1986-11-03

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


Mr. Speaker:: Is it agreed?


Some Hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed from Thursday, October 30, consideration of the motion of Mr. Hockin that Bill C-14, an Act to amend the Excise Tax Act and the Excise Act, be read the second time and referred to a legislative committee.
Miss Aideen Nicholson (Trinity):: Mr. Speaker, Bill C-14 before us today is a Bill which came out of the February, 1986, Budget. It is a rather slim Bill; it does not have very many pages. However, the contents of it add up to a very heavy burden for the average taxpayer. The Bill legislates approval for a number of tax increases with which Canadians have been coping for some months now.
We must remember that the tax increases in the last Budget were on top of the tax increases in the first Budget of the Conservative Government in May, 1985. As I said, it adds up to a heavy burden for the average taxpayer.
For example, the federal manufacturers sales tax has been raised three times in 18 months. The tax rate is now 3 per cent higher and, as well, the tax base was considerably broadened to cover more items. As a result Canadians are paying about $3.5 billion more per year.
The Government says that it needs this tax revenue to fight the deficit. We all care that the deficit should be reduced, but surely the Government must also be sensitive to how the deficit will be reduced.
I do not think enough attention has been paid to the role which unemployment has played in the deficit we are now facing. During recession years when we were averaging between $11 billion and $12 billion per year in unemployment insurance, it was certainly a major factor in our deficit. Also, unemployed people do not pay income tax. They do not make purchases on which they would pay sales tax. Surely if we are seriously attempting to tackle the deficit, especially now in the fourth year of recovery, we should be addressing ourselves much more to the question of unemployment.
These sales taxes run quite a risk of slowing down economic recovery and of adding to unemployment. In order for our employment record to stand still we need economic growth of 3 per cent a year. We are not getting that at this time. In their budget speeches government Members spoke about economic recovery. However, more independent observers have pointed out that we have problems which, I believe, are in no small way due to the Government's policy of "tax, tax, tax".
[DOT] (mo)
The Government's first economic statement was presented in November, 1984, very shortly after it came into power. In that statement the Minister of Finance (Mr. Wilson) set out his basic principles for economic recovery. He said: "Deficit reduction is the key to rebuilding confidence and confidence is the key to growth and job creation". Quite a lot of time has passed since November, 1984, and it is interesting to hear what economic analysts are saying. In the October issue of the Business Conditions Bulletin published by Woods Gordon one reads:
It is becoming increasingly apparent that economic progress in 1986 has been very limited. Overall, the economy has been at a virtual standstill since the beginning of the year.
Data Resources of Canada says:
The choppy and only tepid path of real economic growth has had a predictable impact on the labour market: employment growth has stagnated since late last year.
I have no wish to attack the Government again about broken promises or to be unduly negative. However, no one will easily forget the constant refrain of "jobs, jobs, jobs" in the 1984 election campaign. Therefore the Government must expect to be held accountable for policies which work against an increase in employment.
We have seen increasing attempts by this Government to tax its way out of the deficit by way of sale taxes rather than income taxes. Sales taxes have, for very good reason, been traditionally regarded as regressive. While income tax is related to one's ability to pay, sales tax is charged on every

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product regardless of ability to pay. It hits the poor harder because they have less discretionary income and are obliged to spend more of their income for the necessities of life. Even so, the Government's recent announcement of its guidelines for tax reform included a mention that the Government intends to rely more on sales tax revenue in the future.
There is some evidence that all these sales taxes are having a dampening effect on consumer confidence and that consumer spending is down, with the resultant effect on the labour market. The Minister of Finance recently announced that all the tax increases which consumers have been asked to shoulder have not worked and that the deficit will be higher than forecast.
Let us consider some of the specifics of Bill C-14 in this context. The numbers in this Bill and those given in the February 26 Budget Papers add up to very large tax increases. Between now and 1990 Canadians will have to pay an additional $6 billion. In 1986 alone there will be an additional burden of S820 million. The 1 per cent increase in the sales tax will cost Canadian taxpayers $700 million. The increase in tax on alcohol will probably amount to another $125 million. In 1987 Canadians will pay an additional $1.2 billion in taxes. They will pay an additional $1,355 billion in 1988 and $1,455 billion in 1990, for a total of $6.1 billion.
Measures previously announced and adopted resulted in a 2 per cent increase in sales tax. That, combined with a 1 per cent increase in Bill C-14, amounts to a 3 per cent increase. This is a very heavy burden which seriously affects jobs and poor families. We are now in the fourth year of recovery and the Government's taxing policies have slowed down economic growth. There is great risk that this will continue with very serious effects on our already too high unemployment rate.
I have an article dated October 31 headed "Is Michael Wilson a Reverse Robin Flood?" The article makes the point that this continued emphasis on sales tax will hit the poor hardest and that the likely beneficiaries will be the rich. If the future policy is to put more and more emphasis on sales tax rather than on income tax this will be compounded because the poor, who now pay little or no income tax, will not benefit from the proposed reduction in personal income tax but will pay greatly for the business transfer tax which is essentially a sales tax.
The Minister has spoken of increasing corporation taxes, which I understand the New Democratic Party is in favour of. One must remember that in the long run it is people who pay corporation taxes. If corporate taxes are increased, those taxes will be passed on to the consumer who will end up paying for them.
The Government claims to be sensitive to the relationship of social and economic goals. Yet there is disturbingly little in the Speech from the Throne about an economic strategy for Canada, and this kind of Bill does not inspire confidence. With
over one million Canadians still out of work, unemployment is a very real problem that has proven resistant to the Government's efforts to date. Clearly the Government will be more successful in meeting social policy objectives if it has the means at its disposal. The means will not be there if the economy is not performing well.
This Bill runs a very serious risk of damaging the economy. The Government has talked a great deal about enhancing investor confidence and indeed, if there is investor confidence, businesses can start up, businesses can expand and thereby create jobs so that the unemployed can go back to work and young people can again begin believing in the future.
Flowever, will we get increased confidence from a Bill that piles on tax after tax, reduces consumer spending, and leaves people with less to save?
There is no more urgent problem facing the country at this time than unemployment. It is a problem for individuals, families, and for our whole economy. It has been said that work may not be a blessing, but the absence of it certainly is a curse. Unemployment is a demoralizing and soul-destroying experience. It shatters ideals and ambitions and puts a blight on family life. It lies at the root of any number of social ills. On the other hand, an employed person is paying taxes, spending money on consumer goods and probably saving, since Canadians are great savers. He or she is contributing to government revenues which are the means for providing all social programs for all Canadians.
It is very disturbing to see that the Government is not putting more effort into creating the climate that will assure Canadians of the jobs, jobs, jobs, they have been promised. Instead, all we are seeing are taxes, taxes, taxes.


Mr. Gray (Windsor West):: Mr. Speaker, when concerns are raised about the burden of an increased sales tax or other taxes that deal with consumption rather than income, an answer given particularly by the Conservatives is that it can be dealt with by some type of credit or refund from the Government. In fact I am sure that the Conservative Members in this debate will point out that the Budget provides for a tax credit for low-income people to help offset the higher cost of the Conserative increases in sales tax. Is this really the answer, or is there some type of sleight of hand here? The proposal is that the cut-off point for sales tax credit be only $15,000. Would the Hon. Member comment particularly on what this $15,000 cut-off point means in terms of a definition of poverty, or low income?


Aideen Nicholson: Mr. Speaker, that $15,000 figure is so low as to be meaningless because people with an income that low find it very difficult to buy taxable goods. For example, they are not likely to be in the housing market, and we saw a big increase in sales taxes on all construction materials.
A family consisting of two adults and two children, earning an annual income of $30,000, will be paying about $600 more in taxes this year. That is a sizable cut in the income of a family which is certainly not rich or affluent. Of course, that
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family does not qualify for the sales tax rebate. Indeed, I agree with my hon. friend that the $15,000 level to qualify for a sales tax rebate is so low as to be meaningless.


Herbert Eser (Herb) Gray: Mr. Speaker, I have another question for the Hon. Member for Trinity (Miss Nicholson). Is it not true that putting the cut-off point at $15,000 is an attempt by the Conservative Government to have a new definition of poverty, one that is not the definition established by Statistics Canada or any recognized experts on the subject? My recollection is that the latest Statistics Canada figures with respect to a definition of poverty speak of a family income in the area of $20,000. Are the Conservatives flying in the face of the Government's own impartial statistical agency, not to mention experts across the country, in having the cut-off point for the sales tax credit or refund at only $15,000?


Aideen Nicholson: Mr. Speaker, I do not know how the Government arrived at this cut-off point of an annual income of $15,000, but certainly that is below the poverty level as established by Statistics Canada, the Canada Council on Social Development, the Social Planning Council of Toronto, the Senate Committee on Poverty, and indeed all the authorities of which I know.


The Acting Speaker (Mr. Paproski):: The Hon. Member for Lethbridge-Foothills (Mr. Thacker) on a question or comment. Then the Hon. Member for Prince Albert (Mr. Hovdebo).


Mr. Thacker:: Mr. Speaker, I would like the Hon. Member for Trinity (Miss Nicholson) to expand on her comments with respect to corporation taxes. In the seven years that I have been here, I have been amazed at how essentially dishonest Parliament has become with the population. There seems to be a feeling that taxes, or revenues, will come from someone else.
1 know that the members of the New Democratic Party particularly argue for dramatic increases in corporation tax. I agree with my friend opposite that it just means they will increase the price of their products to ordinary Canadians and it simply masks the fact that it is people who pay taxes rather than some mythical third party.
Is it the official position of the Liberal Party that corporation tax should be kept down for that reason? If not, what percentage of tax does she believe the corporations should pay?


Aideen Nicholson: Mr. Speaker, that is a very loaded question but let me attempt to answer it. First, I can understand very well the outrage that we hear from people such as those in my constituency who work extremely hard to buy homes and support children on salaries that are well under $30,000 a year. People like that may hear of corporations being able to write off the costs of their corporate jets and so on. They often feel a certain outrage that they are carrying a very high burden. I think we have to respond to that outrage and be very sure we have the clear facts.
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The Auditor General, I think, has done quite a good job in pointing out the results of taxes forgone, or the so-called tax expenditures. Indeed, a former member of the Conservative Party, when he chaired the Public Accounts Committee, made a very useful contribution to the debate on tax expenditures. So I believe we have to be sensitive and understand people's outrage and their need for explanations.
That being said, we also have to be very sure that we are dealing with practicalities rather than with ideology. Some phrases like "corporate welfare bums" are great in a campaign, but when one looks at the facts it really comes down to the point that, if a corporation is paying more taxes, in most cases that gets passed on one way or another to the consumer. The real answer is not that corporations should pay less and individuals should pay more. The real answer is for us all to know the facts and to have a very clear handle on what tax expenditures are coming in. Over the years, indeed, our taxation law has grown more and more complex. Tax expenditures have increased in complexity. I think our first responsibility, our first task, is to simplify matters so we all know what we are dealing with. Then we must be very clear about what the burden is and on whom.


Mr. Hovdebo:: Mr. Speaker, I think we have a certain amount of fuzzy thinking on the part of the Hon. Member for Trinity (Miss Nicholson) and on the part of the Hon. Member for Lethbridge-Foothills (Mr. Thacker) who asked the question regarding the passing on of corporation taxes to the consumer. I think the Hon. Member for Trinity expressed it very well. The labourer, the person who goes out and by the sweat of his brow makes his living and pays taxes not only through income tax, but in excise taxes which are being increased by this particular measure, has to be separated to some extent from the person who takes the profits of the corporation for which he has done nothing specifically. He has used his investment capital in some way to receive these profits and it is the profits which are being taxed in corporations, or what are not being taxed in corporations. There are large numbers of corporations which are not being taxed at all. That tax break, theoretically, will be passed on by dividends to the shareholders, not to the consumers. So what we are doing is reducing the amount of return from investment. That is what is intended here. Does the Hon. Member not recognize that reducing the profits of corporations is a more equitable way of taxation than the present consumer tax or income tax directly on an individual?


Aideen Nicholson: Mr. Speaker, I think the Hon. Member is being naive if he assumes that when corporate taxes go up the corporations will not so arrange their affairs as to pass on some of the costs to the consumers. However, if the Hon. Member is asking me to say that I think at the present time the legislation put forward by the Conservatives since they have been in power has increased the burden on the individual taxpayer, particularly in the area of sales taxes, in an inappropriate and

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unfair way, then I would certainly say that is so. The effect of the Bill before us is really to increase the burden and more so on those who are least able to pay. I think it is a very unfair Bill. I also think it is bad economics.


Stanley J. Hovdebo: Mr. Speaker, I would like to refer to another point the Hon. Member made in answering a previous question. The Auditor General indicated in his report that $28 billion in tax incentives and loopholes was forgone by the Government by this process. I would like the Hon. Member to comment. I would also like to ask her whether the Liberals, if they were in power, would do somthing about this, and what they would do?


Aideen Nicholson: Mr. Speaker, I am not in a position to speak for my Party. Our major policy convention will be held in another four weeks and, in our Party, policy is set by the grassroots. In the upcoming months I will be able to speak with more firmness about our Party's policy. However, I think the Hon. Member's question is a loaded question. To say at this stage exactly how we would divide the tax burden, when we are just going into a series of public consultations, would surely be a very unwise thing to do. The Hon. Member certainly remembers the Carter Commission and what happened to that. He will also remember the proposals in the MacEachen Budget. There is a very clear lesson there. Changing our tax system is always difficult and complex and must be done with maximum consultation and public input.
The Hon. Member's Party, I understand, has been holding hearings on tax policy. The Standing Committee on Finance is just starting to study the question. I am sure my Party will have some panels on the subject, and certainly in the next year or so we would hope to have some very specific proposals.


Mr. Winegard:: Mr. Speaker, I must say I was a little disappointed to hear the Hon. Member for Trinity (Miss Nicholson), who is greatly respected in this House, avoid the questions put to her this morning. I am reminded a little of last Monday's debate on trade. I think the position of her Party came out good and firm, "free trade if necessary, but not necessarily free trade". We have heard that kind of phrase before. I am surprised that after 20 odd years in government, the Liberal Party is not yet prepared to say what its position would be on the tax Bills before us with respect to corporate tax.


Aideen Nicholson: Mr. Speaker, I hope the Hon. Member will read the Bill. The Bill does not deal with corporate tax. It deals with sales tax. I addressed the Bill and explained why I thought the sales tax was regressive, unfair, hard on the poor, bad economics, and that it is likely to dampen consumer demand and increase unemployment, which is one of our main concerns. Corporate tax is not before us today.


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


Blaine Allen Thacker: Mr. Speaker, I rise with respect to Bill C-14. I followed with great interest the debate of my colleague, the Hon. Member for Trinty (Miss Nicholson), who was not able to outline the position of the Liberal Party since it is in the process of being developed. That probably explains why the Liberal Party is doing so well in the polls.
When a Party is in opposition it is wise to be on the side of every issue. Members of the Liberal Party have tried very carefully to walk that line, but as we come closer to the general election the Liberal Party will have to declare its position on some of these major policy issues. The minute the Party does that, 10 per cent or 15 per cent of the population will say that they do not like the position at all and that the Liberal Party is no better than the New Democratic Party or the Conservative Party. Members of the Liberal Party will find that their standing at the polls will be hurt as they come to take decisions, and that the Government will then look a lot better.
We must appreciate where we are as a nation and where we were when the Conservative Party came to power. At that time the Liberals had been the governing authority for 20 years. They stayed in power during the period 1972 to 1974 with the direct and open support of the New Democratic Party. During that time they put in place a series of economic and fiscal policies which led the country into a national debt situation which, per capita, is almost three or four times greater than that of our immediate neighbour to the south, the United States of America.
It is in the context of the largest per capita debt that we have to consider the sales tax and excise tax increases. We have to consider the reductions, and they will be dramatic ones, in corporate exemptions and in the tax expenditure account, as well as an increase in income taxes, particularly on the rich as a result of the minimum tax. When we assumed power we decided as an over-all policy that there would have to be increases in corporate taxes and in income taxes, especially those on the rich, and also increases in income taxes on upper-income earners, not necessarily the very rich. At the same time we recognized that there would have to be dramatic cuts in government expenditures.
We are now moving on all fronts, even in terms of indexing. What the Liberals and members of the NDP did was index the expenditure side of the federal Government and deductions against revenue sources to Government. So when we went through the period of high inflation we saw that the expenditures increased proportionately, just as the revenues dropped proportionately. This was so because both sides of the equation had been indexed, which is why we now have a national debt of well over $200 billion at the federal level alone.
I often hear people say that federal debt is not significant because we owe it to ourselves. The argument has some validity with respect to federal debt. But what is not told to our citizens is that, because we at the federal level absorb all the
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domestic savings, primarily through Treasury Bills, Canada Savings Bonds and those types of instruments, we have left the provinces, all Crown corporations, federal and provincial, and private corporations exposed. Private corporations are exposed in that they now have to go offshore in search of funds. The provinces, Crown corporations and private corporations owe over $90 billion outside Canada. This debt poses a great threat to our senior citizens and our lower-income earners.
If international interest rates rise, as they may well rise, that means more dollars have to flow out of the country to service the over $90 billion foreign debt. That move will drive interest rates higher, and it could cause our dollar to drop. This in turn will have a massive impact on our senior citizens. As a country we are faced with the dilemma of having a huge national debt. While our per capita debt is much higher than that of the U.S., we are higher even than Mexico, Brazil, and Third World countries, which is causing concern to our international banking system.
We are also faced with the fact that at March 31 next year we will have finished another fiscal year. Canadians need to appreciate this fact. Even with all of the changes which we have implemented we will have to add another $32 billion to the national debt, which will bring it up to $250 billion as opposed to $220 billion. To service this extra debt of $32 billion next year's Budget will have to be increased by $3 billion just to cover the interest on the increase. Some 93 per cent of today's deficit is the result of paying interest on money borrowed to finance yesterday's deficit. That is the dilemma which we are in now.
I can remember that as recently as 1968 we did not have a deficit in this country. We had a small national debt even after having developed our huge nation, bought the West, opened it up, and fought two world wars. For the first 100 years of Confederation the national debt amounted to $18 billion and the nation's budget had no deficit at all. In fact there were surpluses. After the Conservatives came to power following 18 years of a Liberal-NDP coalition, the national debt had risen to over $200 billion and our national yearly deficit was over $30 billion.


Mr. Keeper:: It's your debt now; you're maintaining it.


Blaine Allen Thacker: It is true that it is now our debt. We have had to take hard decisions to counter it. We want Canadians to understand that we are in a dilemma that was not of their making. It was a position gotten into as a result of conscious and deliberate political decisions taken by the Liberal Party. The NDP cannot get around the fact that it aided and abetted the Liberals, particularly during the 1972 to 1974 period.
My friend opposite spoke about unemployment. There is no doubt that it is serious. I think we must also appreciate that the deficit is so large that even if we took one million unemployed and gave them jobs paying $30,000 a year, if the economy were such that we could do that, a person making $30,000 per year would pay about $6,000 in federal income taxes. So one million people at $6,000 would give us an extra
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revenue of $6 billion. However, the deficit would still be $32 billion; and if we deducted $6 billion from that we would still have a deficit of $26 billion. Of course the unemployment account would go down by perhaps another $6 billion. However, we would still have a deficit of around $20 billion. This sets out the magnitude of the cursed deficit which we face. We spend about $25 billion to service this debt. If we did not have the debt then we would have a balanced budget today. The country would be strong and we would be able to get into making deficits to create jobs for our young people. However, when one starts with a huge deficit it makes it very difficult.
I also wish to clarify another point because I think too many Members try to pass it off as if there is someone in our society who makes a huge amount of money and there is someone else who can pay.
We need to start with the following facts. If one earns $30,000 a year that person is already at the 85.54 percentile point. This means that if one earns $30,000 from all sources there are only 14.46 per cent of people who pay more in taxes than that person.


Mr. Riis:: If you believe that you believe in fairies. That does not happen to anyone in the country.


The Acting Speaker (Mr. Paproski):: Order, please. There will be an opportunity for Hon. Members to ask questions or make comments after the Hon. Member has finished his speech. If the Hon. Member for Kamloops-Shuswap (Mr. Riis) has a comment to make or a question to ask after the Hon. Member has finished his speech, then I will be happy to recognize him at that time.


Blaine Allen Thacker: Mr. Speaker, I tell my hon. friend that the figures I have quoted were taken out of income tax statistics this morning. They show that if one has an income of $30,000 per annum one is already at the 85 percentile point. If a person makes $50,000 per year, less than what we as Members of Parliament make, he is at the 98.1 percentile level. Less than 2 per cent of the people in our society make more than $50,000 per year. In fact that is not 2 per cent of the people in our society but 2 per cent of the people who pay income tax and file income tax returns. That indicates to me that there is no other large group in society that could pay. If we took every cent from people who made over $100,000, that would barely touch the deficit.
We should be honest with our fellow citizens. We should say: "Look gang, there is no one out there except you and me and ultimately the deficit has to be picked up by you and me". As Members of Parliament who make $55,000 per year, we are probably at the 99th percentile point. We should be thinking of what extras we can pay.
On an entirely personal note, it seems to me to be wrong for members of the New Democratic Party to argue for the
990

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continuance of universality with respect to family allowances-they want to continue to receive it themselves-while people are standing in food lines. Somehow, that strikes me as being wrong. I think we as Members of Parliament should face that and should realize that we have to pay more. In a sense, we will be paying more because of the minimum tax.
I was glad to hear the comments of the Hon. Member for Trinity vis-a-vis the corporate tax. I have argued here that corporate tax is very much like a sales tax. It is passed right through to the citizens. It is the citizen who is buying shoes and clothes who pays the corporate tax.
If I had my druthers, I would have the following tax system: every time we as elected Members of Parliament went to our constituents to tell them of a beautiful program that we wanted to give to them, we should have to say in the same breath: "Here is where the money will come from and this is how much you are going to have to pay, Mr. Farmer, and this is how much you are going to have to pay, Mr. Shoemaker". If we did that, we would hear the people saying: "We do not need that program. Thank you very much, Mr. Member of Parliament. It might be a great idea, but we would rather keep the money in our pockets and decide how to spend it".
I have often argued in the House that I would rather leave the money with the people and let them decide how to spend it. I fundamentally believe that millions and millions of individual decisions taken by citizens in their communities and homes for their own best interests would lead to a spending policy that is wiser than the Liberal-NDP policy which has been to tax the money into Ottawa so that the politicans and the Cabinet may decide who will win and who will lose.


Cyril Keeper: You're the one who's taxing it with this Bill.


Blaine Allen Thacker: Yes, we have to say to the people that, as a result of the policies the Liberals and NDPs put in, the people will have to pay. For so many years we had all of these wonderful policies. We all liked the programs, but we paid low taxes. There was a cash flow difference which gave us the appearance of wealth. As a result of having good programs and low taxes, we paid too much for land and for our businesses. It has to come to an end because the trick is that we were borrowing the money and the deficit started to rise.
In 1968 only about 5 per cent of tax revenues went to pay interest on the debt. That figure went to 10 per cent, then to 15 per cent, and then to 20 per cent. We in opposition were saying that it was not right to pay a higher and higher percentage of our revenue, right off the top, to service the debt. Suddenly over 33 per cent of the revenue started going right off the top to pay interest on the debt. That money is not available to be used to create new programs. The people who are rich and have so much money that they can lend some to the Government with no risk, sit back and lend that money to the Government while the Government pays 33 per cent of all its revenues to maintain that loan. This means that we are losing the middle class. The rich are becoming fabulously rich while those in the middle class lose the benefits of government
programs. We have to face up to that. We have to make a very difficult adjustment and I think the people are beginning to see that we must do so.
There is no doubt that there has been an increase in the direct taxes payable by the people. I do not think members of the NDP or the Liberal Party will be able to argue against that because of the European experience. Several European countries are run by socialist Governments. These Governments have moved almost unanimously to value-added taxes, an indirect tax. This is another way in which Governments are dishonest with their people. They take the money from them indirectly rather than directly through an income tax.


Nelson Andrew Riis: And you're going to do the same thing.


Cyril Keeper: That's what you're doing.


Blaine Allen Thacker: Yes, exactly. That is what is happening in Canada. People need to understand that.


Cyril Keeper: Are you saying that you are being dishonest today?


Blaine Allen Thacker: My friend from Winnipeg always gets very exercised when people try to tell the citizens what truly is happening. Socialist Governments in Europe use a value-added tax of about 12 per cent to 15 per cent. If we in Canada switched to a business transfer tax or a value-added tax, it would only have to be in the 2.5 per cent to 3 per cent range to raise the same amount of money as we raise through our tax system.
That the value-added tax in Europe is about 15 per cent tells us how much money those socialist Governments take from their people in order to redistribute it in the way the politicians want. They do this rather than leaving the money with the citizens and letting them decide how they want to spend their own money. Canadians should look forward to that if they want the Government to continue taking money away from them and deciding who will be the winner. Decisions about who will be the winner are never based on economic factors. They are based on being friends of the Government or on being in an industry that the politicians, for the time being, feel is a good industry. However, that is never the same as what the market-place would decide.
Canadians need to appreciate the fact that taxes will go up, up, and up. It does not matter which Party governs the country. However, Canadians are better off with us because we are trying to get them to appreciate the role of government and how obtrusive it has become. I hope Canadians will react by saying that they want less government control and that they want the money left with them so that they may decide how to spend it themselves.


Nelson Andrew Riis: Mr. Speaker, I listened with interest to the words of my colleague, the Hon. Member for Lethbridge-Foothills (Mr. Thacker). I applaud him for his concerns about the deficit and the need to be honest with people. If he is being
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honest with taxpayers, presumably he is justifying the taxes on all sorts of items that had never been taxed before, like soft drinks, as well as the additional taxes on gasoline, cigarettes, and alcohol.
In this same spirit I would like to ask the Hon. Member two questions. Day after day we read in the media about the fact that it will cost the taxpayers of Canada, by the Auditor General's estimates, an additional $41 million because the Prime Minister (Mr. Mulroney) decided to locate a prison in his constituency. If the prison were to be built where it should be built for all sorts of sound sociological and business reasons, it would not cost Canadians an extra $41 million.
As well, we read in the media about the contract that was recently awarded for F-18s. The experts had given Bristol 926 out of 1,000 points and Canadair only 843 out of 1,000 points. If we are supposed to make decisions on sound business, logical, technological, and financial grounds, why was the decision made to give the contract to Canadair? I believe that the Hon. Member is a straight shooter. Will he indicate to us what he really believes about various issues? What does he think about the decision to relocate the Port-Cartier prison? Second, what does he think about the decision to award the contract to Canadair against all logical, financial, and business reasons? What are his personal views on those two topics?


Blaine Allen Thacker: I could give a full 20-minute speech on both of those topics setting forth my views. It is not strictly relevant to the Bill today, so I will only make a comment or two.
Since this country has been founded, Governments have been making open decisions as to the placing of prisons, for example, and other factors. It is not necessarily based on the cheapest cost. If prisons were going to be put in the cheapest location, they would all be stacked up around Kingston. Kingston got going in the first place because the Government made a conscious decision to put a prison there, probably for political reasons.
In my riding of Lethbridge-Foothills we have a wonderful research station. It was put there originally because there was a Liberal Member of Parliament from that region. It would have been much cheaper to do that research in Ottawa because of the already established experimental farm. Those decisions are made. We are saying to the Canadian people that we made an open, honest decision. The role of the Opposition and the Auditor General is to point out how much more that is going to cost. We are saying to Canadians that because of regional development purposes, we think that is a wise expenditure of money. If the Opposition disagrees, they will do what they will do in the next election.
The members of the Opposition have exaggerated the figures. It will be $41 million over the 20 year life of the contract. Think of the benefits to the region of Port-Cartier and the people there who, rather than being on social assistance with no sense of a future, will be able to become guards,
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stay in their community and have schools, hockey teams, and still be on the north shore. To my mind that is a valid expenditure of money. We poured billions of dollars into the maritime provinces and parts of the West when they were developing and getting on their feet. I do not apologize for that. I do not think all of our prisons should be around Kingston because of an earlier political decision.


Cyril Keeper: Because of an earlier Tory Prime Minister.


The Acting Speaker (Mr. Paproski):: Does the Hon. Member have a question?


Cyril Keeper: Mr. Speaker, it is amusing to listen to the Hon. Member who is so honest and frank with Canadians and indicates to them that he and his Government are in the process of increasing their taxes and intend to keep on doing it. Then, when he talks about waste in Government, he is not willing to hit the nail on the head. The Auditor General has pointed out that there was no up-to-date study which indicated that prison was needed now. At the same time, by moving it to the Prime Minister's (Mr. Mulroney) riding, it is going to cost an extra $41 million. Why do you not deal with that frankly?


Blaine Allen Thacker: We have dealt with that honestly. With respect to the CF-18 contract, Winnipeg would not have been in the offing if it had not been for a conscious government decision when the former Liberals were in power to transfer the Air Canada maintentance contract to Winnipeg, which they subsequently lost. It was a patronage decision to put it into Winnipeg in the first place. It seems to be a touch hypocritical for Mr. Pawley, the Premier of Manitoba, to be yelling and screaming because that business was sent to the West as a political decision in the first place. It would have been cheaper to do it in Montreal and Toronto, because during the Second World War they had built the buildings, the infrastructure, and the expertise.


An Hon. Member:: What about the bidding process?


Blaine Allen Thacker: It was put in the West in the first place as a result of a political decision. Second, Mr. Pawley, within his own province makes those types of political choices daily as to whether he is going to put a project in Winnipeg, or whether he is going to move it to Brandon or the North.
We have been trying for months to get Mr. Pawley and the NDP Government in Manitoba to come into a tripartite sugar-beet production agreement. The Province of Alberta has agreed. That whole sugar-beet industry is on a string because the NDP Government in Manitoba does not want to get into a tripartite agreement. The reason is that the sugar-beet growers are in two Conservative ridings in southern Manitoba. He does not want to get into it for that reason. He should not be quite so hypocritical when he is yelling about us.


Mr. Althouse:: With regard to the last statement that the Hon. Member made regarding sugar-beets, is he trying to tell the House that Manitoba did not plant sugar-beets last year

November 3, 1986
Excise Tax Act
and Alberta did? The fact is that Manitoba did have a program that kept sugar-beets being grown last year. Alberta did not even plant sugar-beets, because that Government could not come up with a program either. At least Manitoba can go into these talks having maintained growers last year. Their experience might be of some use in this particular set of negotiations. We still have several months to go before the final decision on planting takes place.
The reason that 1 attracted your attention, Mr. Speaker, had to do with some comments made during the Hon. Member's speech. He talked about the terrible effects of high interest rates and how that had contributed to the rapid acceleration of the deficit. I would like to ask him this. Knowing what the effect would be on the deficit and on Canadians, why did he and his Party support the changes to the Bank Act which unleashed those very high interest rates, along with the cancellation of the old usury laws? With the exception of the Hon. Member for Bow River (Mr. Taylor), most of his Party had supported those changes. Can he now explain why?


Blaine Allen Thacker: If my friend opposite is saying that the high interest rates that we have endured as a nation were the result of the amendments to the Bank Act, I will simply disagree with him on that point. Those changes to the Bank Act which permitted foreign banks to come in and compete with the five banks that had a monopoly position in this country for decades was not the decision that increased the interest rates. The reason that the interest rates went up to 18, 19, and 21 per cent, was as a result of accumulated deficits. Countries all over the world have lived through this before. We seem to be not capable of learning from it. Any time there is a Government, whether it is a king chipping or clipping the coins, or turning on the printing presses, which is what happened here, that leads to deficits that in time automatically leads to an interest rate increase, inflation, higher interest rates, and then the collapse.
What we are enduring right now is the collapse at the end of this 15 year period of madness. That collapse is very difficult. We have whole towns going out of business. We have farmers by the tens of thousands having to give up on farming. Every year there are tens of thousands of small businesses that go out of business. We are now into the adjustment phase. There is no doubt that when we get through it the people who survive are going to be well positioned and the country is going to continue on. However, it would not have been necessary to go through all of that if parliamentarians had stood up, as members of our Party did for years, and argued against those deficits. It is a fundamental deceit when governments say to people that we will give you this wonderful program and you can keep your low tax. It is true that in the short run you can, but ultimately people have to pay.
It is people who pay the taxes and create the wealth. If you do not give people a chance to get a job, which is what happens after inflation and the adjustment phase, they cannot create the wealth. I say sincerely that I think that all of those programs, offered without having a corresponding tax, has
hurt the poor more than if the scenario of the late sixties had been carried on where the Government, if it had a program, had increased the taxes so there were no deficits.


The Acting Speaker (Mr. Paproski):: Questions and comments are now terminated. On debate.


Cyril Keeper: Mr. Speaker, I welcome the opportunity to participate in this debate. Bill C-14, an Act to amend the Excise Tax Act and the Excise Act is a very crucial debate. This Bill comes out of the previous Budget. It is important for Canadians to understand the essential message of the Bill before the House. In a nutshell it indicates that the Conservative approach to taxation is unfair. The Conservative Government is increasing the tax burden of ordinary Canadian families in an inequitable fashion.

Mr. Speaker, I think it is very important to everyone, that all Canadians understand the message the Conservative Government is sending them with this legislation. The Government's approach to the tax system is unfair. It is proposing to increase the tax burden for the average family, and they way it has chosen to do this is unfair.
I should like to take a look at the history of our taxation system. First I will make a few comments about the last 20 years and the direction of that system. Also, I will look closer at what the Conservative Government is doing today and has been doing for the last couple of years. Then I will make some comments about the future and about what is likely to happen in the taxation area.
Two important trends have stood out in the taxation system over the last 20 years. These trends are important to ordinary Canadians in that they affect the burden of taxation, where it falls, and the extent of it. The first trend which has been evident for the last 20 years concerns the responsibility of paying for the expense of Government, whether the money is used wisely or wasted, as was the case in the transfer of a prison to the riding of the Prime Minister (Mr. Mulroney). It was a clear waste of some $41 million according to the Auditor General's report. The burden of taxation has been placed more and more upon the shoulders of ordinary people, and profitable corporations have been carrying less and less of the responsibility of paying for government services. While corporations exist to make a profit, they are also citizens in a sense. Most corporations have a public relations arm or team to ensure that their image is a good one, that they are seen as good corporate citizens. It is incumbent upon them to carry their fair share of the burden.
However, over the last 20 years, under both Conservative and Liberal Governments, the burden of taxation has fallen more heavily upon the backs of individual Canadians, while

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corporations have tended to walk away with a lighter and lighter load.
It is not surprising in that context to have heard the comments of the Hon. Member in the Liberal Party who questioned New Democrats raising the matter about the share of the taxation burden carried by corporations. She claimed that if the taxes on corporations were increased, they would just pass them on to consumers and, therefore, there was no use in taxing them. That analysis ignores the fact that profitable corporations can absorb a portion of the taxation burden. Corporations should not always be free to raise their prices whenever they want. Market forces can force corporations to absorb some of the costs rather than the burden always being passed on to consumers.
Another major trend in taxation has been that the income tax system has become less and less progressive. A generally accepted notion of the income tax system is that it is a way in which people can pay their fair share. Those who earn more pay more because they are capable of paying more; those who earn less pay less because it is more difficult for them to pay taxes. This principle has been eroding in a very significant way over the last 20 years. I wanted to make those two fundamental points about the taxation system over the last couple of decades under both Liberal and Conservative Governments.
Another point needs to be mentioned. The Auditor General indicated in his report that the taxation system was very complicated, that the system of giving tax write-offs to corporations was very complicated, and that it was very difficult to trace just exactly where public money was going. Every time someone is forgiven taxes, in effect it is an expenditure of public money. Obviously when the Government starts a program, it is an expenditure of public money. However, when it fails to collect taxes, it is also an expenditure of public money. The whole system of write-offs riddling the taxation system and giving breaks to corporations for various reasons has become so complicated that it is difficult, if not impossible, to trace the impact of any particular write-off. The use of the taxation system as an economic instrument is being undermined, and the capacity of using the taxation system to steer the economy is being weakened. Since the system cannot be understood, it is not only unmanageable but is less equitable.

Mr. Speaker, during the last 20 years, there have been two important developments in our tax system. First, the tax burden for corporations and individuals has changed, in that the burden has been shifted to the average Canadian and away from the corporations.
Second, Mr. Speaker, personal income tax has traditionally been progressive, in that those who earned more, paid more and people who earned less, paid less. However, this concept is weakening and today, personal income tax has become less progressive than it was before.
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I should like to comment about what is going on today with Bill C-14, an Act to amend the Excise Tax Act and the Excise Act, and what has been going on for the last couple of years under the present Conservative Government.
It is important to note that since that Government has been in office it has managed to increase taxes on an ordinary Canadian family by $1,305. That is an enormous increase for an ordinary family, by which I mean one with two dependent children, earning $35,000 a year. Of that $1,305 Conservative tax increase, some $845 is in sales and excise taxes. That is the significance of this legislation.
Why do I raise questions about the increase in sales and excise taxes? Not only because people are strapped for money and this is not the time to be increasing taxes, but also because the way these taxes are being increased is unfair. Sales taxes are hidden taxes. They are not, as my friend across the way suggested earlier, an honest representation of government policy direction. They are a way of raising taxes without people really noticing. Louis XIV of France, a master at raising taxes, had a finance Minister who helped him raise the money for the grand palaces which he built and lived in. That Minister described taxation as a matter of being able to pluck as many feathers from the goose as possible with the least amount of hissing. That describes what the Conservative Government is doing today in relying so heavily upon sales and excise taxes.
Five minutes, is it? Thank you, Mr. Speaker. I appreciate your letting me know how much time I have left in my speech because time passes faster than I realize.


Mr. McKinnon:: Not for us.


Cyril Keeper: Did I hear some applause?
We criticize the heavy reliance of this Government on sales taxes because they are hidden taxes. They are also inequitable. Whether you are a single parent on welfare or a millionaire, you pay the same amount. That is an inequitable approach to taxation. It is also a brake on the economy. It tends to take money out of the pockets of consumers and therefore slows economic growth. If we should be doing anything to the economy right now, it would be to keep it moving rather than slowing it down.
I have talked about the past and present so I want to take a couple of minutes to say something about the future. The Conservatives appear to be promising tax reform. At the same time they say they are going to lower the income tax rate. What is this all about? It seems to me that the promised income tax rate cut is kind of like a carrot to get the donkey moving. At the end of the road there is going to be a big stick, the continued increase in sales taxes by way of a business transfer tax or whatever name is given to it.

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I encourage Canadians to take a very close look at the specific proposals the Government comes down with under the name of tax reform. To what extent will it increase the tax burden on ordinary Canadians and to what extent will it rely upon regressive rather than progressive taxes? They should not be fooled by the Government saying it is going to lower income taxes while at the same time it forgets to mention sales tax increases.
To conclude, Bill C-14 sends a clear message to Canadians that the Conservative approach to taxation is unfair. It increases the burden on ordinary Canadian families. This is the continuation of a trend which has developed over the last couple of decades under both Liberal and Conservative Governments. It needs to be challenged and we in this party seek to challenge it. I call upon Members opposite to be critical of their leadership and make sure that the tax reform package is designed for ordinary Canadians and is not just another tax increase.


The Acting Speaker (Mr. Paproski):: Questions or comments.


Mr. Oostrom:: Mr. Speaker, I listened with interest to my friend. He made a valiant attempt to understand how this country and its economy operate. However, sometimes he does not come through very clearly. I am sure he would like to have the unemployed in his riding find jobs. If the Government offered tax incentives for business in his riding or some of the ridings north of his, there would be greater transportation costs, it would cost more to train people, and more for many other things in those areas. If the Government decides to offer tax incentives, as he was talking about, does he not think it is important that people in his province and in his riding, or even north of it, also share in the benefits other Canadians in the southern part of Canada enjoy?
So far we have created jobs for about 600,000 more Canadians. We would like to continue with tax reform so we can employ more Canadians, and I think the Hon. Member will agree with that.


Cyril Keeper: Mr. Speaker, I thank my friend for the question because it gives me an opportunity to elaborate on some comments I have made. The point that I was making concerning tax incentives is a point which the Auditor General made in his report this year and last year. That is, we are spending roughly $30 billion on tax incentives for corporations in the name of various economic objectives.
The Auditor General makes the point that this system of tax write-offs is so complex that it is almost impossible to measure its impact. In previous reports he has questioned the effectiveness of such tax write-offs. We are spending billions of dollars for economic objectives and I want to be ensured that the tax write-offs will be effective before I support them. We must make a comprehensive examination of the tax incentives in order to ensure that our financial capacity is used effectively.
The Government delights in mentioning the 600,000 new jobs from time to time. This increased employment is the continuation of a previously existing trend. There is no great new boom in the Canadian economy. Most Canadian families have at least one member who is unemployed and they can verify this through personal experience. There has been an increase in jobs, but that happened under the previous Government as well, and most of the growth is in part-time jobs. I would not brag too loudly about the employment record of the Government.


Mr. Hamelin:: Mr. Speaker, after listening to the comments made by the Hon. Member for Winnipeg North Centre (Mr. Keeper), I want to take this opportunity, as the Member for the North Shore and of course for Charlevoix, and I say this because the riding covers half of the North Shore-as I was saying, I want to take this opportunity to explain to the Hon. Member that he, his party and the Opposition should stop criticizing our investment at Port-Cartier.
Criticizing the Hon. Member for Manicouagan and Prime Minister (Mr. Mulroney) for investing in our remote areas and for redistributing some of this country's wealth is hardly the right attitude, and I think it is an insult to the people of the North Shore and especially to those who live in these remote areas. If the Government were to limit its spending to our large urban centres, which so often benefit in any case, and I am thinking of Vancouver, Calgary, Quebec City, Montreal, Halifax, Toronto especially, and even Winnipeg, this would no longer be Canada.
To hear the Hon. Member, maybe we should close down the North Shore. Why not? We were the geese that laid the golden eggs for this country for fifteen or 20 years, when it was a case of simple arithmetic to prove that North Shore workers were paying more income tax and providing more services to Canada than any other community, and now that we have a Member and a Government promoting these remote areas, people scream bloody murder. I know it pays politically to hammer the Prime Minister. All the Opposition parties are doing it, but I think they should stop try to make political hay out of this situation.
It costs more on the North Shore, I agree. Food costs more. Products generally cost more. You know what the Saguenay syndrome is? Every time you cross the Saguenay, freight costs go up, Mr. Speaker. We don't benefit from the Maritime Freight Act, we don't have a railway, and so forth.
I think these comments, which have become increasingly frequent in the last few weeks, are an insult to the people in our area and to those working in remote regions.
I also wonder whether the Hon. Member-and this will be my final comment, I will give him time to answer-I wonder whether the North of Winnipeg, and I am referring to remote communities, I wonder whether they appreciate your comments? Do you represent Winnipeg or the interests of the
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entire community, including people who live 300, 400 and 500 miles away?
If I may, Mr. Speaker, enough is enough, I am sick and tired of hearing that. I think it is utterly ridiculous. Of course I agree with the Hon. Member, let those who earn more pay more. This is quite normal, this is what the Government is doing. A tax will soon be imposed on all citizens and all corporations so that no-one will be tax-exempt, particularly the rich.
On the other hand, like all its predecessors this Government has a responsibility towards Canada, and Canada includes these regions and especially those who reside in remote areas.


Cyril Keeper: Mr. Speaker, the Hon. Member has raised a few important points and I should like to comment on them.
Mr. Speaker, when I refer to the Port-Cartier issue, I have in mind the effectiveness of such expenditures. I am not saying that the money should not be spent in remote regions, but I think it is important that the money be spent effectively. Let us not kid ourselves, Mr. Speaker, Port-Cartier has been chosen as the site of the proposed prison because it happens to be in the riding of the Right Hon. the Prime Minister. Other ridings in Quebec and elsewhere in Canada report a higher unemployment rate than does the Prime Minister's riding. So why should this prison not be built in the region where the unemployment rate is the highest? Obviously this riding was chosen for political reasons. Since the prison is to be relocated from Drummondville to Port-Cartier, what happens to the people of Drummondville? Do they not need jobs too?


Charles-André Hamelin: A prison is already located there.


Cyril Keeper: As well, Mr. Speaker, the Auditor General made a number of references to this prison, including the fact that there was no study to confirm the need for this type of institution. Yet the Government has decided to proceed with this project and build the prison. In addition, by relocating the prison the Government will be making extra expenditures of $40 million, which is a lot of money for this one prison. There are other ways of wasting money, and the Government's bank bail-out was one of them. I think the funds must be spent wisely if we want to create jobs for Canadians. The money used to bail out the banks could have been set aside to create quite a few jobs, on the north shore for instance.
Why not use the money earmarked for this prison to create jobs on the north shore or in other regions of Quebec, but in an effective and useful manner this time?


Charles-André Hamelin: A supplementary question, Mr. Speaker.


Cyril Keeper: Mr. Speaker, if we are to create as many jobs as possible, these funds must be spent more effectively.


The Acting Speaker (Mr. Paproski):: Questions and comments are over. Debate. The Hon. Member for Capilano (Mrs. Collins).
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Mrs. Mary Collins (Capilano):: Mr. Speaker, it is a pleasure to participate in the debate on Bill C-14, an Act to amend the Excise Tax Act and the Excise Act. It is important to make it clear for the people who are listening to this debate that a majority of the measures that we are discussing in this legislation came into effect with the introduction of the Budget in 1986. They are not new or additional increases, we are simply going through the process of passing legislation to legalize those measures.
This Bill is an integral part of our over-all approach to economic renewal. We must keep reinforcing what we said in September, 1984, about our goals and our objectives as a Government. One of our major priorities was economic renewal.
Unfortunately, we must keep harking back to what the circumstances were at that time. After so many years of Liberal rule we were in a terrible deficit situation. Spending had risen by an average of 23 per cent per year, the gross national debt had grown by 50 per cent, and debt service costs had grown by 85 per cent. In fact, from 1981-82 to 1982-83 the deficit rose from over $14 billion to over $27 billion, an increase of $13 billion in that one year.
People sometimes forget that our financial situation was out of control and that if these spending patterns had continued, we would have been $100 billion more in debt than we will be as a result of the measures we have introduced. It is necessary to remind Canadians that when we took office we said it was necessary to tackle the economic issues, including the deficit. I know that the first thing I am asked when I meet people in my riding is what we are doing to manage the economy and bring the deficit under control.
People are concerned about the future for their children and grandchildren if we simply keep piling up a debt without any thought about its implications in the future. For instance, 93 per cent of today's deficit is the result of paying interest on money borrowed to finance yesterday's deficit. We know that increasing the deficit at a rate that was out of control would inevitably lead to higher interest rates, a weakened dollar, and would have impaired our ability to maintain a wide range of programs. It would have potentially impaired our ability to provide the very social programs that we want for our elderly, our children and those in need.
We said two years ago that we would make changes. The House will recall that in the economic statement and our Budgets we laid out a program so that for the first time in 40 years government spending is actually reducing and, for the first time in six years, the deficit is also declining.
We are debating legislation which has increased revenues through sales taxes and excise taxes in certain areas. It is important to remember that while some taxes have increased,

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for every dollar in increased taxes, expenditures have been cut by $3.
Let us consider some of the steps that have been taken to reduce the deficit. It is never easy to cut programs and it causes some pain and hardship to those who may have a certain interest in certain government programs. However, we have had to take some tough action, including the elimination of the Canadian Home Insulation Program, the Registered Home Ownership Savings Program and Katimavik. We have closed down the heavy water plant, got rid of Canagrex and have modified the rate of indexation of transfer payments to the provinces. It is not easy to take these steps, but governing involves making some tough decisions. We know that each Department of government has been reviewed and is going through a process of managing more efficiently and spending smarter.
Hon. Members opposite may not want us to take these steps, but we feel it is in the public interest and what the people of Canada have asked us to do. There is no limitless pot of money from which we can draw and, if we do not make those very tough decisions, we cannot expect to maintain a competitive edge in the international field.
The measures we have implemented in the past two years include measures to reduce government expenditures and to sell off Crown corporations. Some of our measures have resulted in a reduction of $560 in the cost to average Canadian households.
The proof in the pudding is in the results of our measures, about which I am most pleased. No one can deny that job-creation has occurred in this country. Over one million more Canadians are working today than were working in September, 1984.1 indicated in my speech in reply to the Speech from the Throne that 80 per cent of those jobs are full-time. Members opposite keep giving other statistics but they cannot deny the truth.
We know that unemployment has decreased by 2.2 per cent between September, 1984 and September, 1986, so that it is now down to 9.5 per cent. Furthermore, we know that inflation is holding firm.
The Hon. Member for Trinity (Miss Nicholson) expressed some concern about the impact of these increased sales tax measures on the economy. We know that they have been in effect since April of this year and there has not been an adverse impact on employment which has, in fact, increased. We also know that consumer confidence has increased because consumer spending is at its highest level in 21 years and its second highest level in history. They have not had an adverse impact on consumer spending.
When we consider the international statistics, which the Prime Minister (Mr. Mulroney) quoted during the Throne Speech debate, we know that according to the 1986 report of the European Management Forum, in the past two years Canada has moved from eleventh place to sixth place in improving our competitive position. We can be very proud of
that record. Recently, a high level delegation from Japan visited Canada to meet the Government and private sector groups throughout the country. I had an opportunity to have an informal meeting with some of those delegates and discovered that they were almost astonished by the changes that have taken place in the economy of Canada in the past two years and the level of confidence that this was creating. Obviously, this will make Canada a much more positive place for investment and growth.
During the weekend the Prime Minister spoke to an organization and said that if we want to deal with the country's social problems, first we have to ensure that we have a healthy economy and economic growth. As he said: "Only a healthy economy can lead to the proper funding to combat social ills". It seems obvious, yet it is important that we reiterate those points time after time. It is always more pleasant to spend money. In fact, I find it interesting that the Liberals in their policy sessions being held across the country are saying: "Spend more money. Spend more money". That is all very nice, but we cannot afford to do that. When we spend more money in that way, ultimately it will come back to private citizens who will not then have the kind of income to invest in order to create the jobs which are required. It must always be balanced.
The particular increases with which we are dealing today are a very reasonable and sensible way to raise the 30 per cent which we believe should be raised through increases in taxation. There is a 1 per cent increase in excise tax in some areas. These changes will generate about $ 1 billion in additional revenue in 1987, which will really help us to meet our target of deficit reduction. At the same time, we have within this legislation looked at areas which need special attention. I recall when the Budget came down last April. I was particularly pleased by one of the measures which would exempt certain kinds of information for the travel industry from federal sales tax. That is information which is made available by Chambers of Commerce and Boards of Trade to help us sell Canada to tourists. That was one of the sensitive issues which we included in these provisions.
Hon. Members opposite have been concerned about the impact on lower income families, but they must keep in mind that in the enactment of the Budget we have indeed had that under consideration and have introduced a special refundable sales tax credit to lower income families. The credit provides $50 per adult and $25 per child, which could mean $100 per family with two children, and will be paid to families with an income of less than $15,000. The total benefits are reduced by $5 for every $100 in income over that amount. I think that particular measure, along with the measure we passed a couple of weeks ago for the refundable child tax credit, shows our concern about those families in Canada at the lower end of the wage scale. We know that many of those families are headed by women. We are trying to ensure that they benefit from the
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measures and are not unduly burdened by tax increases. I believe we have accomplished that.
I think the measures we are discussing today, which were introduced in the Budget, fulfil all the criteria of our philosophy, our commitment to economic renewal which is based on more efficient management of Government, reducing Government spending and reducing the deficit, and only, when necessary, increasing taxes, and certain taxes in a way which has the least dampening effect on the economy or on the ability or the initiative of people to take risks and to create entrepreneurial activities and create jobs.
I was in Vancouver on Saturday and spoke at a fascinating conference of aboriginal women who were interested in going into business. There were 90 or 100 women from the Vancouver region who were all looking at opportunities to start new businesses. This conference helped them to develop skills and create the partnerships and the networks. I talked to many of those women. They had ideas for shops and child care services, on reserves and off reserves. There was a tremendous feeling of confidence and optimism. As we know, the majority of new jobs created in this country are created by small business. In British Columbia, women are creating small businesses twice as quickly as men.
We can think of the group I met and spoke with on Saturday as really the leading edge of what we want to see happen in this country; people taking risks, making investments, and we in Government providing them with the framework and the environment in which they can take those risks successfully. 1 felt so good about that particular experience that I wanted to share it with my colleagues.
I also feel good about the kind of legislation we are debating today because it is consistent with our over-all policy of economic renewal, of new opportunities for our citizens and, as we have always said, a new Canada for all Canadians.


Victor Fredrich (Vic) Althouse: Mr. Speaker, I enjoyed listening to the speech of the Hon. Member, as usual. She talked about the hope that this legislation will increase tourism. She referred to the clause in the Bill before us which exempts people who relay information to tourists from tax on that particular written information. She, and indeed all of us, hope that this will contribute somewhat to an increase in tourism. However, I wonder, looking at the rest of the Bill, if she is not concerned that while information to potential tourists will not be taxed, this particular Bill creates actual extra expenses for tourists. I note there is an air transportation tax increase from the current 9 per cent to 10 per cent. There is an increase in fuel tax on regular gasoline from 3.2 cents a litre to 3.9 cents a litre. If the tourist flies in, his or her ticket will be more expensive because of these taxes. If the tourist drives in, it will be more expensive to use ground transportation. I just wonder how the Hon. Member sees the tourist industry being able to absorb these very real tax increases which amount to something in the order of 10 per cent. How will this affect the tourism industry?


Mary Collins: Mr. Speaker, I am pleased my hon. colleague has raised this issue because it is an issue which is very close to my heart. I might point out with respect to the air transportation tax the Hon. Member mentioned, there is a ceiling of $50 on domestic flights so that it will not place an undue burden on those who fly within Canada for long distances, particularly those residents of the North with whom we are very concerned.
One might think from what was said by the Hon. Member that these tax measures, most of which were in effect during the summer except for the gasoline tax, which did not come in until after, might have had an adverse effect, but I can assure my hon. colleague they did not. Not only as a result of Expo, but because of all the activities going on across the country, this has been an absolute boom year for tourists coming to Canada. It is terribly exciting.
I was at the United Nations in New York last week and had the opportunity to visit with our Consul General. We talked about tourism and what our New York office is doing. I was told there was a great deal of interest from the eastern United States. I particularly want to get them all out to British Columbia because we want people to come back after Expo and enjoy the glories of my wonderful province.
There were tours already booked. The raising of awareness in the eastern United States about Canada as a tourist destination has been fantastic. We will be following that up with very significant advertising campaigns co-ordinated through the Ministry of Tourism as well as with the private sector. Therefore, I can assure the Hon. Member that this kind of sales tax increase has not had a dampening impact. In fact, I see a great potential for growth in tourism which will benefit the economy of Canada.


The Acting Speaker (Mr. Paproski):: Order. Before I call it one o'clock, I would inform the Hon. Member for Capilano (Mrs. Collins) that she does have five minutes left in the time for the questions and comments when Orders of the Day are called.
It being one o'clock, I do now leave the chair until two o'clock this day.
At 1 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.

[Stage Direction]
USE OF CHEMICAL PESTICIDES CONDEMNED Hon. Chas. L. Caccia (Davenport): Mr. Speaker:
[Stage Direction]
November 3, 1986
The use of chemical pesticides in rural and urban settings has contaminated lakes, streams, aquifers, wildlife and food marketed all over the world. Farmworkers, their families, and non-farming residents of areas placing heavy reliance on chemical pest control often suffer acute and chronic ill effects from pesticide exposure. Severe economic losses result as many pests develop resistance to chemical controls. Farming methods dependent on high capital inputs can also accelerate soil erosion and fertility loss, threatening the base of all agricultural productivity and human sustenance.
This quote is from the Ottawa Declaration, made on World Environment Day, June 5, 1986, by concerned scientists from Canadian and American research institutes. These scientists urge their colleagues:
-to explore innovative sustainable systems of crop and livestock production, and particularly to seek pest control methods which protect human and environmental health.

[ Translation]

Mr. Darryl L. Gray (Bonaventure-Iles-de-Ia-Madeleine):: Mr. Speaker, I am honoured and privileged to point out that Transport Canada is celebrating its 50th anniversary today. I am sure that Hon. Members and all Canadians are as proud as all the employees of the Department to mark this first half century today, the first 50 years of Transport Canada's outstanding contribution to the well-being of our society.

Yesterday, November 2, was the fiftieth anniversary of the Department. On that day in 1936 the Department of Transport Act was proclaimed by Parliament when the former Departments of Marine, Railways and Canals, and the civil aviation branch of National Defence were merged into one.
Today Transport Canada's role and responsibilities are global in scope. Canadian airlines span the world. Search and rescue telecommunications are relayed through satellites. We must address environmental concerns and such issues as international terrorism in our planning.
I would like to salute Transport Canada and its people. May the next 50 years be as productive and inspiring as the last half century.


INDIAN AFFAIRS
Nelson Andrew Riis: Mr. Speaker, since the changes to the Indian Act were made to enable those people who had lost their status as Indian people to have their status reinstated, over 70,000 applications have been received
by the Department of Indian Affairs and Northern Development. To date fewer than 13,000 have been processed. People have been waiting for more than a year and still have not had their applications processed. Many young native people have had to forgo their education and job training plans while they wait for a decision on their Indian status.
I urge the Minister and the officials of the Department of Indian Affairs and Northern Development to recognize this outrageous situation and to take immediate steps to process the backlog of status applications.


SHIPBUILDING
Mr. Joe Reid (St. Catharines):: Mr. Speaker, Canada has thousands of miles of coastline, perhaps more than that of any other country in the world. We are a member of the North Atlantic Alliance, with areas of responsibility. Yet for all practical purposes we are without a navy. Given the difficult starting point of the Government in its marine renewal it has experienced delays and frustrations. Meanwhile Ontario shipbuilding yards remain without a contract, yards that have a proven record in Coast Guard vessel design and construction, yards that have proven themselves in navy refit and repair.
Whatever the cost advantage there was in the original program, it has long since disappeared.
I ask the Department of National Defence to review the cost benefit of seeing men at work building ships and the pride that we all can share as Canada's navy puts out to sea.


SUPPLY AND SERVICES
Hon. Lloyd Axworthy (Winnipeg-Fort Garry):: because the licensing is clearly related only to the servicing and maintenance of the aircraft. There goes one argument.
The other argument used by the President of the Treasury Board (Mr. de Cotret) is that only Canadian companies need apply. Does that mean that the new-found interest of the Conservative Government in recruiting foreign investment to help build Canada is no longer applicable? Does it mean that companies are no longer able to provide for this technology transfer if there has been foreign investment in them? I suggest that technology transfer is simply a subterfuge and what we really need is for the Government to come clean.


WELFARE
Mr. Geoff Wilson (Swift Current-Maple Creek):: Mr. Speaker, low-income Canadians are defined as those who spend more than 58.5 per cent of income on the essential items of food, clothing, and shelter. Happily, substantial progress against poverty has been made since the present Government took office. There were 298,000 fewer low-income Canadians in 1985 than there were in 1984.
The National Council on Welfare has pointed out two factors which account for this reduction. These are improved social program benefits and a reduction in unemployment. Obviously the major cause of poverty is unemployment and therefore the major weapon against it is job creation.
Since September, 1984, the Government has provided an economic climate in which over 600,000 jobs have been created and under which the unemployment rate has fallen from 11.7 per cent to 9.5 per cent.
The Government stands committed to alleviating the curse of poverty through the provision of long-term meaningful jobs for Canadians.


CANADIAN BROADCASTING CORPORATION
Ms. Lynn McDonald (Broadview-Greenwood):: Mr. Speaker, the celebration of the CBC's 50th anniversary this weekend was marred by the fact that in this of all years the CBC failed to account properly for millions of dollars of expenditures.
Let us not be so curmudgeonly as to fail to congratulate the CBC for its many contributions, for being the voice of Canadians speaking to each other and for often winning prizes. All this is done with a budget that is modest by international comparisons.

Canadian men and women who work for the CBC deserve a round of applause. The outstanding quality of their programs has earned them the respect of radio and television broadcasters throughout the world. Listeners and viewers, particularly in the remote areas of Canada, appreciate their work and dedication.
The Sauvageau-Caplan report advocates a still greater role for CBC broadcasting in the future.

The millions of Canadians who listen to and watch the CBC will want Parliament to wish it well on its anniversary on their behalf. May it have a computer that really works, better labour relations, more women on the air, and enough money to produce the high quality programming Canadians want and need.


WELFARE
Mr. Alan Redway (York East):: Mr. Speaker, notwithstanding press reports to the contrary, a Progressive Conservative Member of Parliament did attend the National Conference on Hunger this past weekend. I attended the conference because of the growing number of people my constituency office has had to refer to food banks for help.
In 1980 there were no food banks in Canada. The term "food bank" was virtually unknown. Today there at least 94 food banks and hardly a week goes by without some reference to food banks in the media.
The existence of food banks in Canada is a direct result of the high interest rates that brought on the recession in 1981. Although interest rates have been falling and the economy recovering, food banks are not disappearing. We are in danger of food banks becoming a permanent part of our social safety net. That is no reflection on the good intentions of those who work at food banks, or those who donate to food banks. But do we really want to have-


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

November 3, 1986


ROYAL CANADIAN MOUNTED POLICE
Hon. Bob Kaplan (York Centre):: Mr. Speaker, this afternoon I would like to draw the attention of the House to the role played by a retired member of the Royal Canadian Mounted Police, Charles Philion.
According to The Globe and Mail, Mr. Philion found racist elements in the RCMP's personnel policy. He was responsible for revealing the existence of the report and bringing it to the attention of the RCMP Commissioner.
According to the article, Commissioner Simmonds put an end to this policy, and today, I would like to talk about Charles Philion's role in this respect.


NATIONAL CRIME PREVENTION WEEK
Mr. Bob Hicks (Scarborough East):: Mr. Speaker, this is National Crime Prevention Week across Canada. The Solicitor General (Mr. Kelleher) will be travelling the breadth of this nation from Victoria to St. John's to acknowledge the many activities that are taking place at the community level to make our neighbourhoods safer and better places to live.
Hundreds of programs have been set up across the country. There are thousands of Canadian men and women volunteers who are working to make the crime prevention partnership between the police and the community strong and effective. Volunteer work is tremendously important to our society. One of the most satisfying aspects of the crime prevention partnership is the extent of the volunteer effort that goes into it. We are seeing a resurgence of community level participation addressing a whole host of social challenges. Mr. Speaker, everyone can play a role. Mr. Speaker, everyone should play a role.


WELFARE
Ms. Margaret Mitchell (Vancouver East):: Mr. Speaker, New Democrats share the outrage of delegates who attended the Hunger Conference last weekend. It is a national disgrace that food banks have been institutionalized because our social security system does not provide enough income for families. I am appalled that in Vancouver thousands of people must line up at food banks. Many of them are women and children.
At a summer poverty forum poor people told us that welfare must be raised, earnings must be exempted, and parenting must be recognized. We must have affordable housing and child care. Governments must act on several fronts to end poverty. We need aggressive job creation, tax reforms, higher minimum wages, pay equity, and guaranteed adequate incomes above the proverty line. Volunteer organizations should not have to feed hungry people. Governments must act now to eliminate hunger and poverty in Canada.


NARCOTICS
William C. Winegard: Mr. Speaker, some weeks ago the Prime Minister (Mr. Mulroney) suggested that illicit drug use in our country was a very serious problem and was epidemic. Recent information, including a new Gallup poll, confirms that most Canadians are as concerned as the Prime Minister. The Gallup poll indicated that 75 per cent of Canadians agreed with the Prime Minister on this issue.
Illicit drugs are a dangerous trap for all Canadians, especially the young. In that connection it is important to note that both the Canadian Football League and the National Hockey League have begun major drug education campaigns for the youth of Canada. Each of us should support wholeheartedly the efforts of the Prime Minister, the Minister of National Health and Welfare (Mr. Epp), the Minister of Justice (Mr. Crosbie), and the Minister of State for Youth (Mr. Charest) to control this major crisis facing us all. As Members of the House we have a special responsibility, particularly with respect to education.


SUPPLY AND SERVICES
Mr. Dave Dingwall (Cape Breton-East Richmond):: Mr. Speaker, to achieve regional equality requires strong, bold initiatives by the national Government. In regard to the award of the CF-18 contract to Canadair in Montreal one must ask these questions. What does it mean to the regions of this country? What does it mean to western Canadians? What does it mean to those Canadians in Atlantic Canada?
Is the Prime Minister (Mr. Mulroney) saying to western Canadians: "Go grow your wheat"? Is he saying to the people of Atlantic Canada: "Yes, continue your fishing"? When it comes to diversifying the economies of western Canada and of Atlantic Canada, the Prime Minister and the Government say an unequivocal "No". What does it mean with regard to a program that the Prime Minister initiated called the Atlantic
November 3, 1986

Opportunities Program? This was a golden opportunity for the Government to put its money where its mouth is. This was an opportunity for the Prime Minister to say to those individuals in Atlantic Canada: "We are going to give you a real opportunity and a real chance to diversify your economy." Shame on the Prime Minister.


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



ORAL QUESTION PERIOD


Right Hon. John N. Turner (Leader of the Opposition):: Mr. Speaker, my question is directed to the Prime Minister. The Government's handling of the maintenance contract for the CF-18 was unfair to the companies involved in that the standard bidding procedure was not followed. If the question of technology was the determining factor, why did the Government not say so in the first place rather than making it the prime factor only as late as last Thursday or Friday?


Hon. Robert de Cotret (President of the Treasury Board):: Mr. Speaker, regarding the right hon. gentleman's preamble to his question, 1 would like to repeat what I said last Friday. There was no change in the bidding process in any way, shape or form. We stood by the bidding process throughout. We went through the bids, through evaluation, through ministerial recommendation, and finally to cabinet action. In no way, shape or form was the normal process subverted.


GOVERNMENT'S POSITION
John Napier Turner: technology was not a factor in so far as the companies were concerned until last Thursday or Friday, and the Government of Manitoba was not informed that was the prime factor, why was Canadair not awarded the contract about a year and a half ago, and instead of raising false expectations why did the Government not provide alternative work of equal quality to Bristol and IMP?


Robert René de Cotret: Mr. Speaker, I must repeat once again what I said last week. We had two excellent bidders in those two groups covered by our technical evaluation teams. The bids were very close, both technically and as to cost. A number of considerations were taken into account. Given the fact that the bids were very close, we had a choice to make in the interests of Canada as a whole. That was not in any way against the bidding process. We made that choice, and one of the factors was technology
Oral Questions
transfer which we considered to be important. We made the choice on that basis and we stand by our choice.


INQUIRY WHY GOVERNMENT HAS NOT ISSUED CONTRACTS TO OTHER COMPANIES
John Napier Turner: Mr. Speaker, I have a supplementary for the same Minister. If the technology transfer to a company that builds whole aircraft is so important, and since Canadair is the only company of its kind in Canada, why wasn't the maintenance contract awarded a year and a half ago? And why didn't the Government spend the last 18 months obtaining contracts of equal value for companies like Bristol in Winnipeg and I.M.P. in Halifax, to give them a fair break?


Robert René de Cotret: Mr. Speaker, I think two comments must be made in this respect. First, about the time frame. We observed the time frame set for awarding this contract. The time frame was extended somewhat because initially, none of the bidding groups satisfied all the criteria. We therefore had to make a second call for tenders, which delayed the process for a couple of months.
I also can inform my hon. friend that when awarding contracts, the Government has always made clear it is not anxious to award the contract to the lowest bidder. The call for tender specified that "the proposal would be evaluated on the basis of socio-economic benefits such as Canadian design, development and manufacturing, and the technical support staff used by the entrepreneur."
Mr. Speaker, I think we observed every single rule governing the bidding process.


NATIONAL RESEARCH COUNCIL
Mr. Len Hopkins (Renfrew-Nipissing-Pembroke):: Mr. Speaker, my question is directed to the Minister of State for Science and Technology. In a memo dated October 31 the Director of the Algonquin Radio Observatory stated that due to Government forced cut-backs at the National Research Council, the Algonquin Radio Observatory would have to be closed, with the loss of specialized and unique expertise, and to the severe disappointment of scientists in Canada, the United States, and Europe. How could the Minister justify this ill-conceived closure of the largest fully steerable radio telescope in North America, in view of the Government's stated commitment that research and development would be a major

November 3, 1986
Oral Questions
priority? Is the Algonquin observatory to become yet another Tory graveyard of excellence-


Mr. Speaker:: Order, please.


Hon. Frank Oberle (Minister of State for Science and Technology):: Mr. Speaker, I can only repeat what I said last week, that plans for the refurbishment and extension of the observatory have been postponed and that there will be some cuts to the program. The decision to close the observatory has not been made. I wish the Hon. Member would keep that in mind when he asks his next question.


GOVERNMENT POLICY
Leonard Donald Hopkins: Mr. Speaker, perhaps the Minister could tell the House why the employees have been asked to apply for other jobs. How can the Minister justify the closing of this $40 million world-class telescope to save $1.1 million and to cut 20 jobs at a time when the Prime Minister of Canada has squandered enough money on a prison in his riding, not only to pay for upgrading the Algonquin Radio Observatory-


Mr. Speaker:: Order, please. I would ask Hon. Members to confine their questions to a question, not to argument.


Frank Oberle: Mr. Speaker, as the Hon. Member knows, the Government relies upon the wise counsel of 20 eminent persons who help the management committee of the National Research Council to select priorities in accordance with national priorities. The Council and the management committee have not made a decision on the Algonquin observatory. In fact other alternatives are being considered. I wish the Hon. Member would not be such an alarmist, because it is not very helpful to the morale of the people.


SUPPLY AND SERVICES
Hon. Edward Broadbent (Oshawa):: Mr. Speaker, my question is for the President of the Treasury Board. He knows very well that the Government of Manitoba and others think that the process of awarding the F-18 contract was not a fair one and that in some sense new criteria were introduced at the last minute. Was the question of technological transfer an item which was added at the last minute?


Robert René de Cotret: Mr. Speaker, I think I have just answered that question. I told an Hon. Member through you, Mr. Speaker, that from the very beginning of the bidding process there was a clause indicating that consideration would be given to socio-economic benefits, including such terms as Canadian design development
and Canadian manufacturing, engineering, and support personnel which would be used by the contractor. In no way does that exclude or preclude considering technological transfer; quite the opposite. I would think that is a very important part of the clause, and it was in there from the very beginning.


John Edward Broadbent: It may well be that the Minister thought that general phraseology included transfer of technology. However, the Minister also knows by now the Bristol Corporation did not think that, the Government of Manitoba did not think that, nor did a number of other people.


TENDERING PROCESS-INCLUSION OF GENERAL CRITERIA
John Edward Broadbent: Mr. Speaker, I should like to ask the Minister a question about this important tendering process. He said in the House on Friday, with reference to the future, that the Government would consider spelling out in a more detailed way such specific national concerns. At a meeting I had this morning with representatives of the Board of Trade and Chamber of Commerce of the City of Montreal, they also indicated that they would like a public spelling out of such criteria. In view of those facts, would the Minister now assure us that, before any other tendering process is entered into, there will be the spelling out of such general criteria?


Robert René de Cotret: Mr. Speaker, I indicated on Friday-and I stand by what I said-that I would be happy to consider how we could phrase the general clause to which I have referred to accommodate as many people as possible. However, I can only tell you, Mr. Speaker, that when we act in the national interest we do not necessarily have to spell it out. I would think that any responsible Government of the country would act in the national interest. It was in the national interest to ensure that we had the best possible transfer of technology. In our view the group of firms which could best assure that in a very close tendering process involving excellent firms was the group of firms headed by Canadair.


PERCEPTION OF FAIRNESS
John Edward Broadbent: Mr. Speaker, the Minister and everyone else in the country know that decisions of this kind are very sensitive and very difficult. Everyone understands that. However, the Minister also knows that such decisions must be perceived to be fair.
With this in mind, when will the Minister be prepared to tell the House something about the proposed change in criteria and about his own commitment to consider making more specific some of the national considerations which were clearly in the Government's mind when it reached this decision?


Robert René de Cotret: Mr. Speaker, if the Hon. Member is talking about changes to
November 3, 1986

the criteria in this contract, I can assure this House that there were no changes in the criteria for this contract. The criteria were well spelled out. We followed the bidding process. We had the evaluation, and ministerial recommendations by one Minister before the Cabinet shuffle and by another after. The recommendation was acted upon in due course, after thorough study and evaluation, by the Treasury Board. We followed the process as well as any process can possibly be followed in this field.


REGIONAL INDUSTRIAL EXPANSION
Lloyd Axworthy: Mr. Speaker, I have a question for the Prime Minister. The spokesperson for Bristol Aerospace said that they may well have to close the aircraft maintenance division, a company which has provided service for the Department of National Defence for over 30 years. The union president says that over 300 jobs could be lost.
What does the Government intend to do to keep the aerospace industry alive in Winnipeg? Can we be assured that the same kind of specious and biased arguments which were used in the CF-18 decision will not be used in the decision on the CF-5 maintenance contract or in judgments on other aerospace industry work?


Right Hon. Brian Mulroney (Prime Minister):: Mr. Speaker, I, of course, must reject very vigorously the pejorative allusions made by my hon. friend. They are unacceptable and completely inaccurate. The decision was made in the national interest. That having been said, I can assure my hon. friend that Bristol, which is an excellent company, has had a very productive association with the Government of Canada over many years. We will ensure that that association remains productive and beneficial to Bristol.


Lloyd Axworthy: Mr. Speaker, I can only say that many people in Manitoba find that decision unacceptable because of the criteria that were used.


WINNIPEG RAILWAY SHOPS
Lloyd Axworthy: Mr. Speaker, I would like to ask the Prime Minister a question about the remark of the Minister of National Health and Welfare who said that "Manitoba is owed" as a result of the decision taken by the Government. Does the Government intend to pay its debt to Manitoba, as described by the Minister of National Health and Welfare, by restoring funding for the National Research Centre on Science and Technology and ensuring that CN will do the light hopper work in the Transcona shops in order at least to retain that technology in
Oral Questions
the city of Winnipeg rather than having it taken away by the Government?


Martin Brian Mulroney: Mr. Speaker, in an ideal situation in matters such as this there would be no losers, there would only be winners. Unfortunately, that is not always the case. As I indicated to the House, these decisions are painful for a national Government because we want, as would any Government, to do our very best for all regions at all times.
As the Premier of Saskatchewan and the Government of Alberta pointed out yesterday, the Government has done an enormous amount for western Canada. I want to assure my hon. friend that we do not consider that to be enough. We have taken and shall be taking many more initiatives on behalf of western Canada, and Manitoba in particular, which I know my hon. friend will be delighted to support.


MINES AND MINING
Mr. Neil Young (Beaches):: Mr. Speaker, my question is directed to the Minister of State for Forestry and Mines. It has been reported that Algoma Steel intends to close its iron ore mine in northern Ontario resulting in the loss of thousands of jobs in transportation and tourism as well as in mining. Can the Minister advise the House whether he has been in touch with officials of Algoma Steel? Can he clarify whether this report is in fact accurate?
Hon. Gerald S. Merrithew (Minister of State (Forestry and
Mines)): Mr. Speaker, certainly that news report is a source of worry to the Government as well as to the people in that particular community. That operation has had some difficulty for several years. They have made proposals to the provincial Government, to labour, and 1 guess to some of our Departments, with regard to a package that might preclude its being shut down. Those proposals are under consideration now.
With respect to whether we can verify the truth of that statement, I can only say at this time that there is no formal announcement.


PROPOSALS CONCERNING MINE'S FUTURE
Neil Young: Mr. Speaker, my supplementary question is directed to the Minister of Transport. Could he advise the House whether it is his intention to call in officials of Algoma Steel and the railway company involved, who jointly made the proposals to the Government, to discuss with them this week the feasibility of adopting the proposals that they put forward to the Government?

November 3, 1986
Oral Questions


Hon. John C. Crosbie (Minister of Transport):: Mr. Speaker, the Solicitor General has been in touch with me and other Ministers of the Government and several weeks ago arranged a meeting on this very subject between Algoma Steel and Algoma Central Railway. The lead Department for the Government of Canada in this matter is really the Department of Regional Industrial Expansion. The Department of Transport is also acting in the matter and the Government of Ontario, of course, is also involved. Negotiations are continuing and I have no doubt that, if the Solicitor General has his way, we will do what we can to assist in the situation.


NATIONAL RESEARCH COUNCIL
Mr. Jean-Robert Gauthier (Ottawa-Vanier):: Mr. Speaker, my question is directed to the Minister of State for Science and Technology. Press reports on the weekend have given support to Doctor Donald Morton's statement to the effect that he had no choice, had no money, and had to cut the telescope program. In a memo dated October 31, 1984, Doctor Donald Morton, Director of the Herzberg Institute of Astrophysics, stated: "It is with regret that I must announce these changes with the loss of dedicated staff with specialized expertise and the need to close a major telescope". Who is telling the truth? arm's length NRC, or the Minister with a hands-on policy?


Mr. Speaker:: Order. I would ask the Hon. Member to rephrase the latter part of that question.


Jean-Robert Gauthier: In that case, which version is correct: the arm's length statement of that Director of the Institute who says "We have no alternative, we will close next summer", or the hands-on attitude of the Minister, saying, "We have decided to cut the moneys."?


Frank Oberle: Mr. Speaker, the decision to modify the program at the observatory and postpone or cancel expansion plans was made by the Management Committee of the NRC on the advice of the council. It is not my decision. My information, after phoning the President of the NRC this morning, is that a decision to close the observatory has not been made.


PROFESSIONAL'S FUTURE PROSPECTS
Jean-Robert Gauthier: I have a supplementary, Mr. Speaker. This morning, the Professional Institute of the Public Service of Canada tabled its annual report in the House, and in it we read: "Canada cannot afford to lose very many qualified replacements for its aging research staff and highly specialized professions." What does the Minister have to say to university students today? What kind
of career can they expect? What can they expect from this Government besides cutbacks and program cuts?


Frank Oberle: Mr. Speaker, instead of looking at one particular program, the Hon. Member should examine the Government's record in total.


Jean-Robert Gauthier: I have. I will send you a copy.


Frank Oberle: With regard to universities, we have committed ourselves to a program which will produce a billion dollars of additional funding to universities over the next five years because we believe so strongly that this fundamental research needs to be combined with the task of training our next generation of scientists. That is the kind of program we are promoting.


SUPPLY AND SERVICES
Mr. Rod Murphy (Churchill):: Mr. Speaker, my question is directed to the President of the Treasury Board. Earlier in Question Period he said that despite the feelings among parts of Canada that the Government changed the rules part way through the game, technology transfer was one of the criteria from the beginning. If that is the case why did the 75 top bureaucrats who examined the bids recommend Bristol?


Robert René de Cotret: Mr. Speaker, I believe I have answered this question time and time again. There were no changes in the criteria for the allocation of this contract at any time during the submission process. There were clauses in the initial requests for submissions that were exercised, given the fact that two excellent groups of companies were very close to each other. That was a choice that the Government had and that is a choice that the Government made. The Government exercised that choice in the best interests of the country.


TECHNOLOGY TRANSFER DECISION
Rodney Edward Murphy: Does the Minister mean to say that if the Government made that decision on the basis of technology transfer, the government experts ignored that completely? Who made the choice that technology transfer would be better served at Canadair than at Bristol?


Robert René de Cotret: Mr. Speaker, when there are two excellent bidders the terms of the submission indicate very clearly that the Government reserves the right to award the contract to other than the lowest bidder and also reserves the right to consider other
November 3, 1986

criteria. That is what the Government did. It had a choice and exercised that choice in the best interests of the country.


BID MADE BY THIRD CONSORTIUM
David Charles Dingwall: Mr. Speaker, my question is directed to the President of the Treasury Board. The Minister stated on Friday that the decision to award the CF-18 maintenance contract was between two successful bidders, Canadair and Bristol. He also stated that a third consortium was dismissed "because of technical insufficiencies". What were those insufficiencies and when was that decision made to exclude the consortium?


Robert René de Cotret: Mr. Speaker, my hon. colleague should know that I am not at liberty to reveal the details of any commercial submission on any request for bids. Throughout the evaluation process one of the groups of companies was judged to be non-compliant from a technical point of view and was dropped at that point.


David Charles Dingwall: I suggest to the Minister that that particular answer could be interpreted in the most negative way, calling into question the integrity of the bidding process.


REQUEST THAT UNSUCCESSFUL BIDDERS BE REIMBURSED
David Charles Dingwall: Mr. Speaker, on the basis of fairness and equity would the Minister not deem it appropriate to reimburse those two bidders, IMP of Halifax and Bristol of Winnipeg, the full cost they have incurred in submitting proposals for this contract?


Robert René de Cotret: Mr. Speaker, the answer is no.


MINES AND MINING
Nelson Andrew Riis: Mr. Speaker, my question is directed to the Minister of State for Forestry and Mines. The Minister is well aware that the proposed iron ore mine closure at Wawa is apt to cost that part of Canada 6,500 jobs, perhaps even more. He indicated that it was a source of worry to him and others and that he guessed there had been some representation to some of the Government Departments. As the Minister responsible for mines is he aware of the situation and the whole problem associated with the closure at Wawa? If so, what has he done about it and what is he planning to do about it?


Hon. Gerald S. Merrithew (Minister of State (Forestry and Mines)):: Mr. Speaker, the Hon. Member can rest assured that I certainly am aware of what has been done as well as what the problem has been in the past. A proposal has been put forward
Oral Questions
by the company. It involves the province, the federal Government, and labour. We will make an announcement once those solutions are considered by all three parties.


MINISTER'S POSITION
Nelson Andrew Riis: Mr. Speaker, is the Minister aware of the proposal that has been put to the federal Government and, if so, when can we expect some comment because there is a great deal of concern, particularly among the 6,500 people who are likely to lose their jobs if the mine closes?
Hon. Gerald S. Merrithew (Minister of State (Forestry and
Mines)): Mr. Speaker, the Hon. Member can rest assured that I am aware of the problems. They are under consideration and, as stated earlier by the Minister of Transport, their consideration involves other levels of government. A potential solution will have to be considered by labour. This is under consideration and an announcement will be made when there is something to announce.


ADMINISTRATION OF JUSTICE
Robert Phillip Kaplan: Mr. Speaker, in the absence of the Solicitor General my question is directed to the Prime Minister. Why is the Government taking risks with public safety and with public confidence in the parole system by transferring the responsibility for its supervision from trained professionals in the Public Service to volunteers?


Hon. Don Mazankowski (Deputy Prime Minister and President of the Privy Council):: Mr. Speaker, perhaps I could take that question as notice and ask the Solicitor General to get back to the Hon. Member later on this week.


RALLY HELD IN TORONTO BY PAROLE OFFICERS
Robert Phillip Kaplan: Mr. Speaker, my supplementary is directed to the Prime Minister. With regard to the rally by parole officers which took place in Toronto on Saturday afternoon, will he give assurance on behalf of the Government that reprisals will not be taken by the Government against those public servants who chose to participate in that demonstration?


Donald Frank Mazankowski: Without having all the facts at my disposal, I will certainly convey that representation to the Hon. Solicitor General. I am sure he will be in touch with the Hon. Member.

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Oral Questions


NATIONAL RESEARCH COUNCIL
Mr. David Orlikow (Winnipeg North):: Mr. Speaker, my question is directed to the Minister of State for Science and Technology. Last week when I asked the Minister about the Algonquin Radio Observatory, and again today when he was asked questions about the closing of that observatory next year, he denied that a decision had been made. The director of the Herzberg Institute today notified 25 permanent employees that because of the cut of over SI million to its budget, the observatory will be closed next year and their jobs will be phased out. Will the Minister explain what is happening?


Frank Oberle: Mr. Speaker, I thought I had explained it. There is a reduction in the program which has been announced. However, the decision on the long-term future of the observatory has not been decided. How many more times can I explain that? The Council is looking for alternatives.


David Orlikow: Given the fact that these people have been given their notice, how can the Minister say that?


USE OF OBSERVATORY'S EQUIPMENT
David Orlikow: Is the Minister aware of the plan that when the observatory, which cost $40 million to build, is closed, the equipment will be cut up and sold as scrap? Is the Minister aware of that plan?


Frank Oberle: No, Mr. Speaker, I am not aware of that plan, nor am I aware of any lay-off notices going to any employees. I state emphatically that that has not happened.


CANADIAN HUMAN RIGHTS COMMISSION
Ms. Sheila Copps (Hamilton East):: Mr. Speaker, in the absence of the Minister of Justice, my question is directed to the Prime Minister. In response to opposition questions about Conservative appointees to the Canadian Human Rights Tribunal, the Minister said the issue was competence. Was competence the reason for the appointment of Toronto Tory, Antonio Arcangel, who, in the current issue of Toronto Life Magazine, praises the Government of Ferdinand Marcos and its nine-year imposition of martial law in the Philippines by saying: "We were so happy. We would go home at 11 in the evening and have a sound sleep thinking there were no more people making a mess out there". Is that the kind of person we want in our Canadian Human Rights Tribunal here in Canada?


John Carnell Crosbie: Mr. Speaker, members of panels who have been selected across the country in the various provinces and regions are all competent and responsible people-


An Hon. Member:: How would you know, John?


John Carnell Crosbie: -as far as we know-


Some Hon. Members:: Oh, oh.


John Carnell Crosbie: -and it is unheard of for scattered statements to be plucked out of the air and imputations made about them. It has never been done in this House before and I find it very unbecoming now.


REQUEST FOR INVESTIGATION OF APPOINTEE
Sheila Maureen Copps: Mr. Speaker, I am asking a serious question and I would like a serious answer. Who in this Government is checking the qualifications of people who are appointed to a quasi-judicial tribunal, the Canadian Human Rights Tribunal? Would the Prime Minister personally investigate this appointment, and if in fact the statements attributed to this gentleman in Toronto Life are true, will he be thrown off the Canadian Human Rights Tribunal, because we do not want a supporter of martial law on the Canadian Human Rights Tribunal.


John Carnell Crosbie: Mr. Speaker, the Hon. Member is a member of the committee in question. If the Hon. Member was seriously concerned-


Sheila Maureen Copps: I am.


John Carnell Crosbie: -about the integrity and qualifications of these persons, she would not be up slandering them in this House. She would be trying quietly to find out in committee what their qualifications-


Jean-Robert Gauthier: He made the statement himself, John. Come on.


John Carnell Crosbie: -and backgrounds are.


Mr. Speaker:: Order. I would ask the Hon. Minister to withdraw the word "slandering". I do not think it was necessary and I do not think most Hon. Members in the House feel that way.


John Carnell Crosbie: I withdraw the word "slandering" and replace it with the word "disgusting".


Some Hon. Members:: Oh, oh!


Mr. Rossi:: You are a big joke.


Mr. Speaker:: I would ask the Hon. Minister to withdraw that word in view of the context within which it was said.


John Carnell Crosbie: I withdraw, Mr. Speaker.
November 3, 1986


Jean-Robert Gauthier: Good.


CANADA POST CORPORATION
Geoff Wilson: Mr. Speaker, my question is directed to the Minister responsible for the Post Office who will know that recently Canada Post officials denied second-class mailing privileges to the national publications of the Lutheran and Presbyterian Churches. In view of the fact that other churches continue to enjoy second-class mailing privileges, will the Minister consider instructing Canada Post to restore the privileges previously enjoyed by the Lutheran and Presbyterian publications? And will he ask Canada Post to ensure there is some consistency in the application of its rules?


Hon. Michel Cote (Minister of Regional Industrial Expansion):: Mr. Speaker, the Post Office is fully aware of the situation. The chairman is presently reviewing the situation and we hope to be able to make an announcement in the near future.


NATIONAL RESEARCH COUNCIL
Mr. Howard McCurdy (Windsor-Walkerville):: Mr. Speaker, my question is directed to the Minister of State for Science and Technology. A few moments ago he said that questions about NRC are hurting morale. I would have him know it is the answers which are hurting morale.


An Hon. Member:: It's the evasions.


Howard Douglas McCurdy: If, as the Minister states, the radio telescope is not at the present time to be shut down, when will the decision be made as to whether it will be shut down, and by whom?


Frank Oberle: The decision on any program of the National Research Council is made by the board and the management of that Council.


COMMITTEES' REVIEW
Howard Douglas McCurdy: Mr. Speaker, does the Minister not agree that the NRC Associate Committee on Astronomy and the NCR Management
Oral Questions
Committee are appropriate bodies to have reviewed the matter of the telescope, as indicated in this memo I hold, and to come to the conclusion that the telescope would be shut down?


Frank Oberle: If such a prestigious committee came to that conclusion, I would say perhaps it would be shut down. It would be its decision to make.


BANKS AND BANKING
Aideen Nicholson: Mr. Speaker, my question is directed to the Minister of Finance. Last Friday the Minister of State said that when the Estey Commission was established it was to decide on the question of releasing the names of the uninsured CCB and Northland Bank depositors and that Mr. Justice Estey had decided not to release the names. Can the Minister clarify that answer since, contrary to what was said on Friday, the matter of the uninsured depositors was not in the Commission's published terms of reference and the report is silent on the matter?


Geoff Wilson: Mr. Speaker, the terms of reference for the Estey Commission, as the Hon. Member well knows, are not so broad as to identify every specific item which might or might not be considered by the Estey Commission. The Hon. Member is quite aware of the position the Government took at the time. We decided it was inappropriate for us to release those names because we valued highly the importance of the privacy of individuals as expressed in the Bank Act and the fact that this also is reinforced by the traditions of the Access to Information Act. We know that the matter could have been considered by Mr. Justice Estey. He chose not to do so. I think the matter rests there.


INQUIRY CONCERNING POSSIBLE INTERIM REPORTS
Aideen Nicholson: Mr. Speaker, the Minister's answer today differs from the answer given by the Minister of State for Finance on Friday. Will the Minister tell the House whether Mr. Justice Estey submitted interim reports? Did he recommend that any portions of his report, or reports, be kept confidential?


Geoff Wilson: Mr. Speaker, Mr. Justice Estey did not issue any interim report, and did not ask whether or not any of his report should be made confidential.

November 3, 1986
Oral Questions PORTS


PRINCE RUPERT-FUTURE OF GRAIN TERMINAL NO. I
Mr. Jim Fulton (Skeena):: Mr. Speaker, my question is for the Minister of Transport regarding Prince Rupert Grain Terminal No. 1. I am sure the Minister is aware that Price Waterhouse has studied the feasibility of operating the facility and has found that it can be run at a profit. Underwood McLellan has completed an engineering study and has found that the facility is basically sound. Since there is now an offer from Alberta Terminals to purchase and operate the facility will the Minister add his support to maintaining and operating this facility?


John Carnell Crosbie: Mr. Speaker, this is a grain elevator and handling facility which is in excess of 60 years old. In 1979 the present Deputy Prime Minister and the present Minister of Agriculture arranged with a consortium for a new elevator to be built in Prince Rupert. The consortium has the right either to have it demolished now, having spent over $200 million on the new facility, or to return it to the Government of Canada. My predecessor went to great lengths to attempt to arouse interest in operating the old facility. There was no interest expressed within the time limit that he indicated earlier in the year, and there is no present proposal before the consortium. I can only say that I will continue to look at the matter, but that is the present position.


REPORTED PURCHASE OFFER
James Ross Fulton: Mr. Speaker, over 40 per cent of that facility was built since 1969. The taxpayers of Canada turned it over to the consortium for one dollar. The taxpayers own it. My question to the Minister is very simple. Since Alberta Terminals has offered $14 million for it and since Prince Rupert Grain wants to tear it down at a cost of $3 million, does it not make more sense to keep it in operation handling grains such as feedstock that are not competitive with Prince Rupert Grain No. 2? This would keep people in Prince Rupert, and in the country, working.


John Carnell Crosbie: Mr. Speaker, perhaps the hon. gentleman does not understand that an agreement was entered into with the consortium in 1979 and that it expended something between $200 million and $250 million. It has certain rights in this matter as well. I reaffirm what I just told the hon. gentleman. I am advised that there is no concrete proposal with any figures capable of being analyzed or reviewed now before the consortium. That is the present position. There is nothing concrete before it in terms of concrete figures on which it can decide to act or not.


ENVIRONMENTAL AFFAIRS
Herbert Eser (Herb) Gray: Mr. Speaker, my question is for the Acting Minister of the Environment or such other Minister as may be appropriate. Yesterday we learned that a number of environmental groups in the United States are prepared to go to court to stop the construction of the Detroit incinerator which is causing great concern to so many Canadians because of its lack of environmental control equipment. Will the Government join in such a court action or at the very least will it provide funds to appropriate Canadian environmental groups to join in such an action to prevent this incinerator from being built and threatening the health and safety of large numbers of Canadians?


Donald Frank Mazankowski: Mr. Speaker, I am advised that my colleague, the Minister of the Environment, discussed this case in detail with the EPA Administrator, Mr. Thomas, at their regularly scheduled meeting on environmental issues. Officials of Environment Canada and External Affairs held consultations with Washington on this matter on October 22. The Minister of the Environment and other representatives of the Canadian Government are vigorously restating our concerns on this very important matter.


COURT ACTION CONTEMPLATED IN UNITED STATES
Herbert Eser (Herb) Gray: Mr. Speaker, if the Minister is not ready to give a commitment to provide financial support with respect to the court action for which I understand there is precedent with regard to the Niagara River problems, I ask the Minister whether he will at least have officials of the appropriate Departments meet with Mark Richardson, counsel to the American environmental groups which are contemplating the court action, to see how the Canadian Government can best support their action which is of such an essential nature to so many Canadians?


Donald Frank Mazankowski: Mr. Speaker, I can tell the Hon. Member that the Government of Canada is exploring all options on this particular issue. We will continue to press our case with the United States, as well as look at those options. I can assure the Hon. Member that his concerns will be expressed to the Minister of the Environment on his return to the House.


NARCOTICS
Alan Redway: Mr. Speaker, my question is for the Minister of National Health and Welfare. According to the results of a Gallup poll released today, 75 per cent of
November 3, 1986

Canadians agree with the Prime Minister's comment that the use of illegal drugs in Canada is an epidemic. Will the Minister advise the House if he intends to take urgent action to deal with this problem as he would with other epidemics? If so, when and what?


Hon. Jake Epp (Minister of National Health and Welfare):: Mr. Speaker, what the Hon. Member has said was included by Gallup in a poll conducted approximately two weeks after the Prime Minister's statement. 1 think the Prime Minister's statement clearly reflected what a number of us knew as a result of communications we had had with parent-teacher groups and others. It is very clearly confirmed in the Speech from the Throne which includes a drug strategy. For example, the Solicitor General will be making certain announcements in the next few days along this line. There will be others. The Prime Minister's view has been very solidly endorsed by the average Canadian.


REGIONAL DEVELOPMENT
Mr. Bill Blaikie (Winnipeg-Birds Hill):: Mr. Speaker, my question is for the Prime Minister. It has to do with a comment made by the Hon. Member for Provencher that Manitoba is owed one by the federal Government. Will the Prime Minister tell us when the appropriate Minister in his Government will make a statement in the House about matters that are relevant to the economies of Manitoba and western Canada? For instance, when will we be told that new transcontinental equipment will be ordered? When will the VIA Rail shop in Winnipeg be built? When will the capital expansion of the diesel shop in Transcona happen? We need to know these kinds of things.


Martin Brian Mulroney: Mr. Speaker, I think that the Minister of National Health and Welfare, as an outstanding representative of Manitoba and western Canada, was merely indicating in response to a question that, inasmuch as he is aware of the commitment of the Government to western Canada, he can speak with certainty that there will be future good news for western Canada, and for Manitoba. In that, of course, he is quite right.


AEROSPACE INDUSTRY INQUIRY
William Alexander (Bill) Blaikie: Mr. Speaker, we do not want further news of the kind we have had so far-


Mr. Speaker:: Order, please. The Hon. Member gave a very lengthy preamble to what turned out to be a very detailed and lengthy question. Perhaps on his supplementary question he could be direct.
Oral Questions


William Alexander (Bill) Blaikie: Mr. Speaker, I would like to ask the Government when the appropriate Minister will make a statement with respect to what will be done for the aerospace industry in Manitoba, and for all the other industries that I listed in my first question. We need to know this.


Martin Brian Mulroney: Mr. Speaker, as soon as possible in all cases.


FINANCE
Mr. Jacques Guilbault (Saint-Jacques):: Mr. Speaker, I have a question for the Minister of Finance regarding a disagreement between the provincial Ministers and the federal Minister of Finance about equalization payments. The fact is that the Quebec Minister of Finance has said he is willing to reduce his demands in an attempt to reach a settlement with the federal Government. My question is as follows: Considering the general opposition in Quebec to transferring the Drummondville penitentiary to Port-Cartier, would the Minister of Finance be willing to recommend withdrawing this decision in order to save many millions of dollars that could be better used to increase the equalization payments Quebec needs so badly?


Geoff Wilson: Mr. Speaker, the Hon. Member has referred to disagreements that were encountered during the course of a Finance Ministers' meeting in Edmonton on Friday. I think there was general acceptance that the proposals that were on the table from the Government of Canada were reasonable proposals. There were some Ministers who, I thought, were a little bit unrealistic in the demands that they made, particularly in view of the fiscal position of the Government of Canada. I quite firmly stated to them that we could do certain things to enhance the fairness of the equalization program but that it was not possible to go to the extent of the demands made. In that regard I think that they were quite unrealistic.


EDUCATION AND MEDICAL CARE IN QUEBEC-GOVERNMENT POSITION
Jacques Guilbault: Mr. Speaker, the Minister of Finance claims that an agreement has been reached and that everybody has come round to his position. However, the facts are there: the Quebec Minister of Finance is not happy with the decisions that were made.
And to get back to my question: Does the Minister really believe he has his priorities right by spending money on

November 3, 1986
Privilege-Mr. Waddell
transferring a penitentiary or does he feel that education and health care for Quebecers have a higher priority? That is what I want to know.


Geoff Wilson: Mr. Speaker, I do not think the Hon. Member understands the nature of the equalization process. The equalization payment is a totally unconditional payment on the part of the federal Government to certain provinces which are not as well off as others. Those moneys can be used in any way the provinces want to use them, but we have made it quite clear to the provinces that equalization will continue to be a priority of the Government of Canada.
We indicated that the growth rate in equalization payments will continue to be one of the highest of all government programs, and the enhancement that was discussed on Friday would have increased that growth rate even more. It is for that reason that I felt that the provincial Finance Ministers who opposed this were being unrealistic and did not understand, or did not want to understand, the fiscal position of the Government of Canada.


Mr. Speaker:: I recognize the Hon. Member for Vancouver- Kingsway on a question of privilege.


Mr. Waddell:: Mr. Speaker, my question is directed to the Minister of Transport. I have before me a letter from the British-


Mr. Speaker:: Order. Question Period has expired. I thought the Hon. Member was rising on a question of privilege of which I had received notice. Does the Hon. Member wish to proceed with his question of privilege?


Ian Gardiner Waddell: Mr. Speaker, I thought I could sneak in one more question. I will ask the Hon. Minister of Transport to return tomorrow and we will take it up from there.


PRIVILEGE
Ian Gardiner Waddell: Mr. Speaker, I have raised a question of privilege and you have in your possession the letter I wrote to you giving you notice of it. The facts are as set out in the letter. I would just say that the role of a critic in this House, and I have been-


Mr. Speaker:: Order. I do not know whether or not the Hon. Member wishes me to hear argument. However, I think it is the right of the Hon. Member to put the basic facts when
arguing a question of privilege. I would invite the Hon. Member to exercise his right accordingly.


Ian Gardiner Waddell: Mr. Speaker, the facts are set out in the letter, a copy of which has been given to the Hon. Minister and yourself. I would ask you to adopt those facts.
In summary, on October 29 and 30, both myself and members of my office staff tried to receive a copy of the Minister's very important speech on the deregulation of natural gas which was to be given in Calgary. My office was repeatedly promised the document and was told certain things about what was going on that were not true. The result was that the press in Calgary and elsewhere managed to receive a copy of the Minister's speech before I did. The Minister's speech was made available to the press before it was made available to Members of Parliament. I was not asking for an advance copy of the speech but just for some co-operation.
This is a continuing trend. Sometimes speeches are given to the press before they are given to us. I know this has happened on one other occasion.
A critic must respond quickly. When the Minister for International Trade (Miss Carney) was Minister of Energy, she made a point of making speeches available to the Opposition. She was a good Minister. We received a continual runaround from the present Minister's office so that I was not able to respond in the House as critic.
The story came out of Calgary where they are able to control the news. So much as it is possible, they are able to control the news because there was no general critical comment from a federal Member of Parliament in Calgary.
This kind of thing is becoming the trend. It is a breach of the privileges of Members of the House and it is not the way to run a Department. I am sorry to see this happening. The Minister came into his Ministry highly regarded. If this is the way he will act, it is very regrettable and I believe it is a question of privilege.


Mr. Masse:: Mr. Speaker, I had to work on the text until the last minute, and this explains the delay. Perhaps there was a Translation delay, I have no idea. I can assure you that the text was ready when I gave it. It was ready at the last minute because I corrected it until the last minute, as Minister responsible for departmental policy. It was with this in mind that I revised the text.


Philip Derek Lewis: Mr. Speaker, I believe it is fair for me to say that of all the suggestions made, I find the suggestion that we are controlling the news to be the most amusing. I believe this is an isolated incident. The Hon. Member will know that the Government has made every effort to co-operate with opposition critics on statements by Ministers and on instances such as this. I would suggest that this is not really a question of privilege but an isolated incident. We
November 3, 1986

will do our best to see that these problems are ironed out in the future.


Mr. Speaker:: On Friday, the Hon. Member for Vancouver-Kingsway (Mr. Waddell) very courteously delivered to the Chair a letter setting out extensively the facts of the Hon. Member's grievance. The Chair has considered the facts as set out in the letter and has also listened carefully to the Hon. Member for Vancouver-Kingsway. Hon. Members will note that I invited the Hon. Member to be sure that when rising on an occasion like this, he put at least some of the basic salient facts on the record of the House because the Chair feels that that is helpful. The Chair has also listened to the Minister and to the Parliamentary Secretary.
The Chair is conscious of the fact that this kind of complaint has been made repeatedly over a great many years. All Hon. Members will know that when some who sit on one side of the House sat on the other side, this kind of complaint, taken as a point of privilege, was made.
The Chair feels that the complaint is a serious one, but must advise the Hon. Member and other Hon. Members that in the view of the Chair, it is not a question of privilege. The Hon. Member for Vancouver-Kingsway has heard the statements of the Minister and the Parliamentary Secretary. It would seem to the Chair that there is in both those statements a disposition to say that they regret that the incident occurred. I am sure the Hon. Member can, with that disposition of goodwill evidenced, take the matter up with his House Leader, the House Leader of the Government and perhaps as well the House Leader of Her Majesty's Loyal Opposition. Perhaps together they may be able to work out an understanding so that the Chair will not have to take up the time of the Chamber to deal with this kind of complaint.
In the interests of parliamentary reform and of enhancing the role of the private Member, of committees and of critics, a careful adherence to all of the courtesies that can be exercised would be helpful to the administration of Government and certainly to the mood and attitude in the House. After having been in this new position for one month, I think the Chair can say that Hon. Members of the House have been extremely helpful to the Chair and I thank them for that. I think that helpfulness was exhibited in today's exchange.


Some Hon. Members:: Hear, hear!



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Hockin that Bill C-14, an Act to amend the Excise Tax Act and the Excise Act, be read the second time and referred to a legislative committee.
Excise Tax Act
Mr. Speaker:: When the House rose at 1 p.m., there were five minutes remaining in the question and comment period following the speech of the Hon. Member for Capilano (Mrs. Collins).

I will now recognize Hon. Members who wish to go on with the period of questions and comments. The Hon. Member for Scarborough East (Mr. Hicks).


Robert Nelson David Hicks: I would like to comment briefly on the very good speech of the Hon. Member for Capilano (Mrs. Collins) which was made in her regularly imitational style.


Some Hon. Members:: Hear, hear!


Robert Nelson David Hicks: The Hon. Member alluded to the air transportation tax, which has been increased from 9 to 10 per cent. When that was done, many people living in remote areas were extremely concerned. This Government has recently taken steps to alleviate some of those concerns. I wonder if the Hon. Member would care to comment on those steps.


Mary Collins: I would like to thank my colleague for Scarborough East (Mr. Hicks) for his very kind comments. Yes, indeed, the question of the air transportation tax is part of Bill C-14 which we have before us. To begin with, it is important to remember the reason for the air transportation tax. It is a tax which goes toward the provision of airport facilities and navigation services, so it is a tax directed toward specific services.
The Hon. Member will recall that prior to the introduction of the change in the last Budget, there was a transportation tax of 9 per cent without a ceiling. That was a hefty bill for people from the further regions of this country, particularly from the far North where the costs of air transportation can range from $800 to $1,000. What has been accomplished with the new revision is that the rate has gone from 9 per cent to 10 per cent but there is a ceiling of $50 on domestic travel. That means that even if the airfare is $1,000 from point A to point B, the limit of the transportation tax will be $50. That is certainly consistent with our whole approach in trying to make taxation fair. In this particular case it is going to help people who live in the far northern parts of the country or the farthest regions. On the other hand, there is not the same limitation on the tax which went into effect in August on the cost of air travel from outside the country. Generally speaking, you can get such good rates these days, and many of the airlines offer specials, that quite often you can go a long way for $500, which is where the $50 tax comes into effect.


Nelson Andrew Riis: I listened with interest to the Hon. Member's speech. It was a very entertaining and exciting presentation. The Hon. Member indicated a concern that most speakers to this debate have regarding the deficit and ways and means of

November 3, 1986
Excise Tax Act
combating an increasing deficit. The implication was that one of the ways of increasing revenues for the federal Government was by levying these taxes on all types of new items and increasing the levels of sales tax, which is a regressive tax.
I would like to ask the Hon. Member her views regarding the $500,000 capital gains exemption. Does she feel that it is appropriate to have a carte blanche capital gains exemption up to $500,000 so that a person who makes money by speculating in land in Florida or Arizona does not have to pay tax on that money or if someone is speculating in the Hong Kong stock exchange and makes profits there of up to $500,000 that one should pay no tax on that? Personally, how does the Hon. Member feel about this provision? To my knowledge such a wide application of exemption from capital gains does not exist in any other country in the world.


Mary Collins: I thank my hon. colleague for his comments. I not only try to be entertaining but to be enlightening about the legislation that we are putting forward.
I had the opportunity of commenting on the capital gains exemption a couple of weeks ago when I spoke in an earlier debate in the House. I believe at that time I explained to the House that I felt it was a very important measure and one that had not received as much attention as it should. It is an important tool in encouraging new investment. I would hope that most of that investment would be in Canadian activity, particularly in small Canadian companies. As Members know, other provisions have been brought in during the past year to encourage that as well. I have found that it is often identified as only wealthy people who are going to benefit from the capital gains exemption. To some degree they will. However, ordinary Canadians who have a little bit of money to invest in a penny stock, some other stock, or a piece of property will have the benefit of that growth and the opportunity to reinvest and to spend. That will assist in improving the economy over a period of time. I have certainly welcomed that measure and I think it will be an advantage.


The Acting Speaker (Mr. Paproski):: Questions and comments are terminated. On debate.


Hon.   Chas. L. Caccia@Davenport: Mr. Speaker, as we are having this debate, this measure is already in place, because it came into effect in April of this year. It might not harm for a moment to indicate to Canadians what is taking place in terms of a persecution of the consumer by way of increased sales tax. In most of these cases it is invisible because it is incorporated in the price of services or goods long before they reach the consumer.
What we are debating today with this Bill C-14 is an increase of 14 per cent in the sales tax for construction goods. This is an increase from 7 to 8 per cent in the tax rate applied to construction goods. There is an increase from 7 to 8 per cent in the cable and pay-TV services. There is an increase from 14 to 15 per cent in the tax rate as it applies to wine, beer, tobacco, and other alcoholic beverages. There is an increase in
the tax rate from 11 to 12 per cent in a number of other taxable goods, which are too numerous to be listed here today. However, the increase taking place now compared to the one which existed before translates into some pretty surprising percentages.
In the case of construction goods, the increase in the tax rate from 7 to 8 per cent means a percentage increase of 14 per cent in the tax itself. In the case of cable and pay-TV services, the increase as a result of this legislation represents an increase of 14 per cent. In the case of wine, beer, tobacco and other alcoholic beverages, it represents an increase of 7 per cent. The increase that applies on other taxable goods is an increase of 10 per cent.
On January 1 of this year we witnessed another increase in the tax rate on manufacturers' sales. At that time we had an increase comparable to what we are debating today. In other words, in the same year there is a double whammy by the Conservative Government to the Canadian consumer by way of applying twice an increase on sales taxes that in the end amounts to the following. There is an increase in the sales tax of 28 per cent on construction goods and similar material and an increase of 28 per cent in cable and pay-TV.
There was also an increase of 14 per cent on wine, beer, tobacco, and the like, as well as an increase of 10 per cent applied to all other taxable goods. If we look at the tax as it was before January 1 of this year and as it is now after two increases have taken place, we understand the decline in the political fortune of the Tories in Canada this year. We also understand why their performance in the polls is so weak, why there is a downward trend, and why their popularity in general is suffering.
We are witnessing a hard year in terms of the application of taxes upon consumers. It is a taxation regime based upon a Tory philosophy which says that everyone, no matter what their income, should pay the same tax. In addition, the tax is not visible at the time of purchases.
It is unlikely that the purchaser of construction goods will pay the tax in the end. It will be consumers at the retail level who will pay for it. In the case of cable and pay-TV services, the subscribers will pay for the increase in taxes. The same must be said about consumers of alcoholic beverages and tobacco. That is the inevitable conclusion at which one must arrive in examining the application of the measure before us for debate.
What is happening in 1986 is a continuing erosion of the purchasing power of consumers by way of the imposition of an invisible tax which hits harder those with lower incomes and much harder those who are below the poverty line. The policy is a typical Tory approach to economics. It reinforces the well known perception about which people on the street speak when they say that Tory times are tough times. It is another example of the application of economics which are regressive in social
November 3, 1986

terms and are bad per se because they diminish the capacity of consumers to purchase and to keep the economy healthful and vital.
Earlier this morning the Hon. Member for Lethbridge- Foothills (Mr. Thacker) made reference to the Bill as being a necessary instrument to pick up the tab for the deficit by taxation. That is the point of departure or the watershed between the Tory approach and the Liberal approach to tackling the deficit. The Tories are trying to tax people in every respect. They have the notion that by doing so the deficit will be reduced substantially. They say that it is a medicine which must be taken to reduce the deficit, the monster which has been described in various interventions on the part of the Conservative Party.
I submit that it is the wrong way in which to reduce the deficit. One does not bring down the deficit by applying a tax which hits the poor hardest and hits the well-to-do least. It is actually an unfair way of dealing with an important measure, that is, the reduction of the deficit. It should not be fought on the backs of those who can least afford it. In that respect Tory Members and those of us on this side of the House part ways in a very dramatic and drastic manner. I do not think they should pick up the tab for the deficit, as the Hon. Member for Lethbridge-Foothills put it, by way of taxation, particularly a sales tax which is applied equally on everyone and therefore hits hardest those who can cope the least.
There are other ways of reducing the deficit. There are other techniques of maintaining the good health of the economy, actually increasing its momentum, increasing the revenues of the state, and gradually coming to grips with a reduction in the deficit itself.
There is an aspect in Bill C-14 about which I should like to comment very briefly. It concerns the ways and means application on page 11a as it affects petroleum products, in particular regular gasoline, unleaded gasoline, and the like. We have the introduction of a tax whereby unleaded gasoline is taxed more heavily with the application of a tax of SO.0036 per litre and the tax on regular gasoline is $0.0032 per litre. In other words, we are witnessing the application of a policy whereby the consumer of unleaded gasoline, that is an individual driving an environmentally friendly type of engine, is being penalized by an ever-increasing tax on unleaded gasoline.
We on this side of the House raised this matter almost a year ago. At that time the Conservative Government had already introduced a taxation measure which applied a greater tax upon unleaded gasoline than upon regular gasoline. In second reading debate-and I believe it was also at third reading-we drew to the attention of the Government the way this could be avoided. We suggested that a tax increase on gasoline ought to be applied with greater emphasis on regular gasoline than upon unleaded gasoline in order to protect the environment. I remember Your Honour was in the Chair and
Excise Tax Act
listened patiently to what would be the advantages in environmental terms in the application of a greater tax on regular gasoline than on unleaded gasoline.
I regret to report that the Tories have done it again despite promises and statements made in public. For example, on October 31, 1985, as reported in The Globe and Mail, the Minister of the Environment (Mr. MacMillan) proclaimed that eliminating the price difference between leaded and unleaded gasoline might be the best way to end widespread misfuelling. He went on to say that he would co-operate with the federal Minister of Finance (Mr. Wilson) and with provincial colleagues to see whether the disparities in the price of gasoline could not be addressed. Then he extolled about what Canadians ought to do, namely, pay a premium to protect our health. He indicated that this would be a way of protecting the health of our children.
As we know, unleaded gasoline is not as harmful to human health as is leaded gasoline. That was a year ago, almost to the day. However, we find ourselves facing a second increase. This despite representations made to the Government a year ago, and despite promises and declarations of good intentions, which is basically what they remain, by the Minister of the Environment. He seems to be very prone to making promises and impotent in delivering upon them. That is very regrettable because the question of taxation of unleaded versus regular gasoline is becoming a national concern. There is no reason why a Government which claims to be interested in protection of the environment, human health and other resources affected by acid rain, cannot proceed through a change in taxation policy to ensure that unleaded gasoline costs less at the pump than regular. I for one cannot understand why this cannot be achieved given the length of time which has gone by since the matter was first raised.
It is true other jurisdictions, being the provincial Governments, impose taxes on gasoline. It is my fervent hope that the Ontario Liberal Government will be the first jurisdiction to adopt a policy which taxes unleaded gasoline less than leaded. While that process is under way, however, we in this House of Commons have twice witnessed a tax Bill in which this basic fact has been ignored. Therefore I urge Conservative Members who care about the environment in fact as well as in words to register this point in their national caucus. The matter has not been dealt with. It is not right that the gap between leaded and unleaded gasoline would continue to rise to a difference of over 3 cents a litre at the pump. Imposition of the Ways and Means figure I mentioned earlier will result in an even greater differential.
I refer those Members concerned about the reaction of farmers to that excellent clause in this Bill which provides refunds to farmers on the purchase of gasoline. 1 refer now to Clause 9 as a whole which takes into account the desirability and necessity to compensate farmers, and I suppose it applies to fishermen as well, on the gasoline they consume.

November 3, 1986
Excise Tax Act
In essence this Government has to come to grips with its economic policy so as to make it jibe with its environmental policy. That has not yet taken place despite the repetitive promises made by the Minister of the Environment. In fact, the Government made a regressive decision by extending the phasing out of lead in gasoline to 1992 instead of 1990. For that reason alone let us at least have a tax policy which will result in a price for unleaded gasoline at the pump which is less than leaded.


The Acting Speaker (Mr. Paproski):: I regret but the Hon. Member's time has expired. Questions and comments.


Mr. Blenkarn:: Mr. Speaker, I was quite intrigued when the Hon. Member first made the proposition with respect to the difference in price between leaded and unleaded gasoline. Is it the view of the Liberal Party that it would consent to an amendment to the Ways and Means motion to increase the tax on leaded gasoline to make it the same price as leaded gasoline?


Mr. Caccia:: Mr. Speaker, if the Hon. Member would care to look up the submission I placed on the record at the time of the debate on Bill C-80 he will find the formula and precise percentages which would have to be applied to regular and unleaded gasoline in order to bring about this switch without a loss of revenue to the Treasury.


Donald Alex Blenkarn: The Hon. Member will of course realize that the whole question of taxation is changing given our tax reform proposals. This Bill is really a temporary Bill. The only easy way of doing this would be to have an identical tax on gasoline, whether it be leaded or not. Therefore I ask him again, will his Party consent to an amendment to the Ways and Means motion so that the particular schedules concerned can be amended at a later stage in the proceedings?


Charles L. Caccia: Mr. Speaker, I went to committee on Bill C-80 with an amendment. I was not granted the opportunity to submit it there. I did submit it as an amendment on third reading in a detailed manner. It is in Hansard, and all the Hon. Member has to do is to look it up. It can be done if there is the political will to do so. I urge him, though, not to confuse this Bill with tax reform. I doubt very much, and I think deep down he does too, that tax reform and the imposition of taxes on gasoline will have very much in common. This tax, once it is in place, will be hard to remove no matter what kind of tax reform you engage in. If we are going to have tax reform, it will be Tory tax reform and I am very suspicious of it.


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


Mr. Jean-Pierre Blackburn (Jonquiere):: Mr. Speaker, I am sure Canadians are not overjoyed today, listening to a parliamentary debate a proposed sales tax increase on certain products. No taxpayer in his right mind appreciates paying
more for any product, good or service he might consider buying.
Still, Mr. Speaker, Canadians readily admit that the existing situation could not last any longer. Canada was sliding down a dangerous hill, heading full speed for a bottomless pit. Under the previous Government, the gross national debt increased by 50 per cent in only a few years, and debt servicing soared by 85 per cent.
More specifically, the deficit rose from $14 billion to $27 billion between 1981-82 and 1982-83, almost doubling in a single year.
Mr. Speaker, we probably cannot repeat it too often.
Our annual budget is now $116 billion, and every time Canadian taxpayers are presented with a new Budget, they should realize that there will be a shortfall of nearly $30 billion-yes, $30 billion-in revenue to balance the budget, which means that we are spending more than we get in revenue. This shortfall is now $28 to $30 billion annually, but if we had not intervened, it would be as much as $38 to $40 billion annually, nearly $10 billion more per year. The annual deficit was close to $40 billion, as it was during the last year of the previous Government's term. This administrative disaster led us to apply sounder management practices aimed at reducing the rate of growth of the deficit, which we wanted to see below the growth rate of our economy.
The purpose of Bill C-14 is to achieve that goal through legislation that will generate revenu and at the same time reduce our expenditures. The tax increases produced in this Bill represent 30 per cent of our deficit reduction program, while spending cuts represent 70 per cent. Exactly what kind of revenue are we talking about in Bill C-14? Seven hundred million will be raised by increasing federal sales tax during the 1986 fiscal year, rising to $1.05 billion in 1987. Excise tax will produce $125 million in 1986, and twice that much: $250 million, in 1987.
However, there are other reasons as well for increasing our revenue and bringing down the deficit. Ninety-three per cent of the present deficit arises from interest payments on the amounts we borrow to finance the previous deficit. Yes, Mr. Speaker, 93 per cent of our present deficit consists of interest payments on the money we borrow to pay off the previous deficit.
We also want to maintain our basic social programs. Consider the child tax credit Canadian families will be able to claim this year. In fact, Canadians with incomes of less than $15,000 will be able to claim $300 per child in November. Furthermore, the child tax credit will be increased by $70, which will raise the credit to $524 starting next year.
Job-creation programs are also very important, and we are allocating $4 billion over two years to job creation through our six job-strategy programs.
November 3, 1986

Farmers will also benefit, Mr. Speaker, through a reduction in tax on the gas they use in their farm operations. This is the kind of assistance they need and the kind we are giving them.
Mr. Speaker, another very important measure, one we implemented in the last Budget, is the $500,000 capital gains tax exemption.
Mr. Speaker, 1 still remember that very recently some Canadian farmers told me how much they appreciate the $500,000 capital gains tax exemption. Mr. Blackburn, they said, you know, we were no longer even able to give or sell our farm to our children. It was viewed as a capital gain and we did not even have the money to pay taxes on it. Thanks to the tax reform-our tax reform-now we can do that, let our children take over and keep the farm going. This $500,000 capital gains tax exemption is a measure which Canadians really appreciate.
A number of other Government initiatives bear fruit as well, and this would be a good opportunity to raise the matter of employment. When we came into office the unemployment rate was 11.7 per cent, today it is down to something like 9.5 per cent. We have created 595,000 jobs since we took over in 1984, which works out to 24,792 jobs a month against 7,345 under the previous administration. In other words we are creating three to four times as many jobs each month. Three to four times as many jobs a month has to be some kind of an achievement, Mr. Speaker, a significant figure which Canadians should be aware of. It is still not enough, of course, what with an unemployment rate of 9.5 per cent, an improvement but still not enough by a long shot. We must keep up our efforts and, as a responsible Government, that is exactly what we are doing. We are always coming up with job-creation policies, ever on a quest for a fresh approach to this problem.
Mr. Speaker, Canada's economic growth is another challenging issue. In terms of economic growth, Canada ranks second among the 24 OECD member countries. It is indeed a promising performance. This means that, on 24 countries, Canada had the second best record for economic growth and job creation. That is an important factor and it must be taken into account.
Let us speak also about the announced tax reform. Our Government has said that it would examine the options offered for an in-depth tax reform. We remain committed to our objective of implementing a simpler, fairer and more efficient tax system. Our review deals with the relationships between the three major components of federal taxation, that is direct personal income tax, corporate income tax and the sales tax, and their role in meeting our tax reform objectives in Canada. Our Government has established major principles to promote the debate in coming months as well as public input on reform options. In fact, what we want is more equity in the tax system. Our taxation system must ensure an equitable distribution of the tax burden among all taxpayers. This means that taxpayers in the same situation must be covered by the same taxation system, that all high income individuals and all profitable corporations must pay their fair share of taxes and
Excise Tax Act
that similar products must be subject to the same sales tax rate. The sales tax burden must be distributed more equitably among goods and services and the sectors which produce them, which is not the case now.
When we talk about a tax reform, our objective is to reduce the personal tax rate and perhaps to increase the corporate tax rate. I refer to an article by reporter Vincent Cliche which appeared last October 29 in the newspaper Le Soleil. The author had this to say: Yet it has become necessary to review the method of taxation in Canada, first for a very pragmatic reason since the United States have already completed their own reform which will come into effect in 1988. The attraction of simplicity could incite many corporations or taxpayers in Canada to opt for the American system and to decide to pay their taxes in the United States. It is therefore important for us to join in this process. However, the major reasons for an indepth review of the tax system, as everyone including the Minister of Finance (Mr. Wilson) himself recognizes, is that Canadian taxpayers pay too much in taxes, to the extent that the percentage of federal tax revenue from personal income tax has been increasing constantly in the last 25 years to reach the present figure of 50 per cent.
Finally, the tax burden balance between lower and higher income earners, between individuals and corporations, has been greatly jeopardized by the gradual introduction of tax shelters.
This is therefore a major tax reform, and I think that Canadians are happy to see our Government undertake such a reform.
While we are on the subject of Government policy, I should like to mention the one that was made public over the past weekend concerning a major contract which was awarded to Canadair for the maintenance of F-18 aircrafts. Mr. Speaker, there was a difference of less then 3 per cent between the Bristol Aerospace and Canadair. Our Government acted in Canada's best national interest when it decided to grant this contract to a Montreal corporation. I must say that even if this decision is difficult to accept for a province, I suggest that, under the circumstances, Canadair being an airplane manufacturer, it will fully benefit from this high technology transfer.
With this in mind, our Government decided to award a $104 million contract for three and a half years to Canadair. Over the weekend, a great many Canadians have congratulated our Government for its choice, a choice which was both difficult to make and of great importance in view of the high technology involved in this maintenance contract for F-18s.
Mr. Speaker, perhaps we should talk about the inflation rate, which is still around 4 per cent. This is part of this Government's performances, as is another one our policies applying to 185,000 widows and widowers aged 60 to 64, who can now get the spouse's benefit. This is very important.
There is of course something else that we might be able to implement and I am thinking in particular about single people who are in the same predicament and unfortunately cannot

November 3, 1986
Adjournment Motion
benefit from it. In order to extend that, and of course I do not think there is one single Member here who would not wish we could give more to Canadian men and women in need or facing difficulty. But we need money for that, and it is not always possible to act as and when we would like to.
Mr. Speaker, I would also like to recall that during the summer, when the Quebec Caucus met in the Beauce area, it was my pleasure as a Member for Jonquiere to present to my colleagues a working paper on voluntary retirement at age 60. This is another policy I know would be most popular with Canadian men and women. It would have the additional benefit of opening jobs for our young people who are looking for employment or are trying to get into the labour force after graduation, or for fathers or mothers aged over 40 who very often have difficulty re-entering the labour market.
Mr. Speaker, we now have 1,160,000 Canadian men and women aged 60 to 65, and I was recommending that gradually, over a five-year period, we implement a policy of voluntary retirement under which in 1988, for instance, people aged 64 could go on early retirement; in 1989, it would be those aged 63, in 1990 those aged 62, and so on and so forth. This would mean that Canadians who so desire, who have worked hard, could decide on a well-deserved retirement to allow young people who would like to work to get into the labour force. Mr. Speaker, it is a sad situation for Canadians, or for young people aged 20 to 25 to be jobless. And I can tell you that as Members of Parliament, we regularly have those people coming to our offices to discuss the problem. They would like us to introduce more measures to help young people get on the labour market and be entitled to a job, which is so rewarding for everyone.
Mr. Speaker, I mention that because it is important and it is part of this Government's policy, because we are trying to implement those policies, and in order of course to do that we need more revenues, and to make the Canadian economy work better and to continue reducing the deficit.
Bill C-14, the Bill we are considering today, has a disagreeable side for Canadians because we are going to increase sales tax in certain areas. People should realize that the money we raise in this way, $700 million this year and $1.05 billion next year, will enable us to sustain the social policies we are introducing now for the benefit of Canadians. I am sure they agree with what we are doing, Mr. Speaker, to put our economy on a sound basis and steer a straight course so that pretty soon, instead of an annual deficit of $30 billion, we will have a balanced budget within several years.
Mr. Speaker, I want to thank you for this opportunity to speak to Bill C-14 and the various sales tax increases it entails, and those were my comments on the subject.


Stanley J. Hovdebo: Mr. Speaker, the Hon. Member spent a considerable amount of time talking about the deficit and defending the type of tax proposed in this Bill.
The Auditor General has suggested that the Government of Canada has forgone billions of dollars in tax expenditures in various forms of relief mostly to corporations. In years past this has amounted to considerably more than our deficit and this year it amounts to $28 billion, which is as much as our deficit this year.
Would the Hon. Member agree that a better source of funds to reduce the deficit in a more effective way would be to ensure that all or part of the tax expenditures of corporations are tapped by the Government? According to the Auditor General's Report from last year, these tax expenditures amounted to between $23 billion and $50 billion. This year, the Auditor General specified that at least $28 billion was forgone by the Government in this way.


Jean-Pierre Blackburn: In my opinion, Mr. Speaker, the question raised by my colleague does underscore or indicate how imperative a tax reform has become in this country. A good many tax shelters are now allowed, yet Canadian taxpayers must pay ever more taxes as years go by. The tax reform we are about to embark upon will undoubtedly deal with the tax shelter issue since the proposed reform would advocate higher corporate taxes and a lighter tax burden on Canadian taxpayers.
Needless to say, the Auditor General's report has raised this important issue and, as it happens, one of the recommendations of this Government is to implement a tax reform which should benefit all Canadian men and women.



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mr. Paproski):: It is my duty, pursuant to Standing Order 66, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the Hon. Member for York East (Mr. Redway)-Trade- Canada-United States negotiations-Economic Council's projection; the Hon. Member for Churchill (Mr. Murphy)- Unemployment insurance-(a) Pay-outs in Atlantic Canada, (b) Request for Government guarantee; the Hon. Member for Trinity (Miss Nicholson)-Finance-(a) Sales tax-Effect on disposable income, (b) Personal taxes-Request for rollback.
November 3, 1986



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Hockin that Bill C-14, an Act to amend the Excise Tax Act and the Excise Act, be read the second time and referred to a legislative committee.
Stanley J. Hovdebo: It seems to me, Mr. Speaker, that we spend an inordinate amount of time discussing the deficit and the methods of reducing it. The Hon. Member who just spoke indicated that the main reason for the establishment of Bill C-14 was to reduce the deficit and that the time is now. I do not believe anyone in this House does not recognize that the deficit is a major problem. We operate under a financial structure where our financial institutions are the strongest organizations in Canada and they will continue to take their pound of flesh regardless of the economics of the country and how much it hurts us. Therefore, we have to take seriously the fact that the deficit costs us $20 billion to $30 billion a year to service.
The point we should make clear as often as possible is that there are ways of dealing with the deficit other than nickel and diming us to death with sales taxes on every little item a consumer purchases. The sales tax in any form is a regressive tax. It takes the same amount of money away from persons who are trying to live on $7,000 or $10,000 a year as it does from the person who earns $100,000 a year. Since we all consume approximately the same amount of most items, this is not a fair way of dividing the burden. All Parties in this House and every Government in Canada has recognized that there is some value in having a progressive type of tax. But that progressiveness is being attacked by the Government with the Bill which is before us today. Progressive taxation means that the person who is able to pay the most, pays the most. A regressive tax is a tax which it is necessary for the individual to pay regardless of how much he earns. Therefore, every time tax is put on a loaf of bread, whether the bread is purchased by someone on welfare or someone who receives a very small wage, they will have to pay the seven cents, eight cents or nine cents, whatever the tax amounts to on that loaf of bread, in the same way as a person who earns $100,000. Of course, that tax affects the low wage earner a great deal more than it does someone who earns a good wage.
It seems to me that when the Government uses these sales taxes, these hidden taxes, to a large extent, in its attempt to reduce the deficit, it is being cowardly in its approach. It is unwilling to say to those who earn a great deal of money that they should pay. It chooses instead to hide the tax so that everything which is purchased will contribute to the reduction of the deficit. The Government thinks this will not be noticed by most individuals because when one goes to buy a loaf of
Excise Tax Act
bread, the fact that it is two cents or three cents more expensive will not really be a factor because that loaf of bread will still be purchased.
It is of great concern to me, to members of my Party and to many people across the country that this Bill deals not with who is able to pay but only with the collecting of money. It does not recognize that Governments have a social responsibility to even out the amount of money which people live on.
Two weeks ago the Minister of Finance (Mr. Wilson) rose in his place and promised he would make some changes in the taxation structure to make it more progressive and fairer for ordinary Canadians. But today we are debating a Bill which does exactly the opposite. This Bill is not fair to ordinary Canadians and will make it more difficult for the Canadian family to survive. What makes it more of a problem is the fact that the Government has shown that this is not something new it thought up last week. This is a policy which it has carried on for two years and intends to continue to carry on. In the first two years of this Conservative Government, instead of introducing a fairer taxation system, it has increased the amount of taxes to be paid. It has made the system less fair than it was before. There were quite a few problems in the tax system before the Government came to power but instead of doing what it said it was going to do in its campaign speeches before it was elected, it has continued to increase the complexity and the unfairness of the tax system. The Government in the two years it has been in power has added something over $800 per family in direct taxes. It has also added a considerable amount in regular income taxes. So that a family of four who thought they were doing pretty well two years ago, unless they received a 7 per cent increase in income per year, is earning less today. That problem is being perpetuated by this particular Bill.
The Government has a propensity for using hidden taxes. Sixty-nine per cent of the tax increases in the last two years have been in excise and sales taxes and only 31 per cent of the increase of money taken in has been in income tax. The Government suggests there are a lot more people earning a better wage than before, at least it keeps telling us that. I think it is important to recognize that the Government is speaking from a certain position. It is likely to continue to develop its tax structure in that way regardless of how much it says it will improve it.
We have suggested that the Government increase the corporate tax rate. I was not surprised to hear the Hon. Member for Trinity (Miss Nicholson) defend the corporate tax structure-the Liberal Party has been doing that for many years. The Government is now suggesting that it will increase corporate taxes. The Hon. Member for Lethbridge-Foothills (Mr. Thacker) seemed to express some concern with respect to that point. We must recognize that if corporate taxes are increased it is likely that there will be some adjustments passed on to consumers. Tax on corporations is tax on income which

November 3, 1986
Excise Tax Act
cannot be avoided in quite the same way that other taxes can be avoided. If a corporation makes more money by gouging the consumer then it will have to pay more tax on the extra money it earns. We recognize that this extra money may be used to increase profits. If that happens then a law which is in place in the country will have to be utilized when it is obvious that corporations are gouging consumers.
The Minister of Finance has suggested that what the Government will do is to close the loopholes and eliminate some of the tax expenditures which the Auditor General suggests costs the Government some $28 billion per year. If this is done, the Government will be able to take advantage of this forgone money and increase the income of the Government. Consequently, it can do what it spends so much time telling us it will do, that is, reduce the deficit.
Today I had the fortunate-or unfortunate-adventure of looking into what is happening to the farm community in Saskatchewan. As Hon. Members know, the Government in the last year established the Farm Debt Review Board. Maybe it has not helped the farmers much as yet. There is even some suggestion that it may not help farmers. However, it has done one thing. It has made available statistics about farm foreclosures. For instance, statistics from the Farm Debt Review Board, which is in place in every province, show that there were 1,233 notices by financial institutions of intention to foreclose against farms in Canada between August 5 and October 16, a matter of just over two months. I was a little shocked to find out that Saskatchewan accounted for 677 of those notices. In other words, more than one-half of those notices were filed in the Province of Saskatchewan. The rest of the country is also in bad shape. For instance, Alberta had 217 financial organizations file against farmers. Manitoba had 110; Ontario had 142; Quebec had 42; and there were 27 in New Brunswick. Little Prince Edward Island even had 12 financial organizations file against farmers. The same is true in the case of British Columbia.
I make the point that even as the Government puts in place what it says may help farmers, it brings in this Bill which affects every item a farmer buys. It affects every item which is necessary for production. Today farmers will tell us that it is input costs which are killing them. I refer to the cost of fuel, the cost of money, fertilizer and chemicals. These are costs which are making farming less profitable when one considers the low prices farmers receive for the commodities which they produce. The Government talks about how it will help the farmer through the review board and other measures while at the same time it puts forward a Bill such as this which will cost the farmer even more money. I use farming as an example, but this measure will affect every industry in the same way. Each time direct taxes are increased input costs are increased. This in turn makes it more difficult for industries to make profits.
Over the last few years the effect of increasing input costs without increasing commodity values has decreased farm incomes to the extent that there have been 1,233 filings with respect to foreclosures in a matter of a few months. That is
only a small part of what will happen to the farming community. I suggest that what the Minister of Finance is doing through this measure is playing a shell game with the taxpayers. He is telling them that he will shift the tax burden and reduce the amount of income tax they must pay. Taxes may disappear momentarily, but in the end they will return in larger amounts than ever before.
Instead of this shell game which moves taxes from income to direct taxes the approach should be much more worth-while. If the Government continues in this approach it will not be long before we will be penalizing the poor and ordinary Canadians to the extent that we will be paying much more in terms of welfare. We will be increasing the number of food banks necessary to keep people alive. The taxation process that is being put into effect through this Bill will contribute to this.
I believe the direction that is being taken is wrong. Instead of trying to increase direct taxation, the Government should take the advice of the Auditor General and eliminate as quickly as possible tax expenditures from corporations.


Rodney Edward Murphy: Mr. Speaker, the Hon. Member for Prince Albert (Mr. Hovdebo) spoke eloquently of the problems faced by farmers. I wonder if he would spend a few moments explaining to us about the things he thinks could be in tax legislation that would be of direct assistance to the farming community not only of Saskatchewan but of Manitoba, Alberta and elsewhere in Canada.


Stanley J. Hovdebo: Mr. Speaker, I used the example of farmers being affected by this type of taxation, but this example must be extended to every ordinary Canadian. If the only thing the Government will do is to increase the price of goods used by farmers, it will increase farmers' input costs. If the Government were to pick one particular industry to do something about, it should make the inputs to that particular industry exempt from tax. The Government has done this in the area of fuel. The tax paid on fuel by farmers is only a small percentage of a cent after receiving the rebate. If that rebate applied to all other inputs, there would be some effect on the cost of production on each farm.


Nelson Andrew Riis: Mr. Speaker, I wonder if the Hon. Member would shed some light on a question that has been arising in the House for many years and that is the matter of the hesitancy of the Government to move on the definition of a farmer for taxation purposes. I know the question about Section 38 of the Income Tax Act has been raised here for as long as I can remember.
Perhaps I could ask the Hon. Member to indicate whether or not this matter is still a problem and why it is that the Government seems to be taking so long to take action on this matter. The Government is two years into its mandate and has still taken no particular action on defining Section 38 of the Income Tax Act more precisely.
November 3, 1986


Stanley J. Hovdebo: Mr. Speaker, Section 38 supposedly defines a farmer as a hobby farmer, a part-time farmer or a full-time farmer. As long as a farmer makes money, the Government is willing to call him a farmer regardless of how much or how little he makes. It is when he starts losing money that the Government starts changing its rules.
As soon as a farmer loses money, the Government says that he cannot deduct the money he has lost because he is not a farmer. It tells the farmer that farming is just a hobby with him and he has spent that money for his own enjoyment. That problem must be faced and it must be faced very quickly.
As I indicated, 677 people are faced with foreclosure. That is an indication of what is happening to farmers. More and more farmers are getting jobs off the farm so that they can survive. If they make more money off the farm than on it because of the economic structure of agriculture, then the Government tells them that they are no longer farmers and therefore cannot deduct their losses against their incomes.


Mr. David Kilgour (Parliamentary Secretary to Minister of Transport):: Mr. Speaker, it is a pleasure to speak on this Bill. A number of Hon. Members have spoken about what the Bill is about and what it is not about. If I may, I would like to discuss what the Bill attempts to do and why it attempts to do it. Then, since members of the other Parties have raised a number of questions about social policy, I would like to spend most of my time speaking about what we have done in that area of great importance to many Canadians.
Some Hon. Members say that it does not contain too much good news, but the good news in the Bill is that it provides a one-year extension of the fuel tax rebate for primary producers. The rebate will go from three cents per litre to 3.5 cents per litre. We believe that is important in that it fulfils a commitment made by the Prime Minister (Mr. Mulroney) to the primary producer sector which, as you know, Mr. Speaker, is in great difficulty.
The Bill is designed to raise revenue. We are chronically short of revenue thanks to the 15 or 16 years of financial mismanagement on the part of the earlier Government. The Bill will generate approximately $700 million in the present fiscal year and about $1 billion in 1987.
It is a little known fact that about 93 per cent of today's deficit has accrued as a result of paying interest on money borrowed to finance the previous Government's accumulated deficits. That, of course, has led to higher interest rates. Interest rates are decreasing, but they are not low enough yet. The deficit has led to a weaker dollar, and I would point out that about $90 billion is owed by Canadian provincial Governments, the federal Government, Crown corporations, private citizens and corporations to external creditors.
Maintaining a strong dollar and keeping interest rates as low as possible are two things which are very important to Canadian men, women and children. The national debt is close to $250 billion. The mountain of red ink in which we find ourselves impairs our ability to provide better and richer social
Excise Tax Act
programs to citizens who need them. We are trying to spend smarter. We are trying to eliminate waste and unnecessary programs. We are trying to sell off some Crown corporations and we are trying to help low-income Canadians.
I believe our social programs are excellent. Someone has said that a rising tide lifts all boats including human boats. The creation of jobs is probably the most important social policy we can have. We have created fully 595,000 jobs since we were elected in the 1984 election. The national unemployment rate was 11.7 per cent on election day. I am happy to confirm that last month, it was 9.5 per cent. I know, as do other Members from western Canada and the Maritimes, that the unemployment rate is still too high in our own regions but over-all, jobs are being created at an average rate of about
25,000	per month.
More than 75 per cent of the jobs that have been created since we took office are full-time jobs. Youth unemployment nationally has dropped by fully 112,000 since the election or, in percentage terms, from a dreadful 18.4 per cent to about 15 per cent. Of course, it must still drop further.
Fully 328,000 more women across Canada were working last month than in September 1984. The unemployment rate for women across Canada has dropped from 12 per cent at the time of the election to 9.7 per cent now. I understand that employment has increased and unemployment has decreased in all 10 provinces since the election. This is small comfort to an unemployed constituent of yours or mine. While door-knocking about 10 days ago, I met a person from the oil sector whose income had dropped from a salary of $4,000 a month to $1,000 a month in unemployment insurance benefit. That is a very difficult thing for him to go through. He, you, and I are all grateful for the unemployment insurance safety net.
My point in citing these figures is that creating a social, business, and investment climate where jobs can be created is a central feature of our social strategy on this side of the House. More jobs are still needed, especially in the west, Quebec, and Atlantic Canada. Unlike our political opponents, we have already shown considerable success in creating a climate where jobs are being created in good numbers. My colleague, the Hon. Member for Jonquiere (Mr. Blackburn) mentioned that the OECD forecast that this year Canada will have the best employment growth rate of any major industrialized country of the 24 OECD countries. It is this political Party on this side of the House more than any other that cherishes the inherent dignity and worth of each individual Canadian. Our Party does not look at our fellow citizens as being members of this consumer group or that production unit. We see people as individuals created by a creator who must never again be treated by Government as objects, units of production, or the like. From that perspective comes true compassion and help for disadvantaged Canadians.
Let me illustrate what we have already achieved in three areas. First, with regard to disabled persons, there has been a

November 3, 1986
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substantive increase in funding for the participation program which encourages self-reliance, self-determination, and self-managment by disabled Canadians. The Walter Dinsdale Information Centre for Disabled Persons opened in Calgary in April, 1986. There were new measures designed to improve access for disabled individuals to federal Government buildings. There was an increase in the maximum housing renovations program for the disabled to $5,000 from $1,500. There was a significant broadening of the definition of "disabled person" in the Income Tax Act for purposes of eligibility for the $2,590 disability deduction, which is expected to add about
120,000	disabled persons to the current claimants. I am very proud of that record for disabled Canadians.
Second, with regard to seniors, we have extended the spouse's allowance to more than 85,000 low-income widowed persons who are mostly women, aged 60 to 64, regardless of the age of their spouse at the time of death. We have significantly enhanced pension and other benefits to our veterans and their spouses. Pension plans in federally-regulated sectors are to be improved by our legislation on such issues as portability, benefits for part-time employees, and equal benefits for men and women. Proposed changes to the Canada Pension Plan will improve it in terms of its future financial health, benefit elibility as early as age 60, increased disability benefits and the continuation of survivor benefits upon remarriage. Many seniors will benefit from our new definitions of "disability" for purposes of the Income Tax Act. A further 350,000 senior taxpayers have been exempted from having to make more tax instalment payments. Thank goodness for that. We have increased flexibility in using funds accumulated in RRSPs and removed the maximum limit on registered retirement income funds. We have funded over 1,900 New Horizon Program projects in one year alone.
Third, with regard to women and families, about 10 days ago in the House we debated our child tax credit proposal, under which will hopefully next month send a prepayment of $300 per child to approximately 700,000 families whose income in 1985 was $15,000 or less. More than 4 million families with incomes of less than $15,000 will also receive a refundable sales tax credit of $50 for each adult and $25 for each child.
We are committed to economic and social equality for women. The latest issue of Chatelaine magazine provides a pretty fair assessment of some of our initiatives. More is needed, but we are making headway in some important areas. The recent Throne Speech outlined a number of initiatives to protect and enhance Canadian families, which are the cornerstone of our society. Unfortunately, they are probably more under attack now than at any point in Canadian history. We will move on pornography. This is simply hate literature against women, children, and the family. Its linkage to increased crimes against women and children is pretty clear. Robert Lunney, our Police Chief in Edmonton recently pointed out that you can obtain video tapes in Edmonton which
advocate incest. Is it any wonder that there were a reported
17,000	sexual assaults in 1985 alone across Canada?
For the first time in history, we will initiate a national drug strategy against illegal drugs. Can anyone in the House doubt that a $9 billion to $10 billion a year illegal drug industry is at the epidemic level? I note that, as was mentioned earlier in Question Period, according to Dr. Gallup about 75 per cent of Canadians think that it is at the epidemic level, as was pointed out by the Prime Minister (Mr. Mulroney).
We have already moved against street soliciting, primarily because of the Hutt decision which in effect said that it is virtually impossible to be found guilty of soliciting in a public place. This created many juvenile prostitutes of both sexes. Once the new law is finally upheld by the Supreme Court of Canada, which I am certain will be the case, it will reduce the number of young boys and girls who enter this self-destructive and brutal occupation.
In short, we believe that deeds are more important than words in matters of social policy. We have already done much. We will do a great deal more. The Bill itself before the House is part of a mosaic of raising more money to enable us to do more things to help Canadians in distress and in difficulty to cope with problems that they need help with.


Mr. Sergio Marchi (York West):: It gives me great pleasure to rise this afternoon to address the House of Commons on Bill C-14, an Act to amend the Excise Tax Act and the Excise Act.
I listened with great pleasure to the speaker before me who was representing the Government side on this particular piece of legislation. Perhaps it conjures up comments made by a colleague of his. I used the past tense because he is no longer a member of the Conservative Party or the governing Party. He is the Member of Parliament for Terrebonne (Mr. Toupin), who now sits as an independent. One of the many reasons that Member of Parliament prefers the independent category as opposed to the Party of the governing side is that, in his own words, he believes that the Conservative Government is essentially a Party of the rich, a Party very much interested in the elitist category of this country and not a Party of the people. Using his own definition, he felt that he and his principles and the values represented in his riding precluded him, and perhaps impelled him, not to sit as a member of the Government Party but to seek his independent category and thus better represent the aspirations of his own constituents.
When you look at Bill C-14 you see the facts behind the reasons for the Member of Parliament for Terrebone and the very difficult decision that he must have had in switching from the governing side to that of independency. Bill C-14 states that the federal manufacturers' sales tax increas on construction goods goes up from 7 to 8 per cent. On cable and pay-TV services it goes up from 7 to 8 per cent. On alcoholic beverages and tobacco there is a rise from 14 to 15 per cent. On other goods there is a rise from 11 to 12 per cent. There is an alcohol and tobacco excise tax, as I earlier indicated. There is an airport transportation tax. There is a telecommunication
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program service tax. There is a motive fuels tax. And on and on.
Basically, Canadian citizens are not advocating that taxes should be going down. All Canadians, including Members of the House, know that if taxes are to go anywhere, they will go up, or remain the same. That principle is accepted by Canadians from the Atlantic to the Pacific as long as the tax burden is fair and equitable and as long as taxes are applied in a way Canadians can accept. Canadians must know that they are being asked to shoulder expenses incurred by a federal Government which wishes to do well for the citizenry across the land. Canadians accept that principle if all taxpayers are being asked to shoulder the same burden, proportionately speaking. However, there is great concern about the philosophy of the Conservative Government that some people should pick up a bigger piece of the tax burden. Some individuals are being asked to shoulder disproportionately the burden of taxes.
This gives rise to the reality that there is a growing disparity between the rich and the poor, a growing gulf between the have and the have-nots, a growing gulf between those in the urban centres and those in the more regionalized and perhaps disadvantaged areas. This fuels speculation that somehow the priorities of the Government are out of whack and that the burden being asked of those less well off is unfair and inequitable. It is at that point that the Government is asking for trouble. It is aggravating an already bad situation, and it is really trying to kick the poor taxpayer who cannot bear another kick. That is when we have a tax revolt; that is when the fires of disparity give rise to emotionalism.
Individual taxpayers cannot be asked to carry the burden unfairly. When we look at unfairness, what are we talking about? Let us look at the last couple of Budgets introduced by the Government. We see an unfairness in the cumulative tax increases. A family with an income in the range of $15,000 to $20,000 will be facing a cumulative tax increase of some 23 per cent by 1990, compared with a 15 per cent increase being faced by those earning between $30,000 and $50,000, a 4 per cent increase being faced by those earning $100,000, and a 2 per cent increase being faced by those earning $200,000. What do we think a $15,000 wage earner will do? What questions will he or she be asking of elected representatives, more specifically of the Government of the day? One does not have to be an economist to understand the frustrations being felt by such individuals. That is where the disparity or the fuel for enhancing the disparity comes in.
They are asking a $15,000 wage earner to face a 23 per cent increase by 1990. On the other hand, the $200,000 wage earner will only face a 2 per cent increase. The $15,000 wage earner will not take it sitting down. He or she will send a message to the Government, as we are trying to do in this national Chamber. We, as Members of Parliament, have an obligation to rise and at least inform the Government of what its financial and fiscal policies are doing across the land,
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particularly in communities like York West that are typical working-class and middle-class communities.
I have attended numerous public meetings on the subject of taxes and the fiscal policies of the Government. No one in the country minds meeting together our fiscal challenges in the 1990s and beyond. However, no one is prepared to shoulder the burden on an unfair basis.
The disparities between the have and the have-nots or the rich and the poor are actually being reflected for the very first time in national polling studies. Never before have Canadians perceived the gulf of disparity to be hitting Canada as much as it has in the last few years. They never perceived Canada as having a well defined class structure. Although we have Mr. Porter's vertical mosaic, Canadians did not want to believe that there was a well defined class structure. For the first time in history there are very clear signals from polling studies that Canadians are beginning to understand and accept the perception of class disparities or class structures.
The fights in our country have been along other lines. We have had linguistic battles between the legitimate rights of Francophones and other communities which perhaps did not wish to extend those rights across the board. We have been able to put that behind us, for the most part. We have had struggles between the East and the West, where perhaps regionalism gave rise to emotionalism, where perhaps Alberta could not understand the manufacturing centre of Ontario and vice-versa. We have also had struggles among provincial Governments whose responsibility it is to protect their regions and parochial concerns, as well as the clashes which have ensued with the federal Government. Those facts tell us that the country is not easy to manage or to govern because of its vastness in size and what size implies in terms of priorities.
However, we have never had the battles along the lines of class structures which have unfortunately occurred in other parts of the world such as Great Britain. Those fires have been fuelled consistently for years under Margaret Thatcher and her brand of Conservatism. We are beginning to see an element of that disparity taking on a more active role.
Is it any wonder that we see the manifestation of those disparities and inequities indicating that somewhere in the system things are not right? When we look at the increases in the numbers of food banks in the country, we realize that something is wrong. Not only are there increases in the numbers of food banks, whether they are in local parishes or in community centres in Vancouver, Toronto or Montreal, regrettably and unfortunately the line-ups outside food banks are growing longer and the food supplies in those banks are becoming more sparse. Is it any wonder there was a conference on food banks and the hungry in Toronto this past weekend?
We are in 1986; we are not in the 1940s. There is nothing more degrading for human beings in society than having to line up in the morning with their children in tow to ask for their piece of daily bread. There is nothing more serious than
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human beings having to say to the state, society, their neighbours, community centres, or local parishes: "I do not have enough dollars to go to the IGA to buy food for my supper this evening". Thousands of individuals are lining up in front of food banks. I have seen them in Toronto and I have seen them in Vancouver. There is nothing more repugnant than to have to see that. There is nothing more repugnant than to have to ask ourselves why in today's rich, educated, technological society we witness fellow Canadians having to line up at food banks. Yet, when you look at something like Bill C-14, it is not surprising at all.
Consider some of the statistics produced by that very Government. After all these cumulative tax measures are in place, a person earning $50,000 or more faces a 1.2 per cent increase in taxes by the end of 1986. Yet a single parent family with two children faces a 2.1 per cent increase. At the very least the single parent family would expect the numbers to be reversed. Someone with a $100,000 income will pay a tax increase of 1.7 per cent. However, an elderly couple with less than $25,000 has a 2 per cent increase. Is it any wonder that the National Council on Welfare put out a report just last month which said the disparity between rich and poor in Canada is increasing at an alarming rate?
It said there were close to 4 million Canadians, or 16 per cent of our population, living in poverty. That is more than there were in 1980. One child in five is growing up in poverty, single mothers are five times more likely to be poor, and 60 per cent of female single parent families are poor. If that is the unfortunate reality facing Canadians from coast to coast, then why do we not have legislation which will adequately address that reality? Why are we asking the elderly to pay more than the $100,000 wage-earner? Why is the cumulative tax about 23 per cent for those earning $15,000, and only 4 per cent for those earning $100,000?
I would suggest, and other Canadians would suggest, that somehow the Government has its priorities out of whack. Somehow the mind-set governing its philosophy is out of whack with the realities. If there are 4 million poor, if tax increases are more for those less well off, then we are not talking about fairness and equity. We are proving the truth of the words of the Hon. Member for Terrebonne when he described the philosophy which has enveloped the Conservative Party and the Government of Canada.
We are not talking only about the working poor. We are also talking about a middle class which has constantly and consistently been clobbered by the Government. An individual came to my office last Saturday during constituency day and said he always thought of himself as a member of the middle class. He has a bungalow, two children, his wife works parttime and he holds down a pretty good job. What he then said was very indicative of where people are coming from in their thinking about a Government of the stripe we have seen over the last two years. He said the Government is making it more
difficult for him to call himself a member of the middle class. That individual and thousands of others like him are beginning to see society in terms of the politics of extremism.


Some Hon. Members:: Oh, oh!


Sergio Marchi: You are either a have or a have-not in this country. It is more and more difficult for that person to remain part of the middle class. Taxes are increasing at a rate that he and his family cannot keep up with. Hon. Members might have some snide remarks or they might smile, but I suggest they go back to their constituencies and talk to some of those middle class Canadians. That will counteract the mind-set which seems to have been plaguing their Party and their Government for a long time.
One message I have as an opposition Member is to tell the Government to address the realities. It should shape a fiscal policy and tax program which does not exacerbate but which addresses and solves the problems. Once again, no one in this country is unwilling to pay increased taxes to deal with the challenges we have to deal with as a young, progressive nation. At the same time, no one is willing to have to pay more than his next door neighbour, particularly when the next door neighbour can better afford to pay more of that burden.


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


Donald Alex Blenkarn: Mr. Speaker, the Hon. Member has given us a great harangue but he does not bother reading the Ways and Means motions. A motion was filed on June 11th and again last Friday which specifically gives his $15,000 wage-earner a tax credit equal to all of the sales taxes paid to this Government. The Hon. Member does not know that. He says there is discrimination. Yet for the first time in history we have a Government prepared to be fair, to make sure the ordinary person gets a sales tax rebate. Yet what does he do? He harangues it as if he did not know any better. In fact, he does not. If he went down to his own riding of York West and talked to his constituents, he would find they are all employed, making more money today than they have in any time in their lives. Their properties are worth more. Their businesses are worth more. They are all working and they all have a good life. Why does he not say so? Why does he not say that this is the best Government his constituents have ever had?


Some Hon. Members:: Hear, hear!


Sergio Marchi: Mr. Speaker, I used to have great respect for the Hon. Member but I think he just blew it there. He suggests that somehow I am preaching something that is not real. What I am doing is perhaps being a lightening rod for the Canadians he refers to in my riding, and essentially Canadians from coast to coast. If Canadians thought that somehow this Government was being fair and compassionate, if Canadians thought this Government was the best they have ever had, then the Government would not have the problem in the polls it has had ever since it was elected two years ago.
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I wish the Hon. Member would not leave because this is the best part. The Government was elected with the largest majority in history. Canadians voted for a change. They wanted to see what the Conservative Party could do. We have seen the Government, which has such a large majority, throw away its support and popularity in such a short time. In the two years remaining in its term it will exacerbate that.
Members of the Opposition are trying to convince the Government to listen to Canadians and learn from what they are saying. Canadians will make the judgment. When Canadians read the statistics of the disparities in the 1986, 1987, and 1988 tax forms, they will become much more active than they have been. The poll results of today will look good by comparison in two years time.


Rodney Edward Murphy: Mr. Speaker, the Member gave a very eloquent speech on behalf of the downtrodden and unemployed who are suffering as a result of the taxation system of the country. He was quite right to spend a substantial portion of his time attacking the Conservative tax regime and pointing out that it has added to the taxation and debt load of ordinary Canadians. However, would he not also admit that there is inequity between the amount of taxes being paid by ordinary Canadians and that being paid by the rich as well as between individuals and corporations?
In other words, individuals with low incomes are still paying proportionately much more than they should. Those with large incomes are still paying very little, if any, income tax. An increasingly larger share of income tax is being paid by individuals rather than corporations. Indeed, it has become evident lately that a large number of corporations are paying no taxes at all. They are earning vast sums of money year after year and are paying no federal tax at all. To be fair, would the Liberal Member who just spoke not admit that this taxation system was imposed by the Liberal regime of the last 16 years?


Sergio Marchi: Mr. Speaker, the Hon. Member from the New Democratic Party failed to note that our Party has historically and traditionally been a Party of reform. We have sought to make Canada a better place for everyone. We have tried to shape the policies of the country as fairly and equitably as possible. I do not suggest that that reform is finished, that the problems have been solved. During the 16 years that this Party was in power it was recognized as having done the right thing and moved in the right direction. If the New Democratic Party had all the right answers, it would have been in Government for those 16 years. The fact that it was not reflects the thoughts and priorities of Canadians.
During the 16 years when my Party was the Government, we brought forward fiscal reform to make Canada a little more progressive, equitable and fair in order to eliminate the class barriers which are taking on a new definition under the present Government of Canada. We in the Liberal Party feel that the reforms we put forward have come to an end, that instead of becoming a progressive country with regard to fiscal outlay we
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are turning the clock back. We feel that four years of Conservative rule will undermine the progressive elements of reform which this Party introduced and which we will once again champion after 1988.
[ Translation]


Mrs. Mailly:: Mr. Speaker, I would like to know whether the Hon. Member thinks that the lowest interest rates in eight years are helping the rich or the middle class.
I would also like to know whether the fact that people with an annual income of SI5,000 or less will receive their child tax credit cheque in November, instead of having to wait until they file their income tax returns, will help the rich or the poor.
I would also like to know whether the fact that inflation is below 4 per cent is helping the rich or the poor.
If the Hon. Member is perfectly honest, Mr. Speaker, he will answer that it helps both the poor and the middle class, and that his comments earlier were not exactly correct.


Sergio Marchi: Mr. Speaker, the Hon. Member has asked me to be honest and fair and admit that low inflation and interest rates help the poor. Of course they do, but they also help the rich. I do not know what the Hon. Member intends by her question. If low inflation and interest rates help the Canadian working poor and the Canadian rich, we are on an equal playing field. That is fine and fair. We, too, advocate as low an interest and inflation rate as possible. However, leaving those two aspects aside, we are left with what the future course of fiscal responsibility will be. Is it fair to have taxes which favour the rich over the poor? She should ask this of her constituents and executive to hear the real answers.


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


Victor Fredrich (Vic) Althouse: Mr. Speaker, I am sorry that the period for questions and comments comes to an end after some of these speeches.


Claudy Mailly: On a point of order, Mr. Speaker.


The Acting Speaker (Mr. Paproski):: Order, please. The Hon. Member for Gatineau, on a point of order.


Claudy Mailly: Mr. Speaker, I should be grateful for some guidance. The Hon. Member for Bourassa (Mr. Rossi) is back to his old tricks of shouting comments once the debate is over with. If the Hon. Member for Bourassa had anything to say about the subject, it seems to me he could have risen in the House and made his comments at that time.


Carlo Rossi: Mr. Speaker, I was only doing what the Hon. Member did when the Member for York West (Mr. Marchi) was speaking. I did exactly the same ... I took a leaf from the Hon. Member's book of etiquette and acted accordingly.

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The Acting Speaker (Mr. Paproski):: I find these comments out of order. The Hon. Member for Humboldt-Lake Centre (Mr. Althouse) has the floor.


Victor Fredrich (Vic) Althouse: Mr. Speaker, I rise to continue debate on Bill C-14, an Act to amend the Excise Tax Act and the Excise Act. This Bill provides for the third increase by the Government in the sales tax and excise tax since it took power in September of 1984. We sometimes leave the impression that the tax increases are much smaller than they actually are because we talk about a 1 per cent increase. To be more accurate, we should be describing it as an increase of one percentage point in the tax base. These seemingly small one percentage point increases mount up to a great deal of tax. One should consider this not as an increase of 1 per cent on three different occasions, but as a basic sales tax increase to 8 per cent from the 5 per cent sales tax when the Government took power. That is an increase of over 40 per cent, which reflects a much greater increase than 1 per cent.
Those 1 per cent increases have added up. In 1982, federal revenues from excise taxes and duties amounted to just over $2 billion. This year they will total more than $4 billion on an annual basis and will be in excess of between $5 billion and $6 billion per annum going into 1988. This means there is nearly a 300 per cent increase in that type of tax over the mandate of the Government.
We know that the 1984 Economic Statement contained an agreement by the Conservatives to increase federal sales taxes which had been announced by the Liberals. It also contained an increase of a percentage point for federal sales tax, bringing it from 5 per cent to 6 per cent, and an increase in the petroleum compensation charge. Just over six months later, in the May 1985 Budget, there was a further 1 per cent increase in sales tax, to 7 per cent. As a result of the February Budget and the implementation of this Bill, there will be a further 1 per cent increase in sales tax on April 1, bringing the sales tax on these items to 8 per cent from the 5 per cent in September, 1984. In a matter of two years, sales tax has risen from 5 per cent to 8 per cent. In addition, this legislation will increase taxes on certain goods from 11 per cent to 12 per cent, and from 14 per cent to 15 per cent on wine and spirits.
This Bill does not reflect small increases of 1 per cent, but very substantial increases in excess of 10 per cent to sales and excise taxes in this country. These extreme increases add up very quickly as far as individual Canadians are concerned.
To this point the Conservatives have netted the federal coffers almost $7 billion from increased sales and excise taxes alone. During the same period, the Progressive Conservative Government has increased corporate income taxes by an additional $ 1.4 billion and has increased personal income taxes by $3.3 billion. This amounts to a total tax grab of more than $11.5 billion since coming to power just over two years ago. If
it were not so serious it would be rather amusing to consider that the Government has attempted to reduce the deficit by increasing these taxes between $11 billion and $12 billion, yet the deficit has only decreased by a few billion dollars on an annual basis.
In the year the Government took office the deficit exceeded $36 billion. This year the deficit will be over $30 billion even though the Minister of Finance (Mr. Wilson) promised to reduce the deficit to below that amount. The Government has not succeeded in bringing down the deficit by as much as it has charged Canadians in extra taxes.
There have been some serious cuts to services and additional charges have been made against Canadians who use Government services. Yet no dent as such has been made to the deficit. I believe the accumulated deficit is approaching some $300 billion, and while it costs a great deal to carry this deficit the only changes the Government seems capable of making are increases that will affect ordinary Canadians by reducing their take-home pay and purchasing power.
Several high profile groups in Canada hqve commented on this reduction in purchasing power. They include the National Council on Welfare, which is often quoted by my Party. It has noted that there has been a steady decline in disposable income of all Canadians, which can be expected to continue over the next five years as a result of this kind of taxation policy we see in Bill C-14. It is essentially a regressive tax because it taxes the items that people need, like goods and services to maintain their standard of living. This is a hidden tax because it is already included in the purchase price of goods. On the other hand, provincial sales taxes are very clear because when one pays the bill, the additional 5 per cent or 7 per cent is clearly stated as the extra sales tax. Similarly, we know what we pay in income tax.
Income tax in Canada is considered to be a progressive tax because the rate of income tax increases as one's taxable income goes up. This means that people who have $20,000 in taxable income will pay a lower proportion in income tax than those who have a taxable income of $45,000. I believe the rationale behind this tax is good because it assumes that there are certain goods and services that all of us must have and on which we cannot cut back. We need a certain minimum for food, clothing, housing and transportation needs in this country to maintain a certain standard of living. Families who are in the $20,000 income range do not have much opportunity to save, but families who earn $45,000 find it much easier to set aside savings or pay a higher tax rate. Therefore, our system of taxation is a progressive system in which higher income families are charged more.
However, our over-all tax policy has not been so clear or fair. We have permitted the income tax system to deteriorate over the years to the point where it is reported that some corporations pay absolutely no income tax even though they showed very good profits. We have seen statistics made public in the last few months that show that some 80,000 Canadian
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corporations, all of which showed substantial profits, paid absolutely nothing in corporate income tax.
This is the way we have permitted our income tax system to deteriorate. We have moved away from a progressive form of taxation to one which is now so full of loopholes that, to some extent, it is becoming a regressive kind of tax. Families with an income of $20,000 are paying more tax than some corporations which in the past year earned profits of up to $450 million. These corporations paid absolutely zero in income tax. That does not seem fair when a family is trying to struggle along with an income of just over $20,000 and is not receiving any tax breaks. That family pays its share of income tax, but one of our large corporations in the downtown area showed hundreds of millions of dollars of profits and contributed absolutely nothing by way of income tax to the maintenance of our services.
The two views of taxation are whether it should be a progressive tax or a regressive tax. The arguments some Conservative philosophers have given is that the regressive tax is in fact a fair tax. We have heard some allusions to that, although not too many Government Members, to their credit, have actually defended regressive taxation. They have made references to regressive taxation and supported that position in a vague sort of way by saying: "When the tide rises, it carries us all, rich and poor alike". But they know in fact it carries the very wealthy much further and much faster than it carries the low income earner.
The continued move is toward the hidden regressive kind of sales tax that we see presented in this legislation before us today. This is the third attempt at this kind of legislation. What the Government has succeeded in foisting on the people of Canada, has resulted in less income for ordinary Canadians and a rapidly accelerated tax load. For those people who are considered middle income earners, who may have both spouses working, two dependent children and a family income of $35,000, a fairly typical Canadian family, these particular sales tax and excise tax increases which have come into effect since the Government took over, have resulted in a total increase in taxation to that family of just over $1,300.
The 1984 Economic Statement which placed the first one per centage point increase on sales tax cost that family approximately $350 a year in clothing and building materials and so on which would include the hidden sales tax. The Budget of May, 1985 added another $325 to that family's tax burden. The recent February Budget which announced the sales tax and excise tax increase we are debating today, will have added another $170 per year. These increases total just over $1,300 for this particular family, and $845 of this new burden would be due to sales taxes. The rest would be the increases in excise taxes mostly with regard to transportion costs, driving one's automobile or riding the bus. With the increase in fuel tax and airport taxes, the increase in airline
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tickets would show up in that family's expenditures if they took a vacation once during that period of time.
The tax increases are fairly substantial. Most Canadians have not been so privileged as to have received that kind of income increase to their own personal family income. As a result of this kind of tax policy, low income and medium income families are worse off. Government Members have made it very clear that there is a tax credit for those low income families who earn between $10,000 and $15,000. We applaud that, but we also point out it is very hard going in the very cold waters of "sink or swim" for those families who earn between $15,000 and $20,000. Their income position is not a whole lot better but they do not have that kind of tax break. They still pay the extra excise and sales tax with no compensation back in the form of a tax break. Those families are finding it increasingly difficult to live under this kind of tax regime. These hidden taxes are not just sales taxes. I mentioned so far the increases to sales tax. I would like to talk a little bit about the kinds of increases which have fallen on Canadians who use fuel. This is something which is important because Canada is a large country and we must have fuel not only for heating our homes but to be able to move around in our automobiles and use our transportation system. There was an increase of two cents a litre on September 3, 1985. There was a further one cent per litre increase on January 1, 1986. There has been a new excise tax of two cents per litre on diesel and aviation fuel imposed since that time. Those increases have meant extra costs to the budgets of ordinary families with no recognition of how much harm that is doing. The Government simply explains it away by saying: "This is the way we are asking our people to fight against the large deficit". Yet the Minister, who has collected something in the neighbourhood of $11 billion and $12 billion in new and extra taxes in the sales and excise area alone, has, in spite of cuts, still left us with an annual budgetary deficit not very much different from the annual budgetary deficit left to us by the Liberals. With a total expenditure of something over $120 billion annually, we are failing to collect taxes in excess of $30 billion. The Government has not decided to collect taxes from large corporations where the money is available but has chosen instead to go after low and middle income earners. It is ignoring the several hundred millions of dollars of profits of corporations which are escaping without paying any taxes at all. This is unfair. The situation must be but right. There is a great deal of money to be collected from that area.
One of the old rules of taxation Tommy Douglas used to follow when he was Premier of Saskatchewan-and I would point out he got rid of what was for his time the very large deficit he inherited-was to give tax breaks to the ordinary people in Saskatchewan and taxing those corporations which had surplus funds. Failure to do that will result in a continuation of the kind of policies we had under the Liberals where these large tax breaks have resulted in large amounts of money in corporate coffers. These corporations do not use this money to start new businesses. They simply use them to buy each

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other out with the result that a lot of people actually lose jobs rather than get jobs.


Rodney Edward Murphy: Mr. Speaker, 1 would like to ask the Hon. Member the same question I asked the previous spokesman from the Liberal Party. As Hon. Members are aware, the Member from the Liberal Party stated that there were all sorts of tax reforms taking place under the Liberal regime. He stated that it was only in the last two years under the nefarious Government of the Conservative Party that the situation had fallen apart, that all of a sudden there was poverty in the nation and that the tax system was unfair. He suggested that all of a sudden our corporations are not paying their fair share of-


Jean-Robert Gauthier: Mr. Speaker, I rise on a point of order.


The Acting Speaker (Mr. Paproski):: I believe the Hon. Member is coming to his question. However, I will hear from the Hon. Member for Ottawa-Vanier (Mr. Gauthier).


Jean-Robert Gauthier: I would like some direction from the Chair, Mr. Speaker. When I rose previously to ask a question, the time for questions and comments had expired with respect to the speech of the Liberal Member. I now see that the Hon. Member for Churchill (Mr. Murphy) is bootlegging a question on the previous speech. I wonder if Your Honour could make it clear that we are talking about-


The Acting Speaker (Mr. Paproski):: As soon as the great Member for Ottawa-Vanier stood up I knew exactly what he was going to request. I also know that the Hon. Member for Churchill (Mr. Murphy) is directing his question to the Hon. Member for Humboldt-Lake Centre (Mr. Althouse). I believe he was coming to his point. I am sure that as a result of the comments by the Hon. Member for Ottawa-Vanier the Hon. Member for Churchill will now ask his question.


Rodney Edward Murphy: Mr. Speaker, despite the provocation I will not repeat the preamble to my question. Suffice it to say that the Hon. Member for Winnipeg North Centre (Mr. Keeper) points out that the Liberals seem to be awfully sensitive with respect to this issue.
Presuming that the preamble to my question had been restated, my question was with respect to the fact that there was obviously a situation in which we did not see tax reform during the last 16 years of Liberal Government. I would like the Hon. Member for Humboldt-Lake Centre to comment on that fact.


Victor Fredrich (Vic) Althouse: Mr. Speaker, 1 was just getting to the Hon. Member's point when my time ran out. The philosophy of the previous Government, and one which seems to be carried on with little noticeable difference by the current Government, seems to have been to provide more incentives and loopholes in the tax system. This would have the effect of leaving money in
the hands of the corporate sector on the assumption that it would be reinvested and that jobs would be created.
On the face of it, it sounds like a good argument. It sounded like a good argument, and it was something which was experimented with. However, after a few years of experimentation, when it became clear that jobs were not being created by the corporate sector as a result of these types of policies and that real job creation was taking place in the very small business sector, large corporations rather than create jobs were forming conglomerates. In these cases they bought each other out. This usually resulted in a great many middle management people of one or other of the takeover corporations being retired. Oftentimes plants were shut down in order to make the productive capacity of the new corporation even more efficient. This had the net result of fewer jobs. Canadians financed the augmentation of some corporations with no benefit going to the taxpayers or the workers.
We have to rethink this particular theory. It seems to me that if the small "c" conservative economic analysis which says that there should be absolutely no corporate taxes were put in place then there would be absolutely no way that corporations could retain earnings at a lower corporate tax rate. I would only accept that argument if earnings were distributed to shareholders and the shareholders of those corporations then decided how expansion should take place.


Blaine Allen Thacker: Mr. Speaker, I think the Leader of the New Democratic Party will be quite angry with the Hon. Member for Humboldt-Lake Centre (Mr. Althouse) since in the early part of his speech, before dealing with the usual NDP ideology, he was quite sensible in that he fingered the real problem. This problem is the $300 billion national debt. He set out the tax increases that people will now have to pay. He also set out all of the cuts that have been made. He then went on to admit that in spite of all these cuts we still have a deficit of $32 billion. I point out to the Hon. Member that without those cuts we would have had a national deficit of $38 billion or $39 billion. As a farmer, can the Hon. Member tell me how his Party would cope with a $30 billion yearly deficit? Would the Hon. Member increase income taxes? If so, on whom and by how much? Would he increase corporate taxes or sales taxes? I think that Canadians are entitled to know the position of his Party.
It would be very simple for the Hon. Member to put it forward if he has thought about it. I would like to be able to send copies of the Hon. Member's speech out to the constituencies to say: "If you are not happy with our solution, then here is how the NDP will solve the problem". We know that the Leader of the Liberal Party said that he would reduce the deficit by 50 per cent within three years of coming to power. In order to achieve this he would have to implement massive tax increases, something in the order of $16 billion or $17 billion. What would the NDP do?


Victor Fredrich (Vic) Althouse: Mr. Speaker, I will give the Hon. Member my personal assessment of this situation. When the NDP
November 3, 1986

comes to power there will be more Members than I in the Government. As I suggested in my speech, there is really only one place at which to attack the deficit. We need more money. We are spending in excess of $120 billion per year and collecting only about $80 billion or $85 billion. The only thing that can be done in such a situation is to collect the money where there is money, just as Tommy Douglas did in Saskatchewan. There is no point in raising sales taxes on the people who earn less than $20,000. There is no point in trying to obtain money from the poor workers or those who are on welfare. We cannot attack the deficit by permitting large corporations which have profits of up to $450 million to pay absolutely zero in terms of tax. There has to be a method by which to collect taxes out of these enormous profits. If we do not address that issue then we cannot address the problems with respect to employment or the deficit.


Alan Redway: Mr. Speaker, I listened to the Hon. Member refer to the question of solving the deficit problem and solving all the tax and fiscal problems of Canada by increasing taxes on corporations. I know that his is a compelling argument to many people. Over the weekend I attended the National Conference on Hunger. At that conference I heard one person after another who lives below the poverty line get up and express concern with respect to the solution of the Hon. Member. They felt that his solution was a regressive type of tax. They felt that increased taxes on corporations would be passed on to them as the poor of the nation.
Does the Hon. Member agree with the opinions of the poor people of the country with respect to the question of corporate taxation or does he feel that they do not really know what they are talking about with respect to this issue?


Victor Fredrich (Vic) Althouse: Mr. Speaker, I think the Hon. Member will agree that along with tax breaks if there were some requirements imposed upon corporations to provide jobs then some accommodation could be worked out. I do not think we should assume that people will have to pay more for products simply because corporations are paying an ordinary amount of tax. I think that has to be seen. However, I think it is clear that poor people will have to pay more tax with these types of taxation measures, something that cannot be avoided. Everything they buy has an additional tax on it of up to 40 per cent because of these types of policies.


Sheila Maureen Copps: Mr. Speaker, it is unfortunate that we did not have a chance to pursue the argument put forward by my hon. friend from the Conservative Party. I understood him to be paraphrasing the participants in the poverty conference. The statement he made seemed to suggest that they were against corporate tax increases because corporate tax increases mean that ultimately the people will pay.
It seems to me that the measures we are debating today, specifically the increases that were imposed in the last federal
Excise Tax Act
Budget directly on the taxpayers in the form of sales and excise taxes, are in fact a form of direct taxation of poor people and those who can least afford to pay. These are in fact the most regressive kinds of taxation. If there is to be an increase in corporate tax, something that might be affected could be the issue of profit margins or shareholders' returns.
Quite sincerely, this particular tax measure encapsulates the philosophy of the Conservative Party. I hesitate to say Progressive Conservative Party because I think it is a contradiction in terms, a contradiction underlined by the kind of regressive tax measures introduced by Bill C-14 and further compounded by recent statements made by the Minister of Finance (Mr. Wilson) relating to tax reform.
The Minister has been titillating the Canadian public for quite some time. He has been suggesting that he will introduce a tax reform package that will in fact ease the burden currently faced by middle-class families. We realize, because of the announcement he made in the House a few days ago, that the Minister is not prepared to ease the burden on middle income taxpayers. Sure, he will reduce personal income taxes, but at the same time he is suggesting that we charge more sales taxes and more of the kind of direct taxation which hits the hardest at those who are in the worst position to pay.
Let us look at the effect of the tax measures contained in Bill C-14 along with sales tax and other tax measures. It has become increasingly clear that the Government has no intention of easing the tax burden on those who cannot afford to pay. In fact, Government Members seem to have devoted themselves primarily to those who cannot afford to pay. An elderly couple earning a total of $27,000 per year-and most Hon. Members will know that senior citizen couples do not, generally speaking, earn that much-will face a total tax increase of $500. At the same time, a family of four earning $100,000 will face a tax increase of $1,740. The percentage of the tax increase imposed on the elderly couple earning $27,000 per year is higher than the percentage of the tax increase imposed on the family earning $100,000 per year.
The same is true all the way down the line. The group that is hardest hit by Tory fiscal policies aimed at ordinary working people is the family with one income earner who has one adult dependent and two children. Because of measures introduced in the last three Budgets, that kind of family will pay an extra $630 in taxes, an increase of 2.1 per cent. In my own community, a steelworker who may be supporting a wife and a couple of children on $30,000 per year will be asked to bear a greater burden of the public tax increases than a family of four earning $100,000 per year. The vice-president of the steel company who may be earning $100,000 per year or more will be faced with less of an increase in his or her taxes than the average steelworker. I think this is what is intrinsically wrong with Bill C-14 and with the legislation that we have seen over the last couple of years. Middle class Canadians are losing their ability to keep pace with inflation because any gains they make are taken away by the tax man.

November 3, 1986
Excise Tax Act
What is happening to all this money? Where is it going? The effect of the 1986 Budget will be that $100 million will go back to the coffers of the Government in 1986, $700 million in 1987, $800 million in 1988, and $900 million in 1990. This is an increase of $3.3 billion in personal income taxes. This has been imposed by a Minister of Finance who then had the gall to say that he will reduce personal income taxes. Sure he will reduce personal income taxes. He will reduce them after the exorbitant $3.3 billion increase that he has already imposed on the Canadian taxpayer.
Where has the money from the increase gone? It took 48 hours for the Government to decide to come up with $1 billion to bail out two insolvent banks. We have learned from the questions asked repeatedly by the Hon. Member for Trinity (Miss Nicholson) that the Government never even revealed the names of the depositors. It hid behind the Estey Commission. The Government said it would wait for Estey's recommendations to find out the identities of those who received $1-million giveaways courtesy of the Canadian taxpayers via the Minister of Finance. In fact, Estey was never asked to look at the identity of the depositors. It was a decision of the Conservative Government of Canada to keep secret from Canadian taxpayers the identity of those who received the $1 billion in bail-outs that came from tax initiatives imposed by this Government.
In 48 hours, we lost $1 billion. That still leaves us with $2.3 billion. The Government's election hymn was that it would reduce the deficit and clean up the terrible mess left by 20 years of Liberal administration. We know what kind of cleanup is occurring. We have seen the cleanup in the Prime Minister's Office. There was a 54 per cent increase in his budget. We have seen the cleanup in the travelling entourage, complete with Hercules, security maids and butlers and a travelling bevy of staff and hangers-on numbering up to 50 or 60 people who have to accompany the Prime Minister (Mr. Mulroney) on every trip abroad. At the same time, we saw the Government telling the taxpayers that it wants them to pay.

Mr. Speaker, the most serious aspect of this Bill is the fact that if sales tax is applied as suggested in Bill C-14, many people . . . For instance, if you buy a house in Montreal, if you want to buy a new home, for every one per cent increase in sales tax, it will cost you around $500 or $600 more, depending on the kind of house.
If, in addition to the 3 per cent sales tax increase imposed by this Government, we consider the 3 per cent increase introduced by the Canada Mortgage and Housing Corporation, we see that thanks to the Conservative Government we have now in Ottawa, the total increase may be from $2,000 to $3,000, the amount the federal Government will be taking from families who want to buy a home.
As I pointed out earlier, the family most seriously affected by the tax system will be the family of four with one breadwinner earning around $30,000, in other words, the average or not
even the average family in Canada, and that family is being asked to shoulder the heaviest tax burden.
For example, Mr. Speaker, according to the Wilson Budget a family with an annual income of $100,000 will pay a tax increase of only 1.7 per cent, which works out to $1,740. Indeed, Mr. Speaker, a 1.7 per cent increase is not a big amount for a family earning $100,000 a year. However, if we are talking about a family whose annual income amounts to $30,000, all indicators in Canada show that a man with a wife and two children who earns only $30,000 a year will see his tax rate go up by 2.1 per cent, or $630 more per family.
Mr. Speaker, it is obvious that the Conservative Government policy is to have middle and even low income families pick up the tab.
Now, Mr. Speaker, the response of the Prime Minister (Mr. Mulroney) and the Minister of Finance (Mr. Wilson) is that families earning less than $15,000 are entitled to a rebate. Well, Mr. Speaker, it is shameful and utterly ridiculous to brag about rebates to families making do with $15,000 or less a year when we know that the poverty level in Canada applies to any family with less than $22,000 or $23,000 a year, depending on the number of children in the family.
As I see it, Mr. Speaker, just to be sure that the Government will do something at least for men and women who live below the poverty level, it should tell these families that any person who earns less than $23,500 a year, as advocated by the Senate committee on poverty, should get a sales tax rebate from the Government. Otherwise, Mr. Speaker, it will become quite clear that this Government failed to react when the people urged it to repeal the $500,000 capital gains tax exemption which can only help those who are already well-to-do, the rich in our society.
Mr. Speaker, if we look at the Order of the Day since the Conservatives are in power-
Since taking office in 1984, we see what the Conservative Party has really intended for families in this country. The tightening and redirecting of family allowances with a review during the summer of 1986, which serves as a potential precursor of a further erosion in family allowances. The tightening and reduction of unemployment insurance benefits to those 50,000 people who were denied unemployment insurance benefits in 1986 because of a unilateral, dictatorial government action to include pension as income for the purpose of unemployment insurance calculation without even waiting for the Forget Commission Report. I am pleased to learn that the Forget Commission has recommended to the Government that pension not be included as income for those
50,000	Canadians who were cut off in 1986 as a result of the Wilson Budget and the Mulroney decisions on the unemployment insurance. I hope that the Government will follow their advice. I urge every one of those 50,000 people to write to their
November 3, 1986

Member of Parliament and tell them that they want the Government to accept the recommendation which would ensure that at the very least all those who were affected in 1986-87 and 1988 will not have their benefits cut back and reduced.
We have heard the horror stories in the House. We have heard the horror stories from individual families and from the people in my own riding who were employed at Miracle Mart, some with 15, 20 or 25 years service who have been cut loose without a penny and told to find other jobs. But they cannot collect unemployment insurance even when many of them have put their small severance pay into a nest-egg so that they could retire with some dignity.
In the time that this Government has been in office there have been severe cut-backs to job training generally, and in particular to employment programs for youth and women. A few weeks ago in the House we heard the Minister saying that the Government was introducing these new programs for women. He did not tell the people that it was this Government that withdrew programs for women as one of the first acts of its changes to the delivery system in the Canadian Jobs Strategy situation.
Social housing is another area. The impact of these cumulative sales taxes, as well as the decision by Canada Mortgage and Housing Corporation to increase the individual guarantees anywhere from 1.5 per cent to 3 per cent on the purchase of a new home, have added several thousand dollars to the cost of a new home. When you have a situation, as we do now in the City of Toronto, where the real estate market has increased by 30 per cent in the last year, and where most average Torontonians have to come up with somewhere in the neighbourhood of $120,000 to purchase an average home, home ownership is indeed becoming a Canadian dream that will not see fruition and reality under the policies of this Government. Specifically with respect to social housing-

First, the Tory Government turned over the full responsibility for social housing to the provinces; now, it is doing the same thing concerning older workers.
The federal Government states that it wants to withdraw, to surrender the responsibility to the provinces, claiming that they know better the housing situation on their own territory. This sounds like a great idea. The only problem is that the Federal Government should sign first an agreement with all the provinces. Some provinces, like British Columbia, are not at all concerned with social housing. If we, as Members of Parliament, truly believe that there should be a national policy on social housing, we do not have the right to surrender our responsibilities to any provincial Government whatsoever.
Mr. Speaker, the same thing is now happening to older workers.
Adjournment Debate

The Minister of Finance made another pronouncement. Millions of dollars are saved by eliminating the Labour Adjustment Benefits Program. In the last federal Budget the Minister said that we are doing away with the Labour Adjustment Benefits Program. It is costing too much money. Instead, we are going to replace it with a program called Program of Older Workers' Adjustment. The Minister said in his Budget that a POWA replacement program would be in place in August of 1986 to assist those hundreds of thousands of older workers who have been laid off and disenfranchised and are completely fed up with a society that even after the recession says to them, "I am sorry, you are going to have to face an unemployment rate that is double what it was before the recession". We have not seen POWA.


An Hon. Member:: What is POWA?


Sheila Maureen Copps: It is the Program of Older Workers' Adjustment. It is $125 million program which was supposed to replace the Labour Adjustment Benefits Program, specifically targeted to those older workers who are being crushed by technological change. Everyone in all of the ridings is concerned with the people who come into constituencies who after 20 and 30 years' service are laid off. Nothing has been done. Not one single provincial agreement has been signed. The federal Minister of Labour (Mr. Cadieux) went to the provinces and said, "We would like you to come on board with POWA. But we would also like you to foot part of the bill". They do not want to foot part of the bill, because at the same time the federal Government is cutting back on transfer payments in post-secondary education and health.
It is interesting that of the $3 billion that we are coming up with as a result of these tax increases, not one single penny is going toward older workers. Not a single penny is going towards the POWA program which was promised by the Minister.
Am I to understand that my time is nearly up?


The Acting Speaker (Mr. Paproski):: You have five seconds.


Sheila Maureen Copps: Well, Mr. Speaker, there is more to come on this subject in the future.



PROCEEDINGS ON ADJOURNMENT MOTION

[Stage Direction]
A motion to adjourn the House under Standing Order 66 deemed to have been moved.
[Stage Direction]
November 3, 1986
Adjournment Debate

Alan Redway: Mr. Speaker, have I ever had an opportunity to tell you a little about my constituency? I see you nodding your head, Mr. Speaker; I guess I have. Notwithstanding that fact, I will remind you of a few things about my constituency.
The riding of York East is situated in the geographic centre of Metropolitan Toronto. One of its characteristics is the fact that there are more jobs per thousand residents in my constituency than anywhere else in the whole of Metropolitan Toronto, with the exception of the downtown financial core. It is a very industrialized riding.
Some of the businesses and industries in my riding are very large ones, such as IBM. Others-in fact many hundreds of them-are quite small with only a few employees or workers. Many of the workers in the small plants and in the larger ones are worried at the moment. They are worried about the trade negotiations which we are undertaking with the United States. They are worried about what the press likes to call "free trade". They are also worried because they do not know what might happen to their jobs as a result of these trade negotiations.
A few days ago they heard from the Economic Council of Canada. Unfortunately, they do not feel much better as a result of those comments. The Economic Council of Canada said that it was quite possible that some 370,000 new jobs could be created by 1995 as a result of a new trade agreement with the United States. However, the Council also said that all Canadians must be sensitive to the prospect that some citizens will lose their businesses or their jobs as a result of more competition from lower cost United States-made goods entering Canada.
That is a sobering thought, especially if one thought that one's job or business might be affected by the trade negotiations. What would you do, Mr. Speaker, if you lost your job as a result? I know that you are a young man and that you could be retrained. Perhaps that is what you are thinking, that you would go through a retraining program. However, many of my constituents do not see themselves in your age category. They think of themselves as older workers, and they believe it would be impossible for them to retrain. Perhaps they are looking to some special government programs to help them, perhaps special retraining programs. They have not heard anything from the Government as yet about what sort of special retraining programs might be available. They also wonder if there might be some financial assistance for them as a result of what could happen through the trade negotiations. Again they have not heard anything specific from the Government about what those programs might be.
However, they have heard some people say: "Businesses go bankrupt every day. People lose their jobs every day. How can we tell who are the people losing their jobs as a result of trade negotiations and who are the people losing their jobs through
inefficiency, lack of good management, or whatever?". These same people say that there is not much point in trying to assist people financially or through retraining programs because they cannot tell whether they are losing their jobs for other reasons or through the trade negotiations. My constituents have heard those comments and are disturbed by them.
They have also heard comments from other people who ask why we should assist businesses which go bankrupt or people who lose their jobs through the trade negotiations, because it will only increase the cost for the winners in the process and they will not be able to afford to compete with the Americans after the negotiations. They are worried by those comments as well.
How are we, Mr. Speaker, you and I, going to reassure our constituents that these trade negotiations are going to be of benefit to them? How are we going to tell them that everything is going to be okay? I think the Government can start by telling you and me and all of our constituents what it calculates both the job gains and job losses to be as a result of these trade negotiations. It can also tell us which industries it believes as a result of its studies are going to be the winning industries and which are going to be the losing industries. Most of all, I think it should be telling us how it is going to cushion the blow. Are we going to have retraining programs? If so, for whom and what kind, and how do people qualify? Are we going to have financial assistance? If so, what is it going to be? Those are the questions that you, I and our constituents are asking, and I know that tonight you and 1 are waiting with bated breath to hear the answers from the Government.


Mr. Lome Greenaway (Parliamentary Secretary to Minister of State (Forestry and Mines)):: Mr. Speaker, it is a pity that you cannot give the answer because I am sure in your previous position as a very important part of the Edmonton Eskimo machine you must have had a lot to do with international trade. Probably. Anyway, the answer I have to give here is the following.


Rodney Edward Murphy: Which has nothing to do with the question.


Lorne Everett Greenaway: The section of the Economic Council of Canada annual review dealing with Canada's trade experience and opportunities discussed the impact of several Canada-U.S. trade scenarios on GNP and employment, based on computer simulations. These simulations made various assumptions, the most favourable of which, such as the removal of trade barriers plus productivity gains, led to an assumed increase in employment of 376,000 by 1995. Other assumptions, such as gradual removal of trade barriers plus productivity gains, removal of trade barriers with no productivity gain, and protectionism with retaliation, all led to different results ranging from an increase in employment by 1995 of 321,000, to a net loss of jobs totalling 528,000.
All such studies based on computer simulations or econometric models make assumptions about how such key elements
November 3, 1986

as productivity, exchange rates, investment and prices respond to the elimination of tariff and non-tariff barriers. Some recent studies include projections done by the University of Maryland, Informetric, and the University of Toronto, as well as those done by the Economic Council of Canada. While estimates of the impact of freer trade on employment vary owing to variations in inputs, the common thread running through all the studies done so far is that freer trade would produce an over-all net national employment gain of between 1 per cent and 3 per cent of the current employment level. With a current employment level of about 11.5 million, that translates into between 115,000 and 345,00 additional jobs.
There, Sir, is your answer.


UNEMPLOYMENT INSURANCE-PAY-OUTS IN ATLANTIC CANADA. (B) REQUEST FOR GOVERNMENT GUARANTEE
[Stage Direction]
Mir. Rod Murphy (Churchill): Mr. Speaker, I cannot help but add to the comments between the Conservative Member who asked the previous question and the Conservative Member who responded on behalf of the Government. He said that you, as a former member of the Edmonton Eskimos, would know how to deal with the problems that Canadians face in keeping jobs in Canada with regard to free trade negotiations. It reminded me, with the greatest respect, that we did guarantee there would be Canadian jobs for people playing for Canadian teams. That was kind of a Canadian content measure. I am sure that you, Mr. Speaker, would have kept your job even without that particular piece of legislation, but others who played for the Canadian Football League did need that sort of protection.
I rise to speak in regard to a question I asked on October 15 of this year. It resulted from the leaking of certain information regarding the Forget Commission. There have been indications that the report of the Forget Commission will result in a drastic change in the way with which unemployment insurance is dealt. This concerns me and my Leader, the Hon. Member for Oshawa (Mr. Broadbent), so much so that we both asked questions that day in the House of Commons.
We pointed out that Atlantic Canada receives approximately $620 million from the Unemployment Insurance Program. We wanted a guarantee from the Government that that amount of money would continue to go to Atlantic Canada through similar programs if not through the Unemployment Insurance Program. We also spoke at that time about the need to recognize the very fragile economy in Atlantic Canada. The fishery, forestry and mining industries, as well as the small business and other sectors, have relied on part-time and seasonal work for a very long time, and that is not likely to change overnight. We said that regardless of what the federal Government does as a result of the Forget Commission, it must take that into account.
It is not only me and the Leader of the New Democratic Party who are concerned about the Forget Commission. I
Adjournment Debate
could quote people from across the land, but one of the most interesting quotes is from the Conservative Minister of Social Services in Nova Scotia, Edmund Morris, who said that this could "wreak havoc on the economy of Nova Scotia".
This is a very serious matter. The fishery and forestry industries have relied on seasonal work for a very long time. The economy of that part of Canada is not changing quickly. The people in that area will continue to rely on unemployment insurance. We are not happy about that or proud of it. However, we are concerned that whatever the Government does as a result of the Forget Commission take into account the economy and job situation which exists in Atlantic Canada. We hope that as a result of the work of the Forget Commission the Government will do all it can to enhance, rather than destroy, that which presently exists in Atlantic Canada.
I raise this issue again at this time because, in response to my questions and those of the Hon. Member for Oshawa, the Minister of Employment and Immigration (Mr. Bouchard) would not give us those assurances. The Minister was right to say that he cannot respond completely to the report of the Forget Commission which has not yet come down. However, he could have taken the opportunity to say, in response to our questions, that there will be certain protections for Atlantic Canada, to guarantee that $620 million will still go to that region and to guarantee that there will be some new job creation programs for that region. He did not do that, Mr. Speaker, and that is one of the reasons I raise this issue at this time.
In addition, I believe the people of Atlantic Canada are still very nervous as a result of the scant mention they received in the Throne Speech. The leaks from the Forget Commission indicated that the Government must get up in the House and explain what it is going to do. I am afraid that the Government's response will be that we cannot allow the unemployment insurance program to continue as it is year after year. I am afraid that the Government will admit that there are problems in Atlantic Canada but will say that it will not deal with the problems of the mine workers, small business and the others involved in various industries in Atlantic Canada. Instead, the Government will talk about the need to reform unemployment insurance.
It is not good enough to talk about the need to reform unemployment insurance. The people of Atlantic Canada are demanding from the Government a clear indication of where it is going. Unemployment has not been reduced in Atlantic Canada in the two years during which the Government has been in power. It is one of the regions that has not benefited from the general improvement in the economy. Frankly, they are very nervous about the Government's intentions and are very concerned that there has been no set direction with regard to what is happening in Atlantic Canada.
Adjournment Debate
It is fine for the Prime Minister (Mr. Mulroney) to say in the Throne Speech that Atlantic Canada will be considered and there will be a new agency set up to see what can be done for Atlantic Canada. The truth is, however, that the Government has been in power for two years and if it is going to do anything for Atlantic Canada it must do so soon, not in a few months prior to an election. If the Government has a plan of action for Atlantic Canada, Quebec and other parts of the country, this is the year for it to act. We want to hear what it will do.
Mr. G. M. Gurbin (Parliamentary Secretary to Minister of Employment and Immigration):: Mr. Speaker, I am pleased to respond to some of the comments by the Hon. Member for Churchill (Mr. Murphy), in conjunction with the answer that was already supplied to him by the Minister of Employment and Immigration (Mr. Bouchard).
There are several holes in the comments made by the Hon. Member. First, he stated that there is a lack of understanding or sensitivity to the problems in Atlantic Canada. I just returned from a meeting in which we dealt precisely with that problem. For instance, fishermen in Newfoundland are facing problems because they no longer have access to job opportunities in the off season due to the mechanization of wood cutting, wood hauling and so on. Those job opportunities are gone and the Government is well aware of that because of the representation from those areas that we have in our ranks. We understand those needs.
I suppose the Hon. Member believes that an unemployed person in Atlantic Canada is different from an unemployed person in western Canada. Perhaps he believes that being unemployed is easier in some parts of Canada than in others. That is unfortunate because I believe the unemployed in Canada face the same kinds of problems.
The Prime Minister (Mr. Mulroney) made it very clear, in referring to the comments of the Minister of Finance (Mr. Wilson) in his May 23, 1985 Budget Speech, that the Government has no intention of reducing its support to the unemployed anywhere in Canada. It will not do that.
We have asked the Forget Commission to look at our system. I believe most Canadians would agree that the system probably requires changes that may be different for various regions of the country. We have asked the Forget Commission to consider this and bring forward recommendations. We intend to study these recommendations conscientiously and then make changes to improve and simplify the system on behalf of all Canadians, particularly unemployed Canadians. We are looking for improvements and we look forward to the Commission's report.


FINANCE-SALES TAXES-EFFECT ON DISPOSABLE INCOME. (B) PERSONAL TAXES-REQUEST FOR ROLLBACK.
Aideen Nicholson: Mr. Speaker, my comments this evening are based not only on the most recent
November 3, 1986
question but a series of questions that I asked in the House following the collapse of the Canadian Commercial Bank and the Government's unprecedented action in paying out $1 billion to uninsured depositors whose names are being kept secret.
By now we are all too well aware of the circumstances of the bank's failure less than six months after the Government bailed it out and guaranteed its viability. Since then I have asked over 50 questions in the House. I have participated in other adjournment debates and in debate on the Bills brought before the House to deal with the bank bail-out and later, the bail-out of uninsured depositors.
The Government's record of providing answers to my questions and those put by my colleagues has been consistently poor. We were told that all our questions would be answered by a special inquiry. First we were promised a parliamentary inquiry. Then the Government appointed the Estey Commission and the Prime Minister (Mr. Mulroney) said in the House on October 2 of last year, and it is found in Hansard at page 7250:
-the Government appointed Mr. Justice Estey with the broadest possible terms of reference so that the full truth can come out, including the conduct of everyone involved and the policies that went into the matter. Mr. Justice Estey will put the spotlight on those people who are responsible.
We have the Estey Report now and, indeed, it is for the most part a very thorough and illuminating document. It confirms much of what we have said in the House about the bail-out being undertaken in an atmosphere of panic and haste without proper information or adequate follow-up.
The report does not answer all of our questions, but the position of the Government appears to be that now the report is public, the case is closed. This is not so. I agree with Mr. Justice Estey when he says in his report at page 21:
It may be that other forums-having different objectives will reach different conclusions with respect to duties and obligations of the participants in these events.
I am not prepared to close the book on the bank failures and the bail-out of uninsured depositors because the principle of ministerial accountability is at the heart of our parliamentary system. That principle is not being observed.
The Government has made much of the fact that the Estey Report does not put blame on Ministers for events prior to the CCB bail-out. However, the report condemns in no uncertain terms the way in which the decision to bail out the bank was reached. It condemns the bail-out package itself and the almost total lack of follow-up action from the Government. The report says about the bail-out, at page 125:
The concept adopted was-at best half baked.
And at page 127:
-this bail-out was ill-starred from the outset and had no chance of success.
And at page 174:

November 3, 1986

The bail-out program seems to have been conducted more like the launching of a toboggan. Once it was placed on the slope, its course, speed and destination were left to gravity and the toboggan. There was no steering mechanism and no machinery for change of direction or increased financial support or indeed any other adjustment, whatever risk may loom up.
And on page 173:
-the Minister of State appears to have made no effort to press for an early and organized hands-on examination of the loan assets of the bank.
That was after the bail-out was decided upon. And at page 175 it says:
The combination of the lack of information at the time the rescue program was adopted and announced, and the tenor of that announcement and subsequent statements by the Ministers-boxed the Government into a position where the only defensible alternative was universal compensation of creditors of the bank.
Under a system of ministerial accountability, someone has to be in charge. Our traditional notion of ministerial accountability says that Ministers of the Crown are responsible and that ignorance of an issue, or being poorly served by officials, does not absolve a Minister from responsibility for decisions he or she has taken. This is fundamental to our system of Government and it is not acceptable for the Government to refuse to take responsibility for its actions which are costing the taxpayers close to $2 billion.
As I mentioned earlier, I and my colleagues still have questions to ask. 1 would like to have answers to those questions and some indication that the principle of ministerial accountability means something to this Government.


David Kilgour: Mr. Speaker, I might indicate at the outset that I checked with the Table officer and I understand that the Hon. Member for Trinity (Miss Nicholson) was going to deal with the question she raised on October 23, at page 663 of Hansard. That question deals with tax reform and sales tax. One subject with which it does not deal is the Estey Commission. I would be more than happy to speak to the question of the Estey Commission with respect to those two banks, but if the Hon. Member has indicated, as I believe she has, that she only wants us to deal with the question raised on that date, it is very hard to reply. Therefore, my answer will be like a ship which passes another ship in the night and will have nothing to do with the subject raised by the Hon. Member late in the day this afternoon, without indicating, if 1 understand correctly, that that is the subject she wanted us to deal with.


The Acting Speaker (Mr. Paproski):: I think I should allow a point of order here to the Hon. Member for Trinity (Miss Nicholson).


Aideen Nicholson: Mr. Speaker, I do not know how the confusion arose. I was expecting to deal with the issue of the Estey Commission. If the error arose in my office, then I certainly regret it. While I appreciate the Parliamentary Secretary's offer to give me a reply with respect to a question concerning sales tax, I agree with him that it would not be a very sensible procedure.
Adjournment Debate


David Kilgour: Mr. Speaker, even if the error arose because the office of the Hon. Member had the wrong date, or the wrong question, if I may I would like to put on the record what the Government has to say in reply to her question concerning sales tax. She has had a chance to speak in the House and I think that sauce for the goose is sauce for the gander-


The Acting Speaker (Mr. Paproski):: I believe a situation such as this has arisen before on the "Late Show". It has happened that an Hon. Member has raised a specific question and the Parliamentary Secretary has responded to a totally different question. I think it only fair to allow the Parliamentary Secretary to read whatever he has into the record. If the Hon. Member wishes to ask another question on the "Late Show" at another time she will be allowed to do so.


Aideen Nicholson: Mr. Speaker, I rise on a point of order. I would like to correct the matter. If the Hon. Parliamentary Secretary wishes to read his answer into the record, I have no objection to that. However, I would like to make it clear as a courtesy to you, Mr. Speaker, and to the Parliamentary Secretary and Members of the House, that I said that if the error arose in my office then I regret it. I am not saying that the error did arise in my office. It could very well have arisen at the Table or anywhere else.


The Acting Speaker (Mr. Paproski):: That is perfectly fine. The Parliamentary Secretary may now respond.


David Kilgour: Mr. Speaker, with respect to a question that was not raised by the Hon. Member for Trinity (Miss Nicholson), in her original question she questioned the benefits to Canadians of a tax reform package which is pivotal to what we will be doing in the next two years since we know it is so important to Canadians. The Hon. Member indicated that reducing personal taxes with one hand and taking revenue back with the other in the form of an increased sales tax was diabolical, or some such term-


Aideen Nicholson: Mr. Speaker, I rise on a point of order. I have never used such language. I really object to that.


The Acting Speaker (Mr. Paproski):: I have allowed these points of order. The question that was to be raised on the "Late Show" was with respect to sales taxes-effect on disposable income. (B) Personal taxes-request for rollback, as reported in Hansard on October 23, 1986, at page 663. I hope that the Hon. Parliamentary Secretary will now complete his remarks so that we can call it a day. I do not wish any other points of order to be raised, particularly since this is the Adjournment Debate and it is something which is not usual in this circumstance.


David Kilgour: Mr. Speaker, I believe the Hon. Member's view of the matter was simplistic, partisan and narrow in view of the tax reforms we are considering.

November 3, 1986
Adjournment Debate

In her statement, the Hon. Member lost sight of the basic objective of our tax reform, which is to make each component of the taxation system, that is personal income tax, corporate income tax and the sales tax, more equitable, simpler and more efficient. A lowering of personal income tax rates is a major objective of our tax reform, but it is not the only one. The first objective of the Government is to solve the problems in each of these taxation fields.
Once they are met, these objectives will provide lasting benefits for Canadians. For instance, Mr. Speaker, the federal sales tax now has several weaknesses: it favours imports rather than goods produced in Canada; it penalizes our exporters and it differentiates between the producers of similar products. The Government is looking at reforms which will ensure that the sales tax applies more consistently in all sectors of the
economy. The widening of the tax base will also help to reduce the tax rate. This will improve both the equity and the efficiency of the tax, not to mention the fact that it will make compliance much simpler for businesses and the administration much easier for Revenue Canada.


The Acting Speaker (Mr. Paproski):: I regret to interrupt the Hon. Parliamentary Secretary but his time has expired. Only three minutes are allowed for a reply.

The motion to adjourn the House is now deemed to have been adopted. Accordingly, this House stands adjourned until tomorrow at 11.00 a.m., pursuant to Standing Order 3(1).


[Stage Direction]
The House adjourned at 6.31 p.m.
[Stage Direction]

Tuesday, November 4, 1986