1987-05-29

STATEMENTS PURSUANT TO S. O. 21


Mr. Don Boudria (Glengarry-Prescott-Russell):: Mr. Speaker, at a time when my region is suffering very serious unemployment one sector of the local economy is suffering because it is unable to find qualified workers. Indeed, the agricultural sector, particularly the dairy industry in eastern Ontario, is in a serious bind and unable to find dairy herd workers.
The Farm Labour Pool office in Vankleek Hill, Ontario, in my riding presently has 28 unfilled vacancies on dairy farms. The salary range for these jobs is between $250 and $350 per week. In some cases accommodation is included. This shortage of qualified people is critical.
I call upon the Minister of Employment and Immigration (Mr. Bouchard) to place the position of dairy herdsman on a priorized shortage list under the Skills Shortage Program and allocate the necessary funding to train dairy herdsmen. Meanwhile, Canadians looking for a good, hard-working, healthy outdoor job should phone the Farm Labour Pool in Vankleek Hill, Ontario, at area code (613) 678-2134, or contact my own constituency office. We desperately need the help.

[DOT] (DOS)


THE MONARCHY
Mr. Reginald Stackhouse (Scarborough West):: Mr. Speaker, is Canada Post going republican? When the new 36cent stamps were issued in April many were disappointed to
discover that there was none bearing the Queen's portrait. This stamp was promised twice for dates in May but still has not appeared. Many Toronto customers have been told by post office workers there that it might never be issued.
If this were an isolated incident it might be accepted as only an inconvenience. However, it impresses many from experience that it is part of a pattern. It is a serious grievance to all Canadians who esteem the Queen as Canada's head of state.
We have just begun today's sitting, as we do every day, with a prayer for Her Majesty. The Government has made clear that respect for the monarchy is a priority. A Gallup poll has shown that a majority of Canadians believe the monarchy is of value to this country. When will Canada Post catch up with Canada?


VIA RAIL
Mr. Bill Blaikie (Winnipeg-Birds Hill):: Mr. Speaker, a controversy broke out a week or so ago about the announcement which the Minister of Transport made in the House that VIA Rail would now be free to go ahead with constructing the maintenance shops in Winnipeg, Vancouver, and Halifax which were postponed when the Conservatives came to office. The controversy was with regard to whether the plans for Winnipeg would be downgraded and the major western maintenance facility would be at Vancouver.
If VIA is considering downgrading the maintenance facility in Winnipeg, I want to tell the House, VIA, the Minister of Transport (Mr. Crosbie), and anyone else concerned with this issue, from an operational point of view, that I advise it not to make the same mistakes as railways have made on occasion in the past, that is, try to run trains from Toronto in the east and Vancouver in the west to Winnipeg, turn them around there, and run them back without having the major maintenance facility in Winnipeg.
It is a fact of Canadian life, due to the climate, that equipment most often breaks down in Winnipeg, particularly in the winter. It would be sheer madness for VIA to differ from the plan of having Winnipeg as a major maintenance facility, both on the motive power side and on the coach side.

May 29, 1987


S. O. 21 NARCOTICS NATIONAL DRUG STRATEGY-SUPPORT FOR GOVERNMENT PROGRAM
Mr. Geoff Wilson (Swift Current-Maple Creek):: Mr. Speaker, last fall the Prime Minister (Mr. Mulroney) announced plans to deal with Canada's drug epidemic. This is a problem which affects in some way virtually every family in Canada, a problem which not only costs the nation millions in lost productivity, but also threatens the minds and lives of many Canadians. In combatting drug abuse the state clearly has a place in the classrooms, workrooms and boardrooms of the nation.
This week the Minister of National Health and Welfare (Mr. Epp) put forward a $210 million five-year plan which will involve public education, drug and alcohol treatment and rehabilitation, law enforcement and control, and research efforts.
I congratulate the Prime Minister and the Minister of National Health and Welfare, first for recognizing that there is a drug crisis in Canada, second, for undertaking to educate all Canadians about the dangers of drug abuse and, third, for responding in a number of concrete ways; internationally through our consulates abroad, and domestically in cooperation with the provinces and community groups.


THE CONSTITUTION
Mr. Keith Penner (Cochrane-Superior):: Mr. Speaker, the aboriginal leaders of Canada and the people whom they represent feel betrayed by the Meech Lake Accord. They, too, have sought to have their distinct place in Canada recognized in our Constitution. Repeatedly, however, they have been rebuffed by fearful, hesitant Premiers who seek more power for themselves but are unwilling to share even a modest amount with others.
The second round of constitutional talks referred to in the Accord mentions fisheries, but aboriginal rights are left out. This is an omission of enormous proportions. The fishery and aboriginal rights are intimately related. I, therefore, urge the inclusion of aboriginal peoples and their rights on the second round agenda.
In the Yukon and Northwest Territories court action is under way against the Meech Lake Accord. To give every Premier a veto over the creation of new provinces is highly offensive to the Governments of the North and the northerners whom they represent.
[DOT] (UlO)
Therefore I urge the deletion of this veto power over the creation of new provinces.


EXTERNAL AFFAIRS
Mr. Clement M. Cote (Lac-Saint-Jean):: Mr. Speaker, earlier this week, I commented on President Mitterand's visit to Canada, and today, a few hours before he leaves this country, I would like to draw the attention of the House to the positive impact of this brief visit.
I want to point out the general approval surrounding the cordial welcome the President received. The unanimity of Canadians in this respect reflects the unity of this country.
As a Canadian, I am particularly happy to feel this unity, since all Canadians want to live in a united Canada. This country has not always been as united, but since we came to power in 1984, our Prime Minister has managed to create this climate of national unity, a fact of which Canadians are very proud.
In concluding, I would like to repeat what I said Tuesday, namely, that the positive impact of President Mitterand's visit will continue to make itself felt and that the prospects for a united Canada under Prime Minister Mulroney are very good indeed.


STATUS OF WOMEN
Ms. Lynn McDonald (Broadview-Greenwood):: Mr. Speaker, Statistics Canada has just published some very encouraging material showing the important entry of women into the professions. There has been a great change in representation, especially in the professions of law and pharmacy. We welcome that change.
In the case of engineering the increase is in the order of 300 per cent. However, since the figure has only risen from 1 per cent to 3 per cent it is not very encouraging. We need to see more storming of these all-male bastions, these boys clubs in the engineering schools.
Canada can only be a great country if its people are well trained. We need the talents of all our people. Thus we welcome this important development of women moving into the professions.
We have to support concrete measures to see that this movement continues. I hope that it will be matched by the movement of native peoples, handicapped persons, and people of visible minorities so that we will have really fair representation and that, as a country, we will be able to employ the talents of all our people.
May 29, 1987


AGRICULTURE
Mr. Ross Belsher (Fraser Valley East):: Mr. Speaker, the dairy industry of British Columbia is deeply worried about the volume of milk and dairy products that is being brought into British Columbia from the U.S. without duty charged.
Customs officials at the five Lower Mainland crossings have calculated that on a daily average there are 12,200 cars crossing at these borders and that 65 per cent to 80 per cent of individuals returning home to B.C. through four of these crossings have purchased dairy products. At the Point Roberts crossing the estimate is that 100 per cent bring home these goods. This crossing, which is U.S. territory, is accessible only through Canada and has been called the "milk and gas run".
If we consider that each car has an average of 2.5 people in it and that each person represents $10 Canadian of dairy products, this could add up to a staggering $72 million per year lost to the B.C. dairy industry. Small grocery stores have opened along the Washington border to sell milk, eggs and bread to Canadian customers who just "pop across the border".
The 17 per cent duty that the law requires is not needed on "small value" grocery items. I believe that Customs must enforce this levy in order to ensure that Canadian dairy producers will receive the full protection of our excise law.


PUBLIC WORKS
Mrs. Lucie Pepin (Outremont):: Mr. Speaker, the people of Montreal have been waiting a long time for the Old Port of Montreal, to be developed. Once it has been developed, the Old Port will have much to contribute to the city, in terms of beauty, recreation and tourism. However, as in the case of the space agency, the Conservative Government has been dragging its feet. Montreal has been waiting nearly three years for financial assistance to develop the Old Port. The city of Toronto made a similar request, and it did receive funding. Will the Old Port of Montreal have the same fate as the space agency?
Yesterday, a telegram was sent to the Minister of Public Works (Mr. Mclnnes), and to the President of the Treasury Board (Mr. de Cotret), signed by Mrs. Manon Vennat and Mr. Marcel Daoust of the Montreal Chamber of Commerce. In it the federal Government is asked to provide funding for the development of the Port of Montreal.
I therefore want to add my voice to that of my colleagues and I ask the Government to act quickly.


PHARMACEUTICAL PRODUCTS
Mrs. Barbara Sparrow (Calgary South):: Mr. Speaker, in Alberta the College of Physicians and Surgeons introduced the triplicate prescription program one year ago. Chemical addiction is a principal disease of our time and prescription drug abuse plays a major role.
For the 10 most commonly abused drugs, narcotics and others, the physician uses a special prescription pad with an original and two copies, keeping the original for himself. The patient then takes two copies to the pharmacist who sends one to the college.
Using computers, the college can identify a physician who is providing unusual amounts of these drugs and patients who may be going from doctor to doctor for prescriptions. If several doctors are involved, they are notified and then are in a position to treat their patients more effectively if addiction is indicated. It is a true success story.
In commending the Alberta College of Physicians and Surgeons along with the Alberta Government, and the Alberta Pharmaceutical Association which support this initiative, I urge the federal Government to make this a national program.


THE CONSTITUTION
Mr. Jim Fulton (Skeena):: Mr. Speaker, the Governments of Yukon and the Northwest Territories have launched a suit in the Supreme Court regarding the Meech Lake Accord. Canadians north of 60 have aspirations to provincehood just as did our forefathers in each of the 10 provinces.
Prior to the 1982 Constitution Act, provinces were created bilaterally between the federal Government and the region wishing status. In these intervening five years, the requirement has been the general amending formula of seven provinces with 50 per cent of the population, along with Parliament.
The Meech Lake Accord touches on the creation of new provinces and provincial boundaries in a most fundamental sense by requiring the unanimity of provinces. I have reviewed the public record and find no evidence of provinces, federal Parties, or public groups arguing for the application of unanimity for the creation of new provinces. This raises a fundamental constitutional and political question that must be addressed by the Prime Minister (Mr. Mulroney).
Since there has been no debate upon applying such a measure, Canadians must ask why and on what grounds are the aspirations of northerners to be made so much more

May 29, 1987
Oral Questions
difficult to achieve. Yukon will become a province as will Denendeh and Nunavut. Eleven men have no right at law or in history to make Clause 42 comparable to an ascent of Everest for our northern brothers and sisters.


POLITICAL PARTIES
Mr. Dave Nickerson (Western Arctic):: Mr. Speaker, pity the poor Liberals for they know not what they do. Split and divided on just about every issue from free trade to Cruise missiles, they have now been shafted on the Constitution by their erstwhile Leader, Pierre Elliott Trudeau.
They cannot even decide who is in charge over there. Is the Right Hon. Member for Vancouver Quadra (Mr. Turner) calling the shots, not that anyone really listens to him, or are they still taking orders from the magus from Mount Royal? It is sad, Sir, but not too sad, to see the demise of a once proud national Party as it sinks into the oblivion that it so richly deserves.


ENVIRONMENTAL AFFAIRS
Hon.   C'has. L. C'accia@Davenport: Mr. Speaker, congratulations are due to the Government of Ontario for its recent Budget as it affects the environment. What a contrast between the Government of Ontario and the Government of Canada.
On the one hand, the Government of Ontario is increasing its environment budget by 16 per cent to $410 million to deal with water pollution, waste management, sewer systems and acid rain. On the other hand, the Tory Government here in Ottawa has this year reduced by 103 persons the number of scientists, technicians and support staff in the Department of the Environment at a time when Canadians want more government action on the environment. On top of that, between September, 1984, and now, the federal Department of the Environment has lost $64.5 million because of inflation. What a sham!


POLITICAL PARTIES
Mr. Ian Waddell (Vancouver-Kingsway):: Mr. Speaker, I would like to correct for the record some statements that were made by my friend, the Right Hon. Secretary of State for
External Affairs (Mr. Clark). The Minister quoted from an NDP resolution book on natural gas exports. He should know that that book was published for the convenience of delegates and does not in fact reflect the present policy with respect to natural gas of the New Democratic Party of Canada.


Mr. Clark (Yellowhead):: It's still current today.


Ian Gardiner Waddell: He should know that that resolution was passed at the time of an energy crisis in 1979-


Some Hon. Members:: Oh, oh!


Ian Gardiner Waddell: -so we could make sure that when Canadians did not have oil, they would have Canadian gas.
The Minister should look at my statements in the House of Commons and my submission to the National Energy Board this month where NDP policy is that there should be reasonable gas exports, not at fire sale prices, and there should be guaranteed reserves for Canadians in the future. That is a rational and reasonable policy and should not be distorted.
V * V


UNEMPLOYMENT INSURANCE
Mr. Jean-Claude Malepart (Montreal-Sainte-Marie):: Mr. Speaker, the Official Opposition is once again asking this Government to start second reading of Bill C-50 as soon as possible, so that elderly workers can get their refunds by the first week of July. We also want to ask this Conservative Government whether in a democracy, older workers can be heard and allowed to express their philosophy and their needs to the Government. Mr. Speaker, the Conservative Government twice made a horrendous mistake in dealing with senior citizens in Canada. And both times it was forced to reverse its decision. This Government should act on the Official Opposition's request and hear witnesses first, before it makes another monumental mistake, in its dealings with senior citizens.



ORAL QUESTION PERIOD


Mr. Russell MacLellan (Cape Breton-The Sydneys):: Mr. Speaker, my question is directed to the Deputy Prime Minister. In early May the Prime Minister in his recent visit to
May 29, 1987

western Canada had western Canadians generally believing he was interested in trying to find a solution to the very damaging decision of the Federal Energy Regulatory Commission in the United States. But now we find that the Prime Minister and the Government are just posturing.
Has the Prime Minister called President Reagan since Question Period yesterday or are the Prime Minister and the Government quite content to wait until the Venice Summit to raise this very important issue?


Charles Joseph Clark: Mr. Speaker, the Prime Minister will be meeting President Reagan within eight or nine days in Venice to discuss the FERC question. I will be meeting with Secretary of State Shultz and in addition I would imagine my colleague, the Minister for Finance, will be meeting with the Secretary of the Treasury of the United States. Those will be the personal meetings. We have already made known our very great regret at the decision taken by the quasi-judicial tribunal with respect to the FERC decision, and we have indicated to those Canadian companies which are affected and which are proceeding, as they have the right to do, through the courts, that they do that with our encouragement and support.


REQUEST THAT PRIME MINISTER TELEPHONE UNITED STATES PRESIDENT
Russell Gregoire MacLellan: Mr. Speaker, with all due respect to the Secretary of State for External Affairs, we are not talking about someone losing their paper route. We are talking a loss of possibly $400 million to the Canadian economy. We are talking about a situation where the Federal Energy Regulatory Commission in the United States acted outside its jurisdiction because it is responsible only for distribution. The import and export of natural gas are the sole jurisdiction of the Department of Energy in the United States. Why has the Prime Minister not telephoned President Reagan by now-why won't he do it immediately-to express the outrage of Canadians?


Ms. Copps:: Absolutely.


Charles Joseph Clark: Mr. Speaker, the Hon. Member speaks of the loss to Canadians. I know the loss to Canadians-most of those who are affected are in my province-just as I know the loss to Canadians in that province of the disastrous National Energy Program which that Hon. Member, and the Government of which he was part, brought in and imposed upon the people of Alberta in an utter act of carelessness for the interests of western Canada.


Sheila Maureen Copps: Next?


Charles Joseph Clark: The Hon. Member for Hamilton East, speaking again from her seat, asks what next the Liberal Party will do to destroy western Canada. Well, it won't get the chance, Mr. Speaker.
Oral Questions EFFECT ON CANADA


Russell Gregoire MacLellan: Mr. Speaker, the Prime Minister himself has said that this decision of the Federal Energy Regulatory Commission is an extension of U.S. regulations into Canada.
The Government is allowing the United States pretty well to run the country. Why are the Secretary of State for External Affairs and the Prime Minister-the whole Government- allowing the United States to make laws in Canada?


Charles Joseph Clark: Mr. Speaker, the people of western Canada, the people of Alberta, take this issue very seriously. We do not regard it as simply another instance for people who are instinctually, viscerally anti-American to express those antiAmerican instincts again.
There is a real problem here. It is a problem deeper than simple visceral anti-Americanism. It is a threat to the economic interests of Alberta and of western Canada. We have raised it. We have failed in the first instance. We intend to continue to raise it, using every option available to us, including the options through the courts and including the options of direct and personal representations by the Prime Minister, by myself, and by the Minister of Finance.
Those kinds of representations have worked before in cases where the Liberals failed as, for example, with regard to the recognition of Canada's rights in the Arctic. We intend to continue to follow that kind of path to protect and advance Canadian interests.


PRIME MINISTER'S STATEMENT
Hon. Herb Gray (Windsor West):: Mr. Speaker, in the Prime Minister's statement of May 6, issued in Red Deer, Alberta, in speaking of the natural gas ruling he said:
If confirmed and applied, this ruling will extend U.S. regulation into Canada
and jeopardize from $140 to $400 million in Canadian export revenue.
If the matter is as serious as the Prime Minister admits, I want to ask the Secretary of State for External Affairs why the Prime Minister is willing to wait even eight days or nine days to raise this matter personally with President Reagan.
If the Prime Minister and the Government are serious about this infringement of Canadian sovereignty and this damage to western Canada, and therefore to all Canada, surely the Prime Minister will get on the phone this afternoon to President Reagan. Why is he afraid to do that?


Charles Joseph Clark: Mr. Speaker, there is no question, as the Hon. House Leader of the Official Opposition should know, about the seriousness of this matter not only for producers in western Canada but also the serious implications of the extraterritorial application of U.S. law in a way which affects Canada.

May 29, 1987
Oral Questions
We take it with the utmost seriousness. That is why, rather than limiting ourselves to a phone call, the Prime Minister has made representations. I have had conversations as recently as two weeks ago. Those conversations did not have the result we sought.
The administration co-operated with us. The Secretary of State of the United States sought a delay before a quasijudicial tribunal. Tie could not order it; he sought it. The quasi-judicial tribunal in the United States decided not to adhere to the request which was made, in effect on our behalf, by the United States State Department.
We will carry it forward now to personal meetings with all those officers. We have indicated that we are prepared to support the Canadian companies which are proceeding through the courts. We have indicated to the United States, immediately after the decision came down, our deep unhappiness about that decision.
Those are real actions which may bring about a change. They are not empty gestures, shaking one's fist at the wind.


Herbert Eser (Herb) Gray: It is obvious that what the Prime Minister did so far has been nothing but an empty gesture. This is why we are calling upon the Government to do something of substance.


REQUEST FOR CANADA-UNITED STATES DISCUSSIONS
Herbert Eser (Herb) Gray: Mr. Speaker, I want to ask the Secretary of State for External Affairs why the Prime Minister persists in waiting until the meeting in Venice where the whole agenda is on matters quite apart from this one and when President Reagan's attention will be on that broader agenda.
Why will he not take the opportunity now to speak personally to President Reagan to try to get some meaningful action? Furthermore, if the executive branch of the United States has some authority in this regard, why won't the Government send the Minister of Energy, Mines and Resources to meet personally with the U.S. Secretary for Energy? It is clear that this is not simply something for a regulatory tribunal. The Secretary of Energy has some direct authority.
Why won't the Government work directly with the Secretary of Energy to have him use that authority, as well as have the Prime Minister speak personally now with President Reagan? Why the delay? Why the willingness to let slide Canadian sovereignty and Canadian jobs?


Charles Joseph Clark: Mr. Speaker, the irony here is that this Government is receiving advice on dealings with the United States from a Government that failed to make any progress on acid rain whereas we have made progress, that failed to make any progress with regard to Arctic sovereignty whereas we have
made progress, that failed to make progress on a range of other economic fronts where we have made progress.
The facts are very clear. There has been a decision taken by a quasi-judicial body in the United States, a decision very harmful to Canada, perhaps in a multitude of ways. We have made known immediately after that decision was rendered our great unhappiness with that decision. In addition to that, the Prime Minister has sought, and there will be a special meeting on the margins of the Venice meeting-


Herbert Eser (Herb) Gray: On the margins?


Charles Joseph Clark: Yes, on the margins. In other words, in Venice in the same place where the President is-


Herbert Eser (Herb) Gray: I presume in a gondola.


Charles Joseph Clark: -in a direct face to face meeting between the Prime Minister and the President in which this issue will be raised again. Those are the ways that if progress is to be made, it is achieved. It is not achieved by the kind of sporadic inconsistent interest in Canadian sovereignty-


An Hon. Member:: Hear the baby crying up there?


Charles Joseph Clark: I guess the Member for Vancouver Quadra is in the House.


Some Hon. Members:: Oh, oh!


Some Hon. Members:: Hear, hear!


Mr. Speaker:: The Hon. Member for Oshawa.


Mr. Broadbent:: I won't say it, Mr. Speaker.


Some Hon. Members:: Oh, oh!


PURCHASE OF DOME PETROLEUM-POSSIBLE INVOLVEMENT OF PETRO-CANADA
John Edward Broadbent: Mr. Speaker, I have a question for the Minister of Finance. The public was informed yesterday during a Senate hearing on the Dome take-over that at one time before the immediate crisis, Petro-Canada was involved in discussions about participating in a resolution of the Dome problem. I was given additional information this morning.
Would the Minister of Finance confirm that, prior to the immediate crisis, the Government had before it a proposal that would have resulted in a total Canadian solution to the Dome problem, that would have included Petro-Canada and with which the major Canadian banks involved would have been happy, and that this proposal, in fact, has been turned down by the Government?
May 29, 1987


Geoff Wilson: No, Mr. Speaker, I cannot confirm that. I can confirm that in a Senate committee hearing today the president of Amoco Canada did say that the company proposed to issue shares in Amoco Canada to the Canadian public to an amount that will not be less than the degree of Canadian ownership that is there in the case of Dome today. I think we are making some very real progress in achieving some of the objectives that both the Hon. Member and myself would support.


John Edward Broadbent: Mr. Speaker, the Government of Canada may be bought off by a certain whitewashing operation, but I can tell you that people on this side of the House won't be taken in by that little manoeuvre.


POSITION OF PRIME MINISTER
John Edward Broadbent: Mr. Speaker, I would like to be more specific and go to the Deputy Prime Minister. Will he confirm that the former Minister of Energy took a proposal directly to the Prime Minister that included participation by Petro-Canada and Dome, that would have kept the banks involved happy, that would have left it totally Canadian owned, and that it was the Prime Minister directly himself, after considering the details of this proposal, who said no to it?


Geoff Wilson: The answer is still the same, Mr. Speaker. There was no proposal put forward that meets the criteria which the Hon. Member has set out. There were a number of things that were being discussed but there was no proposal.


ALLEGED PROPOSAL PLACED BEFORE PRIME MINISTER
John Edward Broadbent: Mr. Speaker, I am sure the Minister of Finance is choosing his words with care. Is he saying to the House that the Prime Minister did not have put before him a proposal endorsed by the former Minister of Energy that included-


Mr. Wilson (Etobicoke Centre):: The former Minister?


John Edward Broadbent: Pat Carney, former Minister of Energy- that included Petro-Canada, that would have been supported by the banks and the net result would have been total Canadian ownership of what is now Dome? Is the Minister saying that the Prime Minister did not consider such a proposal and that he did not turn it down?


Geoff Wilson: Mr. Speaker, for the third time, there was no proposal.


John Edward Broadbent: Okay.
Oral Questions HOUSE OF COMMONS


PRESENCE IN GALLERY OF MINISTER OF FOREIGN AFFAIRS OF NORWAY
Mr. Speaker:: I wish to draw to the attention of Members the presence in the gallery of Mr. Thorvald Stoltenberg, the Norwegian Minister of Foreign Affairs.


Some Hon. Members:: Hear, hear!


PRESENCE IN GALLERY OF NORTHWEST TERRITORIES AND BRITISH COLUMBIA LEGISLATIVE ASSEMBLIES' SPEAKERS
Mr. Speaker:: I wish also to bring to the attention of Members the presence in the gallery of the Hon. Donald Stewart, MLA, Speaker of the Legislative Assembly of the Northwest Territories, and the Hon. John Reynolds, MLA, Speaker of the Legislative Assembly of British Columbia.


Some Hon. Members:: Hear, hear!


SOCIAL SECURITY
Jean-Claude Malépart: Mr. Speaker, my question is directed to the Minister of Finance. The House will recall that on two occasions, this Government blatantly misled senior citizens. We remember the deindexation of Old Age Security pensions and the cuts in unemployment insurance benefits for older workers.
Today, we heard that the Minister intends to cut tax exemptions for senior citizens. This time, could the Minister make a commitment, and I mean a formal commitment, not like the previous ones, that none of the exemptions enjoyed today by senior citizens will be cut after the tax reform?


Geoff Wilson: Mr. Speaker, I think it important for the Hon. Member to exercise some patience. Three weeks from yesterday the tax reform White Paper will be tabled. I can assure the Member that we are very conscious of the position of senior citizens in tax reform, and a very major effort has been made to ensure that they are beneficiaries of tax reform on a bottom line basis.


INCOME TAX-THE ELDERLY-GOVERNMENT POSITION
Jean-Claude Malépart: Mr. Speaker, as a result of this Government's two budgets, senior citizens who were not paying a cent of income tax will now have to pay federal income tax. Could the Minister give these people the assurance that their $2,600 exemption, plus the $1,000 deduction on pension income, will not be cut, because

May 29, 1987
Oral Questions
otherwise people who are already paying income tax will have to pay more? Could the Minister give senior citizens the assurance that they will not be penalized this time?


Geoff Wilson: Mr. Speaker, let me be a little more precise. I have said that a number of low-income Canadians will be off the tax rolls, will no longer be paying tax and a large number of those will be senior citizens.
Second, I have said clearly that we will be moving from a position of a system of exemptions to a system of credits, and the beneficiaries will be those with low and middle incomes, not people with high incomes. Again the major beneficiaries will be senior citizens.


PROPOSED PURCHASE OF DOME PETROLEUM BY AMOCO CANADA
Ian Gardiner Waddell: Mr. Speaker, I have a question for the Minister of Finance, again on this Dome-Amoco matter. Yesterday the Bank of Montreal in a written brief told the committee: "Under Dome's insistence that the company shares be purchased, no Canadian can effectively compete with Amoco". We learned that Public Affairs International has been retained and is lobbying for Amoco, that senior executives-I will not mention some names-from Amoco have been involved with the Government, and the Energy Minister has been talking with the Government-


Some Hon. Members:: Order.


Ian Gardiner Waddell: Why is it hands off the other Canadian bidders, including the proposal that my Leader mentioned a few minutes ago, and it is hands on dealing with the Americans and with Amoco? Why the double standard?


Geoff Wilson: First, Mr. Speaker, it is clear the reason that we are dealing with Amoco is that Dome has chosen to deal with Amoco. That is the only deal in place.


John Edward Broadbent: Because you turned down an earlier one.


Michael Holcombe Wilson: I would ask the Hon. Member to prove that.


Charles Joseph Clark: Prove it, Ed.


Michael Holcombe Wilson: Then the Hon. Member said why is it hands off the Canadian issue or the Canadian purchaser. I think the Hon. Member would not want us to get into the middle of a legal dispute between two private sector
organizations because obviously problems could be generated by that.
[DOT] (M40)
Let me draw the Hon. Member's attention to what Amoco said in an appearance before a committee of the other place. It is going to bring substantial benefits through substantial investment in the oil and gas industry, an increase over what has been the case for the past five years. Continued employment opportunities for Canadians. Increased activity for suppliers of goods and services to the Canadian oil and gas industry. Those are the small companies in the foothills of Alberta. Continuation and expansion of research and development.
Those are the benefits we are going to be looking very carefully at through Investment Canada to ensure the deal will be a good deal for Canadians.


AMOCO'S PROPOSED SALE OF SHARES TO CANADIANS
Ian Gardiner Waddell: Mr. Speaker, Amoco has operated in the oil patch for numerous years. It is 100 per cent American-owned. Last year it sent $686 million in dividends to the U.S. and reinvested $107 million. Has the Minister ever seen such a conversion since Saul on the road to Damascus? This company has suddenly become Canadian.
Would the Minister not agree with me that selling shares to Canadians is simply window-dressing unless you sell the majority of shares? The control of Canada's energy future will rest in Chicago.


Geoff Wilson: Mr. Speaker, I do not know whether the Hon. Member is aware of it, but today Dome is owned by Americans to a far greater extent than Canadians. Opinions as to the precise figure vary, but it is somewhere between 25 per cent and 35 per cent Canadian-owned today. The statement the Hon. Member made is not correct.
I would also point out that Amoco's reinvestment level, before the NEP, was as good as any in the industry. It demonstrated over a period of 35 to 40 years, prior to the NEP, that it was prepared to invest significant amounts of money.


Ian Gardiner Waddell: They held us to ransom over the NEP.


Michael Holcombe Wilson: If the Hon. Member would listen I think he will be pleased with the answer.
Those are the commitments we are going to be looking at through Investment Canada prior-prior-to approval of any deal.


Sheila Maureen Copps: Mr. Speaker, the Government is owned by the Americans, lock, stock, and energy barrel.
May 29, 1987


TAX REFORM
Sheila Maureen Copps: Mr. Speaker, my question is directed to the Minister of Finance and deals with the hypocrisy of the Government concerning senior citizens. We have heard about a potential tax on food and now we see a cut-back of senior citizens' tax benefits. The Minister asked us to be patient. Tom Winning, a former steelworker who has been on a disability pension for 14 years, is now paying income tax for the first time as a result of the Government's tax policies. Should he be patient and wait for another cut-back in his benefits from the Government?


Geoff Wilson: Mr. Speaker, if the Hon. Member could be patient I think she will have her answer on June 18.


SITUATION OF FORMER STEELWORKER
Sheila Maureen Copps: Mr. Speaker, I specifically asked the Minister about Tom Winning, a constituent of mine, a former steelworker who has been on disability pension for 14 years. He is a senior and is now paying taxes for the first time. Why should he wait for another double whammy, another hit in the face from a Government which has already been fraudulent as it relates to senior citizens?


Some Hon. Members:: Sit down!


Geoff Wilson: Mr. Speaker, I am sure the Hon. Member is now on good terms with the Premier of the Province of Ontario. She should go to him and ask him why he has not passed on the increase in the disability pension this Government brought in.


Some Hon. Members:: Hear, hear!


Mr. Epp (Provencher):: Answer that!


Mr. McDermid:: Don't shake your head, Sheila. You know it is true.


Michael Holcombe Wilson: If the Hon. Member is looking for someone who is hitting her constituent in the face she should go and speak to David Peterson.


ADMINISTRATION OF JUSTICE
Mr. Howard McCurdy (Windsor-Walkerville):: Mr. Speaker, my question is addressed to the Minister of Justice. Legislation that would permit the freezing, seizure and forfeiture of the profits of crime would have little effect unless mechanisms are in place whereby those profits can be traced.
Oral Questions
Does the Minister agree with a former Deputy Solicitor General who said any anti-laundering legislation that does not include a reporting requirement by financial institutions is bound to be ineffective?


Hon. Ray Hnatyshyn (Minister of Justice and Attorney General of Canada):: Mr. Speaker, it is rather strange that the Hon. Member would raise a question about legislation which I hope to introduce at 12 noon. If the Hon. Member holds his question for about half an hour I will answer it for him then.


REPORTING OF PROFITS
Howard Douglas McCurdy: Mr. Speaker, it is claimed that $9 billion in profits is generated by criminal enterprise. Leaving aside the tax losses, does the Minister not agree he is using a gun filled with blanks in this so-called fight against drugs if the Government is not willing to impose the same requirements upon its friends as it is on other sectors of society in this so-called anti-drug strategy?


Ramon John Hnatyshyn: Mr. Speaker, 1 gather that the NDP, who have been against the drug strategy from the very beginning and are apparently not at all interested in this very serious problem, are now trying to get on board and pretend they are very much interested. We are bringing in the most progressive and hard-hitting legislation concerning the proceeds of crime in the history of this country. It is a very good piece of legislation and 1 hope he changes his mind and supports it.


MAMMARY IMPLANTS-GOVERNMENT POSITION
Mrs. Suzanne Duplessis (Louis-Hebert):: Mr. Speaker, my question is directed to the Minister of National Health and Welfare. I would like to know what the Minister has decided to do about breast implants since out of thirty laboratory-tested prosthesis implants, seven are defective and a health hazard for women, at considerable cost to provincial health insurance plans.
What kind of action does the Minister of National Health and Welfare intend to take to correct this situation?


Arthur Jacob (Jake) Epp: Mr. Speaker, this is a very serious matter and I am indebted to the Hon. Member for bringing it to the attention of myself and my Department over the last two years. With respect to prosthesis implants the Department has now re-examined this question. Over the summer we are going to be looking at new protocols. We are putting it on the Deputy Minister's agenda, it is proposed that steps be taken not only to examine the

May 29, 1987
Oral Questions
evidence brought to our attention by the Hon. Member and the medical community, but also put in place procedures whereby we can avoid the negative effects of these medical devices, especially for women.


IMMIGRATION
Mr. Sergio Marchi (York West):: Mr. Speaker, my question is directed to the Minister of State for Immigration. Last summer, referring to the increasing number of unscrupulous immigration consultants, he said: "My Department will stop these counsellors and we are going to lay charges and we are going to make them stick."
A year has gone by and fraudulent immigration scams have mushroomed unchallenged here and abroad. Today yet another paper. The Toronto Sun, revealed another immigration ring which has left numerous families deserted and penniless after charging them over $6,000 for visas, jobs, and other documents.
Does the Minister not think the Government has dragged its feet long enough and it is time to stop this cancerous activity from spreading? To use his own words, when will these shady operators be stopped and charges laid?
[ Translation]


Hon. Benoit Bouchard (Minister of Employment and Immigration):: Mr. Speaker, I have informed the Hon. Member several times in this House that the Department of Employment and Immigration has taken steps to have the people to whom he is referring investigated. I also said that reports on a matter as sensitive as this one, namely, investigations carried out by the RCMP, have been made to the Department of Justice. Again, I think that in the circumstances, we must be very careful, considering charges that may be laid. That is why we are not going to assess these cases on our own and start judging these people. I think that is the role of the Department of Justice. It is the Department's responsibility to bring such cases to court if necessary, depending on the charges to be laid at that time.
[ English ]


REPORT SUBMITTED BY ROYAL CANADIAN MOUNTED POLICE
Sergio Marchi: Mr. Speaker, my supplementary question is directed to the Minister of Justice. There are growing fears within the RCMP that their cases against these shady operators are crumbling because of inaction by the Minister's Department and witnesses are no longer coming forward because they have been frustrated over a period of 12 to 14 months.
Since the RCMP completed one report and submitted at least one report to the Minister's Department last June, why, over the course of 12 months, has not one single charge been laid as recommended by the RCMP? Why the procrastination? Will he assure this House that the Minister will order his Department to follow up immediately on the recommendations of the RCMP to lay charges under the Immigration Act so that this illegal and growing industry can be brought to an immediate halt?


Ramon John Hnatyshyn: Mr. Speaker, first, 1 do not accept for a moment the premise of the Hon. Member's question. Second, it is a tradition in the responsibilities of the Minister of Justice not to comment on specific cases because such comments will in fact prejudice the administration of justice. I am sure the Hon. Member did not raise this question for the purpose of impeding the proper course of justice. I hope he will show some restraint in this regard.


Sergio Marchi: You're doing that well enough.


Ramon John Hnatyshyn: This type of allegation is totally irresponsible. I hope his Leader will have a talk with him and explain to him some of the basic principles of justice. The Department of Justice is working on these matters.


EXTERNAL AFFAIRS
Mr. Dan Heap (Spadina):: Mr. Speaker, I have a question for the Secretary of State for External Affairs. On May 2 in El Salvador the headless body of Antonio Hernandez, an officer of the National Association of Agricultural Workers of El Salvador, was found in the city dressed in guerrilla clothes. I was told two days later by the Human Rights Commission that he had been kidnapped on April 16 by armed forces, in front of witnesses, on his way to arrange for a loan for a peasant co-op.
Will the Minister lodge a strong protest with the President of El Salvador, Napoleon Duarte, against the military kidnapping and murder of Hernandez and many other labour leaders and co-op leaders this year, even after the state of siege ended in January along with its special police powers?


Charles Joseph Clark: Mr. Speaker, I am not familiar with the details of the case which has been raised by the Hon. Member, but I am familiar with his record of interest in affairs in that region. I appreciate the intensity and seriousness of that interest.
1 will look into those facts and if they are as he has described them I will certainly take appropriate action. In any event, 1 will keep him informed of what I learn and what we
May 29, 1987

believe it is possible for the Government of Canada to do in the circumstances.


CANADIAN AID TO EL SALVADOR
Daniel James Macdonnell Heap: Mr. Speaker, I thank the Minister very much for his undertaking. As the Minister knows, Canada provides $8 million of bilateral aid to the Government of El Salvador which, after certain transactions, is distributed to certain projects after they have received the approval of President Duarte's Government.
Will the Minister indicate to the President that Canada's decision to extend that aid was based on an expectation that the President would be willing and able to control human rights violations of this sort and that the continuation of the aid is conditional on progress in that matter?


Charles Joseph Clark: Mr. Speaker, 1 do not want my response on this to be misunderstood. I will look into the facts and see what actions they justify.
The question of Canada's development assistance, not only to El Salvador but to other countries in Central America where there is conflict which causes controversy here, is a matter of some delicacy. I do not want to make any general comment that might make that delicate situation more difficult. However, I will certainly look into the information which the Member has provided and will take whatever action is appropriate.


HUMAN RIGHTS
Reginald Francis Stackhouse: Mr. Speaker, my question is also for the Secretary of State for External Affairs and is also on the theme of human rights and official development aid, the subject on which the Standing Committee on External Affairs and International Trade has recently reported.
Canada provides development assistance to Ethiopia, a country with one of the worst human rights records in the world. In keeping with the report of our standing committee, what action can the Minister take to renew government efforts to gain justice for Ethiopia's thousands of political prisoners, many of whom have been held for years with neither a charge nor a trial?


Charles Joseph Clark: Mr. Speaker, the Hon. Member has visited Ethiopia and kept himself very current with the situation in that country. He has raised questions of this kind with a consistency which 1 appreciate. We have raised human rights questions in Ethiopia and will continue to do that.
Oral Questions
With regard to the committee report, it was tabled only yesterday. We have not yet had an opportunity to study it and its very important recommendations with regard to human rights. As is the practice of the Government, we will respond fully to that report by a committee of the House.


AIR TRANSPORT
Mr. John Nunziata (York South-Weston):: Mr. Speaker, my question is with regard to the takeover of Canadian Pacific Air by Pacific Western Airlines. It is now obvious that the Government did not know what it was doing when it approved the takeover. The Government was either innocently naive or grossly incompetent when it deemed that particular takeover to be in the best interests of Canada.
On March 25 the Government estimated that 3,000 jobs would be lost as a result of the takeover. On April 2 it said that few if any jobs would be lost. Today we learned from the president of the new airline that up to 1,900 jobs will be lost as a result of the takeover.
1 will direct my question to the Minister responsible. Why did the Government approve the takeover when it knew, or ought to have known, that so many jobs would be lost? Is this what airline deregulation is all about?


Mr. Blaine A. Thacker (Parliamentary Secretary to Minister of Transport):: Mr. Speaker, as usual my friend opposite is entirely incorrect. The effect of deregulation, which was started by his Party, has, on an over-all basis, been an increase in the number of Canadians working in the airline industry. That will continue because there are now commuter services serving smaller centres.
It is true that in this particular merger there will perhaps be a loss of up to 1,900 jobs. However, most of those losses will be handled through attrition, the golden handshake, and reorganization. However, we should always remember that on an overall basis there will be more people working in the airline industry as a result of deregulation than there were when the Liberals had everything tightly regulated.


GOVERNMENT POSITION
John V. Nunziata: Mr. Speaker, when 1 raised this issue in the House on April 14 I was told by the usually pompous Minister of Transport that there would be few if any jobs lost. Today, for the first time, the Government is admitting that up to 1,900 jobs will be lost as a result of this proposed takeover. It is obvious that the Government did not know what it was doing when it approved the takeover.
I will direct my supplementary question to the Deputy Prime Minister. Will he explain why on one occasion the Government said 3,000 jobs would be lost, on another occasion

May 29. 1987
OraI Questions
it said that few if any jobs would be lost, and today we are told that 1,900 jobs will be lost? Explain the discrepancy. Explain the gross incompetence.


Hon. Don Mazankowski (Deputy Prime Minister and President of the Privy Council):: Mr. Speaker, perhaps it would be more appropriate for the Hon. Member to explain to the House and to the people of Canada his irresponsibility in the way he has raised this issue. He, not the Government, said that 3,000 jobs would be lost. That was roundly condemned and criticized by the officials of the company.


John V. Nunziata: It's a government memo.


Donald Frank Mazankowski: Perhaps he may want to reconsider his questions in that context. Again, the Hon. Member is not only factually incorrect, he is acting irresponsibly, as is normal for him.


REGIONAL DEVELOPMENT
Mr. John Parry (Kenora-Rainy River):: Mr. Speaker, my question is directed to the Deputy Prime Minister. It concerns the economic recovery plan for northern Ontario. The Deputy Prime Minister knows that it has been eight months since the Solicitor General made the announcement and that on four separate occasions in this House the Deputy Prime Minister has promised this economic recovery plan. Since it is now three weeks since the last time the Deputy Prime Minister said the plan would be announced very soon, I would like him to give to this House and this country a commitment when that plan will be introduced?


Donald Frank Mazankowski: Mr. Speaker, not only will an economic recovery program be announced for northern Ontario, but one will be announced for the Atlantic region and the western region in a very short period of time.


John Edmund Parry: Mr. Speaker, for the fifth time of asking the question, that is a pretty poor answer from a man who brags his second name is "Frank".


POSSIBLE CONTENT OF PLAN
John Edmund Parry: The Deputy Prime Minister knows that the unemployment insurance benefits are running out for the laid-off Griffith Mines workers at Ear Falls this very week. What can the people of northern Ontario expect by way of this plan when it is announced?


Donald Frank Mazankowski: Mr. Speaker, they can expect
and will get the kind of treatment that is unique to that region, and a recognition by a federal Government at long last that northern Ontario has problems, challenges, and opportunities which are unique to the region. If the Hon. Member is just a little more patient, I will be frank with him when the announcement is made.


ENVIRONMENTAL AFFAIRS
Hon.   C'has. L. C'accia@Davenport: Mr. Speaker, my question is directed to the Secretary of State for External Affairs who, I am sure, will answer it in his usual non-partisan manner. It has to do with the fact that in January of this year the Minister of the Environment called upon the United States to reduce trans-boundary acid rain emissions by half by 1994. Last week, after Canadian and U.S. officials met in Washington, they indicated that the Government of Canada has become flexible, that it is not going to demand what the Minister of the Environment called for in January.
Why does the Government appear to give up its bargaining position at the very first meeting in Washington?


Charles Joseph Clark: Mr. Speaker, I try to provide non-partisan answers to non-partisan questions. Let me see if I can find a non-partisan element in that question. Perhaps the best way would be to indicate that at the most recent meeting, which was designed in part to try to make some progress towards formalizing the reference the President of the United States made here on the floor of the House of Commons to some kind of formal agreement, we think that some progress was made. We have learned not to celebrate that progress until it has been achieved. However, I think the House will recognize, in fairness, that there has been some modest movement forward on the part of the United States administration on this very serious question of acid rain. Certainly we believe it is important to continue that process rather than to walk away in frustration from the talks.


Mr. Caccia:: I am so glad that the Secretary of State for External Affairs refrained from rounding off his final sentence and 1 appreciate the thoughtfulness of his answer.


CANADIAN POSITION
Hon.   C'has. L. C'accia@Davenport: Will the Secretary of State for External Affairs assure this House now that the Government of Canada will not waver in its position as expounded by the Minister of the Environment last November, namely, that it will not abandon the position of demanding from the U.S. a cut by half in trans-boundary acid rain emissions by 1994?
May 29, 1987


Charles Joseph Clark: Mr. Speaker, our position has been known. The firmness with which we pursued it has yielded more progress than that found by earlier Governments. We intend to continue to seek a reduction in trans-boundary emissions. We require not only constancy on the part of the Government, which will continue to be there, but support and constancy on the part of parliamentarians who have taken an active interest in this issue.
I have been informed by my colleague, the Hon. Member for Parry Sound-Muskoka, that the Parliamentary Committee on Acid Rain will be in Washington later in June. I think the Hon. Member will be part of that group. I certainly hope they can contribute in a constructive way in trying to achieve a reduction in trans-boundary emissions, which is the goal of this Government.


Mr. Speaker:: The Hon. Member for Skeena on a short question, please.


AIRTRANSPORT
James Ross Fulton: Mr. Speaker, my question is directed to the Deputy Prime Minister. Since the Minister of Transport has stated publicly that Fred Turner was treated unfairly, and since Cabinet has overruled the CTC and returned his airline licence, and since Cabinet is determined in principle to compensate with an out of court ex gratia payment, why has the Government chosen to finish Fred Turner off in the Federal Court when it has already stated publicly that he has been unfairly treated?


Donald Frank Mazankowski: Mr. Speaker, that issue has been handled by the Minister of Transport here in the House. Questions have been responded to and 1 have nothing further to add.


LAUNCHING OF LEGAL ACTION
James Ross Fulton: Mr. Speaker, nothing short of back alley justice is now being meted out to Fred Turner. Following a meeting Fred Turner and 1 had with the Prime Minister on May 15, the Parliamentary Secretary to the Minister of Transport, who is here, met with Mr. Turner and suggested the figure of $40,000. When Fred did not agree, the Government chose to prosecute him in the Federal Court at a cost of hundreds of thousands of dollars. I wonder if that is the kind of justice which will be the trade mark of this Government where, if someone does not agree to a settlement, it simply prosecutes them at a far higher cost in the Federal Court?
Tabling of Documents


Blaine Allen Thacker: Mr. Speaker, it is true that I met with Mr. Turner, but it was in the same light as all sorts of Members meeting Mr. Turner, to go through the issues, and try to see the question of liabilities-


James Ross Fulton: You suggested forty thousand bucks.


Blaine Allen Thacker: But other figures were suggested as well. He suggested $2 million. Under our democratic system, if one is unable to come up with a "without prejudice" offer which both sides can accept in order to save the problems of a law suit, one resolves those problems in a law suit. Mr. Turner has revived the law suit and it will have to go its normal course.


Mr. Speaker:: The Hon. Member for York Centre, one question, please.


NORTH ATLANTIC TREATY ORGANIZATION
Hon. Bob Kaplan (York Centre):: Mr. Speaker, my question is directed to the Minister of National Defence. It has to do with Canada's military role in NATO in Norway.
I want to ask the Minister, in the interests of the Norwegian Government and the representations which have been made, to reassure the House that the Government will not be recommending any reduction of our NATO role in relation to Norway, and that it will not be one of the options in the White Paper he will be presenting.


Hon. Perrin Beatty (Minister of National Defence):: Mr. Speaker, as my hon. friend should know, the White Paper will be produced a week today, and he will have to wait for it. One thing I can say, though, is that I am very much aware of the Liberal Party's policy, which was to pull half of our troops out of Europe. This Government, instead of reducing our commitments to Europe, has stepped up Canadian presence in Europe.



ROUTINE PROCEEDINGS


Blaine Allen Thacker: Mr. Speaker, pursuant to Standing Order 106(8), 1 have the honour to table, in both official languages, the Government's response to 181 petitions; Nos. 332-1983, 332-2199 to 332-2282 inclusive, 332-2284 to 3322310 inclusive, 332-2318 to 332-2381 inclusive, 332-2422, 332-2423, 332-2431,332-2435 and 332-2454.

May 29, 1987
Committee Reports


Barbara Jane (Bobbie) Sparrow: Mr. Speaker, I have the honour to present the Seventh Report of the Standing Committee on Energy, Mines and Resources, in both official languages.
[Editors Note: See today's Votes and Proceedings.}



B. Keith Penner: Mr. Speaker, I have a petition from citizens living in three communities in my constituency of Cochrane-Superior, namely, the communities of Longlac, Moonbeam and Kapuskasing. The petition is pursuant to Standing Order 106. The petitioners ask that Parliament support Motion No. M-37, which will allow the unborn to be protected by the Canadian Charter of Rights.


Mr. Vic Althouse (Humboldt-Lake Centre):: Mr. Speaker, 1 have the honour to present a petition concerning postal service which has been signed by most of the residents of Mucnster, Saskatchewan, in my riding. The petitioners call upon the Parliament of Canada to work towards instructing the Government as it highest priority to improve service for Canada Post Corporation and to abandon the policy of closing rural post offices and cancelling rural routes.
They are aware that the existing policy is almost exactly like the previous policy in that these rural post offices are still under threat of being closed when the postmaster retires.


Mr. Les Benjamin (Regina West):: Mr. Speaker, I have two petitions. The first is signed by Canadians from a number of places such as St. Hubert, Lachine, Beaconsfield and Montreal in Quebec, as well as citizens of Vancouver, Richmond and Coquitlam in British Columbia. They petition the House to ask the Government to withdraw Bill C-I8 and to retain public convenience and necessity as a fundamental factor in the development of public transportation policy and to retain licensing in order to restrict market-place activity to a positive level functioning in the best interests of the public as a whole.


Leslie Gordon Benjamin: Mr. Speaker, I have another petition signed by citizens of Ottawa, Nepean,
Montreal, Laval and Val d'Or in which the petitioners show that Mr. Fred Turner, whose licence was cancelled which led to his bankruptcy, operated an airline in Yellowknife, Northwest Territories. The petitioners pray and call upon the House to seek the assignment of an independent arbitrator to this matter to investigate the details of the case and to review and to negotiate the offer from the federal Government with Fred Turner in order to reach an equitable settlement which better reflects the true nature of his loss.



POINT OF ORDER


Clément M. Côté: Mr. Speaker, on a point of order. Beauchesne lists a number of terms and expressions that cannot be used in the House, that are unparliamentary, Now yesterday, I noticed that in Hansard-


Mr. Speaker:: I am sorry, but I think it would be more appropriate if the Hon. Member were to raise his point of order after Routine Proceedings have been called.

[ English ]



CRIMINAL CODE, FOOD AND DRUGS AND NARCOTIC CONTROL ACTS MEASURETO AMEND

Ramon John Hnatyshyn: for leave to introduce Bill C-61, an Act to amend the Criminal Code, the Food and Drugs Act and the Narcotic Control Act.


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


Some Hon. Members:: Agreed.


[Stage Direction]
Motion agreed to. Bill read the first time and ordered to be printed.


[Stage Direction]
On the Order: Motions:
May 27, 1987-The Leader of the Opposition:
That, pursuant to Standing Order 82(15)(a), consideration of Employment
and Immigration Votes 1,5, 10, 15, 20. 25 and 30 of the Main Estimates for
May 29, 1987
[Stage Direction]
the year ending March 31, 1988, by the Standing Committee on Labour, Employment and Immigration, be extended beyond May 31, 1987.
Mr. Speaker:: The motion in the name of the Right Elon. Leader of the Opposition (Mr. Turner) pursuant to Standing Order 82(15)(a) is deemed to have been adopted.



MOTION TO ADJOURN UNDER S. O. 29(1) SOVEREIGNTY-U.S. REGULATION-CANADIAN NATURAL GAS TRANSMISSION COSTS

['Agreed.\nFinancial Institutions']
Mr. Speaker:: 1 advise the House that 1 have received from the Hon. Member for Cape Breton-The Sydneys (Mr. MacLellan) an application under Standing Order 29(1) to adjourn the House. 1 call upon the Hon. Member to make his representations to the Chair.


Russell Gregoire MacLellan: Mr. Speaker, pursuant to Standing Order 29, I ask leave to propose a motion to adjourn the House for the purpose of discussing a specific and important matter requiring urgent consideration, namely, the confirmation of the ruling of the United States Federal Energy Regulatory Commission concerning transmission costs of Canadian gas exported to the United States, a ruling that infringes upon Canadian sovereignty by extending U.S. regulation into Canada and that jeopardizes from $140 million to $400 million in Canadian export revenue.


Mr. Speaker:: The Hon. Member has applied under Standing Order 29 for what is in effect an emergency debate on a matter which it is agreed on both sides of the House is serious. It is a matter which has not only taken up some time in the House, but may well do so again.
However, under the circumstances the Chair feels that it is not appropriate to move an emergency debate, at least at this time. It may be that the Hon. Member might want to bring this matter to the attention of the Chair and the House on another occasion.



[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Blaine Allen Thacker: Mr. Speaker, I ask that all questions be allowed to stand.


Mr. Speaker:: Shall all the questions be allowed to stand?


Some Hon. Members:: Agreed.
Financial Institutions



GOVERNMENT ORDERS


[Stage Direction]
The House resumed from Monday, May 4, consideration of the motion of Mr. Hockin that Bill C-42, an Act respecting financial institutions and the deposit insurance system, be read the second time and, by unanimous consent, referred to the Standing Committee on Finance and Economic Affairs.
Victor Fredrich (Vic) Althouse: Mr. Speaker,
1 rise to make a few comments on Bill C-42 in order to review the policy direction that the Government is proposing with respect to this Bill and to show how we arrived at this point. Since this is second reading debate such comments, 1 understand, are appropriate.
The proposal that we are dealing with here today comes in part out of the Estey report which came about because of the failure of two of our financial institutions, namely, the Northland Bank and the Canadian Commercial Bank. During the same period of time, we saw a number of federal and provincial trust and loan institutions and some casualty insurance companies collapse. When the totals were added up,
1 believe that something like two banks collapsed in 1985; since 1980, nine trust and loan companies collapsed, and again since 1980, five property and casualty insurance companies collapsed.
All of this raised serious doubts about the ability of the regulatory package that had been in place since the collapse in 1923 of the Home Bank to handle the four pillars of our financial institutions. That collapse, along with the depression of the 1930s, resulted in a series of regulatory proposals that had the effect of establishing traditional areas of function for banks, trust companies, insurance companies and the securities industry. Each was complete in itself, and separate, and there was very little integration of the four pillars. Some people believe that a fifth pillar has been established by way of the cooperative credit institutions which have become a force in the financial services area.
The intention of the legislative and regulatory program was to establish, as a result of what occurred in the 1930s, such departments for regulation and supervision as the Department of Insurance, which looked after insurance companies, the Inspector General of Banks, responsible for regulating and monitoring the banks and the Canadian Deposit Insurance Corporation, which provides guarantees to depositors of $60,000 per depositor. Out of that same set of changes came the Bank of Canada, to provide last-minute funding to keep banking institutions as viable as possible.
Over the years these regulatory commissions appear to have been doing their jobs. We had no problems until the 1980s,

May 29, 1987
Financial Institutions
and then we were faced with this sudden and unexpected collapse of the two banks which precipitated the Estey Inquiry. At the same time, something like nine trust and loan companies and five casualty and property insurance companies collapsed. The question of whether or not our financial institutions were being properly monitored and regulated came into public view.
Internationally, there was a philosophical move toward complete deregulation of these kinds of institutions. We saw this happening in Great Britain under the Conservative Government of Margaret Thatcher, and we saw considerable deregulation under the similar-minded administration of President Reagan in the United States.
Perhaps as a result of this, there was beginning to be a tendency for those clear functions of the four or five pillars to blur together. Insurance programs were being introduced by some banking institutions, and mortgage and trust company functions were being carried out by all of the pillars. Some Canadians feared that the blurring and intermarriage of these companies was responsible in part for the difficulty the Inspector General of Banks and the Inspector of Insurance had in carrying out their regulatory and supervisory functions.
While the international philosophical move was away from regulation, this Bill, after the Estey report, appears to be trying to make a compromise between continued regulation or reregulation and lip service toward deregulation as well. The report submitted by Justice Estey in October of 1986 provided the basis for the White Paper which was produced on financial institution reform. I would like to very quickly go through some of the Government's proposals embodied in its twin aims of deregulation and reregulation. I will try to keep it brief as 1 know that our time is limited to 20 minutes.
The Government is proposing to allow the diversification and integration of financial services within the total industry so that consumers will be able to deposit and withdraw funds, buy stocks and bonds, arrange loans and mortgages and obtain investment advice and portfolio management, all within the walls of one branch of a financial institution. For instance, banks will be able to underwrite securities while trust and loan and insurance companies will enjoy full consumer and commercial lending privileges. To a certain extent, these kinds of services are beginning to be offered by some companies already, even though the regulations have not changed.
Having been a Member of Parliament only since 1980, I have observed that this seems to be the pattern with very large financial institutions. 1 recall that when the Bank Act came up for revision in 1980, we rescinded the Usury Act which would have limited interest rates lending institutions could charge. As a new Member, 1 was somewhat appalled and surprised that the actual rate of interest charged by most of the financial institutions had for some months exceeded the limit in the Usury Act and no charges had been laid and nothing was done. Instead, the Government chose to simply rescind the Act and change the law so that the practice would become legal.
To a certain extent, that kind of thing is now occurring as the clear distinctions between the functions of the four pillars has eroded. 1 fear that to some extent this Bill may be a reaction to the existing erosion. 1 only raise this fear because 1 think Members of Parliament, in their blind and simple way of looking at things, would hope that practices in Canada would conform to the law as lorjg as the law is in effect. While I know society changes and politicians often respond after the changes have occurred, we should always be conscious of compliance with the law and we should provide ways to make certain that compliance.
I believe that was one of the difficulties that emerged with the two banks that collapsed. As 1 recall, it appeared that the Inspector General of Banks did not have sufficient resources and personnel to do the job of inspection and to provide the proper kinds of information required by the Minister of Finance (Mr. Wilson) or the Minister responsible for these institutions, depending on how the Government decided to set things up.
Some of these shortcomings may in fact continue with this proposal, since a new office will be set up, that of the Superintendent of Financial Institutions. 1 understand that it would combine, more or less, the Inspector General of Banks and the functions of the Superintendent of Insurance. This combined office would be given a new title, that of Superintendent of Financial Institutions.
The information we have at this point would indicate that the resources available to that office would not be much greater than the combined resources of the existing institutions. In fact, I am wondering whether the interests of consumers will be well served and whether the institution will be well monitored.
Given the now blurred functions of the various institutions, I suspect that it will be more difficult to track down the various combinations of responsibility, ownership, and commitment among various like-minded institutions which, at one time, were clearly separate and apart and therefore more easily monitored and regulated.
The principle of deposit insurance has been under some attack as a result of the bail-out of the Northland Bank and the Canadian Commercial Bank which went under in 1985. Several proposals have been put forward which would basically fall into two categories. The first proposition put forward is that uninsured depositors should be responsible for carrying the burden of a failure of an institution. The other extreme, 1 suppose, was to make certain that all deposits were fully insured and that over a certain level-and 1 assume it would be the $60,000 which was proposed as the maximum level of complete insurance-depositors would pay a higher share of deposit insurance so that almost full coverage of deposits would be possible if a bank or financial institution in fact failed. These kinds of propositions are floating around.
May 29, 1987

Bill C-42 seems to be fairly unambitious in its treatment of the problem. The Bill gives Canada Deposit Insurance Corporation a closer relationship with other regulatory officials and a procedure by which it can terminate deposit insurance coverage for recalcitrant institutions. In the case of this happening, a registered letter delivered to the institution's chief executive would be sent out detailing CD1C complaints. The institution's board must then convene and send a report to CDIC on its deliberations within a given time period.
If CDIC remains dissatisfied it can, with the approval of the Minister of Finance, terminate insurance coverage within 30 days of notice. The procedure will take some time, but there is enough time involved that it is very difficult to intervene quickly enough if there are some shenanigans ongoing within the corporation.
Bill C-42 also attempts to deal with the present debt of CDIC, which I understand is somewhere around $1.5 billion, by increasing the fees for deposit insurance. They will be set at $5,000 per institution, plus one-sixth of one percent of each deposit held by the institution. Most financial institutions have responded to the Government's proposal, including the top five chartered banks, by strongly objecting to this solution and citing the issue of uninsured deposit coverage. Apparently they are still attempting to negotiate the particular issue.
Since the time for my remarks is almost over, I should like to point out that it has been the position of the New Democratic Party that the problem of financial institutional solvency can be resolved only through a combination of clear and effective regulatory and supervisory controls for financial institutions in Canada, with strict domestic ownership limits which ensure that institutions will be widely held. This is one issue which has been debated at some length in financial and policy areas.
Upon entering this new era, some institutions will hold as much as 35 per cent of another institution, which normally would have been one of the other competing pillars of the financial institution under the old analysis.
A great many of us think that it should be limited to about 10 per cent per investor, so that there will be in effect a discouragement in respect of the controlling of some companies, even though only 35 per cent of the shares are held.
We would prefer that the 35 per cent be reduced to 10 per cent by law in order to make certain that financial, insurance, and trust company institutions in Canada are as widely held as possible, to avoid the kind of control and manipulation which appears to have occurred in some of the provincial scandals involving trust and loan companies with fast flips and that sort of thing. We would hope that these kinds of amendments could be made to the process, if not in this particular Bill, in companion Bills which deal more specifically with that particular aspect.
I conclude by saying that we will be watching the legislation closely and will be attempting to make appropriate amendments to bring about the kind of regulatory reform which we
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in the New Democratic Party believe would be in the best interests of Canadian users of financial insurance institutions.


Daniel James Macdonnell Heap: Mr. Speaker, Bill C-42 is an Act respecting financial institutions and the deposit insurance system. Because of the general importance of the subject, both to many Canadians as individual investors and to all Canadians who must be concerned about the possible dangers to our economy if mismanagement of large sums of money, it is quite important that something should be said on the matter, and 1 am glad of the opportunity to contribute to the debate.
The legislation before us appears to be fairly good, as far as it goes, but it appears that it does not go far enough. Of course the concern is with the conflict between the Government's interest in deregulating financial institutions and what even it recognizes as the failure, to date, of some of the regulatory activities, and perhaps some of the regulatory legislation. Therefore, the Government appears to be trying to steer a middle course and taking too cautious a line.
We had the very unfortunate collapse of two western banks a couple of years ago, apparently caused by unwise lending practices, unwise in the sense that they made bad loans because they thought they would get high interest, and their investors invested because of high interest. Then, when the banks collapsed, the investors demanded-and the Government agreed-that they be reimbursed even beyond what legislation at that time required in the form of loan insurance. That has given the Government a very difficult situation to deal with, and it does not seem to be able to think its way clearly to the end of the problem.
We had quite a spate of failures in the early 1980s in the loan and insurance company section of the business. There were two national bank failures in the mid 1980s. The Government has had to give attention to the matter of preventing further failures like those, since clearly people were in danger of losing their confidence in the banking system.
Canada has been lucky for over half a century in not having any serious troubles of that sort. The present legislation was mainly developed about 60 years ago after the collapse of the Home Bank in 1923, and further during the Great Depression. However, part of the principle adopted at that time is what is now being changed by the Government.
At that time there was an attempt to make sure that there was a spreading out of financial responsibility and power, a spreading out between lending institutions, deposit institutions, stocks and bonds institutions and insurance institutions. For the average person, some of those distinctions are hard to follow and to keep track of, especially as detailed regulations change. The principle was not to concentrate too much power in too few hands, which was what most people remembered as the results of the crash of 1929. Therefore, we have a system of controls, notably the Bank of Canada, the office of the Inspector General of Banks, the Department of Insurance, and

May 29, 1987
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the Canadian Deposit Insurance Corporation with which many people are familiar because the CDIC has been called upon to act during several of these failures of banks or credit enterprises.
The situation has been complicated more recently by international development, particularly of conglomerates that combine these functions in ways that perhaps were not foreseen by earlier laws and sometimes are difficult to control because of their bases outside of Canada.
Britain and the United States are moving in the direction of deregulation of their financial enterprises. From time to time we see reports, particularly from the United States, about how paper money is growing mightily without very much counterpart in actual production of goods and services which ordinary people produce and need. In other words, takeovers, buy-outs, refinancings and so on can increase the paper value of an enterprise immensely without actually any more cars, food or any other goods or services being produced for the people who ultimately must carry the cost if the financial system collapses. There is a great deal of anxiety in the United States and Britain about what could happen when things get whirling at a faster and faster pace in the financial world without corresponding development in actual production.
The bank failures of 1985 might have prompted this Government to take more firm action than it seems minded to take in connection with controlling the banks. In 1986 because of the troubles in 1985, some of the smaller banks fell to the pressure of the distrust of the public, the distrust of the investors who are not in a position to know the intimate details of banks, even to the extent that the Inspector of Banks or the Bank of Canada are, and who may have been uneasy about their deposits in certain middle-sized banks, perhaps without good reason. They just did not know.
In 1986 the Mercantile Bank was forced to merge with the National Bank. The Morguard Bank, which I know was engaged in the 1970s in financing low-income housing built by the City of Toronto, and I think was serving a useful function, was taken over by the Security Pacific Bank. There was a Continental Bank that merged with Lloyds Bank of London through its Canadian subsidiary. There was recently the Bank of British Columbia which had to go somewhere. A local powerful financially strong credit union bid to buy that bank, but this Government and the crypto Tory Government of British Columbia desperately headed that off and, with the commitment of $200 million of taxpayers' money managed to ensure that a Canadian based democratically structured credit union did not gain control of the Bank of British Columbia; a foreign bank, the Hongkong Bank got it.
There have been a good many acquisitions of this sort which have considerably altered the general profile of the financial structures of our country placing much more power in much fewer hands. People are uneasy still about the solvency and the safety of an enterprise which is so remote from the control of the investors and perhaps remote from the control of the
Government which would have a responsibility and has the legislative power to take control.
When the western banks collapsed there was much discussion as to whether the controlling institutions, the Inspector of Banks and the Bank of Canada, had carried out their duties adequately or whether they were able to carry out their duties adequately. As these financial structures become more complicated, it becomes difficult to police them, as it were. When the managers make errors through excessive risk taking, through failing to match their assets and liabilities, through perhaps what is or may appear to be a conflict of interest, through self dealing, it is very difficult for the regulator agencies to keep up with, to keep watching all of them, or to keep doing enough inspections to keep track of these evolving institutions.
What happens then is that the officials who attempt to act decisively on behalf of the depositors, the policy holders, the creditors and other victims of the insolvency are hindered. They cannot act fast and surely enough to prevent the trouble such as wc witnessed in the bank collapses.
What we really need is a new framework-The Government has admitted this in its paper at the end of 1986-for corporate Governments to guide this institutional behaviour. Particularly, there have to be firm rules for self dealing and conflict of interest situations. It appears that that is where this Bill is very weak. We understand it is part of a package, but we are asked to take it on faith without being told clearly what the rest of that package will be. As I said, as far as it goes, it appears perhaps adequate.
There will be some development of the supervision powers of the Inspector General of Banks, the Department of Insurance, the Canada Insurance Corporation and the Bank of Canada. They will be given certain legal rights of control which go beyond what they have now. They will include the right of temporary seizing of assets of a troubled institution so as to give officials time to look into things and to respond to the complaints that have been made specifically about an institution's operations. Officials will be able to study the situation and, if they remain unconvinced that the institution really is solvent and will continue to be solvent, they can hold hearings with the Minister of Finance and the institution can afterwards be restricted. In effect, it can be supervised by the superintendent and if the institution fails to respond satisfactorily, the superintendent can wind up the business of the company.
The problem, as I say, is that apparently there is not enough muscle or enough money for staff to carry out this kind of investigation. The pressure on this regulatory institution to either leave them alone or act quickly will be such that the regulators will probably err on the side of leaving them alone, perhaps for too long as they did in the case of the western banks.
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On the question of deposit insurance, which was a matter of hot public and parliamentary debate in connection with the western banks, it should be said that this protection of the public's investments is a very important element of a democratic banking sector. If small investors cannot be protected they will naturally hesitate to invest. The investment pool will then shrink and be occupied almost exclusively by the very large investors whose interests are not the same as small investors. Therefore it is understood to be in the interest of the country to have an insurance system which spreads the risk, within limits, and protects the ability of the small investor along with others to share in the direction of the investment industry.
Unfortunately, confidence in the insurance system was weakened when the Government decided to reimburse uninsured investors in the western banks. They were being reimbursed up to $60,000 according to the law, but the Government decided to reimburse them beyond that. In other words, it rewarded those who had acted foolishly and out of greed, whether it be the officers of the banks in question who made loans they should not have made because they hoped for unusually high returns, or whether it be the investors in those banks who made their investments for the same reason, being lured by high interest rates without examining sufficiently the basis on which the bank was operating.
In fact, Canadian taxpayers are still $1.5 billion in the hole for that bail-out. The Government is penny-pinching on unemployment insurance, pensions, children's allowances, funding of post-secondary education, social housing, even when it admits that half a million units are needed, yet it threw $1.5 billion to the richest people, not to the poorest people. They were protected by the law. It was the richest of the investors who got that $ 1.5 billion.
The provisions for controlling or revising the deposit insurance system seem a little uncertain or timid or tentative. It is not clear that there will be any firm prevention of the same kind of bad decisions. The banks that operate, not only within the law but within good investment practices and did not have to be bailed out, are now having to pay an extra levy in order to cover the Government's bail-out of the foolish banks. 1 understand that many banks are objecting to that practice.
What is lacking is a serious attempt to address the question of, as it were, cross-ownership in which a bank, insurance company or trust company may own a significant part of an enterprise to which it is also lending money. The NDP has for years advocated doing two things to provide reasonable insurance so that these financial enterprises can operate in reasonable safety. First, there has to be a combination of clear and effective regulations and supervision of the financial system. There is some movement in that direction in this Bill. Second, there has to be a restriction on this kind of crossownership, crossing over the lines of different sections of commercial and financial enterprises. There has to be restriction on ownership well below the present 35 per cent. We have
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advocated the figure of 10 per cent. Without some restriction on that ownership and without a considerable increase in the funding of the regulatory institutions, which the Government has not offered and does not offer in this Bill, there is no serious and convincing control over the kind of crashes we have already seen and fear. Therefore I believe this Bill is not really fit to receive approval in principle.


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


Mr. Cassidy:: Mr. Speaker, 1 want to congratulate the Hon. Member on his contribution to the debate on C-42. I would expect such contribution, in view of the fact that many of his constituents work in the financial industry on Bay Street in downtown Toronto and live very close thereto in the riding of Spadina.
1 want to briefly raise a point which is perhaps not in line with what he was saying, but I think still worth noting. Does he believe this legislation adequately addresses the need for the Government of Canada to have some regard for how consumers are treated by their financial institutions? Do his constituents feel content with the services they receive from the banking industry? If they have problems, do they feel they have adequate powers of redress? Does the individual consumer, the small merchant, have a means by which he or she can get reasonable treatment in dealing with these multibillion dollar institutions? If not, would he welcome changes to ensure that the legislation does not just address financial stability but also the needs of the consumer?


Daniel James Macdonnell Heap: Mr. Speaker, I thank the Hon. Member for the question. In fact, Spadina has a great variety of enterprises, large and small. The most frequent problem I have heard from the people who guide those enterprises is their difficulty in getting funding from the banks. Sometimes federal institutions have helped them but very often they simply have not been able to get the help they need from the banks. 1 have known of a number who were closed through lack of that support from the banking system. It appears that even when their credit is acceptable they are told there just is no money, it has gone to someone else. I think there should be a change in the system in the way the Hon. Member has described.


The Acting Speaker (Mr. Paproski):: The Hon. Member will have eight minutes left in questions and comments when we return at two o'clock.
It being 1 p.m. I do now leave the chair until 2 p.m. this day.
At 1 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.
[Stage Direction]
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The Acting Speaker (Mr. Paproski):: When the House rose at one o'clock there were eight minutes remaining in the question and comment period following the speech of the Hon. Member for Spadina (Mr. Heap).


Michael Morris Cassidy: Mr. Speaker, my friend from Spadina mentioned that small enterprises in his constituency have had a number of difficulties. I know of a restaurant in his riding, the proprietor of which was in constant battle with the bank branch in the area. The bank branch in turn could not get authority to make reasonable arrangements with the restaurant proprietor. They required an extraordinary amount of security including a mortgage on the home of the owner. Basically everything he owned was committed to maintaining this enterprise which was probably creating 10 or 15 jobs for people in the constituency of Spadina. This kind of story is repeated again and again.
How can this House of Commons make legislation which ensures that banks are stable for the Conrad Blacks, the Reichmanns and the Bronfmans of this world, are able to make substantial loans, some of which have turned out to be bad, to enterprises or governments, as a result of which enormous losses will be incurred and subsidized by the Canadian taxpayer, while ordinary citizens, farmers, consumers and small business people get pushed against the wall? What is fair about that? Why do we in the House of Commons, in studying the health and effectiveness of the banking system, which in some ways is very effective, not have as much concern for the needs of the little people, the consumers and farmers and so on, as we have for the stability of free enterprise? What use is there in having stable enterprises if they do not also provide effective service to the mass of Canadian citizens?


Daniel James Macdonnell Heap: Mr. Speaker, I thank my hon. colleague for his question. The list of complaints which I have heard over the years from the people of Spadina against banks is long. We all remember the summer of 1981 when interest rates on mortgages went as high as 24 per cent. That could happen again. We do not know whether it will but the homeowners in Spadina who were not wiped out by those interest rates when they had to refinance their mortgages have no way of protecting themselves against that kind of behaviour by the banks. There is deep bitterness and distrust felt by many people, regardless of their formal Party affiliation.
As I mentioned before, I have heard of a number of businesses which failed; and enterprises which were trying to develop but were not seriously considered in terms of assistance simply because they were small. Since there is almost as much paperwork to be done to make a small loan as there is to make a large loan, banks would prefer to make large loans. Small business people, would-be entrepreneurs, young people with education and ideas about modern technology, people skilled in computer work and so on, would like to try out their ideas and start their enterprises, but find a great lack of sympathy at the huge central bank offices at the bottom of
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Spadina. They find an equal lack of sympathy at the branches on every corner.
There must be a greater sense of public accountability by the banks. It is good for the banks to be regulated so that they are not likely to fail and cause collapse. I would point out that when the Government subsidized; that is, bailed out the western banks with taxpayer's money, most of that money came from people who had not invested in those banks and probably did not have enough money to invest in those banks. In other words, the poor were subsidizing the rich. That sort of behaviour ought to be stopped.
The Government is directly responsible for part of that problem and could restrict it if it chose to do so by simply barring itself from that kind of bail-out of foolish and essentially wealthier than average investors. Both in their contribution as taxpayers and in their difficulty in getting the loans they need, many people of Spadina, of all political persuasions, are deeply distrustful of the banking institutions as they stand now.


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


Some Hon. Members:: Question.


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


Some Hon. Members:: Agreed.


Some Hon. Members:: No.


The Acting Speaker (Mr. Paproski):: All those in favour of the motion please say yea.


Some Hon. Members:: Yea.


The Acting Speaker (Mr. Paproski):: All those opposed please say nay.


Some Hon. Members:: Nay.


Some Hon. Members:: On division.


The Acting Speaker (Mr. Paproski):: Carried on division.


[Stage Direction]
Motion agreed to, Bill read the second time and referred to the Standing Committee on Finance and Economic Affairs.

Hon. Tom Hockin (Minister of State (Finance)) moved: that Bill C-56, an Act to amend certain Acts relating to
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financial institutions, be read the second time and referred to the Standing Committee on Finance and Economic Affairs.


Mr. Fennell:: Mr. Speaker, I would like to explain that there has been an agreement between all Parties that there will be one speaker from each Party on this Bill, and at the conclusion it will be put to a vote on second reading. Immediately following the referral to committee of Bill C-56, the House will proceed to consideration of Private Members' Business scheduled for today for debate during Private Members' Hour.


The Acting Speaker (Mr. Paproski):: Is it so agreed?


Some Hon. Members:: Agreed.


Thomas Hockin: Mr. Speaker, I am pleased today to move the second reading of Bill C-56, a measure which will bring important and necessary changes to federal legislation governing financial institutions. This Bill is, as we know, the second of three elements designed to strengthen the system of regulation of financial institutions and to implement the policy proposals which were announced on December 18.
The first element was introduced as Bill C-42, which was just referred to committee, and this Bill is the second.

The Bill regroups and amends two Bills that were tabled on October 6, 1986, and contains an important new provision that will allow federally regulated institutions to own brokerage firms.

All the measures introduced in the earlier Bills are included in this Bill. These include the power to review transfers and ownership of financial institutions, the power to issue cease and desist orders to institutions engaging in unsound or unsafe business practices, the very important power to revalue real estate assets and authority to strengthen the financial standards of insurance companies.
These measures, important as they are, have been in the public domain for several months. Bill C-9 was released in the form of draft legislation and comments which were received were reflected in the final Bill. The consultations indicated that there is wide-spread support for these measure. Bill C-8 also received wide-spread support from the insurance industry.
Major provisions in the Bill are as follows. First, with respect to transfers in ownership, the Bill would require that approval be obtained from the Minister of Finance when a company or individual wishes to acquire, directly or indirectly, an ownership position in a federally regulated trust, loan or insurance company that exceeds 10 per cent. That is a very important provision. The Bill provides for a process which must be followed by the Minister and the applicant when a transfer in ownership is contemplated and gives the Governor in Council the authority to prescribe the type of information which the prospective purchaser must file with the regulator in seeking approval.
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By setting out a formal approval process for transfers in ownership, the Bill provides the basis for the implementation of the policy presented in the December 18 statement and, as you know, Mr. Speaker, the policy, in particular, was to arrest the formation of, or the increase in financial-commercial links. The latter would include any increases in ownership of financial institutions already held by commercially linked institutions or holding companies. Legislation to implement the remainder of the ownership rules, including the requirement that 35 per cent of the shares of commercially linked companies or large financial institutions be widely held and publicly traded, is expected this summer.
The second part of the Bill is very important, and that is in regard to cease and desist orders. The Bill would give the federal regulator the power to issue cease and desist orders to institutions engaging or planning to engage in any activity that is considered to be an unsafe or unsound business practice. In our discussion with respect to Bill C-42, expressions of concern, invoked by memories of the collapse of the two banks a few years ago, gives rise once again to the importance of having this power.
In the past, regulators have indicated that even when they were aware that unsafe or unsound business practices were being followed they frequently lacked the legislative authority to order the institution to cease the questionable practices. It was of great concern. They were watching this go on but there was no legislative authority to bring about the cessation of it. The cease and desist powers in this Bill are broad ranging and will respond to the need for both timely and effective intervention by the regulator.
The third part of the Bill is with respect to real estate valuation power. All of us who have seen how real estate values have changed during the 1980s will know this is important. No one who looks at the reform of financial institutions should overlook how they are often intricately related to real estate because it is such an important part of the assets of financial institutions.
The Bill would give the superintendent the power to prescribe values for real estate or assets secured by real estate held by federally incorporated trust, loan and insurance companies. Past experience has indicated that these companies can encounter serious problems from unrealistic real estate asset valuations. The valuation power will be an important measure in maintaining the public's confidence in our financial institutions.
The next major part of this legislation is to strengthen financial standards for insurance companies.

The Bill will substantially increase the financial standards that insurance companies must meet and will introduce further measures to strengthen the industry.

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For life insurance companies, the Bill would authorize the setting of minimum continuing capital and surplus margins by regulation or by written ministerial directive. The proposed provision follows the precedent in the Bank Act in this regard. The provision would, for the first time, make life insurers subject to statutory minimum capital and surplus margins on an ongoing basis. Other financial institutions are already subject to legislative provisions in this area. I think the House knows that minimum capital requirements are crucial for trust companies and banks since that is the number on which all this leverage is based. Since we are allowing insurance companies to move into these new areas of power we had to put this capital provision in place, something which is at the very heart of a financial institution.
For property and casualty insurers the Bill provides for an increase in the minimum continuing capital, or solvency, requirements. Our major influence as the federal Government in the field of property and casualty insurance is really in the area of solvency. That is the reason people look to us, to make judgments on solvency.
Also, property and casualty insurance companies would be required to submit actuarial reports with their annual statements. These reports must contain a professional opinion with regard to the adequacy of reserves established to provide for future claims under policies in force and to cover the costs of claims that have occurred but are not yet paid. This provision would adopt a practice long used with considerable success in connection with life insurers. The new requirement will assist the superintendent in judging the true financial position of each company.
In addition to these specific proposals, the Bill would establish new rules to govern the use of reinsurance by federally-regulated insurance companies. The proposed rules, to be set by regulation, would require companies to retain a minimum portion of the business that they write. This will ensure that companies have an incentive to write good business and are not merely in existence to make money on reinsurance commissions.
Limits would also be set on the extent to which companies may reinsure business with companies that are not federally regulated, given that in the past difficulties have arisen from the inability or unwillingness of reinsurers to pay claims. Reinsurance effected with associated companies would be permitted only with the prior approval of the Superintendent. These are new and important provisions about reinsurance in this Bill. The approval of the superintendent is crucial throughout the process.

Other provisions in Bill C-56 which are concerned more specifically with the insurance sector include the authority to demand that an insurance company provide preliminary
financial statements, setting margins of assets over liabilities for small companies, provisions relating to wind-up charges and to the priority of policy holder claims when an insurance company goes bankrupt.

The next section with which I wish to deal involves securities subsidiaries which has been at the heart of the business pages and which has generated the interest of financial markets over the past two years. An important new provision in this Bill relative to its precursors is the provision to permit domestically owned, federally-regulated financial institutions to own securities dealer subsidiaries. Schedule B banks and other nonresident controlled federally-regulated financial institutions would also, with prior approval, be permitted to own a securities dealer.
In providing approval for the purchase by a non-resident of an existing dealer I remind the Flouse that the Minister would impose the condition noted in the December 18 policy statement, that not more than 50 per cent of a securities dealer could be bought prior to June 30, 1988. In the case where a new subsidiary is started the Minister would impose the condition that the subsidiary be limited to engaging in activities which its parent is permitted to do in-house. Also, where a non-resident owned institution has a Schedule B bank in Canada and wishes to purchase or establish a securities dealer, it will be required to do so through its Schedule B bank, and not independently.
In view of the conflict of interest problems which could arise with the prospect of financial institutions owning securities dealers an amendment will be proposed to Bill C-42 to ensure adequate authority for the new Superintendent of Financial Institutions to regulate the in-house securities activities of banks. This will be in addition to the measures which will be put forward in the third element of the legislative package and which were covered in the December 18 policy statement, including the creation of what are commonly known in the financial sector as "Chinese walls", greater disclosure to the consumer, and enhanced internal scrutiny through creation of a monitoring group within each institution.
The power for federal institutions to own securities dealers, as well as the constraints on the initial participation by nonresident owned institutions, are being introduced this afternoon to ensure a strong and viable Canadian presence in the strategic securities industry as it is increasingly opened to international competition. We recognize that they must be part of the international market, but we want to give them an important head start.
The final provision in the Bill about which I want to speak deals with mutual insurance companies.

Finally, another new measure is contained in a provision aimed at clarifying the residency status of mutual insurance companies. The Bill will consider as Canadian companies those mutual insurance companies whose head office and chief place
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of business are located in Canada, provided three-quarters or more of the board of directors and its committees are Canadian citizens ordinarily residing in Canada.

In conclusion, I think it is clear to the House that this legislation is an important aspect of a broad, ongoing effort to bring about reform of the supervisory and regulatory framework for financial institutions in Canada. Most of the provisions have been in the public domain for several months, play a key role in strengthening supervisory powers and, if I may reiterate, were very well received by the public. By providing for more effective regulation this Bill will maintain confidence in financial institutions, an essential ingredient in maintaining a healthy financial system. As well, the Bill will allow securities markets to benefit from the provisions for ownership of securities dealers by federally-regulated institutions.
Therefore I am pleased that the House will give this matter its attention this afternoon as well as possible speedy passage into committee.


Some Hon. Members:: Hear, hear!


Miss Aideen Nicholson (Trinity):: Mr. Speaker, I am pleased to see Bill C-56 finally appear before the House. As with Bill C-42, on which I spoke earlier this month, I welcome its appearance in the House as evidence that the Government is finally beginning to move through its agenda for the reform of the financial services industry in Canada. Bill C-56 is the second of three Bills whose passage will complete the reform process which was begun by the previous Government and carried forward somewhat fitfully by the present one.
Bill C-56 was introduced on May 7. If the fact that we are starting second reading today looks remarkably and unusually speedy, I remind Hon. Members that parts of the Bill have been around in one form or another for over a year and a half. Other parts of the Bill are subject to a deadline of June 30 of this year, a deadline imposed by the need for uniformity with legislation brought forward by the Ontario Government last year when the federal Government's reform process seemed hopelessly bogged down.
The Bill is a mix of older and more recent proposals. It contains proposals that would allow federally-regulated financial institutions to own securities dealerships.
As Hon. Members know, the securities industry is provincially regulated. Obviously, it is this portion of the Bill that is meant to complement the earlier initiatives of the Ontario Government which set the effective date of June 30, 1987. However, a good part of the Bill pre-dates the White Paper issued by the Government last December. The Ontario Government's proposals to open up its securities industry were released in June, more or less obliging the Government of Canada to fall into step.
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A number of the Bill's other proposals, for example the strengthening of the powers of the federal supervisory authorities and the ministerial review process for transfer of ownership, have been around for some time. On September 9, 1985, nine days after the Canadian Commercial Bank closed its doors, the then Minister of State for Finance appeared before the Finance Committee and described measures which are included in the Bill before us today. She referred to the urgent need to improve the capacity of the Government and the supervisory agencies to deal with problems in financial institutions. She described as urgent the measures she was proposing and said that they were measures on which immediate action would seem appropriate. That was in September of 1985.
Let me describe the history of those urgent measures. In November, 1985, they were released as draft legislation. In April, 1986, they were tabled as Bill C-103 respecting banks, trust and loan companies. In June, 1986, parallel measures were introduced for insurance companies in Bill C-123. These Bills were never called for debate and died on the Order Paper. In October, 1986, the measures were reintroduced as Bills C-8 and C-9. Now they have been amalgamated and lumped in with the securities proposals to form Bill C-56.
It is clear from this brief chronology that the Government is taking a bit of a liberty in including this Bill as part of its reform program. If the Government had acted with all the urgency described by the former Minister of State for Finance at the Finance Committee meeting in September of 1985, we would have had legislation in place that might have made some difference in events that later occurred in the financial services industry. At the very least, the Government might have been just a little less prone to being overtaken by events.
This Bill in fact is a collection of proposals in response to particular situations. It is in response to the bank failures, in response to the takeover of Canada Trust by a non-financial corporation, and in response to the legislative initiative of a provincial Government. This Bill did not spring from the White Paper issued in December, 1986. As I have said, it is all older than that. It is reactive rather than proactive.
This is not to say that we do not consider the Bill worthy of support. There are proposals that the Official Opposition is pleased to support since they confer what we consider necessary and desirable powers on federal regulators. This Bill would give regulators the ability to take early action against unsafe or unsound business practices by issuing cease and desist orders. Second, the Bill proposes an expansion in the regulators' powers to set and to write down the value of real estate assets held by federally-regulated financial institutions.
The power to have an independent valuation of real estate has been proven to be important because a high proportion of the assets held by financial institutions, particularly trust and loan companies, consist of real estate and mortgage loans secured by real estate. The valuation of real estate is not

May 29, 1987
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always a straightforward matter and inaccurate valuations can materially affect a financial institution.
The Canadian Commercial Bank is a case in point. In the course of our hearings, the Finance Committee found that one of the factors contributing to that bank's eventual insolvency was its practice of over-valuing its loan and real estate assets. So it is appropriate for the Government to address the matter in legislation, even though we are somewhat past the point when it might have been called timely.
Another proposal in the Bill to which I alluded earlier would give the Minister the power to review and either block or give written approval to share transactions that would result in any one person or associated group acquiring more than 10 per cent of the voting shares of a financial institution. The Bill proposes that the ministerial review be based on the following criteria: first, the financial resources of the prospective purchaser; second, the purchaser's plans for the institution's future; third, the purchaser's experience and business record; and fourth, the best interests of the financial system in Canada.
It is the last criterion that concerns me. The language is unbelievably vague and imprecise. What are the best interests of the Canadian financial system? How are they to be defined and interpreted? It seems to me that the criterion of best interests as we see it in the Bill brings the matter down to a political decision in the hands of the Minister of the day. I am not satisfied to see a matter as important as the ownership of financial institutions left entirely to the discretion of any Minister.
We have heard from the Minister of Finance (Mr. Wilson) and the Minister of State for Finance (Mr. Hockin) that the policy on ownership would be part of the final segment of the reform legislation. We have been told to expect a draft Bill, not a Bill, before summer. Who can say when we will have an ownership policy in place? In the meantime, we have only this Bill which says that in certain circumstances there will be a review but that the final decision will be the Minister's.
At this point I am not prepared to approve such an open-ended provision. Once this Bill is in committee, I will want to have much more information about how this provision is to be applied. In fact, my own view is that some clear criteria must be written into the legislation. I certainly would not be happy with, and I do not know of anyone else who would be, a provision that seems to say that the Minister of the day determines what constitutes the best interests of our financial system and lets the Minister have sole responsibility for deciding which large-scale transfers of control or ownership should go ahead and which should be blocked.
I turn now to the other set of proposals in Bill C-56, proposals which would permit the entry of federally-regulated financial institutions into the securities industry. As I said earlier, the Ontario Government came forward with its proposals nearly a year ago. In December, 1986, there was agreement with respect to the timetable and the effective date
of June 30, 1987. However, the introduction of the legislation before us today was delayed by a protracted dispute over what securities-related activities would fall under the jurisdiction of federal and of provincial regulators respectively. It was not until the end of April that an agreement was finally reached.
The June 30 deadline is still intact. This means that again there is pressure on us to "make quick work of this Bill in the House and in committee. There would not have been this pressure had the Government moved earlier and had the Government negotiated better.
The Bill before us today proposes to allow domestically owned financial institutions to own subsidiaries dealing in securities. Foreign banks and other foreign institutions would also be allowed to own securities dealers, subject to the approval of the Minister. Also, foreign owned institutions would be restricted to 50 per cent ownership until June 30, 1988, at which point they would be allowed 100 per cent ownership.
According to the agreement reached by the federal Government and the Ontario Government, the federal regulatory authority, that is the Office of the Superintendent of Financial Institutions, will regulate the securities related activities which are carried on directly or in-house by federally regulated financial institutions. The provincial regulator, that is the Ontario Securities Commission, will regulate all the activities of securities subsidiaries bought or established by federally regulated financial institutions.
It is clear in looking at the agreement that the parties to it were very much concerned about getting the show on the road by June 30, and that the agreement represents the very minimum of what they could find to agree upon. The accord is based very much in the here and now. It says basically that federal institutions can keep on doing in-house whatever securities activities they are doing now; anything on top of that will happen through a subsidiary which will be provincially regulated. Maybe, in the interest of short-term expediency, that is all that is needed, but surely for the long-term a more comprehensive agreement will be needed.
The agreement announced on April 27 is a bare bones affair which does not envision any change, and surely change is the one thing on which we can count as we move to a more integrated financial system in Canada.
Another concern about the agreement is that it was signed with Ontario only, with the hope that it would serve as a model for the other provinces. This is an assumption that some provinces, Alberta and Quebec in particular, are objecting to, and understandably so. After all, none of the other provinces was consulted when the Government of Canada and the Government of Ontario were negotiating. Surely the matter warrants a federal-provincial meeting and the establishment of some sort of permanent mechanism to ensure uniformity in the implementation and regulation of these new proposals which
May 29, 1987

represent significant change for the financial services industry in Canada.
We are told, according to the Bill, that foreign owned institutions wishing to enter the Canadian securities market will need the Minister's approval, but the Bill before us today does not include any criteria on which this ministerial approval would be based. Surely the Government has some criteria. However, why are they not in the Bill?
Something the federal Government should surely look for from foreign institutions wanting to enter our market is reciprocity. If foreign owned institutions are coming to compete in the Canadian market, we should be looking for equal time for our institutions on their home turf. Different countries have different financial systems, so this would have to be negotiated on a case-by-case basis. However, the principle of reciprocity should be there, and the Government should insist on it if it cares for the interests of Canadians.
I also question why the Government has chosen to allow complete foreign ownership of Canadian securities dealers when the trade negotiations with the U.S. are still ongoing. Free trade in financial services is a key part of the negotiations. Why is the Government giving up this bargaining chip now?
This was an issue that Liberal members of the Finance committee raised in our minority report in November, 1985. The committee had recommended a level playing field for domestic and foreign owned institutions in Canada; in other words, a situation of unnegotiated free trade, freely conceded. The other Liberal members on the committee and myself opposed that recommendation, saying at the time that our recommendation was to forestall changes in foreign ownership requirements until the free trade negotiating strategy had been developed and the costs and benefits of the proposals had been established. I think our recommendation is still valid today.
I should also like, before the Bill is passed, some assurance from the Government that in implementing its new system it is mindful of the possible consequences on the concentration of economic power in Canada. Concentration of assets in the financial sector is higher than in many other sectors of our economy. The Government's goal of greater integration of services can lead both to greater competitiveness and to greater concentration. It is very important to ensure that an appropriate balance is struck.
Greater integration also brings with it greater potential for abuse and conflict of interest, and thus a greater need for consistent and vigilant regulation. Bill C-56 contains a few measures in this direction, but the frustrating part is that the bulk of the new policy will be in the legislation we have yet to see.
Again I must say that I have some difficulty in assessing what is before us today when it is only a portion of the total picture. This is a criticism which I made when I spoke on Bill C-42 earlier this month. In Bill C-56 we see some proposals for transfer of ownership of financial institutions, but the over-all
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ownership policy is not available to us yet in specific terms. I do not see why the Government could not have got its act together and presented us with a complete package at the outset.
Bill C-42 and Bill C-56 are welcome and useful preliminaries. However, let us be frank. The main event is yet to come and all we are hearing from the Minister with these curtain raisers is a vague promise of draft legislation.
We in the Liberal Party are willing to proceed. We are interested in getting these Bills to committee where we can explore them thoroughly and where we will have some amendments to move. However, I would certainly prefer to do so in a comprehensive fashion rather than in the piecemeal approach the Government seems to favour. I look forward to an early introduction of the remainder of the Government's proposals.


Michael Morris Cassidy: Mr. Speaker, I did not expect Bill C-56 to come forward today, but I am happy to speak on it. Of course we have already begun study of the Bill in the Standing Committee on Finance and Economic Affairs.
I realize that part of the problem with the legislation is that it is really complex. Everybody's eyes tend to glaze over, I suspect even the Minister occasionally would prefer to be watching the Stanley Cup final between the Flyers and the Oilers than to be worrying about this particular matter. He nods his head. When he writes his epitaph, hopefully some years from now-and I do not mean his political epitaph; I mean his personal epitaph-he will not put on his gravestone, "I crafted a reform of financial institutions legislation". It will be a footnote to a footnote in his biography.
Let me try to put some flesh and blood on what we are talking about in this particular Bill. We are not just talking about new rules in respect of ownership of securities firms by insurance companies and other institutions. We are not talking only about a new formula for regulation or for oversight. We are talking about a related series of Bills, Bill C-42, which we have seen, and Bill C-56, which is before us now.
The third portion-when the third shoe will drop, so to speak, which we have not yet seen and about which the Government has only given us a glimpse of its intentions-is designed to put in place a pattern or a framework of both deregulation and reregulation for Canada's financial services and banking industry. This presumably will be in force for the next 10 or 15 years. In other words, for the period from now to the turn of the century, we in this House are being asked to make decisions about major elements in the financial operations of the country.
Why is that important, Mr. Speaker? It is important because finance, the movement of money, the access to capital, the ability to gain access to the financial payments system and so on, is the lifeblood of the economy, and because in this society, as in other western capitalized democracies, the access

May 29, 1987
Financial Institutions
to political power is very closely related to access to economic power.
What we are talking about in this related series of Bills-I will talk about Bill C-56-in a somewhat broad context is the degree to which the Government of Canada will come to grips with the concentration of economic power that we have in Canada.
As I said in the debate on Bill C-42, and I repeat it now, the major weakness in what the Government is proposing is that it has not been prepared to come to grips with the excessive concentration of economic power in financial institutions and in large holding companies in Canada, and with the fact that that concentration is on the increase rather than on the decrease. The Minister of State for Finance (Mr. Hockin) frowns. Ele looks a bit troubled about that.
Let me read him some figures. People think that at least the major financial institutions in Canada are the chartered banks. The chartered banks of Canada are widely held. Perhaps it would surprise Hon. Members to know that the smallest of the big five financial banks-the Bank of Nova Scotia-is the eighth largest financial institution in Canada in terms of Canadian assets that it controls.
At the head of the Bank of Nova Scotia you have Power Financial Corporation, a corporation controlled by Paul Desmarais which has Canadian assets larger than those of the Bank of Nova Scotia. You have the Desjardines Group, a cooperative group, mainly centred in Quebec, based on the Caisse Populaire movement and larger than the Bank of Nova Scotia; more power to them. You have Genstar Financial Corporation, much larger than the Bank of Nova Scotia and larger than the Toronto-Dominion as well, controlled by Imasco, which if I recall correctly is in the end a British controlled conglomerate which owns 100 per cent or thereabouts of Genstar. You have Trilon Financial Corporation controlled by the Bronfmans with assets larger than either the TD Bank or the Bank of Nova Scotia. Just above them the Bank of Montreal, the Canadian Bank of Commerce and the Royal Bank of Canada.
Therefore, two of those top eight financial institutions are controlled by one or two institutions. As Diane Francis has pointed out in her excellent book on financial concentration called Controlling Interest, there is an enormous concentration of financial power in the hands of a very small number of groups. In fact, something like one-fifth of the assets of the companies on the Toronto Stock Exchange are in the hands of just a mere handful of tycoons.
I did not mention E-L Financial Corporation whose assets are just a bit below the Bank of Nova Scotia, controlled by a Toronto financier, Hal Jackman, someone also known as a prominent Tory, albeit an unsuccessful one when he has tried to run.
I am also trying to put some flesh and blood in this. We should look at the financial record of the past few years in order to see the ineffectiveness of the regulatory system which
the Government is seeking to reinforce by means of the various Bills we have before us. Half of the chartered banks in Canada have gone bust or have had to find new proprietors in the last two or three years since the Government came to power; that is one half of the schedule A banks, which is pretty bad. A whole succession of trust and insurance companies have also had very serious difficulties.
If you look at the list-I have it here-of institutions which have had particularly severe problems, Mr. Speaker, you will find a very sad and sorry tale of institutions which are now defunct, just about defunct, or have had to go on the crippled list. The list begins with the Home Bank in 1923, and jumps to 1985 with the Canadian Commercial Bank and the Northland Bank, not to speak of the Morguard Bank, the Bank of British Columbia and the other two banks which have had to come under new ownership. Beginning in 1980 you have Astra Trust, Fidelity Trust, AMIC Mortgage Investment Corporation, Greymac and Seaway in 1983, Northguard Mortgage Corporation in 1984, Pioneer Trust, Western Capital Trust and Continental Trust all in 1985.
Since 1976 we have seen the failures of the following federally regulated insurance companies:	Underwriters
National, American Reserve Insurance, Pitts Insurance, Strathcona General Insurance, Cardinal Insurance, Ideal Mutual Insurance and in 1985 Northumberland General Insurance Company.
What I am trying to do before coming to grips with the details of the legislation is just to remind the House and remind those dedicated readers of Hansard who will look at this debate that we are talking about real companies and real institutions which have had trouble. We are talking about real failures of the regulatory system and we are talking about concentration of ownership in the financial sector and about a Government which chooses to try to pep up the regulatory system by establishing a Superintendent of Financial Institutions but is not prepared to take any effective action to do anything about ownership.
I want to give a bit of credit to the Minister of State for Finance. He was a brave man, but his loyalty to the Cabinet is stronger than his ability or his determination to do something about the concentration of ownership. On December 4, 1986, the Minister of State took his proposals about ownership of trust companies before the Economic and Regional Development Committee of Cabinet. I cannot vouch for this because obviously I was not there. I did not have the privilege of being a fly on the wall. I hope to be in Government very soon. My Party is working at it very successfully.


Some Hon. Members:: Oh, oh!


Michael Morris Cassidy: That, of course, is an aside. One or two Hon. Members shout, but I would retort to them that if they looked at the opinion polls they would find that the Progressive Conservative Party is shortly to have the fate it predicted for the New Democratic Party for so many years. The PC Party is down to 22 per cent in popularity and sliding very fast.
May 29, 1987


John Horton McDermid: You will eat those words.


Michael Morris Cassidy: I think it is noteworthy that we are having a lively debate on a subject as dry as this one, but one of the reasons is precisely that Canadian people perceive that the Government in power now pays a lot more attention to the rich and the powerful individuals and interests in Canada than it does to the needs of ordinary Canadians.
Let us look at the sad fate of the Minister of State for Finance. On December 4, 1986, Diane Francis, who is very knowledgeable in this area, writing in The Toronto Star said-


Some Hon. Members:: Oh, oh!


Michael Morris Cassidy: -that he took a proposal to limit the ownership of trust companies on a sliding scale, which would mean that the largest trust companies would be allowed to have no more than 10 per cent ownership in any individual hands, putting them on the same basis as the banks. Also there was a proposal to restrict cross-ownership to 30 per cent so that if there were commercial owners they would only be able to have 30 per cent of a financial institution. The Minister will get up and say it ain't so, or he might, but of course he has no choice because Cabinet solidarity binds him and he has not shown-


John Horton McDermid: He was there and Diane Francis wasn't.


Michael Morris Cassidy: The Minister can deny it if he will. I challenge him to rise on a point of order now to say that what I am recounting is not so. I have lots of time. I believe I have 40 minutes. Please do not seek to hurry me up like that.


The Acting Speaker (Mr. Paproski):: I believe there has been agreement in the House to try to terminate this debate by at least 3.15 p.m. I feel, from the way the Hon. Member is participating, that we could be here all afternoon I just thought I would bring that to his attention. There is such a thing as relevance, and I hope the Hon. Member will speak about the Bill. The Hon. Member for Ottawa Centre (Mr. Cassidy) has the floor.


Michael Morris Cassidy: I appreciate your participation, Mr. Speaker. However, I note that the Hon. Minister has chosen not to intervene, as I suggested he might. I believe the first speech on second reading of a Bill can go on up to 40 minutes and I was intending to speak for 40 minutes. I am sure you will inform me when my time has come to an end. I do not intend to speak endlessly. One or two of my friends pointed out they were sure the House would like to debate this matter through July but the attendance might be even more limited than it is right now.
The fact is that when the Minister took this legislation before the committee he found himself garotted, guillotined, manacled, shackled and otherwise prevented from acting to ensure some protection against this concentration of economic ownership. In the end we have a mild set of restraints affecting
Financial Institutions
only two of the largest trust companies compelling them to divest themselves of 35 per cent of their ownership over some period of time while they retain 65 per cent control. I suggest that is no discipline at all. They will still have control.
Not only that, the Bronfmans, the Reichmanns, the Conrad Blacks, the Hal Jackmans and Paul Desmarais have the assurance of the Government that no new financial conglomerates will be allowed to emerge. Is that not wonderful? In other words, we are going to continue this cosy relationship where "them what has" can get bigger, fatter, more prosperous, and pile up more and more assets. At the same time they will not be dogged by new contenders coming up behind them.
The Hon. Minister may recall the way in which the financial industry joined forces and circled the wagons when Bob Campeau of Ottawa, I suppose a constituent of mine, sought to gain control of a major trust company. Boy, did they ever stand tall in order to prevent that from happening. If the Government's view is that it is okay to have these large conglomerates, how can self-made people like Bob Campeau or Paul Desmarais come up in a new generation? The fact is that even Mr. Desmarais was part of the lobby that ensured the door was shut after he got inside. I suggest there is a serious problem there.
Let me move on a bit. The Government of Canada has decided to join forces with the provinces, particularly the Province of Ontario. It is a bit like building the Sky Dome in Toronto. That city somehow feels inadequate if it does not have a dome stadium as extravagant and of as little potential utility as domes in other major cities. World class to Toronto is not a state of mind; it is whether you have the necessary architecture and hardware to say "we are world class".


John Horton McDermid: What a tiny little mind you have.


Michael Morris Cassidy: There has been deregulation on Wall Street and that led to such things as a $250 million loss in mortgage security trading at Merrill Lynch. Because there was a big bang a year or so ago in London, Canada has to have its big bang, too, without looking at the evidence. When the former British Chancellor of the Exchequer, Denis Healey, was here last December he told Canadians not to do it, to learn from their mistakes. If you look at the kind of problems now being experienced on Wall Street with insider trading, massive losses in institutions which had a very good reputation, if you look at the degree to which some President Reagan's men and women are now finding a safe haven with million dollar salaries on Wall Street, I ask myself if that is what we as Canadians really want. Maybe the Minister and his colleagues in the Progressive Conservative Party want that, but I am sure there are some ordinary Canadians watching who ask whether we want a casino economy where this conglomeration of capital is perpetuated. Do we want the situation to continue where an ordinary Canadian who wants to borrow a few thousand dollars to establish a business, buy a house or expand a restaurant is put through an impossible situation by the banks.

May 29, 1987
Financial Institutions


John Horton McDermid: Talk to us, not the TV cameras.


Michael Morris Cassidy: I will talk to the citizens out there. There are only 10 Members on the other side of the Elouse but there are millions of Canadians who may be watching this particular debate.


An Hon. Member:: Not since you got up.


Michael Morris Cassidy: The point I am making is that at the time when we have such a concentration of commercial interests on the boards of directors of Canadian banks, the 10 per cent ownership rule is virtually useless in undermining the concentration of economic power in our country. If I as a citizen would like to have banking services in my community until six o'clock, why do I have to wait for 25 years before the banks begin to wake up? Why is it that through most of the City of Ottawa I cannot go to a bank on a Saturday? If I happen to be in a job where I work hard from nine until six day after day, I cannot, without taking time off from my job, do my banking. When I do, I have to stand in a line with 30 other people because I happen to go on pay day because that is when I need my money.


John Horton McDermid: Boy, are you out of date.


Michael Morris Cassidy: How come the consumer is so badly served, yet, if I am Conrad Black and I want to do a deal and I need to bring together $500 million in bank lending, I can get that through a few telephone calls. The Hon. Member from Brampton should realize that this is precisely what is happening. There are enormous inequities in our financial system between the rich and powerful and the ordinary Canadians.
I speak, among other things, as a democratic socialist. I think there is something wrong when the Government gives to a handful of financial institutions the power to create money. For every dollar in assets they can create $ 19 or $20 by means of the credit system, as any student of economics will know. We give that privilege, and that is what it is, to our Schedule A banks. Yet do we turn around and ask whether those banks are generally doing the appropriate job for the consumer? Do we ask whether the banking services available in the Northwest Territories or in small communities are adequate? Maybe we ask but we do not get answers. In fact they are not.
Do we use the powers of the state through the Inspector General of Banks or the Superintendent of Financial Institutions in order to ensure that a consumer who is being ill-treated by the banks has some right of redress? When the banks grant a loan to Argentina and the loan fails, farmers in western Canada feel it a month or so later when suddenly credit conditions are tightened and their loans are being called. This has occurred over the course of the last few years. I express some indignation over that because I think it is appropriate from time to time that we in the House of Commons should do so and that the banks should hear some of it.
A year or two ago we had a dinner with the presidents of about five Schedule A banks. We had a very jolly time, I and members of my caucus who had taken pains to meet with the banks. It was a very interesting session. We talked about a number of things including concerns the NDP has over the adequacy of services for farmers and small business people. It is really a scandal at times the way some of those people are dealt with. While in general there are aspects to our banking system which are more favourable and more effectively operated than in other countries, I asked why in a country where 40 per cent of the workforce are members of trade unions, you and your institutions have moved heaven and earth to keep the union out of your institutions? There was such a frost that descended on that cosy little tete-a-tete-I had accepted a couple of glasses of wine from the bankers in the interests of communication-you could almost see the icicles hanging down from the walls. I have real concerns about giving privileges to those large financial institutions when they turn around and give generously to the Progressive Conservatives and the Liberals.


John Horton McDermid: You would not accept it.


Michael Morris Cassidy: They do their bit to keep men and women working for financial institutions in a subservient way. They should be ashamed of the way they have behaved over the course of the last two or three decades. They have denied working men and women the right to speak for themselves and are basically trying to perpetuate the labour-employer relationships of the 19th century. Those are the facts. That is how those institutions have been operating.
I say all these things to put what we are talking about into perspective. We as parliamentarians and legislators should be very aware of the abuses which have taken place in our financial institutions. Just because banks do a few good things as corporate citizens we should not be blinded to the fact that there has been too much self-dealing and concentration of ownership. Neither the United States nor Japan allow their banks to engage in underwriting, yet we are about to do that. That is very serious.
What would happen, for example, if we had another Dome situation and the banks or their security subsidiaries are involved in underwriting equity or debt for a new Dome Petroleum? Will the banks which will be concerned about their loans to that particular institution turning bad tell their security people to sell a bit of equity because they are feeling shaky about it? What kind of Chinese wall could prevent the potential abuses in such a situation? All we will get is a Chinese wall based on soft noodles which will not prevent that kind of abuse from taking place.
In the context of the present negotiations for free trade with the United States one must ask whether the United States has offered to allow Canadian banks to own securities subsidiaries in the United States. For 30 or 40 years they have insisted on
May 29, 1987

strict segregation and they will not change just because Canada says it should be so. We are saying that as of this June any American bank can own and have effective control of a securities house here in Canada. As of June, 1988, they will be able to have 100 per cent ownership.
If I were running a $20 billion bank in the United States I would very quickly take advantage of this opportunity and buy a subsidiary here in Canada. We are likely to give American banks a back door to the securities market and then the subsidiary of the Canadian firm will do business in the United States. That is a perfectly logical thing to do.
The other day I said that the investment dealers in this country are like the chickens going to Colonel Sanders because they do not realize that we are seeing the end of an independent securities industry in Canada. As a democratic socialist I am not sure if I should leap to their defence. I noticed that the spokesman from Nesbitt Thomson was beginning to wake up to that fact the other day, but the investment dealers are too late. They have been sold out.
There are some very serious questions which still have not been adequately answered with regard to the degree to which the Government has moved into this area with the consent of Ontario but no particular agreement from the other provinces. We will have to explore in committee where that will lead, but I have some grave reservations about the way in which it has proceeded.
I want to talk now in more specific terms about the Bill and some concerns which New Democrats have about financial services in general. I have been developing some policy, as is appropriate for an opposition spokesman. I suggest to the Minister that there is an over-emphasis on the problems of stability. It is not that those problems are not real, but they are addressed too much by regulation rather than ownership. The missing element is that we are not at all taking up the needs of consumers. That is a real question in that too many banks still close at three o'clock. It is a real question if consumers have to pay an inordinate rate of interest.
An example of the abuse in a supposedly competitive area is that it took the Commons Finance Committee two months to persuade the chartered banks to lower interest rates and service fees on credit cards to a more reasonable level. It was clear that they were making excessive profits and they have now agreed to roll them back. However, a Common's committee should not be responsible for ensuring that kind of protection. It should be there at all times. There should be a means by which individual consumers, small businessmen, farmers and so on can have their grievances against banks examined and get some redress.
The drafting problems in Bill C-56 are very serious. For example, it amends sections of the Canada British Insurance Act which are being amended simultaneously through Bill C-42. I have to ask who is smoking what in the drafting section of the Ministry of Finance.
Financial Institutions
I disagree with banks having security underwriting powers, but the proprietors of the Montreal District Savings Bank point out that if the chartered banks are to have those powers, surely the Quebec Savings Bank Act should be suitably amended as well. If we are going to make a wrong decision, we should not put the City and District Savings Bank on a basis different from that of the co-operative institutions, the financial institutions, and the chartered banks.
With respect to securities regulations in general, we should be seriously looking at a form of joint agency. The present situation in which the provinces all go their own way is ludicrous in a country of 25 million. I would have liked to have seen more leadership from the Government on this. I am sorry that it has not been forthcoming. We have retained an awkward compromise with the securities commission in Ontario doing the job of a national securities commission while Quebec, Alberta and other jurisdictions are able to pass independent legislation. I realize that we will not get a federal securities commission which is under provincial jurisdiction, but there is enough overlapping jurisdiction, particularly as the pillars collapse, that I think the Government, even now, could be taking initiative to get a joint body in which both levels of Government might give up some powers to get a common pattern of securities regulation. My Party does not believe that just because there has been a big bang in London or on Wall Street we have to follow that particular route.
The Bill speaks specifically to the moratorium on ownership.
I think that section is ludicrous in the absence of any adequate ownership rules. The guidelines which include the stipulation that the Minister must look at the best interests of the financial system are meaningless. I do not know what the devil they mean. If I were the Minister of Finance (Mr. Wilson) I might say that it is in the best interests of the financial system not to have further concentration of ownership and, therefore, reject any share transfer which would involve the passage of control of a widely held financial institution into narrower hands. It could be argued that that would be an abuse of a very wide paragraph. I think the whole section is rather nuts. It disguises the Government's failure to come to grips with the ownership powers.
With regard to the cease and desist powers in Bill C-56, the Government is giving the Superintendent of Financial Institutions the power to move in and exercise the powers of directors for a short period of time without giving the institution any power to retaliate or resist and then, with ministerial approval, to do it on a more permanent basis. I believe one can make a strong case that something like that might have been useful in the events we have experienced over the last few years. It is also fair to say, that had there been the will to act on behalf of the regulators, there would be no need for the legislation. It was the failure of will, both at the official level and at the ministerial level which, in large measure, accounts for the approximately $2 billion we had to pay out through the CDIC and, in other ways, over the course of the last couple of years.

May 29, 1987
Financial Institutions
The point I want to make is that I think there are real problems in terms of information being available to other than insiders. I cited in committee the other day an example. Let us suppose that I was a small entrepreneur, I was a good socialist developer and was about to develop a few factory units or a small shopping centre. Socialists do these things as well, Mr. Speaker. The Minister seems to be a bit upset. Suppose I arranged for insurance with a company and the insurance was the last element in making my deal fly. Suppose that three days before I signed the contract with the agent for the insurance company, the Superintendent of Financial Institutions had moved in because he had reason to believe the insurance company was about to belly-up. I took my risks, I committed my capital, without that knowledge. Then it became evident a few days later, after I had signed the contracts and committed my capital, that the insurance had unravelled. With the insurance unravelled, the deal unravelled and I found myself completely up the creek.
The question is, at what point is information to be made available publicly? That is an issue with which we will be dealing in committee. I think it is a very serious issue because if the Superintendent has grounds to move into a company, it seems to me there has to be some way by which that information can be made public.
The Ontario Securities Commission and the SCC in the United States make their actions public despite the fact that those actions will have an effect on the quoted market value of shares actually being traded at that time. We have to look at that and perhaps get used to it.
The point was made about the appraisal of asset values. Again, the Government has failed to address the responsibility of accountants and auditors in this particular area. In other words, they will advise in an area where they have in many respects been a cause of the problems with which we are concerned.
The committee is concerned, and I put this to the Minister now, over the fact that the limits on reinsurance are being put down by regulation when in fact it is appropriate, because it is such a major restraint on the operations of an insurance company, that at least the broad parameters should be in the legislation itself and just in the form of regulations.
With respect to the insurance companies, there is also a matter of consumer protection. The Minister, coming from Ontario and a community where insurance is an important industry, will know the concern which my colleague, Bob Rae, a former Member of this House and Leader of my Party in Ontario, has been raising over the degree to which property and casualty companies are bleeding Ontario drivers dry with the rates they are charging for automobile insurance. In particular, we are concerned about the way in which they are abusing individuals because of arbitrary rules which in some cases have driven businesses to the wall. For example, there was a case in the papers the other day of a woman who
married her boyfriend-I think she was probably living with him as well-and as a consequence, the insurance she had to pay on her vehicle rose from $600 to $1500, just like that. The fact that she assured the insurance company that her husband was not going to drive her vehicle was irrelevant. That kind of silliness has to stop.
Just as there is a desirability for the federal Government in respect to banks to protect the consumer, I think there should be a measure of consumer protection as well with respect to insurance companies who also have the privilege, not the right, of carrying out insurance duties here in Canada.


Thomas Hockin: Talk to Bob Ray. It is a provincial issue.


Michael Morris Cassidy: The Minister says it is a provincial issue. If these companies are federally regulated, then I believe we can in fact provide some direction in terms of how those companies are to operate. If people then choose to set up provincially regulated insurance companies because they do not like the federal rules, that is fine. Let the province deal with them. But I do not think we as federal legislators should abdicate our responsibility in that particular area.
There are a number of specific points which perhaps I will have a chance to talk about later. However, I would like to make a point to the Minister in a very serious way. What we have heard from the officials of the Department of Finance with respect to the resources which will be made available to the new Superintendent of Financial Institutions is extremely disturbing.
The previous Inspector General of Banks should have, in my opinion, put his job on the line to get adequate resources to do his job as Inspector General. It is a personal tragedy, I think, that he did not have the gumption to do so perhaps five or six years ago. He did not and his office was too weak. He perhaps lacked some of the will to do what he needed to do and that contributed to the failures of the banks which we have experienced.
What senior officials of the Department of Finance have told us is that there will only be a moderate increase in the resources which will be made available to the office of the Superintendent of Financial Institutions relative to what was available to the Inspector of Insurance and to the Inspector General of Banks.


Thomas Hockin: That's not true.


Michael Morris Cassidy: The Minister says that this is not true. I hope he will answer that in committee since he will not have a chance to answer here in the House. That is a very serious concern, particularly in view of the excessive reliance on regulations which my Party has indicated we believe is contained in the Act.
I would like to suggest that part of the changes in corporate governments-and perhaps that is still to come-should include a broader reflection of the community on boards of directors for financial institutions. These boards should include
May 29, 1987

representation for consumers, farmers, small business, women and other relevant groups. That is something which 1 think we can insist upon because these institutions operate not by right, but because of a privilege which is given to them in the powers of limited liability, the powers to create money and the other powers they have under federal legislation. We are very concerned about the degree to which self-dealing is permitted. We are concerned about the degree to which there is a total deregulation of the power of making commercial loans by nonfinancial institutions.
These are some of the points about which we are particularly concerned. I could make other points but I guess I will just conclude by saying that we should have addressed, in the reform of the financial institutions, a number of consumer issues as well as the stabilities issues so that the way in which those institutions offer services to consumers was addressed, and there was some redress for consumers. There is a very serious need for a kind of financial ombudsman who would be on the consumer's side.


The Acting Speaker (Mr. Paproski):: Order, please. The Hon. Member's time has expired. Is it the pleasure of the House to adopt the motion?


Some Hon. Members:: Agreed.


Some Hon. Members:: No.


The Acting Speaker (Mr. Paproski):: All those in favour of the motion please say yea.


Some Hon. Members:: Yea.


The Acting Speaker (Mr. Paproski):: All those opposed pleased say nay.


Some Hon. Members:: Nay.


Some Hon. Members:: On division.


The Acting Speaker (Mr. Paproski):: Carried on division.


[Stage Direction]
Motion agreed to, Bill read the second time and referred to the Standing Committee on Finance and Economic Affairs.
The Acting Speaker (Mr. Paproski):: It being 3.30 p.m. the House will now proceed to consideration of Private Members' Business as listed on today's Order Paper.
Non-Smokers' Health Act


PRIVATE MEMBERS' BUSINESS-PUBLIC BILLS   NON-SMOKERS' HEALTH ACT MEASURE TO ENACT
[Stage Direction]
The House resumed from Tuesday, March 31, consideration of the motion of Ms. McDonald that Bill C-204, an Act to regulate smoking in the federal workplace and on common carriers and to amend the Hazardous Products Act in relation to cigarette advertising, be read the second time and referred to a legislative committee.
Mr. W. Paul McCrossan (York-Scarborough):: Mr. Speaker, it is a pleasure for me to join the debate today on Bill C-204. As the only actuary elected to the House I would like to begin by commending the Hon. Member for Broadview- Greenwood (Ms. McDonald) for bringing this important initiative forward, and to indicate that I intend to support the Bill on second reading. However, I should also signal that if the Bill were to leave the legislative committee unamended, I would be forced to vote against it as it currently stands at third reading.
The Bill contains several important features. The first feature would restrict smoking at the work station. I support this feature of the Bill. However, the Bill also provides that designated smoking rooms should be provided for employees who wish to continue to smoke at the office, and imposes a stipulation that any such room be both enclosed and independently ventilated.
While I have no particular objections to the designated smoking room concept per se, I cannot justify the allocation of several hundred millions of taxpayers' dollars at this time to provide for independently ventilated smoking rooms in many old buildings used by the Public Service. It may be desirable, however, to consider such a feature for buildings designed in the future. For this reason, if the Bill passes second reading, and if the independent ventilation feature remains in the Bill, I would oppose it at third reading.
The Bill would also restrict smoking on airplanes, ships, railways and motor vehicles under federal jurisdiction. This feature of the Bill goes far beyond what was recently announced by the Minister of Transport (Mr. Crosbie) who restricted smoking only on airplane flights of less than two hours' duration. I believe that the proposals of the Bill to consider further limitations on smoking on common carriers are worth future study. It is principally for this reason that I offer my support for the Bill at this time.
Finally, the Bill would designate tobacco and tobacco products under the Hazardous Products Act. As an actuary there is no doubt in my mind that tobacco is a hazardous product. I would like to see committee hearings held to establish whether such a designation would be in the public

May 29, 1987
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interest and what the ramifications of such a designation would be.
The debate concerning the use of tobacco is an old one. The first reference I was able to find described tobacco as "barbarous, beastly, hateful to the nose, a vile and stinking custom, harmful to the brain, and dangerous to the lungs". The comment, I hasten to add, was not made by the Hon. Member for Broadview-Greenwood but by King James I in the year 1604.
Nevertheless, tobacco-related illnesses did not begin to flourish until the invention of the cigarette machine in 1880. In that year, 500 million cigarettes were produced commercially in the United States. Within five years the production doubled to one billion cigarettes; and within another five years the production quadrupled to four billion cigarettes. Some 90 years later, in 1980, the annual production of cigarettes in the United States was 620 billion and in Canada it was about 64 billion.
Almost all Canadians know of the association of smoking with lung cancer. What most people do not know is that lung cancer was almost unknown prior to the invention of the cigarette machine. At the turn of the century the pathologist Adler estimated in a review of world hospitals that he had been able to uncover that only about 300 cases of lung cancer had ever been reported. Today, it is the number one killer in terms of cancer for males. In one hospital in Toronto alone, the Princess Margaret, there were 1,119 new cases of lung cancer in 1980.
Cigarette smoking is now the number one cause of premature death in North America. Actuarial studies indicate that it is responsible for 33 per cent of all cancer deaths, 25 per cent of all coronary heart disease deaths, and 40 per cent of all respiratory disease deaths.
Not only do smokers die early, they are sick more frequently. Smokers are hospitalized 50 per cent more than nonsmokers. They have twice the accident rate of non-smokers. It is estimated that in 1980 dollars each smoker costs an employer an average of $600 in lost productivity.
Actuaries have been studying mortality differences between smokers and non-smokers since 1964. The ratio of smoker to non-smoker mortality among insured lives is 15 times higher for respiratory cancer, 14.7 times higher for pneumonia and influenza, 8.1 times higher for hypertensive heart disease, and 5.8 times higher for fatal digestive diseases.
In the United States a detailed mortality study of all U.S. veterans has been conducted. In addition to the elevated rates of cancers of the lung and bronchia mentioned above it was found that smokers are 12.5 times more likely to contract cancer of the pharynx, 10 times more likely to contract cancer of the larynx, 6.2 times more likely to contract cancer of the oesophagus, and 5.2 times more likely to have an aortic aneurysm.
Over the study period 1960 to 1984, it is estimated that 659,000 Canadians had premature deaths directly related to tobacco use-almost 30,000 a year. Studies indicate that the extra mortality is directly related to the age that a person first began smoking, as well as the number of cigarettes smoked per day. This is why it is so important to control the new use of smoking among our youth and why I support the recent ban on tobacco advertising introduced by the Minister of National Health and Welfare (Mr. Epp).
However, there is some hope for smokers. Studies also indicate that mortality starts to return to normal after smoking stops. For those who smoke less than an average of 20 cigarettes a day mortality is only 30 per cent above normal after one year of abstinence and is essentially back to normal after 10 years of abstinence.
Those who smoke more than a pack a day are not quite so lucky. Their mortality in the year after they stopped smoking is still 269 per cent of normal. However, after 10 years even heavy user mortality drops to only 50 per cent above normal. This 50 per cent figure is as high as it is because it includes a large number of people who quit smoking on doctors' orders because they had already developed severe health problems.
If one were to study former heavy smokers who quit voluntarily before their doctors told them to one would find that their mortality is quite close to normal within five years and is essentially back to normal within 10 years. Unfortunately, those who wait until the doctor orders them to quit smoking have considerably elevated mortality even 15 years after they stop smoking, that is those who are still alive.
The actuarial statistical studies are numerous and consistent. Tobacco use kills. Tobacco use disables. Even indirect smoke inhaled by a non-smoker is dangerous. Tobacco use is a health menace. It is now socially unacceptable to expose others to the risks of second-hand smoke at the office or on public transit.
Once again, I wish to congratulate the Hon. Member for Broadview-Greenwood for bringing forward Bill C-204. Obviously, she has served to focus Parliament's attention on the most serious health problem we have in Canada.
Within the last few weeks the Government has taken major initiatives to curtail smoking. Hopefully, by passage of this Bill at second reading and study in committee several additional reasonable steps can be found which might save additional hundreds of lives a year.


Mr. Bob Hicks (Scarborough East):: Mr. Speaker, I would also like to congratulate my colleague, the Hon. Member for Broadview-Greenwood (Ms. McDonald), on an excellent and very topical Bill. It deals with a subject matter which is foremost in the minds of many Canadians. My colleague, the Hon. Member for York-Scarborough (Mr. McCrossan), brought out a great many statistics which I think are worthwhile and which should be considered by all Canadians. I would like to talk generally about the Bill for a long time, but there are some specific matters I would like to bring forward.
May 29, 1987

Bill C-204 which is in its final hour of debate today addresses two specific areas related to the use of tobacco products in Canada. First, it seeks to restrict smoking in federally-regulated workplaces, transit vehicles and other locations under federal jurisdiction. Second, it would ban the advertising and promotion of cigarettes. The goals of this Bill are indeed laudable.
The detrimental effects of tobacco smoke, not only on the health of smokers but also on the health of non-smokers who may be forced to breathe air contaminated with tobacco smoke, has been clearly established. It would therefore be unconscionable on our part to ignore this problem.
On April 22 of this year the Minister of National Health and Welfare (Mr. Epp), the President of the Treasury Board (Mr. de Cotret), and the Minister of Labour (Mr. Cadieux) announced major new initiatives concerning the use of tobacco products in Canada. I shall concentrate on one particular aspect of these initiatives and that is, the issue of smoking in the workplace.
There are approximately 900,000 workers in the federal jurisdiction. The Minister of Labour has the responsibility of ensuring that the health and safety of these workers are protected while they are in the workplace. He fulfils that responsibility by administering the Canada Labour Code. Part IV of the Code addresses the issues of occupational safety and health.
There are two specific points in the Code which the Minister of Labour is intending to use in order to minimize the exposure of workers to second-hand smoke. The first point concerns the creation of joint health and safety committees. These committees are mandatory for establishments with 20 or more employees. A safety and health representative is required and the committees are composed of representatives of both employees and management.
The Minister proposes to request employers to restrict smoking in their workplaces to specifically designated areas. This is to be implemented by the employers in full consultation with their safety and health committees or safety and health representatives as the case may be and should be in place before the end of 1987. This is phase one of his initiatives.
The second point is the authority that the Code bestows on the Minister of Labour to prescribe specific regulations pertaining to any aspect of the occupational safety and health of workers under federal jurisdiction. Phase two of his initiatives involves the development of a new regulation regarding smoking in the workplace.
At the present time, the Minister's Department is actively engaged in a full-scale technical review of all aspects of the Canada occupational and safety and health regulations issued pursuant to Part IV of the Canada Labour Code. This review is being carried out in an unique way which I consider to be very Canadian. A special review committee has been set up
Non-Smokers' Health Act
with the joint participation of labour and industry representatives.
The Minister will be requesting this committee to develop the regulation on smoking and to have it ready to take effect in 1989. He has publicly announced his hope that the review committee will seriously consider a total ban on smoking in all federally-regulated workplaces. The highlight of these initiatives by the Minister of Labour is the active participation of the two key stakeholders in this issue, employers and employees.
We all know that the practice of smoking dates back many centuries and it has become well entrenched in the daily habits of millions of Canadians. We are debating an issue that constitutes a major lifestyle change for these Canadians. Surely, unless we can get the co-operation and good will of both smoking and non-smoking workers, our efforts will be in vain.
One reasonable way of minimizing this potential hazard in the workplace is by seeking the co-operation of employers and employees. This is precisely what the Minister of Labour intends to do. Unfortunately, it is not altogether clear that Bill C-204 would involve employers and employees in the process of decision-making and implementation of workplace smoking restrictions. Experience has shown that when employers and employees are involved in the design and implementation of workplace smoking policies, the policies that result work well and are self-enforcing.
According to Bill C-204, a workplace is considered smoke-free if the concentration of airborne tobacco tar in that space does not exceed .75 micrograms per cubic metre of air. In my opinion, this issue can be more easily addressed by administrative action, and that is precisely the route the Minister of Labour is taking at the moment.
I am sure we all appreciate the complexity of this problem. I am convinced that the phased-in approach put forward by the Minister of Labour will succeed in reducing this hazard to the health of Canadians. In conclusion, let me once again give credit to my colleague, the Hon. Member for Broadview- Greenwood, for bringing this issue to the forefront. I would urge my fellow Hon. Members, however, to consider the major initiatives taken by the Government in deciding how its members will eventually vote on Bill C-204.


Mr. David Daubney (Ottawa West):: Mr. Speaker, I am pleased to participate in this debate on an important Private Member's Bill which has attracted a great deal of attention in my riding and, I am sure, across Canada.
The Government which I support has taken an active role over the past two years in addressing the issue of cigarette smoking. This has been in response to overwhelming evidence that tobacco smoke is the largest preventable cause of illness and premature death in Canada. Moreover, it is becoming increasingly clear that Canadians who are consistently exposed to smoke in the environment may also be suffering adverse health effects. Not surprisingly, the public is increasingly

May 29, 1987
Non-Smokers' Health Act
asking for an environment that protects non-smokers from tobacco smoke.
The effects of direct exposure to smoke have been clearly demonstrated over the past decades. Thirty per cent of cancer deaths, 30 per cent of heart disease deaths, and 90 per cent of chronic obstructive lung disease deaths are caused by tobacco. More than 30,000 Canadians die each year from smoking-related diseases and 17 per cent of all deaths in Canada are attributed to smoking.
The evidence on the effects of environmental or passive smoking has only begun to emerge in the past 10 years or so. Research to date indicates a relationship between passive smoke and low birth weight and injury for unborn babies, respiratory illnesses for children and lung cancer for those involuntarily exposed to smoke over a long period of time such as spouses of smokers.
The U.S. Surgeon General estimates that one hour spent by non-smokers in a smoke-filled room my be equivalent to their smoking five to thirty cigarettes. In his 1986 annual report, he recommended that exposure to environmental tobacco smoke be eliminated and that policies aiming to do this be implemented with the input and support of all involved including smokers and non-smokers and management and employees.
I would like to comment briefly on the recent initiatives announced by the Government to reduce tobacco use in Canada, and particularly those measures to reduce smoking in the federal government workplace. As part of the Government's initiatives which were referred to by my friend from Scarborough and announced on April 22, 1987, the President of the Treasury Board (Mr. de Cotret) indicated his intention to declare a ban on smoking in all Public Service workplaces by January 1, 1989. This smoking ban will be implemented in a phased-in manner based on consultation with the unions in the National Joint Council. This consultation is essential to achieve the successful and harmonious implementation of a ban and to ensure the continued co-operation and compliance of all employees.
The Public Service of Canada is the largest employer under federal jurisdiction and has a number of unique work situations and work sites. Some work sites are shared with employees of private sector employers, others are the full-time residents of special client groups or of Public Service employees, and some work sites are in shared accommodations with the general public. These situations will need to be considered and addressed in the consultation process to establish implementation measures that take into account these special situations.
There are already a number of Public Service departments that have restricted smoking in their workplaces. These measures were implemented after consultation with the employees involved. The experiences of these departments indicate that not only non-smokers but also many smokers and in fact the majority of smokers among the employees supported these initiatives.
It is increasingly evident that smoking in the workplace and in other public areas is becoming unacceptable to a majority of Canadians. The Government's initiative to ban smoking in the Public Service workplace reflects the rapidly changing public and employee attitudes toward tobacco usage. Daily we hear of employers implementing bans or restricting smoking in the workplace to a few designated, agreed upon smoking areas. Exposure to second-hand tobacco smoke in the workplace is no longer tolerated and employees have requested action on this issue.
In 1985, Treasury Board, in consultation with Public Service unions, developed guidelines to assist Departments in implementing measures to control smoking in the workplace. Certain areas were identified where public servants could not smoke, for example in areas or at service counters where the general public was served. It was agreed at that time that the guidelines were an interim measure designed to inform Departments of the increasing sensitivity to this issue and of the need to consult with their employees on ways to resolve cooperatively differences related to tobacco smoke in the workplace. It was also agreed that these guidelines were for a period of three years and that thereafter a more stringent approach would be required. Both the Treasury Board and the unions in the National Joint Council agreed to start consulting on a standard a year ahead of schedule because of increasing pressure to have more stringent measures apply.
According to Health and Welfare Canada, the successful implementation of a smoking ban is based upon strong support for a ban by the senior management of an organization and consultation with employees on the development of a phased in plan to achieve this ban. These measures, as I have indicated, are being adopted by the Public Service of Canada.
The announcement of the Government's intention to ban smoking in the Public Service workplace is an important and progressive step by Canada's largest employer. It is hoped that it may serve as a catalyst for other employers.


Michael Morris Cassidy: Mr. Speaker, 1 congratulate the Hon. Member for Broadview-Greenwood (Ms. McDonald) for raising this issue. It is an historic fact that this is the first Bill under the new Private Members' procedures which will hopefully go through its remaining stages and come to a vote.


Don Boudria: It is the second one.


Michael Morris Cassidy: I beg your pardon. The Hon. Member for Glengarry-Prescott-Russell (Mr. Boudria) has corrected me.
The Bill calls for two measures-first, to ban advertising by declaring tobacco to be a hazardous product and, second, to ban smoking in federally regulated workplaces, particularly in the Government of Canada.
May 29, 1987

I was pleased that the Government had finally began to act on this issue and that it announced some policy in this area in the press conference held by the Minister of National Elealth and Welfare (Mr. Epp) about four weeks or five weeks ago.
Elowever, I was disappointed by two aspects of the Government's proposal. The first is that the proposed advertising ban is incomplete. It will continue to allow point of sale advertising. I think it is well known that if one stifles advertising in one way but leaves a loophole, the advertising funds-and I believe that they amount to $200 million per year which cannot be spent elsewhere-will go into the area which is still exempt. In other words, we are likely to see a substantial increase in point of sale advertising, which will continue to communicate the idea that it is hip, smart, sexy, or somehow positive to be seen with a cigarette in one's mouth.
Second, tobacco companies, perhaps by registering subsidiaries with the names of their brand in the title, will be able to promote their products in terms of sporting and other types of events which they help to sponsor. There too I have some real questions. To have Macdonald Export establish a subsidiary so that it can subsidize the Macdonald Export ballet or some such event is another covert way by which promotion and public relations on behalf of cigarette smoking are likely to be permitted. It is a shame.
Another problem with the Minister's Bill is the fact that he lacks urgency and is not prepared to act in what I believe is the spirit of the Elouse when it decided to put in force a procedure to allow Private Members' Bills to come to vote. If the Minister were really seized with the urgency, I believe he should have in fact said: "I will piggyback the Government's proposals on to the Bill proposed by the Hon. Member for Broadview-Greenwood". We all know that parliamentary time is very scarce. It is difficult for measures or for Bills to actually get heard.
If the Minister were sincere in wanting his Bill or his proposals to go before a committee as rapidly as possible, it seems to me that he should have agreed to see the Bill go and, if his Party had amendments, it could have made its amendments and let the committee do what it would with the particular proposals.
It is no secret that I support the Bill. I am an ex-smoker. I quit in 1983, on New Year's Eve. It was a New Year's resolution which I have actually succeeded in maintaining. I am still scared to death that if I ever had one cigarette, I would be hooked by the habit again. I believe it is an addiction which lasts through life.
I am pleased with the support the Bill has attracted. Three or four groups have written letters of endorsement which I should like to put on record. One is from Frank Garritty, President of the Canadian Teachers' Federation, and is directed to the Hon. Member for Broadview-Greenwood. It reads:
I am pleased to advise that, at its most recent meeting, the Board of Directors
of the Canadian Teachers' Federation passed a resolution endorsing Bill C-
204. The Canadian Teachers' Federation represents 220,000 elementary and
Non-Smokers' Health Act
secondary school teachers who teach in every province and territory of Canada.
Another one is from Ginette Rodger, Executive Director of the Canadian Nurses Association. It is directed to the Hon. Member for Broadview-Greenwood and reads:
The Canadian Nurses Association .. . supports your initiative in bringing this Private Member's Bill. The CNA Board of Directors has reviewed the Bill and has reacted very favourably. The Board is concerned however that the occupational health hazard created by smoking is so significant that smoking should be banned in all federal government workplaces.
Another one is from Wendy Williams, Vice-President of the National Action Committee on the Status of Women. She wrote to the Hon. Member for Broadview-Greenwood as follows:
On behalf of Canadian women who are members of the National Action Committee on the Status of Women, thank you for Bill C-204.
We hope this Act, to regulate smoking in the federal workplace and on common carriers and to amend the Hazardous Products Act in relation to cigarette advertising, gets discussed and passed in the House of Commons.
The last letter is from Bob White, National President of CAW. It is dated March 24, 1987 and it is addressed to the Hon. Member for Broadview-Greenwood. It reads:
-I want to congratulate you on the work you have done towards guaranteeing Canadian workers a tobacco smoke-free environment-there can be no justification for any delay in passing legislation controlling it. It is for this reason that we whole-heartedly endorse your Private Member's Bill, the NonSmokers' Health Act-C-204.
This letter was from CAW, one of the most important unions in the country. These are only some of the more recent letters endorsing this particular measure.
I remind Hon. Members that we are dealing with a health hazard which results in the direct death of some 35,000 people per year. To put it into perspective, I should like to refer to some figures from the Canadian Council on Smoking and Health. It is equivalent in 18 months to the total number of Canadian servicemen and servicewomen who were killed in World War II. In other words, tobacco is creating as much death and suffering every 18 months as Canada experienced as a nation from its participation in World War II.
The costs are enormous. It is time that we took action in order to indicate that tobacco no longer has the endorsement or approval, either in a direct or in a covert way, of the Government of Canada.
If some manufacturer said to the Department of National Health and Welfare that it had a great new product which it wanted to make available to Canadians, which would send hundreds of thousands of them to hospital, which would shorten their life spans from seven years to eight years on average, and which would cause 35,000 deaths every year; if some manufacturer asked "would you please allow me to sell this product in Canada", we would all say it was appalling. However, that is precisely what we continue to allow because of the degree to which Canadians have permitted the tobacco manufacturers' lobby to dictate what we should do.
We have alternative uses for the farmland affected. We, as Canadians, should be prepared to put up some of the money

May 29, 1987
Non-Smokers' Health Act
saved by the reduction in smoking to ensure that tobacco farmers can phase into other areas. Neither the manufacturers, the employees, nor the farmers have a compelling case that we should continue with this health hazard and make it as publicly available as we do now when it causes such amounts of illness, death, carnage, and loss of life as tobacco does today.
This is why I believe that all Members of Parliament should support Bill C-204. Once again I congratulate the Hon. Member for Broadview-Greenwood on what I think is a very positive contribution. I also note with a great deal of approval the way in which members of all Parties have endorsed the Bill and the degree to which even the Minister of National Health and Welfare has now joined in publicly condemning the health hazards caused by tobacco smoking.
It is a disease. It is an illness. We should do away with it. In 50 years we will wonder how anybody could have put a stick of tobacco in his or her mouth. It is time we brought it to an end.


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


Some Hon. Members:: Question.


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


Some Hon. Members:: Agreed.


Some Hon. Members:: No.


The Acting Speaker (JVIr. Paproski):: All those in favour please say yea.


Some Hon. Members:: Yea.


The Acting Speaker (Mr. Paproski):: All those opposed please say nay.


Some Hon. Members:: Nay.


The Acting Speaker (Mr. Paproski):: In my opinion the yeas have it.


[Stage Direction]
Motion agreed to, Bill read the second time and referred to a legislative committee.
The Acting Speaker (Mr. Paproski):: It being five o'clock this House stands adjourned until Monday next at 11 a.m. pursuant to Standing Order 3(1).


[Stage Direction]
The House adjourned at 4 p.m.
[Stage Direction]

Monday, June 1, 1987
[Stage Direction]
Prayers