1988-03-03

Hon. Stewart Mclnnes (Minister of Public Works):: Mr. Speaker, I am pleased to table, in both official languages, a report commissioned by the National Capital Commission and my Department. This report is a planning document for 21st century development of the parliamentary precinct area.

[ Translation]


EXTERNAL AID
Hon. Monique Landry (Minister for External Relations):: Mr. Speaker, I am honored to table in the House today the strategy entitled Sharing Our Future, the action plan that will guide Canada's Official Development Assistance (ODA) policies into the next century.
As parliamentarians are aware, the past three years have been important both for Canadian foreign policy and for the process of policy-making.
I had an opportunity to discuss that new strategy with the critics of both opposition Parties last night.
Commencing with the publication of Competitiveness and Security in 1985, a period of extensive consultation, review and reflection on the various elements and components of Canada's foreign policy in general, and aid policy in particular, has been undertaken.
Canadians and our many development partners-nongovernmental organizations and institutions, trade unions and co-operatives, the private sector, and multilateral agencies, as well as people in the developing countries-have participated in the process.
Parliamentarians, through our committees, have played an important part in giving shape to the diverse views and objectives articulated by Canadians and their organizations.
The new stragegy I am presenting is the culmination of this extensive review. And the various new policy thrusts and initiatives announced in it reflect the development vision of Canadians themselves. The strategy thus demonstrates the confidence our Government has in the wisdom, talents and commitment of Canadians.
Mr. Speaker, our Government believes that a country's foreign policy must be an expression of the vision of its citizens-a reflection of their values, goals and objectives.
Our foreign policy conveys to the international community our character as a nation.

We embarked upon a thorough policy review with a firm belief in mind, a conviction, that the shaping of foreign policy and aid policy is the responsibility of all Canadians and not the exclusive domain of politicians or bureaucrats in Ottawa. The message embodied in this new Canadian strategy for a development corporation is one of which we can all be proud. Canadians care. It says much about us as a nation that Canadians accept our responsibility to be partners in building a better world, not only for our children but for all the world's children.

The strategy that will guide Canada's development assistance policies is built on three commitments I made at the beginning of my mandate: improving the delivery of our aid, fostering partnership, and reaching out to involve Canadians more fully in our development program.
My first commitment, "improving aid delivery", reflects the belief of many Canadians that we need stronger aid policies which are relevant and appropriate, both to those we seek to help and to Canadians as well. Better program delivery will mean that the right Canadian resources reach those most in need, when they need our help the most.
The second, "fostering partnership", captures the spirit of commitment that Canadians showed in their strong response to the crisis in Africa three years ago. It reflects our desire to build on the consensus achieved at that time. Canadians want

March 3, 1988
Statements by Ministers
to create new partnerships-both domestically and internationally-so that together we can build a better world.
And my pledge on reaching out to the public responds to the desire I sense among Canadians to learn more about development, to be better informed-so they can take part more fully.
Before 1 highlight some of the new policy directions we are announcing today, let me quickly sketch for you the principles that will guide our initiatives in international development.
[ Translation]
Mr. Speaker, in responding to the Report of the Standing Committee on External Affairs and International Trade (SCEAIT) last September, the Government endorsed the committee's proposal for an ODA charter.
The charter has four pillars: The primary purpose of our development effort is to help the world's poorest countries and people.

Canada's aid policies must strengthen the human and institutional capacity of developing countries to solve their own problems in harmony with their natural environment.

In setting objectives for development assistance, developmental priorities must prevail.

We must strengthen the links between Canadian citizens and institutions, and those in the Third World. In short, partnership.
[ Translation]
With these principles as the foundation of our policy, our priorities to help focus our projects and programs are: alleviate poverty; design structural adjustment policies that take into account their human impact on the people they are designed to assist; strengthen our emphasis on the role of women in development;

-foster environmentally sound and ecologically sustainable programming; strive for food security; and emphasize energy availability.

The four pillars, complemented by the priorities I have mentioned, constitute the charter for Canada's development assistance program.
Beyond this, we are announcing a significant number of new programs and initiatives in our strategy. Here are some of the highlights:
We have created a "new eligibility framework" for our ODA-one that provides flexibility so we can achieve the goals
to which we are committed, including: eradicating global poverty, concentrating on the poorest countries and people, and ensuring that our aid policies are more focused and more relevant.

The new framework makes it easier to take into account the human rights performance of various countries when deciding upon the nature and scope of our assistance efforts.
[ Translation]
We have also decided to divide the aid program into two distinct parts-each having half of the ODA budget.
The first part, called the "Partnership Program", will be for initiatives and programs shaped by our Canadian and international partners in development.

The second will support Canada's national initiatives program of bilateral assistance and other contributions to development carried out mainly on a government-to-govern-ment basis.

Mr. Speaker, to improve "program delivery", significant numbers of aid personnel will be decentralized both to existing overseas posts and to four new regional field offices.

These field offices, one for the countries of the Southern African Development Co-ordination Conference, the second for the Sahel, a third in the Caribbean and another for the Association of Southeast Asian Nations, will help to ensure that future CIDA initiatives are better tailored to local needs and circumstances. Higher levels of approval authority will be delegated to field personnel.
[ Translation]
To ensure that our programs encourage self-reliance rather than dependence, "human resource development" will become the lens through which all our efforts will be viewed. Creating indigenous capacity to enable each country to solve its own development problems will be our steady focus.
To achieve this, many initiatives are put forward-including one to double the number of CIDA-sponsored students and trainees, both in Canada and the Third World.

New guidelines to govern our food aid policies and to consider the ecological and environmental impact of our aid efforts are also important elements of the strategy.

These measures, and others we are announcing, are designed to improve the effectiveness, relevance and quality of what we do in the Third World.
March 3, 1988

To strengthen our commitment to partnership-one of the four pillars of our aid strategy-new initiatives are being launched to enhance the participation of our development partners from the private sector, non-governmental organizations and training institutions.

For the private sector, the budget of CIDA's Industrial Cooperation Program will be doubled and its parameters enhanced. General lines of credit will be established in up to 20 countries and guidelines governing their use will be made more flexible.
[ Translation]
Measures to encourage co-operation between Canadian universities and training institutes and those in the Third World are being announced today. Universities will be invited to prepare proposals for centres of excellence in development studies.
Canada's non-governmental organizations and institutions are among the world's leaders in international development. To enhance their contribution, numerous initiatives are proposed in the strategy-along with an increase in the amount of ODA allocated to supporting their efforts.

The various agencies and institutions that make up the multilateral system provide some of the most precious and effective tools for promoting international development and cooperation.

The World Bank, the United Nations Children's Fund, the World Health Organization, the World Food Program, the United Nations Environment Program, the Commonwealth and la Francophonie are but a few examples of the diversity of agencies and programs the multilateral system offers for the effort to achieve global progress.
Mr. Speaker, Canada remains committed to a strong and vital multilateral system, and we will continue to strive for renewal and revitalization.

To facilitate access to the aid program by Canadians and raise levels of public awareness of development issues, I am announcing today an extensive multi-faceted public education and outreach strategy.

This strategy is designed both to enhance CIDA'S presence in Canada's regions and to increase public awareness of the challenges and opportunities of international development.
Mr. Speaker, these are a few highlights of our new strategy for ODA-a strategy formulated by Canadians for building a better world.
International development is vitally important to the future of our interdependent world.
Statements by Ministers
Repression, epidemics, famine, desertification and ecological degradation are both the symptoms and the causes of poverty and underdevelopment.

Too often in the past, aid-giving has been considered exclusively a moral or humanitarian issue, haves helping have-nots. We must change that perception. Aid must be regarded not just as charity but as an investment in our shared future.

Mr. Speaker, only through the eradication of global poverty can we create an environment that nurtures the tremendous creative potential of the human race, and frees it to build the better world we all want to see.


Mr. Roland de Corneille (Eglinton-Lawrence):: Mr. Speaker, very often it is the task of a critic to try to find fault with what has been presented in a Minister's statement, and certainly I will try to be loyal to that responsibility. There are some matters of great concern to the Liberal Party and as the critic for the Liberal Party on human rights and international development I would like to bring these to the attention of the Government and the Canadian people.
It is also the responsibility of a critic to commend the Government when it does take positive action. The Government has taken a number of very important, solid steps forward. I want to commend the Minister for the thoroughness of her statement in reply to the report made by the Standing Committee on External Affairs and International Trade entitled For Whose Benefit. That report was made after a year of study, consultation, and travel. The Minister has taken to heart many of the important issues which were brought up.
For example, she has reported today that the Government now intends to, first, emphasize aid to the poorest nations. She has also pointed out that human resource development will now take a front line role, an important priority. She pointed out that decentralization in the field, which the committee recommended, will take place. This means that the people most affected will have a direct input into what is happening in their country and will be partners in what takes place. She has pointed out that there will be a reduction in the amount of tied aid, especially for weaker and poorer countries. That, too, is a positive development. She has pointed out that there will be a much expanded student scholarship program and aid in education.
There are a number of other items on which she reported. We should all take heart from this and be pleased. I want to indicate the satisfaction of my Party and myself with these promised programs of action by the Government to follow the recommendations which we made in the all-Party standing

March 3, 1988
Statements by Ministers
committee which made a unanimous report entitled For Whose Benefit on what we thought should be done. I wanted to make those positive points at the outset.
While I realize that the Government has accepted a number of our recommendations, I do have a concern that there is an unwillingness by the Government to establish concrete and sound criteria for the examination of human rights violations in countries which receive our official development assistance and to determine what amounts of money we should be giving.
In the committee's report, which we hoped would be taken to heart by the Government, we recommended that as part of over-all Canadian foreign policy we apply a universal, consistent, and transparent manner in the way in which we assess human rights violations and make our grants.
Further, we recommended the development of a classification grid for recipient countries which would provide incentives for good behaviour as well as penalties for poor human rights performance. We made that recommendation because we were dissatisfied with the way in which the Government has been handling the granting of official development assistance to countries where there are human rights offences and violations and where Governments have been despotic.
We further recommended an annual ODA human rights review to be tabled in Parliament and referred to the Standing Committee on Eluman Rights. That was a serious effort to try to deal with a most serious area of concern, and the Government has not addressed itself to this other than with a promise that human rights will be reviewed by Cabinet. We are now told that Cabinet will judge the human rights record of receiving countries and determine the "appropriate channels for Canadian ODA and bilateral allocations for each country". Mr. Speaker, can you imagine Cabinet undertaking that responsibility? I myself cannot see Cabinet sitting in session assessing each nation.
We must seriously ask what the Government really means when it says that the Cabinet will be looking into this. Who is the Cabinet? Will it really be some faceless bureaucrats who will make recommendations? Will it be the Secretary of State for External Affairs (Mr. Clark), or will it be some claque of Neanderthal, red-neck Tory back-benchers holding up aid or development assistance because they do not like the political stripe of some recipient Government? Or will we perhaps have no guidelines at all, as has been the case until now, and continue to muddle around with no clear line of procedure as to how we will link our concern about human rights to the way in which we grant aid to other nations?
This is an area of real concern to us and I hope that the Government will realize that the Canadian people will not accept this program as a reply to what Canadians across the country were telling our committee was an outstanding concern of Canadian people, that being how we assess the human rights performance of other countries and how we link our policies in some fair, objective way that will allow us to give grants to countries which are, to some degree at least, respectful of human rights, and to withhold aid from countries that are grossly violating human rights and our bilateral
assistance. It must also raise the question of how we will deal with our multilateral grants.
The greatest concern that we on this side of the House have about this reply by the Minister is that it misses the most fundamental concern of all. The most fundamental issue before us today is the amount of aid this country is going to give. We were promised that at some point in the future the figure would be .7 per cent of GNP. In fact, during the last election campaign the Prime Minister (Mr. Mulroney) promised that Canada's ODA funding would reach .7 per cent of the Gross National Product by 1990. We have to ask what has happened to that promise.
At present our ODA is only at .5 per cent, not .7 per cent. It is going to be maintained at .5 per cent until 1991 and will gradually be increased to .6 per cent by 1995 and .7 per cent of GNP by the year 2000. That means that the promise which was made is completely broken. We are going to stay where we are. We are not going to reach .7 per cent by 1990. The Government is now talking about .7 per cent of gross national product by the year 2000. That is the bottom line.
The question is, what is the priority of the Government? Is it to buy nuclear submarines to patrol the Arctic Ocean to see where other nuclear submarines are and make note of it? Is that how we are going to spend our funds when we know perfectly well that much of the world's peace is at stake because of the unstable and tragic economic problems in other nations? Or are we going to carry out our traditional policy as Canadians of trying to carry a strong Overseas Development Assistance Program which will bring peace and stability to nations throughout the world?
The inability of the Government to deal with the most fundamental issue, that is, to provide the funds that are necessary for overseas official development assistance, is the critical issue which we wish to criticize. It is broken promises. By 1990 another $1 billion was supposed to be injected into this effort. Instead of increasing the amount of aid in order to keep that promise, the Government is saying that we will stay as we are, that we will not increase anything, and that there will be no effort for some time to come.
Therefore, while the program has some assets which I have noted in terms of the priorities of where our funds are going and the way in which they will be spent, there is no serious effort to live up to our promises and obligations and to reach the goals which this country has set for itself. The Government is once again failing to put its money and itself where its mouth is.


Mr. Jim Manly (Cowichan-Malahat-The Islands):: Mr. Speaker, I am pleased to be able to respond to the Minister's statement on behalf of the New Democratic Party. I would like to thank the Minister for her courtesy in making a copy of her statement available to me and my Liberal colleague last evening. It helps to facilitate the business of the House and a friendly spirit on the floor of the House when that sort of courtesy is extended.
March 3, 1988

When we consider development assistance, perhaps we should begin with the recognition that Canadians are fundamentally a generous people. I presume that this is true of other peoples in the world as well.
When we hear of other people who are in trouble, whether through earthquakes, drought, floods or war, we want to be able to help where we can. CIDA is the Government tool for generosity. It provides emergency assistance in all of these and other emergencies.
We need to go beyond spontaneous generosity which fades with yesterday's television news. We need a national policy commitment to assist in the development of other nations.
For the past number of years we have had that national policy commitment through CIDA, recognizing that development assistance is not just a matter of generosity but a recognition that we live in one world and that our peace and security and our children's peace and security really depend upon the development of a decent standard of living for all men and women, boys and girls in this world. This was underlined by the title of the Brundtland report presented to the United Nations a year ago, Our Common Future. The report tabled in the House today builds on that theme and is entitled Sharing our Future.
We share a future with all the peoples of the world. We cannot have a fortress Canada or fortress North America that ignores the needs and the rightful aspirations of other people for a decent standard of living and human rights.
I want to commend the Government for the review that has taken place of foreign policy and development assistance policy over the last two years. It was a privilege for me to be able to work on both the Special Joint Committee on Canada's International Relations and to work on the Standing Committee on External Affairs and International Trade when it did its review on development assistance.
One of the highlights of both those committees was the degree of public interest in external affairs and in development assistance. This kind of public support is absolutely essential and we must build on it.
One of the recommendations of our report was that there should be a development charter. We said that this development charter should be clearly enshrined in legislation that would be clear and binding. Today the Minister tabled her report and talked about a development charter, but the charter will not be enshrined in legislation. To that extent it is a weak charter because there is nothing binding in it. It is simply words that have been tabled in the House of Commons and that have no more binding force than any other words spoken in this Chamber.
The committee recommended very extensive decentralization. I am pleased that an important first step toward decentralization is being taken in this report. It is important to
Statements by Ministers
recognize that the contract awarding authority remains in the Ottawa-Hull region. I think that should be decentralized as well, which would have the effect of encouraging large and small companies that are interested in development to maintain a consistent presence in the developing countries where they wanted to work. When the final contracts are awarded in the Ottawa-Hull area, it leaves it open to people who are able to have an effective lobby in Ottawa. I am not sure this that is the direction we want to take.
I am pleased that the Government is accepting the emphasis on human resource development. Over the last number of years there has been an increasing recognition of the importance of women in development and the need for their participation to be built in at all levels. This is something that needs to be monitored. We give recognition to that in our reports and it is something that is recognized in policy. It must also be consistently monitored to ensure that it is being followed through. The same is true for the growing recognition of the need to have environmental concerns built into our development assistance.
I am pleased with the Minister's announcement about a doubling of scholarships. I believe education is key in the whole development process. One concern I have relates to the public participation program. A couple of years ago there were many concerns that the public participation program budget might be slashed. My concern, as I look at what the report says, is that the entire program could be turned into a public relations program for CIDA. Throughout the country we have a number of learner centres that have had an arm's length relationship with CIDA which occasionally have been very critical of what Canada has been able to do in terms of development assistance. Indeed, representatives of a number of these learner centres appeared before our committees, and I believe they made some fairly trenchant critiques of what CIDA was doing.
It states in the report that there will be a consultation with these learner centres to assess their potential for taking on responsibilities relating to distributing films, publications and so on. I am not opposed to that, and perhaps that is a useful function, but I am concerned that that consultation should not be used as a way of bringing these learner centres into a form of control by CIDA so that they really become extensions of the public relations department.
1 am pleased to see the reduction of tied aid from 80 per cent to 50 per cent for the sub-Sahelan area, and to 66-2/3 per cent for other areas. I believe this is a good first step.
Like my Liberal colleague, 1 am concerned about the Government's failure to take adequate action on the whole area of human rights. This was one of the fundamental areas of concern of Canadians as they appeared before our committee. They wanted to be sure that the aid moneys that are being

March 3, 1988
Petitions
disbursed by Canada are being used in a proper way and not going to repressive regimes.
My Liberal colleague outlined what the committee recommended, a very open process that would involve a public review by the House of Commons standing committee. Instead, there is a cabinet decision. The open process is necessary because there are situations such as the one now where the Government has renewed assistance to Guatemala. I want to read briefly what the 1987 annual report of the Inter-Church Committee on Human Rights in Latin America, says about Guatemala. It states:
Summary executions and disappearances are still a daily occurrence. Neither the government's claim that this violence is the result of common delinquency nor its attempts to reduce it through heavy investments in new police equipment adequately responds to the challenge. It is scandalous to treat these hundreds of violations of the right to life as of relatively minor concern simply because numbers are no longer in the thousands as they were a few years ago.
Along with its inability to put an end to current human rights violations, the present Guatemalan government has shown itself unwilling or incapable of initiating even a preliminary investigation into the fate of past victims of such abuses.
And it continues. The problem is that while that kind of knowledge about Guatemala has been available, the Government, last November, just prior to the visit of the Secretary of State for External Affairs (Mr. Clark) to Central America, used that visit as the occasion for announcing resumption of aid to Guatemala. People across Canada who are concerned about development assistance wonder how development can take place in a climate of repression such as we have in Guatemala.
The same is true of El Salvador. The Inter-Church Committee stated:
Human rights problems of a gross, systematic and continuous nature continued in El Salvador during 1987.
It talks about arrest and detention with little meaningful legal protection. It continues:
Such practices represent a general government policy aimed at stifling popular dissent.
Death squad activity continued and indeed appeared to be increasing as the year drew to a close. The brutal October assassination of a prominent human rights activist thrust the survival of such practices back into the consciousness of the international community.
Undoubtedly the impunity with which past human rights offences have been treated in El Salvador and the Government's attempt to reduce the struggle for human rights to a propaganda battle have done little to contribute to the creation of a better human rights climate.
The Council on Hemispheric Affairs in the United States, in its eleventh annual report, singled out El Salvador and Chile as being among the worst violators of human rights in Latin America last year. Yet when I wrote to the Minister last fall, sending a copy of a report which had been produced by a teacher from my constituency who had visited El Salvador, which documented human rights violations in El Salvador, the Minister replied:
Setting aside for the moment differing views of the human rights situation in El Salvador, there is a broad agreement in this country that Canadian aid should be used to benefit those in greatest need. This is certainly true in the case of our program in El Salvador.
It is not just a matter of differing views of the human rights situation in El Salvador. It is a fact that the Government refuses to recognize that the human rights situation in El Salvador is abominable and disgraceful. We cannot make excuses and say that we hope it will be all right.
The same is true for the scandal of human rights in East Timor,and we have a massive aid program for Indonesia. I commend the Government for some of the steps it has taken. I regret that the aid levels are still below the target that was promised by the Secretary of State for External Affairs when he appeared before the United Nations just after he was appointed to his office. I remind the Liberals that they also cut back on the level of development assistance when they were in government.
I look forward to the implementation of this program. I understand that the standing committee is going to have the Minister come before it. We will review the way in which this program will be administered. I urge the Minister and CIDA to get on with this. I also asked them to try to bring forward a clearer public policy to link human rights and development assistance. Development assistance simply cannot take place in a climate of repression.


PETITIONS
Mr. Nelson A. Riis (Kamloops-Shuswap):: Mr. Speaker, I have the honour today to present two petitions on different issues. They are both certified correct pursuant to Standing Order 106. The first petition is from a number of citizens of the Northwest Territories. The petition indicates a concern that the United States and Japan have proposed to fly plutonium over the Canadian North, representing devastating consequences to both the Canadian environment and its people in the event of an accident or act of terrorism.
The petitioners say that Canada has not been consulted by either the United States or Japan, which effectively challenges Canadian sovereignty in our North. They feel that allowing such flights over Canada would be contributing to nuclear proliferation, something to which Canada should be completely opposed. Therefore, they call upon Parliament to recognize the dangers of such flights and to say a very strong no to the transport of plutonium over northern Canadian territory.


Nelson Andrew Riis: Mr. Speaker, I have the honour to present another petition signed by citizens
March 3, 1988

of Swift Current, Saskatchewan, as well as other centres, who indicate that they believe the federal Government lacks a mandate from the people of Canada to conclude a free trade agreement with the United States. They also believe that the Prime Minister (Mr. Mulroney) promised in the course of the trade discussions that Canadian sovereignty would not be compromised and feel that Canada's sovereignty has been compromised.
The petition goes on to state a number of other issues which 1 will not raise because I will be filing this petition. However, fundamentally the petitioners call upon Parliament to dissolve now and allow the people of Canada the opportunity to either accept or reject the proposed trade deal with the United States during a national general election.


Mr. Geoff Wilson (Swift Current-Maple Creek):: Mr. Speaker, I have the honour and duty to present a number of petitions on behalf of residents of southwestern Saskatchewan concerning Bill C-54. The petitioners indicate their concern that pressures exerted by various permissive minority groups may cause Parliament to water down and weaken this legislation. The petitioners therefore humbly pray and call upon Parliament to support the Bill which will make it illegal to manufacture, import, sell or rent pornographic material as defined in the Bill.
They call upon Parliament to pass the legislation without dilution in the belief that it gives recognition to the inherent dignity of individuals, particularly women and young people who are most vulnerable to exploitation in this area.
1 have in fact 23 petitions from residents of Swift Current, Burstali, Leader, Frontier, Eastend, Fox Valley, Simmie, Herbert, Cabri, Ponteix, Maple Creek, Sceptre, Mendham, Prelate, Admiral, and Hazlet, Saskatchewan, containing over 1,600 signatures, all relating to the same issue.


Mr. Mike Cassidy (Ottawa Centre):: Mr. Speaker, I have the privilege to present a petition, which is signed by a substantial number of constituents of my riding and residents from different areas of Ottawa who note that in October of 1985 the subcommittee on Equality Rights of the Standing Committee on Justice and Solicitor General of this House, submitted a report to the House recommending that the Canadian Human Rights Act be amended to prohibit discrimination on the basis of sexual orientation in all areas of federal jurisdiction.
They further note that in March, 1986, just two years ago today, the Government accepted this report and its recommendations and said it would take whatever measures are necessary to ensure that sexual orientation is a prohibited ground of discrimination.
The petitioners humbly pray and call upon Parliament to ensure that the Government acts to implement that recommendation and that commitment. I have the privilege of submitting their petition and I hope that it moves the Government to act.
Petitions


Mr. John R. Rodriguez (Nickel Belt):: Mr. Speaker, I have the privilege and responsibility to table a petition signed by residents of Toronto, Capreol, Barrie, Hornepayne in the Province of Ontario, as well as Chatham, Merlin, London and Kingsville, also in Ontario. These petitioners point out that in fact the Government had no mandate to conclude a free trade agreement with the United States.
They also point out that the Prime Minister (Mr. Mulroney) had promised in the course of the negotiations with the United States that Canadian sovereignty would not be compromised. They also point out that this proposed free trade agreement not only denies Canadians the secure access to the U.S. market, which was the key objective in these negotiations, but in fact it threatens the loss of hundreds of thousands of Canadian jobs.
The petitioners call upon Parliament to allow the people of this country to decide on this very important issue by a dissolution of Parliament and the calling of a general election by this Government.


Mr. Neil Young (Beaches):: Mr. Speaker, I have a number of petitions to present which have been certified correct as to form and content pursuant to the provisions of Standing Order 106. The petitions are signed by residents of Toronto, Quebec City, Ottawa and a number of other centres across the country.
The petitioners state that the proposed trade agreement would deny Canada the policy freedom to determine its own economic future and undermine our ability to build a society distinct from that of the United States. They state that the proposed trade agreement not only denies Canadians secure access to the U.S. market which was the key objective in these negotiations, but that it threatens the loss of hundreds of thousands of jobs.
The petitioners humbly pray and call upon Parliament to dissolve and allow the people of Canada the opportunity to accept or reject the proposed free trade agreement during a national general election.


Mr. Iain Angus (Thunder Bay-Atikokan):: Mr. Speaker, pursuant to Standing Order 106 I have the obligation and the honour to table a petition that has been certified correct by the Clerk of Petitions.
The petition is signed by residents of Ontario, primarily from the City of Toronto and the Golden Horseshoe. The petitioners indicate that the Conservative Government had no mandate from the Canadian people to conclude a trade agreement with the United States. They state that this agreement not only denies Canadians secure access to the U.S. market that was supposedly the key objective in these negotiations but threatens the loss of hundreds of thousands of Canadian jobs.

March 3, 1988
Order Paper Questions
They 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.


Mr. Steven W. Langdon (Essex-Windsor):: Mr. Speaker, I too have a petition to present which conforms with Standing Order 106. It deals with the subject of the trade deal with the United States and is signed by residents of the City of Toronto.
In the petition the residents of the city indicate their view that the Prime Minister (Mr. Mulroney) promised in the course of bilateral trade negotiations that Canadian sovereignty would not be compromised, yet the trade agreement negotiated by the Government threatens to remove the very fabric of Canadian political and economic sovereignty by removing the power of the Canadian Government to effectively control foreign ownership, to develop Canadian energy resources in the best interest of Canadians and to equalize opportunities between regions.
Therefore they conclude that there must be an election called to endorse or to reject this trade deal before it is accepted.


Mr. Maurice Foster (Algoma):: Mr. Speaker, I have a number of petitions signed by petitioners from Richard's Landing and Hilton Beach. On the petition are several dozen names of constituents of mine who are calling on the Government not to impose a sales tax on food.
They point out the large number of regressive taxes which have been imposed already on dental supplies, snack food, candies and soft drinks, all of which are close to food. They know that the documents of the Minister of Finance (Mr. Wilson) that were tabled in the House stated that food should not be taxed, but they did not say that food would not be taxed. That is the real concern of these constituents.
I hope the House will take this matter into consideration, especially the Minister of Finance, who I know wants to do something good for the country. I am sure that he will be well impressed by this petition.


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. Pierre H. Vincent (Parliamentary Secretary to Minister of Finance):: Mr. Speaker, Question No. 258 will be answered today.


Mrs. Killens: Is the amount of $6 million for the rebuilding of the Paspebiac commercial pier taken from the budget of the Economic Development Plan for Gaspe- Lower St-Lawrence or, if not, which plan or department is assuming these costs?


Hon. John C. Crosbie (Minister of Transport):: The costs of the Paspebiac Wharf Reconstruction project are being funded from the regular capital budget of Transport Canada as part of the ongoing restoration and replacement of public port facilities for which the Department is responsible.


Pierre H. Vincent: Mr. Speaker, I ask that the remaining questions be allowed to stand.


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


Some Hon. Members:: Agreed.


Mr. Deputy Speaker:: I wish to inform the House that because of the ministerial statement Government Orders will be extended by 39 minutes beginning at 1 p.m.



GOVERNMENT ORDERS


Michael Morris Cassidy: That this House notes that the flow-through share tax provision has been instrumental in revitalizing mining communities and regions across Canada, and consequently urges that the initial benefit level of this provision not be reduced but be retained to encourage mineral exploration and development by small and medium-sized companies.
He said: Mr. Speaker, this debate concerns the question of the Government's decision to terminate the flow-through share provisions which have encouraged an extraordinary amount of development in northern Quebec, northern Ontario, western communities, Nova Scotia, and even in Schefferville, the ghost town left by the Prime Minister (Mr. Mulroney) when he was the President of the Iron Ore Company of Canada which has seen some $19 million worth of investment in exploration because of the flow-through share provisions that have been in force since 1983.
March 3, 1988

This specific motion will be voted upon when we will be able to see how some Conservative Members of Parliament, who I know are very unhappy about the Minister of Finance's (Mr. Wilson) decision, will vote on this particular measure. It urges that the initial benefit level of the flow-through share provision not be reduced but be retained to encourage mineral exploration and development by small and medium-sized companies.
Last year the Prime Minister declared that we are in the process of building two Canadas, one which is rich and promising and one which is underdeveloped and underemployed. He was right.
What we are really talking about is a very important measure which has had enormous consequences in terms of providing growth and development on a self-sustaining basis in mining areas and in frontier areas across Canada. This is the Auto Pact of the mining sector of Canada. Perhaps the Government is trying to gut the Auto Pact under the trade arrangement with the United States as well. We reject that. We reject this measure which denies continuation of activity to regions which have benefited enormously. We believe that if this measure is maintained, it can be focused in such a way that it can be confined to junior mining companies which carry out the bulk of mining exploration and development. This can be done in ways which would permit a broader range of the population to participate rather than being confined to higher-income Canadians as the major providers of mining investment.
The White Paper on Tax Reform last July proposed cutting the earned depletion allowance, which is an essential part of the flow-through share mechanism, from 33 per cent, which is where it stood before Christmas, to 16.33 per cent in July of 1988, and to zero per cent in July of 1989. The finance committee suggested that the 33 per cent rate be maintained for a year and then be cut to 16 per cent to the end of 1989. We did not concur with that recommendation. But even that recommendation was not accepted by the Government. The Finance Minister's sole concession has been to extend the 16 per cent rate so that it will last for 18 months from July of this year until the end of 1989.
During the course of the discussion on the question of flowthrough shares, New Democrats have been criticized. It has been suggested that we have adopted contradictory positions. That is not true. During the 1984 election campaign my Leader, the Hon. Member for Oshawa (Mr. Broadbent), was critical about the fact that we have various substantial amounts of tax expenditures and of tax benefits for corporations in Canada. The total of tax expenditures in Canada amounts to something in the order of $25 billion of $30 billion a year, according to the Auditor General. Little or nothing of that amount has in fact been attacked or really taken head-on by the Government.
What we made clear in the 1984 election campaign was not that these tax concessions should be wiped out automatically
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but that they should be evaluated. Those that were demonstrably of benefit should be maintained, just as those that were demonstrably not of benefit and merely cost the taxpayer should in fact be reduced or eliminated.
Earlier this week we met with representatives from across the country in the save flow-through share committee. They brought their campaign to save the flow-through share regime to Ottawa on Monday and Tuesday of this week. From the side of the New Democratic Party, which is consistent, we indicated that we thought the program should be focused on the mining regions and on the junior mining companies. The people from the industry accept and agree with that position. They are not saying that the regime, which was put in by the Liberals in 1983 and which was overly generous to the large mining companies, should be maintained per se. They are not saying that a system which largely benefits taxpayers earning over $200,000 a year should be maintained per se. They are saying that the perceived benefits in their regions should be maintained for the junior mining companies. That is what we are asking Members on all sides to support in this votable motion here today. What is unusual is not the New Democratic Party's position, but that the Conservatives are withdrawing the flow-through program and not putting anything in its place.
Since this issue first emerged in the House of Commons in a high profile manner in December of 1986, I took the trouble to look at our discussions on this issue as a consequence of the 1986 Budget. At that time the Government proposed a modest enrichment of the flow-through share program that existed at that time. On behalf of my Party, I was critical of a further enrichment. I say now, and I said then, that it should be targeted.
At that time I made it clear that rather than voting against that particular motion, measure, or clause in the tax Bill, "We could have tried to change, amend and improve the various measures being put forward by the Government". I went on to
say:
I decided, and my colleagues accepted, that where you have a measure which should fundamentally be re-thought, which is far too broad for the declared purpose, which is to get some needed exploration expense and activity going in the northern parts of my province, that is, Quebec, the oil and gas, areas and so on, rather than simply saying there is a bit of good here and there is a lot of bad, we should simply tell the Government to stop it, take the measure away, start all over again, and strike out the loopholes. Then, if the Government has to have targeted measures in the form of tax credits, grants or other means to encourage certain types of desirable activity, for goodness' sake let it do it that way, but let it not do it in the broad brush kind of way-
That was being proposed at that time. That makes sense. That is consistent. I said, "let us evaluate it". We had not done an evaluation at that time. Let us focus it in order to ensure that we were not making unnecessary commitments of tax resources and that we were getting what we wanted for the desirable activity which is to get needed exploration expense and activity going in the northern parts of my province, in Quebec, and in the rest of the country.

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It is interesting that at that time the Minister of State for Finance (Mr. Hockin) responded with a paean of praise for flow-through shares. He stated:
I think the Hon. Member knows that flow-through shares and the tax arrangements for them are not designed for the riding of Ottawa Centre. They are designed ... for northern Ontario, northern Quebec, the Northwest Territories, the Yukon, and northern Manitoba, Alberta and so on.
As a matter of fact, it is the northern parts of our provinces that are the most neglected parts of our society economically and in every other sense. We must do something for those parts. That is what is behind the flow-through shares.
The Minister of State for Finance went on to say:
-quite frankly, flow-through shares have been very effective in creating very meaningful economic activity in a neglected area of Canada... This policy-is aimed at helping the people in northern Canada and making sure that risk decisions are not taken by Government but by the private sector.
I am in the uncomfortable position of agreeing with the Minister of State for Finance. What is curious is that only six months after that fulsome praise for flow-through shares, the Government turned around and scrapped its support for flowthrough shares. The Government is the one that did the flip-flop. The Government is the Party that changed its mind, not the New Democratic Party.
In responding to concerns which we and many other people have raised about the flow-through shares, in December, in its response to the finance committee, the Government acknowledged that there was widespread concern about the impact of flow-through share financing. Then the Government said that all it would offer would be temporary assistance, in the event that there were depressed prices or economic downturns affecting exploration activity in Canada. In other words, after the mining communities go back to 25 per cent unemployment, then the Government might do something.
[ Translation]
Mr. Speaker, this week, the Minister of Energy, Mines and Resources (Mr. Masse) stated before the save flow-through shares committee, and I quote:
I cannot approve of measures aimed at shielding the mining exploration sector from market forces, nor do 1 support tax measures that reward activity without considering results.
So market forces must prevail. And the Minister also said, and I quote:
These changesin the flow-through shares program
-are part of the overall tax reformand the Minister is not prepared to make any changes at all. [English]
He has cut loose the mining communities despite the evidence of the impact of this particular tax measure, which I maintain meets the New Democratic Party's criterion, that is, it is clear that the benefits have been very substantial, and it is possible to have those benefits at a cost which is reasonable and justifiable in terms of what this does for regional development.
Of course, the Government does not understand very much about regional development. It has consistently cut spending on regional development since coming to office in 1984. This particular measure that the Government inherited from the Liberals has encouraged $2 billion worth of mining exploration activity in Canada. The indications we have from studies financed by the prospectors in Quebec and by the Government of Quebec indicate that the mines already opened under this program have generated an estimated $1.5 billion of production per annum, some 66,000 jobs, $2.8 billion worth of added value, and additional taxes for the federal Government in Quebec of some $300 million per annum after deducting the cost of the tax incentives.
The Quebec Prospectors' Association told the finance committee, "To abandon this program would signify the elimination pure and simple of junior companies which produced almost all the mining discoveries between 1980 and 1985".
[ Translation]
The results have been fantastic, Mr. Speaker. In Abitibi, about $500 million was spent on exploration during the past three years, and 15,000 jobs were created. This has promoted small business. In three years, unemployment dropped from 28 per cent to 5 or 6 per cent in the Abitibi area, saving a lot of money in unemployment insurance benefits and welfare payments.
In Schefferville, $19 million was spent in a community that had been closed down by the former president of Iron Ore Canada, the present Prime Minister of this country.
In Murdochville, in the Gaspe, another region with one of the highest unemployment rates in this country, $6 million was spent.
In Thetford Mines, where 350 new lay-offs were announced in the asbestos industry, two Quebec companies are opening up two chromium deposits, and $20 million will have been spent in 1987 in this region.
We see the same thing happening at La Fosse in Labrador and Ungava. Some 800,000 square kilometres have been staked for exploration purposes by a number of companies, mostly junior companies headed by Quebecers, and these are young entrepreneurs and companies based in the area, not in Montreal or Toronto.

With this program we are seeing the development of an authentic, new mining industry based in these regions. It is genuine regional development, rather than the boom-bust pattern of mining development in which large mining companies situated in Toronto, Montreal, or abroad turned the exploration up when they felt like it and then turned it down flat.
March 3, 1988

We have seen a rate of mine openings and findings such as we have never seen in the country before. There has been an increase from three or four mines being opened per year over the last 30 years to about 15 mines being opened per year. Last year alone some 34 mines were opened across Canada, mainly in the gold mining sector and largely because of this particular program. These mines are generating jobs, every one of them. They are generating tax revenue. They are helping our balance of payments. They are creating regional development for regions which had just about given up hope of anything else happening for them.
[ Translation]
Mr. Speaker, the Association des prospecteurs du Quebec, which wants the flow-through shares program to be maintained, is supported in that province by the unions, the Montreal Stock Exchange, the Quebec Chamber of Commerce, our own Party and the Parti Quebecois, by over a dozen municipalities who are affected by this measure, by the James Bay Development Corporation, and I could go on, but my speaking time is limited.

Support for this program is not confined to Quebec. In Nova Scotia, not renowned as a mining province, it is estimated that $100 million was invested in mine exploration and development in 1987, mainly on the eastern shore of Nova Scotia where we know that unemployment has been particularly high. Just in the small community of Sheet Harbour, with 2,500 people, in the riding of the Minister of National Revenue (Mr. MacKay), the Eastern Shore Development Commission estimates expenditures of $100,000 per week. That is real regional development.
In Kirkland Lake, Ontario, which has suffered economic decline for a half century, from the boom of the 1920s, there has been $70 million in mining exploration and development over the last three years. However, we now have the first casualty. Northfield and Queenston Gold Mines cancelled a $50 million mining development program in that area as soon as the Minister of Finance confirmed that flow-through provisions were coming to an end. In fact, after July of this year we are told that no further equity financing will be raised under this particular program because all the juice has gone out of it as a result of the Minister's statement.
If we look at Red Lake, in the riding of the Hon. Member for Kenora-Rainy River (Mr. Parry), we see that unemployment has dropped from 20 per cent to 6 per cent. There are 45 drills working there, whereas there were three or four drills working just four years ago.
Uranium City was dying, yet it has now been revived because of exploration based upon flow-through shares.
I want to make clear that I have been consistent in terms of pressing the Minister. I offered him suggestions in a letter of last December, which specifically called for flow-through shares to be targeted to small companies that do not have other
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forms of income against which they can write off their exploration expenses. We have also suggested the possibility of there being tax credits allowing smaller income earners to take advantage of the particular program rather than confining the benefits to people who are at or near the top rate of income tax. The Minister of Finance has simply said: "No".
In conclusion, I know how my colleagues from the ridings of Churchill, Kamloops-Shuswap, the Yukon, Skeena, Nickel Belt, Kenora-Rainy River, Thunder Bay-Atikokan, and Thunder Bay-Nipigon will vote on the particular measure. We in the New Democratic Party will vote for these benefits to continue because of the value they have brought to mining communities and for them to be focused on smaller junior mining companies that can take the greatest advantage of them.
I want to know where the Minister of National Revenue stands on this particular question. How will the Hon. Member for Cape Breton Highlands-Canso (Mr. O'Neil) vote? Will he vote with the Government or for his constituents? How will the Hon. Member for Dartmouth-Halifax East (Mr. Forrestall) and the Hon. Member for Halifax West (Mr. Crosby) vote? How will the Hon. Member for Mission-Port Moody (Mr. St. Germain), who we know is uncomfortable with this particular provision, vote, or the Hon. Member for Prince George-Bulkley Valley (Mr. McCuish)? How about the Hon. Member for Abitibi (Mr. St. Julien) who was so strong in criticizing me in 1986 and then spoke so strongly for flow-through shares? Will he be consistent, or will he flip-flop with the Minister of Finance on the particular issue, when unemployment has dropped from 25 per cent to 6 per cent in his area because of the particular program?

Is the Hon. Member for Abitibi (Mr. St-Julien) going to vote against the interests of his constituents and in favour of the Minister of Finance, or will he vote for his constituents and for regional development in the Abitibi area?

How about the Hon. Member for Temiscamingue (Mr. Desjardins)? We know his private views. Does he have the courage to stand and say publicly that the New Democratic Party is right in putting forward this motion and that the Minister of Finance is wrong in withdrawing exploration and development from mining communities across Canada?
I believe that these questions must be answered by government Members. May they live with their conscience if they vote with the Minister of Finance or if they just abstain today, because taking a walk means that they are supporting the Minister of Finance.
Finally, because my time is up, I want to say that this question will not die in the House of Commons today. This question is very lively in mining communities across Canada. The people in those communities are looking to where the

March 3, 1988
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various Parties stand right now. They understand the position of the New Democratic Party. They do not understand what the Government is doing in pulling the rug from under mining communities so that it can cut the taxes on people earning over $100,000 per year. This is what the Government wants to do, it seems to me, or perhaps it is so that it can cosy up to the Americans over the trade deal and say that it is not supposedly subsidizing that particular sector.
The Conservatives will be on the line in the election campaign-did they stand up for mining communities or did they ignore the plight of mining communities which will be adversely affected by the withdrawal of this particular measure?


Mr. Wilson (Etobicoke Centre):: Mr. Speaker, I am sure the Hon. Member is aware that the benefits of flow-through share financing, particularly depletion, go to those Canadians who are upper income investors, people who earn $60,000, $70,000, $80,000, and more. I find it difficult to understand why the Hon. Member is saying that he wants to extend depletion, because then he is encouraging this type of investor to pay little or no tax, something against which he and his colleagues have been railing, and on which we have taken some action.
Could the Hon. Member explain why-and I share his concern about the position of mining communities right now, and 1 will address it in my remarks-why the New Democratic Party is proposing the extension of depletion or the continuation of depletion, which is a subsidy that benefits upper income Canadians and helps them to pay little or no tax? Could he explain that to the House?


Michael Morris Cassidy: Mr. Speaker, 1 am sorry that the Minister seems to ignore constructive suggestions that were made to him, particularly in the letter that I wrote on December 16, 1987, in which I made a number of suggestions.
I said that the measure should be focused on small, nontaxable companies, that is, junior mining companies. Also I said:
-the Government should offer a tax credit or its equivalent to small investors who wish to participate in financing Canadian mineral exploration and development. This would give individuals a tax saving for relatively small investment-and make the incentive proportional to the mining expenditure rather than the taxpayer's income. As a consequence, new investment may come from those communities in which mining takes place and not just from high-income taxpayers who currently purchase close to one-half of the dollar value of flow-through share issues.
In arguing that the benefit should be maintained for junior mining companies, it is quite clear that we proposed that there should be substantial changes in the program.
What appalls and really bothers me is that the Government could, in six months, go from having the Minister of State- and I assume he speaks with the same authority as the Minister of Finance-say that flow-through shares have been effective in creating very meaningful economic activity in a neglected area of Canada, to taking the opposite position and
deciding that they will totally neglect mining areas by withdrawing flow-through shares over a short period of time.


Michael Holcombe Wilson: Mr. Speaker, I think the Hon. Member misses the point here. There will be a continuation of the level of activity of about half of what was done in 1987 without any change in what we have proceeded with right now in income tax reform. The Hon. Member is saying we should extend the earned depletion, something which would clearly help those Canadians who are in the high-income brackets and large, multinational companies. Again, the Hon. Member is talking out of both sides of his mouth. Members of the New Democratic Party are saying that they would stop that dead in its tracks.
How is it that the Hon. Member can say that we should improve the attractiveness of flow-through share financing if he does not want it to spill over into allowing high-income Canadians not to pay taxes? He does not understand the nature of the flow-through share provision and the impact of the depletion on the flow-through share financing. We cannot limit it to investors who are working in Val d'Or or Temis-camingue. Anyone can buy these. What we have done in tax reform is to reduce the attractiveness of them. We admit that that is true, but that was a clear objective of tax reform in order to avoid what the Hon. Member has been saying for many, many years, which is that we have tax provisions which help high-income Canadians pay no taxes. The Hon. Member is talking out of both sides of his mouth and he does not understand which side he is talking out of when he opens it.


Michael Morris Cassidy: Mr. Speaker, if anyone is being hypocritical and if any Government is talking out of both sides of its mouth, it is the Conservative Government which is in power in Canada right now. I quote the Minister of State for Finance who said on December 16, 1986, as recorded in Hansard at page 2171:
As a matter of fact, it is the northern parts of our provinces that are the most neglected parts of our society economically and in every other sense. We must do something for those parts. That is what is behind the flow-through shares.
That is what the Minister's colleague, the junior Minister of Finance, had to say just 15 months ago. Now the Minister of Finance is saying: "Gee, we cannot do this". If that is not hypocritical, I do not know what is.
Since he has not looked at the letter, I would remind the Minister of my letter to him of December 16 in which I said:
However, I believe we can alter the nature of the flow-through share mechanism to prevent abuses while retaining the real economic benefits that emerge from it as an incentive to mining activity.
Firstly, flow-through shares could be directed to small, non-taxable companies of a specific size as they are in the oil and gas sector. At present, too many large, profitable corporations take advantage of flow-through shares at great cost to the federal treasury.
Since it is junior companies that engage in high-risk, grass roots exploration, it is those companies that should chiefly benefit from this measure.
March 3, 1988

The Minister says that it is impossible to target the benefits in that particular way. We talked with representatives of the affected communities and of the junior mining companies who were in Ottawa earlier this week. They do not see any problem with targeting the measure in that way. There is not a problem with targeting it in the oil and gas sector and there is no reason why that cannot be done in the mining sector as well.
The real issue that the Minister ignores is the fact that this program has brought enormous economic benefits to communities from the Atlantic to the Pacific. Those communities are having the rug pulled out from underneath them and this Government does not give a damn.


Nelson Andrew Riis: Mr. Speaker, I wonder if the Minister of Finance (Mr. Wilson) has not indicated by his decision a bit of a cosy relationship with large multinational mining companies as opposed to small, junior companies. A bonanza sale will soon occur and has already begun. The small exploration and mining companies have, as a result of flow-through share issues, been exploring and developing in the country. As they have made their claims and explored and developed their properties, they have identified good ore prospects. Now they will be unable to hold those prospects and develop them further because of a lack of equity financing.
I feel that the Minister of Finance knows this. That means that these properties will now go onto the market because the companies will be desperate for funds. They will need to sell off these properties, and who will buy them if not the large, multinational mining companies?
I would ask my hon. friend whether or not he feels that it is the case that the Minister of Finance has cosied up to the large mining companies and will now exploit the situation of junior companies being forced to sell their properties at fire-sale prices.


Michael Morris Cassidy: Mr. Speaker, I think there is a very real risk in precisely that area. I return to the basic facts which are astonishing. Last year, 34 new mines opened across Canada. The rate of mine finding in Canada has risen from 3 or 4 per year to 15 or 16 per year in the course of the last 3 or 4 years. That is an extraordinary accomplishment. This is not the kind of possibly inflationary growth that occurs within 50 miles of the Finance Minister's riding in Toronto. This is growth in regions of the country where there are resources waiting to be summoned into action.
Before the junior mining companies were able to secure financing through flow-through shares, large robber baron corporations did much of the exploration and development for as long as short-term profits could be made. When returns were diminishing or there was an economic downturn, these corporations closed down operations completely and left the regions devastated.
The cyclical boom and bust of the resource sector has always plagued mining communities, and the flow-through share program has helped these mining communities break
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their reliance on non-resident businesses by encouraging junior mining companies resident in the areas that contribute directly to other economic spin-offs to projects. If, as my hon. friend for Kamloops-Shuswap (Mr. Riis) has indicated, the consequence now is that they are forced to sell out to the multinationals, we will basically be going back in history. That is a sorry and unfortunate tale of boom and bust which I think the mining communities want to and should be allowed to avoid.


Geoff Wilson: Mr. Speaker, as I indicated in my question to the Hon. Member for Ottawa Centre (Mr. Cassidy), I am very pleased to be involved in this debate. It gives me a chance to state where the Government stands on the important Canadian mining industry.
This industry is very important to the Canadian economy and particularly to the northern regions of Canada. We have seen over the early 1980s, through a period of good management, cost reductions and a good amount of reinvestment. The Canadian mining industry has become one of the most efficient in the world. Today, the industry is stronger and more resilient than it has been in its existence, and that is due to the hard work done by the Canadian mining companies, the miners and the communities themselves. It is paying off.
In 1987, the mineral industry was remarkably vigorous. According to recent government estimates, Canadian mineral production jumped by 17.5 per cent last year to $16 billion, with gold production up more than 32 per cent alone. This level of exploration activity reached record levels in 1987 and it is an achievement that is not likely to repeat itself this year, regardless of any changes in the tax provisions relating to flowthrough shares.
We as a Government are committed to keeping this industry strong, growing and able to respond to the opportunities in the world market-place. Because of this commitment, the Government retained its tax reform initiatives, a system that is highly advantageous to the mining industry. Under tax reform proposals, we have ensured that companies pay no income tax at all until all capital costs of a new mine or major expansions have been fully recovered. With tax reform, companies' preproduction development expenses can be claimed as incurred. With reform, we have provided a very generous resource allowance so that companies will be able to invest, prosper and create permanent, long-term jobs for Canadians.
The mining industry, therefore, continues to benefit greatly from highly advantageous tax treatment compared to most other sectors of the Canadian economy and compared to our competitors abroad. In fact, the mining industry has the lowest marginal tax rate of all industrial sectors. This favourable tax treatment ensures that new mines can be brought rapidly into production, creating thousands of new jobs in regions which historically have been hardpressed. These are permanent jobs

March 3, 1988
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that will continue for the life of the mine, not just simply during the drilling season.
[ Translation]
Mr. Speaker, we strongly support regional development. This is why on December 22 my colleague Robert de Cotret announced a series of consultations which will pave the way for new programs designed to meet the needs of Quebec's peripheral regions. These consultations with regional spokesmen are now under way with a view to focusing on their priorities. What we want is a diversified economy.
[English)
As well, we have given the people of northern Ontario new tools to develop and diversify their economy through the FEDNOR program. Again, my colleague from Sault Ste. Marie is involving the local communities in better targeting this assistance.
Our commitment to the mining industry is also evident in the fact that we retained a tax system that fully recognizes the special risks involved in the exploration for and development of new mines. Under tax reform we have provided companies with a 100 per cent write-off for all their exploration costs. Contrary to misconceptions generated by Members opposite, particularly the Hon. Member for Ottawa Centre, we have not terminated flow-through shares. We have retained the flowthrough share mechanism which allows companies to pass their unused tax benefits on to investors. This mechanism is available only to the mining and oil and gas industries.
These special provisions, when combined with the $500,000 lifetime capital gains exemption and the special favourable treatment of exploration expenses under the investment loss rules, provide investors with strong incentives to put equity investment into mining companies.
We improved the provision in December following consultations with the industry so that it recognizes some of the problems that developed last year as a result of the problems in Canadian stock markets. These provisions are of particular benefit to junior mining companies which are critical to a vigorous, competitive mining sector.
The exploration incentives contained in our tax system are the strongest incentives offered to any industrial sector in Canada. No other sector can lay claim to a better system. [Translation]
Under the tax reform companies will be allowed to write off 100 per cent of their exploration expenditures. Contrary to the erroneous allegations made by Members opposite, we have retained the flow-through share mechanism so that companies will be able to pass their unused tax benefits on to their investors. This mechanism is available only to oil, gas and mining companies. These special provisions, coupled with the $100,000 lifetime capital gains tax exemption and the special preferred treatment of exploration expenses under the regulations governing investment losses, are a strong incentive for investors interested in the mining sector.
These provisions are particularly beneficial to junior mining companies which are the very foundation of a vigourously and competitively expanding mining industry. Our tax system features exploration incentives the likes of which are unavailable in any other industrial sector in Canada. No other sector can claim to be better treated.
[ English]
It is a true economic incentive to encourage productive investment. I stress the words "economic incentive" because one of the primary objectives of tax reform is to ensure that business and investment decisions are made on the basis of strong economic merit rather than on tax shelter merit.
A corner-stone of the tax reform measures we have proposed is a system of lower personal and corporate tax rates. Instead of a host of loopholes available to a select group of companies and individuals, we propose to provide the best economic incentive of all, and that is lower tax rates. We have got rid of loopholes in the system introduced by previous Governments and so roundly condemned by the NDP. These loopholes permitted high-income taxpayers to pay little or no tax at the expense of ordinary Canadians. We have also got rid of the tax shelters which the Hon. Member for Ottawa Centre has so often criticized in this House. However, we have retained the very important flow-through share provision as a true incentive, even though the Hon. Member argued as recently as last December that we should have got rid of it.
To reduce our personal and corporate tax rates we must broaden the tax base. This includes our planned phase-out of earned depletion which currently allows an investor to write off $133 for every $100 invested in mining exploration. In other words, we are eliminating a direct subsidy in the tax system. This is so because earned depletion provides a deduction in excess of the actual amount spent by companies on exploration and development. This is consistent with the thrust of the greater fairness and equity that we are implementing in tax reform.
Investors in mining exploration who take advantage of flowthrough shares will also continue to enjoy advantages in capital gains since only 50 per cent of exploration expenses will be included in their investment loss account, thus improving their access to the lifetime capital gains exemption.
In the past several months the financial markets have changed quite markedly. As a result of the severe stock market downturn last October, the mining industry, indeed all industries, face an uncertain investment climate. There have been numerous signs of difficulty ahead for the mining industry. Virtually no equity issues have been completed since October 19. The two major issues attempted by the market have encountered significant difficulties. Share prices across the board are down. Mining shares have dropped even further. The prices of gold and silver recently softened, while investors have fled from equity issues. In fact, the riskier the equity, the faster the flight.
March 3, 1988

The point I am underlining here is that it is far more the problems in the capital markets than it is in the tax system which have affected the market for flow-through shares. It is clear that investors, big and small, have adopted a wait-and-see attitude towards putting their money into any equity. It is also evident that investors are looking for less risky investments such as the bond markets and have decided to postpone their investments in mineral exploration and other forms of risk investment at least for the time being.
Thus, despite one of the most favourable tax regimes in the world for mining, there continues to exist a great concern in the mining regions of Canada that tax reform is killing flowthrough share financing, and with it the exploration activity it finances. As I said, this is simply not true.
First, flow-through shares are not the only source of funds for exploration. The vigorous financial rebound which the mining industry enjoyed means that it is now better able to finance its own exploration activity internally. Cash flow has increased from $320 million in the first quarter of this year alone to more than $1 billion. I am confident that a good portion of this increased cash flow will find its way into funding exploration and development of new mines.
Earlier I said that exploration this year was not forecast to repeat the record rate of 1987. Let us look at the reasons why. In 1986, a very healthy year for the industry, exploration spending was $650 million. In 1987 it almost doubled to $1.2 billion. Clearly that level is not sustainable. If Members opposite talked to the industry as we have done they would know that the industry itself believes exploration was overheated and that 1988 could not, indeed should not, be a repeat of the year before.
In 1987 there was a confluence of events which artificially boosted spending. First, there was the strong bull market in stock markets until October. Second, mineral prices rebounded from recent lows. Finally, the tax incentives themselves prompted high-income investors to buy a record number of flow-through shares. These investors were not miners. They were not local entrepreneurs. They were high-income individuals who were taking advantage of an overly generous tax incentive to mine the federal Treasury. The tax structure was inappropriate. The industry knew this. We knew it. We acted to change it. We acted to change it as was recommended by the NDP Member for Ottawa Centre talking out of one side of his mouth. As the system overheats, the potential for abuse increases dramatically. The scarcity of special equipment and skilled workers results in greatly inflated drilling charges. Inefficient exploration is undertaken late in the tax year.
As Minister of Finance this entire situation gives me and the Government a great deal of concern, as it should Members opposite. In the aftermath of the crash of October 19, we do not want to see the mining industry transformed from an
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overheated situation to a frozen one. We want to see a healthy mining exploration industry in Canada, but we also want an industry that is driven more by market forces than by tax incentives. No industry, indeed no region, can isolate itself from changing patterns in the international market-place.
That is why I said in June and reiterated in December that temporary measures during periods of economic downturns or depressed equity prices may be necessary to ensure the survival of exploration activities in Canada. This is why I have instructed my officials to meet with the various segments of the industry and assess this market situation in light of the current stock market softness and weakening prices for precious metals. If further measures are needed, they will be measures aimed at encouraging investors, particularly in smaller mining companies, and not tax shelters as my friend from the New Democratic Party seems to want.
As I have said, the Government remains committed to the mining industry. Our tax reform proposals with our lower tax rates will provide the ultimate incentive for investors, the ability to keep more of what they have earned. We promised to monitor the situation closely and we will. We will be looking carefully at the levels of exploration activity taking place to determine what, if any, action is warranted.
I will close by making some remarks on what I see as blatant political opportunism by both the Liberal and the New Democratic Parties. Let us not be fooled by the rhetoric of the Liberal Party. They have said that they would restore flowthrough shares. We have not taken away flow-through shares. The two key changes which reduce the attractiveness of flowthrough share financing as an investment are some tightening in the capital gains rules and in depletion. We have left some exemption for capital gains, but the Right Hon. Leader of the Liberal Party (Mr. Turner) said he would scrap all of the capital gains exemption. That in itself would be a far bigger hit on flow-through share financing than anything we have proposed in tax reform.
As I said, depletion is a subsidy, mainly to big companies to pay for the lower personal income tax rates for the average Canadian. Is the Leader of the Liberal Party going to put that back? What would then happen to the lower personal income tax rates which are going to be brought about for the average Canadian through tax reform?
The New Democratic Party said that it was going to stick to its principles. Gerald Caplan is quoted as saying:
I think that the Party would be making a mistake if it publicly repudiated
decades-long policy at this stage-
That is exactly what they are doing. In February, 1987, in Timiskaming the Leader of the New Democratic Party (Mr. Broadbent) said that flow-through share financing allows "affluent investors" to avoid paying taxes. He said that the NDP has "a great deal of difficulty" with the issue of flowthrough share financing.

March 3, 1988
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That is what the Leader of the New Democratic Party said only a short year ago. The Member for Ottawa Centre and the Member for Regina East (Mr. de Jong) voted against some changes that we were proposing in flow-through share financing in 1986 which would assure that earned depletion would be extended to the junior mining companies which they purport to be in favour of today. On December 16 the Member said that he would eliminate flow-through shares. On February 14 and 16 of 1987 the Leader of the NDP and the Member for Regina East said that they would eliminate this as it is simply a mechanism for helping rich taxpayers avoid paying taxes.
Then, late in 1987, something happened. The polls started going up for the New Democratic Party. The members of the NDP got a little sniff of power. The Member for Ottawa Centre started to count ridings. He said that if the NDP flip-flopped on its policies they may be able to win 24 or 25 seats in the northern part of the country. They flip-flopped totally. They repudiated decade-long policies. In December, 1987, Caplan said that they might look unprincipled. Well, that is what Canadians are saying today.
Yes, the New Democratic Party is starting to look unprincipled. This is the Party which kept saying that it had principles and would stand by them, that it would hold firm to the policies which it has held for decades since the Regina Manifesto. But no, they flip-flopped as soon as they got a little sniff of power.
If they are prepared to flip-flop on principles which are designed to stop high-income Canadians from paying little or no tax, what will they do on policies which affect the broad interests of Canadians as a whole? So much for credibility. So much for trustworthiness. So much for honesty. So much for principles. This is the New Democratic Party which Canadians are now starting to see. This is the Party that people are starting to understand. They do not have principles any more. They had principles when they were number three, when they were at 18 per cent in the polls. However, when they are at 35 or 40 per cent the principles go right out the window. When the pressure of power is on them, when they get a little sense that they may get into office, they cave in and the principles go right out of the window.
In conclusion, we recognize the concern of the northern communities. Conservative Members of Parliament represent many communities in the northern part of the country including Temiskaming, Val d'Or, and Timmins. We recognize the concern that is there. We are meeting with representatives of those communities and representatives of the industry.


Michael Morris Cassidy: You're ignoring it.


Michael Holcombe Wilson: However, as I have said, the cause of the problem is much more the poor equity markets that are affecting all forms of equity financing today as well as the falling gold prices. It is not simply the change in the tax provisions of the flow-through shares.
People must not be fooled by the duplicity of the Liberal or New Democratic Parties. The Government has demonstrated its commitment to the mining industry. It has demonstrated its understanding of the flow-through share provision by the changes which we announced in the flow-through provisions in June last year following consultations with the industry and an understanding of the impact of the stock market changes. We made those changes on December 16. We will continue to monitor the situation. We will continue to discuss this with the industry. If it is necessary to make provisions for change, we will make those changes.


Michael Morris Cassidy: Mr. Speaker, of course the changes made by the Government are paltry. I want to take the Minister's statement on. I expected that he would refer to the debate we had in December, 1986.1 think I dealt with that quite fully.
I am concerned about the fact that we are talking about real people here. We are talking about people in mining communities such as Val d'Or, Kirkland Lake, Uranium City, Scheffer-ville, Murdockville, Thetford Mines, and many other communities across the country where the unemployment rates have gone down dramatically because of the exploration and development which was encouraged by this particular provision.
The Minister now says that he agrees with the Minister of Energy, Mines and Resources (Mr. Masse) and he is saying, let the market prevail, let us go back to boom and bust. The Minister is saying, therefore, that he is content to see unemployment in those areas go back up to 15 or 20 per cent and stay at those levels year after year, that the people in those communities should not have the right to share in the prosperity found in certain areas such as the Minister's riding of Etobicoke in Metropolitan Toronto. I find that very difficult to accept.
The Minister claims that the tax rate is among the lowest in the mining sector. Why is it then that the Canadian Committee to Save Flow-through Shares has indicated that investment through the flow-through mechanism is drying up, that it will be down to nothing after June or July of this year? As well, why was the Minister prepared, in his statement of last June 18, to promise to the oil and gas industry that the Government would consider what adjustments in non-tax assistance would be appropriate to encourage oil and gas projects which provided important regional and national benefits and which are fundamentally economic? Why this disparity of treatment? Why is the Government still prepared to offer consideration to the oil and gas industry but not to make any comparable engagement with respect to the junior mines?
I fail to understand that and I condemn the Minister for the distortion in his failure to listen to the fact that our Party is talking about a focused kind of benefit which will encourage continuation of activity by the junior mining sector. I do not
March 3, 1988

know how many times I have to say it to the Minister, but perhaps if I say it once more he will understand.


Michael Holcombe Wilson: Mr. Speaker, talking about distortion, the Hon. Member just totally distorted anything I have said or anything the Government has done. We are very concerned and understand the implications of policies on the northern regions of the country. We have introduced a wide range of policies that respond to the needs.
We have been very much a part of the drop in the unemployment rate in Abitibi, Temiscamingue and Val d'Or. That Hon. Member voted against the policies that we brought in that improved the flow-through share provisions that resulted in the unemployment rate coming down to less than 7 per cent. The Hon. Member has the gall and the hypocrisy to sit in his place in the House and say, "We supported them". It is on the record in Hansard that he voted-


Michael Morris Cassidy: How can you send your Minister of State for Finance to say one thing and you do another six months later? That is hypocrisy.


Michael Holcombe Wilson: On clause 11, five Members of the Conservative Party and the Hon. Member for Laval-des-Rapides (Mr. Garneau) voted yea. The nays were Michael Cassidy and Simon de Jong. That is hypocrisy.


Mr. Deputy Speaker:: Order, please. I would ask both Members and all Members to continue the debate without using the word "hypocrisy", if possible.


Michael Holcombe Wilson: Mr. Speaker, the Hon. Member said that we do not have the best provisions. I was referring to the tax provisions in the mining sector as a whole. If he wants to compare that to any other industry in the country and tell me that my statement is wrong and those are not the best tax provisions, let him come and talk to me. I will listen carefully. However, until he talks specifics instead of rhetoric, then I do not have much time to listen to the rhetoric.
We have stated that we will look at the situation in the industry and will follow this very closely. However, no one will be fooled by the position of the New Democratic Party. He thinks that Canadians are dumb. He thinks that he will have a focused depletion related provision that only helps low and middle-income earners and not upper-income Canadians. He believes one can have such a provision. First, he does not understand that the flow-through share provisions are not very attractive for low and middle-income investors because there is not much tax attraction to them. It is only attractive to people who would have to pay high taxes and can see a flow-through share as a way of reducing that amount of tax.
When the Hon. Member says that he is going to focus it on lower and middle-income Canadians, he demonstrates a total ignorance of the impact of flow-through share financing. That would result in a complete wipe-out of flow-through share financing rather than the middle ground we are trying to achieve to avoid the excesses about which he was railing in the House. He said to change it because it is far too attractive, and go back to the drawing board.
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We made some changes and recognize that they are not quite as attractive as they were. However, as I said, we are talking to the industry, monitoring the situation and will continue to do so.


Mr. Desjardins:: Mr. Speaker, I have a question for the Minister. He would recall that I and a number of other Members have made many representations concerning flowthrough shares in the mining sector. I should think that Canadians generally and Members in particular appreciate the direction the tax reform is taking, that altering any aspect of the reform would be like throwing the doors wide open for all other sectors to rush in and file their own claims. I am sure most Members share this view. Now on to my question. Although I do not expect anything like it this year, what would the response be if there were a recession in the coming years, or if the mining industry were to be a lot less productive and go through a crisis? Is the Minister prepared to consider alternative solutions?
Before concluding, I have a second question. Does the Minister agree that the mining sector becomes really profitable only over the long haul, only when it reaches the development stage rather than the exploration stage?


Michael Holcombe Wilson: Mr. Speaker, I did not hear the last part of the Hon. Member's question. Perhaps he could repeat it.


Gabriel Desjardins: Mr. Speaker, I will sum up for the benefit of the Minister. Flow-through shares are indeed quite an incentive in what is known as the mining exploration stage. But sooner or later, if we want the operation to become productive in the long run we have to go on to the development stage, and that is where new and permanent jobs come into the picture. I wanted to have the Minister's views on this: it is at the development stage that a mine in a community gets to be profitable in the long term, the exploration activity may be important but the development stage is the name of the game.


Michael Holcombe Wilson: Mr. Speaker, I want to thank the Hon. Member for Temiscamingue (Mr. Desjardins) who has demonstrated a very great interest in this particular matter and has been very helpful in the advice he has been providing to me. I hope to continue to consult with him as we proceed with this consultation stage.
The Hon. Member asked me two questions: First, whether we are prepared to consider alternative solutions. We are definitely prepared to consider alternative solutions, but solutions that would not involve broad-based tax measures which result in a major benefit through investment for high-income Canadians. We believe that is not the way to go, unlike the NDP Members which, by the nature of the proposal they have made, will result in a major benefit to help high income Canadians to pay little or no tax.

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We are looking at the options and consulting with the industry to see whether there is sufficient reason for these types of alternative solutions. We will continue to consult with the industry.
The second question relates to the development stage. There is no question that a mine which operates in a community on an ongoing basis and provides permanent jobs year in and year out is better than the type of employment in exploration activity which will be quite focused because of tax measures and will be focused at certain times of the year for weather reasons. We want to encourage a greater degree of stability in the industry. The changes we have brought in through tax reform will contribute to that stability.
In this instance, there are very attractive features in the tax system to encourage the development mines. As I said in my remarks, a company can have the full amount of its investment written off-that includes the development costs-before paying taxes. This, we believe, is one of the contributing factors, as 1 indicated earlier, as to why the mining sector enjoys the lowest over-all effective tax rate of any industrial sector in Canada.
[Translation}


Mr. Raymond Garneau (Laval-des-Rapides):: Mr. Speaker, I welcome this opportunity to take part in the debate on the motion before the House today, dealing with flow-through shares.
Before starting my speech, perhaps I may provide some background for the debate and explain exactly what a flowthrough share is. Sometimes I think that Members who do not represent mining areas, or Canadians who are following the debate at home, must wonder whether we are talking about some strange creature from another planet which for some reason is of particular interest to people who live in mining regions and remote areas. A flow-through share is a tool for financing mining exploration, developed a number of years ago to promote exploration in remote areas of this country and thus assist regional development.
Earlier, I heard the Minister say it was a very generous tax measure. I do not quite agree with his interpretation. Suppose we compare a furniture manufacturer with a mining company. A company that manufactures furniture and spends $25,000 or $30,000 or $40,000 or $50,000 to find new markets in New York, Chicago, Vancouver or wherever, can deduct those expenses from its profits, because the money is invested in the company's future. The same applies to the mining sector. A mining company spends money on exploration to guarantee the future of the company, like the furniture manufacturer who was looking for new markets. Both the cost of exploring markets and the cost of exploring new resources in order to continue mining operations may be deducted from profits.
March 3, 1988
Flow-through shares make it possible for a company that is not expected to make a profit within the next few years to pass the profits on directly to the shareholder. Instead of doing so five or ten years later when the profits come in, it is done right away, and the company pays taxes later on. That is where I disagree with the Minister of Finance (Mr. Wilson) who says that the program in its amended form is very worthwhile. It does not do any more for operations as risky as mining exploration than it does for any company that spends money on exploring markets.
Mr. Speaker, that being said, I must say I am rather astonished at the attitude taken by the Hon. Member for Ottawa Centre (Mr. Cassidy).
The day before yesterday, I went to see the "Save Flowthrough Share" committee, and there were about 300 people present from all over Canada. I told these people on Tuesday that tomorrow, on the Opposition day for the Liberals, I would table in the House a motion on flow-through shares, asking the Government specifically to maintain the earned depletion allowance of 33 1/3 per cent.
Mr. Speaker, how surprised I was yesterday when I realized that for the past year and a half, the Socialist Members of the NDP had fought not only against flow-through shares, but even against the very principle of tax incentives. Not only are they retreating, making an about turn of 180 degrees, of 360 degrees, not only are they changing their position, but they have the gall to move in the House a motion urging the Government to maintain the 33 1/3 per cent of the earned depletion allowance on flow-through shares.
I am sure that the mining industry as a whole and those associated with it will not be fooled by this trick of the Hon. Member for Ottawa Centre (Mr. Cassidy) and will realize just how opportunistic the NDP can get in this debate.
Mr. Speaker, I have emphasized for over 18 months the need for flow-through shares and the principle of tax incentive as tools for regional development in Canada. I believe I was the only one at first, and I felt I was preaching in the desert. The mining industry would never have believed that a Tory Government would abolish the earned depletion allowance on flow-through shares and completely killed the program. The general public and also the regions which are not aware of the benefits resulting from earned depletion allowance on flowthrough shares paid only minimal attention to this debate.
Mr. Speaker, the Liberal Party's position on this issue is well known. I explained it in the House in 1986, after the NDP Member for Ottawa Centre had moved an amendment to a tax legislation aimed at completely eliminating flow-through shares.
At the time, the Hon. Member for Ottawa Centre said this,...
March 3, 1988



It was on December 16, 1986, that the Hon. Member for Ottawa Centre tabled a motion to amend the Income Tax Act. Had it been adopted, the amendment would have resulted in the elimination of the flow-through share mechanism. The main reason the New Democratic Party wanted to eliminate the flow-through share mechanism was that it was used mainly by wealthy Canadians. That is pure NDP policy. If you are wealthy, you are a bad Canadian.
The Hon. Member for Ottawa Centre talked about flowthrough shares as a tax loophole, a tax avoidance mechanism. To my surprise last night and this morning I read that the same Member was tabling a motion to reintroduce the earned depletion after having said what he said in December, 1986. That is political expediency, for sure.
The position of the Liberal Party is well known. I explained our policy in my speech answering the amendment proposed by the NDP to abolish flow-through shares. This is what I said:

Speaking in French in the House on December 16, 1986, Mr. Speaker, I made the following comment, as reported on page 2171 of the House of Commons Debates'.
Mr. Speaker, I have trouble understanding the reasoning behind the motions presented by the Members of the New Democratic Party. When the Liberal Government introduced these measures, as a stimulus to economic development in the mining areas of Quebec and Northern Ontario, the results were extremely positive.
Mr. Speaker, 1 added a little further on that investments were made as a result of the flow-through share tax incentive and that by so doing, the Liberal Party of Canada had come up in favour of regional development. We said also that the tax system could and should be used as a tool of regional development and that, in this sense, tax incentive should be maintained. What we felt was wrong was not the tax incentive itself, but the abuses it could lead to in some regions of this country.
Mr. Speaker, this is why I shall repeat later on what I said in reply to the Minister of Finance's Budget speech in 1986 and what I said on other occasions in this House and in the minority report in support of the concept of regional development and of the need for the Canadian Government to have a truly national regional development policy and to have the ability to use the tax system as a privileged instrument.
In addition, Mr. Speaker, when Phase I of the tax reform was being considered in committee, the Liberal Party objected to the proposal of the Minister of Finance. Our opposition was reflected in the minority report tabled in the House in November, 1987, in which we clearly recommended that the 33 1/3 per cent earned depletion allowance on flow-through shares be maintained. This recommendation can be found on pages 18 and 19 of our minority report and was our recommendation No. 11 for the tax reform. We recommend that flow-through shares be maintained.
Why, Mr. Speaker? For many reasons related to regional development, job creation and the competitiveness of the Canadian mining industry throughout the world.
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The main reason the Liberal Party recommended that the flow-through share mechanism be maintained is not only because it helped to create thousands of jobs in the regions or because it helped to raise more than $2 billion but because it represents an innovative way of establishing harmonious collaboration between the Government and the private sector. Let me elaborate a little bit on that subject.
First, it created jobs. Employment in our regions has increased substantially because of the earned depletion on flow-through shares. The Minister is dead wrong when he suggests that we in the Liberal Party are trying to give a false indication. I have repeated time and time again that what we are talking about here is the 33 per cent earned depletion allowance because it is a risky business and because exploration went down the drain in 1982 and 1983. This is why we introduced the measure. It was to help the remote areas of the country that can live only through their natural resources. We created that program to help the regions to develop and to help the mining industry which has no profit, no expectation of profit, to find a way to go ahead with exploration. It creates jobs.
In Val d'Or and Rouyn, for example, where the rate of unemployment was 28 per cent, it is now down to 6 per cent. The Minister of Finance may claim that he had something to do with that. The only reason that this thing happened is because of the 33 per cent earned depletion on flow-through shares. It is a risky business. This is why we think that the earned depletion allowance should remain. It is a risky business because when one spends thousands and thousands of dollars to dig a hole in the soil thinking that one may find some copper, gold or silver one never knows until the money has been spent. It is a very risky business. This is why I say that without the 33 per cent earned depletion allowance the mechanism of flow-through shares cannot work and will not work.
The Minister talked about the stock market crash. He said that following the crash not only has the mining industry not been able to raise equity but all other sectors have not been able to raise money. This is an additional reason why the Minister should keep the earned depletion allowance of 33 1/3 per cent in place. It is because of the difficulties that the whole industry will have in raising money. It is not the time to cut the program to a level at which the program will not be workable. It is not the time to cut the benefits of the program when other factors are playing against the mining industry, particularly exploration.
We think that earned depletion and flow-through shares should remain because they are good mechanisms to have the public sector, the Government and the private sector work very closely together. It is of direct help to junior exploration companies. Without direct involvement of the Government only the big multinational companies will have the profit and the cash flow to carry out exploration.

March 3, 1988
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Another reason that the earned depletion allowance should be kept, and I have been saying this for 18 months, is because of its regional development implications. The flow-through share mechanism is part of a future Liberal Government's strategy for regional development. It has been in the past and it should remain in the future.
It must be remembered that the total economic and regional development envelope has been reduced by the Tory Government by close to $2 billion since it took power. Not only has it cut direct grants for regional development but it is now killing the flow-through share mechanism by eliminating the earned depletion allowance.

Mr. Speaker, if we want to know about the regional impact, we can look at a study carried out by the accounting firm of Maheu-Noiseux in co-operation with engineers for the Association des prospecteurs du Quebec. This study was funded in part by the Quebec Government. I would like to refer to some of the recommendations contained in this study of approximately 150 pages, which deals with all aspects of the mining industry, especially in Quebec and northern Quebec.
This study indicates that, in Quebec alone, there has been a net creation of 50,000 jobs a year. This figure is in person-years. There is an added value of $2.1 billion. Tax revenue generated in 1985 amounted to $400 million and the cost in taxes to $239 million. In other words, tax incentives cost the Government $239 million and tax revenue as a result of the economic activity generated by the industry amounted to $400 million. This is why I do not understand the attitude of the Minister of Finance. He says that he wants to protect Government revenues. However, the study shows that, in Quebec alone, this program has produced additional tax revenues of $160 million because of the economic activity generated by the industry and the fact that the welfare benefits and unemployment insurance which used to be paid to people in these regions were replaced by positive action and new jobs.

I said that the flow-through shares with the earned depletion mechanism of 33 per cent is a way to have good collaboration between the private sector and the Government. It is my profound belief that the private sector is and must remain the driving force of economic growth in the country. But it is also my belief that the Government has a role to play in the development of the economy.
This role is to create an environment, and in the case of flow-through shares, a fiscal environment, favourable to the emergence of private initiatives. The kind of co-operation that is taking place between the Government and the private sector in the case of flow-through shares is to some extent the
practical way of co-operation. It is simple. It is done without any direct involvement of the Government in the production process itself. It is done without any heavy Government bureaucratic overhead. It is done by helping private corporations gain better access to capital. It is done by reducing the risks incurred by investors in the mining exploration corporations. Quite obviously, it is done in favour of the economic development of the remote areas of the country where there are so many vulnerable one-company towns.

The Liberal Party believes that the kind of co-operation that now exists between the private sector and the public sector, in the case of flow-through shares for resources and especially in the mining industry, is vastly superior to any system of direct government subsidies. Direct subsidies often involve a lot of red tape, become discriminatory and stifle the companies one wants to help. Flow-through shares, with the earned depletion allowance of 33 1/3 per cent, not only preclude this red tape, they are an essential tool of the Government's regional development policy.
Now that the Conservative Government is cutting back on funding for regional development, it wants the regions to develop themselves, using their own resources. And now the Government is removing the main program that was helping the mining industry in these regions.

I wanted to raise another issue which, in my view, has been overlooked in this debate. It is the impact of the trade agreement with the United States and the future use of tax incentives.
According to many people, including the respected firm of Clarkson Gordon, Woods Gordon, it is not sure at all that the Government will be able to introduce new tax incentives in the future without inducing some kind of retaliation by the United States. The following is a direct quote from the newsletter of Clarkson Gordon, Woods Gordon:
Although the existing tax incentives will be grandfathered according to the Agreement, it is important for all Canadian business people to recognize that expanding the list of such incentives could induce a responsive trade action by the U.S.
Yesterday the Minister stated that this was not a serious study. If we cannot believe the words of Clarkson Gordon in the areas of accounting, business activity, and economic development, I wonder on whom we should rely for good expertise.
You have indicated to me, Mr. Speaker, that I have only a few minutes left.
March 3, 1988

[ Translation]
Mr. Speaker, I understand my time is running out. I would have liked to repeat what I said in my speech on the 1986 Budget and explain the Liberal Party's suggestions for eliminating loopholes in the system while maintaining the benefits of flow-through shares in their present form. Unfortunately, 1 will not have enough time, but I hope to have another opportunity to explain what we think should be done to prevent abuse of the system.
Mr. Speaker, before I finish, I would like to move an amendment to the motion presented by the Hon. Member for Ottawa Centre (Mr. Cassidy). I think his motion is too vague, and if the Hon. Member was sincere about what he said, I imagine he will accept this amendment. I move, seconded by the Hon. Member for Algoma (Mr. Foster):
That the motion be amended by adding after the second "that" the words:
"because of the 33 1/3 per cent earned depletion allowance".
and adding after the second "provision" the words:
"and, specifically, the 33 1/3 per cent earned depletion allowance".
With this amendment, Mr. Speaker, the motion will reflect the purpose of this debate, namely that the Government must realize that without the earned depletion allowance of 33 1/3 per cent on flow-through shares, the program as it exists today or as it will be after July 1989, will no longer be operational, which is exactly what we were told by prospectors and representatives of the mining industry from all over Canada, from Northwest Quebec, Northern Ontario, the Northwest Territories, British Columbia and Manitoba. In fact, they gave us the same message when we toured the country in connection with Phase I of the tax reform, and today we see what the consequences may be for our country's remote areas.
Mr. Speaker, I am pleased to move this amendment, and I hope it is well received by the Chair and by the Members of this House.


Mr. Deputy Speaker:: I will take the proposed amendment under advisement and, after the Question Period, rule on its acceptability.

On questions and comments, the Hon. Member for Kamloops-Shuswap (Mr. Riis).


Nelson Andrew Riis: I listened with interest to my hon. colleague. Inadvertently, I believe, he gave the impression that, at some time or another, as a result of one of the many motions sponsored by the New Democratic Party, we supported this government initiative.
I distinctly remember the debate and the motion. The motion was one of the many attempts made by the New Democratic Party to clean up the tax system, to build into the system more justice and fairness, and remove some of the discrimination and the obvious biases in the tax system. At that time, the point of our motion was to look at the flowthrough share concept in terms of an important tax expenditure, and certainly it did not suggest that it be eliminated but
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that it be fine-tuned. The effort was to restrict the advantages or the incentives incurred in this particular initiative to small and medium-sized Canadian-owned companies, in other words, where the benefits would be targeted to benefit the regions of the country, and particularly to the companies that required that assistance.
Having made that comment, my question to the Hon. Member is the following. Would my hon. friend not support such an initiative to improve the tax system and target those tax provisions to assist those who can put that tax initiative to work on behalf of the Canadian mining community? Is that not something that we ought to be striving to accomplish in Canada?


Raymond Garneau: I do not wish to be rude to my hon. colleague, particularly because he was not a member of the finance committee. What is being done this morning by the Hon. Member for Kamloops-Shuswap (Mr. Riis) and his colleague, the Hon. Member for Ottawa Centre, is an effort to rationalize a flip-flop.
I have been a member of the finance committee together with NDP and Tory Members where we sat for weeks, if not months, and heard more than 235 witnesses. The finance committee travelled across the country and met with representatives of the mining resource industry, prospectors, and many other people. We particularly discussed the whole aspect of tax incentives as a tool for regional development and development of some particular type of industry where needed.
Up to that point, the position of the NDP had been that we should get rid of all tax incentives and use direct grants. That position is within the philosophy of the NDP Party. We may agree or disagree, but I think that they are correct to take that position. They have taken the position at the finance committee that they would prefer and favour direct grants. Sometimes direct grants are needed because fiscal incentives cannot work in terms of regional development. But as a principle to say that fiscal incentives are loopholes and a tax evasion used by the rich is not appropriate in a country like Canada where we need all the tools that we can find to ensure that the development and the growth of the country will be experienced in every region.
This is the reason I say to the Member that I understand his rationalization today. I am very happy that finally-

-as we say in French, they have found the road to Damascus. They have seen the light.

I am very happy about that, but do not try to make a fool out of yourself and say that you have always been for that. It is simply not true. I sat for too many hours on the finance committee, and argued too long with some of the Members. It is their point of view, and I accept that, but please do not ask

March 3, 1988
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me today to agree that you have always been for the flowthrough shares, and convince people today of that fact. It is not true. I can accept and I am happy that the Hon. Member has changed his mind and is now supporting the idea, but do not ask me for praise.


Mr. Deputy Speaker:: For a question or comment, the Hon. Member for Temiscamingue (Mr. Desjardins).


Gabriel Desjardins: Mr. Speaker, I listened very closely to the remarks of the Hon. Member for Laval-des-Rapides (Mr. Garneau). When he talks about flow-through shares he has some credibility, but I would not say the same thing about the Hon. Member for Ottawa Centre (Mr. Cassidy), for he does not seem to understand anything at all about flow-through shares, and there is no logic in the position he is trying to defend.
I know that the Hon. Member for Laval-des-Rapides has visited the Abitibi-Temiscamingue region on a number of occasions, particularly Val-d'Or and Rouyn, and that he is familiar with the problem of our mining industry, but he also knows that we are now doing quite well, what with our 6.6 per cent unemployment rate. A moment ago the Hon. Member for Laval-des-Rapides stated in the course of his remarks that the tax rate concerning earned depletion had gone down from 33 1/3 to 16 2/3, and he said this was killing the economy and the mining industry. Perhaps he might explain how such a minor change can possibly kill the industry. The other thing I would like to know, because I did not hear the Hon. Member for Laval-des-Rapides say so, is how long he would like to see the present system maintained.
I have my own views on this but I would like to know whether he thinks it should be maintained for ever and a day, or whether there is a reasonable time limit he would find acceptable.


Raymond Garneau: Mr. Speaker, the Liberal Party's policy on tax incentives has been discussed on at least two occasions here in the House. I said at the time that to prevent abuse, we should have what I called a tax incentive box that would work along the same lines as a registered retirement savings plan. You could put in a certain amount of money annually or a certain percentage of your income, and the incentive would help achieve regional development objectives or perhaps develop our cultural industries, such as the film industry. However, Canadians would not be able to use these tax shelters to avoid paying income tax. Everyone would pay income tax, and I also said that the tax incentive box could be used instead of the minimum tax. In fact, it would be much easier to get rid of the minimum tax introduced by the Conservatives, a tax that does not achieve what it is suppose to achieve because first of all, it is complex, and if you pay minimum tax one year, you still have seven years to get it back. Anyone who is not completely devoid of intelligence and imagination should be able to manage his affairs in such a way that he can recover the minimum tax he paid within seven years' time. That was our proposal for stopping abuse of the system.
As for the time frame, I said in the House and I said to the representatives of various mining organizations that we believe each tax incentive should have an automatic five-year expiry date that will oblige Parliament to review the measure, not necessarily in order to abolish it but to see whether the intended objective was met. If it was not, the incentive could either be repealed or amended and improved.
As for changes in the earned depletion allowance of 33 1/3 per cent that is being reduced to 16 1/3 per cent and eventually to zero, there should be no problem in 1988, because it is still in fact, and as far as the companies are concerned, especially big corporations like CNP and NIM, the decision on share issues for 1988 was made in 1987. So there should be a certain amount of activity.
However, in addition to the earned depletion allowance that will disappear by 1989, there are also the Minister's proposed changes in taxing capital gains.
We know that until quite recently, only 50 per cent of capital gains were taxable. According to the Minister's proposals, however, 75 per cent of capital gains will now be taxed at the marginal tax rate. Since flow-through shares are deemed to cost zero cents because their purchase cost was deducted from the investor's income for the previous year, when the shares are sold, the full selling price is considered a capital gain, which is then taxed at 75 per cent instead of 50 per cent.
So when you add the reduction to zero of the earned depletion allowance-33 1/3 per cent to 16 2/3 per cent to zero in 1989-to the capital gains tax which takes a greater share, you realize that the risk is too great. You would be better advised to invest your SI00 in some other type of less risky activities.
People are wrong when they say it's a tax evasion, for it is a sort of reverse RRSP. When we invest money in an RRSP, what do we do? Instead of paying the income tax in the current year, we postpone paying it until our retirement and we start paying income tax at the then marginal rate when we retire.
In the case of flow-through shares, it is the opposite. We offer the tax advantages immediately at the time of the investment, and that is the reason why we refer to it as earned depletion. Which is called "epuisement gagne" in French. We offer the tax advantages immediately at the moment of investment, instead of offering it at the time the company which is making profits may start deducting its expenses from its profits. This does not cost a cent to the Government, except that instead of paying in three, four or five years, we pay now, which makes it possible for people to carry out mining exploration when they want.
This also makes it possible for junior companies not only to get involved in exploration, but to keep and develop these mines, something which was practically impossible before because of the required cash flow. But now it is possible.
March 3, 1988


S. O. 21 TAXATION
[Stage Direction]
That is why I say that the Tory Government's action today will turn off the tap for mining exploration and prevent junior companies from maintaining their involvement both in mining exploration and development.
Mr. Deputy Speaker:: The period for questions and comments has now expired. The Chair plans to recognize the Hon. Member for Kamloops-Shuswap (Mr. Riis) on debate. However, since we have three minutes remaining before the luncheon break, would there be unanimous consent to break for lunch now and allow the Hon. Member for Kamloops- Shuswap to start his speech after Question Period?


Some Hon. Members:: Agreed.


Mr. Deputy Speaker:: Therefore, it being 1.35 p.m., I do now leave the chair until 2 p.m. this day.
At 1.35 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.


Mr. Russell MacLellan (Cape Breton-The Sydneys):: Mr. Speaker, with respect to the closure of Route Canada terminals on November 20, 1987, in places such as Sydney, Nova Scotia, CN proposed that separation and severance payment provisions contained in an expired special collective agreement be extended to employees affected by terminal closures. However, Route Canada was not prepared to enter into such an agreement with the Canadian Brotherhood of Railway Transport and General Workers, nor would it authorize Canadian National Railways to do so on its behalf.
CN says that it cannot unilaterally enter into an agreement with the trade union representing the employees of another employer without the written authorization of that company. Why would a company like Route Canada, which picked up assets of CN worth about $80 million for approximately $23 million, object to CN or the Government helping the employees it has treated so miserably? Is it just a trumped up story between CN and Route Canada whereby one of the costs to Route Canada of getting these assets for such a ridiculously low price was that Route Canada take the fall?



NORTHERN DEDUCTIONS-ELIGIBILITY OF BORDER COMMUNITIES

Mr. Lawrence I. O'Neil (Cape Breton Highlands-Canso):: Mr. Speaker, I rise today to urge that the commission of inquiry looking into the eligibility of border communities seeking the northern deductions begin its work.
As all Hon. Members know, the definition of isolated communities was adopted in 1980 for the purpose of determining benefits under remission orders. The remission orders conferred benefits only on those who received financial assistance from employers for housing and travel costs. The northern deduction now extends similar benefits to everyone in isolated communities. As a result, these benefits are widely known in the isolated communities and the adjacent communities that are on the outside.
I have spoken with constituents in Victoria County, Guysborough County, Inverness County and Richmond County. They want an opportunity to present their cases to justify getting northern deductions. The northern deduction is more equitable than the remission orders it replaced but inequities remain. The commission of inquiry is an important avenue for addressing these inequities. I urge that it get under way with its work.



THE ADMINISTRATION


Mr. Ian Waddell (Vancouver-Kingsway):: Mr. Speaker, on February 29, the assistant deputy minister of telecommunications and technology, Richard Stursberg, wrote a letter to the editor of The Financial Post to defend his Minister, the Hon. Minister of Communications (Miss MacDonald). It seems to me that this is extraordinary. Is the Minister so weak that she cannot defend herself on this matter?
Right below that letter on the letters to the editor page was a letter from the Minister of Consumer and Corporate Affairs (Mr. Andre). There have been letters to the editor written by the Minister for International Trade (Miss Carney), very witty letters.
Why is a civil servant writing to defend the Minister of Communications? The letter is about a very controversial matter involving the Call-Net decision, the overruling of the CRTC decision, the issue of jobs in the telecommunications sector and the issue of costs to consumers for long-distance and local calls. It seems to me to be against Canadian tradition for a civil servant to write letters to the editor on behalf of his Minister. I think it should stop. What will we see next, someone from the Department of Justice, an assistant deputy minister perhaps, writing to defend Mr. Jean Sirois?

March 3, 1988
[ Translation]



REGIONAL ECONOMIC DEVELOPMENT


Mrs. Carole Jacques (Montreal-Mercier):: Mr. Speaker, 1 rise in this House today to emphasize this Government's interest in Eastern Montreal.
Last week, the Minister of Regional Industrial Expansion (Mr. de Cotret) announced a federal contribution to Eastern Montreal's economic renewal. This is an over-all investment of $275 million distributed through a number of departments, under which moneys have been especially allotted for eastern Montreal's economic development.
This includes the Federal Business Development Bank which is setting aside an estimated $125 million for loans to industries in the East End. The Department of Employment and Immigration will put aside $115 million under its Canadian Jobs Strategy programs. Moreover, we have injected an extra $35 million to strengthen the local industrial structure and encourage diversification of eastern Montreal's industrial base.
Mr. Speaker, these are concrete actions taken by this Government, as opposed to the Liberals who neglected eastern Montreal during more than 20 years.



EASTERN MONTREAL-EXTENT OF FEDERAL CONTRIBUTION-IMPACT

Mr. Jean-Claude Malepart (Montreal-Sainte-Marie):: Mr. Speaker, the Hon. Member for Montreal-Mercier (Mrs. Jacques) just endeavoured-but as usual she is beside the track, and I understand her former colleague for Terrebonne (Mr. Toupin).
Mr. Speaker, she has been inactive and this is the reason why last week workers went to protest and boo the Minister and the Hon. Member because they did nothing for eastern Montreal. It is inaccurate to boast of the figures she just mentioned. This has been-


Carole Jacques: Oh! oh!


Jean-Claude Malépart: -denounced. Only $37 million of new money was announced. Everyone knows the Federal Business Development Bank only puts up money when no trust company or bank will lend you and you are cornered.
Mr. Speaker, the City of Montreal injected $90 million. The Quebec Government came up with money. Only the Canadian Government did not respond to the request from the early retirement program and this is the reason why the Hon. Member for Montreal-Mercier will not be re-elected at the next election, just like the Hon. Member for Hochelaga- Maisonneuve (Mr. Desrosiers) and the Hon. Member for Gamelin (Mr. Gravel) for the simple reason they did not look after the people from eastern Montreal.



RIGHT TO LIFE


Mr. Gus Mitges (Grey-Simcoe):: Mr. Speaker, Pope John Paul II recently received in audience participants in a study conference on the right to life. I would like to put on record some of his remarks. He said:
Unconditional respect for the right to life of the conceived but unborn human person is one of the pillars sustaining every civil society. When a state places its institutions at the disposal of those who may act to suppress the life of the unborn child, it renounces one of its primary duties and its own dignity as a state.
A state has as its primary duty the defense of the fundamental rights of the human person especially of those who are weakest. And who is weaker than an unborn child?
The Pope went on to say:
The legalization of abortion has been inserted as a foreign body bearing within itself the seeds of corruption.
How is it still possible to speak of the dignity of every human person when the killing of the weakest and most innocent is permitted?
The state must always reflect as that of being a place where a person, every person is affirmed in his comparable dignity.



TRANSPORTATION


Mr. Rod Murphy (Churchill):: Mr. Speaker, it is becoming increasingly apparent that the Government does not really care about air safety. We have seen innumerable examples of lapses in airport security that appear to go unheeded. Now we see that the Minister of Transport (Mr. Crosbie) is rejecting an opportunity to meet with those people most directly involved with the problem.
In a recent letter to Shirley Carr, President of the Canadian Labour Congress, the Minister stated that he could not meet with the Council of Aviation Unions. He claimed that his schedule is far too busy. He cannot meet with them this week, he cannot meet with them next week and he cannot meet with them next month. He will be so busy in the foreseeable future that he cannot possibly set a date aside.
Does the Minister mean to say that he is far too busy to listen to the concerns of these employees who are directly involved in the industry he administers? Are we to assume that the Minister is simply too busy to find a solution acceptable to everyone?
It is entirely unacceptable for the Minister to claim that he is simply too busy to ensure fairness or true effectiveness in any regulations that he might come up with. I demand that the Minister make the time in his schedule to meet with this group and allow it to present its case. The Minister is putting aside the safety of Canadian travellers because he does not want to
March 3, 1988

meet with a group of unions directly involved, and that is uncalled for.



NEW DEMOCRATIC PARTY


Mr. Gabriel Fontaine (Levis):: Mr. Speaker, on February 24 last, I accused the Hon. Member for Oshawa (Mr. Broadbent) of having allowed extensive use of his telephone code number for the organization of his party's political campaign in Quebec. The office of the Member for Oshawa stated that it was a mistake. I should point out, Mr. Speaker, that the telephone code numbers are distributed on our desks here in the House of Commons. The code of the member for Oshawa had become a public utility in Abitibi among the Trudels, the Houles and Lemires, all so-called honest workers of the socialist party.
Following my statement, they tried to stifle the matter by cancelling the code of the member for Oshawa. Mr. Speaker, the member for Oshawa, the leader of the socialist party does not have to give explanations to the medias for the illegal use of his telephone code but to the House of Commons. This is the forum where he has to prove his honesty, if any!



FREE TRADE AGREEMENT-EFFECT ON WOMEN

Mrs. Lucie Pepin (Outremont):: Mr. Speaker, yesterday leaders of the women's movement from across Canada kicked off a campaign to oppose the free trade agreement. Canadian women are gathering momentum each day to protest a deal that has been hidden from the Canadian public in page after page of Conservative rhetoric.
The debate over free trade is not about economies of scale or trade revenue. It is really a debate about how we live in Canada and what makes life good here. It is about moral and social standards and about how much we are willing to sacrifice in the name of economic principles.
Everyone seems to agree that women, who make up 65 per cent of the textile industry and 80 per cent of the service industry labour force, will be big losers under free trade. Women are facing massive job losses as well as threats to the existence of essential social programs like maternity leave, child care, pension plans and employment equity.
Faced with these very real threats under free trade, the Government continues to hide behind rhetoric and continues to cut spending on job training that would help women adjust to the disaster they are facing. I support the women's campaign against the free trade deal and I urge the Government to listen to their message. I urge the Government to reconsider this-



THE CONSTITUTION


Hon. Bob Layton (Lachine):: Mr. Speaker, a fundamental purpose of the Constitution of Canada is to protect the basic rights of all Canadians including aboriginal peoples, Englishspeaking and French-speaking minorities and religious, ethnic and other minority groups.
The 1987 accord states that the existence of Englishspeaking Canadians present in Quebec constitutes a fundamental characteristic of Canada. 1 believe it is in the national interest that the language rights of the English and Frenchspeaking minorities in Canada be respected and protected in a spirit of tolerance, civility, amity and generosity. Bill C-72, the Officials Languages Act, is a step in the right direction.
It is increasingly apparent that current legislation in Quebec restricts the English-speaking minority commercially, socially, educationally and in the workplace. I invite the Government and the Quebec National Assembly to take action as expeditiously as possible, each within its own jurisdiction, to effectively protect the rights of the English-speaking minority in that province.



TAXATION


Nelson Andrew Riis: Mr. Speaker, in the last few weeks Canadians from coast to coast have been struggling late into the night with the annual ritual of filling out their income tax returns. They have been shocked at just how much income tax they have been forced to pay. Most Canadians pay thousands upon thousands of dollars. Yet there are reports that Ontario Minister of Finance Robert Nixon was recently heard to exclaim: "It is still not enough. We want more. We have to make them pay more taxes!"
It was reported that Mr. Nixon paced back and forth grumbling to himself that he wanted to raise taxes again, just like the Tories in Ottawa. "Anything they can do I can do better", he said as he yelled at his bureaucrats to take action.

March 3, 1988
After hours of wringing his hands and wrestling with the problem, he was heard to cry: "Eureka, we will raise sales taxes just like the Tories!". After it was pointed out to him that sales taxes fell hardest on the poor, he scoffed: "I am not interested in fairness. I am a Liberal. It is money that I want."
The moral of the story is that when it comes to taxes, Robert Nixon is like Michael Wilson. There is no difference. Given the chance, they will both soak middle and low-income earners to provide tax loopholes for their wealthy friends on Bay Street.



JUSTICE


[Stage Direction]
Mir. Alan Redway (York East): Mr. Speaker, have you ever heard of an organization called Victims of Violence? Some may disagree with their point of view but they always make a lot of sense to me and, I suspect, to the 63 per cent of Canadians who have lost confidence in our criminal justice system. The Victims of Violence wrote the Prime Minister (Mr. Mulroney) on February 23, 1988, and I quote:
Hardly a day goes by without a news report of violent crime being committed somewhere in Canada by a repeat offender out on some form of early release. In the last eight months alone we are aware of at least seven murders committed by murderers who had been released by the National Parole Board.
Ole Instrup keeps letting them out on parole... There have been more repeat murders by murderers out on parole since he took office than in all the years Bill Outerbridge served as Chairman.
Canadians who have lost confidence in our criminal justice system, the Victims of Violence, and myself, all look forward to the Prime Minister's reply.


Maurice Brydon Foster: Mr. Speaker, the Minister of Finance (Mr. Wilson) continues to deny to those resource producing areas of our country reinstatement of flow-through shares and earned depletion allowance. Many communities gathered here in Ottawa earlier this week to protest the cutting off of this program, communities like Elliot Lake, which passed a resolution calling for the reinstatement of this program, and communities like Wawa in northern Ontario. Other communities like the Town of Haileybury are calling on the Government to reinstate this program.
The Government could show its concern and interest in regional development, in assisting the resource producing parts of our country, by fully reinstating this program and the 133 per cent earned depletion allowance with flow-through shares.



EXTERNAL AFFAIRS


Mr. William G. Lesick (Edmonton East):: Mr. Speaker, as a member of the Standing Committee on External Affairs and International Trade, I was pleased to be part of a recent fact finding mission to Jordan, Egypt and Israel. It was an intense and emotionally charged experience. We met political leaders and soldiers on all sides. We spoke with working people, refugees and children. We visited hospitals and churches. We came away with a feeling that the conflict, although as serious and tragic as any, can be resolved if only the parties could sit down and negotiate their differences in good faith.
Upon returning to my constituency I had the opportunity to report my findings to the Jewish Federation of Edmonton, the Canadian-Arab Friendship Association and the Palestinian Action Committee. Each community leader joins me in urging the Secretary of State for External Affairs (Mr. Clark) to support an international conference which will begin to build trust, confidence and peace between the Israelis and the Palestinians.



HUMAN RIGHTS


Hon. Andre Ouellet (Papineau):: Mr. Speaker, today, Amnesty International groups and supporters in over 150 countries and territories around the world are launching the biggest and most ambitious campaign for the promotion of human rights ever undertaken by their movement. It is a difficult but essential task for, as the Right Hon. Leader of the Official Opposition (Mr. Turner) recently said, human rights know no frontiers.
I am particularly impressed by the title Amnesty International has chosen: "Human Rights Now". The word "now" recognizes that action deferred means justice delayed. It injects a measure of urgency into a situation which cannot be allowed to continue, as we know that torture has been reported recently in more than 60 nations, and prisoners of conscience are held in nearly half the countries of the world.
Today, with the launching of this human rights campaign, Amnesty International is taking an important step toward the goal of universal respect for human rights.
March 3, 1988



ORAL QUESTION PERIOD


Right Hon. John N. Turner (Leader of the Opposition):: Mr. Speaker, my question is directed to the Secretary of State for External Affairs and concerns the Government's approach to human rights both here in Canada and abroad.
Today the Minister for External Relations, in a very extravagant booklet, announced that Canada will freeze the level of foreign aid in spite of its commitment that it would increase that aid. Will the Minister explain why the Government has abandoned its commitment on aid to the Third World?


Monique Landry: Mr. Speaker, it gives me great pleasure to tell my hon. colleague and all Hon. Members about the document tabled today which constitutes a comprehensive review of our assistance program. This is the first such review in 13 years.
Mr. Speaker, I believe that the Government of Canada, in consultation with Canadians and with the assistance of the standing committees of this House, has been able to develop an assistance policy which truly meets the needs of the Third World. I believe that this is the purpose of our new strategy and I am very proud of it.


GRANTING OF SUBSIDY TO SENEGAL-GOVERNMENT'S POSITION
John Napier Turner: Mr. Speaker, in spite of her commitments to this country and this Government contained in the statement made today by the Hon. Minister, she has announced a freeze on foreign aid.
In her report to the House, the Minister for External Relations also stated today that, in the future, Canada would take into account the human rights record of Third World countries before granting them assistance.
This morning, the Ottawa Citizen announced a subsidy for Senegal. Yet, the leader of the opposition in that country is still in prison. Will the Government respect the commitments made this morning by the Minister and take the necessary action as concerns this subsidy to Senegal?


Monique Landry: Mr. Speaker, I am very glad to be able to tell the House that we have undertaken to maintain the level of expenditure for our assistance projects at 0.5 per cent of the Gross National Product until the beginning of the next decade.
The Right Hon. Member recently made a speech in which he promised on behalf of his Party to increase Canadian assistance budgets by 50 per cent, or up to 0.7 per cent of the GNP. This is another miscalculation by the Leader of the Opposition as we have now reached the level of 0.5 per cent and as a 50 per cent increase would be less than what our
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Government has planned to do until the next program. The Right Hon. Member should know that we have made a serious commitment and that we are keeping it. As concerns our assistance program to Senegal, I should point out that, as in the case of all Third World countries, our assistance programs meet the needs of the population. Indeed the main purpose of our new policy is to meet the basic assistance needs of the people in Third World countries.


John Napier Turner: Mr. Speaker, the subsidy to Senegal violates the commitment made by the Minister in her document this morning. As for her mathematics, I suggest she should go back to school-


Some Hon. Members:: -to grade school.


John Napier Turner: -to grade school!


EXTERNAL AFFAIRS
John Napier Turner: Mr. Speaker, may 1 again address a question to the Secretary of State for External Affairs concerning human rights right here at home. Yesterday the Secretary of State for External Affairs tabled a letter that he had written to all provincial Premiers counselling them not to meet with members of certain Sikh organizations in Canada because "Some members of these organizations have also engaged in or promote violent activities". 1 believe those were the Minister's words.
Will the Minister explain to the House why he has chosen to condemn and boycott all members of these organizations for the alleged actions of a few? If he has any evidence backing up his letter, would he be prepared to table that evidence in the House of Commons so that we could judge the appropriateness of that letter?


Right Hon. Joe Clark (Secretary of State for External Affairs):: Mr. Speaker, I welcome that question. The letter which, as the Right Hon. Leader of the Opposition noted, was tabled yesterday was very specific. This House knows that the vast majority of Canadians of Sikh origin are first-class Canadian citizens trying to raise their families in peace and trying to raise their families in freedom.
I specifically named three organizations, organizations which exist largely to advocate the creation of an independent Sikh state. Some of the members of those organizations seek legitimacy in Canada by identifying themselves with prominent Canadians and some of them have engaged in or promote violence in Canada and elsewhere. Those are activities which should not appear to be condoned by Canadian authorities.

March 3, 1988
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As the Right Hon. Leader of the Opposition well knows, some members of the Canadian Sikh community do not feel free to speak on these matters. The Government has a duty to help Canadians live their lives in peace and in freedom. We are going to do that.
1 would urge Members of this House and organizations outside of this House not to be drawn inadvertently into support of activities which threaten the peace and the freedom of Canadians, including particularly the peace and the freedom of that vast majority of Canadians of Sikh origin who seek to live in those circumstances.


ALLEGED RACIAL INTOLERANCE AND TENSIONS
Mr. Sergio Marchi (York West):: Mr. Speaker, my question is also for the Secretary of State for External Affairs, and it, too, is with regard to the letter that he sent to only some Premiers urging the boycott of these three organizations.
In his letter to Premier Peterson, for instance, he also justifies the boycott by writing:
I would appreciate your cooperation in avoiding events and activities which
could be perceived as supporting the Sikh organizations mentioned above or
their objective in the creation of an independent Sikh state.
Can the Minister justify why the Government's position on a foreign issue, which is sovereign to the citizens of India, is negatively impacting domestic policy at home whereby the rights of Canadian citizens to participate in the community and political life of Canada are being denied?
If the Minister cannot legitimately justify his actions, why does he not do the honourable thing and withdraw and apologize for his offensive declarations which have aggravated racial intolerance and racial tensions in this country?


Charles Joseph Clark: Mr. Speaker, there was an implicit question as to why the letter went to only some Premiers. It went to Premiers who we thought, either personally or in their government capacity, might be invited to attend and lend their authority inadvertently to organizations of this kind.
Certainly I would extend my counsel, not only to all Premiers but to all Members of this House. I repeat, as I have just said to the Right Hon. Leader of the Opposition, that there are activities engaged in by some members of some of these organizations which should not carry with them the authority of public office holders in this country.
I am not issuing any edicts to anyone. I am not telling Premiers or Members of Parliament that they cannot attend certain organizations. However, I have a duty to Canadians, as has the Government, to promote public order in the country. We intend to carry out that responsibility.
I sincerely hope that Members of the House of Commons who understand the sensitivity of this issue, and who understand also the commitment to Canadian values of the vast
majority of Canadians of Sikh origin, would help us in encouraging peace and freedom in this country.


Sergio Marchi: Mr. Speaker, we all condemn violence and terrorism, but that does not give you open season and licence to smear the reputation of a collectivity, which is what you did.


Mr. Speaker:: The Hon. Member will put his question and put it properly.


POSITION OF INDIAN GOVERNMENT-ALLEGED DISCREPANCY
Sergio Marchi: Mr. Speaker, my supplementary question is again directed to the Minister who also wrote in his letter to Premier Peterson the following:
The government of India has taken particular exception when elected
officials attend functions sponsored by these organizations.
Given that the Indian High Commissioner in Ottawa has contradicted the Minister and denied that they ever requested such a boycott, can the Minister explain this serious discrepancy? Even if the boycott was asked for by the Indian Government, since when should the interests of a foreign government be allowed to undermine the rights of our own citizens here in our own land?


Charles Joseph Clark: Mr. Speaker, they should not be and they are not. The Hon. Member is distorting, I am sure inadvertently, what was said by the High Commissioner. Certainly the High Commissioner did not ask me to write the letter.


Sergio Marchi: Who did?


Charles Joseph Clark: I took that decision for Canadian reasons as a Canadian Minister with regard to Canadian values of peace and security in this country. I do not want to make this a partisan matter and I am sure that no Member of good will would want to make this a partisan matter.
I was very impressed by the response of the Liberal Premier of Ontario to my request. He understood what I was seeking to do and understood my responsibility to do it. I hope that there will be a similar understanding of the sensitivity of this issue and of the importance of our respecting the situation of the vast majority of Canadians of Sikh origin.


EXTERNAL AFFAIRS
Hon. Edward Broadbent (Oshawa):: Mr. Speaker, I have a question for the Secretary of State for External Affairs. Last May the Prime Minister of South Africa announced his government's intention to take action aimed at stopping outsiders, from whatever source, from aiding even non-violent anti-apartheid groups within South Africa.

March 3, 1988

As the Secretary of State for External Affairs will know, two days ago that Government in South Africa introduced repressive legislation aimed at carrying out this intent which that Government announced last May. The Government of South Africa will now have the authority to seize any such funds coming in to, I repeat, even peaceful groups within South Africa.
Is this not the most blatant illustration of the present South African Government's total unwillingness to co-operate with the most open, democratic and, one would have thought, harmless actions by peaceful governments such as Canada?


Charles Joseph Clark: Mr. Speaker, I take the matter seriously, as I know the Hon. Leader of the New Democratic Party and his Party do. I spoke on the matter yesterday in a statement, to which there was a very measured response by the spokesman of his Party.
I remind the Member and the House that that which is before the Parliament of South Africa is a Bill-it is not yet a law. We are studying the detail of that Bill to see what effect it will have upon Canada. We are naturally encouraging the Government of South Africa, with whatever authority we have, that that Bill not go forward.
1 indicated yesterday that we are also vigorously seeking any means open to us which can help us to help the victims of apartheid in that country to oppose that legislation or other means. I am not sure what those openings are, but we are looking for them and if the Bill is passed or other measures are taken we intend to aid the victims of apartheid in fighting them.


IMPOSITION OF COMPREHENSIVE ECONOMIC SANCTIONS
John Edward Broadbent: Mr. Speaker, I read the serious statement which the Minister made in the House yesterday in which he gave reasons for maintaining the current level of diplomatic relations with South Africa. He also commented on his current view about comprehensive economic sanctions. In both cases he talked about the need for Canada to be able to maintain an openness to provide such financial assistance to peaceful groups within South Africa.
If, as the Minister said in his answer this afternoon, the Government of Canada, in its contacts with South Africa now, does ascertain that the Government of South Africa indeed plans to go ahead with this legislation and will, in effect, cut off the peaceful channelling of money into that country which we have accomplished, will the Government of Canada then be prepared to impose, by ourselves, comprehensive economic sanctions against South Africa?


Charles Joseph Clark: Mr. Speaker, the only answer I can give the Hon.
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Member is that we would certainly have to consider that and certainly will. I do not want to anticipate events that have not occurred. It is for good reason that we have a practice against answering hypothetical questions in the House.
However, I want there to be no question about our seriousness. One of the reasons that I and the Prime Minister repeat and underline the commitment the Prime Minister made on behalf of this country in the United Nations is that it is very important that South Africa and others know the bottom line of Canada, and if we have no options other than to suspend our diplomatic and economic relations with South Africa, then we will exercise that option.
[ Translation]


REQUEST AS TO WHEN COMPREHENSIVE SANCTIONS WILL BE IMPOSED
John Edward Broadbent: Mr. Speaker, the South African Government is becoming increasingly anti-democratic, not the opposite. And if now is not the time to impose comprehensive economic sanctions, when, I am asking the Minister, will that time come?


Charles Joseph Clark: Mr. Speaker, that is a good question, but one which cannot be answered today. As I said yesterday in the House, there are positive actions which Canada can now take in South Africa to help the victims and opponents of apartheid. We want to keep on doing what we can. If and when we are no longer able to exert a positive influence, we will have to use other available options and, in those circumstances, end our economic and diplomatic relations with South Africa.
However, I think that it would now be preferable to try and influence the situation by having diplomats there.


EMPLOYMENT
[Stage Direction]
Hon. Warren Allmand (Notre-Dame-de-Grace-Lachine
East): Mr. Speaker, my question is directed to the Minister of Employment and Immigration. Yesterday the Economic Council said that in recent years the number of trade sensitive industries in Canada has been increasing with the result that adjustment due to job turnover has also been increasing. It went on to say that these adjustment problems have been more acute with older workers, workers with low education and workers from remote small communities.
[Stage Direction]
March 3, 1988
Oral Questions
In these circumstances, why has the Government cut employment and training programs by over 30 per cent since 1984, with the recent Estimates proposing further cuts of 11 per cent for next year? Yesterday the Economic Council recommended the strengthening of adjustment and training programs. Why is the Minister and the Government ignoring that advice?
Hon. Benoit Bouchard (Minister of Employment and Immigration):: Mr. Speaker, I am always pleased to compare our figures on jobs with those of the Hon. member and his government years ago. I believe that Canadians want jobs. We have created many jobs. I do not have to give any numbers because I am sure my friend from Notre-Dame-de-Grace is well aware of them. We will continue to deal with that issue.
At the same time I believe that the Canadian Jobs Strategy provides many ways to deal with the problems he raises.
We are conscious of the change in the labour force and the change in employment. However, again, I believe we have provided the answers that Canadians want.


INCREASED TRAINING AND ADJUSTMENT-MINISTER'S POSITION
[Stage Direction]
Hon. Warren Allmand (Notre-Dame-de-Grace-Lachine
East): Mr. Speaker, the Minister has not answered the question. If he wants to compare the records and jobs, let him do it with the pre-recession period of 1970 to 1975-
Some Hon. Members:: Oh, oh!


Mr. Speaker:: The Hon. Member will put his question.


Mr. Allmand:: A Gallup Poll published last week found that Canadians still consider unemployment as their greatest concern. Yesterday that was confirmed by the Economic Council when it said that older workers, low educated workers and workers from remote small regions were the hardest hit and had the greatest difficulty in adjusting to unemployment. The Council clearly recommended that we should strengthen training and adjustment programs. What is the Minister's answer to those recommendations?


Benoît Bouchard: Mr. Speaker, it is exactly what I said before. If you look at the percentage of the unemployment rate in remote communities in all the provinces of this country, it is down compared to what it was three or four years ago. The Liberal Party would like us to raise a lot of issues and answer them with a lot of programs. The problem is that three or four years ago they had job creation programs but had unemployment rates too.


BANK OF CANADA
Michael Morris Cassidy: Mr. Speaker, my question is for the Minister of Finance and it concerns interest rates in Canada. During the past two months, the value of the Canadian dollar increased by 2.5 cents against the U.S. dollar, essentially because of the anti-inflationary monetary policies of the Bank of Canada and the resulting high interest rates. In view of the economic slowdown predicted for 1988 and of the adverse effects on our competitiveness and our exports of a stronger Canadian dollar, is the Minister now ready to instruct the Bank of Canada to take whatever measures are needed to reduce interest rates in Canada?


Geoff Wilson: Mr. Speaker, our economy is indeed very strong now. I think our economic performance in the fourth trimester of 1987 was very good and even better than what most observers predicted before the results were known. I believe the policies of the Governor of the Bank of Canada reflect his understanding of the performance of the Canadian economy. I personally agree with these policies.


CANADA-U.S. INTEREST RATES-PROPOSED DECREASE IN DIFFERENTIAL
Michael Morris Cassidy: Mr. Speaker, I am interested to know that the Minister of Finance supports the policy of the Bank of Canada, which is to bring inflation to zero whatever the consequences on unemployment, particularly in the regions of this country.


Some Hon. Members:: Oh, oh!


Michael Morris Cassidy: Is the Minister saying that an 8 per cent unemployment rate, which his forecasts say will rise during 1988, is acceptable, or is the Minister prepared to step in in order to bring down the differential in interest rates of 1.5 per cent between Canada and the United States to ensure that we can continue to have economic growth in all regions of Canada, not just southern Ontario?


Geoff Wilson: Mr. Speaker, I suppose I will have to remind the Hon. Member again that unemployment came down in every province of this country during 1987.
The Member from Notre-Dame-de-Grace says "Big deal".


William Warren Allmand: 7.5 per cent.


Michael Holcombe Wilson: During his term of office when he was minister of employment, the rate of unemployment increased in every province of the country. There is the big deal for the Member from Notre-Dame-de-Grace.
March 3, 1988



Oral Questions COMMUNICATIONS


PRESENCE IN GALLERY OF MR. ROGER CLARK, PROGRAM DIRECTOR, CANADIAN SECTION, AMNESTY INTERNATIONAL
Mr. Speaker:: 1 wish to bring to the attention of Members the presence in the gallery of Mr. Roger Clark, Program Director, Canadian Section, Amnesty International.


Some Hon. Members:: Hear, hear!


INDIAN AFFAIRS
Mr. Albert Cooper (Peace River):: Mr. Speaker, my question is directed to the Minister of Indian Affairs and Northern Development. It concerns the longstanding Lubicon land dispute. Will the Minister confirm the article in today's Edmonton Journal which states that the province has agreed to transfer 25.4 square miles to the Lubicon Band? If he can confirm that, will he tell us what implications that has on the ongoing negotiations with the band?


Hon. Bill McKnight (Minister of Indian Affairs and Northern Development):: Mr. Speaker, I appreciate the Hon. Member's interest on behalf of his constituents. I can confirm that yesterday Alberta and the Government of Canada reached an agreement in principle on the transfer of 25.4 square miles to settle an outstanding claim.


Some Hon. Members:: Hear, hear!


William Hunter (Bill) McKnight: The Province of Alberta has also offered to have the boundaries drawn so it would include the point of land on which the Lubicon Band wish to establish its community. Chief Ominayak is meeting with Premier Getty tomorrow. 1 hope the discussions that take place will assist in fulfilling outstanding commitments so there can be a just settlement.
We intend to enter into negotiations as soon as the Lubicon wish, on non-land issues such as housing, infrastructure, a hospital, those infrastructures which are necessary to establish the community. I hope in the weeks and months to come we can have ongoing negotiations and reach a just and negotiated settlement.


Some Hon. Members:: Hear, hear!


TRANSFER OF BUDGET FUNDS FOR INTERNATIONAL TRADE TO EMPLOYMENT AND IMMIGRATION
Hon. Lloyd Axworthy (Winnipeg-Fort Garry):: Mr. Speaker, my question is directed to the Minister for International Trade. We learned yesterday, with the tabling of the Supplementary Estimates, that the Government has over-spent its propaganda budget for the trade deal with the United States by close to $4 million. At the same time the Economic Council is saying we need to substantially enrich programs to help Canadian workers, but the Government does not seem to be able to find the money to do that.
As a gesture in the right direction, would the Minister cancel the bloated budget the Government has to try to sell its trade deal, to put out its own version of the National Enquirer in the Safeway stores across Canada, and give the money to the Minister of Employment and Immigration who does not have the ability to get the money himself for the needed programs to help workers in this country?


Hon. Pat Carney (Minister for International Trade):: Mr. Speaker, I think the Hon. Member's question is quite timely. As we have said before in the House, the extra funds were needed because we had to issue extra publications before and after October. We had to print additional publications in December when the final text was agreed upon.
I think the Hon. Member himself in the past has urged this kind of information. I can quote from Hansard on September 24 of last year when the Hon. Member, when calling for an emergency debate on free trade said, "It is very important that information be shared with Canadians". We agree entirely and that is what we have done.


Lloyd Axworthy: Mr. Speaker, I think I would just like to remind the Minister that there is a difference between information and propaganda. We are fully in favour of the first, but the Government does not know the difference between that and the latter.


CANCELLATION AND RECONSTITUTION OF ADVISORY COUNCIL
Lloyd Axworthy: Mr. Speaker, I would like to direct my supplementary question to either of these two inept Ministers. The Economic Council clearly recommended that there be major enrichment of the adjustment programs, yet the Government has cancelled programs like the Labour Adjustment Program that was providing that service. Instead, the Government has introduced a temporary short-term advisory council that does not even have representation from the major labour groups of Canada to help plan adjustment.
Should that advisory council not be cancelled and reconstituted as an independent agency with proper powers to do the necessary studies and to undertake the necessary programs to

March 3, 1988
Oral Questions
help Canadian workers, doing so in full consultation with the labour groups of this country?


Pat Carney: Mr. Speaker, I think Canadians can bestow their confidence in the council that has been established. It represents some of the best brains in this field to advise the Government. We look forward to its reports. I again point out that most of the adjustment will be upward. It will be people moving from jobs in traditional industries into the new growing industries because new jobs are at the heart of the free trade agreement.
I do want to comment on the Member's use of the word "propaganda" because at two o'clock today we did release the impact study on agriculture. It contains such information as the current U.S. and Canadian tariffs on grains and oilseeds, which is all good information, and it discusses the potential markets-


Mr. Speaker:: The Hon. Member for Humboldt-Lake Centre.


AGRICULTURE
Mr. Vic Althouse (Humboldt-Lake Centre):: Mr. Speaker, my question is directed to the Minister of Agriculture who ought to know that over the past year, farmers in my part of the country who export grains, beef and pork, because of the changes to the Canadian dollar, have watched the value of their products decrease by 11 per cent, and have watched the costs of borrowing money go up about 1.25 per cent over the past year. During the course of the Minister's administration they have also watched the value of their lands drop by about 50 per cent. Since these are all very much deflationary values and deflationary results, when will the Minister be satisfied that he has deflated agriculture enough?


Hon. Pierre Blais (Minister of State (Agriculture)):: In
spite of the figures which have just been quoted, Mr. Speaker, I suggest that our Government has responded to the difficulties experienced by our Canadian farmers over the past few years by increasing by 400 per cent the investments which have ended up in the Canadian farmers' pockets, especially in his region. We were aware of the problems and we came to the conclusion that in spite of the significant reduction in interest rates-they were between 4 and 5 per cent lower than those charged during the darkest hours of the previous Liberal Government-we had to inject enormous amounts, thus making it possible for Canadian farmers to finally recognize that this is indeed a Government which meets the needs of Canadian farmers.


An Hon. Member:: Absolutely!


Victor Fredrich (Vic) Althouse: Mr. Speaker, I guess I let the word "agriculture" slip out. I had intended the question for the Minister of Finance.


LEVEL OF INTEREST RATES FOR FCC LOANS
Victor Fredrich (Vic) Althouse: Since the Minister in charge of agriculture has answered my first question, I wonder if he could explain how 12.25 per cent interest at the Farm Credit Corporation, which is not being taken up by farmers-the allocation is not being used-is helping the farmers when they can go to the banks and get credit for much less even though the bank rate has been going up in the last year? How is that helping farmers?


Pierre Blais: Mr. Speaker, the purpose of the Farm Producer Assistance Program which we announced in December 1987 and which provide for over $3 billion in assistance, including several additional hundreds of millions of dollars for the Farm Credit Corporation, is to help farmers. The interest rates you are talking about are greatly lower than those we experienced during these darkest years which no Canadian wants to live through again.


THE ADMINISTRATION
Mr. Don Boudria (Glengarry-Prescott-Russell):: Mr. Speaker, my question is directed to the Deputy Prime Minister. It concerns the Prime Minister's friend, Mr. Jean Sirois who received $400,000 in legal work in addition to his juicy political patronage appointment. Can the Deputy Prime Minister explain to this House why the former Minister of Supply and Services gave Mr. Jean Sirois, according to media reports, a $195,000 contract to assist in an eight-year old legal case which was ready for trial? Given that Government lawyers refused to state how much work he actually did on the job, will the Deputy Prime Minister tell us now when the Government will put an end to this kind of sordid political patronage?


Hon. Ray Hnatyshyn (Minister of Justice and Attorney General of Canada):: Mr. Speaker, I do not quite fully understand what the Hon. Member is driving at. The fact is that legal agents are hired by the Government on a number of files; outside counsel. There is in fact a standard procedure under which all of this is done. When the bills are submitted, they are submitted on the basis of work done on an hourly basis. They are taxed or, to put it in layman's terms, they are
March 3, 1988

scrutinized by the Department and then paid by the client Department. It is important to understand that legal agents perform work and services on behalf of the Government of Canada and that they are paid for services rendered.


Don Boudria: Mr. Speaker, that is not a very good answer. Obviously, the Government had its legal counsel already for that case, and that was added in at the last minute.


JEAN SIROIS AFFAIR-REQUEST FOR TABLING OF DOCUMENTS
Don Boudria: Mr. Speaker, I have a question this time for the Deputy Prime Minister: When asked about the need to hire Jean Sirois and to pay him $195 000, Civil Servant Fred Sparling stated: It was the Minister's decision. Is this not a case of shameful patronage? Is the Government now prepared to table in the House the list of all the contracts awarded and all the amounts paid to Jean Sirois, so that we can put an end to all this sordid affair once and for all?


Hon. Harvie Andre (Minister of Consumer and Corporate Affairs):: Mr. Speaker, Mr. Sparling is responsible for the Canada Business Corporations Act. The Javelin file has been around for literally decades. When the new Government came into power we were interested in and informed about it, trying to bring the matter to a conclusion. Mr. Sirois was added as co-counsel acting in this very complex case. I understand it has been going on for years and years.
The amount of legal fees that have been collected over the years on this matter are shocking to me as a non-lawyer. I think I am in the wrong profession.


Some Hon. Members:: Hear, hear!


Harvie Andre: Mr. Speaker, I understand that, basically, the legal work has been completed. It will be going before the court soon. Hopefully, the Javelin case can be put to bed after the last two decades or so.


HUMAN RIGHTS
Mr. Svend J. Robinson (Burnaby):: Mr. Speaker, my question is for the Minister of Justice. Two years ago this week the then Minister of Justice promised to take "whatever measures are necessary" to ensure that sexual orientation is a prohibited ground of discrimination in relation to all matters within federal jurisdiction. In view of the fact that we do not choose to be gay or lesbian and are not seeking special rights,
Oral Questions
merely the right to live openly and in dignity without fear of losing our jobs, our homes or being subjected to violence, I want to ask the Minister this. Does he stand by the promise that was made by his predecessor as Minister of Justice? If so, when will he finally move to make equality a reality for Canadian gays and lesbians?


Some Hon. Members:: Hear, hear!


Ramon John Hnatyshyn: Mr. Speaker, I appreciate the question from the Hon. Member who has had a long interest in the matter of human rights and has in fact been vocal in that regard.
Of course I stand by the declaration made on behalf of the Government with respect to the response to the parliamentary committee. I have, with my colleagues, been giving the matter very serious consideration on the wide range of issues that were raised. We continue to consult with respect to this matter.
It is my hope that at an appropriate time we will be able to bring forward a statement with respect to this matter that will address all of the issues contained in the report.


APPEAL FOR ENTRENCHMENT IN THE CHARTER OF RIGHTS
Svend Johannes Robinson: Twelve years ago, Mr. Speaker, the Quebec Government amended the Quebec Charter of Rights to prohibit all discrimination based on sexual orientation. Today, the Tory Government refuses to keep its promise to amend the Federal legislation in the same direction. Why does the Minister of Justice accept to maintain such an intolerable situation which deprives both gays and lesbians in Canada, and especially in Quebec, of equality and justice? Why?


Ramon John Hnatyshyn: Mr. Speaker, since the supplementary question was very similar to the first question, I want to reiterate the fact that in the course of its consideration of the matter of the Charter of Rights and Freedoms the parliamentary committee covered a wide range of matters and a wide range of recommendations, all of which were responded to in principle. The Charter of Rights and Freedoms does have meaning. Certainly at the federal level we are examining the various options that are available to us to implement those items that were indicated in the response of my predecessor.
We believe that the Charter of Rights does serve an important function and role. We intend to take such steps as are appropriate with respect to the implementation in a legislative way of those matters within our jurisdiction.

March 3, 1988
Oral Questions EXTERNAL RELATIONS


IMPACT OF DECENTRALIZATION OFCIDA ON THIRD WORLD
Mr. Don Ravis (Saskatoon East):: Mr. Speaker, my question is for the Minister for External Relations. As a member of the Standing Committee on External Affairs and International Trade that reviewed Canada's official development assistance last year, I welcome the Minister's positive response in the form of a strategy which projects into the next century. Will the Minister tell the House how the decentralization of CIDA as outlined this morning will impact on the controversial issue of more effective aid delivery in Third World countries?


Monique Landry: wish to thank my colleague for his question which gives me the opportunity to elaborate on one aspect of this new strategy. I am aware of the important role played by my colleague in this regard in his capacity as member of the Standing Committee on External Affairs and International Trade.
Decentralization means more people in the field to plan our aid projects better. It will also allow for a simplification of decision-making on aid projects.
The other important factor, Mr. Speaker, is that decentralization will allow us to involve the very people we want to help in the development of our programs and in that sense involve them in their own development.
There are other measures which come to mind, but simply stated, this is what decentralization will bring about.


ENVIRONMENTAL AFFAIRS
Hon.   Chas. L. Caccia@Davenport: Mr. Speaker, my question is for the Minister of the Environment. This year's budget for Environment Canada goes up by 3.5 per cent compared to a 30 per cent increase for the Department of Energy, Mines and Resources; a 24 per cent increase for Agriculture; and an 11 per cent increase for Communications. Considering the pitiful performance on the part of the Minister in securing adequate funds for his own Department I would like to ask him this. Does he have any funds left for scientists and economists in his Department to examine the impact of acid rain pollution on the Canadian environment so as to prepare a total cost to be submitted at the next summit when the Prime Minister meets with President Reagan in Washington?


Hon. Tom McMillan (Minister of the Environment):: Mr. Speaker, the Hon. Member for Davenport has lately been making a career of misrepresentation with respect to the budget of Environment Canada. He goes across the country and repeats these nonsensical statements, in committee and on the floor of the House of Commons, that the Government of which I am a part has slashed my Budget in environmental expenditures across the board. Nothing could be further from the truth.
The budget of Environment Canada this year and last year is higher than it has ever been since the Department was formed in 1971, including when the Hon. Member was Minister. That is a fact.
What is more, we are spending more money outside Environment Canada but within the federal Government under environmental matters than has ever before been the case.


Mr. Caccia:: The Hon. Minister may be good in rhetoric but he is weak in arithmetic.


RESEARCH INTO THE EFFECT OF ACID RAIN ON HEALTH
Hon.   Chas. L. Caccia@Davenport: Mr. Speaker, my supplementary question is for the Minister of National Health and Welfare. Last fall the Minister indicated in Question Period that there was not adequate information available to launch a study on acid rain and health. In light of the study that was published a few days ago linking acid rain and cancer of the colon in the northeast of the United States and eastern Canada, is he now prepared to launch a study since his colleague, the Minister of the Environment, is broke anyway?


Thomas Michael McMillan: Mr. Speaker, the Hon. Member says that the Minister of the Environment is broke. The Minister of the Environment is richer than any of his predecessors have been, including the Hon. Member.
In fact, quite apart from the budget of my own Department, which again is higher than it has ever been since 1971, the Government of Canada is spending on environmental matters within the total system outside my Department, for example, $106 million to establish a national park in South Moresby, 50 per cent of which is coming from the budget of other Ministers, among them western diversification and DRIE; we have undertaken a $37 million clean up of the Sydney tar ponds in Cape Breton, the biggest single industrial dump site cleanup in the history of Canada, the second biggest in the history of North America, from the budget of the Department of Regional Industrial Expansion.


Some Hon. Members:: Hear, hear!
March 3, 1988


IMMIGRATION
Mr. Dan Heap (Spadina):: Mr. Speaker, my question is directed to the Minister of Employment and Immigration. As the Minister has acknowledged publicly, two athletes at the Calgary Olympics have defected from their teams, and they have both asked for Canada's protection against being returned to their countries, one to communist Romania, the other to fascist Chile.
Will the Minister explain to this House why he decided that the Romanian will likely be accepted next week, but the Chilean must wait, perhaps for months, without permission to earn a living, and without the Minister's assurance of a favourable decision. Is this not a continuation of the bias of 40 years ago that excluded suspected communists, but brought well known Nazis into Canada?


Benoît Bouchard: Mr. Speaker, in the first case mentioned by the Hon. Member, there has been a policy set up in this country since 1968 which refers to what we call East European countries. This policy makes it possible to deal very swiftly with those cases.


John Edward Broadbent: That's the point.


Benoît Bouchard: There is a richness in this country from those people who have come from those countries and who are Canadians today. I think my friend would agree with me.
I would like to tell the Member for Oshawa that last year we had 1,600 refugee claimants. Chile was one of the countries from which we accepted the most refugees in Canada, and we will continue.
I wish to say that Canada has one of the best performances of all countries in the world in receiving Chileans.


John Edward Broadbent: What's that got to do with the question?


Mr. Nystrom:: Answer the question.


EXPEDITED TREATMENT-MINISTER'S POSITION
Daniel James Macdonnell Heap: Mr. Speaker, since the decision to take a person out of the refugee stream and give him special quick treatment, as in the case of the Romanian, was a decision of the Minister, will the Minister explain why he will not do the same for a Chilean who is in Canada under the same circumstances and has the same reason to fear return to Chile?


Benoît Bouchard: Mr. Speaker, I think I have been very clear on that. There has been for 20 years a policy allowing people coming from East European countries to submit their case.
Business of the House
That policy which I believe has been followed normally by the previous government and that we follow today allows those people to have their case processed rapidly. But again the cases of Chileans that have been submitted and considered as refugee cases have also been processed normally. Therefore, I do not see why my hon. friend suggests there is a double standard in this case.


Mr. Speaker:: A single question from the Hon. Member for Papineau.


EXTERNAL AFFAIRS
André Ouellet: Mr. Speaker, my question is for the Secretary of State for External Affairs (Mr. Clark) who is no doubt aware that President Diouf of Senegal has declared a state of emergency and arrested his political opponents.
Is the Minister prepared to send a note of protest to Senegalese authorities or at the very least to ask for the release of the chief opponent of President Diouf, Mr. Abdoulaye Wade, as well as of the two leaders of the Senegalese democratic party who have been jailed for denouncing the elections as a fraud and a sham?


Charles Joseph Clark: Mr. Speaker, I always take seriously the Hon. Member's representations. I am not certain of all the circumstances involved but I will enquire. If it is appropriate for Canada to take such action, I will do it. Otherwise I will inform the Hon. Member of my decision.


BUSINESS OF THE HOUSE
Hon. Herb Gray (Windsor West):: Mr. Speaker, I want to ask the Deputy Government House Leader to give us the usual statement of government business for the coming week.


Hon. Doug Lewis (Minister of State and Minister of State (Treasury Board)):: Mr. Speaker, as the House is aware, today is an allotted day. Tomorrow will also be an allotted day. On Monday, we will resume second reading debate on Bill C-72, and continue that through Tuesday, if the debate does not

March 3, 1988
Supply
wrap up on Monday. The back-up Bill for Bill C-72 will be Bill C-113, the Western Economic Diversification Act. Wednesday and Thursday will be allotted days. As far as legislation for Friday is concerned, we are looking at the possibility of either Bill C-82, an Act respecting the registration of lobbyists, and/or Bill C-107, an Act respecting plant breeders' rights.



GOVERNMENT ORDERS

[Stage Direction]
[ Translation]

[Stage Direction]
The House resumed consideration of the motion of Mr. Cassidy:
That this House notes that the flow-through share tax provision has been instrumental in revitalizing mining communities and regions across Canada, and consequently urges that the initial benefit level of this provision not be reduced but be retained to encourage mineral exploration and development by small and medium-sized companies.
And the amendment of Mr. Garneau:
That the motion be amended by adding after the second "that" the words: "because of the 33 1/3 per cent earned depletion allowance" and adding after the second "provision" the words:
"and, specifically, the 33 1/3 per cent earned depletion allowance".
Mr. Deputy Speaker:: Before the oral question period the Hon. Member for Laval-des-Rapides (Mr. Garneau) had moved an amendment to the motion of the Hon. Member for Ottawa Centre (Mr. Cassidy) and the Chair has decided that the amendment is in order.

The debate will therefore continue on the amendment, with the Hon. Member for Kamloops-Shuswap.


Nelson Andrew Riis: Mr. Speaker, I am delighted to have an opportunity to participate in today's debate sponsored by the New Democratic Party. It is appropriate to remind Members what we are debating today. The motion is as follows:
That this House notes that the flow-through share tax provision has been instrumental in revitalizing mining communities and regions across Canada, and consequently urges that the initial benefit level of this provision not be reduced but be retained to encourage mineral exploration and development by small and medium-sized companies.
Without going into the details of the flow-through tax mechanism suffice it to say that this mechanism is recognized by miners, those living in mining communities, and those serving the mining industry in all parts of Canada, as being one of the very few tax expenditure programs that makes sense.
I know I do not have to remind you, Mr. Speaker, but perhaps it would be worth-while reminding some others, that some time ago the New Democratic Party conducted what it called Tax Probe '86. One of the recommendations offered by Tax Probe is that the Government ensure that corporate tax expenditures aimed at investment and job creation be overhauled to make sure that the tax benefits conferred are gained
only on the basis of demonstrated performance. Flow-through shares are an example of a tax incentive that has, in the main, worked. This motion recognizes that that particular tax program has resulted in considerable benefits accruing to Canadians, particularly in the regions of Canada. This motion is an effort to improve the nature of those flow-through shares by targeting them more closely to the small and medium-sized companies that are almost by definition 100 per cent Canadian-owned.


Mr. Fulton:: What was that report?


Nelson Andrew Riis: My friend, the Hon. Member for Skeena (Mr. Fulton), asks, "What was that report?" Tax Probe '86 is a report on the tax system prepared by the New Democratic Party. It identified this particular provision as one of the tax provisions that makes a great deal of sense, particularly when one considers the development and exploration activity that has occurred in places like northern British Columbia, which is one of the highest mineralized zones in all of Canada, throughout the Yukon, across the territories, the entire northern parts of the Prairies, northern Ontario, Quebec, and including the Atlantic provinces.
There is not a region in this country that is not affected by the mining industry. From downtown Toronto to the smallest and most isolated northern community the effect of the mining industry is felt either directly or indirectly. When one considers the tens of thousands of people employed by the mining industry, the billions of dollars of business activity generated on an annual basis from this industry, the tremendous amount of tax revenues that accrue to various levels of Government from the industry, as well as the tremendous trade benefits that accrue, for Canada this is a major industry, and of particular interest in the regions of Canada.
We all recognize that the economic prosperity that has occurred in pockets of southern Ontario has not necessarily occurred in other parts of Canada. I remember back in 1986 when the Government pointed out that 95 per cent of all jobs created that year were created within 100 miles of the CN Tower in downtown Toronto. This meant that for most of Canada no jobs were created in 1986 in terms of net gain. Whether it is the Yukon, the Prince Rupert area, across the Kootenay regions of British Columbia, the northern part of Manitoba, or the northern part of Ontario, we are talking about single industry towns and communities which depend either exclusively or largely on the mining industry.
We recognize that the mining industry is a cyclical industry which is vulnerable to the international market-place and, consequently, vulnerable to cyclical trends in the market. We know about the boom and bust situation which exists in the industry. The flow-through mechanism was a method whereby this benefit could be spread over the years so that a net financial gain was always accruing to areas which happened to be nearby or within mineralized zones of the country.
March 3, 1988

Earlier today I had an opportunity to speak with a number of brokers in Kamloops, representatives of the B.C. Mining Association, representatives of the local chamber of commerce, presidents of some exploration companies, as well as some prospectors themselves. These individuals brought home very clearly that the particular flow-through share mechanism was absolutely necessary if we hoped to maintain present levels of exploration in these areas, and particularly if we hoped to see any increase in these levels.
In my own constituency literally hundreds of people have been employed in the last few months. They were previously unemployed, but they are now out in the field staking claims, trenching, drilling, and carrying out all other activities associated with mining exploration, in the hopes of identifying an appropriate ore body and establishing a full mine one day.
When we talk about the benefits of the flow-through mechanism we have a number of supporters. It is not only the New Democratic Party which feels that this initiative must be maintained. I refer, for example, to the White Paper on tax reform, sponsored by the Standing Committee on Finance and Economic Affairs. After analysing the particular program, the committee wrote a report, and I would like to refer to the section dealing with the flow-through share mechanism. I want to remind you, Mr. Speaker, that the committee heard from mining associations, prospectors, developers, brokers, and corporations in the mining industry-a whole host of witnesses.
The committee indicated that a study done by the Association of Prospectors of Quebec found that the flow-through mechanism and related incentives for the mining sector contributed to the realization of 71 public share issues in 1985, of which 38 were from junior companies and 33 were from flow-through shares, and resulted in 25 discoveries that in future may generate profits, 66,000 jobs, $2.8 billion of value added, and $300 million of net income for federal and provincial Governments. This was simply one witness indicating what had happened in one part of Canada as a result of the flow-through mechanism.


James Ross Fulton: Who is opposing these flow-through shares?


Nelson Andrew Riis: I do not know if you heard the Hon. Member for Skeena (Mr. Fulton), Mr. Speaker, but he asks: "Who is opposing these flow-through shares?" Obviously the finance committee found that its witnesses thought that it was an excellent idea, and I will indicate in a moment others who thought that it was an excellent idea. As I look around the Chamber 1 can only assume, since we will be having a vote later, that it must be the Conservatives who oppose it. I know that the Minister of Finance (Mr. Wilson) made clear in his presentation that he was against it, but I also know that there are members in the Conservative caucus-and I would like to think that it is the overwhelming majority-who actually believe in this principle. Whether they have the courage of
Supply
their conviction will be seen later this afternoon when we get to the vote.
Another group representing federal and provincial organizations formed a subcommittee on mineral taxation and gave a report to the Government in which it indicated that the junior mining sector in particular would be hurt by tax reform changes affecting flow-through shares. It feared that a reduction in exploration could lead to a serious decline in economic activity in remote regions. That joint federal-provincial group of organizations made clear in its recommendations that to tamper with the flow-through share mechanism would cause serious problems in the country.
We could also look to what the Mining Association of Canada had to say. For example, it indicated that large amounts of funds had been raised for exploration in Canada through the medium of flow-through equity share financing, and that the device had been particularly significant in giving access to capital to junior mining companies as distinct from senior or producing mining companies, although a number of senior companies not in a taxable position had also found the device useful. The individuals representing the Mining Association of Canada indicated clearly that the mechanism played a very, important role in their development.
The February 15 edition of the Northern Miner contained a very interesting article. It reminded us of the recently formed save flow-through committee representing tens of thousands of people involved in the mining industry across Canada, from Fabrador to Vancouver Island and up to the northern tips of the Yukon and the territories. Thousands and thousands of Canadians representing the mining industry have come together in a desperate move to try to bring the Government to its senses, to try to make it understand that if it continues with its plans to gut the flow-through share mechanism it will have a severely negative impact on these communities in Canada. They pointed out that in 1987 alone more than $900 million in flow-through money was raised to assist the mining communities and mining areas of Canada through exploration activity.
I do not have the time to refer to every area and to indicate why this particular tax provision was so important for the future of the areas they represent, virtually every major mining area of the country. I wish I had the time to do so because they pointed out the tens of thousands of new claims as a result of activities over the last few years and the hundreds of millions of dollars in new mines and new mining properties that have been developed. It is really tremendous.
I have looked at the briefs presented to Members of Parliament which point out that not only do the mining industry and the miners involved benefit directly. However, if we look at the Northern Miner magazine, we see pages and pages of related industries attached directly to the program.

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James Ross Fulton: It sounds like a ripple effect.


Nelson Andrew Riis: It has a real ripple effect. I suppose we could see the flow-through share mechanism as being the pebble we would drop into the water and, as the ripple effect reverberates throughout the economy, it would incorporate people who make tents, people who manufacture mining exploration equipment, motel and hotel owners, grocery wholesalers and retailers-


James Ross Fulton: Small airlines.


Nelson Andrew Riis: Small airlines, yes, to people who make boots, shoes, and snowshoes. I could take up important time of the House by referring to hundreds of companies related to this industry which will be severely hit. Certainly their activities will be curtailed dramatically if the flow-through share mechanism is ripped apart as the Government now plans to do.
I noticed the other night that Mining Life in its most recent publication contained pages and pages on the effects of this action on airlines, shopping plazas, pump manufacturers, drilling equipment manufacturers, and so on.


James Ross Fulton: What are the headlines?


Nelson Andrew Riis: The headlines go for pages and pages, indicating the various communities which support flow-through share funding and that, for example, a chamber of commerce questions the wisdom of the Minister of Finance in cutting this mechanism. On the front page, it says: "Broadbent will speak at the flow-through symposium, Mulroney and Turner not available". I suppose it was only the Leader of the New Democratic Party (Mr. Broadbent) who had an opportunity to represent the views of parliamentarians at that important convention that was held recently.
There is no question that in spite of the prosperity that exists in certain communities in southern Ontario, the same does not exist in the regions of Canada. In some areas, things may have improved marginally. I think of the kind of changes that have occurred in the Yukon. The territorial Government has taken a whole set of measures over the last number of months that have decreased employment substantially and encouraged a great deal of economic activity, particularly in the mining industry. The Government of the Yukon feels so seriously about this particular measure that-


James Ross Fulton: Tony Penikett.


Nelson Andrew Riis: As soon as Mr. Penikett in the Yukon heard that the Government had decided to destroy the effectiveness of the flow-through share tax provisions, he was in touch with the Minister of Finance pointing out what this would do to that particular part of the territories.
I wondered if the other representatives of the territories have bothered to mention this to the Minister of Finance. I have not heard them in debate today. As a matter of fact, I cannot recall ever hearing them raise this matter in the House of
Commons. The day is not over yet. Perhaps we will hear them speak in favour of this motion later.
In the regions, Canadians are doing their best in spite of the Government's actions to generate activity in their regions, to take initiative in local communities, and to take advantage of those few provisions in the tax system that give them some encouragement and support in their activities. In areas like the Kootenay region of British Columbia, this has been important. The people of those areas are mystified about why the Government seems to be cutting back.
I can say without any hesitation, on behalf of my colleagues from constituencies like Thunder Bay-Atikokan, Thunder Bay-Nipigon, Skeena, St. John's East, Prince Albert, Yukon, New Westminster-Coquitlam, Cowichan-Malahat-The Islands, Nickel Belt, Kenora-Rainy River and Churchill as well as many others, just to name a few, that we will be standing in our places, shoulder to shoulder, unanimously supporting the reintroduction of these flow-through shares. I will be watching carefully the representatives of the Territories to see how they will be voting, knowing that their constituents will be more than interested in whether or not they rise.
People from the Kootenays, the Lac-Saint-Jean region, the Okanagan Valley, Timiskaming, Timmins, Prince George, other parts of northern British Columbia, northern Alberta, Saskatchewan, Manitoba and of course Quebec will be watching. I suspect that tonight most Canadians will be riveted to their television sets when that vote takes place to see whether or not those who represent them rise.
I do not like embarrassing anyone, and I will not do so today, but I could have read into the record a whole number of letters to the editor sent by Conservative Members about their support for the flow-through share mechanism. Many of them feel that the decision to gut this program was not a good one and they would like to see it changed. In the spirit of cooperativeness and positiveness and in an attempt to make this a businesslike place, we would provide an opportunity for those Members to indicate how serious they are this afternoon, or are they simply writing about their interest as opposed to standing up, as a Member of Parliament ought to for his or her constituents?
This motion provides an opportunity for all Members of the House to speak. This is a non-partisan issue. This is one of those issues in which politics ought not play any role at all, quite frankly. When I look across the aisle at my Conservative friends, knowing how they feel about this issue-


James Ross Fulton: They will want to support us.


Nelson Andrew Riis: As my friend from Skeena has said, they will want to support this particular measure, as any knowledgeable person would. I heard the finance critic for the Liberal Party speak in favour of this initiative.
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When reading through the various mining magazines and newspapers, I find that there are not very many people who have not indicated in writing their support for the return to the provisions that existed back in the mid-1980s when the benefits of the flow-through share mechanism were being felt by people in virtually every part of Canada. Hundreds of thousands of Canadians benefited. It is unfortunate that I do not have a chance to name the Canadians who have benefited personally from this mechanism, as will their children and their children's children.
We are delighted to provide this opportunity for Hon. Members, be they Liberals, New Democrats or Conservatives, to send a clear message to the Minister of Finance. 1 think the Minister has lost touch on this issue. He is an honourable man, and I think he is probably doing the best job he can as he sees it. However, he sees it from Bay Street. From downtown Toronto, it is difficult to appreciate just how tough life is in the territories and in the single-industry communities that now feel threatened by this particular action of the Government.
In a spirit of goodwill, enthusiasm and a positive attitude, 1 will resume my seat now to allow some Conservative Members to indicate their support for this initiative.


Mr. Thacker:: Mr. Speaker, I simply cannot let that very able speech go by. My friend from Kamloops-Shuswap (Mr. Riis) has put the case for a special deduction for a particular industry very well. I think he would agree that it is a very generous deduction, a deduction of 133 per cent. What he also knows but did not put very well was that all sorts of other sectors want these deductions as well. There is no doubt that if one can invest $1 and deduct $1.33 from one's tax, one is doing very well.
During the three election campaigns in which I have campaigned against the NDP, NDP Members have identified each time the tens of thousands of Canadians who have not had to pay income tax because of these special deductions, whether they be for the film industry or the oil industry. Is the Hon. Member now saying that members of the NDP will forever stop going after these 60,000 people who do not pay income tax because they take advantage of the special deductions? Is the Hon. Member prepared to back off on his attack on those people and say that he recognizes that they are making investments and that they therefore should not have to pay income tax?
The logical flow-through of that is that ordinary Canadians have to pay more if we let the top people take these special deductions and not pay their fair share. Is that what members of the NDP are saying?


Nelson Andrew Riis: Mr. Speaker, that is not quite what we are saying. I too recall the last federal election campaign. At that time, the issue was a minimum personal tax. The Prime Minister (Mr. Mulroney), as a matter of fact all three Leaders, said during that very famous debate that they felt that a minimum personal tax was appropriate.
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Since we now have in place the mechanism for a minimum personal tax, and though there are still a few exceptions who somehow slip through the cracks, we feel that by and large everyone now pays at least a minimum tax. In terms of the personal tax system, there is some equity now in the system.
Those people who will provide the flow-through money by providing equity financing for resource companies will still be required to pay a minimum tax, even if they use significant tax reductions to bring their incomes down. We all agree with that minimum tax, I suppose, if we believe the Leaders of the various political Parties and their commitments to that and the legislation that was subsequently passed in the House.
I think the Hon. Member is referring to the 60,000 corporations that do not pay any income tax in spite of profits. He knows very well that the flow-through program accrues by and large to companies that are not in taxable positions. That is why the flow-through mechanism makes it through the company and into the hands of certain investors who will in fact pay a minimum tax.
We are talking about 60,000 profitable corporations. I use the word "profitable" because too often people are under the impression that we want to tax unprofitable companies. That does not make any sense. However, companies like Brascan, Cadillac-Fairview, the Royal Bank of Canada and Alcan have profits of perhaps S200 million or $300 million. We say that companies with profits like that should pay some income tax. The Mom and Pop shops next door, the small welding shop, all pay taxes if they are profitable. We are simply saying that should also apply to the large corporations and multinational branch plants. I think we agree on this, if I understand my friend's question correctly.


James Ross Fulton: Mr. Speaker, earlier in the week the president of the Single Industry Towns Committee for Canada appeared on the panel at the symposium on flow-through shares. He indicated that they did a calculation of the effect of the Minister's removal of the provisions for flow-through shares. They estimate a job loss by the end of June of 75 per cent of those involved, particularly those with junior exploration companies. When the Minister of Energy, Mines and Resources (Mr. Masse) appeared before this symposium, the only thing he had to offer on behalf of Progressive Conservatives was to consider action once the effect of unplugging flowthrough takes place. Having heard representatives of the juniors and the single industry communities, it is pretty obvious that the effect of unplugging flow-through will be disastrous for the juniors.
It was interesting to note, as pointed out by those who were there, that no representatives of the senior mining companies turned up. They did not have any representatives in attendance and did not participate in the symposium. They may well end up being able to buy up a lot of properties across the country at bargain basement prices because there simply will not be

March 3, 1988
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enough capital around for the juniors to operate. For example, in my constituency, out of Smithers alone, it amounted to $40 million last year. The community has done estimates that $30 million of that will not be available this year as a result of this manoeuvre. Given what the Minister of Energy, Mines and Resources had to offer with respect to bringing some sort of program in six months or a year from now once the juniors have wound down, is that the kind of approach a federal Government should take to one of the sectors which provides a large amount of employment and a substantial amount of balance-of-trade benefits to Canada?


Nelson Andrew Riis: Mr. Speaker, that is a thoughtful interjection. He has flagged a very critical issue. We are obviously about to have a major fire sale.


Mr. McDermid:: You have been wrong in every one of your predictions, Nelson!


Nelson Andrew Riis: Every one of the junior mining companies will have difficulty raising equity financing and will have to dump their properties. The large corporations, now that the work has been done and the properties identified, will be picking up those properties at fire sale prices. My feeling is that the Minister of Finance has cosied up a little too closely to the large mining companies and perhaps some of the large multinationals. He has set the stage for a sale of properties that the juniors will not have a chance to develop on their own.
We of course have not yet mentioned how the free trade deal might be rearing its head in this decision by the Minister. The Americans made it clear that these various programs, either direct or through the tax system, which encourage and support, if you like, a particular industry will not be allowed under the trade deal. The Minister said that we are going to have to back off all these programs which help the regional economies because the Americans will not allow us to do it any longer. That is one of the major reasons why we in the NDP have opposed the free trade deal.
In a country like Canada, the second largest geographically, where a lot of our communities are separated by great distances, we sometimes require assistance from local, provincial or federal Governments to get our local manufacturing, service or, in this case, resource sectors really revved up to speed. Unfortunately, we did not have an opportunity to develop that aspect of the debate, that this is probably the result of Americans making overtures because of the free trade deal.


Mr. Dorin:: Mr. Speaker, I have a comment and a question for the Hon. Member. 1 know he has had a long interest in tax matters. Yet what we are witnessing today is something very remarkable. We are witnessing the greatest transformation in a political Party and the greatest flip-flop on policy we have ever seen. The NDP has decided to endorse tax benefits for the rich!
I am very familiar with flow-through shares. For three years prior to being elected I was with a mining company in Edmonton. It was listed on the Toronto Stock Exchange and it survived on flow-through shares. My salary came from flowthrough shares. It did not come from income from gold or silver mining, which we were ostensibly doing. It came from flow-through shares and from doctors, lawyers and dentists in Toronto. I know where the money came from. Yet the same people who pay the money and take the tax breaks are the ones that the NDP complain about.
Tax Probe, led by the Hon. Member for Kamloops- Shuswap (Mr. Riis), went around talking about fairness and how there are all these tax breaks for wealthy Canadians. The official critic in this area for the NDP, the Hon. Member for Ottawa Centre (Mr. Cassidy), was talking about tax breaks recently. He said that when we are talking about tax savings, we are talking about someone else paying that amount. If that amount is not paid by the taxpayer, we are all going to be paying it, as we have been reminded by the Government many times. He said he did not think there were many people in his constituency in a position to sink $10,000 into oil, gas or mining exploration. He went on to say that he felt these benefits, flow-through shares and others, were strictly for the rich.
The Hon. Member will also know that his official critic, myself and some others were in New Zealand a week or two ago. That country has a Labour Government. For a Labour Government, it has been doing some strange things. It put in place a flat tax. There is no capital gains tax. It has been privatizing government departments. It also introduced a tax on food.


John Horton McDermid: A socialist Government?


Murray Dorin: Obviously what has happened is that the Hon. Member for Ottawa Centre saw the light on that trip. He has been reformed. He has seen what the Labour Party is doing in New Zealand and his whole Party is captivated. They have even started a contest with a prize of a $7,000 vacation for two in Hawaii, New Zealand and Australia. They promise to give you an insider's tour of two capital cities. You might even meet Prime Minister David Lange of New Zealand.
Now that we have this flip-flop on flow-through shares, are we going to have a change in position on capital gains taxes, as the New Zealand Government has done? Is he going to call for a food tax? Can he answer those questions?


Nelson Andrew Riis: There were a lot of questions there.


John Horton McDermid: Let us see if you can come up with any answers.


Nelson Andrew Riis: Let me preface my remarks by reading from Tax Probe '86. My hon. friend will remember that. I know he read it because he has commented on it in the past. 1 wonder if he will recall this particular part which says that the Government ought to ensure that corporate tax expenditures aimed at
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investment and job creation are overhauled to make sure that the tax benefits conferred are gained only on the basis of demonstrated performance.
In other words, out of all the tax exemptions we have, and we have many, I think there is unanimity in this place for the belief that some of those are boondoggles, just plain loopholes that do not result in a net gain for this country. If they cost us $500 million in lost revenue, normally we do not get $500 million worth of new investment, R and D or employment programs.
The odd one is obviously good, particularly if there were to be some minor changes made to it. What this says is that if, on the basis of performance, tax expenditures are seen to be appropriate, so be it. As a matter of fact, it goes on to say that flow-through shares are an example of a tax incentive that has worked. I do not know how more explicit or specific I can make it.
The Member talks about flip-flops. I remember that a little while ago the Minister of State for Finance (Mr. Hockin) stood in the House and said that the flow-through share mechanism was an important one for Canada, that it helped the regions, helped single-industry towns, helped most communities in the regions of Canada, and was one of the best tax programs which the Government has. Then the Government cut it. The Minister of State for Finance said it was a wonderful program and then the Minister of Finance cut it. Therefore, in terms of changing minds, it has been demonstrated clearly that it is the Progressive Conservative Party and no other that has changed its mind on this issue.


Mr. John A. MacDougall (Timiskaming):: Mr. Speaker, it is indeed an honour to be able to enter into this debate today on the motion moved by the Member for Ottawa Centre (Mr. Cassidy). I take a great deal of pleasure in participating on the very important issue of flow-through shares which the NDP finance critic has presented. As the House well knows, quite often the Hon. Member for Ottawa Centre and myself conflict on this issue.
Allow me to refresh the memory of the House and that of my colleague on information which he presented to the House in December, 1986. He talked about the terrible tax loopholes. He said that only wealthy Canadians benefit from flowthrough shares and that Bay Street investors were laughing at the food banks in Ottawa and across the country. He concluded that flow-through shares were a major tax rip-off which had to be removed.
Then in February, 1987, echoing his finance critic's comments, the Leader of the NDP, the Member for Oshawa (Mr. Broadbent), visited my riding of Timiskaming. Right in Kirkland Lake the leader of that socialist party stated that the NDP's position on flow-through shares was that the NDP could not support this tax loophole. Right in Kirkland Lake. Everyone in Timiskaming, in all the communities of northern
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Canada, and everyone in the mining sector knew then and knows today where the NDP stands. The NDP is not fooling anyone with this motion today. The NDP is still against flowthrough shares. This is nothing but politics being played here today.
On December 16, 1986, the Member for Ottawa Centre participated in a debate here on Bill C-23. As reported in Hansard at page 2171, he said:
-we should simply tell the Government to stop it, take the measure away, start all over again, and strike out the loopholes.
A September 26, 1987, editorial in one of the papers in my riding said:
The NDP are likely the spearhead of the effort that helped decimate the flow-through plan in the last Budget.
A year ago they took on the funding plan with a vengeance, seeing it as another tax break for big business. As such, the NDP hated it, and constantly complained about it, putting an incredible amount of pressure on Finance Minister Michael Wilson.
The editorial continues:
And it was all because the NDP shot off its mouth, hoping to strike out at big corporations, and instead threatened thousands of jobs and hundreds of communities across the country and in northern Ontario.
All of a sudden, it seems, the NDP have opened their eyes and noticed the obvious job-creating benefits of the plan. They have suddenly noticed the unmistakable. But the damage has already been done.
I have here a picture of the Leader of the NDP in Kirkland Lake. The NDP saw flow-through shares not as a valuable tax investment incentive for activities and growth in communities like Kirkland Lake, but rather saw it as a tax loophole that had to be closed. So much for what they have said. The past speaks for itself.
I believe it is very important to review what, in fact, the record shows with regard to flow-through shares in mining across the country. I and the Conservative Party did not start talking and fighting for flow-through shares only today, or yesterday when it was brought up by the Leader of the NDP, or this week when a symposium on flow-through shares was held here, or in the past year when a number of interest groups began lobbying Members of this House. We have been in full support of flow-through shares since they were introduced.
As for myself, Mr. Speaker, the Member for Timiskaming, right from my maiden speech in this House on November 1, 1982, the record shows that I have spoken out for the mining sector. I have supported, and this Party has always supported, this vital investment vehicle which mean so much to so many, not only to the mining industries but, more important, to the many northern resource based communities across this country.
I would like to take a moment to review some of the statements that I have made in this House in the last five and one-half years. In my maiden speech I stated: "Just last week, 390 iron ore miners were laid off. . . in Kirkland Lake". That day I did not hear the NDP speaking out about mining, layoffs, and their concern for the steel workers at this mine. I never heard a word.

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In my speech on the Budget on March 5, 1984,1 said:
Not once in this Budget has there been anything done to help the mining industry in northern Ontario or across this country, Mr. Speaker.
On November 19, 1985, 1 asked a question in the House. I said:
Each year at this time mining and exploration companies have run into difficulties with flow-through shares and exploration work.
It used to be that the end of the calendar year was the last time that you could make use of flow-through shares. It was this Government, this Minister of Finance (Mr. Wilson), and the Minister of State for Mines that changed the system so that flow-through shares would go through until the end of February. Where was the Hon. Member from Ottawa Centre in those days? He was speaking against it. He had no concern whatsoever because there were no political points for him to make. He had no concern for the mining community, be it the drillers, the companies, the small communities or the unemployed because there were no political points in it for him. In that December the Government followed through on this and announced extensions for flow-through shares to the end of February.
On October 29, 1986, as reported at page 858 of Hansard, I asked a question of the Minister of State for Finance (Mr. Hockin) with regard to whether there would be a continuation of flow-through shares. The Member for Timiskaming was again ensuring that flow-through shares would continue, as they did for 1987.
On December 16, 1986, that great critic, the new mining and exploration giant, the Hon. Member for Ottawa Centre, again decided that flow-through shares were not a great deal and need not be continued. In debate in the House on that date 1 said:
Mr. Speaker, I find it shocking-I guess that is the only expression to use- that the NDP would try to eliminate something that has done so much for so many Canadians. Why eliminate something that has developed so many jobs over the last number of years and has brought so much to the economy of the northern part of Canada?
At that time they wanted to eliminate flow-through shares.
In a statement in the House on January 26, I mentioned that in the last part of 1984 there was an increase of 49 per cent in development, an increase of 80 per cent in latter 1985 and in the first quarter of 1986 an increase of 100 per cent in mining exploration across this country. This is attributed to flowthrough shares, but the Hon. Member from Ottawa was still against flow-through shares.
February 16, 1987, is a date that will go down in history because the Leader of the NDP told about 100 supporters in Kirkland Lake-


Mr. Nickerson:: That many?


John Alexander Frances MacDougall: They had 100, but I doubt whether they have them any more after this statement. The NDP said again that flow-through shares were nothing but a loophole that had to be changed. They said there was no need for flow-through shares.
The record of this Member and this Government shows that we have done much to ensure the viability of the mining community. The mining community is in its present state because the Minister of Finance, the Minister of State for Forestry and Mines (Mr. Merrithew) and my colleagues have ensured that flow-through shares benefited Canadians.
On Tuesday I had the opportunity to be at the Holiday Inn when the white knight of the NDP rolled in to address whom the NDP would call the mining magnates, the corporate bums of the world who have so many loopholes and do not have to pay tax. He got up in front of them and said: "We were wrong. We were wrong. We think that flow-through shares are the greatest thing since sliced bread". Why would he do that? The only time he mentioned anything about mining was yesterday and today in the House. It is pure politics. The NDP has no concern whatsoever about the mining community and no concern about small communities across this country. All that we are seeing today is-


James Douglas Manly: That is not true.


John Alexander Frances MacDougall: You will have your chance later.


James Douglas Manly: What you are saying is not true.


John Alexander Frances MacDougall: The truth hurts.


James Douglas Manly: It is false. We have concern for small communities across the country and you know it. We will not take that nonsense from you.


John Alexander Frances MacDougall: It is Tuesday before we hear anything from them about flow-through shares.
What has the Government and the Minister of Finance done? A proposal for the alteration of the flow-through shares investment mechanism was suggested by the Government with its introduction of tax reform. As a result of the proposals in this comprehensive package, finance officials and Government Members consulted with the mining industry to find out the future effect of the proposed changes.
In December, the Minister of Finance announced the changes to his proposals. The mining industry continues to have concerns, so the Government has undertaken to consult further with representatives of the mining industry and with interested groups and individuals across the country on the impact of the changes. Meetings have taken place this week and will continue with individuals across the country.
In the past few months much progress has been made. The button I am wearing today is from the flow-through committee of Kirkland Lake, including Evelyn Kasner, Rene Adams,
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Mayor Joe Mavrinac, and other individuals from our community, who along with prospectors and developers from the Provinces of Ontario and Quebec, and chambers of commerce across the country have been meeting, i and members of my caucus from coast to coast have been meeting with them and with individuals from the investment community. We will be working with them to see what can be done.
It should be pointed out that flow-through shares are not gone, as some Members would like to suggest. On December 16, the Minister announced as part of the Notice of Ways and Means Motion adjustments to the June 18 proposals that pertain to flow-through shares. These include a slower phaseout of earned depletion. Therefore, the depletion rates will be as follows: 33-1/3 per cent until June 30, 1988; 16-2/3 per cent from July 1, 1988, to February 28, 1990, which is extended from June 30, 1989, as had been proposed in the June 18 White Paper.
Earned depletion will be excluded from the CNIL pool and only 50 per cent of Canadian exploration expense will be included in the pool. The additional eight-month extension of depletion will facilitate the adjustment process of the exploration sector to the new rules. The adjustment to the CNIL rules will improve the attractiveness of flow-through shares to many investors who would otherwise have been discouraged from investing in them under the June 18 proposals.
The Minister of Finance also announced that the federal Government will continue to monitor mineral exploration levels in the future, and will introduce appropriate measures, if and when they are needed for exploration and regional development.
Over-all, the change to the CNIL rules and to depletion have the purpose of providing an incentive level high enough to ensure adequate levels of investment in flow-through shares. However, let us also remember that on October 19, the stock market crashed. No one could control the stock market, and the investment funds that would be flowing into flow-through shares completely dried up. Anyone involved in the investment community will say that the financing that was available in June and September, 1987, is not there today because it was lost on the market.
When one considers this additional problem, returning flowthrough shares to 133 per cent may not be the answer. The Minister of Finance wants to consult with those involved in the mining and investment communities to ensure that if adjustments will be considered the proper adjustments are made. It is a simple matter to put the flow-through shares back to 133 per cent, but what happens in six weeks or six months if the investment climate has not changed? Will they admit they were wrong and ask the Minister to make another adjustment?
The Hon. Member who moved this motion has made a magnificent flip-flop, as he and his Party have done on many other issues. Recently the Member for Ottawa Centre was in Quebec City playing partisan politics by stating that Saint John should not have been awarded the federal Government frigate contract. The next day in the House the Leader of his
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Party apologized and said that he was not speaking for his Party. Members of the same Party are doing the same thing on such issues as NATO, tax issues, and nationalization of the banks. Now there is flow-through shares.
Unfortunately, today's debate is not dealing with this issue in a proper manner. I was not sent here to play partisan politics. I was sent here to work for my constituents, for the betterment of the mining community and the betterment of all Canadians. I am not here to spend a day in the House to respond to a Party that suddenly recognizes that there is a mining community, with a Member who until today and yesterday did not realize there was a future in mining. They knew nothing about mining. I can put on the record today that the mining community is not new to me. I will be speaking for the mining community in northern Ontario and across this country for many years to come. I regret to see what has gone on here today. Let me say that I will vote with my Government because we have the answers for the future. We are working on the problems of flow-through shares and we will ensure the future of our communities and the mining sector for many years to come.


Raymond Garneau: Mr. Speaker, I listened very carefully to the speech of the Hon. Member for Timiskaming (Mr. Mac-Dougall).


John Horton McDermid: It was a good speech.


Raymond Garneau: Yes, it was a good speech, indeed, but I was wondering how the Member is going to vote on this motion. He did not say. If he supports the idea of flow-through shares and the symposium to keep the flow-through shares alive, will he vote for the motion? That is my first question.
Second, the Member talked about the market crash. I understand it caused difficulty for everyone. Does the Hon. Member believe that cutting the 33 per cent earned depletion and flow-through shares and increasing the taxation of capital gains to 75 per cent, together with the market crash, are reasons why it will be very difficult to raise money? Due to the fact that the mining sector will have to suffer from the crash and from the change in capital gains, does the Hon. Member believe in the idea of keeping the 33 per cent earned depletion, as requested by the representatives of the mining industry, who came to Ottawa last Tuesday wearing the button "Go With the Flow", which the Hon. Member is wearing on the lapel of his coat? Will the Hon. Member try to convince his Minister to keep this 33 per cent and give the mining industry a chance to raise funds in 1989?


John Alexander Frances MacDougall: First, the buttons were made in Timiskaming and Kirkland Lake, so there is revenue coming into my area.
I would like to answer both the Hon. Member's questions. First, with respect to whether I will vote for this motion, if I thought the motion was a sincere motion, I would vote for it,

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but the motion is not sincere. It is a political motion. It is not an issue that I as a Member, or this Government, would ever want to support. We have been working on this issue away prior to the group coming here to Ottawa. My colleagues have met with the mining committee. We have had discussions with the Minister of Finance. We have been in touch with the mining sectors across the country. They are having meetings with the Ministers' officials in the Department of Energy, Mines and Resources and in the Department of Finance. They are meeting again today. I believe that is the manner in which we should approach the problem.
The Hon. Member thinks that one 133 per cent may be the answer but let us really make certain that is really what we are looking at. Let us make certain that one 133 per cent adjustment is all we need. There may be other parts we have to adjust, but let us make certain. Dollars that would have been invested are no longer there because of the market crash. There are a lot of individuals across this country hurting from that market crash. They do not have the dollars they normally would have to invest in flow-through or junior mining. Let us make certain that we are able to come up with a program, working with the industry, that will be viable for years to come.


Michael Morris Cassidy: Mr. Speaker, I understand that the Hon. Member for Timiskaming (Mr. MacDougall) took a fair amount of time looking at the New Democratic Party's position and far less time looking at his own position. 1 happened to meet with the Mayor of Kirkland Lake when he was here with the delegation from the Save Flow-Through Share Committee earlier this week. He made it clear that he in fact appreciated the position of the New Democratic Party with respect to sharpening up and focusing the flow-through share provisions but at the same time retaining the benefits that are there as is proposed in the motion.
The Hon. Member has come up with a new principle; never look at what a Bill, motion or resolution of the House of Commons actually says but try to discern how it fits on your sincerity meter before you decide whether or not to support it. What this resolution urges is that the initial benefit level of the flow-through share provision not be reduced but be retained to encourage mineral exploration and development by small and medium-sized companies.
I know from the people who were present, Mr. and Mrs. Kasner and Mr. Mavrinac, that people who are prominent and important and know the mining industry in the Hon. Member's constituency want this motion supported by the Hon. Member for Timiskaming. I am very sorry he does not see it that way.
I would point out to the Hon. Member as well that the New Democrats have raised this issue on a number of occasions. I have raised it with the Government. The Government has had lots of time to know the concerns of the mining industry and mining communities. The Government turned turtle between
December and June of last year. Now would be an appropriate time for the Government to indicate that it was in fact prepared to listen to those concerns, instead of which we have stonewalling from the Minister of Finance (Mr. Wilson) and stonewalling from the Hon. Member who says: "Trust me. We are dealing with it behind the scenes". It is almost as limp an excuse as when the Liberals were back-benchers and said the same kinds of things in response to a Conservative and NDP Opposition.


John Alexander Frances MacDougall: Mr. Speaker, I have been waiting for this day. I wonder if the Hon. Member asked the question of the Mayor of Kirkland Lake when the Hon. Member was in the provincial House and his Party closed down the United Asbestos Mine in Matachewan, which totally destroyed that community. Three hundred and fifty jobs were lost and the Hon. Member never once said there was any problem there, none whatsoever. And now he wants to talk about credibility.
Let me make it very clear, I believe in honesty, sincerity and truthfulness. That is number one. To support a motion such as this, there is no possible way.


Robert E.J. Layton: Mr. Speaker, I would like to join in the comment and question period following the intervention in this debate by my colleague, the Hon. Member for Timiskaming (Mr. MacDougall). I recall two or three years ago I was the Member's guest at a very special initiative which he undertook. It was always his goal to achieve improvements to the flow-through share program to which the Government was prepared to respond. In particular, there was a need for access to the resources. As I recall, there were mining installations and refineries in the area of Kirkland Lake which no longer had that efficient access to the resources. The Member was particularly effective in bringing that problem to the attention of not only our Government, but to the attention of the Ontario Government. It was in Kirkland Lake one morning, as I recall, that the entente, with the Mayor and all present, was signed which allowed for the development of those access roads.
Would the Hon. Member comment on whether they have achieved some of the goals he set out for them?


John Alexander Frances MacDougall: Yes, Mr. Speaker, in fact it was a very proud day back in 1985. With the federal-provincial agreement, ERDA, we were able to fund an access road into the Harker-Holloway area of my riding which hooks into Kirkland Lake. That started to develop the American Barrick Resources mine, which will be open this July with 250 full-time employees. There are mining exploration possibilities with the Canamex ramp going down now. There can be a lot of exploration in that way in conjunction with flow-through shares, federal-provincial agreements. Yes, it was a proud day for Timiskaming, and it is going to be a prouder day in July when we open up that function.
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Mr. Deputy Speaker:: Resuming debate with the Hon. Member for Algoma (Mr. Foster).


Maurice Brydon Foster: I am glad to have a chance to speak to the amendment, moved by the Hon. Member for Laval-des-Rapides (Mr. Garneau), to the motion of the Hon. Member for Ottawa Centre (Mr. Cassidy). The amendment spells out in clear detail that we are not just talking about flow-through shares here but about the earned depletion allowance. Every time that I or other Members have put a question to the Minister of Finance (Mr. Wilson) asking him to reinstate the earned depletion allowance, he slides off on the limp excuse that we have flow-through shares. We know that we have flow-through shares. That is not the problem.
The problem is that the Government is phasing out the earned depletion allowance. The motion of the Hon. Member for Ottawa Centre does not spell out the 33 per cent earned depletion allowance which is the crux of the problem facing hundreds of communities across the country with the collapse of the stock market last October and the loss of equity investments. Added to that general problem in the market, especially in junior mines, is the loss of the earned depletion allowance that has been in place since 1982. It has been very successful in creating employment in communities throughout northern Ontario, northern Quebec and many other parts of the country.
The magnitude of the economic activity in those communities could not have been generated in any other way. Every mining community eventually faces the problem of diversification or renewal with new mines. It often happens that new ore bodies are found. Some 10 years ago Timmins was in a very bad way. It is now a booming and prospering community with many new mining activities. Similarly, the Kirkland Lake area was suffering from the lack of new ore bodies.
The Minister and his officials in the Department of Finance argue that this may not be as efficient a way to create economic activity in those mining communities as some other method. What that overlooks is the tremendous social investment that we have in these communities. Hundreds of millions of dollars have been invested in housing, streets, schools, churches, commercial enterprises and so on. There are not many instruments that the federal Government has. The provincial Governments have many more which perhaps deliver the type of payload in terms of economic activity.
In this respect I need only look at the area around Wawa and the mining operations that are opening up there. We faced the problem with the iron steel industry of Algoma Steel cutting back its economic activity by several hundred jobs at the Wawa mines. We now see tremendous mineral exploration and development activity moving down from the Hemlo field into the Wawa area to Batchawana, where there is a great deal of activity.
A couple of years ago we faced the prospect of the possible shutdown of Wawa. The ability to diversify that economy and
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bring in some other means of economic activity were very limited. I attended meetings with respect to what activities could take place there, even though it is not in my constituency. Tourism or a specialized pulp and paper operation and so on were considered. Fortunately, the generation of hundreds of millions of dollars that we have seen through the earned depletion allowance in flow-through shares has made possible important discoveries there. Thus the social costs which have been paid in that community will be used. People will be living there. They will have new jobs in new mining activities.
The earned depletion allowance is used for the most risky part of mining exploration and development. Flow-through shares will do the job once one gets to the development of the mine itself. But at the exploration stage money is needed, with a tremendous incentive. That is why we have a 33 per cent incentive on top of the 100 per cent write-off for those people who want to invest. In Quebec there is a 166 per cent incentive because the province, up to the limits of its income tax system, provides an additional incentive.
We are not only looking at exploration and development activity since in a way it is only the catalyst. Even though we are talking about $400 million or $500 million per year being generated for exploration development, those are small amounts of money compared to what is seen once the ore body is delineated and development starts and contracts are let for sales overseas. I take the example of Elliot Lake and the development of the mines at Denison and Rio Algom which were developed back in the early 1960s. They involved some $300 million in the one case and $400 million in the other just to develop two or three existing mines to put them into modern operations.
If we want to have mines actually being developed three, four, or five years down the road, since these things do not happen over night, then we have to make the commitment of funds now for exploration and development. This is why there has been such a tremendous outpouring and rallying this week at the symposium being held here on flow-through shares and earned depletion allowance at the Renaissance Hotel. Literally hundreds of people across the country who are concerned with economic development in the slow growth regions were here to protest the Government cutting off this program during the next 18 or 24 months. They are here to demand that the Government follow through.
One of the officials there, Mr. Massicotte, who is a councillor in the Elliot Lake town council, is also the president of the Mining Municipalities of Ontario. There were a great many representatives from the Rouyn-Noranda area as well. They pointed out that between 1982 and 1986 the unemployment rate in that area due to intensive mining exploration development activity has fallen from some 26 per cent to 6 per cent. That is nothing short of a miracle. Every mining activity in the country is going through a contraction of employment compared to production of mineral because it has to be more

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efficient, more automated and more safety related. To see the unemployment rate drop in an area which has been mined for several generations now due to the flow-through share and the earned depletion allowance is nothing short of a miracle.
However, there is another aspect to this. Although most of the resource areas are relatively active, prosperous, and unemployment is down, much of that prosperity has taken place in the last 12 months. The employment was there, but the value of minerals, for example, copper and nickel have skyrocketed in the last 12 months. During the first several years after the recession from 1982 until the latter part of 1986 or early 1987, things were not that great, but with the mineral value going up, the economies are blossoming in places such as Sudbury, Hemlo, Wawa, and the Kirkland Lake area. The Minister and the Government should be warned that this prosperity is incredibly fragile.
I talked to a mining exploration development engineer who was doing a lot of work in my constituency in Batchawana, an area along the Lake Superior shore about 50 miles north of Sault Ste. Marie. He stated that they did not know, but they thought that there were five mineral deposits there that may turn out to be of production quality, but whether funds can be generated to carry out the detailed analysis and development is all dependent on this whole system.
1 cannot understand why the Minister of Finance when asked if he would reinstate earned depletion allowance and retain the flow-through shares stated: "The problem is that the equity markets all collapsed with the stock market crash last October 19". We agree that that is one of the problems. But with the equity markets down, the interest down, now is the time to maintain this mechanism for generating hundreds of millions of dollars, some $300 million in Ontario last year, and I understand from an earlier figure back in the early 1980s of only $100 million.
It is very important that the House pronounce itself on this resolution, not only the flow-through shares as stated in the original NDP motion, but also in the amendment put forward by the Hon. Member for Laval-des-Rapides which is crucial. That is the part that is important. It spells out the earned depletion allowance which is so important.
It would be easy to list every municipality that is concerned about this matter. I would like to read a letter from Mayor Thomas Despres, who lives in the constituency of the Hon. Member for Timiskaming (Mr. MacDougall). In the letter Mayor Despres spells out how important this is. How the Hon. Member for Timiskaming can vote against the motion, I am not clear. I wish to read part of that letter from Mr. Despres, the Mayor of Haileybury:
Since the economy of Haileybury and Northern Ontario have grown dependent upon the activities of mining and exploration, it is my feeling that "flow-through" investments have been, and hopefully will continue to be, a major stimulant to both the community of Northern Ontario and Canada as a whole. However, I believe the announced tax reform will retard our economic
progress and leave ourselves vulnerable to economic instability. This can and will result in loss of jobs in areas that have been traditionally economically disadvantaged.
Therefore, will you please-urge Mr. Wilson and the Finance Committee to re-evaluate the effects of tax reform on "flow-through" investments. The livelihood of many northerners is at stake.
That letter was signed by the Mayor of Haileybury. I have similar letters from the Town of Elliot Lake, the Township of Michipicoten, which is the community of Wawa, which call on the Government to reinstate this program because it is essential.
The last point I wish to make is terribly important. A report was given in the last issue of the international mining magazine, The Journal of Mining, which tends to indicate that the reason the earned depletion allowance is being phased out is due to the free trade deal between Canada and the United States. That is very disturbing.
The Americans have different ways of doing regional development. They build military bases, and there are hundreds of them across the states. They have procurement programs, and so on. We have a distinctive way of providing regional development, and I think that we do a better job.
Last week I was in Fredericton with the Liberal caucus task force on free trade. A representative of McCain Foods described the impact that free trade would have on the operations of that company and on the Province of New Brunswick. Someone put forward the argument that the New England states, for example Maine, have a similar land base to New Brunswick and they have had free trade with the rest of the states for years. There is not a poultry operation, egg laying operation, very little dairy or food processing, yet they have the same land mass as provinces like New Brunswick which has a very well developed food processing industry with companies like McCain, and a reasonably prosperous dairy industry. Our system of regional development is our own. But with this deal that is proposed we will not have the freedom.
In an editorial in the Mining Journal of February 5, 1988, published in London, Mr. Karl Glackmeyer, Director of the Prospectors and Developers Association told the mining magazine that the proposed reduction in the earned depletion allowance will effectively eliminate flow-through funding and could put 10,000 jobs in northern Quebec at risk, and will threaten new mining projects. Ottawa's position is that the incentives have to be eliminated in accordance with the recently agreed Canada-U.S. free trade agreement. Mr. Glackmeyer suggests that the reduction be gradually phased out over a decade rather than being cut off over 12 months.
I do not think it is should be phased out at all. Our finance critic has suggested that we commit ourselves for a five-year period, and at that time it is reviewed to see if it is still necessary and useful. The article further points out that $900 million was spent in mining exploration in Canada during the last year.
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That is one side of the coin of the free trade deal as it affects the earned depletion allowance. The second part of the equation, which was pointed out in an article by a financial accounting house in Toronto, is that once it is phased out it will not be possible to reinstitute it in Canada as an incentive for regional development for mining exploration and development without Canada being subject to countervail or other attacks of remedial action by the United States.
That is very serious business. This responsible mining journal states that this tax mechanism that has generated $400 million or $500 million is being phased out because of the trade deal. Another responsible house in Toronto that deals with taxation matters and the free trade arrangement states that because of the free trade deal it will not be able to be reinstituted after it is phased out without retaliatory methods being taken by the United States.
We are puzzled about why the Government is doing it and what will be the long-term implications. Surely they will not be good ones. Also, we are surprised that the Hon. Member for Ottawa-Centre came on side and supported flow-through shares. A couple of years ago the Hon. Member clearly indicated that he was not in favour of earned depletion allowance. However, those of us from mining areas throughout Canada are glad for all the support and assistance we can get. We appreciate the tremendous efforts of the Hon. Member for Laval-des-Rapides who has been fighting for the issue ever since it was proposed a little over a year ago.
The issue is important in my part of the country in terms of employment and in terms of providing funds for an industry involved in an extremely risky business. There is no guarantee that when an exploration program is started it will pay off in the development of a mine, regardless of when. In my opinion, action is imperative now because of a downturn in equity investment since last October. I think that is the best reason beyond all others.
I hope the Government reconsiders its policy, backs down, and reinstates the earned depletion allowance which is so important to hundreds of communities across the resource rich regions of the country.


Steven W. Langdon: Mr. Speaker, I have a question for the Hon. Member for Algoma (Mr. Foster) respecting the nature of the resolution before us today. I direct it to him, because with the harsh words going back and forth between the Conservatives and New Democrats, I thought it might be useful to have a neutral view from the Hon. Member.
If the motion were accepted, as amended or as originally put, it would not be, if I am correct, an expression of lack of confidence in the Government. I would simply like to have confirmation from the Hon. Member that that is how he sees it.
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Also I wonder whether he knows of any better way to put pressure on the Government, and specifically on the Minister of Finance (Mr. Wilson), than by putting the motion through the House today in order to bring about change within the flow-through share regulations proposed by the Minister.


Maurice Brydon Foster: Mr. Speaker, I thank the Hon. Member for Essex-Windsor (Mr. Langdon) for his question. I think he put the case very well. The motion, as amended, reads:
That this House notes that, because of the 33 1/3 per cent earned depletion allowance, the flow-through share tax provision has been instrumental in revitalizing mining communities and regions across Canada, and consequently urges that the initial benefit level of this provision, and, specifically, the 33 1/3 per cent earned depletion allowance, not be reduced but be retained to encourage mineral exploration and development by small and medium-sized companies.
It does not condemn the Government, although many Hon. Members have done that. It does not criticize the fact that the Government has cut back on the program or is planning to cut back in July of this year and on December 31 next year. It simply calls for an expression of the will of the House.
I would want to support it and simply call upon Hon. Members from all parts of the House to support it, not just those of us from mining and resource areas, who are obviously a minority. We do not represent highly populated, urban centres. All we are doing here is trying to express the will of the House with regard to an important regional development matter. I would certainly want to see it supported all the way around the House because it would be a useful expression.
It does not cause the Government to fall. It does not even criticize the Government. It talks about the urgency and need for reinstating fully a provision of the Income Tax Act which is not due for change until July 1.


Mr.   Gameau@: Mr. Speaker, I also have a question for the Hon. Member for Algoma (Mr. Foster). He participated in the symposium which was organized by the mining industry last Tuesday at the Renaissance Hotel in Ottawa.
I am asking the question because I heard the speeches of the Minister of Finance (Mr. Wilson) and of the Hon. Member for Timiskaming (Mr. MacDougall). If we listened to what they said, we would believe that there was no reason to organize the symposium to try to save the flow-through share mechanism. 1 have heard all sorts of nice things about flow-through shares, but in fact the Tory Government will destroy the system by cutting earned depletion by 33.3 per cent in 1989.
Could the Hon. Member tell us why that group had to spend a lot of money to organize that symposium in Ottawa? If the speeches of the Hon. Member for Timiskaming and the Minister of Finance were true, why did they bother to organize it? Could he explain what he heard at the symposium, for the benefit of the House?


Maurice Brydon Foster: Mr. Speaker, the representatives of the various municipalities are not involved in the mining business itself. They were simply here as representatives of their communities

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which had started to pick up because of exploration and development activity and are now starting to go down. They spent a great deal of money to come here with delegations of three or four people. Although my own community of Elliot Lake may not benefit, it has a representative on the mining municipalities committee who happens to be the president.
All these municipalities are very concerned. Everyone knows that even when a mining municipality is booming, as many of them are, they are dealing with a depleting resource. Even though the actual development of the mine may take eight or ten years, if exploration and development activities are going on, they will ultimately benefit from it if in fact there are any new mineral deposits to be developed.
The 200 or 300 people who attended the symposium were prepared to come to Ottawa and to spend two or three days meeting with the various party caucuses and impressing upon them the fragile nature of prosperity in mining communities. Due to international forces, to commodity prices, and to mineral prices going up and down, their prosperity is very fragile. They were willing to come here on their own time and at their own expense to ensure that this earned depletion allowance be replaced. I thought it was a very well handled seminar. Representatives of all three Parties made presentations. The people were devastated and very disappointed when the Minister of Energy, Mines and Resources (Mr. Masse) was not prepared to make any commitment but was only prepared to talk in long-term generalities.
The people were pleased that the Elon. Member for Laval-des-Rapides made a firm commitment to bring this matter before the House as he has done today in the sub-amendment which spells out the 33 1/3 per cent mining earnede depletion allowance. That is the crux of the matter. The flow-through shares exist, there is no question about that. They are not being removed. It is the earnede depletion allowance that is crucial.
The Hon. Member for Laval-des-Rapides was able to make a firm commitment that he would put that issue before the House to give Hon. Members an opportunity to discuss this, particularly Members on the government side. There is no opposition on the opposition side now to it, even though there may have been a year or so ago. The Hon. Member for Laval-des-Rapides made the commitment that he would give Hon. Members of all Parties a chance to put the pressure on the Government, because after all, the Government has 210 or 211 Members and is in a position to reinstate this provision at the will of the Prime Minister (Mr. Mulroney) and the Minister of Finance.
I have not seen the Minister of State for Forestry and Mines (Mr. Merrithew) in the House today. I had hoped that he would be here because I know he is very concerned about this issue. Other Members like the Hon. Member for Timiskaming and the Hon. Member for Timmins-Chapleau (Mr. Gervais) were heavily lobbied by their municipal councils and by the
Hon. Member for Abitibi (Mr. St. Julien), who made a statement the other day.
This is a matter that goes beyond politics. It is a matter of crucial economic importance to those resource communities which want to live, survive and continue to grow just like the rest of the country.


Mr. John Parry (Kenora-Rainy River):: Mr. Speaker, I am very glad to have the opportunity to speak on my Party's motion concerning flow-through shares. It is necessary for Canada's prosperity and economy to continue the arrangements which have produced such impressive results in the mining exploration industry and which have had dramatic, positive repercussions not only across northern Canada but also in some of the major economic centres.
I am glad to say that we have before us a motion which is quite specific and is not phrased in partisan terms or indeed in terms that anyone in the House could find offensive either to conscience or political position. Instead, it is a motion that is substantive, meaningful and addresses an issue of great importance and significance, particularly to the remote areas of Canada, the resource communities, many of which are like the ones I have the privilege of representing in this House.
The motion reads:
That this House notes that the flow-through share tax provision has been
instrumental in revitalizing mining communities and regions across Canada,
and consequently urges that the initial benefit level of this provision not be
reduced but be retained-
No one would argue with the proposition, particularly in so far as precious metal deposits are concerned, that the flowthrough share tax provision has indeed been instrumental in revitalizing communities. The total value of investment by means of the flow-through share mechanism, since it was brought in in 1983, has been in the order of $2 billion. That investment has gone largely to communities which, prior to 1983, were depressed, some to very considerable degrees, not having the exploration and mining development business on which they had grown and prospered in the past.
The interest-rate crisis under the Liberal Government of 1981-82 had largely eliminated the pool of capital which had been flowing previously into mining developments, most of it of a speculative or risky nature. The high interest rate policy pursued by the Liberal Government had soaked up capital, drawing it into short-term instruments and mere financial instruments such as bonds, guaranteed income certificates and term deposits. It had taken away the pool of funds which had previously gone into investments that led to the development of Canadian communities, particularly in resource areas.
Unlike many other corporate tax measures, the flow-through share provisions have extended benefits almost uniformly across northern Canada and, by the interchange of expenditures and the sourcing of materials, services and personnel, right through into major economic headquarters such as Toronto, Vancouver and Montreal. These are the places where
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many of the most profitable parts of the exercise such as financing are in fact carried out. This measure was not one of those corporate tax measures which simply gave funds to those large companies which were already prosperous and left with them funds that could have been recaptured for financing social services, economic development expenditures and regional equalization. By contrast with those sorts of measures, the flow-through tax share provisions spread benefits throughout the economy from community to community across northern Canada.
Because of the well-known multiplier effect which of course is much more significant outside small communities, indeed this measure spread those benefits right through the Canadian economy. Most tax expenditures go to the major centres of corporate activity. They go particularly to Toronto and the Golden Horseshoe. By contrast, this specific tax measure spread benefits right through the economy.
Prior to 1983, the rate of development of new mines in Canada was at a level of about 4 per cent, comparing new mine development with the productivity of existing mines. In the five years or so since this flow-through provision has been in effect, that rate has quadrupled so that we now have, primarily in the precious metals sector, a level of new mine development in the order of 16 per cent.
Over those five years, approximately 60 new exploration and development properties have been started by flow-through share investment, some in locations such as Nova Scotia where there had always been the potential but no development. In 1987 alone, about 35 new mines were opened, most of them small, it is true, most of them not Mom and Pop operations but on the level of 50 or 100 employees. These 35 mines have provided employment in communities across Canada which prior to the coming on stream of these mines had indeed been economically depressed.
The operation of flow-through shares produced regional development without favouritism, without patronage and without political partiality. In truth, it produced economic development in an equitable and democratic fashion. That is indeed the sort of economic development that I and my Party want to see, the kind we will be encouraging and promoting when we form the Government of this country.
That regional development was truly benefiting all the regions of Canada which had previously been economically depressed. There were some exceptions where there was not adequate mineralization to permit profitable exploration.
For those Members of the House who do not represent mining communities and are not familiar with the dynamics of exploration and development, it bears pointing out that most of the actual work in exploration and development is done by junior resource companies and sometimes still by individual prospectors. In many cases, small consortia of individual
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investors group into what are known as junior mining companies. In many cases, the people involved live in the communities which are close to where the exploration is being done. Of course, some of the more highly trained geological and geomorphological consultants operate out of major communities with excellent transportation networks. Yet we see a high degree of turnover of these funds within the mining community.
I noticed that in the past the Mayor of Kirkland Lake referred to large exploration companies as robber barons. Without being too harsh on that judgment, I would say that if there were improvements that could be made in the flowthrough share structure, we in the NDP would seek improvements to increase the percentage of funds generated by the shares to the small and medium-sized exploration companies, the individual junior listings, rather than the major companies and major consortia. The economic development brought by smaller companies is more equitable and more widespread. It represents a better spreading through the economy of that multiplier effect. The profits, when they are made, are generally spent or invested in these or neighbouring communities rather than being repatriated to a major corporate headquarters.
We know that the tax value of flow-through shares has been cut in half, according to the White Paper tax changes. The Standing Committee on Finance and Economic Affairs asked that the depletion allowance be continued to keep the value of shares at the present level, and it bears pointing out that that is an all-Party committee of this House.
In addition to investment in exploration and development, flow-through shares indirectly encourage, over time, more processing in the communities where the mining takes place. Prior to the introduction of flow-through shares, mining communities were experiencing cyclical busts and booms, like any other resource economy, with some communities becoming ghost towns within months. We do not expect that the continuation of flow-through shares is going to lead to elimination of that cycle in resource economies, mining in particular. We know there will always be ups and downs.
As northerners we realize that every boom in mining exploration is going to produce a drop-off period in which there is consolidation, analysis, a period in which financing must be arranged and in which strategic decisions must be made vis-a-vis the development of one property or another. However, we do know we have experienced very popular results in economic terms in the vast majority of those communities where flow-through shares have had an impact on resource development.
I would like to address a point which I think is worthy of note by all Members of this House. Mining communities very

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often have extremely expensive social capital and infrastructure. Obviously they are built in areas of significant mineralization and the very minerals being sought are geologically bound and integrated with the Canadian Shield. I note, for example, that in the community of Red Lake in my riding it costs twice as much to service a single house with sewers and water as it does in the community of Dryden, some 160 kilometres to the south in an agricultural clay belt area where soils are far easier to penetrate. What that means when we have these high levels of investment in social capital is that there has to be a productive economy creating wealth, paying salaries higher than the Canadian average, if people are to enjoy a standard of living on a level with the average across this country. Mining communities, traditionally and almost without exception, face these higher costs and require that steady stream of new development work to produce the wealth capable of providing those services.
Let us also not forget the degree to which mining profits and mining income benefit the exchequers of this country, both provincially and federally. Let us not forget that people are out there even now as I speak drilling in the bush. It is 10, 15 or 20 degrees below zero and they are running drills. They are running drills in the Yukon, around Red Lake, Kirkland Lake and Val d'Or. They are well paid, as they should be, and because of that they are producing very significant returns to government exchequers.
The history of mineral development in this country has of course been cyclical, as indeed it is in almost all other countries. There have been some unattractive phases to it. We had the gold rush with a terrible toll in lives and health. We had the period when financing was virtually unregulated and fortunes were made and lost, largely lost, by means of the operation of unethical financing instruments and unethical financiers. Yet the mineral resource development industry is part and parcel, indeed a keystone, of the varied economic development of Canada.
There is, I believe, a fundamental interest for all Canadians, even in the larger centres, that there be healthy economies in remote communities. With those healthy economies we ensure that remote communities do not become ghost towns and people do not have to move everything and lose all the equity they built up in the community; not only the equity in their homes but all they have contributed to the development of a community. That is the sort of economic development that my Party is seeking and wishes to further in consideration of the extension of these flow-through provisions.
It has been said, and I have not heard the observation refuted yet, that one of the reasons for eliminating flowthrough shares is because it will be found to be a subsidy under the trade agreement the Government signed with the United States. I believe that is not a good reason for eliminating a successful financing provision. It should be a good reason for negotiating again with the U.S. concerning its acceptability, and ensuring that there is some acceptance. As the Hon. Member for Algoma (Mr. Foster) observed earlier, the U.S. does its regional development, bearing in mind its task is much less than in Canada because of the size of the economy and the
smallness of their geography, in very different ways which sometimes have more of a private sector flavour, a more capitalist bent. These include financing military research and distribution of military facilities, which are very powerful regional development instruments nonetheless.
We should look very carefully, and the Government should study this if it has not already done so, at the effectiveness of flow-through shares as a tax creator. As I said, through the multiplier effect I believe it is possible to demonstrate that, unlike the scientific investment research tax credit introduced by the last Government and which ended up costing an enormous amount, some of which was used to finance research in Brazil, we could prove that the flow-through share mechanism has produced an over-all positive cash flow to the federal and provincial Treasuries.
As my Party's spokesman on mines, I had the opportunity on several occasions to bring attention to this mechanism in this House. I note that in my statement of Wednesday, December 9, I quoted the Leader of my Party who was addressing I'association canadienne des prospecteurs et entrepreneurs of Rouyn-Noranda when he said this fiscal measure corresponds well to the objectives of our Party with respect to the creation of jobs and development of resource-based regions. I am very pleased to be able to put that on the record again today.
Let us look at financing for a moment. As the Prospectors and Developers Association of Canada says, many junior companies which rely exclusively on equity financing will be forced out of the market. It is of course easy for people to make judgments on the proliferation of junior mining companies. Yet what it does show is that the participation in the mining industry of this country is being democratized. My Party would like to see it further democratized by making it possible for smaller initial investments to purchase flowthrough shares than has been the case up until now.
Within my riding I have seen some very profound benefits from flow-through shares. There are three areas in particular; the Red Lake gold area which has historically been the second largest producing area in Canada, the Pickle Lake area, and the area around Cameron Lake south of Kenora. I had the opportunity to meet with the mining recorder in Red Lake some three weeks ago and I was amazed by what I saw and heard.
His office was jammed to the rafters with charts, maps and geological analyses. He told me of the ripple effect right through the economy in that community. The reeve has estimated that it has affected approximately 25 per cent of the total economic activity in the community. It has affected the hospitality industry, the supply industry, the maintenance of mining equipment, and the furbishing of provisions right down to a shelter workshop which is doing a booming business making core trays for storing the mining cores. The effects are going right through the community to the point where there are now approximately 26 drills currently operating in Red Lake whereas five years ago there were three.
March 3, 1988

Similarly, the community of Pickle Lake, which had been gravely depressed by the pull-out of the Umex mine, is now again enjoying a very healthy economy because of the number of drills that are running in locations around Pickle Lake. Also, partly as a result of flow-through shares, there are three properties in the Kenora area which are very close to coming on stream.
Let us look at this motion realistically. This motion is not partisan. It is simply supportive of something which has proven successful in economic development. I believe that every Member of this House could and indeed should support this motion.


Don Boudria: Mr. Speaker, I would like to make a brief comment. I am not going to get into the issue of who did flip-flops on what. That has already been raised enough times today. My purpose, rather, is to speak on something which involves my own constituency, the constituencies of other Members in the House, and perhaps that of the Member who has just spoken as well.
Many people today in the debate referred to the mining sector. Indeed, that is quite an appropriate and worth-while topic. However, I want to bring to the attention of Members of the House that the mining sector is not the only one negatively affected by the change in earned depletion allowance on flowthrough shares.
Indeed, one company in my constituency was in the process of preparing a proposal to install a hydro generating station in the constituency of the Member of Parliament for Cochrane- Superior (Mr. Penner). They were also preparing for a similar project in Crysler, Ontario, in the riding of Stormont- Dundas. They informed me earlier this week that unless changes are made to restore the earned depletion allowance to its former status, the entire industry of small hydro-powered generating stations will come to a complete stop.
As well, I understand that consulting firms from Toronto have written to the Member of Parliament for the Willowdale area. Others have made representations to their MPs as well. I have a lot of correspondence on it but because I am making only a brief statement and asking for comment, I cannot recite it all into the record.
However, does my colleague have proposals for small hydrogenerating projects in his riding? Has he heard that that industry will be negatively impacted upon as well by the decision of the Minister of Finance (Mr. Wilson) to reduce the earned depletion allowance on flow-through shares? If he has, would he comment on that? Would he agree with me that the provisions should be restored for those people who are working in the alternate energy sector including the small hydro generating sector?
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It is my opinion that there is a lot more opportunity for job creation, particularly in northern Ontario and remote communities, when one works toward developing mini hydro projects than there is in mega projects for nuclear generating stations with high tension power lines that bring in the power from 500 miles away and provide no local employment. At least these small hydro generating stations have a large job-creating factor in ongoing maintenance and so on which contributes to the local community. I invite my colleague to comment.


John Edmund Parry: Mr. Speaker, I am indebted to the Hon. Member for Glengarry-Prescott-Russell (Mr. Boudria) for his comment. I was beginning to wonder, when he started, what his remarks had to do with the substance or import of my speech. I thought the Hon. Member was simply exercising his quick wit to get something on the record by way of replacement for not getting the opportunity to make a speech on this motion.
However, the Hon. Member raises the matter of mini hydro, small-scale hydro. That, of course, is a completely separate topic but, nonetheless, a fascinating one. Having been given the opportunity, I would be happy to expound on it.
If memory serves me correctly, the proposal in the riding of the Hon. Member for Cochrane-Superior (Mr. Penner) would be Jack Fish Falls. I believe that the Crysler project was the reopening of what had once been a private hydro generating station, which falls under the general heading of low-head hydro development, and that it involved the installation of a new generator within an existing penstock reservoir and feed channel to the generator.
I am not sure whether that involves the earned depletion allowance or a change in capital cost allowance. However, I think the general principle is the same. I am certainly in agreement with the Hon. Member on this general principle. I think that the tax law of this country should be so structured as to favour the provision of localized employment rather than the provision of centralized employment. If there is anything in our tax regime which would favour the construction of a large, centralized generating station, be it nuclear, coal, oil-burning or whatever, over the construction of small localized generating facilities, then those provisions should be eliminated.
After all, it is not simply the fact of large generating stations but the concentrations of capital which are required, the way in which this distorts capital markets by allocating excessive funds to a single project, and also, as the Hon. Member points out, the need for transmission lines which not only deteriorate the landscape but have their own inherent problems.
Therefore, if it is a matter, as the Member suggests, of retaining the earned depletion allowance, of retaining a

March 3, 1988
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previous structure within capital cost allowances, or introducing new rates to favour the provision of local hydro projects, then that is certainly something which I would support.
In my own riding we do not presently have any projects for the construction of low-head mini hydro development. However, we do have a couple of sites which are under study and we do have, interestingly enough, a couple of sites which were previously operated by a private paper company and are now in the process of being sold for redevelopment by what will become private generating utilities.
I think it is worth pointing out the progressive step the Government of Ontario has taken in this instance by mandating the buy-back of hydro by Ontario Hydro from private or small corporate generators so that that can be used to feed into the grid system. This accomplishes a very worth-while effect in terms of load levelling, load utilization and the availability of feed-in buy-back load by co-generators in order to reduce the necessity for constructing these large centralized facilities to cope with big demands.


Don Boudria: Mr. Speaker, 1 rise on a point of order. I made a mistake earlier when I referred to earned depletion allowance. It was accelerated capital cost allowance.


Murray Dorin: Mr. Speaker, the Member will be aware that the only people who can purchase flow-through shares and take advantage of the tax benefits they provide are people in the higher income tax brackets, earning at least $60,000 a year or more.
Since the NDP constantly complain about that, does he believe this is appropriate, or does he agree with his Leader who said a few days ago that there should be other methods available in giving away thousands of dollars to wealthy individuals?
Does he agree with the Member who moved the motion, the Member for Ottawa Centre (Mr. Cassidy), that rather than indicate what is good or bad about the measure the Government should simply scrap it and start over again? The same Member voted against flow-through shares altogether. Later, he saw that there were 25 or 30 ridings where this issue was important and that his Party would have to rethink its position.
1 presume that the Hon. Member's riding is one of those 25 or 30. Therefore, has the NDP changed its position and, if so, why?


John Edmund Parry: First, I must thank the Hon Member for acknowledging, as my Party does, that my riding is an important riding. 1 think ridings in Edmonton are important as well.
It is one of the traditional tactics of adversarial politics in this country to decry the dogma of an opponent rather than acknowledge the pragmatism. I think we should acknowledge that in the matter of supporting the flow-through shares, my
Party is able to recognize there are some things which may be questionable on principle but which are successful in practice.
It is quite true that neither I nor my Leader want to see any individual investor completely wipe out their tax liability by way of investment in flow-through shares. That is one reason why we have supported the Government's alternative minimum tax proposal and indeed have very happily given that tax proposal to the Government.
We must recognize that it was one of the planks of my Party's platform in the last election campaign, rather than something which the Progressive Conservative Party was advocating. I see no conflict here, although I am sure the Hon. Member would be glad to set one up.
[ Translation]


Mr. Deputy Speaker:: The Parliamentary Secretary to the Minister of Finance on debate.


Pierre H. Vincent: Mr. Speaker, I am pleased to take part in this important debate on the tax principles of this Government and this country. But it is also very important to show the hyprocrisy of our colleagues opposite, the Members of the New Democratic Party.
The proposal made in the White Paper on tax reform which was amended in December and then tabled does not in any way eliminate tax incentives for the mining industry; indeed the tax provisions specifically designed for the mining sector remain unchanged. Percentages vary at some levels, and this is important; from 133 they drop down to 100 and this reflects the over-all approach of the tax reform. Thanks to tax reform, nine Canadians out of ten will pay less income tax, and nine elderly Canadians out of ten will either pay less income tax or none at all. We should keep that in mind when we look at the tax reform proposals. We can't pick what suits us and throw out the rest.
I think the Minister of Finance and the Conservative Government have shown that they know how to manage and administer this country. We reduced the deficit, and we managed to introduce proposals for a fairer and more equitable tax system. Once again, Mr. Speaker, tax reform provides for changes in various sectors. The mining industry, like all other small businesses, will see a reduction in its income tax rate. I did not hear anyone mention this particular point today, but it is an important one. The tax rate for mining companies will go down, and that applies to both junior companies and companies with annual profits of over $200,000.
Flow-through shares will be maintained, and they will help mining companies pass on unused tax incentives to their investors. I think we ought to be realistic and be aware of what the situation actually is like.

March 3, 1988

Mr. Speaker, we have talked about regional development practically all day. That is exactly why we have tax reform. The main purpose is to have an Income Tax Act that collects revenue, although I am sure, Mr. Speaker, you do not really like the idea and in fact not many people do. The purpose of the Income Tax Act, however, is not to provide for regional, cultural or social development. The purpose of the Income Tax Act is to collect revenue and hand it over to the departments concerned: Employment and Immigration, Energy, Mines and Resources, DRIE, and so forth. The Departments, which have people who are qualified and who know their business, can then distribute this money in the proper fashion.
Mr. Speaker, I hope Opposition Members don't want to go back to the scientific research tax credit scheme which cost Canadians billions but never did those who needed it any good. Our scientists never got anything out of it. They never got a cent.
The Minister of Finance (Mr. Wilson) and my colleague from Duvernay (Mr. Della Noce) pointed out to me that the then Minister of Finance in that red period-worse than a black period, it was a red period-knew about it but did nothing, and those billions of dollars slipped into the hands of most everybody except those who should have got them. This must be stopped. This is what tax reform is all about.
The Minister of Energy, Mines and Resources (Mr. Masse) emphasized this, the Minister of Finance emphasized it, and I think that on this side of the House we all agreed with that if in the future this Government were to develop for the mining sector or for any other sector, a plan for Western development, a plan for Eastern Canada, Northern Ontario, Quebec. If the mining industry needs special help in line with the policies of the relevant Department, at that point there is nothing to prevent supporting the development of resources, Mr. Speaker. There is absolutely nothing to prevent that. There is not a single act that prevents that.
On the other hand, Mr. Speaker, flow-through shares as we know have done a lot for mining areas. They also to a degree created a supermarket. The investment rate was too high. Everyone who is familiar with that industry agrees that we cannot sustain the rate we had in 1986 and 1987 particularly. That rate cannot be sustained.
Therefore, the fact that the rate has gone from 133 per cent to 100 per cent does not mean the mining industry can no longer grow.
It does not mean either, Mr. Speaker, that this reduction that is in line with the spirit and the framework of the tax reform under which corporate and individual tax rates are going down, that does not mean that this Conservative Government, the Minister of Finance (Mr. Wilson) and the Prime Minister (Mr. Mulroney) do not support regional development.


An Hon. Member:: Quite the opposite!
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Pierre H. Vincent: This Government, Mr. Speaker, invested more into regional development than the previous Government over a comparable period of time. We have been doing profitable investment, Mr. Speaker.
When we refer to regional development, what does that imply? It implies helping businesses outside major centres.
I submit, Mr. Speaker, that Trois-Rivieres is not what could be termed a major centre in Canada.
Mr. Speaker, in the constituency of Trois-Rivieres investments have created nearly 3,000 new jobs since 1984. That is regional development! And the same thing has been done across the land, in every industry and every region.
Mr. Speaker, let them not suggest that flow-through shares equal regional development. There is a Department of Regional Development, there is a Department to look after mines, there is another to look after tax laws; let each one do its job! But let people not think that the Income Tax Act is there to do everything because all that would be left to do would be to discard the 39 other Departments while keeping the Department of Finance, with 39 Ministers of State for Mines, Regional Development, this or that. I think we must be realistic.
Mr. Speaker, allow me also, and I think it is essential to point it out, to refer to the New Democratic Party and its position on flow-through shares.
On February 26, 1986, the Conservative Government introduced measures to improve flow-through shares. In September, 1986, the inquiry on the tax system carried out by the NDP indicated that the tax system is an ineffective tool to promote regional development.
Mr. Speaker, for once in 1986, the NDP agreed with a position taken by this Party and pursued by this Government since its election.
On December 12, the NDP voted against the measures in committee. On December 16, the Hon. Member for Ottawa Centre (Mr. Cassidy) which we had the pleasure to hear today asked for the elimination of flow-through shares in this House. That was on December 16, 1986, less than two years ago, in fact some fourteen months ago. Some 14 months ago, the Hon. Member for Ottawa Centre who introduced a motion today asked in this House that flow-through shares be eliminated. And this is not all, Mr. Speaker.
On February 14, 1987, about a year ago, the NDP leader criticized flow-through shares saying that they were a mechanism through which the rich avoided to pay taxes. That was on February 14, 1987.
Mr. Speaker, you know that on behalf of the NDP leader, the Hon. Member for Ottawa Centre gives frigates to Quebec when he is in Quebec and gives them to New Brunswick when he is over there. Mr. Speaker, we would not have enough frigates with the NDP! They would need some in every province because they distribute them all over the place. The

March 3, 1988
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NDP thought that the media did not listen to what was going on in the other provinces. Unfortunately, they missed the boat that day. This is the position of the NDP, Mr. Speaker.
On February 16, 1987, the Hon. Member for Regina East (Mr. de Jong) stated that flow-through shares should be replaced by another program outside the tax system. In 1987, they agreed with us. However, the Hon. Member went further than we did. He did not say that flow-through shares should remain at 100 per cent and that, if the mines needed some other assistance, the Government would provide it. He said that we should scrap flow-through shares and do something else! That is not what we are saying, Mr. Speaker. We are keeping the flow-through share mechanism because it is a useful tool for mining companies and investors and provides a reasonable rate of return. Thus, the people to whom the New Democrats refer when they say that the rich do not pay any taxes, in other words, people who earn $50,000, $60,000 or $80,000 a year and who use flow-through shares as a tax shelter . .. First, the NDP said: Tax them, they are not paying their share of taxes! But now they have just told us: No, leave them their tax shelter!
There is a phrase in English about people who speak from both sides of their mouth, but I think that it would also apply in French. The NDP took a position one year ago in support of taxes for people with high incomes and against tax shelters, but one year later, nearly to the day, they are saying the exact opposite, beginning with their Leader! Yet, on July 21, 1987, the Leader of the NDP promised not to change the policies of his Party simply because he was gaining in the polls.
Mr. Speaker, the Leader of the NDP has not changed since 1987 or since 1984; it is still Ed Broadbent. He was the one who said a year ago: Tax ...


Don Boudria: The Hon. Member for Oshawa!


Pierre H. Vincent: My colleague is right. The Hon. Member for Oshawa. Thank you for calling me back to order. For once, the Hon. Member is right, Mr. Speaker. I shall even name him: the Hon. Member for Glengarry-Prescott-Russell (Mr. Boudria). As he is right for once, Mr. Speaker, 1 have to give him his due.
As I was saying, Mr. Speaker, this same Member for Oshawa ... I can see that the Liberal Party nearly shares my views! This same Hon. Member for Oshawa, as the Hon. Member for Glengarry-Prescott-Russell pointed out, was saying in 1987 that his Party would not change its policies because of the polls. That was six months ago, Mr. Speaker. They have succeeded in completely reversing their stand since then. First, they want to tax high incomes and eliminate flowthrough shares, and six months later, they want to give plenty of tax shelters to high income taxpayers and maintain flowthrough shares. This is the policy of the New Democratic Party and this is how they want to gain the favours of Quebec and Canadian voters in any way they can.
Mr. Speaker, when a party is elected to govern the country, it has to make decisions. 1 believe that the Conservative Government, led by our Prime Minister (Mr. Mulroney), has made decisions for the general welfare of the Canadian population and to give all Canadians a better quality of life. A better quality of life means creating new jobs; it means ensuring that money is invested across the land, in every region; it means ensuring that people have a lower tax bill. That, Mr. Speaker, is what quality of life is all about. This is what the Conservative Party and the Conservative Government under the Prime Minister have been doing for three years.
Mr. Speaker, allow me a last quote.
On September 17, 1987, again, the Hon. Member for Ottawa Centre, recognizing the political nature of the matter of flow-through shares, began his turnaround.
While in July, Mr. Speaker, the Hon. Member for Oshawa (Mr. Broadbent) had said: We change nothing, in September the Hon. Member for Ottawa Centre said: Well, flow-through shares are not that bad. Then-it must have been in October or November-he went to Quebec and said: The frigates are coming to Quebec. While his Leader was in New Brunswick saying: This makes a lot of sense for New Brunswick-


An Hon. Member:: And now he will go to Val-d'Or and suggest-


Pierre H. Vincent: -and now, I hope others will not be travelling across the country, Mr. Speaker, because we will have a problem with those frigates.
Mr. Speaker, in November 1987, the NDP minority report on tax reform recommended that the tax system be used to promote regional development.
Mr. Speaker, the NDP report that came out in November 1987 flies in the face of the national hearings they held in 1986. Because they held national hearings, they asked all Canadians for their views on the Canadian tax system. And as you will remember, Mr. Speaker, they made an awful noise with the tremendous work they had been doing to get the views of Canadians on the tax system. They had the views of Canadians that, lo and behold!, paralleled those of the Conservative Government, and now, one year later, they tell Canadians something else. That is the approach we took, the most profitable option.


Mr. Rossi:: And then some more!


Pierre H. Vincent: I cannot answer that question, dear colleague.
It would seem that our small gang is more intelligent, there must be political gains to be made in some ridings of Quebec and elsewhere in Canada if we support flow-through shares, and since more people work with flow-through shares than there are rich people we will find a way to handle this. And that, Mr. Speaker, is the position of the NDP.
March 3, 1988

So in conclusion, Mr. Speaker, allow me to say that I will vote against this motion and against the amendment of the Liberal Party because-


Carlo Rossi: Careful now!


Pierre H. Vincent: -I said so at the beginning of my remarks and I will repeat for the benefit of my colleague opposite: regional development comes under the ministry responsible for regional development, not under the Department of Finance. And we do not want to experience with the flow-through shares what the Liberal Party had to experience as a result of the scientific research tax credit which ended costing taxpayers a bundle but did not serve Canadians as had been expected.


Mr. Deputy Speaker:: Questions or comments. Debate. The Lion. Member for Cochrane-Superior (Mr. Penner).


Mr. Keith Penner (Cochrane-Superior):: Mr. Speaker, it is my conviction that when this particular tax incentive was first introduced during the last Liberal administration, I doubt very much whether the then Minister of Finance really had a full realization of just how successful this measure would become as a tool of regional economic development. I think most Members in the House will know that if one did a comprehensive history of regional development policies in the country, one would discover that none of them have been particularly successful. It is not an area in which any Government has a particularly enviable or strong record.
There have been all sorts of experiments. There have been all sorts of endeavours. On occasion, large sums of money have been directed toward regional development policies and programs. But we know that none of them have worked particularly well. When Mr. Lalonde brought in this tax incentive, I do not think for a moment that he realized that here was a major tool of regional economic development and that we were going to go a long way in solving the problems in the remote resource-rich regions of the country.
That is what has happened. It has become a major tool of regional economic development. It began modestly. But, today, in remote resource-rich regions of Canada such as northern Ontario, northern Quebec, Newfoundland, north of 60 and in the northern parts of the other provinces, it really is the only thing standing between economic depression or something close to it and a relative degree of economic activity and some prosperity.
For example, when we look at the statistics for Ontario, we see that unemployment is down and growth is up. I was at Mr. Peterson's dinner on Tuesday evening. He is taking full credit for all the activity that is going on in Ontario. I do not remember him mentioning at all that the federal Government had much to do with it.


Raymond Garneau: Because it is the truth.
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B. Keith Penner: It is the truth that the federal Government has contributed next to nothing to the prosperity of Ontario. But certainly the federal Government has done not much at all in the North where the rates of unemployment are considerably higher than they are throughout Ontario generally.
The point I am making is that northern Ontario is not participating in the over-all prosperity of the province. Our rates of unemployment are well above the national average. We are having serious difficulty in maintaining our population and enjoying the prosperity that the other citizens of the province enjoy.
The one thing that we do have going for us is a great deal of activity in the mineral exploration business. It is evidenced if one goes to the City of Timmins. It can be seen in smaller communities such as Longlac and Geraldton. Throughout the North one can name any number of communities in this regard. There is some economic activity being generated. The question is: Why is the mineral exploration business so active? Why is it contributing in such an unbalanced and significant way to the economy of the resource-rich regions? The answer is simple and straightforward. The answer is that the flowthrough shares joined with the mining earned depletion allowance is what is having that effect.
A Sudbury chartered accountant calls this tax incentive, this flow through, the great unknown economic program. Austin Davey, the gentleman in question, is quoted in a journal called Northern Ontario Business as having said:
The tip of the iceberg is the tax incentive, the rest of the iceberg is jobs and
economic diversification in northern Canada.
In 1987 $1.1 billion was raised as a result of this tax incentive through the flow-through shares. Because mining exploration is labour intensive and because the mines are found in the North, the mechanism of flow-through shares is employing thousands of people in regions such as northern Ontario and the other ones I mentioned earlier.
I am participating in this debate simply to urge the Minister of Finance (Mr. Wilson) in the strongest terms that I can find: "Please, do not destroy a tax incentive which is contributing so much to regional development".
The money available for exploration through the flowthrough shares goes specifically to small and junior resource companies. That money is going to disappear entirely when this tax advantage becomes no more advantageous to the company in question or to the purchaser of the share than does buying an RRSP.
The Minister of Finance knows that it is not the big mining companies which are applying the pressure to preserve this investment scheme. Without flow-throughs the senior companies will be able to dominate the scene. They will be able to decide when exploration will take place. That will depend entirely on what is the world price of the mineral. If the world price goes up then there is exploration activity from the seniors. If the price goes down then the seniors become inactive and tend to put their money into other areas.

March 3, 1988
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Once again, if we do not have the flow through and the mining earned depletion allowance, we are going to be back again into the boom and the bust cycle. That is something that we have been trying to avoid over the years with a variety of experiments in regional development.
This morning the Minister of Finance argued that it was not his tax reform policy that was the reason for the decline in investment for mining exploration. It is on the decline. He said, "Well, do not blame me. It is the state of mind of investors that has been caused by the stock market crash of last year". The Minister stated, "Investors are shy about buying equity, especially in areas like mining where the risk is high". I wish to tell the Minister of Finance that he has it all wrong. It is precisely because of the current attitude to the stock market that we need the full advantage of the flowthroughs. Flow-throughs become much less attractive if we do not have the 33 per cent mining earned depletion allowance. If we do not have that then junior stocks, which are among the highest risk investment in the stock exchanges, become totally unappealing to the investor. The advantage is needed to a greater extent today rather than when the market is buoyant. It is today we need it, and the Minister's explanation is very misleading.
To support this argument, I wish to refer to Mr. John Farche, President of the Prospectors and Developers Association, who makes the following statement in support of the view that I have just presented. He states:
At present, flow-through is the only viable means of raising-capital for exploration. Neither of the normal alternative financing sources will provide the funds we need.
Equity financing is crippled under present market conditions. And, in their current profit and cash positions, major companies will not have enough funds to keep up the momentum on exploration.
He further states:
Close to $33 million were raised after the October crash for expenditure before the MEDA phase-down in July. This confirms the fact that flowthroughs can perform, despite the market conditions, and that they are being crippled by the impending tax reform measures.
To emphasize and underline the point, I understand why the Minister of Finance would say, "Don't blame me. Look somewhere else", but he is wrong. It is not the state of mind toward the stock market at present which is causing a decline in investment in mining exploration, it is because of the tax reform proposal which will do away with the 33 per cent MEDA.
For resource regions of this country the full tax advantage of flow-throughs is just as important as is the Auto Pact to the industrial regions of the country. It is just as important as the
Auto Pact is to southern Ontario and to the automobile plants in the Province of Quebec.
I wish the House to know that, because of the flow-through shares, because of the mining earned depletion allowance, exploration activity in Canada has increased dramatically. There has been a 222 per cent increase in footage of diamond drilling in the last five years. Exploration efforts, largely due to the flow-through share financing, have brought about 34 new mines which are now committed to come on stream in 1987 and 1988. That is five times the typical average number of new projects, if that is taken over a period of time of the last 35 years. In addition, another 58 projects for future production are due to come forward as a result of the flow-through shares.
My hon. colleague, the Hon. Member for Glengarry- Prescott-Russell (Mr. Boudria) referred to another area, quite apart from mining, and this is a hydro project in my constituency at Yellow Falls on the Matagami River. The site location was approved by the Ministry of National Resources, a pre-feasibility study funded by the Ontario Ministry of Energy was completed, and the project was considered feasible. It is estimated that this small project in my constituency where jobs are desperately needed will create 50 man-years of employment to complete the project. The barrier which recently appeared was the new federal Budget which eliminated rapid depreciation or flow through and it could render the Yellow Falls project unfeasible.
I have many more arguments to advance, Mr. Speaker. I will conclude by saying to the Minister of Finance: "You are a reasonable man. You know the reality of the resource regions. Please reconsider, and do not spoil a tool for regional development which is as important as it has become".


Mr. Deputy Speaker:: It being 5.45 p.m., it is my duty to interrupt the proceedings and put forthwith every question necessary to dispose of the business of supply in accordance with Standing Order 82(9).
The question is on the amendment. All those in favour of the amendment please say yea.


Some Hon. Members:: Yea.


Mr. Deputy Speaker:: All those opposed please say nay.


Some Hon. Members:: Nay.


Mr. Deputy Speaker:: In my opinion the nays have it.
And more than five Members having risen:


Mr. Deputy Speaker:: Call in the Members.


Mr. Speaker:: I declare the amendment lost.
The question is on the main motion.


Nelson Andrew Riis: Point of order, Mr. Speaker. I suspect you will find there is unanimous consent to apply the last vote to this motion as well.


Douglas Grinslade Lewis: Mr. Speaker, I think that might be acceptable to the House with the exception of my colleague from Temis-camingue who I believe would like to vote with the Government on this motion.
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Gabriel Desjardins: Mr. Speaker, on the main motion I want to vote with the Government and against the motion of the New Democratic Party.


Mr. Prud'homme:: Where is Mr. St. Julien?


Mr. Speaker:: Is that agreed?


Some Hon. Members:: Agreed.
The House divided on the motion (Mr. Cassidy), which was negatived on the following division.
(Division No. 315)
++YEAS
Members
Allmand	Henderson	OuelletAlthouse	Hopkins	ParryBerger	Isabelle	PennerBlackburn	Jewett	Pepin(Brant)	Langdon	Prud'hommeBoudria	Manly	RiisCassidy	McCurdy	RossiCopps	McLaughlin	SkellyFulton	Mitchell	Waddell-34Garneau	Murphy	Gauthier	Nicholson	Guilbault	(Trinity)	(Saint-Jacques)	Nystrom	Heap	Orlikow	NAYS	Members	Andre	Fennell	MarinBlais	Fretz	MazankowskiBlouin	Fricsen	McCrossanBosley	Gass	McCuishBrightwell	Girard	McDcrmidBrowes	Gottselig	MinakerCadicux	Gustafson	MitgesCaldwell	Hamilton	NickersonCardiff	Hawkes	OberleChampagne	Hces	Pennock(Champlain)	Hicks	PetersonClark	Hnatyshyn	Pietz(Brandon-Souris)	Hudon	PlourdeCochrane	Jacques	PorterComcau	Jardine	RavisCooper	Kempling	RcdwayCossitt	Kilgour	ReidCote	King	St. Germain(Lac-Saint-Jean)	Leblanc	ScottCrofton	Lcsick	(Hamilton-Wentworth)Crosbie	Lewis	Sparrow(St. John's West)	MacDonald	SulukCrouse	(Kingston and	TardifDantzer	the Islands)	(Charlesbourg)Darling	MacDougall	ThackerDella Noce	(Timiskaming)	TowersDesjardins	MacKay	TupperDorin	Malone	
Edwards

March 3, 1988
Turner	Supply White	Wilson(Ottawa-Carlcton)	Wilson	(EtobicokeVan De Wallc	(Swift Current	Centre)-83Vankoughnct	-Maple Creek)	Vincent Weiner	
It being after six o'clock p.m., this Elouse stands adjourned until tomorrow morning at 10 a.m., pursuant to Standing Order 3(1).


Mr. Speaker:: I declare the motion lost.
At 6.15 p.m. the House adjourned.

Friday, March 4, 1988


[Stage Direction]
Prayers