1988-07-19

Mr. Richard Grise (Parliamentary Secretary to Deputy Prime Minister and President of the Privy Council):: Mr. Speaker, pursuant to Standing Order 106(8), I have the honour to table, in both official languages, the Government's response to 29 petitions numbered as follows: 332-4838, 3324839, 332-4844, 332-4846, 332-4864, 332-4868 to 332-4882 inclusive, 332-4889, 332-4890, 332-4904 to 332-4906 inclusive, 332-4909, 332-4920, 332-4922 and 332-4923.
[Editor's Note: See today's Votes and Proceedings.]



CANADA WATER PROTECTION ACT


Mr. Nelson A. Riis (Kamloops-Shuswap) moved: for leave to introduce Bill C-309, an Act to protect water in Canada.


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


Some Hon. Members:: Agreed.


Nelson Andrew Riis: Mr. Speaker, it is a pleasure to have an opportunity to introduce this Bill. This Bill is cited as the Canada Water Protection Act. Because it appeared that the trade deal allows at least for the possibility of interbasin water transfers to the United States, this Bill, particularly Clause 9, dealing with interbasin transfers, says that no person shall export water from Canada by interbasin transfers. Essentially, the Bill would prohibit any consideration of moving Canadian water into the United States.


Some Hon. Members:: Hear, hear!


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

Hon. Doug Lewis (Minister of State and Minister of State (Treasury Board)):: Mr. Speaker, there have been the usual discussions between the Parties. I think you will find consent to the immediate putting of these motions. Therefore, I move:
That, notwithstanding the usual practices of this House, if the House is not sitting, reports from the Standing Committees, Standing Joint Committees and Special Committees be deemed presented to the House on the day such reports are deposited with the Clerk of the House of Commons.


Mr. Speaker:: The House has heard the terms of the motion. Is it the pleasure of the House to adopt the motion?


Some Hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

Douglas Grinslade Lewis: The second motion I wish to move reads as follows:
That, the order for second reading and reference to a legislative committee on Bill C-142, an Act to establish the Transportation Accident Investigation Board and to amend certain Acts in consequence thereof, standing on the Order Paper, be changed to read second reading and reference to the Standing Committee on Transport.


Mr. Speaker:: The House has heard the terms of the motion. Is it the pleasure of the House to adopt the motion?


Some Hon. Members:: Agreed.
Motion agreed to.


REFERENCE OF BILL C-139 TO STANDING COMMITTEE ON FINANCE AND ECONOMIC AFFAIRS
Douglas Grinslade Lewis: The last motion reads:
That, the Order for second reading and reference to a legislative committee of Bill C-139, an Act to amend the Income Tax Act, the Canada Pension Plan, the Unemployment Insurance Act, 1971, the Federal-Provincial Fiscal

July 19, 1988
Petitions
Arrangements and Federal Post-Secondary Education and Health Contributions Act, 1977, and certain related Acts, standing on the Order Paper, be
changed to read second reading and reference to the Standing Committee on
Finance and Economic Affairs.


Mr. Gauthier:: Mr. Speaker, I rise on a point of order. I take it that there has been the usual consultations with the opposition Parties on this matter. With the usual co-operation that the Opposition shows, the Minister has its concurrence.
I take it that he can give us the assurance that these matters have been cleared with the House Leaders?


Douglas Grinslade Lewis: Yes, Mr. Speaker, I can assure you and the finance critic for the Official Opposition that the usual consultations have taken place, and everything is go.


Mr. Speaker:: The House has heard the terms of the motion. Is it the pleasure of the House to adopt the motion?


Some Hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

Nelson Andrew Riis: Mr. Speaker, I have two petitions to present on behalf of a number of constituents.
On the first, the petitioners believe that the federal Government lacks a mandate from the people of Canada to conclude a free trade deal with the United States and they believe that the trade deal would deny Canada the policy freedom to determine its own economic future and as well undermine Canada's ability to build a society distinct from that of the United States. They have a number of concerns, but basically they are asking Parliament to dissolve now to allow the people of Canada an opportunity to accept or reject the proposed trade deal during a national general election.


Nelson Andrew Riis: Mr. Speaker, I have a second petition which reminds us that the previous Minister of Immigration promised that unmarried sons and daughters of all ages would be considered as members of the family class for immigration purposes and that married children and brothers and sisters in the assisted relative class would get 15 points as opposed to the 10 points they would normally receive.
Hundreds of petitioners are drawing that to our attention and they call upon the House of Commons to ensure that the Government fulfil its promises on these issues.


Mr. Paul Gagnon (Calgary North):: Mr. Speaker, I have a petition with 271 signatures on it from Calgary, Edmonton, Wainwright, Strathmore, Lethbridge and the Raymond areas of Alberta. Whereas it is becoming increasingly common to learn of government encroachment upon the parental responsibility of child care decision making and government child care incentives do not consider the validity of parental care as a viable alternative to out-of-home child care, and whereas parents are in the best position to determine what is the most appropriate and beneficial form of child rearing, wherefore the undersigned, your petitioners, humbly pray and call upon Parliament to act upon the problem of this limitation in choice for child care, and restore to the system fairness and justice, by opposing any form of national child care policy which does not provide equality of choice, thereby leaving the child care decision-making process with the parents where it belongs.
This was organized by Mrs. Brenda Ringdahl, President, Kids First Lobby Group. This is one of a number of petitions that I have had the honour and privilege to present.


Jean-Robert Gauthier: Mr. Speaker, I have another petition today, along the same lines as the one I tabled before, concerning the Reagan-Mulroney Free Trade Agreement. The petitioners, who come from Ontario, would like the House to censure the Government for this proposal. They submit and humbly declare that the Mulroney Government has sold out Canada without getting anything in return, that Canadian industries are still not protected from American trade laws, that the United States obtained everything they wanted, in all important areas, in particular agriculture, energy, automobile trade, financial services and investments, that the jobs of thousands of Canadians are threatened and that the Conservative Government has not planned any adjustment assistance for Canadian workers.
For these reasons ...


Mr. Speaker:: I hesitate to interrupt the Hon. Member, but he well knows the rules on presenting petitions.


Jean-Robert Gauthier: I wanted to read the petition briefly for you, Mr. Speaker.
I conclude by saying that these people humbly ask Parliament to censure the Government for signing the Mulroney-Reagan trade agreement.


Mr. Gerald Comeau (South West Nova):: Mr. Speaker, I have the honour to present two petitions from members of congregations in my constituency regarding the Supreme Court's decision to allow abortion on demand.
July 19, 1988

The first one is from members of Reverend Wendell England's congregation. They humbly pray and call upon Parliament to pass into law legislation that will protect the life of the unborn child from conception and at all stages of development, with the exception of the extremely rare case in which an abortion is performed in order to save the life of the mother. And as in duty bound your petitioners will humbly pray.
The second petition is from members of Reverend Horace Gardner's congregation. The petitioners humbly pray and call upon Parliament to formulate and legislate a law to protect life from conception, a law which seeks to save the life of both mother and child and as in duty bound your petitioners will ever pray.


Mr. Fernand Robichaud (Westmorland-Kent):: Mr. Speaker, it is my duty again today to present to you petitions from residents of my riding, more particularly people from Sackville, Midjik, Ogden Mill Road, Bouctouche, St. Maurice, St. Norbert, St. Pierre, Ste Anne de Kent, and other petitioners from Sackville, Midjik and Aulac.
The petitioners deplore the decision of the Department of Employment and Immigration to again change the qualifying period for unemployment insurance from 10 to 16 weeks.
They say that the Department has not considered the high rate of unemployment in rural areas and they humbly ask Parliament to rectify the situation by restoring the qualifying period to 10 weeks.
[English)


Ms. Marion Dewar (Hamilton Mountain):: Mr. Speaker, it is my privilege and responsibility to register according to Standing Order 106 a petition from citizens of Edmonton, Alberta and surrounding area. These citizens point out that the Conservative Government had no mandate from the Canadian people to conclude a free trade agreement with the United States and that the trade agreement negotiated by the Government threatens the very fabric of Canadian political and economic sovereignty by removing the power of the Canadian Government to control effectively foreign ownership to develop Canadian energy resources in the best interests of Canadians or to equalize opportunities between the regions.
The undersigned, the petitioners, humbly pray and call upon Parliament to dissolve and allow the people of Canada the opportunity to accept or reject the proposed trade agreement during a national general election.
Order Paper Questions
[ Translation]


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Richard Grisé: Mr. Speaker, the following questions will be answered today: Nos. 371 and 377.

GRANTS AND/OR LOANS BY CANADA DEPOSIT INSURANCE CORPORATION


Mr. Redway: Since September 4, 1984, did The Canada Deposit Insurance Corporation make grants and/or loans to persons or corporations, non-governmental organizations and governments within Metropolitan Toronto and, if so, to which ones and, in each case, in what amount and for what purpose?


Hon. Tom Hockin (Minister of State (Finance)):: The
Canada Deposit Insurance Corporation has, since September 4, 1984, made the following loans pursuant to agency agreements which provided for the orderly wind down of these insolvent member institutions within Metropolitan Toronto:
Date of Loan
Member Institution
Amount
September 30, 1987 November 2, 1987 November 30, 1987 December 21, 1987 December 21, 1987 December 31, 1987 December 31, 1987 February 8, 1988 April 29, 1988 April 29, 1988
Greymac Trust Company Greymac Mortgage Corp. Greymac Trust Company Greymac Trust Company Crown Trust Company Greymac Trust Company Greymac Mortgage Corp. Crown Trust Company Seaway Trust Company Seaway Mortgage Corp.


[Stage Direction]
35.000.	000.00
35.000.	000.00
3.750.000.	00
3.750.000.	00 60,806,232.88 15,927,260.27
96.550.000.	00 56,672,708.64 44,931,631.16
Mr. Althouse: 1.	Has the Department of Agriculture investigated the use of pesticides and fungicides at the Strathbourne, Nova Scotia, tree nursery and, if so, in the period investigated, (a) what are the recommended maximum rates (b) what were the actual rates of use per hectare for each of (/) ROVAL 50 (wettable powder) (it) CAPTAN (Hi) RIDOM 16 (tv) FURDAN 10 (v) BASUDIAN (drazanone) (v/) BEN LATE (vii) SEVIN?
2.	In each case of any difference between recommended and actual rates of application is there a particular reason for the difference and, if so, what is it?
3.	Was any of these pesticides or fungicides, as well as CHLORDANE and POAST, used (a) under conditions (b) in ways not recommended for its use and, if so, which ones and, in each case (i) under which conditions (it) for what reasons (c) what amount of CHLORDANE (/) was used (77) is still in stock and in each case, for what reasons?
4.	Who is responsible for application rates?
5.	Are precautions or warnings provided to workers concerning the effects or dangers, or both, of exposure to overdoses of these chemicals?


Hon. John Wise (Minister of Agriculture):: 1. Yes, an investigation of pesticide use has been conducted at the Strathbourne Nursery in Nova Scotia.

July 19, 1988
Order Paper Questions
(a)	Recommended use rates for products are as follows (where product names given were not registered, closest approximations are provided): (i) Rovral 50 (wettable powder)-750 g of the active ingredient iprodione per hectare, (ii) Captan-10 kg of the ingredient captan per hectare, (iii) Ridomil-1.13 kg of the active ingredient metalaxyl per hectare, (iv) Furadan 10-5.5 kg of the active ingredient carbofuran per hectare, (v) Basudin-3.6 kg of the active ingredient diazinon per hectare, (vi) Benlate-1.5 kg of the active ingredient benomyl per hectare, (vii) Sevin-1.5 kg of the active ingredient carbaryl per hectare.
(b)	Actual use rates are not yet available as further investigation is ongoing.
2.	This information is not yet available. It is expected that this type of information will emerge during the course of the ongoing investigation.
3.	This information should be available at the conclusion of the investigation.
4.	The user must ultimately be accountable for application rates. The Pest Control Products Act states that no person shall manufacture, store, display, distribute or use any control product under unsafe conditions.
5.	Individual product labelling provides precautions, warnings and other relevant information regarding the product and its application. These labelling requirements are set down in the Pest Control Products regulations and are intended to provide users with use directions, precautions and others information that will provide for safety in storage, display distribution and use of products.


Richard Grisé: Mr. Speaker, if questions Nos. 347 and 380 could be made orders for returns, these returns would be tabled imediately.


Mr. Deputy Speaker:: The questions listed by the Honourable Parliamentary Secretary have been answered. Is it the pleasure of the House that questions Nos. 347 and 380 be deemed to have been made orders for returns?


Some Hon. Members:: Agreed.
[ Text]


Mr. Murphy: 1.	Between February 18, 1980 and September 4, 1984, did any government departments or agencies spend money or provide grants in the constituency of Churchill, and if so, by what departments or agencies and, in each case (a) on
what dates (b) in what amounts (c) under which programs was the money spent?
2.	Since September 4, 1984, have any government departments or agencies spent money or provided grants in the constituency of Churchill, and if so, by what departments or agencies and, in each case (a) on what dates (b) in what amounts (c) under which programs was the money spent?
Return tabled.


Mr. Young: 
Richard Grisé: Mr. Speaker, I ask that the remaining questions be allowed to stand.


Mr. Deputy Speaker:: Shall the remaining questions stand?


Some Hon. Members:: Agreed.


BUSINESS OF THE HOUSE
Richard Grisé: Mr. Speaker, I rise on a point of order. We will deal this morning with Bill C-139 until one o'clock. We will then move to Bill C-136. We will have three speakers on that Bill from 3 p.m. to approximately 5 p.m. After the third speaker we ask that you call it five o'clock.
It is my understanding that the Private Member's Motion has been dropped. We will adjourn from five o'clock to 6 p.m. From six o'clock to 10 p.m. we will return to debate on Bill C-139, and if there is any vote on this Bill it be deferred to Wednesday at six o'clock p.m.


Jean-Robert Gauthier: Mr. Speaker, I was listening to the Parliamentary Secretary, and I want to thank him for giving us the agenda for the day. However, I want to say to the Government that I would not want the Canadian public to get the impression there has been a full day's debate on Bill C-139 when we only had a few hours, yesterday and today. This is just a warning against any attempt to have the public believe we had two days of debate on Bill C-139.


Richard Grisé: Mr. Speaker, I agree with the Hon. Member for Ottawa-Vanier (Mr. Gauthier). Yesterday, there was only one speaker on this Bill, and today there will be two speakers for the Opposition parties, while this evening we will continue the debate on the same Bill.


Nelson Andrew Riis: Mr. Speaker, we appreciate having the line-up presented this way so we have a clear understanding, at least today, about what the business will be.
Since we are discussing tax reform, or as my hon. friend from Ottawa Centre indicated, tax deform, and this is very important legislation which touches the lives of every Canadian because it has serious implications for their future taxes, we would like to see a thorough and complete debate. We do not want to see the Government trying to rush it through. I am not suggesting that that is what he is doing, but just so there is no misunderstanding, this is important legislation and should not be rushed by anyone.
Income Tax and Related Acts


Richard Grisé: Mr. Speaker, as I just said, there was only one speaker yesterday. There will be the two speakers for the Opposition today and then we will resume debate later this evening. It is not the intention of the Government to force or speed up this Bill. It is a very important piece of legislation for all Canadians, as the Hon. Member said, so I am sure we will have the full co-operation of both opposition Parties.


Mr. Deputy Speaker:: The Chair has listened carefully to the proposal made by the Hon. Parliamentary Secretary. It is a matter for the three Parties to agree on, of course, but there is one small problem concerning Private Members' Hour. The Hon. Member for Athabasca (Mr. Shields) would have to withdraw his motion, either at five o'clock, or notify the Chair earlier, that it is his intention to do so. Normally he would need unanimous consent to withdraw the motion.


Richard Grisé: Yes, Mr. Speaker, we will abide by your decision.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed from Monday, July 18, consideration of the motion of Mr. Wilson (Etobicoke Centre) that Bill C-139, an Act to amend the Income Tax Act, the Canada Pension Plan, the Unemployment Insurance Act, 1971, the Federal-Provincial Fiscal Arrangements, and Federal Post-Secondary Education and Health Contribution Act, 1977, and certain related Acts, be read the second time and referred to the Standing Committee on Finance, Trade and Economic Affairs.
Mr. Deputy Speaker:: I would just like to remind the House that when the motion was moved originally it was that the Bill would go to a legislative committee. By unanimous consent this morning it was decided it would go to the Standing Committee on Finance, and Economic Affairs.


Mr. Raymond Garneau (Laval-des-Rapides):: Mr. Speaker, Bill C-139 before the House today contains more than 500 pages of legislation, does not even have an index and is a collection of extremely complex clauses. Curious though that may seem, Mr. Speaker, while the White Paper was tabled in June 1987 and amended in December 1987, this is the first opportunity the House has had to debate this reform in this Chamber.
Granted, the Standing Committee on Finance and Economic Affairs has considered the question for a number of weeks. It also heard witnesses. However, this is the first time the debate on tax reform will take place in the House. This reform has aroused considerable concern. The Finance Committee alone

July 19, 1988
Income Tax and Related Acts
received more than 400 letters and briefs and heard thirty witnesses from all parts of the country and all levels of our society. What do these Canadians have to say to the Committee on Finance and Economic Affairs and to parliamentarians? Basically, they don't like this tax reform. Families don't like it, middle-income taxpayers don't like it, R & D firms don't like it, mining regions are disenchanted, and insurance companies, self-employed workers and farmers came here to explain their dissatisfaction with this legislation.
In fact, the Minister of Finance (Mr. Wilson) has the satisfaction of getting a unanimous response to his Bill, since everyone agrees it is unacceptable. More specifically, Canadians came to tell the Committee on Finance and Economic Affairs:
First, that the tax reform is merely a smoke screen because it is an attempt to camouflage four years of massive tax and income tax increases.
Second, these people came to tell the Committee that this reform is incomplete because it postpones the most important part, sales tax reform, until after the election.
Third, people came to tell us that this reform does not simplify our taxation system and in many ways makes it more complex.
Fourth, Canadians told us that the reform does not make the tax system more progressive, more equitable or fairer for private citizens.
Fifth, they told us that the reform hits hardest at middle-income taxpayers.
Sixth, the reform is entirely unfair to families.
Seventh, it discourages the building of capital.
Eighth, it makes businesses, especially in the manufacturing and research and development sectors, less competitive.
And ninth, the reform makes life more difficult for selfemployed workers.
But before analyzing this reform in greater detail, Mr. Speaker, I would like to explain the broad principles that should have served as a guide to the tax reform proposed by the Minister of Finance.

The thrust of the Minister's reform centres on removal of incentives from the tax system and lowering of the tax rates. This general thrust, if I may say so at this point, is in sharp contrast to the position the Minister originally took upon coming into office, in his first three Budgets. You will probably remember that the Minister of Finance (Mr. Wilson), in his previous Budgets, introduced extremely costly tax incentives such as a capital gains exemption, and on a number of occasions he increased the tax burden, mainly by partially deindexing the tax system and imposing surtaxes. Now the Minister has recognized the error of his ways and has
repented, at least on these issues. This change of heart is a death bed repentance and I do not think Canadians will be fooled by the eleventh hour conversion. The pre-electoral timing is just too blatant.
In these various political games that the Minister of Finance plays he has completely neglected to reach the key objective of tax reform, that is to have a tax system which is equitable, redistributive, and fair. Equity and fairness must be achieved in ways which do not lower work incentives either at the lower or at the upper end of the income scale.
Clearly, this reform has in no way improved the progressivi-ty of the tax system. This has been illustrated vividly by at least three different studies which show that middle-income Canadians are hardest hit by this reform. Those studies were done by the Institute of Research on Public Policy, the Senate Committee on Tax Reform, and the Thorne Ernst Whinney analysis. In other words, this is not real tax reform since it neglects to institute what Canadians value the most, namely fairness.
Concerning the role of incentives in the economy, as a general principle we in the Liberal Party favour a move toward a reduction of incentives. We also favour the use of this new room to manoeuvre to lower the tax rates. Tax incentives, when they are blindly piled up on top of each other, can represent-and I emphasize "can"-an inefficient way of encouraging a type of economic activity. They can also distort progressivity in the personal income tax system and can hide the real cost of those programs.
This general principle, however, has to be balanced against other government policies. For instance, if drilling in the mining sector drops off, or if research and development in Canada lags behind other countries, there are legitimate arguments in favour of tax incentives over other forms of government tools such as direct government grants. Tax incentives tend to reduce the role of government bureaucracies and their ability to make discretionary choices.
Pragmatic as always, Liberals believe that governments should, under certain circumstances, use tax incentives to shift the short-term direction of the economy or to solve structural problems for a better long-term allocation of resources or a fairer balance of economic development among regions and sectors.
One must not minimize the enormous challenges the Canadian economy faces if it is to grow at rates necessary to meet the income and employment demands of our people. We should not underestimate the structural weaknesses of our economy. There seems little doubt that in an economic context where high income countries need to be at the cutting edge in research and development based industries, a strategy based purely on the free market or on foreign-centred firms will not be successful.
July 19, 1988

It is obvious to me, as it is to many business people, that tax reform will not meet this new challenge. It puts our manufacturing sector at a competitive disadvantage. It puts our research and development firms at a disadvantage. It puts our small businesses at a disadvantage. It puts our entrepreneurs, our risk takers, at a disadvantage. Ultimately, this will only reduce growth and jobs.
One way to settle the dilemma that the Government faces by keeping useful tax incentives that run counter to progressivity is to set a limit on the total amount of deductions an individual can claim. A "box" of deductions could, for instance, be set up. An individual would not be allowed to claim more than a certain amount or proportion of his income in regard to that box. This box would be a more effective tool to ensure that every taxpayer pays a fair share of taxes. In other words, it is a minimum tax that can replace the complex and ineffective so-called alternative minimum tax of the Tory Government.
I also think that all new incentives, as well as all the existing ones, should be accompanied by a three to five-year revision clause and be subject to parliamentary scrutiny. I emphasize that I am not speaking here of a sunset clause that would automatically kill an incentive after a given period of time, but of a revision clause.

Mr. Speaker, instead of proceeding with the kind of tax reform I just described, the Minister of Finance, a bit like his Prime Minister, preferred to make this reform a political game. For instance, in a pre-election move that did not deceive anyone, the Government announced that as of July 1988, the tax reform would result in a slight drop in source deductions on the paychecks of many taxpayers. Whatever the Mulroney Government cares to think, this respite is merely a smoke screen, a pre-election move to make us forget four years of tax increases unprecedented in this country's history.
The tax reform as tabled is merely the latest in a series of increases in personal income tax, sales tax and excise tax. If we look at studies made by independent agencies, the tax measures introduced by the Conservative Government in the past four years have been both regressive and unfair.
In a report published recently, the Institute for Research on Public Policy calculated the impact on the taxpayer of all changes in personal income tax made by the Conservatives since they came to power. To those figures we must add the additional burden on taxpayers as a result of numerous increases in indirect taxes, such as the increase in federal sales tax from 9 to 12 per cent and the 5 cent per litre increase in the excise tax on gas. There are three points one can make as a result of these calculations, and I would say, Mr. Speaker, that these three points reflect the main deficiencies of the tax reform proposed in Bill C-139 before the House today.
First, in 1988, even after the tax reform, all taxpayers will pay more income tax then they did in 1984, with one exception: taxpayers with an income exceeding $117,000 a year. The
Income Tax and Related Acts
average tax saving for this privileged group, which represents only 1 per cent of Canadian families, is about $3,500 annually.
Mr. Speaker, this means that all taxpayers will pay more income tax except those privileged members of our society with an annual income of more than $117,000.
Second, middle-income families, for instance a family with an annual income of $32,000, will pay $1,200 more in taxes than in 1984.
On this side of the House, when we talk about the unfairness of the Conservative Government's tax reform, the following example is eloquent. The rich, people with an annual income of $117,000 or more, stand to gain over $3,500 per year as a result of the tax reform, while middle-income families with children will pay an additional $1,200 per year.
If we look at the federal Government's total revenues, if we consider the projections made by the Minister of Finance (Mr. Wilson) in his last Budget, and we compare these with the Government's revenue in 1984-85, we realize that corporate income tax increased by only 28 per cent, while personal income tax, including sales tax and excise tax, has increased by 62 per cent, which means 62 per cent more for workers and only 28 per cent more for corporations.
In other words, Canadians will not be fooled by the Government's attempt to gloss over four years of massive tax increases, which took place despite promises made to the Canadian people by the present Minister of Finance and the present Prime Minister (Mr. Mulroney) when they were campaigning in September 1984.
So despite promises by the present Prime Minister and the Minister of Finance that they would not increase taxes, the list of tax increases has grown steadily in the past four years.
Mr. Speaker, I shall mention the main increases. First of all, federal sales tax has increased by 3 per cent: from 9 per cent to 10 per cent in October 1984, just after this Government was elected, and then to 11 per cent on January 1, 1986, and to 12 per cent on April 1, 1986.
This decision by the Finance Minister and the Conservative Government means that just on the basis of these rate increases, in 1988 Canadians are going to pay over $3 billion more in sales tax.
Mr. Speaker, sales tax was extended to candy, soft drinks, health care products and dental instruments on July 1, 1985, which brought in an additional $400 million. All candy and snacks were taxed, which raised $60 million more for the Government, on an annual basis.
The sales tax on paint, wallpaper and toys was increased from 8 to 12 per cent. The excise tax on gas was increased four times, Mr. Speaker. First, two cents a litre more on September 3, 1985, then one cent per litre more on January 1, 1987, another cent on Febuary 17, and another cent again on April 1, 1988. This adds up to a total of 5 cents a litre or more than 23 cents a gallon. The sales tax on leaded gas was raised to

July 19, 1988
Income Tax and Related Acts
bring the price to the same level as that of unleaded gas. There was a progressive increase in the air transportation tax, and excise tax and duties on alcohol and tobacco were increased four times between May 24, 1985 and January 1, 1988. Mr. Speaker, one tax I find outrageous is the 10 per cent tax on long distance calls which became effective on January 1, 1988. The hardest hit are those living in remote areas who must call long distance to reach their doctor, their accountant, their general store, and so forth. This tax will raise an additional one billion dollars and will have a negative impact on regional development across this country. These tax increases were all introduced by the Conservative government since 1984.
And what about income tax? First, the tax tables were partially de-indexed, which increased the tax burden on Canadian families by $635 million then and there. Since the $635 million applies to the first year, January 1986, it means that in 1987, it was twice that and in 1988, three times, Mr. Speaker. This means that in 1988, Canadian taxpayers are paying over two billion dollars more in income tax because of the Finance Minister's decision.
Tax exemptions have been eliminated: $650 million. The deduction for registered home ownership savings plans was eliminated $100 million. The temporary 5 per cent and 10 per cent surtax and then the general permanent surtax of 3 per cent were introduced. Changes were made in the tax treatment of dividends. Married exemptions were changed. Mr. Speaker, all these tax increases were introduced by a Government that made a solemn promise to Canadians that it would not increase taxes.
If we add it all up, Mr. Speaker, you know how much this represents? It works out to $26.7 billion in new taxes, for a Government that promised not to increase taxes for Canadian taxpayers. And when after that they tell us, as the Finance Minister did last week, that the deficit will be $28 billion instead of $29 billion, what kind of an attitude is that on the part of a Finance Minister who just increased taxes by $26 billion! And pleased as punch because he managed to reduce his deficit by $1 billion!
Mr. Speaker, I will get back later to the deficit. For some days now, in fact some weeks, billions of dollars have been spent left and right. Have we had a progress report from the Minister of Finance? How can this Government give away billions and billions of dollars without ever giving the House a statement of revenues and expenditures for the next five years? It's easy, Mr. Speaker. Every time they give away another billion, they charge it to future budgets so that the current year is not affected. The following year will be marginally affected but later on, the bills will start coming in, and then this Government which is so proud of reducing its deficit will have to come clean or take the consequences.
As a result of those measures, "tax freedom day" as calculated by the Fraser Institute has occurred later and later each year since 1984. It now occurs on July 10, which means that the average family works more than six months just to pay its federal, provincial and local, direct and indirect, visible and hidden taxes. The Government has done nothing to reverse this trend. At least these taxes could be collected fairly, but unfortunately that has not been the case. Furthermore, this is only current taxation.
If one considers that the deficits are nothing else but deferred taxation, the average taxpayer will work from January 1 to August 12 merely to pay taxes.

The answer to this question: Why has the Government done nothing? I will say, Mr. Speaker, that when you look at the tax increases brought in by this Government, when you look at what has happened over the last few years, you see that this Government is just deceiving the Canadian electorate.

In spite of these numerous tax increases, public finances remain extremely vulnerable to any downturn in the economy. The Government brags of its success in reducing the deficit, but the reality is that it has not prepared the Canadian economy for the inevitable downturn which many economists fear will come as early as next year.
In spite of six years of strong growth, thanks to the global economic picture, and in spite of four years of massive tax increases, the deficit is still in the $28 billion-$29 billion range. The public debt now amounts to more than $320 billion, or more than $25,000 per taxpayer.


Thomas Hockin: It is because of the debt that you left.


Raymond Garneau: This debt has increased by 80 per cent since the Tories took office. I hear the Minister of State for Finance (Mr. Hockin). The Government stated in its electoral platform that its main objective was to cut the deficit without increasing taxes. The deficit has increased by 80 per cent since October, 1984, with more than $25,000 per taxpayer. The Government's agenda was to cut the deficit. The deficit is still growing at a pace of $77,000 per day.


Mr. McKnight:: It is interest on your debt, Raymond.


Raymond Garneau: When the Liberal Government left office, the debt was $175 billion. It is now $320 billion, an increase of 80 per cent for which you are responsible. You should tell that to the Canadian public.
This huge debt that has been piled up by the Tory Government, which promised to cut the deficit, costs $13 billion in interest charges every year. The Government has increased
July 19, 1988

taxes by $26 billion, after telling Canadians that it has done a terrific job by cutting the deficit by $1 billion this year.
[ Translation]
Mr. Speaker, we also know that tax reform will be done in stages. The first step took effect on January 1, 1988 and contains a few tax reductions but unfortunately its impact was not felt on pay cheques until the beginning of July. Six months later! Why? The answer to this question is obvious: this Government acts only in response to political pressure. July 1 was chosen because it was near the elections, so that voters could feel a slight tax decrease after being hit with $26 billion in increases; the Government gives a few billion back and does it on July 1 to make it as close as it can to a possible election date. And in order to keep some room to manoeuvre, to be able to play on all fronts, the Government said to itself that with the July 1 date, if it could not hold the elections in 1988 but only in the spring of 1989, the refund for the first six months of 1988 would be paid then. It will give the voters another small gift and hope to buy their votes with their own money. Mr. Speaker, this is a loan of over one billion dollars that the Government has given itself. Many Canadians and companies would like to be able to give themselves the same privilege of interest-free loans.
Mr. Speaker, I wish to take a few minutes in this speech to denounce the other election trick of the Government, namely announcing now the good news, or what it claims to be good news, but leaving the bad news for after the election. I wish to talk about this two-stage reform and the one that is not on the legislative agenda now, sales tax reform. The Government is waiting until after the elections to bring it in. It is clear that the Government is only trying to repeat the trick it pulled in 1984. This Government then promised not to increase taxes. And we know how much this Government has increased taxes since 1984! Today they are trying to give us the good news before the elections, but after, watch out! That is when this famous sales tax will hit us. They did not want to introduce it in one step, as all observers and all Canadians who came to the Finance and Economic Affairs Committee asked, so that they could see the pros and cons and know what to expect for the future...
But this Government lacked courage! We must recall that more than three years ago, the most important component of tax reform according to this Minister of Finance was sales tax reform.
So much so, Mr. Speaker, that at that point the Minister of Finance did not even refer to personal income tax reform-he only stressed sales tax reform. He even suggested the existing sales tax, to use his own words, was "a silent killer of jobs".
He also indicated, as the Minister of State (Finance) (Mr. Hockin) yesterday repeated in his speech, the sales tax was hurting exports, and helping imports, in addition to being excessively complex to administer.
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And so, may I ask, if since 1985 that tax has had so many flaws, how come the only part of the tax system that has not now been reformed is the sales tax?
Mr. Speaker, the C.D. Howe Institute even indicated in its 1988 report titled "Focus on follow through", the major economic advantages to be derived from reforming our tax system would come from reforming the sales tax rather than direct taxes. But when the time came to proceed with that reform, this Minister and this Government backed off.
Mr. Speaker, we in the Liberal Party feel that the current sales tax system must be improved. The Liberal Party is committed to reforming that tax upon coming to power. We further feel that basic foods such as milk, bread, butter and meat, should be non taxable items.
Moreover, we believe that a generous refundable tax credit must be established, to be indexed and paid in installments to middle and low income families.
Mr. Speaker, let me now say a few words concerning the complexity of that tax reform included in Bill C-139. I must first emphasize that the legislation includes more than 500 pages, 500 pages without even an index. Try and find your way through that!
In those more than 500 pages of text, there are a number of explanatory notes. We might as well laugh rather than weep over that! Especially when one of the major objectives announced by the Minister was to simplify the tax law.
To sum up my views on the matter, that reform no doubt is one of the most complex we have ever seen in this House. The tax system is being made much more complex in a number of areas rather than simpler. Even the experts can hardly find their way through that maze.
It should be remembered that in October 1986, the Minister of Finance stated in the document titled Guidelines for tax reform in Canada that one of the objectives was, and I quote: "making the tax system simpler so that it is more readily understood by more Canadians".
Mr. Speaker, if there is one thing all observers agree on, it is that the simplification goal never was achieved.

The best example that has been given to us concerning the complexity of tax reform has been provided by the Joint Committee on Taxation of the Canadian Bar Association and the Canadian Institute of Chartered Accountants. Let me quote what it said in its May 1988 submission about the so-called simplification:
Our review and analysis of the April draft legislation, (now Bill C-139), only reinforced the conviction of the Joint Committee, that if simplification was a priority objective of the tax reform process, the Government has failed.

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The most important consequence of such a complexity is, in the words of the Joint Committee, "the prospect of widespread non-compliance".
The report of the Standing Committee on Finance and Economic Affairs on tax reform came to the same conclusion. It capped its chapter on tax simplification by saying: "Tax reform has not successfully addressed the problem of simplifying the tax system". Why did the Minister promise something when he had no intention of delivering?

According to a recent study conducted for the Canadian Tax Fondation, only 30 per cent of taxpayers are brave enough to complete their income tax returns themselves. Nearly 40 per cent have it done by specialized firms, and 30 per cent by friends or relatives. If such was the case under the previous tax law, my prediction is a still larger proportion of Canadians will have to use tax experts in order to complete their income tax returns that otherwise could be greatly simplified.

I recognize that tax simplification is not an easy thing to achieve. It is a long-term goal. However, to achieve any progress at all, I believe, again with the Joint Committee, that the Government must make a firm commitment to simplification as a priority and be willing to accept trade-offs with other policy objectives.
If you remember, Mr. Speaker, in June 1986, the Standing Committee on Finance and Economic Affairs released a report about tax simplification. I must point out that this was a unanimous report also signed by the majority of the Conservative members of the committee. Those recommendations called for measures to simplify both the income tax form, which is the key aspect of tax simplification for most taxpayers, and the Tax Act itself. The Government should have acted but it did not. Why? Liberals have always stressed the importance of having a progressive tax system. It is a question of equity and fairness. No other issue more naturally divides Conservatives from Liberals. I fear that income distribution has worsened over the last four years. This is partly a result of economic trends, but also because of a tax system which has become much less progressive.
I believe one of the most important ways to redistribute wealth in this country is the tax system. What the Tories have done is to redistribute the revenue, but upside down, giving more money to the rich and taking more from the middle-class and lower-income earners. Along with millions of Canadians, I am shocked to see that every taxpayer pays more taxes in 1988, even after tax reform, than in 1984, except those earning more than $117,000 a year. I am shocked that some 60,000 profitable corporations will continue not to pay any tax despite tax reform, and I am also shocked at some 5,220 taxpayers with incomes above $50,000 a year paid no tax in 1986. Forty of those have incomes of over $250,000 a year.
You have to remember, Mr. Speaker, that 1986 was the first year of the implementation of the so-called minimum tax by the Tory Government. That is not fairness. It is not progress-ivity. Even though those numbers are striking, the most perniciously regressive aspect of tax reform is to be found in the new tax structure with three levels. It is not easy to explain why this new structure lacks progressivity, but the difficulty of the task does not make the system acceptable.
As you know, Mr. Speaker, the number of tax rates have been reduced from ten to three. We now have three rates, 17 per cent, 26 per cent and 29 per cent. These are the federal rates only. Provincial rates must be added to these rates. Have you ever asked yourself, Mr. Speaker, why the 26 per cent rate, which kicks in at $27,500, is so near to the 29 per cent rate paid by high-income earners? Why is it that the 26 per cent rate, which is the middle rate, does not lie right in the middle between 17 per cent and 29 per cent? The answer to this question is very simple. The Government has decided to raise the middle rate to 26 per cent because it did not proceed with the reform of the sales tax immediately. This is why the Government claims that under phase 2 of the tax reform, when the sales tax will be reformed, enough revenue will be generated to reduce the middle rate. This is an implicit recognition by the Government of the unfairness of its new tax structure.
Those who are hurt are middle-income earners. Those with incomes between $30,000, $40,000 and $45,000 a year are the big losers with tax reform, and the Government knows it. What we used to call the silent majority are people earning between $30,000 and $45,000. The Government hits that group because it knows that those people will not come here to Parliament Hill and demonstrate their disapproval. However, I am confident they will do so during the time of the next election.
But the situation is even worse than what I have just described. Indeed, Mr. Speaker, in their tax reform report the Senate Committee on Banking, Trade and Commerce pointed out that, on all additional income, a good many middle income families will pay a higher tax rate than will high income households. Mr. Speaker, at the 26 per cent official federal rate a middle income family has to allow for an additional hidden 5 per cent levy due to the fact that every time a family gets a salary increase-say going from $30,000 to $31,000-it stands to lose 5 per cent of its refundable child tax credit. Let us look at it this way: a $30,000-a-year family whose income increases to $31,000 will have to pay a 31 per cent federal tax on the extra $1,000, which is more than the 29 per cent rate a taxpayer whose earnings go up from $100,000 to $101,000 would have to part with. The extra $1,000 in the hands of a family will be taxed at the rate of 31 per cent.
July 19, 1988

A future Liberal Government is committed to make the tax structure more progressive. Progressiveness does not necessarily imply higher tax rates. By lessening emphasis on counterproductive tax incentives and raising ...


Mr. Cassidy:: Oh, oh!


Raymond Garneau: When the Elon. Member for Ottawa Centre (Mr. Cassidy) has his turn he may address a question, but I would request that he please let me make my speech.

By lessening emphasis on counterproductive tax incentives and raising the minimum tax rate as we suggested earlier, while at the same time proceeding immediately with the sales tax reform, we would manage to make our tax system more progressive and still maintain lower tax rates.
In addition to axing some family assistance programs through the partial de-indexation of family allowances and refundable child tax credits, the Government missed a golden opportunity to revamp the whole family tax system. Canada's birth rate happens to be among the lowest in the world and the family structure has changed considerably over the past 20 years, but the Government has yet to make its tax legislation reflect this new reality.
As you know, in terms of the Income Tax Act a common-law couple is not treated as a family unit and each partner is considered to be a single taxpayer. This simple distinction between a common-law and a legal union entails very heavy financial consequences for couples, so much so that in some cases a common-law arrangement is a much better proposition than marriage when it comes to income tax considerations. Many groups gave strong evidence to that effect, but the fact remains that family needs are exactly the same whether the couple are legally married or live as common-law man and wife. First and foremost, I should think, overhauling the family tax system would be the fair approach. Some people might be concerned that such changes would favour a lifestyle over another, but not so, Mr. Speaker. I think that the state must avoid making a value judgment on the kind of union it prefers, it has to respect personal choices and give fair treatment to all couples no matter what their lifestyle may be. That was the low-key message conveyed by the Standing Committee on Human Rights. So what has the Minister of Finance been doing to make tax legislation more consistent with our society's changing mores? Not a thing, Mr. Speaker!

I would like to address one last issue before concluding my remarks. It is the issue of capital taxation. As many business people said when they saw the Government's proposal: "This is not capital taxation, it is capital punishment". The capital reform proposal will cause capital gains to be taxed more heavily than dividend payments. The signal sent to the business community is that the Government preferred to
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encourage prudent investment rather than risk-taking investment.
You indicated to me, Mr. Speaker, that I have only a few minutes left.

May I ask the House to show leniency and to give me two more minutes to complete my speech?


Mr. Deputy Speaker:: Is there unanimous consent to give the Hon. Member for Laval-des-Rapides (Mr. Garneau) a few more minutes to complete his statement?


Some Hon. Members:: Agreed.


Michael Morris Cassidy: I rise on a point of order, Mr. Speaker.


Mr. Deputy Speaker:: The Hon. Member for Ottawa Centre (Mr. Cassidy) on a point of order.


Michael Morris Cassidy: Mr. Speaker, I think his time shoud be unlimited since he is the first speaker from the Opposition to take the floor.


Mr. Deputy Speaker:: The Hon. Member for Laval-des-Rapides (Mr. Garneau), just like the Hon. Member for Ottawa Centre (Mr. Cassidy), is allowed 40 minutes. I think there is unanimous consent to let him complete his speech.


Raymond Garneau: Mr. Speaker, I will not abuse the privilege granted to me by this Hotise. I will only take a few more minutes to conclude my statement.

The Finance Committee has recognized this problem of capital taxation, and has proposed many measures to improve the situation. For instance, the committee proposed to limit the inclusion rate for capital gains to 66 per cent instead of 75 per cent, as proposed by the Government in this Bill. I fully support this recommendation, but it is only a partial solution to the whole question of capital taxation. I sincerely believe that the whole question of capital taxation must be completely revised.
How can the Minister of Finance explain the coherence of having abolished the $1,000 of investment income deduction, which is widely used by middle-income Canadians as well as senior citizens, while at the same time keeping $100,000 of capital gains exemption? How can the Minister of Finance explain that the capital gains and the investment income are not protected from inflation? What is the logic of a capital gains tax exemption and an inclusion rate of 75 per cent on the excess?
To improve the taxation of capital gains, some people have proposed to index the gains, as has been done recently in the United Kingdom. Some others propose to have more targeted measures to help the capitalization of corporations; some also claim that the $100,000 capital gains tax exemption should be simply abolished.

July 19, 1988
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As the Senate committee report said, the question of capital taxation and of taxation of investment income has to be thoroughly reviewed. The Government must generate a new set of proposals more favourable to investments in the country's long-term competitive needs. The Liberal Party recognized this need.

Mr. Speaker, I did not have time in the 40 minutes allotted to me to deal with all aspects of tax reform. For example, I leave it to my colleagues from Outremont (Mrs. Pepin) and Trinity (Miss Nicholson) to go further into the taxation of families, especially children. I leave it to my colleagues from Montreal-Sainte-Marie (Mr. Malepart) and Hamilton East (Ms. Copps) to discuss the issues relating to seniors.
I did not have time either to talk about the flow-through shares that the Government first eliminated and then replaced with a program that does not seem to give the desired results. I will simply remind you that the Liberal Party is in favour of maintaining this system of flow-through shares.
I did not have time to go to the bottom of the questions affecting research and development, and taxation of farmers. Neither did I have time to develop many other aspects concerning small business, taxation of... for example, the whole question of car expenses and offices at home. These are all questions that I hope my colleagues will deal with.
I did not have time either to talk about the taxation of insurance companies, which will have a considerable impact on Canadians' savings in those institutions. I did not have time to discuss the taxation rate of small manufacturing companies. The Minister had promised to lower the tax rate for small business from 10 to 8 per cent. Despite that, he increased it to 12 per cent. Neither do I have time to talk about the film industry.

This tax reform is only a smoke-screen. It remains incomplete; it does not simplify the tax system; it in no way improves the progressiveness or equity of the tax system; it places an unfair burden on middle-income Canadians; it is unjust for families; it discourages capitalization; it reduces the competitiveness of businesses; it makes life difficult for the selfemployed.
The net result of Bill C-139 is that, in 1988, even after tax reform, all taxpayers will pay more taxes than in 1984 with the exception of those privileged few whose income is $117,000 and over. The average reduction in taxes for this group, which represents a mere 1 per cent of Canadians families, is close to $3,500. Second, a family with two children earning $32,000 a year will see their taxes increase by an average of $1,200 in comparison to 1984. Finally, if we compare the total revenues of the federal Government between 1988-89 and 1984-85, we realize that corporation tax increased by 28 per cent, while personal taxes and sales and excise taxes, paid for by all Canadians, increased by 62 per cent.

Therefore, Mr. Speaker, I move:
That the motion now under consideration be amended by striking out all the
words following "that" and replacing them with the following:
"That this House is opposed in principle and therefore refuses to proceed with Bill C-139, An Act to amend the Income Tax Act, the Canada Pension Plan, the Unemployment Insurance Act, 1971, the Federal-Provincial Fiscal Arrangements and Federal Post-Secondary Education and Health Contributions Act, 1977 and certain related Acts, because this Bill seeks to impose a tax system
1)	that is not progressive;
2)	that imposes an unfair burden on families;
3)	that unfairly taxes middle-income individuals;
4)	that is more complex than the one now in place;
5)	that discourages capital formation and that reduces the competitivity of Canadian businesses".


Mr. Deputy Speaker:: The Chair finds that the motion of the Hon. Member for Laval-des-Rapides (Mr. Garneau) is in order.

Resuming debate on the amendment, the Hon. Member for Ottawa Centre (Mr. Cassidy) has the floor.


Michael Morris Cassidy: Mr. Speaker, I want to speak specifically about Bill C-139 which deals with the Government's tax reform. The Minister of State for Finance (Mr. Hockin) talked about a sense of urgency with respect to this Bill. It is interesting to me that this sense of urgency was such that the Government brought its tax proposals forward last June after lengthy delays, and then in December it decided what it was going to do. It was not until June 30 of this year that it finally tabled its tax reform proposals.
What came forward was not tax reform in the sense of a fairness that people were looking for across the country. What we got was Tory tax reform. This means that the interests of wealthy Canadians and of corporations was put ahead of the interests of average Canadians.
That is indicated by such facts as the following. The biggest tax cut in the tax reform is the cut in corporate tax rates from 36 per cent to 28 per cent. The biggest beneficiaries in terms of the income earners who win from this are wealthy Canadians earning over $100,000 per year. Average Canadians get about $6 per week in tax cuts. They have had far more than that in tax increases over the course of the last four years since the Conservatives came to power just under four years ago. But wealthy Canadians get an average of some $80 per week. What that means is that it is lunch at Winston's every week for a wealthy Canadian family which gets tax cuts under this particular tax reform, but for the average Canadian it is two big Macs and one milkshake to share every week.
July 19, 1988

The Bill which has come forward is some 500 pages long. It is an abuse of Parliament for the Government now to have this Bill before Parliament and the people of Canada for as short a period of time as the Government intends to have it.
The Finance Committee has worked at this Bill with a great deal of energy and effectiveness. Despite the fact that we disagreed about basic issues such as progressivity, nonetheless we made a large number of very useful and constructive proposals. I regret the fact that, perhaps guided by the Finance Department, or perhaps guided by its own ideological motivation, the Government has systematically chosen to ignore the vast bulk of those recommendations, let alone the recommendations coming from the New Democratic Party.
I want to serve notice to the Minister of State for Finance, to the Minister of Finance (Mr. Wilson), to the Prime Minister (Mr. Mulroney) and to all members of the Conservative Party that tax reform will be a major issue in the forthcoming general election campaign. The options that Canadians will have to choose will be between Tory tax reform that benefits the rich and the corporations on the one hand and fair tax reform as proposed by my leader and the New Democrats on the other hand and what we have been fighting for over the last many years.
What the Government has done is to put forward changes in the tax system to please its friends in the business community and among wealthy communities. I would say to the Minister of State for Finance that a symbol of the Conservative priorities is the fact that the urgency of tax reform that they saw was a tax-free capital gains provision of half a million dollars for wealthy Canadians most of whom earn more than $100,000 per year. As a symbol of the Tory priorities, when the Prime Minister had to replace his Principal Secretary, did he choose a union leader? Did he choose someone who had worked with the poor? Did he choose a woman who knows the problems that women have in having second class citizenship in our society? No, no, and no.
Who did he choose? The Prime Minister chose a close associate of Conrad Black of Argus Corporation. He brought the corporate elite to the Prime Minister's Office by putting Peter White to work as his Principal Secretary. That indicates the priorities of this particular Government.
The average Canadian has had tax increases on an average income of about $1,300 per year since 1984. That is the reality of Conservative tax policy. Under tax reform, if they are lucky they will get a tax cut of about $300 per year. That means that for every $4 that they have had taken from them in tax increases they will get $1 back. The finance critic from the Liberal Party tried to suggest that the Liberal Party was opposed to the approach to taxation taken by the Progressive Conservatives. He seems to have a short memory. Perhaps because he just came to the House only in 1984.
Who was it that began all the tax concessions to wealthy corporations? It was the Liberal Party. Who was it that began the cuts in top tax rates which are being continued by the
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Progressive Conservatives? It was the Liberal Party. Who was it that began the increases in sales tax?

The sales tax increases which had been first initiated by the Liberal Party were later on perpetuated by the Tory Party. Which is the party which widened the sales tax base to make sure that an increasing number of consumer goods used by the middle income Canadian family would be taxed? It is the Liberal Party which started all that, Mr. Speaker. Which is the Party which was the first to impose taxes on Canadian families below the poverty line? It is again the Liberal Party, Mr. Speaker. Who started the de-indexing process? It is the Liberal Party, Mr. Speaker, with the 6 p. 100 and 5 p. 100 program which it introduced in the early 1980's. Who has maintained the archaic sales tax system which still exists now? It is again the Liberal Party which did nothing to change the system.
Who used its empty rhetoric to defend the fairness of the tax system? It is the Liberal Party, followed now by the Tory Party. That is why I wonder if the Liberal Party would increase the taxes on major corporations? The Liberals are like the Tories. They would equally preserve the privileges of the private industry in our country, just as they did when they were in Government. That is why I urge Canadians to judge the two major parties on their deeds rather than on their words, to judge the Liberal Party on what it achieved while in Government. When they sit on this side of the House, the Liberals talk like New Democrats, but when they are in Government, they act like Conservatives.

They talk like New Democrats when they are in opposition, but they act like Conservatives when they are in government. That is why when we say that tax reform will be a major issue in the forthcoming election campaign and New Democrats will be talking about fairness in taxation for average Canadians. We will put our proposals up against those of the Conservatives. We will put our proposals up against those of the Liberals as well. We will contrast the kind of fairness that we are talking about with what the Conservatives are doing in office and with what the Liberals did when they had power just a few short years ago.
It is interesting to recall that from 1981 to 1984 when the Liberals were in power Canada's banks with profits of more than $5 billion paid approximately 2 per cent of those profits in tax-about $72 million. Canada's trust and life insurance companies paid around 5 per cent of their profits in federal income tax.
It is interesting to note that during that period of time a teller in a branch of the Royal Bank paid more in tax than the Royal Bank itself paid. Did we hear the finance critic from the Liberal Party, who was then himself a bank president, criticize that particular position? He was silent. Did we hear Liberal back-benchers criticize that particular situation? They were silent. Did we hear Conservatives in opposition criticize that

July 19, 1988
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situation? They were silent as well. Yet that is a situation which creates unfairness, cynicism and, finally, non-compliance from average Canadians who say: "Look, if the big corporations are getting all of the breaks, why the devil shouldn't I fiddle my taxes just a little bit as well?"
That is fundamentally demoralizing and undermining to the tax system which depends on voluntary compliance. If Canadians were really looking for fairness and frankness from the tax reform, then they are disappointed and will be disappointed with what they get from the Conservatives. In terms of fairness, when all is said and done what the Conservative tax reform really means is that three out of four wealthy families earning over $100,000 per year will get an average $4,165 per year in tax cuts.
Where does that figure come from? It does not come from the researchers in the NDP, it does not come from a bunch of gnomes in the back room of our Party who devised that. It is in the Government's own documents. The Government itself admits that after its tax reforms, some 60,000 profitable Canadian corporations will continue to get off every year without paying any tax. The average Canadian family will be left paying about $1,000 a year more in income and other taxes than in 1984, presuming that they had the same income as they had in 1984.
In addition to that, the Conservatives have been hardly frank with the Canadian people. They have kept the bad news hidden in terms of what they intend to do about the new sales tax. The Democrats admit and accept that we need a change in the present sales tax system. It is up to the Government to act on this issue. The Finance Committee has just in fact come back with a report indicating that the current changes, the interim changes proposed by the Government on sales tax, are unworkable, unacceptable and ineffective, but we do not know what the Government intends to do.
It was only after months of pressure that we finally had the Minister of Finance accepting that he was not going to continue with his long-cherished ambition to slap an 8 or 10 per cent sales tax on food, on the groceries that every Canadian buys every week. Now, we just do not know what else will be taxed and what is out. The Minister of State for Finance is here. He can interrupt me now and tell me what is going to be taxed and what is not, what is in and what is out. How much will any tax cuts that took effect in July of this year for average families be wiped out once we have the regressive sales tax as proposed by a Conservative Government that puts the interests of the wealthy and of corporations first? How will that affect the tax savings?


Thomas Hockin: What do you think of the present sales tax?


Michael Morris Cassidy: I have just said-if the Hon. Minister had been listening-that the present sales tax is not a good sales tax. It ought to be changed. The Finance Committee has said that as well. We do not know and Canadians do not know the
Government's proposals. The Government is carefully waiting until after an election for the other shoe to drop.


Thomas Hockin: How about the Labour Party in New Zealand?


Michael Morris Cassidy: The Conservatives may have got some of the ingredients right, but they are still following the same recipe that favours the wealthy and lets the largest corporations off easy. The end result is that the average Canadian family is left paying the bill.
Let me point out that three out of four wealthy families get over $4,000 a year in tax cut. The average family earning $35,000 a year gets a cut of only $350 a year. The family earning under $15,000 a year gets a cut of only $100 a year.
In addition to that, the tax reform as proposed by the Conservatives is fundamentally unfair when it comes to families across Canada. As far as families are concerned, the Conservatives think that all it takes to raise a family is $65 a year in tax credit, over and above what is given to the tax system for the average taxpayer who is single. It is $65 a year per child. It is a bit more for the third and subsequent child, if your income is under $24,000 a year. But a tax credit of $65 a year is about $1.28 per week, I believe. Now, $1.28 per week, I would like to inform the Minister of State for Finance, will not even buy one of the cheapest hamburgers at McDonald's or at Burger King in order to help that kid make it through the week. Certainly, it will not pay for the food, milk, extra housekeeping, clothing, personal supplies, educational supplies, sporting goods that a child needs, if the child is going to live normally with his or her peers, for all of the other expenses that are entailed in having children and raising kids.
I think people have said that raising a child these days is an investment which we carefully make. It may be $75,000 or $90,000 over the childhood of that child, until the child is independent and on his own at the age of 20 or 21.
What does a Conservative Party propose to give in terms of that cost? Well, $65 over 20 years works out to about $1,300 or perhaps 1 per cent of the extra cost to families who are raising kids.
Finally, the Conservatives point out that 850,000 taxpayers will be taken off the tax rolls, but they ignore the dimension. A million taxpayers have been added to the tax rolls since 1984. If the wealthy had paid their fair share under the tax system as proposed by the Progressive Conservatives, middle and low-income families could have got a fairer tax break. If the wealthy had paid their fair share, we could have taken families which were below the poverty line off the tax rolls in terms of paying income tax, instead of a family who is $1,000 below the poverty line paying tax. A family who is $2,000 below the poverty line will be paying federal income tax. A family who is $3,000 below will be paying tax. In fact, the tax for families will begin at around $18,500. The poverty line in urban Canada, for an urban Canadian family right now is some $23,000 per annum. So you reach down to $4,500 below the
July 19, 1988

poverty line and yet people at that level are still going to be paying tax.
It is interesting to note what the priorities of this Government are. A taxpayer with an income of $30,000 a year, if he or she is single, will get a $695 tax cut. The Minister nods. He acknowledges the figures which are drawn from his figure. A single taxpayer earner with two kids, with a spouse who is not working, will get a tax reduction of $590. If it is a more typical Canadian family, two income earners and two kids under 18, it will get a tax cut of $285. A single person over 65 will get a cut of $430.
It is significant that in the typical Canadian family with two incomes it takes two wage earners to support the kids, pay the mortgage or the rent, and buy the food and other essentials that you need. That particular family at $30,000 a year, instead of getting the largest tax cut-which would seem to make sense-gets the smallest tax cut, while the single person gets the largest cut. There is something fundamentally wrong about that.
We, the New Democrats, believe that the Canadian tax system is long overdue for fundamental reform. We stand out and speak up for fairness, efficiency and simplicity in the tax system, but the tax system that we have in Bill C-139 is neither fair, efficient nor simple. The committee has come in with some useful suggestions, but it failed to take up the challenge of redrafting the proposal in terms of the fundamental principles which should underpin real tax reform.
Let me cite one specific thing. The first recommendation of the Standing Committee on Finance and Economic Affairs, I regret to say, was to endorse the rate structure which is contained in the proposals put forward under tax reform by the Minister and by the Government. I think it was a very serious mistake because, when you cut the top rate of taxation from some 34 per cent of the federal level down to 29 per cent, it is impossible to create a progressive tax system. When you create a situation where a secretary working for Bell Canada pays a marginal rate of tax, only five points less than the Chairman and Chief Executive Officer of Bell Canada, Mr. Jean de Grandpre, who has an income of close to one million dollars a year, there is something fundamentally wrong with that. Average Canadians will tell you that, and yet, somehow the Government is so distant from average Canadians that it simply does not understand that at all.
How can you defend a situation where out of every dollar that Mr. de Grandpre gets in additional income he pays only a nickel more in tax than the secretary who perhaps is trying to raise a couple of kids and live on her own, perhaps on one income, and certainly is having a tough time getting by on that particular income?
While the tax system's intention is, among other things, to raise funds for government expenditures, it is also a serious moral and philosophical intervention into the society and the economy. We live in a society where income is unequally distributed through the mechanism of the market in the form
Income Tax and Related Acts
of wages, salaries, dividends, interest and that kind of thing. Income is not distributed equally and the market will not distribute it equally. Whether or not the market acts efficiently in economic growth, it is a poor instrument for realizing social equity. Therefore, as New Democrats, we believe that the central focus of the tax system is to achieve a redistribution of income from the wealthy to average and lower-income Canadians. What the Conservatives believe is something completely contrary. They have been captured by the neoConservative view that we need to get the tax system down to a system of taxation as flat as possible. If they could have reduced the categories from 10 rates to 1 rather than 10 rates to 3, I believe they would have done so if they felt they could have sold that, but in the end they could not do that.
The Conservatives are setting the stage for a shift from income taxation over to consumption taxes, despite the fact that consumption taxes affect average Canadians much more than they affect wealthy Canadians, because wealthy Canadians can afford to defer expenditure and consumption because they have lots of money to go around. The Conservatives are creating a system which is less and less progressive. That is demonstrated by the fact that the biggest tax cuts go to wealthy Canadians and the smallest tax cuts go to average Canadians.
The reform package here fails to achieve any substantial redistribution of income among Canadians. The one progressive part of the system, which is the personal income tax, is not far from being neutral in its impact. The reform package is consciously structured so as to be neutral in terms of income distribution. Otherwise progressive features, such as converting tax exemptions which favour upper income earners to tax credits which favour lower income earners are more than offset to changes to the structure of tax rates.
If you really believe in fairness, Mr. Speaker, then you would judge that all forms of income should be treated equally. The Liberals, however, do not believe in fairness. When they were in power they did not treat income equally, and the Conservatives are no better. Income from property, such as capital gains and dividends, is treated differently by the Conservatives than income from wages and salaries.
I hear the Hon. Member for Don Valley East (Mr. Bosley) basically supporting the privilege in which many of his constituents live since he comes from one of the most affluent constituencies in the country. While I have great respect for the Hon. Member, who is a former Speaker and a distinguished Member of this House of Commons, I want to suggest to him that his constituents are far less in need, and if they are committed to a fair society here, they should be prepared to accept willingly a redistribution of income through the tax system rather than fighting at the top always to be in first place.

July 19, 1988
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I go on to point out that we think the corporate share of the over-all tax burden which represents a withholding tax on property income should be increased. We think that the sales tax share, which represents a regressive tax on consumers, should be reduced. Unfortunately, this question of balance was not examined at any length by the Finance Committee nor, of course, was it examined to any extent by the Government.
We think as well that there is a real problem in tax fairness between big business and small businesses in Canada. That continues in the tax reform which is here. The tax rate on businesses and on larger corporations is alleged to rise by a modest amount. The corporate share of Canadian tax collections, which was about 20 per cent in 1984 when the Conservatives came to power, is down to 15 per cent today. In four or five years time it will still be no more than abut 17 per cent of total tax collections, about $1 in every $6, whereas the average taxpayers will be paying well over half of those tax collections, Mr. Speaker. In addition to that, tax benefits intended to create jobs are overwhelmingly concentrated and directed toward large corporations, while small businesses pay more tax and yet create the vast majority of new jobs in this country.
I would say that if we are talking about efficiency, and that is an important goal as well, then the Government has failed to come to grips with the whole question of tax expenditures, which amount to some $30 billion a year, which amount to a sum equal or greater than the annual sum of the deficit in Canada, and which the Government has simply not touched through the tax reform. If you were to take these tax expenditures and reviewed and assessed them on an annual basis, as the New Democrats believe should be done, then you would start to create a system that would be more efficient, you would be measuring every expenditure by a Government whether it was a direct expenditure or an expenditure through the tax system.

Unfortunately, the Tory Government has done nothing in that direction. We believe it is possible to target tax expenditures to ensure that key objectives such as job creation and regional development are achieved with considerably less spending on the Government's part. Once in a while, some tax expenditures are justified such as the flow-through shares. Nevertheless, we believe that in a great many cases, direct expenditures from the Government are much more efficient than tax expenditures to reach national economic goals.

We believe that the goal of accountability has not been seriously addressed by the Government or by the committee. That is what I was saying just now. We recommend that each tax expenditure program should be assigned to a relevant Department for review and consideration every year with regard to alternative policy instruments.
We believe that there should be a tax expenditure analysis presented annually, along with the spending Estimates, the
Budget and the Public Accounts. We believe the tax expenditures should be integrated with the spending envelope system and be subjected to the approval of Parliament. Unfortunately, we are not making much progress on that. Why, Mr. Speaker? Because wealthy Canadians and corporate Canada know they have a better chance of making headway through the back door via tax expenditures than through the front door via direct expenditure by Government.
Finally, on this front, we have the question of simplicity. The Bill which is 500 pages long hardly adds to simplicity. In fact, the tax practitioners are absolutely beside themselves in trying to deal with this tax measure. I regret that the measure is likely to go through the committee and back through this House with little or no effective scrutiny of the details of the legislation.
In 1986, before tax reform, half of all Canadians had someone else prepare their tax returns. One-third of Canadians had tax experts prepare their tax returns because they were too complex for them. Ordinary Canadians are increasingly baffled by the complexity of the tax system. That will certainly not change through this provision. In fact, that is also true as far as corporations are concerned.
There has been a lot of talk about the automobile expense provisions which the committee urged be fundamentally changed and which advice the Government ignored. I read through a seven page memo prepared by one of the leading accounting firms that purported to explain the new provisions on automobile expenses. I have to confess that I did not understand it, even as someone who has some expertise in this area and who has spent the last year looking at tax reform as a member of the Finance Committee. If I cannot understand it, how can someone who is running a small business understand it? How can a salesperson or someone working for a firm understand it? Why do we have to create a system where every time you turn around you have to resort to a tax lawyer who charges $200 an hour for his or her advice?
We had hoped to see a fairer balance between individuals in the tax system. Unfortunately, that is not to be. We had hoped to see a higher top rate on those people earning $50,000 or $60,000 a year who can afford to make that kind of contribution. We had looked for a system where wealthy Canadians would pay more rather than less.
We are fundamentally in disagreement with the approach taken by the Government, which is to say that it will plug loopholes on the one hand but then turn around and take money which is gained from loopholes and give it back to the same people. When a Department is forced to give up expenditure because of cut-backs in a particular area, it is not allowed to take the money and put it into some other area of Government. The money goes back into the Treasury and is then spent according to the general priorities of the Government. When it comes to tax reform, the Government has shovelled money around so that wealthy Canadians who lost certain loopholes are getting the money back through lower tax rates.
July 19, 1988

It may be a more neutral tax system, but it is not a tax system that is fair or more equitable.
It should also be noted that the new credits to be introduced in 1988 will not be fully indexed to inflation. The income tax burden on average families will increase in real terms and many more poor families will be forced back on the tax rolls. In other words, the 800,000 families who may be taken off the tax rolls today will find themselves back on them in the unlikely event that this Government is back in power for the next three or four years after the election.
The partial deindexation means that the $300 tax cut for the average family will be systematically eroded to the point where there will be no effective tax cut about three or four years down the line. That is primarily rooted in two things. The first is the failure of the tax reform White Paper to introduce a fair tax rate structure. The second is the failure of the Government to bring in full indexing on tax rates, particularly for people earning under $30,000 a year. Instead, the credits and everything else are partly deindexed as part of the Tory approach to tax reform.
There are other problems and disparities. One is the fact that the Government is still backing away from full taxation of capital gains. My Party disagrees with that. We disagree with the priority given to the $500,000 tax exemption. The fact that it has been capped at $100,000 is modest progress, but the tax exemption should not have been put there in the first place. It should not be changed or maintained, it should be taken out. We think that the principle that a buck is a buck is a buck, first enunciated by the Carter Commission on taxes back in the 1960s, should be endorsed now if we are to keep our country economically strong and provide for economic regional development. Surely people should know that a dollar they earn is taxed on the same basis as for everyone else and there are not sharpsters and wise boys and girls and people who have the inside track who are able to cut their taxes by means of such devices as the privileged rate given to dividends and capital gains.
That is why my Party recommends that, with the exception of farmers and small businesses-


Some Hon. Members:: Oh, oh!


Mr. Darling:: Aren't you wonderful?


Michael Morris Cassidy: -and we are prepared to make those concessions, that capital gains be fully taxable and that the lifetime exemption be eliminated. I hear some disagreement. Perhaps some members of the Conservative Party do not believe that farmers or small businesses should be exempted. If that is the case, let them say so during the debate.
We note that while many of the tax exemptions or deductions in the system have been replaced by credits, at the same time other personal tax measures which largely favoured the
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wealthy, such as the deduction for RRSP contributions, the special treatment of dividend income, and the full deduction of interest costs for income, have been treated as deductions rather than credits. If you want a system that deals fairly with people at different income levels, we propose that those be dealt with in the form of a credit rather than a deduction. Why should wealthy Canadians get deductions and average Canadians get credits? Why not make it all a system of credits?
I have already spoken about the unfairness of the system with respect to families. I have spoken about the fact that the tax reductions for average families are themselves derisory. A few bucks a week, and that money is going to be very quickly taken away. They are far less than the tax increases which have taken effect under the Conservatives since 1984.
The figures are a bit difficult to calculate, but the National Council on Welfare calculates that by 1991 the total child benefits for a two-child family at the poverty line will have been reduced by $314, and the average two-child family will actually lose $925. Those figures may have changed a little bit with the changes to the proposals since 1987, but not a heck of a lot. I ask, what kind of country is this when the tax system deals so unfairly with people who are performing, apart from everything else, the one absolutely fundamental responsibility of every generation in any society, which is to ensure that children are born and a new generation comes along to carry the torch and keep the human race going? How do we treat that in Canada? Judging by the Tory tax reform, we treat it with contempt.
We urge that the $65 tax credit per child be significantly increased and indexed to inflation. The change just for the third child and subsequent children is not good enough. We believe the new credit could and should be melded with an increased and reindexed family allowance.
The NDP also has a long-standing policy to increase the refundable child tax credit by 80 per cent as an essential step toward lifting low-income families with children above the poverty line. If we have a commitment to children, if we have a commitment to families, then let us do it now, and not wait until after the election.
In the same vein, I heard my friend, the Hon. Member for Laval-des-Rapides (Mr. Garneau), suggesting that absolute necessities of life such as bread, milk, butter and a few similar products should not be subject to sales tax. I am not sure if he was trying to draw a distinction between all groceries and certain limited essentials. However, I want to serve notice on the Government again that it would perform a major disservice to Canadians, and would make a fundamental political error, if it ever again tried, as the Minister of Finance did a year ago in June, to impose a sales tax on the groceries Canadians buy every week. That is a fundamentally unacceptable position. We do not accept it. We fought it from the moment it was proposed. The Minister, after six months, finally backed off. However, on behalf of average Canadians, we say that this is

July 19, 1988
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an unacceptable provision and we will not accept it. Do not let us see the Government going back on that promise.
I want to go on now to deal with the corporate side. It is significant that the increase in taxes on corporations under the Conservatives is far less proportionately than that which took place under tax reform in the U.S. In fact, I think there is a lot of deception taking place on this issue. The marginal rates on high income individuals in the U.S. are much higher than the Progressive Conservatives try to pretend. Corporate taxes went up far more there than in this country. It is interesting that the Conservatives, having promised in 1984 that a minimum tax would be brought in on individuals have failed to do so on corporations. Yet it has been estimated that a minimum tax on corporations of 20 per cent, which is the rate applied in Ronald Reagan's America, would bring in an extra $2 billion a year here in Canada. That would in turn allow tax cuts for average Canadians.
It is also notable that that would sharply cut down if not eliminate the large number of profitable Canadian corporations, some 60,000 or so, who will continue to be able to avoid tax on their profits after tax reform.
New Democrats suggest there should be a minimum tax on corporations here in Canada. If it can be brought in in corporate America despite Reaganomics, for goodness' sake, we can do it here in this slightly more progressive country. I suggest we should be doing that now. We should not be waiting. We should bring in the minimum tax. That is another way of assuring average Canadians that when they pay their fair share, everyone else is doing so as well.
I have had a great deal of correspondence from individual Canadians asking about the elimination of the $1,000 investment income tax deduction. The theory for removing it is quite strong in the sense that you make up for it by means of changes in the basic tax rates and credits and that kind of thing, and by not distinguishing between people who earn by working and those who earn from interest or dividend income. That I understand. However, the more I think about this, the more I realize that the reason people are really offended at that omission is the fact that the Government is cutting the taxes of wealthy Canadians, much of whose income comes from interest and dividends, and at the same time is taking away one of the few tax concessions given to average Canadians. That raises real questions in our minds.
I understand my time is up, Mr. Speaker. I would seek the indulgence of the House and ask for unanimous consent to continue, with the understanding that I would finish by one o'clock.


Mr. Deputy Speaker:: Does the House grant unanimous consent to the Hon. Member?


Some Hon. Members:: Agreed.


Michael Morris Cassidy: I suggest that in terms of simplicity we have a very serious problem. When I began to pay income tax 20 odd years ago my tax form was a dozen pages long, now it is 80 or 90 pages. I am overwhelmed with record keeping and the various ancillary documents I have to submit. Many other Canadians are suffering the same kind of thing. That is why New Democrats believe that there should be a plain language tax form. Why can the tax form for most Canadians not be a dozen pages or so, something we can fill in in the course of a couple of hours rather than having to consult a tax preparer and pay $50 or $200? The tax preparers often do not understand the law either. Why does it have to be so complicated? Why can it not be simple again? Why can we not provide people with a system which is both simple and fair?
Why can Revenue Canada officials not be available to meet with taxpayers on a regular basis to assist in tax filing? A constituent of mine who works here in the House of Commons told me the other day that for the last two weeks he has been trying to get the taxpayer inquiry number at the Revenue Canada office here in Ottawa. He has phoned morning, afternoon, and evening, day after day after day and that telephone number has been consistently busy. That, of course, is no service at all to the public. If he were Mr. White, working for the Prime Minister, or a colleague of Mr. Black, it would be available in black and white. He would have easy access to the people who could give him the tax information he needed. However, that is not available for average Canadians.
I want to turn now to the changes made by the Government since this first came forward in 1987. We know that the Government refused to move in a meaningful way in terms of the tax credit for children. It moved only with respect to the third and subsequent children. I grant that that was the Finance Committee's recommendation. I think the committee was wrong on that particular point. We argued very strongly against that. The Government increased the refundable tax credit by the magnificent sum of $35 per child but refused to raise the net family income threshold as the Finance Committee had proposed.
On automobile expenses the Government proposals are of a mind-boggling complexity. It refused to listen to the Finance Committee. I want to tell the Minister of State for Finance and his boss that every small business in the country is up in arms over that particular provision. They will be spending thousands of dollars every year just to try to administer this particular law in its proposed complexity. The 27-cent and 21cent feature which was added in the final run might alleviate things a bit. We will study that in the committee.
However, it does not have to be this complicated in order to prevent business people from driving a BMW or a Jaguar to work on the firm. That is what we want to eliminate. That is what offends average Canadians who are nursing an eight-year old car and do not understand how someone else can drive a very expensive automobile on the firm.
July 19, 1988

With respect to the taxation on farming, the Government has listened to a certain extent, and I say thank you for that. The Government's proposal for a modified accrual system of accounting on farms was going to offend and outrage every farmer across the country. It was not workable, it was not fair, and it was not reasonable. I am glad to see that the Government has finally backed away from that particular proposal and is now looking at this in more detail.
In other areas, however, the listening was a little less intense. I note, for example, that the Government refused to impose the alternative minimum margin tax which was unanimously proposed by the Finance Committee and would have had the effect of bringing in some $400 million a year from under-taxed sectors, that is, the banks and other financial institutions. In other words, the Government caved in to the lobby from the banks and other financial institutions. It came in with a temporary capital tax on the charter banks of one or one and a quarter per cent, which the Minister of State for Finance himself knows is a perpetuation of an archaic tax. If the Minister wants to move on the sales tax because it is archaic, why is the Government perpetuating an archaic tax?


Thomas Hockin: You want revenues from the banks. That's revenue.


Michael Morris Cassidy: The revenue that will come in is an estimated $120 million in the first year and $125 million in the second year. The committee proposed unanimously, with the support of the Conservative Members, a $400 million increase in revenues. That would have enabled us to create a fairer tax system, but the Government did not want to offend the banks by doing that.
It is interesting that the Government has moved a little bit on some technical provisions with respect to the "put in use" rule relative to the capital cost allowance but, having plugged a few loopholes, it now starts to open them again, most notably with the guarantee of a tax ruling on the Revenue Department with respect to the expenditures on the Hibernia project which it seems to me now sets a precedent for every other corporate interest to look for similar treatment. We will be back very quickly to where we were under the Liberals.
The Government did not accept the Finance Committee's recommendations of an advanced corporation tax or to close the preferred share dividend loopholes available to large corporations. There, too, I think the Finance Committee was well in advance of the Government. Again, the people who benefit the most from things like the preferred share dividend loophole or the moving of dividends from one company to another are Conrad Black and Peter White in the Prime Minister's Office. Only four or five days ago he was in Toronto fiddling around with preferred tax share dividends and that kind of thing in order that ordinary taxpayers would have to pay more so that he and his corporate associates could make more and more bucks.


Thomas Hockin: Nonsense, we removed all that.
Income Tax and Related Acts


Michael Morris Cassidy: The Minister of State for Finance says "nonsense", yet it is true and he knows it. He used to teach business at Western Ontario and he should know that that kind of thing is going on.
The committee recommended that legitimate out-of-town travel expenses for sales purposes, et cetera, should not be subjected to the 80 per cent rule on entertainment and meal expenses. The Government did not grant that, and I think it was wrong. Instead, the Government has left the situation that legitimate business travel will only be deductible to 80 per cent, but if Labatt's from London wants to invest $200,000 in a VIP box at the Skydome it will be able to deduct 80 per cent of that cost as a business entertainment expense.
Again, there is some disparity in that. The small business here in Ottawa in the hightech industry which is trying to crack the European market will find that the cost of maintaining its representative in Europe for a week or two while on a sales trip is not fully deductible, but the expense for a box at the Skydome is 80 per cent deductible. There is something wrong with that.
The final point I wish to raise on that particular issue is that the Government has refused to move with respect to the recommendations coming from the tax fraternity on the issue of anti-avoidance. I would like to read an excerpt from the submission made by the Joint Committee of the Bar Association and the Association of Chartered Accountants. They said:
The Joint Committee is fundamentally opposed to the introduction of a general anti-avoidance rule of the kind included in the draft legislation of April 13, 1988. The Committee is unanimous in its view that the existing statutory rules (with relatively minor modifications) and jurisprudence are adequate to combat unacceptable tax avoidance.
The general anti-avoidance rule in the form proposed by the Minister of Finance is unnecessary, undesirable and represents a retrograde step in the evolution of Canada's income tax system. The introduction of such a rule will create an aura of uncertainty over ordinary business and commercial transactions for many years to come.
They strongly recommended two changes. The one which was accepted was to rule out Section 245(10). The one which was refused was to put the onus of proof onto the Minister of National Revenue.
I cited that because the committee itself felt that way too. It believed that if the Government had administratively been prepared to enforce the existing rules about anti-avoidance it would have been much more effective than bringing in new jurisprudence which will take seven or eight years to be clarified. In the meantime the Government is giving many firms a licence to cheat, firms which will not be caught under this new anti-avoidance rule.
The basic point which New Democrats have been making and will be making on the hustings is that New Democrats want a fairer tax system which benefits average Canadians. Tories want a Tory tax reform which benefits the wealthy and corporations. I believe that Canadians across the country want New Democratic tax reform and not Tory deform.

July 19, 1988


Mr. Deputy Speaker:: It being one o'clock, I do now leave the chair until two o'clock this day.
At 1 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.

Gerald J. Comeau: Mr. Speaker, yesterday the Governments of Canada, Newfoundland and Labrador, and a consortium of oil companies announced the details of the largest development project ever undertaken in Atlantic Canada.
The project means thousands of quality jobs to Newfoundlanders and Atlantic Canadians. As the first major offshore development project in Canada, Hibernia will also generate significant new business opportunities for hundreds of companies in Newfoundland, Atlantic Canada, and other parts of Canada.
The project will take Canadian companies to the leading edge of offshore oil and gas development technology. Canadian companies can then plan an even larger role in future offshore projects both in Canada and around the world.
This project is great news for Newfoundland and Labrador, great news for Atlantic Canada, and great news for all of Canada.


AGRICULTURE
Marion Dewar: Mr. Speaker, Canadian farmers are faced with a drought this year that threatens their livelihood. The drought is also accelerating major changes in rural families. Women have always worked hard on the family farm, helping with the harvests, raising their children and maintaining the home. But now they are faced with another burden, seeking paid employment off the farm to pay the bills.
The number of farm women with outside jobs has increased dramatically over the last 30 years. In 1951, 13 per cent of farm women worked off the farm; in 1988, that number is 68 per cent.
Farm women face many obstacles in trying to combine their many responsibilities. There are inadequate child care facilities for their children in the rural areas where they live. The jobs available to most of these women are minimum wage employment. Farm women are still responsible for most of the housework and child care, and that in addition to helping with many tasks related to the farm. All of this makes for very long and demanding days.
I call upon the Government to offer concrete support to Canadian farm women, especially now because of the drought. More rural day care centres need to be established. Farm women's organizations need to be strengthened through increased funding. As well, women's contribution to the farm must be recognized through pension reform. Finally, farm women will benefit along with all Canadian women from effective employment equity legislation.


VIA RAIL
Mr. Gordon Taylor (Bow River):: Mr. Speaker, when passing laws in this House sometimes our enthusiasm for a cause blinds us to the adverse effect and expense imposed on others. For example, we recently passed Bill C-204, the NonSmokers Health Act, which if proclaimed as is will impose severe constraints on VIA's operations. It will prevent VIA from offering smoking accommodation on more than 40 of its trains. In fact, Clause 5 will ban smokers entirely on all of its one-coach trains.
Also, VIA is discriminated against as it has no time limitations as provided for other modes, even though some trips last 75 hours. Additional equipment required to meet the requirements of the Bill will cost $8.5 million, and even worse, the rights of 300,000 smoking VIA passengers are negated and they will have to find other modes. Are smokers not Canadian citizens too?


ABORTION
Mr. John Nunziata (York South-Weston):: Mr. Speaker, this morning the Supreme Court of Canada summarily dismissed an application by the Government to postpone indefinitely the case of Borowski. In that particular case now pending before the Supreme Court, the court is being called to decide on the rights of the fetus.
The Government had the audacity to interfere in an unprecedented fashion in the process of the court. In effect, the Government asked the independent Supreme Court of this
July 19, 1988

country to dovetail its agenda into its own agenda, for political reasons.
Chief Justice Dickson of the Supreme Court of Canada was not persuaded. One could not help but be embarrassed for the lawyer from the Justice Department who was instructed by the Minister of Justice (Mr. Hnatyshyn) to argue a very weak case.
It was an abuse of the process. When will the Government have the courage to bring in legislation in order to protect the innocent unborn?
The Prime Minister (Mr. Mulroney) in a letter dated February 24, 1984, when he was Leader of the Opposition, said:
On the overall issue of abortion, I realize that there are personal, moral and religious commitments on all sides of the abortion question, and I am not prepared to support abortion on demand.
I call on the Prime Minister to live up to his convictions and bring in legislation to protect human life right from the moment of conception.


ATLANTIC CANADA OPPORTUNITIES AGENCY
Mr. Pat Binns (Parliamentary Secretary to Minister of Fisheries and Oceans):: Mr. Speaker, the Liberal dominated Senate is blocking progress in Atlantic Canada. It is holding up the Opportunities Agency legislation which is the best news for us since John Diefenbaker was Prime Minister.
We want to spend $1 billion in the next five years to let business develop their ideas, to create thousands of jobs and create long term prosperity.
Are the Senators, supported by Liberal Members of Parliament across the way, afraid we will get credit for new jobs and prosperity for Atlantic Canadians? Are they afraid of giving control to Atlantic Canada rather than keeping it here in Ottawa? Are they afraid we will succeed where they failed? Are they playing partisan politics on the backs of our small businessmen? This is an injustice to every Atlantic Canadian, to every Prince Edward Islander. We want jobs. We want prosperity.
I call upon the Liberal Members of Parliament to stand up, to get out of their seats, to walk over to the Senate right now and tell Mr. MacEachen and his colleagues that they are tired of being his patsies. Tell him he is wrong. Tell him you will support the Tories to develop Atlantic Canada.


AGRICULTURE
Mr. Stan J. Hovdebo (Prince Albert):: Mr. Speaker, three years ago the Prairies experienced drought and grasshopper infestations. The Minister of Agriculture (Mr. Wise) agreed then that ad hoc federal disaster assistance to Canadian farmers was inadequate. The Minister promised to do something about it. Three years have passed and we still have no sign of a long-term disaster assistance program.
As you know, Mr. Speaker, much of Canada is in the midst of the worst drought in over 50 years. The Government is providing some assistance to Canadian cattlemen. However, there is still no sign of help for Canadian grain farmers.
The uncertainty of government drought assistance is causing deep anxiety for tens of thousands of farm families. My colleagues and I join farm leaders across Canada who want to know what happened to the commitment of the Minister of Agriculture to create a permanent disaster assistance program. New Democrats call upon the Minister of Agriculture and the agricultural community to develop immediately a long-term assistance program, a program to cover crops, livestock and fixed assets, a long-term program that would greatly reduce the anxiety farm families face each time they are subjected to natural disasters.


TOUR DE L'ABITIBI
Mr. Guy St-Julien (Abitibi):: Mr. Speaker, the Tour international de TAbitibi is the most important multi-stage junior cycling event in America. From July 26 to 31, 1988, a number of national teams including those of Switzerland, France, The Netherlands, Czechoslovakia, Guadeloupe and Canada will be on the starting line. A total of 25 teams will be taking part in the 20th edition of the Tour de I'Abitibi. The 20 years of dedicated work by people such as Leandre Normand, Marc Lemay, Robert Baril, Roland Lord, Andre Babin, Claude Page and thousands of volunteers have paid off. Val d'Or has been chosen to host this 20th edition of the Tour.
Mr. Speaker, Canadian Steve Bauer showed his ability in the Tour de TAbitibi in 1976 and look at him now: he is a top contender in the Tour de France.

July 19, 1988


PUBLIC SERVICE
Jean-Robert Gauthier: Mr. Speaker, last Friday the Federal Court of Appeal ruled on the political rights of federal public servants. The ruling invalidates section 32 of the Civil Service Employment Act, thereby granting the 214 000 public servants who come under this act the same political rights as all other citizens.
In so doing, the Court fulfilled the election promise which the Conservative Government was not able to keep. All interested parties expressed their satisfaction. Alliance President Daryl Bean called it a victory for all employees, one which allowed them to emerge from obscurity, and said that these new freedoms did not endanger the integrity of the Public service.
However, in its ruling the Court has created two categories of public servants. On the one side there are 214 000 public servants with full rights, and on the other there are 357 000 federal employees with no political rights.
I hope that the Government will have the courage to fulfill its 1984 promise and go all the way by granting full political rights to those Federal Government workers.


ATLANTIC CANADA OPPORTUNITIES AGENCY
Mr. Lawrence I. O'Neil (Cape Breton Highlands-Canso):: Mr. Speaker, yesterday we heard Liberal Members in this House charge that the ACOA Bill will mean the end of the ID Division of Devco. Nothing could be more misleading. The ACOA Bill gives the ID Division the status of an independent Crown corporation. The ACOA Bill will give it a separate board of directors. If Liberal Members want an autonomous ID Division they should support Bill C-103. It is time to support Atlantic Canada, not the Godfather.
Cape Breton has never seen the growth of new industries and the commitment of federal money of the kind delivered since the election of this Government. Included are SI 10 million for Sysco modernization, tens of millions of dollars for Devco, more than $150 million for small business development, and more than $50 million under the tax credit program. Our record is clear. If the previous Liberal Government was as committed as we are, we would not be discussing unemployment in Cape Breton today.
Yesterday we learned about Hibernia. We will develop oil in the interests of Atlantic Canadians. The Liberals were determined to leave it under the sea.


RAILWAYS
Mr. Jack Harris (St. John's East):: Mr. Speaker, when rumours first circulated about the closure of the Newfoundland Railway, the Minister for International Trade (Mr. Crosbie) and Premier Brian Peckford of Newfoundland said that their first priority would be the workers who would lose their jobs. We learned on Sunday that the Minister for International Trade gave repeated assurances to the workers and the unions, saying to them behind closed doors: "Keep your mouths shut, and we'll look after you".
They were deceived. When the deal to close the railway was announced on June 20 there was nothing there from the Government of Canada for the 500 workers who would lose their jobs. They would get nothing that they were not already entitled to by their hard won collective agreements or existing employment contracts.
"Keep your mouths shut, and we'll look after you". Those are the words of the Minister for International Trade- patronizing workers, intimidation of possible opposition, and then a stab in the back. That is the arrogance of this Minister and this Government. That is how much they can be trusted.
When will the Government learn that people expect openness and honesty from government? The workers at the Newfoundland Railway got exactly the opposite.


TOUR DE FRANCE-ACCOMPLISHMENTS OF CANADIAN CYCLIST
Mr. Girve Fretz (Erie):: Mr. Speaker, for the last two weeks Canadians have been following the heroic achievements of Steve Bauer, an Erie riding constituent who lives in Fenwick. He is in fourth place in the Tour de France, the world's most prestigious bicycle race.
To win this over 3,000 kilometre race which demands that riders pedal over mountain peaks from 4,000 to 7,000 feet in height, and speed across the borders of Belgium, Spain, Switzerland, and Italy, is considered to be cycling's highest honour. Steve has won the coveted yellow jersey five times. The yellow jersey is presented to the over-all leader at the end of each day-stage of the race. He wore le maillot jaune for four consecutive days, earning him the recognition and respect not just of Canadians but of Europeans as well.
I am sure I speak for all Members of the House and all Canadians in congratulating Steve Bauer and conveying to him our best wishes for a quick finish to Paris.


Some Hon. Members:: Hear, hear!
July 19, 1988


ST. LAWRENCE SEAWAY LAY-OFFS-GOVERNMENT ASSISTANCE URGED
Mr. Iain Angus (Thunder Bay-Atikokan):: Mr. Speaker, the crisis on the Great Lakes-St. Lawrence Seaway system continues. We still have in excess of 1,400 men and women, most of whom reside in the city of Thunder Bay and elsewhere along the system, who have been laid off. We have grain that is trickling to a slow stop coming from the west to a point at which we may only be handling 4 million tons for the next crop year.
I have raised this matter in the House. I have raised it directly with the Minister of Transport (Mr. Bouchard) and with the Minister of Employment and Immigration (Mrs. MacDougall) asking for some kind of program that will ensure that those people who are required to move Canada's gain through the eastern system are treated in the same way as those who are producing the grain, the farmers.
I call again on the Government to develop a program that will ensure that grain can move through the eastern system. Temporary elimination of Seaway tolls, lockage fees, and government imposed charges will help. The long term requires additional work.
We need to do what we can to protect those workers who are so vital to the system. I ask the Government to give consideration to changes to the unemployment insurance legislation so that those workers can be protected as well.


CANADA-UNITED STATES FREE TRADE AGREEMENT-WATER RESOURCES
Mr. Alan Redway (York East):: Mr. Speaker, the opposition fearmongers were wrong again. Last week, for days on end they tried to link the proposal to divert water from Lake Michigan to the Canada-U.S. Free Trade Agreement. Now the United States Army Corps of Engineers has decided not to go ahead with that diversion.
If water is part of the deal, why would the United States have done that? Could it be that water is not part of the deal? "'Tis so", cries the paranoid Opposition. One thing is certain, the Opposition intends to drag every red herring it can out of Canadian water.


EXTERNAL AFFAIRS
Mr. Dan Heap (Spadina):: Mr. Speaker, today is the ninth anniversary of the Nicaraguan people's victory over Samoza. A tiny country often invaded and ruled by the United States sacrificed many thousands of lives to rid the country of the last ruler left in place by the United States. Since then, the U.S. Government has tried to recover control of Nicaragua. It hired ex-National Guard officers with bloody records of brutality, and initiated a war of terrorism, concentrating on the killing of children, women, and unarmed campesinos.
[DOT] (U15)
Recently an uncertain ceasefire has been negotiated with the help of other Governments in Central America, South America, Europe and Canada. However, the U.S. has recently tried again to disrupt the peace through its ambassador, who openly encouraged a public demonstration which ended when the demonstrators attacked the police with stones and sticks and provoked the police response.
I call on the Government of Canada to follow the recommendation of the special committee and appoint a direct representative to Managua so that we no longer depend on the United States for our information about Nicaragua.



Mr. Bill Attewell (Don Valley East):: Mr. Speaker, yesterday the Presidium of the Supreme Soviet decided that the region of Nagornno-Karabagh will remain part of Azerbaijan. This decision is a shock and huge disappointment to Armenians around the world. They had been hoping and praying that Karabagh would become part of Soviet Armenia. As I said in this House on March 1, 1988, the decision to separate this territory in 1923 was an injustice.
With Armenians accounting for at least 75 per cent of the population of Karabagh, they have everything in common with Soviet Armenia and nothing in common with the other citizens of Azerbaijan. In fact, they have suffered human rights violations and many have been killed.
This was one of the most important tests of General Secretary Mikhail Gorbachev's policy of glasnost. He has failed in his first major test. Canadians of Armenian heritage will not forget nor will they give up. The struggle for human dignity and justice will continue.
Oral Questions HOUSE OF COMMONS

July 19, 1988


PRESENCE IN GALLERY OF VICE-SPEAKER OF KOREAN NATIONAL ASSEMBLY
Mr. Speaker:: I wish to draw to the attention of Members the presence in the gallery of three distinguished delegations. The first is led by Hon. Sung Hwan Noh, Vice-Speaker of the Korean National Assembly.


Some Hon. Members:: Hear, hear!


PRESENCE IN GALLERY OF SRI LANKAN DELEGATION
Mr. Speaker:: The second, is the presence of a delegation from Sri Lanka, led by the Chairman, Mr. Wijeva Gunawar-dena.


Some Hon. Members:: Hear, hear!


PRESENCE IN GALLERY OF FRENCH SENATE SOCIAL AFFAIRS COMMITTEE DELEGATION
Mr. Speaker:: I wish to draw attention also to the presence in the gallery of Mr. Claude Huriet, Senator and head of the delegation of the Social Affairs Committee of the Senate of France.


Some Hon. Members:: Hear, hear.



ORAL QUESTION PERIOD


Mr. Brian Tobin (Humber-Port au Port-St. Barbe):: Mr. Speaker, my question is directed to the Acting Prime Minister. I am told that today in Newfoundland investors big and small are making firm investment decisions based on what they perceive to be a firm agreement or deal announced yesterday in Newfoundland by the Prime Minister and the Premier of Newfoundland.


Some Hon. Members:: Hear, hear!


Brian Vincent Tobin: Land is indeed being bought and sold and scarce financial resources are being drawn to offshore related activities in the expectation of a guaranteed return. My question to the Deputy Prime Minister, and perhaps to the Hon. Member for St. John's West, is the following. I ask the Minister whether he is prepared to confirm today in the House that, notwithstanding the stated intentions contained in the Statement of Principles, what in fact was announced yesterday in St. John's was merely a Statement of Principles and not a firm and legally binding agreement to proceed with Hibernia development.


Hon. John C. Crosbie (Minister for International Trade):: Mr. Speaker, what was announced yesterday in St. John's was just as described, an agreed statement of principles between the Government of Newfoundland, the Government of Canada, and the five oil companies that make up the consortium that is developing Hibernia. It was a result of two years of negotiations from June, 1986, and finally concluded on July 9, 1988. As is the usual practice, the detailed legal agreements will be completed before the end of March.
Major expenditures on the project will start in 1989. There will be an investment of $8.5 billion, the greatest investment in any single project ever in the Atlantic region, and ever in Newfoundland. There will be 35,000 direct and indirect jobs created in Newfoundland, and of course across Canada many thousands of others.
The people who stopped the development from 1980 to 1984 and tried to crush the Province and the Government of Newfoundland are the very people now across the House trying to sabotage the deal with this type of silly question.


TERMS OF AGREEMENT
Brian Vincent Tobin: Mr. Speaker, the only thing the Opposition is attempting to sabotage is falsehoods. What we are trying to save and define is the truth. I thank the Member for St. John's West who stood on his feet, unlike the exercise that took place in St. John's, Newfoundland yesterday. There was quite a difference, Mr. Speaker. Yesterday it was a firm deal, Tfoday the Minister has confirmed it is merely a Statement of Principles.
The first principle contained on page 1, paragraph 2 of the document, is the following:
The execution of this Statement of Principles by the signatories hereto is not
intended to and does not create legally enforceable rights or obligations
between the signatories hereto or between any of the signatories hereto and
any third parties ...
The Member for St. John's West, who is a Newfoundland Member of Parliament, shares with me and every Newfoundlander a desire for development, but also a desire not to see people's hopes crushed or their investments burned. Is he prepared to say clearly today, out of all the confusion, all of the hoop-la, and all the smoke and mirrors, that that article, that escape clause that precedes every other statement in yesterday's announcement, makes it possible for any one of the partners from now to March 31, 1989, to cancel out of this deal at any time without penalty? Is he prepared to confirm that?


John Carnell Crosbie: Mr. Speaker, I will confirm this, Mr. Speaker, that five major oil companies have entered into a compact with the Government of Canada and the Government of Newfoundland, the principles of which are set out in the agreement made public yesterday that will result in a $5.2 billion dollar capital expenditure off the coast of our province. It will put a firm
July 19, 1988

economic base under the economy of the Province of Newfoundland for the first time in 450 years. Every Newfoundlander, except those who are jealous or those who are politically motivated, is claiming that this is a great day.
Rather than the actions of former Prime Minister Trudeau who said to Premier Peckford: "I'll see you in court. The jurisdiction and the resource belongs to us", our Prime Minister has gone hand in hand under the Atlantic Accord and we are putting $2.7 billion into the project so it goes ahead and saves Newfoundland and gives Newfoundland an economic chance for the future.


Brian Vincent Tobin: Mr. Speaker, an empty barrel makes the most noise.


John Carnell Crosbie: You should know.


Mr. Speaker:: The Hon. Member will note that the Chair felt it was appropriate to close off the Minister's reply. I would hope that the Hon. Member, recognizing that, would phrase his question in such a way that neither the Minister nor the Chair is provoked.


Brian Vincent Tobin: Mr. Speaker, I want to assure you, Sir, that I meant no disrespect to you and, more important, no disrespect to the Minister. He has a wonderful mind. It ignites when he wakes up in the morning, works flawlessly, and stops as soon as he stands on his feet in the House of Commons.


POSITION OF PETRO-CANADA
Brian Vincent Tobin: Mr. Speaker, the Minister does not want to deal with the document. He does not want to admit that the first clause, the legal clause or the escape clause, means that any partner could cancel out at any time for any reason without penalty, but we will take his silence as an acknowledgement of that fact.
Let me ask him this question, Mr. Speaker. Even given the best intentions of having a real deal by March 31, 1989, within eight months, how is it that the Government would be so sure of its statement yesterday and so sure that within eight months there will be a real deal-sometime after elections are held, of course-and how is it that we see the president of one of the major partners in the consortium who was at the press conference yesterday-and I speak specifically of Petro-Canada and its President, Bill Hopper-


An Hon. Member:: Where is the question?


Brian Vincent Tobin: You are getting the question-saying with respect to Petro-Canada's financial obligation-


Richard Grisé: Short answers, short questions.


Brian Vincent Tobin: -and Petro-Canada's financial participation in the deal, "We don't have the money"? How is it, 24 hours after a deal is announced, the President of Petro-Canada is
Oral Questions
saying with respect to that deal, "We don't have the money" as is reported in today's Financial Post? What kind of Statement of Principles was announced yesterday? When will that Statement of Principles be kept as a firm, legal, binding document?


John Carnell Crosbie: Mr. Speaker, that Hibernia project is going. It is agreed. The companies have agreed. The Government of Canada has made it all possible with the initiative that we have taken and with the agreements that we have made. They will all be legally bound at the end of March. In the meantime, we are morally bound. We are completely bound. We are bound by our word. We are bound by the handshakes exchanged. And, Mr. Speaker, the proof of the pudding will be in the eating.
Those people who tried to crush the Government of Newfoundland, who stopped development for four years, who sat in their seats here and did nothing, the Benedict Arnolds, have failed, and their last minute attempts to sabotage this project will fail as well. As I said yesterday about Premier Peckford, a hero is one who knows how to hang on one minute longer than the vile forces arrayed against him.


AMOUNT OF PROVINCIAL ROYALTIES
Hon. William Rompkey (Grand Falls-White Bay- Labrador):: Mr. Speaker, my question is for the same Minister. He talked a lot about being bound. The fact is the one that is bound most is the Province of Newfoundland. Of the three partners, the weakest partner has to give the most. The companies get money, they get a guarantee. The Government of Canada gets its taxes, its duties, and the Prime Minister himself said Canada will be paid back every cent that it spent. The Government of Newfoundland gives up taxes, reduces corporate taxes, it has to pay $100 million and it gets a royalty of 1 per cent.
Why is it the weakest partner gets a royalty of 1 per cent where Alberta gets a royalty of 12 per cent and Saskatchewan gets a royalty of 20 per cent? Why did the Member for St. John's West allow Newfoundland to mortgage its own future?


John Carnell Crosbie: Mr. Speaker, in my 23 years in politics I was never prouder than yesterday, and I am just as proud today.
Last week the hon. gentlemen opposite said that Newfoundland wasn't going to get any royalties at all, it had given up royalties. Today the hon. gentlemen are suggesting it is 1 per cent. The way it works is this. Before the project is in full production Newfoundland starts off with a royalty of 1 per cent. As it gets to full production the royalties mount. If the price of oil goes up, royalties continue to mount.


Brian Vincent Tobin: To what?


John Carnell Crosbie: Then, Mr. Speaker, if the project does really well Newfoundland gets a supplementary royalty of 12.5 per cent. In addition, the main support frame is constructed in

July 19, 1988
Oral Questions
Newfoundland, the gravity base structure is constructed in Newfoundland, 50 per cent of design engineering is done in Newfoundland, and 35,000 jobs will be had in Newfoundland. While the hon. gentleman was in the last Cabinet he did everything he could to crush Newfoundland. Ele should be ashamed to stand up in this Elouse and ask a question about this project.


Bill Rompkey: Mr. Speaker, if ifs and ands were pots and pans, there would be no work for tinkers. That is what the Minister is, he is a tinker. Tie is tinkering with the future of Newfoundland.


Some Hon. Members:: Oh, oh!


Some Hon. Members:: Hear, hear!


MINISTER'S POSITION
Bill Rompkey: Mr. Speaker, what is the maximum? It is 5 per cent if the price of oil goes up. There are so many ifs.
I know what temporary jobs are like. I have gone through Churchill Falls and temporary jobs evaporate pretty quickly. What about the long-term revenue? There is no long-term revenue. I ask the Minister again why has he allowed Newfoundland to mortgage its own future, because that is what he has done?


John Carnell Crosbie: Mr. Speaker, that is the kind of thinking that resulted in the betrayal of Newfoundland from 1980 to 1984. When Mr. Peckford wanted to settle with Mr. Trudeau, what did Mr. Trudeau say to him? He said, "I will see you in court". That was the attitude of hon. gentlemen opposite. They weren't thinking about the future of Newfoundland then. They were doing the bidding of their master.
But we have a Prime Minister who wants to see every part of Canada develop, who was met yesterday with gratitude, who will go down in history as a friend of Newfoundland, as someone who built co-operative federalism, who has built our economy, who has carried out his promises, who entered into the Atlantic Accord and carried out the Atlantic Accord. The Hon. Member should be ashamed for questioning this deal in this House.


COST ESTIMATES-TERMS OF AGREEMENT
Jack Harris: Mr. Speaker, my question is directed to the same Minister about a part of this deal which I assume he has read, after the public relations disaster of the trade deal. I would like him to enlighten us on the escape clause which says that if the detailed cost estimates for the project rise to $5.6 billion from the current $5.2 billion, either side to the agreement can pull out.
In light of the fact that the cost estimates rose from $4.2 billion in March of this year to $5.2 billion at the end of May, what assurance can he give us that from now until March, 1989, we will not see a cost increase of $300 million and the whole deal is gone?


John Carnell Crosbie: Mr. Speaker, isn't that a typical NDP attitude? Their philosophy is expressed by the statement that many a man waits for his ship to come in who never sent one out in the first place. That is the NDP philosophy.
We are sending our ships out. Mobil is sending its ship out. Gulf is sending its ship out. Columbia Gas is sending its ship out. Chevron is sending its ship out. They are committed to putting over $1 billion into this. They are not going to lose all that and let it all go because costs may have gone up. They figured inflation into this.
If the NDP were in power this project would never be started, and there is the living proof. Why, I was reading documents before you were snivelling!


Some Hon. Members:: Oh, oh!


Jack Harris: The comments of the Hon. Minister give truth to the idiom that age does not necessarily bring wisdom.


Some Hon. Members:: Oh, oh!


PRICE OF FUTURE ENERGY EXPORTS
Jack Harris: Mr. Speaker-


Some Hon. Members:: We want George!


Mr. Masse:: Baker is smart enough not to be here.


Mr. Speaker:: Order. The Hon. Member for St. John's East.


Jack Harris: Mr. Speaker, yesterday's announcement brings into focus the energy provisions of the trade deal, which parts the Minister may not have read. I would like him to confirm that Article 904 of the trade deal will force Newfoundland and Labrador energy, whether it be oil or hydroelectricity, to be exported to the U.S. at the same price it can be sold in Newfoundland, thereby prohibiting for all time energy pricing as a method of attracting industrial development to Newfoundland and Labrador, which the Minister knows is an economic development strategy that successive Newfoundland Governments have long promoted.


John Carnell Crosbie: Mr. Speaker, I was not surprised when I did not see the hon. gentleman down celebrating in Newfoundland yesterday. He was up here trying to condemn and damn this deal when he should be supporting it with every inch of his frame. It is St. John's east and west of the Avalon Peninsula that are going to be especially favoured by this development, along with Come-By-Chance where the main support frame and gravity base

July 19, 1988

structure are going to be built. I would sooner be older and less wise than a puking babe, Mr. Speaker.


Some Hon. Members:: Oh, oh!


Mr. Nystrom:: That wasn't even funny. Flora is embarrassed.


Mr. Speaker:: The Hon. Minister.


John Carnell Crosbie: I withdraw the words "puking babe" and change them to mewling babe, Mr. Speaker.
With reference to the question, the free trade agreement does not dictate what price the oil from Hibernia can be sold at, or the price of electricity. It can be sold at whatever price a willing buyer will pay for the oil or electricity. There is no impediment at all. In fact the free trade agreement helps this development because of course there is now an assured market in the U.S. for this oil if it is not all sold in Atlantic Canada.
Some 110,000 barrels a day will come from Hibernia, and that is 60 per cent of the capacity of Atlantic Canada. As a result of Hibernia will come Terra Nova, and Ben Nevis, and all of the other fields out there will be developed. For the next 100 years Newfoundlanders will experience prosperity such as they have never experienced before.
Fortune has turned for Newfoundland because of our Prime Minister and our Government, and Premier Peckford and his Government, not because of the saboteurs and people who never take a risk on the other side of this House!


Some Hon. Members:: Hear, hear!


EFFECT ON NEWFOUNDLAND
Jack Harris: Mr. Speaker, the province of Quebec has used the availability of low cost energy to attract industry for many years. Much of it is derived from the Churchill Falls hydro power. This resulted in significant economic activity, in the pulp and paper industry, and aluminum, and magnesium smelting, to name just a few.
Why is Newfoundland limited to the development and export of energy, watching it flow out of the province forever, this time from 200 miles away? Why is Newfoundland being denied this economic development strategy which has worked so well for Quebec? Does the Minister not realize that Article 904 of the trade deal will forever deny industrial development in Newfoundland and Labrador based on our abundant energy resources? Will he not admit that there really is prohibition of a two-price system for oil which would allow Newfoundland to use it to develop its own industry?


John Carnell Crosbie: Mr. Speaker, Newfoundland can purchase the oil. Atlantic Canada can purchase the oil. Canadians can purchase the oil. Americans can purchase the oil. Germans can purchase the oil. Japanese can purchase the oil. They can all purchase the oil at
Oral Questions
the highest price the market will pay. That is what they can buy the oil for.
With respect to jobs, the Atlantic Accord is grandfathered. The free trade agreement does not apply to it in any event with respect to the provisions for employment and performance and benefits. Even if it did, appropriate packages could still be there.
There is going to be work done in Quebec. There are going to be thousands of jobs created in Quebec shipyards as they construct modules there. There are going to be hundreds of jobs in engineering in Alberta and Ontario and right across this mighty nation. Some $5 billion is going to be spent, much of it on goods and services.


Some Hon. Members:: More!


John Carnell Crosbie: This is a national project of which Canadians can be proud!


Mr. Speaker:: The Hon. Member for Cape Breton-The Sydneys.


John Carnell Crosbie: There is not one part of Canada from one end of the country to another that is not going to benefit from our Prime Minister's leadership in carrying out his promises to the voters!


Some Hon. Members:: Hear, hear!


Mr. Speaker:: The Hon. Member for Cape Breton-The Sydneys.


REFINING OF OIL
Mr. Russell MacLellan (Cape Breton-The Sydneys):: Mr. Speaker


Some Hon. Members:: We want George! We want George!


Mr. Speaker:: The Hon. Member for Cape Breton-The Sydneys.


Russell Gregoire MacLellan: Mr. Speaker, my question is directed to the Hon. Member for St. John's West. The Statement of Principles gives no indication that any of the oil is going to be refined in eastern Canada, at Come-By-Chance or any other refinery. Nor do we have any indication that any of it is going to be sold in eastern Canada, let alone Newfoundland itself. In fact a federal official says it will probably be sold on the Atlantic seaboard of the U.S.
Why is it that the Minister cannot at least give us some assurance, in spite of the free trade agreement which he says will not allow us to dictate where the oil is going to wind up, that at least Newfoundland will be able to purchase some of the oil produced on its own territory?

July 19, 1988
Oral Questions


John Carnell Crosbie: Oh, Mr. Speaker, the inconsistency of it! The first two questioners from the Liberal side say it is all a bluff, it is not going ahead, it is just a statement of principle, there is no legally binding agreement. Then the next questioner gets up to complain that the oil not yet produced is not going to go to Canadian refineries, it is going to go somewhere else in the world. That's inconsistency.
The oil will go to Canadian refineries if we want it to go to Canadian refineries. If someone else will pay more for it, it can go to their refinery.
The Member is right that there is going to be oil. His comrades are wrong, wrong, wrong, just as they were wrong from 1980-84, sitting by, doing nothing while Newfoundland was stabbed in the back.


Russell Gregoire MacLellan: Mr. Speaker, I am not surprised the Minister does not know anything about oil because it is obvious his speciality is wind power.


Some Hon. Members:: Hear, hear!


Some Hon. Members:: Oh, oh!


JURISDICTION OVER RESOURCES
Russell Gregoire MacLellan: Mr. Speaker, the Government has said it wants Newfoundland to be able to control its own resources. Yet the agreement-or the Statement of Principles, I should say, excuse me-says that the project shall be exempted from any production prorationing or other restrictive programs.
That means that Newfoundland was forced to give up jurisdiction over its own resources so that any contract that may come as a result of a potential or possible agreement will have complete control.
Why did the federal Government force Newfoundland to give up jurisdiction over its own resources while telling it it would have them?


John Carnell Crosbie: Mr. Speaker, no one was forced to do anything. This was a voluntary agreement. It was Mr. Trudeau's Government, helped by the hon. gentleman opposite, that tried to force Newfoundland, and where did that get them? It got them where they are now, on the other side of the House.
No one is forcing Newfoundland. Newfoundland is going to get, for example, 1,100 direct permanent jobs and 2,426 indirect jobs. In the peak year, 1992-1993, it will create 8,900 jobs in Newfoundland.
Newfoundland now has an unemployment rate of 17 per cent. That is why the Prime Minister has been so supportive in this project which he has carried out in accordance with the Atlantic Accord. Our Prime Minister was described by
Shakespeare in Measure for Measure. "He was ever precise in promise-keeping."


Brian Vincent Tobin: "Oh, what a tangled web we weave,
When first we practise to deceive!"


John Carnell Crosbie: You've had it, you've had it.


Brian Vincent Tobin: We'll see about that. I'll meet you in Corner Brook. I am waiting for you, Crosbie.


John Carnell Crosbie: Bring out the stretchers.


Mr. Speaker:: I am reminded of what Burns said:
Oh wad some Power the giftie gie us To see oursels as ithers see us!


Some Hon. Members:: Hear, hear!


CANADA-UNITED STATES FREE TRADE AGREEMENT-CONTINENTAL CONTENT RULE
Mr. Joe Reid (St. Catharines):: Mr. Speaker, my question is directed to the Member for St. John's West, the Minister responsible for International Trade and the champion of Atlantic Canada.


Some Hon. Members:: Hear, hear!


Joseph Lloyd Reid: John Dingell, the representative of that automobile manufacturing State of Michigan and Chairman of the United States House of Representatives Committee on Energy and Commerce states that his bottom line with respect to the free trade agreement is that there must be a 60 per cent North American content rule. Many automobile makers in this country support that proposition.
If automobile producers on both sides of the border support a 60 per cent continental content rule, why do we have to wait till next year or "sometime maybe"? Why can we not make that amendment to this agreement now?


John Carnell Crosbie: Mr. Speaker, this is the first intelligent question we have heard in this Question Period.


Mr. Boudria:: That's more than we can say for the answers.


John Carnell Crosbie: The free trade agreement rule of origin requires that at least 50 per cent of the direct costs of manufacturing be incurred in Canada or the U.S. That is a more demanding rule than is presently in effect. At the present there is included in that calculation overhead, advertising, and administrative expenses. Under the new rule none of those categories are included.
July 19, 1988

Therefore, the rule of origin now requiring 50 per cent is equal to at least 60 to 70 per cent of the cost under the present rules. Therefore, we have made quite a stride forward already under the free trade agreement.
Finally, when this was discussed with the Americans they would only agree to do this if certain provisions for the enforcement of the rule were weakened, which would have made it very difficult to enforce the content rule. Therefore, there was no satisfactory agreement arrived at with them. We have the 50 per cent, but our 50 per cent is equal to 60 or 70 per cent today. I trust the honourable "sleekit beasties" opposite understand that.


ATOMIC ENERGY OF CANADA LIMITED
Lorne Edmund Nystrom: Mr. Speaker, my question is directed to the Minister of Energy, Mines and Resources. I have here a copy of a document prepared for AECL by the Ridley Research group of Toronto. They targeted some 20 environmental groups for surveillance, shadowed these groups, and did research on them.
Did the Minister approve this investigation? If he did, why did he approve it? If he did not approve this, what action is he taking to discipline AECL?
[ Translation]


Marcel Masse: Mr. Speaker, I was informed of yesterday's statement this morning and I asked AECL officials to explain the situation. I was told, first, that this was public information quoted from articles in Canadian newspapers and magazines; second, that AECL had no plans whatsoever to create any group to organize the phoney promotion of environment positions. The House and the Hon. Member particularly can be assured I will give this matter due consideration. It is important and I will meet personally with AECL management to make sure that Crown corporation's behaviour towards Canadians is above reproach.


Lorne Edmund Nystrom: Mr. Speaker, in this document there was some reference made to personal conversations between some of the people who were investigated, which was probably not culled from newspaper articles. At two o'clock this afternoon Mr. Ian Munford told one of our staff that they had filing cabinets full of documents on these groups.


REQUEST FOR PUBLIC INQUIRY
Lorne Edmund Nystrom: Since those environment groups asked for a public inquiry on that issue, Mr. Speaker, I wonder whether the minister is now prepared to
Oral Questions
order that inquiry and make public all the information concerning that matter?


Marcel Masse: Mr. Speaker, I can assure the House I take this question most seriously, and I must first meet with AECL management before committing myself publicly to the position the Hon. Member is suggesting.


FISHERIES
Mr. Dave Dingwall (Cape Breton-East Richmond):: Mr. Speaker, my question is directed to the Minister of Fisheries and Oceans. Yesterday the Minister told the House that Clearwater Fine Foods received additional enterprise allocations for vessels between 65 and 100 feet. He stated further in Hansard:
-Clearwater is not willing to continue to employ these workers, notwithstanding the fact that there are fish available to Clearwater's plant if Clearwater chose to go out and catch them.
Would the Minister of Fisheries and Oceans explain to the House and the 310 workers affected at Highland Fisheries in Glace Bay what he meant by that statement? Will he also explain why he refuses to grant an enterprise allocation to that particular plant for boats 65 feet or less in Glace Bay?
The workers wish to know the facts. The community wishes to know the facts surrounding this most difficult situation.


Hon. Thomas Siddon (Minister of Fisheries and Oceans):: Mr. Speaker, as I indicated yesterday, I certainly share the concern being expressed by the workers of the Highland Fisheries plant.
We have received representation from Clearwater Fine Foods seeking additional allocations to maintain supply to this plant. The Hon. Member knows that the enterprise allocations are dispersed each autumn and according to criteria of fairness to ensure that all plants receive adequate supply within the limits of available quotas. That process has been followed in this case.
The company in question has several thousand tonnes of quotas available. In 4VN, for example, there are 4,000 tonnes of inshore groundfish; 4VSW, 7,800.
The offshore enterprise allocations of June 18 left 2,100 tonnes of groundfish for Clearwater and 750 tonnes of groundfish for the 65 to 100-foot category.
In a nutshell, there are ample quotas available to this company. The fact is that the four vessels originally based at

July 19, 1988
Oral Questions
the Highland Fisheries plant have been moved to southwestern Nova Scotia by the company and are catching fish in that area and delivering them to the Port La Tour plant as a matter of corporate policy.


REQUEST THAT MINISTER INTERVENE
David Charles Dingwall: Mr. Speaker, I thank the Minister for outlining those facts for Members of the House, the workers, and indeed the community at large. However, the Minister of Fisheries and Oceans knows only too well that his Government has assisted Clearwater Fine Foods on a number of proposals to the Government of Canada. It has provided a great deal of funding for the modernization and building of a new fish plant at Highlands in Glace Bay, thereby helping the corporate sector.
Will the Minister not now intervene on behalf of those 310 workers at the fish plant in Glace Bay and order the senior management of Clearwater to come to his office with a proposal which is both sound and realistic, and order them to put that plant into full operation? In view of the fact that the Government of Canada has spent money at that plant and has given money to this multinational corporation, will he not now do that for the workers affected?


Thomas Edward Siddon: Mr. Speaker, of course the Hon. Member is referring to the unfortunate fire that devastated the Glace Bay plant some three years ago, which led to assistance by this Government to reconstruct that plant prior to its acquisition by Clearwater Fine Foods last year.
I would expect that the management of Clearwater Fine Foods, who have received many allocations in other species, particularly in the area of special allocations in shrimp and offshore clams, et cetera, would live up to their obligation to keep that plant open and keep these employees working. I will convey such a representation to the company.


HOUSING
Mr. Neil Young (Beaches):: Mr. Speaker, my question is directed to the Deputy Prime Minister. He will know that the major banks in Canada have increased their mortgage rates on five-year mortgages to 11.75 per cent, which will make it even more difficult for people in areas like Toronto to get into the housing market. What steps is the Government taking to control mortgage rates? Second, what steps has the Government taken to free up either unused or under-utilized Crown lands in the city of Toronto for the construction of affordable housing?


Thomas Hockin: Mr. Speaker, I thank the Hon. Member for his question. In order to control mortgage rates the Government is making sure that inflation does not get carried away. The inflation rate outside of energy and food has been 4.8 per cent in the last five months. This high rate is a problem. We want to avoid the 22 per cent interest rates we had in 1982. We want to avoid the situation that Canadians faced in 1981 and 1982. We want a moderate monetary policy and that is what we are pursuing.


CN LANDS
Neil Young: Mr. Speaker, the Minister will know that an annual income of some $98,475 is required to get a house selling on the market now for about $230,000. He knows that last week the City of Toronto made a proposal to build affordable housing in the downtown market area, and that some of those properties are owned by the federal Government through CN.
Is the Government talking to CN to make sure that those properties are handed over to the City of Toronto at a reasonable price or at no cost at all, in order to build that kind of affordable housing that is being proposed by the City of Toronto?


Mrs. Shirley Martin (Parliamentary Secretary to Minister of Public Works):: Mr. Speaker, there is probably nowhere in Canada where growth and prosperity are more noticeable than in the city of Toronto. Certainly this has had an effect on the housing market there.
The Minister is well aware of the concerns of the Hon. Member and has already met with the Minister of Housing for the Province of Ontario. They have looked at available options and are evaluating the situation.


AIRPORTS
John V. Nunziata: Mr. Speaker, my question is directed to the Minister of Transport. It concerns the disastrous and chaotic situation with limousine service at Pearson International Airport in Toronto.
A few days ago the Minister's officials issued 35 new permits to five existing companies without tender and without advertising. The Minister knows that the total street value of these permits is over $4 million.
Why did he issue these 35 new permits without tender, without advertising? Can he explain why individuals were not allowed to tender or bid for these permits? Will he explain to the people of Toronto what the pay-off was?
July 19, 1988


Hon. Benoit Bouchard (Minister of Transport):: Mr. Speaker, that is the same type of question that Hon. Member asks in the House, in which he hints at something without having any proof. Everyone knows that in Toronto presently it is very difficult at Lester B. Pearson Airport. Indeed, on an urgent basis we issued 35 new permits to the existing companies. At the same time, however, I can assure the House that we have already advertised in The Toronto Sun, The Toronto Star and The Globe and Mail 35 new permits that will be tendered next fall.


REQUEST THAT MINISTER REVOKE NEW PERMITS
John V. Nunziata: Mr. Speaker, the Minister has made the situation worse at Pearson International. I do not think he realizes that he has given these five companies a windfall of over $4 million.
Will the Minister revoke these 35 permits and issue all permits on a tendering basis? Will he allow for a fair system so that all individuals and companies will be able to bid fairly for these lucrative permits at Pearson International Airport in order to ensure that the travelling public is better served?


Benoît Bouchard: Mr. Speaker, again the Hon. Member is trying to hint at something when he knows that there are some conditions to those 35 new permits. I hope he knows that, otherwise he should not ask the question. Those conditions will guarantee, for example, that a permit cannot be transferred for any kind of reimbursement.
I repeat, in the fall 35 new permits will be issued by tender. It is quite possible that with Terminal 3 we will do the same operation next spring or fall. First we have to give the best service to people in Toronto. That is exactly what we are doing.


EXTERNAL AFFAIRS
Mr. Bill Blaikie (Winnipeg-Birds Hill):: Mr. Speaker, my question is directed to the Secretary of State for External Affairs. Today marks the ninth anniversary of the Sandanista revolution in Nicaragua. For some nine years Canada has not had any diplomatic representation in Nicaragua.
Given the unfortunate deterioration of events in Nicaragua recently between the United States and the Sandanista Government, and given the recommendation of the special committee on the peace process in Central America to establish at least a charge d'affaires if not a full ambassador in Managua, is the Government prepared to act on that recommendation and move toward placing someone in Managua on behalf of Canada?
Oral Questions
Right Hon. Joe Clark (Secretary of State for External
Affairs): Mr. Speaker, I thank the Member for his question, and himself and other members of the committee for their work. At this stage I can only report that we are considering the recommendations of the committee of the House that travelled to Central America and I cannot give him today the assurance he seeks today.


REQUEST FOR EARLY DECISION
William Alexander (Bill) Blaikie: Mr. Speaker, I would hope that this kind of action would be forthcoming very soon. The Government appears to have moved expeditiously to restore relations with Iran. I would hope that in the very near future the Minister would be able to announce that a new relationship has been entered into with Nicaragua.
Given the situation in Nicaragua and the fact that the peace process is in such a fragile state of affairs at this point, making Canadian participation on the ground even more important, could the Minister say when the Government intends to make up its mind? There is an element of urgency to Canadian involvement here.


Right Hon. Joe Clark (Secretary of State for External Affairs):: Mr. Speaker, the report came down a matter of weeks ago. It was welcome. I am considering its recommendations and we will act on some of them as quickly as we can.
I think the Hon. Member would agree that, important as it might be to have an enlarged permanent diplomatic presence there, it is also very important for us to try to do everything we can to ensure there is some new life injected into the peace proposal in that region.


FISHERIES
Mr. Ted Schellenberg (Nanaimo-Alberni):: Mr. Speaker, the Minister of Fisheries and Oceans is aware that the Georgia Strait Chinook fishery is important to the British Columbia economy. He is also aware of the declining number of Chinook available to fishermen. With the reluctant co-operation of the sports fishing community, he has acted to save those Chinook by implementing a tagging program, spot closures, and size restrictions. Now the Minister has received a recommendation that his Department initiate a policy of non-retention. In other words, fishermen can have all the fish they can't catch. Surely the Minister has no intention of bringing in catch and release regulations on Georgia Strait Chinook?


Thomas Edward Siddon: Mr. Speaker, I am sorry that I cannot give the Hon. Member that assurance at this time. As the Hon. Member knows, the

July 19, 1988
Broadcasting Act
Chinook stocks in the lower Georgia Strait rivers have declined drastically over the past 20 to 25 years to a level of some 4,000 fish returning to these rivers last year as compared to over 30,000 in the mid-1950s. Our scientists tell us that these stocks are threatened with extinction if we do not take strong management initiatives, and we have asked all sectors to absorb a 20 per cent cut in their harvest this year of these important and magnificent Chinook stocks, compared with last year.
We have, therefore, introduced a minimum size limit of 24 inches, so that we already have a non-retention fishery for Chinook smaller than 24 inches. I will be looking carefully at the catch rates and the strength of this stock as we approach the autumn months before making any decision as to whether or not a non-retention fishery might become necessary later in the year.


Mr. Speaker:: The final question will be from the Eton. Member for Notre-Dame-de-Grace-Lachine East.


CANADA-UNITED STATES FREE TRADE AGREEMENT-WATER RESOURCES
[Stage Direction]
Hon. Warren Allmand (Notre-Dame-de-Grace-Lachine
East): Mr. Speaker, my question is directed to the Minister for International Trade. This morning the Rawson Academy of Aquatic Science, a non-partisan, independent association of scientists and professionals, made a very thorough, comprehensive and scientific case that fresh water is in fact included in the Canada-U.S. Free Trade Agreement. It said that the agreement gives the United States substantial rights to our water not given under GATT, and that the dire consequences will only be known in years to come.
Considering the warming of our planet due to the greenhouse effect and the growing shortage of water, and considering the fact that the Government says it is opposed to the export of water, why does the Minister not make this thing absolutely clear by amending the agreement so that there is a provision that fresh water will not be covered by the agreement? Why will he not agree to that?
John Carnell Crosbie: Mr. Speaker, there appear to be different opinions on this matter because I can refer the hon. gentleman to a study done by Mr. Frank Stone of the Institute for Research on Public Policy, a well known, respected and independent group. Mr. Stone is the author of "Canada, the GATT and the International Trade System". He has had a long career in the Department of External Affairs. He represented Canada at the GATT and represented us in negotiations on the Canada-U.S. Agreement on Great Lakes Water Quality. I will quote what he said:
The free trade agreement. .. has nothing at all to do with the diversion or inter-basin transfer of water.
Furthermore, he said:
Water diversions have never been discussed in the GATT and any suggestion that GATT covers water diversions or inter-basin transfers would be hooted down in Geneva by the GATT member countries.
So, Mr. Speaker, let me repeat, large scale water projects are not part of the FTA. There is nothing that forces Canada to sell water or build pipelines or canals to divert water and, as was said earlier in this House, this is the hon. gentleman's red herring.


Mr. Allmand:: Make it clear, John. Don't leave it to chance.



GOVERNMENT ORDERS


Hon. Flora MacDonald (Minister of Communications) moved: that Bill C-136, an Act respecting broadcasting and to amend certain Acts in relation thereto and in relation to radiocommunication, be read the second time and referred to a legislative committee.
She said: Mr. Speaker, I am very pleased to be speaking in this debate this afternoon. I say that because what we are doing is moving steadily forward on a process which was begun some three years ago with the establishment of a task force to review the broadcasting system of this country, the Caplan-Sauvageau task force. There were then many weeks and months of detailed study by the parliamentary Standing Committee on Communications and Culture, with the intervention of many individuals and organizations all across the country to bring to fruition a new Broadcasting Act for Canada.
When this broadcasting Bill received first reading just a few weeks ago, I stated at that time that it contained vital measures which would affect for many years what Canadians viewed on their television screens and listened to on their radios.
Broadcasting, without question, is the most pervasive cultural medium in the country. That is why I am convinced that Bill C-136, the new Broadcasting Act, is far more than just a set of business criteria governing an industry. It goes to the very heart of our culture and of our country.

I am pleased to have an opportunity to tell my colleagues in the House how important this Bill is. I will be telling them why I think it ought to be passed quickly.
July 19, 1988



Clause 3 of the Bill is, of course, the key article and is fundamental to understanding the thrust of Bill C-136. It is a statement of principles. It states clearly that radio frequencies are public property and that broadcasting is a public service "essential to the maintenance and enhancement of national identity and cultural sovereignty", irrespective of the method of transmission. The broadcasting system, as stated in Clause 3, should serve to "safeguard, enrich and strengthen the cultural, political, social and economic fabric of Canada". These statements, and the redefinitions of broadcasting terms, represent a recasting of the regulatory landscape to reflect the dynamics of modern Canadian society.
The influence of broadcasting is known to all Members. The power of radio and television to inform, to sell, to mold opinions, to create personalities, to provide people from coast to coast with a shared experience is enormous. It is unparalleled.
While this Bill seeks to carry the broadcasting industry into the 21st century, it also recognizes the central role that it plays in the lives of most Canadians. For example, in just one week a typical Canadian listens to between 18 hours and 24 hours of radio and 24 hours of television. It is therefore fundamentally important to our political and our cultural sovereignty that our broadcasting system be an accurate reflection of who we as Canadians are, how we behave and how we view the world.
In addition to these social considerations, there are other external pressures threatening the broadcasting system, pressures endangering the ability of our broadcasters to remain competitive and to explore new ways of contributing to the choices of programming that are available and must be available to all Canadians.
As you know, Sir, the existing Broadcasting Act was passed in 1968-20 years ago. It is based on one technology, the technology of over-the-air broadcasting transmitters. New technologies, ones which do not use this spectrum, are increasingly making obsolete current definitions of what constitutes broadcasting as written into the 1968 Act. New technologies have emerged which are not included or defined in that piece of legislation and are therefore making that Act increasingly obsolete.
Existing technologies, ones which have come into being in more recent years such as cable and satellite dishes, do not fit easily into the 1968 Act. We have had to turn to the courts again and again to determine whether they fall within the jurisdiction of existing broadcasting legislation.

The courts confirmed that the 1968 legislation applied in certain cases but not in others. Every time the scope of these definitions gets narrower the Government loses some of its
Broadcasting Act
ability to set the socio-cultural aims of broadcasting on behalf of all Canadians.

We face the challenge of drafting legislation that can deal with the technology of today, as well as the technology of tomorrow. Our solution is not to add to existing definitions; it is to allow broadcasting technology to evolve by freeing it of legislation that defines the medium of technology.
The approach of Bill C-136 is to be technology-neutral. Broadcasting is defined by content, not by the way it is received by the audience. The signal is not the key. What the signal carries is the important factor.
This technology-neutral approach means that distribution systems can use the technology of their choice. It also ensures that Bill C-136 will keep its legal foundation in the face of future technological development, something which is very critical if the institutions that govern the broadcasting system are not to have their power eroded.
There are increasing societal pressures which demand attention as well. Since 1968 our society has evolved and has changed in many areas. For instance, there is now the Canadian Charter of Rights and Freedoms, the changing role of women, Meech Lake, the recognition of distinct French and English-speaking societies, the growing awareness of our multicultural diversity, the recognition of aboriginal claims and rights-all these developments are changing how we approach broadcasting and what is expected of the medium. The pressure for legislation which recognizes this evolving reality is growing upon us every day.

The particular context of English and French broadcasting commands our attention as well.
The presence of two official languages is more than a simple constitutional reality, it is a fact throughout our broadcasting networks. Bill C-136 explicitly acknowledges the existence of our two official languages as well as the fact that the economic and cultural reality is not the same for English and French broadcasters, that their requirements may differ.
The Bill stipulates that the programming provided by the CBC should reflect the different needs and circumstances of each official language community, including the particular needs of English and French linguistic minorities.
The CRTC must apply these regulations with flexibility and take into account the different characteristics of English and French broadcasting. For instance the Bill has a clause concerning the establishment of a wide array of English and French broadcasting services throughout the country. With this clause the CRTC will be in a position to require that more French services be made available to francophones outside Quebec, in addition to those provided by Radio-Canada. This clause also shows that the Government is committed to expand services intended for official language minorities.

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Broadcasting Act

With the rapid progress in broadcast technology Canadians are demanding an ever greater variety of choice. Our broadcasting system provides a truly remarkable range of radio and television signals. There are literally hundreds of radio signals in the country. Cable television carries dozens of channels. The mix includes private and public stations, both in English and in French, as well as Canadian and foreign programming.
However, in their demands for more and better choice, Canadians are sending a message that is loud and clear. It is: "We want access to increased Canadian choice especially in prime time." That is the message. That was the message that I took to the Standing Committee on Communications and Culture in February of 1987 when it began studying the Caplan-Sauvageau report.
You may recall, Mr. Speaker, that the Government had just received the report of the task force on broadcasting policy, a report which has been referred to many times in this Chamber and elsewhere. This report was referred to the standing committee for examination and for recommendations. The committee studied it in detail over a period of months-indeed, for one year and a half. I said at the time that I first addressed the committee on this subject that I was convinced that the Canadian broadcasting system is the nervous system of our country. It links us together. I told the standing committee at that time that, more than ever, "broadcasting must be seen as a fundamental part of cultural policy."
It was clear then, and it remains clear today, that any initiative must set out the over-all broadcast framework policy, the broad policy under which we must operate, outlining the objectives of the broadcasting system as a whole, as well as the mandate, structure, and powers of both the CRTC and of the CBC.
As I told the standing committee at that time, our ultimate concern must be with the content of programming that is and must be available to Canadians. We must address both the quantity of Canadian programming and its quality if we are to promote viewing acceptance by the public. If we are to have the audiences that we think are vital to Canadian programming we must be sure of the quality of that programming as well as its quantity.
A nation's fictional repertoire is the life-blood of its culture. We must never underestimate the impact of dramatic television programming for, within it, I would say we find the surest expression of our cultural values, of the way we live, as well as our collective memory.
We do indeed share the life experiences of people in other countries. But, as Canadians, we experience them in our own way. We must ensure that we have the opportunity to share this experience with each other, and to appreciate the heritage we enjoy as Canadians-and we must do it, Mr. Speaker, in prime time.
Bill C-136 promotes this imperative. It will strengthen Canadian programming; it will enrich our culture and our national identity; it will permit us to embrace new technologies; it will provide the choices that Canadians expect and want; and it will strengthen Canadian broadcasting.
I would like to make it very clear that this Bill does not seek to limit choice and does not restrict choices. But to ensure that competitive Canadian programming is a central component of an even greater choice of viewing and listening options, the Canadian choices must be there. This means additional Canadian drama and variety must be seen and must be shown in prime-time English television, and also improvements in the production quality of French-language television.
I want to make it very clear that this legislation does not erect barriers against programming that is not Canadian. Canadians now, for the most part, are able to access programming directly from a variety of sources in the United States. What we are talking about here is the encouragement of the production of more Canadian programming by a broadly based approach involving all the players in the broadcasting system. I want to talk about those various players for a brief time, because so often in the past we have considered the players being solely the Canadian Broadcasting Corporation. We must go beyond that.
The Canadian Broadcasting Corporation is vital in this enterprise. Bill C-136 makes clear the central role of the CBC and, in particular, its responsibility for the provision of Canadian programming. The CBC will serve Canadians by providing a distinctly Canadian viewpoint in its programming, including news, variety, drama, and sports.
The Government believes very strongly that Canadians deserve genuinely Canadian popular choice programming which may be different in emphasis from the offerings that private commercial stations give us. We are giving the CBC the financial means of creating programming aimed at the interests of the Canadian audience. We are increasing the CBC's budget by $35 million a year above and beyond its annual increase for inflation. That $35 million is money that is directed to programming. Of that $35 million, $20 million is targeted to help the CBC meet its goal of 95 per cent Canadian content on prime-time English television. The other $15 million is intended to help Radio-Canada increase the production budgets for French language programs. The CBC will remain what it has always been: the principal vehicle for cultural expression in Canada.
We are also strengthening the accountability of the CBC, as recommended by the Standing Committee on Communications and Culture. At the same time, we are guaranteeing the CBC's independence in programming and operations. I want to underline, Mr. Speaker, that the corporation's freedom of expression and its journalistic, artistic, and programming independence is safeguarded for the first time in Bill C-136; it is written into the legislation.
July 19, 1988

The mandate of the CBC, as contained in this Bill, will mean that the CBC will lead in providing authentically Canadian choices, particularly in popular drama in both official languages. But the programming responsibility is net the CBC's alone. I mentioned the role of all of the players in the broadcasting system, and so I want to make it clear that the responsibility for Canadian programming does not rest solely with the CBC. For the first time private broadcasters have a specified legislated responsibility to contribute as well. The Bill contains a number of new instruments for the regulatory authority so that it will be better equipped to supervise the broadcasting system without excessively intrusive procedures. The new powers that are accorded to the CRTC will make this possible.
It is important to understand that broadcasters do not have the option of not doing, or doing less Canadian programming. That option does not exist for them. They cannot say that they will not do more, or they will do less. That is not an option. We are putting before them the means by which they too as private broadcasters can increase their Canadian content.
This Bill is a new approach. It gives the CRTC the tools to work more closely with private broadcasters so as to increase Canadian programming in vital but under-achieved target areas such as drama. The legislation includes the basis for a performance incentive which encourages individual broadcasters to increase the amount of specifically targeted areas of programming, notably drama, in a way which best responds to their economic capabilities. That is above and beyond the Canadian content that is now expected of them.
We will ask the CRTC to hold hearings on applying the performance incentives and to recommend the best use of the incentives. This innovative new tool will give English language broadcasters in particular an added incentive to invest in quality Canadian programming. It is worth noting that private broadcasters themselves say that quality Canadian programming makes good sense. It distinguishes them from the competition. Canadians have said time and again that they will watch quality Canadian programming. Canadians have shown it. I would say to you that French-speaking Canadians have done so and shown so for decades,
Bill C-136 also provides an Alternative Programming Service to meet needs not fulfilled by existing mass entertainment broadcasters. This service has been discussed in many ways: by the task force, by the parliamentary committee and by advisers to my Department from the industry. This service will provide the kind of programming that does not appear, or only rarely appears, on existing television outlets. A key role of the Alternative Programming Service will be the portrayal of Canada's multicultural nature to Canadians as a whole.
Canada, as you know, does not have a uniform single culture but a diversity of cultures. The Alternative Programming Service mandate will provide all Canadians with a more
Broadcasting Act
realistic view of the multicultural realities in all parts of the country, and that is so critically important as the diversity of our country becomes greater and as the strengths and the benefits that that diversity provides become better known. This new service's innovative programming will complement large audience programming, and it will cater to tastes and to interests hot provided for by mass producers. The process of establishing the Alternative Programming Service should be completed within two years.
Programs from across the country, regional programs, programs through the multicultural dimension, programs of the performing arts, all these will be part of the new service's specific mandate which is anchored in Bill C-136.
This Bill also recognizes the unique contribution which distribution services are making. While cable is the most common method of distribution, others are emerging. I refer specifically to subscription television, satellite master antenna television, multi-channel, multi-point distribution systems, and satellite direct-to-home, to name but a few of the new distribution systems that now exist.

Bill C-136 acknowledges that cable TV has expanded considerably since the Broadcasting Act became law in 1968, reaching into more than 70 per cent of Canadian households and altering the basic concept of broadcasting.
Time has come to define anew the role of cable TV operators. Are they just like ordinary companies, or should they be expected to play a wider role and shoulder heavier responsibilities in the field of broadcasting?
As it happens, cable TV companies are already actively involved in programming, particularly with respect to French broadcasting.
The Bill acknowledges the fact and provides that program producing distributors open access to non-affiliated services.

The CRTC is being given the power to mediate disputes between broadcasters and cable distributors. The distributors involved in programming will still be subject to CRTC approval and Control, and they will be required to meet the objectives of the broadcasting policy. That is written into Bill C-136. All distributors, whether involved in programming or not, will be required to continue to give Canadian programming a priority.
I would like to comment briefly as well on the way in which this legislation deals with the questions of fairness and access. The past two decades have been marked by a growing awareness of human rights. Canada has repatriated the Constitution and has entrenched within it a Charter of Rights and Freedoms.
The accessibility of broadcast media to all Canadians, the way in which broadcasting reflects Canadians to themselves,

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Broadcasting Act
and the fairness with which it handles different points of view, these are all addressed in this Bill.
This legislation also recognizes the needs of Canadians living outside of urban areas, recognizes the needs of aboriginal peoples, and the special needs of Canadians with physical disabilities.


Some Hon. Members:: Hear, hear!


Flora Isabel MacDonald: The Government has already announced a number of initiatives to bring distribution systems to small communities, communities that are more remote, and as well has undertaken to provide a satellite distribution system for the reading service of the blind.
I return to the need to stop the erosion of the institutions to regulate and direct the broadcasting system, because that is what has been happening in recent years.
Bill C-136 therefore does not base its definition of broadcasting in technology, but takes a technology-neutral approach.
The major participants in broadcasting can therefore expand and change with the most effective, the most profitable, technologies that they can utilize. Bill C-136 opens the door. It does not limit technologies in the way in which they can be employed, in delivering broadcasting services across the country.
Because it is not solely rooted in technology, the federal Government's ability to exercise its jurisdiction will again be firmly established and will not be challenged as technologies continue to change.
In summary, let me recapitulate why Bill C-136 is vital for this country. It establishes primacy for Canadian programming. It reflects the linguistic duality and the differences in English and in French broadcasting. It ensures that Canadian culture, Canadian tastes and society are reflected in programming and in operations. It provides all Canadians with access to a wide range of radio and television signals. It is technology-neutral and able to accommodate technological changes. It provides for an efficient and responsive CBC and CRTC.

With this Bill the Governement wants to promote our national culture and identity.

I want to say that I am very proud of this Bill. It has come about as the result of the work of a large number of people. The Prime Minister (Mr. Mulroney), the Cabinet, the members of the standing committee who worked for so many months, the Caplan-Sauvageau task force and all its members, the many Canadians who have appeared to express their views, individually and collectively, as organizations, have all had a major input into this piece of legislation.
I may say that no piece of legislation will ever satisfy everyone, in all of its details, but I am pleased with the initial response-whether it is from people in the media or organizations or groups across the country-to the way in which we are moving on this Bill. I am sure that it has been a collective effort and one in which I think the House can take a lot of pride. The Bill itself, I believe, will ensure the existence of a vibrant and dynamic Canadian broadcasting industry well into the 21st century. It will as well foster a cultural identity that is distinctively and uniquely Canadian. I am sure that that is what we all are seeking to attain.


Mr. Waddell:: Mr. Speaker, I rise on a point of order. Could I get unanimous consent to ask the Minister a question?


Flora Isabel MacDonald: That is fine with me.


Mr. Deputy Speaker:: Is there unanimous consent?


Some Hon. Members:: Agreed.


An Hon. Member:: No.


Mr. Deputy Speaker:: As unanimous consent has not been granted, we will resume debate. The Hon. Member for Mount Royal (Mrs. Finestone).


Mrs. Sheila Finestone (Mount Royal):: I have the sense that the Minister was prepared to answer, Mr. Speaker.


Flora Isabel MacDonald: Yes.


Sheila Finestone: I am quite pleased to rise to speak to this Bill. I acknowledge to the Minister that this has been a tour de force. There have been inputs from large sectors of Canadian society to the Bill itself. These people have not as yet had the opportunity to examine the actual Bill which, as I am sure the Minister will agree, was only tabled a couple of weeks ago.
The Minister should receive a medal for the star performance which I accord her for getting this Bill through Cabinet and for getting permission to have it on the docket at this fast rate. In that regard I think we are all quite pleased to see this Bill coming to the point of its natural rotation of every 20 years so we can have a new look at what is happening in this incredibly swiftly evolving and changing telecommunications world in which we live.
That being said, it meets the commitment of the Prime Minister (Mr. Mulroney) who during his campaign in August, 1984, undertook to see to a new communications legislation which the Minister is now bringing forward in the summer of 1988. I find the timing rather interesting and I would like to comment on that for a moment.


Mr. Boyer:: It is prime-time.


Sheila Finestone: It is prime-time? I wonder whether it is prime-time, Mr. Speaker. This is the summer which is a time
July 19, 1988

when people are out relaxing, not paying much attention to the public agenda. It is interesting to note that the public agenda of those matters, which I believe fundamentally touch the character, the nature and the kind of people we are as Canadians, has been addressed during the summer months. We came back here two summers ago for a criminal issue. Last summer we came back because we were being inundated with refugees and we had to address a new immigration Bill.


Richard Grisé: Thanks to the Senate we are still here.


Sheila Finestone: We addressed as well at that time the Meech Lake Bill. This summer we are dealing with free trade and now broadcasting.


Patrick Boyer: All this and more.


Sheila Finestone: If you look at the implication of what Canada is, who composes Canada, which the immigration and refugee Bills do, and if you talk about Meech Lake and the organization of this country, if you look at free trade and its potential impact on the future organization of this land, and then look at the broadcasting Bill, which as I think the Minister mentioned and which I would like to underscore, is one of the most powerful mediums of communication, education, information that impacts on society, you will note that here we are addressing this issue in the middle of the holiday season when there is very little interest about how we share and communicate with one another. I find this a little sad because we are talking about local, national and international future impacts.
This powerful medium, TV, radio and cinema form that part of our lives, and when you think about it, watching television is the number one leisure activity for Canadians. Canadians spend more than 24 hours each week on average in front of a television set. Each year Canadian children watch almost 1,000 hours of television compared to the 800 hours they spend in school. It is little wonder that they have an interesting perspective on what is Canada and how they will perceive things as they grow into adulthood and hopefully become interested in active political life. How will their thinking evolve with the impact of our public media on their lives and thought processes? Ninety-five percent of Canadians are radio listeners, spending 18 days a week on that activity. Two-thirds of Canadians say watching television is their favourite pastime, and more than 50 per cent of Canadians say that broadcasting is still their principal source of news and information.
1 suggest that this Bill, which the Minister, with a degree of pride that is well earned, brings forward today, is one that will have a fundamentally important impact on the sovereignty of this country. That is why it is of great concern to me.
The standing committee tried very hard to remain nonpartisan and non-politicized, although we had one unfortunate fall out over All-News. That aside, I think in general we have
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been of one mind with respect to how we should perceive this very important industry. We have all said that there is nothing wrong with having access to the wider world, notwithstanding the fact that there is an inordinate amount of American programming on our television screens. It is also very critical that Canadians have access to programs and movies, entertainment, information and enlightenment which represent our own cultural values. That is what we are missing. There are so many more hours of American news available which I think could have a very serious impact on us.
In order to remain as non-partisan as possible in this undertaking, I would like to put on record what some of the groups who have been looking at this Bill have to say. I am sure the Minister of Communications (Miss MacDonald) will listen and address these issues and concerns in the legislative committee, but which will be addressed to our standing committee sometime, I hope in the very distant future, but anyway-


Flora Isabel MacDonald: Don't say that.


Sheila Finestone: What has been said in Le Devoir? [Translation]
... in the Saturday July 16, 1988 edition of Le Devoir. The author of this article, Mrs. Esther Desilets, is Director General of the Canadian Institute of Adult Education. What happens to the CBC's mandate? That's the question she asks. And she adds:
The long-awaited Broadcasting Bill is the culmination of an extensive process of reflection and consultation which the Canadian Institute of Adult Education has followed closely.
There is reason to be happy, of course, that the Bill recognizes major achievements such as the leading role of the CBC and the public nature of the broadcasting system as a whole. However, the CIAE considers that the Bill has major faults which must be corrected if the present situation is to improve.

These are the observations where they find some errors or holes in the legislation which they feel need to be addressed.

The first is:
Political Control over the CRTC
The Bill proposes major changes concerning the CRTC. While reaffirming the need to put a single independant public agency in charge of regulating and monitoring the system, it does not increase its powers. It increases rather the powers of the Government and the Minister.
The Bill would enable the Government to issue directions concerning all the CRTC's activities except the granting and renewing of broadcasting licenses. As far as broadcasting licenses are concerned, however, the Government would be able to send back and reverse CRTC decisions. Furthermore, the Government could exempt broadcasters from certain provisions of the Bill.
Under the Free Trade Agreement, the Governor in Council will also have the power to issue directions to the CRTC as to the implementation and interpretation of the clause dealing with copyrights and integral rebroadcasting of American signals.

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Finally, upon request from the Government, the CRTC could require that stations broadcast programs which the same Government feels are urgent in nature and of great significance for the Canadian people. We can foresee already the possible risk of frequencies being used for political partisanship.
The legislation does not provide for any real public consultation mechanisms concerning these directions. The policies and regulations developed by the CRTC have always been scrutinized during public hearings. Well, government orders provide only for very limited consultation mechanisms.
While supporting the principale that our elected representatives and the Government are responsible for developing major broadcasting guidelines, we cannot agree with the proposed political control measures on the broadcasting system. This control is much more political than democratic in nature.
Private broadcasters.
It should be recognized, however, that some recommendations in the Bill will reinforce the power of the CRTC over private corporations. Private corporations will have to respect more CRTC's regulations and decisions, as a result of to the explicit power given to the commission to issue licensees with binding orders. The Commission will also be empowered to levy a performance fee for broadcasting certain types of Canadian programs. It is to be hoped that these new measures will prove efficient.
Finally we note that the real monitoring power of the CRTC will not be reinforced by an extension from five to seven years of the licence renewal period. In this area, we would prefer, as suggested by the CPCC, that the CRTC should issue more frequently license renewals of less than five-year duration.
A Canadian Broadcasting Corporation with a different vocation? The vital importance of the CBC is clearly reaffirmed in this Bill. Moreover, this recognition is reinforced by supplementary budgets. That is the most interesting aspect of the new policy.
We wonder however about the proposals which might alter the CBC's vocation. When we compare the clauses in this Bill with those in the 1968 legislation, we realize that such a possibility exists.
According to the current legislation, the CBC should be "a balanced service of information, enlightenment and entertainment for people of different ages, interests and tastes covering the whole range of programming in fair proportion".
According to Clause, 3(1 ){m) of this Bill, the Canadian Broadcasting Corporation, as the national broadcaster, should provide radio and television services incorporating a wide range of information and entertainment programming that is predominantly and distinctly Canadian.
What will happen to the CBC's mandate concerning the broadcasting of programs for people of different ages, sexes, cultures and tastes? It is stated further that in the evening, during prime time, CBC will offer Canadian programs which are likely to appeal to the widest audience and that such an effort is necessary to justify the subsidies granted by Parliament and obtain the advertising money it needs.
There is the mass audience appeal as opposed to the "large" appeal that CBC had before.

There is ample reference to TV dramas, as if that was the essential part of TV programming. What about news, public affairs, cultural programs? Is the CBC recognized a specific role in those areas?
A reading of the proposals suggests that the only aspect that would set CBC's programming apart from private sector programming would be the quantity of Canadian productions as compared to American productions.
It goes on to say:
In the area of news and programs to satisfy more diversified tastes and smaller audiences, they proposed alternative programming. Although in the legislation there is reference to alternative services in French and in English, in fact one English language service only is in play, the French speaking public having to be content with TV 5 and existing services.
What is the next question?
French language television.
The recognition of the specific nature of French-language TV is a welcome fact. But what is behind that principle? On closer look, the proposals would rather seem to increase the imbalance between services offered in French and in English. Although new English services are proposed, when it comes to French services the only proposal is for improvements to existing ones.
The policy declaration is based on the fact that French-speaking audiences already are getting from Radio-Canada and Radio-Quebec a programming that meets its tastes and special interests, and that soon TV 5 will be added to those services, while such needs are not covered on the English side, whence the proposal for an English-language alternative service.
It may not be warranted to multiply French language programming services because of the limited size of the French-speaking market. However, there should be an attempt at assessing the impact on the development of Frenchspeaking culture of the lack of new programming services in such strategic areas as news and culture.
Currently, the specific needs for specialized broadcasts of a major part of the French-speaking population are no more covered than those of the Englishspeaking public. Radio-Quebec, in the evening, increasingly tends to target the larger audience. TV 5's future programming will not either meet the requirements for alternative programmings services proposed in the legislation.
Measures to improve the quality of French-speaking programming will not have such a significant impact as is being implied. Of course, a $15 million budget increase over the next two years is an improvement. But, in view of the current imbalance-in the order of 50 per cent-between French and English-language production budgets, this measure seems to provide for a catching up rather than for real development.
In order to increase Canadian programming, the statement suggests incentive bonuses. These bonuses will have practically no impact on the French programs produced by the private sector . ..
. . . and I can even add on the English programs as well.
The performance incentives will be determined by the number of drama and variety shows produced by private broadcasters. But, since the French private broadcasters already transmit more than five hours of drama shows a week, which is more than the suggested minimum, they will not benefit from this incentive.
Only the additional credits granted to Telefilm Canada for French productions will in fact benefit the French language television community. It's clearly insufficient. Democracy not at stake
July 19, 1988

And then, she adds:
This Bill is leaving unresolved some major problems related to the whole issue surrounding the control and the democratic access to the broadcasting system. As far as broadcast time for regional communities, various social groups and women organisations is concerned, the Bill suggests no real measures. It also avoids talking about the concentration of media ownership, offering no solution to the problem relating to the joint onwership of distribution and programming undertakings. Also, no specific recommendations apply to community broadcasting.
This Bill respecting broadcasting, as presented, is unacceptable. Some serious deficiencies will have to be corrected if we are to improve the broadcasting system and allow it to develop in conformity with the relevant social and cultural objectives. The Government has to provide for the creation of a parliamentary committee to study this Bill.

I think that is one of the best summaries of the concerns. I recall raising many of those concerns at the press conference following the deposition of the Bill by the Minister.


Patrick Boyer: What does the Liberal Party think about the Bill?


Sheila Finestone: I said at the very outset what the Liberal Party thinks about the Bill. I suggest that my hon. colleague not worry; he will hear in parliamentary committee what we think about this Bill. I have already made my point of view known.
The Canadian Conference of the Arts has some concern about cabinet power of direction. Paul Siren, President of the CCA, expressed some unease with regard to the Cabinet's seemingly unlimited power of direction over the CRTC while maintaining the Government's power to set aside or refer decisions back to the commission. He said that either of these measures would have been sufficient safeguards but that both would give the Government undue control over the arm's length regulator.
We in the committee did not necessarily agree with that point of view, but I would advise the Minister that there are important and substantive groups which see problems other than those the committee indicated.
With respect to alternative programming, the Canadian Conference of the Arts was also disappointed with the estimated two-year delay in the setting up of an alternative programming service. Other concerns include the provisions to allow cable operators to become programmers and broadcasters. The lack of consideration for regional production and programming needs is underscored as well as the state of the CBC all-news channel. These are serious concerns which they intend to bring to our attention in the parliamentary committee.
With regard to the CBC, ACTRA said:
The extra money that will be phased in hardly makes up for the millions the CBC has lost in cut-backs. And while the CBC is expected to fulfil a wide mandate, the money to go forward just isn't there. In short, this part of the
Broadcasting Act
announcement doesn't exactly make my socks roll up and down. The CBC's parliamentary appropriation for 1988-89 is $119.6 million less than the appropriation for 1984-85 in constant dollar terms.
With respect to alternative programming, ACTRA said:
It deserves scrutiny, because unfortunately it may contain some pitfalls. The notion that Canada needs another outlet for Canadian production, particularly of the kind that has no current access to the broadcasting system, is a good one. But, if the mandate of the service is too narrow, and the funding insufficient, it risks becoming a ghettoized service ignored by the viewers. If implemented to genuinely serve Canadians equally, it may prove a success.
With respect to cable companies, ACTRA said:
Cable should not be in production because there are too many possibilities for unfair corporate concentration. We've maintained that separating programmers from cable distributors provides for a much healthier climate. It's a shame the Government doesn't see it that way.
With respect to the Minister's discussion about the Canadian Charter and equality opportunities for both women and minorities, allow me to bring to the Minister's attention that Media Watch has been following this new Broadcasting Act and is concerned about serious omissions.
The Standing Committee on Communications and Culture supported a number of the Media Watch representations. It was convinced that special employment equity measures were necessary. The standing committee recommended that the Broadcasting Act include provisions designed to increase significantly the number of women and minority groups at all levels within broadcasting until equitable representation is achieved.
In this new Act, the purpose for which operations and therefore employment may be scrutinize^ is obscured. The Government claims that it is recognizing human rights in provision 3(1 )(c)(iii), but it chose not to define in clear terms that operations and programming come under scrutiny for the purpose of determining whether principles of equality are reflected. The CRTC authority to make real change in terms of employment equity is undermined in this new legislation and women are once again faced with legal and administrative battles which they can ill afford. I would suggest that the same holds true for minority groups. I regret that the CRTC was not given a direct and specific mandate to apply employment equity as part of its responsibility.
We have heard from other groups, and 1 wish to cite a very interesting observation which was brought to our attention this morning as we were involved with the free trade agreement. It comes from the Stratford Festival Company and is signed by nearly 350 employees at all levels including actors, producers, seamstresses, tailors, cutters, et cetera. They are concerned about the free trade agreement and the specific cultural provision in Article 2005 which exemplifies the kind of sell-out of our national sovereignty which they believe to be taking place. They are particularly concerned about the notwithstanding provision of the agreement. The example they use relates

July 19, 1988
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to broadcasting. I hope the Minister will have an adequate answer for this example. They say:
If a future government were to introduce a broadcasting Bill that specified
greater Canadian content-
I know that is what the Minister wants and that is why she has put incentives into the Bill. They continue:
-U.S. commercial interests could claim loss of revenue (less "Dallas" "Cosby Show" etc. on Canadian TV channels). The U.S. government could assess that loss as $X millions and take "measures of equivalent commercial effect" in, let's say, the Atlantic fisheries. Our Atlantic fishermen would naturally be outraged by the cultural initiative. Canadian would be set against Canadian and of course the new broadcasting Bill would be dropped. U.S. corporate interests would prevail.
They elaborate on this perspective with respect to how measures of equivalent commercial effect can open the door to American corporate intervention and interest. I suggest that these are serious concerns which ought to be addressed.
In terms of aboriginal languages the committee recommended that the new Act recognize the right of Canada's aboriginal peoples to receive service in representative native language where numbers warrant and as public funds become available. We went through a whole presentation on this issue, but in the final analysis the legislation does not assure service in representative native languages. I will save the Minister from all the details of this matter, but I will certainly bring it forward in committee. The Government has failed to act upon the committee's recommendation that the CBC offer services in the aboriginal languages. The National Aboriginal Communications Society has expressed its dismay about the failure of the Government to act on the committee's recommendation.
This legislation does not set limits on foreign broadcasting services in Canada. Recommendation No. 58 was that the Act should be drafted to define the essential role of distribution undertakings, those being cable, as that of distributing Canadian radio and television services in English and in French, both public and private, with first priority given to public sector Canadian services, followed by private Canadian services with the exception of the "three plus one" services already carried.
The Bill should make provision for the carriage of foreign radio and television services only when the programming they provide is complementary to that available from licensed Canadian broadcasters and network operators. The Bill should also provide for priority to be given to the carriage of services in French in distribution undertakings that serve primarily Francophone subscribers.
I see nothing in the Bill that will enforce the provisions found in Recommendation No. 58. In fact, there is great disappointment about tiering and the amount of carriage of non-Canadian services that will be allowed on extended basic cable according to the Government's Bill. The Minister will recall that our standing committee recommended limits on
those foreign broadcasting services in Canada. The Government claimed that this would unduly restrict the access of Canadians to a range of international broadcasting services and that its purpose was simply to encourage more high quality Canadian shows.
I suggest The Toronto Star sums up that response in a very significant and succinct way when it said: "Do statements like that mean Ottawa has declawed its broadcast policies in the same way it weakened its film distribution Bill to overcome American objections?" Did Jack Valenti write the script for this performance as well?
Let us consider vertical integration of distribution undertakings. The committee stated the following in Recommendation No. 51:
The Act should provide that no distribution undertaking may have an ownership interest in, or be in common ownership with, a pay television, specialty or any other network programming service distributed on such undertaking on the basis of a contractual relationship between the licensed network and the distribution undertaking, or where the consent of the network or the distribution undertaking is required for carriage.
There was very serious and long debate about this area and how it should be addressed. The Government decided on inaction on vertical integration. It chose not to preclude distribution undertakings from participating in programming and from participating as broadcasters. The Minister has rejected our recommendation, our recommendation in the committee's sixth report, in its policy report, and the recommendation in the Caplan-Sauvageau report that they not be allowed to be programmers and vice versa. There is an inherent conflict of interest. I hope the Minister will be open minded in addressing this issue in the committee.
I have had much comment on the legislation that weakens the CBC's regional programming role and lacks definition of the community sector. We have made it quite clear that the broadcasting industry should address the private, the public and the community sector. I know the Minister responds by saying it is covered under local broadcasting, but it is not defined who is responsible or how the community sector will be financed and by whom.
Our Recommendations Nos. 22 and 23 suggest that the Canadian broadcasting system should play an active role in stimulating a Canadian consciousness and should serve the special needs of each geographic region in both official language groups by contributing actively to the exchange of information and expression among the regions and between French and English speaking Canadians. The system should acquaint all Canadians with the traditions, values, practices, and aspirations of each region of Canada. I have said that there should be a footprint in both French and English right across this land as part of the fundamental characteristics of this land.
Recommendation No. 23 was that the Canadian broadcasting system should encourage the development of Canadian expression, providing a wide range of programming that
July 19, 1988

reflects Canadian attitudes, opinions, ideas, values, and artistic creativity; displaying Canadian talent in entertainment programming; and offering information and analysis concerning Canada and other countries from a Canadian point of view.
I suggest to the Minister that by changing the mandate and description of the responsibility of the CBC that particular responsibility has essentially been emasculated. The legislation states: "It is hereby declared as the broadcasting policy for Canada that the programming provided by the Canadian broadcasting system should be varied and comprehensive, providing a balance of information, enlightenment and entertainment". The Government has removed "enlightenment" from the CBC's mandate, which is a serious responsibility. The Bill states that the system should reflect the regions rather than that each region should have a role.
As a result of the Government's cuts, CBC's service to the regions has been reduced by 28 per cent. Even the increase of $35 million a year to the CBC will do little to those Tory cuts.
Bill C-136 has weakened the CBC's regional programming role even more. The 1968 Act required the CBC to serve the special needs of geographic regions. Now the Conservatives only want the CBC to reflect Canada and its regions to national and regional audiences. That is a significant difference in responsibility and operation.
Other groups who have spoken to me are very concerned about the policy that fails to ensure a distinction between a made-in-Canada program and Canadian programs made in Canada. There is a very significant difference. The program Night Heat is an example. It is part of a move toward a North American broadcasting system about which we must be very careful as we analyze the impact of this Bill.
The requirement that individual broadcasters provide programming that is predominantly Canadian in character is proposed to be changed. As a result, the CRTC would be free to reduce its requirement that broadcasters maintain 50 per cent Canadian content and still be consistent with the new Bill's intent. The CBC description is reduced to distinctive. These descriptions are of fundamental importance. We see the Bill as paving the way for the Canadian broadcasting system to become more Americanized than we had anticipated.
The CBC's mandate has been altered by removing the requirement that its programming contain a balance of information, entertainment and enlightenment. We are left only with information and entertainment. While programs like Ideas, Quirks <6 Quarks and Arts National on radio and Man Alive and The Nature of Things on television may not attract the large commercial mass audience needed for high ratings and the maximum advertising dollars, it is the kind of programming that has made CBC so unique and highly respected as a broadcaster. The alternative television service is ill-defined.
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There are many positive aspects of this Bill. It addresses some areas that needed attention. It was an excellent move to make this Bill technology neutral.
However, there are also issues which makes one wonder about the juxtaposition of the free trade legislation with the broadcasting legislation. I suggest that those considerations will be addressed with great precision under the lens of a microscope.

... to study it through a microscope in order to make sure that the goal the Minister is aiming for is reached, as well as the goal our Committee is aiming for, and the goal of each and every group we have heard, and which the Caplan-Sauvageau Committee has heard, which is to increase the Canadian content of television programs throughout the day so that our children will be able in the future to learn who they are and why they are who they are.
With that observation, I look forward to an open-minded approach at the committee hearings that will take into consideration the observations I read today. These are not my observations but the observations of people who looked at this Bill, people who were part and parcel of the input into this Bill and who are generally happy with the Bill, with the exceptions I have brought to the Minister's attention over the course of the last 37 minutes.


Ian Gardiner Waddell: Mr. Speaker, as communications and culture critic for the New Democratic Party, I am very pleased to respond to Bill C-136, to the Minister's speech, and to the speech of my colleague, the Member from the Liberal Party. I think the essential problem with Canadian broadcasting is that the public sector is underfunded and the private sector is not doing its job. I can summarize my speech by that line. I think the rest is detail, although important.
Let me say it again. The public sector under this Government is underfunded. That includes the CBC. The private sector, that is all private radio and television stations especially the television stations, is not doing its job. It is not producing quality Canadian programs. The question is: Will this Bill change the situation? I am afraid that the answer is no, it will not change the situation, all rhetoric aside.
As the Minister has said correctly, this Bill is the first major change to the Broadcasting Act since 1968. The necessity for this change is beyond question and the Minister has also said that. First, for technological reasons there needs to be a change. The evolution of distribution and production technology since 1968 has been truly extraordinary. Just as important, however, a new Act and new policy have been made essential by what might be called the crisis in Canadian broadcasting. That crisis has been the subject of numerous commissioned

July 19, 1988
Broadcasting Act
reports. If one stacks them up, they would go from the floor to the ceiling. Two of the reports I hold in my hand, the Caplan-Sauvageau report and the report of the Standing Committee on Communications and Culture, are two examples. They outlined the contemporary crisis in Canadian broadcasting, and it is not just because of new technology. The Minister mentioned the satellites and cable that we did not have in 1968. It is a Crisis in watching, if you like. I would like to give some figures from the Caplan-Sauvageau report.

... page 745. Of the 52,000 hours of English-language television programming provided annually to average Canadians, only 70 hours are Canadian drama, including comedies, films, mini-series, etc. Of the 27,000 hours of French-language television programming available to the average francophone viewer, only 630 are Canadian drama. It means that 98 per cent of all English-language drama programs are of foreign origin. For French-language television, the proportion is 90 per cent, Mr. Speaker; only 28 per cent of all programs offered on English-language television are Canadian. Domestically produced programs do not even account for one third of the time Canadians spend watching English-language television.
Francophone teen-agers spend half their television viewing time watching foreign programs. For anglophone teen-agers, the figure is 80 per cent.

Eighty per cent of our Anglophone young people spend their hours in front of television watching foreign programs in English and the majority of the time passed by Francophone young people is also spent watching foreign programming. The crisis of Canadian television is not isolated, and I want to quote from the study by the Caplan-Sauvageau task force:
The reasons for these problems are clear: the public sector, which must be the chief purveyor of quality Canadian programming is inadequately scaled and funded; the private sector which should complement the public sector at least to the extent of contributing to the fulfilment of the social objective of the Broadcasting Act is not contributing enough.
I say also that this crisis, which is documented by the statistics and by the Caplan-Sauvageau report, is not isolated. Canadian television is not isolated in the difficulties we face in developing distinctively Canadian cultural industries. I think the Minister knows this. She is a Canadian nationalist, I believe. She must know that Canadian films represent only 3 per cent of screen time in Canada. Canadian films only take up 3 per cent of our screen time.
Three per cent of film profits stay in Canada. Ninety-seven per cent of profits go outside of Canada. Three per cent of the new video cassette sales are Canadian made. Ninety-seven per cent are foreign made. Our own publishers own only 30 per cent of the Canadian market. Seventy per cent is foreign owned. Seventy-seven per cent of the magazines sold in this country are foreign magazines. Eight-five per cent of the records and tapes sold in this country are foreign. Rick Salutin pointed out: "No other supposedly independent country
mirrors this situation". To be a really independent country, it seems to me that we must have as far as it is possible, and in the sense that we live in a global village, an independent Canadian culture. Frank W. Peers, writing in A Canadian Forum Supplement in March 1988, said:
-one of the tests of nationhood is that more communications take place within a country than between that country and another. Are Canadians governments prepared to recognize the importance of internal communications if the political structure is to be sustained?
I agree that he makes a good point. Doug Fisher, writing in the Toronto Sun-another level of journalism; going from the left to the right here-on June 27, said:
How do you see that the viewers and listeners have their profusion of choice, even as technology widens it, while ensuring enough of the listening and viewing is Canadian to keep our identities and distinctions?
I think that is a good point and I will come back to it. Of course, a wider number of positive things is happening in Canada's cultural industry-and I do not want to sound too negative-in particular with respect to its broadcasting system, with such films as My American Cousin, Un Zoo La Nuit and television programs such as The Kids of Degrassi Junior High. I said before that that is not a description of an evening cabinet meeting.
One sees what Canadian talent can produce. We have lots of talent in Canada. In animation and documentary work, Radio Canada, the CBC, and the National Film Board have had remarkable achievements. One need only draw attention to the work of Frederic Back, whose film L'homme qui plant ait des arbre won an Oscar this year, to see the kind of programs Canadians can produce when given the opportunity. However, it is a little tragic that in the days following Mr. Back's triumph at the Oscars it was revealed that Radio Canada had been forced to dismantle its animation department because of the Government's fierce assault on the budget of French language broadcasting in this country.


Flora Isabel MacDonald: What nonsense. He is going to a new international film board.


Ian Gardiner Waddell: I should mention the extraordinary success of CBC Radio both in English and French. In spite of being forced to run on a shoe-string it is gaining audiences yearly from the top 40 competitors.
This morning I listened to the Peter Gzowski program. He did a great interview of the Hon. Member for New Westminster-Coquitlam (Ms. Jewett).


Flora Isabel MacDonald: Do you stay in bed that long?


Ian Gardiner Waddell: It is a particular shame that due to the Mulroney-Reagan trade deal our ability to engage in such policies will be severely curtailed.
I want to come back to the trade deal because one has to see Bill C-136 in the context of the world around it. Part of the big world around it is the trade deal.
Before leaving this aspect of Canadian culture I want to say that I think we English Canadians do not know how vulnerable we are. I think we cannot wait 20 years for another Broadcasting Act. That is why this Act is so important. In my lifetime we used to have debates, when I was a student, about whether there was a Canadian culture. We meant by that an English Canadian culture. We always felt that there was a French Canadian culture.
There is an English Canadian culture. We have accepted that. We understand it. We know what it is. I do not think that young people today have that debate. There is an English Canadian culture and a French Canadian culture and, above that, a Canadian culture with its multicultural aspects and its native heritage. We know that. The question is: Will we be able to keep that in light of the onslaught of the American empire and its incredible cultural penetration of the Canadian market?
I was told by someone in the Government who is a Francophone, and I will not mention his name, someone who had been in Cabinet: "You Anglophones do not realize that you may lose your whole culture if you do not start now trying to protect it as we in Quebec in the 1960s took measures to protect our culture".
Having outlined the present crisis we face in Canadian broadcasting, I would like to assess what the Government has done over its entire mandate to help or to hinder Canadian broadcasting. I suggest that one cannot look at this new broadcasting policy and at Bill C-136 without putting it into the context of the Government's performance over its mandate.
We have seen the Government over the past four years institute a systematic attack led by the Prime Minister (Mr. Mulroney) on the public broadcasting system in Canada. One need only cite the example of the all-news network decision. In that case the CRTC, the federal regulator, awarded the licence to put together an all-news network to the CBC. The CBC had a bid that was vastly superior to its competitor. It was also cheaper to Canadian subscribers.
The Government and the Minister of Communications (Miss MacDonald) intervened to sabotage the CBC's bid. What is the result of the Government's policy? The result of the Government's policy-


Flora Isabel MacDonald: Mr. Speaker, I rise on a point of order. The Hon. Member has made an accusation that he cannot in fact back up in the House. The licence awarded by the CRTC to the CBC for an all-news station comes into effect on
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September 1, 1988. The Department of Justice has stated that the appeal period is the 60 days following that. Therefore only then can appeals to the Cabinet be considered.


Mr. Deputy Speaker:: That sounds a bit like debate.


Ian Gardiner Waddell: Mr. Speaker, the fact of the matter is that right now we do not have an all-news network. The all-news network in Canada is the CNN, Ted Turner's network. We have an American all-news network as a result of the Government's policy in delaying this matter. The real story of the Government's assault on the CBC is found in the vicious budget cuts we have seen over the past four years. I would add that this process started with a previous Liberal Government and has continued. I wish to give Hon. Members the figures.
In 1984-85, the CBC's budget was $905 million. In 1985-86, it was $826 million. In 1986-87, it was $806 million. In 198788, it was $789 million. In 1988-89, it will be $775 million.
With respect to this Bill the Minister talked proudly about the new money for the CBC given to it to help it reach its commendable aim of having 95 per cent Canadian content. In fact, the Minister is giving $20 million to the English service and $15 million to the French service. That is great, but that hardly even begins to correct the damage to public broadcasting the Government has done over the past four years. We cannot, as the Minister apparently believes, continue to expect the CBC to produce magic when it is not given the means to fulfil either its present mandate or the mandate that is outlined in the legislation we are discussing today.
What has been the result of the Government's broadcast policy? We have seen the cut-backs in the CBC budget. There has been de facto privatization of the CBC which is consistently being forced to find new money on its own, mostly through commercials, to make up for its shortfalls. Over the past four years the evolution of CBC generated revenue has been as follows. I will give Hon. Members the figures. In 1984-85, the commercial revenue for the CBC was $232 million. In 198586, it was $232 million. In 1986-87, it was $251 million. In 1987-88, it was $251 million. In 1988-89, it will be $266 million.

Mr. Speaker, the effects of this Government policy have been especially hard on the CBC's French services.

We have seen a pattern. It is: cut the CBC budget and increase commercial revenues for the CBC, force it into becoming more like a private station. The way one makes money, as private broadcasters know, is to bring in all the American cop shows and put them on prime time. That is how cash is generated. That has been the change that this Government is forcing on the CBC.
The Minister said in her speech, and I give her credit for it, that the CBC is the nervous system of our country. When we look not at the Minister's rhetoric but rather examine the

July 19, 1988
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substance of it, we find that it really does not follow this Bill, the letter or the spirit of either the standing committee's report or the Caplan-Sauvageau report. It was not a New Democrat but rather a Conservative, the chairman of the standing committee on broadcasting, who said that 250 million new dollars annually were needed.
The Minister, in relative terms, is offering crumbs to the CBC. Where, at the very least, is the money that was lost by the CBC as a result of the sledge-hammer cuts of the Minister and her predecessor? When it comes to rhetoric the Minister is fine. When it comes to getting the beef, the Minister of Finance (Mr. Wilson) has not produced it. It is a sham. That is not just my view, Mr. Speaker. I will give Hon. Members some quotes from people who have looked at this matter. The President of ACTRA, Dale Goldhawk, said on June 24, 1988:
And while the CBC is expected to fulfil a wide mandate, the money to go
forward just isn't there. In short, this part of the announcement doesn't
exactly make my socks roll up and down.
The Ottawa Citizen stated:
But MacDonald's pledge to spend $250 million over four years to enhance the Canadian broadcasting system wouldn't even restore funding to the level it was at when the Tories took power four years ago.
And the promised spending is only a fraction of the $130 million to $250 million a year that the all-party communications committee said two weeks ago was necessary to improve the broadcasting system.
MacDonald has obviously won some concessions from a cabinet with a blinding anti-CBC bias. But it didn't buy the basic conclusion of the Caplan-Sauvageau task force ... the CBC is the heart of Canadian broadcasting and it is seriously underfunded.
Jamie Portman stated on June 23 in an article in The Spectator of Hamilton:
The government has ignored a recent call from an all-party Commons committee that it show its commitment to better Canadian programming by increasing its support of broadcasting with up to $250 million in fresh funding annually... in real dollar terms, the CBC's budget has shrunk by more than $ 150 million since the Conservatives came to power.
Mr. Portman is a senior Southam reporter in arts and culture.
Those are my major criticisms with respect to the CBC in this Bill. I have some other matters that I would like to raise about the CBC that should be considered in the legislative committee. We were pleased to find in the Bill, and the Minister acknowledged it, that: "The CBC is the principal vehicle for cultural expression in Canada". We were also pleased that some of the recommendations of the standing committee with respect to the distinctiveness of the French language service and the separation of the president and chairman's office have been addressed.
However, I have the following question for the Minister. As I read the Bill, Clause 91 seems to fire the President of CBC, and no doubt that will be clarified in committee. Clause 91 states:
Every person holding office as a director of the Corporation, other than the President, immediately preceding the coming into force of section 35 shall continue in office-
Goodbye, Mr. Juneau, after that. Perhaps in committee we can examine the difference between the president and how the president is now to be elected by the Board of Directors.
I have some concern, as does my colleague from the Liberal Party, about the word "enlightenment" which has been dropped with reference to the definition section in the Bill. The CBC is expected to become simply a mass audience network with the abandonment of more specialized programming. At the same time, in the Bill the Minister is ignoring the crisis of regional programming in the CBC. On the first point, I would say to the Minister that we need to have a CBC that is capable of having an appeal to a mass audience, while at the same time is able to address more minoritarian interests. To take off the CBC live drama, music, and documentaries, and perhaps programs such as Man Alive, the Minister seems to be making commercial factors the litmus test of what should and should not be on the network.
The real abandonment comes in terms of regional programming. I say to the Minister that we take this very seriously. The standing committee has detailed the problems of regional programming in its report. The CBC has been forced to cut 28 per cent of the resources for regional programming in order to maintain networking programming in recent years. I come from Vancouver and I see what that means to the local CBC, to the actors, the producers, the writers, and the directors. They get laid off.
This Bill reduces the CBC's mandate to meet the distinct needs of the various geographical regions of the country. I do not understand why the Government wants to do this. What we have here is a centralizing of the CBC. If all CBC dramatic programming is to come from Toronto in English and Montreal in French, then this can hardly be called Canadian content totally. The Minister has forgotten that Vancouver, Calgary, Quebec City, Halifax, and Chicoutimi have to be involved in this process in order to have a truly and uniquely Canadian CBC.
The role of enlightenment as well as regional multicultural programming falls under the rubric of the new alternative programming network. However, the Minister has not yet secured the funds for this network. We appreciate that she did not get it turned down, but she put it on hold. We still do not have it. Thus we will have to wait for a few more years of study and delay, and the Government has apparently ruled out a CBC role and left it to the CRTC to decide on the structure. This service does not exist and will not exist until some time in the next decade, yet there is a pressing need for the type of programs that I talked about.


Richard Grisé: Point of order, Mr. Speaker.
July 19, 1988


Mr. Deputy Speaker:: The Hon. Parliamentary Secretary to the Deputy Prime Minister and President of the Privy Council, on a point of order.


Richard Grisé: Mr. Speaker, I am sorry to interrupt...

I want to inform the House of the proceedings for the rest of the day.

Mr. Speaker, it has been brought to my attention that motion M-163 stands under Private Members' Business in the name of the Hon. Member for Athabasca (Mr. Shields), but that the Member will not be present and that his motion will be postponed or put at the end of the list of Private Members' Business.

You will find unanimous consent, Mr. Speaker, that at five o'clock the House will move to Government Orders with Bill C-139. This Bill will be debated from five o'clock until nine o'clock, at which time you will call it ten o'clock, Mr. Speaker.


Jean-Robert Gauthier: Motion No. 163 was to be moved by the Hon. Member for Athabasca. Normally it would have been debated at five o'clock. If I understand the rules a Member may give notice prior to that that he is not ready to proceed. I understand that the Table Officers received no such notice that the Member was ready to proceed today even though the motion was to be scheduled.
If I understood the Parliamentary Secretary, he wants us to agree to drop this to the bottom of the list. Indeed, what should happen is that the motion itself should be completely dropped from the list. If I understand the rules correctly, since the motion has been called and there is nobody to move it, it should be withdrawn completely from the list of motions and Bills to be proposed to the House by private Members.
If the Parliamentary Secretary is asking for concurrence in his proposal that the motion be dropped to the end of the list, then this is a precedent that is being created. I do not disagree with that, but I want to ensure that we do not do this every time. Members cannot put motions or Bills on the Order Paper, not come into the House, and prejudice other private Members who may have motions or Bills about which they feel strongly and would like to move. We would then be held hostage by somebody who at the last moment does not show up.
There is a stick here which should be applied once in a while to remind Members that they cannot have it both ways. Members have to be present when their motion or Bill is called, otherwise it will be dropped.
Out of respect for the Member, and the fact that the question was put in such a courteous and reasonable fashion, I agree that although we will co-operate today, no precedent has been set.
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Richard Grisé: Mr. Speaker, I just want to thank the Hon. Member for Ottawa-Vanier (Mr. Gauthier) for his comments and clarifications on the situation before us. I accept his comments.


Mr. Deputy Speaker:: Continuing debate with the Hon. Member for Vancouver-Kingsway.


Ian Gardiner Waddell: Perhaps the House may allow me a few minutes after five o'clock. I was going to finish by five, but if the House will give me a few minutes to wind up I will not abuse it.
I stated that the essential problem with Canadian broadcasting was that the public sector was underfunded. I outlined that in figures and in debate. The second problem was that the private sector was not doing its job. This is probably the weakest part of the Minister's Bill, if I might say so.
In the Bill the Minister proposes to pressure the private network to produce more Canadian programming. This will have, at most, a very modest effect. Private broadcasters are always talking about producing quality Canadian programming, but they show very little interest in providing it. I want to quote from an article in The Vancouver Sun of June 25, 1988. In the article Douglas Sagi quotes Mr. Barry Duggan, Vice-President of CKVU, who stated:
I question whether Canadians want more Canadian programming. But I agree they certainly want better Canadian programming.
This is a standard line. Ray Peters, President of western BCTV, also questioned whether Canadians want more Canadian programs. He stated:
I don't think there should be more Canadian programming. I think there
should be better Canadian programming and that's why I like the idea of
incentives.
That basically summarizes the position of the private sector. The question is: What about the whole idea of this policy thrust? I would like the Minister to pay special attention to this. Robert Fulford, a very distinguished Canadian and writer, has put his finger on it. Mr. Fulford made the point by stating:
-the ancient bureaucratic axiom that an idea should never be allowed to die just because it doesn't work. In this case the idea is that private broadcasters, licensed by a federal regulator to use the public's airwaves, will spend a substantial part of their revenue on original production.
Mr. Fulford basically said that we were flogging a dead horse here. He further stated:
-the parliamentary committee on communications and culture delivered one more rebuke to the broadcasters. "Private television," the committee's report said, "has been making an insufficient contribution to achieving the goals of the Broadcasting Act."
Every royal commission and task force has said the same thing, and each of them-like the parliamentary committee-has then expressed the pious hope that private broadcasters would finally deliver what they promised when they were licensed. Year after year, the broadcasters have declined to
do so-

July 19, 1988
Broadcasting Act
Do you know, Mr. Speaker, what the rate of return is for private broadcasters in this country, as set out by the broadcasting committee and not denied by private broadcasters? It averages 50 per cent a year on investment. They are enjoying unprecedented riches, but almost none of this money is going to writers, actors, and film makers. In my view, this Bill is not going to change that.
Private networks have become transmission belts to bring American programs to Canadian viewers with Canadian commercials inserted. The regulators, the CRTC, have not been able to do anything about it over the years. In fact they have become like other regulators an essential part of the business that they are supposed to control.
What is the Government doing to change this matter? It seems that the Government has watered down the requirement in the current Act that private broadcasters be predominantly Canadian-and it has not worked anyway-and has brought in a form of performance incentives.
This is the question I want to put to the Minister, and I was not given unanimous consent to put it. How do these performance incentives work? If you look at it in the face of the Bill, we have fees collected by the Treasury Board if these private networks do not perform with more Canadian content, which they have never done in the past in prime time. This is going to be done in secret. This is a recipe for slush funds, for political interference and for trouble. This is one of the worst parts of the Bill. It is supposedly to attack the worst offender, that is, the private networks especially on television that are using the service just to run American cop shows in Canada, to make a lot of money, and not to put enough of it back into quality Canadian programming. There is the villain.
What are they doing about it? In this Bill the Government is bringing in a very shoddy scheme which is flawed with difficulties in terms of the performance initiatives. I think that we have to look at that issue very deeply in committee.
I want to raise another point and I think the Minister would be interested in it. I want to cover the Bill's reaction to one of the recommendations of the committee with respect to women in minority groups. I will read the recommendation, and I quote:
The programming carried by the system should provide a balanced representation of Canadian society, reflecting its multicultural and bilingual realities, its aboriginal peoples and the composition of its population with respect to sex, age, race, national or ethnic origin, colour, religion, and mental or physical handicaps.
What does the Bill say in Part I, Section 3? It says the following:
3(l)(a)(iii) strive, through its operations and programming, to reflect the circumstances and aspirations of Canadian men and women, including the linguistic duality and multicultural nature of Canadian society and the special place of aboriginal peoples within that society,
That is not good enough. What the Government said in its reply to the committee about why it could not put in a tough section as the committee recommended was that the goals of commercial expression were to outweigh the goals of government policy toward minority groups and women.
We will still see on television the Italian who is portrayed as greasy, the Newfoundlander who is portrayed as stupid, women who are portrayed as not being important. That kind of continuation of these things will remain on Canadian TV without a tough section. Considering the Minister's record in this matter, she should look at it very carefully.
I see the Minister has arrived, perhaps she did not hear that I was attacking her for the fact that women were very critical of this aspect of the Bill and that that aspect needed strengthening so that the portrayal of women can be different on Canadian television.
With respect to aboriginal communities, I have heard in recent weeks that the Minister's somewhat limited commitment to satellite broadcasting in the North is somewhat less than originally thought. We will be pressing the Government on these proposals. I put it on guard with respect to any weakening of this proposal.
I would like to particularly underline the work of Rosemary Kuptana who is with Television Northern Canada in her proposal. I was co-counsel of the Berger inquiry into the Mackenzie Valley pipeline. In 1974 the CBC, through the vision of the late Andrew Cowan, through the hard work of Whit Fraser, a CBC reporter, and other native reporters, was able to broadcast the hearings in seven languages. That was 1974. We broadcast in English, French, in Dogrib, Slavey, Loucheux, and East and West Arctic Eskimo. That was done. It is amazing what can be done with aboriginal broadcasting in this country. It is amazing what can be done in terms of Canadians from different parts of the country talking to each other. It does not have to be cop shows from L.A. as the basis for Canadian programming.
I want to refer to the trade deal before I close, and why the two matters are so intertwined. Basically the trade deal says that it does not change the status quo. Fine. Then look at the status quo. Three per cent of our film distribution and 80 per cent of our publishing are foreign controlled. We can on down the line. I gave the figures at the beginning of my speech.
What happens if the Minister really wants to change that to enact a nationalistic Canadian policy so that we finally have control of our own airwaves and our own culture? What happens if we want a real progressive policy? Then the other part of the trade deal comes in, the Americans could take equivalent commercial measures, not just in culture but in other aspects like forestry, mining, and so on.
Assume for the moment that you are the Minister of Culture, Mr. Speaker, and that you enact a very progressive policy in which Canadianization is very important and of prime concern. The Americans start retaliating. What do they
July 19, 1988

do? They put tariffs on B.C. lumber or B.C. fish. Then the workers who are out of work come to you and say: "You had better remove that progressive cultural policy".
Do you see how it works, Mr. Speaker? That is the insidious part of the trade deal. The fact is that the Mulroney-Reagan trade deal will mean that there cannot be any Canadian nationalistic cultural policy. There can only be this tinkering that we see in the present Bill, which is fundamentally changing the rules of the game. That is why the people from the Stratford theatre who recently signed a petition of protest, the actors and actresses, know in their hearts that the Mulroney-Reagan trade deal stops the future Canadian Government from really enacting progressive policies with respect to Canadian culture.
I want to end there, because the Bill will go into committee. Marshall McLuhan once said that we lived in a rear-view mirror society. It was like looking in the rear-view mirror in your car, which takes you back to your past. Even though we live in the present we think in the past. Artists, he said, think in the present. They do not live in a rear-view society. We are looking back, it seems to me, in this Bill. We are not looking ahead. The new world means fibreoptics, codable signals on television, and addressable receivers. Nothing has been dealt with in the Bill with respect to that. This is a backward looking Bill, not a forward looking Bill. It is a Bill born in haste, because of the attitude of the Conservatives on pornography, their vicious cut-backs in the CBC, and their general attitude to Canadian cultural agencies and patronage appointments. The Government had to do something, and that is why we are debating this Bill today.
I want to say to the Minister that I am not making those criticisms against her personally. I hold her in the highest of regard. I am sad that she is shackled with such a right wing bunch of Philistines as are in this Government. We have built a unique broadcasting system in Canada. It is unique in that it is ours. It is both public and private. It goes back to many commissions and reports. In the future this new technology will help us. We will have to zero in on choices for Canadians. We do not want to force Canadians to watch Canadian programs. That will not work.


Flora Isabel MacDonald: That is exactly what you said earlier.


Ian Gardiner Waddell: What we in the NDP offer, which the Government is not offering-and the Liberals have no policy on anything so they are not offering it-is a chance for Canadians to watch quality Canadian programs and for Canadian artists, writers, performers, dancers, and musicians to have those jobs and produce that programming, not only for Canada but for the whole world. To do that there has to be adequate funding for the CBC, including perhaps what Robert Fowler said years ago in his royal commission. He said that we
Broadcasting Act
had to give the CBC a long-term plan and assured funding removed from political influence.
First, we have to fund the CBC adequately and make it the main vehicle of public broadcasting. Second, we have to require private broadcasters to do their fair share. I have my doubts whether the system proposed in this Bill will work.


Flora Isabel MacDonald: All you have to do is vote against it.


Ian Gardiner Waddell: We cannot wait another 20 years. It is ironic that this debate comes on a Tuesday afternoon in the middle of the summer with a few Members in the House. The Minister is here listening to the debate, I acknowledge that. It is almost like the Bill has gone through as just another Bill. Next to the trade deal it is maybe the most important legislation that we deal with. Let us think of where Canadians spend their time and get their knowledge, Mr. Speaker. They get it through modern communications and from watching TV. That is from where we now pick most of our news, our drama, and public affairs. That is what people do in the modern world. That is why this Bill goes to the whole heart of the future of Canada. That is why this Bill is flawed. It still has not solved the essential problem, and that is an underfunded public sector and a private sector that is not doing its job. That has to be changed or Canadian cultural sovereignty will not survive.


Flora Isabel MacDonald: Will the NDP vote against it?


Ian Gardiner Waddell: You heard me.


Flora Isabel MacDonald: Great.


Mr. Deputy Speaker:: Is the House ready for the question?


Ian Gardiner Waddell: Mr. Speaker, I rise on a point of order. I understood that the debate was now finished and there would be further debate later on. There was not to be just three speakers on the Bill. This was just to start the Bill.


An Hon. Member:: No.


Ian Gardiner Waddell: That is not the agreement that I gave. We have more speakers. The Hon. Member froip Saskatchewan wishes to make comments on the Bill.


Richard Grisé: Mr. Speaker, the Hon. Member for Vancouver- Kingsway (Mr. Waddell) is right. It was agreed by the three House Leaders that we would have the first three spokespersons on the Bill and then we would call it five o'clock.


Mr. Deputy Speaker:: Is the Hon. Member for Yorkton- Melville satisfied with that?


Lorne Edmund Nystrom: Yes, Mr. Speaker.


Mr. Deputy Speaker:: It being five o'clock, we will now proceed to Private Members' Business.

July 19, 1988
National All-News Channel



PRIVATE MEMBERS' BUSINESS-MOTIONS   TELECOMMUNICATIONS

[Stage Direction]
NATIONAL ALL-NEWS CHANNEL On the Order: Private Members' Business:
December 11, 1987-Mr. Shields-That, in the opinion of this House, the Government should set aside the decision by the Canadian Radio-Television and Telecommunications Commission (CRTC) to award the national all-news channel to the Canadian Broadcasting Corporation (CBC).
Mr. Deputy Speaker:: In accordance with Standing Order 39, notice was published of the debate scheduled to take place today on the motion standing in the name of the Hon. Member for Athabasca (Mr. Shields). Since the Member is not present to move his motion at this time the motion would, by unanimous consent, be put to the bottom of the order of precedence. Is there unanimous consent to do that?


Some Hon. Members:: Agreed.


Mr. Deputy Speaker:: As the Parliamentary Secretary indicated, debate will resume on Government Orders from now until nine o'clock tonight, and the House will rise at nine o'clock by unanimous consent.


Some Hon. Members:: Agreed.


Mr. Deputy Speaker:: Resuming debate on Bill C-139.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Wilson that Bill C-139, an Act to amend the Income Tax Act, the Canada Pension Plan, the Unemployment Insurance Act, 1971, the Federal-Provincial Fiscal Arrangements and Federal Post-Secondary Education and Health Contributions Act, 1977 and certain related Acts, be read the second time and referred to the Standing Committee on Finance and Economic Affairs, and on the amendment of Mr. Garneau (p. 17724).
Mr. Pierre H. Vincent (Parliamentary Secretary to Minister of Finance):: Mr. Speaker, I welcome this opportunity to speak on second reading of Bill C-139, a Bill of vital importance to all Canadians and to the economy of this country. As you know, Bill C-139 concerns the tax reform which started in 1984 and was subsequently continued, a reform that will make our tax system more equitable. First, there was thorough planning.
There was consultation, and adjustments were made as required to provide the majority of Canadians with a tax system responsive to their needs, a system that, I would say,
for the first time in the history of taxation in Canada, responds both to the economic needs of this country and to the needs of Canadian men and women. It is probably the first time, Mr. Speaker, since the famous war tax of 1917, which was a temporary tax, that Canadians will see an increase on their paycheck in July as result of this reform. Mr. Speaker, about 9.7 million Canadian families will pay less income tax in 1988 and subsequent years. This means that 85 per cent of Canadians will pay an average of $500 or less income tax per year. And that is a first!
This was achieved in a number of ways. First, as you know, over the years we phased out the tax shelters provided under the system, such as tax credits for scientific research which meant that billions of dollars were spent by a few taxpayers, a few companies, while the majority of taxpayers did not benefit. And even worse, the people who should have benefited from this scientific research tax credit, our scientists, never benefited at all. It is time we put an end to the abuse that existed under the previous Liberal Government and which cost Canadians billions of dollars without doing anything for our country, without giving Canada anything worthwhile as far as scientific research was concerned. Now that these funds have come back into the system, today we can consider the kind of tax reform that will benefit all Canadians. And as I was saying, 85 per cent of taxpaying Canadians will see their tax bill go down this year-they already saw that on their pay cheque for the beginning of July.
This was also done by broadening the tax base; as you know, many companies were not paying their fair share of taxes, for various reasons. So companies that were not paying tax will from now on pay their fair share, giving us money that will allow us to reduce Canadians' tax burden.
What is perhaps most important in this whole tax reform is the change we made to the personal exemption and all exemptions, converting them into tax credits. As you know, Mr. Speaker, exemptions are beneficial to high-income individuals and penalize low-income Canadians. This is easy to illustrate: If you earn $100,000 a year and have a personal exemption of $3,000, your tax rate is 50 per cent and you save $1,500. But if you earn $10,000 a year, your tax rate is 20 per cent and with the same $3,000 annual exemption, you save $500 or $600 of tax. By changing this and giving everyone the same $1,000 tax credit for personal exemptions, whether they make $10,000 or $100,000 a year, they all have the same tax advantage. And this is a major reform of our tax system. It makes it an equitable system, fairer for all Canadians. Looking at my colleague from Laval-des-Rapides (Mr. Garneau), I am sure that he cannot contradict this. He is familiar enough with the tax system to know that tax credits definitely make our system fairer and more equitable. This same principle will apply to all exemptions that Canadians had before, like the married exemption, etc.
July 19, 1988

Tax reform also has another purpose, namely to encourage private initiative, to give Canadians more money in their pocket, as we have been saying since 1984, so that they can decide what to do with it. I do not think that it is up to the Government to direct everything that goes on in the daily lives of all Canadians. The more money taxpayers have in their pockets, the more they will be able to spend as they like, or save or invest, spend on recreation, whatever; that will be good for our economy and our country. And it will automatically encourage economic growth and help create jobs. That is how you have to look at tax reform; this is the philosophy for Canada's future to keep in mind.
Our reform will also solve the problem of corporate taxation. Some companies were overtaxed and others paid nothing at all. As I said, those that paid nothing will pay from now on. But those that were overtaxed could not be internationally competitive; again, Mr. Speaker, in running a country, you must not think only of tomorrow, but 5, 10, 11 years ahead. We are 11 years away from 2000. This underscores the importance of the free trade agreement and of the tax reform which will make Canadian companies more competitive on international markets because their tax rates will indeed stand comparison with those of companies in other countries. It is just as important to Canadians who want to work, who have jobs and want to hang on to them, who are eager to make progress and seek to achieve a better quality of life. You know, Mr. Speaker, very often people equate quality of life with environmental considerations. It is true and it is a sound approach. I think in terms of social benefits, it is true and it is a sound approach as well. But quality of life also implies that Canadians have decent incomes which are not reduced by unduly high taxes. There are no incomes without jobs, and there will be jobs only if Canadian companies can make progress and expand on a logical, normal and lasting basis. That is where that tax reform comes in.
Viewed from a different angle, the reform means that
850.000 Canadians will no longer pay income taxes. Low income Canadians will no longer be taxpayers, including
250.000	older men and women who will never again have to file a tax return, if indeed they have no other income to declare.
With respect to older Canadians, the tax reform means that nine out of ten of them will pay less income tax. Mr. Speaker, you can appreciate that the one out of ten who will have to pay more has a much higher income, and it is only normal that he or she contributes to our society just like all other Canadian men an women.
We have maintained the $100,000 capital gains tax exemption, $100,000 which again will make it possible for Canadian taxpayers to invest and earn a fair investment income.
As a rule, as you know, investments create a great many jobs. So we left at $500,000 the capital gain exemption to benefit farmers as well as small and medium sized businesses.
Income Tax Act and Related Acts
In this country, most jobs are created by small and mediumsized businesses, and I think it is advisable, as well from an economic point of view in terms of the tax reform, to give special attention to those who keep the economy moving and create employment. That is the reason the $500,000 capital gain exemption exists for them.
And the same reform offers the advantage of being an incentive for the private industry. I met last weekend with people with small and medium-sized businesses who told me: we feel it is important for our employees to have a lighter tax burden because we can give them a good pay, and it is equally important that our business should also have a lighter tax burden to keep us competitive on the international market.
Mr. Speaker, the future of Canadian businesses is on the international market. I do not think that as Canadian businessmen, we should rest on our laurels but that we should think of the future. We must realize that we have in Canada some 25 million potential consumers, but we should think of the new opportunities open to us. In the Trois-Rivieres riding, there are a number of very good business people who have already understood the message and who are already exporting in large quantities on the international market. I could mention a few who, through their exports, have created dozens upon dozens of new jobs in my riding. If these people had felt that they were going to limit themselves to Trois-Rivieres, the region, the province or even the country, fewer jobs would have been created in Trois-Rivieres. I feel I must congratulate and encourage our Canadian exporters to look towards this extraordinary new market which beside the United States- this will be achieved through the Free Trade Agreement-also includes the European Common Market. We must have an economic vision of what will happen in a few years from now and to take the necessary steps in Canada to improve the quality of life for all Canadians.
Mr. Speaker, I referred a moment ago to a vision of the future. Automatically, we think of children. The child's tax credit in 1988 has reached $559 and is consistent with what we had already announced in 1986 concerning the federal sales tax.
You will certainly remember that when we increased the federal sales tax by 1 per cent in 1986, we introduced at the same time the concept of a sales tax credit for low-income people and families.
That is what I called developing a tax system which takes into account the needs of Canadians, something foreign to the former Liberal Government which increased taxes without an eye for the future. We had ample evidence of this with the successive budgets of the previous federal government, the scientific research tax credit, the various industries where they abused the income tax legislation, overburdened Canadian taxpayers, without ever doing anything to improve the quality of life and the economic future of Canada.
This is a priority of the tax reform, something for which we can congratulate the Minister of Finance (Mr. Wilson) and

July 19, 1988
Income Tax Act and Related Acts
say: You have done a great job! The tax reform is great for all individual Canadian taxpayers, for all Canadian corporations, for the economy of Canada and the quality of life of Canadians.
Mr. Speaker, the Hon. Member opposite may quack as much as he pleases, nothing he can say will disprove that. Those are the facts of Canadian tax reform.
I see my colleague from Saint-Maurice (Mr. Grondin) nodding that I am right. Even though he is on the other side of this House, he's able to recognize-because he is an honest man-the good things accomplished by the Conservative Government, and I congratulate him for it.
It might be useful, Mr. Speaker, while talking about tax reform, to go back to what has been done since 1984. With the minimum tax put in place in 1986, for example, all Canadians must pay their fair share. That could have been done under the previous Liberal Government, but their good friends wouldn't stand for it. We have put in place a system that requires all Canadian taxpayers to pay their taxes on a yearly basis.
We have also stopped income splitting between family members, which provided tremendous tax shelters to restricted groups. That has also been set aside.
The Registered Home Ownership Savings Plan was primarily used as a tax shelter by families, but low income people couldn't afford to take advantage of it. That has also been settled.
Tax shelters created by the old regime for yachts, cottages and the like were used any which way. We also put a stop to that.
The scientific research tax credit, which I referred to earlier, cost Canadians billions of dollars, didn't do anything for our scientists or the Canadian economy, but fattened some companies' pocketbooks. That, Mr. Speaker, is an aberration. It is unbelievable that this party let such things go by when it was in power.
I recently read an article in which the former Minister of Finance said that he was aware of what was going on but that nothing could be changed and that the deed was done. So they let it go at that. They let billions of dollars escape which should have gone to companies X, Y, Z here in Canada.
In conclusion, Mr. Speaker, when we speak of fiscal reform, I think we must also consider the second stage of fiscal reform. Indeed, it is also important. It is part of the vision of Canada, of the expectation of a better quality of life which I mentioned earlier.
The second stage of fiscal reform will deal with the federal sales tax. It is a well known fact that the federal sales tax, in its present patchwork form, in its sorry state which defies description, Mr. Speaker, and with which the former Liberal administration had managed to "put up", is a nuisance to Canadian businesses and prevents them from competing successfully with foreign firms.
So the second stage is on its way and hopefully, as negotiations are proceeding well, with the agreement of the ten provinces we shall arrive at one single provincial and federal sales tax which will apply to most if not all goods and whereby Canada as well as the ten provinces will have a better tax system for the good of all Canadians, one which will be beneficial, which will improve the quality of life of Canadians and, rather than cause the loss of jobs in Canada, will create employment as does the first part of the tax reform, which I hope will be adopted as soon as possible by this House.


Mr. Deputy Speaker:: Questions or comments. The Hon. Member for Ottawa-Centre (Mr. Cassidy).


Michael Morris Cassidy: Mr. Speaker, I welcome this opportunity which we get very seldom, to put questions in the House to the Parliamentary Secretary to the Minister of Finance, in this case on matters concerning tax reform.
Mr. Speaker, despite the fact that the tax reform proposal was tabled in the House in June 1987, today, July 19, 1988, is the first time we debated the issue in the House, except for a few short statements in response to the statements made by the Minister of Finance (Mr. Wilson) in June and December last year.
I have a question for the Parliamentary Secretary. He just said that all Canadians should pay their fair share of taxes, but in the Government's proposal, and I have the figures here, we see that among the winners, a family with an annual income of $100,000 will enjoy a tax reduction of $4,165 compared with $140 for the individual with an annual income of less $15,000.
Mr. Speaker, the Government seems to think that those who were not paying their fair share were mainly Canadians on low incomes. If we look at the breakdown, we see that the 26 per cent on low incomes will receive about $250 million in tax deductions, but the 2 per cent on higher incomes will get about $380 million in tax deductions. This means that 12 per cent of these reductions go to the wealthier groups in our society and only 8 per cent to people on low incomes, despite the fact that the latter group is much bigger.
Could the Parliamentary Secretary explain why the Government failed to introduce a tax reform proposal that would provide for a more progressive tax system? If we consider all taxpayers, in both cases the winners, that is those who are well off, receive far more in terms of tax reductions than those on low incomes. And could he explain the fact that if we consider the principle of fair tax treatment of families and single taxpayers, there seems to be a disparity that is indefensible in terms of social and fiscal justice? Mr. Speaker, a taxpayer with an annual income of $30,000 and who happens to be single receives a tax reduction of $695 per year, but if we have two taxpayers, both working with two children, their tax reduction is only $285.
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It is difficult to give all the figures, but I wonder why a family with two wage earners who both have to work to be able to pay the rent or their mortgage, receive about $5 per week in tax reductions, while someone else with the same annual income will get $14 per week in tax reductions; and why do the wealthy get thousands of dollars in tax reductions, while those who are less well off might get a few hundred dollars? Why?


Pierre H. Vincent: Mr. Speaker, it is unfortunate that the questions the socialists ask are always distorted and do not reflect reality. What I said at the beginning was that those who paid no tax will pay. And those who paid no tax, those who did not pay their fair share, were the ones who benefited from the tax shelters introduced by the previous Liberal Government. There are no more tax shelters. All Canadians must pay their fair share. There are no more tax shelters and the minimum tax was introduced for the very purpose of making everyone pay his or her fair share.
Moreover, 850,000 Canadians will no longer pay income tax. Eighty-five per cent of Canadians will pay less income tax. But still, Mr. Speaker, the socialist Member is unhappy. Eighty-five per cent of Canadians will pay less income tax and he is not happy! Eight hundred fifty thousand Canadians will no longer pay a cent of income tax. He is still not happy!
It was the same socialist Member, Mr. Speaker, who said that flow-through shares, which are a tax shelter, as you know, should be kept. This same Member is telling us to cut tax shelters and not to give to the rich and those with high incomes. Mr. Speaker, it is high-income individuals who buy flow-through shares; not people with low incomes, but those with high incomes buy them. So you see what the socialist Member is doing, Mr. Speaker. He is speaking out of both sides of his mouth. That is quite unfortunate. We have a fair, equitable tax reform that will benefit most Canadians and that will also . . . but the socialist Member does not mention that, nor that we have converted exemptions into tax credits, which definitely makes the tax system fairer than it was before. He does not talk about that. But maybe he should take a look at it, maybe he should take a proper look at his figures, and he would then see that this is fairness, this is a Government that shoulders its responsibilities and also considers the country's economy. You have to have a vision of the country when you carry out a reform, and a vision of the country for the future also, for the future of Canadians and their children. That is what the tax reform does.


Guy St-Julien: Mr. Speaker, in the wake of the Hon. Member from Trois-Rivieres (M. Vincent) and Parliamentary Secretary to the Minister of Finance, I have a few comments to make on a particular tax credit, namely the R&D tax shelter. In the years 1983-1984, the then Minister, the Hon. Marc Lalonde, stated that his program would cost between $200,000,000 and $300,000,000. Some time after the Conservative Government's victory, the Right Honourable Prime Minister, Mr. Brian Mulroney, said that this research program
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had to be cancelled immediately, which was one of the first things the Minister of Finance did. Several months later, the Auditor General of Canada made public his audit of the program. Instead of $300,000,000, it had cost 3.9 billion dollars, Mr. Speaker, and out of those 3.9 billion dollars allocated to R&D, it was revealed that 1.9 billion dollars had been lost due to frauds and bankruptcies.
Here is a case in point. A mechanic from Victoria, British-Columbia, asked for 5 million dollars to set up a computer technology research program. He presented his project to senior officials and, by the way, Mr. Speaker, in 1983 and early 1984, these senior officials told the then Minister, Mr. Marc Lalonde, and the Canadian Government, the Trudeau Government, as well as Federal Liberal Members of Parliament-and the Hon. Member from Abitibi, Mr. Rene Gingras was one of them-to put an immediate stop to this waste of public funds. And that Victoria mechanic who got $5,000,000 is now in Japan writing a book on break-dancing.
And to think, Mr. Speaker, and I will close on that, that with those 1.9 billion dollars, we could have built right here in Canada, for the benefit of the Abitibi region or Trois-Rivieres, whose Member works very hard for his riding and his constituents, we could have built, Mr. Speaker, in this great country of ours, 50 hospitals.


Don Boudria: Mr. Speaker, it is a pleasure to participate in the debate on this Bill on tax reform. Tax reform was introduced with great fanfare by the Minister of Finance (Mr. Wilson). It was introduced as being his effort to simplify the tax system.
When I first saw the Bill I asked: Is it not great that we have a simple tax system? I decided to read some of this simple Bill, which has only 500 pages, since it introduces a new simplified tax system. I want to read some of it into the record to show how simple it is and how Canadians will be glad that the tax system has been simplified in this manner. It states at page 149:
(4) All that portion of paragraph 88(l)(e.5) of the said Act following subparagraph (ii) thereof is repealed and the following substituted therefor:
"shall, if the parent has been a private corporation continuously from the time of the winding-up to the end of the taxation year, be added to the aggregate determined under subsection 129(3) from which the parent's dividend refunds are to be subtracted, except that the amount to be added to the aggregate determined under subsection 129(3) shall be deemed to be nil where, had a dividend been paid by the subsidiary immediately before the winding-up, subsection 129(1.2) would have applied to deem the dividend not to be a taxable dividend".
Does that not clarify it? I am glad the system has been simplified in such a way as to make it understandable to my constituents and all Canadians. I am sure that when my constituents read this clause it will be eminently clear to all of them that we have a simplified and beautiful tax system.
If the House is not convinced that the tax system is easy to understand, let me turn to the next page to show that I have

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not purposely selected any passage to embarrass the Government. That is the last thing on my mind. It states at page 150:
(6) Subsection 88(1) of the said Act is further amended by striking out the word "and" at the end of paragraph (e.8) thereof, by adding the word "and" at the end of paragraph (0 thereof and by adding thereto the following paragraph:
"(g) where the subsidiary was an insurance corporation, (i) for the purposes of paragraphs (12)(l)(d),(e),(i) and (s) and 20(1 )(1), (1.1), and (jj) and 20(7.(c), section 33, 138, 138.1, 140, 142 and 148 and Part XII.3, the parent shall, notwithstanding paragraph (e.2), be deemed to be the same corporation as, and a continuation of, the subsidiary, and
(ii) for the purpose of determining the amount of the gross investment revenue required to be included under subsection 138(9) in the income of the subsidiary and the parent and the amount of gains and losses of the subsidiary and the parent from property used by them in the year or held by them in the year in the course of carrying on an insurance business in Canada-
Most of my constituents, as all Canadians, will be pleased that the Government has simplified the tax system in the way I have just described it.
We have had some deliberations on this Bill at the committee level. On May 17, 1988,1 attended the Finance Committee hearing because I was interested in this new simplified tax system. I wanted to know in very tangible terms whether or not this new system would result in a more simplified tax form. Obviously, the jargon 1 just read is quite complex, even in its so-called simplified form. I asked an official of the Department of Finance, Mr. David Dodge, Senior Assistant Deputy Minister, who was appearing at the committee that day: "In very tangible form is it going to have fewer lines on it"-I was describing the tax form-"or is it going to be essentially the same thing?" I asked: "To most Canadians our tax system is measured not in many of the ways that perhaps you would, sir. It is: Am I able to fill out my income tax? That is a tangible measure of how simple or otherwise the tax system is".
The response of the Senior Assistant Deputy Minister, as it appears at page 164:10 of the Finance and Economic Affairs Committee was:
It is going to be a little bit shorter, because there are a few things that are treated differently, or are not there under the new legislation. But as I said, my colleagues at Revenue Canada have tried to design it in such a way that there would be as little change as possible in terms of the flow of what people are used to in filling out their own forms.
In other words, the Senior Assistant Deputy Minister has told us that essentially it will be the same thing.
Are you not glad we are simplifying it, Mr. Speaker? Once it is simplified it will be the same as before, after all that effort. That kind of explanation, of course, does not satisfy me entirely of how simple a tax system could be.

In his excellent speech earlier today, Mr. Speaker, the Flon. Member for Laval-des-Rapides (Mr. Garneau) explained to the House that this tax reform occurs following four major tax increases from this Tory Government. We should remember
that these increases were quite unfair for middle-income Canadians. And we know that under this tax reform, there will be very little progressiveness in the application of this so-called reform. The reform is certainly incomplete, because the sales tax will be delayed until next year. But why next year? The answer is quite simple and most Canadians are aware of it: because this Tory government wants to implement these tax increases only after the election. Yet, Mr. Speaker, there is something which this Tory Government has overlooked but which you know as well as I do, being non-partisan, and it is that the forthcoming election will mean the end of this Tory Government. That is fortunate for most Canadians, except of course for the rich friends of this Tory Government.
Mr. Speaker, the personal income tax under the proposed tax reform will be reduced from 10 to 3. So the federal tax rate will be 17 per cent on the first $27,500 of taxable income, 26 per cent on the amount between $27,500 and $55,000 in taxable income, and finally 29 per cent on the amount in excess of $55,000 in taxable income. If you look at the three levels, you see quite clearly 17, 26 and 29. Therefore, the middle class will face a tax rate of 26 per cent. Mr. Speaker, 26 per cent is not halfway between 17 per cent and 29 per cent. As you can see, people with average salaries will again pay more than their fair share, contrary to what the Parliamentary Secretary to the Minister explained to us today. Again, this is a Tory legislation which is unfair to a great many Canadians.
The Parliamentary Secretary told us today something to the effect that the affluent in Canada should assume their fair share of the tax burden. That is true and most of us agree that the rich should pay their share and naturally low income people should not have to shoulder a disproportionate amount of the tax burden. Well, we are well aware that ever since this Tory Government came to power, 1 million Canadians are paying more income tax. The Government is now saying that 850 000 Canadians will pay less income tax. Well, Mr. Speaker, the net result is that 150 000 Canadians will continue to pay more. If 1 million pay more while 850 000 pay less, the net result is that 150 000 Canadians are already losers in this whole process, even before the implementation of Phase 2 of this Tory Government's tax reform. The end result is that Canadians are always losing under a Tory Government. It is a well known fact that Tory times are hard times. As the English say .. .

Tory times are hard times. Let me remind Canadians of some of the tax increases. Since the Tories have came to power, many Canadians are paying more income tax. As I indicated previously, a million taxpayers are paying more.
Let me refresh the memories of Members of the House and all Canadians who are listening to us with respect to those tax increases. First, let me talk about direct taxes. In October 1984 we had a sales tax increase from 9 per cent to 10 per cent, a $1 billion increase. On January 1, 1986, the sales tax increased from 10 per cent to 11 per cent, another $1 billion
July 19, 1988

tax increase. As the Tories say: "What is a billion?" On April 1, 1986, the sales tax increased from 11 per cent to 12 per cent, another $1 billion. Then they decided to extend the tax to children's candy-Tory policy-soft drinks, health goods, dental instruments, snack foods, and so on. That resulted in $460 million of tax increase. There was an increase in sales tax from 8 per cent to 12 per cent on paint, wallpaper, and children's toys, which produced $60 million.
Then there were tax increases on gasoline. There was a 2 cent per litre increase on September 3, 1985, a 1 cent per litre increase on January 1, 1987, a 1 cent per litre increase on February 19, 1987, and a 1 cent per litre increase on April 1, 1988. If we add all that together, and I say this so that the Hon. Member for Chambly (Mr. Grise) can repeat it faithfully to all his constituents, we have $2.5 billion worth of tax increases. Strangely enough, that is an increase of some 5 cents per litre. That 5 cents per litre is more than the 18 cents per gallon which caused the Government, led by the Right Hon. Member for Yellowhead (Mr. Clark), to be turfed out in 1979. That is the sad reality.
Unfortunately for all Canadians this particular Conservative administration has a large majority in the House of Commons. What I am saying today must be thought provoking. It is even waking up some of the Tory back-benchers. That is a good sign. They are earning their day's pay.
I could continue talking about massive tax increases. Let me speak about the 10 per cent sales tax on long-distance telephone calls and cable television services. That has generated $945 million. I represent a largely rural constituency, the great riding of Glengarry-Prescott-Russell. In my riding, and in many other rural constituencies in Canada, citizens do not have a choice as to whether or not they will phone long distance. Some people in rural areas have to phone long distance to speak to their doctor, the farm implement dealer, the veterinarian or the drug store. To phone anywhere one has to pay for a long-distance telephone call. That is the reality of living in a rural area.
Obviously the Minister of Finance, who comes from downtown Toronto, is not too familiar with rural areas. He imposed a sales tax not on basic service, not on luxury items, but on long-distance telephone calls, which means that this tax is unfair and discriminatory against the rural Canadians I am charged with representing in the House of Commons. That is the unfairness of this system and this so-called tax reform with these tax increases of the Conservative administration.
I see the Hon. Member for Gaspe (Mr. Marin) opposite. He represents, as I do, a rural riding. He knows how unfair are those taxes on long-distance telephone calls. He has probably had the opportunity to tell the Minister of Finance. If he has not had that opportunity, there is still some time before the Tories are turfed out of office; a few months at least but not much more. He should tell the Minister of Finance, while he is still the Minister of Finance, that this tax on long-distance telephone calls is indeed unfair to a large number of rural
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Canadians living in Glengarry-Prescott-Russell and elsewhere.
It is particularly unfair to senior citizens. I received a telephone call yesterday in my office from a senior citizen in my riding who, upon looking at his telephone bill, became really upset about the fact that because he lives in Hawkes-bury he had to pay tax on a long-distance phone call to his children living in Ottawa. He has to pay surtax because he has cablevision coming into his house. This gentleman is 88 years old. Why is the Government permitted to impose these types of taxes on senior citizens such as the one I have just described? Obviously there is no rational explanation for that other than the fact that the Minister of Finance is insensitive to the needs of rural Canadians. He has imposed this most unfortunate regressive and discriminatory tax on rural Canadians, the tax on long-distance telephone calls.
There are pages of tax increases in the Bill. I could read them all into the record but if I did that I could hardly speak on anything else this afternoon, except of course if my colleagues extended the time permitted for me to speak, which I know that given the non-partisan tone of my speech they would probably want to do. In the unlikely event that they refuse, I am going to change topics here and move on to more on the area of tax reform.
In the constituency that I represent there is an organization which builds low-head generating stations. These generating stations create employment in my constituency. They are then built on site. They are manufactured in my riding and installed in northern Ontario. They usually provide meaningful employment to residents of remote communities in northern Ontario. This was creating good employment in my riding, which is certainly not in northern Ontario but which suffers from high unemployment. People investing in these types of projects were doing so by means of the flow-through share mechanism. Of course, they have now had a lot of difficulty, first, with the outright cancellation of this measure and, second, with the modifications that were proposed by the Minister of Finance. The long and short of it is that valuable research, development and installation was going on here, and now the whole thing has been placed in jeopardy by the actions of the Conservative administration.
We know that the New Democratic Party has had a great deal of difficulty with this issue. Sometimes it has been in favour of it and sometimes it has been against it. It has not been easy for members of that Party, and I sort of sympathize with them on this issue. I will return to the area of research and development in a minute.
I want briefly to touch on the area of automobile expenses in the tax reform Bill. A number of people in my constituency and several other constituencies in Canada use their cars to work. Their car is a travelling office. I feel that the imposition of the $20,000 maximum for the deductibility of automobiles

July 19, 1988
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is unfair. I ask the Minister at least to index that amount and, hopefully, even to increase it so that it will not adversely affect people who work in their cars.
If one's office does not have wheels on it, then it is fully deductible. If an office does have wheels on it, as is the case with a travelling salesperson, then there are restrictions which are unfair which have been put on them by the Government.
In conclusion, I want to tell you, Mr. Speaker, that the Conservative Government has failed miserably in the area of research and development with or without tax reform. I talked about the flow-through shares. There are several other areas which I could address.
I want to say that in the United States the non-tax support for research and development is 33 per cent and the tax support is 7 per cent for a total of 40 per cent. In France there is 22 per cent non-tax support and 7 per cent tax support for a total of 29 per cent. In Canada, we have 12 per cent non-tax support and 8 per cent tax support for a total of 20 per cent. We can see how underfunded research and development is in Canada.
Given that serious underfunding, I move, seconded by the Hon. Member for Saint-Maurice (Mr. Grondin):
That the amendment be amended by deleting the "and" before (6) and the
period at the end thereof and by adding the following:
"and (7), imposes a higher burden on small manufacturing corporations and unnecessary red tape on the self-employed."


Mr. Deputy Speaker:: I will take the Hon. Member's subamendment under advisement and report back to the House later. On questions and comments the Chair recognizes the Hon. Member for Ottawa Centre.


Michael Morris Cassidy: Mr. Speaker, I know that the Hon. Member for Glengarry-Prescott-Russell (Mr. Boudria) agrees with me in some of the criticisms I have made about the Government in terms of the lack of progressivity in the tax reform proposals which have been put forward. I am sure that he agrees with me that there is something wrong with the tax system that cuts taxes for most people earning over $100,000 by $4,000 per year but only cuts taxes for people earning $15,000 and less per year by an average of $140.
I know that he agrees with me that there is something wrong when the Government claims that many people will be paying less tax when in fact average Canadians were paying about $1,200 more in tax after tax reform than they were prior to 1984. In other words, the Progressive Conservatives have raised the taxes on the average family earning of perhaps $35,000 per year by a sum of $1,500, and then it has turned around and taken down their taxes by perhaps $250 or $300 per year for a net increase that we calculate of $1,253 per year.
I know my hon. friend will agree with me that there is something perverse about a situation in which only the top 2 per cent of taxpayers earning more than $100,000 per year
wind up paying less tax in 1988 after tax reform than they paid in 1984.
My reason for asking a question of my hon. friend is the fact that it seems to me that some of the problems we are having with taxation under the Progressive Conservatives did not begin on September 4, 1984. They began before then.
I would like to ask my friend if he recalls the Budget brought down by the Minister of Finance who is currently the Opposition House Leader in the Senate, Senator MacEachen, who in 1981 brought in a Budget which purported to broaden the base of the tax system and at the same time resulted in a very substantial drop in tax rates on wealthy Canadians.
Does he recall as well the fact that the loopholes that were being plugged by that Budget eventually got opened up again, and that in fact the Minister of Finance of the time gave way in front of the interests so that the broadening of the base that he was proposing did not take place but that it did not take away the reductions to wealthy Canadians?
What is the difference between the Liberal Party which cut tax on wealthy Canadians in 1981 without notice that it was dropping the base and the Conservative Party which in 1988 is proposing to cut taxes on wealthy Canadians while still leaving a number of loopholes?

I noted that the Parliamentary Secretary to the Minister of Finance had indicated that there are no more tax shelters in the tax system. Of course, he did not mention the capital gains tax exemption on the first $100,000 earned by the rich people as provided under the Conservative tax system.
My question is the following: Didn't this regressive tax, whose history began with the Conservatives, exist under the Liberals?
Naturally, Mr. Speaker ... I realize that the Hon. Member told us there is a lack of funding, a lack of support by the government for research and development. But, this lack of funding, wasn't it something the Liberals proposed in the first place? History didn't start on September 4, 1984. So, how can we distinguish between his Party, which decreased the tax rate for the rich and did not properly finance Canadian research and development, and the Conservative Party which is now doing the same thing?


Don Boudria: Mr. Speaker, my colleague stated that not everything in taxation started under the Conservatives. It would be true to say that nothing has started under an NDP Government because there has never been one, and there never will be one. Thus we have to start off with that particular premise since it is a reality that all Canadians know and certainly all Members in this House know as being a fact.
That being the case, let me remind the Hon. Member that it was indeed the Liberal Party which stood up for universality of
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old age pensions when the Tories tried to cut old age pensions in the Budget of their Minister of Finance.
It was the Liberal Party that established a national health care system, the old age pension, and a guaranteed income supplement. Those were measures to more evenly distribute the wealth and to aid people who were in the position of having less financial wealth than others. Those are some of the examples of good social programs established by the Liberals in the past. Those very same programs have been threatened and cut back by the Conservatives who are in power now. One need only look at the issue of deindexation of income tax deductions.


Michael Morris Cassidy: What about six and five?


Don Boudria: Let me repeat this slowly. The deductions in income tax were indexed by the Right Hon. Member for Vancouver Quadra (Mr. Turner) in the days when he was the Hon. Member for Ottawa-Carleton, part of the riding that I now represent, and when that Member was the Minister of Finance for Canada-and a great Minister of Finance he was. He established a system whereby there would not be an inflation-causing income tax system the way we have now. In other words, if someone receives a 3 per cent cost-of-living allowance each year, that 3 per cent is now taxed. Under the Liberals it was not. The system was far fairer and was established by a more progressive Government than the one we have now.
I am glad the Minister of Communications (Miss MacDonald) is listening attentively. This information will come in handy in the election that we will soon have when Peter Milliken confronts her with some of those facts in the great riding of Kingston and the Islands.


Michael Morris Cassidy: I was a little puzzled when hearing the response of the Hon. Member for Glengarry-Prescott- Russell (Mr. Boudria). I recognize that he was in the Ontario House in 1981, and not in the federal House, but I do not recall his responding to my specific question. The question I asked is, what is different about a Liberal Finance Minister in 1981 cutting taxes on the rich, and a Conservative Finance Minister under tax reform cutting taxes on the rich? I find it difficult to distinguish between them. I listened carefully, but I did not hear the Hon. Member offer any credible distinction. I recall that in Opposition the Liberals seem to talk like New Democrats, and we welcome their support from time to time on issues that we feel to be important, but at the same time we find it somewhat inconsistent. The Hon. Member seems to forget that his Party deindexed Public Service pensions under the six and five program and turned around and attacked the Government for attempting to do the same thing in 1985. The Liberals are being a bit inconsistent.
What is different about the Liberals who cut taxes on the rich in 1981 in the MacEachen Budget, and the tax reform
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here which seems to be far more interested in cutting taxes on wealthy Canadians than it is in bringing in tax equity for average Canadians?


Don Boudria: The Hon. Member from the NDP states that he welcomes the Liberals in Opposition from time to time. I am glad that we are only in Opposition from time to time, which is certainly not the same as could be said for the NDP Members. They have a lot of practice at being in Opposition. They have been there and will be there forever.
The Hon. Member asked what the difference is between a Liberal Finance Minister and a Conservative Finance Minister. The Hon. Member raised the issue of a Budget in 1981 which he says was unfair toward average Canadians. The Tories criticized that Budget because it was unfair toward rich Canadians. It is difficult to reconcile the views of the Tories and the NDP. Each one is polarized with tunnel vision and they cannot see the rest of the world around them. That is unfortunate.
I described how in the past Liberals attempted to make the tax system fairer by redistributing wealth throughout the country. Many of the valuable social programs, supported from time to time-but always when they were in Opposition-by members of the NDP.
I have described how all this has happened for the benefit of the Member for Ottawa Centre (Mr. Cassidy) who, by the way, was not here before 1984 either. I was in the Ontario Legislature, and so was he as the Leader of the NDP.


Alan Redway: Mr. Speaker, I appreciate the opportunity to say a few words in support of Bill C-139 which deals with the question of tax reform. You and I, Mr. Speaker, have heard a lot about tax reform over quite a number of years. In fact, when I first considered standing for Parliament, I can remember that the whole issue of tax reform was in the forefront of public discussion and debate. I can remember a leadership contender in our Party by the name of Mr. Peter Pocklington who made that one of the prime objectives and thrusts of his efforts to become the Leader of the Progressive Conservative Party in 1983. You will recall, Mr. Speaker, the debate that raged around the issue of tax reform. As a nominated candidate for office, knocking on the doors of many people, I found a great interest in and a great desire for tax reform.
However, tax reform means different things to different people. As we talk to different people, they send us the message that tax reform does not always mean the same to everybody. If there is one thing that people have in common about tax reform, it is the whole question of its conveying the meaning to them that they will be paying less taxes under some sort of reformed system than they were under the present or past system. That is what the Bill before us this evening is all about. This Bill means that Most people will pay less in tax than they have been paying.

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I had the opportunity of sitting here today and listening to the comments of the Opposition with respect to this Bill. I listened to the Elon. Member for Laval-des-Rapides (Mr. Garneau) speaking on behalf of the Liberals. I listened to the Hon. Member for Ottawa Centre (Mr. Cassidy) speaking on behalf of the NDP-the new dinosaur Party. I also listened to the Hon. Member for Glengarry-Prescott-Russell (Mr. Boudria). Frankly, as I listened to their comments, I was astounded. I wondered if we were talking about the same thing. I have a friend who was the Mayor of the Borough of East York where I hail from by the name of Leslie Saunders. He used to describe some things as being "out of this world". As I listened to the comments of the Liberals and the new dinosaurs, I had to agree with him that they were "out of this world". In fact, I thought that perhaps they were "out of this world" by many of the comments they made on tax reform. I could spend all my time commenting on all of the things that they said. However, I do want to comment on a few of the things, because they were and they are "out of this world".
One of the first comments the Liberals made had to do with the question of the progressiveness of the income tax system. Both Liberal Members who spoke in this debate indicated that under the former Liberal Governments there was a progressive tax system but that for some reason or other, the progressive tax system is now being done away with. Well, I can see the smile curving at the edges of your mouth when you hear those words about the progressive tax system under the former Liberal Governments. You and I know about all of those interesting tax shelters that the former Liberal Government had introduced and put into effect. You will remember the tax shelter for MURBs. That certainly was a very progressive measure. It allowed people with high incomes to invest their money and in fact to have a tax deduction and not pay any tax on the money that they had in that tax shelter.
You will remember, of course, the film investment tax shelters that were put in place by the former Government, again a tax shelter which enabled rich people to invest their money in the production of movies, shelter their income and not pay any income tax on it.
You will remember as well that there were similar tax shelters for things like hotel investments, similar tax shelters for things like recreational vehicle purchases. These certainly added to the progressiveness of the tax system in a big way. You know that as well as I do that the system that was in place under the former Liberal Government was anything but a perfect progressive tax system.
To top it all off, there was something called the scientific research tax credit, one of the greatest boondoggles that has ever been introduced into the income tax system by any Government. It was introduced by the former Liberal Government, and it milked and looted the Treasury of this country. It certainly could not be considered in any way, shape or form to
be adding to the progressiveness of the tax system. In fact, it did just the opposite, as all of these tax shelters did.
What has happened to these tax shelters, as you and I know, is that they have been eliminated by the present Government, by the present Minister of Finance (Mr. Wilson), and all of those steps in eliminating those tax shelters have helped to return the system to a progressive tax system, the kind of a system that the Liberals tell us that they want to see but the kind of a system that certainly they did not produce.
Another of the comments of the Liberal spokesman on this tax reform legislation had to do with the question of the simplicity of the tax system. Once again the Liberal spokesman seemed to imply that the tax system as it existed under the previous Government was far simpler than it is going to be under the present system.
You and I know that many of the complications of the previous system-complications which included some of these tax shelters-are being eliminated by the present Government. One thing that always strikes me about this whole question of simplicity-and several members of the Opposition have touched on this issue, whether they were Liberals or new dinosaurs-is that it seems to imply that it is some sort of a panacea, that there is some way of creating a simple system but still creating the same kind of a system that they want to see, one which takes into account rich Canadians, poor Canadians, and the question of a progressive tax rate. You and I know that that is very difficult and probably impossible to accomplish.
Certainly we can have a simple system, one where all of us can sit down, as we did 40 or 50 years ago, and work out our income tax on one simple page, but it does not take into account all of the complexities that have now been built into the system, which would cause a great furore and uproar if they were done away with.
One simple example, is the deductions for charitable donations. You know, Mr. Speaker, as I know, that under that very simple system that we used to have there was no such thing as making deductions for charitable purposes from income tax. That system was instituted in an effort to assist organized charities to raise money. A great number of organized charities doing very beneficial work for society have been created under that system.
Just think, Mr. Speaker, of the furore the Opposition would raise if we suddenly did away with the charitable donation or any charitable tax credit whatsoever. Certainly it would make the system much simpler, but at the same time it would devastate this system of charitable giving and the system of charitable expenditures that have been built up over many years. It would make the system simpler, but it certainly would devastate the present charitable scheme that has been established over many, many years.
Another comment of both of the opposition Parties had to do with the fact that although the Government has indicated
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that there are some 850,000 taxpayers who will be taken off the tax rolls by this tax reform legislation, in fact there are a million people who are now paying taxes that were not when the Government took office.
Again, Mr. Speaker, you and I know that there is a very simple answer to that, and that is the fact that when the Government took office, there was an unemployment rate across this country of something approaching 12 per cent, whereas that has now been lowered very substantially.


Flora Isabel MacDonald: Thirteen per cent.


Alan Redway: Into the 7 per cent range. You and 1 know, Mr. Speaker, that most of those people who are new taxpayers are people who were not working before but now have jobs. No wonder they are paying taxes. I guess they are happy to do that. They were not happy when they did not have a job. They wanted a job, and they knew that with a job they would have to pay some income tax. That is in fact what has happened.
As you know, there have been over 1.2 million new jobs created since September, 1984. In fact, it is interesting to note that unemployment has fallen since 1984 by 430,000. The number of unemployed youth has fallen by 201,000. The number of unemployed women has fallen by 150,000. That means, very simply, that these people now have jobs which they did not have before. It is no wonder that they are paying taxes where they were not paying taxes before.
The Opposition in their criticism went on to deal with a number of other items as well. One of the things that they talked about was the unfairness of things like the capital gains tax exemption and the dividend tax credits. In a recent newsletter I published an outline of how this new tax reform legislation would impact on the average taxpayer. I published in effect a tax return for 1988, and I left it to the reader to work out their own income tax in terms of that income tax return for 1988. I invited them to contact me if in fact they were going to have to pay more tax or have to pay less tax. It is interesting to note that 100 per cent of the people who contacted me and who felt that they were going to have to pay more tax under this system were either people in a high-income bracket to begin with or people who were presently taking advantage of the dividend tax credit, whether they were modest-income people or whether they were high-income people, and it is that that concerned them.
Some modifications had been made to this legislation which the NDP says is helping the rich get richer. Those modifications concern people with high incomes because with the changes in the dividend tax credit and the change from what was anticipated in the capital gains tax credit, they anticipated that they would be paying less income tax with the present system than they would be with the new system. It is significant to my mind, Mr. Speaker, that these so-called assists to the rich, the dividend tax credit and the capital gains tax credit, are really the main source of criticism on the income
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tax reform package. People in the higher income tax brackets feel the substantial change in the tax system and feel they will be paying much more tax than they paid in the past whereas I, at least, am not hearing from the lower income people because, I assume, having worked out their tax, they find that they are saving money. It is not costing them any money under the new system.
Finally, let me comment on the criticism which the opposition Parties have levied regarding the sales tax changes. The opposition Parties said that people are now paying tax on potato chips but were not before. I have a company in my constituency by the name of Wrigley's Gum. Wrigley's Gum became very exercised with me and with the Government a couple of years ago when it discovered that under the sales tax system people who bought Wrigley's Gum had to pay sales tax whereas those people who bought potato chips did not.
The Wrigley's Gum people felt that potato chips were a direct competitor to them and said that everybody should be paying sales tax on goods or no one should be paying sales tax. I suppose the Government could have said: "Well, we will eliminate sales tax on everything". As you know, Mr. Speaker, that would have meant tax on something else.
Another comment which the opposition Members have made and make regularly has to do with the whole question of the increases in taxation over the last four years. There is one simple answer. Under the previous Government, supported by the New Democratic Party, the deficit in this country rose enormously to frightening heights, approaching $40 billion on an annual basis. When our Government came to office, we started off by suggesting we would cut some of the expenditures so as to reduce the deficit. Every single solitary suggestion that was made for a cut was opposed vehemently by the Liberals and by the new dinosaur party. In each case, both opposition Parties opposed anything that would cut expenditures and now, of course, they are opposing and have opposed anything that would change the tax system in any way. You know, Mr. Speaker, and I know that when you are in Government you cannot have it both ways. Unfortunately, the Opposition wants to imply that you can have it both ways. That just does not work and we all know it. Even the opposition Parties know it in their hearts.
I did not hear the Opposition commenting on the results of tax reform. The Government has said that the net personal income tax revenues to the Government will be reduced under this package by about $12 billion over the next five years. I did not hear either of the opposition Parties dispute that in any way. The federal Government said the income taxes will be reduced for 9.7 million households for over 85 per cent of all households by an average of $490. I did not hear either of the opposition Parties or any of the opposition spokesmen dispute those facts.
The Government says that about 850,000 low income Canadians will have their income tax rates reduced to zero or will receive refundable tax credits in 1988. I did not hear

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either of the opposition Parties or their spokesmen dispute those facts. The Government said that income taxes will be cut for about 1.3 million of the 1.4 million households. About
250,000	elderly Canadians will have their income taxes reduced to zero. I did not hear either opposition Party dispute that nor any of their spokesmen dispute those facts.
All in all, it is interesting to note that as the Government has indicated, under this tax reform package there will be a very substantial reduction. In fact, a very, very substantial number of people will be cut off the tax rolls entirely. A very, very substantial number of people will have their taxes reduced, but we did not hear any of those facts disputed. All we heard disputed was the past. That is where both opposition Parties stand on this issue and on all issues. They are deeply rooted in the past. They do not seem to be able to look forward or get their heads out of the sand. It is time that both opposition Parties admitted, as they know in their hearts, that this is good legislation. It will be good for Canadians and we should see the Bill passed quickly.


Mr. Deputy Speaker:: The Chair has considered the subamendment moved by the Hon. Member for Glengarry- Prescott-Russell (Mr. Boudria) and finds it to be in order. I will, therefore, propose it to the House. Mr. Boudria, seconded by Mr. Grondin moved:
That the amendment be amended by deleting the "and" before (6) and the
period at the end of thereof and by adding the following:
"and (7), that imposes a higher burden on small manufacturing corporations and unnecessary red tape on the self-employed."
The debate will continue on the subamendment. Questions and comments, the Hon. Member for Ottawa Centre.


Michael Morris Cassidy: Mr. Speaker, I thank the Hon. Member for York East (Mr. Redway) for his speech. I found it a bit difficult listening to him to recognize how progressive his Party really was. I noted the number of people whose taxes would be cut. I do not dispute the figures particularly, but what I noted was that a cut, after you have had a big increase, is hardly a cut at all. It reminds me of the story of somebody who goes to the store and he or she-I will be catholic about this-comes back and says: "Well it was 33 per cent off. I could not afford to buy it". You still wind up paying something for whatever it is you bought. That is very much the same with Conservative tax reform.
If your taxes go up by $1,500, which is what has happened for the average family since 1984 under the Conservatives, and you get a tax cut of $300, should you be grateful for the tax cut or should you not recognize the fact that you still wind up paying $1,200 or more in taxation compared to when the Government came to power. That seems to me a very relevant figure. I do not think it is a very progressive type of tax reform if the Conservatives wind up soaking the average family $1,200 more after four years and after tax reform than that family was paying before.
I heard the Hon. Member trying to blame the Opposition that the Conservatives could not cut expenditures where they felt like cutting expenditures. We make up 32 Members in the House of Commons. There are a few more Liberals, a total of some 70 Members in Opposition. The Progressive Conservative Party has three times our number. If they could not cut expenditures, it was because they did not know how, they did not want to, or it was politically unfeasible.
However, my question is whether it is progressive, in his view, to cut taxes on the average person earning more than $100,000 a year to a level lower than in 1984, but to raise taxes on all other Canadians higher than they were in 1984? Is it progressive to have three-quarters of the taxpayers earning over $100,000 a year receiving a tax cut of $4,165, whereas the average taxpayer earning under $15,000 a year gets a cut of only $140? If he thinks that is progressive, I am not in agreement with him and I find it very difficult to associate myself with the so-called tax reform put forward by his Party. It is not fair reform, it is Tory tax reform.
The Hon. Member suggested his Party had done away with a number of tax shelters and therefore deserved a certain amount of praise. He neglected to mention the $100,000 total tax break for capital gains which is available largely to high income Canadians. Is that not a tax shelter worthy of being enshrined in the pantheon of Liberal tax shelters which the Conservative Government inherited? If that is the case, why did the Government, if it is so progressive, not eliminate it?
I would conclude by saying that since the Hon. Member insists on referring to my Party by a name unfamiliar to me, and I always thought the dinosaurs were in the Progressive Conservative Party, and given the retrogressive nature of the tax reform proposed by the Progressive Conservatives, they should be renamed the "prehistoric coprolite party".


Alan Redway: Mr. Speaker, I wish the Hon. Member had listened carefully to my comments before he launched into his own dealing, first, with the tax increases that occurred before this tax reform package. If he had, he would have heard me say that those tax increases preceded the package we are talking about now and therefore he should be addressing the legislation we are dealing with now. He apparently is not interested in tax reductions now because he finds that a tax reform package that actually cuts taxes should be criticized. He apparently would have been much happier had there not been any tax cut whatsoever. He then could have said that all we have had is tax increases over these years.
In addition, the Hon. Member obviously was not listening when I spoke about the enormous deficit that was in place when this Government came to power. He and his Party and the Liberal Opposition criticized and vehemently opposed every suggested spending cut. It is interesting that under a government of the Hon. Member's Party there is no way anything could be cut. There is no way you could raise taxes.
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At the same time, somehow or other they want the deficit to mysteriously disappear or else they do not care about it whatsoever.
The economic policies put in place prior to this tax reform package have rejuvenated the country. They reduced unemployment and increased economic growth. We have had the greatest job-creation in the western world for each of the last four years. We have had the greatest economic growth for each of the last four years.
It is interesting to note as well that there has been a decrease in the number of Canadians living below the poverty line since 1984. It has fallen by 525,000. This, apparently, under these terrible economic policies of the present Government. Not only have people been put back to work, not only were 1.2 million jobs created since 1984, there are also
525,000	people who are now above the poverty line who were below it in 1984.
In addition, with all the Hon. Member's criticisms about the economic policies and taxation policies of the Government, the average family income in this country has climbed in real terms since 1984 by some $1,600. That is very interesting in light of the Hon. Member's comments with respect to this package.
I am sure that on reflection the Hon. Member is really supportive of this package. He really wants to see taxes cut and he really feels this is a good piece of legislation and wants to see it put in place as quickly as possible so Canadians can benefit.


Mr. Deputy Speaker:: Resuming debate. The Hon. Member for Regina East.


Mr. Simon de Jong (Regina East):: Mr. Speaker, I definitely wish to participate in this debate this evening. I might say, however, being a member of the Standing Committee on Finance, Trade and Economic Affairs, that we have discussed tax reform for almost two years now and it is not until the dying months of the Government, in the middle of the summer, that it finally brings in its legislation. It seems to me the Government has waited for some of its most important legislation in order to try and ram it through Parliament when at least half of the Members are not present and most Canadians are either on holidays or at the cottage. I think the Government's intention is quite clear. It is not interested in the Canadian people having too close a look at what is in the legislation, and I do not think it is interested in having a full debate in the House on this legislation.
When we first heard from the Minister of Finance (Mr. Wilson) about tax reform, he stated in his speech on June 18, 1987, page 7360 of Hansard:
Mr. Speaker, tonight I am proposing sweeping changes to Canada's tax
system. These changes will directly affect all Canadians for many years to
come.
Our tax system should be a strong force in meeting the challenges that face
our country.
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It must help individuals and businesses deal with the challenges of the 1990s and into the next century.
It must reinforce our ability as a country to continue to provide the social programs needed by our people.
It must generate the hope and opportunity that will motivate Canadians to build a strong country in a very competitive world.
But to do this, the tax system must have the respect of Canadians. We know that it does not. And we know why.
We all know that the tax system allows many profitable corporations to avoid paying a fair share of tax, year after year.
We all know that it allows some people with very high incomes to pay less tax than the average Canadian wage earner, year after year.
We all know that it allows those who are able to use special tax breaks to shift the burden to others less able to carry it.
Canada needs a tax system that raises revenues in a fair and reliable way; a system that supports our national effort to promote economic growth and create more and better jobs.
Those were the comments of the Minister of Finance. By these comments I and all Canadians will judge the legislation before us today.
Since the Conservatives were elected, corporate income tax has increased by 8 per cent, personal income tax has increased by 45 per cent and sales tax has increased by a whopping 67 per cent. I ask again, is this equity, is this fairness? It is obvious to the Canadian public that the tax burden, particularly under a Conservative Government, has been placed on the shoulders of income earners, mainly the middle-income earners. They are the ones who are carrying an increasing load of the tax burden. Again, corporate income tax has only increased by 8 per cent since the election of the Government but personal income tax has increased by 45 per cent and the sales tax has increased by 67 per cent.
Conservative Members, including the Minister of Finance, made much to do about how this tax reform proposal will take some 850,000 low-income earners off the tax rolls. They are right, but they do not mention that since the election of this Tory Government some one million low-income Canadians have been put on the tax rolls. What we have is a revolving door, smoke and mirrors. The Government made low-income Canadians liable to pay tax and is now taking some of them off the rolls. However, that is only temporary because the Government failed to reintroduce full indexation and many of the 850,000 Canadians taken off the income tax rolls this year will be back on next year or the year after.
One million Canadians were put on the income tax roll because the Government took away indexation. Therefore, as incomes rose, because of inflation, they all of a sudden found themselves paying tax whereas before the election of this Government at least the thresholds kept pace with inflation. The Government took that away and that is why one million Canadians who should not be paying taxes because of their low incomes are paying tax for the first time. The Government is now attempting to take credit for removing 850,000 of them for this year only. I emphasize the fact that it is for this year

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only because full indexation has not been introduced and many of these 850,000 low-income Canadians will be paying tax again next year or the year after.
The Minister talks about fairness, he talks about removing the tax load from the backs of poor and middle-income people. I ask again whether he has done it. I suggest to you, Mr. Speaker, that he has not. He has reduced the rates of wealthy Canadians from a top rate of 51 per cent to 44 per cent. In other words, a stockbroker earning $200,000 a year is going to save $15,000. Is it fair that a secretary earning $28,000 per year should have a marginal tax rate 5 per cent lower than someone earning over $1 million a year? Is is equity that a secretary or labourer earning $28,000 a year should have an effective tax rate only 5 per cent lower than a person earning over $1 million a year?
What we have before us today is a sham. Let us look again at the savings. A household earning $15,000 a year saves $90 with this tax reform proposal. A household earning up to $100,000 a year saves $1,615 in taxes. A household earning over $100,000 will save $4,365 per year in taxes.
Is this fairness? Is this equity? It is not, it is a sham. It is a sham that the Tories are hoping to perpetrate on the Canadian public. I suspect that the average savings in income tax of $8 per week which the average Canadian received on his pay cheque in the month of July will not make up for the many tax increases that the Government has imposed on many of those Canadians.
One should also mention that much of these income tax savings will be lost. In fact, most of it will be lost because of the increases in sales tax which the Government has introduced for this year. There is a $1.1 billion increase in sales taxes for 1988. Therefore, most of the poor will lose out.
When the Minister of Finance announced his tax reform proposals, he also mentioned that many Canadians have lost respect for the tax system because many large corporations did not pay any tax. In his White Paper he stated that in the year 1983, 110,000 profitable corporations did not pay a cent of tax. He was proud to point out that had his proposals been in effect, some 50,000 of those corporations would now be paying tax. Why, under these proposals, will there still be some 60,000 profitable corporations which will not pay one cent of tax?
Is this fairness? Is this equity? Is this what the Minister of Finance meant when he said: "We all know that the tax system allows many profitable corporations to avoid paying a fair share of tax year after year"? The rhetoric is great but the reality, I am afraid, is something else. The fact is that some
60,000	very profitable corporations will still not pay a cent of tax. That means that $10 billion to $12 billion in profits do not create one cent of tax. Is that what the Government means when it talks about equity and fairness and restoring confidence in the tax system? It is no wonder that many Canadians feel ripped off by our tax system.
We hear Tory Members talking about the need to raise taxes because of the terrible deficit that the Liberals left behind. I sympathize with that. I think we have a problem with the deficit. It is much too large. The amount of interest we have to pay on the deficit every year is unacceptable, it is scandalous. However, I do not accept that we have this deficit because we have been spending and living beyond our means.
The OECD figures show that Canada spends less on social programs than any industrialized country in the world with the exception of the United States. We spend the second lowest percentage of our gross domestic product on social programs; old age pensions, housing, education, health, family allowance, and income support programs. We spend less as a percentage of our gross domestic product than Holland, Ireland, Italy, Germany, Sweden, Denmark, Japan, France, or Belgium.
Why is it that little Holland, with hardly any resources and an over-population, can spend more on its senior citizens, its education system, and its health system than can Canada, a young country with a population of young people and an abundance of resources? That is, I suggest, because the wealthy in this country have not been paying their fair share.
We have the deficit because there is $10 billion to $13 billion that does not generate one cent of tax. The deficit is not a result of overspending on senior citizens or the unemployed, or because we are spending too much on education or housing. I hear the Tories complain day after day that we are living beyond our means and must tighten our belts. There are food banks in every major city of this country. Yet the Tories still have the gall to tell us we are living beyond our means. I find that obscene. It is also obscene when the spokespersons from the large and wealthy corporations tell us that we must tighten our belts because we are living beyond our means and must reduce the deficit.
One year I received a letter from the President of the Royal Bank of Canada who advised us that we must tighten our belts because the deficit is out of control and government spending must be cut. Yet in 1982, 1 believe, the Royal Bank of Canada had over $365 million in profits and did not pay one cent in tax. In other words, a woman teller at the Royal Bank of Canada would have paid more in dollar and cents in tax than the Royal Bank of Canada. In fact, in that particular year the Royal Bank of Canada received a tax credit of some $20 million.
That is why we have a deficit. Yet we see a letter like that from the President of the Royal Bank of Canada saying that we must cut back on old age security and pensions, cut back on the benefits to the sick and elderly, cut back on social assistance and cut back on education while there are food banks and hungry people on the streets. That is obscene.
The Royal Bank of Canada is only one example. We asked the life insurance companies when they appeared before the committee when was the last time they paid tax. Most of them
July 19, 1988

could not remember because the last time they paid tax was in the mid 1970s. Billions of dollars in profits did not create one cent in tax. I suggest to the Tory Members that when they are concerned about the deficit, as they should be, they should examine why it exists. It is not because we are spending too much on social programs. It is shameful that we are second to last among all other industrialized countries in the world in terms of the amount we spend on social programs. When the elderly, the sick and the kids are blamed for the deficit, I say double shame.
The New Democratic Party Members on the Finance Committee co-operated with Government Members. I thought we produced a relatively good report. Unfortunately, the Government chose to ignore many of the recommendations of the committee. For example, it chose to ignore our recommendation of an advance corporate tax. It chose to ignore the recommendation of a minimum corporate tax to ensure that a company will indeed pay some tax if it makes a profit.
These companies enjoy a good business climate in this country. They depend upon educated young people to make profits for them and it is the public that has paid for their education. Is it not about time that the corporations paid something back to the public?
These corporations enjoy the road system and railway system in this country. Is it not time they paid for some of that? They enjoy many of the incentives governments have given them in grants and subsidies. Is it not time that they help pay for that?
We have seen the wealthy receive most of the tax breaks under the present Government. Despite all the rhetoric of the Minister of Finance about the unfairness of the existing tax system in which the rich were not paying their fair share and corporations making good profits were not contributing to the national purse, when it comes to the bottom line in Tory tax reform the Minister is taking the same action that he is denouncing. After tax reform, the rich in this country get even greater tax breaks than before.
Although the Government claims it will create more revenue from the corporate sector, already some of the Minister's estimates are out of whack. It is a farce for Government Members to talk about tax reform. It does not even measure up to the Minister's own standards.
It is true that compared to last year many Canadians will pay less tax. However, when we compare that to when the Tories came to power, most Canadians are paying more in tax. The corporations will be paying proportionately less in taxes than before.
When the Tories were elected, corporations made up some 20 per cent of tax revenues. In 1987-88, it was 15.6 per cent. After tax reform, it is projected that 17.2 per cent of all revenues will come from corporations. That is a far cry from the measly 20 per cent that existed before the Tories were elected.
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The Minister has not introduced genuine tax reform. In fact, the tax system is even more regressive. Canadians will easily see through this sham, and I suggest they will reject it as they will reject the Government when it gets the courage to call an election and face the electorate. At that time Canadians will make a pronouncement on this Government that the Tories will not like.


Marion Dewar: Mr. Speaker, I want to compliment my colleague on his analysis of this Bill. We need to consider further the kind of progressive tax policy that is needed in this country. The Government has considered using tax credits rather than tax expenditures. Does a policy of tax credits rather than tax expenditures give a break to the poor?
There are more people living below the poverty line and paying tax now than ever before in the history of Canada. I do not believe it is acceptable to anyone that we ask the poor to pay our bills. We must give consideration to a tax reform system that redistributes income on an equitable basis. Has the Hon. Member considered the difference between tax credits and tax expenditures? Does it make this legislation any more progressive?


Simon Leendert de Jong: That is a very good question. In theory, yes, moving from a deduction to a credit is more progressive. It works in this way. Let us take a SI,000 deduction. If one is paying a tax rate of 50 per cent, a $1,000 deduction is worth $500. However, if one is a low-income earner and only paying, let us say, 25 per cent rate, that $1,000 deduction is only worth $250. The Government is taking away certain items as deductions and making them into credits so that the value of the credits are the same whether one is earning $100,000 and is in the 50 per cent bracket or one is earning $25,000 and is in the 25 per cent bracket. If the credit, let us say, is $200, it will be worth $200 if one is earning $100,000, and it is the same $200 if one is earning $25,000.
Having said that, it is interesting to see what the Minister of Finance and the Tory Government decided to move from a deduction to a credit and what they kept as a deduction. Those items that are important to lower and middle-income Canadians such as the personal exemption, the dependent's exemption and so on became credits. These are not too important to those earning $100,000 and more a year. What is important to them, of course, are the capital gains. What is important to them is the retirement savings plans, the RRSPs. These were not made into credits. These were still deductions.
It is interesting to note that 1 per cent of all taxpayers whose incomes are over $100,000 receive 34 per cent of all the capital gains. Capital gains do not become a credit. That still remains a deduction. Those with the higher incomes are the ones who will benefit. It is the same with retirement savings plans. These were not made into credits. They are still deductions. Those earning $100,000 per year will eventually be able to deduct $15,000 a year. If those people are in the 50 per cent bracket,

July 19, 1988
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that means the Government will forgo some $7,500. Even if one is earning $30,000 and puts half of that into a RRSP, the way the Government has it rigged, they could not even claim that $15,000. But let us say for argument's sake that they could, and they are in the 30 per cent bracket. That $15,000 is only worth one-third or $5,000. It is worth $7,500 to the guy in the 50 per cent bracket but only $5,000 to the guy in the 30 per cent bracket. Again, in terms of capital gains and in terms of retirement plans, these did not become credits, they are still deductions, so while on the one hand we can say that moving personal exemptions into credits is progressive, where it really counted, the Government did not move.
The Government also took away some tax deductions that are important to middle-income earners. It just wiped them out. It did not even change them into credits. For example, the $500 deduction that was previously able to be deducted because of employment expenses is gone. The $1,000 interest deduction is eliminated. These are two deductions that are important to middle-income earners. They are not as important to those earning $100,000 or more per year. Deductions that are important to middle-income earners are gone and deductions that affect the poor have been turned into credits, but deductions that really benefit the rich still remain a deduction. I think that proves my thesis that this legislation is making the income tax system not more progressive but less progressive. It is making it regressive despite what the Minister of Finance initially claimed.


Alan Redway: Mr. Speaker, the Hon. Member is aware, and I do not think he disputes the fact, notwithstanding his comments, that income tax under this legislation will be reduced for 9.7 million households, over 85 per cent of all households, by an average of $490. He knows, and I do not think he disputes the fact, that about 850,000 lower-income earners will have their income taxes reduced to zero or receive refundable credits in 1988. He knows as well, and I do not think he disputes the fact, that income taxes will be cut for about 1.3 million of the 1.4 million households with at least one person aged 65 or over and about 250,000 elderly Canadians will have their income taxes reduced to zero. I do not think the Hon. Member disputes any of those facts, but he does dispute a good many of the changes that have been made in the legislation.
Would the New Democratic Party eliminate flow-through shares? Would the New Democratic Party eliminate the $500,000 capital gains tax exemption for farmers? Would the New Democratic Party eliminate the deduction for Registered Retirement Savings Plans?


Simon Leendert de Jong: Mr. Speaker, in his rhetoric, the Hon. Member wants us to look at 1987-88. He does not want us to look past 1987. He says we are dinosaurs if we talk about 1986 and 1985. Does the Hon. Member want me to totally blank out and not consider the full record of this Government since it was elected in 1984? I do not think that would be quite fair. We have to look at where things were when the Tories were elected
and where things are now. It is true that compared to last year, all these people are off the income tax rolls. But did the Hon. Member not hear my address? Perhaps he did not. I pointed out that since 1984, the Tories have added a million people to the income tax rolls.


Alan Redway: Did you hear my comment about that?


Simon Leendert de Jong: Yes, but that happened before 1987 and I am a dinosaur for looking back prior to 1987.


Alan Redway: They did not have a job before.


Simon Leendert de Jong: The fact is that you guys dropped the deindexation of the income tax and so all at once a whole bunch of people got moved onto the income tax rolls.


Alan Redway: Those people were unemployed before.


Simon Leendert de Jong: That is the reason why more people, poor people, ended up paying income tax. For example, let me put on the record that the $3.1 billion that is going to be taken out of the income tax system, or the $3.1 billion that is going to go back into the pockets of people because of the changes in the tax regime because of tax reform, means a savings of $3.1 billion to taxpayers in this country, but with respect to the bottom income group that means 26 per cent of all householders will receive some $257 million in total as a tax break. That is 8 per cent of $3.1 billion.
Twenty-six per cent of all householders will receive 8 per cent of the benefits. The top income group, which represents 2 per cent of all householders, will receive $379 million in tax breaks, or in other words 12 per cent. Twenty-six per cent of the low-income earners will receive 8 per cent of the total tax benefits whereas 2 per cent of the top-income earners will receive 12 per cent of the tax breaks that the Minister of Finance has introduced in this budget.
Is this fairness? Is this equity? Is this what the Minister of Finance talked about when he said: "We all know that the tax system allows many profitable corporations to avoid paying a fair share of tax year after year. We all know that it allows some people with very high incomes to pay less tax than the average Canadian wage earner year after year"? Is that what he meant when he said that the average Canadian taxpayer is paying more taxes than the wealthy? It is a sham.
What this is about, as my figures have indicated, is that low-income Canadians are still paying more and that high-income Canadians are getting even more tax breaks than before tax reform. It is a sham. It does not hold water.


Mr. Michel Champagne (Parliamentary Secretary to Minister for External Relations):: Mr. Speaker, I would point out that my Conservative colleague asked a question to the last NDP Member who had the floor, wanting to know whether an NDP Government would do away with the capital gains tax
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exemption for farm producers, whether the NDP Government would abolish-no, he ought to listen instead of shouting- whether an NDP Government would abolish flow-through shares or boost corporate taxes. There was no answer, Mr. Speaker. The NDP Member chose to criticize something else.
But I want to go back a bit further in the debate because my Conservative colleague did raise a very good point, particularly when he referred to the capital gains tax exemption for agricultural producers who, in my opinion and in the opinion of most Members who are genuinely concerned about the nation's business and the public weal, know full well that their $500,000 capital gains tax exemption is not a $500,000 capital gains tax exemption for wealthy people.
This is something our Government had promised in 1984 to help Canada's farm community get back on an even keel, and that is the way we forged ahead thanks to the generosity of the Minister of Finance.
First of all, Mr. Speaker, I want to thank you for giving me this opportunity to take part in the debate this evening. I think it is a very important debate, precisely because it deals with the tax reform as set forth in Bill C-139.
Mr. Speaker, some people have their own peculiar vision of what a tax reform should be, but as a responsible Government, a Government whose budgets follow a logical sequence, we simply could not come up with a tax reform featuring every single change which should have been made to the Canadian tax structure. That is so because over the last 20 years there was no major overhaul of our tax system despite the fact that we made significant economic progress and that tax rates underwent some changes, in the sense that corporate taxes declined while personal income taxes increased.
The Opposition, headed by the father of the federal deficit, the leader of the Opposition, not to name him, has accused the Conservative Government of not having done enough. Mr. Speaker, a little history lesson is in order. When we came to power in 1984, the deficit was already over 200 billion dollars divided among all Canadian taxpayers including low-income families and our future generations. In the final analysis, that amount was spent for purely partisan purposes and in an irresponsible manner by a Governement supposedly willing to defend the interests of Canadian consumers.
When we were elected in 1984, Mr. Speaker, under the leadership of our Minister of Finance, we said that we were going to clean up public spending and the facts have proved us right. First of all, we had to bring our spending under control.
The Minister of Finance (Mr. Wilson) brought down his first budget. Liberal and New Democratic Members said that we would never be able to recover our expenses. They were wrong. We recovered our expenses and we brought the deficit under control.
With the second budget, we reduced the deficit. This year we cut the deficit even further and we introduced tax reform.
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Myself and many of my constituents do not understand the New Democrats and the Liberals when they say that tax reform penalizes the poorest families.
Mr. Speaker, I have read the documentation in French and English and found that 850 000 Canadians will no longer be paying any income tax. Indeed, 850 000 low income earners in Canada will not pay taxes any more. And I would respond to my NDP colleague who just made a stupid statement which I find beyond comprehension when he said that the rich are the ones who benefit. Mr. Speaker, those 850 000 low income Canadians are ordinary people who live in my riding, in his riding and in those of my colleagues and who are getting some relief thanks to a Governement which has been able to take charge of public finances, thanks to a Finance Minister who has been able over the last four years to manage budgets rigourously, to lay down within the Civil service, within the departments, budget restraints, more than 70 percent of which have been absorbed by the Governement, regardless of what the two opposition Parties would have us believe.. . That is why, Mr. Speaker, our Government is able, along with the Minister of Finance and the Prime Minister (Mr. Mulroney), to put in place a tax system, a fiscal framework, because we do not claim, as a Government or as a Party, that all problems can be solved in one fell swoop.
We leave the magic wands to the Wonderful World of Disney, which is to say the "World of Broadbent". We act in a rational fashion, Mr. Speaker, and that means controlling spending first and then moving forward progressively with legislation.
We have thus seen over the last four years the Conservative Governement put in place an allowance for widowers aged 60 to 64. The Liberals had promised as much but it took a Conservative Governement to deliver the goods. We have seen an increase in the child tax credit. We have seen social measures for senior citizens. We have seen social measures put in place for low income families. We have also seen, Mr. Speaker, incredible benefits. We only have to think of what our Minister of National Health and Welfare (Mr. Epp) just announced about child care, a very important program for all Canadian families, for all low-income families, for all families that need government assistance. That is the thrust of our tax reform. And that is why we can rightly say in all honesty that the tax reform presented by the Minister of Finance will give low-income Canadians major tax benefits.
People on low incomes, Mr. Speaker, have always been and will always be a special group for our Government, special in that the Governments of our industrialized countries must do their best to help these people.
Despite what the Liberals and New Democrats say about tax reform being meant for the wealthiest individuals and for big corporations that pay no tax . . . For us, Mr. Speaker, as the figures clearly show, tax reform means that 2 million Canadian families will be entitled to a higher refundable credit. Two million Canadian families will have a refundable

Canadian to save money and increase its purchasing power. We are setting up a new balance.
A while ago, I heard a NDP Member tell us that the Government was favouring corporations at the expense of the needy. One of his colleagues nods in agreement.
Mr. Speaker, some months ago an NDP Member moved a motion in this House blaming the Government for maintaining flow-through shares; now, a few months later, he moved another motion this time calling on the Government to maintain flow-through shares. Mr. Speaker, the situation is such that nobody knows exactly where the New Democratic Party stands any more! Yet, that is exactly what happened and the official record of this House can back me up. A NDP Member rose in the House and accused the Government of being too generous with Canadian corporations with flowthrough shares, that it should get rid of them because they favoured the rich at the expense of the poor ... It is a member of this same party, with a very slight possibility of becoming the next government, who rose and said that the House should blame the Tory Government for removing flow-through shares. That is a blatant evidence of intellectual cowardness at the decision-making level and shows that Canadians should not trust the New Democratic Party.
Again, Mr. Speaker, it is also true when we consider that the $500 000 capital gain tax exemption mostly benefits farm producers from all parts of Canada. Our Party does not feel that they are rich, contrary to some high-income people who could certainly afford to pay income tax. No, Mr. Speaker! This is a sector of economic activity which we must assist. And it is for these people that we have implemented the capital gain tax exemptions.
NDP members and some Liberal members are saying that we should abolish that capital gain tax exemptions. Personally, I am against removing the capital gains tax exemption for our farm producers because they need protection and their economic interests should be promoted. We should assist them through regional development and the capital gains tax exemption is a way to achieve that.
To conclude, Mr. Speaker, 1 want to say just how proud I am of the Minister of Finance, of the responsibility he has assumed over the past few years, especially through his tax reform, because he has managed to stand on his own two feet, contrary to all the Ministers of Finance before him over the past 20 years. He has given this House and Canada a new direction, a new approach based on income tax fairness, which means that corporations will pay more, that taxpayers will pay less, that the rich will not enjoy tax exemptions and loopholes as they did under Liberal governments, and that this way we will be able to give Canadians a more equitable social system, more suited to their needs and an economy made for them where they will be treated with fairness from coast to coast.
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Mr. Deputy Speaker;: Resuming debate.


David Charles Dingwall: Mr. Speaker, I want to thank you for this opportunity to participate in this debate. Perhaps before we proceed much farther we ought to remind ourselves of some of the comments that were made by Conservatives in the election campaign of 1984 in relation to tax reform. We all know that politicians, particularly Conservative politicians, have a tendency to speak with great compassion, in great urgency, but when the time comes to seek concrete and specific action, something is left wanting, something is omitted.
Tax reform. I wonder what Joe Howe would have said of the Conservatives' promises with regard to tax reform. For Members opposite, Joe Howe was a great Nova Scotian. He fought for responsible Government. One of the underlining pinnings of democracy and of responsible Government, as Howe defined it, was the foundation of accountability. When we look at the Government's action, and indeed omissions, as it relates to tax reform, we see very clearly that they must be accountable for their actions and for their lack of actions in other areas of tax reforms to the Canadian people.
Prior to the end of their mandate we have before us Bill C-139. By the words of the Minister of Finance (Mr. Wilson), it is a piece of legislation which supposedly is to be tax reform, but in its substance and in its essence there is not much that will benefit the Canadian people.
Tax reform, as touted by the Leader of the Conservative Party during the last election, was going to be major, substantive. It was going to be effective and equitable for all Canadians. Bill C-139 does not live up to the billings of some four years ago. We should remind ourselves, as well as Canadians, that it was four years ago and then some in the campaign in July and August of 1984 that promises were made to the Canadian people with regard to tax reform. They have not moved with great urgency, they have not tried to facilitate an agenda which would result in major substantive tax reform for Canadians.
It has come at the end of their mandate and just prior to a federal election. The Conservative Government is trying to make Canadians believe that it has been concerned about tax reform and has done something very substantive, hoping that the first 36 months of their administration will be forgotten by the majority of Canadians. Well, it has not been forgotten by the majority of Canadians. That is why I remind government Members that, as Joe Howe fought for the principle of accountability, that principle of accountability will be brought to the forefront in the next election as it relates to their lack of action with regard to the subject of tax reform.
My colleague, the Hon. Member for Laval-des-Rapides (Mr. Garneau), has outlined the reasons and the rationale for

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our opposition to some of the measures which are being put forward by the Conservative Government of the day.
In summary, they can be stated in seven reasons. First, we oppose this reform because its intent is merely to have Canadians forget four years of massive tax increases. I will come back to that. It is massive tax increases. Second, because it is unfair, mainly to middle-income Canadians. Third, it does not improve the progressivity of the tax system. Fourth, because it is incomplete. Sales tax reform has been delayed until after the next election.
Is that not a buzz word for this Government? We had the smoke and mirrors, the singing of When Irish Eyes Are Smiling in Quebec, with the President of the United States, only to find out some time later that Canadians would be entering into an arrangement with the United States where we would in effect be selling many of our natural resources and, in particular, energy, at a very, very low price.
We oppose this legislation because it makes the tax system more complex, not simpler. It discourages capital formation and it reduces the competitiveness of our corporations, mainly those in the manufacturing sector.
In summary, those are the seven reasons as enunciated and spoken at length by my colleague from Laval-des-Rapides. The new structure of tax rates and tax breaks is not progressive enough. Hon. Members opposite know, and only know too well, that these rates are not enough. The gap between the second and third rate is not large enough-three points only- in comparison to the nine-point difference between the first and second rate.
If you want to be fair and equitable, you must put in place a system which is fair and equitable in order to achieve the end result. Even some Republicans have tried to be progressive, people like Theodore Roosevelt. He talked about tax reform. Yet, there is nothing here to equal some of the statements and sentiments expressed by Ministers of the Crown and Members of Parliament with regard to equity in the tax system.
Three brackets are all there is. Even after tax reform, 60,000 profitable corporations will still pay no tax. I remember posing a question to the Minister of Finance. His response was: "Well, you know, we are trying to do better". Is that what this is all about, Mr. Speaker? I thought there was a substantive package being put forward by the Government of the day.


Mr. Friesen:: Mr. Speaker, I think if the Member checks the record he will find that the Minister of Finance's (Mr. Wilson) answer was to the effect that those 60,000 companies lost money at least one if not two or three years prior to that.


David Charles Dingwall: Mr. Speaker, I do not know whether or not you ruled that that was a point of order.


Benno Friesen: A point of correction.


David Charles Dingwall: A point of correction says the Hon. Member. Perhaps he could read carefully what Hansard reported on that particular day and dissect the response of the Minister of Finance, who often puffed and shifted feet from one day to the next and from one answer to the next and did not respond with any degree of clarity other than to say in terms of his conclusion: "We are trying to do better". Quite frankly, from a Government which promised tax reform, which campaigned on tax reform and received the largest majority of any Canadian Parliament, it has fallen far short, far short, of the promises made to the Canadian people.
Even after the implementation of a minimum tax, 5,220 taxpayers who earned over $50,000 did not pay one cent in tax in 1986. You cannot in all fairness say to the working people, to those people on fixed incomes, that the system is fair when they can readily and easily point to situations where Canadians are not paying one copper in tax. What about the working man or woman who puts in a good day's work for a fair rate of pay? At the end of the week or the end of the month when they collect that pay cheque and find that there are taxpayers making in excess of $50,000 paying nothing while they are paying a substantial amount of taxes, particularly under this Conservative administration, how are they supposed to have faith in the system? There is no faith by many Canadians in this tax system which the Government promised to reform so as to give us some equity.
Of these 5,220 taxpayers, some 40 earned in excess of $250,000. That is a lot of money. It may not be a lot of money to the Minister of Finance, but it is a lot of money to average Canadians across the country whether they reside in Newfoundland, British Columbia, Nova Scotia, Quebec, Ontario or in many parts of western Canada. Contrary to the promises made by the Minister of Finance, the tax system has not been simplified by tax reform at all. We have not seen, although we have asked to see, some demonstrable proof of tax simplification. I think all Members would concur that that has not taken place. Even my colleague who rose on a bogus point of order would concur with that particular sentiment.


Benno Friesen: Careful now.


David Charles Dingwall: In October, 1986, the Finance Minister affirmed in the document Guidelines for Tax Reform in Canada that one of the guidelines was to make the tax system simpler to make it more readily understood by more Canadians. That has not been achieved. The House of Commons Finance Committee concluded its chapter on simplification by stating, and I quote for the Hon. Member who rose on the previous point of order: "It is disappointing for the committee to draw the inevitable conclusion that the proposed tax reform has not successfully addressed the problem of simplifying the tax system". That is found at page 136 of that report. An allParty committee clearly, and by a process of consensus, reached that conclusion.
I commenced my remarks, and I believe I have only a few moments left, by referring to a principle enunciated by a great
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Nova Scotian in the person of Joe Howe who fought for responsible Government, particularly for the principle of accountability. Let us today as a Chamber account for the Conservative record over the last four years with regard to taxes. The record must be corrected, as I am sure the Hon. Members opposite would at every opportunity. With regard to sales tax, in October, 1984, we had a 1 per cent increase in that tax. The effect was $1 billion in revenues for the Government of Canada. In January, 1986, that tax went from 10 per cent to 11 per cent, which brought in another $1 billion for the Government of Canada. This tax rose from 11 per cent to 12 per cent on April 1, 1986, which brought in another $1 billion. Since the Conservatives have been in power, the sales tax has gone from 9 per cent to 12 per cent, costing Canadians some $3 billion. Where is the fairness, Mr. Speaker? We know that the sales tax affects and hurts those Canadians least able to afford it.
The Government extended the sales tax to such things-old Mr. Scrooge himself, the Minister of Finance-as candy, soft drinks, health goods, dental instruments and snack foods. That is what the Minister of Finance did. On July 1, 1985, this cost Canadian taxpayers $400 million. In July, 1987, there was an additional $60 million in taxes collected, for a total of $460 million. That is what the Minister of Finance did for kids. He put tax on candies for children. That shows you how tough, how determined our Minister of Finance is with regard to fairness in the tax system. He said to the four and five year olds and to the nine and ten year olds across this country that the Government would have to charge them more for their Crispy Crunch. What a complete and utter joke.
Yesterday I referred to the Conservative Cabinet as the Keystone Kops. Another prime example of the Tories wonderful achievements in the last four years was to say to four and five year olds: "I am sorry, the deficit has to be cleared up and you will have to pay for it. Get into line. We need to have more taxes on candies".
We have had increases in sales tax from 8 per cent to 12 per cent on paint and wallpaper and, oh, yes, a tax on toys. It was not enough to hit the kids for candies, the Government had to go after kids' toys. That was done in January, 1988, for a total of $60 million. Of course, there were increases in the excise tax on gasoline. Listen to this, Mr. Speaker. On September 3, 1985 there was a raise of 2 cents a litre on gasoline for a total of $900 million. On January 1, 1987, we had a 1 cent increase for a total of $450 million. That was duplicated again on February 19, 1987, for another $450 million. Again on April 1, 1988, there was another $450 million. That is some accountability on the actions of the Government of the day. It goes on and on and on.
In conclusion, Sir, it is quite obvious that when Canadians stop and reflect on what has taken place over the last four years and the proliferation of tax increases, compared to what is proposed in this Bill, they will find that the Government has
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again broken its promise to them. I find it very upsetting indeed that the Government would place an undue burden on certain elements of our society while it allows certain others, the more fortunate, further tax benefits and holidays. The Government does not care enough to try to resolve the problem.
Those are some of the reasons why I oppose this measure and why it is important that we make the Government accountable for all its actions over the last four years, not just the last few months because we are nearing an election.


Mr. Deputy Speaker:: Questions and comments.


Alan Redway: Mr. Speaker, the Hon. Member quoted Joseph Howe, a famous politician and statesman from Nova Scotia, and said that he fought for the principle of accountability. That is a principle I certainly believe in very strongly and I was most interested to hear the Hon. Member refer to it. He also indicated that this Government should be held accountable for its record of the last four years.
It is also interesting to note, and I know the Hon. Member will find it interesting also, that his leader served as Minister of Finance from January, 1972, to September, 1975, a period of four years similar to the period of time the present Minister of Finance (Mr. Wilson) has served. I know the Hon. Member will be aware that during the time the Right Hon. Leader of the Opposition (Mr. Turner) was Minister of Finance the deficit rose by $4 billion, while during the current Government's four years the deficit has been cut by $9 billion.
He will know as well that total spending when his leader served as Minister of Finance increased by 107 per cent, whereas during this Government's time in office total spending has increased by only 21 per cent. He will know as well that when his leader was Minister of Finance the prime interest rate rose 3.75 per cent, while in the last four years it has fallen 3.25 per cent.
He will know as well that the inflation rate while his leader was Minister of Finance doubled from 5.1 per cent to 10.6 per cent, but over the last four years it has remained stable at about the 4 per cent range.
He will know as well that while his leader served as Minister of Finance the number of unemployed climbed by 164,000, while in the last four years the number of unemployed has fallen by 430,000.
He will also know, I am sure, that during the four years the Right Hon. Leader of the Opposition was Minister of Finance, personal income tax revenues rose by 76 per cent. During the last four years, personal income tax revenues will have increased by only 55 per cent. That means that personal income tax revenues rose 38 per cent more under his leader than under the current Government.
Does the Hon. Member agree with me that his leader, his Party, and he himself should be held accountable for those things as well?

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David Charles Dingwall: Mr. Speaker, the Hon. Member alluded to certain figures which he may have pulled out of his hat or the hat of a colleague, but it is very clear to anyone who has entered Parliament in the last 10 to 15 years that we have been held accountable, just as the Hon. Member and his colleagues will be held accountable in the next federal election. He will, as we have in previous elections, have to account for the expenditure plan, account for deficits, account for tax increases, account for social programs introduced, account for assistance given to the elderly, account for the various programs dealing with housing, energy, and a host of other things that were put before the Canadian people who will adjudicate accordingly.
However, I suggest to the Hon. Member that if he is going to try and provide bogus arguments about a previous government, hoping that Canadians will somehow forget these last four years, he is making a mistake. His Government was given the largest mandate the Canadian people have given any Government based on a promise of, among other things, substantive tax reform. Yet the complete opposite has occurred.
What has happened? On January 1, 1986, family allowances were deindexed along with the income tax rates at a cost of S635 million. We had the elimination of the federal tax reduction on January 1, 1986, S650 million. We had elimination of the deduction for the registered home ownership savings plan, $105 million, on May 22, 1985. The list goes on and on and on. It is obvious to Canadians that this group which was trusted to run this country has clearly and unequivocally come down on the side of the corporate sector. That infringes, in many instances, on the average working man and woman in this country.
The Hon. Member can twist, do the limbo, rock and roll, the Crosbie shuffle or the Wilson two-step, but it ain't gonna help because he will be held accountable for the four years his Government has spent in office.
The Government has fallen miserably. It has lost the trust of Canadians from one coast to the other. They think you are shysters. They do not believe you. All they remember of the Government is scandal, not tax reform. Hon. Members are coming to life now because the truth hurts. It hits them in the heart because Canadians have seen time after time, whether it be deindexing senior citizens' pensions, or a proliferation of goodies for the Conservatives' corporate friends, this has been a rape of the middle class. You shall be accountable and we shall run in the next election shoulder to shoulder on what you have done over the last four years.


Marion Dewar: Mr. Speaker, the Hon. Member was talking about accountability. I certainly think that accountability is important. However, I am wondering whether the Member has considered the accountability of the Government's response to the deindexation of the family allowance and the increase in
taxes for families with children versus working couples with no children.


David Charles Dingwall: Mr. Speaker, that is a very sensible question regarding a very important problem which had a dramatic and devastating effect on a lot of low-income families across the country. I know there are big shots in this House of Commons who make a lot of money, or have made a lot of money. However, we must recognize that a lot of Canadians are living from paycheque to paycheque and scraping by. Some of them are going to food banks. Some of them find it very difficult, as a result of the legislation and actions of the Conservative Government, to find enough money to buy snowsuits and boots for their kids in the wintertime and to provide them with enough money to go to a show on the weekend. Of course, if you are a Conservative and are poor you should not have any entertainment; entertainment should only be for the select few who can afford it.
The impact has been very substantial indeed. People who are scraping to make ends meet are, in some instances, aided by provincial and municipal Governments, but the fact remains that they are not living on the types of salaries referred to earlier in debate which go by tax-free. Not as partisan politicians, but as thinking Canadians, we must realize that it is no wonder that large numbers of Canadians believe they are being ripped off and have legitimate and profound concerns about the tax measures of the Government.
It does not take a very tough Minister of Finance to tell a four-year old that the tax is going to be increased on Juicy Fruit gum. However, it underlines that the Government has no heart, that it does not care. It cares only about its friends, its corporate Tory friends.
The Minister of Communications (Miss MacDonald) rose in this House one time when in opposition and read a letter from a constituent from another part of the country, I think it was North Sydney, who talked about the lack of heart of the then Government. What about the Government's attempt to deindex the pensions of senior citizens?


John V. Nunziata: She's leaving; she can't take the truth.


David Charles Dingwall: The truth hurts. The fact is that not on one occasion, not on two occasions, and not on three occasions but repeatedly the Government has singled out the middle-class Canadians, the poor, and those on fixed incomes to bear the brunt of government action while its corporate Tory friends get away scott-free.
I could name those friends but I do not want to get into a game of sleaze politics prior to an election. We will save that for the hustings. In the election campaign the Government will be accountable for its actions and inactions with regard to its corporate Tory friends. What John Diefenbaker said that dogs do to poles is what is going to happen to the Government.
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Mr. Deputy Speaker:: Resuming debate. The Hon. Member for Abitibi (Mr. St-Julien).


Guy St-Julien: Mr. Speaker, I welcome this opportunity to take part in the debate on the advantages of tax reform and to go on to more serious matters, after listening to the Hon. Member for the Liberal Party.
Mr. Speaker, I think I can safely state that most Members in this House are in favour of tax reform, in other words, a thorough revision of our tax system. Today's debate is about choosing the approach that is fair to the largest possible number of Canadian taxpayers.
The new legislation on tax reform is simply a reflection of the basic principles of lower tax rates and a broader and fairer tax base. The fairness of our system is the main concern of Canadian men and women. In fact, they will judge the new system in terms of this fundamental principle.
During the last ten years, Mr. Speaker, the system has failed to meet the legitimate expectations of Canadians with respect to fairness. So many people are wondering why their neighbour, who earns more than they do, is paying less in taxes. And why does the system contain so many loopholes that are of little benefit to the average Canadian unless he or she can afford to spend a lot of money on accountants and lawyers?
When the present Government came to power, we asked ourselves the same questions and, like so many Canadians, we were not satisfied with the answers. Consequently, we have eliminated a number of loopholes. The scam of the century was the scientific research tax credit program introduced by Marc Lalonde. We can say today, and we will say it again during the election campaign, that this was the scam of the century in Canada during the past twenty-five years.
Mr. Speaker, we introduced a minimum tax for Canadians on high incomes. We limited the option of redistributing income among members of the same family. We got rid of certain tax shelters involving investments in consumer goods such as yachts and pleasure vehicles. We put an end to the serious abuse of tax credits mentioned earlier, the scientific research tax credit of Mr. Lalonde.
However, in order to provide for a system whose fairness and effectiveness would be in line with the expectations of Canadian men and women, a complete revision of personal and corporate income tax and sales tax was necessary.
Mr. Speaker, Canadians told us that above all, they wanted their system to be fair and that they didn't want the majority of taxpayers to be deprived of certain advantages for the sake of a small group.
They told us that corporations and private citizens on high incomes should pay their fair share of income tax. They told us that people in the same income bracket should pay substantially the same amount of income tax. They said that above all,
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Canadians on low incomes, especially the elderly, deserved fairer treatment.
Mr. Speaker, our tax reform reflects the desires of Canadian men and women. Perhaps I may point to one particular aspect of the reform which I feel illustrates the general principle of fairness which has been our constant guide. I am referring to benefits for the elderly.
Tax reform certainly meets the needs and aspirations of all Canadians, but it is especially beneficial for people 65 and over.
As of 1988, nine out of ten senior households will pay less income tax. In other words, about 1.3 million of the 1.4 million households that have at least one person aged 65 or over will pay less income tax. Furthermore, nearly 250,000 seniors will no longer pay income tax. That is what this Government has done and what is really important for our seniors.
The minimum income subject to income tax for seniors has also been changed. Depending on the type of income, the minimum for single people will be $11,430, or $645 more. For married couples, the minimum will rise by more than $2,000, to $19,010.
These changes are due to the reduction in tax rates and the conversion of personal exemptions and some deductions into tax credits.
This conversion is particularly beneficial for people aged 65 and over. Indeed, it is largely because of the greater value of credits that more than 90 per cent of senior households will pay less income tax.
Mr. Speaker, income tax credits will make the system fairer and more progressive. Members of this House know that exemptions are worth more to high-income individuals because they can reduce income that is subject to a higher marginal tax rate. On the other hand, credits directly reduce the amount of tax that seniors have to pay. They are worth the same for all taxpayers. For example, the new age credit for people 65 and over will be $550 in 1988. This represents a tax decrease of $550, whatever the level of income. It is a considerable additional tax saving for most seniors, because the exemption that the new credit replaces would only have been worth $450 for an individual declaring a taxable income under $25,500.
But for senior citizens with income of $55 000 or over, the former exemption would have been $775. Since some 80 per cent of senior taxpayers are at the bottom tax bracket, the new credit for the great majority of them means a significant improvement in terms of system fairness. Also, the basic personal exemption, that of the spouse and the disability credit all are worth more for most senior citizens than the exemptions they replace. Converting the pension income deduction into a 17 per cent credit up to a maximum $170 will still benefit those senior citizens whose taxable income is below $25 500. For most Canadians 65 and over, those credits will largely compensate for the elimination of the $1 000 deduction for investment income.

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Mr. Speaker, certain other deductions involving senior citizens also will be converted into income tax credits:
-The deduction for medical expenses becomes a 17 per cent credit. All taxpayers whose medical expenses are not covered by insurance will also enjoy the same income tax reduction;
-The new credits for tuition fees and student expenses applicable to post-secondary students involve a significant change: The unused portion of the first $600 of those credits can be transferred to the spouse, parent or grandparent who assumes the maintenance costs of the student;
-The new, two-tier credit for charity is not only fairer to all taxpayers, it should also generate higher charitable contributions.
Low-income seniors also benefit from the increased sales tax credit. The level of family income at which that credit begins to decrease in value has been raised by $1 000 to $16 000.
I would also like to take this opportunity to mention the fact that the Minister of State (Seniors), the Hon. Member for Northumberland (Mr. Hees), recently published a book.
This publication was made possible by seniors themselves. They suggested
that I publish a complete, detailed guide with every possible information on
federal programs available to them.
This idea ...
As he states in his message ...
... strongly appealed to me and you can now see the results. Your comments on that guide will furthermore be welcome because they can be included into the later revised editions.
As maybe seen in this book, reference will be made to income security, such as Old Age Security programs, Old Age Security pensions, Guaranteed Income Supplement, spouse's allowance, the Canada Pension Plan and all other provincial programs.
This is a publication the Hon. Minister of State (Seniors) had prepared for every Canadian man and woman.
Mr. Speaker, I would like to assure all senior citizens that tax reform will not affect the Old Age Security program. The Guaranteed Income Supplement and the spouse's allowance will remain tax free. Canada Pension Plan and Quebec Pension Plan benefits will not be affected. Finally, the unused portion of the age credit and pension income credit will remain transferable, just as the exemptions they replace.
Mr. Speaker, some senior citizens who earn high dividends or capital gains or have access to other tax benefits will have to pay a fairer share of taxes. However, those people usually earn high incomes. They will still benefit from the reductions in the tax rates and will have an advantage over wage-earners and those who receive basic pension revenues, but they will pay an amount of tax which is closer to what people with comparable earnings make. That is only fair.
As my colleague from Champlain (Mr. Champagne) was saying earlier, the entire $500,000 capital gains exemption will continue to apply to allowable agricultural equipment. This
will be of great benefit to retired farmers who often cannot build up a pension fund. This exemption also covers capital gains from small business shares.
Mr. Speaker, I believe the Government's tax reform lives up to the high expectations of Canadians as far as fairness goes. All things considered, it will allow the vast majority of Canadians to pay less tax, senior citizens being the main beneficiaries.
As I mentioned at the beginning of my speech, our Government has eliminated the tax shelters. To think that the Auditor General of Canada stated in September 1987 that under the Liberals billions of dollars had been wasted. Indeed, the then Minister of Finance learned, in early 1984, that there were problems with the R&D Tax Deduction Program. He was warned again of the situation around the middle of the year, and several warnings were made by public servants to all the Federal Liberal Members under the Trudeau and Turner regimes. Public servants had warned them that a lot of money was being wasted through this tax shelter. Had they intervened earlier they could have saved a lot of money, and I am talking about billions of dollars.
I noticed as well that there was a feature article that same year in the magazine L'Actualite, and my colleague and friend from York East (Mr. Redway) told the standing committee it was the fraud of the century, an unprecedented embezzlement carried out by the Government itself.
That is quite a conclusion .. . when the Liberals raise the spectre of scandal and immorality. We too will have a chance during the election campaign to say exactly what happened concerning this $1.9 billion swindle. We could have built 50 hospitals throughout Canada with that kind of money, we could have built community centres for elderly Canadians, we could have built social centres for senior citizens. Mr. Speaker, that is the kind of deals we must unveil before the public. That is what happened in 1984.
In conclusion I would urge all Members of the House to join me and support the tax reform, an outstanding initiative for Canadian men and women as well as for all elderly people in this country. Thank you, Mr. Speaker.


Simon Leendert de Jong: Mr. Speaker, I want to make a comment and then pose a question to the Hon. Member. My comment concerns the scientific research tax credit.
I agree with the Hon. Member's statement that the scientific research tax credit turned out to be a complete waste and an abuse. This initiative that first began under the Liberals was a scam that resulted in a loss of roughly $1.5 billion.
The Hon. Member was quite right that the Liberals were warned. However, I do not quite understand why the Conservatives took almost a year to shut down this tax credit. The Conservatives were elected in September, 1984. In October,
July 19, 1988

1984, the Minister of Finance tried to implement a restriction, but he also allowed a grandfathering clause. This meant, for example, that if the Hon. Member and I had a scientific research agreement written on the back of an envelope, the research credit would be honoured.
Statistics will show that of the approximate $3 billion lost on the scientific research tax credit scheme, over $1 billion of it was while the Tories were in power. Had they shut it down completely in October, 1984, we could have saved $1 billion. However the Minister waited until May, 1985, when he finally realized the types of abuses that were occurring, to shut it down. What he did in May of 1985, he should have done in October of 1984. Had he done that in October of 1984, he would have saved over $1 billion. We made that point in the fall of 1984, but the Minister of Finance said that a commitment was made, that after all this was the law, and that the liberals had allowed it to be. In other words, he was saying that a commitment was made and even though there was all this abuse he could not shut it down. He left in the grandfathering clause and that cost Canadian taxpayers a further $1 billion. This went on until it became so obscene that he finally just had to shut the whole thing down, regardless of what previous agreements had been made.
That was the comment I wanted to make. I come now to the question I want to pose to the Hon. Member. The Hon. Member stated what all government Members state when they echo the Minister of Finance. We all know that it allows some people with very high incomes to pay less tax year after year than the average Canadian wage earner. The Hon. Member stated as well that higher-income earners should pay more taxes. Therefore, is tax reform fair when it results in a family which earns over $100,000 a year receiving a tax break of $1,615 and families with an income of between $30,000 and $40,000 receiving only an income tax break of some $320? Is that what the Government means by "higher-income Canadians paying more tax"? Tax reform in this form means that those earning $100,000 or more receive a tax break of $1,600 while the average income earner earning between $30,000 and $40,000 will only receive a tax break of some $320.
Is it fair that under this particular tax proposal 175,000 families whose incomes are over $100,000 a year will be receiving an average tax break of $365, compared with a $90 tax break for families earning less than $15,000 a year? Is it fair when the tax reform so obviously favours the rich and is only of minimum help to the poor?


Marion Dewar: Mr. Speaker, I do not believe we have a quorum in the House at the moment, do we?


Mr. Deputy Speaker:: We do have a quorum now. The Hon. Member for Abitibi.
Income Tax Act and Related Acts


Guy St-Julien: Mr. Speaker, it is a good intervention on the part of the NDP Member. She forgot to count Government Members, she counted Members on her side only and we can see for ourselves that the NDP does not have a quorum. That is what we understood. Thank you, Mr. Speaker.
Before answering the question of the Hon. Member of the New Democratic Party, I should like to point out something to him, particularly in connection with Marc Lalonde's scientific research tax deduction program. Referring to La Presse of Wednesday, September 30, 1987, for we know Opposition Members in the House often draw inspiration from daily newspapers or the Quorum... I will go back a little further, back to Wednesday, September 30, 1987 where it says:
The Liberals are responsible for the fact that Canadians lost billions of dollars.
In a statement yesterday Auditor General Ken Dye said that without valid reason the former Liberal Government, mesmerized by the political situation, made Canadian taxpayers lose billions of dollars.
During his press conference, Auditor General Dye went on to say:
Had they intervened earlier they could have saved a lot of money. I mean a lot of money.
It was stated in the motion from my NDP colleague that the Government of the day, the Conservative Party, had done nothing! But I have to say, Mr. Speaker, with all due respect for my colleague from the NDP that what is mentioned in the news report is as follows, and I quote:
But so far the program, which was cancelled by the Conservative Governement shortly after it came to power, amounts to $3.5 billion ...
It is clearly stated in the La Presse article. We must rely on articles written by newspapermen and in this one which is written by Canadian Press, it is clearly mentioned that this is shortly after the Conservative Governemnt came to power, the Canadian Governement, under the leadership of the one who has been showing us how to run an economy in the last four years, how to take up the challenge at home, how to build an economy with the future of our children in mind, the right Honourable Prime Minister (Mr. Mulroney). In other words, this is a $1.9 billion rip-off.
Mr. Speaker, I can tell my NDP colleague that he is right to say that this has cut into... Mr. Speaker, I have not finished ...
In my speech, and I am aware of the fact that many are looking forward to speaking ... I spoke mainly about senior citizens. And that is what is really important.


M. Boudria:: Fine, say no more!


Guy St-Julien: Single people over 65 years of age ... for a 65 year old couple with two children, the base was $4 440 before the reform and $6 220 after.

July 19, 1988
Income Tax Act and Related Acts
But to answer his question, in the case of senior citizens in Canada, not many are earning $100 000 in pension income. Not many have $100 000 in the bank.
The subject of my speech was senior citizens and fiscal reform, a reform which was put in place by a very competent government and which is truly fantastic for Canadian men and women, for seniors.


Mr. Deputy Speaker:: Resuming debate with the Hon. Member for Hamilton Mountain.


Marion Dewar: Mr. Speaker, I am pleased to participate in this debate on tax reform. I have in front of me some criteria on how we should test tax reform. First, the burden of income and consumption taxes should be removed from low-income families and individuals. Canadians with incomes below the median or mid-way point for 1987, an estimated $13,000 for a single person and $42,000 for a family of four, should pay less total taxes, both income and consumption taxes. Only the taxpayer with an above average income should bear a heavier over-all tax burden under the new system. Tax reform must restore full indexation of tax brackets and credits, and the tax mix should not be altered to get more revenue from the regressive sales tax and less from income tax, which is the only progressive part of the over-all tax system. That is fairly clear. It is not too complicated a way of being able to judge legislation for tax reform.
We have looked over the years at what has happened to the tax system in Canada. There is no question in our minds that we certainly have ourselves into such a boondoggle that it is very difficult to get out of it. I think we need to look at some kind of criteria to see how we are to do it. Canadians must be terribly insulted by the kinds of reform the Minister of Finance (Mr. Wilson) has brought before this House. It is not reform. One thing we have done is to recognize the fact that additional revenues should not dependent on sales tax. As we look at the Bill before us, we find that more and more people with adequate incomes will have their taxes reduced. Sure, we have reduced the brackets from ten brackets to three brackets, but it is looking more and more like the flat income tax which the Fraser Institute, that right wing institute, wanted to implement over the years. The rich Conservatives certainly ascribe to that kind of philosophy and policy, but it is not the kind of policy average Canadians want to have implemented.
We must recognize that in 1984 when the Government came into office it said that it wanted to be fair and honest. It promised tax reform. If it had said since then that it had changed its mind and was not going to go ahead with it and that it would reduce taxes for the rich, then that would be okay. What is most upsetting is the sneaky way that this measure has been introduced. There has been a lot of rhetoric with respect to the introduction of this Bill.
If we look at what the Bill is all about, we see that what is being done is that a burden is being laid on the poor. A family earning $10,000 which was not paying any tax up until now will be paying about $1,100 to $1,200 in taxes in the form of sales tax in the next year.
What upsets me even more is that the return of taxes which was to be implemented January 1 will not come into operation until July 1. If the Government really thinks that Canadians are that gullible, then it has a great surprise coming to it. The electorate is not stupid. The electorate understands on what it is paying taxes and to whom it is paying them. Members of the public know that they will be getting a rebate even though they have been paying more taxes in the last four years than they have ever paid before. They will receive a rebate on July 1. That will be retroactive to January 1. That is an insult to their intelligence. It is a crass political operative type of program.
If we look at the loopholes about which the Government brags about closing, we know that some of them do not come into effect until 1991. What the Government is really saying is that perhaps after the next election we will be able to change the minds of some of the politicians and we will be able to continue with our tax breaks. That is not any way to run a railroad, and it is certainly not any way to run a country.
What Canadians have been looking at over the years in terms of tax reform is fairness and honesty. I travelled across the country when I was in another position which I held before I came here looking at the tax system. What I heard from Canadians right across the country was: "We do not mind paying taxes. But we really do object to knowing that people who are much better off than we are are paying less taxes than what we are paying". Canadians are not selfish or greedy. Perhaps the top 2 per cent of income earners might be. Perhaps their modus operandi is to ensure that they pay less tax and keep more for themselves. On the whole, as a society, we have clearly demonstrated over the years that we do not mind redistributing our income.
Another item which disturbs me is some of the rhetoric being used with regard to accountability and having to be careful in the corporate sector. The Auditor General for years has asked to have an accountability with regard to tax expenditures come forward to this House. In this way, for instance, if there was a tax expenditure in place we would know whether it was doing its job or not. The reason we have got into the science and film industry and other areas which have not necessarily worked is because there was no accountability and no measuring. To allow a tax exemption and not to look at its merits and not to see what it is doing to stimulate whatever industry it was put there for simply does not make sense.
We have heard that corporations are not paying taxes because three or four years ago they lost money and therefore they cannot afford to pay. If I had been unemployed for a couple of years and I consequently became employed, National Revenue would not say to me: "Because you did not have any
July 19, 1988

income for two or three years you do not have to pay any income tax this year". That is something which does not make any sense.
The rhetoric which has been used in the introduction of this Bill has been an attempt to make the system look very complex so that the ordinary person cannot understand it. The ordinary person can understand finances. They know how to run their country. They care about what happens to their public dollar. They will not be had by this type of faqade that says that we now have in front of us tax reform. We do not have that.
I have heard members of the Government say that they cannot tax corporations too high because if that is done there will be no incentive for reinvestment. It has been said that initiatives will be discouraged. Studies have shown that a measure of this type does not provide incentives to business. The level of taxation on corporations has no effect on whether or not they will reinvest.
In this respect we need only consider Japan, which has a very high level of productivity. The tax level in Japan is at 86 per cent. We realize that with this policy we do not have to be afraid to redistribute the income where there are massive profits being made. I will never understand the reluctance of people after they get into public office who say that, yes, it is an unfair system and, yes, we have to do something about it, and lo and behold they do nothing about it.
I know that there is a heavy dependency on the bureaucrats and the advisers when we have these types of Bills put before us. I think that our professionals should be well paid. I think politicians should be able to live within an adequate standard of living. I am not into a martyr syndrome at all. However, if we look at the people who deal with this type of policy, as well as every Member in this House-and I am not talking in a partisan way-we see that we are living a lot better than a lot of people living in our constituencies. The people who draw up these Bills very often have not been in that two room or three room accommodation where there are two or three children. They do not recognize that those people are still paying taxes.
I cannot express to Hon. Members how much it upsets me when I realize that very low-income people are paying taxes. By flattening out the tax system and by going to a consumption tax what we are really doing is saying: "Okay, poor, you have paid some now but we are really going to get you every time you buy something-and you can't wait for a sale because you do not have any extra cash. We'll get you then. You'll have to pay at that point in time". That is not a compassionate type of policy. This is not a compassionate type of Bill.
More important, this is not an intelligent piece of legislation when we consider it in terms of reinvestment in our country and in terms of stimulating the economy through the tax system. What we have in front of us is a Bill that does not provide us with the type of accountability for which we are looking. It is a Bill which states that we do not have to measure what the incentives were.
Income Tax Act and Related Acts
A great many of my constituents in Hamilton Mountain are over the age of 65.1 have heard various Members of the House address the income of senior citizens. Wiping out the $1,000 investment exemption does not mean a thing to people who have large incomes and large investments. For the ordinary working person who has invested, for example, seniors who are receiving $1,000 annually, they have looked at it as part of their income. As one gentleman said to me, it has been the way in which he has been able to provide Christmas for his family. He knows that with this money he can get things for his grandchildren and feel comfortable about it. Now that $1,000 is gone. It is being taxed. When bureaucrats look at those types of things and decide that they have to get rid of some exemptions, they take a whole page and get rid of them. Not a lot of thought went into the recommendation to take away that $1,000. It is not the upper-income earner who is hurt, it is the ordinary person who is hurt by that type of policy.
There has been much talk about the number of people who will drop from the tax lists. We must look at the number of people who came onto the tax roll since 1984. All of a sudden they are to be dropped and we say that that is good. That does not make any sense. That is not reform, but regression to where we were. I hear the Conservatives saying that they want to be different from the Liberals, and they are going back to where the Liberals were. That is not what we want.
Certainly, if we are going to look at tax reform, we must look at starting to pay taxes at the upper end of our society so that income tax is used as a real tool for redistribution of income. We should not play games with each other. We have a very rich country with many resources. Yet 40 per cent of the clients of the soup kitchens in our major cities are children. Here we have a tax Bill in front of us that is putting a burden on families with children, and is kinder to a two-income couple who are childless. That is not the type of tax reform that Canadians are looking for.
To redistribute the income we must look at who taxes are hitting most. When we burden the poor we are making society non-functioning, and putting a bigger burden on people generally. The cry for more housing is heard. Surely no one present does not recognize the fact that soup kitchens are a cancer in our society and in our cities. People are lining up at soup kitchens and are beholden to each one of us for the crumbs from our table, and we are sitting here with a tax Bill where our own tax rate will be reduced. Most of us are at the upper end of the scale and we will pay less. Sure, it is great for us, but what is happening to the population is really hurting. They are not getting any breaks from this Bill. All they will receive are more burdens.
Further, there is an attempt by the Government to put a veil around all of this. It states that it will go to the second step after the election; the second step after we know we have you

July 19, 1988
Income Tax Act and Related Acts
and we will really lay it on you. I have news for the Government. Canadians are not that gullible and they certainly will not swallow that.
We must seriously look at some of the companies that are not paying any tax at all. I have here a list for 1986 of income figures for certain companies. In 1986 Alcan Aluminum on income totalling $220 million received a tax credit of $32 million; Brascan on income totalling $187 million received a tax credit of $2.3 million; Power Financial on income of $132 million received a tax credit of $1 million; Xerox Canada on income totalling $115 million received a tax credit of $10.8 million. I am sure we all contribute to that company's income in our offices. Bramalea on an income totalling $51 million, no taxes were paid; Wardair on an income totalling $70 million, no taxes were paid. In 1987 Carena-Bancorp on income totalling $37 million, no taxes were paid. Hudson's Bay Company, a company we all contribute to as consumers, had income totalling $50 million, and a tax credit of $15.7 million; Seco-Camp on income totalling $43 million, no taxes were paid; Union Carbide Canada on income totalling $28 million, no taxes were paid.
These are not the types of policies that we think are tax reform. We certainly do think that there are resources in this country, and that we can redistribute that economy in a more fair way in order that every Canadian citizen has the ability to have a quality of life with some dignity.
I am certainly not giving any credit to the Liberals because they got us into this mess. They started with the tax expenditures and there was no accountability. When the Carter Commission was conducted in 1967 it was appointed by a Tory Government. When it came to reporting predominantly business commission and it was decided that there must be accountability in the tax system, Bay Street got into the act. The lobbying took place and they all backed away. Who was hurt? The ordinary Canadian. We knew in 1967 that we were in a mess and we dug ourselves deeper and deeper into it. We are giving more corporate give-aways and consistently putting a greater burden on the poor. That is not tax reform. The people of Canada will not be fooled by it.


Alan Redway: The Hon. Member had quite a bit to say on the question of fairness of the tax reform package with respect to low-income Canadians. I know that the Hon. Member would not want to leave the impression that this particular Bill and the tax reform package before the House is not going to be of assistance to low-income families, and to all families.


Flora Isabel MacDonald: Of course they would like to leave that impression. That is exactly the impression they would like to leave.


Alan Redway: I certainly hope that we can correct that tonight, if that's the impression that they want to leave.
The Hon. Member is well aware that, for a single individual under 65 before tax reform the threshold of tax, that is, where the income that can be earned by a single individual under 65
before he or she starts paying any taxes prior to tax reform was $4,940; after tax reform it is $6,220. In the case of a married one-earner couple under 65 with two children 18 and under, which is a pretty typical case, prior to tax reform that family started paying tax when their total income was $16,770. After tax reform they will not start paying tax until the income is $18,890.


Michael Morris Cassidy: That is $5,000 before the poverty line.


Alan Redway: I know the Hon. Member wants to talk and he will have the opportunity to ask a question when I am finished. I hope that he will allow me to ask my question.
In the case of a single individual aged 65 and over prior to tax reform he or she started paying tax at $10,785; after tax reform it will be $11,430. In the case of a married couple aged 65 and older, before tax reform they started paying tax at $16,945; after tax reform they will not start paying tax until they have earned some $19,010. There is a substantial difference, and the Hon. Member is quite well aware of that. I am sure that she does not want to leave a false impression.
There are some other facts as well that I know that she is aware of and that she would not want to leave a false impression about. One has to do with what is happening again with the tax cuts for couples, both earning income, with two children 18 and under. In fact, the tax refunds go up for people earning a family income of $10,000, by $280 for a $15,000-a-year couple. They go up for a $20,000-a-year couple by 59 per cent. That is a percentage of tax of 59 per cent.
In the case of a family earning $25,000, it goes up by 21.6 per cent. I am drawing to a close, but as your income goes up the percentage of savings goes down. At $30,000, it is only 11.4 per cent. At $75,000 it is only 5.9 per cent. I know that the Hon. Member does not want to leave a false impression. I know that she wants to stand up now to correct that false impression and to make it quite clear that not only are Canadians going to benefit under this tax reform package, but they will have already benefited under the economic policies of the Government as there has been a reduction in the number of Canadians living below the poverty level since it took office of 525,000 people.
In addition, the average family income has climbed, in spite of tax changes, by $1,600 in real terms since this Government took office. I know that the Hon. Member wants to correct the record and to applaud the Government for its fine work.


Some Hon. Members:: Hear, hear!


Marion Dewar: Mr. Speaker, I certainly do want to correct the Hon. Member's record. One of the things that I opened with was looking at five basic points of what good tax reform is. One of them was was that tax reform must restore full indexation of tax credits, in brackets.
July 19, 1988

Certainly, if you look at the falling threshold you recognize that tax reform will provide only a temporary respite from the downward trend in the tax-paying threshold for the simple reason that deindexation has taken place. It also depends on where you are comparing it from, whether from 1984 or from 1988. After all the regressive policies have been put in, from 1984 to 1988 you will see that it makes a big difference. However, if you just take 1988, you will see that it lifts the tax threshold up to $5,971, or 54 per cent of the poverty line. But partial indexation of the tax system pushes it back down after 1988. By 1991, federal income tax applies to earnings of $5,448, or just under half the poverty line.
I think that it is an absolute disgrace that this Government is constantly trying to mislead the Canadian people, and when they are talking about a tax threshold that has been-


An Hon. Member:: What is the assumption?


Marion Dewar: The assumptions are the deindexation that has taken place, and we are looking at about 4 per cent. It is the same as you are doing. What you are saying, if you wanted this tax reform to be able to sustain itself so that people would be better off, is you would keep the deindexation in place. By deindexing, what you have done is wiped out the ability to be able to sustain that plateau. Of course, if there is no inflation, your index rate would be there. But you have taken that away.


An Hon. Member:: What is the difference?


Marion Dewar: What you have done is made everybody vulnerable. It is insidious that this Government is constantly attempting to tell the people of Canada that they are going to be better off when they know that this kind of policy is in front of them. I think it is important to recognize that it is the upper level, about 2 per cent of the people of this country, who are going to be better off after this is through, and the rest of us are going to be carrying the burden for the mismanaged Government that we have in this country today.


Flora Isabel MacDonald: Such virtue.


Mr. Deputy Speaker:: The Hon. Member for York South- Weston on a question or comment.


John V. Nunziata: Mr. Speaker, the Hon. Member for York East (Mr. Redway) drew me into this debate. I was content to sit back and listen. One cannot help but to stand up when you listen to the nonsense coming from the Member of Parliament from the Conservative Party. I would like to ask the Member from the Ottawa area if she can comment on the credibility. It is Hamilton. I am sorry. You were formerly from Ottawa and you went to Hamilton. In any event, I would like the Member to comment on the issue of credibility. In the election campaign, the credibility and the integrity of the Prime Minister (Mr. Mulroney) and the Conservative Government will be at issue. She knows that even after tax reform 60,000 profitable corporations will still pay no tax. The Hon. Member for
Message from the Senate
Hamilton Mountain (Ms. Dewar) knows that even after the implementation of a minimum tax, 5,220 taxpayers who earned over $50,000 will not pay one cent of tax, or did not pay one cent of tax in 1986. Of these 5,220 taxpayers, 40 earned $250,000 and more. She knows as well that if we compare the total amount of tax paid by taxpayers in 1988, after tax reform in 1984, when the Conservatives took power, we realize that only families with incomes of over $117,000 a year paid less tax in 1988 than in 1984.
These families account for the top 1 per cent of all Canadian families. The Member for York East said that he does not want to leave a false impression. I put my question to the Member for Hamilton Mountain: Would she not agree that the Member for York East was really stretching it in terms of credibility? I recall very specifically, when the-if the Conservative Members opposite would grant me the courtesy of listening, maybe they will have the opportunity to stand up and defend the Conservative Budgets and their economic policy. I appreciate that we are nearing the bewitching hour of nine o'clock. Perhaps the Member for Hamilton Mountain could comment on the Conservative Government's attempt to deindex senior citizen pensions when they talk about fiscal responsibility and social justice.


Marion Dewar: Mr. Speaker, I appreciate the question from the Hon. Member. What we really have to look at is what has happened to senior citizens, what has happened to a lot of people in this country and what will happen after 1988. What I was really attempting to do was to help the Hon. Member for York East (Mr. Red way) understand the Bill that we have in front of us, because obviously he has difficulty with the figures that he is using, comprehending what the implications are of this Bill. Certainly Canadians are going to be worse off after 1988 than they were before. When we are looking at the reduction of taxes, all we are doing is reducing the taxes that we have already increased in the last three years. It seems to me that the Hon. Member needs to read the legislation so that he will understand.


MESSAGE FROM THE SENATE
Mr. Deputy Speaker:: I have the honour to inform the House that a message has been received from the Senate informing this House that the Senate has passed Bill S-18, an Act to amend the Immigration Act, 1966, to which the concurrence of this House is desired.
Pursuant to order made earlier this day, this House stands adjourned until tomorrow at 2 p.m., pursuant to Standing Order 3(1).


[Stage Direction]
The House adjourned at 9 p.m.
[Stage Direction]

Wednesday, July 20, 1988
[Stage Direction]
Prayers