy, and it wants an example where that policy is a success. And so it has decided to sell a company that is making a profit, a company that cost Canadians money in the past and that was attacked as a waste of public funding. This is their way of telling the public: When this company was in the public sector, it was a drain on the public purse, but once it is privatized, it will be a profitable concern.
That is how they are trying to sell the concept of privatization. Mr. Speaker, I know this approach is going to cost Canadians a great deal. Although the Canadian Government spent a lot on Canadair, Bombardier paid a very low price, less than the $2.2 billion Canadians have invested in this company.
Bombardier bought Canadair for only $120 million while Canadians had already invested $2.2 billion in the corporation. It is unfair, Mr. Speaker, nothing less than an outright gift from the Conservative Government to Bombardier, a private sector company.
I might point out as well that employment guarantees in this deal are worth little more than the paper which they were printed on. The agreement does include an employment guarantee, but it is not legally binding besides being full of major shortcomings. Here is a quotation to illustrate my point, Mr. Speaker:
"Bombardier is committed to maintaining existing levels of employment at Canadair subject to cyclical shifts and sound business practices". It goes on from there.

A Conservative asked me what was wrong with that. What is wrong is that it is not a real guarantee, it is only an acknowledgement that there will be jobs if the economy is buoyant and company operations are quite profitable. This is not a real employment guarantee.
In my opinion, Mr. Speaker, the Conservative Government took an ideological approach in the case of Canadair. Canadair should have remained public property because it was beginning to turn a profit and Canadians should have been able to reap the benefits of their own investments.
I can tell you that the Bombardier deal to acquire Canadair raises other questions. The people of Manitoba would like to know whether the original agreement included the CF-18 contract. Is the Government prepared to table all documents concerning the Bombardier sales agreement just so we can know whether the Government made a commitment with respect to the CF-18 contract when it made the decision to sell Canadair to Bombardier? This is a very relevant question, Mr. Speaker, because we in Winnipeg have the feeling that we have been shortchanged through the CF-18 contract decisionmaking process. It does appear that the Government may have promised the contract to Bombardier in exchange for the company's commitment to buy Canadair. Mr. Speaker, I would suggest that the best way to get answers to these questions would be to have the Government release all data and documents with respect to this contract. If indeed the Government did strike such a deal with Bombardier concerning Canadair and the F-18 contract, then there was no way the government could have acted fairly with Winnipeg and the other companies which filed tenders for the contract. And I think that if the Government did not make such a commitment, it should have no trouble releasing this information.
I want to stress the employment issue, and I think it is important for the Government to have a better guarantee than the one it received from Bombardier about the jobs concerned, because there is no reason for selling the company at a time when it is making a profit, and especially if we consider that by selling the company, we will be jeopardizing people's jobs.
Canadians have invested a lot of money in this company for the purpose of preserving these jobs. After investing over $2 billion in a company to save these jobs, I think we need a better guarantee than the one the Government received.
Our Minister of Finance (Mr. Wilson) made a promise about Canadair. Fie promised a super Crown corporation that would maintain Canadair in the public sector and help it develop a Canadian aerospace strategy. The sale of Canadair to Bombardier is a clear indication that the Conservative Government has broken a promise it made during the last federal election campaign.
I make this point because the Government has a reputation for breaking promises. People have lost confidence in this Government. People look at all the promises it has broken and think: When will we be able to believe what this Government tells us? With this sale, the Government is once again breaking promises it made during the last election campaign.
I think this Government will fall. Not just because of its poor decisions and errors of judgment, but also because it is projecting the image of a party that does not keep its promises.


An Hon. Member:: That's not true.


Cyril Keeper: The Hon. Member opposite said: That's not true. In that case, I hope the Hon. Member will take part in the debate and clarify the issue for us all. How could the Government promise during the last election campaign that we would have a super Crown corporation that would keep Canadair in the public sector, a promise, if you please-
Mr. Speaker, I want the Hon. Member to take part in this debate to clarify the issue. I want him to explain how the Government could promise it would take action to keep Canadair in the public sector as part of a super Crown corporation, and, when it came to power, break that promise, change its mind and sell Canadair to Bombardier?
December 8, 1986

1 hope the Hon. Member can explain why this is not breaking a promise, because I think that one of the big problems facing this Government is that people have little confidence in its commitments and promises. I imagine the Hon. Member will rise as soon as I finish my speech.
Mr. Speaker, I just want to say that the sale of Canadair to Bombardier is a giveaway and a waste of public funds.


Mr. Blenkarn:: Mr. Speaker, 1 wonder if we could straighten out the record. The Hon. Member will know that Canadair was bought by the Government of Canada at the insistence of the then Minister of Industry, Trade and Commerce, the former Hon. Member for Saint-Maurice, who wanted to expand and build jet aircraft as a result of conversations with the Lear people. He decided he was going to be a builder of planes and needed a plant so he paid $46 million for part of Canadair. The rest of Canadair was, of course, left with General Dynamics which even today continues to operate part of the plant. It has an arrangement whereby Canadair pays the salaries but the people are still part of the General Dynamics empire. The Hon. Member might want to know that it is building nuclear submarine parts.
The Government of Canada blew $2.2 billion on the famous Challenger experiment. Having said that, I wonder if the Hon. Member has looked at the evaluation done by Burns Fry who valued the company at $70 million? And could he tell us why he thought the sale of $120 million for cash, plus another $176 million in notes, shares and so on, which guarantees the continuous operation of Canadair for another 15 years at least, is a bad deal considering the evaluation of Burns Fry.


Mr. Hees:: What does your legal counsel say?


Cyril Keeper: Mr. Speaker, I heard the intervention that I was consulting my legal counsel. I hope that means it is understood that when we respond we have considered what we have to say. I want to remind the Hon. Member that while Bombardier will pay the Government $120 million for Canadair, experts have valued the company at $300 million to $400 million. That is quite a contrast.


Donald Alex Blenkarn: Which experts?


Mr. McDermid:: Name the experts?


Donald Alex Blenkarn: Tell us the names of the experts?


Mr. Speaker:: Order, please. The Hon. Member asked a question and the Hon. Member who has the floor is giving a reply. There seems to be some unsolicited questions coming from other Hon. Members. Since this is a time for comments and questions, perhaps other Hon. Members could wait their turn.


Cyril Keeper: Mr. Speaker, I want to briefly point out to the Hon. Member-and I hope he would acknowledge this-just why this is a such a sweet deal for Bombardier and why I have
Canadair Limited Divestiture Act
described the sale as a fire sale. Bombardier is paying $120 million for this company. That is less than the $300 million liquidation value of the company and less than the $224 million book value. At the same time Bombardier will receive $50 million in federal grants in January and another $30 million to come. There will be export financing of a nonspecified amount. It has now the $1.7 billion defence contract. It has no financial obligation related to the debt of Canadair or its outstanding liabilities and it is going to receive the $20 million profits from 1985 and the $2.8 million profits from the first quarter of 1986. What I am pointing out to the Hon. Member is that it is receiving an awful lot for having paid $120 million and the equivalent of $20 million in royalty payments.
The Hon. Member described the Challenger in very negative terms. He should realize that Canadair will continue to sell the Challenger, that it is a success, and that it expects to be paying the Government royalties with regard to that aircraft.


John Horton McDermid: He did not speak negatively about it.


Nelson Andrew Riis: Yes, he did.


Cyril Keeper: It was hard to see his comment as positive. [Translation]


Mr. Lanthier:: Mr. Speaker, I appreciate the comments made by the NDP Member that there are very few Quebecers in this House this morning to oppose the sale of Canadair to Bombardier. That, to my mind, is a shameful comment to hear this morning, and I hope they will have the guts to tell Quebecers face to face that they opposed Canadair's sale to Bombarbier. To my amazement, but fortunately, he did not make that speech when our fellow-Quebecers were here in this House, because of course he would probably have been, if not lynched, at least booed down.
Second, this is a typical example of the NDP's peculiar sense of business. Since when do you sell a company when it is in the red? The time to sell a company is when it is hale and hearty. You cannot get good prices for a company when it is going under, when it is ready to bust. Of course, Bombardier was showing good signs. I would say our Minister showed a good sense of business when he sold the business to Bombardier, a Canadian corporation, while it was fit for sale. As you know, the time to buy is not when everyone else is buying. The time to buy is when everybody is selling. And I think that this French-Canadian company from Quebec did a risky thing when it bought that industry with all that was involved.
As I said, I have two comments to make. I would like the New Democratic Party to come to Quebec and tell people whether they oppose Canadair's sale to Bombardier. Second, I would like to know what business principle would require a business to be sold when it is on the verge of bankruptcy rather than when it is hale and hearty.

December 8, 1986
Canadair Limited Divestiture Act


Cyril Keeper: Mr. Speaker, I want to mention to my hon. colleague that I have said that this sale is a gift to Bombardier. Why sell a public corporation to a private company at a price which is really lower? Why sell a public corporation when it has started to show a profit? Why sell such a corporation without strong jobs security clauses? Because the jobs security clauses in this agreement have no legal power. In this party, we are aware that the industry will be able to ensure employment.
I suggest it is as possible in the public sector as in the private sector. Is it necessary to give such a Christmas present to a private firm for this corporation to continue its operation in Montreal? No, Mr. Speaker. Canadair has already started to show a profit.
The second point raised by the Hon. Member had to do with the price. He said that when a company is not a profitable going concern it is not possible to sell it at a good price. Mr. Speaker, the right time would be now that the company is beginning to make a profit. That is the right time if you want to sell this kind of company and ask for a good price. The company may have lost money in the past, I agree, but then it was designing new projects and Canadian taxpayers invested their own money in the company. To simply give it away to some private sector friends is definitely not a good idea and the Government should have asked for a fair price.


Donald Alex Blenkarn: Mr. Speaker, I was wondering if members of the New Democratic Party have had an opportunity to read the opinion of value put forward by Messrs. Peat Marwick dated April 16, 1985. I would like to read into the record the opinion which states in part:
-subject to the scope of our review and the major assumptions noted below, the net realizable value of Canadair Limited as at September 30, 1985 would be in the range of $(246,500,000) to $(376,20Cf,000). Bracketed figures indicate a negative value or a net cost to wind down the operations.
The report goes on to state that the average would be somewhere in the range of minus $330 million, and that would be winding it up or liquidating the company.
Let us put the record straight. Let us understand that this company had a value as a going concern of $70 million. It was sold for $120 million cash, plus royalties of up to $176,000, perhaps netted out at $20 million on cash now for future considerations. It was a very good sale. Let us understand that and let us not give the House any more false figures.


Cyril Keeper: Mr. Speaker, I have but one thing to say to my colleague. It is that, yes, we are aware of the background to this deal, and yes, it does have all the appearances of being a fire sale, a Christmas gift to the corporate friends of the Conservative Party in Montreal.


Some Hon. Members:: Oh, oh!


Cyril Keeper: I would like to back that up by pointing out that Canadair became profitable a couple of-


Claude Lanthier: Mr. Speaker, the allegations we have just heard are harmful to a business-oriented Montreal company which has always been thriving and whose management have never been identified with Conservative grass roots. So this is absolutely false.


Cyril Keeper: If it was not a gift, Mr. Speaker, I wish the Hon. Member would explain why the Government sold a company like Canadair at a basement-bargain price.

1 would like to respond to my friend, and I will do so briefly and to the point. The points are these. First, Canadair has become a profitable company, so why sell it for a low price? Second, Canadair is benefiting from numerous forms of assistance from the federal Government which I have outlined earlier. I ask to Hon. Members, why pay Bombardier to take Canadair off the hands of the public when it is now making a profit?


Nelson Andrew Riis: Mr. Speaker, we have just listened to a very interesting speech, and some always interesting interventions following the speech. I think all Members would agree that the Hon. Member for Winnipeg North Centre (Mr. Keeper) who gave his entire speech in French without the use of notes is to be congratulated.


Some Hon. Members:: Hear, hear!


Claude Lanthier: It's your turn now.


Nelson Andrew Riis: It is always a pleasure to see Hon. Members who have studied hard demonstrate their proficiency in one of Canada's official languages. Others of us still have some work to do in that respect.
It is a pleasure to have this opportunity to say a few words about the Bill which is before us at second reading, Bill C-25, an Act that will result in the transfer of ownership of Canadair to the private corporation of Bombardier in the fine City of Montreal.
I wish to begin my comments by indicating, first, a fact about which I am not sure Members of the House are aware. There is a great deal of myth and fantasy, fact and fiction, which takes place in the House at times. But since the Progressive Conservatives came to power in September of 1984 there has been a move to change over by selling off a number of Crown corporations to the private sector, a move called privatization. The Minister of State for Privatization (Mrs. McDougall) was appointed. So presumably the assumption in the country is that since the Progressive Conservative Government has come into effect there must be less public ownership in the Canadian economy today than there was, particularly in the federal sector.
December 8, 1986

Statistically, it is interesting to note that today, in spite of a number of moves by the Government, including this latest one to privatize Canadair, there is now more federal public ownership than ever before in Canadian history as a result of Petro-Canada expanding into the service station industry. On the one hand there is a Government which as a result of its own initiatives has expanded the federal role in the economic sector of the country, particularly through the expansion of Petro-Canada, and on the other hand it is giving the impression or the illusion that it is reducing the amount of public ownership. I just want to put that fact on the table, so to speak, before we continue so that while we might be giving impressions in the House of Commons today the facts will speak for themselves.
I wish to indicate that we New Democrats oppose this legislation for a number of reasons. I will comment on only three of them this morning. The first is that when one looks carefully at what is going on it seems that what we are discussing today is a role toward privatization in the absence of any clear program, plan or strategy for privatization. When we have 233 provincial Crown corporations in existence and 464 federal Crown corporations I do not think there is anyone who would say that we must automatically expand those numbers. In fact, no one would say that an evaluative process over time probably makes a great deal of sense in terms of ensuring that these corporations under public ownership make sense, that they continue to fulfil the roles for which they were intended. Just to make it perfectly clear, we have no opposition to the consideration of the role of various public Crown corporations. To blindly flail ahead and privatize for the sake of privatization, or for the sake of appeasing some radical right wing fanatical back-benchers in the Conservative Party, does not make any sense.
A few years ago Canadians were given an impression. When Ministers of the Crown or when political leaders in the Progressive Conservative ranks make certain comments people assume that they are telling the truth. I recall a statement made on August 27, 1984 by the Hon. Member for Etobicoke Centre (Mr. Wilson), who is the present Minister of Finance. He said the following regarding the Canadian aerospace industry:
As taxpayers we have a large investment in Canadair and de Havilland. Our objective is to get our money's worth for this investment, in terms of employment, sales and development.
We will set up a separate Crown corporation for Canadair and de Havilland with a mandate for the development of the aerospace industry and not merely financial control. This organization will be responsible for developing in conjunction with the aerospace strategy so that Canadair and de Havilland will become commercially viable and will continue to be so into the next century.
We will increase aerospace expertise in this new corporation so that the management are not merely bureaucratic financial wizards but people with hands-on experience and a thorough knowledge of the aerospace market.
I recall hearing the Minister of Finance (Mr. Wilson) making that statement. It seemed to me at the time that he was making a commitment to Parliament and the people of Canada that the Government planned to continue on with the
Canadair Limited Divestiture Act
public ownership of both Canadair and de Havilland. However, such is not the case. Now in 1986, a completely different approach is being taken.	.
Looking closely at the situation, I believe it was after the former Minister of Regional Industrial Expansion took over the responsibility of the concept of privatization that he, motivated by his extreme political, financial and economic right-wing views, decided to proceed in the manner in which the Government is proceeding today. I do not think it was the original intent of the Government to move in this direction but, as on a number of other occasions, it appears to have changed its mind. The Government simply decided to expand its privatization initiatives simply for the sake of privatization.
Government Members are doing this so they can say to their more radical, extremist supporters, look what we have done, we have now privatized X, Y and Z public corporations. Look at the wonderful job we have done. This is being said, keeping in mind that we have more public ownership in the federal sector today than there has ever been. Again, I see this Bill as being a political, extremist tool.
A second reason that we will oppose Bill C-25 is that as far as we can make out this is not a sound financial decision. If all Members of the House were to identify sectors of the Canadian economy in which there will inevitably be growth, development, progress, job creation and the development of expertise in the future, there is no question that the aerospace industry would be one of them.
Because you are a student of Canadian politics and history, I know you, Mr. Speaker, would recall the Avro Arrow fiasco. This occurred at another time in history when Canada was just on the edge of developing into a world-scale player in the aerospace industry. The Progressive Conservative Government of the day said that it had a better idea. It wanted to scrap the Avro-Arrow plan. In a sense, it wanted to torpedo any effort on the part of Canada to develop in the aerospace industry. Perhaps "torpedo" is the wrong word to use in that sentence. Nevertheless, the reality is that the Government of the day made an interventionist decision that set back the development of Canada's aerospace industry for decades.
Just in the last number of months we were beginning once again to build up this leading technology. Canadians are being recognized around the world as being significant and major players in this very critical field of the future. What is the Government doing now? It is backing out of the commitment it made to the people of Canada through the present Minister of Finance back on August 27, 1984, to continue playing some role in the development of this technology.
For a Government to play some role in the development of the aerospace industry is nothing new. As a matter of fact, every single country around the world that is developing an aerospace industry, with the exception of one, is doing so in cooperation with the Government of that particular country. The one exception is the United States of America. West Germany,

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Canadair Limited Divestiture Act
France and Great Britain all have major public-sector involvement in the development of the aerospace industry. However, the United States does not. Of course, the reason for that is obvious. The tremendous power of the military budget and the role of the Pentagon essentially drives the aerospace industry through incredibly vast, financially viable defence contracts. There is no need for the Government to play a participatory role. It simply buys such a significant number of aircraft of all sorts and descriptions as well as parts and technology that the need is not there.
The point I want to make is that the role of a Government as a partner and co-operative player in the development of aerospace technologies is something that is found everywhere. Canada does not have to feel that it is out of step. As a matter of fact, it is now moving out of step by removing itself through the selling off of Canadair.
Back in May of 1985, I read the Budget Papers with interest. Under the heading of Rationalization and Privatization of Crown Corporations and Other Federal Investments, a number of points are listed. Point No. 4 at page 26 says the following:
Crown corporations will not be sold at distress prices merely to transfer them quickly to the private sector.
A large deficit and normal fiscal prudence dictate that the privatization program should proceed at a measured pace with careful consideration of all the issues, not the least of which is the receipt of a fair and reasonable price for each asset.
That was contained in the Budget Papers of May 1985 which my friend, the Hon. Member for Mississauga South (Mr. Blenkarn), has now committed to memory.
Let us take a look at Canadair itself and just what it is we are talking about at this stage of the progress of this Bill. The history of Canadair takes us back to 1944 and the development of our aircraft industry. It is useful to note that since then we have constructed in excess of 4,000 aircraft including 600 jets. By all accounts, world over, Canadian participation in the aerospace industry is recognized as positive participation. We have been a world leader in a number of technologies and continue to be one.
In 1976 one of General Dynamics' components ran into some very serious financial difficulty and planned to abandon its plant. The Government of the day thought that rather than abandoning the plant and the technology and, perhaps more importantly, all of the people who worked in that sector of General Dynamics, they would purchase it for the best interests of the development of the Canadian aerospace industry. Indeed, the Government did purchase it to the tune of something like $48 million back in 1976.
Canadair is now recognized as being the number one player in the aerospace industry and its most recent success has been the development of the Challenger executive jet. Personally, I have some concerns about our initiative in that area but, nevertheless, it is a high quality piece of machinery and one of which we should at least feel proud in terms of technological development.
It is important that this occurred at a time when the aerospace industry was experiencing difficulty around the world. Let us face it, there was a good deal of mismanagement going on. I do not suppose it would be easy to prove that, but I think all of us in this room have been briefed by a number of players who have recognized that there was a great deal of mismanagement and some very serious problems with the handling of the affairs of Canadair. This caused a great deal of financial difficulty so the Government and taxpayers of Canada were asked to assist through a variety of measures. A great deal of money, in excess of $2 billion, was spent over a number of years to develop front-end technology, the expensive part of investing in research and development through to production. We are now at the production stage, having spent all of that time, expertise and research. Quite frankly, now seems like an odd time to be selling after making that tremendous public investment.
Today we are talking about the four plants in Montreal, three at Ville St-Laurent and one at Dorval, employing in excess of 4,500 employees. It is very important that Canadair remain a viable industry, not only for the City of Montreal or the Province of Quebec but indeed for the future of Canada and Canadian industry.
Why privatization? Why are we selling this off? Over the years the Government has invested a tremendous amount of money preparing the stage and laying the foundation for what is becoming a world leader in the aerospace industry. Various sources place its book value from $75 million to $400 million in terms of the actual value of the company. These are difficult times to place a value, because we are trying to evaluate how the company will perform in the future.
Bombardier has received an early Christmas gift considering that all it has to pay is $120 million. Bombardier is receiving a lot for that money. On December 2, 1986 my colleague from Winnipeg-Fort Garry (Mr. Axworthy) was referring in the House to a condition incorporated into the letter of intent which involved the maintenance contract for the CF-18 going to Canadair as opposed to Bristol Aerospace in Winnipeg, and he stated:
-the transfer of the CF-18 systems technology would cause Canada to pay Crown royalties equal to 1 per cent of Canada's share of the program revenue.
He went on to say:
-that quite clearly in the bargaining and negotiations the Conservative Government had decided to provide the CF-18 work as one condition of the sale in order to get cash flow into Canadair sufficient to satisfy the requirements of Bombardier.
In other words, there was at least the suggestion that there was all sorts of wheeling and dealing prior to the finalization of that decision to provide the CF-18 maintenance contract to Canadair. We see now that this was all done thinking ahead as a way to sweeten the deal, so it could be made more attractive to Bombardier, so that they would purchase it.


An Hon. Member:: No proof.
December 8, 1986


Nelson Andrew Riis: As my hon. friend opposite has said, there is no proof. Certainly, all of the allegations certainly point in that direction.


Philip Derek Lewis: All of the allegations point in that direction; what a statement that is.


Nelson Andrew Riis: Again, we have always wondered what it was that caused the Government to change the rules of the game half way through. Now, I guess, we have found out. We find that it was all part of the deal to privatize Canadair and it required the maintenance contract, which I might add was worth nearly $1.5 billion over a number of years. This is a pretty attractive piece of icing on the cake that was delivered to Bombardier.
In closing, I wish to say when we talk about privatization, let us all recall that Liberal governments, Progressive Conservative governments, P.Q. governments, Social Credit governments and New Democratic Party governments have all found it appropriate to create Crown corporations at one time or another. The Conservatives created the Canadian Broadcasting Corporation, the Canadian National Railway, Ontario Hydro, Alberta Telephone, Pacific Western Airlines, Manitoba Telephone, B.C. Hydro and B.C. Rail. I could go on and on, Madam Speaker. Nearly 250 of them could be listed where various provincial governments decided that it was appropriate and in the best interest of their region, or of that industry, or of that public utility.


Mr. Cassidy:: I thought they were opposed to public ownership.


Nelson Andrew Riis: Most of these were done under the rule of Conservative governments. In closing, let us remember that, while there seems to be a commitment to privatize for the sake of privatization, we have to ask, is this good for Canada? No, it is not. Is it a good deal for Bombardier? Yes, it is. Is it an appropriate step that the Government should be taking? No, it is not.
Also, in conclusion, Madam Speaker, we must recognize that today as a result of Progressive Conservative policies under the Mulroney Government we now have more federal public ownership than ever before in Canadian history.


The Acting Speaker (Mrs. Champagne):: Questions or comments. The Hon. Member for Mississauga South (Mr. Blenkarn).


Donald Alex Blenkarn: Madam Speaker, I was wondering if the House Leader of the New Democratic Party, and their former finance critic who spoke eloquently in the past about the horrors of this particular Canadair corporation when we were spending well over $2 billion financing an expensive and ill-conceived aircraft program, could tell me where he gets his valuation of $400 million. The valuation we have as a going concern to wind up the company was negative $330 million. We would like to know where the valuation of $400 million comes from.


Nelson Andrew Riis: I will respond to that in a moment. I wish to respond, however, by asking the Hon. Member for Mississauga South (Mr. Blenkarn) whether he is aware of the facts that I laid on the table earlier, that under his Government there is now more of our economy in Canada under federal public
Canadair Limited Divestiture Act
ownership than ever before, and if this does not fly in the face of many of the comments that he has made over the years?


An Hon. Member:: Answer the question.


Nelson Andrew Riis: It is the time for questions and comments. I am asking a question as well as making a comment. I do not think that there is any rule that says one cannot ask a question of my hon. friend.
To be fair, the Hon. Member for Mississauga South is the Chairman of the Standing Committee on Finance and Economic Affairs. Therefore, he is eligible for questioning. Therefore, under the Standing Orders, he is not a person who is not eligible to receive questions. I will begin with that I also wish to remind the Hon. Member that in my speech I went on at some length about the fact that there was a great deal of mismanagement at the senior levels in Canadair. We are all aware that that was very costly to the taxpayers of Canada. I was a critic at the time, and I continue to be, of what that poor management had cost.
I wish to remind my hon. friend that while at times this Crown corporation has had disastrous management in terms of its decisions, think of Dome Petroleum, think of Maislin, think of Massey-Ferguson, think of hundreds and hundreds of private sector corporations like Northland Bank, Canadian Commercial Bank, and so on, that made decisions that were unbelievably stupid. They made silly, unbusinesslike, unprofessional decisions. When we talk about mismanagement or making imprudent decisions, this is not restricted to the public sector. We can certainly list many more private sector corporations that are equally guilty of having misread the climate of the time, for example, assuming that oil prices would reach certain levels when, in fact, they did not, and made all sorts of misjudgments. If we are going to be spreading some of the blame around in terms of management leadership, let us recognize that it is to be spread around through both private and public sectors.


An Hon. Member:: You did not answer the question.


The Acting Speaker (Mrs. Champagne):: The Hon. Member for Mississauga South.


Donald Alex Blenkarn: That is exactly what I was going to do, Madam Speaker, is ask the Hon. Member about the $400 million valuation that the New Democratic Party has in mind. While we are looking at valuations, may I point out that Burns Fry did a current value of the company for us. They came up with a value of possibly $70 million. But we were able to negotiate a transaction where the buyer pays $120 million cash on closing; $173 million in royalties on further sales of Challenger aircraft; $150 million if the company does not stay in business for up to 15 years by virtue of certain shares in Bombardier Aerospace; an additional $3 million in dividends as a result of the proceeds of a lawsuit with Avco Lycoming; and 1 per cent of the royalties under the CF-18 systems engineering contract, which, if the contract is worth $1.5 billion, that amounts to another $15 million.

December 8, 1986
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Now I am wondering where they came up with this $400 million valuation. It seems to me that the Government's deal is far better than any other appraisal, and far better than any other offer. The offers were analysed. How could he possibly indicate a price of $400 million? If the Hon. Member has that price, will he table it with the House? Will he tell us who arrived at that figure? Who gave us the evaluation of $400 million?


Nelson Andrew Riis: Madam Speaker, 1 am pleased to indicate formally to the House the source of that $300 million to $400 million evaluation. It was provided to us by our esteemed critic of the industrial sector, the Hon. Member for Essex-Windsor (Mr. Langdon).


Some Hon. Members:: Oh, oh!


Nelson Andrew Riis: To be fair


Mr. Turner (Ottawa-Carleton):: What is his source?


Nelson Andrew Riis: -when the actual source is identified, we will table it in the House of Commons.
However, I remind the Hon. Member for Mississauga South (Mr. Blenkarn) that he forgot to answer my questions. Because of the involvement and interventions of the Progressive Conservative Party in the market-place, the result has been more public ownership than ever before in Canadian history. I am referring to the takeover of Gulf by Petro-Canada, of some 800 service stations. Consequently, what we are talking about here are really nickels and dimes; we are talking about a little nickel and dime privatization here and a little nickel and dime privatization there. In the meantime they are quietly expanding their activities in the private sector.


Ian Gardiner Waddell: $866 million.


Nelson Andrew Riis: I hear my hon. friend. Let us keep this in perspective. The Government may be commenting upon its wonderful plans and upon privatizing players which are minor in many respects, relative to the giant, Petro-Canada. However, I wonder whether the Hon. Member would have some comments about the facts which were laid upon the table today.


Donald Alex Blenkarn: Madam Speaker, I am quite prepared to answer questions in the question period of the Standing Committee on Finance and Economic Affairs if my friend wants to ask me some; I would be delighted to do that. I am pleased he is so interested in seeing Petro-Canada privatized. If this is only a nickel and dime Bill-


Nelson Andrew Riis: Madam Speaker, I rise on a point of order.


Donald Alex Blenkarn: Let me continue; you will have your opportunity.


Nelson Andrew Riis: I just want to make it absolutely and perfectly clear, so that my hon. friend does not get carried away with the enthusiasm of his bombast, that at no point did I suggest that the leading oil producer in Canada, Petro-Canada, should be privatized. That was certainly never my intention.


The Acting Speaker (Mrs. Champagne):: The Hon. Member knows very well that that is not a point of order but a point of debate. The Hon. Member for Mississauga South (Mr. Blenkarn) has the floor.


Donald Alex Blenkarn: Madam Speaker, it is interesting that the New Democratic Party thinks this is only a nickel and dime Bill. If that is so, the NDP ought to let it go through.
If it were really the privatization Bill about which the NDP is concerned, that is the privatization of a totally integrated oil company, it would perhaps see more privatization by the Hon. Minister of State for Privatization (Mrs. McDougall).
In view of the fact that it is only a nickel and dime Bill, will the Hon. Member tell the House why he is opposing the sale of a company in an amount which is far more than the appraisals and on terms considered by everyone to be excellent? The sale will be to a solid, Quebec-based manufacturing corporation, so that the corporation can widen its abilities and put Canada squarely on the aerospace map where it should be. Why is he opposed to it? Why is his Party opposed to a solid Quebec company, Bombardier, buying this company, even though it is paying far more than the estimated value as determined by Toronto estimators?


Nelson Andrew Riis: Madam Speaker, this provides me with an opportunity to clarify our use of the figures. On April 16, 1985 the firm of Peat Marwick advised the Minister responsible for privatization that the value would be in the range of $330 million.


Donald Alex Blenkarn: That is negative, my boy, and I have the letter right here.


John Napier Turner: That is a negative figure.


Some Hon. Members:: Oh, oh!


Donald Alex Blenkarn: On a point of order-


The Acting Speaker (Mrs. Champagne):: Order, please. I cannot even hear the Hon. Member. How can I rule on whether or not he has a point of order?


Donald Alex Blenkarn: Madam Speaker, when we quote in the House from documents prepared by others it is essential as a matter of order that the documents be quoted accurately. That being a point of order, I indicate to the House that I referred earlier to the letter of Peat Marwick and now my friend is referring to it. It shows the figures in brackets. That being so, and as was pointed out in the letter, it is a negative $330 million.
December 8, 1986


The Acting Speaker (Mrs. Champagne):: I thank the Hon. Member for that information. I think it is time to resume debate.


Leslie Gordon Benjamin: Madam Speaker, I want to speak on the Bill because it raises fundamental issues, partly concerning philosophy and ideology, but also concerning the commitments of political Parties in Canada in the course of trying to be elected to Government.
In his statement of August 27, 1984 the Minister of Finance (Mr. Wilson) stated that as taxpayers we had a large investment in Canadair and de Havilland. He also indicated that the objective was to get our money's worth for this investment in terms of employment, sales, and development. That statement is true, and we agree with its objective.
Canadians have massive investments, through their Government and through the tax system, in a host of enterprises. That has been the case for decades. However, it is very difficult for Governments to run something in which they do not believe or to keep something in their possession which they do not want. That has been true of Liberal and Conservative Governments since the 1860s. They did not become involved in Crown corporations because they believed in them. They did not take over industries or put taxpayers' money into public enterprises because they thought it was the proper thing to do. In almost every instance investments of taxpayers' money since the 1860s were made because the private sector failed or refused to carry out essential public services and fulfil national goals.
The Conservative mythology, a mythology peddled by both the Liberal and Conservative Parties, is that it can be left to the private sector, to free and open market forces, to do this. They believe that Government should get out of the private sector, that it should play a minimal or no role at all. However, experience over the decades has shown that the first to run to the Government of Canada with its hands out is the private sector which failed. We have a 120-year history of bailing out the private sector. A former honoured and respected Member of the House was perfectly right when he spoke in 1972 and 1974 about corporate welfare bums. We paid for the CPR and do not own it. We created CN out of five bankrupt railroads. The taxpayers made an initial investment of over $1 billion in the early 1920s. That was quite a bit of money then. Over the next several decades the bond holders and shareholders got their money back. They were safe. The taxpayers paid and paid and paid.
When CN finally turns things around and starts making money, and while I am only guessing I think I am close when I say that over the last few years CN has paid around $40 million or $50 million in dividends to the shareholder, namely the taxpayer of Canada, that shareholder is just as much entitled to a return on that investment as you or I or any other person who invested in the stock or bond markets. However, for some reason or other, when the taxpayer invests through
Canadair Limited Divestiture Act
his Government he is not supposed to get a reasonable return on that investment. He is only supposed to get stuck. If it is a private investor in a bank, for instance, we have to look after them when the bank goes belly up. If it is the aircraft industry that fails, it is the taxpayer who bails the private investor out; some $48 million initially to take over Canadair. I forget what it cost to take over de Havilland. Why did we do this? There were two laudable objectives to preserve jobs and retain research and development already in place. However, I submit that those objectives took second and third place to the objective of bailing out private corporations at the taxpayers' expense.
Every time public funds are put into these kinds of enterprises the taxpayer must retain equity ownership. I make the same argument now as I did when we were dealing with the Western Grain Transportation Act. When the Government of Canada puts up $650 million a year, divided roughly evenly between Canadian Pacific and Canadian National, we maintain, then and now, that what CN gets increases the equity of the people of Canada in CN by that amount. For the amount of money given to CP the people of Canada should receive common voting shares in CP. Do not just hand them the money and let them do what they darn well please with it.
However, even where we have billions invested there is little or no concern about the right of the taxpayers collectively to have the opportunity to get a return on that investment. Instead, those investments are looked upon as Government interfering with the private sector-whether it be was the private sector that failed and came to Ottawa on its hands and knees begging to be bailed out, whether it is the aircraft industry or the financial institutions, or a host of other kinds of operations in which the private sector had been bailed out time after time after time. In this instance the taxpayer gets to keep the $ 1.2 billion of long-term debt owed by Canadair. I thought normal business practice was that when you took over a company you took over the assets, the goodwill and the accounts receivable, but you also take over the accounts payable. Not in this case. That is strange. If that is not a double standard I have never seen one.
The same thing has applied in other instances. We relieved CN of billions in debt and it was only in the last refinancing that we took increased equity ownership. In the decades prior to that the debt was removed from CN and placed on the books of Canada.
About the same time as the CDIC started the bidding process for Canadair the Government of Canada all of a sudden fattens up Canadair. The company was fattened up with $31 million in immediate financial assistance, plus $20 million for a joint venture with West Germany, plus an unspecified amount of export financing which is still to come. As I read it, we have already put up $51 million, and you can knock that off the $120 million Canadair is supposed to pay the people of Canada.

December 8, 1986
Canadair Limited Divestiture Act
I want to say something about my one experience with Bombardier. The Minister of Industry, Trade and Commerce in the former Government, Mr. Lumley, made it a practice that when he made a trip he would take one or more Members of Parliament with him, from opposition Parties as well as the government Party. He took me with him on a trip to six countries in 11 days in East Africa. He closed some $80 million or $90 million worth of contracts with different Governments. When we were in Nairobi he asked me if I would have a look at their railway operations. The government people there were very good. They escorted me and two or three others through the fully-modernized railway shops. They had the latest technology and equipment supplied by West Germany and Sweden. There were 15 locomotives there which had been built in Canada. Immediately one feels good about that. However, at that point in time, February of 1982, 12 of those locomotives were on the ground. They had been bought from Bombardier 10 years earlier. The main generator of each locomotive, made by Canadian General Electric, did not work. All the welding around the fuel tank, which is also the walkway around the locomotive, had cracked. For the information of my colleagues who are not acquainted too well with locomotives, the Bogie is the cast iron framework which holds the wheels of a locomotive on. The Bogies were made by Algoma Steel. They cracked. At that point none of those three companies, not a damn one of them, had paid a nickel under warranty or fixed the problems. That country cannibalized three of the 15 locomotives and used the parts to get the other 12 running. It was the most embarrassing experience.


John Napier Turner: Whose fault was that? CIDA? Who was responsible for maintenance?


Leslie Gordon Benjamin: Bombardier was the manufacturer of the locomotives. To this day I do not know whether that country has been properly recompensed for our default of a normal contractual obligation.
West Germany bought three Challenger jets which I understand have been grounded in West Germany since February because Canadair was unable to supply maintenance manuals properly translated into German. As a result, West Germany has withheld $60 million of payment for those Challenger jets. If that is true, why is it not shown as an account receivable on the books? If it is an account receivable, who will receive the money? If West Germany is finally satisfied with the translation of the highly technical maintenance manuals and pays the $60 million, who will receive the money? I hope the Government will answer that question if and when this Bill goes to committee.
I submit that those funds should go to the people of Canada as some compensation for the $1.2 billion of long-term debt imposed upon them. For your information, Madam Speaker, the people who wrote the maintenance manual for the Challenger jet are writing the maintenance manual for the CF-18. That should be checked out very carefully.
I would like to say a word about the general thrust of the Government's action in this instance, which is all part of its
policy of privatization, deregulation and free trade. It will cost us dearly. One need only ask the folks in Sault Ste Marie and London, Ontario, who have lost their Air Canada services, what they think of deregulation. I predict that places such as Yarmouth, Nova Scotia, Sudbury, North Bay and Thunder Bay will not long receive the services of Air Canada or those of the other national airline. I suggest that Windsor, Ontario, is probably not very safe either. I suggest you ask the folks in Edmonton what they think of deregulation now that they no longer have any direct flights from Edmonton to Ottawa. Edmonton is only a little village of about 650,000 people. In addition to having to change aircraft, one may now also change airlines. So much for the privatization-deregulation thrust.
I move, seconded by the Hon. Member for Humboldt- Lake Centre (Mr. Althouse):
That the motion be amended by deleting all the words after the word "that" and substituting the following therefor:
Bill C-25, an Act to authorize the divestiture of Canadair Limited and to provide for other matters in connection therewith, be not now read a second a time but that it be read a second time this day six months hence.


Ian Gardiner Waddell: Madam Speaker, I rise on a point of order. Before beginning debate on this motion, what becomes of the period for questions and comments with respect to the speech of the Hon. Member for Regina West (Mr. Benjamin)? I would like to ask him a question.


The Acting Speaker (Mrs. Champagne):: I will allow Hon. Members to ask questions or make comments on the speech of the Hon. Member. We will then begin debate on the motion of the Hon. Member for Regina West (Mr. Benjamin).


Donald Alex Blenkarn: Madam Speaker, would the Member for Regina West (Mr. Benjamin) advise the House whether it is his opinion and that of the New Democratic Party that Bombardier is such an incompetent company that Canadair should not be sold to it? His remarks with respect to his tours of East Africa indicated that. Having made that connotation, could the Member tell us whether the New Democratic Party is opposed to the sale of Canadair to Bombardier because Bombardier is incompetent? Is that the view of the New Democratic Party or only of the Member who castigated Bombardier because of certain locomotives he saw on his travels around the world?


Leslie Gordon Benjamin: Madam Speaker, as the Hon. Member will recall, I told the House that I wished to relate my one experience with the products of Bombardier. I did not say it was a bad company or that it was badly managed. I believe it was bad in that particular case but, to be completely fair, it inherited some of its badness from M. L. Worthington Locomotive Works, CGE and Algoma Steel. However, that has nothing to do with the lack of viability of Bombardier. I think it is a viable company and it has manufactured many good products. I remember riding in the first snow vehicles made by Bombardier. They had a cab and were much bigger than the snowmobiles they presently make. I believe that Bombardier was one of the originators of that vehicle.
December 8, 1986

I am not for one minute saying that Bombardier is not a viable company and cannot be even more viable. Perhaps I was not clear enough in explaining that one reason for retaining some equity ownership when selling off a Crown corporation is to ensure that there is continuous good management and continued protection of the investment for which you are responsible on behalf of the taxpayers of Canada. The Government should retain some equity ownership in Canadair in order to ensure that Bombardier operates efficiently and competently. The Government is supposed to protect the interests of the investors for whom it is responsible, namely, the taxpayers.


Donald Alex Blenkarn: Madam Speaker, if my hon. friend is correct, that the New Democratic Party would approve the Bill if we retained equity ownership, did he not know that we are in fact retaining equity ownership? Let me quote what it says with respect to shares:
Series A-S100 million special shares to be issued by a company, to be incorporated under the name of Bombardier Aerospace, reflecting Bombardier's commitment to use the available working capital of Canadair for the future growth and development of Canadair; Canadair must pay full face value for these shares if the capital is used for other purposes
Series B-S50 million special shares to be issued under the name Bombardier Aerospace to be offset by future incremental benefits to Canada of Canadair's operation under Bombardier ownership; if not earned out the face value will be paid to the Crown after 15 years.
Does the Member not realize that this is particularly the nature of this deal? That being the case, will he stand up and withdraw his motion that clearly is improper and suggest to his colleagues that they vote for the transaction?


Leslie Gordon Benjamin: Madam Speaker, of course that does not provide any significant control. How many people will the Government of Canada put on the board of directors? What say will the Government have in the management of the company? I would like to be here in 15 years to see what, if anything, is recovered on those shares. We will leave that for another day. That is one of many features that should be in the Bill. The deal is simply too easy and the amount is too low for what I believe to be its reasonable book value, its technology value or reasonable liquidation value. I believe that $120 million is far too low.


John Napier Turner: What should it be?


Leslie Gordon Benjamin: I would put it somewhere between $300 million and $400 million if you took into account-


John Horton McDermid: That is a $100 million variance.


Leslie Gordon Benjamin: If one takes the net book value, estimated technology value or liquidation value, I believe the value is in that range. I believe that is what should be obtained for the taxpayers of Canada.
Canadair Limited Divestiture Act


Ian Gardiner Waddell: Madam Speaker, when I rise again to speak in the debate I will deal with these figures which I believe have been bandied about inadvertently. There is a difference between the liquidation value and the technological book value of a company. I will invite Hon. Members to read the Canadair annual report. I suggest we should be careful in our reference to these figures.
However, I want to ask the Hon. Member about the principle that is involved because he is an old hand in the House and a veteran Member who has long been the transport critic for our Party. He is well respected by all sides of the House and by people throughout the country. The Hon. Member is especially knowledgeable in this area of deregulation. All Canadians are interested in this because the Government seems to have embarked on a path of deregulation. I ask the Hon. Member to compare deregulation with privatization, because this is the first time we have debated the new Conservative thrust of privatization in the House. We have seen deregulation in the United States and privatization in Britain. Are these approaches tied together and, if so, will he explain how? I look forward to his reply because the Hon. Member speaks in down-to-earth language which ordinary Canadians can understand.


Leslie Gordon Benjamin: Madam Speaker, I must disagree with my hon. colleague about one of his points. He used the word "old". I prefer to say "older".
I suppose this policy is part of an ideological package that has been put forward ever since the days of the proposition 13 syndrome that came out of California some 15 years ago and spread up to Canada like a swarm of grasshoppers. It is all part of the same package. If you are going to privatize a public corporation that is quite heavily regulated-and I am thinking of airlines in particular-it is necessary to give the private sector all the benefits possible to entice it to take over a public enterprise and put it in the private sector. The deal must be made as attractive as possible.
The airlines made it plain to the Transport Committee that if fares and revenues would be deregulated it would be necessary to deregulate the companies and relieve them of public regulations so that they could operate more freely in the so-called open market.


The Acting Speaker (Mrs. Champagne):: Resuming debate.


Donald Alex Blenkarn: Madam Speaker, I rise on a point of order. I believe you intend to recognize the Hon. Member for Vancouver-Kingsway (Mr. Waddell). He has already spoken in this debate and is not permitted to speak again, despite the motion which has been put. The motion dealt with Bill C-25. We are debating Bill C-22. The motion is void and cannot now be put.

December 8, 1986
Canadair Limited Divestiture Act


The Acting Speaker (Mrs. Champagne):: We are debating Bill C-25. The Hon. Member has spoken on the main motion but we are now on an amendment. The Hon. Member can participate in debate on the amendment. The Hon. Member for Vancouver-Kingsway (Mr. Waddell).


Ian Gardiner Waddell: Madam Speaker, I wondered why the Hon. Member was giving us all that trouble. He was on another Bill. I hate to think what the Hon. Member was attempting to dismantle or privatize. I am being unfair to the Hon. Member. He may have been talking about Canagrex and wheat, I do not know. The Hon. Member for Mississauga South (Mr. Blenkarn) has a lot to contribute to this debate and is handy with the figures, although I am still not clear from which end of the Conservative dinosaur he is speaking, the mouth or the tail.
1 would like to speak on the motion to hoist the Bill for six months. As critic for our Party, I have had a little pressure from requests that we get this Bill passed before Christmas. I hope we can get this matter addressed by some hon. members of the Conservative Party in the debate because, unless the Government changes its mind on this and other matters, it is not going to get the Bill passed by Christmas.
Hon. members of the New Democratic Party have a lot to say about this Bill. This is the first Bill which deals with privatization, an incredibly important topic that will heat up as a topic next year. It may be the topic for 1987. It is worth debating. I would also say to hon. members of the Liberal Party, come on, Liberals, get with it. Start participating in the House. You cannot just continually do your leadership things outside the House. Come and take part in the great issues facing Canada.


An Hon. Member:: That is a commercial.


Ian Gardiner Waddell: No, it is not a commercial. If the Liberal Party is going to be a viable Party again it had better start participating in some of the issues and take a position. The Liberals are on both sides of the trade issue, the Cruise missile issue, NATO and all these other issues. They cannot just sit there like mugwumps, their mug on one side of the fence and their wump on the other and not take any position. At least the Conservative and the New Democratic Party take positions. In modern politics, the people want political Parties to take positions. The Liberal Party, to the extent it does not take any unified position, becomes an irrelevant Party. It is temporarily ahead in the Gallup polls but it will quickly disappear to third place. Look at what happened to the Liberal Party in Great Britain.
There is another reason the NDP wants to debate this Bill further, that is, we are concerned that there is not sufficient protection in the Bill for the ordinary working people in Quebec. My colleague, the Hon. Member for Winnipeg North Centre (Mr. Keeper), gave a speech entirely in French without notes. He came to the House unilingual a few years ago. He
talked from a national standpoint of trying to protect jobs in Quebec. The jobs statement reads:
Bombardier is committed to maintaining existing levels of employment at Canadair subject-
All working people worry when they read lawyers' clauses which start with the word "subject".
-to cyclical shifts and sound business practices,-
If it has some money problems it can fire the workers. With respect to sound business practices, it can say, we have to be more productive. We need less workers. Then, bang, the workers are out on their ears. It decides it has to contract out and get away from the union. Then, bang, the workers are out.
This is the kind of thing from which Canadian workers are suffering all over the country. A good example was the International Woodworkers of America strike in British Columbia, my home province, which, thank goodness, has just been settled. The reason for the strike, with the loss of $2 billion to the economy of British Columbia, was the fear that the contracting-out clause would in fact reduce union rights, and when union rights are reduced wages are dramatically lowered. Of course, that is what the employers want to do. That is why we are concerned about the phrase "sound business practices".
We have nothing against sound business practices and nothing against Canadair. We think Canadair is a very good Canadian Quebecois company. That is important. But we want to make sure the workers are protected. The workers also want to have sound business practices. They also want to be part of the enterprise. However, all too often the workers are left out of the compact, if you like, between employer and employee who are doing things for the good of each other and for both rather than for the good of one group, which is the trend in these Conservative times.
The statement continues that Bombardier:
-will pursue new programs and opportunities so that the level of employment at Canadair and its suppliers will increase.
We are in favour of that, but we worry about job security. We said in the debate, and I reiterate, that the reason we want the matter looked at in greater detail is that we think Canadair was fattened up prior to the final sale. At the very moment CDIC began the bidding process the Government approved $30.9 million in defence assistance for the production of CL-227 systems and another $20 million for Canadair's participation in a joint venture with West Germany on the CL-289. That is a total of $50 million. Canadair will be eligible for more defence money; $14 million to improve the CL-215 water bomber, $10 million for modifications to the Challenger and $5 million for new equipment, or approximately $30 million in grants which have not yet been announced but which we think will come. This is apart from an unspecified amount of export financing to come.
Canadair was given the $1.7 billionCF-18 jet fighter defence contract which is a guaranteed $50 million per year for 20 years. The Canadian taxpayers will have to assume Canadair's
December 8, 1986


STATEMENTS PURSUANT TO S.O. 21
[Stage Direction]
long-term $1.2 billion debt. They paid $120 million for the company.
The Hon. Member for Mississauga South (Mr. Blenkarn) told us to look at the Peat Marwick figures, and it is minus $330 million, but that is based on the liquidation value of the company, if we are forced to liquidate it, with all of the future costs we have to assume. So the Hon. Member is right and he is wrong. He is right in the sense that those are the Peat Marwick figures, but he is wrong in the sense of the real value of the company. We need only to look at its annual reports. In fact, the technological value of the company alone is worth something in the order of $300 million.
We are throwing these figures back and forth across the House and we should not mislead each other. It is common sense that if one puts as much money as the Canadian Government has into technology, it is worth something. The company does have defence and aircraft technology. It has the Challenger jet technology. If I were the executive of Canadair years ago I would not have developed the Challenger jet. It was expensive and who needed to get into the market for widebodied executive jets. However, there was a lot of investment made and we should not just throw it away.
To review then, Bombardier is paying $120 million, less than what we say is the $300 million technological value of the company. It is receiving $50 million in federal grants in January with $30 million to come, unspecified export financing, a $1.7 billion defence contract, no financial obligation related to Canadair's debt or outstanding liabilities, plus profits of $20 million in 1985 and $2.8 million in the first quarter of 1986. That is not bad for what it is paying for the company.
We stick by the argument we made this morning, that this in fact is a distress sale or un cadeau as it was called by the Hon. Member for Winnipeg North (Mr. Keeper), or a fire sale as another Hon. Member said.
I will continue my speech after lunch by talking about the philosophical problems with the Government's policy of privatization.
The Acting Speaker (Mrs. Champagne):: Order, please. It being one o'clock, I do now leave the chair until two o'clock day.
At 1 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.

Mr. Sergio Marchi (York West):: Mr. Speaker, the arrival of the Christmas season traditionally enhances the warm feeling of giving and sharing within our respective communities across the country. In keeping with this holiday spirit the York West Young Liberals Club has launched its Christmas Food Drive 1986, a worthy project aimed at helping those less fortunate.
The increased number of food banks across our country is a disturbing reality of our times. All too many are forced to line up for their daily meals and rely on the generosity of their fellow Canadians. The gravity of this situation is further aggravated by the shortage of available foods. However, the people behind the food banks and welcome missions in Metropolitan Toronto are a reminder that our city is not an exception to caring for the plight of others.
Toward this end I ask and encourage fellow citizens of York West to contribute to the Christmas Food Drive 1986 and to donate what they can. In helping the needy, non-perishable goods can be given to the York West Young Liberals Club through my constituency office located at 2397 Finch Avenue West, or by calling my Toronto office at 743-3153.
The less fortunate members of our community do need help. I encourage and thank those who are willing to support and come to the assistance of those Canadians less fortunate than they are during this Christmas season.


SOVEREIGNTY
Mr. Dave Nickerson (Western Arctic):: Mr. Speaker, the reluctance of the Government of Canada to give straight answers regarding the May voyage of three United States nuclear submarines to the North Pole is leading to a suspicion on the part of Canadians that their Government was unaware of these manoeuvres and is now trying to save face.
There is no security reason why the following questions cannot be answered. Did the submarines travel through Canadian waters? Did the United States advise Canada in advance of the manoeuvres and did it seek our permission? Is there an agreement with the United States concerning navigation by its warships in our territorial waters? Is Canada capable of detecting the presence of foreign submarines under our ice-covered waters?
1870

December 8, 1986
The quicker these questions are answered the better we will know if our Government is serious about its commitment regarding Arctic sovereignty.


THE SABBATH
Mr. Bill Blaikie (Winnipeg-Birds Hill):: Mr. Speaker, the current controversy over Sunday shopping raises several questions. For Christians, and for those who value our Christian traditions, the widespread acceptance of Sunday shopping signals the fact that we do indeed live, ironically, in both a thoroughly secular and a religiously plural society. This means that Sunday shopping cannot and should not be opposed on a narrow Sabbatarian basis.
But most traditional religious practices are grounded in some profound insight about the nature and needs of human life, and this is certainly true of sabbath keeping. The whole notion of rest and of rhythm, and of the community's right and need to institute socially chosen rest times and, indeed, the very existence of public time, are at stake in this debate.
From a class perspective many shift workers who want to shop on Sunday are being played off against the shift workers in stores who want to rest on Sunday, while the only thing for sure is that owners, with the exception of some small businesspeople, will be able to stay at home on Sunday and worship their market share. To my mind Sunday shopping is one of the final victories of capitalism, of Mammon, and the idolatry of commodity fetishism.
Our Constitution states that we recognize the supremacy of God. If the Supreme Court rules in favour of Sunday shopping why don't we drop the pretense, and rewrite it to read "supremacy of the market-place"? And if it does so on the basis of the Charter, in the name of freedom of religion, God forgive those of us who voted for the Charter.

[DOT] (MOS)


CANADA POST CORPORATION
Mr. Walter Van  de Walle@Pembina: Mr. Speaker, rural mail delivery service in Canada cannot be curtailed. While many Canadians enjoy five-day-a-week door-to-door mail service, Canada Post gives rural residents two-day-a-week delivery. That is for the fortunate few. The rest have to pick up their mail. They are also saddled with an additional cost to rent boxes. When I am told that our postal service is fair and equitable, I say "Hogwash".
Last week in an Edmonton newspaper, John Bail, President of the Edmonton Local of the Canadian Union of Postal Employees, was quoted as saying: "By manipulating the Post Office, the Prime Minister (Mr. Mulroney) is cutting hundreds of jobs, probably thousands". Instead of making irresponsible statements, my advice to Mr. Bail would be to give leadership to his membership. Motivate them to be productive, and instil pride in their work. I am firmly convinced that with a high degree of efficiency in the postal service, we can avoid postal service cuts and-


Mr. Speaker:: I regret that the Hon. Member's time has expired.


STATUS OF WOMEN
Miss Aideen Nicholson (Trinity):: Mr. Speaker, I am sure all Members of the House of Commons will be pleased to know that Dr. Rosalie Bertell is being honoured today in the Swedish Houses of Parliament with the Right Livelihood Award which is also known as the alternative Nobel Prize.
A scholar, a scientist, a member of the Order of Grey Nuns, an author, an activist, and currently Director of Research at the International Institute of Concern for Public Health, Sister Rosalie has devoted her energies and considerable abilities to working for humanity and against the escalation and development of nuclear weapons and nuclear power. In 1986, the International Year of Peace, it is especially fitting that the international community has chosen to honour Dr. Rosalie Bertell who has spent decades of her life in a dauntless and uncompromising crusade for truth and peace.


CROWN CORPORATIONS
Hon. Bob Layton (Lachine):: Mr. Speaker, much has been said in recent weeks regarding the privatization of Canadair, Canada's leading airframe manufacturer. For purely political reasons members of the Opposition have been delaying the passage of Bill C-25 which would authorize the transfer of ownership of Canadair from CDIC to Bombardier Ltd., one of Quebec's most successful entrepreneurial societies.
Privatization with new managerial inputs and controls is good for the Government and the buyer. It is good for the Canadian aviation industry, and is particularly good for Montreal. It is good for the workers who are calling for support of the government Bill.
December 8, 1986

Union leaders, representing as they do the best interests of the workers, are saying the following. Norm Cherry, President of Local 712, has said: "The deal looks promising".

Mr. Jean-Luc Belanger who works for Canadair says: "This indicates that we are going to stay here." I too have confidence in Bombardier. The sale of Toronto's de Havilland has created 700 jobs so far. The best employment security is a prosperous company. Let us put a stop to such nonsense and get down to work!


HOUSING
Michael Morris Cassidy: Mr. Speaker, today more than 100,000 Canadians live in co-operative housing. Cooperatives have been particularly important in integrating low-income families, disabled people, ethnic and racial minorities and others into communities where they feel comfortable and safe.
Co-operative housing has proven to be reasonably priced and of good quality. That is why I am so upset and my Party is so concerned about the fact that the Conservative Government has abandoned the promise it made in the 1984 election campaign and in this session's Throne Speech with respect to co-operative housing.
After a lengthy period of discussions and bargaining between the federal Government and the co-operative housing movement, the expectations that were raised have been shattered. While between 1981 and 1985 an average of 5,500 units of co-operative housing were financed, that figure will be only 3,200 this year.
The co-ops have done their job. They have negotiated innovative new means of financing with the federal Government. The problems have been delays and over-regulation by Canada Mortgage and Housing Corporation, and a lack of political will on the part of the Government. I call on the Government to honour its commitment to co-operative housing. The funding for this unique and important form of housing must be continued at a level that will ensure that Canadians of average incomes can truly have an alternative in housing, and live co-operatively in good communities.
[DOT] (MIO)


CANADIAN JOBS STRATEGY
Mr. Alan Redway (York East):: Mr. Speaker, this past weekend I attended graduation ceremonies for some 26 young women who have received computer and office skills training at the Overland Learning Centre in my riding as part of the Government's Canadian Jobs Strategy program. This is the first graduating class. Another class with 32 students is now under way.
You will be as delighted as I was, Mr. Speaker, to learn that 80 per cent of the graduates have permanent jobs, or job offers. The success of this program is a refreshing change from the failure of the former Liberal Government's national institutional training program, a program which cost taxpayers almost $1 billion, and trained the unemployed for jobs which already had a surplus of workers. Lortunately, the Progressive Conservative Government which was elected to make changes scrapped the old program and instituted the Canadian Jobs Strategy program, a program which does work.


MEMBERS OF PARLIAMENT
Mr. Len Hopkins (Renfrew-Nipissing-Pembroke):: Mr. Speaker, recently I received a very pleasant message from the office of the Hon. Member for Parry Sound-Muskoka (Mr. Darling). It was indeed a revelation because it was addressed to the Hon. L. Hopkins, M.P., Minister of State for Youth. While I wish to thank the Hon. Member for Parry Sound- Muskoka for the confidence that he has displayed in me, 1 do wish to assure him and my many other friends on the government side of the House that I have not crossed the floor to join them.
I have never been the type of person who was willing to join a sinking ship with a captain who has no compass, no maps, no navigator, and hence no direction. I prefer to be on a ship with a smaller crew sailing through well charted waters, a Liberal ship whose captain is well qualified for the job. Our captain has a new compass called a mandate, which is only one week old, and a crew that is willing to take on any assignment. He is sailing through these turbulent waters under this Tory Government to a safe harbour called Victory '88, if you dare, or Victory '89, as you must

December 8, 1986
1872____________________________________
Oral Questions NATURAL RESOURCES


LOW SULPHUR WESTERN COAL-RECOMMENDED USAGE BY ONTARIO HYDRO
Mrs. Barbara Sparrow (Calgary South):: Mr. Speaker, western Canada's coal industry is in difficulty following attempts to sell larger quantities of coal in a depressed and increasingly competitive international market. The recent federal-provincial task force may have indicated a way for our coal producers to broaden their marketing opportunities. Using low sulphur western coal in place of high sulphur American coal would allow Ontario Hydro to meet future limits on acid gas emissions, without resorting to flue scrubbers. The drawback is that Ontario consumers will pay somewhat more for their electricity, a cost differential which could, however, be reduced by initiatives noted in the report.
I urge both levels of Government to investigate the potential for marketing more western Canadian coal in Ontario, as this can provide economic benefits to all Canadians at little or no extra cost to the electricity consumers.


CANADA SAVINGS BONDS
Nelson Andrew Riis: Mr. Speaker, I believe that I may have discovered one of the many reasons that the Government of Canada has been unable to deal effectively with Canada's large deficit. It appears that the Government may be sending out volumes of Canada Savings Bonds interest cheques to people who are not eligible, or expecting them.
In October, 1985, Mr. William Fader of Chase, British Columbia, cashed in his Canada Savings Bonds, yet he received a cheque for $450 on November 1, 1986. How many other cheques of this nature have been sent to Canadians more than a year after they cashed in their Canada Savings Bonds? Is the Government sending out cheques for hundreds of dollars to surprise Canadians, such as Mr. Fader, as special Christmas presents, or has the Government blown it and once again demonstrated its fiscal incompetence and its inability to deal with important financial issues facing Canada?


NORTH ATLANTIC TREATY ORGANIZATION
Mr. John Oostrom (Willowdale):: Mr. Speaker, NATO will be making a decision within the next few weeks as to whom to award a new $500 million air training base. There are only two nations, Canada and Turkey, that are competing for this
facility. Canada must continue to lobby hard for the base to be awarded to Labrador, since it will provide this area with badly needed economic stimulation. This base will provide for more than 500 permanent jobs, and it will inject enormous amounts of capital into the local economy.
Since all aircraft will be requiring service, and today's aircraft require highly skilled technical personnel, the potential technological spinoff to Canada and the local community will be of benefit in enticing high technology industry around the proposed base. Goose Bay could also provide NATO with a more secure location.
The Government of Canada, Members of Parliament, and our ambassadors should continue to use every means at their disposal to secure the base, for it will help an area of the nation which needs economic stimulation, and will provide security for our NATO allies.


GOVERNMENT EXPENDITURES
Mr. Don Boudria (Glengarry-Prescott-Russell):: Mr. Speaker, once again Ministers of the Tory Government are abusing taxpayers with their excessive spending in refurbishing their offices following the last ministerial shuffle.
Most of us did not know that a cabinet shuffle meant a boondoggle for movers. I wonder whether the Prime Minister (Mr. Mulroney) could justify to the House the expenditure of $33,000 so that the Minister for International Trade (Miss Carney) could satisfy her fetish of having an office away from a junior Minister. Is that what the Prime Minister meant when he said: "Watch Pat Carney go"? Did he mean from Tower B to Tower A?



ORAL QUESTION PERIOD


John Napier Turner: Mr. Speaker, my question is for the Secretary of State for External Affairs. Apparently the American Government is proposing to issue licences for the exploration of oil and gas in the Canadian segment of the Beaufort Sea. What is our Government doing to object to the procedure? What steps is Canada taking to protect its sovereignty in those waters?
December 8, 1986


Right Hon. Joe Clark (Secretary of State for External Affairs):: Mr. Speaker, I thank the Right Hon. Leader of the Opposition for raising that question. Of course any questions relating to Canada's sovereignty are of great importance to every Member of the House. The CBC report was slightly misleading this morning in that it suggested that licences were in the process of being issued. In fact hearings are being held. This has happened before. When it happened before we protested, and we are protesting again. In the interim of course there has been, after some 16 long years of delay and neglect, the assertion by Canada of our sovereignty over our North.


John Napier Turner: I will not accept the latter part of that answer. My predecessor, Pierre Trudeau, was very insistent on protection of that sovereignty.


Some Hon. Members:: Hear, hear!
[ Translation]


INQUIRY WHETHER GOVERNMENT AUTHORIZED PRESENCE OF TWO NUCLEAR POWERED UNITED STATES SUBMARINES IN ARCTIC WATERS
John Napier Turner: Last week, Mr. Speaker, the Prime Minister and the Secretary of State for External Affairs admitted that nuclear powered United States submarines navigate through the Canadian waters of the Arctic Ocean, but both refused to say whether the Government had authorized their presence there. So again I am asking the Secretary of State for External Affairs: Had the Canadian Government authorized in advance the presence of these American submarines in our Arctic waters? Yes or no?


Charles Joseph Clark: Mr. Speaker, there are two matters to be dealt with here. One is the question of the record of the former Government. It was so insistent on Canada's claims to sovereignty in the Arctic that it refused to let those be judged by the International Court of Justice. That indicates an absolute lack of courage and lack of conviction in our claims, and that has been reversed by this Government.


Some Hon. Members:: Hear, hear!


Charles Joseph Clark: With regard to the allegations respecting submarines in Canadian waters, that question was raised and responded to the other day in the House of Commons. As the Right Hon. Leader of the Opposition knows, it would not be in anyone's interest, except for perhaps some of our adversaries, for us to be identifying with any precision the presence in our waters of United States ships of any kind. I have given guarantees in the House on Friday by which I stand.


CANADIAN POSITION
John Napier Turner: Mr. Speaker, I suggest to the Secretary of State for External
Oral Questions
Affairs that he should quit using the national security argument as a way of ducking questions on national sovereignty. We do not want to know whether or not American submarines were in our waters. The issue is whether the Canadian Government is giving permission to those American submarines to be under our waters; that is the issue. What does the Minister know, and what permission has the Canadian Government given for those patrols under Canadian waters by American submarines?


Charles Joseph Clark: Mr. Speaker, the Right Hon. Leader of the Opposition is assuming there were patrols by U.S. submarines in the North.


John Napier Turner: That is what you said.


Charles Joseph Clark: There have been reports of submarines having come to the surface at the North Pole. He would know there are at least four routes by which they could have reached the North Pole, one Canadian and three American. I do not propose-


John Napier Turner: Just answer the question.


Charles Joseph Clark: I do not propose to be drawn into a question which might lead us to indicate the presence of submarines of Canadian allies anywhere in the world where that indication might be to the benefit of countries hostile to Canada. I know full well-


John Napier Turner: Under our waters.


Charles Joseph Clark: -the position taken by the Liberal Party at their convention. They decided they would adopt a nuclear weapons-free policy. The Leader shakes his head. That is what his Party did. It would take this country out of NATO. We do not propose to turn our backs on the obligation-


Mr. Speaker:: Order, please.


JOINT COMMITTEE RECOMMENDATION ON DEMILITARIZATION OF NORTHERN WATERS
Hon. Lloyd Axworthy (Winnipeg-Fort Garry):: Mr. Speaker, my question is directed to the same Minister. He referred to the stand taken at the Liberal convention. I would like to ask him about a stand taken by a joint committee of the Senate and House of Commons with a majority of Conservative Members of Parliament on it. That committee clearly recommended demilitarization of Canada's northern waters. The Government rejected it. Why did the Government do so? The recommendation would provide Canada with the opportunity of securing its sovereignty in those waters so we would not have warships travelling through Canadian waters.


Charles Joseph Clark: Mr. Speaker, demilitarization, like disarmament, in order to be effective requires at least two to play. You cannot

December 8, 1986
Oral Questions
have unilateral demilitarization just as you cannot have unilateral disarmament. I know the Liberal Party, under the guidance of the Hon. Member for Winnipeg-Fort Garry, has moved much closer to a position of advocating that Canada stand away from its obligation to defend freedom. That is not a position which this Party or this Government defends. I think if the Hon. Member would like to have a debate on that in this country he will find most Canadians believe we have an obligation to stand up and defend freedom and not simply talk about it.


Lloyd Axworthy: Mr. Speaker, any time the Minister wants to have a debate I will hire the hall and we will see what Canadians believe is the right way of defending freedom.


Some Hon. Members:: Oh, oh!


USE OF CANADIAN WATERS
Lloyd Axworthy: Mr. Speaker, I would like to direct my supplementary to the Secretary of State who said he is defending Canadian interests. Why will he not answer the question as to whether Canada has an agreement with the U.S. on the use of our waters by its warships? Do we have such an agreement? Does Canada permit or go along with those initiatives? Has this country the capacity to detect when its waters are being used, or do we simply rely on information from other countries? We expect answers from the Government, not the cheap rhetoric of the Minister.


Charles Joseph Clark: Mr. Speaker, the Hon. Member does raise important questions. It is too bad he waited until he was in opposition to do so. He and his colleagues did nothing about them when they were the Government of Canada.
The situation with which we are faced is that there are arrangements in place which allow the Government of Canada to know about the presence in our waters of any submarine or other craft of friendly or, indeed, other powers. Those arrangements are being respected. I do not propose to divulge them in detail in the House of Commons.
It is also clear that we do not now have the capacity to assert our sovereignty in the North that we should have. That is because the former Government backed away from the need to build a Polar Class 8 ice-breaker, which this Government is now going to build.


Some Hon. Members:: Hear, hear!


UNITED STATES DUTY ON CANADIAN SOFTWOOD LUMBER
Mr. Steven W. Langdon (Essex-Windsor):: Mr. Speaker, my question is for the Minister for International Trade. The Prime Minister is quoted as saying this weekend: "The American lumber industry does not make decisions." Does the Government not understand the nature of the U.S. countervail system? Does it not realize that the U.S. lumber producers have to withdraw their petition and are using this leverage to increase the 15 per cent offer which we put on the table? They are the people in the no-lose situation as a result.


Hon. Pat Carney (Minister for International Trade):: Mr. Speaker, I do not know what selected quote the Hon. Member is using, so I cannot comment on that quote from the Prime Minister. However, we clearly understand how the U.S. trade laws on countervail affect us because the U.S. preliminary decision on lumber came down on October 16. The Hon. Member should know that there are only three solutions when faced with a countervail. The first is to pay it, the second is to seek to suspend it, and the third is to try to negotiate a solution. We are trying to negotiate a solution.


Steven W. Langdon: Mr. Speaker, the Minister has in fact tried all three at different times.


INQUIRY WHETHER GOVERNMENT HAS MANDATE TO INCREASE OFFER
Steven W. Langdon: A supplementary, Mr. Speaker. Considering the American position, does the Government have a mandate from Messrs. Bourassa and Vander Zalm to offer more than 15 per cent?


Pat Carney: Mr. Speaker, the Government has been consistent and persistent in seeking every possible resolution to the American countervail action which we face against one of our biggest industries. We have sought every possible solution which would avoid a final determination that would affect our sovereignty and the right of the provinces to manage their own resources. We have been consistent and persistent in that.
The Hon. Member has repeatedly alleged that the Government is changing its position. I refer the Hon. Member again and again to the statement made in Vancouver as follows:
The Canadian Government has proposed an agreement that would lead to a complete withdrawal of the countervail action by U.S. lumber producers. In return, Canadian governments would agree to take measures to offset the effect of a 15 per cent countervailing duty.
Details of the Canadian measures will be disclosed following further consultations-
That is my answer, Mr. Speaker. I cannot and will not deviate from it.

December 8, 1986


CANADIAN OFFER
Steven W. Langdon: Mr. Speaker, I must admit that there has been persistence, but there has not been consistency. Anything but!
Senator Bentsen, who supports the U.S. lumber producers, is coming tomorrow. Therefore, will the Government clearly confirm out front and up front that 15 per cent is the final offer, or is it going to leave Canada in a no-win position while American lumber producers are in a no-lose position?


Pat Carney: Mr. Speaker, the only people who are putting Canada in a no-win position are members of the NDP who are consistently pressing for measures which would undermine our sovereignty and our ability to price and manage our natural resources under our own terms rather than those imposed by another country. I have already given my answer to this persistent question from the NDP and I do not intend to change my answer.


GOVERNMENT'S LEGAL ADVICE
Mr. Keith Penner (Cochrane-Superior):: Mr. Speaker, my question is directed to the Minister for International Trade. The Canadian Lumbermen's Association has said that the 15 per cent U.S. countervail on softwood lumber is excessive and beyond the economic capacity of the industry to pay. Why has the Government proclaimed its own 15 per cent solution when legal advisers to the Canadian industry were confident, one month before the U.S. Government decision was to come down, that we could have won that decision if the Government had not sabotaged our position by caving in?


Pat Carney: Mr. Speaker, the Hon. Member raises an interesting point. The same legal advisers who were so confident of winning this decision were also confident of winning the preliminary decision which they lost. The same legal advisers who are so confident now sat in my office and asked the Government to negotiate on their behalf.


POSITION OF COUNCIL OF FOREST INDUSTRIES
B. Keith Penner: Mr. Speaker, I turn to the Deputy Prime Minister-


Some Hon. Members:: Oh, oh!


B. Keith Penner: -because I want an answer. The Government says that it has a good working relationship with the private sector. Is the Deputy Prime Minister aware that Adam Zimmerman, President of the Council of Forest Industries, has said that the Government's willingness to negotiate this tariff is a wimpish position? Mike Apsey of the council has said that the Government's offer and its negotiation should be killed. Will the Government go back to its original position and stand with the industry to fight this matter right through the courts,
Oral Questions
because we can win? That is the position the Government ought to be taking.


Pat Carney: Mr. Speaker, Mr. Zimmerman speaks for his corporate interest. The Government speaks for the interest of all Canadians and a very important industry which employs Canadians from coast to coast, and which we are trying to protect.
Let me remind the Member once more that it was Adam Zimmerman and his Washington lawyers who sat in my office and asked us to negotiate. It was Adam Zimmerman and his Washington lawyers who sat in my office and accepted the 10 per cent proposal which we put forward. It was Adam Zimmerman and his industry which are currently faced with a 15 per cent countervailing duty at the border. We did not create this problem. We are trying to put forward a solution to deal with it.


INVESTMENT CANADA
Nelson Andrew Riis: Mr. Speaker, my question is directed to the Minister of Energy, Mines and Resources. Does he believe that it is appropriate for a foreign company to own and control a Canadian utility involving both hydro-electric power and water rights, which would then effectively give foreigners control over a crucial western Canadian resource?


Hon. Marcel Masse (Minister of Energy, Mines and Resources):: Mr. Speaker, if a company wants to invest in Canada, there is a law on the books, Investment Canada is there. The criteria are well-known and I believe that in due time these institutions will respond directly to the question of the Hon. Member.


WEST KOOTENAY POWER AND LIGHT COMPANY
Nelson Andrew Riis: Mr. Speaker, there is certainly nothing hypothetical about the question. The Minister will likely be aware that the West Kootenay Power and Light Co. is presently being purchased by the Kansas City based Utili Corp. United for $80 million and must now appear before Investment Canada. Does he believe it would be appropriate for him to say that the Government of Canada finds it totally inappropriate to approve a foreign company purchasing a water and electrical utility in Canada, which will be 100 per cent foreign controlled for the first time in Canadian history?


Marcel Masse: Mr. Speaker, as long as the application is before

December 8, 1986
Oral Questions
Investment Canada officials, it is up to them to provide the answer sought by the Hon. Member, not to the Minister of Energy, Mines and Resources.


EXTERNAL AFFAIRS
Mr. Chris Speyer (Cambridge):: Mr. Speaker, my question is directed to the Secretary of State for External Affairs. The Minister will know that last Wednesday a Canadian engineer by the name of Philip Engs was arrested by the Iranian Revolutionary Court. Nothing has been heard of him since. Will he advise the House whether or not the Government knows what the charges are against Mr. Engs and what steps it is taking to protect his interest?


Charles Joseph Clark: Mr. Speaker, let me thank the Hon. Member for bringing that question to my attention and that of my officials over the weekend. We are seeking answers to precisely the questions that the Hon. Member raised. We do not have them yet. We are using every means available to us, both through the Danish Embassy which works on our behalf in Iran, and through other avenues. As soon as we have that information we will make it available to the Hon. Member.

Second, the next day, Mr. Herrington himself told the American press that the quote which had been attributed to him did not correspond to what he had said at the press conference.


FUNDING OF CLEAN COAL TECHNOLOGY
William Alexander (Bill) Blaikie: Mr. Speaker, I understand that the Minister of Energy, Mines and Resources met with Mr. Herrington. Did he get commitments from the U.S. administration, through Mr. Herrington, that new money would be spent on clean coal technology, not money that was already spent and authorized by Congress prior to the envoy report? Has a commitment of new money been made, and when will we see it?


Marcel Masse: Mr. Speaker, I have met with the Secretary of Energy. I have told him about the views of the Canadian Government in these matters, and I can assure the Hon. Member that, as far as the Canadian Minister is concerned, money is always money. There is no such thing as new money and old money.

Money is money, and the American Government is committed to ensure that it will stick to its own report.


UNEMPLOYMENT INSURANCE
[Stage Direction]
*

William Alexander (Bill) Blaikie: Mr. Speaker, my question is directed to the Deputy Prime Minister. It concerns statements made by the United States Secretary of Energy, Mr. Herrington, with respect to the American commitment to the program that resulted from the envoy process on acid rain. Has the Government investigated Mr. Herrington's reference to a meeting of Canadian officials that led him to believe Canada would accept a smaller program? Has the Government made it absolutely clear to the United States that no scaled down version of the already inadequate program that came out of the envoy process will be acceptable?


Marcel Masse: Mr. Speaker, the Minister of Environment, who was at this meeting, replied publicly to this question by saying that the Government of Canada expected that the United States would keep to their commitments.


EARLY RETIREES-CALCULATION OF PENSION AS INCOME
[Stage Direction]
Hon. Warren Allmand (Notre-Dame-de-Grace-Lachine
East): Mr. Speaker, my question is directed to the Minister of Employment and Immigration. We have re-examined the Minister's Friday statement with respect to the unemployment insurance cuts for pre-retirement pensioners. We find that it does absolutely nothing for those Canadians who were obliged or were pushed to take pre-retirement pensions but have not been able to find jobs. Since approximately 75,000 Canadians have paid into the unemployment insurance fund for many years and are still looking for work, why should they wait for a second job and a second lay-off to collect their legitimate unemployment insurance benefits? Even Forget recommended that that policy be withdrawn.
Hon. Benoit Bouchard (Minister of Employment and Immigration):: Mr. Speaker, I trust that I did not understand the Hon. Member for Notre-Dame-de-Grace asking for implementation of the Forget Report. That is a first point.
Second-


An Hon. Member:: Ha! Ha!

December 8, 1986


Benoît Bouchard: Ha! Ha! Mr. Speaker, we announced last Friday an allocation of $230 million for people who reestablish their eligibility for unemployment insurance with a second job.
We also clarified certain points regarding those who were apparently misinformed about the consequences of applying the rules retroactively to January 1, 1986.
I think that we have acted honestly to correct actual situations, and as for the principles, the Hon. Member for Montreal-Sainte-Marie said that we have rejected the principles involved. We certainly did not; what we have done was to consider certain variables in the practical application of these principles.
Now I think that the situation has gone back to normal and that the Government will continue to examine specific cases-


Some Hon. Members:: Order, order!


MINISTER'S POSITION
[Stage Direction]
Hon. Warren Allmand (Notre-Dame-de-Grace-Lachine
East): Mr. Speaker, as Canadians examine this policy they will find that the Minister has not solved the problem for thousands and thousands of Canadians who are bilked out of their unemployment insurance payments. How can the Minister justify income testing unemployment insurance with pensions when he does not do it with profits, rents, interest, and dividends? If it is not done for those things, why do it for pensions? How does he explain that?
Benoît Bouchard: Mr. Speaker, the Hon. Member for Notre-Dame-de-Grace is getting into the details of how the Unemployment Insurance regulations are applied.
What the Government has said, what the Minister of Finance said in 1984 and what I am still saying today is that we consider that anyone who applies for Unemployment Insurance must do so because he is temporarily without employment and not to gain a second source of income. This is the principle which applies now and it will continue to apply.


TREATMENT OF EARLY RETIREES
Mr. John R. Rodriguez (Nickel Belt):: Mr. Speaker, my question is also directed to the Minister of Employment and Immigration. In light of the fact that last Friday the Prime Minister said: "There shall be no second-class citizens in this country as long as this Government remains in office, postal services or otherwise", and in light of the Minister's announcement last Friday with respect to his half-backtracking on pension as earned income for unemployment insurance purposes, making a clear distinction between pensioners who live in Toronto who can get a second job, and pensioners who live in eastern Canada who cannot, will the Minister tell the House why he is creating this second-class citizenry?
Oral Questions


Benoît Bouchard: Mr. Speaker, Friday's announcement did not create second-class citizens, because those people who retired in Toronto and those who retired in St. John's will both have access to a second job, thereby taking up a second career, and will then become eligible to unemployment insurance.
The same principle applies across the land. There is no question in our view of this applying differently depending on where one lives in Canada.


REQUEST THAT BENEFITS BE PAID TO ALL RETIREES
John R. Rodriguez: Mr. Speaker, the Minister knows full well it is much easier to get that second job if one lives in southern Ontario than if one live in the other regions of Canada. Therefore, the person in Toronto will be able to requalify, according to the Minister's statement. Will the Minister now give a commitment? Don't go half way, go all the way and give all the retirees their U.I. benefits to which they are entitled.


Benoît Bouchard: Mr. Speaker, the commitment I am willing to make is the same one that I and the Government have always made: it is to make sure that people in Canada who are temporarily unemployed and are on the labour market have access to unemployment insurance. That commitment the Government is ready to make at any time, anywhere.


NATURAL RESOURCES
Mr. Blaine A. Thacker (Lethbridge-Foothills):: Mr. Speaker, my question is directed to the Deputy Prime Minister. In Ottawa today we have a delegation of United Mine workers and elected officials from British Columbia, Alberta, and Saskatchewan promoting the increased use of low sulpher western coal in Ontario. What is the federal Government doing to promote low sulpher western coal in Ontario as a solution to the acid rain problem in central and eastern Canada, as well as promoting Canadian jobs and economic development?


Hon. Don Mazankowski (Deputy Prime Minister and President of the Privy Council):: Mr. Speaker, as the Hon. Member knows, the report on the use of western coal in Ontario was made public on August 20, I believe. Clearly the Government supports the initiatives contained within that report. To that end, officials have been meeting with representatives and discussions have taken place with representatives of Ontario Hydro. I will be meeting with the mine workers, and I hope to meet later on this month with Premier Peterson.

December 8, 1986
Oral Questions
We think this is an excellent initiative. It is good for the environment, for the economy, for western Canada, good for Ontario, and good for Canada.


AGRICULTURE
Mr. Maurice Foster (Algoma):: Mr. Speaker, in the absence of the Minister responsible for the Canadian Wheat Board, my question is directed to the Deputy Prime Minister. He knows that Canadian wheat producers are facing the lowest prices since the 1930s. Is the Deputy Prime Minister prepared to make a commitment today to take the necessary steps to ensure that producers of No. 1 and No. 2 Red Spring wheat will receive the full final payment to which they are entitled for the 1985-86 crop year, as has been recommended to the Government by the Saskatchewan Wheat Pool, the Western Canadian Wheat Growers Association, and other responsible farm groups in western Canada?


Donald Frank Mazankowski: Mr. Speaker, the Government acknowledges the fact that grain producers are going through a difficult period, that their income is down, and is taking concrete steps to redress this situation. The fact is that while prices are down, support from the federal Government has increased by some 62 per cent over the last two years of the Liberal administration. I think that is a very good record.
As the Prime Minister has indicated, the details of the billion dollar farm aid package to the grain and oil seeds producers of Canada will be announced later on this week. The Minister of Agriculture and the Minister responsible for the Canadian Wheat Board are currently meeting with representatives of the total agricultural industry. I can assure the Hon Member that this Government will not leave the farmers in a difficult situation without our full support. In fact, I think the record will clearly show that no Government in the history of Canada has given more support to agriculture and the grain and oil seeds producers than this Government.


REQUEST FOR MINISTERIAL COMMITMENT
Maurice Brydon Foster: Mr. Speaker, we are still facing the lowest grain prices since the Bennett Government of the 1930s. The Deputy Prime Minister knows that not making that full final payment on No. 1 and No. 2 Red Spring wheat will cost the western wheat growers some $200 million. In 1970 there was a special payment made for Durum. Why is
the Minister reluctant to give a full commitment to make that final payment to western grain producers for the past crop year?


Donald Frank Mazankowski: Mr. Speaker, in addition to the $1 billion package, the details of which will be announced later on this week, I think I can also indicate to the Hon. Member that there will be a deficit within the Canadian Wheat Pool account which will have to be met by the federal Treasury. That is an additional amount of money which will go directly to support the farmers.
Let me say that we are not only supporting the farmers in terms of improving their income, we are out selling and marketing. That is quite different from the Hon. Member's Leader who said to the farmers: "Go and sell your own wheat".


FISHERIES
Mr. Russell MacLellan (Cape Breton-The Sydneys):: Mr. Speaker, my question is directed to the Minister of Fisheries and Oceans. In response to Premier Buchanan and some prominent Nova Scotia Tories, the Minister issued a licence which would grant two Japanese fishing vessels the right to catch 401 bluefin tuna off the coast of Nova Scotia, in return for which the Japanese would pay to Bayshore Tuna Limited, a company run by prominent Nova Scotia Tories, the sum of over $400,000. Can the Minister explain why he ignored the advice of his own Department, his own Atlantic regional council, and his own tuna advisory committee in authorizing this blatant giveaway?


Hon. Thomas Siddon (Minister of Fisheries and Oceans):: In fact, Mr. Speaker, the answer is quite simple.


Some Hon. Members:: They are Tories.


Thomas Edward Siddon: These tuna are international in nature.


Some Hon. Members:: Oh, oh!


Thomas Edward Siddon: The Canadian share of these tuna has only been fished to the extent of 10 per cent of the quota. A group of fishermen and a company were near bankruptcy because the tuna did not come inshore so that company is being allowed to fish those tuna and to learn how the Japanese catch tuna on the high seas-


Some Hon. Members:: Oh, oh!

December 8, 1986


Thomas Edward Siddon: -with a view to creating a new industry for Canadian fishermen and to keeping the dollars in Canadian hands and in the pockets of Canadian fishermen. That is why this initiative was approved.


Russell Gregoire MacLellan: Mr. Speaker, 1 knew tuna went to schools but I did not know they carried visas.


Some Hon. Members:: Oh, oh!


Russell Gregoire MacLellan: There is no question of learning from the Japanese. We do not have an offshore bluefin tuna fleet. It would cost $1.5 million to fund one of those vessels. The Minister has broken every principle of fisheries management.


Mr. Speaker:: Order, please. The Hon. Member is making a point with some vigour, but I would ask that he direct his question to the Minister.


CANADIAN RESOURCES-GOVERNMENT POLICY
Russell Gregoire MacLellan: Mr. Speaker, I want the Minister to justify how he can give away the resources of the people of Canada just to bail out this Tory-owned company?


Thomas Edward Siddon: Mr. Speaker, the fact is that we do not have an offshore tuna industry in Canada because the previous Government never went to the trouble to encourage it and to provide those opportunities to Canadian fishermen by exploring alternative fisheries, which we are doing in this case. I take pride in doing that.


PHARMACEUTICAL INDUSTRY
Mr. Howard McCurdy (Windsor-Walkerville):: Mr. Speaker, my question is addressed to the Minister of Consumer and Corporate Affairs who says that it is mischievous to suggest that there is any relationship between the new patent Bill and the free trade negotiations. Can the Minister deny that it has been the consistent position of the Americans, expressed by both the Senate Committee on Finance and the President of the United States, that a comprehensive free trade agreement will not be approved unless Canadian intellectual and patent laws conform to those of the United States? In fact, is Bill C-22 not a product of negotiations to that end?


Hon. Harvie Andre (Minister of Consumer and Corporate Affairs):: Mr. Speaker, with all the double negatives in the Hon. Member's question I do not know if I can give a singleword answer. The fact is that this matter has nothing to do with the free trade talks. What this has to do with is more
Oral Questions
medical research in Canada so that we have Canadian scientists looking for cures for cancer, Alzheimer's, cystic fibrosis and other diseases. I hope that we have done it in a way that will look after the interests of the Canadian consumer. Incidentally, it puts us in phase with the rest of the western industrialized world which respects patent rights.


CANADA-UNITED STATES TRADE NEGOTIATIONS
Howard Douglas McCurdy: Mr. Speaker, I do not think it is too much to demand that a question that is asked be answered, and not be given this falderal that there is some kind of guarantee that Canada will be the originator of a whole host of drugs for which there is no agreement in which these corporations will engage.
My question to the Minister is, again, quite simple. Would the Minister deny that, repeatedly, various American representatives up to and including the President of the United States have said that there will be no engagement in discussions over a comprehensive free trade treaty unless, among other things, the questions of lumber, oil, foreign investment, and patent law are addressed?
Hon. Harvie Andre (Minister of Consumer and Corporate
Affairs): Mr. Speaker, in answer to the preamble to the question, I have already announced $770 million worth of new research and development.


Howard Douglas McCurdy: How about the question?


Harvie Andre: The answer is no-I believe it is no. I am not sure with all the double negatives that the Hon. Member has put in his question. The fact is that this has nothing to do with the trade talks. What this has to do with is the interests of Canada.
The Hon. Member has a vivid imagination-


Ian Gardiner Waddell: That's nonsense!


Mr. Speaker:: Order, please. The Hon. Member for Annapolis Valley-Hants.


UNEMPLOYMENT INSURANCE
Mr. Pat Nowlan (Annapolis Valley-Hants):: Mr. Speaker, my question is reality and supplementary to the questions asked by the Hon. Member for Notre-Dame-de-Grace- Lachine East and the Hon. Member for Nickel Belt. It is addressed to the Minister of Employment and Immigration to whom I gave general notice of the question. I will not repeat the earlier questions.
Does the Hon. Minister not appreciate that the reason the Government is taking time to assess the Forget Commission

December 8, 1986
Oral Questions
Report is because there are so many opinions, and conflicting ones, whereas the one unanimous recommendation in the Forget Commission Report was with respect to the rescinding of the pension income regulation? It took the Government three years to come up with a realistic policy. With all the good intentions he expressed on Friday, he has created second-class veterans by giving moderate help to those who can obtain a second job and by not giving any help to those who need it most, those who cannot get a job.


Some Hon. Members:: Hear, hear!


Benoît Bouchard: Mr. Speaker, the Government, through the Minister of Employment and Immigration, has incessantly answered over the last two weeks-or since the report was tabled-that implementation of a Forget Report recommendation in any form would have to be studied by the Government. In this specific matter of early retirees and pensions, we have considered independently .. . Mr. Forget made his recommendation. It was my intention that we provide a response very rapidly in a way that would take the whole issue into consideration.
The principle put forward by the Government in November 1984, that workers should apply for unemployment insurance benefits when they are unemployed has not changed. We did not create second-class citizens. We have simply been applying that principle, making adjustments wherever groups of people, including those who took up a second career, could be entitled to unemployment insurance benefits.


FISHERIES
Don Boudria: Mr. Speaker, in the absence of the Prime Minister my question is for the Deputy Prime Minister. It concerns Tunagate, Take 2. Is it just a coincidence that the lawyer for Bayshore Tuna Ltd., Mr. John Grant, just happens to be the former President of the Nova Scotia Tories? Is this just not another case of patronage exploding in the face of the Government? If it is a new policy which the Minister was announcing a while ago in this House regarding offshore fishing, why is it that it is a Tory again who is the beneficiary of a new policy rather than the general public of Canada?


Mr. Ricard:: Why not?


Don Boudria: Some Tories here ask why not.


Thomas Edward Siddon: Mr. Speaker, I think Canadian fishermen are pleased that we
have a Government which is pursuing new options to create an income and employment opportunity for them by harvesting fish that have been previously left in the water.


Nelson Andrew Riis: Name one.


Thomas Edward Siddon: I would accept the same request from the Premier or the Government of any province to undertake to develop a new offshore fishery rather than let those fish swim out of Canadian waters uncaught. That is money in the pockets of fishermen.


Don Boudria: Mr. Speaker, it sounds as if we were given a blue option in this case. I have a feeling of deja vu with respect to this issue.


GOVERNMENT POSITION
Don Boudria: Will the Deputy Prime Minister tell the House why the Government once again has listened to a provincial Premier and a Conservative lobbyist, against the advice of its own officials? Lastly, will the Government tell us whether it is a national Conservative trait to put both feet in it whenever possible? [English]


Thomas Edward Siddon: Mr. Speaker, I wish to remind the Hon. Member that these are indeed bluefin tuna.


John Horton McDermid: Even the fish are Conservatives.


Thomas Edward Siddon: That's right; and there are more of them, too.
The fact of the matter is that under the rules of the International Commission for the Conservation of Atlantic Tuna, Canada is given a quota. This year, by the end of the year, we will have fished only one-tenth of that quota because we do not have the offshore capacity to catch these fish. I make no apologies for having Canadian fishermen and our officials onboard Japanese vessels to find out how they are catching fish we cannot catch.


SUPPLY AND SERVICES
Rodney Edward Murphy: Mr. Speaker, my question is for the Minister of Supply and Services. Would the Minister not agree that by purchasing a large order of meat from Gainers Inc., Peter Pocklington's firm in Alberta, the federal Government is in fact taking the side of Gainers in a strike about which even the Premier of Alberta has said that Gainers is being unfair to its workers?


Hon. Stewart Mclnnes (Minister of Public Works):: Mr. Speaker, the Minister of Supply and Services is not in the
December 8, 1986

House today. However, I think my hon. friend is asking me to reply, so I will do that. I do not know the particular answer. I do know that the Government has had a long experience-


John Napier Turner: If you don't know the answer, then sit down.


Stewart Donald McInnes: I can only assume-


Some Hon. Members:: Oh, oh!


Mr. Speaker:: The Hon. Member for Regina West.


AIRPORTS
Leslie Gordon Benjamin: Mr. Speaker, I have questions for the Minister of Transport. Last night, W5 reported fire-fighting services at airports as being dangerously inadequate. A year ago in June I asked the former Minister about the purchase of 75 new fire trucks. He told me that the funding had been reprofiled. We have 150 fewer fire-fighters at work today than we had then. What action is the Minister of Transport taking to put those fire-fighters back to work? Where are the 75 new trucks?


Hon. John C. Crosbie (Minister of Transport):: Mr. Speaker, the trucks referred to are on order and under construction.


Leslie Gordon Benjamin: For the last three years?


John Carnell Crosbie: Not for the last three years. There are 34, as I recall, under construction under one contract, and 34 under construction under another contract. They are rapid intervention vehicles. Six other all-terrain vehicles are under construction as well. That makes up the total.
There has been no change in the number of personnel employed in the crash-fire rescue service. I think there are something like 650 people employed in that service at 60 sites across the country. The service is costing the people of Canada around $40 million a year. There was a change made this summer with respect to overtime rules, and that aggravated or irritated some of the personnel concerned who were not getting as much overtime as they had been getting previously.
I would like to assure the hon. gentleman that I have looked into this carefully with personnel in the Department. I am satisfied that our service is adequate, and I would say even more than adequate when compared to the U.S., Australian or other crash-fire services.
___________________________________1881
Oral Questions AIR TRANSPORT


SERVICES PROVIDED FOR AIRCRAFT FLYING OVER ARCTIC
Leslie Gordon Benjamin: Mr. Speaker, I would also like to ask the Minister what action the Ministry of Transport is taking to replace services being cancelled by the Department of National Defence for commercial aircraft transiting the Arctic. These services include course, speed, altitude and ground speed checks, and aviation weather information en route. What alternative organization will provide those services for commercial aircraft in northern Canada and across the Arctic?


John Carnell Crosbie: Mr. Speaker, I will have to take that question as notice because this is the first time it has been brought to my attention. I can assure the hon. gentleman


Leslie Gordon Benjamin: DND didn't tell you?


John Carnell Crosbie: They have not told me personally. I would imagine, though, that if that has happened, our Department would be fully informed and there would be other services in its place. Just to reassure the hon. gentleman, I will have that looked into and get back to him.


FINANCIAL INSTITUTIONS
Aideen Nicholson: Mr. Speaker, my question is for the Minister of State for Finance and concerns last week's announcement by the Ontario Government of its plans to open up ownership of the provincially regulated securities industry to other financial institutions. The Government, after two years of study, still has no policy on ownership and no new legislation on financial institutions.
Does the Minister not think that Canadians deserve better? Will he at least tell us the calendar year in which the Government will assume some leadership?


Hon. Tom Hockin (Minister of State (Finance)):: Mr. Speaker, the Hon. Member knows that that province made its intentions and aspirations known with regard to one element of financial institutions, that being the securities industry. We are now preparing a comprehensive approach to financial institutions. We will be bringing in that policy very, very shortly.

December 8, 1986
Income Tax Act POINT OF ORDER


CLARIFICATION OF QUESTION PERIOD ANSWER
Charles Joseph Clark: Mr. Speaker, so that the record can be clear, I referred in an answer in the House to a multitude of ways, four ways, by which there could be access to the North Pole. One of those is American, one is Canadian, and two are by way of international waters.


BUSINESS OF THE HOUSE
Donald Frank Mazankowski: Mr. Speaker, with respect to Bill C-23, there have been discussions with representatives of both opposition Parties and I think there would be a disposition to have the reference of this Bill made to the Standing committee rather than the legislative committee.


Mr. Speaker:: Is that agreed?


Some Hon. Members:: Agreed.


Mr. Speaker:: So ordered.



GOVERNMENT ORDERS


Hon. Michael Wilson (Minister of Finance) moved: that Bill C-23, an Act to amend the Income Tax Act and a related Act, be read the second time and referred to the Standing Committee on Finance and Economic Affairs.


Mr. Pierre H. Vincent (Parliamentary Secretary to Minister of Finance):: Mr. Speaker, I welcome this opportunity to take part in the debate on Bill C-23 which concerns amendments to the Income Tax Act. Mr. Speaker, as you know, this Bill follows consultations that started before the Budget was brought down in February 1986 and continued subsequently, until tabling of the Notice of Ways and Means on October 31 of this year. Wide-ranging consultations were held with Canadian taxpayers, experts in the field and representatives from all sectors in this country. The proposed legislation which, as I said before, follows the February Budget, is in line with the philosophy outlined by the Minister of Finance (Mr. Wilson) in his agenda for economic renewal.
Mr. Speaker, I shall, if I may, recall the four major challenges identified by the Minister of Finance at that time. First, we must control our budgetary deficit. Second, we must stimulate business by adopting policies that foster higher investment, greater innovations, increase international
competitiveness and a positive climate for the birth and growth of new enterprise. Third, Madam Speaker, we must provide for greater efficiency in Government operations so that they become less of an obstacle to achievement in the private sector. Fourth, we must bring about these changes in a way that is fair, open, and consistent with the basic sense of compassion, tolerance and justice that is characteristic of Canadian society.
Madam Speaker, I think Bill C-23 reflects these four challenges in a body of legislation that is of primary importance to all Canadians. This is a major Bill, although its concepts are not new. The House will recall that on May 23,
1985,	the Minister of Finance tabled in the House a paper entitled: "The Corporate Income Tax System, A Direction for Change." After consultations were held, these changes were included in the February 1986 Budget. The result was that the corporate tax system was improved by abolishing the tax incentives enjoyed by certain companies and, at the same time, reducing the overall corporate tax rate. I believe that although we reduced the number of tax shelters, this was more than compensated for by the fact that we managed to reduce the corporate tax rate for all companies and corporations in Canada.
Indeed, Bill C-23 contains some important changes. Investment tax credits from 10 to 7 per cent will be gradually phased out by the end of 1988. The 3 per cent deduction with respect to inventory has been eliminated as of February 26,
1986.	Corporate income tax rates will decline appreciably over the next three years. The small business tax rate will decrease from 15 to 13 per cent. The small manufacturing company tax rate will go down to 8 per cent. The tax rate of major corporations will be reduced from 36 to 33 per cent. Finally the major manufacturing company tax rate will be cut down to 26 per cent. All these changes reflect our desire to make the income tax legislation simpler as well as fairer to all Canadian taxpayers.
Another aspect of the same Budget which can be noted in Bill C-23 is that we want to give a better treatment to Canadian taxpayers. As you may recall, Madam Speaker, we introduced the minimum individual tax rate effective January 1 this year, a measure which was praised even by the Leader of the New Democratic Party. Unfortunately, as usual the Liberals had nothing but criticism for this initiative. But it is an important step towards a fairer tax system for all Canadians.
Through Bill C-23 we will implement the new at-risk rules in the case of limited partnerships, as well as the rules governing the use of tax credit by trust companies so that Canadian investors will no longer be able to take undue advantage of the tax system and make much bigger profits than their investments would warrant in the first place.
Once again, the aim of this measure is to ensure fairness or tax justice.
December 8, 1986

I am sure all your constituents were glad to learn that the maximum RRSP deduction for 1986-87 would be going up from $5,500 to $7,500. You know as well that the annual ceiling will rise to $9,500 in 1988, and then by $2,000 each year up to $15,000. This faithfully reflects the approach of the Conservative Government which was elected in September 1984: Canadian men and women must have an opportunity to invest in their own retirement savings plans and look forward to financially worry-free retirement years, partly at the Government's expense, but also as a result of their own contributions.
Madam Speaker, again those are the major provisions of Bill C-23 and precisely because of them this measure must be adopted immediately. If Bill C-23 were to be put off for two or three months because of the Opposition, provisions due to be implemented in 1986 could not benefit Canadian taxpayers. I would find it difficult to understand why the Opposition would be critical of the fact that starting with 1986, Canadian men and women would be able to deduct higher contributions to their retirement savings plans.
And concerning senior citizens again, Bill C-23 does something more. It introduces a number of significant changes to Registered Retirement Income Funds, the RRIFs, which as you know were instituted but were not in tune with the needs of Canadian men and women.
We have also introduced significant changes in order that those funds may actually become a more useful instrument for withdrawing funds accumulated in an RRSP. The major changes, madam Speaker, are first, that the ceiling on annual payments from a RRIF will be eliminated. This will give an opportunity to people aged 65 and over who can benefit from their RRSPs and RRIFs to have higher annual amounts than as originally limited. The RRIF ceiling per person will be eliminated. This means that even after their retirement income has been registered, there could be more than one person participating.
Madam Speaker, those rules are designed to make the system more flexible and allow Canadian men and women greater discretion in their benefits.
Contributions to an RRIF could start at any time after it has been registered instead of only after the start of the following calendar year.
This would mean that where someone has not planned his or her retirement way ahead of time and wakes up a few years down the road saying: "I would like to draw funds from my RRSP and transfer them to my RRIF, and I need them for that year", he or she could do so with the new amendments. We are therefore trying to make the system more flexible, trying to make it fairer to everybody.
There is something else in Bill C-23, something new, something innovative, something for which Canadians elected a Conservative Government, namely a legislation that is new, innovative, good and fair. As you have guessed, it is the federal
Income Tax Act
sales tax income credit under which every family with an income of $15,000 or less will be entitled to $50 per adult and $25 per child. And this, Madam Speaker, is a refundable income tax credit, which means a family could file its income tax return, and automatically, whether a federal income tax is due or not, it would receive a refundable income tax credit. If they have no taxes to pay, they will get a cheque. For instance, a family of two adults and two children will get a cheque for $150 to take into account the fact that the federal tax rate has gone up and that we do not want to penalize low-income families.
This is new in our tax laws, Madam Speaker. There has never been in Canada a tax credit for the federal sales tax. This is what Canadians want. They want something fair which fires the imagination, something new which meets the needs of Canadians.
I think that this is an excellent initiative, which is another reason why this Bill should be adopted by the House as soon as possible.
Speaking about the tax credit reminds me of Bill C-ll which provided for a reimbursable child tax credit of $300 to be paid in November. I am convinced that, in your constituency, all the families who received a $300 cheque for each child at the end of November were happy. They know that Christmas is coming. In my riding of Trois-Rivieres, I have had many telephone calls from people thanking us for this good move. Madam Speaker, even though the Opposition criticized that Bill, we were able to adopt it and it has made low-income Canadians happy. Because of this initiative, this year, low-income families will have a bit more money to purchase winter clothing and for the coming holidays. Because of this, they will not be as likely to go to the tax discounters who keep 15, 20 or 25 per cent of the child tax credit to which these people are entitled and which they would otherwise have received in April. In the past, because they needed money sooner, they brought their tax returns and so on to the discounters in February.
We have solved this problem and made some people happy. This is what Canadians will remember.
Another proposal included in Bill C-23, Madam Speaker, concerns the $250 increase in the deduction for the handicapped. As Hon. Members will recall, representations were made by the vision and hearing impaired, and so on, and the Government listened to these representations. We listened to their associations when they asked for a small increase in the deduction for the handicapped. The deduction will increase by $250 for 1986 and will reach $2,860. This is another measure which meets the concerns and the needs of Canadian men and women.
There is another point which is somewhat more complex, Madam Speaker, but which 1 think should be mentioned. My friend, the Hon. Member for Abitibi (Mr. St. Julien), has a great many problems in this regard in his riding; I am

December 8, 1986
Income Tax Act
referring to the new flow-through share provision concerning the mining industry which makes it possible for investors to buy flow-shares without being concerned about their responsibilities toward third parties in case of events occurring during the exploration or development stage. This is another major step showing a widening of exemptions in the case of the tax deduction which must be made in the mining industry, so that the people in the Abitibi riding and elsewhere may get what they need to encourage the economic development in their area.
There is also a widening of exemption in the case of tax deduction for non-residents, in order to make it possible for Canadian corporations to go to foreign financial markets and reduce their borrowing cost on international markets.
Finally, Madam Speaker, that is part of what we have been preaching for the past two years and is slowly becoming reality. Yesterday, in Montreal, the Prime Minister (Mr. Mulroney) indicated in an excellent speech that Montreal was doing just fine. Montreal has been progressing rapidly over the past two years. This is thanks to the provincial Government, the municipal Government, but certainly not thanks to the opposition, Madam Speaker. Last week, he said the same thing in Toronto, and that is true, Madam Speaker; buildings have been going up like mushrooms both in Montreal and Toronto over the past two years. When people go to the Maritimes, they hear exactly the same thing. They hear out West that the economy is recovering and that the federal Government has made tremendous efforts to this day to achieve this. Things are progressing on all levels. Why? Because both on the domestic and international levels, Canada is taking the place it deserves. We have done away with the famous legislation which you know and we have replaced it with Investment Canada. This has done a lot of good. It has been important for Canada. A number of Hon. Members opposite, I see, are laughing, but they have to admit that it has been useful and that is what is needed in Canada.
As far as small- and medium-size businesses are concerned, Madam Speaker-I know how deeply you feel about that issue in your own riding just as I do in mine-we have abolished as of January 1, 1987, the 12.5 per cent tax on dividends paid by corporations. This means for shareholders the possibility to invest more, to receive dividends and do something else with them. This means that we are helping our small businesses progress and recover, giving them more incentive and helping them create more jobs both in Quebec and the rest of Canada. I think it is important to emphasize the contribution of small businesses in Canada. As you know, Madam Speaker, they are responsible for 70 per cent of all jobs created in this country. That is why in Bill C-23, introduced by the Minister of Finance (Mr. Wilson), we have taken this into account and shown our support for small businesses.
Madam Speaker, there are many other things which I could mention concerning Bill C-23, but what we should remember is that there are many important things which are provided for
and implemented in 1986. I have named several. There also others. And Bill C-23 should be passed by this House as soon as possible so that it may be implemented in 1986 for the benefit of all Canadians before the holiday season. There are no bad provisions in Bill C-23, it is unfortunate but there are none.


An Hon. Member:: You should read it before saying that.


Pierre H. Vincent: I read it. Read it over yourself. I will be pleased to answer your questions. These are fine measures. These measures will mean progress for the Canadian economy; they will deal with the different groups in our society whether they are large or small corporations, high income people who are now liable to a minimum tax, the handicapped, the superannuated. There are good things for every Canadian corporation and individual. In such a context, Madam Speaker, I ask the Members opposite to support and pass Bill C-23 as soon as possible.


Mr. Raymond Garneau (Laval-des-Rapides):: Madam
Speaker, while I welcome this opportunity to speak to Bill C-23, which contains hundreds of pages and will result in a major increase in the tax burden on Canadians, I am most unpleasantly surprised by the fact that the Government team did not see fit to explain, and assume political responsibility for, this government policy. This task was delegated to a parliamentary assistant who is no longer- who is not a Minister, although he might have been after the last cabinet shuffle, and he has been entrusted with the task to come before the House and explain this very significant piece of legislation. I am saying all this, Madam Speaker, because it seems to me that the Hon. Member for Trois-Rivieres (Mr. Vincent), who made the introductory speech, certainly did not give the proposed legislation complete and careful scrutiny, if we are to judge by what he has said today.
Madam Speaker, upon hearing the Hon. Member, especially towards the end of his speech, one had the impression that the purpose of this Bill was to hand out money to all and sundry, while the exact opposite is true. This legislation will take money away from everyone except, and I will get back to this later, for some clauses which we may be prepared to support. On the whole, however, this Bill taxes everyone, and what is worse, it taxes people on low incomes more than the rich.
First of all, I would like to put this into the proper context and ask public opinion as well to be the judge of the Government's tax changes. Madam Speaker, to put this into perspective, we must go back to what members of the present Government were telling us, before the 1984 election campaign and later on, regarding two or three issues that are extremely important in terms of political choice.


An Hon. Member:: Where are the Ministers?


Jean-Robert Gauthier: There isn't a single Minister in the House. Shame!


Mr. Rossi:: What else is new?
December 8, 1986


Raymond Garneau: I could refer to what the Prime Minister (Mr. Mulroney) and the Minister of Finance (Mr. Wilson) were saying during the last election campaign and immediately following the September 1984 election. For example, as reported in the November 29, 1984 edition of The Toronto Sun, the Prime Minister said that he did not favour higher personal income taxes to reduce the swelling federal deficit because Canadians were already overtaxed. That is what the Prime Minister said on November 29, 1984 after the election.
What did he say before the election? He said that Canadians were already overtaxed and that they were paying a pretty hefty bundle for their government services. He said that Canadians felt they were paying enough and that that view was not without support in Government, in private industry and in labour circles.
I will refer to what the Minister of Finance said in August 1984 before the election. As a member of the Opposition he said: "We have no intention of raising income taxes to Canadians. What we have to do is get down Government". After the election, on March 1, 1985 the Minister of Finance said: "I do not want to increase taxes. I think we have a good deal of scope on the expenditure side to deal with the deficit problem. A tax increase, certainly a general tax increase, puts a dampening effect on the economy, and I don't want to see us do that". That is what he said in March, 1985, many months after the Government had been sworn in.
What do we have today? We have Bill C-23 which will place a burden upon the shoulders of many Canadians. Almost all Canadians will be required to pay, particularly those in the middle and low-income classes. Without taking into account the automatic deindexation, this year they will have to pay SI.7 billion in additional taxes. That is what the Parliamentary Secretary to the Minister of Finance (Mr. Vincent) should have told Canadians. It is the truth. Bill C-23 will add billions in taxes on to the shoulders of Canadian taxpayers.
Let us look at the net result of the last two Tory Budgets. The cumulative effect of those two Budgets has been $6.5 billion in additional taxes for individuals and corporations in Canada. How do you square that with the statement made by the Prime Minister (Mr. Mulroney) not only before but after the election when he said Canadians are already overtaxed? They were overtaxed then and now they will have to pay $6.5 billion in additional taxes. We have been told time and again that those taxes were being raised to fight the deficit. You will certainly recall that in the early part of his mandate the most important thing for the Government was to fight the deficit.

Madam Speaker, the Leader of the Conservative Party, the Prime Minister (Mr. Mulroney), was constantly repeating that this Government's objective was to fight the deficit. In an interview with one of the papers, and this goes back to before the election, in March 1984, he said that-
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I would like to quote it in English because it was said in English in March, 1984. The Prime Minister was asked this question:
On your list of priorities where would you put an attack on the deficit?
The answer from the Prime Minister was:
Right on top of the heap.

Madam Speaker, that was where the Prime Minister ranked the deficit: right on top of the heap. When we look at the current situation, however, it is clear that the present Prime Minister and the Minister of Finance (Mr. Wilson) did not tell Canadians the truth, which is as far as I can go without using unparliamentary language, and this applies to the tax increases they were not going to introduce as well as to the deficit. It is clear this Government did not deliver the goods, especially since during the last year the Liberal Government was in power, it was criticized right and left. Mistakes were certainly made, since Canadians decided to change Governments in 1984, I am ready to admit that. But when one considers that on March 31, 1984, our national debt was $160.8 billion as per the figures published by the Minister of Finance himself, and that according to the forecasts of the present Minister of Finance which were updated in September, it will have gone to $265 billion, well, for a Government that wanted to tackle the deficit as a first priority-surely, I am ready to concede, Madam Speaker, that for the period from March 21, 1984 to September 4, 1984, this Government cannot be held responsible. Let us adjust that and say that when they were elected on September 4, our national debt was $176.8 billion, and that by March 31, 1987, if the forecasts made by the Minister of Finance are any indication, it will have risen to $265 billion, with a $88 billion increase over two and a half years. No Minister of Finance of any Government of any political stripe has ever achieved the unheard-of performance of adding $88 billion to the national debt over a period of two years and some months, in spite of the fact that taxes were increased to an unprecedented high.
They have increased taxes by $6.5 billion over the span of two budgets, imagine that. This Government was committed to it as a priority, as stated not by us but by this Tory Government, this Prime Minister, this Minister of Finance who led the fanfare, with the Tory chorus endlessly repeating the same tune.
Despite their having increased taxes by $6.5 billion over the span of two Budgets and one financial statement, without mentioning the tax increases that are delivered through press releases. I am only looking at those that are in the Bill and that were announced in the Budget, at nothing else, and they amount to $6.5 billion, and after two and a half years of that kind of Government, you can see that we will be back to the status quo. In other words, we will have just about the same budget deficit as we had for the last full year of Liberal Government.

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I submit that this Government has failed, not only with regard to revenues but also with regard to expenditures. It has not only failed with regard to the deficit, it has also failed with regard to the national debt increase.
Yes, that was the Government, the political party that stated during and after the elections that increasing taxes was counterproductive, since those tax increases would slow down the economy.
I recall having said here in this House in the first speeches I made in reply to the Minister's statement of November 1984 and to the Minister's Budget of May 1985, especially in reply to the latter, that such a tax increase would have a definite impact on the economy. One has only to look through the financial pages of last week's newspapers to see that our Canadian economy has grown at a rate of only 1.2 per cent, and observers mention the massive tax increases as one of the reasons.
Madam Speaker, what are those massive increases? When I say $6.5 billions, the figure is so huge that one almost has to break it down to appreciate and really understand what it represents.
The economic statement of November 1984 was the first opportunity for the Minister of Finance to renege on the commitment he had made before the elections to the Canadian people not to increase taxes. However, two months and a half later, they were going ahead, and running full steam ahead.
For the individual taxpayer, the cumulative effect of the November 1984 statement and the May 1985 Budget was adding up to $4.5 billions in additional taxes. I can come back to that later on and give you the complete list of those taxes.
Let me see the impact of the February budget measures which we are now discussing, as they apply to the individual and corporate taxpayers. For individuals, the impact of the February Budget is compounded by a very slight detail announced a little earlier, that is in November 1984 and May 1985, about deindexing the tax rates.
As you know, Madam Speaker, the tax table de-indexation for fiscal year 1986-87 when Canadians will file their tax returns means close to $600 million in new taxes, yet no legislation was passed and no ministerial statement was required.
But if we take into consideration the impact of the 1986 Budget, we are talking about $925 million plus another $600 million, and it all adds up to $1.5 billion in new taxes to be paid by individual Canadians, men and women alike.
Madam Speaker, this is something the Hon. Member for Trois-Rivieres did not even mention in his remarks. I can understand why Ministers-particularly the Minister of Finance- go into hiding and would rather have parliamentary secretaries take over the responsibility of doing the explaining before the TV cameras.
The Minister of Finance has a new management system through press releases. He gets his Minister of State to answer controversial questions about financial institutions, and when the time comes to present his own Budget, to elaborate on his own Budget speech, we find ourselves listening to his Parliamentary Secretary who somehow tries to hide the real impact of the Budget on all Canadian taxpayers. Therefore if we take into consideration the combined effect of the Budget, Bill C-23 and de-indexation a natural process nobody mentions, we are talking about one billion and a half. Madam Speaker, the cumulative effect of the budgets in 1986, without the addition of the fiscal impact in 1985 or even in 1984; I am only talking about the 1986 fiscal year and the taxes people will end up paying at the beginning of 1987, when it is time to file their income tax return. For individual Canadians, we are talking about $5 billion, or $4.52 billion to be exact plus $600 million, for a total of $5 billion, that is $5.42 billion, plus de-indexation.
In other words, $5 billion. Do you know how much corporations will pay in additional taxes? $580 million. In other words, ninety-two per cent of the new taxes will fall on middle-class Canadians because the Government created the $500,000 capital gains tax exemption to benefit the rich. This was a tax gift. In addition pension plans exemptions were increased, which means that people earning $75,000 or $100,000 were not treated in the same way as those earning $30,000, because their marginal rate of taxation is much higher and they derive a greater benefit for each thousand dollars they invest in a Registered Retirement Savings Plan. Madam Speaker, individual Canadians will pay $5 billion in new taxes whereas corporations will only pay $580 million.
That same Finance Minister, when he panicked in July because of the tax reform undertaken by the Americans, came and told us: "We will follow their example, we will reduce personal income tax and increase corporate taxes." Big deal! After squeezing money out of taxpayers over and over, especially low- and middle-income earners, the Government is now telling us it will alleviate slightly the burden for those taxpayers and that an additional 3 per cent tax will apply over and above last year's 5 and 10 per cent surtaxes. It means that for the period between July 1, 1986 and December 31, 1986, an additional surtax of 3 per cent will apply on top of the 5 and 10 per cent surtaxes.
So much so, Madam Speaker, that corporations have to be explained-and truly that is the only positive aspect they get from this whole exercise-how to figure out surtaxes, whether the new one should be calculated before the first and second, or after. Nothing is said to individual Canadians. I do not know, Madam Speaker, how the 3 per cent additional surtax that is being introduced will mesh with the other two of 5 and 10 per cent.
December 8, 1986

To my mind, it is outrageous, especially after the commitments that were made. Those commitments were not made by Liberals, because during our election campaign we said we would make no promises for fear of not being able to live up to them, given that not only Canada but the whole Western world was just working its way out of an economic crisis. Meanwhile the Conservatives were going around the country with their cheque-books. By the way, I met with these farmers and they told me that it was a "rubber" cheque, the kind that bounces. In that case, it was a small matter, a matter of a few million dollars. Still, it was a promise which was not kept.
As for taxation-
As for Quebec, the president of the Quebec Conservative caucus would be well advised to check opinion polls to find out what Quebecers think of his Government's initiatives. If my Party were third in the polls, Madam Speaker, I would not speak about the Government's popularity. However, the Hon. Member, the caucus president, should keep his cool. He is generally a good fellow and he knows that I have a lot of respect for him for all sorts of reasons, but in this case he is embarking upon extremely slippery ground.
More important than the fact that the Government will impose a surtax on Canadian workers, the middle class and the poor is that the Government promised all Canadian electors to do differently. I cannot understand why the Prime Minister (Mr. Mulroney) said on November 29, 1984, that he did not favour higher personal income taxes to reduce the deficit. This is exactly what the Government has done. The Minister of Finance (Mr. Wilson) said it was almost impossible to increase taxes because they were already too high. After having said that, the Government has imposed an additional $6.5 billion of new taxes, of which 92 per cent will come from individuals.
I am very disturbed by the fact that this Bill was introduced by a Parliamentary Secretary rather than the Minister. When the Government decides to put additional taxes on the shoulders of citizens, the least that can be done is for the Minister who made the decision to come into the House and explain this move to members of the Opposition, his own backbenchers and the entire Canadian public. He should explain why he has decided to increase taxes after having said on November 29, 1984, that it was not the intent of the Government to put additional taxes on the shoulders of Canadians.

Madam Speaker, when one looks at the implications of Bill C-23 and the decisions taken by this Government which go against formal commitments made by the Prime minister and the Minister of Finance, it comes as no surprise that Canadian men and women no longer believe their Prime minister. They do not believe what the Minister of Finance is saying, but even less what the Prime Minister is saying. That is all there is to it. They have a very good memory and because they have been deceived, they will not believe even apparently well intented statements. They had decided to support a political party
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which had promised never to increase taxes but, after two budgets, they realized that an average family of a husband, wife and two children earning $30,000-nothing to write home about-will have to pay $630 in additional income tax. Let us take the case of another family-a man, a woman and two children-earning $15,000 a year. They certainly cannot be considered as millionaires. They will have to pay almost $300 more in income tax. Fifteen thousand dollars income with two children.
Madam Speaker, people often say that there are singleparent families, and it is true. A single-parent family, two children, an income of $20,000. We know just how difficult it is to balance a budget: they will have to pay almost $425 per year more in new taxes. Can you imagine $420 more in income tax, when the Government had clearly promised them not to increase taxes while reducing the deficit?
What are the other significant features of this Bill and who benefits from them? The rich do benefit, to the tune of a $500,000 capital gains exemption.


Pierre H. Vincent: Even on television you were told that you were wrong-


Raymond Garneau: Well, the Hon. Member for Trois-Rivieres has just returned. If he wanted to assume the responsibility of a Minister, he should have been sworn in. If he was not appointed, it is not my fault. Anyway, he should let- Madam Speaker, I think that this is too important to overlook. A $500,000 capital gains tax exemption may mean up to $250,000 in benefits, or even more depending on the marginal rate. I have personally met a great many people in the Laval-des-Rapides riding and elsewhere, but I have rarely met anybody earning $25,000 or $30,000 per year who could claim a $50,000 capital gains tax exemption to reduce his or her income tax. But a number of Members in this House, for instance, have a larger income, own companies, or have additional revenues-and that is understandable, they have not stolen it-and can take advantage of that $500,000 capital gains tax exemption and lower their income tax.
Higher income people again can make the most of Registered Retirement Savings Plans. It is a fact that someone in the 60 per cent income tax bracket who invests $1,000 in a Registered Retirement Savings Plan gets a $600 tax break. But someone who earns $15,000 and pays maybe 10 or 12 per cent income tax, pays little or no income tax, even if he were paying 15 per cent, would only be getting $150. This Government therefore has once again attempted to help the rich and the wealthy and reach into the lower income people or the middle classes for its revenues.
The income tax was raised by 3 per cent (1 per cent in 1984, 1 per cent in 1985 and another percentage point in 1986) and the Hon. Member for Trois-Rivieres, the Parliamentary Secretary for the Minister of Finance, is now talking about all those initiatives by the Government. Can you imagine that! They have introduced a sales tax exemption which may bring

December 8, 1986
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in maybe $150 at the most. Can you imagine that the federal sales tax was increased by 3 per cent over three successive Budgets, 1 per cent every year, and we have not had the 1987 Estimates, Madam Speaker, we are still waiting for it. I can see what the Hon. Minister of Finance is up to, you can tell beforehand exactly what he is going to do. He is going to rationalize the federal sales tax. Is that not a fantastic deal, Madam Speaker? We all know that this rationalization is just a smooth way of saying that the federal sales tax on manufactured goods is going to go down, but it is going to be extended to all goods and services.


Pierre H. Vincent: You are using scare tactics again.


Raymond Garneau: Madam Speaker, I sometimes wonder if we should be more afraid of the Government when it tells us frankly what it is thinking or when it does not, because we were clearly told that there would be no tax increase, and taxes have increased by $6 million in two years. This time, we are told that there will be a business transfer tax or taxe de transaction as we call it in French. We are told that this will replace the federal sales tax. The Minister of Finance has said this three times already outside the House. Yet, the Parliamentary Secretary says that we are trying to scare people. We are simple repeating what he has told us, but he says that we are using scare tactics.


Carlo Rossi: That is why he was not appointed to Cabinet.


Raymond Garneau: We have good reason to be worried because, after increasing the federal sales tax by 3 per cent to bring it up to 12 per cent, the Government now says that the tax will be extended to all goods and services, but that the rate will be somewhat lower. I understand that some 80 per cent of the federal sales tax is paid by about 10 per cent of all businesses, or at least this is what we were told in previous studies, and the tax will now be extended to everyone. If the comments of the Minister of Finance are accurate, this means that we shall have to pay this tax indirectly, if not directly, when we have a haircut or get a sales agreement notarized. Even Senators may have to pay the tax when they get their hair cut.


Jean-Robert Gauthier: Listen to that, Roch!


Raymond Garneau: The Hon. Member for Joliette (Mr. La Salle) should be very interested. He may have to pay the tax when he goes for a haircut.


Mr.   La Salle@: There is just one way to avoid it-


Raymond Garneau: There is just one way and that is not to be appointed Senator. But he will still pay. Everyone will pay. What is discouraging is to see that, after making so many promises, the Government is underhandedly imposing new taxes.
I said earlier that Bill C-23 provided for a 3 per cent permanent surtax to be added to the 5 and 10 per cent surtax which were announced previously. We are getting a minimum tax, but there also, the Government has let us down. The Government is boasting about its new minimum tax.
Madam Speaker, to be sure that this minimum tax will have as little effect as possible, the Government has added two
provisions of which it had never talked before. When this tax was first announced, it was supposed to apply to the bad rich people who were using tax exemptions to avoid paying any taxes. We were told that this would generate something over $300 million. However, between the time when this was announced and the time when this Bill was introduced, there have been two major changes. The first concerns dividends. When you have $100 in dividends, you add 150, and you then have a credit. This provision has been changed to bring it down to 33 1/3. The second change concerns the seven-year averaging provision. This means that, if you are caught having to pay the minimum tax for one tax year, you have seven years to recover the cost. Imagine, seven years!
First of all, it is going to be a nightmare to follow for seven years your income tax returns, because you will have to file a regular income tax return and another complicated form with lots of operations to determine whether or not you will be required to pay the minimum tax. You will have to keep records for seven years. Only the most stupid taxpayers will have to pay the minimum tax. During a meeting of one of the committees of this House I read a quote from a chartered accountant in a large Canadian company who was saying that the only good news about this minimum tax is that, given the number of loopholes added to it, nobody will have to pay it. However, the Government is going to boast about the minimum tax.
When you look at what are called the Budget Papers, on page 51, you can see that the changes to the tax treatment of dividends mean that in 1986 there will be a decrease in tax revenues amounting to $150 million. It took me a long time to realize why, in 1986, taxpayers would be paying $150 million less in taxes, and then $250 million in 1987, $300 million in 1988 and $365 million in 1990. Do you know what it means? It means that the changes to the tax treatment of dividends, as far as the minimum tax is concerned, will reduce the Government revenues forecasted by the Minister of Finance (Mr. Wilson) by $300 million. So, what is left in this minimum tax? This is just a lot of window dressing that is supposed to fool people into believing that now everyone will have to pay taxes, while that is not necessarily the case.
Madam Speaker, there is some good news in this Bill, however. The advantages granted by Orders in Council to people living and working in the North have been given more permanent status. I may recall that, previously, the Liberal Government had been granting these tax rebates by tabling the Orders in Council necessary to implement such decisions.
Today, these advantages are included in the legislation, and that is good news. There are a few technical changes that may be necessary when we look at the Bill clause by clause, but this is probably the best news so far. It is good news because a measure that previously existed on a discretionary basis will now be made permanent.
December 8, 1986

Madam Speaker, as far as the sales tax refund is concerned, I think everyone will agree this is a drop in the ocean, and that it would have been far better not to increase federal sales tax by 3 per cent. Now, the Government is taking $300 or $400 away with one hand and giving back $50, $75 or $100 with the other. One thing is certain, and that is that taxpayers and their families will find themselves in a more complex and difficult situation as a result of these amendments and tax increases.
That is a beginning, but I fail to understand why they have provided that only families earning $15,000 will be entitled to that sales tax refund. Madam Speaker, we lowered the sales tax from 11 per cent to 9 per cent, so I do not see why this would have been needed when it was felt that this was the right course, that is lowering the federal sales tax. But this Government increased it by 3 per cent. Now, after taking $300 or $400 from one pocket, they will be putting $50 back into the other pocket. But still, that is better than nothing.
But it is unbelievable, at a time when the poverty level is recognized by all the major agencies involved as being somewhere around $20,000 for families with three or four children, that only families at the $15,000 level should benefit.
This small item is another clear example of the fact that this Government is more concerned with helping the affluent than the middle-income people.
Madam Speaker, they are now taxing marriage. It used to be that people could at least marry during the month that suited them best, and they were entitled to the married status exemptions for the full year. Can you imagine that now they will have to prorate that, accounting for the number of days they have been married and the number of days they were not married in order to decide whether the taxpayer filing his income tax return, either the husband or the wife, whoever benefits from the deduction . .. now they will have to prorate on a daily basis.
I see that my time has expired and I shall simply repeat in closing that this Government has failed more than once to keep its electoral promises not to increase taxes and that, in fact, taxes have increased dramatically. The Government has not delivered the goods as far as controlling the public debt is concerned. In addition, Madam Speaker, this Government has not respected the integrity of the Canadian family and, in one Budget after the other, it has decided to give tax benefits to the wealthy and to take money away from the poorest members of our society.
I said at the beginning of my speech that I found it unacceptable that this Government could proceed with Bill C-23 without the Minister of Finance, or at the very least, the Minister of State for Finance being here, and this is why I
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move that the debate be adjourned to give the Minister of Finance time to join us.


The Acting Speaker (Mrs. Champagne):: Order, please. The Hon. Member for Trois-Rivieres on a point of order.


Pierre H. Vincent: Madam Speaker, as I recall, we are not supposed to refer to the absence of another Member from the House.


Carlo Rossi: You have no business giving orders.


Pierre H. Vincent: No, I rose on a point of order.


Carlo Rossi: You have no right to do that. Go and learn the Standing Orders.


Pierre H. Vincent: No, I rose on a point of order.


Carlo Rossi: This is not Trois-Rivieres.


Pierre H. Vincent: This is not Montreal.


The Acting Speaker (Mrs. Champagne):: Order, please. The Hon. Member for Trois-Rivieres and Parliamentary Secretary to the Minister of Finance (Mr. Vincent) rose on a point of order while the Hon. Member for Laval-des-Rapides (Mr. Garneau) was moving a motion.
Quite simply this motion underscores the fact that a Member or Minister is not in the House, and to that extent it is out of order.
The Chair cannot present the motion to the House because no prior notice was given.
The Hon. Member for Ottawa-Vanier (Mr. Gauthier).


Jean-Robert Gauthier: Madam Speaker, although I would not want to appeal or comment on your ruling, I would remind the Chair that Standing Order 71 does provide for putting a motion to adjourn the debate when a question is under debate. This is what the Hon. Member did, he moved that the debate be adjourned. If you were to read Standing Order 71, Madam Speaker, I think you would agree with me that this motion is quite in order.


The Acting Speaker (Mrs. Champagne):: The Chair would be prepared to accept the motion if it were quite simply to adjourn the debate, but since it is to enable the Minister to come to the House it is out of order.


Michael Morris Cassidy: I rise on a point of order, Madam Speaker. Standing Order 28 states-


The Acting Speaker (Mrs. Champagne):: Does the Hon. Member have a point of order on the same situation we have now discussed?


Michael Morris Cassidy: I am seeking some guidance from you, Madam Speaker.

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The Acting Speaker (Mrs. Champagne):: The ruling has been made that this motion is not receivable. We are resuming debate.


Michael Morris Cassidy: Perhaps on a point of order I may simply cite-


The Acting Speaker (Mrs. Champagne):: I will give the floor for a moment to the Hon. Member for Ottawa Centre (Mr. Cassidy), but the ruling has been made.


Michael Morris Cassidy: Standing Order 28 states:
A motion to adjourn, unless otherwise prohibited in these Standing Orders, shall always be in order,-
That is my understanding of parliamentary procedure. There is a qualification that one cannot do this repeatedly, but there is no prohibition in the Standing Orders on certain forms of adjournments and I cannot see how the ruling arrived at by the Chair-


The Acting Speaker (Mrs. Champagne):: Order. The Hon. Member does not seem to realize that the purpose of the adjournment motion is only to enable a Minister to come to the House. In that case the motion is out of order, I have so ruled and that is the end of it.

Resuming debate. The Hon. Member for Regina East (Mr. de Jong).


Mr. Simon de Jong (Regina East):: Mr. Speaker, I am plesased to rise this afternoon in debate on Bill C-23. As all Hon. Members are aware this comes as a result of the Budget which was introduced in the spring of this year. We finally see the legislation stemming out of the budget presentation and debate.
In beginning my comments, I wish to point out the flaws in our process. Here we have a Budget which was introduced and debated in the early part of this year, some nine or 10 months ago. However, we are only now finally dealing with the actual Act and the legislation. Many of these tax measures are already in effect, yet Parliament has not properly debated or passed the enabling legislation. It is a process which leaves a lot to be desired, particularly in terms of the work which the finance committee has to do in this case.
If parliamentary reform is to be valid and real, if committees are to have some responsibilities and some flexibility so that incongruities in legislation can be cleared up, then we cannot have the present situation continued in which a budget speech is delivered in February or the beginning of March and tax measures come into effect immediately . That means that all the committee and Parliament can do from there on is rubber-stamp the process because the tax measures are already in effect. To change the legislation means to change the rules again.
The process we are involved in is really a farce. The decisions have already been made. It really does not matter
what the House will say and what individual Members will say and what work the finance committee or the legislative committee will do; the legislation is already written in stone and the Government will not allow any major amendments to it.
What we are debating here is a tax measure that, simply put, will sock it to the poor and middle-income earners and benefit the rich. The two Budgets presented by the Government have increased the tax burdens of ordinary Canadians by some $1,300. They have increased the tax burden by some $1.7 billion this year on a total basis for the poor and middle-income earners. Of course, there is some window-dressing. There is legislation which will allow for what is called a minimum tax. As we all know, particularly members of the finance committee who will snicker when they hear it being said, the minimum tax legislation is like a sieve. It will not collect one cent of new taxes, if taxpayers are at all smart. There are so many loopholes in the legislation that a knowledgeable and sophisticated taxpayer who might have to pay the minimum tax will very quickly find new ways of getting around paying it. So it is window-dressing.
The Government claims that it is plugging some of the business loopholes, loopholes which have allowed some 79,000 corporations in this country with book profits of over $12 billion not to pay one cent of tax on that $12 billion. The Government has taken some pride in plugging some of the loopholes. For example, it takes great pride in having plugged the scientific research tax credit loophole, a crazy scheme devised by the Liberal Government in its last dying months in office. It was a scheme that cost Canadian taxpayers some $3 billion in lost revenues. When the Conservatives took office everyone knew what a scam it was. Everyone knew what a tremendous drain it was on the public Treasury and that the new Government had to act. So in October of 1984 the Minister of Finance (Mr. Wilson) announced that he was placing a moratorium on the scientific research tax credit scheme. However, he incorporated a grandfathering clause. In other words, if you and I, Madam Speaker, had reached some arrangement which we scribbled on the back of an envelope, we would still be eligible under this scheme. Apparently, a great many people had agreements scribbled on the backs of envelopes. Some $3 billion of public revenue was lost and some $1.2 billion of that was lost since the Minister announced his moratorium in October of 1984. Finally, even the Government and the Minister of Finance recognized that the grandfathering clause still left the door wide open, and in 1985 he killed the whole thing, thus putting an end to the nonsense.
I wish to point out that had the Government acted decisively in October of 1984, it would have saved the Treasury some $1.2 billion. To lay the scam of SRTC entirely on the doorstep of the Liberal Party and the former Liberal Government is not quite accurate. The present Government must also accept that, of the $3 billion in lost revenues, it was responsible for $1.2
December 8, 1986

billion of that. One can well imagine what SI.2 billion could really have done to research establishments in this country. Had we had some genuine research coming out of that $3 billion, the country would have been much further ahead. Instead, we heard the universities, the National Research Council and all the scientific bodies in this country, including the granting agencies, crying out for money. They had to cut back programs and cut back on research and development.
1 am certain that some legitimate research took place as a result of this scheme. After all, if one is going to throw $3 billion to the wind, some of it is bound to stick and some legitimate research is bound to come out of it. But I think every Member of the House will agree that a very small percentage of that $3 billion actually went into legitimate new research.
The history of the scientific research tax credit is an important example for all Members of the House. It is an example of the Government attempting to direct economic and social programs and policies through the tax system. In this particular case it illustrated a desire to put money into the hands of small research establishments which could not benefit from tax credits and tax losses because they were already operating on a business loss. There was a very worth-while purpose behind the SRTC. One thing we have to learn from it is that it became an invitation for one of the most major tax scams in the history of this country. And the story is not entirely finished yet. I think research will show that some of the most prestigious accounting and law firms were involved in offering advice to clients who saw the loss of some $3 billion of public revenue.
My Party will continue to press for tax reform. We will continue to press to ensure the plugging up of these tax loopholes and those opportunities which allow large corporations and wealthy individuals not to pay any tax at all.
While the Government and the Minister of Finance talk about tax reform, about removing the number of loopholes and deductions and about broadening the base and therefore being able to reduce the tax rate, the real action on the part of this Government in the form of its two Budgets has in fact done the very opposite. While the Government has plugged up a few loopholes, it has opened up that many more. Certainly the capital gains tax exemption is an example of this. One can receive $500,000 in one's lifetime and not pay one cent of tax on it.


Michael Morris Cassidy: Good times for the rich.


Simon Leendert de Jong: It is certainly not something that will benefit the average Canadian taxpayer.


Donald Alex Blenkarn: Why don't you talk about the Bill?


Simon Leendert de Jong: It will only benefit those who have capital gains of $500,000 in a lifetime. How many individuals have that? Very few of them do.
*	Income Tax Act


John Horton McDermid: Ask the farmers.


Simon Leendert de Jong: I heard the Hon. Member mention the farmers. With the price of farmland going down and with billions of dollars in lost capital in the prairie regions, the capital gains tax exemption will not be of much benefit to them either.
In this legislation there is the proposal to make certain that rich folks simply do not continue not paying any tax at all. It introduces the minimum income tax. I have here a document entitled "The Tax Letter". It is put out by one of the more prestigious accounting firms in Toronto.


Nelson Andrew Riis: What does it say?


Simon Leendert de Jong: "The Tax Letter" of January 23, 1986, has as its general heading: "Yes, you can beat the minimum tax".


Nelson Andrew Riis: You can?


Simon Leendert de Jong: Indeed you can, Madam Speaker. In fact, six different ways of escaping paying any amount of minimum tax are listed. I see that our dear Chairman of the Finance Committee has a grin that goes from ear to ear. I am sure he himself has figured out many of these six different steps. Perhaps he has even discovered seven or eight different ways to avoid paying a minimum income tax.


Michael Morris Cassidy: His grin is even wider now.


Simon Leendert de Jong: The chairman of the committee knows, as does every member of the finance committee that the Government will not collect significant revenues from the minimum income tax. They recognize that only the unsophisticated taxpayer will be caught paying a minimum income tax and that the sophisticated taxpayer will not pay one cent of a minimum income tax.
I could go on to outline some of the ways in which individuals can avoid paying the minimum income tax. However, I will not do so on this occasion. I am certain that the finance committee will deal with many of them in a more specific way.
A small progressive step in the legislation before us is the child tax credit. This amount will be sent out to those who are eligible-


Donald Alex Blenkarn: We've already passed that Bill.


Simon Leendert de Jong: Now that the Government has implemented this policy, the strange aspect of it is that there has been a total foul-up in the implementation of it. A great many low-income families and single-parent families eligible for the child tax credit move around. The Government is sending out the cheques to the addresses used to file income tax returns the year before. Lo and behold, tax credit cheques are floating around the country into mailboxes and homes from which families have already moved. I am afraid this is another indication of the Government not properly thinking through the administration of its own programs. It is another indication of the mismanagement of the Government. It simply could not operate a lemon stand.

December 8, 1986
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This Bill also contains changes to the northern allowance. Again, while there are some positive aspects to these changes, we have some difficulties with them. Steelworkers who work in mines in northern and remote regions will, in the end, receive fewer tax deductions under these proposed changes than they had received before.
As well, the Government is attempting to encourage research and development by allowing for scientific tax credits. These tax credits are mentioned in this Bill. However, the point that we in this Party have raised on several occasions is that the Government discriminates between engineering, natural and medical sciences and the humanities and social sciences.
The Government has told the granting agencies to go out and raise more money in the private sector since they will be receiving fewer government grants. The Government will give tax credits for donations to these funding agencies. However, donations made to the medical, engineering and natural sciences granting agencies will receive a different tax treatment from those donations made to the humanities and social sciences granting councils. We say that this is not fair. It is not fair to the humanities and the social sciences. As well, it indicates the misguided sense of priorities of the Government.
The Government hopes that inventions and discoveries in the natural sciences will get us out of the problems we face.


Donald Alex Blenkarn: It'll create jobs.


Simon Leendert de Jong: As the Hon. Member says, it will create jobs. However, the Government believes that research in the humanities and social sciences is not as important.


Donald Alex Blenkarn: Won't create jobs.


Simon Leendert de Jong: I assume that the Hon. Member firmly believes that that will not create jobs. I beg to differ with him. Canada's situation in this century of very rapid social, economic and technological changes is one which requires research in social sciences and humanities. We need research in those areas if we are to survive as a country in a holistic sense. Unfortunately, the Government does not see it that way. Therefore, it is quite prepared to discriminate against the humanities and social sciences.
Another aspect of this legislation that will help the rich is the change in payments to retirement funds contained in this legislation and in other amendments the Minister had introduced earlier this year. It will be done at a cost of some $300 million to the taxpayers, two-thirds of which will come from the federal Treasury, and the rest from the provinces. The benefits will go almost entirely to the 10 per cent of the population with the highest income. That works in the following way. The Government will now allow total contributions to increase to some $15,000 a year. First of all, very few
people can afford to put away $15,000 a year, other than the well-to-do.


Michael Morris Cassidy: Tories.


Simon Leendert de Jong: Let us say that the average person can afford to put away only $7,000 a year. That $7,000 becomes tax deductible.


John Horton McDermid: I know a lot of rich socialists also.


Simon Leendert de Jong: If you are earning $50,000, $60,000, $80,000 or $100,000, then that $7,000 tax exemption becomes more meaningful to you than if you are only earning $20,000 a year. So what we have are tax measures that will again benefit those who are well-to-do, while the average Canadian will be paying the bill. The average Canadian will be helping to subsidize pensions that could be up to $60,000 a year, which are half paid for by the taxpayers.
Now we come to the question of the surtax. This legislation puts in place a surtax. There was no question about why the surtax was introduced. It was stated over and over again that it was to help fight the deficit. The Tories love talking about the deficit. The strange thing is that the deficit seems to increase when Tories and Tory Governments are in power. In the United States the deficit has increased under the conservative President, Ronald Reagan. In Great Britain the deficit has increased under the Conservative Government of Margaret Thatcher. In this country the deficit has increased under a Conservative Government. In my home Province of Saskatchewan, before the Tories were in power there in 1982, there were surpluses year in, year out. The Tories came into power, and now it is close to a $3 billion deficit that they racked up in the Province of Saskatchewan.
The Tories create the deficit. How do Tories create deficits? First of all, they have the rhetoric against the deficit. They stand up as a Party to fight against the deficit. They tell us all that we are living beyond our means, we have to cut back. So they cut back in social programs. Oh, indeed they do. They love cutting back on social programs. That is where we will fight the deficit. When the Tories claim that we are living beyond our means and you look at the figures of the OECD countries, you find that we are one of the lowest in our expenditure on social programs compared to the other industrialized countries of the world. We are below Italy, Ireland, France, Germany, Holland, Denmark, and Sweden. We spend just a little bit more of our Gross Domestic Product on social programs than the United States. We spend less on hospitals, family allowances, income support programs, health care, pensions, and unemployment insurance benefits. As part of our Gross Domestic Product we spend less than almost every other industrialized country in the world. Yet the Tories
December 8, 1986

tell us that we are living beyond our means. First of all, I cannot believe that we are living beyond our means when you compare us to other western industrialized countries. How can a country as rich in natural resources, as young in its population, and with such a small population be living beyond its means and spending so little on social programs? Perhaps the reason there is a deficit, and perhaps the reason there is a greater deficit under a Conservative Government, can be seen when you look at tax expenditures and see the amount of dollars and cents the Government collects or does not collect. Then you realize that the reason there is a deficit is that the woman who is a teller at the Royal Bank of Canada paid more in actual dollars and cents in taxes than the Royal Bank of Canada paid. Even though the Royal Bank of Canada had over $300 million in profits, it did not pay one cent in tax. In fact, the Government gave it a tax credit of some $6 million in 1982.
So you realize why we have the deficit when you see that there are over 79,000 corporations with a total profit of some $12 billion that did not pay one cent in tax. No wonder there is a deficit, because the Government has not been collecting the revenues from those who can and should be paying their fair share.
So when we talk about fighting the deficit, we realize that this Government, as did the former Liberal Government, is going to fight the deficit on the backs of the working people and the middle-income people. They are the ones who have seen taxes increase under a Conservative Government. They are not the ones who will benefit from half a million dollars capital gains tax exemption. They are not the ones who will benefit from an enriched program in the retirement savings plan. It will not be your average working person and salaried income person who will benefit, or the retired, or the young person who is out looking for a job. They will be paying more income taxes, and they will be paying more sales taxes as a result of the Tory Government and its policies, whereas the well-to-do will continue to reap even more and more benefits.
So there is this injustice in our tax system. The Government talks about tax reform. It is proposing that we will change this and finally set to right the injustices that most Canadians are beginning to realize are there and no longer accept. That means the Government will have to reverse in its next Budget everything it has set down in its Budget in the two previous years. It will have to be willing to reverse itself on capital gains. It will have to be able and willing to reverse itself on the other tax measures and giveaways that it introduced in the two previous Budgets. We will see, indeed, how serious it is when it talks about tax reform.
The Bill before us is complex, and in many ways it is unfortunate. I join with the spokesperson for the Liberal Party in saying that it is unfortunate that neither the Minister of
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Finance nor the Minister of State for Finance (Mr. Hockin) deemed fit to lead in the debate on this Bill, even though last week we received the draft copy of the remarks of the Minister of State for Finance that he was going to give today in introducing the second reading stage on Bill C-23. Instead, the Parliamentary Secretary opened the debate on this Bill. I can understand why this might be the case. The reason is that because the legislation we are asked to approve is such a contradiction to everything that the Minister has been saying since this summer about tax reform, that it must be an embarrassment to the Government.
Because of these and other reasons, I move, seconded by the Hon. Member for Kamloops-Shuswap (Mr. Riis):
That the debate be now adjourned.


The Acting Speaker (Mrs. Champagne):: The House has heard the terms of the motion. Is it the pleasure of the House to adopt the motion?


Some Hon. Members:: Agreed.


Some Hon. Members:: No.


The Acting Speaker (Mrs. Champagne):: All those in favour of the motion will please say yea.


Some Hon. Members:: Yea.


The Acting Speaker (Mrs. Champagne):: All those opposed will please say nay.


Some Hon. Members:: Nay.


The Acting Speaker (Mrs. Champagne):: In my opinion the nays have it.
And more than five Members having risen:


The Acting Speaker (Mrs. Champagne):: Call in the Members.


The Acting Speaker (Mrs. Champagne):: I declare the	
motion lost.
Motion (Mr. Young) negatived.


The Acting Speaker (Mrs. Champagne):: Resuming debate. [English]


Mr. Norman Warner (Stormont-Dundas):: Madam
Speaker, it is a pleasure to participate in this debate on a very important piece of legislation. It is part of a program that the Government began over two years ago. During the election campaign we talked about economic renewal and a stronger economy for Canada and for all Canadians.


The Acting Speaker (Mrs. Champagne):: Order. I would think Hon. Members would allow the Chair to hear the remarks of the colleague who has the floor.


Norman Melvin Warner: Thank you, Madam Speaker. This is a very important debate and I am very glad you have brought that point to the attention of some Hon. Members who were not listening. The economic renewal of Canada is something our Government has been working on since we first came into office over two years ago. This Bill is one more step towards providing that economic renewal.
On November 8, 1984, our Minister of Finance (Mr. Wilson) gave a statement which was called "A New Direction for Canada, an Agenda for Economic Renewal". In that statement he outlined many of the proposals we had discussed throughout our election campaign. He gave us a direction which we continue to follow. The Government must get the deficit under control. We must promote policies which will encourage a higher level of investment in business in order to create new jobs. We must have increased international competitiveness and make Government more efficient in its own operations and less obstructive to the work of the private sector. We must bring about changes in a way that is fair and open, and the changes which are proposed in this Bill are changes which have come about after a process which involved consultation with business leaders, labour and individuals. This is truly reflective of what our Government wants to set out as part of its agenda for economic growth.
Bill C-23 contains amendments to the Income Tax Act which were announced in the Budget of February 26, 1986. The Bill also incorporates some important technical changes which were added to the Ways and Means Motion before it was tabled on October 31. Our Government is committed to the consultation process which is indicated by this Bill. Some Hon. Members opposite were concerned about the delay in implementation of many of the measures which were first suggested in our Budget. Consultation is a worth-while process and it does take time.
Today we are debating the principles of Bill C-23 at second reading. This Bill reinforces our Government's priorities as outlined in previous economic statements. We are looking forward to restoring fiscal balance by rigorous and effective control of government expenditures, greater efficiency and effectiveness in Government, improved management procedures and elimination of programs which have outlived their usefulness. Improvement to our tax system is a priority. Tax reform is on the minds of all Canadians because our present tax system is far too complicated. It has now reached a stage where even our best and most renowned experts have trouble understanding the Income Tax Act. It is so voluminous and difficult that the average person whose affairs are the least bit complex must resort to a tax expert and, in many cases, a lot of expense. That is not what we want.
Bill C-23 provides for reforms and improvements which will be welcomed by many people. It follows our objective to simplify our tax system and to be more fair to all people. It fosters economic activity. It supports social justice. It ensures a stable source of revenue to support viable government programs.
All of these objectives are admirable and I am sure every Hon. Member in the House would agree they are very important and desirable. Hon. Members will also know that the implementation of these objectives is difficult. In introducing these objectives through this legislation, we must also keep in mind that we want to streamline the tax system and, while doing so, we want to continue to be fair and equitable, and so it is very important that we eliminate any distortions created by previous legislators and their legislation.

December 8, 1986

Bill C-23 removes some tax initiatives of which only certain businesses could take advantage. These types of initiatives only complicate the decision-making of small businesses. Small business should be making decisions based on sound business and economic principles in the same way as do other larger corporations.
Bill C-23 broadens the base of tax by the elimination of the 3 per cent inventory allowance and through the phasing out of the general investment tax credits of 7 per cent and 10 per cent and the 7 per cent transportation and construction credit. These changes will be accompanied by a phase-in reduction of the tax rates. The basic federal rate will be reduced from 36 per cent to 33 per cent. The manufacturing rate will be reduced from 30 per cent to 26 per cent. The rate for small manufacturers will fall from 10 per cent to 8 per cent and the rate for other small businesses will be reduced by 2 per cent from 15 per cent to 13 per cent. Our commitment for greater equity in our tax system is reflected in our record and in the improvements we have made to economic growth.
Mir. Cassidy: Like the capital gains exemption.


Norman Melvin Warner: Like our capital gains exemption.


Michael Morris Cassidy: That doesn't increase equity at all and the Hon. Member knows it.


Norman Melvin Warner: The minimum tax will reduce tax avoidance. Bill C-23 terminates the use of partnerships and corporate takeovers to increase tax deductions through so-called partnership step-up or bump-up rules. The so called carve-out transactions whereby profitable oil and gas companies temporarily transfer property to companies with losses in order to reduce taxes will no longer be permissible. Trusts will be prevented from marketing securities in such a way that income and capital returns to investors are distributed tax-free.
I do not believe any person in the House can argue that this is not a progressive piece of legislation, one which is fair and will serve the needs of Canadians and assist in the economic renewal which has already taken place on a grand scale. Most of us will also agree that it will continue very successfully over the next few years. How can anyone argue otherwise when the unemployment rate has dropped from 11.7 per cent in September of 1984 to 9.4 per cent in October of 1986? This is a progressive Government and it is carrying on with a very successful renewal program. Total unemployment has fallen by
255.000	since September of 1984. Since September of 1984 the number of unemployed youth has fallen by 119,000. The number of unemployed women has fallen by 98,000 since that time. Jobs are being created at a monthly rate of over 24,000 compared with a little over 7,000 by the old Government. We have created over 600,000 jobs in 25 months compared to
400.000	in 55 months.
The record of the Government on economic renewal is absolutely outstanding. No one in the House can say that we
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are not on the right track or that we are not taking the right direction with respect to economic renewal. Interest rates have fallen by almost 4 per cent. Interest rates on mortgages have fallen by over 3 per cent. This translates into making house purchases much easier for the average Canadian. The cost of a $50,000 mortgage has been reduced by over $100 a month in the last two years. This means that more people have entered into the housing market. The housing boom in Ontario and other parts of the country is tremendous. How can anyone argue against that? The people of Stormont-Dundas and Glengarry certainly know what has happened with economic renewal in their area. It has meant more jobs for all Canadians, all men, women and youth. Economic renewal will continue with positive legislation such as this.
The interest rate on five-year farm credit mortgage loans has fallen by over three percentage points to the lowest rate since 1979. Although this does not solve all farmers' problems, it is of great assistance in reducing by 3 per cent one's debt burden. The reduction in interest rate has been facilitated by responsible Government. It has been facilitated by a Minister of Finance who has set a course for our Government which we are following and supporting. The results are obvious. They are appreciated by all Canadians, whether they are represented by members of the Opposition or by government Members. Economic renewal is alive and well in Canada.
Perhaps one of our only criticisms can be that it is not as widespread as we would like it to be, but we are working on that as well. 1 only wish that the economic prosperity of Mississauga or greater Toronto were shared by people in Alberta and in the east. Our Government is committed to looking at these regional disparities. This legislation has approached some of those problems. It will facilitate the funding of more investment in some of the areas that have not grown or do not have the wealth and prosperity that we would like them to have.
Interest rates can only be maintained at a low level, or a comparatively low level, if our Government is perceived by the international community to be a sound Government with sound direction. Interest rates are not inherited; they are something that one deserves and one earns. It is through international respect that the capital flow will continue to come to Canada. This year we are looking at increased foreign investment, something about which our Government campaigned and something which is now happening. Investors are coming here from Germany and from Hong Kong. In terms of Hong Kong, the numbers are higher than any previous year. These are very wealthy investors coming to Canada which is a haven for investment. Canada is safe and has a responsible and democratic Government. Not only is it safe in terms of investment, but investments will grow. They will create jobs for Canadians as they grow and give a return to investors.

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Our economic agenda has attracted more visitors to Canada, not only people who are looking at investing in Canada but people who are coming as visitors. The number of foreign travellers in the first nine months of 1986 was up by 19 per cent compared with the same period the previous year. This is something in which Ontario has participated and, in particular, the riding of Stormont-Dundas. It is something in which all of Canada has participated. Ours is an attractive country, not only for investors but for visitors and tourists who love to visit us.
There are many other positive economic indicators. Consumer spending has risen, which is good news for small business, retailers and for all the people on Main Street, Canada. Retail sales have increased by 10 per cent in the last year from September, 1985 to September, 1986, and by 23 per cent since the election in 1984.
Price stability is certainly something about which we can be proud. After a period of high inflation coupled with staggering interest costs, the inflation rate in the last two years has been in the 4 per cent range. Price stability is something which has grown out of the direction and the soundness of the Government.
The Progressive Conservative Government inherited a deficit of $38.3 billion. Last year the deficit fell to $34.4 billion. This year it will probably be in the $32 billion range. This will be the first time in 16 years that the deficit has declined for two consecutive years. I think we can probably project that it will continue this downward trend. Excluding debt service costs, spending declined by $1 billion last year. This was the first significant decline in program expenditures since the Second World War. Bill C-23 facilitates further reductions and more responsible Government.
A couple of Members who spoke before me referred to the capital gains tax exemption. Although that is not part of this Bill, it is certainly part of the responsible tax reform that our Government is endeavouring to present. It is not only a fair and equitable tax but it is a simplification for a great many people doing business in Canada. I hope that further Bills of this nature will be introduced. I hope that we will be able to introduce in this session further legislation which will simplify the tax system. I believe that we are one of the first Governments to take such a bold initiative to attempt to simplify our tax system. I know that in this respect we will have the cooperation of all Members of the House as we develop these ideas in committee and also in the consultation process which is so much a part of our Government. All Canadians will continue to have an input into our Government and into the legislation which we are presenting. This Bill is a great example of the consultation process. I know that future Bills involving tax reform will have the opinions and ideas of all Canadians. It is a difficult procedure to have equity and fairness and at the same time simplification.
Pursuant to the provisions of Standing Order 9 (4) (a) I move:
That the House continue to sit beyond the ordinary hour of daily adjournment for the purpose of the continued consideration of Bill C-23, an Act to amend the Income Tax Act and a related Act.


The Acting Speaker (Mrs. Champagne):: The House has heard the terms of the motion moved by the Hon. Member for Stormont-Dundas (Mr. Warner). Is it the pleasure of the House to adopt the motion?


Some Hon. Members:: Agreed.


Some Hon. Members:: No.


The Acting Speaker (Mrs. Champagne):: According to the provisions of Standing Order 9(4)(6), if 25 Members rise in their places to object, the motion is defeated. Shall the motion carry?
And fewer than 25 Members having risen:


The Acting Speaker (Mrs. Champagne):: There not being 25 Members rising in objection to the motion, according to the provisions of Standing Order 9(4)(b), the motion is deemed to be carried.
Motion (Mr. Warner) agreed to.


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


Don Boudria: Madam Speaker, I would first like to make a comment and then ask a question of my colleague, the Hon. Member for Stormont-Dundas (Mr. Warner). First, of course, I wish to express shock and dismay at the attitude of the Government. Obviously, being the non-partisan person that you are, Madam Speaker, you will understand that I am simply outraged by the tactics used by the Conservative Government in trying to ram through this legislation.
Having made that remark, I would like to ask my colleague a question. The Hon. Member for Stomont-Dundas, of course, represents a constituency which neighbours on mine. In fact, he represents the riding right next to the one I have the honour and privilege of representing in this House. He will know that both our areas have not benefited from much of the new growth that we have seen in the Province of Ontario, particularly in the last couple of years.
If I can get the attention of other Hon. Members, and I am not convinced yet that they are all listening, I would ask the Hon. Member a question. The Hon. Member will know that in three successive Budgets, beginning with the expenditure and program review of November, 1984 as well as the two budgetary documents, the Minister of Finance (Mr. Wilson)-


The Acting Speaker (Mrs. Champagne):: Order. Order, please. The Chair would very much like to hear the questions and comments. It is very difficult to do so when comments going across the floor are louder than the voice of the people who are speaking into the microphone.
December 8, 1986


Don Boudria: 1 never thought I would be accused of not speaking loud enough, Madam Speaker. However, I will try to speak louder than some of the other Hon. Members in the House in order to make sure that the Hon. Member for Stormont-Dundas hears me.
The Hon. Member will know that the regional incentive programs of the Department of Regional Industrial Expansion have been cut, particularly the programs that benefited Cornwall which is in his riding and Hawkesbury which is in mine. He will know particularly that the Canadian Industrial Renewal Board had benefited our areas. As a matter of fact, the Hon. Member for Stormont-Dundas lately announced a grant relating back to the good old Liberal days when that program existed.
How does the Hon. Member feel about the fact that in his budgetary measures, the Minister of Finance (Mr. Wilson) has cancelled those regional programs which were good for Glengarry-Prescott-Russell	and	Stormont-Dundas?
Could he at the same time tell us what he thinks of the new tier structure under the Department of Regional Industrial Expansion which seriously affected our areas, making it not as attractive to invest there as it was before?


Norman Melvin Warner: Madam Speaker, the Hon. Member for Glengarry-Prescott-Russell (Mr. Boudria) mentioned in his preamble that he represents a neighbouring constituency and he mentioned that our areas had not benefited as much from the econmic renewal as had other areas. I would have to point out to him that the riding of Stormont-Dundas along with Charlottenburg, which is part of my riding, and Glengarry- Prescott-Russell, have benefited substantially from the economic renewal.
A considerable number of new jobs have been created in the last couple of years. It is not only new industry that has come into our area but there has also been the expansion of many small businesses. Our unemployment rate has dropped significantly. The official unemployment rate is probably some 3 per cent lower than it was before. However, I do realize that the Hon. Member's riding has not benefited as much as my riding has, and there may be some specific problems or complications which have caused that.
I will tell the Hon. Member that my riding will continue to grow at an above average rate. Next year will be an even better year than this year or last year. This will not be because of government hand-outs or programs but because we have a sound basic economy which is growing and will continue to grow. There are over 1,500 small business people in the area who are progressive, positive-thinking people. They are expanding their businesses and will contribute to the creation of more jobs again next year.
The Hon. Member mentioned the CIRB Program which was an excellent program. He made reference to the good old days. The good old days carried on into the last couple of years. The CIRB Program was continued by this Government and money continued to be allocated until the program was wound down
Income Tax Act
and died a natural death. Some people did not qualify for these grants. There were some industries that looked, sat around and waited and waited for perhaps a year or a year and a half until the bureaucratic process would approve or disapprove their applications. Some stayed, some went on. Some did not do anything. Some got fed up because someone else got money and they did not.
I hope that the Government discontinues many of these programs. This is not the way business decisions should be made. There are certain areas that do need assistance and these areas are quite obvious. However, to be fair, I believe that our areas will prosper and grow without the CIRB program.
There are other programs now in place and there is more money for training in our areas than there had been before. Sometimes it makes more sense to train the unemployed and put them into jobs required and demanded by industry than to throw money into a community on a holus-bolus basis. True, that was not always the case, but capital expansion and expenditures do not necessarily have the greatest impact on unemployment in an area. It is better to look at the jobless rate and then say: "Stormont, Dundas and Charlottenburg have really great people who are unemployed and want some job opportunities". So what we do is to look at an industry where there is a shortage of labour, and we train people, so that suddenly they are not unemployed, they are employed. It makes a big difference. I am quite proud of what has happened in our area recently.


The Acting Speaker (Mrs. Champagne):: The time for questions and comments has expired. On debate, the Hon. Member for Trinity (Miss Nicholson).


Aideen Nicholson: Madam Speaker, Bill C-23 which is before us contains proposed amendments to the Income Tax Act, both personal and corporate income taxes, that were announced in the February 26, 1986 Budget, together with some other measures previously announced like the introduction of a minimum tax.
The Bill was first introduced in the House in June, 1986 as a Notice of Ways and Means motion, and reintroduced in October, 1986. However, the Government has detached two measures from the June motion: the prepayment of the child tax credit, Bill C-ll which has already been adopted by the House; and the increased limits for Registered Retirement Savings Plan contributions, which is still a Notice of Ways and Means motion.
So we are addressing in this Bill some of the issues on which we have already spoken since February 26, 1986. In the case of the personal income tax, we have here the Bill to give authorization to the introduction of a 3 per cent surtax on all individuals, which in fact became effective on July 1 last. We have the introduction of a minimum tax on certain taxpayers, the

December 8, 1986
Income Tax Act
introduction of a refundable sales tax credit for low-income families, a special deduction for travel and housing for northern employees, an increase of S250 in the disability deduction to $2,860, a revision of the married exemption for the year of marriage, and modification to the tax treatment of dividends. In the case of a corporate income tax, over the next three years we have the elimination of the investment tax credit of 7 per cent and 10 per cent. However, the investment tax credit for the Maritimes will stay at 30 per cent, and the investment tax credit for Cape Breton will be increased to 60 per cent.
This Bill also gives effect to the elimination of the 3 per cent inventory allowance. This measure will take effect for the fiscal year 1986. There is a substantial reduction over the next three years of corporate income tax rates, with the general business rate being reduced from 36 per cent to 33 per cent, the rate for the manufacturing sector reduced from 30 per cent to 26 per cent, the rate for small businesses reduced from 15 per cent to 13 per cent, and the rate for small manufacturing businesses reduced from 10 per cent to 8 per cent. We also see some tightening up of the eligibility criteria for tax shelters in this Bill, in the case of limited partnerships, flow-through shares.
That is a summary of this Bill. Many of the issues are issues that we have spoken to before, therefore, my comments tonight will be brief.
When we go back to the Prime Minister's speeches, and the speeches of those who are now members of his Government prior to the 1984 election, we find a very great difference between what was in the election platform, and what we have actually seen since as policy. Both before and after the 1984 election campaign, the Prime Minister (Mr. Mulroney) and the Minister of Finance (Mr. Wilson) made many statements to the effect that they did not intend to fight the deficit by raising personal taxes. The Toronto Sun on November 29, 1984, wrote:
Prime Minister Brian Mulroney says he does not favour higher personal income taxes to reduce the swelling federal deficit because Canadians are already overtaxed.
The Toronto Star on June 1, 1985, quoted the Prime Minister as saying:
Canadians are already overtaxed-Canadians are already paying a pretty hefty bundle for their government services. They feel they are paying enough and that view is not without its support in government and private industry and labour circles.
The Toronto Sun on November 29, 1984, stated:
Finance Minister Michael Wilson said ... he also does not want to raise personal income taxes.
CITY-TV, Toronto, August 28, 1984, quoted Finance Minister Michael Wilson as saying:
We have no intention of raising income taxes to Canadians. What we have to do is get down government.
CTV Question Period, March 1, 1985, the Finance Minister stated:
I don't want to increase taxes-I think we have a good deal of scope on the expenditure side to deal with the deficit problem. A tax increase, certainly a general tax increase, puts a dampening effect on the economy and I don't want to see us do that.
Well, on this side of the House we have repeatedly pointed out that the massive increases in sales tax that we have seen since this Government came into power will certainly have a dampening effect on the economy. But since coming into power the Government seems to have changed its slogan from "jobs, jobs, jobs", to "tax, tax, tax". The Government has imposed tax increases, or new taxes in every Budget. There are taxes on top of taxes whose cumulative effect would bite a little deeper each year.
In the fiscal year 1986-87 alone, the Government's tax increases, including those in the Bill before us today, will bring into the Treasury an extra $5 billion. The effect on the individual family is significant. For example, a family with two children with a single salary of $30,000 a year will be paying $630 more this year because of the tax increases and the new taxes imposed by the Government. A single parent caring for two children and earning $20,000 a year will have to find ways to cope with increased taxes of $420 this year. An elderly couple on an income of $27,000, most likely a fixed income, will be paying about $500 more this year. None of these families is eligible for the sales tax rebate. According to the Government's standard for qualification, their incomes are too high. So there is nothing to offset this tax grab. Those who can least afford it will be hurt most by these tax increases. This is because people at the middle and lower ranges of the income scale have to spend what money they have on necessities. They cannot affort to put thousands of dollars a year into tax sheltered RRSPs, or to make investments and make tax exempt capital gains. So the impact of these tax increases is not spread evenly or fairly among taxpayers of low, middle, and high income.
Apart from the harshness of this, and the difficulty especially for low and middle-income families, there is the effect of that, effect that, as we predicted, the economy is showing some signs of slowing down. Perhaps I may continue after the vote.


PATENT ACT
[Stage Direction]
The House resumed from Friday, December 5, 1986, consideration of the motion of Mr. Andre that Bill C-22, an Act to amend the Patent Act and to provide for certain matters in relation thereto, be now read a second time and referred to a legislative committee; and of the amendment of Mrs. Killens (p. 1378).
The Acting Speaker (Mrs. Champagne):: It being six o'clock, pursuant to Standing Order 13(5), the House will now proceed to the deferred division on the amendment to the motion for second reading of Bill C-22, an Act to amend the Patent Act and to provide for certain matters in relation thereto. Call in the Members.
December 8, 1986

Income Tax Act
The vote is on the amendment of Mrs. Killens.
That the motion be amended by deleting all the words after the word "That" and substituting the following therefor:
"Bill C-22, An Act to amend the Patent Act and to provide for certain matters in relation thereto, be not now read a second time but that it be read a second time this day six months hence".


Some Hon. Members:: Agreed.


Some Hon. Members:: No.
Allmand	YEAS Members Gray	NicholsonAlthouse	(Windsor West)	(Trinity)Axworthy	Guilbault	OuelletBenjamin	(Saint-Jacques)	ParryBlaikie	Hopkins	PennerBoudria	Keeper	Prud'hommeCassidy	Killens	Riisde Jong	Langdon	RobichaudEpp	MacLellan	Rodriguez(Thunder Bay-	Marchi	RossiNipigon)	McCurdy	Waddell-32Foster	Mitchell	Gauthier	Murphy	Andre	NAYS Members Graham	McKinnonBelsher	Gray	McMillanBlackburn	(Bonaventure-iles-de-	Merrithew(Jonquiere)	la-Madeleine)	MinakerBlenkarn	Greenaway	NicholsonBourgault	Grise	(Niagara Falls)Bradley	Gustafson	NickersonBrightwell	Halliday	NowlanBrisco	Hamelin	OberleBrowes	Hardey	OostromCadieux	Hawkes	PennockCardiff	Hockin	PlourdeCarney	Holtmann	PorterChampagne	Howie	Price(Champlain)	Hudon	RedwayChartrand	James	ReidClark	Jelinek	Ricard(Yellowhead)	Johnson	St. GermainClark	(Bonavista-Trinity-	Scott(Brandon-Souris)	Conception)	(Hamilton-Wentworth)Collins	Kelleher	ScowenCossitt	Kilgour	SiddonCote	King	Sparrow(Lac-Saint-Jean)	Ladouceur	StackhouseCrofton	Landry	StewartCrosbie	Lanthier	Taylor(St. John's West)	La Salle	ThackerCrouse	Layton	TowersDaubney	Lewis	Tupperde Cotret	MacKay	TurnerDick	Mailly	(Ottawa-Carleton)Domm	Malone	ValcourtDorin	Mantha	Van De WalleEllis	Marin	VezinaEpp	Martin	Vincent(Provencher)	Mayer	WarnerFor restall	Mazankowski	Wise-105Fretz	McCain	Gagnon	McCuish	Gass	McDermid	Gottselig	Mclnnes


The Acting Speaker (Mrs. Champagne):: I declare the motion lost.


The Acting Speaker (Mrs. Champagne):: All those in favour please say yea.


Some Hon. Members:: Yea.


The Acting Speaker (Mrs. Champagne):: All those opposed please say nay.


Some Hon. Members:: Nay.


The Acting Speaker (Mrs. Champagne):: In my opinion the yeas have it.
And more than five Members having risen:


The Acting Speaker (Mrs. Champagne):: Shall I dispense with the ringing of the bells?


Some Hon. Members:: Agreed.


Some Hon. Members:: No.


The Acting Speaker (Mrs. Champagne):: Call in the Members.


The Acting Speaker (Mrs. Champagne):: Pursuant to order made this day, we will resume debate on Bill C-23.


INCOME TAX ACT
[Stage Direction]
The House resumed consideration of the motion of Mr. Wilson (Etobicoke Centre) that Bill C-23, an Act to amend the Income Tax Act and a related Act, be read the second time and, by unanimous consent, referred to the Standing Committee on Finance and Economic Affairs.
Donald Alex Blenkarn: Madam Speaker, this is the most important tax reform Bill to come before the House of Commons this year and I am indeed surprised that the Opposition would not recognize that, particularly members of the Opposition who are on the Standing Committee on Finance and Economic Affairs. They have had an opportunity to review this Bill as it appeared in the Ways and Means motions of June, 1986 and October, 1986.
The Bill deals with some very serious issues that substantially change our tax laws in order to make those tax laws more
equitable and to collect revenue from those who should pay taxes.
I would have thought that the New Democratic Party, having made an alleged study of taxes across the country, would have hailed this Bill as something they would have introduced if they were in power.
I want to take this time to talk about the issues involved. First, the former Government introduced a program of investment tax credits which were a form of double-dipping. Not only was there a generous system of capital cost allowances, there was a form of investment tax credit throughout the country, starting at 7 per cent.
This Bill phases out those investment tax credits. They ought to be phased out because their effect was to allow those who bought machinery and equipment to have not only generous capital cost allowances, but to have credits against their taxes for their investment. In order to provide the kind of fairness there should be in a tax system, it is only proper that those credits be phased out.
This Bill goes further because it deals with the horrendous rip-offs that seem to have taken place in our society with the misuse of limited partnerships. People could take tax reductions because they invested their money in a limited partnership that had leverage advantages. The effect of a limited partnership was that they could take a reduction and reduce their taxes payable, but not be at risk. According to this Bill, those who are in a partnership transaction or any business transaction and want a tax reduction or to take a capital cost allowance, can only do so if they are in fact at risk.
This is a very important Bill because it ensures that those people who should pay taxes do so. I am surprised that the Member for Laval-des-Rapides (Mr. Garneau), the finance critic for the Official Opposition, says that this is a Bill that raises taxes. I agree that it raises taxes, but it raises taxes for those who were getting away without paying taxes. That is what we intend to stop, but it apparently is something the Liberal Party would like to continue.
One of the most important issues raised by our side was the fact that people who were collecting money as a result of T bills were not paying tax on the profits from those transactions. According to this legislation, one must supply a social insurance number in order to cash one's T bill. When this legislation goes to the Finance Committee I will recommend that it be broadened to include all forms of government financing. There is no reason why people should escape taxation because they happen to lend money to the Government of Canada or the provinces or happen to take their income in the form of coupons. It is important that we view this legislation as the tax reform Bill that it is.
December 8, 1986

Bill C-23 is designed to ensure that those people pay their fair share in taxes. That is the nature of the tax reform we will be introducing in the next Budget. It is tax reform designed to make sure that we can reduce the rate of taxation and lower the individual's requirement to pay. This Bill is fair as it attempts to make sure that those who pay sales tax receive a sales tax rebate.
I suggest that this Bill should be passed immediately, and, on that basis, I move:
That the question be now put.


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


Some Hon. Members:: Agreed.


Some Hon. Members:: On division.


[Stage Direction]
Motion agreed to.
Income Tax Act
The Acting Speaker (Mrs. Champagne):: Mr. Wilson (Etobicoke Centre), seconded by Mr. Mazankowski, moved that Bill C-23, an Act to amend the Income Tax Act and a related Act, be now read the second time and, by unanimous consent, referred to the Standing Committee on Finance and Economic Affairs.
Is it the pleasure of the House to adopt the motion?


Some Hon. Members:: Agreed,


Some Hon. Members:: On division.


[Stage Direction]
Motion agreed to, Bill read the second time and referred to the Standing Committee on Finance and Economic Affairs.
The Acting Speaker (Mrs. Champagne):: It being after six o'clock, this House stands adjourned until tomorrow at eleven o'clock, pursuant to Standing Order 3(1).


[Stage Direction]
The House adjourned at 6:40 p.m.

1903
[Stage Direction]
Tuesday, December 9, 1986