1986-03-06

Mr. Speaker:: I remind Hon. Members to indicate that their petitions are certified.


Mr. Barry Turner (Ottawa-Carleton):: Mr. Speaker, the petition I wish to present is definitely certified. Again it concerns the issue of the proposal of the NCC to build an embassy enclave in the Mile Circle parkland in my riding. The 83 persons who have signed this particular petition are all very much opposed to the proposal and come from all the cities within the National Capital Region.



CRIMINAL CODE


Mr. Jim Jepson (London East) moved: for leave to introduce Bill C-273, an Act to amend the Criminal Code (prostitution).


Mr. Speaker:: Is it the pleasure of the House that the Hon. Member shall have leave to introduce the Bill?


Some Hon. Members:: Agreed.


James Kenneth (Jim) Jepson: Mr. Speaker, this amendment would increase the maximum imprisonment for six months to five years when an accused is found guilty of participating in an act of prostitution with a person under the age of 18 years. It will be no defence that the accused believed the prostitute to be age 18 years old or over.
Canadians are greatly concerned about the increasing sexual abuse of young people. This Bill will provide a strong and effective deterrent to customers of juvenile prostitutes.


[Stage Direction]
Motion agreed to, Bill read the first time and ordered to be printed.
Mr. Fennell:: Mr. Speaker, I rise on a point of order. I either did not hear Your Honour call for the presentation of reports from committees or it was missed. I wonder whether I could
present the twenty-first report of the standing committee with unanimous consent.


Mr. Speaker:: Of course there is one other possibility with regard to what happened. 1 am sure the House is perfectly willing to consent to returning to the presentation of committee reports.


Some Hon. Members:: Agreed.

[ Translation]



STRIKING COMMITTEE


Thomas Scott Fennell: Mr. Speaker, I have the honour of tabling, in both official languages, the Twenty-First Report of the Striking Committee.
[Editor's Note: For above report, see today's Votes and Proceedings.]



PATENT ACT


Mr. Lome Nystrom (Yorkton-Melville) moved: for leave to introduce Bill C-274, an Act to amend the Patent Act (generic farm chemicals).


Mr. Speaker:: Is it the pleasure of the House that the Hon. Member shall have leave to introduce the Bill?


Some Hon. Members:: Agreed.


Lorne Edmund Nystrom: Mr. Speaker, this particular Bill would amend the Patent Act regarding farm chemicals. It will reduce the exclusive right farm chemical companies have on a patent from 17 years to 4 years and in effect establish generic farm chemicals. It is very similar to what the country did many years ago with generic pharmaceuticals.


[Stage Direction]
Motion agreed to, Bill read the first time and ordered to be printed.
[Stage Direction]
March 6, 1986
Order Paper Questions PUBLIC SERVICE EMPLOYMENT ACT

['Agreed.']
Mr. Don Ravis (Saskatoon East) moved: for leave to introduce Bill C-275, an Act to amend the Public Service Employment Act (open competition).


Mr. Speaker:: Is it the pleasure of the House that the Hon. Member shall have leave to introduce the Bill?


Some Hon. Members:: Agreed.


Donald Paul Ravis: Mr. Speaker, I am very pleased to present my first Private Member's Bill to amend the Public Service Employment Act. This Bill would open competition in the Public Service Commission to all qualified Canadians.
Motion agreed, Bill read the first time and ordered to be printed.
*
* *



[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. Doug Lewis (Parliamentary Secretary to President of the Privy Council):: Mr. Speaker, Questions Nos. 447 and 457 will be answered today.


Mr. Blenkarn: 1.	Did the Canadian International Development Agency help finance, through a grant, the construction of an agricultural sawmill co-operative at Ucua, northeast of Luanda in Angola?
2.	Was the sawmill, in fact, built with the money supplied and did an employee of the Government actually see the sawmill being built and operated?
3.	Does the sawmill now exist?


Hon. Monique Vezina (Minister for External Relations):: 1.
For many years the Government of Canada through the Canadian International Development Agency (CIDA) has had programs which contribute Financially to the international development activities overseas of Canadian church groups, unions, co-operatives, universities and colleges, non-governmental organizations and other organizations.
In August, 1980, in response to a request, CIDA provided funding worth $44,145 to the Canadian Council for International Co-operation (CCIC) for materials to assist with the rehabilitation of the Ucua agricultural/sawmill co-operative.
This project was jointly sponsored by the Anglican Church, SUCO, OXFAM, and the Canadian Catholic Organization for Development and Peace (CCODP). It was co-ordinated by the Canadian Council for International Co-operation (CCIC) and administered by CUSO.
2. The sawmill had been in existence for about 50 years at the time of project approval in 1980. The materials were to
provide forestry and agricultural support to the Ucua agricultural/sawmill co-operative to encourage and increase food production, furniture making, etc.
CIDA has never had a bilateral program with Angola. Officials of the Government of Canada have not, to our knowledge, visited the project. However, CUSO and OXFAM do have photographs of the sawmill taken in 1982 and 1983.
3. Canada does not have a resident mission in Angola and we understand that there are security problems relating to visits to the area.


Mr. Kaplan: Since September 4, 1984 how many (a) men (t) women have been appointed by the government to Courts of Record and, in each case, to which courts?


Hon. Ray Hnatyshyn (President of the Privy Council):: 
Philip Derek Lewis: I ask, Mr. Speaker, that the remaining questions be allowed to stand.


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


Some Hon. Members:: Agreed.



POINT OF ORDER


Mr. Speaker:: Prior to going to Orders of the Day I am in receipt of a notice of a desire by the Hon. Member for York Centre (Mr. Kaplan) to raise a point of order.


Hon. Bob Kaplan (York Centre):: I rise on a point of order, Mr. Speaker, and I do so as the Chairman of the Standing Joint Committee on Regulations and Other Statutory Instruments. 1 want to draw to the attention of the House a failure by the Minister of Transport (Mr. Mazankowski) to comply with Standing Order 70(16). I will do so in two sentences.
Our committee tabled its fourth report on October 17, 1985. The Standing Order to which 1 just referred provides for the Government to table a comprehensive response to the report within 120 days of the report being tabled. That 120 day period expired on February 14. The Minister of Transport, since that day, has been in default of his responsibility to table a comprehensive reply.
Our report is an important one, and I want to draw to the attention of the Speaker this breach of the rules of the House.


Mr. Speaker:: 1 thank the Hon. Member and 1 take his point. I am not entirely sure what I can say or do, but 1 think the House knows the point which the Hon. Member is making and I will certainly look into the matter.
DEBATES__________________________________________11235
The Budget-Mr. Hnatyshyn



GOVERNMENT ORDERS


[Stage Direction]
The House resumed from Wednesday, March 5, consideration of the motion of Mr. Wilson (Etobicoke Centre) that this House approves in general the budgetary policy of the Government.
Ramon John Hnatyshyn: Mr. Speaker, on February 26, the Minister of Finance (Mr. Wilson) brought down a Budget designed to restore fiscal stability to the country.
Through the most far-reaching program of expenditure control ever undertaken by a Government in Canada, the Budget took yet another deliberate step in the implementation of the Government's November, 1984 agenda for economic renewal. It is a step that enables us to foresee government program spending falling by the end of the decade to the same share of the economy as at the beginning of the 1960s. It is a step that promotes economic renewal by smarter spending.
You will recall that two weeks earlier, as a part of our plan for economic renewal, the Deputy Prime Minister (Mr. Nielsen) announced the Government's decision to launch a major regulatory reform strategy. By improving the Government's regulatory performance, we intend to reduce impediments to economic growth, cut down inhibitions to job creation and eliminate unnecessary incursions on personal freedom. In other words, we want to promote economic renewal through better regulation.

In my new capacity as Minister responsible for regulation, 1 would like to inform the House of two components of the federal reform strategy: the introduction of the Citizens' Code of Regulatory Fairness and a regulatory program improvement package.
First of all, I would like to comment on the subject of regulation and the need for regulatory reform.

As a lawyer and a former member of the Standing Joint Committee on Regulations and Other Statutory Instruments, 1 am no stranger to Government regulations. Last year I was appointed Chairman of the Special Committee on Council. That is the cabinet committee responsible for approving all regulatory initiatives. The concern about regulation that I had developed while in the Opposition was only reinforced when looking at it from the Government's point of view. You have to see it to believe just how many regulatory initiatives go through the committee week in and week out, very much like chickens on a processor's conveyer belt, Mr. Speaker. [Translation]
We all know how extensive federal regulations are and how considerable the cost is to the public purse and the economy. If

March 6, 1986
The Budget-Mr. Hnatyshyn
we consider these costs, the very limited information available to the Ministers who establish new regulations and the limited input by Parliament and the public into the system, the importance of regulatory reform and the need for it are obvious.

As Hon. Members know, regulatory reform is a term that has been in more or less common use for about 10 years. It is frequently associated or confused with the more dramatic but usually less accurate term, deregulation.
To me, deregulation is only one of several options open to the regulatory reformer. The key objective for proponents of regulatory reform is to improve regulation, that is, to make it rational and efficient, to limit its growth but not necessarily to dismantle it.
Although regulatory reform has been talked about a lot in Canada, very little has actually been done about it. A lot of people probably saw it as a short term political fad deserving lip service and nothing more. Others may have found it a hard issue to take seriously because regulatory matters sometimes seem too technical for mere mortals. Still others may have been put off by the subject by identifying it with ideological movements in other countries.
In my opinion, we have to move beyond these preconceptions and we have to do it soon. The fast movement of technology and the growing integration of the world economy are challenging and, in some cases, rapidly outpacing our traditional approaches to regulation.
Twentieth century economic realities need to be matched by twentieth century regulatory approaches. This is a matter not of ideology but of good, sensible and pragmatic government. I know I have good company in this House with these views.
In the debate following the Deputy Prime Minister's announcement of the regulatory reform strategy, I was gratified to see that the opposition representatives gave the strategy their approval, qualified perhaps, but fundamental approval nonetheless.
I am hoping that, as the details of the strategy are announced, any lingering doubts among my opposition colleagues will disappear. I am most serious in expressing this hope because I think regulatory reform is one of those issues on which bipartisan support and co-operation will make a great deal of difference in improving government efficiency, promoting economic growth and, most important, getting Government off the backs of Canadians. Indeed, I will go further, Mr. Speaker. I think it is the kind of issue on which Canadians would want their Members of Parliament of all stripes to work together.
With these general reflections on my new regulatory responsibilities, I would like now to announce details of two new initiatives which form an important part of the Government's regulatory reform strategy.
First, I am proud to announce and introduce The Citizens' Code of Regulatory Fairness. It is a unique initiative based on the principle that Canadians are entitled to know in as much
detail as possible exactly how much government regulators are carrying out their responsibilities. Citizens have a right to know the rules of the game and to know they will be fair. The code response to concerns expressed to the ministerial task force on program review that the federal regulatory system is almost inaccessible to ordinary Canadians, that regulation at all levels has become too much the preserve of public servants, specialized lawyers and lobby groups. The code's purpose is to provide a set of high standards for ensuring regulatory fair play. The code also provides an explicit basis for judging the performance of regulators. In this way the code is intended to regulate the regulators.
Copies of the code are being distributed to all federal officials with regulatory responsibilities. Mr. Speaker, not only will they be expected to comply with the letter and spirit of the standards, but adherence will be a prerequisite-possibly I could refer to it as the ticket of entry-for approval of new regulatory proposals by the Special Committee of Council. The code consists of 15 points and copies of it are being circulated to all Members' offices, so 1 will not read them in detail at this time. However, I think it would be of interest to the House and the people of Canada to know some of the highlights of this new Citizens' Code of Regulatory Fairness.
Canadians are going to have a fuller opportunity, henceforth, to be consulted on regulatory initiatives. Second, they are going to have adequate early notice. Third, regulatory decision-making is going to become more prompt and efficient. The Government is going to tell Canadians in clear language what the regulatory requirements are and why they have been adopted. Regulatory officials are going to be held more clearly accountable for their actions and advice. Disproportionate regulatory burdens on small and medium-sized business are going to be avoided from this point forward. Regulations will have to pass cost-benefit tests, and sanctions and enforcement powers are going to fit the seriousness of violations. Finally, the public will have an on-going role in evaluating and criticizing ineffective or inefficient regulatory programs.
The report of the Macdonald Royal Commission affirmed the view that, in this day and age, big Government requires more democracy, not less. In its thought-provoking first chapter the report says:
The extension of democracy which is required by big government is not one of war fragmented participation, but one which addresses Canadians as citizens and seeks our involvement in common tasks.
I see The Citizens' Code of Regulatory Fairness as encouraging the democratization of federal regulatory activity. That is a goal which I am sure we all endorse.
My second announcement, Mr. Speaker, is that I am today releasing a major regulatory program improvement package. It provides a long list of regulatory reform initiatives which are now under way in 16 Departments and 7 regulatory agencies to address specific problems identified by the ministerial task force on program review.
March 6, 1986



These measures are in addition to the many regulatory reform initiatives already implemented or about to be implemented under the direction of Ministers with a central responsibility for regulation. These Ministers will provide details on their reform activities as work progresses. Although I am responsible for developing and implementing the overall strategy of regulatory reform, I think I should stress the crucial role played by the Ministers in this process within their respective responsibility sectors.

Indeed, Mr. Speaker, it should be clear that we are not talking about a one-shot crack at regulatory reform. Rather, we are launching an across-the-board series of initiatives which we expect will pick up increasing momentum and become one of the Government's most substantial achievements.
You will recall, Mr. Speaker, that the Government's regulatory policy makes clear that the Government is committed to a program of pragmatic and balanced regulatory reform. Its aim is to make federal regulations smarter in terms of efficiency, and fairer in terms of public access and participation. The regulatory program improvement package being released today reflects this pragmatic and balanced approach to regulatory reform.
While time does not permit me to go into all 43 of the items included in this package, perhaps I can give you some of the flavour by referring to a few of the specific items. The ministerial task force found that there are a number of federal, as well as provincial, regulatory programs touching on different aspects of hazardous products. It queried whether the net protection provided to Canadians by these programs is adequate. In response, the Government has decided to evaluate a re-ordering of priorities and the possible elimination of fragmented responsibilities in these areas.
Several of the items in the package call for increased privatization, cost recovery, or increased self-regulation as means of reducing unnecessary Government intervention or regulatory costs. As an example, an action plan is to be prepared for the phased and full devolution over six years to the private sector of electricity and gas verification.
The package identifies a number of statutes, such as the Bankruptcy Act and Copyright Act, which are seriously out of date and deficient. These laws provide the crucial regulatory framework within which our economy operates. If these laws are flawed, our economy suffers a serious disadvantage. The Government intends to give priority to reforming these laws. Several of the items in the package relate to areas of parrallel, and sometimes overlapping, federal-provincial regulatory activity. An example of this is the item calling for early action to arrive at more satisfactory compliance and enforcement policies for Section 33 of the Fisheries Act governing water and fish habitat.
Finally, Hon. Members will no doubt be interested to note that the reform package includes a number of improvements
The Budget-Mr. Hnatyshyn
affecting food regulation and inspection. The decision in this respect are typical of the Government's general approach to regulatory reform with the emphasis on making things work better in the interests of economic development, job creation, public protection, and more efficient Government. In keeping with these priorities we are introducing today several practical reforms intended to strengthen still further Canada's worldwide reputation for excellence in food production. The reforms represent a major advantage in the efficiency and effectiveness of our regulation of food products. They boil down to four main thrusts.
First, we are going to strengthen the protection of Canadians by reaffirming the absolute primacy of the Department of National Health and Welfare on all matters affecting the health, safety, or nutritional dimensions of the food industry. Second, we are going to eliminate duplication and inconsistency among regulations dealing with health and safety issues on the one hand, and quality and grading issues on the other. Third, we are going to try to intensify efforts to co-operate with the provinces to bring about common health and safety standards across the country. Fourth, the Government is going to adopt a policy of no ministerial discretion with regard to individual inspection judgments.
I have gone into some detail on the food regulation reforms contained in the program improvement package because 1 think they are an excellent illustration of how the Government intends to proceed with regulatory reform in general. We have no intention of throwing the baby out with the bath water, but confronted by a need for regulatory improvement we intend to take firm, forthright, and effective action. With these food regulation reforms we have preserved the good while confronting the problems and, I trust, overcoming them.
The February 26 Budget makes it clear that the Government intends to face up to the problems of fiscal instability with statemanship and determination. In the same way, the regulatory reform strategy is directed at getting the country's regulatory affairs in order. By responsible spending and a strategy for fair and better regulation, the Government has already begun the monumental process of turning the country's economy away from pessimism and decline and toward energetic renewal and prosperity for the future.


Robert Phillip Kaplan: Mr. Speaker, I wondered whether 1 was listening to the budget debate because, within the latitude permitted, the Minister spent much time talking about ministerial responsibilities outside the Budget. Is it because he is not prepared to defend the Budget that he spent so much of his time trying to divert the attention of the Canadian people from all of the things that are wrong with it? As a result of his silence on this subject, can we expect that the Government is proposing to take our advice and make some of the changes in the Budget that we have been asking for?


Ramon John Hnatyshyn: As you know, Mr. Speaker, I am the last one to indulge in partisan repartee across the aisle, especially in connection with observations made by my distinguished

March 6, 1986
The Budget-Mr. Hnatyshyn
friend from York Centre. However, if the co-chairman of the Joint Committee on Regulations and Other Statutory Instruments does not understand the importance of regulatory reform as it concerns good management and efficient delivery of Government services, then I am a little leery about the paucity of understanding on the part of the Official Opposition with respect to any economic issue. I can say nothing further except that we would be only too happy to give serious consideration to suggestions on the part of the Official Opposition concerning this Budget if they have any.


Philip Derek Lewis: Mr. Speaker, I do not share the same concern that my friend across the way had with respect to the budget policies of the Government. I do not think anyone really does. However, I want to ask my colleague, the Government House Leader, to elaborate on one point. We brought in a Budget which was almost bang on with what a committee suggested a Budget should be in the early part of the year. The Estimates were linked very closely with the Budget; I think they came down the day after. Hand in hand with our efforts to tie down the deficit left to us by the previous Liberal Government, there was an effort to make sure that we regulate smarter. Part of the cost of Government is the number of people we have examining regulations, putting them into effect and enforcing them. Perhaps my colleague could comment on the cost to the Canadian taxpayer of regulations which may be inappropriate or out of date as Canada moves toward the end of the 20th century.


Ramon John Hnatyshyn: Mr. Speaker, my Parliamentary Secretary makes a very valid observation with respect to the juxtaposition of regulatory reform in connection with the total fiscal and economic policy of this Government. A task force dealt with regulatory reform and looked at the wide ranging implications of regulations for Canada. It was pointed out by way of example-and this was the most conservative assertion possible on the basis of advice we received from experts in the field-that regulations impact on Canadians to the extent of some $30 billion. Consider that in the regulatory process there are some 35,000 public servants involved directly and, I suppose, indirectly. This means that a very large part of Government is involved in law-making behind the scenes. This has a very serious and wide-ranging effect on the daily lives of Canadians. Regulations cover food inspection, hazardous products, transportation, shipping and fisheries, to name a few, not to mention agriculture which is a matter of substantial importance to me, being from the Province of Saskatchewan. This gives you an idea of the wide range of activities affected by regulations which are not made on the floor of the House of Commons. They are created behind the scenes and promulgated in a conveyer belt process, as I said, by Cabinet.
What we are doing now is trying to bring some light to the process. It is absolutely essential, for example, that we enter into a process where all new regulations are measured against their social cost and cost efficiency so that a judgment can be made by the people involved in the political life of our country, including Members of Parliament, as to their validity.
I say this in all seriousness to the Hon. Member for York Centre (Mr. Kaplan). He has had some experience with regulations, as have I, in sitting for many years on that committee. If the people of Canada had an opportunity to look at this, they would be astounded and amazed just how much law and constraint on their activities is effected outside of this Chamber. There is a phenomenal amount of regulation of people taking place.
For example, the committee has been doing excellent work in examining whether or not officials are arbitrary; whether or not our freedoms are negatively affected by regulations; whether or not principles of natural justice are observed in the drawing up of regulations. These laws, and that is what they are, are drawn up in the bureaucracy without the same sort of scrutiny that laws in the statute books receive on the floor of this House. There are certainly no television cameras watching and no public discussion. It is done by people who have a responsibility but also a kind of self-interest with respect to the nature and form of regulations. In my view, the Parliamentary Secretary has highlighted the significance of this problem and the necessity for the Government to enter into a new regime of measuring what is being done regarding the economic welfare of Canadians.
I do not want to take any more time but I do want to reiterate that under this new regime Canadians are going to become, so far as the federal level is concerned, world leaders in regulatory reform. This is a very, very progressive initiative we are taking. I am very proud to be associated with it because I know the long history of this issue. I say this is a non-partisan sense. There has been a desire by all Parties to come to grips with the growing volume of regulation and make sure there is some rationale to the regulations which affect the daily lives of our fellow citizens so very much.


The Acting Speaker (Mr. Paproski):: The period provided for questions and comments has now expired. Debate. The Hon. Member for York Centre (Mr. Kaplan).


Robert Phillip Kaplan: Mr. Speaker, I listened with interest to what the Government House Leader had to say about the initiatives he is taking in regulatory reform. I have remarks I want to make on the Budget, of course, but I welcome very much, and I think all Canadians should as well, what is being proposed by the Government House Leader concerning regulatory reform. We may be-and I say "may be" because I want to see what happens before I congratulate the Government-seeing a real breakthrough here in the way in which delegated legislation and other statutory instruments are handled. As chairman of the committee concerned, 1 appreciate his remarks about the nature of our work. It is dull, it does not get public attention even when egregious wrongdoing is found in the way in which regulations are processed, simply because they affect the rights of Canadians indirectly, not directly. However, that is important, too, and I appreciate
March 6, 1986

a Government which indicates it intends to give priority to this issue.
Maybe we will see the same type of breakthrough here as we have seen in the new rules of this House. This Government can claim the credit for a substantial breakthrough in humanizing the rules of this House. I do not want to let members of the Government get away with taking that totally as a compliment because I think an element of enlightened opposition has been responsible for House reform. 1 do not think that in the last Parliament the Opposition was prepared to give the kind of co-operation which this Opposition is prepared to give.
Be that as it may, we have a lot to look forward to as Members of Parliament, and a lot to tell our constituents about ways in which their rights, direct and indirect, are being enhanced by reforms that may be under way in the House of Commons now. That does not take away the fact that the Minister, during the budget debate, did not spend any of his time talking about the Budget. I am entitled to draw from that the conclusion that I suggested in my question, which is that he is not prepared to defend a Budget which I want to put into the context in which it is seen by the people of York Centre and York North. They have watched a trend, since this Government took office, through two Budgets of tending to stratify the Canadian people ever more between those who are better off and those who are worse off. There is a developing sense in our country that it is a country of rich and poor, and not one where most people are in the middle class. It is interesting that 20 years ago when surveys were done most Canadians said they felt they were in the middle class in Canada. We had in our society a certain social cohesion. That social cohesion is being undermined now by two Budgets in a row, which have heightened the disparity between the rich and the poor and given Canadians the sense that the Government is fostering that type of disparity.
I want to put statistics on the record that show exactly that, that the impact of these two Budgets has been to make middle and lower-income Canadians worse off and to make well-to-do Canadians better off. I know that this is a concern of the Conservative Party because their chief statistician and analyst, Allan Gregg, has mentioned in interviews that he has given to the press that the Conservatives are worried that they are being seen as a Party which is devoted to enhancing the incomes of those better off, even if it means making the rest of the Canadian people, those in the middle and at the bottom, that much worse off.
Knowing that the Government has been given that advice by its chief strategist, I would have thought that this would be a Budget in which it would try to undo the damage that was done in the first Budget. For example, in that Budget it introduced an amazing tax relief in the area of capital gains. Those in a society who get capital gains do not have to pay taxes any more on the first $500,000 of capital gains. Capital gains are enjoyed by those who are better off. People in the middle and at the bottom do not get capital gains, except
The Budget-Hon. B. Kaplan
maybe on their house, which is already exempt under the existing tax laws. That was a clear benefit for people in this society who are better off. With the warning that they got as a Party about the impact that their fiscal policies was having on the class structure of Canadian society I thought they would retract that.
We found in this Budget that they added additional measures to help the rich and to make the poor worse off, because the Government's theory is, and the Minister of Finance (Mr. Wilson) said it in so many words, that there are not enough rich people in Canada. I took it from that that, if the Budgets were designed to make more rich people in Canada, they would be achieving what the Conservatives wanted to achieve through this mandate.
I want to deal with two concrete cases. A family which was earning, in 1984, $100,000 a year paid in tax $35,236. Now, under the Budget proposals, which we are debating now, combined with the Government's first Budget that was brought in in 1985, that $100,000-a-year family will be paying $34,450 in taxes by the year 1988. That family's tax load will decrease by $1,000 over the next three years. However, a family earning $20,000 a year-that is a family at the bottom or close to the middle-will find in the same period that its tax bill will have increased from $1,388 to $1,409 in the same period of time. In other words, the $100,000-a-year family under this Conservative Government gets its taxes cut; the $20,000-a-year family gets its taxes increased.
Let me look again at the two combined Budgets and their effect on a family of four with one wage earner earning $20,000 a year. As a result of those two Budgets that family's income tax will go up by $225, and the wage earner will pay an additional $300 in sales tax in addition to the income tax increase. I suggest that that kind of social result is unacceptable in the Budget. I know that a lot of members of the Conservative Party regard President Reagan in the United States as their great guru. Let me say this about President Reagan, he has a plan to attack the deficit, but his plan has never included tax increases at all, tax increases on the rich or tax increases on the poor. He is popular in the United States with his approach. In Canada you can understand the public reaction to the Conservative Government whose plan is to increase taxes but not to increase them on those who are better off but, rather to increase them on those in the middle and on those who are worse off.
I want to deal at length in the balance of my remarks with the question of gasoline prices. Gasoline prices are a very important item to the average Canadian family. People used to think that the price of gasoline was rather like a luxury, let us say like cigarettes, and that, if the federal or provincial Governments needed more money, gasoline was one of the discretionary spending areas where you could go-let people drive less. We have smartened up now in our understanding of the impact of gasoline prices on the Jiving standard of Canadians and on inflation in general. For most people-and I am not talking here only about those in our great cities, I am talking about most people in most places in Canada-we find the car

March 6, 1986
The Budget-Hon. B. Kaplan
is an essential vehicle, even in our big cities. Mass transit in Canada is less transit in buses and subways than transit by car. Mass transportation in Canada is the automobile, because that is the way most people do travel. So we cannot look at gasoline prices as being a luxury item. In addition, gasoline is the fuel for most of the transportation of goods in Canadian society. When gasoline prices go up through tax increases, it is inevitable that food prices will go up, the cost of shelter will go up because of the transportation factor and its production, and all of these industries in the middle are part of the cost of living of the Canadian people. Gasoline prices have to be a matter of concern of the Government and of this Parliament because of that.
Finally, gasoline prices matter a lot because tourism is an important industry in this country. If gasoline prices are high, as they are now, when they are falling in other places in the world, that is a factor against one of the most important industries in our country, the tourism industry.
So having shown you how important gasoline prices are and how important it is that it be Government policy to moderate gasoline prices, I want to look at the record and examine what it is that is happening in gasoline prices, and what, in the submission of the Liberal Party and of our caucus here, should be happening.
Since this Government came to office, it increased the taxes on a litre of gasoline by 66 per cent. That is a very big increase, because the taxes are a high proportion of the price charged for gasoline. In 1984, federal and excise taxes on gasoline were 4.3 cents a litre. After this Budget, they are 7.12 cents a litre. That is a 66 per cent increase. While there was no increase in the excise tax in the last Budget, the general sales tax was increased by 1 per cent, and that applies to gasoline as well. That Budget, alone, saw a 0.3 cent a litre increase in the price of gasoline, which amounts to 1.3 cents a gallon.
In spite of the importance of gasoline to tourism, which I believe the Government acknowledges, it has looked to gasoline and targeted the price of gasoline as an area where taxes can be levied but not noticed by Canadians.
However, Canadians do notice these increases in a very interesting context. They are noticing it in the context of world prices that have fallen by more than 50 per cent since last December.
Last December, the international price of a barrel of oil was S22.50 U.S. The price of a barrel of oil has fallen to below $14 U.S. which is a decrease that is having an enormous impact on the energy sector. I will talk about the problems of that sector in a moment. Members of our Party have pointed out what must be done to keep the energy industry healthy and to ensure job increases and economic activity in Alberta and elsewhere.
Before dealing with the impact of falling oil prices on the energy sector, let me talk about its impact on my constituents who fill their gas tanks at the pump. The price decreases as a result of a 50 per cent drop in the world oil price has been so
small that it is almost scandalous. Gasoline prices in Canada are not falling to reflect that drop in world oil prices although we see in the United States that the price of gasoline at the pump is falling rapidly.
The prices have not decreased partly because the Government is applying a substantial increase in taxes, but even when one takes that into account, there should be a decrease similar to what is taking place in the United States.
The Minister of Energy, Mines and Resources (Miss Carney) tells us that we only need to wait for that drop in price to take place. She says that it takes 75 days for a decline in world oil prices to work its way through the storage tanks, through the vessels carrying the oil, through the refineries and through the consumer storage depots in our cities to get to the gas pumps. Therefore, it should also take 75 days in the United States for those price decreases to take effect. Why must my constituents wait for 75 days when these benefits are being realized much more quickly in the United States?
The answer is that in the United States there is a much higher degree of competition among gas retailers. Many of us have visited the United States as tourists and witnessed the competition that does not exist in Canada. For instance, gas stations charge lower prices to those who are prepared to pay cash and accept many different credit cards. There is much greater evidence of interest in the consumer and competition in the United States than in Canada.
I am not suggesting that the gasoline companies in Canada that run the majority of gas stations in this country are breaking the law or in a conspiracy. I do not have proof of that, but an investigation was conducted by the former Government and a report published explaining that this is not an industry in which competition works. The major oil companies are powerful and watch each other closely. Price leadership occurs, and when the reduction of 2 cents a litre took place a couple of weeks ago we saw how the other companies followed the lead of Imperial Oil.
The report to which I refer warned Canadians that steps needed to be taken to make the Canadian industry more competitive so that Canadians would benefit immediately from any breaks without any stalling by the companies. The former Government's solution to increased competition in Canada was the establishment of Petro-Canada. We wanted it to make money and operate much like an ordinary company except that it would be publicly owned. When the public interest requires it, we expect Petro-Canada to show some leadership in that industry.
In this environment of falling world oil prices when the Seven Sisters are trying to make as much money from this situation as possible by keeping prices high for as long as possible, Petro-Canada's role is obvious. It should begin to lower prices as a result of what is happening in the world.
Instead, we learn that Petro-Canada is being used as an instrument of the energy industry to keep prices high and rationalize the industry through non-competitive means so that
March 6, 1986

the consumer will get as little and as late as possible. That is unacceptable.


Mr. Orlikow:: Mr. Speaker, the Hon. Member was correct when he said that the Government has imposed sharp increases in taxes on Canadians.
His Party formed the Government of Canada for 30 of the last 36 years, from 1950 to 1986. In 1950, corporate taxes and personal incomes taxes brought in the same percentage of revenue to the Government. The Government has exacerbated this discrepancy.
Now, corporate taxes are about one-quarter of personal income taxes in Government revenue. This has not happened only since the Conservative Government but because corporation tax breaks got larger every year while the Liberals were in power. Where was he when his Government was allowing this?
I also point out to the Hon. Member that it was during his term of office that 250 people with incomes of more than $200,000 in the last year, for which we have records, did not pay a cent in personal income tax. It was his Government that permitted and encouraged this kind of unfair discrepancy. Where was he during those years?
The Hon. Member talked about lack of competition in the oil industry, which is reflected in the price that consumers pay at the pump. We have had reports about that lack of competition taking place for years while the Liberals were in power. He is correct that Petro-Canada should set an example, but there are other ways in which the oil companies could have been brought to task. They should have been charged and prosecuted under the competition laws, but the Liberal Government did not do it. Why?


Robert Phillip Kaplan: Let me deal with the last point, Mr. Speaker, although I thought I had covered it in my remarks. I did not read that in that report for which the former Government asked and which it obtained. It showed the true nature of the gas retailing industry and the impact it had against the interests of consumers, but I did not read that report as outlining crimes for which the players in the gasoline retailing industry could be called to account. However, what it told us was that, without necessarily breaking the law, a situation had been produced in which there was a lot less competition. I know what the New Democratic Party would have done. It would have nationalized Imperial Oil or a whole bunch of the other players. That is the easy socialist solution, but it is not what the Liberals wanted to do.


David Orlikow: You didn't do anything.


Robert Phillip Kaplan: The Hon. Member says we did not do anything, but we established a vehicle as a major player which was meant to keep the game honest. It was meant to be there, sticking up for us, the Canadian people who paid the taxes, which allowed that company to acquire all of its assets, Petrofina, a lot of these Gulf stations and a lot of other
The Budget-Hon. B. Kaplan
facilities across the country. We are the ones who put the money up for the company to do that.
What do we find now that we recognize a very specific situation where lack of competitiveness is hurting Canadian consumers? We find that Petro-Canada is on the other side and the Minister is proud to come to the House and tell us she told Petro-Canada to act like the other ones, not to try to do anything special to help its shareholders, who are the Canadian people. She told it to get together with the industry and act like the rest of them. Well, that is a perversion of the intention of Petro-Canada and it has left the Canadian people at the mercy of the energy players in a very non-competitive situation.
I know I do not have very much time but I do want to deal with the observation with respect to corporations contributing proportionately less and individuals contributing proportionately more over the years to the tax system. The fallacy of the New Democratic Party in making this criticism,-in viewing it as a criticism-is to think of the rich corporations as if they were rich people.


David Orlikow: Should they not pay some taxes?


Robert Phillip Kaplan: The corporations in society are not people, rich and poor, with needs and with wealth. The corporations belong to people.


Mr. Hovdebo:: The courts treat them as people.


David Orlikow: Why don't the banks pay taxes?


Robert Phillip Kaplan: Well, 1 would like to answer that and the Hon. Member can certainly ask another question, but I want to try to enlighten-


The Acting Speaker (Mr. Paproski):: Order, please. The Hon. Member will be allowed a supplementary question, if he wishes. The Hon. Member for York Centre (Mr. Kaplan).


Robert Phillip Kaplan: I am trying to explain the rationalization of the tax system which was recommended by a great hero of the NDP, the Carter Commission, that is, to try to place the burden of taxes on people with the ability to pay it. Behind those corporations are their owners and to the extent that taxes were shifted from corporations to individuals, the tax burden was shifted through the corporations of the rich people who own the valuable corporations. I think if the Hon. Member would look at the way in which the burden of tax was laid on individual taxpayers during that period, he will find that, contrary to what has happened since the last election, the shift has been that those with less ability to pay taxes are paying less and those with more ability to pay taxes are paying more.
I know there are a few individuals with large incomes who manage to work the system so they do not have to pay any taxes. We agree with the idea of the minimum tax so that the tax system cannot be played that way. 1 am a former tax lawyer. I know about the limits to which we can assist people with very high incomes to get away without having to pay any tax at all. It is not that easy and it was getting harder and

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The Budget-Hon. B. Kaplan
harder each year until this election. Starting with the current election-and 1 put the figures on the record that show this- the purpose of the Government was not to try to place a heavier burden on those more able to pay. It was the reverse. It was to try to help the rich people in Canada get richer faster by paying less taxes and to ask those at the middle and at the bottom-contrary to what had been done by former Liberal Governments-to pay more of the tax burden.


The Acting Speaker (Mr. Paproski):: The Hon. Member still has a couple of minutes for questions or comments.


Mr. McKenzie:: Mr. Speaker, I hope the Hon. Member for York Centre (Mr. Kaplan) will pass along his concerns to the Liberal Government of Quebec about the high price of gas, because it puts some very high new taxes on gas. That is why the price of gas is so high in Ottawa. It is not going to be lowered here, because even if it is higher here than in other parts of Canada, people from Quebec still come here to buy gasoline.
1 do not know why the Hon. Member did not mention the Liberal promise in the 1980 election that it was going to give the Canadian people cheap gas. After the Liberals and the NDP got together to support the National Energy Program, gas went up by SI.25 a gallon. The Canadian people had to fork out $1.1 billion to buy Petrofina, which was one of the poorest deals which has ever been forced upon the Canadian people. That deal is still under investigation by the Auditor General. And $1 million in legal fees went to some law firm in Switzerland that handled the Petrofina deal.
It is very interesting to listen to the Hon. Member for Winnipeg North (Mr. Orlikow) who is so worried about high taxes. We have an NDP Government in Manitoba, a province which has the highest taxes in the country, but I do not hear any Hon. Members of the New Democratic Party talking about the high taxes in Manitoba.


Mr. Parry:: That is rubbish.


A. Daniel McKenzie: Listen to them squeal and holler. Perhaps they will bring up the subject of high taxes in Manitoba some day. The reason we have high taxes in Canada is that we have to pay for all of our social programs which, between the provinces and the federal Government, amount to $62 billion a year. The United States has cheap gas but it does not have a cheap medical program. It has cheap alcohol and cheap tobacco because it does not have the social programs we do.
The 60 days is just about over for the oil companies. If the price of gas does not come down pretty quickly, you can be sure, Mr. Speaker, that Hon. Members on this side will be up on their feet complaining and raising the very dickens with the Minister of Energy, Mines and Resources (Miss Carney) about the high cost of gas.


John Edmund Parry: You haven't done it yet.


The Acting Speaker (Mr. Paproski):: I will give the Hon. Member for York Centre (Mr. Kaplan) an opportunity to rebut.


Robert Phillip Kaplan: I know, and I believe the Canadian people know, that we do not get social programs for free. We have medicare here. They do not have that in the United States. We get to send our kids to university for much lower fees than people do in the United States. We know we do not get those things for free. The people in this country know they have to pay some taxes. My complaint is not about that, but about the way in which the burden is shared, the fact that the Government is letting rich people off the hook for these taxes and is asking people at the middle and at the bottom to pay more.
With respect to the 1980 promise of cheap gas-I am glad I have the opportunity to say a word about that-it is true that when the National Energy Program came into effect the price of gas jumped at the pumps. However, in the world market it jumped even more. When the Western Accord came in, the creature of this new Government, prices jumped, but when they fell in the United States, they continued to remain high here.


A. Daniel McKenzie: A lot of people went back to work in Alberta.


Robert Phillip Kaplan: We can argue about $1 million fees, and so on, but it is undeniable that when the National Energy Program was on, Americans would come to our country to fill their tanks. They would come to Windsor and Vancouver to fill their tanks, and gas stations were growing in number. Now that we have the Western Accord-and this is also undeniable-Canadians are going to the United States to fil their tanks with gas. So much for who is being fair with the consumers.
In our day, Americans wanted to take advantage of the Canadian system. In this day, the Conservative day, Canadians are escaping to the United States to get a tank full of gas.


The Acting Speaker (Mr. Paproski):: The time for questions and comments has now terminated.


Stanley J. Hovdebo: Mr. Speaker, I appreciate this opportunity to say a few words with respect to the Budget. Since it has to be but a few words I will zero-in on its effects on agriculture.
The problems facing agriculture are well defined. I am sure there is not one person in the House or in the agricultural community who does not recognize what the problems are and even has some idea with respect to possible solutions. We know what is wrong with agriculture. I am sure that even farmer Wilson, the Minister of Finance (Mr. Wilson), knows what the problems facing agriculture are. The solution is fairly obvious. If we were to pay enough for commodities produced by farmers then we would not have the problems with which farmers are now concerned. This would make it possible for farmers to pay their debts. Unfortunately, in the Budget, or in
March 6, 1986

any other approach to the problems facing farmers, the Government has not considered the issue of commodity prices.
Many people in the country would be willing to pay more for the products they use which they purchase from Canadian farmers, if they could be assured that the extra amount of money would go directly to farmers in order to assist in the survival of the family farm and the agricultural industry as a whole. We have investigated this suggestion. The National Farmers Union conducted a survey in food stores in Ottawa and found that most people buying groceries would be willing to pay more for those groceries if they knew that the extra money would go directly to the farmer.
My colleague, the Hon. Member for Yorkton-Melville (Mr. Nystrom), introduced a parity price Bill which would be a start to this end. What it suggests is that the people of Canada should pay at least the cost of production for products which come off Canadian farms. We recognize that it is impossible to demand prices which are above world prices from Japan, Algeria or Russia. That does not mean to say that we could not require the people of Canada to make some type of contribution to the farms of our country. What we are considering today is what the Budget has done for the farmer in support of agriculture.
The flagship of the agricultural aid program in the Budget is a commodity-based mortgage program. In that regard it is stated in the Budget Papers:
The federal Government has directed the Farm Credit Corporation (FCC) to establish a $700 million loan program to make commodity-based mortgages available to existing FCC clients in need.
That is a very misleading statement. It sounds as if the Government has gone out and found another $700 million to put into agricultural support. That is not the case at all. What the Government will do is to take $700 million worth of loans which are already in place-money which farmers have already borrowed-and rewrite those loans at lower interest rates. That is of real value to those farmers who will receive such assistance. However, it will cost less than is suggested. In fact, it will cost much less than $700 million since it is not new money. It is money which is already in place. Farmers have already borrowed that amount of money. They will now be re-borrowing it at a lower rate of interest, that is, 6 per cent instead of 12% per cent. However, there is a catch in that it is stated "Farm Credit Corporation clients in need".
Representatives of the Farm Credit Corporation tell us that is has approximately 26,500 clients in need who fall into three categories.
The first category is comprised of those farmers who have less than 15 per cent equity in their farms. There are 5,500 farmers in this category alone. They are technically insolvent. The Farm Credit Corporation will not do a thing for those farmers. The policy of the Corporation is not to throw good money after bad. Perhaps it is right in this regard.
The second group of farmers is comprised of those who have from 15 per cent to 40 per cent equity in their farms and who have a debt to asset ratio of approximately 67 per cent. This is the group at which the commodity-based mortgages is aimed.
The Budget-Mr. Hovdebo
In this group there are 10,000 farmers who are clients of the FCC. Of those 10,000 farmers, approximately 6,000, or maybe even fewer, will receive some assistance. This is so because the FCC is targeting the next highest group which has less than 55 per cent equity.
The third group, which is also considered to be in financial difficulty, is that group composed of farmers who have between 40 per cent and 55 per cent equity. They will not likely receive a particularly large amount of assistance.
Apart from all that, the commodity-based mortgage is turning out to be a bit of a lottery. If a farmer decides he wants to enter this particular mortgage structure, what he will be doing is betting that if he pays 2 per cent more the prices of the commodities he selects will go up. On a $100,000 mortgage, that amounts to $20,000 which may be cut from the farmer's final payment. He is betting that against the fact that if commodity prices go down the FCC will pick up on some of his inability to pay.
I am not downgrading the experiment. I think it is a good idea to look at it and try to see how it will work. What it emphasizes is the fact that the Government is overlooking nine out of ten farmers who are in financial difficulty. There are some 60,000 farmers in Canada who face financial difficulties. This program might help 6,000 of them. In the process it will create an unfairness which will come back on the Farm Credit Corporation and discredit it much more than we would like to see as it is a very good structure.
The National Farmers Union issued a release in which it stated that the Budget's proposal to establish commodity-based mortgages at 6 per cent interest is a most useful proposal but is available only to Farm Credit Corporation clients in need and totally ignores farmers in trouble with other farm lending agencies. The union states that that confirms its suspicion that the Government really has no equitable national policy approach to deal with the most serious farm financial crisis to confront the country in 50 years.
That is a concern of farmers out there who are looking for some help. A very small portion of those farmers in trouble, those who are within a certain category because they are clients of the Farm Credit Corporation, are being given assistance, but those who borrowed money from other financial institutions are being ignored entirely. Although it is a good idea, it does not deal with the entire problem. The total farm debt at the moment is $21 billion. Of that amount, the FCC has about $4 billion out in long-term loans, and it is to rewrite $700 million, a very small portion of the total debt.
The second attempt by the Government to appease the farm crisis is the establishment of a farm debt review panel. On several occasions the Minister of Agriculture (Mr. Wise) said that when the Government deals with the debt crisis faced by farmers, it would provide legislation with teeth. Instead, we are told that the panel will establish whether arrangements between farmers and their creditors are feasible and will aim to facilitate a voluntary arrangement between them. That has

March 6, 1986
The Budget-Mr. Hovdebo
no teeth; in fact it is nothing but an opportunity for farmers to talk with their bankers and to have someone else present. That will not contribute to the solution of the debt problem.
Third, in the assistance to farmers there is the world transition program to help them get out of farming. Like the $500,000 capital gains exemption, it is assistance for them to get out of farming. There is nothing wrong with that, but one wonders how much value there would have been in assisting them to survive as farmers. The Minister of Education for Saskatchewan said recently in Regina that the Department of Agriculture recognized that some farmers would not be able to remain as farmers. I suppose we all recognize that, but the Government is gradually convincing the Canadian population that it does not need as many farms as there are at present. Before becoming Premier, the Premier of Saskatchewan said that one in three farmers had to disappear because they were uneconomic. Canadians do not want that number of farms to be reduced. The farm family life is a way of life. We want the Government to help us keep that way of life. The approach of the Government goes almost in exactly the opposite direction. It says that farms must be put on a basis where they can survive and, if they cannot survive, they must go. We do not pay them for the commodities they produce. We do not give them debt servicing which will help them survive.
I should like to refer to a couple of other items in the Budget. Some money will be given to tobacco farmers to remain in farming but to become involved in other crops. It is a very commendable program.
The final agricultural issue in the Budget is the fuel tax rebate. It is a very disappointing situation because Government Members have admitted, as have farmers across the country, that fuel has become a major cost. Any reduction in their input costs-fertilizers, chemicals, interest rates or fuel-could assist in their survival. The prairie pools, the Western Canadian Wheat Growers Association, the National Farmers Union and others have pleaded with the Government to take some action to eliminate entirely the taxes on fuels used in the primary industries, particularly agriculture. Those taxes should be taken off and the cost of fuel should be reduced so that that cost will have a lesser impact upon the profits of farmers. "Profits" is an unusual word in the agricultural industry these days because very few farmers are making profits. They are trying to survive; that is what they are trying to do.
I should like to turn to what is not covered in the Budget. Rather than assisting the farm community, the Government is attacking it. There are small things such as the elimination of postal rural routes. Farmers in rural areas have had these routes for many years. Not only are these routes being eliminated, but when they go to town to pick up their mail they will now have to pay for their postal boxes. Instead of free farm delivery, they will have to drive 35 miles or 45 miles to town to pick up their mail and of course will have to pay a rental on their postal boxes. Let us compare that with the service provided to urban dwellers. They receive their mail at the door and they do not have to pay any rental for postal boxes.
The Government took some limited action to reduce interest rates, but it could have done more. It could have reduced unrealistic input costs, but it took no action at all in that area. It could have done something about low commodity prices, but it took no action at all. It could have eliminated the taxes on fuel. It has taken limited action in that it will continue to pay the three-cent rebate, but it has been increased much more than three cents in the same period of time. It could have increased the amount of money for research.
Turning to research, it is very surprising that the Minister and other Government Members suggested that research funds for agriculture were being increased. We on the Prairies have been told that at least 35 employees must be dropped and that there is a 4 per cent cut in the Budget. The total effect will be a reduction of several programs which we hoped would continue. We got negative action in the area of research, maybe at a time when we need more research in the farm community.
We got a little bit of action on farmers being able to get away from the farm. That, as I say, admits defeat to some extent, but I commend the Government for putting that effort in place. It is a humane approach to an inhumane operation on the part of financial institutions.
I could spend considerably more time on this topic, Mr. Speaker, but you have indicated that my time is almost up. If we had the time it would be interesting to see how the $225 billion in national debt was put in place. It was not done by the farmers. I know the Hon. Member for Red Deer (Mr. Towers) would back that up. Farmers have contributed very little to the national debt.
The national debt came as a result of corporations not farmers. Yet the farmers are being asked to pay for it along with you and I and every other person in the country.
I would hope that all of this effort by ourselves and by the Government will lead to a more realistic look at what we can do with the deficit, how we can get rid of it and how we can get the economy back on track, making it possible for farmers to survive.


Mr. Taylor:: Mr. Speaker, I would like to deal with one or two of the points made by the Hon. Member by way of comment and then ask the Hon. Member for Prince Albert (Mr. Hovdebo) a question.
The Hon. Member seemed to indicate that the Progressive Conservative Government Canada is opposed to the family farm. That is completely wrong. There has been no Government in Ottawa that more strongly supports the family farm and realizes the necessity of keeping the family farm.
Second, there has been no Government that has tried to tackle the basic problem, the bottom line, of what is hurting our farmers today. If our farmers could secure a price for their product including the cost of production plus a reasonable profit there would be no need for any hand-outs or subsidies. The difficulty is that farming is the only industry that is unable to get its costs of production plus a reasonable profit.
March 6, 1986

When farmers have to sell below the price of production, obviously they will get into trouble. That is the root of the problem. That is why the Government is now searching for ways and means to provide the farmer with the opportunity of getting his cost of production plus a reasonable product.
The parity price program introduced by one of the Member's own colleagues never saw the light of day until our Government came into office. Now that program is being pursued. I believe there is some hope in parity prices for our farmers. That is only one thing we are doing.
I was astounded when the Hon. Member said that the capital gains exemption was an instrument to get people off the farm. That is not the purpose of the capital gains exemption at all. The Hon. Member for Prince Albert must recognize, and surely recognizes, that the land is the only nest-egg a farmer has. When a farmer spends 35, 40 or 45 years on the farm with his wife and family, part of his life is in that farm. When he wants to retire, unless he is able to get something for the nest-egg he has built up over a period of 35, 40 or 45 years, he is simply subjected to welfare.
The Government has seen the light. It has said that a farmer can now sell his land, get sufficient money for it, and that it will not take a big chunk from the proceeds, as the previous Government did. The farmer can sell his land and have the money on which to live for the rest of his life with his wife and family and also keep a reasonable standard of living.
The capital gains exemption is not to get people off the land. It is to treat those who have spent their lives in farming in a fair and honest way. Ours is the first Government that has recognized that point.
Let me come now to the issue of natural gas. The price of oil is coming down. I have not heard anyone in the Opposition mention the need to reduce the cost of fertilizer for farmers, yet natural gas is one of the major components of fertilizer. As gas comes down, we expect the fertilizer price to come down also, which will be a great help to the farmer because fertilizer is necessary for him.
I ask the Hon. Member for Prince Albert, who has a good knowledge of farming, why he says consistently that capital gains exemption is to get people off the land, when its real purpose is to reward those who have spend their lives farming
the land.


Some Hon. Members:: Hear, hear!


Stanley J. Hovdebo: Mr. Speaker, I could not expect the Hon. Member for Bow River (Mr. Taylor) to know it but the policy of a capital gains exemption for farmers and small business people has been part of New Democratic Party Policy for many years. We support it entirely in that sense for those people and for the same reasons as the Hon. Member for Bow River suggested.
My disappointment with the Government is that it picked those areas to give help allowing people to get off the farm rather than allowing people to survive on the farm. I have no question about the validity and support of his arguments.
The Budget-Mr. Hovdebo
I want to comment on a number of other things the Hon. Member said. Unfortunately, over the years, and 1 do not only put this Government in the category. Governments generally have given lip service to the family farm. I can criticize my own Governments in the provinces as well. Getting money to survive as a Government and not making money available for the family farm to survive seems to take precedence. Governments do not support family farms as well as they could.
I am glad to hear the Hon. Member for Bow River support the parity price idea. As he said, farming is becoming quite quickly the only part of the industry, the producer part of the agricultural industry, which is on a straight market system. Farmers put the product on the table and ask how much they will be given. We have to do something about that.
A fellow who builds a car finds out how much it will cost to build the car and then adds 100 per cent and says that this is how much he will charge for the car, and he gets away with it. We have the same thing with the oil companies, although now they are hurting a little bit. OPEC and Britain have decided to compete. Maybe that is the first sign of a true market system in the oil industry that we have had for many years. Britain and some of the other producers are being forced to compete with OPEC.


The Acting Speaker (Mr. Paproski):: Does the Hon. Member for Medicine Hat (Mr. Porter) have a short question or comment? The time for questions and comments has just about expired.


Mr. Porter:: Mr. Speaker, I would just like to make a short comment in response to the Hon. Member for Prince Albert (Mr. Hovdebo). I respect the views which he has expressed. His background in agriculture stands him in good stead. It is unfortunate that, in many cases, those who make the rules in this business do not have to play the game.
The Member made a number of comments with regard to the Budget and the changes which were implemented. The gas pricing which was to have expired has been extended. I realize the cost is still high, but a benefit of approximately $120 million for Canadian farmers is being continued. It has been indicated from time to time in the House that the capital gains tax exemption is a break for rich people who will receive all the benefits. I remind those who served in the former Government that when that tax was brought in it increased the price of farm land. When farm land was sold its price was increased by the amount of the capital gains tax. This resulted in the increased cost of farm land which we are paying today. We are paying for the high interest rates of the late 1970s and early 1980s.
Almost $1 of every $4 of agricultural income has come from one level of Government or another. While there has been limited action taken on the situation that the Government inherited, there were some steps taken in the Budget. With regard to input costs, commodity pricing, and research, more

March 6, 1986
The Budget-Mr. Ravis
initiatives have been announced in the past 18 months than were in the previous 10 years of Government.
I would like to know in what areas the Hon. Member would have increased spending, by how much, and where those funds should have come from. Any money that is spent today must be taken from other programs.


Stanley J. Hovdebo: Mr. Speaker, there are two areas in which it will not cost the Government to help farmers survive. The first is that of parity pricing. We could ask the people of Canada to pay a little more for Canadian products. The second area is the cost of inputs, which are out of hand. The Saskatchewan Conservative Government is looking into the costs of inputs. I know from my own experience that products such as the chemical treflan are selling for $140 in the United States and $210 in Canada. The patent on treflan expired three years ago.


The Acting Speaker (Mr. Paproski):: 1 regret that the Hon. Member's time has expired. This is a great debate, but we will have to carry on.


Donald Paul Ravis: Mr. Speaker, I doubt that I can complete my 20-minute speech in the remaining 15 or 16 minutes, but I will commence. It is with great pleasure that I rise today in the House to participate in the budget debate. For the record, I heartily congratulate the Minister of Finance (Mr. Wilson) for staying the course toward cutting our deficit and bringing about economic prosperity in the country.
I have been travelling across the country, as I am sure many Members of Parliament have done since the introduction of the Budget. I returned to the House of Commons with a strong feeling of determination. The majority of the people across the country are saying that the Budget is tough medicine but it is long overdue. Many people do not really want to pay more taxes, but feel that if we do not do something about these problems now we will have a very tough future.
As a new Member of Parliament in the 33rd Parliament I learned that my constituents in Saskatoon East wanted more jobs, and that is one of the things which we continue to hear a lot about. 1 am pleased that we have made some headway in that direction, and indications are that we will continue to make excellent progress. My constituents wanted the Government to be managed more like they manage their households. People have a certain amount of money with which to budget in their households or small businesses, and they want the Government in Ottawa to manage within those same restraints. My constituents were looking for leadership, for someone who would set the course and stay on it. People want to have a goal set and then to move toward it. I will say a little more about that in a few minutes.
People wanted accountability to those who are paying the bills. They were tired of the blank-cheque approach taken by Ottawa. They wanted fair and honest consultation with the provinces, particularly on budgetary affairs, rather than a hidden agenda. They also wanted value for tax money collected. The recent decrease in expenditures by 70 per cent is a strong response to that. Finally, they wanted a Government
which respected the people who elected it, truth about our finances, and respect for the tax dollar.
In a nutshell, Mr. Speaker, the people of Canada did not want to have the wool pulled over their eyes. I suggest that this Budget is a continuation of that process which was started in November of 1984 and continued through the May Budget of 1985. The Government is calling things as they are in the country and facing up to the facts.
The Leader of the New Democratic Party (Mr. Broadbent) said last weekend that most people do not like the Budget. I would like to return to the House of Commons after the next election, not on a record of throwing money away, as has been done in the past, but on a record of responsible fiscal management of our money, the public service, and all the Crown agencies for which we have responsibility.
I would like to give you an historical perspective as to why Canada has this massive deficit. The red flags did not appear only a couple of years ago. They were there long before the present Government took power. The Glassco Royal Commission in the early 1960s began ringing the alarms about financial management by the federal Government. The commission reached inescapable conclusions of Government waste and inefficiency in the federal Government.
In 1976 the Auditor General, J. J. Macdonell, stated in his annual report that the Government had lost or was close to losing control of the public purse. Warnings were everywhere that a financial crisis was developing. While the Lambert Commission resulted in some reforms, the political will to quit spending taxpayers' money as if there was no tomorrow was still missing. In fact, every new idea was dealt with by spending millions of dollars. You name it, and the previous Government bought it or made it into a Crown corporation. I must say that that was great for those people who got on the bandwagon, but it was an unbearable burden for the taxpayers of Canada who had to pay the bills and face the mounting debt.
I would like to touch on the issue of Government control, particularly of Crown corporations. I think the previous Government threw too much money at problems which arose in those days. Twenty years ago there were only 28 Crown corporations in the country, and by 1984 the Liberals had created over 300 additional Crown interests. That means 300 bureaucracies, hundreds of personnel and accounting functions, communication staff, administrators and so on.
Back in the 1970s loan guarantees became the order of the day, for example, those given to de Havilland, Canadair, some trucking companies, hotels, bicycle and computer companies. What happened to those loan guarantees? We inherited them. We are now in the position of having to deal with them, and 1 will talk a little later about the disposal of some of those Crown corporations which are no longer performing a worthwhile function in this Government. As the Auditor-General stated in 1976, it was a Government out of control.
March 6, 1986

I happen to be Vice-Chairman of the Standing Committee on Public Accounts. It is a non-partisan committee and we review many of the examples of mismanagement over the last five or ten years, many of which are still with us. One of the objectives of this Government, and I am sure it was an objective of the last Government, was to try harder to make the senior public servants manage smarter and much more efficiently.
What are some of the questions most commonly asked by Canadians today? This is very relevant to the Budget. First, they ask if they can trust the Government in what it is going to say and do. There is a lot of cynicism out there and there is good reason for it. Let me give you a couple of examples. The MacEachen Budget of 1981 forecast a deficit of about $10.5 billion. It ended up being $19 billion, more than $8.5 billion over the projected amount. The Lalonde Budget of 1983-84 projected a deficit of $29.6 billion. It ended up at $33.5 billion, about $4 billion over. Yes, it was getting better but it was still out of control.
Last week my friend, the Hon. Member for Gander-Twillin-gate (Mr. Baker), made an interesting point. He said that since the new Conservative Government came to Ottawa it created 23 per cent of the total deficit. A lot of the programs we inherited were statutory programs and they account for about 75 per cent to 80 per cent of this Government's expenditures. You can do nothing about those expenditures, they are fixed. However, if that is the way the Hon. Member wants to call it, I will gladly take responsibility, as I am sure this Government would, for the 23 per cent that we created, but they can be accountable for the other 77 per cent. Last year we said we were going to bring in a Budget with a deficit of $33.8 billion. That is precisely what it came in at. This is the beginning of setting a plan and sticking to the course.
Will this new Government give the country some consideration and leadership, particularly in its management and spending? In other words, people are saying we have to show them how we are different from the previous Liberal Government. I would like to give some examples which I think point this out very well. In 1984 the Government established a blueprint to get its house in order. There were three main points: Making Government more efficient; encouraging private initiatives; restoring private confidence. The Budget brought down a few days ago is not something new. It is all part of the game plan developed in November, 1984 and followed up in May of 1985. There is consistency and it goes back to what we said we were going to do when we came here in 1984.
Let me give you some examples of what I think makes us different from the previous Government. First of all, we have the Nielsen task force which has been doing a lot of work with public and private sector individuals. As you know, we will be receiving a report next Tuesday. I, for one, am very anxious to see what it is going to tell us. I suspect we will see an awful lot of overlapping in those programs. As my colleague, the Government House Leader, mentioned this morning, there will be regulatory reform and, in many cases, less regulation. The
The Budget-Mr. Ravis
President of the Treasury Board (Mr. de Cotret) said that for the first time in the history of this country there would be incentives for senior public servants to manage prudently the taxpayers' dollars. A freeze on hiring and spending was announced a couple of weeks ago by the President of the Treasury Board. That will cut down on that last minute flood of spending which has been going on for years and years. There is a potential saving there of $6 billion. I would say that even the previous Government would be doing the same thing if it had the chance. We have seen the biggest cut in Government spending in the last 20 years announced in this Budget. Believe me, that is a major difference between us and the previous Government. Borrowing requirements are down by 25 per cent. That means we are seeing an economic recovery and we do not need to borrow as much money. Finally, there will be reduction in the Public Service of 15,000 person-years by 1990. That will be achieved through attrition wherever possible.
Can the deficit be reduced, Mr. Speaker, and is it being done fairly? We have been consistent in our belief that the deficit needs to be reduced and we need to get Government spending under control. Believe me, it took three very important ingredients. One was a lot of courage. Another was a lot of political will which we certainly have not seen much of here for many, many years. Finally, it took a lot of leadership. This Government has come to grips with the financial crisis which has been developing for the last 10 or 12 years. As a person said to me on a plane the other day, it is just about time we faced up to these issues.
Some measures to control the deficit in addition to the ones I mentioned previously have to do with the disposal of Crown corporations. De Havilland is the best example. Then we have a cost recovery program. As well, we have to hold our operating budget to a growth of 2 per cent, which is less than inflation. Going back to my conversation on the plane the other day, this person made a very interesting point. He said one of the reasons we are enjoying the high standards we have today is the fact that our grandparents and parents did not hand down to us a horrendous debt. As another lady said on Cross Country Check-up this past Sunday, her daughter is expecting a baby sometime in May. She said the minute her grandchild is born it will have a debt of about $8,200 hanging over its head. That was the thing she did not like and that is why she likes this particular Budget. It faces up to reality.
I see there are only a couple of minutes left before one o'clock. I would just like to say that for those people who are concerned about social programs, and certainly-


The Acting Speaker (Mr. Paproski):: Before I call it one o'clock, may I say that the Hon. Member will have seven minutes plus question and comments when Orders of the Day are called.
It being one o'clock, I do now leave the chair until two o'clock later this day.
At 1 p.m. the House took recess.

March 6, 1986


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.


Hon. Warren Allmand (Notre-Dame-de-Grace-Lachine East):: Mr. Speaker, once again the President of the United States is spreading blatant lies about Nicaragua, and, in fact, has declared war on this small, struggling Central American country.
The American President does not want peace or democracy in Central America. He has refused to support the draft Contadora peace treaty. While the President labels the San-danista Government a communist plot to subvert and attack its neighbours, not one of those neighbours agrees with him. The eight Contadora and support countries from Latin America have asked the President to stop funding the Contras and to support Contadora. When the Prime Minister (Mr. Mulroney) goes to Washington on March 17, will he tell President Reagan to get his troops out of Central America and to put in some development money?



INTERNATIONAL WOMEN'S DAY


Right Hon. John N. Turner (Leader of the Opposition):: Mr. Speaker, this Saturday, March 8, marks International Women's Day-an event which stems from the tragic death of women in sweat shops in New York City's garment district in 1908. As we enter the year following the United Nation's International Women's Decade, I think about families in Canada, about working women in Canada, single women who are supporting children, and elderly women living on fixed incomes.
As a result of the Government's Budgets, single women in Canada will need financial help because it is going to be tougher to get along. A single parent with two children earning $15,000 a year will pay $248 more in taxes in 1986. A retired single woman with an income of $10,000 will pay $160 more this year in taxes because of these Budgets. I do not believe this is a good start for women and families in Canada as we honour International Women's Day.

The Liberal party has implemented a number of measures for the benefit of Canadian women: family allowances; old age security pensions; the child tax credit; affirmative action programs; appointment of women to positions including that of
Governor General and Justice of the Supreme Court, giving women access to training-


Mr. Speaker:: Sixty seconds, I'm afraid.



AGRICULTURE


Mr. Steven W. Langdon (Essex-Windsor):: Mr. Speaker, never have so many been so disappointed as have Ontario farmers with the latest Conservative Budget. Their crisis is very real. As the Chairman of the Farm Credit Corporation told the agricultural committee this week, the number of farm families in severe financial distress rose from 33,000 in 1984 to
39,000	as of last fall.
These farmers hoped desperately for three clear moves-the end of all farm fuel taxes, a significant cut in interest rates for farmers, and moves toward parity pricing. Yet the Budget failed these hard working producers. Only 6,000 will get some interest relief through the new FCC mortgage system.
The Government made no new move on farm fuel taxes. In 1984 the Prime Minister (Mr. Mulroney) promised to end excise taxes on farm fuel.


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



EMPLOYMENT PLANNING STRATEGY


Mr. Ricardo Lopez (Chateauguay):: Mr. Speaker, in 1984, the Conservative Government promised to create jobs. Last November, it tabled a strategy for economic renewal and job creation, and during the past fifteen months, the Government has followed its plan very closely.
Part of this strategy was to create programs that would provide workers with the training they need according to current and future labour market requirements. The Canadian Jobs Strategy was designed with this training and career concept in mind, as opposed to the previous emphasis on programs for temporary jobs.
We are starting to see the results, since 580,000 jobs have been created up to now. The unemployment rate has dropped from 11.7 per cent in September 1984 to the current 9.8 per cent. It is the first time in four years that unemployment has been less than 10 per cent.
In addition to creating new jobs, the Conservative Government has also controlled-


Mr. Speaker:: Order, please. Sixty seconds!
March 6, 1986



THE DISABLED AND THE HANDICAPPED


Mrs. Suzanne Duplessis (Louis-Hebert):: Mr. Speaker, 1 would like to mention before the House how pleased 1 am with the increased disability deduction for persons with severe cardio-respiratory failure, mental retardation, profound bilateral deafness and other serious disabilities. The 1986 Budget has increased the deduction by $250, thus bringing the total deduction to its new level of $2,860.
As a result of this Budget, a number of disabled Canadians will also be able to take advantage of the refundable federal sales tax credit, while items especially designed for guide dogs for the blind may now be imported duty free.
These measures will benefit more than 185,000 disabled Canadians and reflect the compassion shown by the Mulroney Government for the least fortunate in our society.



THE BUDGET


Mr. Norman Warner (Stormont-Dundas):: Mr. Speaker, I am pleased to inform the House today that the reaction to the Budget from my riding has been most favourable. My constituents realize that the Budget is a tough one but they are prepared, as are all Canadians, to share the responsibility for reducing the public debt.
They recognize that great progress has been made in the past 18 months toward the reduction of the deficit and the creation of new jobs.
Although unemployment is still a problem, my constituents appreciate the Government's continued support and encouragement for small business to create more new jobs.
However, at a public meeting held in my riding on Saturday, serious concern was expressed about the effectiveness of the Small Businesses Loans Act. They applaud the program and our initiative to expand the amount of the loan guarantees, but they also note that some bankers are not making these loans available to their customers. Access to financing at the bank's prime rate plus 1 per cent should be available to all qualifying small businesses so they can maximize their potential for growth and, at the same time, create new jobs.


Mr. Speaker:: Order. Sixty seconds.



ROYAL CANADIAN MINT


Mr. John R. Rodriguez (Nickel Belt):: Mr. Speaker, once again the Government of the Prime Minister (Mr. Mulroney) has displayed the business like manner in which it handles taxpayers' money, which we saw previously in the Habitat flip.
This time it is its handling of a consulting contract to a gold expert in the United States on how to market the Maple Leaf coin. The Royal Canadian Mint paid Mr. Morrie Sandler of Stanford, Connecticut, a consulting fee of $250,000 U.S., $50,000 U.S. in expenses, and an open-ended incentive bonus based on sales. When all of this is worked out, this gentleman received $480,000 Canadian in 1984, and $2.73 million Canadian in 1985. All of this was for part-time work.
This led a Canadian authority on gold bullion to exclaim: "How many people in the stock and bullion business have a $250,000 contract plus $50,000 in expenses and a guaranteed incentive? 1 know of very few".
A New York trader said: "The 1985 figures are shocking".
We on this side of the House are also shocked. The Government should hang its head in shame, considering what the Minister of Finance (Mr. Wilson) has been saying-


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



CULTURAL AFFAIRS


Mr. Jim Caldwell (Essex-Kent):: Mr. Speaker, at a federal, provincial, and territorial meeting on March 3 and 4, the Ministers responsible for culture and historical resources met in the spirit of co-operation that has been the hallmark of the Government since September, 1984. Solutions relating to the present difficulties experienced by the Canadian film and book publishing sector were proposed, which make allowances for regional differences and diversities as well as provincial policies.
The conference, under the co-direction of our Minister of Communications (Mr. Masse) and Quebec's Deputy Premier and Cultural Affairs Minister, Lise Bacon, agreed to take steps to ensure that Canadian cultural products have better access to domestic markets and to reinforce the Canadian presence in the production, distribution, and marketing sectors.
To the doom and gloom merchants of the two Opposition Parties who accused the Government of selling our cultural sovereignty, I say that, on the contrary, we are strengthening our sovereignty over our cultural industries and will continue to do so.

March 6, 1986



APPOINTMENT OF WOMEN TO KEY JOBS-GOVERNMENT POSITION

Mrs. Lucie Pepin (Outremont):: Mr. Speaker, during this special week for women, I would like to comment on the Government's record with respect to appointing women to key positions.
As far as principles go, Conservatives are sometimes hard to beat, but when it comes to action, the record is less than impressive. As an example, Mr. Speaker, I would like to read a press release my office received yesterday morning: "The Minister of State (Physical Fitness and Amateur Sport) and Minister of State (Multiculturalism) (Mr. Jelinek) announced that ten Canadian businessmen had agreed to sit on the Board of Directors of a new agency created by the Minister to increase financial support from the private sector for amateur sport."
You heard me correctly: ten businessmen and not a single woman!
Need I remind the Conservative Government that women are fed up with hollow promises? What we want, Mr. Speaker, is this: half of everything!



USE OF CERTAIN EPITHETS IN CHAMBER

Mr. Vincent Della Noce (Duvernay):: Mr. Speaker, further to yesterday's incident which affected more particularly my compatriot and political adversary, the Hon. Member for Bourassa (Mr. Rossi), I want to say that as a member of the Italian community, I am opposed to such discriminatory remarks being addressed to Italian Canadians.
Nevertheless, I am sure that my colleagues and my party do not believe that all Italian sounding names mean the bearers of those names should be qualified as "mafiosos".
As was remarked recently in the House, 1 am positive that the comments of my hon. friend from Nunatsiaq (Mr. Suluk) hardly reflected his thinking. We occasionally hear comments of this kind which have often become a conditioned reflex among the public, based on the number of social prejudices fed by false mythology and film fiction, and I am thinking here of "The Godfather". I am sure the incident is now closed.



INCOME TAX ACT


Mr. Simon de Jong (Regina East):: Mr. Speaker, during the 1984 election campaign one of the major commitments made by the Conservatives was that Section 31 of the Income Tax Act, at the very least, would be reformed. This Section of the Act applies to those who are part time farmers, those who must work off the farm in order to sustain themselves financially. After a year and a half of the Conservatives being in office, nothing has been done. This was another promise made and another promise broken.
When the chief source of income is derived from farming, all business losses are deductible. When the chief source of income is not from farming, the restrictions of Section 31 apply which allow only a maximum deduction of some $5,000.
Given the enormous number of family farms in desperate financial condition and the low price many farmers receive for the commodities they produce. Section 31 becomes an additional penalty for many who have had to seek off-farm employment just to survive. If the Government has any interest in preserving family farms, especially in these current hard economic times, it will abolish Section 31.



THE BUDGET


James Kenneth (Jim) Jepson: Mr. Speaker, the Budget is
so good that even Jean Chretien is going into private business. No doubt, others will follow. After the next federal election it is more than likely that Canadian voters will give all members of the Opposition the opportunity of joining Mr. Chretien and becoming entrepreneurs.
Whether it likes it or not, the Opposition cannot change the fact that the Minister of Finance (Mr. Wilson) has presented a Budget which eases the burden on lower-income Canadians, while providing them with the benefit of an economy that is, after 20 years of neglect, once again starting to live up to its potential. Most important, small-businessmen in Canada finally have a solid financial footing which will allow their enterprises to grow, prosper, and create jobs. This is the kind of Budget that helps all Canadians, even opposition Members.



REGIONAL ECONOMIC DEVELOPMENT


Mr. Gerald Comeau (South West Nova):: Mr. Speaker, last week the Government announced two very important programs for Atlantic Canada. The special $1 billion Atlantic
March 6, 1986

Enterprise Program announced in the Budget will help companies in the Atlantic regions to lower their borrowing costs and provide them with special loan insurance.
The Atlantic Opportunities Program, announced by the Hon. Minister of Supply and Services (Mr. Mclnnes), will increase the amount of goods and services purchased from Atlantic Canada firms, identify and pursue opportunities for purchasing and subcontracting from Atlantic Canada which arise from large-scale procurements, and develop Atlantic Canada firms to respond competitively to federal purchasing needs.
The goal is to increase federal purchases from Atlantic Canada by $600 million over the next four years to a total of $2.2 billion. This increase will generate over 20,000 person-years of new employment, or an average of 5,000 jobs a year. And that is good news for Atlantic Canada.



APOLOGY FOR USE OF TERM &quot;WELCHING&quot;

Robert Phillip Kaplan: Mr. Speaker, on February 26 I was exploring whether I had committed a racial slur when 1 accused the Minister of Regional Industrial Expansion (Mr. Stevens) of "welching" on the people of Canada. I indicated that the Oxford Dictionary did not regard the expression "welch" as a pejorative but that Webster's Dictionary suggested that it was.
I would like now to refer to a very important authority, William Safire, who, in a recent article in The New York Times on February 23, took Webster's position. 1, therefore, want to apologize to the House and to the Welsh-Canadian community for using that expression.



INTERNATIONAL WOMEN'S WEEK


Mr. David Daubney (Ottawa West):: Mr. Speaker, I join with my colleagues in paying tribute to Canadian women during this International Women's Week. This is a time to look ahead at new challenges. All Hon. Members of this House recently received a copy of the Nairobi Forward-Looking Strategies for the Advancement of Women, the document adopted at the World Conference held last summer to mark the end of the UN Decade For Women.
This is a comprehensive and path-finding document. It includes practical guidelines to advance the status of women in all aspects of life, social, economic, legal, and cultural. Canada played a key role in seeing this document come into being and in ensuring its adoption by consensus. It is up to us all in this House to ensure that Canada leads the way in implementing these forward-looking strategies.
Oral Questions
[DOT] (U15)



ORAL QUESTION PERIOD


John Napier Turner: Mr. Speaker, in the absence of the Prime Minister and of the Minister of Finance, who are desperately trying to rescue a very weak Budget-


Some Hon. Members:: Oh, oh!


John Napier Turner: -my question is directed to the Minister of State for Finance. I hope she has recovered from her pulmonary problem of yesterday.
Why is it that a family with total revenues of $15,000 will pay 23 per cent more in taxes in the next four years, on the basis of forecasts and documents from the Department of Finance, while a family with total revenues of $200,000 will pay an increase of only 1 per cent more? Is that the Minister's interpretation of the Prime Minister's definition of fairness?


Some Hon. Members:: Hear, hear!


Hon. Barbara McDougall (Minister of State (Finance)):: Mr. Speaker, I think that the fairness in the Budget is self-evident. The measures we have introduced for lower-income families are more than any Government has introduced for a long time. The sales tax refund, the child tax credit, and the child tax credit early payment direct our fairness measures exactly to where they are needed.


Some Hon. Members:: Hear, hear!


TAXES PAYABLE BY WIDOW WITH ANNUAL INCOME OF $10,000
John Napier Turner: Mr. Speaker, I would like to ask the Minister of State for Finance why it is that the total taxes for an elderly widow living on $10,000 a year will rise by $160 this year. Does the Minister feel that this widow can find the money to pay that tax from her old age pension?


Mr. Gauthier:: Is that fair?


Barbara Jean McDougall: Mr. Speaker, under this Government the taxes paid by people in low-income brackets have actually gone down.


Some Hon. Members:: Oh, oh!


Barbara Jean McDougall: I suggest that the Right Hon. Leader of the Opposition take another look.

March 6, 1986

Oral Questions DIVISION OF FISCAL BURDEN


John Napier Turner: have a supplementary, Mr. Speaker, after this frankly incredible answer. A widow, living alone on $10,000 per year, will have to pay $160 more, while according to the Financial Post, an individual earning $150,000 a year will pay $3,500 less in taxes next year than he did in 1984. Is that fair, Mr. Speaker?


Barbara Jean McDougall: The whole Budget is fair, Mr. Speaker.

In our continuing package, including the economic statement and two Budgets, we have closed more tax loopholes for the rich, tax loopholes which were created by the former Government. People in high-income brackets are the ones who will pay the tax on the dividend tax credit. They will pay the tax because we have done away with income splitting.
*
* *


THE BUDGET
Mr. Jean-Claude Malepart (Montreal-Sainte-Marie):: Mr. Speaker, my question is directed to the same Minister. Referring to the fairness of the Budget, she bragged about the merits of the child tax credit prepayment. Can the Minister explain the fact that her Government has completely ignored the 538,000 families which get the full child tax credit and will not be eligible for the $300 prepayment? How is it that her own Government has chosen to ignore them, the majority being single-parent families headed by women?


Barbara Jean McDougall: Mr. Speaker, I am truly amazed by the comments made by members of the Opposition with respect to our Budget. Yesterday they said: "Freeze spending". They said: "Don't raise taxes. Spend more on foreign aid, regional development, and research councils". At the same time the interest payment on their debt is up by $2 billion. Where would they like us to increase the fairness in the Budget? Do they want us to cut social programs? Is that what they are looking for?
[ Translation]


Jean-Claude Malépart: Mr. Speaker, all she had to do was to tax her friends the multinationals.


INQUIRY WHY FAMILY WITH INCOME OF $16,000 IS PENALIZED
Jean-Claude Malépart: have a supplementary question, Mr. Speaker. I would like to know how the Minister can claim that the Budget is fair, yet a
family of four with an income of $16,000 will be penalized- being uneligible for the prepayment-and will be forced to deal with tax discounters. How come a family with a $ 16,000 income is penalized?


Barbara Jean McDougall: Mr. Speaker, I am truly amazed. I point out to the Hon. Member that last year under this Government disposable income, the amount of money which Canadian families have in their pockets to spend after taxes, went up substantially.
[DOT] * *


FINANCE
Mr. Nelson A. Riis (Kamloops-Shuswap):: Mr. Speaker, my question is also directed to the Minister of State for Finance. She will know that, as a result of her Government's policies since assuming office, it has cost the average Canadian family $1,305 in additional taxes and charges. Today we learn that the Government plans to introduce a value added tax, or a business transfer tax. If the Government plans to introduce one of these two forms of new tax, which will result in a new tax system or a new bureaucracy, will the Minister guarantee the people of Canada that it is not a sneaky way to impose more taxes on an already over-taxed Canadian public?


Barbara Jean McDougall: Mr. Speaker, I do not know which is worse-hypocrisy or hysteria. In his budget address to the House, the Minister of Finance said that he would be reviewing the basis of the federal sales tax by way of a discussion paper on what I believe he referred to as a business transfer tax. There is nothing hidden about it. He says there will be a paper out there, and we will be listening to everyone who wants to comment on it at the appropriate time.


REQUEST FOR MINISTERIAL GUARANTEE
Nelson Andrew Riis: Mr. Speaker, I asked the Minister whether this new form of taxation would result in additional taxes on top of the $1,305. Will the Minister guarantee that this will be a revenue neutral tax, that it will be a broadening of the tax system or a new system, but that she will not impose new taxes on top of existing tax bases?


Barbara Jean McDougall: Mr. Speaker, the Hon. Member knows that the sales tax system which we have now has presented some difficulties. Lord knows, he has pointed them out often enough. We have said that we will try to improve the system with a discussion paper which will be issued later in the year. I suggest the Hon. Member make his comments on it at that time.
March 6, 1986


GOVERNMENT POLICY
[Stage Direction]
Oral Questions
Nelson Andrew Riis: Mr. Speaker, my colleagues and I will certainly make comments at the time. My question is a very critical one, when there is a concern that people are now overtaxed. Will the Minister not rise in her place and tell the people of Canada and Members of the House that the Government does not plan to add more and more taxes as a result of a value added tax or a business transfer tax?


Barbara Jean McDougall: Mr. Speaker, what we are telling the Canadian people is that our tax system is going to be fair, as it is now.


Some Hon. Members:: When?


Barbara Jean McDougall: We have introduced more fairness measures than any other Government. We are getting control of the deficit. That will bring down interest rates for ordinary Canadians. We will continue to review and improve the tax system as we have done already.


PRICE OF CRUDE OIL
Mr. Russell MacLellan (Cape Breton-The Sydneys):: Mr. Speaker, my question is for the Minister of Energy, Mines and Resources. The Minister's market sensitive system is a disaster. Consumers have received practically no benefit from falling world oil prices. The industry is in such a state of uncertainty that it is going to ask the Government to scrap deregulation and to step in and save it from collapse. When will the Government step in?
Hon.	Pat	Carney	(Minister	of	Energy, Mines and
Resources): Mr. Speaker, I am really surprised that the Hon. Member would ask that question. The last time the Government stepped in, it created the National Energy Program which devastated the western economy.


MINISTER'S POSITION
Russell Gregoire MacLellan: Mr. Speaker, to use the Minister's own words, she said that such low prices would be "catastrophic" for the industry. What is she planning to do about the catastrophe facing the industry?
Hon.	Pat	Carney	(Minister	of	Energy, Mines and
Resources): Mr. Speaker, I think it is quite important that the Hon. Member not add to the hysteria which his Party is generating at this time. If he is referring to the volatility in oil prices, may I point out, as Premier Getty and others have pointed out, that this is a price war. Prices are very volatile, and we do not know where they will stabilize.


PRICE OF GASOLINE
Mr. Ian Waddell (Vancouver-Kingsway):: Supplemental to that last question, Mr. Speaker, why has the Minister not required the 10 cent per litre reduction at the pump which ought to have flowed through because Canadian crude oil has decreased from $37 a barrel since December to today's price in Canadian funds of $18 a barrel? Why has the Minister not required that 10 cent a litre reduction at the pumps?


Hon. Pat Carney (Minister of Energy, Mines and Resources):: Mr. Speaker, 1 noted with great interest that my hon. friend across the way was on television last night advocating that we should be increasing prices to producers and reducing prices to consumers. If that is the kind of fantasy land the Member is living in, I wish him well.


Mr. Crosbie:: Fantasy Island.


ADMINISTERED PRICE SUGGESTION
Ian Gardiner Waddell: Mr. Speaker, would the Minister agree that it is possible to give the motorist a real break also to save the jobs in the industry by considering an administrated price for oil?
Why is the Minister sitting over there fiddling when both the motorist and the Province of Alberta right now are burning?


Pat Carney: Mr. Speaker, I think if the Hon. Member feels that the industry would prefer a choice between his policies and our policies, he should know that the policies that would be chosen are ours.


Ian Gardiner Waddell: That is not what we hear these days.


Mr. Deans:: We will see all those oil rigs leaving Canada again.


Ramon John Hnatyshyn: They are not going to go to Manitoba.


Mr. Speaker:: Order, please, Members and House Leaders.


REDUCTION IN OIL PRICES-ATTITUDE OF MULTINATIONAL OIL COMPANIES-MINISTER'S POSITION
Mr. Raymond Garneau (Laval-des-Rapides):: Mr. Speaker, my question as well is directed to the Minister of Energy, Mines and Resources.
Oil prices have gone down 60 per cent in the past four months, from $30 to $12 U.S. a barrel. Consumers in the United States have long since been benefiting from this reduction, yet in Canada the decrease has been a mere 2 cents a litre.
11254

March 6, 1986
Ora! Questions
Here is my question to the Minister: Can she explain why the multinationals have passed the lower international prices on to American consumers, yet those same companies do not appear anxious to pass the same savings on to Canadian drivers?


Pat Carney: Mr. Speaker, I do not understand where the Hon. Member gets his figures. He said the drop had occurred in the last four months, let us say back to November.
The figures I have for the official crude oil price, average Canadian posted, for November are $27.95 U.S., and for January 28 $20 U.S.
1 think, as I have explained to the Member before, that part of that decrease which occurred really toward the end of January has already been passed through, and we expect the rest of it to be passed through in a few weeks time.


GOVERNMENT POLICY
Raymond Garneau: Mr. Speaker, as they say in boxing, keep an eye on the referee, somebody is throwing punches somewhere.
All newspapers report that the international price of a barrel of oil is down to $12, television, the media-


Mr. Speaker:: Order, please. Thank you.


Raymond Garneau: Here is my question, Mr. Speaker.

Is it the policy of the Tory Government to have the Canadian consumer pay a higher price for gas and oil than the international price? Is this the policy of the Government?


Pat Carney: Mr. Speaker, I think what I really should do for the benefit of Hon. Members is to give more information about the way the international oil market works.
The price of the Hon. Member is using of $12 is the spot Brent price in the North Sea, which is offered but not necessarily accepted for future delivery. That price which the Member talks about is for some load of oil that will be delivered weeks or months in the future, which then has to be transported, refined, processed, stored, distributed, and sent to the pumps.
The price that Canadians oil is currently posted at is around the $22, $21 range U.S. That is the price to which he should be referring.


SHIPBUILDING
Mr. Ernie Epp (Thunder Bay-Nipigon):: Mr. Speaker, my question is for the Minister of Regional Industrial Expansion. In November 1984 the Minister of Transport stood in his place in the House and promised that CN Marine would place orders for several vessels, including a second state-of-the-art ferry, with Canadian yards. Will the Minister rise in his place in the House today and assure 700 angry workers, who feel left out in the cold by the Government, that CN Marine will forthwith place orders for this second state-of-the-art ferry with their yard?


Hon. Sinclair Stevens (Minister of Regional Industrial Expansion):: Mr. Speaker, as the Hon. Member has indicated, the shipbuilding industry in Canada is presently going through a very difficult time. We know that the yard to which he referred has perhaps been impacted upon more than other yards. However, I would like to reassure the Hon. Member and other Members of the House that the Government has been in the past, and continues to be, the main purchasing agent for work at shipyards. Government procurement is the main source of activity in Canadian shipyards, and we intend to continue that type of sourcing.


LAUZON SHIPYARD
Abram Ernest Epp: Mr. Speaker, will the Minister promise the contract to the angry workers at Lauzon?


Jean-Claude Malépart: Yes or no.


Sinclair McKnight Stevens: Mr. Speaker, as far as we are concerned the workers at Lauzon to whom the Hon. Member refers-


Jean-Claude Malépart: Yes or no?


Sinclair McKnight Stevens: The Hon. Member says "yes or no". He obviously did not understand the nature of the question. This is quite a complicated matter. I suggest that that shows how the Opposition deals very frivolously with a very serious question.

[ Translation]


PUBLIC WORKS
Mr. Don Boudria (Glengarry-Prescott-Russell):: Mr. Speaker, my question concerns the contract policies of the Department of Public Works and is directed to the Deputy Prime Minister, in the absence of the Prime Minister.
March 6, 1986

1 have here a letter from the office of the Hon. Member for Quebec East about a policy for giving preferential treatment to financial backers of the Conservative Party when letting Government contracts, a matter involving one million dollars per year.
Why does the Government let taxpayer's money be used to promote, assist and even reward the friends of the Conservatives?


Hon. Erik Nielsen (Deputy Prime Minister and Minister of National Defence):: Mr. Speaker, the Government is doing nothing of the kind. I am aware of the media reports with respect to the letter referred to by the hon. gentleman. Upon his return from being out of the country, the Hon. Member for Quebec East immediately sent an apology to the Prime Minister for the erroneous information which went out of his office in his absence. Further, he sent to each and every-


John Napier Turner: How long a trip was it?


Erik Nielsen: Further, he has sent-


Some Hon. Members:: Oh, oh!


John Napier Turner: When is he coming back?


Erik Nielsen: Further, he has sent, to each and every recipient of the original letter, an apology for the erroneous information therein contained. He has, in addition, set forth the correct procedure for the letting of contracts by the Department of Public Works.


Don Boudria: Mr. Speaker, 1 am well aware of the deathbed repentance letter which was sent.


ROBERGE COMMITTEE MEMBERSHIP
Don Boudria: According to reports, the Member for Quebec East is not only a member of that caucus, but a member of the Roberge committee on patronage-


Mr. Speaker:: Order, please. The Hon. Member made two statements in his First question. Will he come immediately to the question?


Don Boudria: Why is the Government sanctioning this kind of activity by allowing this Member to sit on the Roberge patronage committee?

And why didn't the Prime Minister or the Deputy Prime Minister immediately demand the resignation of the Hon. Member for Quebec East?


Erik Nielsen: Mr. Speaker, what the hon. gentleman has said is totally misleading and incorrect. He has admitted that
Oral Questions
he is aware of the apology which was extended by the Member for Quebec East acknowledging the mistake he had made and setting out the correct procedure to all of those who received the original letter. All of us make mistakes, Mr. Speaker, even the Hon. Member who put the question.


AGRICULTURE
Lorne Edmund Nystrom: Mr. Speaker, my question is for the Minister of Agriculture. As everyone knows, this Budget means taxes, taxes, taxes. We have just discovered in the Budget Papers a hidden tax on the farm families of the country.
Is the Minister of Agriculture aware that the elimination of the investment tax credit for farmers means that Canadian farmers will have to pay an extra $150 million per year, of which Saskatchewan farmers will have to pay an extra $50 million per year? What influence did he have with the Minister of Finance?


Ian Deans: None, I assume.


Hon. John Wise (Minister of Agriculture):: Mr. Speaker, the Hon. Member was very cautious not to acknowledge the fact that in the Budget, in addition to the long list of special measures which the Government has directed to the agricultural industry, the Minister of Finance has provided additional support exceeding $400 million over the next two years. The Member very carefully avoided asking that question.


MINISTER'S POSITION
Lorne Edmund Nystrom: Mr. Speaker, I want an answer. Is the Minister of Agriculture aware that by eliminating the investment tax credit for farmers there will be a 50 per cent increase in federal tax payable by the farmers of the country? Is he aware of that, Mr. Speaker?


John Wise: Mr. Speaker, it is obvious from the Hon. Member's interpretation of the Budget that he has not recognized the changes which took place in Canadian agriculture from 1981 until 1985. He is not looking into the future to 1986.


John R. Rodriguez: Answer the question.


John Wise: The investment tax credit certainly had a purpose when it was in place. However, I have talked to farmers across the country, and to accountants working for farmers. The message I receive from them is loud and clear-


Mr. Speaker:: This is becoming long. Order, please.


Ian Deans: The more you talk, the less convincing you are.

March 6, 1986
Oral Questions


SUPPLY AND SERVICES
Mr. Jean-Guy Guilbault (Drummond):: Mr. Speaker, my question is directed to the Minister of Supply and Services. Yesterday's Citizen reported that a two-year contract had been signed in February 1984 by the previous Government with an American who was paid exorbitant fees for his services in marketing a Canadian gold coin. Does the Minister intend to investigate the matter, since this person is under contract to other Governments and since according to a Canadian bank, experts were available in Canada?


Hon. Stewart Mclnnes (Minister of Supply and Services):: Mr. Speaker, this particular individual is a New York broker who is working for other Governments as well as that of Canada. He signed a contract with the Canadian Government on February 1, 1984. There have been some media reports that he has done very well by the contract. We have to acknowledge that he has done so. In hindsight, we probably would not have signed the same contract today, but giving him all the credit to which he is entitled, he has done very well. He has increased the share of Canadian gold bullion from 22 per cent of the market to 64 per cent.


PUBLIC WORKS
Robert Phillip Kaplan: Mr. Speaker, I want to direct my question to the Deputy Prime Minister. It is with regard to the letter from the Member for Quebec East which the Deputy Prime Minister asks us to believe was a mistake which was corrected. As long ago as the fall of 1984 the Prime Minister admitted that the Roberge group exists, that the Member for Quebec East is a part of it, and that he, the Prime Minister, consults that group from time to time.
Is the Deputy Prime Minister prepared to let a committee of this place review the work of the Roberge commission, which advises the Government after its weekly meetings, in order to learn how it operates, what recommendations it has made, how they have been made, and what the real role of that letter is?


Hon. Bill McKnight (Minister of Labour):: Mr. Speaker, I would like to take this opportunity to inform the Hon. Member and the House that contracts under $30,000 are let under Treasury Board guidelines established by the previous administration. I suggest that the present administration is just as pure, or maybe a little more so, than that of the last 16 years.


Mr. Speaker:: Supplementary. Very short. Immediately.


INQUIRY OF THE ATTORNEY GENERAL
Robert Phillip Kaplan: Mr. Speaker, I will address my supplementary question to the Attorney General. Has he reviewed this letter and the practice of this committee in light of Section 110 of the Criminal Code which deals with shakedowns by officials of the business community?


Mr. Speaker:: Order, please. The Hon. Member's first question was very lengthy. That is why I asked him to be very brief with this one.


John Carnell Crosbie: Mr. Speaker, I heard the explanation of the Deputy Prime Minister. I am quite satisfied with it and 1 do not understand why the hon. gentleman would not be.


Mr. Henderson:: You have to be, John.


AGRICULTURE
Ms. Margaret Mitchell (Vancouver East):: Mr. Speaker, my question is directed to the Minister of Agriculture. The Government's lack of effective economic assistance for farmers has forced farm women to carry an unbearable triple workload. What has the Government done in the Budget to relieve farm women from having to be a full-time farmer, home maker, and off-the-farm worker in order to make ends meet?


John Wise: Mr. Speaker, I appreciate the Hon. Member's question. This Minister and this Government certainly recognize the tremendous contribution made to the agri-food industry by the women of this country.


Some Hon. Members:: Hear, hear!


John Wise: I hope the Hon. Member would give us credit for establishing, for the first time, the Family Farm Focus Program. I am meeting with the leaders of farming women's groups very shortly to establish a program of this kind. I hope the Hon. Member would recognize that this Budget, in cooperation with my colleague-


Mr. Speaker:: Order, please. This is becoming a speech.


CHILD CARE INQUIRY
Margaret Anne Mitchell: Mr. Speaker, if the Minister is meeting with farm women will he ask them what their feelings are about child care? Will he explain to them why the Government has nothing in the Budget for child care which is desperately needed by farm men and women?


John Wise: Mr. Speaker, I appreciate the fact that the Hon. Member recognizes there are
March 6, 1986

certain special needs. Facilities now available in urban areas are not universally present in rural Canada at the moment. That will be a high priority item in the meetings I expect to have with these leaders across the country very shortly.


PORNOGRAPHY
Mrs. Jennifer Cossitt (Leeds-Grenville):: Mr. Speaker, my question is directed to the Minister of Justice. The Standing Committee on Justice and Legal Affairs made a number of recommendations in its report in 1978, as did the Badgley Committee Report on sexual abuse of children, and the Fraser Committee Report on pornography and prostitution. When will the Minister take the courageous step, which previous Liberal Governments failed to take, and introduce important legislation which will respond to those recommendations, and amend Section 159 of the Criminal Code to define what is deemed to be obscene and pornographic?


John Carnell Crosbie: Mr. Speaker, 1 agree with the Hon. Member that the failure to act in previous years was deplorable. I am sure we will have considerable support from the Official Opposition to make up for that failure when we introduce proposals, which will certainly be in the House during the month of April, to tackle this very important issue. This area of the laws of Canada needs to be reformed and tightened up.


REGIONAL INDUSTRIAL EXPANSION
Mr. Jacques Guilbault (Saint-Jacques):: Mr. Speaker, my question is directed to the Minister of Regional Industrial Expansion. The Minister knows perfectly well that hundreds of workers are out in the cold. They have come from Lauzon at Versatile Davie to get an answer they have been waiting for months, and the question is whether their shipyard will benefit from the contract for building a second ferry for CN Marine. I would like to ask the Minister whether he can give the House the assurance he is going to do everything he can to ensure these people receive justice.


Sinclair McKnight Stevens: Mr. Speaker, I hope there is no question that I will do everything possible to ensure these workers receive what he calls justice. I personally have met with representatives of the companies, unions, and provincial authorities concerning this matter. Hopefully we are all going to be able to
Oral Questions
come up with a solution so as to ensure the continued viability of shipyards in Canada, in particular the Davie shipyard. That is our objective.


REQUEST FOR CLARIFICATION OF MINISTER'S ANSWER
Jacques Guilbault: Mr. Speaker, I am delighted the Minister is so forthcoming. I would therefore ask him to clarify his answer and explain whether giving them justice means that they will have a shipbuilding contract or whether it simply means they will be taken for a ride.


Sinclair McKnight Stevens: Mr. Speaker, the contract he refers to is, of course, one way of trying to relieve the situation in that shipyard. However, I would emphasize once again that this Government has managed to keep our shipyards working to date by procuring virtually 90 per cent of the ships constructed in Canadian shipyards. Surely that is a tremendous contribution on the part of the people and Government of Canada to ensure continued jobs for those workers.


Raymond Garneau: You did not answer the question, though.


AGRICULTURE
Stanley J. Hovdebo: Mr. Speaker, my question is directed to the Minister of Agriculture. The centrepiece in the Budget for farmers is the commodity-based loan program. The Minister knows there are about 60,000 Canadian farmers in financial difficulty. The Government loan lottery will help about 6,000 of those farmers. What does the Minister propose in the way of help for the other 55,000 farmers who are in financial difficulty?


Mr. Fulton:: Higher taxes.


John Wise: Mr. Speaker, I appreciate the Hon. Member's continuing concern for the financial plight of farmers. However, I think he has to recognize that this Government, to this point in time, has taken over 195 initiatives which have provided over $4 billion for farmers. That is a pretty significant contribution. This Budget, as 1 indicated earlier, takes additional measures which provide over $400 million. Indeed, there are other components which will, for the first time, recognize the reality of the situation.


DEBT REVIEW LEGISLATION
Stanley J. Hovdebo: Mr. Speaker, it is obvious that the Minister is abandoning those farmers.


Some Hon. Members:: Oh, oh!

March 6, 1986
Oral Questions


Stanley J. Hovdebo: Can he tell us what happened to his promise to the farmers to bring forward debt review legislation with real teeth to deal with farm creditors?


John Wise: Mr. Speaker, nothing has happened to it. If he listened to the Minister of Finance the night he presented his Budget, he would know that the Minister of Consumer and Corporate Affairs will be bringing forward debt review legislation.


Stanley J. Hovdebo: With no teeth.


John Wise: There will be teeth in it, just wait and see.


John R. Rodriguez: Stop gumming around.


Mr. Speaker:: Order, please.


CHILDREN
Mr. Alan Redway (York East):: Mr. Speaker, my question is directed to the Solicitor General. Yesterday there was a news report to the effect that he was going to make some changes in the passport rules to help prevent child abduction by separated and divorced parents. Was that report correct and, if so, what changes does he intend to make?


Hon. Perrin Beatty (Solicitor General of Canada):: Mr. Speaker, there are no changes necessary at present because since 1981 the Canadian Passport Order has been in effect. Unfortunately, a good percentage of the cases where children are abducted involve estranged parents where the child is used as a weapon. As a result, the Government passed the Canadian Passport Order which requires that, in cases where there is a court order affecting movement of children, no passport will be issued in contravention of that order. As well, where custody has been awarded to one parent or where visiting rights are affected, that parent must sign off on any attempt to include the child on the other parent's passport.


FINANCE
Mr. Alfonso Gagliano (Saint-Leonard-Anjou):: Mr. Speaker, my question is directed to the Minister of State (Finance).
According to the Member for Mississauga South, the Government intends to levy a new tax of between 4 and 6 per cent, starting this fall.
Could the Minister inform the House whether the Hon. Member for Mississauga is speaking for the Government?


Barbara Jean McDougall: Mr. Speaker, perhaps I should quote from the budget speech of my colleague, the Minister of Finance.


David Orlikow: We heard it once, that is enough.


Barbara Jean McDougall: He said, referring to the business transfer
tax:
I expect to complete a review of the options in the very near future and put forward a paper with a concrete proposal for public discussion at an early date.
Is that not the answer?


MEASURES CONTAINED IN BUDGET
Alfonso Gagliano: Mr. Speaker, there is no mention of 4 per cent or 6 per cent tax anywhere in the Budget.

My question is as follows. Can the Minister of State for Finance assure Canadians that no tax increase will be passed to consumers if this business transfer tax is implemented?


Barbara Jean McDougall: Mr. Speaker, if the Hon. Member reads further on page 16 he will find: "Our intention is to move to a new system that will encourage growth, improve equity, and yield revenues sufficient to replace the federal sales tax, to end the surtaxes 1 have announced today and to provide adequate offsets for low-income Canadians".


An Hon. Member:: You should have read the speech.


An Hon. Member:: We know you can read.


MANNER IN WHICH AID IS GIVEN
Mr. Howard McCurdy (Windsor-Walkerville):: Mr. Speaker, my question is directed to the Minister of State (Youth). Does the Minister believe that the Government's policy on youth should include support for the political efforts of the youth organizations of the Progressive Conservative Party, and that this should be one of the Government's priorities for its election platform?


Hon. Andree Champagne (Minister of State (Youth)):: This Government's policy is to create jobs for young people, to ensure they will have a future, to ensure they will have a say in how things are run and a place in society. And that is what we have done. We created over 5,000 jobs a month since we came
March 6, 1986

to power, which is a lot better than the 5,000 jobs a month being lost before.


CONTENT OF ALLEGED LETTER
Howard Douglas McCurdy: Did the
Minister not say in a letter dated January 6 that it should be the policy of her Ministry to support the recruitment efforts of the PC Youth Federation, and that that should be the priority for the Government?


An Hon. Member:: Here's the letter. Here's the letter.


Andrée  Champagne: have no idea to which letter the Hon. Member is referring. I would very much like to see it. For the time being I think that the reports of my demise were grossly exaggerated. I will be working for all the young people of Canada with my colleagues.


UNEMPLOYMENT INSURANCE
[Stage Direction]
Hon. Warren Allmand (Notre-Dame-de-Grace-Lachine
East): Mr. Speaker, my question is directed to the Minister of Employment. 1 have examined her answers yesterday with respect to the invasion of privacy by Peat Marwick and I want to ask her the following question. Is she admitting that her personal staff were not familiar with Section 114 of the Unemployment Insurance Act, which expressly forbids the release of confidential information without her consent? Is that the level of competence in her office?
Hon. Flora MacDonald (Minister of Employment and Immigration):: Mr. Speaker, I thank the Hon. Member for raising this question again. I want to tell him and the House that I have now received a preliminary response to the investigation that I requested. I find that proper procedures were not followed and, therefore, I have taken the following action. I have recalled all the information from Peat Marwick; I have undertaken and directed the Department that this not happen again, and I have directed the Deputy Minister to put in place procedures to ensure that it will not happen again.


ROLE PLAYED BY MINISTERIAL STAFF
[Stage Direction]
Hon. Warren Allmand (Notre-Dame-de-Grace-Lachine
East): Well, Mr. Speaker, I am pleased that the Minister has taken that action. I would like to ask her whether the investigation that was conducted also examined the role played in this matter by the people in her office and herself, the diligence which they applied, and their familiarity with the provisions in the Act. Were they investigated as well?
Oral Questions
Flora Isabel MacDonald: Mr. Speaker, there is a full investigation going on. I have given a preliminary report. I said yesterday that 1 did not know of the details of this survey or, indeed, of a number of surveys which are carried out. 1 may say that applies to my staff as well. I would say to the Hon. Member that the reason I am looking at this in detail is to look at where it has been in past years, what has happened under previous administrations, and how we come to grips with something that has not been carried out properly.


FORESTRY
James Ross Fulton: Mr. Speaker, my question is for the Minister of State for Forestry. As the Minister is aware there was a great deal of fanfare in the U.S. Senate about Canadian softwood lumber exports last week. Thanks to the efforts of our forest industry and workers, the arguments on subsidy and stumpage seem to be waning. However, the determination on quotas and reducing Canadian penetration of the U.S. market is rising dangerously. Does the Minister feel that the talks presently being held between the Canadian and U.S. Governments are moving toward an acceptable conclusion on lumber?


Hon. Gerald S. Merrithew (Minister of State (Forestry)):: Certainly, Mr. Speaker, we share the concern of all Hon. Members in this House and the industry in general about the protectionist sentiments that are so rampant in the United States. We have worked very closely with industry, very closely with the provinces, in terms of dealing with the sectors there that would normally be supportive of Canadian interests, and with their own Congressmen to make sure our story is told. We will continue to do that. In fact there are presently ongoing negotiations with the interests in the States. They have visited our sites here. We feel, and of course this is concurred in by the 1TC, that there are no undue subsidies at all given by the Canadian Government or any Government.


UNITED STATES SENATOR'S LETTER
James Ross Fulton: Mr. Speaker, we know there have been a lot of bold threats and blackmail regarding the lumber issue, but I would like to ask the Minister what he thinks Senator McClure meant when he wrote to me last week and said:
Talks between your government and mine on this issue do not appear to be moving toward any acceptable conclusion.


Gerald Stairs Merrithew: Mr. Speaker, it is reasonable to assume that some of those people, the Congressmen who have forest products industries in their own ridings and who are up for re-election, would undertake to protect them against what they perceive to be injustices. Naturally, they are entitled to their own opinion. It

March 6, 1986
Oral Questions
is the opinion of the industry in this country and of the Government that we are not providing any undue assistance to our forest products industries.

[ Translation]


THE BUDGET
Lucie Pépin: Mr. Speaker, my question is for the Minister of State (Finance). Forty-five per cent of Canadian single-parent families headed by women live below the threshold of poverty. 1 wish the Minister would explain to us why they put a ceiling of $15,000 with respect to measures aimed at the most destitute families, yet that ceiling happens to be below the threshold of poverty for many families, and women are particularly affected by this?


Barbara Jean McDougall: Mr. Speaker, it is always a difficult decision, as I am sure the Hon. Member knows, to discover what is precisely the right point at which to create or cut off a payment. The Government has been targeting our policies to those most in need. We would always like to be able to do more, but given the state of our economy at the moment we are very pleased that we have been able to help people at the bottom end of the scale, which we feel is where it is most deserved.


FUTURE OUTLOOK
Lucie Pépin: A supplementary, Mr. Speaker. The families that most need it now are necessarily single-parent families, so I would like the Minister to tell us what other bad news the Government has in store for singleparent families concerning the reform of social expenditures which the Minister of Finance mentioned in his Budget.


An Hon. Member:: That is a good question.


Barbara Jean McDougall: Mr. Speaker, 1 think that is a bit of a hypothetical question. This Government has a good record for fairness and a good record for compassion for people with real needs. The people of Canada will see that continue.


CANADA MORTGAGE AND HOUSING CORPORATION
Mr. Bill Vankoughnet (Hastings-Frontenac-Lennox and Addington):: Mr. Speaker, my question is directed to the
Minister responsible for Canada Mortgage and Housing Corporation. The Rural and Native Housing Program has created several problems in the constituency that I represent. In light of the recent agreement that has been signed with the Province of Ontario, can the Minister assure this House and my constituents that there will be consultation and participation by Members of Parliament, as well as municipal and local representatives, before implementing any further rural and native housing programs?


William Hunter (Bill) McKnight: Mr. Speaker, through the consultation process consultations were held with several groups. I recognize the contribution made by the Hon. Member in pointing out some of the difficulties with the Rural and Native Housing Program. I have had discussions with the Native Council of Canada, with OMNSIA, and I can inform the Hon. Member that there will be consultation between the federal agency, CMHC, the municipalities, and the groups to which rural and native housing provides a much needed program.


SENATE COMMITTEE REPORT
Mrs. Sheila Finestone (Mount Royal):: Mr. Speaker, my question is for the President of the Treasury Board. How can youth and the public have any trust in this Minister in face and the sad scenario that was highlighted in the Senate report on youth, which underscored the serious mental state of this growing lost generation, with suicide as the second highest cause of death? In light of this, how could the Minister cut down on the budget to the youth Department and literally cut out the voice of youth at the cabinet table in this way?


Hon. Robert de Cotret (President of the Treasury Board):: Mr. Speaker, it has always been the practice in Main Estimates to include the expenses for activities within the Ministry that fall under the Ministry of State under the Department in which that has been placed. So there has been no cut there.


Sheila Finestone: Mr. Speaker, I find that a totally unacceptable answer.


MINISTER'S POSITION
Sheila Finestone: Mr. Speaker, my supplementary question is directed to the Minister of State for Youth. In the face of that travesty how can the Minister, who says she cares about youth, perpetuate this tragedy by staying in the Cabinet with no responsibility and no budget? How can you stay there?


Andrée  Champagne: Mr. Speaker, for a Liberal, perhaps having something to say in Cabinet means having money, but in this Government it does not.
March 6, 1986

We in this Government are creating jobs and giving hope for the future to young Canadians who had no hope whatsoever under that Government. We are continuing this, and if the Opposition are serious about getting on with the business of building Canada for young Canadians, they should get together and vote for the Budget and Main Estimates today so that we can get on with the business of building Canada for the young people of Canada.


PRIVILEGE
Mr. Speaker:: Last Monday, March 3, the Hon. Member for Bourassa (Mr. Rossi) raised a question of privilege concerning certain remarks allegedly made by the Hon. Member for Nunatsiaq (Mr. Suluk) during Question Period.
I checked the official report since then and was unable to find that any such remarks could be attributed to either Hon. Members.

First, I must say that there is no prima facie question of privilege raised by the Hon. Member for Bourassa (Mr. Rossi); there might have been, at the time of the alleged incident, a matter of order but as the alleged remarks are not in any way that 1 can find a part of the public record and would therefore appear to be a private conversation not heard by the Chair and the House as a whole, one can hardly claim that disorder occurred in the House as a result of the said remarks.
The basic principle behind a question of privilege or a point of order is that it must be related to a proceeding in the House of Commons. It would be difficult to find that a private conversation-Members know that hundreds occur here every day-of which the House is unaware constitutes a proceeding under the rules.


Mr. Rossi:: He still said it.


POINT OF ORDER
James Ross Fulton: Mr. Speaker, one of the Bills which 1 introduced yesterday has an error in law and the Law Clerk is drafting a replacement for it. I just wanted to give you notice.
I will be unavailable to reintroduce the Bill for a couple of days but at the appropriate moment I will provide the proper drafting for the Bill regarding political rights for public
employees.
Privilege-Mr. Rossi


Mr. Speaker:: Order. 1 take it the Hon. Member is saying that his Bill appears to be out of order.


James Ross Fulton: Yes.


Mr. Speaker:: My dilemma is that I must know whether it is, in his view or the Law Clerk's view, a substantive matter or typographical matter. Perhaps he could advise me later.


PRIVILEGE
Jean-Robert Gauthier: Mr. Speaker, following your decision on the question of privilege, I simply want to remind you of some incidents which can occur and do occur in the House occasionally when the media overhears conversations. 1 am thinking of the Hon. Member for Hamilton East (Ms. Copps) and the day a Minister made a comment which was not heard by you or recorded by Hansard but was heard by the press and it became a question of privilege about slandering a Member of the House.


Mr. Speaker:: Order.


Jacques Guilbault: He said it in the public, in the press.


Mr. Speaker:: Order. The Chair has indicated, as best it can, what the Chair has been able to find as evidence.


Jean-Robert Gauthier: On record.


Mr. Speaker:: Order. The Chair has ruled. If the Hon. Member wishes the Chair to consider some other matter or some other way of coping with this matter, it welcomes his representatino for future application.


Carlo Rossi: He still said it.


Mr. Speaker:: Order.


Carlo Rossi: We won't stand for that. The Italian community won't stand for that.


Mr. Speaker:: The Hon. Member for Bourassa (Mr. Rossi) will come to order immediately. Let it be clear that the Chair in no way condones unparliamentary language but it must deal with these matters on the basis of what it has before it. That is all the Chair can do.


James Ross Fulton: Mr. Speaker, I rise on a point of order.


Mr. Speaker:: The Hon. Member for Skeena (Mr. Fulton) is rising to continue his point of order-order, please.


Carlo Rossi: I am just trying to say something to Joe.


Mr. Speaker:: The Hon. Member for Bourassa will please, with respect, come to order.


Mr. Prud'homme:: Mr. Speaker-

March 6, 1986
Privilege-Mr. Rossi


Carlo Rossi: My origins have been attacked and he is joking about it.


Mr. Speaker:: The Hon. Member for Bourassa and the Hon. Member for Saint-Denis (Mr. Prud'homme) will stay in order.


George Albert Proud: 1 stayed in order.


Mr. Speaker:: The Hon. Member for Skeena is attempting to continue a point of order. I cannot allow that. I suggest that he may want to consult the Chair about his procedural remedies. The Hon. Member for Skeena could simply deal with this elsewhere because there is a way in which to deal with it.


George Albert Proud: Mr. Speaker, I understand that you have made a ruling and I will not comment on it. However, it is also the duty of the Chair to ask Members to refrain from pursuing a debate even though they now know they can attack each other and that it will not be reported. The ongoing conversation that we heard here should also be brought to your attention-


Mr. Speaker:: Order, please. The Hon. Member is attempting to comment on a ruling. He may wish to check Erskine May about the difference between private proceedings and the proceedings of the House. He may also wish to check Erskine May and its precedents with regard to matters and remedies that are-


George Albert Proud: I know.


Mr. Speaker:: If he knows that, what is he doing?


George Albert Proud: But you should ask them to refrain.


Mr. Speaker:: Will the Hon. Member for Saint-Denis come to order? The Hon. Member for Nipissing (Mr. Mantha) will come to order as well.


George Albert Proud: That is exactly what we want.


Mr. Speaker:: The Hon. Member for Saint-Denis will stay in order or he will push the Chair beyond its limits.


George Albert Proud: But-


Mr. Speaker:: Would the Hon. Member for Saint-Denis button up?


George Albert Proud: No, that is not the way to talk. Now I have a question of privilege.


Mr. Speaker:: The Hon. Member for Saint-Denis-


George Albert Proud: You are making the question of privilege.


Mr. Speaker:: Order. This is a situation that is difficult for everyone, including the Chair. I repeat to the Hon. Member for Saint-Denis that he and other Members may wish to read Erskine May on this matter with respect to the rules and references for Members with regard to private proceedings. That is what I suggest other Hon. Members may wish to do.


George Albert Proud: A question of privilege.


Mr. Speaker:: If the Hon. Member for Saint-Denis is asking that the Chair apologize to him for saying "button up", I apologize.


George Albert Proud: That is fine.


Carlo Rossi: Mr. Speaker, in the past 1 heard that kind of remarks here


Mr. Speaker:: Order, please.


Carlo Rossi: At least you should have asked if he said it.


Mr. Speaker:: Order, please. As far as the record shows, nothing was said that the House can-


Carlo Rossi: Ask him.


Mr. Speaker:: Order. The Chair has ruled on the matter.
The Hon. Member for Windsor West (Mr. Gray) on the business question?


Mr. Gray (Windsor West):: I want to ask the business question but I also want to ask whether, if such a situation arises in the future, you will be able to take judicial notice of the fact that the Member for Nunatsiaq (Mr. Suluk) made a statement in the House and a Conservative Member made a statement as well.


Mr. Speaker:: Order. Will the Hon. Member for Windsor West (Mr. Gray) resume his seat? The Hon. Member knows, particularly as House Leader, that continuing to comment on a Speaker's ruling is improper. Therefore, I recognize the Hon. Member for Windsor West on the business question.


BUSINESS OF THE HOUSE
Herbert Eser (Herb) Gray: Mr. Speaker, I will ask the Government House Leader about the business of the House. I am asking the Speaker how we may look on a similar matter in the future.


Mr. Speaker:: Even if it were in order to comment on the ruling, it could not be in order to put a hypothetical question because the Speaker could not answer it. The Hon. Member knows that. Does the Hon. Member have a business question?


Ramon John Hnatyshyn: He
already asked it.
Mr. Speaker, I thank the Hon. House Leader of the Official Opposition for the usual question. I indicated last week that the debate on the Budget would continue to its termination tomorrow. Next week it is my intention-as I have already advised the Opposition House Leaders-to call inter alia, as we say in Saskatoon, Bill C-87, the Bill respecting Canadian
March 6, 1986

Arsenals Limited, Bill C-99, with respect to the authority of the Government to borrow a record low amount of money to service economic objectives, and Bill C-91, the Bill with respect to the Competition Tribunal, for second reading. In the usual way, I would like to indicate that we will be monitoring the debate and after consultations with the Opposition House Leaders, and if there are any changes to be made, 1 will advise the House, but that will be my intention for the business of the House into Monday and Tuesday.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Wilson (Etobicoke Centre) that this House approves in general the budgetary policy of the Government.
Mr. Speaker:: The Hon. Member for Saskatoon East (Mr. Ravis) had the floor at one o'clock. Resuming debate.


Donald Paul Ravis: Mr. Speaker, I will try to make this last seven minutes of my remarks uncontroversial. I will talk about the deficit for a moment. This morning I focused on the reduction of the deficit and Government spending. I just want to spend a moment on the whole question of deficit reduction because there are people in the Opposition, the press and the business community who are asking if the deficit is really being reduced and if it can be reduced in the future. As I said earlier in my presentation, last year we targeted for a deficit of $33.8 billion, sad as that may sound, but that was the state of the economy we inherited. I think the important thing is that what we targeted for we met. We achieved that target. What we are now forecasting is that the deficit will be at a level of $22 billion by the year 1990-91.
There are people who will probably ask how we can really achieve that. I believe the important thing is that we are saying publicly that that is our target for 1990-91. It is probably a first in recent Canadian history that a Government has come right out and said: "This is what we are shooting for", and providing there are no unforeseen circumstances, 1 have every reason to believe that we will achieve that particular level of $22 billion and that is just a matter of three or four years away.
With respect to the question of whether debt management is being done fairly, I believe there are some critics who are saying that the cuts have not been deep enough and others who are saying that taxes are too high. I would like to say as a Member of Parliament-and I guess all of us sitting in the House would agree-that on the day of the Budget it cost us all personally, in addition to the tax cuts, $1,000.


Alan Redway: Tax increases.
The Budget-Mr. Ravis


Donald Paul Ravis: In addition to the tax increases, as my seatmate reminds me, it cost each one of us $1,000 in a salary cut. So, personally, 1 am saying, yes, I think we have gone far enough in terms of cuts.
I would like to refer to the Budget which indicated a 70 per cent deficit reduction, by commitment, to expenditures and a 30 per cent reduction coming from extra taxes. What that really boils down to is that for every tax dollar the Government will receive, it has cut $3 in spending. That is another first in the history of the Canadian Government, I am sure. Cutting that deficit that severely is certainly a first. The Government is coming to grips with the excessive spending which had been going on.
Another key element is that the Government has shown not only leadership but, in particular, has shown by example its determination to come to grips with these problems. If there was one criticism we all heard during the election campaign, I am sure it was to the effect: "When will Ottawa start to demonstrate to the rest of the country that it is prepared to tighten its belt and share some of the burden?" If 1 heard that once, Mr. Speaker, I heard it 500 times at the door. Canadians were getting tired of not only high taxes but the lack of any example being set by Ottawa, and not just in Ottawa, but with respect to money spent by the federal Government right across the country.
In conclusion I would like to touch on a few points. First, 1 am proud and, as I said earlier, am more determined than ever, that the Budget is staying on course towards economic prosperity and employment for Canadians. Second, our new Government is putting a stop to the financial mismanagement which was threatening the future of our nation. This mismanagement was causing our country to become a laughing stock, not only domestically but internationally. The Nielsen task force, to which I alluded earlier, and the report of which will be revealed next Tuesday, March 11, and the regulatory reform to which the Government House Leader referred this morning, are just two examples of how the Government is prepared to come to grips with some of the mismanagement.
Our record of more efficient Government, 1 believe, speaks for itself. The accomplishments of the Government are only a beginning. There are people out there saying it is not enough. They want more jobs. That is understandable, but 1 believe we can be very proud of our record and 1 am satisfied and confident that there is a lot more to come. Certainly, the business community, which has created so many of those jobs feels the same way. Of the 580,000 new jobs, approximately 80 per cent were created by the private sector. 1 believe that is a reflection of the new confidence in the federal Government.
I believe another thing Canadians are happy with-1 know 1 certainly am-is that the Government is being honest with Canadians. It is restoring the trust which the previous Government certainly lost. The game plan of November, 1984 is still the same game plan we are using today and which was in the Budget delivered last week. It takes a lot of courage, a lot of political will and a lot of example in leadership to come up with the kind of Budget which comes to grips with those

March 6, 1986
The Budget-Mr. Ravis
serious problems. That is the solution to the real economic recovery we are looking for down the road.
One lady said to me during the election campaign about a year and a half ago that she fully agreed with many of the problems the country faced, but, she said: "After all these years, how can you possibly take it away?". I think that very well sums up the problem this Government is facing.
I trust Hon. Members of the Opposition will join with us- seeing that an election is probably two or three years away-in some of the positive things which are happening in this country today and will not harp on so many of the negative and critical things they seem to find in any Budget which is given.


The Acting Speaker (Mr. Paproski):: Questions and comments. I will recognize the Hon. Member for Winnipeg North (Mr. Orlikow), then the Hon. Member for Sarnia-Lambton (Mr. James), and then I will see how much time we have left.


David Orlikow: Mr. Speaker, I have a question for the Hon. Member for Saskatoon East (Mr. Ravis) who spent his time- not surprisingly as a Government Member-in lauding this Budget. How can he defend this Budget as being fair based on the current issue of the Financial Post-not a very radical journal-which gives three examples of what happens to taxpayers? In case one, the gross income is $40,000. The income tax in 1984 will be $9,145. In 1987, it will be $9,957, an increase in round figures of $800. With respect to case number two involving a gross income of $60,000, the income tax paid in 1984 would have been $14,909. In 1987, as a result of the Budget, it will be $13,708, a reduction of $1,201. With respect to case number three involving an income of $150,000, the income tax paid in 1984 would have been $53,448. In 1987, as a result of the Budget, it will be $47,978, a decrease in round figures of $5,400.
Does the Hon. Member think it is fair to reduce the taxes of people in the top income brackets while increasing the taxes of people in middle and lower-income brackets? Is that his idea of fairness?


Donald Paul Ravis: Mr. Speaker, I think the Hon. Member is playing some games with numbers here.


David Orlikow: Not me, it's The Financial Post.


Donald Paul Ravis: I finished off my presentation by saying that we would probably hear some negative comments from members of the Opposition. That is exactly what I expected.
When it comes to fairness-and I certainly stressed this in my presentation-I do not like the fact that I will be paying more taxes. The Hon. Member for Winnipeg North (Mr. Orlikow) does not want to have to pay more taxes. However, we have but two options. The first is that we can let the printing presses run. We can stick our heads in the sand and pretend these problems do not exist. The second option we have to face up to is, as the lady said the other day on Cross Country Check-up: "I don't want my grandchild who will be
born in May to have an $8,200 debt on its head". Unfortunately, whether we like it or not, it will have an $8,200 debt on its head.


Mr. James:: Mr. Speaker, I was interested in the comments made by the Hon. Member for Saskatoon East (Mr. Ravis). He spoke about the 70-30 split. My colleague, the Hon. Member for Winnipeg North (Mr. Orlikow), read from a newspaper article. Rather than take issue with his figures I would like to point out what was written by Bruce Little in The Globe and Mail. He wrote the following:
According to the fiscal plan, federal revenue in 1984-85-the year the Tories took over-amounted to 16.8 per cent of the gross national product. Spending was 25.9 per cent of GNP and the deficit-the difference between the two-was 9.1 per cent of GNP.
He went on to state:
If the economy turns in a middling performance over the next five years, Mr. Wilson's fiscal policy moves will change those figures dramatically.
By 1990-91, the deficit would be down 5.6 percentage points to 3.5 per cent of GNP. Spending would have fallen to 21.4 per cent, a decline of 4.5 percentage points, while revenue would have increased by only 1.1 percentage points to 17.9 per cent of GNP.
That means that spending cuts would account for fully 80 per cent of the decline in the deficit and tax increases only 20 per cent, an even better split-
No matter whether one talks about a 70-30 split or a 80-20 split, we have brought about an excellent record.
As Vice-Chairman of the Public Accounts Committee, and in connection with what the Hon. Member has talked about, can he provide examples of waste and mismanagement which he has seen and which the restraint processes in the Budget will see eliminated?


Donald Paul Ravis: Mr. Speaker, with respect to the Public Accounts Committee, I wish my colleagues in the House of Commons would read a little more about us and come to some of our meetings in order to see the type of work that is being done. I can give the Hon. Member some examples of matters which we have identified. One has to remember that it is a non-partisan committee which looks at good management of the bureaucracy of Government. One of the things we identified was the scientific research tax credit which involved a bit of political policy, political decision-making. There are certainly some indications that the senior bureaucrats were not giving good advice to the Government of the day. Unfortunately, that measure will cost the Government something in the order of $3.4 billion, which will have to be absorbed by the taxpayers. We also identified a great deal of real estate space which the previous Government had acquired. I refer to literally thousands of square feet of real estate space. That space has been disposed of along with a number of public buildings which were no longer required by the federal Government. Certainly in the area of cash management there will be savings in this neighbourhood of well over $100 million. Those are just three examples which I can give to the Hon. Member.


Mr. Wilson (Swift Current-Maple Creek):: Mr. Speaker, I welcome the opportunity to make an intervention at this time and to congratulate the very useful contribution made by my colleague, the Hon. Member for Saskatoon East (Mr. Ravis).
March 6, 1986

I noted that in his remarks he referred to the continuing thrust of this Government toward job creation led by the private sector, which was initiated in the November, 1984 Economic Statement and continued through the May Budget and the most recent Budget. I wonder if my colleague's constituents have noted with amusement the antics of front-bench members of the opposition Parties who, back in November, 1984, felt that the idea of the private sector being able to lead the way in job creation would be rather amusing. I realize that the concept is foreign to them. Indeed, back in November of 1984 those who sat on the front benches of the Opposition were wondering whether it would be a matter of 60,000,
100.000	or 200,000 jobs lost as a result of the policies enunciated. At that time one opposition front-bencher said: "Last night, the Minister produced a program which gave Canadians tax increases and cut-backs which will destroy thousands of jobs". The fact is, on the contrary, far from losing 50,000,
100.000	or 200,000 jobs, the Government has created 580,000 new jobs. Furthermore, most of these jobs are permanent, durable and lasting jobs, unlike the few which were created by our predecessors which were jobs of short duration. These were jobs in the area of painting fences, cleaning up cemetaries and the like, after which the workers would be laid off and back on unemployment insurance.
I am wondering if the Hon. Member's constituents have noted with amusement the about-face of members of the Opposition who back in November of 1984 were jeering. They were saying how risky this was and how terrible and dire the results would be. Now that we have seen hundreds of thousands of jobs created through the policies of the Government we can see the spectre of the Official Opposition suggesting that these job-creation figures come about as a result of a time lag. In fact, they have come about as a natural progression of their own bankrupt policies which are now somehow producing these hundreds of thousands of new jobs. Have the constituents of my colleague from Saskatoon East noticed this hypocrisy on the part of members of the official Opposition and are they giving credit to the outstanding policies of our Government?


Donald Paul Ravis: Mr. Speaker, I mentioned earlier that there is a certain amount of cynicism out there. It is understandable why a great many of my constituents are cynical given some of the negative things which they hear day after day, not only from members of the Opposition but from members of the media as well. Nobody seems to like good news. It seems to me that when one takes a look at some of the economic trend lines these days, in terms of what has been happening in the country, I am proud to stand in my place and take some of the credit along with my colleagues. I think my constituents can see through all that. They are saying: "This Government is on the right track. Let's give them a chance. Sure, they are not perfect, they will not do everything overnight". I think it is important that one look at the direction in which we are going. That is the most important thing. Where are the trend lines pointing? They are all pointing up. There is a renewed sense of confidence in the country. There is a sense by the small business sector in particular that it wants to make some
The Budget-Mr. Ravis
investments because there is a brand new Government in Ottawa.


The Acting Speaker (Mr. Paproski):: I will recognize the Hon. Member for Scarborough Centre (Mrs. Browes), followed by the Hon. Member for Kamloops-Shuswap (Mr. Riis), and that will be it.


Mrs. Browes:: Mr. Speaker, I compliment the Hon. Member for Saskatoon East (Mr. Ravis) on his presentation today, in particular on how he approached the topic of the deficit reduction and the agenda for it. He expanded upon a number of words such as leadership, trust and confidence. I believe those are the kinds of things for which Canadians are looking.
Many people in my riding have been in touch with me, and I should like to refer to some of their comments in this area. One constituent wrote: "I am a senior citizen who listened to Michael Wilson present the Budget. I accept this Budget which I feel is fair to all segments of our population. It is moderately tough but all reasonable persons will understand that it has to be in order to reduce the deficit". Another constituent wrote: "Please thank Mike for his no-nonsense Budget. We are lucky to have Mr. Wilson in this critical post. People I talk to appreciate his guts, strength, fortitude, intelligence and devotion at this difficult time". Another constituent wrote: "It is a step in the right direction", and another wrote: "It was long overdue".
These are examples of some of the sentiments and comments of people in the riding of Scarborough Centre. Could the Hon. Member indicate whether they are representative of the kinds of comments from the constituents of Saskatoon East?


Donald Paul Ravis: Mr. Speaker, possibly the Hon. Member did not hear me mention that one of the most commonly used expressions about the Budget when I was in Saskatoon last week was: "It is long overdue". On the other hand, nobody likes the bitter pill, the fact that we have to face up to the reality of the country today and pay additional taxes, but they were saying that it was long overdue.


Mr. Attewell:: Mr. Speaker, I rise on a point of order. I am not totally familiar with the House rules, but 1 believe the Hon. Member for Saskatoon East (Mr. Ravis) went about 22 minutes, and normally 50 per cent of the time is allowed for comments or questions. Would Your Honour consider adding a bit of time so that I might ask him a question, inasmuch as he went over?


The Acting Speaker (Mr. Paproski):: 1 went a little overboard as far as the Hon. Member for Saskatoon East (Mr. Ravis) is concerned, and I have already given a little more as far as the 10-minute question and comment period is concerned. I will now recogize the Hon. Member for Kamloops-Shuswap (Mr. Riis). There are many other Hon. Members who want to speak on the Budget. Would the Hon. Member please resume his seat. I do not mind being lenient as far as speakers are concerned, but there are other Hon. Members

March 6, 1986
The Budget-Mr. Gagliano
who want to participate. I will entertain a short question from the Hon. Member for Kamloops-Shuswap, and that will be it for this speaker, I regret. Then we will carry on with debate.


Nelson Andrew Riis: Mr. Speaker, I appreciate the opportunity to ask a very short question of the Hon. Member for Saskatoon East (Mr. Ravis). Today in Question Period, the Hon. Member for Yorkton-Melville (Mr. Nystrom) asked the Minister of Agriculture (Mr. Wise) whether he had fought for the removal of the investment tax credit for farmers, which will result in $150 million actually being taken away from them? Knowing the concern of the Hon. Member and his interest in farmers, did he support the removal of the investment tax credit for producing farmers?


Donald Paul Ravis: Mr. Speaker, as the Hon. Member for Kamloops-Shuswap (Mr. Riis) knows, I am not part of the Cabinet, therefore I was not consulted on that particular issue. I am sure he fully understands some of the things in the Budget for the agricultural sector, such as commodity based mortgages and assistance to farmers who have their backs against the wall by providing some review of their financial situation. There is no question that things are tough in the agricultural sector, as they are in the small business sector and as they are in the corporate sector. Everyone is having to bear some of the brunt. Those people in the most dire straits will be receiving the most assistance, and I think we are addressing that-


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


Alfonso Gagliano: Mr. Speaker,
1 would like to take advantage of this opportunity to discuss a Budget that contains the highest tax increases since World War II.
Today, I want to focus on small business. Since September 4, 1984, the Conservative Government's political rhetoric has been that it has done some very important and very significant things for small business.
First of all, I would like to give a short description of small business in Canada. The small business sector is a healthy one. Small business is essential to continued job creation and economic growth in Canada. In fact, it is estimated that this sector has provided 70 per cent of the jobs created in Canada between 1979 and 1980, and practically all the jobs created in Canada, if we extend this to include the recession from 1980 to 1982. Furthermore, Mr. Speaker, at least 90 per cent of our businesses in Canada are small and medium-sized businesses, and they represent over 30 per cent of this country's Gross National Product.
We are often told the Liberals did nothing for small business and did not understand the small businessman. I would like to mention some of the programs set up when the Liberals were
in power.
From 1980 until the April Budget in 1983, we took a number of measures aimed at helping the small business sector. I intend to describe some of these programs and measures. We had a program to promote sub-contracting with Canadian businesses (August 1980). The purpose of the program was to give Canadian small businesses better opportunities to bid on subcontracts related to major projects carried out by the federal Government's main suppliers.
The reduced tax rate for small businesses was introduced by a Liberal Government in 1972, but for the first time a Conservative Government narrows the tax rate gap between small and large companies. I will give more details on this later on.
Mr. Speaker, the latest change was made in the November 1981 Budget. The tax deduction was raised from $150,000 to $200,000 and the over-all ceiling from $750,000 to $1 million. Today still the ceiling is set at $200,000. Those were Liberal measures for small businessmen.
Acknowledging the great importance of small- and mediumsized businesses, the Hon. Marc Lalonde announced various measures in his last two Budgets. Together the two Budgets of April 1983 and February 1984 provided tax incentives and new expenditures of more than $2.2 billion in 1984-85, $1.8 billion in 1985-86, and $1.4 billion in 1986-87.
I could go on and on, Mr. Speaker. Earlier today my colleague on the other side read letters supportive of the Minister of Finance, so if it were allowed by the Standing Orders we in the Opposition could also read letters, perhaps during a whole week. I have no intention of doing that, so I will deal directly with the proposals contained in the Conservative Budget of February 26, 1986.
First of all, Mr. Speaker, the 3-per-cent inventory allowance deduction has been eliminated. This is a hard blow to small businesses, Mr. Speaker.
Even the small corner store merchant who must keep an inventory worth between $25,000 and $30,000 to operate will have a tax loss; on top of that, the 3 per cent inventory allowance is eliminated right now, while the small income tax reduction and the other 3 per cent taxes will apply in April 1987 and January 1, 1987 respectively.
Now, the elimination of salary deferral is another blow for small businesses. What happens when the owners or shareholders start a small business? They often have liquidity problems, especially during the first year, so they take a small salary or no salary at all to help pay their bills and develop their new venture.
I mention this because, as an accountant, I often had to do this kind of planning. At the end of the year, I had to sit with a small business owner and prepare his first balance sheet. Realizing that his wages were low, he would suggest to give
March 6, 1986

himself a bonus to make his financial statements presentable and consistent with those of other similar businesses. This way, the small businessman could delay his income tax payment for one year. Since February 26, this is no longer possible. The Minister of Finance (Mr. Wilson) has decided to hit him where it hurts most. Small businessmen will no longer do that. They will have to pay within 180 days if they want to reduce this bonus. Of course, whenever they declare bonuses or commissions, major corporations have to pay within 180 days, but not small businesses.
The general 3 per cent surtax is another low blow, Mr. Speaker. It will hurt especially the smallest of the small businesses, those which are not incorporated. They will have to pay the 3 per cent surtax effective January 1987, while the large corporations which are paying 5 per cent now, will have to pay only 3 per cent beginning January 1, 1987, a two per cent reduction. The Minister has increased the burden of Canadian consumers and small businesses while reducing that of large corporations. Such are the consequences of this Conservative Budget, Mr. Speaker.
Now that I have explained the surtax, let us go on to the corporate tax rebate. At the time of the tax reform during the 70s, Mr. Speaker, it was a well-established fact that there was a difference in the tax rates for large companies and small businesses. This difference was a well-established fact. There was a 21 per cent deduction for small businesses. The Minister of Finance says that the tax returns will be simplified, but I am anxious to see how this will be done. The tax return for corporations, Form T-2, now provides for a set rate of 46 per cent for all businesses, from which you then subtract the 21 per cent deduction for small businesses and the rebate for provincial taxes, and you get a rate of 15 per cent.
In the Budget of February 26, the Minister of Finance decided to lower this rate from 15 to 13 per cent, but not immediately. This will occur over two years, the rate will decrease by 1 per cent on April 1, 1987, and by 1 per cent on April 1, 1988. However at the same time, the Minister decided to reduce the tax rate applicable to large companies by 3 per cent, from 36 to 33 per cent. There is therefore a decrease of 2 per cent for small businesses and one of 3 per cent for big corporations. That is social justice.

That is what is fair with this Government? He is talking about fairness. Why do big corporations get a reduction of 3 per cent and small businesses get a reduction of 2 per cent, Mr. Speaker? And it is not over yet.
The big manufacturing corporations get a 4 per cent tax reduction and the small business manufacturing corporations get a 2 per cent tax reduction. That is what is fair? Small business for years and years during crisis periods created all the jobs and here the Government is not rewarding small business, it is rewarding big corporations.
The Budget-Mr. Gagliano
That is how fair this budget is, Mr. Speaker. That is why yesterday the Minister of Finance (Mr. Wilson) in answering my questions said that the Progressive Conservative Party is the Party of small business. That is how the Party considers small business. It is not the Party of small business, it is the Party of big business.

Mr. Speaker, he has abolished the investment tax credit. Of course, this credit also helped small businesses by encouraging people to invest in small business. This credit has been abolished.
Let us now talk about the federal sales tax. 1 would like to refer first to the building industry, which is vital for our economy. Do you know that federal sales taxes in this industry have increased by 8 per cent in eight months? There were no taxes before. Since the Budget of last May, the Government has started to tax building materials, and there is now an 8 per cent tax on this industry. Since November 1984, the federal sales tax has gone up by 3 per cent. Is this fair?

Is that fair? That is what Members opposite say when they are trying to sell the Budget. They should be asking themselves whether a 3 per cent increase in federal sales tax in 16 months fair?
The Progressive Conservative Party when it was in opposition was screaming that increasing the sales tax was no good and that it was not fair. The first thing the Conservatives did when they got into power was increase the federal tax 1 per cent.
Let us see what happened in the pre-consultation period. The Minister of Finance said that before he prepared a budget he would consult people to see exactly what they want so as to accommodate everyone.
[ Translation]
Mr. Speaker, one of the many things suggested by the Canadian Federation of Independent Business was the very interesting proposal that expenses associated with developing a potential business should be deductible for income tax purposes. It is true that if an established business decides to open a subsidiary, such expenses are deductible. By the same taken, if a taxpayer decides tomorrow morning to rent premises, sign a contract and open a small business, and if, finally, he does not succeed, why should his expenses not be tax deductible? This is what the Canadian Federation of Independent Business asked during the consultations. However, there is no such proposal in the Budget.
The Canadian Organization of Small Business also asked that owners, members and partners in small businesses have an opportunity to invest in a retirement savings plan within their small businesses. Last year, in the May Budget, the Minister of Finance allowed funds to be invested in small businesses, provided that neither the owner nor members of his family nor his partners would invest money in such funds.

March 6, 1986
The Budget-Mr. Gagliano
Mr. Speaker, as we very well know, a small business has to do without a board of directors or senior management. Everything is done by the owner, by members of his family or by his partners. How do you expect big corporations, big business to invest in small businesses when the first question asked is: "What about your five-year projections? Where are your financial statements for the last five years? Have you figured out all those things?" Do you think that small businesses, the really small ones have five-year projections, that they have enough time on their hands to make five-year projections? They work day and night keeping busy as delivery man, driver, manager, secretary and accountant all in one. They have do do everything. To those people this budget offers nothing.
Mr. Speaker, I would also like to quote a few comments we heard on budget night from those organization and say how they viewed this Budget.

To start with, let us see what the Canadian Construction Association had to say. There were no surprises in the Budget. Bill Nevins said that the 1 per cent increase in federal sales tax effective April 1 presents a severe problem for the construction industry. It could cost the industry an additional $75 million. He was upset that there was not much advance notice given for the increase.
[ Translation]
And that is another problem in the construction industry, Mr. Speaker, and we discussed it on a number of occasions here in this House. Long-term contracts are signed but taxes are increased as of now. Once contracts are signed, how will contractors go about collecting that tax?
The association said that contractors sell on a fixed price basis. Therefore, the contracts already signed will not take this increase into account. The contractor will have to pay for this out of his profits. Since last May the construction industry has been hit three times with tax increases: July 1, 1985; January 1, 1986; and April 1, 1986. Because construction projects take one, two, or even three years to complete and bids are made well in advance, the contractor must absorb the tax increases.
The Budget does not aid the fragile business recovery that just began in 1985. The rate of growth of business investment will be reduced. The Minister of Finance projected in his Budget that the rate of growth would be 7 per cent and Statistics Canada yesterday projected 2.5 per cent. The Member is laughing. Those are the figures of Statistics Canada.
The Canadian Construction Association also said the Budget does not give a positive framework for business. The phasing out of the investment tax credit, the elimination of the inventory allowance, and a 3 per cent corporate surtax will not help the industry, but will slow the recovery.
On Budget night Tim Bennett of the Canadian Federation of Independent for the Budget of the Minister of Finance to bear fruit. The cancellation of the 3 per cent inventory allowance will hurt all small businesses with large inventories such as car dealerships, farm equipment dealerships, and jewellers. The 3 per cent surtax on income tax will hurt proprietorship and partnership small businesses.
The federation would like to have seen a one-year holding period minimum requirement on real estate property in order to qualify for the capital gains exemption tax. It would like to have seen a limit set at $5,000 per year on private pension contributions in order to close a loophole which is very costly to the Government. The federation felt that the restrictions on the 50 per cent RRSP investment in small business should have been lifted to permit the investor to place his money in his own business, or that of a relative or a friend.
Geoffrey Hale of the Canadian Organization of Small Business said that capital gains exemption tax should have been redesigned to be further targeted at long-term equity investment. He said that whether or not the deficit can be reduced below $30 billion is totally dependent upon the investment rate. That is what everyone has said.
Corporate taxes are actually increasing, contrary to first impressions, as indicated by the elimination of the 3 per cent inventory allowance, the phasing out of the general investment tax credit starting January 1, 1987, and limitations on the ability to defer taxes by deductions for unpaid remunerations. Mr. Hale said that there is basically nothing in this Budget for the successful small businessman. The 3 per cent surtax on income tax negates all advantages to proprietorship and partnership businesses.
The night of the Budget the Retail Council of Canada was disappointed but not surprised. It was concerned that the Government sees the deficit as an expenditure problem rather than a spending problem, and that the money is coming out of the public pocket. The Government is hoping that employment and consumer spending will increase substantially. The consumer has been hit twice; once with the sales tax, and again with the surtax on income. The Government is taking a huge gamble on prices and consumer spending. The rise of sales tax could negatively impact on economic activity.
The Retail Council felt it surprising that the Government has let sales taxes increase to 10, 11, and 12 per cent after being upset when the Liberal Government increased the sales tax from 8 per cent to 9 per cent. The council was upset that the inventory allowance was removed, effective immediately, whereas the corporate reductions do not start until next year. It felt that retail business was hit.
This is not a fair Budget, Mr. Speaker.

This is not a fair budget, and the proof is that a taxpayer in the $40,000 income bracket has to pay an extra $812, while the taxpayer with an income of $150,000 gets a $5,470 reduction. That is not fair, Mr. Speaker.
March 6, 1986


The Acting Speaker (Mr. Paproski):: Questions, comments. The Hon. Member for Don Valley East (Mr. Attewell) and from Montreal-Sainte-Marie (Mr. Malepart).


Bill Attewell: Mr. Speaker, 1 could hardly believe my ears when listening to the comments of the Hon. Member for Saint-Leonard-Anjou (Mr. Gagliano). An analogy kept going through my mind of an arsonist giving a lecture on fire prevention. The Member is part of a Party which almost brought the country to its knees financially. The comments of this Member and those of the Hon. Member for Gander-Twil-lingate (Mr. Baker), who spoke the other day, are an example of the twisting and distortion which takes place.
The Member for Gander-Twillingate said that 23 per cent of our present debt was created by the Conservative Government since September, 1984. That makes me think of another analogy. Consider the case of a forest fire which has burned
3,000	acres. When the fire fighters are brought in it takes them several days to bring the fire under control, during which another thousand acres burns. Do we blame the firemen for the loss of the extra thousand acres? Of course not. We blame the people who started the fire. Canadians are not going to be fooled by this transparent rhetoric about what has happened recently.
Canadians will not forget that the last time the country had a surplus was in 1969-70. They will not forget that by 1975 the Liberal Party created a deficit of $5.7 billion. They will not forget that the deficit rose to $10 billion two years later. Canadians will not forget that by 1982-83 the deficit was $23.9 billion. Neither will they forget that when this Member's Party was in power it accumulated the largest deficit ever in the country, $36.9 billion in 1984-85. Canadians can see the facts, which are very clear.
I want to challenge the Hon. Member on a couple of comments he made about the fairness and equity of this Budget. I consider it to be very fair. In fact, I must again compliment the Minister of Finance for the balance he has achieved, not only between corporations and individuals, but also among individuals.
There are some very good measures contained in the Budget for the needy but, of course, the Member does not recognize that type of initiative. There is a balance between taxes and expenditure cuts at a ratio of 70 to 30. The financial statement of November, 1984, the Budget of May, 1985, and this Budget have consistently struck a balance. The best proof of that balance is the 580,000 jobs which have been created in only 18 months. The Member's Leader projected a loss of 200,000 jobs.
I urge the Hon. Member to be more complete in his assessment of the Budget and to have a little humility with regard to what his Party caused in the country. I suggest that he read the Budget a little more carefully. I understand that he is an accountant and he will appreciate the fairness in the Budget.
The Budget-Mr. Gagliano
The Member spoke as if the surtax wiped out the decrease for small business from 15 per cent to 13 per cent. He knows that is not correct. It is 3 per cent of 15 per cent. In other words, .45 per cent. Clearly it does not wipe out the advantage for small business. I urge him to be a little more realistic and honest as to how good the Budget really is.


Alfonso Gagliano: Mr. Speaker, the Conservative rhetoric is always to reduce the deficit. If they were serious about reducing the deficit, why did they give $2 billion to bank depositors who had more than $60,000 on deposit? Why did they give $2 billion to the multinationals? Why did they give a $1 billion tax reduction to the Reichmann brothers? They only cut $4 billion from the deficit this year but six months ago they gave away $5 billion. That is the rhetoric of the Conservative Party.
I agree with him concerning the 3 per cent inventory tax. However, what upsets me about the budget and corporate taxes, and I would like the Hon. Member to one day stand up and explain this to me, is why did the Minister of Finance reduce the big corporations' taxes by 3 per cent and the small corporations by 2 per cent? Why did he reduce the manufacturing tax on big corporations by 4 per cent and only 2 per cent for small manufacturing corporations? That is why 1 say this is not fair. The Government has been saying small business is the key to recovery. It is small business which creates jobs. Then why are we giving more-


Bill Attewell: Is it unfair to create jobs?


Alfonso Gagliano: -to big corporations?
[ Translation]


Jean-Claude Malépart: Mr. Speaker, the Conservative Member who spoke earlier reminded me of his leader. It is true the Budget is fair. It is a fair and good Budget for the rich, but there is nothing in the Budget for the poor, and the Budget attacks the middle class. And that is the truth, Mr. Speaker. I wish my hon. friend would tell me, and the Minister of National Health and Welfare (Mr. Epp) is here, what he thinks of a measure providing for prepayment of $300 of the child tax credit that covers only a certain percentage of the Canadian families eligible for the tax credit. Today, 1,538,000 families are receiving the full child tax credit, and the Government, by some magic and inhuman calculation, has decided that only one million families will receive the $300 prepayment of the tax credit, and 538,000 families will have to throw themselves on the mercy of the friends of the Conservatives, the tax discounters, who take advantage of the poor. Would the Hon. Member please explain how he could possibly say this is a generous Budget?


Alfonso Gagliano: Mr. Speaker, my hon. friend from Montreal-Sainte-Marie (Mr. Malepart) is absolutely right. It is a discriminatory measure. It allows some people to receive a certain amount in advance and ignores many others. Mr. Speaker, last year they decided that to be eligible for the child tax credit.

March 6, 1986
Adjournment Motion
individuals could earn as much as but not more than $23,500. This year they are increasing federal sales tax by one per cent, but to compensate for this, they give us a handout of $50 per adult and $25 per child, but only for those earning $15,000 or less, that is, those below the poverty line. Another clear example that this Budget is not fair. Although the Government is going to do everything it can and ask all Conservative Members to sell this Budget, it will not succeed, because people will begin to understand that this Budget is not fair.


Mr. Brisco:: Mr. Speaker, I would like to make a couple of comments and pose a question. It is useful, most of the time, to listen to the Opposition to see if in their comments there are some pearls of wisdom which will shed new light, some new recommendations for change which may not have occurred to us. That is the role of the Opposition, to offer alternatives. I very much regret that I have not heard one alternative or one useful suggestion. Instead, I have heard nothing but railing against a Budget which people generally have accepted as a good Budget, including Mr. Bulloch who the Hon. Member made reference to. Did he not watch his own leader on television when the interviewer said: "Mr. Turner, don't you finally agree that this is a good budget?" I would also ask him if he read Jeffrey Simpson's column in The Globe and Mail on Wednesday morning? That would be an excellent guide to the thinking of Canadians on this Budget.


Alfonso Gagliano: Which one should I take, The Globe and Mail or La Pressel They all say the same thing. The Financial Post?


Robert Hylton Brisco: How about making a useful suggestion?


Alfonso Gagliano: If you want to reduce corporate income tax, why not do it across the line? Why does small business get less than big business?


Robert Hylton Brisco: Don't rationalize, just tell us how.


Alfonso Gagliano: Well, if you decide a corporate-


The Acting Speaker (Mr. Paproski):: On that basis, questions and comments are now terminated. It being four o'clock-



PROCEEDINGS ON ADJOURNMENT MOTION

[Stage Direction]
[ Translation]

The Acting Speaker (Mr. Paproski):: It is my duty, pursuant to Standing Order 46, to inform the House that the questions to be raised tonight at the time of adjournment are as follows:
The Hon. Member for Levis (Mr. Fontaine)-The Economy- Le Conseil du patronat du Quebec-The deficit-Government position; the Hon. Member for Don Valley East (Mr. Attewell)-Terrorism-International security measures- Canada's position; the Hon. Member for Saint-Leonard-Anjou (Mr.	Gagliano)-Unemployment	Insurance-Difficulties
facing early retirees. (6) Scope of regulations.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Wilson (Etobicoke Centre) that this House approves in general the budgetary policy of the Government.
Hon. Robert C. Coates (Cumberland-Colchester):: Mr. Speaker, I am delighted to have the opportunity to enter this debate and indicate my strong support for the initiatives taken by the Minister of Finance (Mr. Wilson) in this Budget, as well as for the direction he has given this country since he assumed that portfolio. This is the third major initiative he has taken. His first was in November, 1984 when he laid down a program which indicated his strong intentions to move against the horrific deficit this country was facing. He was going to try to bring our accounts into order so that not only this but future generations would derive some long-term benefit from his actions. He moved from there to his Budget last year. We now have this Budget. We are onstream, moving in the right direction, and at the same time showing the Canadian people that the extra taxes we are going to extract from them will be far less than the cut-back in the over-involvement of Government in the lives of Canadians. As a result, we will be moving forward into the next decade in a way which should give every Canadian confidence that they have a man steering our economic course who fully understands the complexity of the financial situation in this nation. He has taken the type of steps that can only be of long-term benefit to the nation.
I noted that one Member, in questioning an opposition Member, indicated that 70 per cent of the cuts have come out of Government services. In other words, we are cutting back a bloated bureaucracy in a way which can only be of benefit to all Canadians. This will produce long-term savings for the people of this nation and result in their having to pay less taxes over the long term. I happen to come from Atlantic Canada and the only Prime Minister, until this Prime Minister (Mr. Mulroney), who really took a serious look at our economic problems and tried to take innovative actions of long-term benefit to our area was John Diefenbaker. The Diefenbaker years were good years for our part of Canada. In this Budget I see some new thinking, some innovative thinking, some real programs that are going to produce long-term benefits for the
March 6, 1986

people who live in Atlantic Canada. I congratulate not only the Minister of Finance, but the Minister of Regional Industrial Expansion (Mr. Stevens) and other Ministers in this Government for taking special time to put together new and innovative programs. I know they will produce a degree of momentum in the development of new industry in our part of Canada and new permanent jobs that are going to be of long-term benefit to our area.
I want to also congratulate the Minister of Agriculture (Mr. Wise), who is in the House, and to tell him how much I have appreciated the personal attention he has given to problems that face Atlantic Canada. I would like to congratulate him for the special and very good innovative thinking on the type of programs he has produced which are going to make the agricultural community once again know that it has a friend in Ottawa who is putting forward new programs and plans that are going to be of long-term benefit to them.
We have a lot of problems in Atlantic Canada. The Minister of Agriculture needs a lot of help from Members from all sides of the House. We still need feed grain assistance and we need a new program for the development of feed grains in our own area that the Minister is moving forward with now in a very positive way. I congratulate him for that, and I say to him that while we are in the period of developing the new initiatives for the development of feed grain production in our part of Canada we still need the additional feed grain assistance. This will allow our agricultural community to hold down their costs of production to compete in a fair and equal way with other farm products in this country. I have had numerous meetings with the Minister, and I find him to be up on everything in his Department. I find him to be very sympathetic to the problems that people face in our area, and I congratulate him for the work he has done.
I would now like to spend just a moment talking about what is happening in Atlantic Canada, specifically initiatives the Minister of Finance took in his Budget relating to Atlantic Canada that will mean new jobs, new opportunities and new developments for our people. One of the most important is the Atlantic Enterprise Program. This program is designed to help the private sector in this part of Canada grow, to stimulate the economy, and to provide the jobs and diversity we need.
This is only the latest step in a series of measures this Government has taken in support of the Atlantic economy since its election in September 1984. In total, during that period the federal Government has committed $1.5 billion to support economic development in Atlantic Canada. Some $611 million has gone to Newfoundland, $90 million to Prince Edward Island, $372 million to Nova Scotia, $328 million to New Brunswick and $100 million to the Atlantic region of Quebec. Our Government has not made empty promises. We have taken action to create employment and economic stimulus for Atlantic Canada. The budgetary measures announced by the Minister of Finance have heralded more growth for the region. The programs it contains are good news and takes the
The Budget-Hon. R. Coates
special needs of the Atlantic provinces into account. Together they will promote investment to bring in new employers and help existing businesses to expand.
The Atlantic Enterprise Program will provide the new initiative the Government felt was necessary to give Atlantic Canada an edge. It will build on the strength of the private sector, because we believe that this is the way to achieve the long-term economic growth which is needed in the region.
It contains two basic components. The first is loan insurance for businesses which need capital to establish or expand. The program will insure up to 85 per cent of the loans provided in the capital security, so important to a new or growing enterprise. Second, the Atlantic Enterprise Program will provide less expensive capital for businesses being established or expanded. It will reduce loan interest by up to 6 per cent. This can make a critical difference between a marginal and a profitable enterprise.
To give you an example, it means that someone who today has to borrow money at 13 per cent can have that 13 per cent reduced to as much as 7 per cent in projecting his forward movement as a new or an expanded industry in our area. It is a big incentive for a businessman who is either thinking of establishing in Atlantic Canada or who is thinking of expanding his operation there. This is a significant program which will provide $1 billion in loan assistance in the region. The result will be a healthy private sector which is essential to Atlantic Canada.
The Atlantic Opportunities Program is another federal initiative which will be of important benefit to the region. This consists of a series of special measures to significantly increase the level of public purchasing in Atlantic Canada over the next four years.
I want to congratulate the Minister of Supply and Services (Mr. Mclnnes), a new Minister in this Government, for taking hold of his Department and producing a program like this that is bound to be of tremendous benefit to our area. What he hopes to do is expand purchasing in Atlantic Canada from $1.6 billion to $2.2 billion, an increase of nearly 40 per cent in actual purchasing in our area. This $600 million dollar increase will generate an average of 5,000 new jobs a year.
That is what it is all about. That is what we mean when we are taking action and producing jobs for people in a real and concrete way. For so long I sat here in Opposition and watched the former Government throw money at every problem and produce what I call gyp programs, because everybody got gypped. The people who got the jobs got gypped because they got 10 or 12 weeks of UIC and then they got 40 weeks of doing nothing to requalify for UIC. They were locked into a UIC syndrome that meant they could never really improve the lives they lived. Nor did they have any hope of improving the lives that they lived. What we are doing is producing firm, permanent, long-term jobs for people rather than the gyp-program jobs of the last Trudeau Government. The Grits were gyps, and that is why they are out and that is why they are going to stay out.

March 6, 1986
The Budget-Hon. R. Coates


Mr. Epp (Provencher):: Hear, hear!


Robert Carman Coates: Mr. Speaker, I want to say that one of the leaders in producing a new confidence in Atlantic Canada has been the Minister of Regional Industrial Expansion. He has been aggressive. He has gone into Cape Breton, which fed off the former Minister of everything from Cape Breton High-lands-Canso who managed to spend taxpayers' money on producing runways at Port Hawkesbury so his private jet could land, where no one had anything other than a six or eight-week job at one time.
What we have now are long-term favourable programs that have excited the business community and have, from all of the applications that are coming in, produced in that business community a new confidence about Nova Scotia and about Cape Breton. I know that with the Minister of Regional Industrial Expansion's leadership we will continue to see new plants and new jobs being produced, not just in Cape Breton but in all of Atlantic Canada.
I want to speak about my province of Nova Scotia and indicate what has been happening there since the Government was elected and what will continue to happen in the future. In the past 12 months, 11,000 jobs have been created, including
3,000	in January of this year. The value of building permits in the first 11 months of 1985 was up $94 million, or 18.2 per cent compared to the same period in 1984. Bankruptcies were down 6 per cent in 1985 compared with 1984. Total housing starts in 1985 rose 51 per cent, to their highest level in eight years. Retail sales have increased by 8 per cent between December, 1984 and December, 1985 and have increased by 11 per cent since the September, 1984 election. The value of fish landing in the first 11 months of 1985 were up by $26 million or 11 per cent over the same period in 1984. The former Government left the fishery in a total shambles after years of disinterest and disrespect for the people involved in the fishing industry. Last year, the rate of closures of small and medium sized businesses in Atlantic Canada was 6.3 per cent, down from 8.9 per cent in 1984. The January inflation rate of 4 per cent in Halifax was below the national average of 4.4 per cent. That is the situation in Nova Scotia.
I want to talk about my constituency because during the Trudeau years I was a virtual undertaker, burying one industry after another as a result of bankruptcies. We did not have any good news in Atlantic Canada. However, in the years since 1984 we have seen the establishment or expansion of 21 industries directly related to assistance through DRIE. They are not the only industries that have been established but they had direct federal involvement.
On Monday I will be attending a press conference with the Minister of Agriculture for Nova Scotia and the Mayor of the town of Amherst, participating in the establishment of another industry in Amherst. Furthermore, I can advise the House that there are new plant possibilities under active consideration for Truro, Springhill and Oxford. I have also been personally involved in the establishment of a new luggage factory, with
Korean participants, in the town of Amherst. Those are some examples of what is happening because the business sector in this country has confidence in the Government and the Minister of Finance.
Let me say a few words about national defence. We have seen much progress in national defence since the Government took office. Nowhere is that more apparent than in Atlantic Canada. One of my first acts as Minister of Defence was the re-establishment of Chatham as an air base. It is almost a cornerstone industry of northern New Brunswick and, if it had been left to the former Government, that base would have been dismantled completely. We have re-established it as an air base and we have reconfirmed the employment possibilities for those people of the north shore who are associated with that base. I want to congratulate Members from the north shore who worked closely with me in re-establishing that base.
There are many new developments at Goose Bay that will be of tremendous benefit to Newfoundland and Labrador. The Department of National Defence has re-established itself as the lead Department in handling that base. There are many activities associated with NATO in relation to major utilization of that base which will be of tremendous benefit to the people of Happy Valley, in particular, and the people of Newfoundland, Labrador and Atlantic Canada generally.
I am absolutely committed to major improvements in the naval element of the Armed Forces. We must take major steps to ensure that our navy is properly constituted and that it has the ships it requires. Currently, Saint John shipyard is the lead yard in building six new frigates,. While I was Minister, 1 began the definition program for the second batch of six frigates and I say to the Government that we must move forward quickly in getting that second batch of six frigates on line in order to benefit from the volume buying associated with the construction of those frigates.
I compliment the Saint John shipyard for establishing a centre of excellence with the recruitment of 600 to 700 top qualified people in the construction of warships. We have not been involved in this activity for many years. I have great confidence in their ability to manage the second batch of six frigates that should be constructed. We need new submarines quickly for our navy as well as new helicopters.
We must re-establish the navy which Prime Minister Trudeau and his Government let deteriorate almost to the point of oblivion. The Government must take the necessary steps to establish the navy as a significant part of our Armed Forces if we are to meet our commitments as a partner in NATO.
I want to repeat that our Government has been progressive, with new and positive programs of benefit to all Canadians combined with a reduction in our involvement in their lives. We are moving forward with positive programs that will have long-term benefit for all Canadians. They can look forward to a Government that recognizes the social justice system and is sensitive to the just society. We will not forget those in need while providing a Government that is aggressive and sensitive but much smaller than its present size.
March 6, 1986


Pauline Browes: Mr. Speaker, I want to compliment the Hon. Member for his excellent speech in which he outlined some of the positive effects the Budget will have on the Atlantic region, and particularly on the Province of Nova Scotia. The Hon. Member also has experience in defence and indicates that the Budget will have positive effects in this area.
I believe the Minister of Finance (Mr. Wilson) deserves much credit in being able to implement positive measures to produce the necessary prosperity in the Atlantic region while maintaining the justice that is so important for that area.
My constituents are quite weary and some are very angry about the burden which was left as a result of the spending of the previous Government. The national debt left as a result of the previous Government's spending represents an average of $7,000 over the head of every single Canadian.
Let us consider some of the statistics. Last year's Nobel prize winner for economics, Franco Modigliani, is a noted economist. He said that in reaching levels unprecedented in peacetime, the deficit has become a serious threat to the well-being of younger and future generations of Americans. His comments, of course, were in reference to the United States deficit which, on a per capita basis, is less than our own. So it is time the brakes were applied.
I would just like to refer to a telephone message which came into my constituency office the day after the Budget. My constituent said: "Thank you for bringing down the kind of Budget the Liberals never had the fortitude to introduce". I believe that the kind of positive comments mentioned by the Hon. Member in his speech are a great tribute to the Minister of Finance (Mr. Wilson) and to our Government, that we have been able to have those positive elements in the Budget and at the same time reduce the deficit and reduce waste.
We recognize the Hon. Member's long service in the House of Commons and the experience and wisdom he has gathered as a Member of the House of Commons and as a great Canadian. I wonder if he might comment on the relationship of this Budget to other Budgets he has had the experience of debating in this House?


Robert Carman Coates: Mr. Speaker, I appreciate the Hon. Member's remarks and I also appreciate her special work in relation to the former Hon. Member for Prince Albert, the Right Hon. John Diefenbaker. I wish her well in that regard. I am looking forward to the birthday celebration this September.
I would like to say that it has been many years since I can recall a Budget which actually, in a very forthright way, tackled the deficit, and which has given us the long-term projections which, in turn, give us some hope that some day we might be able to balance the Budget in this country again. I was in the House at a time when Ministers of Finance did bring in balanced Budgets, but it was a long time ago.
Today we have a great concern about our dollar as compared with the United States dollar, whether it is at 70 cents, 68 cents or 72 cents. I think it is important to stabilize our
The Budget-Hon. R. Coates
dollar somewhere. More importantly, as far as myself and other Hon. Members in this House are concerned, we must stabilize it at a point, even if it is below 70 cents, which will allow interest rates to come down. For instance, a two point reduction in interest rates would mean $100 a month less for a person carrying a $70,000 mortgage. That is a big incentive to our Party, and to our Government, to try and get interest rates down at least two points. Let us hope that when the dollar is stabilized-at whatever level it is stabilized-we will be able to move interest rates down in a positive way, which will be of assistance to all people carrying mortgages at the present time.


A. Daniel McKenzie: Mr. Speaker, 1 would like to congratulate my hon. friend from Nova Scotia on his excellent presentation. He gave us an update on the economic upswing in Atlantic Canada.


John Wise: It came from his head and his heart.


A. Daniel McKenzie: Yes, as the Minister of Agriculture (Mr. Wise) just said, it came from the Hon. Member's head and his heart. With respect to the $300 million being funded for the Atlantic Accord and the $200 million Canada-Nova Scotia Development Agreement which has been signed and, for initial projects, approved, will this now mean that many young people in Atlantic Canada and in Nova Scotia will now have a future in their own province? 1 know in the past, because of years of Liberal neglect, many people, especially the youth of Nova Scotia, had to leave their home province to find employment in other parts of Canada. Will the different developments and agreements which have been signed for Nova Scotia and Atlantic Canada mean that they will now be able to stay in Atlantic Canada and have some hope for the future?


Robert Carman Coates: Mr. Speaker, I thank the Hon. Member for that question. 1 want to say that the type of programs the Hon. Member has outlined, and the type of new innovative thinking of a new and strong Government with its special attitude towards Atlantic Canada, will ensure the future for that region. The Minister of Agriculture just signed a new agreement with the three provinces on red meat which indicates this new type of aggressiveness. The youth in Atlantic Canada, because of programs such as the Hon. Member pointed out, have a new sense of confidence about their future in our part of Canada. They are thinking about living, getting educated and working there rather than going elsewhere in Canada looking for jobs.
There is tremendous co-operation coming from the provincial Government of Nova Scotia, the Buchanan Government, and it is that kind of co-operation that has produced the type of new plant establishments which are giving new hope to young people, not only in my province but in our region. The Government has to be complimented for its aggressive and innovative approaches to the problems we face.


The Acting Speaker (Mr. Paproski):: The period for questions and comments has now terminated. Debate.

March 6, 1986
The Budget-Mr. de Jong


Simon Leendert de Jong: Mr. Speaker, I also wish to participate in the debate this afternoon on the Budget presented to us by the Minister of Finance (Mr. Wilson). This Budget, like last year's Budget, and the Budgets which came from previous Liberal Governments, all have a common goal and strategy. That strategy was so ably described by the Canadian Conference of Catholic Bishops in their historic statement "Ethical Reflections on the Economic Crisis", published in 1983. The big problem in 1983 was inflation. Today it is the deficit. But what the Bishops stated in 1983 is still very applicable today. Here in part is what they stated, and I quote:
As recent economic policy statements reveal, the primary objective is to restore profitability and competitiveness in certain Canadian industries and provide more favourable conditions for private investment in the country. The private sector is to be the "engine" for economic recovery. To achieve these goals, inflation is put forth as the number one problem.
In today's terms, it is no longer inflation, it is the deficit. The Bishops go on to state that the causes of inflation-today it is the deficit-are seen as workers' wages, Government spending and low productivity rather than monopoly control of prices. The means for curbing our deficit are such austerity measures as deindexing of pensions, restraints and cut-backs in social spending. The Bishops go on to say, and I quote:
In effect, the survival of capital takes priority over labour in present strategies for economic recovery.
At the same time, working people, the unemployed, young people, and those on fixed incomes are increasingly called upon to make the most sacrifice for economic recovery. For it is these people who suffer most from lay-offs, wage restraints and cut-backs in social services. The recent tax changes, which have the effect of raising taxes for working people and lowering them for the wealthy, adds to this burden.
The Bishops continue in their statement. They state:
If successfully implemented, these programs could also have the effect of transferring income from wages to profit. Yet, there are no clear reasons to believe that working people will ever really benefit from these and other sacrifices they are called to make. For even if companies recover and increase their profit margins, the additional revenues are likely to be reinvested in more labour-saving technology, exported to other countries, or spent on market speculation or luxury goods.
In my remarks this afternoon I wish to analyze what the Bishops said in their statement of 1983, and demonstrate how very accurate those remarks are, given the economic realities and strategies of today.
The Budget again raises the tax load on middle and low-income groups and extends tax breaks to the corporations and the rich. As the Bishops stated, that was the strategy then followed by Liberal Governments, and it is again the strategy followed by the Conservative Government of the day. Since this Government came to office in the fall of 1984 it has raised the tax bite on the average Canadian wage-earner by some $1,305 through income and sales tax increases. Yet, at the same time, it has extended the tax exemptions enjoyed by the corporations. In fact, the Government will be taking an additional $7 billion out of the pockets of the average wage-earner next year while the corporations will be paying some $75 million less.
Earlier today I read an analysis in The Financial Post which showed that a taxpayer earning $40,000 per year will be paying an additional $800 in income tax in 1987. The same study showed that a person who earns some $150,000 per year will see a net decrease of some $5,500 in the taxes they will be paying in 1987. Our tax system is rotten to the core. There is no fairness in it. The tax credits, deductions and loopholes created by this and previous Liberal and now Conservative Budgets have shifted the tax burden almost entirely onto the backs of the wage-earners.
In the 1950s roughly one-half of public revenues in the country came from the corporate sector and one-half from individuals. Today, the relationship is approximately 25 per cent from the corporate sector while 75 per cent comes from the pockets of individual taxpayers.
I would like to illustrate just how unfair our present system is. A woman who is a teller with the Royal Bank of Canada paid more taxes than the Royal Bank paid in 1982, even though the bank made profits over $300 million that year. Yet the teller paid more in dollars and cents to the federal Treasury than did the Royal Bank of Canada. The kid who pumped gas for Shell Oil in 1982 paid more in terms of dollars and cents to the federal Treasury than did Shell Oil in 1982. These examples are just the tip of iceberg.
In fact, let us have a look at the Royal Bank of Canada, its profits and the taxes it paid. We have a statutory tax rate of roughly 49.5 per cent for banks. If we look at how much the Royal Bank paid in actual taxes, and how much it would have paid had the statutory rate applied, we would see that from the years 1977 to 1985 the federal Treasury would have collected an extra $1,135 billion. When one looks at all the banks grouped together one will find that if they had been paying the statutory tax rate from 1971 to 1983 the public Treasury would have been enhanced by some $3,286 billion. The reality is that the banks have been paying a much lower rate than a women who is a teller at one of these banks.
Of course, the oil companies and the banks are not doing anything illegal. These are tax provisions and loopholes which this Government and previous Liberal Governments put in place. I would ask Hon. Members to remember the theory which the Bishops so eloquently enunciated; that is, the economic strategy is one of allowing the private sector to be the engine of growth. Therefore, they are given all these tax breaks in order that they can earn hundreds of millions of dollars in profits and not pay one cent of tax. The hope is that eventually the money will be reinvested to create economic activity, according to the theory of this Government and previous Liberal Governments.
Let us examine whether they do in fact create economic growth and employment. I would remind Hon. Members that in 1983 the Biships stated that they doubted that the average Canadian wage-earner would benefit from this type of economic strategy. They predicted that these extra profits would not be reinvested to create jobs but, in fact, they would be reinvested in labour-saving devices or shipped out of the country and invested elsewhere.
March 6, 1986

The Auditor General estimates that there is between some S30 billion and S50 billion in these tax expenditures. Some of them are personal deductions, child care deductions, charitable donations and so forth. However, a great many of these deductions are those which are aimed to encourage economic growth. They are deductions which are placed there for use by the corporate sector and the wealthy in order to have them reinvest, and to be the "engine of economic growth".
I would like to give Hon. Members some examples of what would fall into this category. In one of Mr. Lalonde's later Budgets, when the Liberals where in power, he wanted to encourage research and development. Thus he implemented a tax credit for scientific research and development. It was estimated at that time that this one provision would cost some $100 million in terms of lost revenues to the public Treasury. The darned thing has ballooned and the public Treasury has now lost some $3.5 billion. The Tories claim some credit for this. They say that at least they closed the door on this major scam. They placed a moratorium on it in October of 1984. However, they allowed some loopholes to remain. In this respect they allowed a grandfather clause. In other words, if you and I had an agreement on the back of an envelope, Mr. Speaker, that agreement would be honoured. By October of 1984 some $1.5 billion of public money had been lost as a result of this cam. The amount is now $3.5 billion. In other words, since the Tories came to power and since the moratorium was put in place another $2 billion has been lost through this one major loophole.


Donald Paul Ravis: Come on!


Simon Leendert de Jong: It is true. The Hon. Member doubts what I say. He says: "Come on!" I invite him to check the figures of Revenue Canada. This moratorium caused the loss of an extra $2 billion when the Tories came to power.
We must now ask the question: Did we have $3.5 billion in new research and development in the country? No one in their right mind would claim that we have had an additional $3.5 billion in new research and development. It was nothing but a tremendous waste of money. Our universities are starving for funds, as is the National Research Council. Yet, they have been cut and cut again. We have blown $3.5 billion of public moneys for nothing as a result of what is called tax expenditures. Those are loopholes and ways of avoiding the payment of taxes.
I would now like to give some specific examples in this regard. We find that Northern Telecom chalked up $3.3 billion in sales in 1983 and showed $325 million in profit. Yet it managed to end the fiscal year without paying any taxes. We see that in 1982 TransCanada Pipelines Limited had $4.7 billion in assets with pre-tax earnings of some $182 million. Yet it paid just a 7 per cent effective tax.
We mentioned the case of Shell Oil, with assets of $4.7 billion and pre-tax earnings of some $302 million, not paying a cent of tax. How is that possible? Is that just?
The Budget-Mr. de Jong
Canadians are demanding a change, tax reform and justice. As a people we are not afraid to tackle the deficit, but surely Canadians have every right to expect that when we tackle the deficit the Royal Bank of Canada and Shell Oil will pay their fair share, rather than it being left on the backs of working Canadians.
How dare the President of the Royal Bank of Canada, Mr. Rowland Frazee, sent all of us a nice letter saying how much he is concerned about the deficit and how we must reduce it to save our country? He sits at the top of a corporation, a financial institution, which can get away without paying a cent in tax on over $300 million worth of profits. The gall of the man, the very gall of those who sit in high corporate boardrooms and dictate to us sanctimoniously that we should reduce Government spending-in other words, reduce social programs-and tighten our belts.
Of course Mr. Frazee and the leaders of the corporate sector say: "We have tax breaks so that we can create jobs. There is nothing illegal about them. We have them so that private industry can be the engine of economic growth". We have some grave doubts about whether it is an efficient engine of growth. Studies have shown that it takes some $77,000 in corporate tax cuts to create one job, but that general Government expenditures-in other words, direct government expenditures-create a job at $13,000. If we are really interested in creating employment, I suggest that it should not be done through corporate tax cuts but through general Government expenditures, direct expenditures and grants. It certainly is a heck of a lot cheaper.
I should like to refer to the fallacy that if the guys at the top do well, eventually they will reinvest in new plant and equipment thus creating more jobs. I have in front of me a study of the top 100 Canadian corporations. It reports their annual profit increases from 1981 to 1984. These corporations saw their profits increase by some 97 per cent or almost 100 per cent, almost double, from 1981 to 1984. I know many workers who would like to have seen their income, salaries or wages double in those few years. Be that as it may, these corporations have been doing quite well. However, have they been reinvesting in new plant and equipment? The figures show that in actual fact the number of people working for them has declined by some 3.1 per cent. Some job-creation strategy!
Defeating the deficit is now our major goal. We hear that from the President of the Royal Bank of Canada. We hear from Government Members that we must bring down the deficit. I do not disagree with them; indeed we should decrease the deficit. The amount of money going to pay interest is scandalous. Of course we have to decrease the deficit, but these folks across the way say that the reason for the deficit is that the country is living beyond its means and that we have to learn how to tighten our belts. Also, they suggest that our social programs are a little too rich and it is time that we cut back. How sad it is to hear this reasoning being enunciated in the House and in newspaper columns from day to day.
Let us look at the statistics on what we spend as a country, as part of the Gross National Product, on social programs-

March 6, 1986
The Budget-Mr. de Jong
housing, education, hospitals, unemployment insurance and welfare. We are one of the lowest in the western industrialied countries. We are lower than the United States, Germany, France, Italy, Belgium, Denmark, Holland and Norway. We are lower than all these countries; we are even lower than Italy.
When I hear the argument that we are living beyond our means and that our social programs are a little too rich, are they trying to tell me that people in Italy can afford a richer social program than we can? It is shameful that a country with our strength and resources should have food banks from coast to coast, people going hungry, starving and sleeping in the streets. Yet, these sanctimonious people across the way, the Frazees and the presidents of banks are telling us that it is still too much, that we have to tighten our belts and cut back on our rich social programs to control the deficit. What a sham. What a tremendous sham.
If the Royal Bank of Canada, Shell Oil and Northern Telecom paid their rightful share, perhaps we could have wiped out our deficit. Certainly it would not be as high as it is today, even if they paid a 10 per cent interest on deferred taxes. There is some $30 billion in deferred taxes out there. If we charged them 10 per cent we could reduce our deficit overnight by $3 billion.


An Hon. Member:: Not a chance.


Simon Leendert de Jong: Absolutely, not a chance, because they are the so-called engine of economic growth and if the guy at the top does well, supposedly it will eventually filter down. That theory is similar to the one which indicates that if the horse is fed a lot of oats, eventually the sparrow will get some. It is a disgusting theory. It is one of the major shams which is occurring today, because it has not worked.
Let us look at the figures of investments in the country since the Tories have come to power. We must remember that during the election campaign they said: "Elect us and international business will have such great confidence that we will have new capital flowing into the country".


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


Alfonso Gagliano: Mr. Speaker, I have a question for the Hon. Member. Lately we have been reading articles such as the one by Alain Dubuc in La Presse indicating that an individual earning $20,000 will be faced with a $500 increase, that an individual earning $30,000 will be faced with a $600 increase and so on. Yesterday in The Financial Post it was indicated that an individual making $40,000 would have an increase of $812, that an individual making $60,000 would have a decrease in tax of $1,201, and that an individual earning $150,000 would have a decrease of $5,470. Would the Hon. Member indicate whether he thinks it is fair that the rich receive tax deductions and the poor and the middle-class have to pay more?


Simon Leendert de Jong: Mr. Speaker, 1 thank the Hon. Member for his question. In the beginning of my remarks I quoted from The Financial Post and stated that it was not fair. Surely it is immoral, but it is part of the economic strategy that has been occurring, in which more and more is given to the wealthy and the rich at the expense of the poor.
Turning to the statement issued by the Bishops from which I quoted earlier, in their summation they indicated the following:
For the present economic crisis, as we have seen, reveals a deepening moral disorder in the values and priorities of our society.
The Bishops condemned the type of Budget with which we are dealing. The Government cut back on the services of the poor, raised the taxes of the low and middle income workers and so benefitted the rich. The Bishops call it a deepening moral disorder in the values and priorities of our society. The Bishops continue by saying:
We believe that the cries of the poor and the powerless are the voice of Christ, the Lord of History, in our midst. As Christians, we are called to become involved in struggles for economic justice and participate in the building up of a new society based on Gospel principles.
Unfortunately, the Budget we are dealing with today is a continuation of the moral disorder.


John Wise: Mr. Speaker, I believe I am entitled to a question or two. I am seeking clarification from the Hon. Member for Regina East (Mr. de Jong) who was quoting from some conclusions made by the Canadian Catholic Bishops. Would he clarify whether those comments were directed to the recent budget of the Minister of Finance (Mr. Wilson) or do those comments and observations refer to a previous budget? Yes or no?


Simon Leendert de Jong: As I indicated earlier in my remarks, Mr. Speaker, the statement was made in January, 1983.


Some Hon. Members:: Oh, oh!


Simon Leendert de Jong: The statement attacked an economic strategy that is surely no different. Had the Hon. Member and the Minister been in the House he would have heard the quotes I made from this document. He would have heard that recent economic policy revealed the primary objective is to restore profitability and competitiveness in certain Canadian industries. Is that not the same strategy as the one now when the Bishops stated that the present economic strategy is one of economic recovery through the engine of private industry? Is it not the same strategy that the Tories have now, that Lalonde had and that previous budgets had? Is there any difference?


John Wise: There certainly is, Mr. Speaker.


John Edmund Parry: Mr. Speaker, what does the Hon. Member for Regina East (Mr. de Jong) think of the budget setting a target only in the realm of the projected deficit? Could he tell us what he thinks of the underlying assumptions behind that
March 6, 1986

target and what he feels the true targets of a budget should
be?


Simon Leendert de Jong: It is obvious again that the real target of this budget-


John Wise: Which budget are you talking about?


Simon Leendert de Jong: It is true the target of this budget and of
previous budgets have been-


John Wise: The debate is on this budget.


Simon Leendert de Jong: -to allow economic growth by giving all sorts of tax deductions and tax loopholes.
The Minister stated that reducing the deficit was a major one. He gave us some figures. He had a few assumptions. He assumed a certain price for the price of oil. He assumed a certain interest rate. From this we have from the Minister a projection that the deficit would be reduced to a shade under $30 billion. Of course, the Tories must be crossing their Fingers that they do not have another Canadian Commercial Bank or a Northland Bank that will throw the projections out by another few billion dollars. These are very shaky figures.


John Wise: Your comments are a bit shaky, too.


Simon Leendert de Jong: Unfortunately, the Minister has not realized that if he can reduce unemployment by 1 per cent he will get an extra $2 billion. Why does the Minister not have a made-in-Canada interest rate policy, which the Tories talked about when they were in opposition, because every time that interest rates drops by 1 per cent the cost of the deficit gets reduced by $1 billion? There are definite, different alternate strategies in terms of dealing with the deficit. We violently disagree with the strategy adopted by the Government. The Bishops state that it is an immoral strategy. It is one based on the backs of the poor and the working people while benefiting the rich.


John Wise: That is 1982.


Simon Leendert de Jong: It is still true.


Mr. Mantha:: Mr. Speaker, I have a question for the Hon. Member for Regina East (Mr. de Jong). The New Democrats go around painting good socialist colours all over the place. I have people in my riding who are out of work. They cannot pay their union dues. They are on welfare and they find enough money to pay half the rates, hoping that the unions will get them jobs. The New Democrats take money from these union people to run their campaigns. They are taking money from the very, very poor. Can the Hon. Member answer that question?


Simon Leendert de Jong: Mr. Speaker, concerning contributions, I understand the amount paid for dues is around 5 cents a week. Why did the Royal Bank of Canada not pay any tax in 1982? Take a look at the type of contributions that bank made to the Conservative and the Liberal Parties. I ask the Member to explain to me how the Conservative Party with a budget of
The Budget-Mr. Nielsen
some $20 million last year raised some $10 million to $12 million from the corporate sector. You mean to tell me, Sir, that the $10 million to $12 million in contributions to the Hon. Member's Party were just contributions given with no expectations of a continuation in tax breaks? The worker who contributes to the New Democratic Party will have a guarantee that in this House of Commons someone will be standing up on his behalf drawing to your attention, Mr. Speaker, that the primary purpose of this Budget should be to create jobs. He will not be having someone, perhaps the Hon. Member and other Members standing, protecting and defending tax breaks to the Royal Bank of Canada which allow the Bank to earn over $300 million a year and not pay 1 cent in tax. That is the purpose of contributions. Sir.


Moe Mantha: Mr. Speaker, I would like the Hon. Member for Regina East to answer whether these people have a choice. Do they have a choice, Sir?


Simon Leendert de Jong: Mr. Speaker, it is a choice made by a majority vote within the local. If the majority within the local decide to affiliate and make a contribution to the New Democratic Party, that decision gets made. Might I ask again, the $10 million in corporate-


Moe Mantha: No.


Simon Leendert de Jong: I know he does not want to hear about this but I am going to tell him anyway. The $10 million in corporate contributions-


The Acting Speaker (Mr. Paproski):: 1 regret to interrupt the Hon. Member but the time for questions and comments is terminated. The Hon. Minister of National Defence.


Erik Nielsen: Mr. Speaker, I rise to participate in this debate in my capacity as Deputy Prime Minister and not as Minister of National Defence. I want to try to set the framework for what I am about to table next week in its global context.
In his budget last week, the Minister of Finance (Mr. Wilson) reminded all Members of the House of Commons, indeed, Canadians generally, that our strategy for economic renewal is based upon three fundamental principles. First, the way to create jobs is through private initiative. Second, good government does not mean more Government, it means more efficient government. Third, Canada's prosperity depends upon restoring the health of the nation's finances.
These are not principles the Minister of Finance invented last week. In fact, our Party espoused them throughout the 1984 election campaign, and our new Government reaffirmed them in an Agenda for Economic Renewal which the Minister of Finance tabled in November, 1984.
I want to address my remarks to the second principle, our commitment to more efficient Government and the manner in which that commitment is being realized through the process of program review.

March 6, 1986
The Budget-Mr. Nielsen
In his Budget, the Minister of Finance announced that the reports of the study teams to the task force on program review would be released on March 11, next Tuesday. I will be tabling those reports in the House on that day at 11 o'clock, Mr. Speaker.
The work of the task force on program review and its study teams fulfills a commitment the Government made when it was sworn into office, and an obligation I accepted personally when I became a member of this Cabinet. The people of Canada deserve good Government. In my view, they proved on September 4, 1984, that they wanted good Government by electing this Government. Part of the mandate we received from Canadians was to improve the management of government, to increase Government efficiency rather than its size, and to improve the programs of government rather than just add more programs. We, who sought the responsibility of governing this country, also promised to find new ways of doing things. Those new ways included involving Canadians from all walks of life in policy and decision-making processes.
The work of program review has been one mechanism to honour this mandate. As Members of Parliament and all Canadians will see next Tuesday, March 11, the work of the study teams on program review represents a service to the public which, I believe, is without precedent in the annals of Canadian public administration. The results of the work of these dedicated teams of individual Canadians, as represented in their reports, provide knowledge of how the federal Government functions in a manner which has never before existed in the history of this country.
I am always surprised by the litany of some Members of the House who claim we do not know where we are going or what we are going to do when we get there. In point of fact, we have been steering a very narrow and very deliberate course since the first days of this Government.
I remind all Members that I received the terms of reference for program review from the Prime Minister (Mr. Mulroney) just one day after the new Government was sworn in. Our basic agenda for economic renewal was established by the Minister of Finance (Mr. Wilson) in November of 1984. That agenda was reaffirmed in the Budget of May, 1985, and in the Budget of last week. I am pleased to say that some of these measures had their origins in the preliminary results of the program review process.
It should be evident to all honest observers that the Government is following the same track that it has been on since the last election. It should be obvious by now that our actions are consistent with the directions we told Canadians we would pursue in our bid for election. Even more heartening, it is very obvious from our successes in both economic and social policy that we know exactly what we are doing. Moreover, we have a Minister of Finance who knows exactly where we are going.
From the perspective of the program review process, this means eliminating overlap and duplication. It means developing programs that are simpler, more understandable, and more
accessible to the Canadians they are designed to help. It means reviewing and revising administrative, personnel, and management processes.
The results of program review are more than just improving the management of government. We are trying to remove serious obstacles to economic and social growth which have developed through decades of unchecked government. We are renewing the confidence of the Canadian people in their Government by making it work for them.
I want to be clear on one thing, however. The study team reports are not, by themselves, the sole source of wisdom available to Government in choosing new approaches and new instruments of change. The study team reports will influence Cabinet in making choices. They will help to provoke a more informed debate, and, in some cases, the proposals contained within them could be accepted unanimously.
The reports do not represent decisions which the Government has taken or is about to take, nor do they represent an articulation of government policy. They are a very valuable decision-making tool, and a perspective on government programs and services which has never existed before. We invited the private sector into the process of program review because we wanted a cross section of opinions, and because we wanted advice that was, above all, independent. The Government assumed that we would benefit greatly from the insights and experience of individual Canadians with backgrounds and credentials in labour, in large and small businesses, and from the professions.
You will find these insights and these refreshing viewpoints in the study team reports. The reports were prepared by 122 people from the private sector and provincial Governments, with the assistance of 99 federal public servants.
Mr. Speaker, there were 19 study teams in all. Each of them had three months to complete their investigations, undertake their analyses of findings, and develop conclusions for their report. The teams worked sequentially in that they commenced their work as soon as they were appointed. Thus, while each team took only three months to report, all 19 teams took a year to complete their activities.
In addition, I was asked in September of 1984 by the Prime Minister to undertake a review of regulatory agencies of the Government. The report of this review process is also being released at the same time as the study team reports since it relates quite closely to the work of at least one of the program review teams.
In developing proposals and options, study teams had to deal with an often confusing and contradictory array of programs and services. Within the limits of time and available information, the teams together compiled a management mosaic of about 125 federal departments and agencies involving approximately 170,000 public servants. The study team reports, which will be released next Tuesday, contain descriptions and assessments of 989 federal programs and services. In addition to these program assessments, study teams produced summary overviews which analysed specific issues or combinations of
March 6, 1986

programs. These are also included in the reports along with optional courses of action for the Government to consider.
It is my deep conviction, Sir, that the people of Canada have a right to the information contained in these reports. For too long, Canadians have had to find their own way through a maze of conflicting Government programs and services. For too long, Canadians have had no idea of what their tax dollars were paying for or who was benefiting from them. We are about to change that. The 20 volumes which will be released contain an image, a snapshot if you like, of the federal Government, more current, complete, and comprehensive than has ever been developed in the history of democratic governments around the world. At no time has the Government of Canada ever been as forthcoming or as open.
When I say the study teams did a thorough job despite their adherence to a very rigid time schedule, I am referring to the many thousands of pages of study team reports. If Members opposite take the time to read these reports, they will find the legacy of Governments of the last 20 years. They will find that the cost of burdensome Government regulations has been underestimated by more than 50 per cent. They will find that no one really knew the extent of Government property holdings, or how much it cost in operating funds and personnel just to look after them. They will find that the cost of a ten-dollar hammer might approach $50 by the time all the procurement forms are finally filled out.
I hope the House will indulge me by allowing me to exceed the allotted time in order to inform it fully of the framework within which these reports are being tabled next week.
I must emphasize that the study team reports are not just a list of horror stories of the kind produced by the Auditor General in his annual reports. They are reasoned, analytical assessments of the programs which came within the terms of reference of each of the study teams. Each study team received terms of reference which, practically speaking, gave them carte blanche to look at just about anything relevant to their review process. As they went about their work, they started discovering things and developing conclusions that did not quite fit into their program review reports, but these concerns arose again and again throughout the entire review process. It soon became evident to the private sector advisory committee that these issues warranted special consideration and a focus of their own.
What are these issues that tend to be so pervasive, overriding, and particularly troublesome for public sector managers? What is the hidden and so far incalculable cost to the public? For obvious reasons, people involved in the program review process began to call them the generic issues, and it is these issues which must be addressed before the full benefits of the review process can be achieved. First among these issues is a phenomenon which was termed the universal subsidy. This is a constant theme running through virtually every study team report. The teams report that successive Governments used subsidies to solve many different problems, to equalize between the haves and have-nots, to support failing enterprises,
The Budget-Mr. Nielsen
to provide essential services, and to encourage specific economic and social behaviour in companies as well as individuals. Mostly, these subsidies rewarded and supported activities rather than results.
As a consequence of this phenomenon, the Canadian economy has become like Gulliver, tied down by a multitude of Lilliputian subsidy ropes, each rope infinitely thin yet together immobilizing. To put it bluntly, past Governments in this country have encouraged Canada to become a nation of program junkies. As long as this situation prevails, I for one will be concerned about our ability to compete in international markets or to develop an economy which can adapt to changing realities.
The universal subsidy has been allowed to flourish thanks to another phenomenon which emerged from the program review: inadequate knowledge of the fiscal totality. Until this program review, no Government has had a comprehensive overview of the impact of tax provisions and statutory and non-statutory expenditures. The program inventory compiled to support the review process demonstrated the extraordinary importance of tax provisions which comprise 39 per cent of total expenditures in relation to the other categories. As a consequence, new program proposals have never been challenged or debated within the total fiscal context. Further, there has been insufficient recognition that tax expenditures constitute expenditures as large as all statutory program costs.
The third generic issue uncovered by the study teams relates to program evaluation, the procedures for evaluation within the federal Government itself. Routine Government program evaluations were found by study teams to be inadequate for the work of program review. These evaluations tended to be selfserving and were inclined to overlook the fundamental rationale for programs, concentrating instead on impact and delivery criteria. Further, departmental evaluations suffered from tunnel vision, with their focus on internal programs to the exclusion of similar activities of other government Departments and agencies.
It is primarily in the context of these three generic issues that federal expenditures have been growing with the momentum of a rolling snowball. However, study teams also noted a number of other generic issues which tend to impede the overall performance of Government. They include the power of inertia in a system as large as the federal Government, and the lack of institutional memory, which means that Government is constantly reinventing the wheel or developing solutions to problems regardless of the impact of previous solutions to the same problems. Perhaps the most intractable issue of all is the well-known deficiencies in the personnel system which tie the hands of personnel managers and reward longevity rather than productivity.
There are no easy solutions to these generic problems, but solutions must be found. These issues have been routinized and entrenched in successive government bureaucracies for the past two decades but they must be dealt with, and soon. As a Government, we must support a new attitude for Canada's Public Service, an ethic based on productivity improvements,

March 6, 1986
The Budget-Mr. Nielsen
greater efficiency and the reallocation of priorities within the limited resources available. To put this issue in the sharpest perspective, it is not individual public servants who have created these problems, it is the environment within which they try to function to the best of their abilities which is at fault.
As I reviewed these issues through so many of the study team reports, I was struck by the need to improve the system of management control and accountability if we are to improve productivity within the Government generally. As I mentioned earlier, if we are to correct the many problems identified by the study teams, we must first develop a system for proper management accountability.
All Members of this House are aware of some of the decisions which have been made by this Government that have arisen directly out of the work of the study teams. These have been announced over the past year, beginning with the May, 1985 Budget tabled by my highly-esteemed colleague, the Minister of Finance.
I do not propose to list all of these decisions today or identify all the Government's actions which have arisen, directly or indirectly, out of the work of the 19 study teams involved in the program review process. Decisions in the areas of agriculture, job creation and training, and services and subsidies to business were announced in this Government's first Budget. Subsequent announcements dealt with the Canada Assistance Plan, veterans' programs, housing and real property management. Personally, I announced a major initiative with respect to a national strategy for regulatory reform just two weeks ago, which was the subject matter of the remarks of our House Leader just yesterday. These major announcements are but the tip of the iceberg of activities which are a direct result of the program review process. The study teams, in simply doing their work, have raised the awareness of both politicians and bureaucrats on issues that need resolving and problems which have to be addressed.
The impact is pervasive. There will be very few Government decisions announced over the next few years which have not been influenced, positively or negatively, marginally or totally, by the reports that the study teams laboured so intensively to produce. Sir, the first stage of the process of program review that has just been completed is a credit to the people from both private and public sectors who worked so diligently throughout the past year. They have captured a snapshot of the federal Government for which there is no parallel. I believe that the storehouse of information which has been placed on the public record will keep public administration and political science academics, as well as the general public, interested for many years to come.
If you examine the basic themes of the Budget as put forward last week by my colleague, you will find that we want to restore fiscal responsibility, we want to bring the deficit down to manageable proportions, and, ultimately, eliminate it completely. We want to improve the current taxation system while at the same time restraining government expenditures.
We want to help those who are in need today as well as protect our ability to help those who might be in need tomorrow.
In this regard, I believe that the stellar accomplishments of the Minister of Finance have had fundamental support in the work of program review as pursued by the 19 different study teams. If we can create programs that are flexible, that meet real needs, and that are responsible to their clientele, then we have done something that no Government over the past two decades has been able to accomplish.
While that may be a credit to this Government, it is a bigger credit to the people from the private sector and the public servants who worked so diligently during the past year on the production of these study team reports. The decision-making process that was designed to deal with the findings and options presented by the study teams assures the prerogative of Government to act independently and responsibly. By tabling these study team reports next Tuesday, it is my hope that our Government can provide all Canadians with a further opportunity to think about and to influence government decisions in an open atmosphere, where mutual respect is the order of the day.


Some Hon. Members:: Hear, hear!


The Acting Speaker (Mr. Paproski):: Questions or comments? The Hon. Member for Vancouver East (Ms. Mitchell).


Margaret Anne Mitchell: Mr. Speaker, I did have a question, and 1 would certainly like to acknowledge from the Minister's report the tremendous volume of work that has gone on in these 19 study team reports. I would like to ask him a question related to the process. I assume there were 19 committees of some kind established. He refers of the private sector. I wonder if he could tell me who were on these committees, and 1 am particularly interested of course, this week being International Women's Week, in whether or not there were 50 per cent women on the committees?


Erik Nielsen: Mr. Speaker, I am sure that the Hon. Member would not expect me to name a full response to her question today. There were 122 members of the private sector. All of that information in detail will be part of the published volume that will be tabled next Tuesday at 11 o'clock. I assure her that the composition that she is inquiring about now is addressed in explicit detail.


Margaret Anne Mitchell: Could you not give me an idea of how many women?


The Acting Speaker (Mr. Paproski):: The Hon. Member for Glengarry-Prescott-Russell (Mr. Boudria).


Don Boudria: Mr. Speaker, a question on the same topic as the Hon. Member from Vancouver. Would the Deputy Prime Minister confirm that in the case of the agricultural study team there were no members from East of Montreal, no members from West of Toronto, no women and no youth, and
March 6, 1986

no one from the agricultural sector other than an official from a sugar company that sat on that team?


Erik Nielsen: Again, the hon. gentleman will see with precise detail exactly who were on these study teams and where they were drawn from, but 1 can assure him that the study teams consulted broadly throughout the country with all levels of Government, with industry and with producers in the case of agriculture.
I should have mentioned to the Hon. Member who asked the last question that I am deeply indebted, as should we all be, to the work of the private-sector study team leader who headed up the separate study on regulatory agencies, Louise Martin.


Alfonso Gagliano: Mr. Speaker, I know that the Hon. Deputy Prime Minister (Mr. Nielsen) cannot give me an answer today in full detail and I am waiting anxiously for next Tuesday, but could he indicate to me today if the report will include the Federal Development Bank?


Erik Nielsen: There are references to that particular program in at least two of the study team reports that will be coming down. The answer is yes.


The Acting Speaker (Mr. Paproski):: Since there are no more questions or comments, debate.


Don Boudria: Mr. Speaker, I am pleased to participate in debate on the Budget. I would like briefly this afternoon to speak to you of issues that affect my riding, more particularly I would like to talk about the farming community, the youth of my constituency and the industry in the riding that I represent. This includes textiles, footwear and many others in that sector. I would also like to discuss middle-class families and how they are affected by this Budget. First of all 1 want to talk to you about the agricultural sector.
You probably remember only too well, Mr. Speaker, that during the last election campaign the Conservative Party made several promises to the people of Canada. I draw to your attention a booklet concerning those promises. I just happen to have a copy of it here in front of me. It is entitled 338 Tory Promises. This is a complete list of all the major national promises that the Tories, in the last election campaign, made to the people of Canada. Did it ever promise things. It promised to the people of Canada-and I notice that the Hon. Member for Nipissing (Mr. Mantha) across the way is paying attention to this-113 different things involving spending more money. There were five promises involving the spending of less money. Two promises to increase revenues and twenty-six promises to decrease revenues.
What did the Government do? The Government increased the deficit and claimed that it was being reduced. The Government made several cut-backs and increased the staff of the Prime Minister (Mr. Mulroney), among other things. As you see, in general the Government made promises that it could not live with, and now of course and it should not be to anyone's surprise, least of all the Government's, it cannot
The Budget-Mr. Boudria
deliver on the package it presented to the people of Canada during the election campaign.
This Budget is actually not the second but the third budgetary document of this Government. The first document, of course, was the expenditure and program review of November 8, 1984, a day which, of course, has become affectionately known as black Thursday-November 8, 1984-because of all the cut-backs in this particular document.
What specifically did the Government cut? In the area of agriculture, to give you an example, the Government in 1984 cut $6.2 million from the dairy program, and $9.4 million from the operations of Government Departments. It closed down Canagrex and cut off $6.6 million there. It deferred some capital projects, and that cut $8.4 million off the Budget, and increased service fees in the amount of $32.3 million for a total of $62.9 million.
In the May 23 Budget of last year the budget for agriculture was reduced by $50 million annually starting in 1985-86. Of course that means there is another $50 million that was cut off in this year's Budget. The Government increased by 2 cents a litre the excise tax on gasoline and diesel fuel. That of course runs in direct contradiction to the promises this Government made during the last election campaign. We saw tax increases on cigarettes and liquor, and this of course affected the grape-growing industry of the Province of Ontario which 1 represent. What happened on this whole issue? Let me outline for you a comparison of election promises with delivery by the Government. It promised to reduce the price of farm fuels by 20 cents a gallon, by removing 9 per cent federal sales tax and by not collecting the current excise tax. Do you know what the Government did instead? It increased the price by 2 cents a litre on May 23. The Government said it would extend and expand the Farm Credit Corporation, with special interest rate subsidies. The only thing the Government did there, of course, is it decreased the effective rate of the FCC from 14 per cent to twelve and three-quarters per cent only for those individuals who were financed at a rate of 14 per cent and less.
We have presently in this country 25 per cent of all farmers who are in financial difficulties. This means that roughly or
65,000	farmers in Canada, are in financial difficulty.
In the last Budget the Government announced what it considered to be new measures to improve the farm sector. It promised measures that would partially defer the repayment of loans for 5,000 farmers. Earlier this week I asked the Minister of Agriculture what he will do for the other 60,000 farmers who are also in Financial difficulty. During the election campaign the Conservatives said they would assist farmers who were in difficulty, but they did not say at the time that they would only assist a small number of them while ignoring the rest.
The Budget we are discussing today provides for a 1 per cent increase in the federal sales tax. This represents a large increase to a farmer buying a $100,000 silo. It will cost another $1,000 for that purchase. When one analyzes the

March 6, 1986
The Budget-Mr. Boudria
federal sales tax increases as they affect the farming community, the amount of tax increase is greater than the budgetary allocation the Government has made to assist farmers. Obviously, the farmers come out with less after the Budget than before the process began.
Let me talk briefly about the disadvantaged people in our society. Perhaps Leonard Shifrin, a well known commentator who writes for The Toronto Star and other papers, put it best when he said:
Indeed, some of the poor will actually be a few dollars better off as a result of Wilson's new offering, though others will be worse off.
A family of four with a $15,000 income is well below the poverty line anywhere in Canada. But under our preposterous tax system, it pays more than $1,000 of income tax. And the surtax Wilson is now introducing will add a further $20 levy.
At the same time, the 1 per cent in the federal sales tax will pile another $50 or so onto the family's tax load.
Whether one is rich or poor, one has to repair or replace the refrigerator or other major appliance when it breaks down. The fact is that the least advantaged people in our society are paying a disproportionate amount because they can least afford that tax increase that some of us may think is very small.
On the night of the Budget the Leader of the Opposition said:
It's becoming impossible to improve one's quality of life in the face of this kind of Government attack.
He said that those from 30 to 50 years of age earning from $15,000 to $40,000 a year are the ones who are hit right between the eyes.
1 want to talk about the middle income people in our society who are so often hit by tax increases. They must bear the burden. The middle class seems to be getting smaller and smaller. The number who are well off seems to be increasing and there are more and more poor people in our country that we consider to be affluent.

Mr. Speaker, I should like to deal now with the problems young people are facing in our society. You are aware that a few days before the Budget speech, a report entitled "Youth: A Plan of Action" was tabled in the House in which the Canadian Senate suggested extending the Katimavik Program to offer still more help to young Canadians who need it most. What did the Government do?
In its Budget, it started by dispossessing the Minister of State responsible for Youth of her portfolio or purse, thereby eliminating her department for all practical purposes. From now on, the Minister will have no money and no budget.
Today, in the House, we heard an Hon. Member saying that in a document he had read, the Minister herself was quoted as saying that her responsibility was simply to convince young people to join the Progressive Conservative Party. Mr. Speaker, it is a disgrace to see a Minister of the Crown forget about
young Canadians and think only of the political gains the party in Government could make.
Illiteracy is another problem which affects a great many young Canadians. It is a very serious problem which most Canadians and a great many of their elected representatives would rather forget then deal with.
In my federal riding of Glengarry-Prescott-Russell, there are quite a number of my constituents who just cannot read, a situation which is not unique, Mr. Speaker. I am sure that although Hon. Members opposite do not seem to be too concerned with the issue, if they could think it over for a few minutes, they would realize that our educational system unfortunately has created a situation in which a great many people are facing the same problem.
Mr. Speaker, the most amazing thing is that such a great proportion of illiterates are young people.
And I call your attention to the following recommendation contained in the Senate report which reads as follows:
Our committee supports the proposal of a national campaign against illiteracy.
The Committee feels that the recommendations in the "Obstacles" report that have not yet been implemented should be, and that it is important to acknowledge the special needs of the young who have learning problems or handicaps.
Mr. Speaker, I call your attention in particular to the areas where it is seen that this Government is attempting to make quite significant budget cuts in social programs.

I listened to the discourse of the Deputy Prime Minister (Mr. Nielsen) in which he spent considerable time of the House telling us how he and others within the Governement are trying to find ways to cut back Government expenditures and make the system more efficient. One cannot help but wonder how a Governement that encourages blatant patronage, as the Tories do, can talk honestly and sincerely about cutting unnecessary expenditures.
I see that one of my Conservative colleagues has woken up. I want to remind him that when my constituents who live near the national capital and work on Parliament Hill or elsewhere in the public service see their salaries and benefits being cut back and their jobs abolished, they do not take too kindly to what we heard earlier today about the patronage of the Government.
[ Translation]
Mr. Speaker, we have seen a 57 per cent increase in the estimates for the Office of the Prime minister (Mr. Mulroney). Where are the Budget cuts in the Prime Minister's Office? We fail to see any. There were 30 ministers in the previous Government, the new Government now has 40. But the same Government is telling us that we must slash whatever expenditures they consider unwarranted.
I put it to you, Mr. Speaker, what am I supposed to tell my constituents? What should I tell Mr. Remi Saint-Jean, for
March 6, 1986

instance, one of my constituents who lives in Cumberland, Ontario, and works for the Department of Public Works and whose job as a janitor is threatened? What am I going to tell him? Am 1 going to tell him that the Minister will make sacrifices, that the Government will make sacrifices if he loses his job? No, Mr. Speaker, this will not happen. The Government still will have 39 or 40 Ministers, 39 or 40 limousines, 39 or 40 executive assistants, and so forth, constantly giving to those who are well off and taking away from middle income people and the most in need.

A few days before the Budget came out, Canadians became aware of a rumour that the Government might increase gasoline prices. The Hon. Member from Mississauga is chuckling at that proposition. But we know of course the Government did not intend to make a major increase in gas prices at that time. It was a deliberate strategy, in my view. I submit to you, Mr. Speaker, that the Government attempted to scare the people of Canada by participating in the propagation of these kinds of rumours so that when the Budget was not quite as offensive as the rumours-in which the Conservatives likely participated- indicated, then Canadians were supposed to be grateful. They were supposed to be grateful for the fact that there was no tax increase on gasoline.


Jean-Robert Gauthier: There is one percent.


Don Boudria: I recognize the fact, of course, as my colleague the Hon. Member for Ottawa-Vanier (Mr. Gauthier) pointed out, that the federal excise tax increase will include gasoline, to the extent of 1 per cent, which really means one half cent per litre. We should all be aware of the fact that the Government, through its policy of not encouraging Petro-Canada to reduce the prices on gasoline, is indeed causing a situation of serious hardship on the taxpayers of Canada.
Across the border-and I happen to have been in the United States last weekend-gasoline was selling for approximately 90 cents a U.S. gallon. There are parts of this country where we are paying almost that much, in Canadian dollars, of course, for a litre of gasoline. Indeed, we are paying in the 65 cents to 70 cents a litre range in some parts of the province of Quebec, and 55 cents in my riding, only 10 miles from the Parliament Buildings. That price for gasoline is totally unjustified. The people of Canada expected that the Government, as part of its budgetary measures, would at least have a suggestion in its Budget that it would be cutting off the increases-


The Acting Speaker (Mr. Paproski):: The Hon. Member's time has expired, but he is such a popular Hon. Member that I am sure the House will allow him to continue until six o'clock. Is it agreed?


Some Hon. Members:: No.


The Acting Speaker (Mr. Paproski):: Questions and comments. The Hon. Member for Ottawa-Vanier (Mr. Gauthier).
The Budget-Mr. Boudria


Jean-Robert Gauthier: Thank you, Mr. Speaker. I would like to take this opportunity to congratulate my colleague for Glengarry-Prescott-Russell (Mr. Boudria) on his excellent speech.
I am somewhat familiar with his constituency and I know that he represents a large number of medium and low income families. Since the Government has now changed the definition of the poverty line by lowering it arbitrarily to $15,000 as this is the cut-off level for certain Government programs according to the budget papers, and since 1,538,000 families now receive the child tax credit, whose cut-off level was set at $23,500, and this Budget provides a prepayment of $300 for one million families next November, can the Hon. Member tell us what it will mean for the standard of living of a family in his constituency that 538,000 families will not eligible for this prepayment. For instance, in his constituency, is a family with four children and an income of $17,000, which will make this family uneligible to the prepayment of the tax credit next November, not just as deserving as a family with one or two children and a $15,000 income? Why is this Government insensitive to the fact that 1,538,000 families receive the tax credit and why has the Government arbitrarily decided to exclude 538,000 of these families? Has the Hon. Member anything to say about this?


Don Boudria: Mr. Speaker, the Hon. Member for Ottawa-Vanier (Mr. Gauthier) is raising a very valid point. Naturally, someone in my constituency who has an income of $15,002 rather than $14,999, especially if he has a large family, needs the cheque as much as the family earning a few dollars less. This decision is extremely arbitrary and very unfair for my constituents since a great many of them have low or medium incomes. 1 am sure that the Hon. Member for Argenteuil-Papineau (Mrs. Bourgault), whose constituency is close to mine, agrees with me, and I trust that the Deputy Prime Minister (Mr. Nielsen) will let her speak later on. If he allows her to speak, I am convinced that she will want to make a few comments.

This Government will be remembered for tunagate, deindexation, patronage, free trade when it promised the opposite, privatization, lay-offs in the Public Service, bank failures and Ministerial resignations. I say to those Hon. Members opposite that this is not my Government. It is the Government of the Party in power. I may not even claim to like it. But it is goofing up, messing up so many things that I ask those Hon. Members to pick themselves up, get themselves organized and try to make this country work. Investors across the world are losing confidence in the Government because of its activities and because of the way it has gone about totally removing the confidence everyone had. In so doing, it is creating damage not only to itself-and I do not particularly care about that part of it-but to all of us in this House. The actions we saw today are an example of that. The Government is creating damage and that Party should pick itself up by its bootstraps and try to at

March 6, 1986
Adjournment Debate
least act as if it knew what it was doing and run this country appropriately.


The Acting Speaker (Mr. Paproski):: If Hon. Members wish to ask the Hon. Member questions, he has four minutes left for tomorrow. He is such a popular Member, I know everyone here would want to ask him a question. Please come back tomorrow.



PROCEEDINGS ON ADJOURNMENT MOTION

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

Mr. Gabriel Fontaine (Levis):: Mr. Speaker, on February 14, 1986, during Oral Question Period, I asked the Minister of Finance (Mr. Wilson) whether he was going to give us a balanced Budget, a Budget that would try and reduce the deficit. We know that the current cumulative deficit totals $230 billion, a deficit accumulated by the Liberals as a result of their social policies.
This deficit has definitely discouraged investment by our business people, and I am talking about both small businesses and large corporations. The deficit also puts us in an untenable situation in the long term. A country is a little like a family or a business. It cannot always afford deficit financing, something our predecessors have never understood.
However, Mr. Speaker, a deficit of this size, a deficit of $230 billion, is a drain on the savings of Canadians and puts upward pressure on interest rates. Interest rates have increased so much in recent years because of the previous Government's enormous deficit.
To visualize what a deficit of $230 billion means, suppose we divide it by the population of Canada, which is 25 million, which gives us a deficit of $9,200 for every Canadian man and woman, including Canadians less than a year old and those who are nearly 100. That is what a deficit of $230 billion means.
The message given by the Minister of Finance was very clear: in 1984-85, we had a deficit of $38 billion, after last Liberal Budget. Last year, we announced a deficit of $33.8 billion and we remained within this estimate. It was the first time in twenty years that a Minister of Finance managed to meet his own estimates. The present Leader of the Opposition (Mr. Turner) did not, nor did any of the other former Ministers of the Liberal Government. This year, we announced a deficit of $29.8 billion, and by 1990, we expect to have reduced the deficit to between $11 billion and zero.
I would like to quote a national accounting firm, Price Waterhouse, on the deficit we are going to reduce this year. Now this company can certainly not be accused of any political involvement, and in its tax bulletin published under the heading "Attacking the Deficit", it says: "The Government provides 70 per cent of the ammunition and taxpayers 30 per cent." This according to Price Waterhouse, a national auditing, accounting and consulting firm.
Over the last eighteen months we have demonstrated the strength of our first Budget. Unemployment has dropped from 11.7 per cent to 9.8 per cent. Our first Budget gave us 580,000 new jobs, and 156,000 of these were in Quebec. We created 9,750 jobs per month in Quebec. The Liberals created 475. When we brought down our first Budget, the Leader of the Opposition said contemptuously that the Budget would lose us between 200,000 and 300,000 jobs. We created 560,000. The Leader of the Opposition was out by 700,000 quite a difference!
And besides that, Mr. Speaker, we have set an example. Our Prime Minister (Mr. Mulroney) did what the Leader of the Opposition refused to do, and took a $20,900 cut in salary. Our Ministers and our Members have accepted cut-backs of $10,000 and $1,000 respectively, and we have introduced incentives for small- and medium-sized businesses.
Contrary to what has been said, we lightened the tax burden of small- and medium-sized businesses and we removed the
12.5	per cent dividend tax imposed in 1981 by Mr. Mac-Eachen, a fact which my colleague did not mention in previous speeches.
In conclusion, Mr. Speaker, the deficit will reduce the cost of money, and that is something the Liberals did not dare explain. Indeed, Mr. Speaker, Canadian men and women will pay $2,000 less on a typical $50,000 residential mortgage, and our businessmen will pay less in interest.
That is the kind of effort we have made to control the deficit and boost the economy. I commend the Minister of Finance (Mr. Wilson) for his Budget aimed at restoring financial stability.


Mr. Chuck Cook (Parliamentary Secretary to Secretary of State for External Affairs):: Mr. Speaker, I find myself in rather a quandary. After a brilliant statement of that nature, I am not sure whether it requires any response whatsoever. However, perhaps a few points should be re-emphasized.
The Canadian economy performed substantially better in 1985 than most observers anticipated with real GNP growth of
4.5	per cent. The unemployment rate declined to 9.8 per cent
March 6, 1986

in January of this year. Since September, 1984, 580,000 jobs have been created.


Alfonso Gagliano: You don't know how to count.


Charles Henry (Chuck) Cook: It the Hon. Member opposite would listen to those figures, he would realize that we have to be doing something right.
Since the fall of 1984, great progress has been made in controlling government expenditures and reducing the deficit. This restraint resulted from eliminating or reducing Government programs, improving management procedures and increasing Government efficiency. As well, steps have been taken to increase the efficiency and fairness of the tax system. These changes, combined with some increases in tax rates, will over the medium term contribute to further reducing the deficit.
As a result of these initiatives, the net public debt, which averaged almost 23 per cent per year from 1974 to 1984, will grow by only 17 per cent this year and by less than 10 per cent in 1987-88. Those are the important figures for the public to know, those are the important figures for the public to consider.


TERRORISM-INTERNATIONAL SECURITY MEASURES- CANADA'S POSITION
Bill Attewell: Mr. Speaker, on December 2, 1985, I rose in the House to ask a question of the Secretary of State for External Affairs (Mr. Clark) on how Canada could bring pressure to bear on countries to tighten security measures and to take other strong steps to eliminate terrorism and hijacking.
My question was prompted by the tragic deaths of 59 people, including two Canadians, Valina Leonard and her infant son, Andrew, during the hijack and subsequent Egyptian commando raid on Egypt Air flight 648 last November 24. The hijacking of this flight was only one of a number of terrorist incidents in 1985.
On December 27, 1985, 19 people were killed and many injured in almost simultaneous attacks on the airports in Rome and Vienna. It was the thirteenth major terrorist attack in the world causing loss of life in 1985. Regrettably, 1985 became a period of resurgence for terrorism-a year of the assasins.
Terrorism also came closer to home for Canadians. On March 12 of last year, Claude Brunelle, a Pinkerton guard at the Turkish Embassy here in Ottawa, was killed, and the Turkish Ambassador, Coskun Kirca, was seriously injured during an attack on and the seizure of the Embassy by three self-proclaimed members of a group called the Armeniam Revolutionary Army. As a result, Pinkerton security guards were replaced with RCMP special constables.
Subsequently, authorities in Toronto and Montreal received calls allegedly from the Armenian Secret Army for the Liberation of our Homeland, threatening bomb attacks on the transit systems of both cities, unless the three held for the Ottawa
Adjournment Debate
attack were released. Fortunately there were no bombs. I used the word "allegedly" just a moment ago because no proof exists that the Armenian community was involved in this threat. As a matter of fact, I had two meetings with executives of the Armenian Community Centre in North York, including the President, Levon Hasserjian. They were distressed, to say the least, at these aspersions cast on that great community of hard working, decent Canadians.
On June 23, 1985, Air Indian Flight 182, en route for India from Canada exploded and plunged into the sea off Ireland, killing all 329 people aboard. On the same day, CP Air Flight 003 flew from Vancouver to Tokyo where some passengers were to transfer to an Air India flight for Bombay. Two Japanese luggage handlers were killed when a bomb hidden in luggage exploded.
After the Air India tragedy, the Deputy Prime Minister (Mr. Nielsen) said:
Wc will not allow this country to become a killing ground for international terrorism.
What has happened in Canada and to Canadians is just one piece in the world mosaic of international terrorism. We have the killings at the Rome and Vienna airports, the hijacking of the Italian liner, Achille Lauro, and the murder of Leon Klinghoffer, the hijacking of TWA Flight 847 to Beirut, assasinations and bombings. There are many instances of terror. Terrorism is a declaration of war against the western world, and it threatens us all. It threatens Canadians on their home ground.
In January, 1986, security measures were increased at the Ottawa International Airport and the Pearson International Airport in Toronto. One of the difficult decisions we face as members of an open society is how to protect ourselves and our society from the threat and violence of terrorism, while still protecting those precious freedoms which we, in our society, guard so carefully.
What can we, as Canadians, do to combat international terrorism? On January 10, 1986, the Prime Minister (Mr. Mulroney) made a statement which I will quote:
Those who murder and maim innocent people, and who bring anarchy to civilized society, should have no sanctuary, no comfort and no indulgence.
On January 30, 1986, Senator Kelly rose in the other place and proposed a special committee to study international terrorism because, as he said:
We do not know enough about the extent to which terrorist groups are locating or have located in Canada, and I think we should know more. I do not think we know enough about the actions Canada can and should take to combat international terrorism.
One group will be taking action this Tuesday, Mr. Speaker, the North American Jewish Students Network Canada. A delegation of students from across the country will come together in Ottawa to take part in a one-day student mobilization effort against terrorism. This day-long event will be the culmination of an intensive nation-wide campaign against terrorism.
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March 6, 1986
Adjournment Debate
I have had the pleasure of dealing with Network on several occasions, most recently to celebrate the release of Anatoly Shcharansky with Naomi Noyek, the chairperson of Anti-Terrorism Day 1986, and Dan Ronen, the chairperson of Network's Political Action Committee.
On March 11, these students will be meeting with Members of Parliament, holding a memorial for victims of terrorism on Parliament Hill at 2 p.m. at which Mr. Edward Leonard and his Member of Parliament, the Hon. Member for Bow River (Mr. Taylor) will be present. A panel discussion on international terrorism with students and Members of Parliament will be held at 3.30 p.m.
I commend Network to my colleagues in the House of Commons and the other place, and I hope they will find the time either to meet with the students on that day or, if the schedule does not allow, at least to focus their attention on the issue of international terrorism.
No society or individual is immune to terrorism. It is time for Canada to take a leading role in combating this insidious cancer of terrorism.


Charles Henry (Chuck) Cook: Mr. Speaker, speaking before the Memorial Fund Committee on November 3, the Secretary of State for External Affairs (Mr. Clark) stated that freedom to travel safety was the very essence of what international order was all about, and that there was a real danger that global terrorism would come to dominate the international order. In Canada we have been painfully aware of the tragedies visited upon us by international terrorism and, as the Secretary of State for External Affairs said, we intend that Canada should be in the forefront of countries seeking new initiatives to combat it.
The international community has become sensitized to the issue. In specialized bodies such as the Milan Crime Conference and the International Maritime Organization, resolutions have been passed condemning international terrorism. On Friday, December 6, for the first time, a strong anti-terrorist resolution was unanimously adopted at the United Nations General Assembly. It urged the further development of international co-operation on the prosecution and punishment of acts of hostage taking and abductions as manifestations of international terrorism.
Canada is determined that the scourge of international terrorism should come to an end. We have taken steps within the country to strengthen the security of our airports, and more will be done. Canada deposited its instruments of ratification of the U.N. Convention on Hostage Taking on December 4 and is undertaking negotiations with a number of countries to establish or strengthen extradition arrangements, an essential step in deterring potential terrorists.
More needs to be done. Despite the blows that have recently been struck against international terrorism, the phenomenon is by no means defeated, and the threat to the international order
and to civilized international conduct is still grave. I must emphasize that Canada remains determined in dealing with the immediate impact of this tragic phenomenon. Canada will come to grips with its underlying causes and will do everything possible to ensure that Canada's airports and ships remain safe for Canadians to travel anywhere.
[ Translation]


UNEMPLOYMENT INSURANCE-DIFFICULTIES FACING EARLY RETIREES. (B) SCOPE OF REGULATION
Alfonso Gagliano: Mr. Speaker, last February 25 I put a question to the Deputy Prime Minister (Mr. Nielsen). According to a report by the Office de la construction du Quebec, 5,432 pensioners will not be entitled to unemployment insurance, despite the fact they have paid premiums.
Mr. Speaker, we seldom get answers from the Government side, but now and again they are so illogical that we have to raise the issue again on the late show, we simply have to try again in the hope of some clarification.
Mr. Speaker, the illogical answer was: "The matter is before the Forget Commission and they will be reporting in due course." Mr. Speaker, if the Government were really serious, if the Government really wanted to wait until the Forget Commission has dealt with the problem, why not wait until the Forget Commission complete their work and make their report public? Should the commission report suggest that retirees did not have the right to collect unemployment insurance after working and paying premiums, then they would say: Well, according to the report, such and such regulation applies.
However, Mr. Speaker, without notice or comment, an unfair and insensitive regulation has been enforced since January 5.
Mr. Speaker, particularly in the construction industry there are people between 50 and 55 and even 60 who may have decided to accept early retirement in 1981, 1982, 1983 or 1984. A worker might have figured he would be eligible for monthly payments from his retirement fund contributions, or again he might have worked a few weeks in the summer when the weather is fine and, at the time of early retirement, this work would have made him eligible for unemployment benefits to supplement his income and take care of his children. As a matter of fact, Mr. Speaker, I know specific cases of people in my riding who have retired early from construction jobs and still have children attending high school or university.
It is not fair for these two or three people who accepted to take an early retirement that the Government decided on January 5, 1986 to cut off their unemployment insurance benefits. Naturally, this means that they will not be able to send their children to university, and this is why I find this decision unfair, Mr. Speaker.
March 6, 1986

In closing, 1 would like to quote for the record from a report of the Office de la construction du Quebec, which clearly states that the worker who reaches the age of 65 is no longer protected by the Unemployment Insurance Act. For a retired worker to be affected by the recent changes to the unemployment insurance regulations, he must be under 65 and his annuity must exceed $321.75 a month. In such a case, he will no longer be entitled to unemployment insurance benefits. Can someone live with $321.75 a month nowadays, Mr. Speaker? It is ridiculous. In fact, the Office says:
We can establish at about 6,800 the number of pensioners whose monthly income exceeds $300 a month and who are under 65.
Half of them are under 60, Mr. Speaker.
However, in the same report, Table 1 shows that, in 1984, 5,432 pensioners registered hours of work during the year, and we can presume that a very high proportion of them are under 65. This is why we say that, realistically, at least 5,000 construction workers in Quebec are penalized by these unfair and unsensitive regulations-
Or, as we say in English, unfair.


Charles Henry (Chuck) Cook: Mr. Speaker, the unemployment insurance program has operated on certain basic principles. Most important are these two: universal payment of premiums to pool the risk; payment of benefits to those who are both unemployed and not receiving income as a result. The changes the Government has made are consistent with those principles.
Adjournment Debate
There are those who seem to believe that unemployment insurance should operate like a savings plan or prepaid pension scheme. The fact is that unemployment insurance is not, and was never intended to be, any of those things. The Minister of Finance (Mr. Wilson) announced on November 8, 1984, as part of the Expenditure Reduction Program, that the UI rules dealing with pension income arising out of an employment would be changed as of December 31, 1984. On December 20, 1984, Cabinet decided to postpone to January, 1986, implementation of that change. This was in order to allow the private sector sufficient time to adjust to the changes. The pension regulations have now been in force since January 5, 1986. Any claimants in receipt of UI benefits on and after that date became subject to the new rules. The starting date of a claim has no impact. Claimants are allowed to earn up to 25 per cent of their benefit rate before deductions are made from benefits payable. The program is being administered according to its basic principles. If the Forget Commission suggests that fundamental principles should be revised, then this Government will consider making the appropriate changes.
I would repeat that for all to hear very clearly: If the Forget Commission suggests that fundamental principles should be revised, then this Government will consider making the appropriate changes.


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


[Stage Direction]
The House adjourned at 6.25 p.m.
[Stage Direction]

Friday, March 7, 1986