1987-12-16

Mr. Gilles Grondin (Saint-Maurice):: Mr. Speaker, I would like to say that 1 support the position taken by the coalition including the Federation de Page d'or du Quebec, the Forum des personnes agees de Montreal, the Golden Age and the Association quebecoise pour la defense des retraites, all of which favour a truly progressive taxation system under which corporations and the wealthy will pay their fair share. They want the Government to maintain the investment income deduction of $1,000, which means that the first $1,000 is not taxable. They also want full indexation of our personal income tax system so that tax credits and deductions increase with the cost of living.
Mr. Speaker, 1 think the Minister of Finance (Mr. Wilson) should listen carefully to the demands being made by these organizations and	by all senior	citizens	who come to	see	usregularly at our	constituency	offices	to complain	aboutfinancial pressures and who want the Minister of Finance	to
pay special attention to their demands.


FINANCE
Mr. Dave Nickerson (Western Arctic):: Mr. Speaker, the communique issued on December 10 by the Minister of Finance (Mr. Wilson) is good news for northerners who had been concerned about the narrow application of the tax rules applied to northern travel benefits.
Under the new rules tax benefits will be extended to trips for all destinations, including those in the North, thereby allowing northerners to take their holidays in the North should they so wish.
The maximum deduction, of course, still is tied to the cost of travel to the designated southern point. Northerners will wish to thank the Minister for listening to their problems and developing workable solutions.


MULTICULTURALISM
Mr. Ernie Epp (Thunder Bay-Nipigon):: Mr. Speaker, an effective policy of multiculturalism requires an effective program to improve race relations in Canada. The present Conservative Government has been tragically weak in this area.
The Race Relations Directorate has been allowed to deteriorate to the extent that it includes only an acting director and one program officer. Such a limited staff, which makes the title "directorate" a bitter joke, is quite incapable of mounting the programs that this country needs.
Is that the reason the program promised last March by the Minister for Immigration (Mr. Bouchard) to fight fear, bigotry, and racism among Canadians has not yet been announced? The Minister promised an aggressive federal public education campaign for this fall. Where is it?
The Minister spoke truly when he declared: "You only beat racism, discrimination and prejudice by defeating the ignorance and stupidity from which they spring". When does the Government expect to act on that fine declaration?


LABOUR RELATIONS
Mr. William G. Lesick (Edmonton East):: Mr. Speaker, this morning's reports that Air Canada and its 8,500 ground workers have come to an agreement is one Christmas gift for which all Canadians can be thankful.

December 16, 1987
My colleagues from western Canada will attest that travelling of late has been nothing short of horrendous. This past Monday, for example, it took me seven hours to arrive here from my riding of Edmonton East. As you well know, Mr. Speaker, such travel can be exhausting, inconvenient, and can only impede our efforts to serve Canadians better.
Commendation should be extended to the Minister of Labour (Mr. Cadieux). When the talks broke down the Minister acted swiftly in appointing a mediator with instructions to resolve the impasse with all possible haste. The Canadian public was again held at ransom as labour and management resorted to strike and lock-out. Surely there must be some better method of settling disputes and differences.
Travelling Canadians will now be assured of being home for Christmas with family, friends, and loved ones.
*
* *


INDIAN AFFAIRS
Mr. Keith Penner (Cochrane-Superior):: Mr. Speaker, for almost 50 years the Lubicon Lake Indian Band in northern Alberta has struggled for a resolution of its outstanding land claim. The people are still waiting for the land they are entitled to and were promised almost 50 years ago.


AGRICULTURE
Mr. John Gormley (The Battlefords-Meadow Lake):: Mr. Speaker, I would like personally to thank the Prime Minister (Mr. Mulroney), the Ministers of Agriculture (Mr. Wise) and Finance (Mr. Wilson), and all of my colleagues on the government side of the House for their timely assistance package for agriculture and western farmers.
The initiative includes a 1987 Special Canadian Grains Program payment of $1.1 billion, farm fuel tax rebates for two additional years at a cost of $400 million, $100 million will be committed to soil conservation, and the Farm Credit Corporation will receive an additional $330 million over the next three years for debt restructuring.
Farm Debt Review Boards will be extended until 1991, and $750 million of the Western Grain Stabilization Plan debt will be written off and new measures brought in to include all western farmers in stabilization.
In the last election campaign the Government made a commitment to farmers across Canada. These new initiatives illustrate our belief in standing up for western farmers.
The NDP is completely devoid of any agricultural policy. As farmers all too well know, the Liberals never acted responsibly on behalf of farmers. The Mulroney Government continues to listen and deliver for agriculture.


TRANSPORTATION OF DANGEROUS GOODS
[Stage Direction]
Negotiations are stalled at the present time because the federal Government has refused the band's request for a mediator. Surely it is reasonable to request mediation in a dispute that has dragged on for so long. The proposed mediator is a highly respected former federal Conservative Justice Minister, the Hon. E. Davie Fulton, who has carefully examined the Lubicon Lake situation and is willing to serve in that capacity.
The federal Government, however, is ignoring this opportunity for a just settlement. Instead, the federal negotiator is working out a deal with the province without the band's involvement. The negotiator has said that he "can make a deal with the province" and the Lubicons are going to have to accept it. "They will have to be left holding the bag."
In Canada we take pride in our record on human rights. That record, however, is a blemished one, and the Lubicon Lake issue proves the point.

Hon. Bob Kaplan (York Centre):: Mr. Speaker, the transportation of dangerous goods by rail is a matter of great concern in major centres in Canada, including Toronto. In 1979 we in the Toronto and Mississauga area had the near tragedy of a derailment of railway cars containing dangerous chemicals. Ever since then measures have been implemented to make the carriage of dangerous goods more safe.
Currently, a task force set up by the Government is looking into the rail transportation of dangerous goods. The IBI Group consultants' summary report which they commissioned refers to the risk that is much greater when goods are carried through highly populated centres than when they are carried further north. The report states that there is a "basic trade-off between public safety and over-all cost," in bringing goods through Metro.
I note with alarm the prospect of northern railway tracks and central Ontario railway tracks being shut down and urge
December 16, 1987

the Government to have the task force consider the consequences to Toronto of closing down railway tracks through remote regions which could result in dangerous chemicals having to be carried through our metropolitan areas.


WINTER OLYMPIC GAMES
Mr. Terry Clifford (London-Middlesex):: Mr. Speaker, today with the arrival in Ottawa of the Olympic Torch, the Parliament of Canada had the opportunity to share the spirit. As the Torch lights up 800 Canadian cities, towns, and villages, its glow is reaching the hearts of millions of Canadians.
The Government of Canada's initiative to share the Olympic spirit with the Celebration '88 Program is an overwhelming success. More than 2,000-and counting-voluntary self-financed community committees are creating and implementing hundreds of Olympic-themed events.
The City of London Celebration '88 Committee, with 40 members and 30 organizations, has organized, among other events, a program on January 3, 1988, named "The London Winterfest", a special day when the Torch arrives for all Londoners to join in the Olympic spirit. The London Celebration '88 medal award winners who proudly manifest the Olympic ideals are Darrel Foley, Jennifer Armstrong, John Simmons, Harvey Bailie, Tim McLennan, and Jimmy Agathos. As all communities of Canada "catch the flame" we will truly recognize the ultimate goal-a unity among Canadians, and their pride in showing the world "our Canada" at Calgary in 1988.


INDIAN AFFAIRS
Ms. Audrey McLaughlin (Yukon):: Mr. Speaker, today the Olympic Flame came to Ottawa. To the majority of people who were standing in the blowing snow to watch the Flame arrive, it represents the pride of the world in its best young athletes. But to one small group huddled in the cold this morning this flame means something else. To the Lubicon Indians it is a symbol of those who are exploiting them, the sponsors of the Olympic Games.
The oil companies are taking oil out of traditional Lubicon lands to the tune of $1 million a day. The federal Government
has permitted this uncurbed exploitation that brings with it disease, despair, and destruction to the people who live on the land.
The rest of the world watches us as we approach the opening moment of the Winter Olympics. Unfortunately, we as Canadians are cast in the shadow of this shameful business. The federal Government now plans to negotiate a deal with the Alberta Government without the participation of the very people who are suffering as a result of the Government's dereliction of its duty.
All the Lubicons ask is that the person who carried out the inquiry on this matter, the person most knowledgeable about the facts of this case, and I might add, a former Tory cabinet Minister, be involved in these negotiations. I call upon the Minister of Indians Affairs and Northern Development (Mr. McKnight) to direct his negotiator to invite Mr. Davie Fulton to participate in the negotiations, and to ensure that this longstanding claim is settled in a fair and democratic manner.


REGIONAL ECONOMIC DEVELOPMENT
Mr. Marcel R. Tremblay (Quebec-Est):: Mr. Speaker, I am proud to announce that twenty-four projects for the riding of Quebec-Est were approved under the Industrial and Regional Development Program from September 1984 to September
1987.	The funding provided by the Progressive Conservative Government for these commitments totalled $1,614,453.
One hundred and sixty-eight jobs were created as a result of these projects, Mr. Speaker. This is an example of a serious and concrete commitment on the part of our Government to improve the country's economy which had been so sorely neglected by the federal Liberals.
In Quebec, the Progressive Conservative Government has been creating jobs at the rate of 6,421 per month, for a total of 244,000, nine times the rate of 727 jobs per month under the Liberals, while today's unemployment rate of 9.5 per cent is the lowest since April 1981.
Entrepreneurs in my riding have benefited substantially from this Government's economic programs, and they greatly appreciate our initiative and our leadership in this respect.
Thanks to financial assistance provided by the Government to businesses anxious to modernize or improve their productivity, those businesses will be in better shape to compete with the Americans when the Free Trade Agreement is ratified, which in turn will create thousands more jobs.

December 16, 1987
Oral Questions


ATOMIC ENERGY OF CANADA LIMITED
Mr. Len Hopkins (Renfrew-Nipissing-Pembroke):: Mr. Speaker, the Prime Minister of Canada (Mr. Mulroney) totally misled the employees of Atomic Energy of Canada Limited and all industries related thereto during the last election campaign.
The present Prime Minister promised in 1984 not only to maintain the level of research that was being done by Atomic Energy of Canada Limited but to consider even more advanced research. After he gained power the first devastating act which the Prime Minister and his Minister of Finance (Mr. Wilson) performed was to cut the budget of Atomic Energy by 50 per cent, or $100 million, and to lift an additional $70 million out of the reserves of the company.
To date they have collected the $70 million reserve fund and cut $60 million of the $100 million cut from AECL.
Next year this Government, which talks about R and D in rhetorical terms only, will be cutting an additional $25 million out of R and D, and the following year it will be cutting an additional $15 million out of Atomic Energy.
I call upon the Government to throw its rhetoric aside and start supporting an industry which has saved the country billions of dollars over the last 40 years because of its new developments in energy, in medical research, in many areas of high technology, and in a whole host of offshoots from an industry which has been a tremendous asset to many areas of human life-


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


AGRICULTURE
Mr. Bill Gottselig (Moose Jaw):: Mr. Speaker, the Special Canadian Grains Program announced yesterday by the Prime Minister (Mr. Mulroney) is good news for all Canadian farmers. The injection of $1.1 billion of cash, the extension of the fuel tax rebates, further funding for the Farm Credit Corporation in the amount of $100 million per year for each of the next three years, provision for a write-off of one half of the Western Grain Stabilization Fund deficit, a recognition of the necessity to deal with the serious problem of soil degradation through PFRA programs, and the Farm Debt Review Boards receiving $40 million to keep them operating until 1991,
certainly give new meaning to the old adage that actions speak louder than words.
What a change, Mr. Speaker, to have a Prime Minister who says "the Government will stand by farmers and their families when they are hurting".
We recall only too well the response of a former Prime Minister who said "why should I sell your wheat?" and responded with an obscene gesture.
The response of the farm community indicates how well received this new program is where it really counts, in the farm kitchens and coffee shops across Canada.


EXTERNAL AFFAIRS
Mr. Bill Blaikie (Winnipeg-Birds Hill):: Mr. Speaker, like all Canadians, we in the New Democratic Party were shocked by recent events in Haiti. We were also disappointed in the Canadian Government's weak response to this serious situation.
Mr. Speaker, it is clear that the National Council of General Namphy's government has lost all legitimacy in Haiti and that the new provisional electoral council appointed by General Namphy is unconstitutional.
This is a crisis situation, and the Government of Canada should take a clear and strong stand. A diplomatic protest note is not enough. The Government must cut its aid to Haiti and stop deporting Haitian refugees. At the international level, the Government must take a clear stand against General Namphy's regime and make strong representations at the United Nations and elsewhere to bring about strong and effective international pressure on General Namphy's regime to ensure a stable situation for a proper and legitimate election.



ORAL QUESTION PERIOD


Right Hon. John N. Turner (Leader of the Opposition):: Mr. Speaker, in the absence of the Prime Minister, I will direct my question-
December 16, 1987


Some Hon. Members:: Order.


Mr. Speaker:: Perhaps the Chair could help. I apologize to the Right Hon. Leader of the Opposition for interrupting, but there is a long standing rule about not referring to the absence of Members.
There has also been a long standing custom that, when asking questions of the Treasury bench, the questioner starts off by saying-if in fact the Minister is absent to whom the Member wishes to direct his or her question-"in the absence of the Minister for so and so, I will direct my question to-". That is a perfectly proper procedure. The Right Hon. Leader of the Opposition is absolutely correct in his approach.


John Napier Turner: Mr. Speaker, some of the backbenchers, the trained seals of the Conservative Party, need a rest. We understand that.


Some Hon. Members:: Oh, oh!


John Napier Turner: I think some of them have started the party early today.


Some Hon. Members:: Oh, oh!


Mr. Speaker:: We certainly are not starting the Question Period early.


Some Hon. Members:: Oh, oh!


Mr. Speaker:: Perhaps the Right Hon. Leader of the Opposition could try again.


John Napier Turner: Mr. Speaker, I have a question for the Deputy Prime Minister, a very simple question because here in the House we are always trying to elicit very clear and very specific answers.
The Deputy Prime Minister knows full well that the Prime Minister has been arguing that his free trade agreement with the United States guarantees that Canada will be fully exempt from existing and future American trade laws.
Mr. Speaker, Article 1904,2 of the agreement provides, and 1 quote: "-the antidumping and countervailing duty statutes of the Parties, as those statutes may be amended from time to time, are incorporated into this agreement." In other words, the agreement directly contradicts the Prime Minister.
Can the Deputy Prime Minister explain and give us a reason for this?


Hon. Pat Carney (Minister for International Trade):: Mr. Speaker, I did not get all of the Right Hon. Member's question, but I certainly point out that Article 1904 says:
Oral Questions
-the Parties shall replace judicial review of final antidumping and
countervailing duty determinations with binational panel review.
That, of course, confirms what we have said, that we are going to have a binational panel review and that we are providing ourselves with time to develop new trade remedy laws appropriate to one single market.
I think it would be more appropriate, rather than picking out specific clauses in the Free Trade Agreement-


Mr. Riis:: We would not want to do that.


Pat Carney: -for the Right Hon. Member to read the whole Chapter of the agreement because each Article relates to other Articles in the Chapter as is normal in treaty language.


GOVERNMENT POSITION
John Napier Turner: Mr. Speaker, I turn then to the Minister. Is she suggesting that we not read the document? Is she suggesting we do not refer it to Parliament and that we accept the Prime Minister's and her statement as to what is in it?
I want to bring the Minister back to her own document which says on page 273 that American anti-dumping law and countervailing laws future and present apply against Canada. Why then does the Minister claim that Canada has been exempted from American trade law when it is not the case? Why then does the Minister claim that we have somehow got guaranteed access to the American market, something which in light of the text we clearly have not? Why does the Minister not admit that she and her colleagues, led by the Prime Minister, failed to obtain for Canada what they undertook to obtain?


Pat Carney: Mr. Speaker, let me make it very clear that I am urging all Hon. Members to read this agreement, and particularly members of the Opposition who, through their speeches and public statements, have made it clear that they have not read the agreement and do not know what is in it.
I have never said when talking about the Free Trade Agreement that Canada is exempt from trade law. I have said repeatedly, over and over again, that we set up a binational review for a period of five years plus two so that we could develop common trade law that applies to one market. I said that over and over. I have explained to the House that through many, many difficult negotiations, we were unable to do that in the time period preceding October 4. I have said over and over that in the meantime we have set in these interim measures and we will be addressing this question in the time period we have set. For the Right Hon. Member to suggest otherwise is misleading the House and Canadians.

Oral Questions


EXEMPTION FROM U.S. TRADE LAW-EFFECT OF AGREEMENT
[Stage Direction]
December 16, 1987
John Napier Turner: Mr. Speaker, the Minister has said in the House repeatedly, particularly in the last debate on this issue, that her purpose was to get an exemption from American countervail. We can give her the citations. She said it right in this House.
The Prime Minister said in New York City that American trade law cannot apply to Canada, period. I cite again for the Minister's attention 1904.2 of the agreement referring to American trade law future and applicable; anti-dumping, quotas, surtax and countervail will apply to Canada. How is it, therefore, that Canada has an exemption from American trade law in this agreement? How have we got secure access to the American market?


Pat Carney: Mr. Speaker, the Right Hon. Member's question is both pitiful and pathetic. I am being very kind to the Right Hon. Member.
I have explained to him in the course of debate over the last year, when I told Canadians about the historic negotiations that took place over the last 16 months and the historic negotiations that took place in Washington in October and recently, that we had set ourselves that goal of creating new laws and we could not do it in the time period available to us. Therefore, we have put in interim measures while we develop the new laws that are required when there are two markets that are being integrated into one through the reduction of tariffs.
It is a matter of public record. I have said that all across the country. For the Right Hon. Member to maintain, after we have tabled the "Elements of the Agreement" and after we have tabled the entire Free Trade Agreement, that I am claiming that we are exempt from U.S. trade law is ridiculous and irresponsible.


PROPOSED OMNIBUS U.S. TRADE BILL-PARLIAMENTARY COMMITTEE RECOMMENDATIONS
Hon. Lloyd Axworthy (Winnipeg-Fort Garry):: Mr. Speaker, I have a supplementary question for the Minister for International Trade. While the Minister is talking about statements that are ridiculous and irresponsible, I would like to cite to her a statement made by the Prime Minister of Canada in an interview in The New York Times. He said: "We will have guaranteed access to the U.S. market through the elimination of U.S. trade laws or we won't have a deal". That is a direct quote from the Prime Minister of Canada.
The fact that the Minister for International Trade is engaging in double-backward gymnastics, trying to cover up her tracks on this matter, is of no comfort to Canadians when they know that they are being denied proper information.
My question is directed to the Minister. She said yesterday in response to a question that she had not had time to know
what was in the U.S. Trade Bill which will apply to Canada if passed. I have here a 45-page document prepared by the Department of External Affairs which outlines every specific issue in the proposed omnibus U.S. Trade Bill. Obviously the Minister has not got around to reading that.
An all-Party committee of the Commons recommended that the Government say now that it will not abide by the agreement if the United States passes the omnibus Trade Bill before it deals with the Canada-U.S. Trade Agreement. Therefore, can we get a firm commitment from the Minister today that the Government will not proceed with the trade agreement if the Americans pass the omnibus Trade Bill?


Pat Carney: Mr. Speaker, double-backward gymnastics may be easy for the Hon. Member but are very difficult for me.


Some Hon. Members:: Hear, hear!


Pat Carney: The Hon. Member raised several issues in his question. Possibly he would like to repeat them in a supplementary question.
If the opposition Party read past Article 1904 to Article 1906, it may explain to them the provisions of the Free Trade Agreement.
Article 1906: Duration, says:
The provisions of this Chapter shall be in effect for five years pending the development of a substitute system of rules in both countries for antidumping and countervailing duties as applied to their bilateral trade. If no such system of rules is agreed and implemented at the end of five years, the provisions of this Chapter shall be extended for a further two years. Failure to agree to implement a new regime at the end of the two-year extension shall allow either Party to terminate the Agreement on six-month notice.
That certainly meets the Prime Minister's commitment.


REQUEST THAT GOVERNMENT ACCEPT COMMITTEE RECOMMENDATION
Lloyd Axworthy: Mr. Speaker, I am sorry that the Minister no longer has much agility of feet. I knew she had no agility of mind, but we now recognize that she cannot move on her feet either.


Some Hon. Members:: Oh, oh!


Some Hon. Members:: Shame!


Some Hon. Members:: Order.


Mr. Hnatyshyn:: Cry-baby.


Lloyd Axworthy: I am not crying. I am just saying that some of us are a little more quick-footed than others.


Mr. Speaker:: Order. The Hon. Member for Winnipeg- Fort Garry will put his question.


Lloyd Axworthy: Mr. Speaker, I will now pose the question which I thought the Hon. Minister might want to answer. Will the Government go along with the unanimous recommendation

December 16, 1987

of the Commons committee and say explicitly at this time that the Government of Canada will not proceed with the trade agreement with the United States if the Americans go ahead and pass their omnibus Trade Bill? Yes or no?


Pat Carney: Mr. Speaker, I would have thought that the Hon. Member would have the grace to stand in his place and withdraw his coarse and common allegations in Question Period.


Some Hon. Members:: Hear, hear!


Some Hon. Members:: Oh, oh!


Pat Carney: His question is totally hypothetical and I will not deal with hypothetical questions in this House.


OBSERVANCE OF AGREEMENT PROVISIONS BY PROVINCES AND MUNICIPALITIES
Hon. Edward Broadbent (Oshawa):: Mr. Speaker-


Mr. Shields:: Ladies and gentlemen, Shirley Carr!


Some Hon. Members:: Hear, hear!


Some Hon. Members:: Oh, oh!


Mr. Speaker:: Order. I may have to keep you here for a while this afternoon. The Hon. Member for Oshawa has the floor.


John Edward Broadbent: Mr. Speaker, we have once again seen the intellectual level of which the Conservative Party is capable.


Some Hon. Members:: Oh, oh!


John Edward Broadbent: The Hon. Member has a very profound sense of humour.
Mr. Speaker, I have a question for the Prime Minister. Article 103 of the trade proposal between Canada and the United States states as follows:
The Parties to this Agreement shall ensure that all necessary measures are
taken in order to give effect to its provisions, including their observance ... by
state, provincial and local governments.
This clause is unequivocal in its assertion that it is up to the federal Government to ensure compliance, including by the provinces and municipalities, and the Government itself has admitted that at least a number of areas are within provincial jurisdictional authority. Has the federal Government obtained agreement from all the provinces to implement this accord? If not, does it intend to do so?


Ramon John Hnatyshyn: Mr. Speaker, I want to correct an assumption which the Hon. Member has made in his question. As I and the Prime Minister have stated, the Government's position on this matter is very clear.
This treaty is within the legal competence of the Government of Canada on behalf of the people of Canada. We are
Oral Questions
entitled, under the Constitution of this country, to enact this treaty. In fact, as we have indicated on many previous occasions, we have every legal right to put into effect all the provisions of the treaty.


John Edward Broadbent: Is that so?


Ramon John Hnatyshyn: It is as simple as that. That is the considered legal opinion of people who have studied this matter. It is the opinion of the Government of Canada.


IMPLEMENTATION OF PROVISIONS
John Edward Broadbent: Mr. Speaker, that which the Minister of Justice has just said is very interesting. I do not know of a single legal authority who would support what he has just said. I would like him to clarify that.
All legal authorities I know have said that it is the unequivocal right of the federal Government to sign the treaty but that the one decision which has been made in this area, which was made in the 1930s, makes it quite clear that the federal Government has no right whatsoever to implement it in areas of provincial jurisdictional authority.
I will address my question to the Minister of Justice since he is apparently answering these questions. Since the Government is required to carry this out by the agreement it is about to enter into with the United States, how does it plan to carry out these commitments when at least three provinces have said that they are categorically opposed to it?
When the Minister answers that question will he also do us the courtesy of tabling the legal opinion which he apparently has which would justify the making of the extraordinary assertion he made only a minute ago?


Ramon John Hnatyshyn: Mr. Speaker, I will reiterate the point. I have given the view of the Government of Canada of the legal position. We know that we have the ability to enter into this treaty and to have the provisions thereof put into effect. The courts of this country are always available in the event that anyone wants to challenge that right. We are certain and determined in our legal right to proceed.


John Edward Broadbent: There we have the first withdrawal, Mr. Speaker.


EFFECT ON FEDERAL-PROVINCIAL RELATIONS
John Edward Broadbent: Mr. Speaker, would the Minister cite, not half a dozen, not four or five, but only one legal authority in the country, apart from himself as a politician somewhat interested in the area, who would support the claim he has made? I suspect that waiting for his answer will be like waiting for Godot. Therefore, while we wait, I will ask him another question.
Since three of the provinces have said that they are opposed, and since the Government will be committed to acting on this

December 16, 1987
Oral Questions
with the Government of the United States, does it intend to act on the federal power of disallowance, for example, to carry out its will? If it does, what does the Minister think that will do for federal-provincial relations?


Ramon John Hnatyshyn: Mr. Speaker, I do not quite understand what the hon. gentleman wants me to do. I am sure that he may have access to his own legal opinions on this issue. I state categorically that the Government has the right to enter into and implement this treaty under the trade and commerce provisions of the Constitution of Canada.


John Edward Broadbent: Name one authority.


Ramon John Hnatyshyn: Mr. Speaker, I have just quoted the Constitution of Canada. What kind of authority does the Hon. Member want?


Lloyd Axworthy: That is to enter a treaty, not implement it.


John Edward Broadbent: Just give us one.


Ramon John Hnatyshyn: There are precedents galore with respect to international trade arrangements.


Nelson Andrew Riis: Name one.


Ramon John Hnatyshyn: There is 1935, 1947, the GATT. I take it the Hon. Member knows what the GATT is. This was passed by the federal Government and brought in some months after the GATT had been signed on the part of Canada for the approval of the House of Commons. We are now debating this in advance of the signature of this agreement, and that is something that has never happened before.


TOXIC MUSSELS-REQUEST FOR FINANCIAL COMPENSATION PROGRAM TO ASSIST VICTIMS AND FISHING INDUSTRY
Mr. Brian Tobin (Humber-Port au Port-St. Barbe):: Mr. Speaker, my question is directed to the Prime Minister. The Prime Minister is aware of all of the circumstances surrounding the tragic toxic mussel episode. He knows that as a result of general mismanagement and confusion, individual Canadians have become seriously ill, two have died, and the fishing industry has unnecessarily suffered financially, in particular those sectors that were improperly included in a health alert issued by the Government of Canada.
I ask the Prime Minister if the Government is prepared to consider establishing a financial compensation program, first and foremost for the victims of toxic mussel poisoning, and also for the fishing industry, particularly those sectors that
have suffered financially because of the Government's mismanagement of this issue.


Hon. Jake Epp (Minister of National Health and Welfare):: Mr. Speaker, the issues have been raised in the House many times. I have explained very clearly the position of the Government, the health alert which was necessary on Friday last, and which the Hon. Member's Party and members of that Party said was over-reaction. This week we have a different reaction to the position they took last Friday. The action I took was correct, and in respect to the best information for the industry, is exactly what I said yesterday in the House, and what I said outside the House, and that is to clear the system and bring new product in that is inspected and that we know is safe.


REQUEST FOR ESTABLISHMENT OF FINANCIAL COMPENSATION PROGRAM
Brian Vincent Tobin: Mr. Speaker, we all know that despite the incredible confusion and mismanagement by the Government on this issue, the Government and the Minister make the claim, incredibly, that everything operated according to plan. All we can say is, some plan! What we are raising today is a separate issue. It is a question directed to the Prime Minister of Canada, and I ask it again.
Is the Prime Minister prepared to consider a financial compensation program for those victims-more than 100 in Canada, including two who have died-and their families, of toxic mussel poisoning, and also for the fishing industry, particularly those sectors that have suffered unnecessarily financially because of being falsely included in a health alert issued by the Government of Canada? That is the question. It is a separate one.


Arthur Jacob (Jake) Epp: Mr. Speaker, to repeat, the question does not change the answer and the answer remains the same.


Brian Vincent Tobin: What is the answer to the question?


Arthur Jacob (Jake) Epp: The point, as I indicated yesterday, the ads that went into various newspapers across the country, in both official languages, today, secondly, the news release entitled: "Live Atlantic mussels, clams, oysters and quahogs removed from sale". I think if Members look very carefully, the plan that is in this one, for example, 280 officers of the Department of Fisheries and Oceans and the Department of National Health and Welfare, plus 1,075 officers from the federal Health Protection Branch, from provincial and municipal departments. We have contacted 52,689 individual retail restaurants and other establishments.


Brian Vincent Tobin: You are saying no compensation, then? Answer the question.


Arthur Jacob (Jake) Epp: We have a very clear plan in action. What we are saying is the best thing we can do with health as
December 16, 1987

a priority, and then to clean the system and have an orderly plan of bringing the product back. That is the best way to handle the industry-


Mr. Gauthier:: How about compensation?


Brian Vincent Tobin: Answer the question.


Arthur Jacob (Jake) Epp: I am answering the question. The hon. gentleman last Friday said the health alert was overreaction. Today he is yapping about something else. Get your act straight.


Some Hon. Members:: Hear, hear!


Jean-Robert Gauthier: So much for compensation.


FISHERIES INSPECTION PROGRAM-REQUEST THAT PUBLIC INQUIRY BE INSTITUTED
Mr. Jack Harris (St. John's East):: Mr. Speaker, my question is also directed to the Prime Minister. There is a loss of confidence by Canadians which has increased as a result of the second death from mussel poisoning, a loss of confidence in the Government's fisheries inspection program and the Government's ability to respond quickly and appropriately to a problem of such seriousness.
The handling of this matter has also caused financial chaos in the shellfish industry in Atlantic Canada. Will the Prime Minister demonstrate that his Government can act responsibly by instituting a public inquiry into the whole sequence of events and the procedures of the Department of Fisheries and Oceans, and immediately announce a compensation program for those in the shellfish industry who have been so drastically affected and for those whose health has been injured?


Arthur Jacob (Jake) Epp: Mr. Speaker, the hon. gentleman asked the same question yesterday and I answered it yesterday.


Mr. McCurdy:: No, he didn't.


Arthur Jacob (Jake) Epp: I say to him again that the operations centre has a very clear plan in mind. I can say to the Member and to the House that after the press release of this morning at six a.m.-I believe that was the agreed time it would go out-tomorrow there will be a further briefing in the operations centre in terms of the testing procedure and the reintroduction into market-


Nelson Andrew Riis: Compensation, Jake.


Arthur Jacob (Jake) Epp: -which I think is the best plan at this stage respecting the reintroduction of product into the market. That is as far as I will go today and that is as far as I went yesterday. The answer remains the same.


Howard Douglas McCurdy: What about compensation? That was the question.
Oral Questions


RESPONSIBILITY OF MINISTER OF FISHERIES
Jack Harris: Mr. Speaker, has the Minister of Fisheries and Oceans been put out to pasture on this issue? It is his Department, his inspection procedures, we are talking about. He is the one who should know about compensation programs. Why does he not get up on his feet and announce a compensation program and an inquiry into his own procedures?


Arthur Jacob (Jake) Epp: Mr. Speaker, the issue of health is the primary issue.


Some Hon. Members:: Hear, hear!


Nelson Andrew Riis: The question is about compensation, Jake.


Arthur Jacob (Jake) Epp: That issue remains the primary issue and all the actions we are taking relating to the actions of yesterday, which were explained in the House, the actions which we took today with the press release and, again with explanation in the House, what we are doing today, what we have said we will do tomorrow and the type of briefing for tomorrow and what action, that is on a very clear plan as to how the health of Canadians can be protected and the best action for the industry, and I am following that plan and I am sticking to that plan.


PRESENCE IN GALLERY OF MINISTER OF RENEWABLE RESOURCES AND CULTURE, AND OF MINISTER OF SOCIAL SERVICES, NORTHWEST TERRITORIES
Mr. Speaker:: I wish to bring to the attention of Hon. Members the presence in the gallery of two Members from the Northwest Territories Legislative Assembly the Hon. Titus Allooloo, Minister of Renewable Resources and Culture and Communications, and the Hon. Jeannie Marie Jewell, Minister of Social Services.


Some Hon. Members:: Hear, hear!


FISHERIES
Mr. Jacques Guilbault (Saint-Jacques):: Mr. Speaker, I should like to direct my question to the Prime Minister and get back to the issue of compensation for the victims of toxic mussels, particularly in light of negligence on the part of two Cabinet Ministers. We know that the first alarm was sounded four days late-on December 1-because lab tests results

December 16, 1987
Oral Questions
released on November 27 already indicated that mussels were toxic. The outcome of all this is that in excess of 100 people are sick and that a second victim has died today. And then the ban on seafoods, which covered perfectly good products including-through sheer blunder, I might add-such things as lobsters, shrimps and scallops, made fishermen, wholesalers, fish dealers and restaurant owners incur huge financial losses. I want to ask the Prime Minister whether he thinks it might be fair and equitable if his Government were to repair the damage it has done to the victims as a result of its own blunders and mistakes.


Arthur Jacob (Jake) Epp: Mr. Speaker, the Hon. Member's Leader stated the health priority in the House. I have stated the health priority. Now, the answer today is the same answer I have given every day as to the knowledge of the issue for this Minister, that the information came to me on November 30th and that the health alert went out on December 1. The Member cannot change the facts. The Member cannot put a different twist on the facts.


Mr. Gray (Windsor West):: The facts of your negligence.


Arthur Jacob (Jake) Epp: So to the Hon. Member I say that just today in his question he now used the word "seafood". That has not been the issue. Just analyse what you are saying. Analyse what you are doing to the industry. But, more importantly, analyse what you are doing to the health of Canadians. He cannot have it both ways.


Some Hon. Members:: Hear, hear!


CONSUMPTION OF TOXIC MUSSELS-QUERY WHY GOVERNMENT REFUSED JUST COMPENSATION FOR VICTIMS
Jacques Guilbault: Mr. Speaker, it is clear the Minister of National Health and Welfare does not intend to acknowledge his responsibility, nor does the Minister of Fisheries and Oceans. That is why I am directing my question to the Prime Minister, who in the final instance will have to decide about compensating the victims. Both ministers have behaved like bulls in a china shop, and today, the Prime Minister has to decide what to do next. Why is the Government refusing to pay fair compensation to people who became victims through the Government's fault?


Arthur Jacob (Jake) Epp: Mr. Speaker, as I have said so many times, the health issue will remain as the priority issue. There is a very clear plan in terms of how to restore the industry and to keep the health issue as the primary issue.
The Hon. Member will have to think of his words and his partisanship in relation to what he wants to do. Not only does he want to make the points about responsibility, he also wants to use his position in this House to raise-


Some Hon. Members:: Oh, oh!


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


INCOME TAX
Mr. Alan Redway (York East):: Mr. Speaker, my question is directed to the Minister of National Revenue. He is aware that financial contributions made to municipal political candidates are not deductible for income tax purposes.
However, according to a recent report, supporters of NDP municipal candidates in the city of Toronto have been making contributions to those candidates and receiving federal income tax receipts.


Some Hon. Members:: Shame!


Alan Redway: They have been doing it by funnelling the money through the federal New Democratic Party.


Some Hon. Members:: Oh, oh!


Alan Redway: Is this NDP tax rip-off legal and, if so, will the Minister immediately move to close this NDP tax loophole?


Some Hon. Members:: Hear, hear!


Hon. Elmer M. MacKay (Minister of National Revenue):: Mr. Speaker, I am sure this matter is of interest to all political Parties in this Chamber. I can assure my colleagues that our Department, pursuant to its responsibilities, will check into the amounts of the receipts and authenticate them.


Mr. Crosbie:: And prosecute.


Elmer MacIntosh MacKay: Insofar as the use or purpose to which the contributions are made is concerned, I think that is probably within the jurisdiction of Elections Canada.


Mr. Jelinek:: It is a question of morality.


Elmer MacIntosh MacKay: That process will be looked at very carefully. It is not in the interest of any of us in this Chamber that these political contributions which are, after all, a special form of tax deduction, should be abused or misused.


John Carnell Crosbie: You are tattle-tale grey, Ed.


An Hon. Member:: Honest Ed.
December 16, 1987


GENERAL AGREEMENT ON TARIFFS AND TRADE
Mr. Jim Fulton (Skeena):: Mr. Speaker, I hope the Tories do not run off with the shoe closet after the election.


An Hon. Member:: You can do better than that.


James Ross Fulton: My question is directed to the Minister of Fisheries and Oceans. On November 30 he received a letter from the British Columbia Minister of Fisheries, Mr. Savage, regarding the GATT panel ruling, which pointed out that the decision has serious implications for export controls and natural resource management. Mr. Savage said:
British Columbia also notes that any specific grandfathering of Provincial fishery practices impairs all those practices not specified. By grandfathering East Coast policies, the legal text could be interpreted as specifically disallowing existing West Coast policies which have a similar intent.
He concludes by saying:
Without such a solution the British Columbia government may find itself under considerable pressure to reassess its support for the Canada-U.S. agreement.
Will the Minister confirm that the Government of Canada will oppose the GATT ruling as the Minister stated on November 18 in this House?


Hon. Thomas Siddon (Minister of Fisheries and Oceans):: Mr. Speaker, I do not have the letter from the Hon. Mr. Savage in front of me. Indeed, as we have indicated in the House and as 1 have indicated to the British Columbia fishing industry, in the matter of regulations which we apply against the export of unprocessed salmon and herring, we intend to meet our obligations to our fishermen on the West Coast, to the processors, and to meet our obligations under the GATT. We intend to take all those factors into consideration in preparing for our case to be heard before the GATT council.


GOVERNMENT POSITION
James Ross Fulton: Mr. Speaker, yesterday the Minister of Fisheries and Oceans said that he could not recall the context in which he made a particular statement. He was asked what action he would take in relation to the GATT panel ruling, and the statement he made, as reported in Hansard at page 10922, is:
-we will be opposing that recommendation when it reaches the GATT council.
Is that or is that not the position of the Government of Canada, or was that not the Minister of Fisheries who was in this House on November 18?


Thomas Edward Siddon: Mr. Speaker, as I have indicated to members of the industry, including some of the Hon. Member's own constituents, we will be consulting with the processors, the unions and others, and preparing the Government's response to this GATT panel recommendation. I might add, it does not become a decision of GATT until the GATT council finally ratifies it.
Oral Questions


Howard Douglas McCurdy: Do you oppose it or not?


Thomas Edward Siddon: I, together with the fishing industry which 1 represent, certainly will be doing everything in my power to ensure that their interests are represented.


Mr. Rodriguez:: What do you think?


Thomas Edward Siddon: If the Hon. Member wants to interpret that as opposing, at this point I am certainly opposing anything that is not in the interests of our fishermen.


EXTERNAL AFFAIRS
Dave Nickerson: Mr. Speaker, my question is addressed to the Minister of State for External Relations. Has Canadian citizen Dick Laban been held in a Zimbabwe jail for several months without even a formal charge being laid? What is the Department doing to ensure that Mr. Laban is dealt with in accordance with fundamental justice in a country that does not have a very enviable human rights record?


Hon. Monique Landry (Minister for External Relations):: Mr. Speaker, we are aware of Mr. Laban's case. As the Hon. Member said, he is being held in Zimbabwe. He is being visited regularly by an officer from our High Commission. He is also visited by his family and friends who bring him books and food. He is in good health, is well treated, and has retained a lawyer. He is accused of having provided information to South Africa's intelligence service in 1984. A hearing was scheduled for December 8, and we are now waiting for news from our High Commission.


TOXIC MUSSELS-PLAN OF ACTION-REPRESENTATIONS REPORTEDLY MADE TO ONTARIO GOVERNMENT
Ms. Sheila Copps (Hamilton East):: Mr. Speaker, my question is directed to the Minister of National Health and Welfare. Throughout the situation dealing with the toxic mussels, the Minister today has insisted that last Friday he had "a very clear plan of action" to deal with the over-all ban.
If he had this very clear plan of action, can he explain why, after he had announced a ban on all shellfish from Atlantic Canada, his own officials were in touch with the Government of Ontario in an attempt to convince it to lift a ban on mussels

December 16, 1987
Oral Questions
outside of P.E.E and the Magdalen Islands? Can he explain why, in his clear plan of action, his own officials were trying to convince the Ontario Government to lift its own ban?


Arthur Jacob (Jake) Epp: Mr. Speaker, again the Hon. Member puts together positions, allegations which are not factual and which I did not say.
On Friday I put forward a ban. On the weekend of Saturday and Sunday the operation centre was put together. The plan that I put forward in the House today was developed during those days and the subsequent days this week.
For the Hon. Member to say that the plan was in place on Friday, again, as she has done day after day, it is simply false, and she insists on it, and she knows it, and she persists in it.


Some Hon. Members:: Hear, hear!


Arthur Jacob (Jake) Epp: What I am saying to her if in fact she checks the Ontario records, when she checks the Ontario records when the information went out on December 1 to the Ontario Health Ministry on that day, which is then the job of the Ontario Health Ministry to put that information forward into all health units, Ontario didn't do it, and it was my officials in the next days in Health Protection Branch who literally took those alerts and went into the Ontario units of health, because Ontario hadn't done it. For her to put those kinds of details forward and try and wrap them around in some kind of semblance of truth has gone too far.


Some Hon. Members:: Hear, hear!


ONTARIO BAN-MINISTER'S POSITION
Sheila Maureen Copps: Mr. Speaker, I suggest that when two people have died it is not the arena for applause.
I would like to ask the Minister to give us a very specific answer to a very specific question. Last Friday morning in the House he stated that within three minutes he had issued an allout alert on all shellfish in Atlantic Canada. Subsequent to that, his own officials in his own Department were in touch with officials from the Ministry of Health in Ontario trying to tell them it was okay to lift a wider ban on mussels outside of the mussels in P.E.I. and the Magdalen Islands.
I would like to ask the Minister how he can claim in the House today that he had a very clear plan of action last Friday, when on the one hand he was issuing an all-out ban on all shellfish, and on the other hand his own officials were trying to tell Ontario to lift their ban?


Arthur Jacob (Jake) Epp: Mr. Speaker, the Hon. Member has again stated the allegations as if they were fact.


Sheila Maureen Copps: They are fact.


Arthur Jacob (Jake) Epp: They are not fact.


Sheila Maureen Copps: They are absolute fact.


Arthur Jacob (Jake) Epp: They are not fact. What I said on the Friday was the ban. I did not say that there was a clear plan in place on Friday. For the Member to persist on that time after time is simply false, it's wrong, and it shouldn't be done in this House.


CANADA-U.S. FREE TRADE AGREEMENT-PROVINCIAL JURISDICTION
Mr. Rod Murphy (Churchill):: Mr. Speaker, my question is directed to the Prime Minister. His Minister has risen in the House and stated that the federal Government can sign treaties without the consent of the provinces.
Why is it that every year that I have gone to the International Labour Organization, the Canadian Government, whether it was the previous Liberal or the present Conservative Government, has always taken the position that it cannot sign treaties on the environment, on human rights, on women workers, and on occupational health and safety, because these are the jurisdiction of the provinces?


Right Hon. Brian Mulroney (Prime Minister):: Mr. Speaker, for just about 45 minutes I have been sitting here expecting the NDP or the Liberals to ask me a question about agriculture.


Some Hon. Members:: Hear, hear!


Martin Brian Mulroney: Mr. Speaker, it was either that, or the statement this morning by the Chairman of General Motors in Oshawa saying that the Free Trade Agreement is a great deal for Oshawa, a great deal for Ontario and the automotive industry.


Some Hon. Members:: Hear, hear!


Martin Brian Mulroney: What do I get? The NDP wants a legal opinion.
The Leader of the NDP has just heard from the distinguished Minister of Justice and Attorney General of Canada one of the finest legal opinions that this House will hear in a long time.


ILO COVENANTS-LEGAL POSITION OF GOVERNMENT
Rodney Edward Murphy: The Minister should be nervous after that endorsation by the Prime Minister considering past history.


Ramon John Hnatyshyn: The Prime Minister is always right.

December 16, 1987


Rodney Edward Murphy: We do want our Government to be saying the same thing all across this land and at international conferences.
What is the position of this Government? Does it have a right to implement International Labour Organization covenants, which it has always stated that it has not the right to do? Will it reverse its case time after time whenever it is convenient? What is the legal position of this Government?


Martin Brian Mulroney: Mr. Speaker, is the socialist Party arguing that the federal Parliament and the Government of Canada have the right to conclude international treaties, but are dispossessed of any rights in respect of their implementation? If my hon. friend is saying that, I want to tell him on behalf of Canadians-


Rodney Edward Murphy: That is what your Government has been saying.


John Edward Broadbent: That is what you have been saying in Geneva.


Martin Brian Mulroney: -and on behalf of this Government, and on behalf of the people in the Parliament of Canada that this Government and this Parliament speak for Canada, all Canada. This is what we have done, and this is what we will do.


Some Hon. Members:: Hear, hear!


Mr. Speaker:: In view of the time, I should advise that the Hon. Member for Glengarry-Prescott-Russell has indicated his co-operation in asking a single question, which will be followed by a question from the Hon. Member for Pembina.


John Carnell Crosbie: One too many.


CANADA LANDS COMPANY
Mr. Don Boudria (Glengarry-Prescott-Russell):: Mr. Speaker, I will ignore that remark from the Minister of Transport, and I will ask a question of the Minister of Public Works. It concerns the management and disposition of property by the Canada Lands Company at Mirabel, and I know that this is embarrassing for the Government.
Yesterday, in answer to my question concerning the deficiencies in a report of an internal audit by Louise St. Laurent, the Minister stated that there was no wrongdoing-


Some Hon. Members:: Oh, oh.


Mr. Speaker:: The Hon. Member for Glengarry-Prescott- Russell has the floor, and he is entitled to the usual courtesies.
Oral Questions


Don Boudria: Mr. Speaker, yesterday the Minister stated that there was no wrongdoing at Mirabel, and that everything at the Canada Lands Company at Mirabel was clean.
Does this mean that the Minister personally approves of a beer parlour receiving an untendered contract to do security surveillance of vacant lots at a cost of $42,000? Is this the Government's position?
If so, I would like to tell the Minister that it is small wonder that the people of Canada do not think much of the competence of this Government to run the affairs of the country.


Hon. Stewart Mclnnes (Minister of Public Works):: Mr. Speaker, I refer to the report of the Auditor General who made no adverse comment about any wrongdoing at Mirabel.
Let me refer to a portion of the report of the special audit division of Public Works Canada which states the following:
To achieve its mandate the new management of the Corporation followed management practices and controls examined during this review. In the areas of Land Sales and Agricultural Renewal a structured and controlled process was put in place in accordance with Treasury Board terms and conditions and regularly monitored by Central Agencies. The Corporation complied with the approved process and produced complete documentation in support of decisions and approvals.
I think that says it all, Mr. Speaker.


AGRICULTURE
Mr. Walter Van  De Walle@Pembina: Mr. Speaker, my question is directed to the Prime Minister.
Yesterday a very positive announcement was made with regard to the Special Grains Program. When will that Special Grains Program come into effect?


Martin Brian Mulroney: Mr. Speaker, I thank the Hon. Member for his surprise question. Yesterday I was honoured on behalf of the Government of Canada to announce a deficiency payment to grains producers in Canada of $1.1 billion, the largest-


Some Hon. Members:: Hear, hear!


Martin Brian Mulroney: In excess of some $800 million will be in the pockets of farmers by March 31, 1988. Among other things, a major series of initiatives was announced to render more secure the status of the Canadian farm, the family farm, and the plight of the Canadian farmer in a multitude of ways.
We announced initiatives yesterday which we think put the proper spotlight and the proper degree of attention on all Canadian farmers who do so much for the country.

December 16, 1987
Tabling of Documents
I am proud to say that in the three years since I have been Prime Minister and this Government has been here, direct aid to Canadian agriculture has increased by 400 per cent.


Some Hon. Members:: Hear, hear!



ROUTINE PROCEEDINGS


Pat Carney: Mr. Speaker, I have the pleasure today to table, in both official languages, the Memorandum of Understanding on Softwood Lumber, pursuant to Standing Order 67(2).


SOFTWOOD LUMBER
[Stage Direction]
15 PER CENT EXPORT CHARGE EXEMPTION
Pat Carney: Mr. Speaker, 1 am pleased to report that we have successfully renegotiated the Memorandum of Understanding on Softwood Lumber which was concluded a year ago with the United States. As a result, all softwood lumber products milled in five provinces-British Columbia, New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland, and representing close to 75 per cent of Canada's softwood lumber exports to the U.S.-will be exempt from the 15 per cent export charge.
Discussions are continuing with the U.S. on the value of Quebec replacement measures, and I am optimistic that we will be in a position to announce shortly a reduction in the export charge for softwood lumber milled in Quebec.
The Government of Saskatchewan has recently advised me of that province's interest in seeing the export charge eliminated for Saskatchewan producers on the basis of changes in Saskatchewan forest management policies.
Clearly we are well on the way to achieving the objectives which we set for ourselves a year ago to move away from this export charge.
Our key objectives in signing the Memorandum of Understanding last year were to retain in Canada revenues which would otherwise have gone into the U.S. Treasury and to protect the ability of the provinces to manage their resource. That is an important consideration.
Faced with the prospect of a countervailing duty imposed by the U.S., nine out of ten provinces and the IWA, the international woodworkers' union, fully supported the Government's
decision to seek a negotiated solution to the dispute with the U.S. over softwood lumber.
As a result of that agreement, approximately $335 million has already been remitted to the provinces. The provinces have been able to proceed with planned changes in forest management policies which would have been, for all practical purposes, precluded if the U.S. had imposed a punitive countervailing duty. I have today reminded the Governments of Ontario, Manitoba, and Alberta that we are prepared, as soon as each province is ready, to discuss with the U.S. the value of their replacement measures.
We were criticized for our decision to seek a negotiated solution to this dispute, and there were dire predictions from our critics that the export charge would result in shutdowns and lay-offs in the industry. Our critics were wrong.
A study issued November 20, 1987 by Dough Smyth of the IWA-Canada provides an authoritative assessment of the impact of the export charge on employment in the Canadian lumber industry. This study concludes:
The massive job losses which many Canadian observers believed would surely result from the imposition of the 15 per cent export tax on softwood lumber shipments to the United States during 1987 simply have not occurred.
Altogether 600 new jobs were added in British Columbia alone between January and September, 1987, according to the union's report.
The IWA study also shows that during the first eight months of 1987 Canadian lumber production exceeded comparable 1986 output by more than 5 per cent. After noting that the few sawmill closures announced throughout Canada during 1987 were caused by a number of factors, the study concludes:
In no instance that we know of can the export tax be directly blamed as the sole cause of the closure.
Over all the study concludes:
It is clear, therefore, that the dire predictions of declining profits, production cutbacks and sawmill job losses ranging from 5,000 to 20,000 positions during 1987 have simply not come to pass.
The main elements of the agreement which I am tabling today are as follows. First, the value of B.C. replacement measures constitute full replacement of the export charge on softwood lumber products milled in B.C. and exported to the U.S. after November 30, 1987. Termination of the export charge for lumber milled in British Columbia eliminates the unfair burden on lumber remanufacturers in that province. B.C. will be able to rebate to remanufacturers any export charge paid with respect to softwood lumber products shipped after October 31.
Second, effective January 1, 1988, all softwood lumber products milled in the four Atlantic provinces will be exempt from the export charge.
Third, lumber produced in Canada from logs harvested in the U.S. will also be exempt from the export charge subject to a ceiling of 365 million board feet per year. This will be of
December 16, 1987

particular benefit to a number of Quebec mills close to the U.S. border. That ceiling is roughly the amount of the volume of trade at the present time.
Fourth, additional further manufactured products will be exempted from the export charge with respect to the value added. This will be of particular benefit to mills in Alberta, Ontario, and Quebec.
Finally, all individual company exclusions will be terminated. As a result, the 20 companies which have enjoyed the benefits of this exclusion over the past year will now be competing in the U.S. market on the same basis as other softwood lumber producers in their respective provinces. As a practical matter, for most of the companies affected, the loss of their exclusion will be offset wholly or in part by the concessions we have gained.
In conclusion, I want to acknowledge the significant investment of time and effort on the part of my colleague, the Hon. Minister of State for Forestry and Mines (Mr. Merri-thew), and the Canadian Council of Forest Ministers concerning provincial replacement measures. Finally, I would like to make particular mention of the very close and effective working relationship with the Governments of British Columbia and Quebec during all the negotiations.


Some Hon. Members:: Hear, hear!


Lloyd Axworthy: Mr. Speaker, time after time in the House the Minister for International Trade (Miss Carney) has shown a remarkable facility of taking a disaster and describing it as a victory.
The fact of the matter is that the announcement today should bring absolutely no joy to the hearts of Canadians, because what she is not announcing in the elimination of an export tax is the application of a major new program of stumpage fees which will have significant negative consequences for the entire lumber industry, not just the softwood industry.
When the legislative committee on Bill C-37 held its hearings, the problem of replacing an export tax with a stumpage fee was made very clear. Our there in the forests in the interior of British Columbia and other places, it is impossible to distinguish which tree is going to be softwood lumber and which one is going to be used for other wood products such pulp and paper. There was no formula or equation announced in the Minister's statement to show that that is indeed the case. We have the problem that in the softwood lumber field itself there will be a new cost to Canadian consumers.


Pat Carney: This is good news, Lloyd.


Lloyd Axworthy: All Canadian consumers will now be paying higher lumber prices. That is consequence number one. All Canadian softwood lumber products in the building industry will now be higher priced. As we saw previously in the
Statements by Ministers
committee, that can add anywhere from S500 to $700 per house in new construction in this country.
Second, we will now, because of the stumpage fee, be adding additional costs to all our other exports, not just U.S. related exports, but all our other lumber related exports going to other countries. You cannot say that this tree is going to the United States and that one is going to Europe. The stumpage fee has across the board application and, therefore, we will be in a position where our own exports will be at a higher cost and in a less competitive position with others in the softwood lumber area.
Third, will the new stumpage formulae being brought in by the provinces apply only to those stands of timber used for softwood lumber or will they be applying to all wood products? There is no clarification in the Minister's statement to determine whether in fact the negotiation has resulted in some kind of complicated formula that will allow a distinction to be made between various kinds of lumber products. If that is the case, then the inflationary consequences, the cost-push consequences, will be enormous for the entire lumber industry.
When the Minister, in an attempt to dissemble in this House, says that we are eliminating the export tax, she does not provide any information on the other side of the equation about the additional cost to Canadian consumers, additional costs to our export markets and potentially additional costs to all other lumber products as a result of the raise in stumpage fees.
The Minister in her statement suggests that the imposition of the export tax in its original form and now the stumpage fee will have absolutely no impact on the softwood lumber industry. It is a mere irrelevant, small item that has no consequence whatever. She points to the fact that in the last six or seven months since the passage of the Act the market prices have stayed strong and employment up. There is no argument with that. But the Minister does not deal with the fact that the softwood lumber industry is a cyclical industry. It goes through boom and bust times.
What was clear in the evidence presented before the standing committee dealing with this matter was that it may be possible for the lumber industry to pass on these additional costs to consumers when there is strong market demand. But when that market turns down, as historically it will, because it has every time in the past, then the additional $700 million, $800 million, $900 million-close to a billion dollars-in additional costs imposed will provide an enormous drain on the cash flow of the industry and put many companies in a position where they will no longer be able to operate.
Let me give you an example of the changes already occurring as a consequence of the new regime that has been brought in as a result of the Government's action.
In an article dated October 17 in The Vancouver Sun various spokespersons for the British Columbia interior lumber industry point out that these are the changes in cost. If you

December 16, 1987
Statements by Ministers
combine the additional stumpage fee increases and the cancellation of the reforestation subsidies, which are not allowed as a result of the Memorandum of Agreement signed with the Americans, the cost of production which used to average around $5 a cubic metre, will now be in the range of anywhere from $50 to $80 a cubic metre. In Prince George the cost was $4 a cubic metre. It is now $80.75 a cubic metre. That is an incredible increase for the entire production of that major lumber producing area. Let us take a look at Cranbrook. Dealing in spruce the price goes from $5 to $50. In northern British Columbia, dealing in spruce, the price goes from $10 to $125 a cubic metre in additional input costs in that lumber area.
If the Minister for International Trade (Miss Carney) and her colleagues, especially her colleagues from British Columbia, are attempting to say that the lumber industry can absorb those kinds of costs in perpetuity, then they are whistling through their proverbial hats. When the market turns down they are condemning the industry to an additional cost of $10 to a $125 a cubic metre. That will be the death-knell for many a softwood lumber producer in that region. Will that change occur?
There is a kind of economic convulsion taking place in the United States today. All of a sudden the Americans are going through a major re-organization of their economic system which could be the foretaste of major chaos and which could bring major destruction to the lumber industry.
There is one other point concerning the substance of the Minister's statement. She says, as if this is a great achievement, that further manufactured products will be exempted. Manufactured products were never supposed to be in the agreement in the first place. They were caught there and they have been there for a whole year. All of a sudden the Government is making this announcement as though it were a great big deal, that products have been exempted.
This Memorandum of Agreement set in motion a very dangerous precedent. For the first time, Canada is agreeing that the kinds of programs we have in our resource industries are considered to be unfair trade practices. We have now accepted that in principle and that principle is becoming entrenched in the proposed trade agreement under Sections 408 and 409. All our resource industries will be prevented from applying the kinds of direct support and assistance necessary to keep many of them healthy.
This Memorandum of Agreement is only one further step against the resource industries of Canada perpetrated by this Government in the last few years.


Mr. John Parry (Kenora-Rainy River):: Mr. Speaker, in listening to the Hon. Minister's statement on the lifting of the softwood lumber export tax in certain circumstances I was reminded of the story of the person who was observed to be hitting his head against a brick wall. When asked why he was
doing such a thing he replied, because it feels so good when you stop.
I have to challenge the statement by the Minister that there have been no lay-offs resulting from the application of a year's duration of the softwood lumber export tax. The fact is-and the Minister's Parliamentary Secretary in this House had a list-that there have been several lay-offs and closures both of a permanent and temporary nature, and in all cases the imposition of the softwood lumber export tax was cited as a contributory factor; in most cases major, in some cases minor. I have also heard personally about this from operators of some mills. Several producers have closed.
It is true, nevertheless, that there has been an upturn in some sections of the industry and in some parts of the country. That is a reflection not of any inherent worth of this measure but simply of the cyclical upturn in the softwood lumber industry and the strong domestic market. Although we have been accused of being doomsayers, none of us was hoping for unemployment to result. Fortunately, it has enabled the industry in many parts of the nation to ride through the imposition of this measure. That is a reflection, as I said, of the cyclical nature of the industry. Just as the boom must end, so surely the downturn will unfortunately begin and detract many of those who have had to pay this tax.
The announcement is welcome in the Maritimes-
[ Translation]
-And would also be welcome for mussels that are near the border between the United States and the Province of Quebec.

But let us not be deceived. The impact in the Province of British Columbia of this measure has been cataclysmic. Industry sources estimate up to a 600 per cent increase in management and cutting costs as a result of the softwood lumber export tax, because of the measures introduced to replace that tax and to satisfy the American industry lobby. The Council of Forest Industries recognizes a 250 per cent forest-wide cost increase in wood acquisition.
The Hon. Minister and the Premier of British Columbia are playing whip-saw with this industry. Their approach failed. They got into a blind auction with the Americans. Their first offer on this tax was 10 per cent and their final offer was 15 per cent. It is not only a failure but essentially a cession of sovereignty within the context of Canada's independence.
The Government failed to consult adequately with the industry and, completely sub rosa, ceded a constitutional power from the provinces to the U.S. Trade Department.

A dangerous precedent, Mr. Speaker, and the present Memorandum of Understanding does nothing to deny this concession.
December 16, 1987



In the United States, that tax was seen as part of the softening up process, the process widely remarked on by American commentators, whereby the United States established its expectation and its intention of hegemony in the free trade agreement. A sophisticated lobby was able to manipulate public and legislative opinion, not only within the United States but within Canada, to the ultimate advantage of the American economy.
Those fee increases which have now been introduced to justify the removal of the softwood lumber export tax will of course affect the competitiveness and prices of all lumber products to all Canadians. Let us not be deceived into believing that softwood lumber is the only component of the product mix the bounty of our forests yields us. From the railway tie to the toothpick, all markets will be affected. All Canadian consumers will pay higher prices because of these ill-counselled, hasty and peremptory measures the Government is now withdrawing.
American sales into the Canadian market have had their effect and may continue to have their effect. The 25 per cent of our industry that is still affected will, as will the sectors that are now unaffected, continue to feel the damage of the Minister's concessionary and ill-prepared negotiating approach in this agreement as in the other agreement.
*	* J*


INTERPARLIAMENTARY DELEGATION
Mr. Marcel Danis (Vercheres):: Mr. Speaker, pursuant to Standing Order 101, I have the honour of tabling, in both official languages, the Parliamentary delegation's report on its official visit to Mexico.


CORPORATIONS AND LABOUR UNIONS RETURNS ACT
Mrs. Jennifer Cossitt (Leeds-Grenville):: Mr. Speaker, as Chairman of the Legislative Committee on Bill C-91, an Act to amend the Corporations and Labour Unions Returns Act, I have the honour to present the Bill to the House without amendment.
Introduction of Bills EXCISE TAX ACT


MEASURE TO AMEND
Hon. Tom Hockin (for Mr. Wilson (Etobicoke Centre)) moved: for leave to introduce Bill C-101, an Act to amend the Excise Tax 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.
Mr. Lewis:: Mr. Speaker, I would like to take this opportunity to thank the two opposition Parties for their courtesy. There have been discussions and 1 think you would find that there would be unanimous consent in the House to send the Bill to Committee of the Whole House on the understanding that it would be dealt with as the first order of Government business. There is also an understanding among the Parties that the item would be completed in all stages by 4.30 this afternoon.


Herbert Eser (Herb) Gray: Mr. Speaker, what the government House Leader just said does reflect the understanding of our Party on the matter. I would like to make a suggestion. If by some chance we complete consideration of the Bill through all stages before 4.30 and the person who had the floor in debate on the trade motion, the official spokesman for the NDP, is not present, perhaps we could suspend the sitting of the House until the Minister of Finance (Mr. Wilson) is ready to give his statement on tax reform at 4.30.


Douglas Grinslade Lewis: Agreed.


Nelson Andrew Riis: Mr. Speaker, indeed there have been discussions between the Parties. However, recognizing the contents of the Bill before us and the fact that it does a number of things other than simply extend the date for the fuel tax exemption, but in fact results in some increases, I suspect that there will be adequate debate to fill the time until 4.30.


Mr. Speaker:: I take it that there is agreement with the suggestion put forward by the Minister of State (Mr. Lewis) and it will be so ordered. I also take it that if the Bill should happen to be completed before 4.30, the Hon. Member for Kamloops-Shuswap (Mr. Riis) would have no objection to the Chair adjourning until 4.30 to go along with the suggestion which has been extended as a matter of courtesy by the other two House Leaders to his own Party.

December 16, 1987
Petitions


WESTERN ARCTIC (INUVIALUIT) CLAIMS SETTLEMENT ACT MEASURE TO AMEND
[Stage Direction]


Hon. Bill McKnight (Minister of Indian Affairs and Northern Development) moved: for leave to introduce Bill C-102, an Act to amend the Western Arctic (Inuviaiuit) Claims Settlement 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.
Audrey Marlene McLaughlin: Mr. Speaker, it is my honour and duty to present petitions which have been signed by residents of Whitehorse, Elsa, Mayo, and Dawson City, Yukon, who wish to register their extreme concern, based on the potential environmental hazards and threat to security and safety not only of northern Canadians but of all Canadians, with the proposed plutonium flights over the North.
These petitioners call upon the Government of Canada to say no to these flights, in the interests not only of northern Canadians but of all Canadians.



CANADA PORTS CORPORATION ACT


Mr. Andre Harvey (Chicoutimi) moved: for leave to introduce Bill C-276, an Act to amend the Canada Ports Corporation Act (port Saguenay de Ville de la Baie).


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


Some Hon. Members:: Agreed.


André Harvey: Mr. Speaker, thank you for giving me this opportunity to table the Bill to amend the Canada Ports Corporation Act. The purpose of this Bill is simply to change the name of the port of Chicoutimi to port Saguenay de Ville de la Baie.
Mr. Speaker, this name change reflects a regional need, and I am therefore particularly pleased to table this Bill this afternoon.


Mr. Speaker:: Is it the pleasure of the House to adopt the motion?


Some Hon. Members:: Agreed.


[Stage Direction]
Motion agreed to, Bill read the first time and ordered to be printed.)
Mr. Speaker:: When shall the Bill be read the second time? At the next sitting of the House?


Some Hon. Members:: Agreed.



PROPOSED FREE TRADE

Mr. Dan Heap (Spadina):: Mr. Speaker, it is my honour and duty to present a petition from a number of residents of Canada who are concerned that the recent agreement negotiated between the Prime Minister of Canada (Mr. Mulroney) and the President of the United States has no mandate in the last election or since from the Canadian people and will seriously erode and undermine the sovereignty of Canada and hinder Canada in planning and determining its own economic future. They believe that it fails to win for Canada the secure access to the United States market which was promised as the key objective and, in fact, endangers hundreds of thousands of jobs.
Therefore, the undersigned, your petitioners, humbly pray and call upon Parliament to dissolve and allow the people of Canada the opportunity to accept or reject the proposed free trade agreement during a national general election.



OPPOSITION TO PROPOSED TAX REFORM

Abram Ernest Epp: Mr. Speaker, I have two petitions to present. The first is from citizens of the City of Thunder Bay who note that the federal Government's White Paper calls for changes to the taxation structure of Canada. The proposals do not, however, change an already unfair tax structure for average Canadian families; those wealthy Canadians earning over $100,000 a year who do not pay their fair share will in fact receive a tax cut under the proposal, and 60,000 profitable corporations are likely to pay no income tax at all.
The petitioners protest the failure to restore full indexation to the personal tax system and call upon Parliament to reject these tax changes and to restore full indexation to the personal tax system.



PROPOSED FREE TRADE

Abram Ernest Epp: Mr. Speaker, the second petition is also from residents of the City of Thunder

December 16, 1987

Bay who point out that the Conservative Government had no mandate from the Canadian people to conclude a free trade agreement with the United States.
They say that the Prime Minister (Mr. Mulroney) promised, in the course of the bilateral trade negotiations, that Canadian sovereignty would not be compromised but that in fact the agreement negotiated threatens the very fabric of Canadian political and economic sovereignty by removing the power of the Canadian Government to control effectively foreign ownership, to develop Canadian energy resources in the best interests of Canadians, and to equalize opportunities between the regions.
They say that this agreement would in fact deny Canadians the policy freedom to determine our own economic future.
The petitioners call upon Parliament to dissolve and allow the people of Canada the opportunity to accept or reject the proposed free trade agreement during a national general election.


John R. Rodriguez: Mr. Speaker, I have the privilege, honour, and responsibility to present a petition signed by residents of R.R. 1, Blenheim; R.R. 1, Chatham; Windsor, and Timmins, Ontario. These petitioners are putting forward the proposition that the Government had no mandate from the Canadian people to conclude a free trade agreement with the United States.
They further point out that the Prime Minister (Mr. Mulroney) promised, in the course of the bilateral trade negotiations, that Canadian sovereignty would not be compromised.
In view of the fact that the proposed trade agreement not only denies Canadians the secure access to U.S. markets which was the key objective in these negotiations, but indeed threatens the loss of hundreds of thousands of Canadian jobs, these petitioners humbly pray and call upon Parliament to dissolve and allow the people of Canada the opportunity to accept or reject the proposed free trade agreement during a national general election.


Mr. Jim Manly (Cowichan-Malahat-The Islands):: Mr. Speaker, I have petitions here from a number of Canadians concerned about the trade arrangement that has been made between the Government and the United States.
They point out that the Government had no mandate for such, that the Prime Minister (Mr. Mulroney) promised that Canadian sovereignty would not be compromised but that the trade agreement threatens the very fabric of Canadian political and economic sovereignty, and that it not only denies Canadians secure access to the U.S. market which was the key objective in these negotiations but threatens the loss of hundreds and thousands of Canadian jobs.
Therefore, the petitioners humbly pray and call upon Parliament to dissolve and allow the people of Canada the
Petitions
opportunity to accept or reject the proposed free trade agreement during a national general election.


Mr. Steven W. Langdon (Essex-Windsor):: Mr. Speaker, I, like my colleagues, have a petition from a number of residents of Canada who have called upon Parliament assembled, indicating that in their view the Conservative Party has no mandate to conclude a free trade agreement, that such an agreement as has been signed threatens elements of Canadian control over our destiny, denies Canada the ability to build a society distinct from that of the United States, and threatens the loss of hundreds of thousands of Canadian jobs.
In addition, there is not-


Mr. Speaker:: I hesitate to interrupt when any Member is presenting a petition. However, the Hon. Member will know, as will all Hon. Members, that the presentation of a petition can be accompanied by words describing the petition and from where it comes, but I think the Hon. Member is getting well into the field of argument now. I will have an application from someone wanting to comment and that will take up a lot of time. I would ask the Hon. Member to close off his remarks.


Steven W. Langdon: Thank you, Mr. Speaker. In fact, I was quoting from the petition, which concludes with a call from the petitioners for Parliament to dissolve to allow the people of Canada the opportunity to accept or reject the proposed free trade agreement. This petition has been signed by people from Nipigon, Red Rock and Thunder Bay as well as from other parts of northern Ontario.


Mr. Iain Angus (Thunder Bay-Atikokan):: Mr. Speaker, I, too have a petition to present, it is signed by people from all across the Province of Ontario; from Fort Francis and Kenora in the northwest, to Welland, Burlington, Hamilton and Guelph in the south. It is signed as well by people from Geraldton, Red Lake, Atikokan, and Thunder Bay.
These petitioners call upon Parliament to dissolve and allow the people of Canada the opportunity to accept or reject the proposed free trade agreement during a national general election.


Ms. Marion Dewar (Hamilton Mountain):: Mr. Speaker, I have the privilege and responsibility to file a petition signed by people from Thunder Bay, Dorion, and Nipigon.
These people say that the Prime Minister (Mr. Mulroney) promised in the course of the bilateral trade negotiations that Canadian sovereignty would not be compromised, and that the trade agreement negotiated by the Government threatens the very fabric of Canadian political and economic sovereignty by removing the power of the Canadian Government to control effectively foreign ownership, to develop Canadian energy resources in the best interests of Canadians, and to equalize opportunities between the regions.
Therefore, the undersigned, your petitioners, humbly pray and call upon Parliament to dissolve and to allow the people of

December 16, 1987
Order Paper Questions
Canada the opportunity to accept or reject the proposed free trade agreement during a national general election.


Rodney Edward Murphy: Mr. Speaker, again I have the honour to present a petition signed by Canadians who express their concern with the Government's trade agreement.
They believe it would deny Canada the policy freedom to determine its own economic future and would undermine our ability to build a society distinct from that of the United States.
They also believe that the proposed trade agreement not only denies Canadians secure access to the U.S. market, which was the key objective in these negotiations, but also threatens the loss of hundreds and thousands of Canadian jobs.
Therefore, your petitioners humbly pray and call upon Parliament to dissolve and allow the people of Canada the opportunity to accept or reject the proposed free trade agreement during a national general election.


Nelson Andrew Riis: Mr. Speaker, pursuant to Standing Order 106, I have the honour to present a petition on behalf of a number of westerners who indicate that the Prime Minister (Mr. Mulroney) promised in the course of the bilateral trade negotiations that Canadian sovereignty would not be compromised.
They believe that the trade agreement negotiated by the Government threatens the very fabric of Canadian political and economic sovereignty by removing the power of the Canadian Government to effectively control foreign ownership, to develop Canadian energy resources in the best interests of Canadians, and to equalize opportunity between the regions.
Therefore, they call upon Parliament to dissolve now and allow the people of Canada the opportunity to accept or reject the proposed free trade agreement during a national general election.



OPPOSITION TO TAX ON FOOD

Don Boudria: Pursuant to Standing Order 106, I welcome this opportunity to table in the House a petition asking the federal Government to refrain from putting a tax on food. Mr. Speaker, I realize that the Government has finally decided to take the advice of the Official Opposition and refrain from imposing this tax. And I also want to take this opportunity to mention that 385 petitioners were also instrumental in persuading the Government not to take such a regressive measure.



REQUEST FOR NECESSARY GOVERNMENT ACTION TO INCREASE HOUSING FOR THE NEEDY

Don Boudria: Mr. Speaker, I have another petition which informs us that over
100,000	people are homeless and asks Parliament to act now to
take the necessary measures so that Canadians in substandard housing will be given adequate accommodation. This petition is signed by 105 petitioners.



SITUATION IN HAITI-DEMANDS OF HAITIAN COMMUNITY

['I have the honour to inform the House that a message has been received from the Senate informing this House that the Senate has passed Bill C-95, an Act for granting to Her Majesty certain sums of money for the Government of Canada for the financial year ending the 31st March, 1988.']
Hon. Suzanne Blais-Grenier (Rosemont):: Mr. Speaker, pursuant to Standing Order 106, I present a petition on behalf of 4,000-odd people of Canada's Haitian community. Your petitioners humbly request:
That the regime of General Namphy in Haiti be denounced because it is made up of former Duvalier supporters, some of whom are now on trial;
That the Canadian Parliament firmly denounce the so-called democratic approach of this regime since it took over;
That Canadian assistance, earmarked mostly for salaries paid to Canadian volunteers and for project administration expenditures, be suspended until such time as the interim electoral council, whose members have been dismissed by General Namphy, has been reinstated; and
That the Prime Minister urge the United Nations to launch an inquiry into the repeated breaches against human and democratic rights which were witnessed on November 29 and the following days and which are still going on.
The petition of the Haitian people will continue to circulate and gather public support until the disappearance of the Haiti dictatorship and the end of the massacre of these people.



[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. Jim Hawkes (Parliamentary Secretary to Deputy Prime Minister and President of the Privy Council):: Mr. Speaker, it is with a great deal of pleasure that we answer Question No. 208 today. It was the subject of some discussion last week and 1 am pleased to see that the Minister of Energy, Mines and Resources (Mr. Masse) has followed through upon his return to the House.


Mr. Boudria: 1.	Since September 17, 1987, did any cabinet Minister utilize the Petro-Canada jet and, if so (a) on how many occasions (6) what was the name of the cabinet Minister (c) in each case, what was the (i) date (ii) destination (iii) cost (iv) purpose of each trip?
2.	Did any person accompany the Minister and, if so, what was the (a) name (b) occupation (c) purpose of travelling of each person?
December 16, 1987


Jack Wendele Shields: In so far as the Minister of Energy, Mines and Resources is concerned:
1.	Yes. (a) Three occasions.
(b) & (c) 1. Hon. John C. Crosbie. (i) September 20, 1987, (ii) Prince Rupert-Ottawa, (iii) equivalent commercial rates for chartered craft-$4,000, (iv) government business.
2.	Hon. Marcel Masse, (i) September 27 and 28, 1987, (ii) Quebec City-Calgary, Calgary-Ottawa, (iii) equivalent commercial rates for chartered craft-$7,500, (iv) government business.
3.	Hon. Marcel Masse, (i) October 10 and 12, 1987, (ii) Quebec City-Chicago, Chicago-Ottawa, (iii) equivalent commercial rates for chartered craft-$4,500, (iv) government business.
2.	Hon. John Crosbie-Information not available. Hon. Marcel Masse-Yes.
September 27 and 28, 1987 (a) & (b) Daniel Carrier,
Executive Assistant to the Minister.
Bob Evans,
Press Secretary.
(c) Government business.
October 10 and 12, 1987
(a) & (b) Daniel Carrier,
Executive Assistant to the Minister.
Bob Evans,
Press Secretary.
Penny Gotzaman,
(public servant),
Policy Advisor.
Mrs. Masse,
Minister's wife.
(c) Government business except for Mrs. Masse, who was officially invited by the American Gas Association to accompany the Minister.


Frederick James (Jim) Hawkes: I ask that the remaining questions be allowed to stand.


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


Some Hon. Members:: Agreed.
Excise Tax Act


Frederick James (Jim) Hawkes: Mr. Speaker, I ask that all notices of motions for the production of papers be allowed to stand.


Mr. Speaker:: Is that agreed?


Some Hon. Members:: Agreed.


Mr. Speaker:: I have the honour to inform the House that a message has been received from the Senate informing this House that the Senate has passed Bill C-95, an Act for granting to Her Majesty certain sums of money for the Government of Canada for the financial year ending the 31st March, 1988.



GOVERNMENT ORDERS


Thomas Hockin: that Bill C-101, an Act to amend the Excise Tax Act, be read the second time and, by unanimous consent, referred to the Committee of the Whole.
He said: Mr. Speaker, I have some very brief comments to make pursuant to the agreement the House Leaders made earlier this day with regard to this Bill. I would like to make a few comments, however brief, because it is an important Bill.
The main purpose of this Bill is to extend the fuel tax rebate program for primary producers for two years to December 31, 1989. The Bill will also implement other proposals relating to the excise taxes on motive fuels announced by the Minister of Finance (Mr. Wilson) in his Budget Speech on February 18, 1987. These include the one-cent per litre increase in the excise taxes on motive fuels and an equivalent increase in the fuel tax rebates payable to primary producers to offset the tax increase.

The fuel tax rebate program provides for a refund of taxes paid by primary producers on fuel bought for their production operations. Farmers get a full refund of the federal and excise taxes they pay on this kind of fuel. Federal sales taxes are paid back to other primary producers-fishermen, forest resources operators, hunters and trappers, to name some. In addition, all

December 16, 1987
Excise Tax Act
primary producers are also eligible for a 1.5-cent-a-litre refund of excise taxes on motive fuels.

The program was introduced in the fall of 1984 in response to financial difficulties being experienced by primary producers. We remember that time. It is a temporary program that was designed to provide short-term assistance. The program expires on December 31 of this year.
The economic situation has improved for many of our primary producers since this program was introduced. The farming sector, however, continues to experience very serious difficulty. This was, of course, recognized by the announcements made by the Prime Minister (Mr. Mulroney) yesterday. Farmers in the grains and oilseeds sectors have been hit particularly hard in recent years. The devastating effects of the international subsidy war make additional assistance imperative. All of us who follow the subsidy war know that this is continuing from our major trading competitors.
In response to this serious problem, and to provide additional assistance to all primary producers, the Prime Minister announced yesterday at the Agricultural Outlook Conference that the fuel tax rebate program would be extended to December 31, 1989. This extension will provide $200 million each year to the farming sector, $110 million of that to grain farmers as part of the grains assistance program. The total benefit from the two-year extension of this particular program for all primary producers will be $500 million.
This initiative also responds to the recommendation of the Standing Committee on Agriculture that the fuel tax rebate program be extended.
The one-cent per litre increase in the excise taxes on motive fuels was part of a limited number of tax increases announced in the February Budget to maintain an acceptable rate of progress towards the Government's medium-term deficit reduction goals, which are proceeding on course. The fuel tax rebates to farmers and other primary producers are being increased by an equivalent amount. Since the rebates to farmers are currently equal to the taxes imposed, it would be inappropriate to propose any further increases in the level of these rebates without implementing the tax increases on which the higher rebates are based.
This program is an expenditure program. No payments can be made in respect of fuels purchased in 1988 until after the legislation receives Royal Assent. In order to ensure that rebates can continue to be paid to farmers and other primary producers in respect of fuels purchased after December 31, 1987, it is imperative that this legislation receive Royal Assent before the end of this year.
I am certain that Hon. Members appreciate the importance of this program. The time remaining is very short and I ask their assistance in giving quick consideration to this Bill. This
will ensure that primary producers and, in particular, Canadian farmers, will continue to receive fuel tax rebates in respect of fuels purchased in the new year.


Herbert Eser (Herb) Gray: Mr. Speaker, we are dealing with a Bill intended to extend the rebate program for groups such as farmers, loggers, fishermen, miners, hunters and trappers for two years, to December 31, 1989. However, that is only one part of the Bill.
The other part of the Bill is to increase the rates of excise tax on gasoline, aviation gasoline, diesel fuel and aviation fuel by one cent per litre, effective last February 19, 1987, the date of the last budget. This would bring about a total annual increase in revenue from this excise tax of approximately $450 million.
The net increase in revenue to the federal treasury as a result of this legislation will be $200 million. That is $450 million produced by this increase in excise tax, less the $250 million for the fuel tax rebate. In other words, the Government is asking us to agree to an increase in excise tax not simply to equal the additional cost of extending the rebate program for another two years, but to also carry out what amounts to a hidden and unjustified tax grab from the Canadian people of another $200 million.
The position of our Party is certainly to support the measures to extend the fuel tax rebate program for farmers, loggers, fishermen, miners, hunters and trappers to December 31, 1989, but I do not see how Canadians would expect us to support the one-cent increase in gasoline excise taxes, because this would certainly further hit the hard-pressed Canadian taxpayer, not simply to match the additional cost of the rebate, but to produce another $200 million for the federal treasury.
This additional tax grab has negative effects on many sectors of the economy. Furthermore, this measure cannot be judged in isolation. One must also examine the other increases in indirect taxes introduced by the Conservative Government.
Let us consider the Conservative record when it comes to increases in indirect taxes, that is to say, sales and excise taxes. First, let us look at gasoline and associated products. There was the first increase of two cents per litre on gas, effective September, 1985, with an annual cost of $900 million. There was a second increase of one cent per litre on gasoline, effective January, 1987, with an annual cost of $450 million. There was a third increase of one cent per litre on gasoline effective February, 1987, with an annual cost of $450 million. There is equalization of sales tax on unleaded and leaded gas, effective 1987, with an annual cost of $30 million.
There are other increases in sales taxes. There was the first increase of one per cent in sales tax in 1984, with an annual cost of $1 billion. There was a second increase of one per cent in sales tax, effective January 1, 1986, for another annual cost of $1 billion. There was a third increase of one per cent in sales tax, effective April 1, 1986, for a further annual cost of $1 billion.
December 16, 1987

There was the extension of the sales tax on candy, soft drinks and even pet food, which went into effect in 1985, for an annual cost of $400 million. There was the extension of sales tax on snack foods, coming into effect in 1987, for a further annual cost of $60 million. There is the increase in air transport tax, coming into effect in 1987, for an annual cost of $45 million.
There is the proposed 10 per cent tax on all long distance calls and business telephones, and the increase in cable television tax, coming into effect in 1988, for a further annual cost of $945 million. There is the proposed increase in sales tax on paint, wallpaper and toys, coming into effect in 1988, for an annual cost of $370 million.
I have added this up quickly, and it means that the Conservative Government has imposed an additional tax burden of some $6.65 billion in the few short years since it came into office.
Furthermore, we are talking about an annual increase. This burden goes on and on, on the shoulders of the hard-pressed Canadian taxpayer, especially the lower income taxpayer who bears the heaviest burden of sales and excise taxes.
These are unfair, regressive taxes that do not hurt the wealthy friends of the Conservative Party but particularly hurt middle and lower income Canadians.
These increases are only part of the additional burden placed on ordinary Canadians by this heartless Conservative Government. There are also increases in personal income taxes which have added hundreds of dollars and more to the annual tax burden of middle and lower income Canadians.
Later today the Minister of Finance (Mr. Wilson) will give a statement indicating the Government's final answer to what it laughingly calls tax reform. In that regard, we will find that any reductions that the Government will promise will do nothing more than give back some of the hundreds of millions of dollars improperly taken out of the pockets of middle and lower income Canadians since it came into office. It will not be giving back all of what it has taken. It will not even restore Canadians to where they were in 1984.
While I certainly support the extension of the rebate for farmers, fishermen and the other groups which I have mentioned, we must put on the record what is really happening here. It is not just an extension of the rebate, it is also another hidden tax grab, added to the tax grab of billions of dollars imposed on middle and lower income Canadians in the short years since the Tory Government came into office. I want to put this on the record so that Canadians will very much remember what the Tory Government has done to their pocketbooks when they come to vote. I am sure it will not be long before they have the opportunity to vote and I am sure they will turn out of office the heartless Conservative Government.
Excise Tax Act


Mr. Stan J. Hovdebo (Prince Albert):: Mr. Speaker, it is always somewhat dangerous to accept a Bill for passage through all stages without seeing the text of the Bill. This is a Bill where there is that danger.
Bill C-101 does two things. It extends the rebate to people who are primary producers across the country from December 31, 1987 for the next two years. It also increases the tax on fuel by one cent per litre on February 19, 1987. In fact, we have been paying that for some time. It is something to consider that without too much trouble we can collect from the people of the country without passing a Bill in Parliament, but we cannot pay out to the people of the country without passing a Bill. Therefore, at the eleventh hour, we are asked to pass a Bill, which it is necessary to pass, because without it the primary producers who purchase fuel after January 1, 1988 would not be able to get part of the rebate for which they are being considered. Consequently, it is a little dangerous to tell the Government that we will pass something, because what we get in the end is not necessarily what we are told we will get.
Since February 19, 1987 all people across the country have been paying an extra cent per litre on fuel. That is authorized or ratified by this particular Bill. Since that is already in place, it behooves us to pass this Bill, rather than to stop it from going through quickly. But I do point out the danger of accepting a Bill without having the text in its entirety.
In the presentation made yesterday by the Prime Minister (Mr. Mulroney) and the Minister of Agriculture (Mr. Wise) before the Agricultural Outlook Conference, we were told that this rebate would be 9 cents per litre for gasoline, and 7.5 cents per litre for diesel fuel. This is a welcome amount, particularly for the farmers and, I am sure, for the hunters, the loggers, the trappers, and the fishermen.
It is interesting to note that this is part of an agricultural package which is a little confusing. The $1.1 billion going into the special grains payments and deficiency payments is recognized and appreciated. It is also recognized that in a couple of areas the Government did bite the bullet and pay back, or at least cut off the responsibility for the Western Grain Stabilization fund. That was $750 million that it would eventually find itself picking up, and it may as well be done now.
The other points were spread over two or three years, and consequently had to be divided by two or three. The net result is a rather confusing suggestion that the farmers were getting a lot more in this package than they will get in the next fiscal year. If you read the headlines, Mr. Speaker, you will see how confusing it was. No two reporters picked out the same things. Consequently there is a variety of reports on what was actually proposed yesterday by the Prime Minister and the Minister of Agriculture for farmers.
I appreciate the fact that it is worthwhile to pass quickly a Bill which allows for the increase of taxes and the ability for

December 16, 1987
Excise Tax Act
farmers and other primary producers to collect the rebate of 4 cents and 3 cents per litre on the fuel that they buy. We have to recognize that the Government is not rebating the entire amount of excise tax. If one looks at the Bill carefully, it will be found that the present tax on gasoline will be 5 cents per litre, and the tax on diesel will be 4 cents per litre. What we are being told is that the Government will rebate 4 cents per litre in 1989, and 3 cents per litre in 1988.
In order to have this rebate program in place on January 1, 1988, we have agreed to allow this Bill to go through the House today.


Hon. William Rompkey (Grand Falls-White Bay- Labrador):: Mr. Speaker, I would like to make a few comments. Because it is Christmas, it might be appropriate to refer to The Bible where it states, "The Lord giveth and the Lord taketh away". It goes on to say, "Blessed be the name of the Lord". In this case the Government is giving and the Government is taking away. Canadians, particularly those who live in northern and rural areas will say, "cursed be the name of the Government", because, as my colleague from Windsor has pointed out, the Bill gives to primary producers, but it certainly takes away more than it gives. It extends the tax rebate for two years to farmers, loggers, fishermen, miners, hunters, and trappers, and it puts into their pockets S250 million. But it will take out of the pockets of Canadians generally S450 million in the rates of excise tax on gasoline, aviation fuel and gas, and diesel fuel. That will be increased by 1 per cent.
The net effect is that although farmers and fishermen and primary producers, many of whom live in northern and rural areas, will pay less for the gasoline that they use in their work, they will pay more for everything else. For example, a placer miner in the Yukon has to fly in and out. He has to fly on an aircraft, and fuel is going up. Moreover, the Government still has a tax that he has to pay at the airport, but I will not get into that. Everything that the miner buys has to come in by air. The cost of that transportation is going up. The cost to the man who produces the tools that the miner uses, and the nets, the boats, and the engines that the fishermen use, will all go up because the fuel that is used by industry will be increased in price.
On the one hand, while it appears that the Government has made a magnanimous gesture toward primary producers, that is, farmers, loggers, fishermen, and so on, particularly those people who live in northern, rural, and remote parts, because they have to pay more for their materials and the transportation of those materials they will be in a net deficit position.
I could go on and talk particularly about fishermen who have not been helped by the actions the Government has taken. It is important to point out in the context of this debate that although on the surface this appears to be a gesture aimed at improving the lot of farmers and fishermen, there is no net gain. As a matter of fact, there is a net loss on the part of those primary producers.


Mrs. Sheila Finestone (Mount Royal):: Mr. Speaker, I would like to follow up on the remarks made by my hon. colleagues. This particular Bill reminds me of many of the Bills that we have been faced with in this House that say one thing and basically do another. Bill C-101 is the extension of a fuel tax rebate program that was first introduced in October, 1984. This rebate program is to be extended for farmers, loggers, fishermen, miners, hunters, and trappers to December 31, 1989. It is a rebate to primary producers for an additional two years. It looks and sounds good, but it will affect only one part of the day in the life of a farmer, logger, fisherman, miner, hunter, or trapper.
The rebate of the excise tax imposed on gasoline and diesel fuels sold to or imported by these various sectors for purchases between January 1, 1987 to December 31, 1987 will be 3 cents per litre, and for purchases between January 1, 1988 to December 31, 1989, it will be cents per litre. The total annual cost of the rebate program is estimated to be $250 million. This sounds very kind, very generous, and very wonderful. I am sure that government Members will be thrilled with themselves.
On the other hand, why does the Government not look at the second part of the Bill? The increase in tax on fuel of one cent per litre is already in effect, look at the impact of that tax on the daily lives of everyone, and government Members might not be so quick to vaunt and be so proud of what it has undertaken to do.
I see the Hon. Minister giggling and laughing across the way. It is no laughing matter for the person who pays for it out of his or her pocket.
We do not support the one cent increase in the gasoline excise tax which has been in effect, by the way, since February 19 of this year. Further, it has hit hardest at low and middle-income Canadian families. The increase has had a negative effect upon many sectors of the economy.
If we are to take a look at the impact, we should not do it in isolation. If we put the increases all together, they amount to $6,650 million, and that is only the sales tax section. It does not even include what the Conservatives have done in the area of personal income tax, what they have dug out of the pockets of every good Canadian close to $22 billion. I think such a tax grab it is totally unconscionable.
I should like to put on record what the Conservatives have taken from the pockets of Canadians in the area of sales tax. They should be ashamed of their tax record. It is actually an unbelievable gesture. Referring to the Conservative tax record, in terms of gasoline and associated products the annual cost was $900 million. The first increase of two cents per litre on gas was effective in September, 1985. The second increase of one cent per litre on gas, effective January, 1987, amounted to $450 million. The third increase of one cent per litre on gas, effective February, 1987, amounted to $450 million. We must
December 16, 1987

look at those amounts, along with the equalization of sales tax on unleaded and leaded gasoline which amounts to an additional $30 million. We know that Canadians need to use their cars for transportation. 1 regret the way they have dug into that pocket!
Let us look at the other sales tax measures which they have put into place. There was a 1 per cent increase in sales tax in 1984 which amounted to $1 billion. There was a second increase of 1 per cent which amounted to another $1 billion. Those guys do not even care how many billions they take. They do not even count the zeros. The third increase of 1 per cent in sales tax amounted to another $1 billion. The extension of sales tax on candies, soft drinks, and pet food amounted to $400 million in 1985. We cannot even enjoy small pleasures around here. The extension of sales tax on snack foods-they are Scrooges-amounted to $60 million. The increase in air transport tax-and we have settled the Air Canada situation- amounted to $45 million. The proposed 10 per cent tax on all long distance calls and business telephones and the increase in cable TV tax, which was automatic and with no justification, will amount to $945 million. The proposed increase on paint, wallpaper, toys, et cetera-they want to kill Christmas too- will amount to $370 million.
These tax changes do not include any increase which will occur when a new federal sales tax is introduced. I believe the Minister is expected in here in about five minutes with some more such jolly good news which we are all waiting with bated breath to hear!
This is not a simple Bill and it is not as pleasant as it would seem on the surface. I suggest that they ought to re-look at some of their goals.


Mr. Deputy Speaker:: Is it the pleasure of the House to adopt the motion?


Some Hon. Members:: Agreed.


Nelson Andrew Riis: On division.


[Stage Direction]
Motion agreed to, Bill read the second time and, by unanimous consent, the House went into committee thereon, Mr. Danis in the chair.
Clauses 1 and 2 agreed to.
Title agreed to.
Bill reported.
Thomas Hockin: that the Bill be concurred in.


[Stage Direction]
Motion agreed to.
Thomas Hockin: that the Bill be read a third time.


Mr. Deputy Speaker:: Is it the pleasure of the House to adopt the motion?
Statements by Ministers


Some Hon. Members:: Agreed.


Herbert Eser (Herb) Gray: On division.


[Stage Direction]
Motion agreed to, Bill read the third time and passed.

Douglas Grinslade Lewis: Mr. Speaker, I rise on a point of order. I believe there was unanimous consent to recess or adjourn the House until 4.30 p.m.


Mr. Deputy Speaker:: Very well.
At 4.28 p.m. the sitting of the House was suspended.


SITTING RESUMED
[Stage Direction]
The House resumed at 4.30 p.m.


Mr. Speaker:: It being 4.30 p.m., pursuant to order made Tuesday, December 15, 1987, the House will now revert to Statements by Ministers. I will recognize the Hon. Minister of Finance (Mr. Finance).


Hon. Michael Wilson (Minister of Finance):: Mr. Speaker, six months ago, 1 proposed comprehensive reforms to ensure that Canada's tax system serves the interests of all Canadians.
I set out clearly for public discussion and consultation the objective of tax reform and a carefully balanced package of specific proposals to achieve those objectives. The response was clear. Canadians want a fair and progressive tax system that imposes little or no burden on those least able to pay; a system that levies similar amounts of tax on individuals in similar economic circumstances.
Canadians want a tax system with a broader base and lower rates; a system that encourages individual initiative and in which all high income individuals and profitable corporations pay their fair share of tax. Canadians want a tax system that supports Canada's ability to compete in world market and to create increased employment opportunities; a system that supports the ability of Canada's regions to grow and prosper. Canadians want a more understandable and reliable tax system that ensures the revenues to finance public programs.
Today, I am presenting measures to implement the far-reaching changes to Canada's income tax system that I proposed in the White Paper in June. The proposals meet those objectives with lower tax rates and a fairer system for all.

December 16, 1987
Statements by Ministers
During the extensive consultation process, broad support was repeatedly expressed for the main thrust and the framework of the proposed income tax reforms. A number of specific proposals were put forward by the House of Commons Standing Committee on Finance and Economic Affairs, by the Senate Committee on Banking, Trade and Commerce and by others. I am tabling today a formal response to the recommendations of the House committee.
I want to pay particular credit for the fine work done by the House committee led by its Chairman, the Hon. Member for Mississauga South (Mr. Blenkarn).


Some Hon. Members:: Hear, hear!

As a result of these consultations with Canadians, we have incorporated improvements that further the objectives of the White Paper. In my remarks I will touch only on some features of the measures which are of broader interest. Details on all the measures that I am bringing forward are contained in the supplementary information that I will table.

To achieve the objectives of personal income tax reform, the three fundamental proposals of the White Paper will be implemented: One, a simplified structure of lower personal income tax rates. There will be three federal tax brackets instead of 10. The rates will be 17 per cent, 26 per cent and 29 per cent respectively. Two, conversion of personal exemptions and many deductions to tax credits. The new credits will be worth the same to all taxpayers regardless of their income. This is a major improvement in fairness. Three, the reduction or elimination of many special tax breaks. This helps to pay for lower tax rates and makes the system fairer.
As a result of these reforms, personal income tax will be reduced for 9.7 million Canadian households, 85 per cent of the total. Income taxes will be reduced for 90 per cent of those aged 65 and over. About 850,000 Canadians, including
250.000	senior citizens, will have their income tax reduced to zero.


Some Hon. Members:: Hear, hear!


Michael Holcombe Wilson: The vast majority of families with children will pay substantially less personal income tax as a result of the White Paper proposals. Today I am announcing further improvements to the tax treatment of families with children.
To provide further assistance to lower and middle-income families, the refundable child tax credit will be increased by an additional $35 per child to $559 on January 1, 1988. This will directly benefit 2.3 million Canadian families, including
300.000	below the income tax threshold.
To target additional assistance to larger families, the child credit for the third and each subsequent child in the family is
being doubled to $130. A dependent child will be able to earn up to $2,500 before the basic credit will begin to phase out.
[ Translation]
To provide further assistance to lower-and middle- income families, the refundable child tax credit will be increased by an additional $35 per child to $559 on January 1,
1988.	This will directly benefit 2.3 million Canadian families, including 300,000 below the income tax threshold.
To target additional assistance to larger families, the child credit for the third and each subsequent child in the family is being doubled to $130.
A dependent child will be able to earn up to $2,500 before the basic credit wil begin to phase out.
In addition, children who reach the age of 18 during the year will be eligible for the dependent child and the refundable child tax credit for the full year. Family allowance payments will be reported on the tax return of the higher-income spouse, but there is no change to the provisions which determine who receives the family allowance payment.
These measures incorporate a number of suggestions from the House Committee on Finance and Economic Affairs. The impact of these measures is to further reduce the taxes paid by families with children. In combination with the new child care initiative announced earlier this month by my colleague, the Minister of National Health and Welfare (Mr. Epp), these measures will bring about a major strengthening of tax assistance for Canadian families.
In keeping with the objectives of fairness and base broadening, the White Paper proposed to limit deductions for automobile expenses to reflect more accurately the element of personal consumption in these expenses.
As a result of suggestions received during the consultation process, changes have been incorporated to meet a number of concerns that were raised. For those drivers using personal automobiles for business use of more than 24,000 kilometres per year, the existing system will remain. Deductions will be restricted only for those who drive personal automobiles for relatively modest amounts of business use. These measures will ensure that deductible automobile expenses more accurately reflect business use.
The White Paper proposed measures to provide objective tests for determining the extent to which farm losses could be deducted against other sources of income. As part of these measures, new accounting rules were proposed. During the consultation process, a number of suggestions were received on ways that the objectives underlying the White Paper proposal could be achieved without asking all farmers to adopt modified accrual accounting. I am thus issuing today amended proposals which will retain cash accounting for farmers.
December 16, 1987


Some Hon. Members:: Hear, hear!


Michael Holcombe Wilson: The Government will continue consultations on these amended proposals which would address the tax treatment of farm losses, but which would allow farmers to continue to account on a cash basis. Implementation will follow completion of these consultations.
1 made a limited number of modifications to other proposals. For example, adjustments are being incorporated in measures dealing with investments in Canadian films and in multiple-unit residential buildings.
The corporate income tax proposals will achieve three major objectives set out in the White Paper. Corporate tax rates will be reduced. The general federal rate will fall to 28 per cent in 1988 and the manufacturing rate will be reduced to 23 per cent by 1991. The rate for small business will fall to 12 per cent. This will promote growth and job creation in Canada by maintaining a corporate tax system that is competitive with other countries, particularly the United States.

The elimination or reduction of many special tax breaks will pay for lower corporate and personal tax rates. It will return the profit motive to investment by rewarding success. And it will encourage investment decisions based more on economic initiative and opportunity than on tax considerations.

A broader tax base with fewer preferences will mean that profitable corporations will pay a bigger share of the total tax burden. The corporate income tax will also be a more predictable and reliable source of revenues.
At the same time, important tax incentives have been retained for key priorities such as small business growth, research and development and regional development. The corporate tax measures will be implemented substantially as put forward in the White Paper. Adjustments have been incorporated to moderate the impact of tax reform in a number of areas.
To support the development that is vital to regional economic growth and to isolated communities, the White Paper proposed to retain important incentives in the resource sector. In particular, improvements are being made in the proposed regime for flow-through shares.


Some Hon. Members:: Hear, hear!


Michael Holcombe Wilson: The period during which resource expenditures will qualify for the 16 and two-thirds per cent rate of depletion will be extended to the end of 1989. In addition, changes are being made in the investment loss rules to ensure that flow-through shares remain an attractive investment vehicle for junior resource companies.
The White Paper proposals recognize the vital role of research and development in the future of our economy. To
Statements by Ministers
ensure that Canada's tax regime for R and D continues to be among the world's best, the proposed limitation on claimable investment tax credits has been increased to 75 percent.


Some Hon. Members:: Hear, hear!


Michael Holcombe Wilson: In addition, the proposal for the capitalization of interest on vacant land will be modified so as not to affect small firms in the home building industry.
Across the entire economy, corporate tax reform will strengthen the incentive for firms to invest in profitable ventures. The rate of tax on the return from new investment will be reduced. The tax treatment of capital in this country will continue to encourage risk taking, initiative, growth and job creation.
One of the key principles of tax reform is that all corporations should pay a fair amount of tax on their economic income. The existing tax base fails to achieve this goal. Tax reform broadens the tax base so that it more closely measures the true income of corporations. This directly addresses the problem of profitable corporations paying little or no tax.
The changes being proposed will reduce by one-half the number of profitable corporations that pay no tax. Those that remain will either be firms in cyclical industries that have experienced significant economic losses in prior years or will be firms in industries which receive incentives directed at important national priorities. These priorities include promoting regional development, ensuring a healthy and active resource sector and encouraging research and development to provide jobs in the future.
However, there has been some concern that many large banks and life insurance companies have not paid significant tax over the past decade. To respond to this concern, the Commons committee has suggested that it might be appropriate to levy a minimum tax.
I share this concern. This has motivated the proposals in the White Paper affecting the taxation of financial institutions. I am confident that the combination of all the proposals in tax reform will ensure that financial institutions will pay their fair share of tax in the future. It is expected that over the next five years, the base-broadening measures being applied to the larger financial institutions will raise substantial amounts of revenue estimated to be almost $4 billion. In the meantime, I will be reviewing various mechanisms which could be used in achieving this objective should that be necessary.
Before tax reform is fully effective, a number of banks are not expected to be taxable in 1988. Accordingly, I will implement a tax on the capital of larger banks and trust companies. This tax, a form of minimum tax, will be creditable against future income tax.

December 16, 1987
Statements by Ministers
Corporate tax reforms will ensure that life insurance companies pay appropriate tax on their regular corporate income. However, without further action, investment income earned by life insurers on funds accumulated in respect of life insurance policies would have remained untaxed.
1 therefore intend to tax this income in the hands of the insurance company at a rate of 3 per cent in 1988 rising to 15 per cent by 1992. This measure will include some modifications to the original White Paper proposal. It will remove a major tax preference for the life insurance sector. In conjunction with reforms to the regular corporate income tax, this will ensure that insurance companies are appropriately taxed.
To deal with the increasing problem of abusive tax avoidance and evasion, the White Paper proposed a number of measures including a general anti-avoidance rule. As a result of consultations, changes will be incorporated in the proposal to deal with concerns that were raised about the possible unintended scope and effects of such a rule. Draft legislation is being released today for further discussion. Implementation will follow these consultations.
Fiscal responsibility was a major constraint that we imposed on ourselves in evaluating proposed changes to the tax reform package. We would not and we will not abandon the principle that tax reform must pay its own way. Nor did we accept the notion that the bill for changes in the first stage of tax reform can be held over until the second stage. That is why we have rejected suggestions for larger personal income tax cuts now to be financed by sales tax reform later. Tax reform is not a reform-now-pay-later proposition.
Therefore, improvements such as child benefits have to be paid for now. To maintain the fiscal balance of the package, I am taking the following measures: additional taxes will be levied on banks and trust companies, including a capital tax on large deposit-taking institutions; effective January 1, 1988, the federal sales tax on alcoholic beverages and tobacco products, currently 15 per cent, will be increased by three percentage points.
We are proceeding with the changes to the existing sales tax as announced in the White Paper, according to the schedule set out in November. These measures will ensure that the first stage of tax reform is fully consistent with responsible fiscal management.
Over-all, the White Paper proposals and the measures I have announced today will reduce personal income taxes by $12 billion over the next five years. This will be paid for by roughly equal increases in corporate and sales tax revenues.
1 am tabling the Notice of Ways and Means Motions that will enable us to proceed with the measures that make up the first stage of tax reform. Most of the measures will come into effect on January 1, 1988. Personal income tax reductions will be reflected in payroll deductions beginning July 1, 1988. This will provide employers with adequate time to make the necessary adjustments.
The measures presented today deal with the first stage of tax reform. In the second stage the outdated federal sales tax system will be replaced by a multi-stage tax and a number of further adjustments will be made to the income tax system. The refundable sales tax credit will be substantially enriched, paid in advance, and extended to more households. There will be further income tax reductions for middle-income Canadians, and the income surtaxes will be removed.
The consultation process has indicated there is support among a wide range of interest groups for a new sales tax system-one that is fairer, more reliable, and more supportive of efforts to strengthen competitiveness, growth, and job creation.
A multi-stage sales tax system has been the subject of ongoing discussions. A multi-stage tax can be implemented either at the federal level alone or on an integrated basis in conjunction with the provinces. Currently, the opportunity presented by combining both federal and provincial sales taxes under one system is under discussion with the provinces.
Last week, after meeting with my provincial colleagues, I announced that we had agreed that work on the national sales tax should continue based on the following considerations: municipalities, hospitals, school boards, colleges and universities should not bear a greater tax burden under the national sales tax than they would under the existing sales tax regimes; basic groceries, prescription drugs, and certain medical devices should not be subject to tax.


Some Hon. Members:: Hear, hear!


Michael Holcombe Wilson: These considerations reflect our commitment to ensuring that the design of the tax is consistent with the views of Canadians. They provide a foundation for further discussion of the national sales tax with the provinces. While much more work must be done before we can be sure that a national sales tax system can be achieved, I am encouraged by the progress to date with these and other discussions.
These proposals are the result of extensive consultations. This dialogue, with full involvement of the House committee, has been a clear improvement in the process of implementing taxation proposals. The flexibility of the Government has served Canadians well in achieving a better balance among the competing objectives and priorities that make tax reform the challenge it is. The result is an improved set of proposals for tax reform that retains the structure and principles established in the White Paper.

The measures febore the House today will put more money into the hands of Canadians. The freedom to make their own decisions, as individuals and families, on how best to use that money is at the heart of the government's philosophy of economic renewal.
December 16, 1987



Building a stronger, more resilient economy is the best way to ensure that Canadians have the resources to sustain and enhance their social and cultural identity, key elements in the high quality of life we enjoy. It is the best way to strengthen the distinctive elements of national life that make Canada a unique and uniquely successful nation.

The government will continue building a stronger Canada by moving forward on the full range of initiatives designed to unlock our potential as individuals and as a nation-initiatives such as tax reform, free trade, regulatory reform and child care.

Last June 18, I said that, in the final analysis, this package must be judged on whether the proposals would give to our senior citizens more peace of mind and security; to those in need, a fairer and reduced tax burden; to our young, a greater sense of opportunity and hope; and to our working people, more incentive, stability and freedom.
I can say today-with even greater confidence-that we are meeting those tests.


Mr. Raymond Garneau (Laval-des-Rapides):: Mr. Speaker, we have just witnessed what I would call a farce, and I think this fact deserves to be strongly emphasized so Canadian taxpayers will realize what it is they have been watching.
OO)

This Government cannot be trusted. This Minister of Finance (Mr. Wilson) cannot be trusted-


Some Hon. Members:: Oh, oh!


Raymond Garneau: -because he has abused the confidence of Canadian taxpayers. The Minister of Finance is just like a thief who has stolen the purse of an old lady in a park with $200 in it, and just because he returns the empty purse, he expects to be thanked.

Mr. Speaker, I intend to comment on the various items mentioned by the Minister of Finance in his speech today, and to give you an example of the simile I just gave, here are some comments on the tax treatment of families.
Mr. Speaker, in 1985 when this Minister of Finance decided to de-index partially family allowance payments, reduce the dependent child exemption and increase the child tax credit, he saved the federal Treasury and took out of the pockets of Canadian families one billion two hundred million dollars over a five-year period. He cut family tax benefits by $1.2 billion. For 1988-89 this would represent a saving of $200 million.
Statements by Ministers
And what did he announce today? He will return part of the 200 million he took out of the pockets of these families three or four years ago.
Mr. Speaker, that is what I mean when I say the Minister cannot be taken seriously, when he says his tax reform will improve the circumstances of our families. He is just giving back part of what he took away several years ago.
Mr. Speaker, since 1984, tax reform has developed into a three- or four-act farce. Initially, the Government tightened the screws on Canadians with the biggest tax increase in our history.
Mr. Speaker, in his last three Budgets the Minister of Finance increased taxes by a total of $22 billion-yes, $22 billion-which put a considerable burden on families-


An Hon. Member:: The deficit!


Raymond Garneau: -the Hon. Member for Portneuf (Mr. Ferland) had better look after his riding, because if he is so anxious to talk about the deficit, we will talk about it later on. I certainly have some comments to make.
So the Minister of Finance increased taxes by $22 billion.
Mr. Speaker, perhaps I may recall the various tax increases he introduced.
First, he increased the sales tax by 1 per cent in 1984.
Second, he increased the sales tax by another 1 per cent in 1986 and then by a third I per cent. In fact, there were two sales tax increases in 1986 of 1 per cent each. Mr. Speaker, do you realize how much this cost, per increase? It cost Canadian taxpayers an additional 1 billion dollars. For every increase, the Minister took an additional 1 billion dollars out of the pockets of Canadian taxpayers.
He raised the tax on gas by two cents a litre in 1985. He increased it by an additional cent in 1987. This afternoon, the House was looking at four cents altogether, because as of today, the tax on gas will be four cents a litre more than when this Government came to power.
Mr. Speaker, sales tax has been extended to a number of items that were not taxed before, representing an increase of $400 million. There is even a tax on chocolate bars, the stuff children buy for snacks. The tax on cigarettes and tobacco was raised initially in 1985. In 1986 the tax on tobacco and alcohol was raised a second time. The third time was in 1987, and we will have another 3 per cent increase as a result of the Minister's statement.
The Registered Home Ownership Savings Plan was abolished. Our income tax system was de-indexed. The federal tax rebate was eliminated. The status of married persons was changed, resulting in additional tax increases. Five and 10 per cent surtaxes were introduced. Another 3 per cent surtax was added, which has now become a permanent fixture as a result of Bill C-64. And now we have an additional 10 per cent tax on all communications except basic services, which will take $1 billion out of the pockets of Canadian taxpayers.

December 16, 1987
Statements by Ministers

After having increased taxes by $22 billion in three years, now, on the eve of the election the Minister comes to the Canadian people and says he will return $2 billion in 1988. Big deal! There is still a net increase of $20 billion that the Canadian people are going to have to pay because of this Government. The trick he is using is unbelievable. This is why I am saying to the Minister of Finance that he is playing with his credibility a lot. I do not think the Minister can stand that for very long.
The Minister announced in June that he would cut the R and D credit. Companies that invested in research and development could have deducted 100 per cent of the net taxable benefit the company had. He decided in June to cut by half this tax credit for research and development, and today he announced with a smile on his face that he is now increasing it to 75 per cent. The conclusion is a net decrease of 25 per cent, and he announces it as being an improvement. God knows we need research and development. You are playing with your credibility, Mr. Minister.
When the Minister says he is going to give back to families a certain amount of money, he is playing with his credibility, because in 1985 he took from Canadian families $200 million because he partially de-indexed the family allowances cut the child exemption to the level of the family allowances and increased

and I take that into account-the refundable child tax credit. But altogether in the process, in the year 1988, he put $200 million in his pocket. Now, on the eve of the election, he is returning $150 million by increasing the refundable tax credit by $35. This is what the officials have told us. So altogether the Minister nets another $150 million, and he is telling the Canadian people that he brought more fairness to the system. That is a farce.
Let us talk about the flow-through shares. In June the Minister decided that the earned depletion would disappear in two steps, first, sixteen and two-thirds per cent for 1988, and zero for 1989. Now it is a big deal. He says he is improving the system. He will keep the sixteen and two-thirds per cent for
1989.	Yet the earned depletion allowance of 33 per cent will disappear. The Minister says in his speech that he will protect this to help regional development. I say to the Minister of Finance that he is playing with his credibility because he is not telling the truth. He has hit hard the Canadian taxpayer and now he is returning a little amount of money and saying: "I helped you".
[ Translation]
Flow-through shares: the Minister of Finance (Mr. Wilson) has just lowered the boom with respect to flow-through shares, for two reasons. First, he does away with earned depletion.
What he had announced on June 18 remains basically unchanged, except that he prolongs the agony for one more year. But because he cuts the earned depletion in half and, second, because he will tax capital gains at a rate of 75 instead of 50 per cent, he makes the operation of flow-through shares almost inapplicable. And that is what we have been hearing throughout Canada, not only in Quebec, people have been saying just that in British Columbia, Alberta, Manitoba, Northern Ontario and Northern Quebec. They told us that the measure of the Minister was going to kill investments in smaller oil and mining companies.
All he is doing today is to decide to maintain the system. I would ask the Hon. Member for Abitibi (Mr. St-Julien) and the Hon. Member for Temiscamingue (Mr. Desjardins) what they are going to tell their constituents, after promising them that the Minister of Finance would keep the earned depletion at 33.3 per cent. What is the Minister going to say to small businesses that have asked ... Again yesterday I was reading the statement of Maritime residents who told us that the way the Minister applies the $500,000 capital gains tax exemption only on shares will make it impossible for them to use the tax benefit which the Minister is bragging about. In fact only big companies will be able to benefit from the sale of shares.
You know, Mr. Speaker, according to the measure announced by the Minister, a family company which would be as big a monopoly or consortium as Eaton's or Power Corporation is considered to be a small business.
Can one imagine Eaton's as a small business that will get the advantage of the $500,000 capital gains tax exemption? Is that what you call fairness? A small business owner who is not incorporated and wants to sell the assets will not benefit from the exemption. Is that fairness?
I suggest that the Minister of Finance is playing with his credibility. The House will recall that, before the election in 1984, he made a number of statements, one of which was that "We would cut spending. We would not raise taxes. Tax levels in Canada are already too high". The Minister said that in March, 1984, before the election. After the election, he increased taxes by $22 billion, which is the largest tax increase in three years that we have seen in Canadian history.
In November, 1984, after the election, they said that Canadians pay a pretty sum in taxes and they feel they pay quite enough. The Prime Minister (Mr. Mulroney) said this as well. They said they would not increase taxes, yet they have increased them by $22 billion. Just before the next election, the Government is bragging that it is returning $2 billion.
December 16, 1987

On June 18, the Minister of Finance tabled in the House of Commons a proposal for sales tax in which food would be taxed. An example was given to show that the new tax on food would not hurt Canadians.
Today, the Minister announced that he will not impose that tax. Yet I cannot trust what he is saying.
Let me explain why. The House will certainly want to pay attention to what he said in his speech. He stated that municipalities, hospitals, school boards, colleges and universities should not bear a greater tax burden under the national sales tax. Why does he use the words "should not"? He also says that basic groceries, prescription drugs and certain medical devices should not be subject to tax. Why use the words "should not"?
1 have been part of the Budget speech process for many years and I know that the officials of the Department, if not the Minister, use very precise words. There are reasons for this. If there is certainty that food will not be taxed, we do not say it "should not" be taxed but that "it will not" be taxed. We would say that the municipalities and hospitals "will not" bear a greater tax burden.
I state very sincerely that I do not believe the Minister one bit. If I compare what he said before the election and what happened after the election, and if I compare what he is saying now in this statement with what could happen after the election if by chance he is re-elected, I am sure we would hear more about these items that "should not" subject to tax. It is not a firm commitment and he may change his point of view.
[Translation\
Mr. Speaker, I should like to return to the matter of financial balance. The minister does not support his statement with figures because he either could not or would not. Why? I want to know. The Minister would not say how much additional revenues he was expecting to collect with his proposals and what exactly would be the cost of those changes. He simply said that everything should balance out. We do not know what will be the tax level on banking institutions. All we know is that there will be a 3 per cent additional tax on tobacco and spirits, although he would not say exactly how much additional revenues it would provide.
Mr. Speaker, we have just lived through five years of economic prosperity which had begun before the Conservative Party came to power. 1983 was a year of very interesting economic growth. 1984: since the Conservative Party came to power in September, it could not claim responsibility for the economic growth which occurred in 1984 and which exceeded 5 per cent; 1986 was also a year of economic growth. During these five years the Government has increased taxes by $22 billion and, in spite of that, the deficit still amounts to $28 or $30 billion a year. Each year the public debt increases by as much as $30 billion. By the end of this fiscal year, it will amount to nearly $300 billion.
Statements by Ministers
Mr. Speaker, this is a political party which came to power on the pretence that it would bring down the deficit not through taxe increases but by a reduction in expenditures. So I will say again to the Minister of Finance: Sir, you are playing a dangerous game with your credibility, as evidenced by an article published recently that the C.D. Howe Institute said-

"The C.D. Howe Institute calculates that the total Canadian deficit amounts to 4.1 per cent of the Gross National Product compared with the U.S. deficit of 2 per cent of the GNP".

Mr. Speaker, this Government and this Minister of Finance seem . . . Perhaps I should put it another way... When the Hon. Member for Etobicoke-Centre entered the House as Minister of Finance, I don't think people saw the new Minister as an accomplished politician, but he did have a certain credibility in the business world and among ordinary Canadians. When the new Minister of Finance spoke, he had a certain credibility. Today, however, under constant pressure from the Prime Minister's Office which cannot be said to have a monopoly on truth, the Minister is losing that credibility. He is brandishing billions of dollars' worth of expenditures. Mr. Speaker, do you realize that in two weeks, the Minister of Finance has added nearly $3 billion to public expenditures to pay for items like nuclear submarines, the icebreaker Polar Sea, daycare funding and wheat? Three billion dollars! Did anyone hear the Minister say where he is going to get the money? Did you hear anything in his speech today that says those $3 billion will be financed by increasing sales tax? Did he tell us those additional $3 billion would increase the deficit? Did he tell us he was going to increase personal income tax? No, not a word about how he was going to finance the $3 billion! Mr. Minister, you are playing fast and loose with your credibility. No one is going to believe you anymore, not even your Prime Minister.
If we look at today's operation, it is really sad to see what the Minister has done. I don't know whether you looked at everything . . . Mr. Speaker, you may have glanced at the report of the Standing Committee on Finance and Economic Affairs. The Committee travelled across this country. The Committee heard hundreds of witnesses who came with briefs prepared after consulting with thousands of members of their chambers of commerce, professional associations and senior citizens clubs. We received all kinds of briefs. We drafted a very thorough report, and the Hon. Member for Mississauga South (Mr. Blenkarn) must be very disappointed today, because at least 85 per cent of our recommendations were rejected outright.


Michael Holcombe Wilson: Bullshit!


Raymond Garneau: The Minister of Finance says: Bullshit! I added up all the recommendations we made. Mr. Minister, you are playing fast and loose with your credibility when you say

December 16, 1987
Statements by Ministers
things like that. Eighty-five per cent of our recommendations were set aside.
Mr. Speaker, I would like to talk about the banks, since I am familiar with the subject. The Minister of Finance said he had set aside the minimum tax to be applied to banks. Here is an area, a community of institutions which in actual fact have paid no income tax over the past years for a number of reasons, one of which is mainly the use of investment instruments that generate non taxable income. The banks evaded nothing, they simply made use of the law, but one thing remains, they paid no income tax. In committee we looked at several options and we recommended a minimum tax because it allowed the Government to tax profits. What did the Government do? It is going to tax reserves. After his blunders in connection with the Northland Bank, the Bank of British Columbia, the Bank of Alberta, the Canadian Commercial Bank, after fumbling around and engulfing hundreds of millions of the taxpayers' dollars, the same Minister says in this House that he will tax reserves aimed at protecting the savings of Canadians. This is the reason why I viewed a minimum tax as a lot more rational because at least this concept was based on the profits made and showing on the banks' balance sheet. The Minister will now tax capital, and a bank showing no profit would have to pay tax. Will this make the savings of Canadians in those banks any safer? I would like to deal with the insurance companies from across the land which told us here that the Government's policy was wrong, that it would increase by 20 to 40 per cent life insurance premiums paid by Canadians.
Did the Minister listen to the committee's recommendations? Not at all. We might understand he would turn a deaf ear to the Opposition, but he turned a deaf ear to his own Members, the experts in the field. He maintained the 15 per cent tax on insurance company investment. This is the only thing he did: instead of doing it outright, he will do it in two or three steps.
However, the principle remains that there will be a 15 per cent tax on the investment income of insurance companies, which will result in an increase of between 20 and 40 per cent in insurance premiums according to the experts who appeared before our committee.
The Minister believes that he can do anything he wants. He is always consulting, but he throws all the replies that he receives in the waste basket as soon as they come in because he does not know how to listen. For instance, and I shall close with this as my time is nearly expired, did he listen to the coalition of senior citizens who came twice to tell us that the tax reform would affect them and that their taxes increased substantially between 1984 and 1987? I have two examples here. An older couple with an income of $27,000, which is not that much, saw their taxes increase from $2,000 to $3,300 within three years under this Government.
This group of senior citizens, who come not only from Quebec, but from all Canada, appeared before the Finance
Committee. These people came back last week to meet the Minister. Did he listen to them? No, he must have simply thrown their submission into the waste basket since nothing will change for senior citizens.
Their $1,000 exemption on the first $1,000 of investment income has been eliminated. They have no protection against inflation. They do not know how they will be affected by Phase II of the tax reform. Senior citizens have been completely ignored.
Mr. Speaker, the credibility of the Government as well as personal initiative and entrepreneurship have been affected substantially by this reform.
Under tax reform, the same Minister who provided a $500,000 capital gains tax exemption is now proposing to tax capital gains at a higher rate than dividends, on the pretext that this will promote investment and development.
People who take risks and who make capital investments will be taxed at a higher rate if they obtain any capital gains than if they had invested the money in a quiet company and received dividends. This will affect the dividend policy of companies and completely change stock and shares dealings in Canada. After the market crash last October, there is cause for concern about our economic future and our development. Small manufacturing companies will see their tax rate increase from 10 to 12 per cent, and what about the simplification of the tax system, which was one of the objectives of tax reform?
If somebody can show me and prove to me that this reform will simplify Canada's tax system and make it easier for taxpayers, Mr. Speaker, I should like to meet him and listen to him because, after spending weeks with the finance committee, listening to briefs from experts of every description, accountants, lawyers, businessmen, we came to the conclusion that the new system is going to be more complicated than the one we had before.
Mr. Speaker, I will conclude the way I began, by saying that this Minister of Finance reminds me of a highway robber who steals a woman's purse containing $200, and because he gives back the empty purse he fully expects the victim to be grateful. It does not make sense, the Minister of Finance knows very well that I am right, he knows very well that taking $22 billion out of the pockets of Canadian taxpayers and handing back a mere $2 billion- And he expects us to thank him for that. Mr. Speaker, I know my time is limited, so I hope I will have other opportunities to focus on each of these measures and show that the credibility of the Minister of Finance is at its lowest ever because he has given up everywhere under the Prime Minister's election pressure.


Mr. Mike Cassidy (Ottawa Centre):: Mr. Speaker, this feels a little like the replay of a movie, because six months ago I stood in the House of Commons and commented on the
December 16, 1987

Minister's White Paper on tax reform, so little has been changed since that time that I might as well pull out the speech that I gave on June 18 and deliver it again.
We are left with a tax system, Mr. Speaker, which is as unfair as the reforms that the Minister put forward back in June of this year. We are left with a tax system in which wealthy Canadians with incomes of over $100,000 will be big winners, and in which poor Canadians and Canadians with average incomes will be considerably worse off than they were back in 1984 before the Conservative Government came to power. We are left with a system where the essential unfairness of the tax system has not been changed by the Minister of Finance (Mr. Wilson).
The Minister says that he is quite happy and that the Government is quite happy to go to the people with tax reform as one of the major planks in the Conservative platform. If the Minister thinks the bank shareholders are the only voters, then so be it. I am sure that they will give the Minister of Finance the vote of confidence which they feel he richly deserves.
As far as average Canadians are concerned, that is not the case. The Minister had a choice. He could have opted in favour of average Canadians or he could have opted in favour of the banks. He has opted in favour of banks and financial institutions and against average Canadians. I am quite happy to go to the people and talk about tax reform and about real fairness, a fairness which I am afraid we do not see in the proposals from the Minister of Finance.

Mr. Speaker, the Minister of Finance had a choice to make, but what he gave us is a system which remains unfair to ordinary Canadians. Canadians were expecting justice, but with this so-called tax reform advocated by the Minister of Finance the average family will pay $1,000 more than in 1984 as a result of the tax reform just unveiled by the Minister of Finance, and once he is through making the changes announced today in the ways and means motion.
People living below poverty level will continue to pay taxes. Sixty thousand profitable corporations will still be able to pay no income tax at all under the fiscal reform introduced by the Minister. And thanks to the partial deindexation, the benefits, if any, for the average Canadian family will have completely disappeared within three years.

Over the past six months the Standing Committee on Finance and Economic Affairs has worked particularly hard on the question of tax reform. We responded, albeit with some reticence, to the Minister's timetable. We accepted that the Minister's delay until June 18 in introducing his tax reform would not prevent us from offering our comments. Just over a month ago, after a cross-country tour, after receiving more than 600 briefs and after hearing from some 200 witnesses, we presented a report with 81 recommendations which were based
Statements by Ministers
on sober second thought and on a great deal of reflection on the proposals made by the Minister of Finance.
I regret to say that the Minister has totally ignored most of those recommendations. In fact, according to my count, only 12 of the 81 recommendations made by the committee have been acted upon by the Minister. The rest have either been ignored, rejected, or put aside for further study. If the Minister and the Conservative Government really believe in parliamentary reform, then that is just not good enough.
I commend my friend, the Chairman of the Finance Committee. We get along reasonably well. We differ on certain ideological questions from time to time. However, I can commend him for keeping us going and for the work that is there. I saw him get to his feet reluctantly and I do not believe that he applauded the Minister. Well, I did not applaud the Minister either, and with good reason. I understand the Chairman's reticence, because the Minister of Finance has slapped the committee in the face and has kicked Canadians in the ass in the way that he has treated their need for a fair tax system.
This apostle of Christmas cheer, the Hon. Member for Etobicoke Centre, has chosen to make a few small changes. However, rather than having them paid for by the corporate sector as we proposed in committee, he is ensuring that they will be paid for by average Canadians. Average Canadians got "scrooged" by the Minister of Finance.
The Minister, just to put it on record, is raising the price of a case of beer by 41 cents on 24 bottles, by 38 cents on a bottle of scotch, and by 26 cents on a carton of cigarettes. On behalf of average Canadians I want to convey with somewhat clenched teeth my greetings for a Merry Christmas to the Minister after what he has done to Christmas cheer.
This whole exercise is a bit like free trade. In this case Canadians have been consulted but ignored. In the case of free trade they were not consulted and they were ignored. On December 16 we are seeing a Ways and Means motion which, by parliamentary tradition, will enter into force on January 1. The legislation will come months later, but the message is very clear to average Canadians-do not bother to try to influence the legislation, do not bother to try to get any words into the conscience of the Minister of Finance. He did not listen over the last six months. He will not listen over the next six months. He is actually proud of a measure which does little or nothing to redress the imbalance in taxation between corporations and average Canadians and between rich Canadians and average Canadians. It is clear that not only the Minister but the Government has its head and heart on Bay Street, not on Main Street.
It goes without saying that the recommendations made by the New Democratic Party in our minority report, along with the report of the Finance Committee, have been ignored. Likewise, the recommendations made by my friends in the Liberal Party in its minority report were ignored. This was despite the fact that we were speaking for some 75 per cent of

December 16, 1987
Statements by Ministers
Canadians who have decided that they cannot support this particular Government.
I would like to deal for a minute with the specific proposals made by the Minister. I guess it is useful that the Minister accepted to a modest degree certain proposals made to improve the benefits for families. However this means, in his case, that families with three or more children will get an extra $65 in tax credit. There will be a certain amount of child tax credit added, to be paid for whenever one buys a bottle of scotch or 24 bottles of beer. Apart from that there will be nothing at all, according to the committee's recommendations in respect of dependent children between the ages of 18 to 21. That is to be deplored.
It is interesting that in terms of our recommendations for a substantial increase in benefits for families with children, because of the important responsibility they carry in society, there is nothing at all.
The Minister backed off on his proposals for accrual accounting for farmers. They will welcome that, but he has left farmers across the country in a position of grave uncertainty, because they do not know what will happen next. Farmers are in limbo. In fact, the proposals put out by the Minister for discussion look very much like modified accrual accounting for farmers, except that it is called cash accounting. In other words, the Minister has not really backed away. He has just changed the cosmetics of his proposal to make it sound a little different. I suspect that farmers may treat that with the same contempt that they treated the Minister's proposals in the White Paper.
I regret the fact that the Minister, who claims to be listening to average farmers and average Canadians, did not listen when farmers across the country said that there must be peer review in deciding who is a legitimate farmer. The Minister rejected that out of hand. Farmers like the proposals made by the committee. In respect of the loss provisions, the Minister has kicked them out of the court as well and has said that they will not apply. Why? It is because they happened to reject the ability of certain of his wealthy friends in Mississauga and other such places to deduct farm losses when they are not genuinely full-time farmers. I exempt the Hon. Member for Mississauga North (Mr. Horner), who I understand messes around with cattle from time to time in a fairly legitimate way.
The point 1 am making is that the Minister has drawn back from his proposals for farm accounting because they were so unacceptable. He has not indicated clearly what will be there, therefore farmers must wait yet another year before finding out what the situation will be.
The Minister has moved on auto expenses. I suppose that is welcome. It is hard to analyse exactly what he has done. We will see what that means in a day or two when the dust has cleared. Apart from that, the Minister has done as little as possible to implement the recommendations made by the committee. In fact, the other recommendations he accepted seem to be the ones which amounted not to benefiting average
Canadians but to taking income away from average Canadians, for example, those who will pay the tax on family allowances.

Mr. Speaker, in the end, the problem with the Minister is not simply that he rejected all the recommendations made by the Standing Committee on Finance and Economic Affairs, there is much more than that. The problem is the fact that the Minister is completely ignoring the recommendations that are being made by the New Democratic Party and by a great number of Canadians from all walks of life, by groups representing ordinary Canadians that have appeared before the Standing Committee on Finance and Economic Affairs during our hearings in the last five months.
Mr. Speaker, our Party and the Committee have recommended that we increase the corporate income tax and especially the tax on all financial institutions in order to have a better balance between individuals on the one hand and corporations on the other. The Minister of Finance and the Government have rejected these recommendations.
Mr. Speaker, even the Hon. Member for York-Scarborough (Mr. McCrossan), who is a Member of our Committee on Finance and Economic Affairs, in a letter that he wrote to the Minister of Finance in November, has stated clearly that if the Government does not take a clear stand in support of an adequate tax on financial institutions, in order to avoid the situation in which banks and life insurance companies were paying almost no tax at all on their profits, then in effect, Mr. Speaker, the Government would be guilty of advantaging the rich at the expense of ordinary Canadians.
I will cite the comment from the Hon. Member for York- Scarborough (Mr. McCrossan) who said in his letter to the Minister of Finance (Mr. Wilson):
To the extent that "handsome" taxes which are seen to be fair are not levied in 1988 against all profitable financial intermedies, it is almost certain that tax reform will be seen as unfair and that the allegation of "favouring the rich" will form an important part of the next election campaign.
What the Member from York-Scarborough said is absolutely dead on. He understands that situation. I think he made a great contribution to the committee in helping to design the average minimum margin tax and I, with him, deplore the fact that the Minister of Finance would not listen to the committee and, therefore, is guilty of a tax system which favours the rich and ignores the needs of average Canadians.
What has the Minister done, Mr. Speaker? He has brought back a capital tax and said, "Look what I am doing". In fact, in his language he tried to indicate that this was a brand new tax that will soak the banks. It is not true. It is a weaker capital tax than the tax on capital which is in force right now and which was due to expire at the end of 1987. This is the Minister's dirty little secret. There is a capital tax on the banks
December 16, 1987

right now which the Minister proposed to withdraw. Will he put it back in its present form? No, Mr. Speaker. He is going to make it refundable. That means it will simply be a prepayment on income taxes if, as, and when the banks ever get around to paying those taxes.
What about revenues? The Minister says this will increase his revenues by $120 million in the first year. We have looked at the figures. They indicate that the banks were paying only $20 million in capital taxes under the old tax at the same rates. The Minister, by some legerdemain, has come up with an extra $100 million, which I suggest will not be there. If you gave the Minister the benefit of the doubt, if you said, "Okay, the system will work", what will the banks pay? The banks will be forced to pay 6 per cent of their profits as opposed to an overall level of taxation which, with provincial taxes, ought to amount to some 40 per cent to 44 per cent of their taxes. The banks will pay 6 per cent. It is reminiscent of the situation prevailing over the last five or six years. Tax measures were brought in by the Liberals back in the 1970s, and have been perpetuated by the Conservatives since 1984. These measures saw to it that the banks paid between 1 per cent and 5 per cent of their income in tax.
Any average Canadian, any bank teller, who pays taxes has to pay a higher rate of tax on his or her income than the average Canadian bank. The poor Canadian banks are only able to pay 1 per cent, 2 per cent or 3 per cent taxes on their profits. Poor dears. They are not able to stay profitable, not able to stay in business, almost forced to the wall, forced to be in little tin tarpaper shacks because they cannot keep up the rent on those locations they have on every major street corner, on every main street in urban Canada. The banks have to be spared. On behalf of the bank presidents of Canada, I would like to say to the Hon. Minister of Finance how grateful they all are for this particular consideration.
Perhaps I spoke with tongue in cheek just now, but I want to say there is something wrong about a tax system which spares the banks and taxes average Canadians at a level higher by a substantial amount than in 1984. Make no mistake, we are not talking about tax cuts for average Canadians; we are talking about tax increases for average Canadians.
The people who benefit are the wealthy Canadians who drive around in BMWs and Jaguars who go to the cocktail parties in Forest Hills and in Etobicoke held to raise election funds for the Minister of Finance and his Conservative colleagues, who go to the convention centre in Toronto and similar quarters in Montreal and dole our $250 a plate for fundraising dinners where they can hear the Prime Minister (Mr. Mulroney) say how the Conservatives are acting on behalf of average Canadians.
Those average Canadians with incomes of $100,000 a year, or a majority of them, will have a tax reduction of $4,365 per annum thanks to tax reform from the Hon. Minister of Finance. Nothing in the proposals which have been made today in the Ways and Means motion will change that at all.
Statements by Ministers
But the family earning $15,000 a year will get a tax cut of $90 a year. If you are in the $100,000 bracket, you will get a tax cut 50 times as great as the average tax cut for someone who perhaps shines your shoes, delivers your milk or cleans house for you once a week and earns less than $15,000 a year.
For a family with a couple of kids earning $30,000 a year the White Paper would have given a tax cut of about $263. That will change slightly, perhaps by another $30 with the proposals made in the Ways and Means motion, but that family on $30,000 a year has had a tax increase of $966 since 1984 because of the increases of the minister of finance and the conservative government's policy of soaking the poor to benefit the rich, that, of course, has been needed so that we can have these huge capital gains exemptions for wealthy Canadians and other types of things designed to keep the BMW owners off the poor lines.
The consequence is that for the average Canadian with $30,000 worth of income he or she will wind up, after tax reform, paying $700 or $800 more in tax per annum than he or she paid prior to 1984.
What else has changed, Mr. Speaker? Nothing much has changed in the Ways and Means motion, sixty thousand profitable Canadian corporations will not be paying a nickel of tax. Twenty per cent of Canadian corporations, one Canadian corporation in five which is profitable, will not pay tax. On behalf of the shareholders, the presidents and the officers of those companies, I suppose I should thank the Minister of Finance again for remembering their needs, even if it is at the expense of average Canadians.
I come back to the problem that we face, namely, that Canadians have indicated more and more that they want fairness and justice in the tax system. They want real tax reform, not the phoney tax reform which the Minister of Finance is giving them. When it came to choosing between the needs of the banks and the needs of average Canadians, people wanted the Government to side with average Canadians, but they failed to get that.
I want to remind the Minister of Finance of some of the recommendations we made in our minority report. These are constructive recommendations which an NDP Government would seek to put into operation in order to give Canadians a genuinely fair tax system. We say the tax system should be more progressive. There should be higher rates of taxes, dare I say, on upper income Canadians. Canadians say yes to that, Mr. Speaker. I regret that the Minister of Finance has said no. We say the tax system should be fully indexed so that average Canadians will not find that any benefits they get from tax reform will disappear as quickly as they will disappear. The finance committee itself estimated that the benefits from tax reform will, because of deindexing, disappear in just three years. Canadians say yes to that change. 1 regret to say that the Minister of Finance said no.
We have been arguing year after year that capital gains in Canada should be taxed like any other form of income.

December 16, 1987
Statements by Ministers
Somebody who clips coupons, who holds shares, properties, who has works of art, condominiums in Florida and makes capital gains on them should surely pay as much taxation as a man or woman who works eight or 10 hours a day. He or she may work eight or 10 hours a day, week in and week out, year in and year out, in order to earn the amount of money that is made in a property flip, money which would be tax free according to the Minister of Finance. One must ask, if capital gains can be earned that easily, perhaps they should be taxed more highly rather than at a lower rate than wages and salaries are taxed.
We have argued that the lifetime exemption on capital gains was wrong. It should not have been brought in. It should only have been allowed for small businesses and farms. We accepted that, but we do not accept it in other areas. Unfortunately, the Minister of Finance did not hear us. The Government did not hear us either.
Canadians say that it is wrong to give special treatment to capital gains, but the Minister of Finance says that it is right. It certainly is right-wing. It suits his friends in the banks, it suits wealthy Canadians, but it does not suit average Canadians.
We said that other measures that favour wealthy Canadians should be blocked, measures like the top-ups on RRSPs and the ability to deduct interest payments against other income when investing. Canadians understand that it is wrong to have those kinds of loopholes in the tax system. The Minister of Finance does not understand that.
We said that the child tax credit should be substantially increased by some 80 per cent. The Minister of Finance heard us but acted in a very limited way. Canadians know what is fair to families. The Minister of Finance does not.
We said that there should be no sales tax on food. I guess I should comment on that because back on June 18, I said very specifically that if the Minister of Finance refused to listen to average Canadians on that issue, he would have the fight of his life in the 1988 or 1989 election campaign. It has taken him six months, but last week we finally heard from the Minister of Finance. He should not have left Canadians with any uncertainty on that question. I welcome the fact that the Minister of Finance has finally seen the light, but I ask how it is that this man of the people could have been so deaf to what Canadians from Bonavista to Vancouver Island, from Tuktoyaktuk to Point Pelee, were saying which is that a tax on groceries was absolutely wrong. From the very beginning, from June 18, the Minister of Finance should have acknowledged that.
New Democrats have said that we believe it is right that there should be a minimum tax to ensure that wealthy Canadian individuals do make a reasonable contribution to the society from which they benefit. Canada is one of the finest countries in the world. Every Canadian benefits from that, even if he or she does not directly receive government services.
Every Canadian benefits from medicare and from the kind of healthy, decent, caring, sharing society that still exists in this country. If that is right, we feel that it is just as right that corporations should pay their fair share as well.
It is wrong that every year, 60,000 Canadian companies do not pay tax. If the Americans can agree that there should be a minimum tax on corporations, why the devil should we be lagging behind? We say that there should be a minimum tax on corporations. Canadians agree with that because it is part of a fair tax system. It is only the Minister of Finance who fails to understand that.

Mr. Speaker, the New Democratic Party has been giving some very serious thought to the remote areas in this country, our mining companies and flow-through shares, and to the problems created by the fact that according to the Minister of Finance, flow-through shares and earned depletion allowances have been abolished. Very little was done to cope with these problems by the amendments announced today by the Minister. We said we would need targeted tax measures that would benefit small resource companies, to ensure continued exploration in regions like Abitibi, Schefferville and other remote areas that depend on this country's resources, and that the tax measures must also benefit these areas as such. Unfortunately, the Minister of Finance only said he would consider the recommendation. I regret to say that once again, the Minister of Finance has refused to listen to the mining industry, the people in the regions concerned and the recommendations of the New Democratic Party.

We called for a tax system that was more accountable. We said that the cost of tax expenditures which amounts to more than the annual deficit of Canada every year should be reported every year to Parliament and should be voted upon every year by Parliament. That was ignored as well.
We said that there should be a tax system that was simpler and easier for Canadians to understand. That was ignored as well. It is very interesting just how much of what average Canadians are looking for in the tax system was in fact ignored by the Minister of Finance.
In conclusion, I want to say that the responsibility is not just that of the Minister of Finance. Sometimes there is a tendency to say that the Minister is right if one is a Conservative or that the Minister is wrong if one is an average Canadian or is speaking from this side of the House. It is not just the Minister of Finance who is responsible for this.
When the Minister announces his Ways and Means motion for a tax system that goes into force on January 1, 1988, he is speaking on behalf of the Government, on behalf of the Prime Minister on behalf of 38 or 40 cabinet Ministers, and on behalf of 200-odd Conservative Members of Parliament. That is Conservative government policy. They will say it is Progressive Conservative policy, I say it is regressive Conservative policy.
December 16, 1987

This tax reform is a government initiative that the Government intends to take to the people of Canada in the 1988 or 1989 election campaign. If that is its reform, I will take on the Minister of Finance or any Conservative candidate on any television station on any platform at all anywhere across Canada.
In the 1984 election campaign, the now Prime Minister promised a fairer tax system. He said that those wealthy banks and companies will pay and pay handsomely. I suppose they paid handsomely to the Conservative war chest because they are not being made to pay handsomely in tax revenues that would allow us to take the tax burdens off average Canadians.

Mr. Speaker, finally, the Government had a choice. The measures announced today are not just decisions made by the Minister of Finance. They are supported by the Progressive Conservative Party and by all Members and all Ministers in that Party. Apparently, this is to be the Conservative Party's platform for the next election campaign. Mr. Speaker, if the Conservatives want to ask the average Canadian to vote for them on the basis of a platform that favours the banks and large corporations at the expense of ordinary Canadians, they can go right ahead. We favour genuine tax reform that is fair
Statements by Ministers
and equitable to all Canadians, to all taxpayers and not just to the corporate sector.

We are prepared to fight an election campaign on this particular tax reform. I wish that even now the Minister of Finance would understand what a mistake he is making, listen carefully to the proposals made by the Finance committee, listen to what average Canadians are saying, and then come back with real tax reform that brings taxes down for average Canadian families, that takes poor Canadians right off the tax rolls and not just temporarily, that ensures full indexing of the tax system and not just a partial deindexing, and that is fair to families. Better to be fair to average families than to be fair to the banks. That is our slogan.


Douglas Grinslade Lewis: Mr. Speaker, I think you might find that there have been discussions between the Parties and there would be consent to call it 6.20.


Mr. Deputy Speaker:: It being 6.20 p.m., this House stands adjourned until tomorrow at eleven a.m.
At 6 p.m. the House adjourned.

Thursday, December 17, 1987


[Stage Direction]
Prayers