1987-12-08

Mr. Jim Hawkes (Parliamentary Secretary to Deputy Prime Minister and President of the Privy Council):: Madam Speaker, pursuant to Standing Order 106(8), I have the honour to table, in both official languages, the Government's response to Petitions Nos. 332-3292, 332-3325, 332-3340 to 332-3356 inclusive, 332-3358 to 332-3366 inclusive, 332-3383 to 332-3413 inclusive, 332-3416 to 332-3422 inclusive, and 332-3424 to 332-3435 inclusive.



COMMUNICATIONS AND CULTURE


Mr. Jim Edwards (Edmonton South):: Madam Speaker, I have the honour to present the tenth report of the Standing Committee on Communications and Culture, in both official languages. The report is entitled "Accomodation Requirements of the National Archives of Canada". Our study and recommendations stem from the committee resolution adopted on June 19, 1987. Pursuant to Standing Order 99(2), the committee requests that the Government table a response to this report.

Our major findings are as follows. First, the Archives is short of space to store its archival holdings and government records. Second, the space now available for storage, laboratories, and offices is spread over 14 different buildings in the National Capital Region. The third and most important finding, in the committee's opinion, is that the available
storage space does not meet acceptable, recognized environmental standards for the long-term preservation of our national heritage.
The unacceptable environmental conditions in which archival holdings and government records are kept accelerate the process of deterioration of Canada's archival heritage and, in some cases, have threatened their survival.
We found that 100 per cent of archival holdings, and not only 75 per cent as the National Archivist stated in June, are stored in substandard facilities with insufficient or no environmental controls, and that important records of government Departments and ministerial papers were threatened with serious damage.

In our estimation, the archival heritage, the nation's collective memory, is in danger because our national archival treasures are kept in inadequate accommodation. With a view to preserving them properly and with all the care they deserve, and so as to show future generations that we are concerned over their heritage, it has become imperative that we provide adequate accommodation.

The committee has considered a variety of options to rectify this unacceptable situation. The committee therefore recommends that priority be given to the construction of a new facility which would meet the accommodation needs of the National Archives of Canada until the year 2010.
Aware of the Government's policy of fiscal restraint, the committee also recommends that the Government consider entering into a lease-purchase agreement with a private sector developer for construction of the new facility.
I have the honour as well to present the eleventh report of the Standing Committee on Communications and Culture on the Order in Council appointment of Mrs. M. Elizabeth Burnham as a director of the Canadian Broadcasting Corporation.

The committee considers that this person has the titles, qualities and qualifications to discharge the duties of the position for which she was appointed.
[Editor's Note: For text of above reports, see today's Votes and Proceedings.]

December 8, 1987
Order Paper Questions


QUESTIONS ON THE ORDER PAPER
Frederick James (Jim) Hawkes: Madam Speaker, I ask that all questions be allowed to stand.


The Acting Speaker (Mrs. Champagne):: Is it agreed?


Some Hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House proceeded to the consideration of Bill C-64, an Act to amend the Income Tax Act, a related Act, the Canada Pension Plan and the Unemployment Insurance Act, 1971, as reported (with amendments) from the Standing Committee on Finance and Economic Affairs.
Mr. Blenkarn:: Madam Speaker, when the committee reported the Bill, there was an error in one of its amendments in connection with a date. I would like to move a motion which I think will be carried unanimously by the House, perhaps seconded by the Hon. Member for Kamloops-Shuswap (Mr. Riis).
I move:
That Subclause 3(7) of Bill C-64 be amended by striking out line 10 on page
4 and substituting the following:
"1987 and subsequent taxation years."
This is a highly technical amendment, Madam Speaker. It just corrects an error made in committee in recording a year.


The Acting Speaker (Mrs. Champagne):: On the same point of order, the Hon. Member for Trinity (Miss Nicholson).


Mr. Cassidy:: Mr. Speaker, on the same point of order we were contacted a few minutes ago-


The Acting Speaker (Mrs. Champagne):: The Chair had just recognized the Hon. Member for Trinity and I will recognize the Hon. Member for Ottawa Centre (Mr. Cassidy) right after. The Hon. Member for Trinity.


Miss Nicholson (Trinity):: Madam Speaker, about 20 minutes ago I received a call from the office of the Minister asking if I would agree to unanimous consent for this amendment to be introduced even though there was no notice.
Because the matter is important, I have said on behalf of my Party that we would give consent to the introduction of the amendment but naturally we would expect fuller discussion of it in the Minister's opening statement.


Michael Morris Cassidy: Madam Speaker, the intervention of my colleague from Trinity (Miss Nicholson) has allowed me to have a word with the chairman of the committee. I understand the proposal increases rather than reduces tax revenues. It is a technical amendment and it does not nullify changes which, as I recall, were made to the Bill by the Hon. Member for York-Scarborough (Mr. McCrossan). I was concerned that the proposal might be an attempt to have unanimous consent for the House to undo what my colleague, the Hon. Member for York-Scarborough, had succeeded in doing in committee. I am assured that this is not the case, and under those conditions we will allow the amendment to come forward with unanimous consent. I understand it will still have to be considered in the House, but it can be brought forward with unanimous consent, which we offer.


Mr. Gauthier:: Madam Speaker, to clear up some misunderstanding here in my own mind, there is an amendment at concurrence stage. There could be debate. We are not at this time expecting debate but that the Minister will incorporate in his remarks at third reading why the change and why the amendment. If that is the understanding, we accept that concurrence be given at this time.


The Acting Speaker (Mrs. Champagne):: Is the House ready to accept the amendment?


Some Hon. Members:: Agreed.


Aideen Nicholson: On division.
Motion (Mr. Blenkarn) agreed to.


Hon. Tom Hockin (for Minister of Finance) moved: that Bill C-64, an Act to amend the Income Tax Act, a related Act, the Canada Pension Plan and the Unemployment Insurance Act, 1971, as amended, be concurred in.


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


Some Hon. Members:: On division.


[Stage Direction]
Motion agreed to.
The Acting Speaker (Mrs. Champagne):: When shall the Bill be read a third time, by leave now?


Some Hon. Members:: Agreed.


Thomas Hockin: that the Bill be read the third time and passed.
He said: Madam Speaker, I am very happy to give the explanation requested by the Hon. Member for Trinity (Miss Nicholson).
Having regard to the amendment to subclause 3(7), we were faced with a need for some grandfathering of shorter debt instruments than was accommodated originally. Subclause 3(7) provides the effective date for the extension of the grandfathering from the interest accruals for debt instruments
December 8, 1987

acquired before 1982. The motion changes this effective date from, as it read, 1990 and subsequent tax years to 1987 and subsequent taxation years. This change ensures that the additional grandfathering will benefit debt instruments having a term of less than 10 years as well as those having a term of 10 or more years. It is a technical change. I think all Members of the House will want to accomplish this grandfathering so I will not speak any further on the motion.


Aideen Nicholson: Madam Speaker, on a point of clarification now that we have passed the motion, is the Minister proposing to open third reading debate or are you prepared to recognize other speakers? I am not sure what is happening, Madam Speaker.


Thomas Hockin: Madam Speaker, in the interests of time and the importance of this, I will forego my opportunity to speak at the beginning of third reading.


Aideen Nicholson: Madam Speaker, the Bill before us is a major tax Bill, the government has handled it in a very unusual fashion or, shall we say, attempted to. On June 30 there was an attempt to get agreement between the Parties to deal with all stages of this Bill in one day. That was totally unprecedented approach to a major tax Bill. The Official Opposition took the view that a major tax Bill of this kind should be referred to a standing committee where witnesses could be heard and the Bill receive the normal examination. The Government acceded to that and also agreed to refer it to the finance committee, whereas the plan had been to send the Bill to a legislative committee after the negotiations to get it passed at all stages in one day failed. The next was to send it to a legislative committee.
With the new rules in the House, it has often been the case that Bills should go to a legislative committee which would deal with them promptly. However, the underpinning for that was that the standing committee would have done a pre-study of all the major issues and heard witnesses.
As I said, following the objections the Government did agree to send the Bill to the Committee on Finance and Economic Affairs. At the finance committee I had a long list of witnesses and the Chairman then made the proposal that, since we would be hearing from many of these witnesses on the White Paper on tax reform in any case, rather than bring the witnesses twice, we might deal with the White Paper first and then return to Bill C-64. That suggestion was accepted.
In that event, we examined this Bill for two days without witnesses other than departmental officials, but we had by that time received the benefit of many witnesses on closely related issues.
Bill C-64 is a mixture of income tax measures from budgetary papers, technical notes and press releases dating back to the February 18, 1987 Budget. Clause 10 acts as the fulfilment
Income Tax Act
of a government election promise to increase the status of two key cities.
The Bill has proposed a change to the investment accrual rules which would allow the owners of 1981 Canada Savings Bonds to defer reporting their interest income until the bonds have actually matured. People who bought bonds on a different basis prior to 1981 would otherwise have been forced to pay tax on their interest before they had any cash in their hands.
This clause in the Bill received a good deal of discussion in committee because, although the Government was moving to remove an inequity from holders of Canada Savings Bonds, the holders of Quebec Savings Bonds were not being covered by this and an amendment put by the committee dealt with that.
There are several very complicated problems in relation to retirement compensation arrangements. A number of the Bill's clauses were meant to remove the tax benefits of off-side pension plans. The committee found it necessary to do a good deal of questioning on who was covered and who would stand to gain. It really seems as though the main group to be excluded were deputy ministers. Some questions were raised about special treatment of people by people who were designing that same plan. This is an issue that still warrants further attention. Presumably, when we return to deal with the pension Bill we can look further at it.
To revert back, in June the Government was all for rushing this legislation through and I would point out that at the committee stage the Government, not individual members of the committee, introduced about 69 amendments designed to clarify matters or to remove inconsistencies between this Bill and other legislation. In other words, last June the Government was not ready with this legislation. It had not done its drafting properly. It had not done its homework properly. If we had agreed to pass the Bill through in the stage it was in then, indeed the Government would now be coming back with amendments. As it is, 69 of the amendments were brought by the Government itself to committee.
Two of these Government amendments applied to Clause 15 and dealt with the Saskatchewan Pension Plan in particular. These are technical amendments and I will not take the time of the House to go into them. However, I will say that they were necessary because of numerous government oversights in the original drafting of the legislation. That is yet another example of why this Bill should not have been rushed.
Clause 18 also posed some difficulties for the committee. It was meant to deal with successor corporations in the resource sector. The effect of the clause was to prevent companies from renouncing their flow-through rights up to parents, and parent holding companies to further renounce them and then be able to issue shares on an exchange basis. There was some suggestion that it was not within the scope of the committee to deal with this amendment but, in fact, an amendment was passed in committee.

December 8, 1987
Income Tax Act
There were further changes to Clause 38 concerning the ways in which an individual can generate a taxable benefit from an employee stock option. The clause was passed on division and it remains an issue to which we might want to return.
Clause 66 deals with the question of source deductions. This has been quite a contentious issue. The Government, in an effort to improve its cash flow problems, has twice increased the rates at which employers remit the compulsory deductions for income tax, for Canada Pension Plan and for unemployment insurance. Originally we saw the requirement to remit these being moved up from monthly to fortnightly. More recently they have been moved up to weekly.
This is a nice bit of smoke and mirrors. It makes the government books look better by over $1 billion in each of two successive years. However, it is not a real answer to the question of the deficit or to the question of reducing expenditures. It is causing problems for employers. It is an additional expense in their payroll operations.
Moreover, in this Bill, we now find that the Government also has plans to garnishee employers who do not meet with this requirement to remit promptly. There was a considerable amount of discussion of this clause in committee. The Crown gets a super priority over all other creditors in the case of unremitted source deductions. Correspondence was received by most Members from the Canadian Insolvency Association and the Canadian Bankers' Association which took exception to this super priority. However, at committee, officials took the line that the Crown was not looking for a super priority over other creditors except in the case of unremitted deductions. Therefore, money which did not belong to the employer, money which in effect belonged to the employee, should have been remitted. While I do not think that members of the committee were entirely satisfied that the clause was drafted tightly enough to exclude abuse, that clause was also passed.
There are a number of other areas addressed by this Bill. Regarding co-operative corporations, the classification of cooperatives eligible for meeting the 90 per cent co-op membership and share ownership rule has been broadened to include farm corporations and partnerships. Co-ops have been given increased flexibility in paying dividends to their Members.
The Bill has also taken some steps to prevent double taxation in the operation of Canada's tax treaties.
The Bill allows interest owing on late or deficient tax installments to be calculated using an interest offset method. This lets taxpayers eliminate interest charged on a deficient tax installment by prepaying or overpaying other instalments. The administrative burden of master trusts has been lessened by easing some tax rules. In addition, master trusts may use the three-for-one small business investment provision. When that provision was introduced in this House, I think many of us had reservations about it, and those reservations continue. The
rules allow pension funds three dollars of additional investment in foreign property for every dollar invested in small business in Canada. The program is not moving very fast and probably for good reasons.
Then there were several proposals in Bill C-64 concerning RRSPs and registered pension loans. The foreign holding property rules are changed so they are not subject to penalty because of corporate transactions they are unable to influence. The Bill also provides for the prorating of resource deductions when a corporation has a tax year of less than 12 months. This step was taken because some companies, due to takeovers, mergers or start-up dates, found themselves in unusual situations with a short tax year.
The Bill introduces a number of measures to reduce tax avoidance. Rules for the federal sales tax are tightened so that only one person may use credit for a particular dependant. It is very interesting that at the same time the Minister of Finance (Mr. Wilson) criticizes the federal sales tax, calls it a silent killer of jobs and says he intends to remove it and reform it and move to some form of consumption tax, we are seeing increased reliance on the federal sales tax.
There are a number of amendments in this Bill which will prevent companies from getting preferential capital gains tax treatment by distributing profits as a capital gain rather than a dividend. There are also some changes relating to venture capital corporations, and stricter measures concerning the forgiveness of employee debt in order to ensure that the full face value of what is owing is taxed. The rules concerning treatment of income interest in a trust are tightened to restrict such deductions to testamentary and certain commercial trusts. Scholarships, fellowships and sales achievement prizes are still subject to tax, although something called "widely recognized prizes for meritorious behaviour" are given a tax exemption.
I think this is probably a matter that should be studied further and would have been had there been the normal climate of calm, reasonable examination of an important tax Bill. What we saw was not such a normal climate. We saw something that we have not seen since reform of committees. We saw the membership of committees changed. We saw additional committee sessions being planned without consultation with opposition Members because the Government was so desperate to pass one particular clause, Clause 10. That clause sets up the international banking centres. This one clause in a major tax Bill became the Government's be-all and end-all and seriously interfered with the normal calm, reasonable scrutiny of a major tax Bill.
I would like to talk now a little bit about the history of international banking centres. In the 1970s New York banks feared that they were being closed out from the Eurocurrency market. They had a number of reasons for their concern. First there was their lack of familiarity with the market, the competitiveness. Second, they felt that in New York City they were limited by the very high city taxes, the very high state
December 8, 1987

taxes, and certain regulatory requirements of the Federal Reserve. So the New York banks at that time thought that the establishment of international banking centres would help them compete in Europe. It was the bankers who began the movement for international banking centres in the U.S. That was not the case in Canada. Canada did not have to feel closed out for the same reasons as the U.S. In fact, our banks are really quite competitive in international markets.
As part of the effort to persuade New York City and the State of New York to reduce their taxes, and as part of the effort to get the federal banking regulations changed, those banks in New York City started a very impressive public relations campaign. All kinds of estimates were floated about the number of jobs that would be created and the economic benefits that would accrue. Last year a banker told me about his experience at the time this effort was at its height. He was asked to go on a television program describing the advantages that an IBC would bring to New York. He was being coached for his interview by someone from a public relations firm. One of the questions he was told to expect was how many jobs this would create. He said he had no idea and the PR person said the figure that is being used is 150,000. You can use that figure safely, he said. Here is an example of a figure pulled out of the air and people being encouraged to use it.
In actual fact, what the banks really wanted they got because the federal regulations changed, which was their main wish; local taxes were reduced; then the question of the economic activity that was to have followed was just quietly dropped.
The chronology was dealt with rather well in an article by Mr. McKie, a very well-known bank tax expert. I will quote from Mr. McKie's paper in a minute. From my own recollection I know that twice in the last Parliament the Government was requested to approve international banking centres. The request originally came from Montreal and later from Toronto and, I believe, Edmonton. On both occasions the Government studied the proposal and decided that it would result in no significant advantage to Canada but might result in tax loss. Therefore, on both occasions the Government refused to establish an international banking centre.
However, when the present Government came to power, and even before it came to power, it made some promises. In 1984 or 1985 Mr. Louis Rasminsky, the former Governor of the Bank of Canada, was commissioned by the Department of Finance to do yet another study on international banking centres. I will quote from the last paragraph of that report as follows:
-IBFs are not going to generate the large increase in employment in New York or elsewhere in the United States that some earlier advocated. Suggestions that they would create, directly or indirectly, 5,000 to 6,000 new jobs have turned out to be substantial overestimates. The experience has been that moving even large amounts of Euro-dollar business from the books of one bank office to another involves very little movement of staff.
Income Tax Act
The final conclusion of the Rasminsky-Lawson report released in 1986 was that there would not be significant benefits to Canada but there was the risk of loss of tax revenue. Nevertheless, IBCs in Montreal and Vancouver are what we have in this Bill before us. Studies were done for the previous Government as well before it declined to go ahead with IBCs. The conclusion of those studies was that the benefits would be marginal and the risk of loss to the treasury quite high.
Another interesting factor is that when the present Government decided to go ahead with international banking centres it did not consult the banks which, incidentally, had never asked for this. The Government did consult with chambers of commerce in a number of cities but these negotiations went on for months before the banks were ever made aware of them. When the banks were made aware of them they pointed out that they could see no great advantage to this proposal.
Unlike the U.S. banks the Canadian banks were not inhibited by banking regulations in their international transactions. Also the Canadian banks were not complaining about income tax or asking for changes at that time. If the Government were serious about bringing new business to Canada it would move in the direction of changing withholding tax.
I would like to refer to evidence which was received by the Standing Committee on Finance and Economic Affairs in January, 1987, from the President of the Canadian Bankers' Association. Mr. Macintosh stated:
It should be stated at the outset that the chartered banks have never asked for legislation to create international banking centres. However, we have said also that we are prepared to go along with the government's initiative, provided that two basic conditions are met. The first condition is that the implementation of any IBC proposal must not cause banks to be worse off than they are now from a taxation and business operating point of view.
The second condition-is that market forces should be allowed to determine the location of IBCs.
In the measure before us there is no question of market forces determining the location of IBCs. The IBCs are to be established in Montreal and Vancouver only. No other country in the world has limited the development of banking facilities on the basis of geography in this way.
The session of the committee on January 29 was long and very interesting. It gave some quite interesting history. As far back as 1981 the City of Montreal approached the federal and Quebec Governments to consider an IBC. The federal Department of Finance carried out an internal study which concluded that such centres would be of little benefit to the Canadian economy or any particular region of the country. At the same time, the proposal eventually would lead to a significant erosion of the federal tax base.
As I mentioned, after the change of Government the new Minister of Finance requested Mr. Louis Rasminsky and Mr. Lawson, the former Governor and Senior Deputy Governor of the Bank of Canada, respectively, to re-examine the issue.

December 8, 1987
Income Tax Act
During the Rasminsky-Lawson study representatives of the Canadian Banking Association met with them on several occasions. The study was delivered to the Government in May, 1985, but not released until March, 1986.
The study concluded that Canadian efforts to develop an international banking centre would meet intense competition from the existing centres and from other places with potential as great as ours, and that it would be unwise to force the issue by vigorous tax competition. If the view is taken that rich priorities should be given to increasing Canada's role in international financial affairs, it was their opinion that the way to pursue that goal is to take care that the tax arrangements in Canada are no less favourable than they are in the major international banking centres and that foreign banks in Canada are given as much flexibility for their international operations as they are given in those centres.
Following on that point, many observers have suggested that if Canada really wants to increase the activity of our banks in foreign affairs and if some of the business now done in the Caymans and such places is to be brought back to Canada, the real answer is to make some changes in the withholding tax. There is no mention of that in this measure before us. It is a very simple, limited measure that will give a tax break to Canadian banks in respect of deposits from or loans to foreign customers, transacted in an international banking centre. It is a measure that excludes most of the paper, where the real activity is at the present time. In fact, it is a boondoggle, not any kind of enhancement of the roles of those two cities.
[DOT] (M50)
The measure before us will not enhance the role of our banks in international banking. If the Government really wanted to bring back offshore business, it would negotiate the bilateral tax treaties providing for exemption from source country taxation on commercial loan interest payments flowing between the two contracting states.
Let me quote from the expert I mentioned before, Mr. McKie. In a recent interesting article on European taxation, he also gives the history of IBC's. Let me quote a little of the history to point out how different the situation in New York was before the establishment of international banking facilities there, and our present situation. Mr. McKie refers to the efforts of New York state bankers between 1978 and 1981 to obtain legislative authority for the creation of a free banking zone in the state so they could compete with the so-called cubicle banks abroad. He said:
Under the proposal, banks would be allowed to establish special facilities in
New York to conduct foreign transactions without paying state franchise taxes
or being subject to federal reserve rules or deposit interest ceilings.
I would emphasize that those were the key changes that the American banks wanted at that time, but the proponents were not seeking any federal income tax concessions. Somehow, with this strange measure before us, we find federal income tax concessions being offered to banks who do not want them, and never asked for them, as an encouragement to do a very
limited amount of business which is very finite, while there is no incentive here to do the really profitable business.
I return to Mr. MacKay's account of what happened in New York:
Persuaded that these international banking facilities would generate jobs and spillover benefits, even the state's tax commissioner became an advocate of the proposal. The inevitable outcome was that in December 1981 appropriate legislation was enacted, bringing IBF's into existence, not only in New York but in many other states as well. Foreign banks, including Canadian banks, created IBF's in the U.S. The development and growth of U.S. IBF's is interesting, but it is generally agreed that the great expectations of the advocates have not been realized.
That, however, is another story which seemingly escaped the notice of the Canadians who were enthusiastically advocating international banking entities in Canada using all the U.S. hyperbole that so soon proved to be illusory.
Mr. McKie goes on to discuss various meetings in 1981 and so on. The banks continued to be less than enthusiastic about the IBC proposals. The requests for IBC were coming from chambers of commerce and others. People who had heard all the New York estimates of job creation naturally wanted this good thing for their communities.
According to Mr. McKie, as far back as 1983, the banks explained that:
-unlike the U.S. banks, they were not inhibited by banking regulations in their international transactions, and that freedom from Canadian income tax on an IBC's profits would not be any great incentive when the major hurdles to handling international operations from a Canadian permanent establishment were Canada's foreign tax credit procedure and the gross withholding taxes imposed by foreign countries on loan interest flowing into Canada.
That was the position which the Finance and Economic Affairs Committee took. The finance committee examined the whole issue of international banking centres. We went to New York, where we had extensive consultations with bankers, with people in various commercial institutions, and with the New York tax authorities. The finance committee's unanimous report was that this measure before us, which gives federal income tax concessions to banks, which either in Vancouver or Montreal make loans to or take deposits from foreign customers, is unlikely to do very much to bring back offshore banking business to Canada or unlikely to do anything to enhance economic activity in those two cities.
Montreal and Vancouver have very interesting geographical positions; Montreal in relation to Europe, Vancouver in relation to the Pacific Rim countries. They are both cities with high rates of unemployment. I am sure that every Member in the House would support the Government's desire to help those cities revitalize their economies and create jobs. This measure will not do it. This is a boondoggle which has been sold to people in Montreal and Vancouver as a job creator, which it is not. The Government has set city against city, region against region, for no reason whatsoever.
There is a long list of people who advised the Government that this measure would not do anything constructive, but did advise the Government on ways to bring international banking business to Canada if it wanted to do so. All this advice has been ignored.
December 8, 1987

It is understandable that municipal associations and boards of trade want more economic action in their cities. What is not understandable is that the Government is selling and misrepresenting the program which will result in tax leakage without any compensating benefit.
Among the inconsistencies in the Government's position, we have recently had a White Paper on Tax Reform which proposes to reduce corporate taxes by broadening the base. Base broadening is being done by eliminating or reducing tax expenditures. Yet with this IBC measure the Government is introducing new tax expenditures, and it has failed to provide us with costs or even forecast the costs. No one knows what the benefits, if any, will be. The Government has been unable to produce evidence of benefits. This is a wide open program; it is demand driven. We have no idea what we are getting into. It affects banks, but the banks do not want it and have not asked for it.
During the whole year that this matter has been before us, the Department of Finance has failed to come up with any benefit cost analysis. We do not know how much these international banking centres will be used; perhaps they will not be used at all. It may be that the banks will continue to do what the Government says that all businesses should do, which is make their business decisions on a business basis, not on the basis of tax incentives.
Interestingly, quite some time ago one of the Ministers announced an IBC in Vancouver as part of a regional development plan. If any economic impact studies were done, they were never made available to Members. Someone described the international banking centre proposal in Clause 10 as the "bankers' relief act". Indeed, the banks do stand to gain a lot from such an open-ended measure, if they use it creatively.
In fairness to the banks, I should say that they have never asked for the legislation. But up to now the evidence has always been that when the Government designs an open-ended demand-driven tax incentive, the tax lawyers and the tax accountants are much more ingenious than the Government at finding ways to get maximum use out of it.
What do we know about IBCs and job creation? The banks say that they might create 25 jobs. The Department of Finance say that they might create 11 jobs. What do we know about costs? The Department of Finance estimated the cost to the Treasury at $100,000 maximum. Nevertheless, it became very worried at the thought of our putting a cap on it. In committee, amendments to hold the cost to the treasury to $100,000 were met with great panic. An amendment that would hold the cost to several million dollars was met with similar panic. Obviously, the Government does not know what are the costs. In New York State they suspect, but they had not completed a full audit when I talked to them, that there had been a leakage in the amount of $200 million.
Income Tax Act
Let me repeat the three essential points about the international banking centres. They are being sold as a benefit to Montreal and Vancouver, and there is no proof that there will be any benefit whatever. Montreal and Vancouver, with high unemployment rates, could certainly benefit from government assistance, but why not do it in a logical fashion with export development assistance, or in other ways. This is a sham. There is no cap on the program, there is no assessment, and we have no idea of what are the costs. There is no guarantee that it will not run out of control. The Government has badly mismanaged this whole affair. The IBCs have been introduced as a regional development measure. They are not. It is a boondoggle, but it is not regional development.
How does the legislation fit with the Government's Canada-U.S. trade agreement? We are told the financial institutions will be wide open; there will be full reciprocity. How can the Government justify that position with a measure that is attempting to introduce banks to doing certain types of business in one city or another? It cannot. The Government keeps prattling to us about the importance of market forces. Yet the Government attempts to get banks to do certain types of business in two cities only. There is no other country in the western world which has produced this type of geographical limit.
We will watch with great interest. If I am wrong and this measure does bring prosperity to Montreal and Vancouver, nobody will be happier than I. But the onus is on the Government to produce some facts, and up to now it has totally failed to do so.


Michael Morris Cassidy: Madam Speaker, I would like to participate in the debate on Bill C-64. I must say that I am a bit surprised at the Minister. Bill C-64 is largely a technical Bill, but it also includes some measures on which the Government has been priding itself. In fact, the other day in Montreal the Prime Minister (Mr. Mulroney) had a great deal to say on Clause 10 which provides for the international banking centres.
[Translation\
According to the Prime Minister, international banking centres would bring prosperity to Montreal. The plan would benefit everyone in Montreal. It would absorb unemployment which is still at 11 per cent in the Montreal area, and so forth. I wonder why the Minister of State (Finance) failed to mention the advantages of this Bill and why he apparently instructed his Conservative colleagues to refrain from taking part in this debate and defending a measure that would not be effective, would be very expensive, would not provide any benefits in terms of jobs and which, I repeat, legitimizes the efforts of our Canadian chartered banks to avoid paying taxes to the Canadian Treasury.

The Minister of State for Finance (Mr. Hockin) might have been more forthcoming, given the proud boasts of the Prime Minister that this single measure will bring prosperity and

December 8, 1987
Income Tax Act
banking jobs back to Montreal. I am sure he probably said that thousands upon thousands of banking jobs would be moved, despite all the evidence to the contrary.
First, 1 wish to comment on some more general provisions related to Bill C-64. It is an Act to amend the Income Tax Act, the Canada Pension Plan, and the Unemployment Insurance Act, 1971. It is the annual hodgepodge or grab bag of different measures that have to come forward in order to stop tax avoidance and to put into force a number of technical measures announced at the time of the Budget in February, 1986.
One of the things that I feel strongly about now, in terms of the Department of Finance playing fair with people in the tax field, is that there should be a better means of handling legislation that relates to tax avoidance, which may well be necessary-it often is-than ministry press releases which may or may not be adequately reported across the country, in many cases followed some months later by legislation.
Where these measures are taken, and often there is no choice but to move very quickly, they should be gazetted, tabled in the House of Commons, or there should be some other means to officially notify those taxpayers who may be affected.
1 do not wish to defend those particular taxpayers. Many of them are wolves, sucking the Canadian taxpayer and the Treasury dry with all types of elaborate schemes which, although legal, are certainly designed to take money out of the pockets of average Canadians and put them into the pockets of well advised rich Canadians.
1 must say as well that there are a number of sections in the Bill which at least deserve some attention. The Bill perpetuates the refundable sales tax credit at a level which is fairly inadequate. It is meant to compensate people for what they spend in terms of sales tax if they are very poor, but the amount of credit is reduced by five cents for each dollar of family income in excess of $15,000. Therefore the effect of that is that by the time the family gets just above the poverty level it gets no more refundable sales tax credit at all. In fact, I believe the present level is $50 per adult and $25 for each child. If we reduce that by five cents for each dollar of family income, this means that by the time a family reaches an income of $16,000, which is far below the poverty line, there is no sales tax credit.
We all know that the sales tax is a regressive tax. We know that it bears more heavily on people who have to spend all their income on consumption than on people who are able to save part of their money because they are well off. Nonetheless, the sales tax credit remains inadequate.
The Government is also continuing the 3 per cent surtax which came into force in the 1986 Budget. That particular surtax of 3 per cent a year applied to all taxpayers and, as a
consequence, it had the impact of being a tax increase of $104 per year for an individual earning $30,000 per year, a tax increase of $177 per year for a $40,000 income earner with a wife and two children, and a tax cut of $450 for the same individual if he happened to earn $100,000.
Once again an unfair tax measure is being perpetuated by a Government whose tax policies are unfair and whose tax reform proposals which will come before the House in a few days, will be unfair. It is a Government that does not understand what fairness is all about, which is one of the reasons it stands so low in the opinion polls. It is a matter of shifting the burden from rich to low and middle income Canadians.
The Bill also has a number of other measures which are at least interesting. Clause 57 it provides for advance tax on corporate distributions of corporate surplus. This is an antiavoidance measure. It interests me that the Government has stated that it is opposed to the advancement of the margin tax which was proposed by the finance committee in its recommendations to the Government and in its report tabled about a month ago, yet, at the same time the Government is not above using a refundable tax on corporate distributions. In other words, it is not the instrument to which it objects. It objects to a tax which would start to collect adequately from the banks that only pay 1 per cent or 2 per cent of their profits in tax right now, because of the inadequate tax policies of the Government and because of the inadequate tax policies of the former Government headed by the Hon. Member from Bay Street, who also happens to represent Vancouver-Point Grey. He and his adversary, who is our adversary as well, the Hon. Member from Cleveland or the Hon. Member for Manicoua-gan worked together to ensure that Canada's banks pay next to no tax. As the finance committee pointed out, they only pay 1 per cent or 2 per cent of their income in tax. That has been the picture over the last few years.
This year the banks are incurring a loss, but in one year they will be able to offset almost all the hit they are taking at the direction of the Superintendent of Financial Institutions because of bad loans which were made to Third World and developing countries. In fact the banks, in their annual reports, are priding themselves on an exceptionally high level of operating profits, which would have resulted in record profit levels had it not been for the need to accommodate and write off some of the foreign loans that have turned bad.
At the same time Canadian taxpayers will be paying their taxes for 1987, and that means the shipbuilders in Levis, if they have jobs; the fishermen on Vancouver Island whose jobs are now threatened, or fish processors whose jobs are threatened because fish may be sent in raw form to the United States under the recent GATT ruling; and the farmers in western Canada who can barely survive because of the situation of the agricultural industry. Those taxpayers will be paying tax for 1987 at the same time as the banks are being allowed to have their profits written off against bad debts because of imprudent loans which they made a few years ago.
December 8, 1987

Of course if those same taxpayers turned around to the bank and asked for consideration because they have had trouble, we know what would happen. We can tell that from the number of forced bankruptcies and forced seizures of farm property by banks in western Canada.
I should like to focus now on the question of banking centres. This is mainly a technical Bill, but the IBCs are in fact a very costly tax break which may be of great benefit to financial institutions in Vancouver and Montreal that make use of it, but will be of little use to the economies of those two cities. Like many other corporate tax preferences, the cost of the measure is unknown. When the Department of Finance, through its Assistant Deputy Minister, came before us we asked for it to justify this IBC measure. Members of the committee from all Parties said, "we have questions about this matter". That was not because my Party is opposed to looking for ways to develop banking and financial business in Montreal or Vancouver. We are not opposed to that. We are looking for ways by which that could be done, but we are questioning this particular measure because it is an open-ended tax measure with questionable benefits in terms of jobs.
We asked the Finance Department how many jobs might be produced, and in the end it came up with an estimate which was equivalent to approximately 11 jobs in Vancouver and Montreal. I see the Hon. Member for Kamloops-Shuswap (Mr. Riis) who is looking rather questioningly at me. I think that is to be questioned as well.
The Hon. Member for Mission-Port Moody (Mr. St. Germain) has just come into the House, because he presumably thinks that this might be a good arrangement for his community. When he goes back to his constituents in the 1988 election campaign he should explain to them why the major measure for job creation and economic development in Vancouver, for which he voted, was a measure which gave Vancouver maybe 20 per cent or 25 per cent of 11 jobs through international banking centres. That was all he was able to do for his constituents. At the same time the unemployment rate in Vancouver remains at a level of 10 per cent or 11 per cent, or some such level. It has not come down appreciably to levels that would have been seen to be tolerable in Vancouver and in British Columbia. The Hon. Member for Mission- Port Moody should answer that kind of question, because it is the ridiculous kind of thing we are facing, but at what cost?
When the finance committee looked at the particular measure we looked at the tax implications because of what could happen if the banks were to transfer funding into Canada from just their Bahamian branches. We did not touch the business of Canadian banks in other tax havens or other paradis fiscal. It was clear that the excess of Canadian tax that would be paid, over the foreign taxes paid in The Bahamas, amounted to $32 million in 1985 and $20 million in 1984.
The banks may have avoided paying that tax for other reasons, but they incurred a Canadian tax liability through
Income Tax Act
those foreign branches, just in The Bahamas, of $32 million in 1985 and $20 million in 1984. This does not count elsewhere.
We pointed out to the Finance Department that we could see a very natural incentive for the banks to transfer enough business to Montreal and Vancouver that they would in fact be able to extinguish Canadian tax liability on the business which now takes place in The Bahamas. However, business would still be sought and marketed abroad. Any decision about the business made in Canada now would continue to be made in Canada, but there would not be new jobs created to manage the particular business. It would be mainly just a bookkeeping entry. It was pointed out-and the banks and the Finance Department agreed-that foreign business in The Bahamas does not create any substantial amount of economic activity by those banks in The Bahamas. Their branches are just that. They have a handful of employees. There is no big deal about it and only a portion of that business might be moved back to Canada.
What will be get, Madam Speaker? We will not get any money for Canadian purposes. We will not get any additional liquidity to be used for investments in Chicoutimi or in the Fraser Valley or places like that. By definition the money which is put into banking centres has to be relent abroad. The rules laid down in this Bill are so narrow that the only money which will come into banking centres will be money in sovereign risks, money in the giltest of the gilt edge investments in which there is absolutely no risk at all and in which the margins tend to be extremely limited.
What will the tax loss be? As I say, $32 million is a good estimate. What other estimates are there? We asked the Department of Finance and it was not able to tell us. What we have is a precedent. The Department of Finance was asked to estimate the cost of the scientific research tax credits back about five or six years ago. That program was brought in by the Liberals and perpetuated for a while by the Conservative Government. The department said the cost would be about $200 million, but it wound up being some $2.5 billion to $3 billion in tax expenditures. Most people understand that concept now. Instead of sending a cheque to an individual, a tax expenditure allows that individual to save the equivalent amount through not paying tax that would otherwise be payable. The Finance Department underestimated by a factor of 10 times the loss on the SRTCs. The Department was unable to tell us what the tax loss would be, but we had an estimate of $32 million.
Suppose that $32 million was a correct estimate. Suppose we got 11 or maybe 25 jobs, which is what the bankers estimated. You are talking about $1 million to $3 million of lost tax revenue every year in order to create a handful of jobs in Vancouver and Montreal under a banking centre concept which, regrettably, will have no spin-off effect that I can imagine or that anyone else can imagine in those particular communities. If we wanted to create 11 jobs it would be a heck

December 8, 1987
Income Tax Act
of a lot cheaper to have a budgetary item in the House of Commons dealing with that creation. These are bankers so let us give them a salary of say $50,000 on average a piece, a substantial salary according to most Canadians. That cost would be in the order of $500,000 or $600,000 a year. If my hon. friends from Montreal and Vancouver want to see 12 jobs created in those communities at much less cost to the taxpayer, then let us do that and save most of $32 million a year which will be the cost of creating those jobs according to the proposals that we have from the Government right now.
It has been pointed out that the Canadian Bankers' Association does not want this particular measure. In fact, the bankers have had a bit of a conversion about tax expenditures and tax deals that benefit them. I think they shed crocodile tears because they have benefited from the biggest tax boondoggle this country has seen in its history in basically exempting banks from tax over most of the last decade. Alas, the banks are now saying "Gee, we really have too much with those tax exempt shares and the various other deals that allowed us to avoid tax. We do not want that again. In terms of our public relations, it is not good." This they have begun to recognize after having pocketed huge amounts of taxpayers money.
The bankers' reticence on this measure has not cut any ice at all. The Government has decided to go forward. It has provoked what can only be described as a nasty little fight between the three communities that are mainly affected, Toronto, Montreal and Vancouver and, frankly, as a Canadian who has worked in Montreal, grew up in Toronto and was born in British Columbia, I do not think that that kind of thing is good for national unity.

Many times, in discussions with the banks and chambers of commerce in the three communities in question, I suggested and I said so in committee when witnesses came to testify, that there should be a better distribution of jobs in our economy, specifically in banking and financial services. This is a very important point. If the Governor of the Bank of Canada during the seven years preceding the appointment of John Crow had been doing his job, perhaps the banks would not have abused the system and would not have been allowed to abuse the system the way they did.
Madam Speaker, if we had had a governor and a government worth their salt, they would have insisted on having a better distribution of jobs in the banking sector than is now the case.

The situation we have right now is that financial jobs have been migrating to Toronto in large numbers. The banks have been moving different sections and so on there, even if they have kept a shell of their head office operations in Montreal. Efforts to establish regional banks in western Canada have not been particularly effective. Vancouver has also seen financial activity migrate to Toronto.
I would like to see a task force established between the Chamber of Commerce and the municipal authorities in Vancouver. Maybe some Members of Parliament from the banking industry and the Department of Finance could look at ways of developing financial and trade related service activities in Vancouver in a way that will be far more effective than a small proportion of 11 or 12 jobs which is all that this measure proposes to us.

I would like to see a similar exercise for the Montreal area, Madam Speaker, where chambers of commerce, municipal authorities, even Members of Parliament, private citizens, companies involved in world trade and the Government, the Department of Finance, would work together to try and create the climate for the kind of financial service that does not exist at this time.

I regret with relation to this particular measure the degree to which the Government has, for reasons which I believe are inadequate and unjustified, subverted the parliamentary reform process. Our committee recommended against this measure. Perhaps my colleague would like to ask me about the committee. I think this is a matter which should be laid on the record before the House during this debate on third reading.
We will oppose the Bill for the reasons I have given because we think the Government is wasting taxpayers' money with no discernible benefits. It is unfortunate.
IVIr. Baker: Madam Speaker, could the hon. gentleman enlighten the House on the committee?


Michael Morris Cassidy: Madam Speaker, that is a very intelligent and perceptive question. I will be brief because I know other Members want to speak.
The finance committee has been a pioneer in parliamentary reform. Our work on tax reform demonstrates that; for example, our work on credit card interest rates and on the banking centres. We went to New York and prepared a report, which we knew the Government would not like, but it represented the collective judgment and wisdom of the committee. In addition, the committee has shown that you can have a solid group of Members of Parliament from all Parties who can develop the technical competence and expertise to handle extremely difficult legislation. That is why we have insisted, and it has been accepted, that rather than having legislative committees deal with financial legislation the finance committee does.
The other day when Bill C-64 came before the committee, instead of allowing the committee to do what it would have done-because we know what the report had been on this measure-the Government packed the committee. The Government sent in a number of Members whom we had never seen before. They subverted the integrity and the ability of the committee to work together in future under the reform process
December 8, 1987

to get a positive vote on the measure in Clause 10. They got it, but the cost, I suggest, is a very high one.
If the Government were really committed to the parliamentary reform process, it would be prepared, as say the British Government has been prepared to do from time to time in the House of Commons, to accept that the wisdom of the parliamentary committee, which has studied a matter very closely, is greater than the wisdom of a Prime Minister who has made a silly promise, or of one or two officials in the Department of Finance, or of political advisors who have made a particular recommendation which does not wash in the light of close scrutiny. I regret that the committee's advice was ignored and that it was subverted by a bunch of parachutists who came to the committee at the last minute in order to ensure that it voted the way the Government wanted it to do. Perhaps the Hon. Minister would like to justify those actions. He has been notoriously silent on the IBC question during the course of this debate.


Mr. Riis:: Madam Speaker, it is an unfortunate turn of events that the committee has been manipulated to facilitate the Government's policies as opposed to the implementation of the recommendations the committee worked so long and hard to develop.
My question to the Hon. Member deals with his suggestion of a task force that would be made up of the obvious players who are interested in improving the banking and financial facilities in both Montreal and Vancouver. Perhaps my hon. colleague could elaborate on what might be some of the avenues that Montreal and Vancouver could pursue to develop a more comprehensive financial community, particularly recognizing the need for taking steps to initiate an increased trade function as well as a financial function for both these Canadian cities.


Michael Morris Cassidy: Madam Speaker, some of that, of course, will come from those communities if they are consulted. I know from my contacts with members of the new municipal administration in Montreal that they are anxious to develop many new initiatives in order to solidify the position of Montreal as the trading centre for Canada, the centre that can provide services for trade with Latin America, Africa and of course particularly Europe. Perhaps, in the near future, if the summit talks in Washington this week go well, it will increasingly provide services for trade with Warsaw Pact and Soviet Bloc countries in eastern Europe.
It seems to me that we need to work systematically through the services in terms of factoring, financing, export and trading information and market intelligence. I learned the other day that there is a franchise service called the World Trade Centre which is trying to establish itself here in Ottawa. I am afraid it is just a kind of a club where a few people meet from time to time.
Income Tax Act
When we talk about a world trade and financial centre in Montreal or in Vancouver, it seems to me we should be talking about something much broader than that. I believe that a wide range of interests in Montreal are able to contribute toward developing that as they are in Vancouver as well. I find it ironic that at the time we are entering into this legislation for international banking centres the Government is introducing a trade deal with the American Government which will allow the Royal Bank of Canada centered in Montreal to be 100 per cent American owned. It will allow-

This means that the Bank of Montreal would be 100 per cent directed and controlled by American interests. In the past, we insisted that our chartered banks be headed by Canadians and that not more than 25 per cent of Canadian banks should be controlled by foreign interests. Now this is going to change, and it is a strange about-face. How can the Government both insist on creating small international bank centres in Montreal, for instance, and make it possible for chartered banks such as the National Bank to be controlled by American interests as a result of the Free Trade Agreement between the Prime Minister and U.S. President Reagan?

It is a very curious kind of contradiction, but this Government has been intent on adopting American standards and selling this country to the Americans ever since it came to power in 1984.


Mr. Parry:: Madam Speaker, I would like to hear a bit more of the Hon. Member's analysis on the use of the goon squad by the Government in committee. I think this is something worth putting on the record. Perhaps the Hon. Member would go into a little more detail about what happened on the committee.
Does the Hon Member think that the public disputes between members of the Government on a regional basis was simply an opportunity the Government offered its own backbenchers to get themselves some good publicity back in their own ridings where of course it would be their comments and their opinions rather than those of their colleagues which would receive attention?


Michael Morris Cassidy: Madam Speaker, what I noted was the number of members we had never seen who suddenly popped up. For example, I believe that the Hon. Member for Fraser Valley East (Mr. Belsher) was substituting for another Member. I also believe that arm-twisting took place.
Members who could not be present but were regular members who participated very actively in the committee were absent, including, for example, the Hon. Member for Edmonton West (Mr. Dorin). Did he have his arm twisted? Did the Government tell him that he is an up-and-coming Member, there is still hope the Government will stay in power for a bit longer and a Parliamentary Secretaryship or some other glittering prize would be his provided he did not rock the boat

December 8, 1987
Income Tax Act
on this particular issue? Of course, the Government understood that he had signed the finance committee's report, but perhaps he could make himself absent on that particular day in order for the Eton. Member for Fraser Valley East to take part.
Is that what took place? I am not sure what exactly happened because I am not privy to the things that happen on the back-benches of the Government.
The Hon. Member for Beauharnois-Salaberry (Mr. Hudon) has never, in my three years in this House, shown the slightest interest in matters which touch upon the finance committee or on any economic matters at all. I am not permitted to comment on whether or not he is in the House, but I am sure if he is he will pop up to explain his sudden attendance at the committee and his sudden insistence at the time the vote was taken on replacing some other member on the committee.
The Hon. Member for Capilano (Mrs. Collins) popped up as well. I am not sure if she was recently appointed to the committee or not, but she too had not been involved with the committee until it came time to vote on this particular measure. Since she represents many people from the Chamber of Commerce and the banking community in Vancouver who live in her constituency in West and North Vancouver, she hastened to vote the way the Government wanted her to vote. So it went.
I say that that was a shameful day in the life of the Commons finance committee and I say it is shameful that the Government packed the committee in the way it did.


Mr. George Baker (Gander-Twillingate):: Madam
Speaker, I have a few words to say concerning this Bill. I was surprised to hear members of the New Democratic Party talking about the goon squad. I would like to have listened to more of the information the hon. gentleman was imparting. The only goon squad about which I thought he would talk was the goon squad that some people say will exist in a section of the Unemployment Insurance Act which is to be amended by this Bill under which persons are identified as collecting unemployment insurance when they are not supposed to be collecting it.
The title of the Bill is an Act to amend the Income Tax Act, a related Act, the Canada Pension Plan and the Unemployment Insurance Act, 1971. This big Bill is supposed to create jobs in Montreal and Vancouver. I think it is supposed to create 26 jobs. No, according to the Deputy Minister for Tax Policy Division, Department of Finance, 11 jobs will be created. That is so, but Mr. Macintosh, the President of the Canadian Bankers' Association, estimated that some 26 jobs would be created, not 11.
I imagine that more than 26 jobs were required to print this Bill. I suppose the purpose of the Bill is to create 26 jobs. I do not know where the jobs will be. How many jobs will be created in Montreal and how many jobs will be created in
Vancouver? I imagine that will be the subject of the next cabinet meeting. Will 15 jobs be created in Montreal and the rest created in Vancouver? Where will the jobs be? According to the Canadian Bankers' Association, there will be 26 jobs, but there will be 11 if we accept the word of the Assistant Deputy Minister and the word of the hon. gentleman who spoke a few moments ago.
One would expect this Bill would deal with the Unemployment Insurance Act and the Canada Pension Plan. It does. It makes more amendments to more sections of the Unemployment Insurance Act than I would have time to mention.
If we are going to amend the section of the Unemployment Insurance Act that deals with eligibility or overpayments to recipients, one must wonder where the priority of the Government is. Those sections of the Act are being amended here today. If you were to say to someone affected by the overpay^ ment section of the Act that it is being amended today in the House of Commons, somebody would say, my goodness, is it being amended so that at least I get a chance to appeal the decision made by the Government on my unemployment insurance? You say no, that is not what is being amended. Well, they say, what is being amended, because that is what it deals with?
If you said to someone else that the section that deals with undue hardship is being amended today in the House of Commons, somebody would say, my goodness, it is being amended today! That section of the Unemployment Insurance Act says that a person will not have to pay monies back to the treasury if it creates undue hardship to that person. Somebody would say, my goodness, that is a very good thing to amend to make it clear at least that the Government would be able to give us more of a break. I mean, we have not seen the Government of Canada use that section for ages, perhaps simply because the Minister or the commission did not want to forgive the debt.
Let us not forget, we have a system in place in Canada today where all of the bureaucrats, all of the managers, all of the fellows receiving big salaries can receive a big Christmas gift now if they cut back more, and collect more money for the Government of Canada.
If you were to say to somebody that section is being amended today in the House of Commons by Bill C-64, somebody would say yes, that is what Members of Parliament should be talking about today in the House of Commons. That is, to give us a break so that perhaps we will not have to pay back as much.
After all, they did not make the mistake under this section that is being amended. The people who made the mistake were the employees of the Unemployment Insurance Commission. The computer made the mistake. It was not their error but they have to pay it back. Well, it is nice that the section is being amended today. Perhaps the Government of Canada is
December 8, 1987

doing what we want it to do, and that is to say, look, this is unfair, you should not have to be the ones who have to pay that back. However, if they do not pay it back, they go to jail. Perhaps somebody would say the Government of Canada is amending that section so they do not have to go to jail. In other words, if they owe money to the Unemployment Insurance Commission, if they owe money to a bank or a loan company, they could quite conceivably end up in jail under our system if the right levers are pulled and if the right things are done. The hon. gentleman who is talking should have a few words to say after me because I imagine he has individual cases as well.
I suppose you will find similar sections of the Canada Pension Plan Act that are being amended. If you said to someone collecting that pension, my goodness, this section or that section is under review and is being amended today in the Parliament of Canada, someone would say, hurrah, because perhaps something useful is being done. Perhaps the Government of Canada has now changed its tune for the first time and is saying those sections are wrong, the law is wrong, it is unfair to those people to say you must do this and you must do that when it is not their fault in the first place that they are in the situation they are in.
That is why I decided to have a few words to say today. Instead of doing these things, the Government of Canada has embarked on another policy. Yes, it will change the Act. It will change a whole whack of sections today. Yet it has nothing to do with benefits to the people of Canada. It is to make sure that the changes the Government of Canada has made as far as increased taxation is concerned are carried through into the various other Acts that relate to it. In other words, to make sure again that the recipient cannot get away with what is already in the Act.
One would question as well the intent of the Government of Canada in this particular Bill to extend the 3 per cent surtax. One would question the intent and purpose of the Bill to create jobs on the principle that has been used many times throughout this country; that is, to have an area of the country set aside in which something would happen because you have set it aside for a particular purpose, either for taxation purposes or trade purposes.
The Bill will accomplish very little as far as what the Government has said it will accomplish. It is very discouraging to see Acts such as the Unemployment Insurance Act amended by the Government in this way when it could be doing so much, and when it is acting in a manner to further penalize the poor in this country and to take whatever it can out of their pockets.


Aideen Nicholson: Madam Speaker, the Hon. Member Who has just spoken so eloquently mentioned the 3 per cent surtax. That tax was announced in February, 1986, and made permanent by this Bill. I wonder if the Hon. Member would care to comment on some of the other taxes introduced by the Government.
Income Tax Act
For example, if you add up the income tax on individuals and sales taxes they find an astonishing $36.8 billion which is expected to flow to the Government. Looking at the effects on a married couple, two wage earners, two children, earning $15,000 a year, their total tax increases add up to $470 in the taxation year 1987. I wonder if the Hon. Member would care to give the House his views ofi the taxing record of the Government since it has been in office.


George Baker: Madam Speaker, that is an excellent question because it gets to the Very heart of the matter of the general direction of the Government. One would have to wonder whether there has been an intentional effort by someone behind the scenes to scuttle the Government of Canada ever since it came to power in 1984. Some of the measures which were introduced to increase the recovery of money from Canadians were absolutely incredible. We recall the measure which was brought in to charge a fee if you telephoned the weather office. That was pure insanity. There was a measure to lay off tour guides in national parks and other such things.
Those measures are ill-advised for anyone trying to run a government sensibly. In order to collect money from the people of Canada a government should not tax popsicles, potato chips, and ice cream bars which young people purchase in the corner store at recess time. That all-important treat for a young child should not be taxed. With all the big banks, financial institutions, and cozy millionaires, the Government need not tax the snack foods of little children, but that is what the Government did.
In response to the Member's question, the over-all impact of the government charges has been to alienate ordinary people. After seeing the Government's sneaky summer snack attack they believe that the Government does not care about them.
The Government of Canada is now considering a tax on groceries. I suppose since they are taxing individual Granola bars which you purchase in the corner store they believe they should tax the large packages of Granola bars which you buy in the grocery store. I suppose that is the rationale. The Government even taxes popcorn. If you want to alienate a whole group of people you put a tax on popcorn, and that is what the Government did.
Therefore, one would suspect that there is someone behind the scenes who is advising the Minister of Finance to impose taxes such as that on little children's snack food which will destroy this Government for all time. It will never get past the next election if it follows such advice. However, that is what the Government of Canada did. I believe that there is someone behind the scenes scheming and conniving to destroy the Government of Canada with tax policies.


Mr. Lewis:: Madam Speaker, I rise on a point or order. I want to advise the House that Thursday will be an allotted day.

December 8, 1987


John Edmund Parry: Madam Speaker, I am glad to have the opportunity to speak on Bill C-64, although it is always difficult to follow the Hon. Member for Gander-Twillingate (Mr. Baker) whom I admire-


Mr. Brisco:: Madam Speaker, I rise on a point of order. I understood that questions and comments were permitted and that there was still time for them. I am not sure whether the Hon. Member is speaking on debate or is speaking on questions or comments.


The Acting Speaker (Mrs. Champagne):: There were two minutes remaining for questions and comments. I recognize the Hon. Member for Kenora-Rainy River (Mr. Parry) on a question or comment.


John Edmund Parry: Madam Speaker, I had risen on debate and I would be perfectly willing to yield the floor to my hon. friend if he has a question or a comment.


Robert Hylton Brisco: Madam Speaker, I will seek an opportunity to expand upon concerns which I have arising from the contribution to debate of my colleague from Newfoundland. I suspect that he is having a "Mac attack" and not a "snack attack". I believe he is in league with the dentists, some of whom are delighted to see children eat junk food to contribute to their cavities.


Some Hon. Members:: Shame, shame.


Robert Hylton Brisco: Well, I am stretching the point not quite as far as my colleague stretched his.
My colleague should consult with the NDP which as a matter of policy some years ago said that all junk food should be taxed out of existence leaving available to young growing children only those foods which have a healthful contribution to the diet.
I would like to asked some technical questions of the Hon. Member. However, other speakers from his Party will probably be making the same kinds of supportive comments in terms of trying to cover the backside of the City of Toronto on behalf of their Leader. Therefore, I will raise my questions later.


The Acting Speaker (Mrs. Champagne):: The period for questions and comments has now ended. Resuming debate, the Hon. Member for Kenora-Rainy River.


John Edmund Parry: Madam Speaker, I am glad to have the opportunity to speak on Bill C-64 which, as has been remarked upon by other speakers, consists in part of the rearrangement of some tax loopholes, principally those which refer to corporations, and in part to the institution of the notion of international banking centres within Canada.
There are numerous other amendments of a consequential and a detailed nature. I had to admire the ability of my colleague, the Member for Gander-Twillingate, to bend the subject under discussion to his desired theme, that of the
turpitude of omnibus Bills, something, I think we should point out, which was not invented by the present Government.
Our tax system is complex. This Bill does nothing to simplify it. In my view in the long run complexity equates to unfairness in Canada's tax system. There is complexity to such a degree that the ordinary accountant or lawyer has absolutely no chance of understanding the Income Tax Act. Rather than further rearranging loopholes, shuffling deductions, and complexifying what we have, we should be lending all our efforts to the simplification of the tax system.
The amendments foreseen by this Bill as they relate to the refundable sales tax credit have been condemned, and I believe rightly so, by the National Council on Welfare. The refundable sales tax credit threshold is too low. The sales tax credit disappears too fast at the rate of 5 cents on the dollar above that threshold. The 3 percent surtax which is perpetuated by this particular Bill is, of course, an inequitable tax measure which has no degree of progressivity.


The Acting Speaker (Mrs. Champagne):: I am sure the Hon. Member will want to continue his expose after Question Period.
It being 1 p.m., I do now leave the Chair until 2 p.m.
At 1 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.


Jean-Robert Gauthier: Mr. Speaker, according to a headline on the front page of the newspaper Le Droit today, the space agency will be located in Ottawa. As everyone knows, in the hesitation waltz, the heart of the Prime Minister is swinging between Montreal and Ottawa and the location of the space agency changes according to his humour. While the Prime Minister wallows in uncertainty, the National Research Council is working. Tired of waiting for the Prime Minister, the NRC began last weekend to recruit the scientific and administrative staff for the space program by placing a full page ad in the newspapers.
The NRC published in Ottawa and Montreal newspapers a hiring advertisement giving full details on the number and designation of positions, the qualification and hiring criteria, job descriptions, position classifications and even linguistic requirements. Everything is there; everything is ready. Only
December 8, 1987

one detail is left out, namely where the candidates will work, in Ottawa or Montreal. Yet, this is a major detail!
The uncertainty of the Prime Minister is becoming ridiculous. Make up your mind, Mr. Prime Minister, because, by the time you do, those responsible for the program will probably have put the space agency in orbit somewhere between Ottawa and Montreal!



DISARMAMENT


Mr. Alex Kindy (Calgary East):: Mr. Speaker, the eyes of the world are on Washington today and the visit of the First Secretary of the Communist Party of the U.S.S.R. to that city.
The event is the signing of a treaty to ban intermediate nuclear missiles. Some people see it as a move in the direction of nuclear disarmament. Who would quarrel with that proposition?
The only problem is that the United States, a democracy, is signing a treaty with the biggest colonial power of the twentieth century. The record of the Soviet Union in respecting treaties is dismal. Let us mention just a few. Yalta is an agreement to hold free elections in Poland and other satellite countries. We are still waiting 40 years later for those free elections.
What about the Helsinki Convention on Human Rights and the free flow of people between countries? The Soviet answer to this question is the continuing maintenance of the Berlin Wall.
What about the presence of the Soviet Armed Forces in Afghanistan, and the killing of innocent villagers, including women and children, by attack helicopters?
Let us put the signing of the treaty in its proper perspective.



EMPLOYMENT


Mr. Rod Murphy (Churchill):: Mr. Speaker, yesterday, in answer to a question raised by the Member for Hamilton Mountain (Ms. Dewar), the Minister of Employment and Immigration (Mr. Bouchard) said that he was authorizing non-Canadian workers to do the work that is normally done by people who are on strike at Air Canada because no Canadians applied.
Again the Minister of Employment and Immigration is refusing to enforce the laws of the land. Manpower directive, Chapter 17, states that temporary work authorizations cannot be issued to people from outside Canada to take the jobs of striking workers. The manpower directive is very clear. Chapter 17 is very clear.
It is obvious that the Minister of Employment and Immigration is refusing to live by his own regulations. I call upon the Minister to stop this illegal act and to enforce the laws and regulations of this land.



EXTERNAL AFFAIRS


Mr. Gordon Taylor (Bow River):: Mr. Speaker, in a book written by Mikhael Gorbachev entitled Perestroika, the Communist Leader says:
We want freedom to reign supreme in the coming century everywhere in the
world-
In the same book he states that:
We are not going to change Soviet power, of course, or abandon its
fundamental principles, but we acknowledge the need for changes that will
strengthen socialism-
As one reads these words, remember that the Soviets signed the Helsinki Final Act in 1975 which pledged to protect human rights and fundamental freedoms. Just two years later the Communists marched into Afghanistan and ruthlessly killed children, women, and men, and they are still at it. Remember also that one of the fundamental principles of the Communists is the domination of the world.
It will be time enough to believe Gorbachev's "freedom to reign supreme" talk after he takes his army out of Afghanistan, after he permits the Ukrainians, the Poles, the Yugoslavians, the Hungarians to have free elections, after he removes the Berlin Wall, and stops persecuting the Jews in Russia. Until then, let us keep our powder dry.

[ Translation]



DISARMAMENT


Mr. Marcel Prud'homme (Saint-Denis):: Mr. Speaker, it gives me great pleasure to say a few words, if only to balance the first three statements we have just heard about the summit meeting in Washington. I find the opinions just expressed so negative that I would like to have more time to say that, for my part, like millions of other human beings, I rejoice at the

December 8, 1987
fact that the two most powerful men on this earth can come to an agreement.
I publicly applaud the open-mindedness which now exists in the USSR thanks the new Soviet leader Mr. Gorbachev. I hope that this openness to new ideas will meet a corresponding attitude in the Western world.

I hope that this would only be the first step toward the real summit of total disarmament, the real summit toward better comprehension and a better world.
By being negative that we will not help bring sanity to this planet that we want to see survive. We must concentrate first on disarmament. I do not think it is fair to be negative, negative, "niet, niet", when Gorbachev says he would like to restructure his country and show openness to the West. Some say it is a bluff. I say let us it and see how far we can go in cooperation at this most important time.
1 can assure my colleagues who spoke before me that millions of young people see this as a hope. When there is a hope, I join in sharing that hope.



EXTERNAL AFFAIRS


Hon. Suzanne Blais-Grenier (Rosemont):: Mr. Speaker, on Sunday, November 29, more than 700 people lost their lives in Haiti. The Front national de concertation, consisting of members of the Haitian community of Montreal, has asked me to speak on their behalf today in the House.
The Haitian people have lost all confidence in Colonel Namphy's National Council and ask that he be immediately replaced by a national coalition government consisting of the five major opposition leaders.
Furthermore, the Haitian community in Montreal asks that the nine-member Provisional Electoral Council that was dissolved by Colonel Namphy be reinstated. Only then will our community in Montreal be able to trust our Government and have faith in its firm resolve to promote and work out a democratic solution to defuse the present crisis in Haiti.
The Government of Canada is asked to terminate all financial aid to Haiti until it is convinced this aid is not being diverted by the present government to purposes other than originally intended.
Furthermore, the Haitian community has lost confidence in the Canadian Ambassador, Mr. Laverdure, and prefers to see
the political situation in Haiti assessed by grass roots groups and the Church, and it wants the Canadian Government to demonstrate its clear intention of supporting these organizations.



DISARMAMENT


Mr. Bill Blaikie (Winnipeg-Birds Hill):: Mr. Speaker, 1 would have thought that today would have been a day on which we could all join together in welcoming and celebrating what is happening in Washington. I remind those who want to keep their powder dry that there are still enough nuclear weapons in the world to kill us all 10 times over.
I was to begin by saying that I hoped 1 spoke for all Members of Parliament. Perhaps I should revise that by saying 1 hope 1 speak for most Members of Parliament when 1 say that we join with people all around the world who today are looking to the meeting between Ronald Reagan and Mikhael Gorbachev as the beginning of a new day in Soviet-U.S. relations and new hope for the future of the world.
The agreement to be signed is a first, in that it eliminates a whole class of nuclear weapons, but it must become the building block upon which future agreements to rid the world eventually of nuclear weapons are built. Otherwise, it will have been an occasion for false hope.
Congratulations are in order to both leaders, both of whom seem to have transcended, hopefully for good, the traditional thinking which has so imprisoned them and their military industrial complexes. I hope Mr. Reagan will be able to transcend his current view on star wars as well.
I am not a fan of the President, as is well known, but give credit where credit is due. It is in the recent attacks by the maniacal American right against President Reagan for signing this agreement that we see the "evil empire" that still lurks in far too many American hearts and minds. President Reagan should pay no more heed to them than General Secretary Gorbachev should pay to those who oppose glasnost or perestroika.
Now, if they would each agree to be as wise about Nicaragua and Afghanistan, respectively, we would have something else to celebrate.


Some Hon. Members:: Hear, hear!
December 8, 1987



SLED-DOG RACING-PRE-OLYMPIC EVENT IN CANMORE, ALTA.

Mr. Dave Nickerson (Western Arctic):: Mr. Speaker, one of our fastest growing sports is sled-dog racing. Canada has an enviable reputation, both for its dogs and the athletes who contest the events.
Top Canadian racing dogs are in demand not only in the United States but also in European countries such as Germany and Switzerland.
An international circuit of important races is being developed in North America.
Sled-dog racers, wishing to encourage better support and recognition for their sport, are organizing a major race at Canmore, Alberta, just prior to the Olympic Games. The hope is that within the not too distant future sled-dog racing will itself become an Olympic sport.
*
* *



THE ARTS


Mrs. Lucie Pepin (Outremont):: Mr. Speaker, this morning, there was a demonstration in Ottawa in front of the National Arts Centre. It was a joint demonstration by three Quebec dance groups: Eddy Toussaint, Ballet Jazz and Les Sortileges.
These groups are asking for more generous grants from the Canada Council. All three are nationally and even internationally known. They are loved and appreciated by everyone except, it seems, the Government of Canada. The Government, through the Canada Council, has refused to increase their grants. This, while we so often hear about the need for preserving our Canadian culture!
Well, gentlemen, here is your chance! Considering the Conservative Government's interest in the arts, Mr. Speaker, I would ask this Government to listen to these Quebec dance groups and meet their requests, to help promote Canada's culture and the arts through the medium of dance.



WINTER OLYMPIC GAMES


Mr. William G. Lesick (Edmonton East):: Mr. Speaker, may I remind all Hon. Members that Parliament Hill will welcome the Olympic Torch on the morning of December 16.
I urge all Members, people from the other place, and staff, to take an active part in the planned festivities. Most of us have received an invitation from the Minister of State for Fitness and Amateur Sport (Mr. Jelinek) to a unique reception that will take place on the evening of December 15 in honour of the Torch.
I look forward to sharing the spirit with the Minister, and meeting members of Canada's national sport governing bodies, Olympians past and present, Torch carriers, and many other interesting personalities.
In Edmonton we are very excited that the Torch will be arriving on February 10, one of its last stops before reaching the Fifteenth Winter Olympics in Calgary.
I congratulate the Minister on the success of the relay to date. The Torch has given Canadians an issue around which to rally. We all want the Calgary Winter Olympics to be the best of all. It is simply a matter of national pride!
*
* *



CANADA-UNITED STATES TRADE AGREEMENT-EFFECT ON CANADIAN WINE INDUSTRY

Nelson Andrew Riis: Mr. Speaker, the Minister for International Trade (Miss Carney) in a letter to Mr. Alan Brock, the Chairman of the B.C. Grape Marketing Board, indicated that the Government was providing assurances "that changes arising from a Canada/U.S.A. Trade Agreement would not be implemented overnight". She went on to say that "full consultation" with the industry would occur.
In a letter to the growers from the British Columbia Grape Marketing Board, the Chairman said the following:
What we now have in this agreement bears absolutely no resemblance to the recommendations put forward by our provincial trade negotiators. We do not have an adjustment period here; we have the premature death of an entire Canadian industry. There is no doubt in our minds that the Canadian wine industry was used as a bargaining chip by our federal officials in their attempts to cut an eleventh hour trade deal. Either that, or we had already been sold out long ago to President Reagan and his powerful southern California wine lobby.
The Canadian wine industry has undoubtedly been singled out in this trade agreement. We are the hardest hit industry within the Canadian economy and we grape growers are by far the most vulnerable segment within this industry.
The British Columbia Grape Marketing Board further states that an immediate compensation package must be

December 8, 1987
Oral Questions
structured to provide compensation for literally every grape grower in Canada who, by this agreement, will be out of business within two years.



THE ECONOMY


Mr. Gabriel Fontaine (Levis):: Mr. Speaker, in 1976, the present Leader of the Liberal Party (Mr. Turner) resigned from his Party because in his opinion its policies were leaning too much towards socialism and were contrary to the basic principles of a healthy economy. He left because he considered that the Government was intervening far too much in the economy, was accumulating too much of a deficit and was showing an obvious lack of respect for the free market forces.
From 1976 to 1984, Liberals kept on increasing governmental control of the economy, making Canadians more and more dependent on interventionist policies, resulting in the private sector getting discouraged when faced with ever rising interest rates and increasing unemployment.
In 1984, Canadians saw the light and gave us the mandate to reduce the deficit, to put the economy back on track, and we are doing well. However, the Liberal Leader is now changing his mind again. His new creed is that the State must take charge of the management of the economy.
The Liberal Leader is afraid of the Socialists. If you cannot beat them, join them. He will embrace them, Mr. Speaker, the better to stifle them, hopefully.



CANADA-UNITED STATES TRADE AGREEMENT-EFFECT ON ENERGY INDUSTRY

Mr. Russell MacLellan (Cape Breton-The Sydneys):: Mr. Speaker, the Government is not satisfied to give away energy in the trade agreement, now it wants to deregulate energy sales to the United States.
At the present time energy has to be offered to dependent provinces at a comparable rate before it is sold to the United States. To do away with this system would leave quite a few of the provinces dependent on energy without an assured supply.
Why is the Government doing that? The Province of Prince Edward Island will be the hardest hit. It will not have that assured supply. Why is the Government abandoning its responsibility and taking away the power of the National
Energy Board? Why is the Government again abandoning its powers to the provinces?



DISARMAMENT


Mr. Alan Redway (York East):: Mr. Speaker, in spite of concerns about the Soviet Union, all Canadians yearn for peace. Because of that, we warmly welcome the Intermediate Nuclear Arms Reduction Treaty signed today, and we look forward with anticipation to further discussions taking place this week that are aimed at reducing long-range arms by 50 per cent.
The credit for this obviously goes to Mr. Gorbachev and Mr. Reagan. But credit is also due to millions of Canadians and others around the world who continue to press for peace and balanced multilateral nuclear arms reduction.
Three years ago no one would have predicted that any agreement was possible. However, it is interesting to note that when the Government took office three years ago Canada's approach to defence and disarmament changed significantly. That change obviously did not hurt the disarmament process. I personally believe that process was helped when Canada started putting pressure on the United States privately instead of berating it publicly, as was done in the past.
Hopefully very soon more progress will be made in our quest for peace on earth to men and women of good will.



ORAL QUESTION PERIOD


Right Hon. John N. Turner (Leader of the Opposition):: Mr. Speaker, I have reviewed in detail the answers made yesterday by the Minister of National Health and Welfare. I was present in this House when he was trying to explain his action concerning the problem of toxic mussels that poisoned Canadians, and I am appalled.
Mr. Speaker, here are the facts: His department was first notified of poisoning evidence on Wednesday, November 25th. Laboratory animals died on Friday when poisoned by mussels. Mussel shipments have been stopped on Sunday. However, the Minister only issued a public alert on the following Tuesday, almost a week after the existence of a problem was first suspected.
December 8, 1987

Why did the Minister not recommend to the public to stop eating mussels on Friday? Why not on Saturday, on Sunday, on Monday? Why did he wait until Tuesday before alerting the public? How many Canadian men and women were hospitalized because of the Minister's negligence?


Hon. Jake Epp (Minister of National Health and Welfare):: Mr. Speaker, I gave the details to the House and to the country in very specific form yesterday. Those details were accurate yesterday. Those details are accurate today.
I said yesterday in the House that on Sunday, November 30,
I had not been informed when the Department, with its experience, with its scientific knowledge, still did not have a health link but had what they referred to as "reason to believe" and they stopped the shipments. The laboratory tests continued.
I think the right hon. gentleman should accept that toxicologists and scientists have a responsibility to develop a knowledge base, based on their experience and their scientific abilities.
On Tuesday, when the evidence was clear to them, they came, very clearly, to me and recommended a medical alert, and I said: "Give me a medical alert and 1 will put it forward immediately", which I did.
I know the right hon. gentleman wants to stay with facts. His Members, again yesterday, said that I had known, and they gave the date of November 25. That is simply not true.


QUERY WHY POPULATION NOT NOTIFIED AT SAME TIME AS PRODUCERS
John Napier Turner: Mr. Speaker, I have just related the facts as the Minister himself explained them yesterday. Public health must always have priority. Mussels producers were made aware of the problem Sunday morning, November 29, but no warning was issued to the Canadian public before Tuesday evening, December 1. Two and a half days went by between the times when producers and the Canadian public were told about the toxic mussel problem. Why? Does the Minister not realize that hundreds of thousands of mussels were on sale during those two and a half days? Why did he not immediately warn Canadians about the danger, at the same time as the producers?


Arthur Jacob (Jake) Epp: Mr. Speaker, I have said in the House, both on this issue and on other issues, that I will always err on the side of safety and health. I have done so.
Additionally, I say to the right hon. gentleman that I think he should understand that the scientists have a responsibility to
Oral Questions
give me scientific facts. I have not questioned that. I have not tried to change that. I have not tried to influence that. I have spoken to nobody in the industry. Every time that a fact was given to me appropriate action was taken.
I say to him that surely he has to understand, as do Canadians, that some time is needed to establish a health link, whether it would be shellfish poisoning or a toxin other than the traditional ones with which the Department was familiar.


NATURE OF AVAILABLE EVIDENCE
John Napier Turner: Mr. Speaker, during the period in question, hundreds of thousands of mussels were sold to the Canadian public. We are not talking here about food which looks bad or about food which smells bad. We are talking about food that was poisonous.
My question is quite simple. If the evidence was sufficient to tell the producers to stop shipping, why was that evidence not sufficient to warn the Canadian public? That is a very simple question.
I want to ask the Minister: in view of this negligence on the part of his Department, and on the part of the Minister, why doesn't he seriously consider resigning that portfolio?


Some Hon. Members:: Oh, oh!


Some Hon. Members:: Hear, hear!


Arthur Jacob (Jake) Epp: Mr. Speaker, the Department was not negligent. My scientists were not negligent. The doctors were not negligent. The toxicologists were not negligent. Any information that I received-that's why the medical alert came forward on the Tuesday, as he is aware, and I was not negligent.


Some Hon. Members:: Hear, hear!


Arthur Jacob (Jake) Epp: I would like him to understand very clearly that on Sunday, where there was not a clear medical link established for a health alert, as a precautionary measure the Department put forward the "reason to believe" and stopped shipment. Surely any reasonable, fair-minded person would understand that and then expect scientists to put the information forward.


MINISTER'S POSITION
Ms. Sheila Copps (Hamilton East):: Mr. Speaker, quite surely the caution should have been to tell Canadians to stop eating the mussels, not to tell shippers to stop shipping them.


Some Hon. Members:: Hear, hear!


Sheila Maureen Copps: This afternoon we hear another contradiction. The Minister now says that he learned about it on Sunday, November 30. Of course Sunday was not November 30, and I would like to ask the Minister how can he deny a telex from his own Department in which his Department had first notified of an illness on November 25, 1987? Quite clearly, if the

December 8, 1987
Oral Questions
Minister did not personally find out about the illness until Monday, he was negligent. If in fact the Department had known Friday mice were dying, Saturday mice were dying, and Sunday morning the shippers were told to stop shipping, how can the Minister possibly stand iti the House and claim that he should not have told consumers until Tuesday night?


Arthur Jacob (Jake) Epp: Mr. Speaker, again if you take a look at the chronology which 1 have here and which I made available yesterday, the Hon. Member persists in saying something that isn't true. She persists in saying that I knew. The answer is that I did not know.


Jean-Robert Gauthier: You should have known.


Arthur Jacob (Jake) Epp: Surely somebody has to understand what we are dealing with in respect to this issue, that is, that there are food inspectors with Health and Welfare across the country. In terms of illnesses, for example a person accessing a medical clinic in Quebec or Moncton or Prince Edward Island, the Department of Health would not necessarily be notified instantaneously.
For example, a Member of the House could be ill tonight. Surely the Health and Welfare Department would be notified tomorrow morning because of something he might have had for lunch today.
I am just asking Members to think through what they are saying, and what they are saying is that somehow every time the Department of Health and Welfare, with its inspectors across the country, is looking for an issue, immediately I have to put forward a health alert or that immediately I would know, as Minister, of every matter they are inspecting.
The point that I make to the Hon. Member is this. The facts I gave her yesterday were accurate yesterday. Those facts are the same today. 1 suggest to her, stay with the facts.


QUERY WHY MINISTER DID NOT WARN PUBLIC EARLIER NOT TO EAT MUSSELS
Sheila Maureen Copps: Mr. Speaker, the fact is that on November 25 his Department was aware of problems associated with mussels and that people in Montreal, Moncton and Charlottetown were sick. The fact is that, according to the Minister's own words, the matter was serious enough Saturday morning to ask all companies to stop mussel shipments. On Saturday morning, the moment it became clear that it was serious enough to stop mussel shipments, why did he fail to warn consumers? Being responsible for consumer health, why did he not tell Canadians not to eat mussels?


Arthur Jacob (Jake) Epp: Mr. Speaker, the answer is the same in both languages. The Member talks about Saturday. Dr. Todd received those
samples from Prince Edward Island at 8.15 p.m. upon which testing began that evening, Saturday. Yet the Member stands up in this House and says somehow that I should have an alert on Saturday.
On Sunday, after the testing through that night-again not fully established as a medical link-the shipments were stopped, an additional medical examination took place, and the alert on Tuesday. I say to the House and to Canadians very clearly that every step was followed by the Department. My Department did everything correctly, and as the Minister 1 support what the Department did.


GENERAL AGREEMENT ON TARIFFS AND TRADE
Mr. Jim Manly (Cowichan-Malahat-The Islands):: Mr. Speaker, my question is for the Minister of Fisheries and Oceans. There are reports that, in the final text of the trade deal, Atlantic fisheries have the recognized right to require that their fish be processed in Canada before being exported. No such protection exists for Pacific fisheries which have been hit-


Mr. Speaker:: The Hon. Member for Cowichan-Malahat- The Islands is taking the lead question for the New Democratic Party. I would think that he is entitled to far more courtesy than has been exhibited so far. The Hon. Member.


James Douglas Manly: No such protection exists for Pacific fisheries which have been hit by a GATT ruling which discriminates against Canada and prohibits us from having restrictions on the export of unprocessed salmon or herring, Mr. Speaker.
Why didn't the Government insist on the same protection for Pacific fisheries as it did for Atlantic fisheries? Why didn't it protect 6,000 shoreworkers' jobs in British Columbia?


Hon. Pat Carney (Minister for International Trade):: Mr. Speaker, the Hon. Member should know that the West Coast salmon and herring problem is not related to the free trade agreement. As the Member points out himself, it is involved in the recent GATT panel report which finds our measures inconsistent with the GATT provisions.
Therefore, the solution to that problem must be found within the context of the GATT itself. That is what my colleague, the Minister of Fisheries, and myself are pursuing.


THREAT TO JOBS OF WORKERS
James Douglas Manly: Mr. Speaker, my supplementary question is for the Minister of Fisheries and Oceans. He knows that when this issue was first raised two years ago he said on Prince Rupert radio that this
December 8, 1987

would be a good issue to be resolved in the trade talks. He knows that he made that link himself-not I, but the Minister.
Last December 9 the Secretary of State for External Affairs said that these export restrictions:
-are essential to the effective conservation and management of the fishery.
We have made it clear that the Government does not intend to terminate these
restrictions.
Last month the Minister of Fisheries said:
I give my assurance those jobs aren't going to be jeopardized in any way.
Does the Minister still stand by that assurance, and can he tell the House how he will carry out that commitment?


Hon. Thomas Siddon (Minister of Fisheries and Oceans):: Of course, Mr. Speaker, I stand by that assurance. I want to point out to the Hon. Member, as has been stated by my colleague, the Minister for International Trade, that whatever is the situation with respect to provincial processing regulations in Atlantic Canada it is quite a different situation on our West Coast where many forms of unprocessed fish are exported from British Columbia, including groundfish and some forms of salmon.
The Hon. Member also knows that there are a variety of considerations here involving other nations, in particular, the whole question of the herring roe fishery and the important ability to maintain certain processing standards in Canada before the roe is exported to Japan.
This is, indeed, a multilateral issue and is to be properly dealt with before GATT, which is the course of action we are taking in order to ensure that our processing standards in Canada are maintained.


GOVERNMENT POSITION ON ISSUE
James Douglas Manly: Mr. Speaker, my question is again for the Minister of Fisheries. Obviously the Americans think they have the GATT decision already in the bag. That is why they refuse to make any concessions on the Pacific fishery.
The primary consideration is the 4,000 to 6,000 shorework-ers' jobs that are in jeopardy. In light of the fact that the Government has betrayed their interests in its desire to get a free trade deal with the United States, can the Minister give any reason that Canadian workers from one end of Canada to the other should put any trust in the Government? Why shouldn't they completely reject the Government and why shouldn't they have their request granted now for an election before this deal goes into effect?


Mr. Blackburn (Brant):: That is an easy one for you, Pat.


Nelson Andrew Riis: Yes or no.


Pat Carney: Mr. Speaker, the reason that Canadians may not believe our claims
Oral Questions
that we will deal with this before the GATT, where this problem initiated, is because of the extravagant claims made by the Opposition, glooming and dooming over other issues, such as the shakes and shingles industry which they said was going to lay off hundreds of thousands of people, and the softwood industry which was going to lay off hundreds of thousands of people.


Nelson Andrew Riis: What about the Okanagan grape industry?


Pat Carney: People will equate what we said about job creation, our 1 million new jobs, against what the Opposition said about the loss of jobs, and people will make up their own minds.


CANADA LANDS COMPANY
Mr. Don Boudria (Glengarry-Prescott-Russell):: Mr. Speaker, my question is for the Prime Minister. It concerns the management, operations and dispositions of properties by the Canada Lands Company at Mirabel. Today the media report that there may be as many as 50 expropriated owners in the Mirabel area whose properties were subsequently flipped. There are also reports that the Crown corporation in question has failed to file its financial statement pursuant to the Financial Administration Act.
Given this new information and the issue that I raised in this House yesterday and, given the transaction involving the industrial park in Mirabel that I brought to the attention of the House in October of this year, will the Prime Minister now do the right thing and appoint a Royal Commission of Inquiry into the functioning, management, operations and the disposition of properties by the Canada Lands Company at Mirabel?


Hon. Stewart Mclnnes (Minister of Public Works):: Mr. Speaker, the Government instructed the Mirabel corporation to return to the original owners of the lands in that area those which had been expropriated and which were surplus to the needs of the corporation. That has been done and that procedure has been followed. All of the original farm owners have been contacted and been given the option to purchase the land. That procedure was universal.
With respect to the filing of the statements of the corporation, the documents were presented to the Auditor General. He questioned some of the items. I immediately asked the special audit team of my Department to make further inquiries. Those inquiries have almost been completed. There is a meeting of the board in the next two days and I will be able to report more fully to the House then.

December 8, 1987
Oral Questions


NECESSITY FOR COMPLETE INQUIRY
Don Boudria: Mr. Speaker, I have a supplementary. I have here the Public Accounts of Canada, and at page 73, where the Corporation's audited financial statements for 1986-87 should have been, there is only a blank space. The Minister informs us that a special team in his Department is making inquiries. Perhaps he could report to the House on the nature and scope of these inquiries. In fact, why doesn't he say outright that it will take a full scale investigation of the dossier-not just the financial statements but the functioning, management, operations and disposition of properties at Mirabel? That is what we need and that is what we want.


Stewart Donald McInnes: Mr. Speaker, what is involved is how certain overhead expenses should be profiled. There has been some disagreement between the Auditor General and the Mirabel corporation. I have pursued that and we will have a response in the next two days.


EXPORTS OF WEST COAST SALMON AND HERRING
Mr. Jim Fulton (Skeena):: Mr. Speaker, my question is for the Minister of Fisheries and Oceans. The Minister in Prince Rupert suggested that the West Coast herring and salmon regulations issue would best be dealt with between Mr. Reisman and Mr. Murphy. Why wasn't it?


Thomas Edward Siddon: Mr. Speaker, I do not remember making that observation. I would be pleased if the Hon. Member could produce a quote to that effect because I do not believe I made such an undertaking.


James Ross Fulton: I will produce it later today, Mr. Speaker.


Some Hon. Members:: Oh, oh!


James Ross Fulton: Mr. Speaker, it was in an interview the Minister gave on CBC and it will come much quicker than the text of the free trade deal.


PROCESSING OF FISH-CANADA-UNITED STATES TRADE AGREEMENT
James Ross Fulton: My supplementary question is directed to the Prime Minister. On October 28 the Prime Minister said that the Liberal and New Democratic Parties
were opposed to the interests of western Canada. Since the new trade text stipulates that Canada can ensure that fish caught in Atlantic waters must be processed in Canada and that the same rate is not extended to the West Coast fisheries, placing a $750-million industry and 6,000 jobs at risk, should not a right in a free trade agreement that applies to Atlantic Canada apply to the Pacific West Coast fishery?


Pat Carney: Mr. Speaker, I have already explained to the House that the specific issue of the West Coast fishery in salmon and herring is presently before the GATT where it has been decreed that our practices are not GATT consistent. Since the problem we have arises within the GATT, the solution must be found within the GATT as well.
I find it very strange that this Party which wraps itself in the GATT, says that GATT is the only way to go, and wants to say no to the free trade agreement because we will live up to our obligations to GATT, is the very same Party which is disputing our right to deal with this issue in the GATT and resolve it in the GATT.


HAZARDOUS SUBSTANCES
Alan Redway: Mr. Speaker, my question is for the Minister of National Health and Welfare and concerns reports in today's press that dioxin has been found in Canadian paper products, including facial tissue and paper towels. In September, the Minister advised me in the House that his Department was doing a detailed assessment of this problem, but today's reports indicate that there have been no government tests conducted in connection with the situation.
Will the Minister advise the House whether or not there are tests going on and what steps the Government is taking to protect the health of Canadians?


Arthur Jacob (Jake) Epp: Mr. Speaker, I would like to reply to the Hon. Member. In October of this year I commissioned an interdepartmental committee with representatives from Health and Welfare, from Consumer and Corporate Affairs and from Environment Canada, to address the issue of dioxins in products. That committee has begun its work. Once we have determined the parameters of the manner in which a study should be conducted, a detailed study will go forward as well.
I know what the Hon. Member is referring to when he refers to studies of dioxins in paper products. I am concerned that we have as much of a multidisciplinary approach to the question as possible, and that we have Canadian data.
December 8, 1987


CANADA LANDS COMPANY
Hon. Bob Kaplan (York Centre):: Mr. Speaker, my question is directed to the Minister of Public Works and is about those financial statements. There are lots of disagreements between the Auditor General and the Government about proper accounting and about matters that are reported in financial statements. I would remind the Minister that that does not mean that the Department or agency is not obliged to file its version of the financial statements of its operations. That happens all the time. That is no excuse for not filing or tabling in the House the financial statements of this Crown corporation.
Apart from the disagreement with the Auditor General, where is the Crown corporation's version of its financial statements? Will the Minister undertake to table them now, whether or not the dispute is resolved with the Auditor General?


Stewart Donald McInnes: Mr. Speaker, what is involved is the profiling of certain overhead expenses, and there is a meeting of the board of directors on Thursday of this week. My Deputy Minister will be in attendance. There is to be a meeting on Friday of this week with the Auditor General to review the situation and to see if the format proposed is acceptable to the Auditor General.


MINISTER'S POSITION
Robert Phillip Kaplan: Mr. Speaker, if it is not acceptable to the Auditor General, I hope it will be tabled anyway. Lots of the financial statements of this Government are not acceptable to the Auditor General. That is normal.
A matter that concerns Canadians is what makes this Government tick on these questions. When did the concern of the Minister of Public Works about the unfiled financial statements begin? Did it begin when the matter appeared in the newspapers the other day, or did it begin when the corporation failed to file its financial return as it was its statutory duty to do?


Stewart Donald McInnes: Mr. Speaker, by way of global response, I think it appropriate that I indicate that the Auditor General indicated that the performance of this Government during the past year was the most optimistic he has had the occasion to comment on in a very long period of time.


Some Hon. Members:: Hear, hear!


Stewart Donald McInnes: I think it also relevant that the Auditor General be seized of the same information that the corporation wishes to present. There must be a common denominator so that he can properly comment. That is the information we are trying to get and we will get it. I have advised him that he will have it in three days.
Oral Questions


EXTERNAL AFFAIRS
Suzanne Blais-Grenier: Mr. Speaker, in the absence of the two Ministers responsible for this dossier, my question is directed to the appropriate Minister.
Considering the atmosphere of violence that still prevails in Haiti; considering the Haitian people have lost all faith in the National Council and Colonel Namphy, and considering that 30,000 people belong to the Haitian community in Montreal, I would like to know whether the Canadian Government has identified ways of bringing the situation back to normal in a country where violence is still the order of the day.


Right Hon. Brian Mulroney (Prime Minister):: Mr. Speaker, I want to thank the Hon. Member for her question about this important matter.
We have called back the Canadian ambassador to Haiti. He will arrive in Canada this evening. In the absence of the Minister, I intend to meet with him tomorrow morning for a more detailed report on the events in Haiti.
Through the Minister we have already made known our profound disapproval of the actions and intentions of the Government. After meeting with the ambassador, the Canadian Government will signal very clearly what its intentions are with respect to our bilateral relations and our presence in Haiti.
We profoundly disagree with certain positions taken by the Haitian government and we shall be making a statement very shortly.


Some Hon. Members:: Here, here!


CREATION OF COUNCIL PRO TEMPORE
Suzanne Blais-Grenier: Mr. Speaker, 1 thank the Right Hon. Prime Minister for his very clear answer which will provide some encouragement to the Haitian community in Montreal.
May I ask the Prime Minister whether he would promote the solution suggested by various groups in Haiti and supported by the Haitian community in Montreal to the effect that a council pro tempore be created consisting of the five main opposition leaders, which would reassure the Haitian community in Montreal and the population of Haiti itself?


Martin Brian Mulroney: Mr. Speaker, we noted with interest the suggestion of the Haitian leaders in Montreal about the creation of a council pro tempore. It still remains that there is a government presence- and I choose my words carefully-in Port-au-Prince which we must accept for the moment.
However, recent actions and events in Haiti have given rise to serious objections, not only from the Canadian Government,

December 8, 1987
Oral Questions
but from all Canadians as they are a direct denial of the democratic action of the population.


TOXIC MUSSELS AFFAIR-QUERY WHY MINISTER DID NOT INFORM PUBLIC PROMPTLY
Mr. John R. Rodriguez (Nickel Belt):: Mr. Speaker, my question is for the Minister of National Health and Welfare and concerns the problem with mussels.
On November 28, the rats died. The Minister was informed on November 29 and stopped deliveries. Consumers were informed only on December 2.
Since the Minister had the information required to stop deliveries, why did he not warn the consumers at the same time?
* (1450)


Arthur Jacob (Jake) Epp: Mr. Speaker, the Hon. Member's statement had details in it which were not accurate. We received samples from Prince Edward Island at 8.15 p.m. on Saturday, November 28. At 10 a.m. on Sunday, November 29, based on very preliminary reports a decision was made by the Bureau of Field Operations HPB in Ottawa to stop distribution of any further product from P.E.I. At 10.15 a.m., 15 minutes later, HPB discussed the decision with BFO officials by phone. At 10.30 a.m., 15 minutes later, we notified the HPB, Atlantic region.
I was not informed about the "reason to believe'' and the "stop shipment" on the Sunday. I was informed of the problem on the Monday. I told the Department to get me every detail and "we are going to put out a health alert at the first moment we receive any scientific medical information". The minute I received that on Tuesday the health alert went forward.


TIME BETWEEN STOPPING SHIPMENTS AND INFORMING PUBLIC
John R. Rodriguez: Mr. Speaker, this is an extremely serious situation.


Mr. Crosbie:: We know that!


John R. Rodriguez: After all, no one got sick or was hospitalized over tuna, but they are certainly getting sick and being hospitalized on this mussel deal.
Since the Minister had "reason to believe", and on that basis he stopped the shipments, then the "reason to believe" should also be exercised in favour of consumers. My point is, why was there a lapse between stopping the shipments and informing the public that they ought not to be purchasing this stuff?


Jean-Robert Gauthier: Same question.


Arthur Jacob (Jake) Epp: Mr. Speaker, now that the Hon. Member has accepted the facts I gave him, let us go to the Monday and Tuesday, November 30 and December 1. On the Monday we injected into mice and rats the material which could have a toxin in it. On the basis of our past experience, the size of the animals, and the amount of neurological and other damage observed, decisions can be taken. The Hon. Member must realize that the medical detective work takes some time. That was the time that was used on Monday and Tuesday.


TESTING OF PRINCE EDWARD ISLAND MUSSELS
Mr. George Henderson (Egmont):: Mr. Speaker, 1 have a short supplementary question for the Minister. Is he telling the House that no tests on those mussels were made on Friday, November 27, by Dr. Todd? Is he trying to tell us that no tests were made and no mice died on that day?


Arthur Jacob (Jake) Epp: No, Mr. Speaker, that is not what I said. What I say to the hon. gentleman is that even at this moment the exact source of toxin in the Prince Edward Island mussels has not been determined scientifically or medically. We are not dealing with a traditional toxin. It could have been from dredging. It could have been from algae bloom. The toxin secreted by the mussel is to ward off any bacterial activity in the mussel. It is that toxin which is damaging to human beings. Let us keep the details very straight.


MINISTER'S KNOWLEDGE OF EVENTS
George Roland Henderson: Mr. Speaker, once again, the Minister knows that mice died on November 27. That has been established. Does he not think that the serum from the mussels which was injected into these mice and killed them would be a health hazard to humans? He knew that on Friday night.


Arthur Jacob (Jake) Epp: Mr. Speaker, I know the Hon. Member is someone who likes to stay with the details. No, that is not true. I go back to exactly when this Minister knew. This Minister knew there was a problem with mussels on the Monday.


Sheila Maureen Copps: He was not in control of his Department.


Mr. McKnight:: Get control of your mouth, Copps.


Arthur Jacob (Jake) Epp: During the week tests were being done by the Department. The Hon. Member knows various tests are done on various foods by the Department on a routine basis. I am not informed of every one of those tests. I was informed on the Monday.
December 8, 1987


HAZARDOUS SUBSTANCES
Ms. Lynn McDonald (Broadview-Greenwood):: Mr. Speaker, my question is for the Minister of National Health and Welfare and concerns the presence of dioxins in paper products. Is the Minister aware of the studies showing that dioxins do not always stay in the paper, but in the case of paper coffee filters, for instance, that they also go into the coffee? At what risk are Canadians being put by the presence of dioxins and what is the Minister doing in co-operation with the Minister of the Environment about this problem?


Arthur Jacob (Jake) Epp: Mr. Speaker, I am aware of the details the Hon. Member has raised. It is referred to as dioxin migration. When the Hon. Member for York East asked me questions about this earlier in the fall the interdepartmental committee, which I mentioned again today, was struck, and studies are being developed. There have been studies in the U.S. as well and I believe a report is due to be released on the 15th of this month.


REQUEST THAT GOVERNMENT USE UNBLEACHED PAPER
Lynn McDonald: Mr. Speaker, is the Minister aware that this problem is being dealt with better in other countries by changing the industrial process used in making pulp and paper? As well, in Sweden, for example, the Government set an example by using unbleached paper. Would the Minister get his Government to set an example, and you, Mr. Speaker, for the House, so that as consumers we could be helping the process by switching to natural unbleached paper that would be dioxin free?


Arthur Jacob (Jake) Epp: Yes, Mr. Speaker, I am aware of that. However, the Hon. Member should go back to the answer I gave earlier in the fall on this issue. I said at that time I was not questioning whether there were safer methods. That evidence has yet to come forward. That is why studies are being done, to verify that.
She should also understand, obviously, that there is scientific thought on both sides of the question. We want to opt for the safest method and that is why the interdepartmental study and the need for that data.


WEST COAST FISH EXPORTS-GATT PRELIMINARY RULING
Hon. Lloyd Axworthy (Winnipeg-Fort Garry):: Mr. Speaker, my question is addressed to the Minister for International Trade and concerns the second round of negotiations just concluded with the U.S.
Oral Questions
On the question of the West Coast fishery the Minister said in the House today that matter is before GATT. She well knows that under the GATT rules, after a preliminary ruling, it is open to the parties to the dispute to withdraw, negotiate, or change the application. In other words, it was possible, and certainly desirable, through negotiations to have the U.S. withdraw its application to GATT.
Given that, why did the Government of Canada not explicitly ask the U.S., referring to the stand-still provision and others, to withdraw its application to GATT? Under the rules that is perfectly permissible, desirable, necessary, and encouraged. Why did the Government of Canada neglect to make that demand or request of the U.S?


Pat Carney: Mr. Speaker, I think the Hon. Member will have to wait until we get the final text to see in what way this issue has been resolved. The final details and the actual wording and is being addressed by the lawyers today. We hope to have their report before us.
It strains the credibility of anyone on this issue to think that the Americans, having won this case in the GATT, would be prepared to give it up in the GATT. We are following the solutions in the GATT. Since the Hon. Member is such a fan and supporter of the GATT and believes to the depths of his soul in the GATT, he should be happy that the two parties are dealing with this before the GATT in the context of the rules which are in force.


Lloyd Axworthy: Mr. Speaker, we support the rules of the GATT when those rules are applied. Considering that the Government did not follow those rules on softwood lumber, that would be a useful precedent of which to remind our American neighbours.


CANADA-UNITED STATES TRADE AGREEMENT-DEADLINE FOR SIGNING
Lloyd Axworthy: Mr. Speaker, my supplementary question is directed to the Minister for International Trade. Last week the Chairman of the Ways and Means Committee and the Chairman of the Finance Committee in the United States wrote to Secretary of the Treasury Baker saying that they do not intend to deal with the legislation dealing with the Canada-U.S. trade pact until June and will, in fact, be considering the omnibus trade Bill prior to consideration of the trade agreement between Canada and the United States.
Why are we signing, on January 2, a commitment by this country to a trade arrangement with the United States before we know what is in the omnibus trade Bill, knowing that that omnibus trade Bill contains many discriminatory, punitive trade measures against Canada which will be entrenched in the trade agreement if it is passed prior to Congress accepting the Canada-U.S. trade deal?

December 8, 1987
Oral Questions
Why are we committing ourselves on January 2 to entrenching that kind of discriminatory trade legislation forever as part of the commercial relations between our countries?


Pat Carney: Mr. Speaker, with regard to the softwood lumber issue, I would remind the Hon. Member that the timeframe with which we were faced did not permit us to seek recourse through the GATT. That is a fact which he should know because the average GATT case has been taking as long as 14 months to resolve, which is an improvement. The timeframe we were faced with at that time did not permit us to deal through that route. If we had taken it to the GATT we would not have had a decision in time to be effective.
With regard to his question about January 2, the President of the U.S. and the Prime Minister of Canada have to sign the free trade agreement on January 2 because the authority for the U.S. President to sign under the fast-track provision runs out on January 2. After that date the free trade agreement could go ahead but it would be held ransom by everyone in Congress to make every possible change, and to do all the log rolling possible to unravel the agreement.
That is why the fast-track agreement is in place. January 2 is important because the U.S. mandate to use the fast track runs out then. I have explained that to the Member many times and I will give him a further briefing should he so require.


SOVEREIGNTY
William Alexander (Bill) Blaikie: Mr. Speaker, my question is directed to the Right Hon. Prime Minister and is with regard to the impending agreement between Canada and the United States with respect to the Canadian Arctic.
There has been government rhetoric with regard to sovereignty in the Arctic, a word which was apparently left out of the agreement, and also with respect to the environment and the native peoples of the Arctic.
Could the Prime Minister tell us why the Inuit Tapirisat of Canada and other native peoples, to whom the Government of Canada has often wanted to attach the Canadian flag for sovereignty purposes, were not consulted, so that the Government could have the benefit of their advice and the Americans could have the benefit of their participation, which would be needed in order to protect the environment in the North?


Martin Brian Mulroney: Mr. Speaker, our proposals involve the exercise of Canadian sovereignty on an ongoing basis. These are presently being discussed by the Secretary of State for External Affairs and the Secretary of State of the United States. At the appropriate time upon his return to the House the Secretary of State for External Affairs may indeed have something to say in this regard. It would be a step toward the strengthening of the exercise of Canadian sovereignty which has been gravely neglected in the past.


NORTHWEST PASSAGE-QUERY CONCERNING POSSIBLE SHIPMENTS OF OIL
William Alexander (Bill) Blaikie: Mr. Speaker, I asked the Prime Minister a question about consultation. I asked him why the Inuit Tapirisat of Canada have not been consulted. If he is not prepared to answer that question, perhaps he would give a commitment that they will be consulted.
Can he assure the House that there is no connection between this agreement on the Arctic and the free trade agreement? Can he assure the House that there is no intention, pursuant to this agreement, to use the Northwest Passage to ship those 50,000 barrels of Alaskan crude through the Northwest Passage? Is this the prelude to that sort of an affair? Can we have an assurance on that? If it is so funny, give us an assurance.


Martin Brian Mulroney: Mr. Speaker, the free trade agreement is not responsible for the common cold either.
With regard to the first part of my hon. friend's question, I think he knows that the exercise of sovereignty is the responsibility of the Government and the Parliament of Canada. While we have engaged in many consultations, it is for the Canadian Government to assert and exercise that sovereignty.
That is why, with regard to the important matter of sovereignty raised by my hon. friend, the Government is in the process of expending some $500 million in Vancouver to build a Class 8 ice-breaker so that we can assert our sovereignty for the first time in that vital area. That is why the Government has made an important commitment with regard to nuclear submarines to ensure the exercise of sovereignty over Canada's North which has been so badly neglected by previous Governments.


Some Hon. Members:: Hear, hear!


William Alexander (Bill) Blaikie: What about the Inuit?


Mr. Speaker:: I regret to advise that that is the end of Question Period. I know that some Hon. Members were seeking the floor and I will try to recognize them tomorrow.
December 8, 1987


POINTS OF ORDER
James Ross Fulton: Mr. Speaker, I have been able to confirm that on October 27, 1986, the Minister of Fisheries and Oceans (Mr. Siddon) was interviewed by CBC Prince Rupert in the person of reporter Christine O'Gryzlo and that he said the following: "If we are talking about liberalizing trade and if we are talking about free talks maybe we should be talking about the free flow of fish between the two countries, especially B.C. and Alaska. We are discussing with industry whether this should be put on the table in free trade talks".


Thomas Edward Siddon: Mr. Speaker, I rise on the same point of order. Of course there were a number of options at that time. Discussions have taken place with the industry on this issue. One of the prime pieces of advice from the industry, including the United Fishery and Allied Workers Union, was that this matter should not be resolved in the context of the free trade talks because it had implications extending far beyond the context of Canada-U.S. relations.


CORRECTION TO QUESTION
Sheila Maureen Copps: On a point of order, Mr. Speaker, when asking my question to the Minister of National Health and Welfare about the mussels issue this afternoon, I asked the Minister why he warned the companies on Saturday and the public only on Monday evening. In fact, the sequence of events is that he warned the companies on the Sunday morning and the public only on the Tuesday evening. I would like the appropriate correction to be made.


Mr. Speaker:: I thank the Hon. Member for making that correction. That will be helpful.


BUSINESS OF THE HOUSE
Douglas Grinslade Lewis: Mr. Speaker, there have been discussions among the Parties. I think you will find that there is unanimous consent to dispense with the adjournment debate today. Therefore, when Private Members' Hour is completed today the House will stand adjourned until two o'clock Wednesday, December 9, 1987. I would like to thank the Opposition Parties for their courtesy in this matter.


Mr. Speaker:: Do all Parties agree?


Jean-Robert Gauthier: We agree, Mr. Speaker.
Income Tax Act


Mr. Speaker:: Is that agreed?


Rodney Edward Murphy: Mr. Speaker, I do not believe there is a problem. Perhaps you could give us a few seconds to consult on that.


Jean-Robert Gauthier: Mr. Speaker, I had a question on the late show and cancelled. Another Member on the opposition side had a question on the late show tonight and he cancelled it as well because of the party of the government side tonight. We respect that. We expect that they will do the same for us tomorrow.


Mr. Speaker:: Is that agreed?


Some Hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
MEASURETO enact
The House resumed consideration of the motion of Mr. Wilson (Etobicoke Centre) that Bill C-64, an Act to amend the Income Tax Act, a related Act, the Canada Pension Plan and the Unemployment Insurance Act, 1971, be read the third time and do pass.
The Acting Speaker (Mr. Paproski):: When the House rose at one o'clock, the Hon. Member for Kenora-Rainy River (Mr. Parry) had the floor.


John Edmund Parry: Mr. Speaker, before lunch, I had just embarked on a short critique of some of the provisions of Bill C-64 that do not relate to the establishment of international banking centres. 1 want to make some further comment with regard to the omnibus character of this tax Bill.
Frankly, this omnibus Bill is an adjustment of the edges of the tax system and has nothing to do with tax reform as such. Even in those adjustments to the details on the periphery, the Government has not shown any willingness to implement some of the principles to which heretofore it has been giving lip service by way of the White Paper on tax reform.
This legislation does not envisage any indexing of the sales tax credit, nor of the turnover point. Therefore, with the normal operation of inflation, the value of this sales tax credit will diminish year by year and the point at which it will be clawed back through the tax system will also diminish in terms of real income. Surely, those measures could have been indexed if the Government was really committed to over-all tax reform.

December 8, 1987
Income Tax Act
The non-indexation of the threshold will mean that Canadians will see this sales tax credit clawed back at a progressively lower level of income, whereas the level at which this clawback starts is already approximately 25 per cent below the poverty line as defined by Statistics Canada, in terms of a family of four in an urban centre. Even those who are just on either side of the poverty line will be subjected to a marginal degree of taxation that will be higher than the people who are in higher tax brackets because of the operation of this particular claw-back provision.
The Government often states, when discussing those higher marginal rates of tax, that they constitute a disincentive to attempting to earn more income. That disincentive will be doubly present for those who are on either side of the poverty line, particularly those at that 75 per cent of the poverty line where this claw-back provision comes into effect.
While the measures dealing with international banking centres are perhaps the most interesting and intriguing part of Bill C-64, they will have less effect in the long run than some of the minor detailed changes to unemployment insurance and to the question of sales tax credits and thresholds.
However, It is of particular interest because it provides such a telling paradigm of the way in which the Government is prepared to go to such lengths to express its basic economic philosophy, whether or not that philosophy will have any beneficial effects for Canadians.
This is an example of the Government pursuing two themes. One theme is that enterprise should be freer. However, it is very difficult to think of that particular term in regard to the banking system in Canada. The second theme is that tax considerations should be diminished in the formulation of business decisions. A third theme is that there should be some advantage given to sectors of the economy which the Government believes are beneficial to the entire economy.
What sacrifices is the Government prepared to make in pursuit of those objectives? First, it is prepared to allow interregional strife and hostility to break out within the business community and its political surrogates on the Government side, to the point of dividing its own back bench. It is prepared to allow abuse to flow back and forth between the financial communities in Vancouver, Montreal and Toronto which is, of course, the predominant one in this country and which has almost unanimously opposed this legislation. Canadians should know that in doing so it is prepared to allow action that essentially compromises whatever value or effect this legislation might have had.
We heard testimony in the finance committee that seems to border on the absurd in its naivety. We heard testimony that 26 jobs might be created, and testimony from the Department of Finance that only 11 jobs might be created. The Government is taking the time of Parliament, taking hearing time and the expense of travelling across the country, using the efforts of Members of the House, in pursuing a plan that might create 11 to 26 jobs. Surely, any of us could conceive numerous
legislative measures that would have five or tenfold the effect on job creation with a similar expenditure of time and money which the House might have more profitably used.
The purpose of this legislation is for the Government to align itself with the Reagan and Thatcher economic view of the world as well as with the so-called free enterprise philosophers. It is to align itself with the mullahs of the economic new right in the pursuit of objectives which, while they may have very little use or effect in themselves, nevertheless have an important philosophical underpinning that can be communicated to those who want to hear the message.
What is the cost? Department of Finance officials have suggested that there is no cost because all of this is happening offshore. It would be a very dangerous assumption to accept that view. While there may be no financial cost, we must consider the political cost to Canada in the institution of international banking centres. We must consider the measures that correlate with international banking centres.
Of course, we are talking about the free trade zones which have been established in different countries of the world to assist in industrialization. Of course, these are the darlings of the economic right because they enable the concentration of wealth and the substitution of cheap labour for labour that earns a decent wage. They allow the internationalization of products to subvert Government controls on rules of origin and to undermine national economic planning. They allow the treatment of labour and capital as if they are completely interchangeable and they allow the subversion of safety legislation, environmental legislation, health protection legislation and the tax system.
One of the principal themes of my leader and of this Party has been the misuse of the tax system, and what is left out of the tax system by way of economic policy. Although it may be useful and beneficial to the country, and beneficial in certain areas itself, we should be very careful about adopting a measure that is so susceptible to harmonization in an international economic order that does not empower individuals or communities, that does not permit the development of Third World countries in a democratic fashion, and that essentially leads to the concentration of wealth, capital, and power in the hands of a few.
The Eurocurrency reserves, as they are sometimes called, which the international banking legislation is designed to accommodate, are an example of that phenomena which has been described as-

-"money without a country", there are huge monetary reserves, billions of dollars throughout the world, thousands of billions of dollars indeed, money called eurodollars.
December 8, 1987



The notorious hot money flows which can lead to runs on the currency of a particular country are an example of the operations of the Eurocurrency and of the Eurodollar market. The existence of numerous tax havens and tax shelters, convenience banking islands such as The Bahamas and the Cayman Islands are manifestations of that same system, and of the degree to which international finance is adapting to accommodate those Eurocurrency transactions and those Eurocurrency reserves.
It is unfortunate that there have been comparisons with the American experience, because the reserve requirements and the restrictions on interstate banking in the United States render Canada's situation very different from that of the United States, to the point where it would be unwise to draw comparative conclusions. Our fear is that loans that have a significant risk element will continue to be put through the normal channels, and only the safe loans will go through those international banking centres.
In looking at this legislation we have to ask the following questions. Will there be any real economic benefits in the form of jobs to the centres of Vancouver and Montreal, or is the federal Government simply undertaking a measure that is designed to stroke the leaders of those two financial communities and convince them that they are getting something for nothing when, in fact, they are not? What will be the real size of the tax expenditure involved, particularly at a time when we are looking at tax reform and when there is $28 billion of other federal tax expenditures out there, essentially unaccounted for, although we have an idea of their order of magnitude?
Given the profit picture of the banks, should we be doing anything to benefit institutions of that size? I say this not to call down the banking industry, but to point out that over the past years job creation has almost exclusively been the preserve of small and medium sized business. The job creation record of Canadian banks would not bear comparison with that of small business as a whole.
I could on at some length on this whole question. It brings into play the matter of the free trade agreement. I want to hold my fire on the free trade agreement until the Government can state with confidence, and produce the evidence before the House, that it really has a free trade agreement.
I simply wish to point out that the three centres around which discussion has hinged in this debate are those of Toronto, Montreal, and Vancouver. The whole problem that I see with the operation of a free trade agreement is the danger of centralization of the Canadian economy. It is not that the legislation to create international banking centres is inequitable; it is obvious that both Vancouver and Montreal are far more in need of economic stimulus, even in the financial industries, than is Toronto. But what we will see under the move to a free trade environment, which undoubtedly this international banking legislation is designed to harmonize with, is a centralization of the Canadian economy that will
Income Tax Act
lead to a reduction in jobs, and a reduction in economic opportunities in the smaller communities of Canada, and quite possibly in most communities in Canada outside of those three centres.
Yet we should never fall into the trap of believing that because there may be job creation, and certainly centralization of industry in those three centres, that the people who live there will actually benefit from the results. I believe that when there is excessive centralization of an economy, the benefits of productivity and job creation are extremely vulnerable to being outweighed and overburdened by the simple physical strains expressed as financial constraints that occur in the major areas of centralization.
Thus it is today that we have situations such as that in New York City where I was told by one of our own civil servants if I was looking for a nice pied-a-terre I could perhaps view the penthouse in his apartment block. The owner had just reduced the price by $1 million, from $5 million U.S. to $4 million U.S. in the hope of getting a quick sale.
1 hope that we as Canadians never adopt the measures that will lead us to the type of future where those real estate prices combine to gut cities of their population, force people ever further out into expanding remote suburbs, and eventually deteriorate the quality of life for the majority of people who live in the major centres that will benefit from free trade legislation, as they plan to benefit from this legislation.


Mr. Layton:: Mr. Speaker, I thank you for the opportunity to participate in this debate. I feel it is important that the House realize that reports and impressions that have been given to the public over the past day or two by the press are both incomplete and incorrect. They have been filled with comments from one side of the argument and the proposition that we are discussing today as part of Bill C-64.
Many years ago the international banking centres idea was first advanced from the community of Montreal and endorsed and reinforced by the community of Vancouver. It has been studied and analysed. The Standing Committee on Finance and Economic Affairs conducted a major study of this concept. Our visits to New York developed a wealth of information that concluded under the limited circumstances that would be allowed for those banks that there would be a limited opportunity, and therefore a limited number of jobs. That did not change the fact that when the committee came to its final statement, its recommendation clearly established that it was a good idea, it just was not developed far enough; the Minister should consider other ways of increasing and improving the success or the effectiveness of this idea.


Michael Morris Cassidy: Not true.


Robert E.J. Layton: The committee report went on to state that one particular requirement, our second recommendation, was that we should negotiate withholding tax agreements with other countries to make this idea more successful. Under those circumstances, the banks would be more competitive. This

December 8, 1987
Income Tax Act
committee, of which 1 was a member for more than a year, clearly was in favour in its majority of supporting the Montreal and Vancouver initiative. There were those who were against-


Michael Morris Cassidy: That is not true.


Robert E.J. Layton: -and they are the most vocal members of the committee, Mr. Speaker, and they will give the impression to the press that their views stand as the opinion of the committee. However, I stand here and assure the House that there was a majority of us on the committee who felt that it was a good idea.


Michael Morris Cassidy: That is not true.


Robert E.J. Layton: All we have to do is to ask members of the committee. The truth is that this concept will continue the feeling or the impression that it is a very major concern to Montreal, as all of us who live there know. We have watched our role and our opportunity as an outlet for Canadian skills and international services diminish in favour of points west, in particular Toronto.
Along comes an idea, the Government recognizes that it is a good one and promotes it. We in Montreal are very pleased. However, I would certainly want to correct the idea that the committee was stacked. If one thing should go on record, it is that both opposition Parties were divided on the issue. It might surprise the Hon. Member to know that in a vote his Party was divided, as was the Official Opposition. It was also divided on the government side.
It was recognition of whether or not regions like Montreal and Vancouver would have certain opportunities and rights in the future. A vote could have come at any time, and it came at committee in the absence of those from the Opposition who supported this particular motion. Maybe that was a surprise. Maybe it was well planned. However, I can only assure the House that at any time when that vote would have been taken, a majority of the finance committee would have been in favour of it, as was shown in the final announcement of that election.

Mr. Speaker, to us Montrealers and to our fellow Canadians in Vancouver, opening banking centres is an element, a symbolic indication of the special values of these two international cities in Canada.


John Edmund Parry: Mr. Speaker, in response to the Hon. Member I must say that perhaps he did not observe the degree and intensity of some of the conflicts which I was able to identify in just one appearance at the finance committee on this particular matter. I can assure him that there will be no kudos in our caucus to any degree about the division on this particular legislation. However, I must recall to the Hon. Member the very words of the Chairman of the committee, which I believe
he heard, when he indicated on a particular vote that he had to cast his vote with the Government.
I am not too sure of the direction in which the intervention of the Hon. Member is proceeding. If he wishes simply to demonstrate his dedication to the interests of the business community of the city which he calls home, I am sure that all of us would accept it as a given and that none of us would wish to challenge it, as he would certainly not challenge the commitment of other members of the Progressive Conservative Party to the business interests of the cities they represent.
However, I would have to point out that in the divisions which I saw at this particular committee, the divisions by way of vote and the divisions by way of opinion, I felt that the basic purpose of the committee was being undermined in some sense when the Chairman declared that his function was to vote with the Government. To me that was a notion which almost reached the point of absurdity, particularly since at the other committees before which I have appeared there had always been declarations of the Chairmen that they were in fact the masters of their own procedure.
I commend to the Hon. Member a careful study of what happened in that particular committee, before he commits himself to such a drastic and dramatic degree of revision in the rewriting of the history of the committee hearings. I commend to him the committee record and a brief conversation with his colleague from Scarborough on the particular interests involved in the formulation of the report on this matter.


John R. Rodriguez: Mr. Speaker, I recall the Chairman of the finance committee making a comment when the matter of banking centres was discussed-and it was reported in the press-that the whole proposal belonged in the waste-basket. When the vote came on the proposal, there was a complete turnaround and the spirit of reform, which is supposed to permeate the finance committee, went out of the window. The Chairman did docilely what the nabobs in the Department of Finance wanted. He did what the Minister of Finance (Mr. Wilson) wanted. He fell in line. He did the bidding. He sat up and wagged his tail, voted, and broke the tie.
I think that needs to be explained to the Hon. Member who just presented the view that somehow or other the divisions which may exist in caucuses of the House were extended to a committee which, in the spirit of reform, is supposed to look at a proposal and make a decision on the basis of what it feels is beneficial to the country as a whole. I think the committee fell down in that regard.


The Acting Speaker (Mr. Paproski):: Does the Hon. Member for Kenora-Rainy River (Mr. Parry) have a rebuttal, or should I recognize another Hon. Member on debate, because there are only 30 seconds remaining?


John Edmund Parry: Fine.
December 8, 1987


Hon. Donald J. Johnston (Saint-Henri-Westmount):: Mr. Speaker, I am very glad to have the opportunity to rise in this debate and to speak of Bill C-64.

In speaking to this Bill I intend to raise issues which go to the heart of the credibility of the Minister and of the Government. The Bill contains certain elements which point, if I may say so, to a lack of candour, a lack of frankness, or almost a disdain for the public which by and large is ignorant of fiscal matters.

Mr. Speaker, I recall that on a number of occasions during the 1984 leadership campaign I was compared with the Hon. Member for Etobicoke Centre (Mr. Wilson), who was not Minister of Finance at the time. He was the Opposition critic. I was not offended at all. I would not say I was all that flattered, but I was not offended. I felt enormous respect for him and for his integrity.

I think I would have to say that when the present Minister of Finance (Mr. Wilson) was named to his functions I, along with other members of my Party and probably members of the NDP, looked to this man as being solid, as a man who would not provide a flamboyant leadership in the Ministry but who would be solid, dependable, and reliable. We felt that he was a man who would not try to fool Canadians into believing something other than the reality with respect to the fiscal position of the Government of Canada and with respect to the contents of any particular piece of financial legislation.
That image has been irretrievably damaged by a series of events during the course of this Minister's stewardship. Whereas I once thought the Minister was solid, the most I can say today is that he is stolid. Even that I suppose is flattering. I have just thought, if I may take poetic licence, Mr. Speaker, that he is stolid compared with the Government, of which he is a member, that indeed is squalid. That is not too bad; I am sure that could be turned into a limerick by you, Mr. Speaker. I would not go so far as to say that the Minister is squalid, far from it, but he has been a profound disappointment. He has lowered his standards, and he has fallen in the esteem of Members of the House and of the public.
I fear the Minister has become an advocate of that philosophy of Phineas T. Barnum, namely that there is a sucker born every minute. Thank God, Mr. Speaker, there are no suckers in the Opposition in this House, and I do not believe there are suckers in the Canadian public either.
Before I come to the specifics of linking this lack of credibility to the context of Bill C-64, let me offer a bit of an overview of how I see the Minister's performance to date. First, I would remind you that after this Minister assumed his
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functions, he came forward on national television. In Question Period I raised this matter, but it has to be raised again. In March, 1985, and in response to a question as to how he intended to get at the deficit, which he considered to be a major problem and allegedly still does, he said:
I don't want to increase taxes. I think we have a good deal of scope on the expenditure side to deal with the deficit problem. A tax increase, certainly a general tax increase, puts a dampening effect on the economy and 1 don't want to see us do that.
We are aware, and you are aware, Mr. Speaker, that, having made that declaration, the Minister then proceeded to increase taxes at a rate and of a magnitude never seen in peacetime in Canada. Let me offer you a couple of examples. Taxes on individual Canadians, namely, income taxes and sales taxes, increased from 1984-85-you will recall that that was the year the Government assumed power-until 1988-89 by an estimated $22.2 billion, an increase of 93 per cent. This comes from a Minister who on national television said, "We don't believe in a general increase in taxes".
Despite five years of economic growth, which we have realized-

And I can tell you, Mr. Speaker, that we achieved this strong economy, not as a result of the Minister's policy but indeed in spite of his policies.

Imagine what this economy could have been like without an increase of 93 per cent in personal income taxes, an increase of $22 billion, Mr. Speaker? It would be all right if the Minister could turn to us and say "Yes, but the deficit has now been taken care of. It is now under control". But despite those taxes and economic growth, the deficit is still in the neighbourhood of $30 billion. Some attack on the deficit. Some way of getting at it through the expenditures of Government. It is incredible that the Minister has been able to get away with this chicanery. To go even further, the Minister now tells us we are going to have tax reform. "We are going to make the tax system equitable. We are going to widen the tax base and do all these things".
Tax reform is necessary in order to correct the inequities, the increased tax burden and the complexity that the Minister himself has put into the Act. Sure, tax reform is necessary. It was necessary in 1984, but it is much more necessary today by reason of what the Government and the Minister have done. It is reminiscent of the woman who, when convicted of murdering her husband, sought clemency on the grounds that she was now a widow. That is what we have in terms of tax reform under the Minister of Finance. If he gets away with this, indeed Canadians will justifiably be regarded as suckers, and if we, on this side of the House, let the Government get away with it, we should properly be regarded as suckers as well and also incompetent in not doing our job. Our job here is to ensure that Canadians are not horn-swaggled by this master horn-swaggler.

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1 never thought the Minister of Finance, whom I knew when he was on this side of the House, would become such a first-class snake oil salesman. He has been successful because he has enjoyed the benefits of strong western economies, and the Canadian economy has followed suit. I say, as 1 said a moment ago in French, this is not because of the policies of the Government; it is in spite of the policies of the Government. For all of that, in these areas with which I take issue, namely, raising taxes to lower them and telling us that the deficit will be through expenditure cuts and then trying to do it through massive tax increases, failing on both counts, I never expected the Minister to stoop so low as to tinker with accounting procedures in the name of management practices simply to get at the deficit artificially. He was not able to get at it, as I pointed out, through massive tax increases. The Minister obviously did not get at it through expenditures which, initially, he said he would do. Instead, what has he done? He has tried to get at the deficit through tinkering, if you like, with bookkeeping procedures under the Income Tax Act. We will not let him get away with that. In other words, creative arithmetic seemed to be the only vehicle left.
The first hint that we would be faced with this kind of activity by the Minister and his Department was in the first Budget of 1985. In that Budget, Mr. Speaker, you may recall that in the name of new management and initiatives, the Government expected in 1985 and 1986 to realize savings of $1.2 billion. That was called a plan of improved cash management. You may recall this because we discussed it in the House. It ties in very directly to what I have to say today about Bill C-64. Most of that better cash management, a total of $336 million, was to be saved in 1985-86. Those funds were to come from stripping Crown corporations of their surpluses. In other words, by taking dividends out of Crown corporations and bringing them up into general revenues, the Government was saying, "We are providing better cash management and, of course, in this fashion we will be reducing the deficit". That is like moving your funds from one bank account to the other and saying, "You see, I have no deficit now in my savings account", but you still have depleted your other account. The Minister just moved funds from account A to account B and put that procedure forward as some magical way of getting at the deficit through that wonderful name of better management initiatives and improved cash management.
Worse still is what we see in Clause 67 of Bill C-64. This is stooping even lower than what the Minister did in 1985. Specifically, the Minister decided to get at his deficit by a one-shot $1.2 billion move of tax remittance from 1988-89, I believe it is, to 1987-88. Let me make sure of that. Yes, it will indeed. By obliging employers to effect withholdings on salaries paid to employees twice a month instead of at the end of each month, a block of withholding funds of approximately $1.2 billion will be moved from April of 1988 to March of 1988. That has been estimated to bring an additional $1.2 billion into the 1987-88 fiscal year.
Of course, this removes that same $1.2 billion from the following fiscal year of 1988-1989. What kind of sound financial management is that?
I could go further. When the Minister presented his Budget and his Estimates for the deficit, he did everything possible to get it below $30 billion, the magic number he had in his head. Of course, by changing the payroll withholding date from April to March, he in fact was able to get his deficit below $30 billion. Had he not done so, the projected deficit at that point would have been $30.5 billion.
Let us think about that. If I am wrong about it, I stand to be corrected. I wish I were wrong about it and I wish the Minister would tell us that it is not true. However, in order for the Minister to have this $ 1.2-billion increase in revenues in 198788, this one shot at $1.2 billion, employers across the country have to change their accounting systems forever to provide bimonthly rather than monthly remittances to the federal Government of Canada.
Imagine the increased costs and increased paper burden on those employers, simply to accommodate the Minister's deficit which he promised in 1985 he would get at through expenditure cuts. As I said, despite the $22-billion increase in taxes on individuals, he has been unable to get at it through tax increases.
What has the Minister done instead? He has moved to artificial, creative arithmetic, imposing a burden on employers right across Canada, simply to move $1.2-billion worth of receipts in the federal coffers ahead by 15 days. I think that is shameful. I think it is scandalous. In my judgment, the Minister has tarnished that image of fiscal management and fiscal integrity, if it is not in tatters when people understand what is taking place.
When I saw this bit of sleight of hand, I became very concerned. I thought that the Minister had found something else. He discovered the coffers of Crown corporations back in 1985, and now he has discovered the concept of accelerated payments.
Where will it end? Will I be invited to accelerate my income tax payments over the next several years in order to bring more money into the coffers of the Government of Canada and basically reduce the deficit of the current year? The Minister has effectively set out a lot of chickens which will come home to roost.
Let us look at the initiatives of this Government across the board. If I can coin a phrase used by the former Minister of Finance on that side of the House who had a very brief tenure, you may recall quite painfully, Mr. Speaker, back in 1979, it is short-term gain for long-term pain. This is a first-class example of short-term gain for long-term pain. The pain will be felt by employers forever and the gain will be realized by the Minister simply for the current fiscal year.
December 8, 1987

The same is true of so many other initiatives the Government has taken since it came into office. There have been so many ill-conceived initiatives that when those chickens start to come home, I promise that the sky will be dark. It is our successors in many cases who will have to deal with those chickens. Short-term gain for long-term pain has become one of the principles by which this Government conducts its affairs; that and the principle of Phineas T. Barnum I enunciated at the outset: a sucker is born every minute.
I never believed that particular principle. Clearly the Minister of Finance (Mr. Wilson) and the Government does. Let us set any doubt about that to rest by ensuring that the Canadian public is not suckered on this particular provision.


Alan Redway: Mr. Speaker, I may not have heard the Hon. Member's remarks on the subject, but one of the important aspects of this Bill is the question of international banking centres. I wonder if the Hon. Member could tell us if he believes that the Bill should be amended to include the area of Metropolitan Toronto as an international banking centre.


Donald James Johnston: Mr. Speaker, what an interesting question in light of my comments. This gentleman and other Members of the House who are so caught up with the notion of international banking centres also believe in the principle that a sucker is born every minute.

In French we say it is good, that is the idea of such a centre, it is a label on an empty box. There in nothing there.

There is nothing there. All the puffery and exaggeration about international banking centres has been created by the Government, but it knows full well how minimal the economic activity is that can be associated with such centres. It is simply ridiculous. It did not merit any comment in my remarks because I did not want to obscure some of the fundamental issues which are at stake in this Bill, such things as accelerating the remittances of employees' deductions.


Alan Redway: Mr. Speaker, I understand from the Hon. Member's response that he does not feel that the question merited any comments in his remarks. However, he did not answer my question, and I put it to him again. Does he believe that the Metropolitan Toronto area should be included as a banking centre, and if he does not, does he believe that the provisions in the Bill with respect to banking centres should be struck out?


Donald James Johnston: Mr. Speaker, I thought I had made it perfectly clear. I think the whole thing is silly. 1 just do not think that the Government should be allowed to get away with creating visions in Canada that there is some great thing here.
[ Translation]
There is nothing there, Mr. Speaker! What good is it going to do, be it located in Montreal, Vancouver, Toronto, Winnipeg,
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or Halifax? What good is it going to do? Just exactly what kind of fallout can we expect from such a centre? Perhaps the Hon. Member might tell me, perhaps he might convince me there is something there? But, the way I see it, there is nothing there. As I said, it is a label on an empty box.


Robert E.J. Layton: Mr. Speaker, as this debate winds down, I would like to respond to my colleague from Montreal and from the business community which we share. It has been our community from the outset that has felt that there was an advantage, an opportunity and a contribution to be made to the image of Montreal as an international city.
The recent Picard report, which was presented and responded to in only these last few days by the Government, indicates that if Montreal is to regain its stature in the world of commerce and in the world of industry, there must be certain strong bases, among them aerospace, biotechnology, international commerce and international banking. This is a step in the right direction for Montreal. 1 think that most of the Montreal business community supports it. I know that a financial representative from his community and from his Party, the Official Opposition, supports this. I am rather surprised to find this great division in the Official Opposition.


Donald James Johnston: Mr. Speaker, I am delighted to respond to my friend from Lachine East, and friend he is and has been for many years. He touched upon at least two issues. One is the international banking centre about which 1 said that there is nothing there. Putting an international banking centre into Montreal will not change the face of Montreal. Montreal is an international centre.
Let me deal with something else he said. He referred to biotechnology. Let us compare those two notions. You may recall that 1 was responsible for placing in Montreal the Institute of Biotechnology under the Special Recovery Projects Program back in 1983. I had the pleasure of visiting that facility, situated on the northwest side of the city, at the end of Royalmount Avenue which has now become an industrial park. Paramax and Canada Cement Lafarge Ltd. have established themselves there. Each company creates many skilled technical jobs. In the biotechnology centre, just commissioned last May, there are something like 650 employees already. Companies are coming from the U.S. to take advantage of that facility. People will be coming there from all over the world. 1 am assured by the National Research Council that it is a world-class facility, and may indeed be the very best of its kind in the world.
That is the kind of initiative I want to see for Montreal. Compare that to the concept of an international banking centre. There might be a dozen people working on computers in some office in the city. Sure, we have the etiquette "international banking centre". That is form, and the Government has been very strong on form. However, the biotechnology centre is

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substance. There are real jobs, real spin-offs. New industries are being created in a technology which is at the leading edge of the new wave industries.
1 am glad my hon. friend mentioned those in this context because it simply indicates that when I say-
[ Translation]
-it is a label on an empty box, there is nothing there.

-exactly that, but not so with biotechnology.


Michael Morris Cassidy: Mr. Speaker, I would like to both thank and congratulate the Hon. Member for his remarks. I presume he has a substantial number of people from the Montreal Chamber of Commerce who have been pressing him on this issue. I respect their concerns, but I commend the Hon. Member for his courage in indicating that the proposal sounds attractive and looks good but when you examine it carefully it is very costly in terms of lost tax dollars. It might cost as much as $3 or $4 million per job created and will not contribute in any material way to the development of Montreal as a financial services centre. I take it what he is saying is that other proposals such as R and D and the biotechnology centre, for which he was partly responsible, make an awful lot more sense. If we were able to do this in the area of biotechnology-

-it can also be done with the financial services industry to ensure a greater involvement of the Montreal banking establishments in international finance without at the same time having to pay an enormous price for the meagre benefit which may result from the proposed legislation.


Donald James Johnston: Mr. Speaker, it might be somewhat difficult to thoroughly examine the issue in a few sentences. It is clear, however, that every elected representative will seek to promote the interests of his or her region, just as I do promote the interests of the city of Montreal. That is why I managed to convince my Cabinet colleagues at the time to set up in Montreal a biotechnological centre.
What would a financial centre bring Montreal? It is very important, if we want to sell this project to Montreal businessmen, that they should know exactly what it is all about.
As someone who has a lot of expertise in that area, I fail to see any benefit being derived from such an institution. While I remain dedicated to the promotion of my city's interests, I feel that the main concern of Montrealers, whether they are businessmen, workers, or ordinary citizens is to have good jobs requiring better training which will contribute to the economic development of the region.
When I compare the scientific centre with a financial centre which will provide about a dozen jobs for computer operators-that is what I am told; if I am wrong, so be it, but this is exactly what I have been told to this day-I cannot see any great advantage to it. I think the Government is promoting
something without a thorough knowledge of what is involved. As we say in English, this may not be a pig in a poke, but this is certainly not the greatest windfall of the century either, Mr. Speaker.


The Acting Speaker (Mr. Paproski):: The time for questions and comments is over. Debate. The Hon. Member for York East (Mr. Redway).


Alan Redway: Mr. Speaker, thank you very much for the opportunity to say a few brief words, I hope, in connection with Bill C-64, and to express my own personal grave concerns about the provisions of the Bill relating to international banking centres. Those provisions are found in Clause 10, particularly subclause (3), which designates only two cities, the metropolitan area of Montreal in the Province of Quebec, and the metropolitan area of Vancouver in the Province of British Columbia, as those in which international banking centres can be carried on.
Coming as I do from a riding in Metropolitan Toronto, I have had great concern over this particular provision. I feel that concern is best expressed in a letter I received from the Chairman of the municipality of Metropolitan Toronto, Dennis Flynn. I would just like to quote a very small portion of that letter. He says:
This proposed legislation is not in the best interests of Canada, and our concerns are based on the following reasons:
The financial services industry is undergoing rapid and dramatic changes. Canada cannot afford legislation that restricts its number one financial centre from competing on an equal basis for international business.
Clearly, Metropolitan Toronto is recognized throughout the world as a major financial and business centre. If Canada ignores this reality by arbitrarily excluding Toronto from IBC designation, it will change the perception of Toronto in international markets.
In its report to the Commons, April 30, the Committee on Finance and Economic Affairs cited three potential sources of loss in tax revenue for Canada if the current IBC proposal is pursued, and indicated a "minimal" positive impact on employment.
The IBC proposal is already creating interprovincial friction with the Province of Ontario threatening to "neutralize" federal action. It is not in Canada's interest to introduce a policy that will generate a tax war between provinces-particularly at the outset of discussions on sweeping tax reform proposals.
Those comments incorporate the gist of my concerns with this particular legislation. It seems to me the reports referred to by Chairman Flynn underline that fact.
The only real argument I have heard for this legislation, and for excluding Metropolitan Toronto and including only Metropolitan Montreal and Metropolitan Vancouver, is based on the fact that, hopefully, the legislation will create jobs and stimulate economic activity in those areas. That seems to me to be refuted very effectively by the report of the Standing Committee on Finance and Economic Affairs. I refer to the sixth report of that committee to the House which refers to the
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issue of employment creation. I quote from that report as follows:
Since the fiscal provisions of the IBCs are restrictive (narrow definition of eligible transactions, no bad debt deductions against regular income, and daily matching obligations at arm's length) and the international tax environment is not favourable (withholding tax abroad), transfers of assets and new business conducted through the IBCs will be quite small. Any positive impact on employment will therefore be minimal. Solicitation and negotiation of transactions currently take place abroad, where the business is located, and will continue to do so.
Management can be done partly in the offshore centres at present and a portion of that activity could be repatriated in Canada. The part that is in Canada today-certainly at the more senior levels-will continue at its present location. The same applies to credit analysis. Therefore, a small number of people required under the new legislation will work in the IBCs. Most probably the banks will only transfer existing positions and will certainly not create many jobs. Thus, the job impact of the IBC proposal appears modest.
I have heard that at the very most this may generate 20 to 30 jobs. As the committee indicates, those jobs are likely to be the transfer of existing jobs as opposed to new jobs. Therefore, if the basis for proposing this sort of legislation, which I think is clearly discriminatory, is to create jobs, no case has been made for that.
That brings me to the concern which I have as to what position I should take with respect to this Bill, bearing in mind that I find it extremely difficult to support. I must bear in mind at the same time, however, that there are other important financial provisions contained in Bill C-64. They include, for instance, the right to postpone until actually received in 1988 Canada Savings Bond interest which accrues in 1987 on series C-36 bonds. They also include the important provision that taxpayers can reduce or eliminate interest charged on deficient tax instalments by overpaying other instalments or paying other instalments before their due date.
In addition to that, bearing in mind the amendments which have been made to the Canada Pension Plan, the Bill provides that when an individual applies to split his or her pension with his or her spouse the portion going to the spouse will be taxed in his or her hands. Finally, the other important provisions are with regard to the child tax credit and the federal sales tax credit.
The Bill does not only deal with the issue of international banking centres but with a number of other very important tax aspects. Because it is a tax Bill and is in fact a Bill to implement the Budget, it is quite likely that the Government, in its wisdom, might consider a vote against this Bill to be a vote of non-confidence in the Government. I certainly have a great deal of confidence in the Government, notwithstanding my concerns with and objections to the provisions relating to international banking centres.
As you can appreciate, Mr. Speaker, while I do not believe that a vote against this Bill would be a vote of non-confidence in the Government, I can understand why you might believe otherwise. That puts me somewhat on the horns of a dilemma. I intend to resolve that dilemma by voting neither for nor
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against this Bill. 1 hope to be in the House when the Bill is voted on at third reading. 1 shall not rise in support of it but 1 will ask to be recognized by you, Mr. Speaker, so that I can indicate that I am present but will not be voting for the Bill.


Nelson Andrew Riis: Mr. Speaker, 1 appreciate being recognized to participate in this important debate. It is our intention that this debate be relatively short. However, I do want to make some comments because I think that a great deal of mythology has built up surrounding the international banking centres which this legislation addresses.
During the time leading up to the committee's examination of the impact of international banking centres on various communities and after the concept was introduced by the Government many people thought this was a major step toward significant job creation, particularly in the Cities of Vancouver and Montreal. If you were to ask people about this in Vancouver even today they would say that they are looking forward to this designation because they need the jobs and the economic activity in western Canada and, more precisely, in the port city of Vancouver.
Unfortunately, the evidence shows that that assumption is not accurate. In 1984 the United States General Accounting Office did a thorough examination of the establishment in the United States of international banking centres. In 1984 they stated in their report: "Significant increases in employment and other real activity associated with IBCs-only 55 to 67 new jobs". In other words, after a number of years in one of the major centres of world commerce, the number of jobs that a small restaurant would create is all that resulted.
Some analysis has been done on what this will mean in terms of jobs in Vancouver and Montreal. The Canadian Bankers' Association studied what international banking centres had done in other places and applied that to Vancouver and Montreal. They factored in the extent of financial activity which takes place in those centres now. They concluded that between the two cities we may expect an increase of 26 jobs. The finance officials applied their analyses to the two centres and concluded that only 11 jobs would ultimately be created in Montreal and Vancouver combined.
The evidence which we have seen indicates that this is not the best way to create jobs. As a matter of fact, it is a very expensive way to do so. Studies which have been done to date indicate that about $32 million would be lost to the federal Treasury as the result of the creation of these international banking centres. If we are to lose $32 million to create 11 jobs, that works out to about $2.9 million per job. That is a very expensive job creation program. If job creation is our aim, we can do much better. The point 1 am trying to make is that the aim is not to create jobs in international finance. There must, therefore, be some other purpose.
What is the purpose? People have assumed that the creation of an international banking centre would result in all kinds of money flowing into Canada which we could use for investment

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purposes. That is not the concept of an international banking centre. An international banking centre does in fact attract offshore money, but only for investment offshore. In other words, it is a depository for a short period of time while overseas investments through that financial institution and its affiliates are being determined.
The creation of an international banking centre in the City of Vancouver would possibly attract funds which are presently going to the Cayman Islands or others of the rather peculiar tax havens. Those funds would not, however, be used for investment in Vancouver, British Columbia or Canada, but in offshore locations. There would be no direct benefit to Canada whatsoever through economic activity which would flow from the moneys in international banking centres. However, there are people who would benefit. Of course, the major beneficiaries would be the banks themselves.
This legislation creates an international banking centre where the profits generated in that centre would not be taxed. When we consider examples in the Cayman Islands and other places which we recognize as international tax havens, we see that substantial profits that are generated would be tax-free. At a time when we are expending a lot of energy and money deciding how to restructure our tax system to make it more equitable, fair and just, the Government is taking a rather peculiar step by creating an international banking centre and giving another break to the banks.
I do not fault the banks for this. As a matter of fact, the banks have made it quite clear that this step is probably not a good idea in terms of the financial system in Canada and its reputation in the financial circles of the world. They are simply going along with what the Government passes.
A number of bankers have told me not to blame them for taking advantage of tax laws that the Parliament of Canada creates. Last year I believe that not one of the big six banks in Canada paid any income tax. They have said that they should not be blamed for not paying taxes because they are only following the laws that the Government of Canada makes. If the Government wants them to pay taxes, it should change the laws. In a sense, they have a point. The fact that they will be the main beneficiaries raises questions. It would make it very difficult for me to support this legislation on those grounds alone.
This legislation will designate Vancouver and Montreal as international banking centres. I think we can do a great deal more as a Parliament to enhance the financial services available in Vancouver and Montreal, as well as in cities like Edmonton, Calgary, Winnipeg and many other Canadian centres where I believe we should be doing what we can to enhance the availability of financial services, particularly to the small and medium-sized businesses operating in those jurisdictions.
Many Members meet small and medium-sized business people in their constituency who have ideas and concepts they want to act upon but have difficulty obtaining financing to do so. They are hindered by the ability to obtain that financing.
As my colleague, the member for Ottawa Centre (Mr. Cassidy) indicated, it is time to set up some task forces in centres where the appropriate boards of trade and chambers of commerce could meet with urban officials as well as provincial and federal officials and representatives of the financial community to identify ways and means of enhancing the level of financial services in those centres. That is what people want.
Unfortunately, I believe the impression has been created that the designation of Vancouver as an international banking centre will present a host of new financial opportunities for local business people, industrialists, entrepreneurs and others. However, that is not the case.
The identification of Vancouver as an international banking centre is only symbolic. While it may send a certain message to some people in the country that we have identified Vancouver as an important West Coast city and port, no one who understands international banking will be fooled by this designation. They will realize that the critical decisions on national and international finance will be made in Toronto or New York, no matter what designation we give to centres around the country.
We are talking about a very sophisticated, effective and complicated international community of financiers. These trained and experienced individuals understand that to designate an international banking centre means very little, other than being a symbolic effort. They will know where the real, important and critical financial decisions will continue to be made.
While I am in favour of the concept of applying an international banking centre status to a city like Vancouver, I think it is somewhat of a smokescreen. It gives the illusion that something is being done and gives the people of Vancouver, and perhaps the people of western Canada, the impression that they have been given a significant designation, according to this Bill. Such is not the case.
It is important for us to recognize that we should not only do something of significance but also be seen to be doing something of significance. Unfortunately, only the latter is the case. The life of the average Vancouverite, British Columbian and Canadian will not significantly change as a result of this legislation. It is essentially a waste of our energy.
If anything, this legislation has made Parliament and the finance committee recognize that we must take steps to provide better financing vehicles for Canadian investors and business people. If this debate has moved us a step in that direction, I think we have made some progress. But let us not be duped into thinking that this will make a major difference in terms of the economic activity that is generated either in Vancouver or in Montreal.
December 8, 1987


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


Hon. John W. Bosley (Don Valley West):: Mr. Speaker, 1 intend to be brief. This has been difficult legislation, particularly for those Members who come from Toronto. 1 want to elaborate on some of the concerns raised by the Member for Kamloops-Shuswap (Mr. Riis) and the Member for York East (Mr. Redway).
It seems that there is no one who seriously believes that Clause 10 is reasonable or sensible. Certainly, no one in the banking community believes that to be the case.
Some Members believe that a symbolic gesture with regard to Vancouver or Montreal perhaps makes sense. That may be easier to accept if either of those centres were being considered on an experimental basis, but that is not the .case. We are being asked to accept permanent legislation 'which no tax expert believes makes sense.
On that basis, as an honourable Member, I do not think I can do anything but vote against the legislation. While I suspect that no one will believe me, let me make it clear that I do not intend to vote for this legislation because I believe it is unnecessary.
If this were reasonable banking centre legislation, I would then be arguing that Toronto should be included. I cannot believe that anyone would not contemplate anything called international banking centre legislation in this country and exclude the place where 80 per cent of the banking is done.
The Hon. Member for York East has raised his dilemma, and I simply wish to say to him that under the spirit of reform, the only way that individual Members will ever be able to make their points to a Government will be on third reading. In the end, that is where we will have to stand up, even though you and I know, Sir, and the Member for York East and I both know that we will lose this fight. Sometimes it may be necessary, when it seems appropriate, because that is what this Government in absolute legitimacy said, that when Members want to vote against Bills, they should do so. Well, I intend to do so. Sir.


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


Some Hon. Members:: Question.


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


Some Hon. Members:: Agreed.


Some Hon. Members:: No.


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


Some Hon. Members:: Yea.


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


Some Hon. Members:: Nay.


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


Some Hon. Members:: On division.


The Acting Speaker (Mr. Paproski):: I declare the motion carried.
Motion agreed to and Bill read the third time and passed.


CUSTOMS TARIFF
Hon. Elmer M. MacKay (for Minister of State (Finance)) moved: that Bill C-87, an Act respecting the imposition of duties of customs and other charges, to give effect to the International Convention on the Harmonized Commodity Description and Coding System, to provide relief against the imposition of certain duties of customs or other charges, to provide for other related matters and to amed or repeal certain Acts in consequence thereof be read the third time and do pass.


Mr. Pierre H. Vincent (Parliamentary Secretary to Minister of Finance):: Mr. Speaker, I am pleased to speak to Bill C-87 which was debated in the House recently. This is an important measure which is designed to finalize existing economic agreements and which Canada needs to ensure uniformity between our files and those of other countries. Such is the main purpose of Bill C-87, Mr. Speaker, and you will recall that it was debated at certain levels, but unfortunately they did not focus exclusively on the issue. Bill C-87 ought to be adopted as soon as possible because it is an excellent measure which will solve some of the minor problems we have with respect to customs tariffs between various countries.
Mr. Speaker, I do not think there is any need to go over what has already been said about Bill C-87. I am sure Hon. Members are aware of that and know the Bill ought to be adopted at the earliest opportunity. Mr. Speaker, all I can ask Hon. Members of the House is to pass the Bill as soon as possible.


Michael Morris Cassidy: Mr. Speaker, I wish to speak a little on Bill C-87, because it covers two things. It is a revision and an updating of the Customs Act, and it also provides for a harmonized tariff between Canada and its major

December 8, 1987
Customs Tariff
trading partners. The major trading partners of Canada include a number of countries, among others, the United States of America with which Canada has approximately 80 per cent of its trade.
When we are putting into place a harmonized system of tariffs for Canada, what is taking place, as the Hon. Parliamentary Secretary has stated, and as the Minister of State for Finance (Mr. Hockin) stated the other day, is at one level a matter of government routine, which is important for trade, important for exporters and importers in Canada, and is a necessary updating. Among other things, it will allow Canada to move to a system which is computerized, and a system which is more efficient and more effective. It will also mean that some of the unfortunate disputes on the amount of trade between the two countries and over trade statistics and so on will come to an end. Both countries, for example the United States and Canada, or Canada and Japan, or Canada and another trading partner, will be dealing with a common description.
The new tariffs which are laid out in the very substantial document under Bill C-87, which has been worked out over some time with close consultation with the industries affected, are more detailed, they are put on to a different base, and they do allow for a better reporting and a better understanding of what Canada's foreign trade is all about. Being a trading nation, that is extremely important to us.
When the Minister of Finance (Mr. Wilson) rose during report stage of this Bill and indicated how unfortunate he thought it was that anyone would even comment at report stage because the Bill was historically important, but then stated that we must have this by January 1, it raised some questions in my mind. I have given some serious thought to those questions since then. On third reading, I think it is important and appropriate perhaps to raise some of those questions with you, Mr. Speaker.
In Bill C-87 there are a number of very important clauses and powers. Those powers include a power to levy a surtax, a power to put import controls, and a power to suspend trading rights which Canada has granted by agreement with other countries. It includes a power to levy surcharges on certain types of imports. Most of all, it includes a power given to the Governor in Council, which I consider to be extremely important. Clause 62 states:
The Governor in Council may, on the recommendation of the Minister of
Finance, by order,
(a)	reduce or remove customs duties on goods imported from any country by way of compensation for concessions granted by that country or any other country, subject to such conditions as may be specified in the order; and
(b)	extend the benefit of any order made pursuant to paragraph (a) to any country as may be required by Canada's international obligations, subject to such conditions as may be specified in the order.

Mr. Speaker, the first sub-paragraph of Clause 62 is particularly important since it provides that the Governor in
Council, in fact the Cabinet, may, on the recommendation of the Minister of Finance, reduce or remove customs duties on goods imported from any country by way of compensation for concessions granted to Canada by that country or any country.
Mr. Speaker, what we have here is a clause that restates a section that existed in the former Customs Tariff, under which the Governor in Council or Cabinet may, without the approval of Parliament, reduce or eliminate tariffs between Canada and any other country, by way of compensation for concessions from the other country.
Mr. Speaker, as an intelligent man with considerable political experience, you are of course aware that we have at this time a situation that is being handled exactly in the manner described in Clause 62. It's the truth, Mr. Speaker. We have a situation where Parliament is being asked to authorize the Government to approve new tariffs for use by Canada in its trade with United States.

As I am sure you realize, Mr. Speaker, those powers raise some important questions which go to the very heart of the principles of this rededication of the Customs Tariff which is found in Bill C-87. Those principles relate both to Canadian sovereignty and to democracy. It is important that, in the past, Governments of various stripes, both Conservative and Liberal Governments, when reworking the Customs Tariff have always felt that certain trade actions were sufficiently important in Canada that they should be referred to Parliament.
It is curious that those trade actions do not include the power to reduce or eliminate tariffs under Clause 62 of the new Bill. Nonetheless, certain trade actions require reference to Parliament. In fact, surcharges, surtaxes, import controls, and such things cannot be maintained for a period longer than 180 days, or a bit longer if Parliament does not happen to be sitting throughout the period of time. Basically it is about six months, without even having a resolution of approval from Parliament.
I believe that it is a valuable move and that it is important because of the degree to which Customs Tariff is an important instrument of trade policy and therefore an important instrument for a trading nation of industrial and government economic policy.
If we decide to remove $2 billion worth of tariffs, as apparently the Government is now intending to do, 1 believe some consequential questions are properly raised which really should come back to Parliament as the body ultimately responsible for control of the purse. As you know, Mr. Speaker, control of the purse is something which is perhaps more an illusion than a reality under a parliamentary system of government and under majority government. The fact is that, as the system goes, the majority tends to control these things. Nonetheless, the unanswered question in respect of the power of the Government to take away or remove substantial
December 8, 1987

amounts of tariffs is: Where is the money going to come from? Who will pay? Of course the answer is that we do not know. The problem is that we have not had the opportunity to ask those questions and to get those answers from the Government.
During the course of earlier stages of the Bill, members of my Party, myself as the proponent, moved a number of motions essentially designed to try to re-establish parliamentary control over the whole process. We gave, quite explicitly, our reasons for so doing.
The reasons we gave were the following ones. We said that in the past the power to exchange most-favoured-nation tariff treatment with a country under the general tariff before was relatively minor. We might have a trade exchange of perhaps a few million dollars a year. It was relatively routine for Canada to reach an agreement with another country to go ahead and exchange most favoured nation status or some other type of privilege. Therefore, there was not a loud cry for Parliament to be required to approve.
We said then-and I believe it is correct-that the situation has changed quite fundamentally. This is because of the determination of the Government, despite very broad and deep concerns raised by an increasing number of Canadians, to use the executive power to enter into a trading arrangement, possibly under Section 62 of the Act. I cannot say that for sure because I just do not know.
However, over the course of the next 24 days, with the Christmas and New Year's holidays along the way, the Government intends to take us helter-skelter into a binding trade agreement with the United States. One of its most important features comes squarely under the powers given under Bill C-87.
Earlier in second reading debate my colleagues debated that fact at length. It is our feeling that a Bill which would normally be routine is no longer routine in this case because of the circumstances surrounding it. Possibly the Government, which very few people in the country trust any more, is thinking that if it cannot get what it wants by means of action in Parliament, if Parliament quite possibly finds it difficult to get work done when we come back sometime in mid-January, it would then use executive power not just to sign the treaty with the United States of America but to implement a treaty which will have fundamental effects on every aspect of Canadian life.
This is why I say that I believe the fundamental principles which are at stake in Bill C-87 are principles related to sovereignty and to the question of democracy. Should Parliament have the power, which is quite clearly laid out in legislation, to ensure that the Government cannot do by the back door what it perhaps does not dare to do or might not be able to do by the front door?
I assume you would agree with me, Mr. Speaker, that it is not right for a Government to be able to do something
Customs Tariff
surreptitiously when it refuses to, does not want to, or is blocked by Parliament from doing it in an open and overt way.
You may recall, Mr. Speaker, since you were a Member of the House at the time the Liberals were in power, the degree to which you and members of your Party fought valiantly on a number of occasions for the principle that Parliament should in fact continue to be sovereign. That does not mean that the majority should not have the right to decide in the end. 1 have a problem with that. However, we face a real problem in terms of what is happening now. The majority is seeking to make a decision on the basis of an election result in 1984 and on the basis of not having proposed and not having a mandate for the major changes in tariffs and other measures apparently anticipated in the agreement which will be made public over the course of the next two days or three days.
Until now we have had no word at all on exactly how the Government intends to proceed in terms of legislative approval of the details of the free trade agreement.
1 ask the many Canadians who are increasingly concerned about it whether the Government of Canada is being adequate and fair in relation to average Canadians by publishing a document of some 2,000 pages in length on a Thursday and taking it to Parliament for three days or four days of debate the following week, debate which inevitably will not be able to get down to all the details and all the fine print of an agreement. Dare I remind you, Mr. Speaker, that it is some 200 pages long, has substantial numbers of pages of annexes that contain God knows what, and on top of that has some 1,500 pages of detailed tariff schedules.
I do not know how I could even read and absorb that material over the course of the three days or four days between its publication and the time that it actually comes up for debate. 1 must say that the democratic process where Parliament should have the right to consider major matters in a serious way will be a joke and a sham, if in fact we do not get any chance to consider in detail or in a more adequate way what will be proposed to us before then.
In a general way, as I am sure Hon. Members will point out, the intention of Bill C-87 is to have a harmonized system. When consultations were taking place between the Government of Canada and the trade community-exporters and importers-it was quite clearly indicated by the Department of National Revenue in hearings that took place across the country early this fall that the implementation of this harmonized system of tariffs would take place on January 1, 1988, under the condition that our major trading partners, that is the United States and Japan, adopted the harmonized system at the same time. Therefore, I was very surprised when I had my office talk to the American Embassy and to sources in Congress in order to find out whether the Americans, who after all are our major trading partners, were in fact on track in terms of bringing this new system into force.
In fact, what is happening is that Canada is harmonizing its tariff system with an American system which will not be

December 8, 1987
Customs Tariff
harmonized under the new scheme as of January 1, 1988. It appears that the Americans intend to bring in their harmonized system in conjunction with the omnibus trade Bill. You may recall that the Americans have now cooled off on some of the protectionist elements of that. They have perhaps cooled off because of the threat by President Reagan that he intends to veto the omnibus Bill and, therefore, legislation is apparently to be introduced separately by a member of Congress.
That legislation, at last report of just a few days ago, has not yet been introduced. As you know, Congress is taken up this this week by the visit of Secretary Gorbachev of the Soviet Union. There is absolutely no certainty that the Americans will deal with this legislation prior to January 1. They too, of course, are also about to come up into their Christmas break.
Canada will harmonize with an American system that will not be harmonized. In Bill C-87, the Government will have the power to allow the Cabinet, at the stroke of a pen by the Prime Minister (Mr. Mulroney), to sign $2 billion worth of tariff cuts with the United States without any further reference to Parliament.
1 want to talk a bit about that because to allow that kind of latitude in making decisions about Canada's tariff structure without reference to Parliament is wrong.

Mr. Speaker, I say there is no justification for the Government of this country to have the power to cut Canadian tariffs on goods from the United States to the tune of $2 billion, without any reference to Parliament. The Minister of State (Finance) informed me I had no grounds to raise this question. Mr. Speaker, I read Clause 62 three times, and it is crystal clear the Government has the power to reduce tariffs on goods from the United States by way of compensation as defined by the Government, without any reference to Parliament.

As I said, the Government does not have a mandate for that. The Government is taking this action despite the fact that it does not have support in the polls. The Government is taking this action despite the fact that half the country opposes it. The Government is taking this action despite the clear opposition from the Premier of the largest province who has a mandate from the last election in Ontario when he won a rather overwhelming majority.
The Prime Minister has emerged from the First Ministers' Conference on the economy just the other day indicating that he had a consensus, that there was an emerging consensus. But the consensus of which he speaks consists of the support of four or five provinces, no more, and those provinces in turn have not had a mandate from their citizens. I know that in Quebec, for example-

there is a coalition against free trade supported by all kinds of grass roots groups and by all the major unions in the Province of Quebec, with strong support from the Union des produc-teurs agricoles which represents 42,000 Quebec farmers. At its convention the other day in Quebec City, the UPA declared it was totally opposed to the Bill proposing these tariff reductions and the proposed Free Trade Agreement with the United States.

I would also point out that two of the provinces, which are part of the so-called consensus which has been raised by the Prime Minister, are in fact provinces where their leaders claim and purport to speak for their populations, yet the opinion polls indicate that they do not do so. Quite the contrary. Mr. Devine in Saskatchewan is far behind the New Democrats and Roy Romanow in popular support. Mr. Vander Zalm in British Columbia is in the same position. We had an example in the House of Commons today. Mr. Vander Zalm is supporting a measure of free trade with the United States despite the fact that the Government, behind closed doors, has just negotiated protection for the East Coast fisheries to ensure that processing would take place on the East Coast and that raw fish could not be exported from there, but the same protection is not given to the equally important fishery on the West Coast.
I find myself also at a loss to comment on Bill C-87 because the powers it gives relate to a very substantial reduction in tariffs and relate to certain tariffs being eliminated effective in one year from January 1, 1988. They also relate to other tariffs being eliminated at a very rapid rate over five years. Since the text of the agreement has not been released and the details of the tariff cuts have not been released, I have not had an opportunity to talk to my constituents to find out what their reaction would be. I suppose, since we are being asked to look at the harmonized tariff schedules part of this Bill, that 1 could comment in some detail on what is being done, except that 1 have not seen the detail and it is impossible for me to comment in any knowledgeable way.
If I can go on I would like to talk in more general terms about what all this means. The Government has demonstrated through a number of different actions that it is not a Government which is credible to average Canadians. It is not a Government which can be trusted by average Canadians, whether on pensions, the tuna deal or now on the outrageous behaviour of the Hon. Member for York-Peel (Mr. Stevens), by refusing to take appropriate action after the report by Mr. Justice Parker. This Government has lost the trust of Canadians. Yet when it comes to the question of tariff cuts which it can take by the powers of Bill C-87, the Government is simply saying, "Trust us and we will do the right thing". When they say "the right thing", Mr. Speaker, it is becoming clear to me that "the right thing" is those things that are demanded by the political right.
December 8, 1987

The Business Council on National Issues originally proposed that we should have free trade, supported by a Bay Street lawyer, Donald Macdonald, a former Liberal Cabinet Minister who headed the Macdonald Commission. He indicated that he too thought Canada should have free trade. Many business spokespeople have advocated that we go to the kind of tariff cuts and the other arrangements that so fundamentally affect Canadian sovereignty involved in the free trade agreement. But when it comes down to average Canadians, the situation is the opposite. Farmers, trade unionists, auto workers and people in the cultural industries, who are concerned about the survival of Canada's soul and culture, are overwhelmingly opposed. It is ironic that the Government should claim it has a consensus when the consensus it has is a view of the world which may be held by Mr. D'Aquino and his friends in the Business Council on National Issues, which may be held by the major corporations in Canada but which increasingly is not a view held by average Canadians.
In the last two or three weeks there has been a dramatic shift in opinion in Ontario against the free trade deal. I believe that we will find very shortly that a dramatic shift is taking place in other parts of the country as well. Yet the Prime Minister and his Government are threatening our country with a trade deal which will hurt those average Canadians, and people are beginning to realize it.
I would like to go on, but I believe it is five o'clock. I intend to continue when this debate resumes tomorrow or whenever it is called again.


The Acting Speaker (Mr. Paproski):: Order. It being five o'clock, the House will now proceed to the consideration of Private Members' Business as listed on today's order paper.



PRIVATE MEMBERS' BUSINESS-MOTIONS

[Stage Direction]
\ English]

Alan Redway: That, in the opinion of this House, the government should consider the advisability of establishing uniform guidelines and an evaluation procedure similar to those presently in use in Australia, upon which Government Departments, Boards, Crown Corporations and Agencies should base their annual reports and thereby establish a system by which those reports which have most effectively complied with these guidelines may be acknowledged.
He said: Mr. Speaker, if you are like me, and I suspect that at least to some extent you are, you receive dozens and dozens of annual reports every week of the year. I do not know what you do with those annual reports. Perhaps you sit down deep in
Government of Canada
the recesses of your office and read through each one in careful detail, starting off at the beginning of the year and working your way toward the end of the year. Perhaps you stay up burning the midnight oil, trying to get those reports read from cover to cover.
I can see by your motions, Mr. Speaker, that that is in fact the way you treat these things. I thought that maybe, just maybe, you might have filled your garbage basket with quite a few of these reports. If you do not fill up your garbage basket with these annual reports on a regular basis, 1 venture to say that you have a hard time battling your way through the front door of your office after you have been in it for a year or two. So many of these reports are received all the time. I know that you must have the same problems I do.
Reports are issued on just about every conceivable situation and every conceivable body seems to send out these reports. The Freshwater Fish Marketing Board does. I know that if our hon. colleague from the Western Arctic were here, he would rise to shake his fist after hearing about the Freshwater Fish Marketing Board. We receive annual reports from the Dairy Commission, from Canada Mortgage and Housing Corporation and from the Bank of Canada. I see my hon. friend, the Hon. Member for Winnipeg-Assiniboine (Mr. McKenzie) shuddering when I mention the annual report of the Bank of Canada. That is one of his favourite subjects, and I hope he will have a few things to say about the annual reports from the Bank of Canada.
We receive annual reports from just about everyone. In fact, we received one today, and you probably read it already, Mr. Speaker. The report we received today was from the Department of National Revenue, Customs, Excise and Taxation, for the fiscal year ended March 31, 1987. Does it not strike you as a little strange, Mr. Speaker, that today is December 8, 1987, and we are just receiving the annual report of the Department of National Revenue for the fiscal year ended March 31, 1987? It should strike you as strange. However, it should not strike you as being any stranger than the way we receive all these other annual reports.
As the House knows, we receive annual reports from Departments, boards and commissions. Sometimes we get them from Crown corporations and sometimes we do not because they are not all under the same obligation to report.
As you have gone through all these annual reports, Mr. Speaker, you may have been impressed by them. I see you shaking your head, and I know that, like me, you were not really impressed by them. In fact, if you were not, you are in good company. You are in good company because not many Members of Parliament, I suspect, are impressed by them, and certainly the Auditor General of Canada has indicated that he is not impressed by them at all. In fact, I am sure you read his annual report from cover to cover. It is a thin little volume in which he says specifically that he is not impressed with the quality of the annual reporting that goes on by all these boards, commissions. Departments and corporations.

December 8, 1987
Government of Canada
One of the reasons the Auditor General is not impressed is the very reason I pointed out when I mentioned this annual report from the Department of National Revenue. The legislation which sets up these Departments, boards, and agencies usually provides that these bodies must file annual reports. The annual reports must deal with the fiscal year, but the bodies do not have to file their annual reports until some time after the end of the calendar year. The fiscal year ends on March 31 of each year while the calendar year ends on December 31 of each year.
It is astounding that information that is compiled as of March 31 would not get into the hands of Members of Parliament or the public until after the end of the calendar year, and in fact well into the new calendar year. It is that sort of thing that causes the Auditor General, me and 1 know you, Mr. Speaker, to be unimpressed by the annual reports we are receiving.
While the legislation creating these Departments, boards and commissions does specify that there must be annual reports and when they must be presented, it does not specify what is supposed to be in the annual reports. It does not identify in any way, shape or form to whom the annual reports are supposed to be addressed. Are they supposed to be addressed to you and 1 as Members of Parliament, Mr. Speaker? Are they supposed to be addressed to the public? Are they supposed to be addressed to the Government? Are they supposed to be addressed to the employees or the management of these organizations? Who knows?
In fact, these organizations can virtually do their own thing. They do not have to worry about it at all because there is nothing in the legislation that says that they have to do anything other than send us a piece of paper entitled annual report. They do not even have to do that until after the end of the calendar year.
As the Auditor General has said in his report, there is a good chance that the information contained in these annual reports is completely irrelevant. In fact, it can often be months and months old and sometimes we get these annual reports just a month or so before the next annual report should be compiled.
Another thing the Auditor General points out in his report is the fact that very often these Departments do not meet the statutory deadlines they are required to meet when filing reports. Sometimes, annual reports are not filed at all in some years and sometimes, as in some cases about which I have read, Departments have to go back and reconstruct the facts so that two or three years later, they can produce annual reports to comply with the requirements of the legislation that set them up.
It seems ludicrous to me that we should operate in this way. As you will recall, Mr. Speaker, because I know you read it thoroughly and probably committed it to memory, the Auditor General in his report said that the Comptroller General of Canada should re-examine the very need for these reports in
the first place, but if they are to be continued, there should be some minimum standards as to form and content.
I wonder what sort of procedure we might put in place to provide those minimum standards. Shall we leave it to the Government to put in place some new minimum standards? I would be interested in hearing, when the Government responds to this motion, if it will do that or not, but 1 suspect not. In fact, while inquiring around, I was enlightened by the Principal Clerk of the House of Commons, Mr. Michael Kirby, a good friend of yours, Mr. Speaker. He usually sits at the Table, but unfortunately he is not there tonight.
Michael Kirby pointed out to me that there is a better way and that there are other jurisdictions that use this better way. In fact, our sister Commonwealth country, Australia, has devised a better way of dealing with the reporting system.
Australia has guidelines or minimum standards like those spoken of by the Auditor General. It has a method for evaluating the reports that come out and it has a system of rewarding Departments, boards, committees, commissions and Crown corporations for turning out good reports. That makes a lot of sense to me.
Apparently Australia has set up a panel of judges to evaluate these reports. The panel consists of five people who come from a variety of backgrounds, and those backgrounds make sense to me. One of the members of the panel is a retired senior public servant, someone who has had some experience putting together these reports. Another is a university professor of public administration, someone who is usually critical of the way reports and other things in government are put together. A third is a member of the Press Gallery.
My gosh, no one is in the Press Gallery tonight. However, we know that members of the Press Gallery are all listening to every word of this debate on television. Whenever we ask them why they were not sitting in the Press Gallery, they tell us not to worry, they were back in their offices watching us on television. We know they are doing that tonight. I know at least one member of that illustrious Press Gallery would love to sit on a panel like this and be able to judge the information they are always critical of. They are always trying to utilize the freedom of information system to get more information. This would be their opportunity to produce quality information.
Another member of the Australian panel is a chartered accountant because a good deal of this information is financial. Lo and behold, another member is a politician, someone like you. Oh, no, not like you, Mr. Speaker, but like some other Members of the House. You are a little cut above that, but the rest of us fall into that category. That is not a bad perspective to bring to bear on a panel that judges the quality of these reports. That is the sort of system they have in Australia, and it makes sense to me.
December 8, 1987

What are the criteria set up by the Australians? They require the report to answer the following question. Note this: They have questions which the report has to address. First of all, what are we here for? That is an interesting question. If some Crown corporations addressed that question they might not be able to come up with an answer.
The second question is: What do they do? They are supposed to detail the sort of things they actually do.
The third question is: Who is it that does it? They have to tell us who is involved in the process. Have you ever seen that in one of those annual reports that you read? I can see you shaking your head. You have read them all from cover to cover, but I bet you do not know who actually carries out the functions. They do not tell you what the functions are anyway. Yet that is the sort of thing we would have if we followed the Australian system.
They also have to give us some sort of idea of how well they perform. Is that not interesting? They have to actually evaluate and assess themselves. That is putting a pretty heavy burden on a Department or Crown corporation, committee, board or agency. We would be asking them to actually tell us how well they think they are performing. That is incredible because it might be embarrassing. Instead of having a happy face on some of these reports, we would perhaps have a red face. That might be bad for them, but 1 suspect it would be good for the rest of us.
As well as those things, they actually require information like the names of people who do the jobs and their telephone numbers. Can you believe that? The public would actually know who it is they want to get hold of to deal with a particular problem. That is inconceivable, but that is what the Australians would have you put in a report. To me it makes sense.
Then there is the question of timeliness. Does the report actually get filed on time? The Auditor General tells us a lot of them in this country do not, but in Australia they rap your knuckles if you do not get it in on time. You do not get a gold star on your work book the way you would in Grade 1 or 2. In Australia it is important that this be done, and 1 think it should be important here.
Then we have financial information. 1 see the Hon. Member for Quebec-Est (Mr. Tremblay) over there. I know he is most concerned about Part III of the Estimates each year. They contain some expenditure material, but only of a minimal nature. The same thing with respect to the Public Accounts. We could be getting relevant, detailed and important information in that annual report if we followed a system like the Australians are.
I know that the Government in its response, because 1 was told ahead of time, is going to say that in fact it has a wonderful system in place right now. It makes a lot of sense. We do things perfectly. There is nothing wrong with the system. My suggestion of the Australian method would unnecessarily
Government of Canada
complicate things. It would just ruin the whole system we have, and it is such a wonderful system.
What I hope the Government will talk about is what the Auditor General had to say about that wonderful system. I hope it will mention, as I have, some of the Auditor General's concerns, the fact that he is not impressed with the quality of the reports, and the fact that there is nothing to specify what is to be in the report. There is no purpose to the report. There is no idea of who the Auditor General is. The reports are often late and perhaps completely irrelevant because of the time frame in which they have to report.
It will be interesting to see if the Government addresses those issues and, in doing so, can honestly say that it has a good system which does not need to be changed. This motion is put forward for the purpose of improving the system. Surely you and I, and all other Members in the Chamber here tonight, in fact all Members of the House of Commons, and all members of the Press Gallery who are watching on television, are here to ensure that we do things better. We are not here to do things worse. We are not here to just carry on making the same mistakes. We are here to do things better. That is the purpose of the motion.
That motion, which you so eloquently read and which 1 moved, says:
That, in the opinion of this House, the government should consider the advisability of establishing uniform guidelines and an evaluation procedure similar to those presently in use in Australia, upon which Government Departments, Boards, Crown Corporations and Agencies should base their annual reports and thereby establish a system by which those reports which have most effectively complied with these guidelines may be acknowledged.
In fact, maybe rewarded. I would like to move that the motion be referred to committee so that we can deal with it properly and the Government can address it properly so as to improve the system.
[ Translation]


Mr. Marcel R. Tremblay (Quebec-Est):: Mr. Speaker, in addressing the motion tabled by the Hon. Member for York East (Mr. Redway) to establish guidelines and evaluation procedures for annual reports, I would like to emphasize the major progress made in this country on the quality of the information the Government provides on departments and programs through the new version of the Estimates.
Hon. Members are of course aware they now have access to a vast store of new and more detailed information in the Estimates and that these documents, in their present form, are a remarkable improvement in terms of disclosure of the information that forms the basis for government accountability-
Briefly, the new Estimates are divided into three parts. Part I is concerned with the multi-year expenditure plan, which is first tabled in Parliament as part of the Budget brought down by the Minister of Finance, in the form of an overview of public spending which highlights past and future spending priorities and their impact on the economy. Part I also contains

[DOT]	(1720)


Mr. Cyril Keeper (Winnipeg North Centre):: Mr. Speaker, I welcome the opportunity to speak on this motion and 1 am glad that my hon. friend, the Member for York East (Mr. Redway), put it forward. Annual reports of government Departments, Crown corporations, and other government agencies are ignored for the most part by Members of Parliament and the public. I am glad that the Hon. Member had the opportunity to state his case and I enjoyed hearing the Government's response to it.
Before 1 make my own comments, 1 want to do something that is normally not possible in this House. 1 want to give my colleague, the Member for York East, the opportunity to respond to what the Government said about his motion that we take a serious look at annual reports.
The Member for York East has heard the government response and put his response to it in writing. He says: "After reading that speech prepared by the Government, will the Hon. Member for Quebec East (Mr. Tremblay) be able to look the Auditor General in the eye when he next sits with the Public Accounts Committee?"
That is a strong statement. It gives us the flavour of my hon. friend's response to the Government's response to his motion. That is a unique contribution to debate in this House. It adds to the public discussion and democratic process.
The Hon. Member has moved:
That, in the opinion of this House, the government should consider the advisability of establishing uniform guidelines and an evaluation procedure similar to those presently in use in Australia, upon which Government Departments, Boards, Crown Corporations and Agencies should base their annual reports and thereby establish a system by which those reports which have most effectively complied with these guidelines may be acknowledged.
It is a good idea to look at annual reports. Why otherwise do we have them? The Government's response does not persuade me that it has thought the problem through. The Hon. Member for Quebec East basically said that there had already been progress made in the provision of information to Parliament through the new budgetary process. He said that the progress in the way budget and expenditure items are reported to parliamentary committees is sufficient and we need not bother with annual reports.
[DOT]	(1730)
If we already have the information we need within the budgetary process, why am i wasting my time talking to this motion?
One could ask, what is the purpose of annual reports? Perhaps at one extreme it could be said that there is no need for annual reports because they do not provide the required information. At the other extreme it could be suggested that annual reports are such a valuable source of information that
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there is no need for the expenditure accounts or the budgetary papers even in their new format.
Clearly, both of those extremes would not be considered by the parliamentary committee if it were to study the motion being put by my hon. friend.
We must consider the basic question about the purpose of annual reports. I believe their purpose is to provide information to Members of Parliament, the public and the press. Next, we must consider what kind of information government Departments, Crown corporations and other government agencies must provide so that they are more accountable to the public.
My hon. friend has clearly pointed out that there is a real lack of guidelines for providing such information. Other countries, such as Australia, have devised a system that has basic guidelines with respect to what information should be included in annual reports. 1 believe we should follow that procedure.
It would be a progressive step for any Government to consider the purpose of annual reports and therefore provide the public with the required information to evaluate whether a government Department or agency is doing its job. The failure to address the question of annual reports reflects the general nature of Government not to address the purpose behind its activities. As a result, the taxpayer's hard earned money is wasted. That is why the Auditor General is able to write rather voluminous reports every year, indicating where money has been wasted.
Perhaps we can rectify this by beginning to study the whole question of annual reports. 1 commend my friend, the Hon. Member for York East, for bringing this motion forward.
My experience as the NDP Post Office critic supports the argument he is making today. The annual reports from the Post Office do not provide the kind of information we need in order to make a real evaluation of what it is or is not doing and determine how it can function better. The establishment of straightforward and simple guidelines for annual reports will improve the process of public accountability for the activities of Government.
I encourage the House to support his motion so that a parliamentary committee can consider this question and establish some good guidelines for annual reports which may contain useful information that will help keep the Government accountable, as is only proper in a democratic society.


Mr. Dan McKenzie (Parliamentary Secretary to Minister of Veterans Affairs):: Mr. Speaker, it is a pleasure for me to support the motion of my friend and colleague, the Hon. Member for York East (Mr. Redway). As a new member of the Public Accounts Committee, it has been my pleasure to work with him as the Vice-Chairman and with the Member for Trinity (Miss Nicholson) as Chairman. I want to congratulate them on their hard work on the committee and I am sure that

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we will see better auditing and greater attention paid to annual reports as a result of their efforts.
It has been stated that many annual reports are shelved and little attention is paid to them. Since many of them are referred to a committee, perhaps it is the committees that should spend more time on these reports.
From time to time, the Auditor General makes an in depth audit of a particular government Department. As a Veterans Affairs' spokesman a few years ago, I found an extensive audit of Veterans Affairs by the Auditor General most helpful. As a result of that information, we were able to clean up the Veterans Affairs Department, which was being run very poorly.
1 want to take this opportunity today to pay tribute to the late J.J. Macdonell, who was Canada's Auditor General prior to Mr. Dye. He introduced comprehensive auditing to Canada, and I am informed that he was one of the leaders in the world in introducing such a procedure.
Comprehensive auditing means value for money, which deals with efficiency, economy and devising measures to assess the effectiveness of auditing. Our present Auditor General, Mr. Kenneth Dye, has continued the fine work that was introduced by Macdonell. He is President of 1DI, an international organization of supreme audit institutions. Its members form the national audit offices of countries belonging to the United Nations. Our Auditor General is showing leadership in helping the Third World countries have proper and effective auditing systems.
We must also pay tribute to our Auditor General for having probably one of the most efficient offices in government. His office works at 81 per cent productivity, which I believe is probably the most efficient of any government Department or Crown corporation. He must be congratulated for his efforts in obtaining such productivity in his office.
Our Public Accounts Committee will be dealing more extensively with productivity in the New Year. This is important because millions of dollars can be saved with increased productivity throughout the whole government system. There will never be 100 per cent efficiency with big government. We have big government in Canada which the majority of Canadians want. But they will have to understand it will cost them a lot of money, because it is so unwieldy.
I wish to point out that the Auditor General has congratulated the Government for making a lot of improvements in efficiency, and his reports are not as damaging as they have been in the past. The Auditor General's reports are most helpful to Government, Crown corporations, and different Departments in order for them to clean up their act, so to speak.
I also must congratulate my hon. friend, the Chairman of the Standing Committee on Public Accounts, on the tenth
report. They have certainly gone to great lengths in making recommendations for proper accountability throughout the whole system. I hope that the Government pays strict attention to this tenth annual report. A lot of effort has gone into it, and there are many excellent suggestions and recommendations in this report.
The motion presented by my friend, the Hon. Member for York East speaks directly to the account to be taken of any performance indicators and other quantitative measures relevant to an evaluation of a Department's operations. I believe that the establishment of an evaluation procedure and uniform guidelines for government Departments, boards, Crown corporations and agencies to base their annual reports on would establish a system by which those reports could be most effectively compiled.
The Australian model endeavours to pursue such ends, and much of what I am saying here today is gleaned from their experience. The Australian model offers much in terms of streamlining the annual reports of government Departments, boards, Crown corporations, and agencies.
The following criteria exemplify the standards begged by this particular motion: The clarification of a Department's over-all function through the detailed reference to each division of a Department as well as its various branches; the integration of the objectives of a Department and a review of its operations so that there is some sense of how well that Department has been performing, and what, in the Department's view, are the relevant indicators. Because a Department is a large and complicated organization with responsibility for a wide range of related activities, the format chosen to serve as a sensible exposition should be detailed yet well proportioned; provide a brief introduction and overview of major or recent developments; relate management structures to the working environment; and provide an informative account of the Department's consultative mechanisms with other bodies.
Such reporting would be able to ensure a strong early focus on management issues, to allow frank statements of administrative problems and policies, and to provide, through an informative appendix, a listing of statistics on a range of important matters. Departments should be more selective, concentrating on those statistics that are relevant performance indicators in respect of a Department's basic responsibilities.
In the financial area, this motion concerns the use of program or functional statements of expenditures, the reporting of future commitments, and the details of any separate funds administered by Departments.
The demand for an annual report arises from the community interest in the accountability of public bodies. Whatever else reports might hope to do, they must address this demand. Information provided in a report should be relevant to this primary task, and in this regard there should be a judicious selection of tables and statistics to give the reader a well-informed picture of the Department's actual workload.
December 8, 1987

The value of reports is substantial, substantially influenced by their early availability. The timeliness of reports is so important that Departments should make every effort to publish their reports as early as possible in the new financial year.
Although departmental reports are first and foremost accounts of internal administration, they should seek to address for the public the basic purpose of answering, what we are, what we do, who does it, and how well we perform. The basics of public accountability would be served if such questions were answered in departmental reports.
I have a section here from the Auditor's General's Office. It is on value for money auditing. It is an excellent document for all Members to read to show what the Auditor General is attempting to achieve.
[ Translation]


Don Boudria: Mr. Speaker, I would also like to take a few minutes to speak in support of the motion put forward by the Hon. Member for York East (Mr. Redway). I would also like to take this opportunity to congratulate him for his contribution and for his work on the Standing Committee on Public Accounts.

Some years ago the Auditor General and his predecessors began to do their work for us in the House of Commons. They made a more uniform system of reporting some of the financial information. That has been very useful in terms of compiling numbers and expenditures of various government Departments, and some Crown corporations and agencies of the Government.
However, in our quest to standardize some of those procedures, perhaps we have overlooked another area that has to be far more uniform and standardized, and an area that we need to make more accessible not only to Members of Parliament but also to the general public. That area is the area of annual reports of the various government Departments, corporations, boards, agencies, and so on.
Hardly a day passes that a Member of Parliament does not receive an annual report of some sort in his or her office. As you will know, Mr. Speaker, there are days in which we actually get stacks of them coming from all over the place, including corporations of the Government, and also private corporations that are proud of their achievements and want to send Members of Parliament of all stripes their annual reports in order to highlight what it is they have done during the previous fiscal year. Sometimes those reports are interesting. Perhaps I am the exception, but I do not read every single one of those reports. Possibly other Members do, but we do try to read or glance over the ones that are important and informative to us.
As a Member of Parliament from a largely rural constituency, I represent probably a greater number of dairy farmers than anyone else in the House. One report that I always read
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from cover to cover is the annual report of the Canadian Dairy Commission. I find that the information contained in that report is indeed useful to me in representing my constituents.
This particular report contains everything, such as the cost of production formula that is utilized by the commission in establishing the revenues that will be generated to farmers, and so on. It talks about the importation of cheese into this country. It talks about the subsidies paid. It talks about the production of industrial milk versus fluid milk, and everything else Hon. Members would want to know about the operations of this particular commission.
In my opinion it is generally well prepared, well presented, and attractive to read and to view. It has a few pictures, not 14 eight-by-ten glossies of the Minister or anything excessive like that. However, it is well balanced and has the audited financial statements appended to the document in question. It is really a very useful tool. It is probably not perfect. I suppose none of them are, but at least it is interesting.
Sometimes other annual reports that we see have so little information that we actually wonder why anyone bothered to put them out. Others are so complex that they are virtual encyclopaedias of how the government Departments in question work.
Obviously what we need is a more standard formula, not one which is identical, because what is good for the Canadian Dairy Commission is not necessarily what is important for the Canada Lands Company, to use another corporation with which I have some familiarity. These two corporations or agencies operate very differently, and the procedures they use should probably not be identical. Nevertheless, there should be a standard form by which, if a parliamentarian or anyone else opens up one of these documents, he will know what it is. The first thing he is presented with is the letter by the Minister presenting his or her report. The second thing is the board of directors of the corporation, followed by the audited statements, the operations, and so on. Someone picking up one of these documents should be able to see at a glance what happens.
Another matter of interest to me-and I am not sure how it would be realized; but I am expressing the view nevertheless- is that there should be a standard or more uniform time of reporting for some of these corporations. Some of them operate on the government fiscal year, others operate on the calendar year, and some operate on scattered fiscal years in a way similar to that of private companies. Because they are all Crown corporations or agencies of the Crown in one way or another, we should at least make uniform, or a little more uniform, the time in which they are called upon to report. If that is deemed to be a serious overload on the system, perhaps we could have a number of them reporting on March 31 and a number of them reporting in September, October, or whenever. That would ensure that 90 days or 120 days after the end

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of the fiscal year. Members of Parliament would be able to get the annual reports of all Crown corporations from a to /, and six months later it would be the same for the ones from m to z.
Not only must the information be made available to us, but it must be made available in a timely manner so that we can use it. Also, there should be a parallel means of identifying to parliamentarians, to the media, and to everyone else those occasions when people are in breach of the established procedure.
Yesterday it came to my attention that one Crown corporation had failed to file its audited statements in the prescribed time according to the Financial Administration Act. That information was not published in the Public Accounts of Canada. All Members of the House, and probably those of the other place, have received copies of the Public Accounts of Canada. We all had them in our offices. However, how many people actually knew that that information was missing from the complete set of volumes? There should be a mechanism by which the authority, responsible for publishing the information, releases some sort of communique at the time the documents are published to identify and highlight to parliamentarians and all other Canadians that the deficiencies in the system are such that the agency which has failed to report is easily identified. Then we can raise questions, or whatever we must do, to ensure that next year the offender does not repeat what it did. We could only achieve that if we can identify it. There must be a means to identify those who are delinquent.
The time available to me is probably close to an end, so I will conclude my remarks by suggesting to the Hon. Member that his initiative is excellent. I hope he will succeed in having the issue dealt with and voted on as soon as possible, so that it can be brought to the attention of a parliamentary committee in future.
I am not sure whether the Standing Committee on Public Accounts or the Standing Committee on Government Operations would be the appropriate one to deal with the issue. I think either one would be excellent. Hopefully we can come up with good and constructive recommendations toward having more uniform forms of reporting in terms of annual reports of government Departments, agencies, and Crown corporations.


Mr. Richard Grise (Parliamentary Secretary to Deputy Prime Minister and President of the Privy Council):: Mr. Speaker, the contribution made by the Hon. Member for York East (Mr. Redway) has been most important, but I could not miss this opportunity to say a few words, although I have not much time left. You are being rather hard on me, Mr. Speaker, in giving me so little time while other Members in this House have had a good ten minutes. All 1 have is those meager three or four minutes.
I am most pleased to mention that the Hon. Member for York East is referring to establishing uniform guidelines and an evaluation procedure similar to the one now in use in Australia.
Mr. Speaker, speaking of Australia, I am sure Hon. Members in this House will allow me a short digression concerning Australia, and 1 will take this opportunity to send my kind regards to my nephews Gaetan and Sylvain Grise who left Canada two years ago and have since been living in Australia, and especially, to Gaetan, the elder one, who was married over the weekend in Sydney, Australia. 1 would therefore like to take this opportunity, on behalf of the whole Grise family, to extend to them my best wishes of happiness on their wedding. And since in Australia a name like Gaetan Grise does not set you very far, Mr. Speaker, he decided to change his name to Polo Martin, which is much more popular in Australia. So, Polo Martin-

On behalf of my entire family I wish to extend to Polo and Fiona-


Alan Redway: You are sending them a big koala bear.


Richard Grisé: -best wishes in their married life and happiness together for a long time.

Mr. Speaker, I would like to mention, in connection with the motion-


An Hon. Member:: Let's get back to it.


Richard Grisé: We only went to Australia for a moment and I am seriously getting back to the motion moved by the Hon. Member for York East.
It should be mentioned, in fact, that Canada has one of the best systems in the world for presenting official documents, in both official languages, of course.
During the past 25 years, there were many reports and commissions, such as the Glassco Commission in 1962, the Lambert Royal Commission in 1979-


The Acting Speaker (Mr. Paproski):: Order, please. The hour provided for the consideration of Private Members' business has now expired. Pursuant to Standing Order 42(1), the order is dropped from the Order Paper.
It being 6 o'clock, pursuant to order made today, this House stands adjourned until tomorrow at 2 p.m., pursuant to Standing Order 3(1).


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

Wednesday, December 9, 1987
[Stage Direction]
Prayers