1988-05-26

[Stage Direction]
37 Elizabeth II

[Stage Direction]
Published under authority of the Speaker of the House of Commons by the Queen's Printer for Canada
Available from Canadian Government Publishing Centre, Supply and Services Canada, Ottawa, Canada K1A 0S9.
[Stage Direction]
Thursday, May 26, 1988
[Stage Direction]
Prayers


Hon. Bob Kaplan (York Centre) moved: for leave to introduce Bill C-291, an Act to amend the Supreme Court Act (references by a Lieutenant-Governor in Council).


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


Some Hon. Members:: Agreed.


Robert Phillip Kaplan: Mr. Speaker, this is an amendment to the Supreme Court Act in an important respect. The Act now provides for references to the Supreme Court of Canada for interpretation of Bills, but under the Act they can only be made by the federal Government.
The purpose of the amendment is to open the door so that provincial Governments can also refer questions to the Supreme Court of Canada. After all, if the Supreme Court is the arbiter between the two levels of government, both levels should have equal access to it. This is extremely relevant these days, Mr. Speaker, and I hope that the Bill will commend itself to all Members.


Mr. Speaker:: I suppose we can say we certainly received the message.


Some Hon. Members:: Oh, oh!


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

Mr. Don Boudria (Glengarry-Prescott-Russell):: Mr. Speaker, I have a petition signed by a number of constituents from the riding of Glengarry-Prescott-Russell and from the riding of Stormont-Dundas.
These Canadians ask that the Government move ahead expeditiously with Bill C-51, which is aimed at reducing the number of Canadians who die from cigarette smoking.


Don Boudria: Mr. Speaker, I have another petition signed by a number of constituents, again from the great riding of Glengarry- Prescott-Russell.
These constituents are protesting plans by the Canadian National Railway to shut down the Montreal to Ottawa rail line through my constituency. They ask the House of Commons to protest, in order to ensure that this rail line which the Government and CN want to shut down remains open for the benefit of the citizens of the great riding of Glengarry- Prescott-Russell.
I totally support their petition.


Mr. Ross Belsher (Fraser Valley East):: Mr. Speaker, I have the duty and honour to present a petition on behalf of approximately 3,100 people from the lower mainland of British Columbia.
The petitioners are asking this House to protect the rights of the unborn through appropriate legislation.


Mr. Iain Angus (Thunder Bay-Atikokan):: Madam Speaker, I have two petitions to present this morning. The first one, pursuant to Standing Order 106, has been certified correct as to form and content by the Clerk of Petitions.
It deals with the concern of residents of the community of Atikokan in my riding because they have been left off the eligibility list for the northern residents' tax deduction. They point out that many of the communities left off the list, like theirs, share identical environments. Because they are northern isolated communities they pay increased costs for food, fuel,

May 26, 1988
Order Paper Questions
and housing, and the tax deduction was designed to alleviate the added costs of living in these isolated communities.
The petitioners humbly pray and call upon Parliament to declare the Township of Atikokan and the surrounding area to be eligible for the northern residents' tax deduction. There are approximately 240 names on this particular petition.


Iain Francis Angus: Madam Speaker, the second petition is one of many that I have tabled in this House over the last year. It is certified correct as to form by the Clerk of Petitions and is signed by residents of the Thunder Bay-Atikokan riding and the Thunder Bay- Nipigon riding.
The petitioners call upon the Parliament of Canada to allow the people of Canada the opportunity to accept or reject the proposed free trade agreement during a national general election.


Mr. Jean-Robert Gauthier (Ottawa-Vanier):: Madam Speaker, it is my duty to present to the House a petition signed by many Canadians, most of whom are public servants working for the Government who care about official languages and who teach Canadians the second language. The petitioners humbly state that the Government of Canada, represented by the Treasury Board, has not recognized the principle of fair and reasonable course preparation time for federal language teachers and that this situation is seriously undermining the policy of bilingualism in Canada.
Therefore, the undersigned, your petitioners, ask Parliament to mandate the Treasury Board to negotiate a collective agreement with the federal teachers in the ED group that will provide 15 hours a week of course preparation time for language teachers.


Mr. David Orlikow (Winnipeg North):: Madam Speaker, I have the honour to present two petitions, pursuant to Standing Order 106.
The first is signed by a number of people in my constituency. It says that the Conservative Government had no mandate from the Canadian people to conclude a free trade agreement with the United States. Therefore, 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 through a national general election.
The second petition is similar and is signed by residents in Winnipeg. It says that the Prime Minister (Mr. Mulroney) promised in the course of bilateral trade negotiations that Canadian sovereignty would riot be compromised and,
therefore, they pray and call upon Parliament to dissolve and allow the people of Canada the opportunity to accept or reject the proposed free trade agreement through a national general election.


Mr. Dennis H. Cochrane (Moncton):: Madam Speaker, pursuant to Standing Order 106, it is my honour and privilege today to present a petition containing the names of 39,894 New Brunswickers. They ask that the House of Commons consider the tragic effects of the recent decision of the Supreme Court of Canada and take immediate action to protect, defend, and respect the rights of unborn children.
The petition contains names from all over the Province of New Brunswick: 2,841 from my constituency of Moncton, over
11,000	from Madawaska-Victoria, over 3,200 from Gloucester, and over 1,600 from the constituency of Westmorland- Kent, as well as all other ridings represented by the signatures. The total petition represents over 5.5 per cent of the total population of the Province of New Brunswick.
The New Brunswick Right to Life Association, the sponsor of this petition, calls upon all legislators to respond to the wishes of the majority of Canadians by enacting legislation to protect the basic rights of the unborn child.


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. Jim Hawkes (Parliamentary Secretary to Deputy Prime Minister and President of the Privy Council):: Mr. Speaker, the following questions will be answered today: 319 and 322.


Mr. Boudria: Is there a government publication entitled Canada's Seniors-a Dynamic Force and, if so (a) did the Government spend money on its production and, if so, what was the cost of (i) research (ii) preparation (Hi) publishing (iv) printing (v) distribution (b) what is the total number of copies printed (c) were any private consultants, printers or other non-governmental groups or individuals involved in the preparation and, if so, in each case (/) what was the name of the individual or firm involved (ii) what was the value of each edhtraet awarded if any (tii) which contracts, if any, were awarded by tender?


Hon. George Hees (Minister of Veterans Affairs and Minister of State (Seniors)):: Yes, a government publication entitled Canada's Seniors: a Dynamic Force was developed for Senators and Members of Parliament.
May 26, 1988

(a)	(i) and (ii) For manuscript and design development including consultation in Ottawa, document review, preparation of English and French copy, production management from design development to mock-up $21,122.20
(iii)	For creating art boards including typesetting, galley editing, corrections, layout and pasteup for English and French copy $6,071.00
(iv)	First edition. For production of 2,000 bound tumble format copies including development of print specifications, film preparation, printing and binding $11,040.00 Second edition. For printing of additional 10,000 copies $13,069.12
(v)	Distribution to Senators and Members of Parliament was managed within Health and Welfare Canada with no charges allocated.
(b)	First edition: 2,000 copies; second edition: 10,000 copies.
(c)	(i) First edition: Manifest Communications Limited; second edition: Love Printing Limited
(ii)	One contract awarded in the amount of $38,233 for the development of the first edition.
(iii)	The contract for the second edition was awarded by tender.


Mrs. Collins: 1.	Since the passage of Bill C-91 in June, 1986, have any mergers been reviewed by the Director of Investigation and Research and, if so, what number (a) have been reviewed (b) have been referred to the Competition Tribunal for resolution (c) are still pending?
2.	Is the main focus of the Director's review on compliance?


Hon. Harvie Andre (Minister of Consumer and Corporate Affairs):: 1.	(a) Throughout the period from June 19, 1986 to March 31, 1988, the Director of Investigation has examined 186 merger transactions in a significant fashion (defined as two days or more of examination). As of March 31, 1988, examinations were continuing on 25 of these transactions.
(b)	The Director has made application to the Competition Tribunal in three instances since June 19, 1986.
(c)	As of March 31, 1988, two applications before the Tribunal were still pending.
2.	The Director takes a compliance-oriented approach in the administration of all the provisions of the Competition Act and in particular to his review of merger activity for which the compliance approach is particularly well suited.
The new legislation has encouraged parties to a merger to co-operate with the Director in resolving concerns he may have on the competitive impact of a particular merger. Equally, timing constraints are a factor both for the parties, who typically face a narrow window of opportunity for the purchase or sale of the assets or shares in question and for the Director,
Excise Tax Act
whose assessment of the impact of the proposed merger must be completed in a rather short time frame.
The objective of the Director's compliance approach is to offer a broad spectrum of alternatives to ensure that every reasonable opportunity is provided to business persons to structure their affairs within the parameters of the law.
The Competition Act provides the Director with broad discretion in the resolution of merger matters. There are six mechanisms, or compliance instruments available: advance Ruling Certificates (ARCs); advisory Opinions under the Program of Compliance (which may in certain instances be given in relation to a restructured transaction); monitoring (as allowed for by the three-year statutory period in which a merger may be challenged); undertakings; applications for Consent Orders; and contested applications before the Tribunal.


Frederick James (Jim) Hawkes: I suggest, Madam Speaker, that the other questions be allowed to stand.


The Acting Speaker (Mrs. Champagne):: The questions listed by the Hon. Parliamentary Secretary have been answered. Shall the other questions be allowed to stand?


Some Hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House proceeded to the consideration of Bill C-117, an Act to amend the Excise Tax Act and the Excise Act, as reported (without amendment) from the Standing Committee on Finance and Economic Affairs.
The Acting Speaker (Mrs. Champagne):: Is the House ready for the question?


Some Hon. Members:: Question.


Mr. Nystrom:: Madam Speaker, I had assumed that there would be someone from the Government leading off this debate on the Excise Tax Act. If that is not the case, then I would like to say a few words.


The Acting Speaker (Mrs. Champagne):: We have to dispose of the concurrence motion, and then we can go into debate on third reading.


Hon. Doug Lewis (for the Minister of Finance) moved: that the Bill be concurred in.

May 26, 1988
Excise Tax Act


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


Some Hon. Members:: Agreed.


Some Hon. Members:: No.


The Acting Speaker (Mrs. Champagne):: All those in favour will please say yea.


Some Hon. Members:: Yea.


The Acting Speaker (Mrs. Champagne):: All those opposed will please say nay.


Some Hon. Members:: Nay.


The Acting Speaker (Mrs. Champagne):: In my opinion the yeas have it. The motion is agreed to on division.


[Stage Direction]
Motion agreed to.
Philip Derek Lewis: that the Bill be read the third time and passed.


Mr. Pierre H. Vincent (Parliamentary Secretary to Minister of Finance):: Madam Speaker, Bill C-117 contains the requisite provisions to implement the changes in federal sales tax and excise tax announced by the Minister of Finance in his respective Budgets on February 18, 1987 and February 10, 1988, in the White Paper on Tax Reform on June 18, 1987 and the document on tax reform on December 16, 1987.
The Bill contains a number of important measures whose purpose is to increase tax revenue and deal with certain technical aspects of the legislation. Most of the provisions for increasing revenue are part of the Government's tax reform program. These changes and the changes in corporate income tax will be used to offset the short-fall in revenue from personal income tax as a result of tax reform. Madam Speaker, as you know, it is imperative to adopt Bill C-117 as soon as possible, in order to amend federal sales tax legislation and remove certain inequities it contains. Madam Speaker, I would ask the House to adopt this Bill as soon as possible.


Mr. Alfonso Gagliano (Saint-Leonard-Anjou):: Madam Speaker, I welcome this opportunity to take part in the debate this morning on Bill C-117, whose purpose is to legislate a number of historic tax increases. The Parliamentary Secretary said earlier that he would like to see this Bill pass as soon as possible. I may remind him, and I may remind this House, that we are talking about the tax increases announced in the February 1987 Budget. That Budget contained the 12 per cent tax on snacks, candy and ice cream, which became effective on July 1, 1987, and this means the Government is going to take the following amounts out of taxpayers' pockets: In 1987-88 it will be $60 million, in 1988-89, $80 million, and so on. The same budget announced a 4 per cent increase in the excise tax on cigarettes and tobacco, effective the day the Budget was brought down, on February 19, 1987, and this will take $70
million out of taxpayers' pockets in 1987-88 and another $7 million in 1988-89, and so forth, Madam Speaker.
The same budget provides for a $4 increase in the air transportation tax, effective on May 1, 1987 and estimated to raise $45 million for the Treasury by August 1, 1987 and $50 million in 1988-89 and following years. The same budget raised the sales tax on leaded gas to the same level as for unleaded gas, effective April 1, 1987, which means another $30 million annually for the Treasury, taken out of taxpayers' pockets!
And so this Bill keeps increasing taxes. After a long wait, after many promises, the Minister of Finance finally tabled his White Paper on Tax Reform in June 1987. At the very moment the White Paper on Tax Reform was tabled, this document on which Canadians were asked to consult, in June 1987, the Minister-and he did it again in December 1987- raised taxes again. He introduced what was referred to in English as "the talk tax". There is now a 10 per cent tax on long distance calls. Imagine, Madam Speaker, people who live in rural areas, farmers who have to make long distance calls whether they like it or not, and now, since 1987, they have to pay this tax. Add to this a 2 per cent increase in the tax on cable TV, from 8 to 10 per cent during the 1987 tax reform, which became effective on January 1, 1988. This adds up to $870 million taken out of taxpayers' pockets by the Conservative Government for 1988-89 and $945 million for 1990 and $1 billion for 1990-91.
The number of taxes this Government is dumping on Canadian taxpayers is outrageous! Imagine, the elderly, the handicapped and all other groups, including farmers, who now have to pay a tax on long distance calls they cannot avoid. It's not like living in the city where you can ... And even in urban areas, and I am thinking of Montreal East, in Riviere-des-Prairies, the present riding of Mercier and in the new riding of Anjou-Riviere-des-Prairies, people still pay long distance rates if they call Laval, which is right next door, across the river. And in addition to being penalized by having to pay long distance rates within an urban area, they are penalized even more by this tax.
As part of the same tax reform, before the consultation process was complete, the Minister of Finance increased the tax on paint and wallpaper from 8 to 12 per cent, effective January 18, 1988, which increased the Government's revenue by $60 million per year. As part of the same tax reform, with a little creative accounting the Minister of Finance produced something like $1.6 billion which, in fact, does not mean a thing, because it does not apply to all the other years, but he wanted to cook the books to give Canadians the impression that his deficit was gradually diminishing. He just changed the rules of the game, and he said:
From now on, employers, the people who create jobs, will pay the Government every two weeks instead of every month,
May 26, 1988

and in this way the Government will get the money faster and the money will be coming in every month although at year end it boils down to the same thing, except for this one-time gain of $1.6 billion. This has definitely changed all the rules and skewed all the figures, and that is why the Minister claims he reduced the deficit, although if we look at the national debt and the annual deficit, there has been an increase instead of a decline.
Madam Speaker, the same rule is now being applied to federal sales tax. Remittance of the tax has now been accelerated. And for the deductions at source, the Minister has used an accelerated payment system which, according to him, was only for big business. But in his calculations, he forgot that such a measure also applies to small business. The construction contractor who has 20 employees in the Province of Quebec is affected by this measure because he must remit every 15 days these payroll deductions and this creates an unacceptable cash flow problem.
If we consider the effects of such a measure on municipalities, if they have cash flow problems, if this measure reduces their revenues, who will pay at the end of the year? Why, the taxpayers, of course! Through this accounting measure that the Minister of Finance wanted to implement in his tax reform, in his 1987 Budget, he has again indirectly increased taxes and created another hidden tax.
In the tax reform of June and December 1987, the Minister of Finance also raised the tax on alcohol and tobacco by 15 to 18 per cent. Here again, it is more money for the Government, but the extra $175 million a year must come from the taxpayer's pocket.
Madam Speaker, we have seen accelerated tax increases since this Conservative Government took power in September 1984, and it still goes on with every budget and every ministerial statement. For example, in the February 1988 Budget, there is another cent a litre excise tax on gasoline that took effect on April 1, 1988 and yielded $225 million right away, for the 1988-89 fiscal year, and $300 million a year thereafter.
Madam Speaker, gasoline taxation is something that affects everybody. It involves our communication system, public transit, everyone's car. People need gasoline to go to work, home, to the doctor or the hospital. So it is very important and every time we tax gasoline, it affects everybody. This Government is always dipping into the taxpayers' pockets.
So when the Parliamentary Secretary tells us that it is in Canadians' interest to pass this Bill C-117 immediately, I would like to say first of all that these taxation measures, these unacceptable tax increases, were announced in the February 1987 Budget, more than a year ago, since we are in May 1988. So it is definitely the Government that has taken more than a year to pass Canadian legislation. Secondly, I do not see why it is urgent for Canadians to pay this tax.
As you see, Madam Speaker, this Government is pushing through all those measures before the election, in the hope that
Excise Tax Act
Canadians will have forgotten them when the election comes. Of course, Madam Speaker, on behalf of this side of the House I can assure you, I can assure this House and Canadians that as soon as the Prime Minister (Mr. Mulroney) calls for an election, we will make sure Canadians are aware of all those billions and billions of dollars this Government pocketed in taxes while in office. Of course we will remind Canadians that the Minister of Finance, the former finance critic of the then Opposition, stated he was committed not to increase taxes. Increasing taxes was no good. But the first thing he did, his first step as Minister of Finance was to increase taxes, Madam Speaker.
If we were to list all the hidden taxes this Government imposed on Canadians, in the social area, in the area of immigration-when a Canadian for instance applies to have a relative come to Canada, he must make a deposit, make a contribution to Canadian citizenship. When we move, for instance-let us look at Canada Post Corporation. How many increases have there been? And no later than this morning, Madam Speaker! They are digging into our pockets!
Up till now, the concept has been that to err is human. The Canada Post Corporation is now suggesting in its five-year plan this is no longer so. Starting from April 1st, 1989, it is no longer human. If you use the wrong postal code on a letter, you will have to pay 10 cents. The letter will be sent back to you and you will have to pay a 10 cents penalty. And if you want to know what your postal code is or to correct your postal code, you have to buy the postal code directory from the Canada Post Corporation. But that directory costs $10. And it changes every year. This is how they go about it, not only through direct taxes we find in each and every budget and Minister's statement, but through indirect taxes from all Crown corporations where the Government can get after the money. Let taxpayers pay!
I would simply like to mention the direct taxes announced in the Budget presentation to the House-never mind all the other hidden taxes the Government has been pocketing since 1984-and make a brief summary, a short list. There is more to it than that of course, but I simply want to remind my colleagues that we do have indirect taxation. The sales tax went up from 9 to 10 per cent on October 1 and the Government got an additional $1 billion out of that. Another sales tax increase-again an indirect tax-from 10 to 11 per cent on January 1, 1986 yielded $1 billion more to the Government. Still another sales tax increase from 11 to 12 per cent on April 1, 1986, again another $1 billion for the Government. And of course there was the tax on candies, soft drinks, snack foods, anything the Government could tax. They even tried to slap a tax on food under their tax reform.
So the Liberal caucus got into the act and my colleague from Montreal-Sainte-Marie (Mr. Malepart) hit the road and had people sign a petition. That was when the Conservative Government decided to backtrack, Madam Speaker, because it soon found out that people simply would not accept a tax on food. There was another sales tax increase-from 8 to

May 26, 1988
Excise Tax Act
12 per cent-on paint, wallpaper and toys which took effect on January 1, 1988 and has brought in $60 million. The excise tax on a litre of gasoline went up 2 cents on September 3, 1985, up a cent on January 1, 1987, up a cent on February 19, 1987, and again up a cent on April 1, 1988.
If we add them all up-$900 billion, plus $450 million, plus $450 million, plus $300 million-we can hardly believe the Conservative Government and the Minister of Finance have been siphoning that kind of money from the pockets of the taxpayers. I repeat, Madam Speaker, especially the tax on gasoline which has become a necessity because people do more than drive around, they take their car to work, they drive to the hospital, they drive their kids to school. These taxes on essential things give you an idea just how much money this Government takes away from taxpayers.
On April 1, 1987 the sales tax on gasoline again went up and cost taxpayers an additional $30 million. There was a gradual tax increase on air transportation on May 1, 1986, $340 million. Higher taxes on alcohol and tobacco, first increase of $340 million on May 24, 1985; second increase of $150 million on February 27, 1986; third increase of $70 million on February 19, 1987; and fourth increase of $175 million on January 1, 1988. These are millions of dollars Canadian taxpayers have to pay every day in sales taxes. This commodity tax is not a luxury tax, but a tax on day-to-day necessities.
On top of the $945 million tax increase starting January 1, 1988, there is the 10 per cent tax on long-distance phone calls. What a shame, Madam Speaker! Slapping a 10 per cent tax on long-distance phone calls, especially in rural regions. But this is just a short list. There will also be a long one apart from all the other taxes which the government will impose through fees and permits and also through Crown Corporations. And I am only talking here about indirect taxes.
Let's now turn to direct taxes. On January 1, 1986, the government deindexed family allowances, personal credits and tax tables, bringing in 635 million dollars. Imagine what would have happened, Madam Speaker, if we had not succeeding in stopping the government from deindexing old age security pensions. Imagine the money the government would have siphoned from the pockets of taxpayers and our senior citizens who had to endure such an insult from this government. Still in the realm of direct taxes, on January 1 1986, the government eliminated the tax abatement, which has brought in $650 million dollars. On May 22, 1985, it eliminated the deduction for Registered Home Ownership Savings Plan, $105 million. From July 1, 1985 to December 31, 1986, it imposed a temporary surtax of 5 to 10 per cent on highly paid individuals, $500 million. On July 1, 1986, it imposed a permanent surtax of 3 per cent on all taxpayers, $1.2 billion. On January 1, 1986, it changed the taxation of dividends, $300 million. On January 1, 1986, it changed married people's exemptions, $20 million. And so on and so forth, Madam Speaker.
When you look at that list, which is a short list, and realize the billions involved in these increases, you wonder: My God, how can there still be a deficit? How can there still be a national debt? And yet, despite all the accounting tricks which the Minister of Finance has used, the deficit remains above $30 billion a year.
Since this Tory Government came into office, our national debt has risen by as much as 40 per cent, in spite of all the tax increases. If the Prime Minister (Mr. Mulroney), together with his Cabinet and other Conservative Members, thinks that with this legislation brought in before an election, Canadians will forget about these tax increases, I have news for him, Madam Speaker. He will realize that Canadians have not forgotten and we will make sure they do not forget that Mrs. Denis insisted on saying: You deceived us, Charlie Brown, and we will not forget it. Canadians will certainly not forget it, Madam Speaker.
When I consider the tax reform which was supposed to create an equitable system where everybody would be treated fairly-what do I find? That the Government will carry out this tax reform in two stages. During the first stage where small adjustments were made in an effort to convince Canadians with a few goodies before an election, to forgive its major tax increases of the past four years. But even that has failed.
Take the case of a major industry: small businesses. Everybody agrees that this industry is responsible for creating most jobs. Small and medium size businesses have created between 75 and 80 per cent of our new jobs. That is great! The Government should encourage our businessmen. How should it go about it? Except for the programs which it has implemented, even in the tax area, it should have favoured these people with a lower tax rate. But it did the opposite! The only industry which will be faced with a tax increase under the tax reform is the small manufacturing industry. Once this tax reform is implemented how do you think manufacturers will be able to compete with U.S. manufacturers within the framework of the Mulroney-Reagan Agreement? How do you thing our small businesses will be able to compete with this 2 per cent tax increase? How will they be able to compete? Is this how they will make the U.S. market accessible to our business corporations? The first thing they do, even before the free trade agreement is implemented, is to increase the tax rate. The only initiative put forward by this Tory Government for small businesses was indeed to increase the tax rate.
Still in the area of tax reform, Madam Speaker, we find that the second stage is somewhat forgotten or put aside-they are negotiating with provinces, they are referring to multiple, value added tax, a national federal sales tax, negotiations are going on, but all this takes time. In the meantime, he suggests they have to find new taxes. Before the process is completed taxes must be raised. And all of a sudden he creates a new tax, without implementing or completing tax reform. Because we do not yet know where we are going with the sales tax and tax reform. Everything is put into question.
May 26, 1988

The Minister says: Let us be realistic, we need money. But since an election is coming, we cannot impose a sales tax across the board, especially on food. We will try doing it sector by sector, but we have to find a way to increase Government revenues, create a new sales tax indeed on marketing. Now a manufacturer, once he has priced his product, must add to that price, in order to evaluate the sales tax, by including his promotion and marketing cost. In this Bill, the Minister of Finance completely neglected to include a definition of "promotion costs, marketing costs", or perhaps he does not even know himself. So everyone is left in the dark and companies definitely are seriously concerned with that unrealistic, incomplete legislation that will create a red tape monster.
Moreover, two or three years down the road, when an auditor from Revenue Canada's Sales Tax Branch makes an audit, a difinition will then be issued, if there is a definition at that stage, and this will be arbitrary-what is a marketing cost? What is a promotion cost for a manufacturer? This is why a multitude of companies and organizations appeared before the Standing Committee on Finance and Economic Affairs, suggesting: In the name of God, stop that! This is a sheer madness, its makes no sense! Let us not get into that! We do not know where we are going, we do not know how much to charge because the sales tax cost is part of the pre-retail sale cost, and there is a danger two or three years down the road that we will be assessed by the Government- Therefore we have discouraged entrepreneurship instead of promoting and encouraging our manufacturers and our industrialists to become more active and innovative in producing and selling. They are discouraged because they are dealing with an uncertain tax system and they do not know how to proceed.
I should like to refer to a single case, that of furniture manufacturing in Quebec, a vital industry which will have to compete against Americans if the market is opened up. There is a problem and I should like, Madam Speaker, with your consent, to read from a letter which I received from one of my constituents, a company in my riding of Saint-Leonard- Anjou, by the name of Les meubles Valentino, which says:
We should like to bring to your attention the representations made by the Quebec Association of Furniture Manufactures to the minister of Finance, Mr. Michael Wilson, in connection with the new computation method of the federal sale tax to be implemented on November 1,1988.
As an employer and as a member of that organization, we should like to support its action and ask you to be kind enough to demand from the government the withdrawal of that new measure.
As you will appreciate after reading the enclosed brief we have good reasons to oppose this new measure. Suffice to mention:
They mention six points in their letter, and again I quote:
(1)	The measure adding $34 million a year in taxes on the furniture industry.
I did not refer to this measure a moment ago when I listed the tax increases, but it means the furniture industry alone
Excise Tax Act
must pay an extra $34 million. You can imagine how much money this unrealistic and discriminatory measure brings in!
Again I quote the letter:
(2)	The measure will not narrow the gap in favour of imports, on the contrary it will make it even worse in most cases.
(3)	The administrative complexity of the measure will entail huge additional costs.
Just think of the small businessman having to cope with this mess and figuring out how much more he will have to spend on distribution and advertising to sell his products. How can he be expected to do that when the measure does not even define what constitutes an advertising or distribution expenditure?
I continue the quotation:
(4)	The measure will be harmful because of uncertainty concerning the amount taxable.
How will that be defined, how will the 25 per cent be added, and two or three years later in comes an inspector or an auditor who says: No, you know, such or such item must be included. For example, take a small firm where the president of the company or the owner happens to be the production manager, the salesman, the clerk, the accountant, he does everything, so where does his salary come from? How is his salary accounted for? What part? Is it part of the distribution? The gentleman or the lady also makes deliveries? What part of the salary will go under advertising? That is how far this Government has gone in its never-ending quest for money.
Fifth, he says, and again I quote:
(5)	It is unfair to make the furniture industry pay for the actions of other industries.
What is the meaning of the fifth point? There was a case before the court and they said a few companies took advantage of the situation and tried to get secrets, an advertising company with a separate branch for distribution, they boosted their products and their affiliated firm did not have to advertise, this way they could cut costs and therefore on the basic cost the tax was lower. The court ruled for the plaintiff. There were other ways of solving the problem. The Minister of Finance could have brought in regulations which, as is done for small business deductions, define allowable relationships between corporations and forbid corporations which are not at arm's length from claiming certain benefits.
The Minister decided instead to use the opportunity given to him by the judicial system to get additional amounts, unconcerned about the problems such a system would create for business.
Furthermore, the sixth point in the letter states: "The timing is bad for such a radical change!" Indeed, Madam Speaker. The government wanted Canadians to believe that its tax reform package would simplify things-and everybody agrees that the Income Tax Act needs simplifying.
All Canadians were therefore hoping that, through tax reform, their annual tax form would be clearer and simpler,

May 26, 1988
Excise Tax Act
that businesses would enjoy more harmonious relationships with the government as far as tax collection is concerned.
This has not been achieved during the first phase, in fact things have only become more complicated-and I invite you, Madam Speaker, and all my colleagues just to look at the tax form. Did you know that, on July 1, the first phase of tax reform goes into effect? All we need is to take the form- Members have to complete it as well -to determine the exemptions which are now credits. However, if we look closely, it is even more complicated than our annual income tax return. This is supposed to be a simple form that tells the employer how to deduct taxes from his payroll. And it turns out to be more complicated than an income tax return! Tax reform was supposed to simplify matters, but it seems to be making them more complex.
Phase two of the tax reform has yet to be implemented, but the Minister has started to announce new measures. If he needed money, he could have raised taxes. No, he couldn't do that, because raising taxes is a political no-no. We are right in the middle of an election campaign, so we can't raise taxes. We have to get the money somewhere else. So we create a new tax, a new way to calculate it, just like that, and nobody has a clue how they should calculate this tax and what kind of responsibility is involved.
Considering all the people who contributed to the discussion, all the businesses and industries that appeared before the committee, I hope the committee on finance will recommend that the Minister get rid of these new federal taxes and give businesses a breather so that they can get on with their work and create jobs.
Madam Speaker, we see here a Government that was elected on the basis of promises made by its Minister of Finance who was not supposed to raise taxes, because taxes were already too high. They would concentrate on bringing expenditures down through better management, in order to balance government spending and government revenues. Today, however, when we look at the results-as of March 31, 1984, we had an annual deficit of $32 billion. Today, we have an annual deficit of about $30 billion, which means only $2 billion less. However, during that period, income tax and other taxes increased by $22 billion. If we add to that the $1.6 billion and $1.3 billion worth of creative accounting the Minister of Finance has done on sales tax and remittance of payroll deductions, we could say that without the accounting changes and the disastrous increases in sales tax, we would have an annual deficit today of $34 billion, which means an increase of $2 billion.
That is what the Conservative Government has accomplished, a Government that promised it would not increase taxes, a Government that promised a simple tax system that all Canadians would be able to understand. Now we have a national debt that has increased by 40 per cent. We have a deficit that didn't go down, and especially, if we adjust all the creative accounting entries-we have a taxation system that
will come into effect as of July 1-it won't be long now-and all employers have received these exemption forms for the changes in payroll deductions, and it will take them ages to complete these forms. This is an untolerable situation.
In concluding, Madam Speaker, if the Parliamentary Secretary thought this morning that we would approve this Bill in a matter of minutes, I think he failed to realize that Canadians don't agree with this Government. Not long ago, in fact it was early this week or on the weekend, a poll showed that 50 per cent of Canadians were not satisfied with the Conservative Government. If we consider all these taxes and everything they involve, Canadians are definitely disappointed in a Government that was elected on a promise of good government and a commitment not to raise taxes. And I am sure that as soon as the Prime Minister can screw enough courage to call an election, Canadians will remember this and send the Conservative Government to the Opposition benches.


Mr. Roger Clinch (Parliamentary Secretary to Minister of Communications):: Madam Speaker, it is a real pleasure for me to say a few words on Bill C-117. We know that the Bill contains legislative amendments required to implement the changes made to the federal sales tax, the excise tax announced by the Minister of Finance on various occasions like the February 18 Budget, on February 10, in the White Paper on Tax Reform on June 18, 1987, and the December 16 paper on tax reform.

I move:
That this question be now put.


The Acting Speaker (Mrs. Champagne):: Mr. Clinch, seconded by the Mr. Hawkes, moves that this question be now put.


Mr. Cassidy:: Madam Speaker, I want to raise a point of order and then, hopefully, go on to debate. Yesterday, somewhat in heat because of some tactics being used by the Government, I made some comments about the Chair which I wish to withdraw and apologize for. I think you, Madam Speaker, realize that the next few weeks are going to be difficult for the Chair, as they will be for all of us, if the level of debate and perhaps the partisanship among the different Parties rises in view of the forthcoming election.
However, I apologize for my remarks which may have suggested the Chair was not acting fairly. I recognize that even if we may have been uncomfortable about the different procedures being used at that time, they were in fact within the Government's right to bring forward. That was my point of order, Madam Speaker.


The Acting Speaker (Mrs. Champagne):: I thank the Hon. Member. Resuming debate.
May 26, 1988


Michael Morris Cassidy: I believe debate is now on the motion that this question be put, but effectively it allows the debate to continue.


The Acting Speaker (Mrs. Champagne):: Is the Hon. Member seeking the floor?


Michael Morris Cassidy: Yes, I am.


The Acting Speaker (Mrs. Champagne):: The Hon. Member for Ottawa Centre (Mr. Cassidy).


Michael Morris Cassidy: Madam Speaker, I think there was discussion in which it was suggested that it would be possible to end this debate at the end of today. I do not know where those negotiations are at this time, but I am not quite sure why the Parliamentary Secretary to the Government House Leader thought it necessary to bring forward that particular motion, because it would seem to me that, if anything, it might interfere with our ability to discuss these things-


Frederick James (Jim) Hawkes: Madam Speaker, to the best of my knowledge, outside Routine Proceedings, I have not risen in the House today, so I do not know if I could have put a motion.


Mr. Murphy:: It was some other guy. Don't worry about it.


Frederick James (Jim) Hawkes: Perhaps my hon. friend erred accidentally.


Michael Morris Cassidy: I acknowledge, Madam Speaker, that the vividness-


The Acting Speaker (Mrs. Champagne):: That is not a point of order. The Parliamentary Secretary was named as seconder to the motion moved by the Parliamentary Secretary to the Minister of Communications (Mr. Clinch).


Michael Morris Cassidy: Madam Speaker, I would say that the Hon. Member by his dress is identifying himself as, shall we say, a purple Tory, not quite a red Tory but certainly-


Ms. Copps:: You are colour-blind. That is maroon.


Michael Morris Cassidy: Is it maroon? The vividness of his coat of many colours should remind him that it was his colleague behind him who moved the motion.
I would like to speak with respect to third reading of this particular Bill. The purpose of this Bill is to sock it to Canadians once again in terms of raising revenue from the sales tax. It certainly raises the whole question about the fairness of the tax system which has been put in place and developed by the Progressive Conservative Government since it assumed power back in 1984.
You will recall, Madam Speaker, that in the 1984 election campaign, the present Prime Minister (Mr. Mulroney) indicated: "The rich will pay and pay handsomely under a Conservative Government". Perhaps he was referring to the contributions he expected his Party to receive from wealthy
Excise Tax Act
Canadians in gratitude that they are the only group of Canadians who have wound up paying less taxes in 1988 than they were paying prior to the present Government coming to power in 1984.
I think it is instructive that the American Government under President Reagan, the British Government under Prime Minister Thatcher, and this Government here have all seen fit to sharply cut taxes on the wealthy. I guess it is also worth noting that if there was a role model to follow, instead of President Reagan and Prime Minister Thatcher, it would have been that of the previous Liberal Government which also saw as a priority the cutting of taxes on wealthy Canadians in a very major way.
I was reading this morning some notes which referred specifically to the question of where the deficits have come from. What has been the source of the deficits which we have experienced in this country over the course of the last 10 years and which have risen monumentally since the early 1980s, the time of the recession? Would that that could enter into the record, the strip-tease being done by the Hon. Member in front of every Member of the House.
Since the 1970s, the study indicated, it is not so much increases in spending which have driven the deficit of the Government of Canada to levels with which every Party, including mine, is uncomfortable. It is the amount of tax expenditures. It is the amount of reductions in tax which have been given to corporations, and particularly to wealthy Canadians, which has accounted for something like three-quarters of the current level of the deficit now running at some $29 billion a year.
I think it is instructive, as well, that the present Government, which did have an option in terms of taking away those tax privileges from corporations, failed at that job. Rather than taking those tax privileges away, it has in fact continued to allow them to exist. In certain cases it has increased them such as was done with the half million dollar exemption on capital gains.
Capital gains were always treated very tenderly by the previous Liberal Government. The present Conservative Government has done it in spades by putting in the $100,000 and the half million dollar exemption on capital gains. At the time it was introduced it meant that people who dabble in the stock market in a serious way, people who flip houses in hot real estate markets such as Toronto, Vancouver, or Ottawa, people who made money in that way, would be able to have tax-free an amount of money equivalent to what a Newfoundland fisherman or someone who is farming in New Brunswick would hope to earn during an entire lifetime.
I raise that because what Canadians say to us when we have talked to them-and we have spent a lot of time thinking about the issue of taxation in the course of the last three years-is: "We are looking for the tax system to be fair". It

May 26, 1988
Excise Tax Act
seems to me that one of the primary standards on which the present Bill increasing the sales tax and other taxes has to be judged is whether or not the tax on goods put in by the Progressive Conservatives is fair. I think one has to come up with an answer which is to the contrary. It is not fair.
In fact, Canada is the only remaining industrial country in the world with a sales tax at the manufacturers' level. That sales tax now collects more revenue from goods and services- and it amounts to some 35 per cent of total revenue-than most countries in the Organization for Economic Co-operation and Development collect, which is about an average of 29 per cent.
There has been an increasing bias away from corporate taxes and toward sales taxes and personal taxes by the present Government. This is something which we inherited from the Liberals, but Liberals and Conservatives alike have seen nothing wrong with increasing sales taxes in all kinds of ways in order to increase an inequitable and a regressive tax as opposed to taking tax revenues from progressive sources.
My Party has argued for a long time that we should be looking for tax fairness. It is not fair if the same proportion of income is taken from people in a low-income bracket as is taken from people in a high-income bracket. Yet that is the effect of these constant increases in sales taxes.
If someone who is not well off goes today to buy some chips or food for the kids, some pet food for the family dog or cat, or even goes to buy candy for the children, then those products are taxed. The sales tax on candy for kids is the same whether the family's income is $15,000 or whether it is $150,000 per year. Perhaps that illustrates graphically what I mean. There is something unfair when poor kids are paying as much tax as rich kids pay on those few things that they can buy in order to have some pleasure. This is true when we talk about poor families and rich families as well. It seems to me that this is a fundamental unfairness. It is why it makes more sense to have the bulk of personal income taxation coming through the income tax system rather than constantly trying to cut the income tax system, and saying: "We have to do it because there are some states in the United States which have a lower tax rate than those which happen to prevail here in Canada".
The Standing Committee on Finance and Economic Affairs has spent a fair amount of time looking at the whole question of a manufacturers' sales tax and the whole question of Phase 2 tax reform. We have been looking at some of the proposals which were made in Bill C-117. We have also looked at some of the proposals that the Government was making with respect to Phase 2 tax reform and the proposals being made for an adjustment to the manufacturers' sales tax, a kind of quick fix which is meant to last for a couple of years' time.
As you know, Madam Speaker, the proposal is extremely complicated. It is somewhat like a skill testing question one has to answer in order to collect a lottery prize which one gets in one's cornflakes or some other product some manufacturer is trying to promote. One has to take away a certain portion of
the cost of the good in order to make some allowance for marketing and distribution costs. Then one has to add back a certain amount.
The hope is that this will create greater fairness between domestic manufacturers and importers of foreign goods who, right now, have some benefits because of the present sales tax system. In fact, we are increasingly hearing evidence in the system that it does not work. It will not work until we get to a system which is fair and modern and which probably hits at every level up to the retail level so that the disparities that now exist, depending on the way in which manufacturers or importers do business here in Canada, can in fact be brought to an end.
For example, right now there is discrimination as to whether a manufacturer sells directly to retailers or whether that manufacturer sells through wholesalers. Roughly half the goods sold by manufacturers in Canada today are sold directly to retailers. This creates all kinds of problems under which the base of tax for the purposes of the tax has to be attributed in some way so that there is not too much loss to the Treasury.
It has also been pointed out that for our export industries the present tax is quite unfair. It is estimated that something in the order of 42 per cent of federal sales tax revenues has been collected on intermediate and capital goods, or are therefore being charged in various ways on production which is for export. We are disadvantaging our exports at the same time that we advantage importers and imports in terms of their ability to compete in the Canadian market. That is not fair.
There is something more fundamental that is not fair. This goes right to the heart of what we have talked about when we talk about tax fairness for average families. It is this. Since 1984 the Progressive Conservative Party has consistently raised the sales tax and the excise tax burden on average families. It has done it year after year after year, to the point where there is now a total increase on the average family earning $35,000 per year of some $1,074.50. That is what we calculate has been the increase of tax over the course of the last four years under a PC Government that said it would make the rich pay and not that it would make average Canadians pay. That is a great deal of money, more than $1,000. It is not compensated by a cut of perhaps $300 or $400 in the personal tax burden which people are meant to get under the tax reform when it comes into force in July of this year.
The partial deindexing of the system will mean that any income tax benefits that come from tax reform will very quickly slip away. In a couple of years that benefit will have gone as well.
I know, Madam Speaker, that you would be interested in what some of these figures show average Canadians are now having to pay. In 1984 the Government took measures that led to an increase in oil and gas prices that was worked out to about $100 for the average family. The increased unemployment insurance premiums amounted to the equivalent of $102
May 26, 1988

for the average family. The Government put into place a Liberal tax increase which it had opposed when it was in Opposition. How things change when it moved to government. It put in a sales tax increase equivalent to $ 150 for the average family, for a total increase in the November 1984 mini budget of $352.
Then, in May of 1985 it did it again. It eliminated the federal tax reduction on average families. That amounted to $100. It modified indexing on average families. That amounted to $115. It cut family allowance payments-a cost of $22.50 to an average family. It increased the tax on cigarettes and alcohol. That amounted to $75 extra. It broadened the sales tax, which amounted to $150 for the average family. It increased the gasoline tax by the equivalent of $50. That was an increase of $512.50.
In June, 1985 the Conservatives went at it again with a 1 cent per litre increase in gasoline to pay for indexing the Old Age Security, something the Conservatives have tried to sneak through and eventually were compelled not to do. That was $50 for the average family. In February, 1986 a surtax of 3 per cent was added which cost the average family $170. Another sales tax increase, $150 more for the average family, and an increase on the tax on cigarettes and alcohol amounted to a further $200. In February, 1986 that was a total of $340 extra.
I keep on asking: "Is that fair?" What about the fact that at the same time capital gains were exempted from tax? That was not capital gains for farmers or small businesses, but capital gains for people who speculated in the stock market, people who were flipping houses, or people who were investing in condominiums in Florida. Those capital gains were totally and completely tax-free. That is something that did not affect the average Canadian.
In 1987 the Conservatives went back at it again. Gasoline went up again by one cent a litre, which amounted to $50 for the average family. The sales tax was broadened again, which amounted to $15 for the average family. Cigarette and air ticket taxes went up by $35, for a total of some $80 per family depending on the category. In June, 1987 tax reform brought in a $300 tax cut for the average family, so my figures are already incorporated in that.
In February, 1988 there was a gasoline tax increase of one cent per litre, worth $50 for the average family. I do not have the costing, but the 10 per cent on telecommunications services will raise some $870 million per annum. If that is taken down to perhaps 10 or 11 million families across the country, one is talking about another $80 or $90 per family that the Conservatives will collect.

I would like to point out, Madam Speaker, that I do not know how many times we New Democrats have tabled in the House our calculations on the tax increases imposed by the Progressive Conservative Party since it took power in 1984.
Excise Tax Act
Madam Speaker, the Government has never denied these estimates. We do not have the exact figures because we do not have the resources of the Department of Finance or of National Revenue, but we tabled them in the House many times. And the Government has never denied these figures showing that for an average family with an annual income of, say, $35,000, the tax increases over three and a half years now amount to some $1,400 a year. And now tax reform provides a temporary tax reduction of $310 a year for this family with a $35,000 income.
Madam Speaker, on average, this means an increase of around $1,100 a year for the average family with an annual income of $35,000. And I wonder whether this is really fair. Why, when I met my constituents in recent weeks, going door to door in my riding, do they all comment that they pay more and more every year on their tax return, that every year when they file their tax return, they have to pay more? The reason for that is deindexation and the tax system imposed by the Conservatives. The reason is the income tax increases imposed on average families by the Conservatives. The reason people's real income and purchasing power is going down is that the Conservatives have imposed tax upon tax upon tax, so much so that people are less well off, less able to afford the necessities of life and even the small luxuries that they could afford previously, because of what this Government has done.

I raise these matters at this point when we are talking about Bill C-117. A number of the details have been discussed at second reading and during the course of committee stage and report stage of this particular Bill. However, I wish to raise one specific question that particularly affects Canadians in northern Canada. As a member of the finance committee, I wish to say how disappointed I am that the Progressive Conservatives were so unfeeling and unfair when it came to northern Canadians and the particular problems that they face under this new telecommunications tax.
If one lives in the North and wishes to keep in touch with neighbours, let alone with people in southern Canada, one inevitably has to make long-distance telephone calls a great deal. A person living in the North can easily have a longdistance telephone bill of $75 to $150 per month. That 10 per cent tax will apply to all those long-distance charges. Whereas a person living in Ottawa can communicate by telephone with one million people without paying any of this tax because it is all a local charge, people who live in the Holman Islands, people who live in the Mackenzie Valley or in other remote communities, cannot do that.
The finance committee strongly urged that there be a cap on the tax on residential telephone subscribers of $3 per month. In other words, if a long-distance telephone bill exceeded $30 a month, no extra tax would be required to be paid. That would have been fair to people who live in isolated communities and have unduly high long-distance telephone charges because of

May 26, 1988
Excise Tax Act
their isolation and their need to keep in touch. Unfortunately, that was ignored.
I see that my time has ended. I thank you for your attention, Madam Speaker. I will consult with you privately on those figures, but I know that they are correct because not once have they been denied by the Progressive Conservatives. A tax increase of $1,000 in three and a half years on the average family, including this recent sales tax increase and the other measures contained in Bill C-l 17, is just not fair.


Mr. Nunziata:: I find it amusing that the finance critic for the New Democratic Party should be critical of certain policies of the previous Liberal administration. The Lion. Member is justified in criticizing the present Conservative administration.
The New Democratic Party has a track record in government with regard to economic policies. A few short weeks ago the people of Manitoba defeated the New Democratic Party in a devastating and resounding fashion, to a large extent because of the economic policies of the New Democratic Government in Manitoba. The people of that province said that enough was enough, that they were fed up with the incompetence of the NDP Government, and they turfed out the last remaining NDP Government in Canada. A short while ago the people of British Columbia were fed up with the economic incompetence of the NDP Government there, and turfed it out.


Michael Morris Cassidy: That was in 1975.


John V. Nunziata: The Hon. Member states that that was in 1975. That is correct, and never again will the New Democratic Party in the Province of British Columbia ever see the light of day or ever be a government because of its incompetence in managing the financial affairs of that province, and the same applies in Saskatchewan.
My question to the Hon. Member is the following. How can Canadians have trust in the economic policies of the New Democratic Party when that same Party mismanaged the economies of Manitoba, Saskatchewan, and British Columbia? Can the Hon. Member, the finance critic for the federal New Democratic Party, explain why the electorate in those three provinces turfed out those governments to a large extent because of their economic policies? Can he explain to the people of Canada how the federal economic policies of the New Democratic Party would be any different from the economic policies of the provincial NDP governments that were defeated?


Michael Morris Cassidy: It is trust. It seems to me-


The Acting Speaker (Mrs. Champagne):: The Hon. Member for Ottawa Centre.


Michael Morris Cassidy: Thank you, Madam Speaker. The Hon. Member speaks of trust. It seems to me it was just the other day that I was at a meeting of the Riding Association of the
York South New Democratic Party, which was attended by the man who is presently the Hon. Member from York South and represents the Liberal Party. It seems to me it ill behoves him to speak of such things as trustworthiness when we do not know from one day to the next which Party he is with, whether he is behind his Leader or trying not to stab his Leader in the back.


John V. Nunziata: Madam Speaker, I have a point of privilege. The Hon. Member for Ottawa Centre (Mr. Cassidy) is suggesting that I was in attendance at some meeting of the New Democratic Party.


Michael Morris Cassidy: Yes.


John V. Nunziata: I hope he will check the record and extend an apology because that is an absolute falsehood and a lie. For the Hon. Member to be so irresponsible as to make such allegations is not surprising in his case, but for the record I would hope he would be a little more honest.


The Acting Speaker (Mrs. Champagne):: Order. First, I would like the Hon. Member for York South-Weston (Mr. Nunziata) to put some nuance into the accusation that he has just put. The words that have been used are not parliamentary-


Michael Morris Cassidy: Withdraw.


The Acting Speaker (Mrs. Champagne):: -and the Hon. Member knows that. I would like him first to correct that and then we will deal with the other situation, please.


John V. Nunziata: Madam Speaker, the Hon. Member has uttered an absolute, unequivocal, and complete falsehood. Until he withdraws that falsehood, I do not intend to withdraw my comments about his dishonesty.


The Acting Speaker (Mrs. Champagne):: Does the Hon. Member for Ottawa Centre (Mr. Cassidy) have any comment?


Michael Morris Cassidy: On a point of order, Madam Speaker, I believe the Hon. Member for York South-Weston (Mr. Nunziata) used unparliamentary language and he should withdraw it. I am quite prepared to deal with the issue of facts. The issue of fact is that the Hon. Member was a member of the New Democratic Party. He ran on the NDP ticket when he ran for alderman in the Borough of York. It was just the other day, around the same time that the NDP Government was defeated in Manitoba, and that is why I said it was just the other day that I attended meetings where he was involved with the New Democratic Party in the provincial riding or the federal riding of York South.


Jean-Robert Gauthier: Madam Speaker, I rise on a point of order. I would like to ask the Chair to look at the "blues" later this day to read what was said by the Hon. Member for York South- Weston (Mr. Nunziata). I was here and I heard the language used. I do not want to pass judgment on that language. I do
May 26, 1988

not think the Member said that the Hon. Member for Ottawa Centre (Mr. Cassidy) was an unparliamentary word but I did hear him say that the statement made by the Hon. Member for Ottawa Centre was not very truthful. Maybe the Chair would like to look at the "blues" to make sure that nothing has been said here that was not parliamentary. I am sure the Hon. Member for York South-Weston would not want at any time to be against the practices or the rules of this House. If the "blues" are exact, they will show that he was right and the Hon. Member for Ottawa Centre was wrong.


The Acting Speaker (Mrs. Champagne):: The Chair wishes to thank the Hon. Member for Ottawa-Vanier (Mr. Gauthier).

As usual, his comments, his suggestions are almost always of great wisdom-


An Hon. Member:: Not always.


The Acting Speaker (Mrs. Champagne):: Almost always, 1 know, in helping the Chair and in helping the Members of this House act as they should. I will take the Hon. Member's advice and we can, if necessary, come back to this subject a little later today. The Hon. Member for Ottawa Centre (Mr. Cassidy) had the floor during the period for questions and comments.


Michael Morris Cassidy: Madam Speaker, I do hope you will look at the specific comment made by the Hon. Member for York South-Weston. He accused me of a lie. I do not believe that that is parliamentary language. I think that should be withdrawn. You will look at the "blues"-


The Acting Speaker (Mrs. Champagne):: I said a few moments ago that this was exactly what the Chair meant to do over the next few hours. I should like now Hon. Members to resume debate on the issue we are dealing with. Agreed?


Mr. Prud'homme:: On the same point of order, Madam Speaker.


The Acting Speaker (Mrs. Champagne):: The Hon. Member for Saint-Denis (Mr. Prud'homme) rises on a point of order.


George Albert Proud: If I may, madam Speaker, I should like to ask you to be a little more explicit. If the NDP Member says that a Member of the Official Opposition did this or that, was at such or such a place, and that the latter states that it is a lie, what he really means is that it is not true. It is either true or not true. It cannot be half true. One cannot be partly somewhere. I submit therefore to the Chair that the Hon. Member should stick to the point, because it is not the first time that he came to Quebec to make statements which are exactly the opposite of what he said in other provinces. We just let it go.
Excise Tax Act
But if he keeps it up, we are going to raise points of procedure all morning and, if necessary, all afternoon.


The Acting Speaker (Mrs. Champagne):: I thank the Hon. Member for Saint-Denis (Mr. Prud'homme). Although I tried, my comments obviously were not clear enough, therefore I shall repeat. Following the advice of the Hon. Member for Ottawa-Vanier, I said in the House that I would look at the blues as soon as they are typed, that we could return to this later if necessary, and that I was willing to let things stand for the time being. I asked the Hon. Member for Ottawa Centre (Mr. Cassidy) to resume debate on third reading of the Bill before the House and I interrupted him when he failed to continue with the debate, preferring rather to return to the unfortunate incidents of a few seconds ago. I therefore urge again the Hon. Member for Ottawa Centre to address the issue before us. The Hon. Member for Ottawa Centre (Mr. Cassidy) has the floor.


Michael Morris Cassidy: Madam Speaker, I will comment very briefly on the comments made by the Hon. Member for York South- Weston who was critical of the record of New Democratic Party Governments in Manitoba, Saskatchewan, and British Columbia. In Saskatchewan the NDP governed for decades without plunging the province into deficit, but since the current Conservative Government under Grant Devine has taken power that province has seen monumental deficits such as Saskatchewan had never known. They amount to S3.2 billion. Through the 1981-82 recession the unemployment rate in Manitoba, which had an NDP Government, remained at the lowest level of any province in Confederation.
I happened to have a cup of coffee this morning with the Government Leader for the Yukon, my friend Tony Penikett. In the Yukon, just a few days ago, the Yukon NDP Government's economic strategy for the next 15 years called "Yukon 2000" was adopted unanimously by the legislature of the territory with the full support of both Liberal Party Members and of Conservative Party Members.
Those are points which seem to me to point to the kind of sound, sensible economic management that our Party has given in western Canada. We have made mistakes from time to time. Every Party does, but the sound, over-all management we have given to western Canada I believe we can now give as the national Government of Canada after the next election.


David Orlikow: Madam Speaker, I would like to ask the Hon. Member for Ottawa Centre (Mr. Cassidy) a question. We heard the spokesperson for the Liberal Party criticize the Conservative Government because of the large increases in excise, sales, and other taxes as if the Liberals, when they were in power, did not do so.
Would the Hon. Member confirm that one of the last recommendations made by Mr. Lalonde when he was the Liberal Finance Minister was to increase the sales tax by 1 per

May 26, 1988
Excise Tax Act
cent, which increase was permitted to be imposed by the present Conservative Government?
Is it not a fact that the biggest part of the reason we have such a deficit is the kind of give-aways that Liberal Governments started under the present Leader of the Official Opposition (Mr. Turner) when he was the Minister of Finance? The Conservatives have continued this, so that
60,000	corporations pay no taxes at all. In 1986-87 some of the largest corporations like Alcan, Hudson's Bay, and Bramalea paid no corporate taxes at all.


Michael Morris Cassidy: Madam Speaker, my friend from Winnipeg North has a good deal of reason. In fact, as he points out, I may have been unfair, in the heat of partisanship, to the Progressive Conservatives when I read through that list of tax increases which occurred under the Conservatives.
The first increase in sales tax equivalent to $150 for the average family was in fact a Liberal tax increase, not a Conservative tax increase. The Conservatives simply borrowed it from the Liberals.
We talk about unfairness in the tax system and about the fact that there are all these loopholes and tax privileges for wealthy Canadian individuals and corporations. That tradition was not begun by the Progressive Conservatives; it was begun by the Liberals.
Of course, the Liberals talk like New Democrats in opposition but they act like Conservatives when in government. There is an ample record to prove that point, and I would hate to see that Party back in government because it would give it a chance to show that the Minister of Finance (Mr. Wilson) is a patsy. Liberals can do just as well at favouring rich Canadians and corporations at the expense of average Canadians.


Don Boudria: Madam Speaker, I want to ask a question of my distinguished colleague. I wonder what the present policy of the New Democratic Party is on the taxation provision of flow-through shares. I would like to know the position today as opposed to the one of yesterday or the one of the day before, which presumably were all different because they always are.


Michael Morris Cassidy: Madam Speaker, the short answer to the question of my hon. friend from Glengarry-Prescott-Russell (Mr. Boudria) for whom I normally have a great deal of respect is that the policy today is the same as it was yesterday, the day before, and the day before that. We have argued that when a tax concession has had proven results and is proven to be of significantly greater benefit than cost, it is worth considering.
The fact that some 60 mines, I believe, have been opened in Canada in the last three or four years as a consequence of the flow-through share provision is a sign of the benefit of this particular provision. When it is used as a tax loophole-


Jean-Robert Gauthier: A Liberal provision, by the way.


Michael Morris Cassidy: The Hon. Member talks of a Liberal provision. Another example of a Liberal provision which was a disaster across Canada to the tune of some $2 billion was the scientific research tax credit. The interesting thing is that the Conservatives continued that one along to the point that more money went out the door of the Treasury from the Conservatives continuing that provision than had actually gone out the door during the time the Liberals had that particular provision in force.
I have questions about flow-through shares and the way the Government was dealing with the issue in 1986. However, our Party is one which is able to consult and to listen. We have talked to northern Canadians.

We have talked to prospectors, to people in the mining industry, to residents of Northern Quebec communities.

We have seen the benefits of the program and we have said that we should keep it, focus it, and ensure that it is not used by Falconbridge, Inco and other large corporations like that. Let us ensure that it encourages the junior mining companies and that it gets genuine activity into smaller northern communities. On that basis we think it has a great deal to be said for it. Our policy has been to support it, and that is our policy today.


The Acting Speaker (Mrs. Champagne):: The time for questions and comments has expired.

Resuming debate, the Hon. Member for York South- Weston.


John V. Nunziata: Madam Speaker, I appreciate the opportunity to make submissions on Bill C-117. Before I get to the merits of this particular piece of legislation, let me say a few more words about the New Democratic Party.
For far too long the New Democratic Party has been treated with kid gloves when it comes to its economic policies.


Sheila Maureen Copps: What economic policies?


John V. Nunziata: What economic policies? I will be getting into some of the New Democratic Party economic policies, but for far too long members of the NDP have occupied their little corner on the left side of the House, knowing that they will never form a government, and have made all kinds of different promises and espoused all kinds of different economic policies. However, when one scrutinizes the NDP policies, whether they are on NATO or on the economy, the true colours of the New Democratic Party come out.
It seems to me that the NDP members have mastered the art of hypocrisy. They say one thing in one part of the country
May 26, 1988

to cater to one particular region of the country, and the NDP finance critic is a master at that. He will say one thing in one part of the country to try to curry votes, and then his Leader will say something else in another part of the country.


Don Boudria: Like the frigates.


John V. Nunziata: Like the frigates, like Meech Lake, like the nationalization of certain companies. Let us examine the NDP economic policies and the NDP socialist philosophy. Members of the NDP believe that the Government has to play a very significant role in the economy. It has to intervene here and it has to intervene there. It is NDP policy that once elected, if ever elected, they will nationalize banks. Think of the absolute naivety of that particular policy. Let us examine that policy which is a policy of the New Democratic Party and is in the policy handbook.
The New Democrats say that they will nationalize banks. What does that mean? That means that the Government of Canada will expropriate, let us say, the Royal Bank. From where will the Government of Canada and the taxpayers of Canada obtain enough money to buy the Royal Bank? Is the NDP suggesting that the Leader of the NDP and the NDP Government will walk down Bay Street, get into the elevator at the Royal Bank Tower, and take over the meeting of the Board of Directors of the Royal Bank?


Lorne Edmund Nystrom: Madam Speaker, I rise on a point of order. I know that you would like to enforce the rule of relevance. I enjoy this ex-NDPer, this ex-supporter of the socialist movement in Canada, this ex-activist in the NDP, when he speaks, but I am glad he is with the Liberals. However, there is a rule of relevance, and I am sure even the Liberals would appreciate talking about the Bill.


The Acting Speaker (Mrs. Champagne):: I am sure that if the Hon. Member shows a little bit of patience, the Hon. Member for York South-Weston will make the link somewhere along the line.


John V. Nunziata: Thank you, Madam Speaker. You are quite correct that I fully intend to-


Mr. Shields:: Madam Speaker, I rise on a point of order. I am sure all of us are very sad to see a marriage break up, and I would like to offer my services as a marriage counsellor to try to get the two Parties back together again.


John V. Nunziata: Fortunately, Madam Speaker, there is absolutely no prospect of reconciliation, absolutely no prospect. Yes, I admit that in my youth I was a member of the socialist movement, the New Democratic Party, but I saw the light.
Let me tell you the reasons why I tore up my membership in the New Democratic Party, why New Democrats across the country are tearing up their membership cards, why people like Maud Barlow, Chaviva Hosek, and Patrick Johnson have said no to the New Democratic Party. It is because of its policies. It is because the New Democratic Party is completely,
Excise Tax Act
absolutely, and unequivocally out of touch with mainstream Canada.
Yes, I was 12 or 13 years old and I joined the New Democratic Party. However, it did not take long for me to find my rightful home.
Let me return to some of the economic policies of the New Democratic Party. It behoves the NDP to criticize the economic policies of other political Parties because when Canadians are given the opportunity, in the light of day, to examine New Democratic Party economic policies, they will see that the New Democrats want to take over the Royal Bank, the Bank of Commerce, and the Bank of Montreal.
The Leader of the NDP and all his socialist followers are going to get in the elevator at Commerce Court, go up to the board of directors and say: "Sorry, guys, we are taking over." That is absolute naivety but that is NDP policy. They are going to nationalize the cable companies and the banks. Shareholders should beware because if the NDP is elected, Heaven forbid, it will take over those companies.
I could go on and on about NDP economic policies but Canadians are not fooled. They know the NDP is very seriously lacking in credibility, whether it is on the economic or any other front. Therefore I should, in the few moments remaining, speak about Bill C-117, an Act to amend the Excise Tax Act and the Excise Act.
The purpose of the Bill, as you know, is to implement the many sales and excise tax increases announced by the Conservative Government. It is now the Government's turn. It is as deserving of criticism as the NDP, if not more. The Conservatives, under their Prime Minister (Mr. Mulroney), are seriously lacking in credibility, and when the election is called, whether it is September or October of this year or the spring of next year, the key issue in the minds of Canadians will be the honesty, integrity, and credibility of the Prime Minister and the Conservative Government.


Don Boudria: Or lack thereof.


John V. Nunziata: Or lack thereof. The Conservatives made a lot of promises and my hon. and distinguished colleague from the federal riding of Glengarry-Prescott-Russell (Mr. Boudria) has duly documented each and every one they made in their thirst for power in the summer of 1984.
His book has a number of columns, one of which is entitled "The Promises". The next column is entitled "The Broken Promises". Surprisingly, the columns match. For almost every promise made there is a broken promise. If any Canadian wants a copy of that book put together by the Hon. Member for Glengarry-Prescott-Russell, all they need do is write to him postage free and he will send them a copy. It is called The Book of 338 Tory Promises and is very interesting.

May 26, 1988
In the book the Hon. Member quotes some of the statements made by the Prime Minister and members of the Conservative Party during the election. One of the statements the Minister of Finance (Mr. Wilson) was: "We will reduce spending. We will refrain from increasing taxes which are already too high." Let me repeat that just to be absolutely clear. This is the Minister of Finance who has taken charge, if you will, of the finances of the nation over the last three and a half years. He made this statement on March 6, 1984, here on the floor of the House of Commons: "We will reduce spending. We will refrain from increasing taxes which are already too high."
That is a promise of sorts. If you believe what he said when he was in opposition then one would expect that he would deliver on that promise, that is, to refrain from increasing taxes. What did he do when his Party came to power and he was appointed Minister of Finance? He proceeded almost immediately to increase taxes. Canadians will never forget that very first Budget, that very first attempt at managing the finances of the country. Canadians will never forget the attempt by the Government to deindex senior citizen pensions, notwithstanding the promise made by the Prime Minister of Canada when he was Leader of the Opposition, when in Quebec he said to the senior citizens: "Elect me, Brian Mulroney, and I promise that your pensions are sacred trust". What happened to that sacred promise about sacred trust? In the very first Budget handed down by the Minister of Finance the Government tried but failed to reduce the deficit on the backs of senior citizens.
While the people of Canada might have been hoodwinked during the election campaign, they were not going to put up with that. There were protests across the country. Senior citizen groups from one great coast to the other started to complain, demonstrate, and write letters. Eventually the Government and the Minister of Finance had to back down on that ill-conceived, unfair, inequitable tax measure. What made matters worse was that after saying senior citizen pensions were a sacred trust and they would not increase taxes, they did a complete about face.
That is not the only example of the Minister of Finance breaking a promise. As you know, this legislation we are debating today will implement a number of sales and excise tax increases announced by the Government in the February, 1987 Budget, the June, 1987 Budget, the December, 1987 tax reform proposals, together with the February, 1988 Budget. If one examines not simply the Budgets I have just referred to and the tax reform proposals but also the record of the Government over the last three and a half years on tax increases, the statistics are absolutely staggering.
Let us just examine what this Government has done from 1984 to fiscal year 1988-89. It has increased taxes by $32.4 billion, a 46 per cent increase. What taxes were increased? The Government not only broke its promise not to raise taxes, it broke its promise to practise equity and fairness in the tax
system. The Government increased personal income taxes by 55 per cent in that period of time while at the same time it increased corporate taxes by only 28 per cent. Individuals were ripped off to the tune of 55 per cent, but corporation taxes were increased by only 28 per cent. Not only did the Government increase personal income taxes, and the income tax system is somewhat regressive or not as progressive as it ought to be anyway, but it increased sales and excise taxes by 77 per cent. Canadians have been asked to pay over the last five years an additional $10.6 billion in sales and excise taxes.
I note that it is one o'clock and I would appreciate the opportunity to continue my remarks at three o'clock.


The Acting Speaker (Mrs. Champagne):: There will be six minutes left for the hon. gentleman to continue his remarks.
It being one o'clock I do now leave the chair until two o'clock.
At 1 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.


Hon. Andre Ouellet (Papineau):: Mr. Speaker, I rise today to show Canadians just how irresponsible the Government's defence policy actually is. This very week President Reagan arrives in the Soviet Union for talks with Soviet General Secretary Gorbachev. Also, the American Senate is on the verge of ratifying the INF treaty signed between the superpowers last December.
Meanwhile, back in Ottawa, what is Canada doing? It is proposing the most irresponsible defence initiative in Canadian history, that is, the acquisition of 10 to 12 nuclear powered submarines. Not only does this go against the trend toward peace, but yesterday we discovered how unhappy Canadians truly are at having nuclear powered submarines.
According to an Environics poll conducted between May 3 and May 17, 59 per cent of those questioned oppose the purchase of nuclear powered submarines. The picture is clear. The world does not want proliferation in arms and neither do 59 per cent of Canadians. It is only a Conservative Government locked in the 1950's cold war rhetoric that continues to push this irresponsible initiative.

*
May 26, 1988



ABORTION


Mr. Don Ravis (Saskatoon East):: Mr. Speaker, since the Supreme Court decision overturned the abortion law Canada has become the only civilized nation in the world without legislation protecting the unborn child. The question of abortion is a moral issue, not a political issue, and should be treated accordingly. For this reason a free vote should be held to allow Members of Parliament to follow their consciences and express their personal views by choosing the option they believe is proper.
A recent poll shows that 60 per cent of Canadians believe that restrictions should be placed on abortion. That is a 7 per cent increase since February. Clearly, the Canadian people find the present situation unacceptable and expect this House to pass a law which is fair and responsible to both the mother and the unborn child.
We as parliamentarians must have the strength to face this issue and not seek to hide behind the guise of party politics. The question of rights for the unborn is far too important to be treated irresponsibly.
# * *



MARINE SAFETY


Mr. Jim Manly (Cowichan-Malahat-The Islands):: Mr. Speaker, on May 31, 1989, the Department of Transport will make it mandatory for all vessels over 20 metres to be fitted with an EPIRB or electronic beeping device. But why not all vessels over 10 metres as it planned to do last year?
The change in vessel length means that a large percentage of vessels will not have this protection for their crews. Pressure was brought on the Minister because of the cost in dollars, neglecting the cost in human life.
EPIRBs should be mandatory on all commercial vessels. It has been estimated that the cost of the search for the Scotia Cape, at approximately $10 million, could have placed EPIRBs on all West Coast commercial vessels.
A Victoria company, Modern Products Inc., has developed a 406 megahertz system for EPIRBs. The company was given a guarantee that they would be mandatory on vessels 10 metres and up and had planned its production accordingly. It feels that this is one more case of a small Canadian company, which is a world innovator, getting the shaft. The Government should revert to its original plan and have EPIRBs mandatory on all vessels 10 metres and over.



THE ADMINISTRATION


Mr. William G. Lesick (Edmonton East):: Mr. Speaker, in 1984 the Progressive Conservative Party's election platform was based on four major pillars; national reconciliation, economic renewal, social reform, and renewed internationalism. Have we delivered? The answer is a resounding yes with the Meech Lake Accord, various regional diversification initiatives, the lowest unemployment and interest rates in years, day care, capital punishment, abortion, a better than ever defence policy, and over 220 individual pieces of legislation passed.
The Government has delivered in the areas that it promised it would. Now, with the free trade agreement, prosperity for all Canadians is at hand.
As we near the next federal election, Mr. Speaker, I ask Canadians to compare this record of accomplishments with that of the previous Government or, for that matter, any previous Canadian Government.



FERRIES


Mr. George Henderson (Egmont):: Mr. Speaker, I want to bring to the attention of the House today a serious situation which is developing in the line of transportation to and from Prince Edward Island.
Three years ago, when the present Deputy Prime Minister (Mr. Mazankowski) was Minister of Transport, he announced that they were very close to making a final announcement with regard to two new ferry vessels for Northumberland ferries to travel between Wood Island, P.E.I., and Caribou, Nova Scotia.
The next Minister of Transport, the present Hon. Minister for International Trade (Mr. Crosbie), stated a year and a half ago that construction of these ferries would proceed in a matter of days.
This is May, 1988, and there is still no construction. I ask the current Minister of Transport (Mr. Bouchard) to proceed with the announcement of the construction of two new vessels for Northumberland ferries. We rely totally on agriculture, fishing, and tourism in the Province of Prince Edward Island.
The Northumberland ferries now in place at Wood Island and Caribou are over 30 years old. If they are not replaced within the next year, they will have to be decommissioned. It is urgent, and I ask the Government and the Minister to make this announcement immediately.

May 26, 1988
5. O. 21 ABORTION



SANCTITY OF HUMAN LIFE

Mr. Gordon Taylor (Bow River):: Mr. Speaker, one of the most misleading statements by pro-abortion activists is: "Before abortion on demand there were 30,000 or 40,000 women dying every year as as result of botched-up back alley abortions".
This false statement is intended to create an unjustified fear by suggesting that only abortion on demand could prevent such tragedies. There may have been an occasional death, but
30,000	or 40,000 is false and without any valid statistical foundation.
Before we vote on this matter let us be sure to separate the facts from the fiction. Surely the only scientifically honest new law that can be passed is one that recognizes the truth of the existence of a new human person from the moment of conception, and then proceed to protect that person from those who would seek to destroy him or her. Let us recognize the sanctity of human life.



NATIONAL DEFENCE


Mr. Bill Blaikie (Winnipeg-Birds Hill):: Mr. Speaker, the flagship of the Conservative White Paper on Defence, a plan to buy 10 to 12 nuclear powered attack submarines at a cost of at least $8 billion, is sinking fast.
A broad range of defence analysts and Maritime experts have questioned the wisdom of such a plan, especially given that the budget of $8 billion to be provided by the federal Government may actually be only half of what will need to be spent by the time the cost of construction in Canada and the total costs of an extensive training, servicing, and environmental monitoring infrastructure are added.
Now a new poll published by the Canadian Centre for Arms Control and Disarmament shows that 59 per cent of the Canadian public disapprove of spending even $8 billion to procure these militarily destabilizing and environmentally dangerous submarines. Even half of those who identified themselves as Tories are against these submarines.
A spokesman for one of the firms in the race for the contract dismisses preoccupations with cost, wanting to stick instead to what he calls simpler premises.
Canadians are concerned with the outrageous price tag attached to this program, especially since the Government itself has admitted that it has no accurate figures. The real cost of this program can go nowhere but up as consensus for nuclear powered submarines sinks lower and lower.
[ Translation]



EQUITY IN EMPLOYMENT


Mrs. Gabrielle Bertrand (Brome-Missisquoi):: Mr. Speaker, the Conservative Government made a promise to Canadian men and women concerning employment equity, and it is taking steps to live up to this commitment.
Our Government has been urging industrialists and employers to support and promote employment equity. With that in mind, every year the Department of Employment and Immigration gives an award and a trophy to the firm which pays particular attention to equity in non-traditional jobs.
During the recent Salon de la femme at the Montreal Velodrome, a company with a plant at Bromont in my riding of Brome-Missisquoi, Canadian General Electric, was awarded the "Equal Opportunity" trophy.
Mr. Speaker, this company has been innovative and took the lead in this field. Women hired by General Electric can expect to perform the same kind of work as men do, and they have been quite successful. Like men, they can just as well be assigned to manufacturing as to automated operations.
Thanks to our incentive policies other firms like General Electric made special efforts to reach the same objective even though they did not have to do that.
I thank and commend General Electric, I congratulate the director of Cowansville's manpower centre for submitting that company's name and, finally, I say well done to women who face up to challenges whenever they are given an opportunity.



CANADA POST CORPORATION


Alfonso Gagliano: Mr. Speaker, the Canada Post Corporation had decided to penalize Canadians who by oversight put a wrong postal code on a letter or who did not put it in at all because they did not know what it was.
This measure would have been unfair. Imagine its effect on senior citizens, the disabled, the small businesses.
Mr. Speaker, I was pleased to learn that finally the Canada Post Corporation recognized that it was a mistake. It is human to err, Mr. Speaker, but up to now the Canada Post Corporation refused to acknowledge it.
In the same spirit, I hope that the minister will bring pressures to bear on the Canada Post Corporation to make it also admit that setting up supermailboxes and closing rural
May 26, 1988

post offices were other mistakes. The mandate of the Canada Post Corporation should be entirely altered to make it clearer and more specific, its essential service being the delivery of mail to all Canadians without discrimination and such should be the Corporation's mandate. It should not take the first opportunity to try to make money and to give an unequal treatment to Canadians.



PHARMACEUTICAL INDUSTRY


Hon. Bob Layton (Lachine):: Mr. Speaker, a few days ago opposition Members, looking for headlines, claimed that drug prices in Canada were rising at more than double the inflation rate. What a flagrant misrepresentation of the facts. I want to set the record straight.
An independent study by the Peat Marwick Consulting Group has demonstrated that drug prices have stayed well within the inflation rate since Bill C-22 established the Drug Prices Review Board in December, 1987. Eighty-three per cent of prices for prescription drugs did not increase at all during the last six months, and 96 per cent showed price increases of less than the average Consumer Price Index of 5 per cent.
The Opposition is slow to recognize the substantial benefits, including Canadian made products for medical and health care, thousands of high-tech, high quality jobs, and sizeable investments being made across the country, as a result of the passage of this Bill.
The good news announcements come every week. This may mean little to the Liberals and the New Democratic Party, but it sure matters to the people finding jobs in my riding of Lachine. Let us keep the record straight.



BENZOYL PEROXIDE-DEPARTMENTAL STUDIES

Mr. Howard McCurdy (Windsor-Walkerville):: Mr. Speaker, a number of issues have drawn attention to the sluggishness of the Department of National Health and Welfare. Mussels and AIDS are two examples. We can now add Benzoyl Peroxide.
Benzoyl Peroxide is a chemical used in acne medication. For three years evidence has been mounting that it causes skin cancer. Two years ago a committee of specialists studying the issue felt more study was necessary before a final decision could be made, but it recommended a ban on over-the-counter sales of Benzoyl Peroxide in the interim. Nothing happened.
I wrote to the Minister of National Health and Welfare (Mr. Epp) a year ago. His answer was: "The matter is under review. We will have a decision soon". I wrote to the Minister again in March of this year, after a year of silence and inaction and the accumulation of yet more evidence of danger. His answer was: "It needs more study. We will have an answer soon".
The Department of National Health and Welfare has done nothing to restrict over-the-counter sales of Benzoyl Peroxide products. Indeed, so complacent is the attitude that a senior toxicologist at the Department of National Health and Welfare resigned his position in protest over the Government's lack of action.
Where are the results of the surfeit of studies? Is the Government going to study the issue to death, the death of Canadians still in the dark about the dangers of Benzoyl Peroxide?



THE DISABLED AND THE HANDICAPPED


Mr. Gus Mitges (Grey-Simcoe):: Mr. Speaker, Canada's first National Access Awareness Week for disabled persons will be held May 29 to June 4. National Access Awareness Week is designed to encourage the active participation of communities, organizations, businesses and governments in improving the quality of life for disabled Canadians. It is being organized in co-operation with representatives of disabled persons, organizations, labour, business, government, and rehabilitation organizations.
The goal is to develop "five star" communities, where five elements-housing, employment, transportation, recreation, and education-are available to everyone who lives there.
Communities across Canada are being asked to celebrate what has already been accomplished by persons with disabilities; assess the accessibility of services and facilities in their community; and plan practical improvements and set goals by which progress can be measured over several years.
This is an excellent program that merits the support of everyone.



CANADIAN NATIONAL RAILWAYS


Hon. Lloyd Axworthy (Winnipeg-Fort Garry):: Mr. Speaker, last week in the CNR Fort Rouge yards a very major

May 26, 1988
Oral Questions
mishap took place when a tanker car containing lethal gas sprang a leak. Officials worked eight hours on the particular tanker car without informing residents who live within 1,000 metres of this particular location.
I draw this matter to the attention of the House because it is a disaster waiting to happen. I want to urge the Minister of Transport (Mr. Bouchard) strongly, or his representatives, to inquire into and investigate the problem of the storage of dangerous goods in the CN Fort Rouge yards because it represents a serious potential threat to thousands of residents who are in close proximity to the yards.
In fact I suggest that the CNR should be responsible for removing all goods of a dangerous nature that are stored in those areas, and provide major barriers to protect the citizens of that region.
*
* *



CANADA-UNITED STATES FREE TRADE AGREEMENT-BENEFITS FOR WOMEN

Mrs. Mary Collins (Capilano):: Mr. Speaker, free trade, as a Canadian woman, what's in it for me? As a business woman, free trade means economic expansion and jobs, particularly in the retail and wholesale, trade, commercial, personal care, and business services. It looks like some good opportunities there to make my future more secure and prosperous.
As a mother, not only are there jobs but more highly skilled jobs to secure my children's future. Free trade will create a firm financial foundation to secure our social programs too, such as child care and health care.
As a consumer, listen, I count my pennies. When tariffs are removed those pennies will grow into dollars. In fact, I will probably save about $1,000 per year in my household.
As a woman in all my roles, free trade is for me!



ORAL QUESTION PERIOD


Lloyd Axworthy: Mr. Speaker, I have a question for the Minister for International Trade. He will know by now that a number of premiers have said that the Bill on trade that was tabled in the House this week is an unacceptable intrusion into their provincial jurisdiction. The only explanation we have had back from the Minister is: "The Americans made me do it". He counters them with a threat of: "Take me to court".
That is no way to run a country. Canadians expect a more constructive and positive response on the very important impact this trade Bill will have on federal-provincial relations.
I wish to ask the Minister this question. What is he going to do about the major confrontation that is now building up with the provinces over the trade Bill? Will he withdraw this offensive Bill and rework it so that we will not put in danger the important balance of federal-provincial relations? Will he take a reference himself to the Supreme Court to get a proper ruling before we engage in open warfare with the provinces over a deal that does not do much for this country at all in any event?


Hon. John C. Crosbie (Minister for International Trade):: Mr. Speaker, the hon. gentleman's question shows just how far out of touch he is, and how anxious he is to try to damage the free trade agreement for which he or his Party has no alternative.
As an example of how inaccurate the hypothesis of his question is-and I don't know if it had an hypothesis, I don't know if it had anything actually-here is the latest information on Saskatchewan Premier Grant Devine who said today that he does not believe that the proposed federal free trade legislation affects his province's rights. I can quote, of course, a number of other premiers.
The reaction of the premiers has been most positive because they recognize that it is only by the exercise of our trade and commerce power, and it is only by our having the limited authority given us in Clause 9 to deal with Ontario, which is out to block the benefits of this agreement for the rest of the country, that we can proceed with the free trade agreement, which was negotiated freely and in consultation with the provinces with the United States of America.


HEALTH CARE SYSTEM
Lloyd Axworthy: Mr. Speaker, by that answer I presume we can expect the Premier of Saskatchewan to be receiving another major grant for his province within 24 hours.


Some Hon. Members:: Oh, oh!


Lloyd Axworthy: The Minister is ignoring the statements made by the Premiers of Quebec, Ontario, Nova Scotia, Alberta, and others.
I wish to cite to him the study released by the Attorney General of Ontario that clearly points out that this trade deal will put in danger the operation of health clinics, blood clinics, and the practice of medicine and health care in the Province of Ontario, and open the door to profit oriented businesses to distort that system totally.
In light of that clear evidence of the way in which this trade Bill will have a serious impact upon the health care system of
May 26, 1988

the country, will the Minister withdraw the Bill? Will he not admit that the price that he is asking this country to pay for the trade deal is far too high? Canadians do not want their health care system ruined by this trade deal.


John Carnell Crosbie: Mr. Speaker, it will not be long before Canadians will be warned that there will be an invasion of killer bees because of the Canada-U.S. Free Trade Agreement, or that American typhoons will come up and wipe out Canada. The Canadian people are not buying the cry wolf stuff.
Might I refer to something that was said by the Honourable Donald Macdonald. He said that the deal signed by the Tories with the U.S."is consistent with the policy of the governments of which Mr. Turner and I were members.11 The Government "has taken great care to respect the jurisdiction of the provinces," and "it has made every effort to ensure compliance with the agreement in a manner that is both consistent with federal jurisdiction and also respectful of provincial concerns".
That was stated by a Liberal, an impartial and truthful Liberal, not now in active politics, prostituting himself as the Hon. Member is.


Some Hon. Members:: Oh, oh!


Lloyd Axworthy: Mr. Speaker, that is a strange and curious observation from a Minister of the Crown on politics, a profession that he has practised throughout his entire life. I would say to him, Sir, that it does not speak well for a Minister to cast aspersions on all Members of the House in that manner.


Some Hon. Members:: Oh, oh!


EFFECT ON CANADIAN LAWS
Lloyd Axworthy: I wish to ask the Hon. Minister the following question.
Section 8 of the trade deal clearly indicates that the Canada-U.S. Trade Agreement will prevail over all laws passed by this Parliament. At the same time, the U.S. Congress yesterday decided that the trade agreement with Canada will be subservient to U.S. law.
Why is it that the U.S. Congress states very clearly that the trade agreement does not override its laws, but that Canada is prepared to make a totally different decision and have the trade agreement supersede all the laws of this Parliament? Why the imbalance? Why the distortion? Why are we caving in to those types of American demands? What is the Minister going to do about that major disparity between the two pieces of legislation on either side of the Canada-U.S. border?


John Carnell Crosbie: There is a simple explanation. The Americans have their statutory draftsmen, we have ours. We have our legislative precedents, they have theirs.
Oral Questions
In the United States legislation there is a clause that states that its legislation implementing the free trade agreement will override every inconsistent piece of state legislation. The hon. gentleman did not cite that. Would he like us to have that in our Bill, overriding every inconsistent provincial legislation? No, of course not, because the Hon. Member is now trying to pretend that he is for provincial rights when he was one of those who imposed the national energy policy on western Canada in an attempt to crush Alberta and the rest. He is a Johnny-come-lately to the provincial rights league. Well, you better come over and join us.


Lloyd Axworthy: No, that's your trick, John. You crossed the House, not me.


CANADA-UNITED STATES FREE TRADE AGREEMENT-BILL C-130-PROVINCIAL JURISDICTION
Mr. Jacques Guilbault (Saint-Jacques):: Mr. Speaker, my question is directed to the Minister for International Trade, and I want to say that although he insists on denying that Bill C-130 does not impinge on areas of provincial jurisdiction, his denials do not change the facts. The Premier of Quebec said there was an impingement on provincial jurisdiction. The Premier of Ontario said so, and some of the other provinces have expressed reservations. However, what I fail to understand is why the Minister included Clauses 6 and 9 in Bill C-130, although he had been warned that the provinces did not agree. Mr. Speaker, I want to ask the Minister whether he would confirm that two weeks ago, the Government of Quebec specifically asked him to withdraw Clauses 6 and 9, and I also want to ask him whether he would confirm that other provinces also disagreed with the presence of these two clauses. Finally, would he also confirm thal in response, he said he could not withdraw the clauses because the Americans wanted them in?


John Carnell Crosbie: Mr. Speaker, I wonder whether the hon. gentlemen when they were in power checked all their legislation with the provinces to see whether the provinces agreed with every clause they had in their legislation? They didn't do that with the national energy legislation which they later had to divide into eight sections because of its violation of the rules of this House.
What does the Premier of Quebec say? Quebec continues to support the free trade agreement. Quebec's objectives have, by and large, been achieved. The Premier of Quebec says that Quebec will proceed to legislate to protect provincial jurisdiction of with respect to wine and distilled spirits, so that Clause 9 will not need to apply to Quebec. This is the role and position which the Premier of Quebec has taken-most sensible, most conciliatory, and most disappointing to the hon. gentlemen opposite, Mr. Speaker.

May 26, 1988
Oral Questions


BILL C-130-REQUEST THAT MINISTER DELETE CLAUSES 6 AND 9
Jacques Guilbault: Mr. Speaker, the Minister is skirting the issue, because he knows perfectly well that he consulted the provinces and that they told him quite clearly not to include Clauses 6 and 9 in Bill C-130. That these clauses impinge on areas of provincial jurisdiction is clear, since the Premier of Quebec has to table legislation in the National Assembly to prevent the federal legislation from doing just that.
Mr. Speaker, my question to the Minister is this: Now that we have nothing more to add and the Minister is aware of provincial objections to these two clauses, will he do the sensible thing and withdraw these two clauses?


John Carnell Crosbie: Mr. Speaker, I can reassure the hon. gentleman right here and now that we are not withdrawing Clause 9 which is made more than necessary by the dog-in-the-manger attitude of the Premier of Ontario and his Government. We are not going to withdraw it, Mr. Speaker. There can be no Canada-U.S. FTA without Clause 9 in the Bill. Nor are we going to withdraw Clause 6 which is a declaratory clause, as Premier Bourassa has said, that maintains our rights.


Jacques Guilbault: Your American masters would not allow you to do that.


John Carnell Crosbie: The Premier of Quebec said this and I quote him from yesterday "We discussed the situation"-that is he and I- "and we would have preferred another approach". If there could have been another approach, we would have preferred it as well, but I must say-[DOT]


Lloyd Axworthy: The Americans would not let you.


John Carnell Crosbie: He said "The Quebec Government's position on this type of federal decision is no different from the one taken by successive governments for 40 years".


Some Hon. Members:: Time!


John Carnell Crosbie: The Hon. Members don't like to hear this. It is long past time.


DEFINITION OF SUBSIDY
Hon. Edward Broadbent (Oshawa):: Mr. Speaker, I have questions for the Minister and I will do my best to ask them devoid of rhetoric and I hope the Minister will reciprocate.


Some Hon. Members:: Oh, oh!


John Edward Broadbent: I will try, Mr. Speaker.


Some Hon. Members:: Oh, oh!


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


John Edward Broadbent: I will try again, Mr. Speaker.
The Government clearly believes that with this proposed law it has the authority to pass regulations in the area of the regulation of wine and spirits traditionally in the constitutional domain of the provinces. I see the Minister nodding in agreement, that that is what they believe their constitutional right is in the circumstances.
If this is the case, does the Minister also believe that when the Government sits down with the United States, to discuss, as it plans to, what constitutes a subsidy, the federal Government will also have the right to act independently to amend provincial legislation enacting social and regional development policies, for example, that the federal Government considers to be inconsistent with the agreement it has negotiated with the United States? That is a factual question, and I would appreciate getting the Minister's clear, factual understanding of the Government's position on this important matter.


John Carnell Crosbie: Mr. Speaker, I welcome a question from the hon. gentleman that is devoid of rhetoric. It was also, of course, devoid of much sense. Nevertheless, I will attempt to deal with it without rhetoric myself.
I do not at the present time know of any social policy or regional development policy of this Government or of a province that is inconsistent with the free trade agreement. That is our position. If any of them are challenged in the United States, either before the FTA goes into effect or after, we will be protecting our right to have these kinds of policies in our own country, as we have in the past.
As to what may be a subsidy or not, that is a question for dispute and argument. It is not yet settled. We have our strong views on what is a proper subsidy, and there are certain GATT rules understood. This process we hope to expedite as quickly as we can, and have a definition that is as reasonable and as sensible as is possible to achieve.


POWER OF FEDERAL GOVERNMENT
John Edward Broadbent: Mr. Speaker, the last half of the Minister's answer is, of course, what I was asking about. The Minister knows that the next five to seven years are precisely the period in which what constitutes a subsidy will be negotiated.
Since the Government is resting its case on the use of the federal Government's trade and commerce power as justification for legislating within the provincial domain in wine and spirits, is it not, by inserting in Clause 6 the override power, claiming well in advance, in negotiating what constitutes a subsidy in the years ahead, that it will have the authority, quite clearly and unilaterally, according to the federal Government, to pass regulations for social and regional development policies if, in negotiations with the United States,
May 26, 1988

these are regarded as subsidies? If so, will he also admit that what this constitutes is a profound shift in constitutional power, going right from Regina to Ottawa to Washington? Will he acknowledge that?


John Carnell Crosbie: Mr. Speaker, I will not acknowledge something that is completely wrong. Premier Bourassa has a complete grasp on this subject. This is what the Premier of Quebec said yesterday, and he of course is very conscious of provincial rights. He said that Clause 6 is declaratory, it is more political than legal.
What Clause 6 does-


Some Hon. Members:: Oh, oh!


John Carnell Crosbie: If I might be permitted to answer, Clause 6 says that the Government of Canada, the Parliament of Canada, reserves its right to legislate in the future in connection with the free trade agreement if it deems it necessary in the future. It does not give the Government of Canada any additional powers because this Parliament cannot give the Government of Canada any powers beyond the legislative jurisdiction of the Government of Canada. Surely that is obvious.
Premier Bourassa went on to say that if the federal Government acts in a way in the future which affects provincial jurisdiction, Quebec has options, including going to court or passing provincial laws. It has been that way since 1867. Why do members of the Official Opposition and of the New Democratic Party want to twist this obvious proposition?


UNILATERAL CHARACTER OF CERTAIN GOVERNMENT DECISIONS
John Edward Broadbent: Mr. Speaker, my question was put very seriously, without rhetoric, and I am confident about the substance. My last question is this: According to the Premier of Quebec and his responsible Minister, according to the Premier of Prince Edward Island, according to the Premier of the Province of Ontario and his responsible Minister, and according to many constitutional experts, the federal Government is out to change constitutional powers unilaterally. My question is just this: Why this unilateral action by a Conservative Government?


John Carnell Crosbie: Mr. Speaker, why is there a debate in the country about the so-called Meech Lake amendments? One can only change the Constitution if one does it in a way that accords with the Constitution, the BNA Act and the Constitution Act of 1982.
Neither this Government nor this Parliament could unilaterally change the Constitution, and the only powers that we are asserting in our Bill are federal powers that have been federal since 1867, under the trade and commerce power, because we
Oral Questions
cannot be a nation, we cannot enter into commercial arrangements with other nations, unless we have those powers. Normally, Ontario is one of the greatest supporters of these kinds of powers for the federal Government. We are doing nothing that the Constitution does not permit us to do, and if we are, the courts will strike us down.


CANADA POST CORPORATION
Alfonso Gagliano: Mr. Speaker, my question is for the Deputy Prime Minister, in the absence of the Minister responsible for Canada Post. Canada Post decided to penalize Canadians who omit the postal code or make mistakes in it. Today, as a result of pressure, Canada Post recognized that this decision was a mistake and withdrew the proposal that had been accepted by the Government. Will the Deputy Prime Minister recognize that installing supermailboxes is also a big mistake and that Canada Post should reintroduce home mail delivery immediately?


Mrs. Lise Bourgault (Parliamentary Secretary to Minister of Consumer and Corporate Affairs):: Mr. Speaker, Canada Post's decision is known. This morning, the President of Canada Post issued a press release in which he admitted having made a mistake and it is over.
As for the Hon. Member's last question, he must remember that Canada Post wants to increase service, Mr. Speaker, and not decrease it, and I would like to remind him that by the end of its plan, Canada Post will have increased the number of places where stamps can be bought and letters mailed to 7,000. This will be very good in providing more service for Canadians.


COST OF POSTAL CODE GUIDE
Alfonso Gagliano: Mr. Speaker, now that the Government and Canada Post have admitted that they made a mistake, can the Government ask Canada Post to make available the postal code books at every post office at a minimum cost and not at the excessive cost of $10? If they want Canadians to use the postal codes, they should give them the possibility to find the postal codes.


Lise Bourgault: Mr. Speaker, obviously, Canada Post must do everything to encourage Canadians to put the postal code on their mail so as to help them make it easier to deliver the mail and minimize the delays in sending it.

May 26, 1988
Oral Questions
[English]	ENVIRONMENTAL AFFAIRS
AGRICULTURE	thinning of ozone layer


WESTERN DROUGHT-FEDERAL ASSISTANCE
Mr. Vic Althouse (Humboldt-Lake Centre):: Mr. Speaker, my question is directed to the Minister of Agriculture and is with regard to the drought relief proposals he made outside the House yesterday to the press. He said he would be moving water to livestock, moving feed to cattle, moving the cattle to pastures, monitoring livestock prices against overselling, and providing crop insurance where it is too dry to put seed in the ground.


Some Hon. Members:: Hear, hear!


Victor Fredrich (Vic) Althouse: Can he tell us how the no seeding necessary to collect crop insurance scheme will work, and is it in effect at this moment?


Hon. John Wise (Minister of Agriculture):: Mr. Speaker, it is obvious that my hon. colleague is using some misrepresentations in reference to the conversations I had outside the House yesterday. I was not announcing details of a drought assistance program but simply carrying out a reasonable, common sense conversation with the interested members of the press about things that we would have to consider, common sense and logical things, aspects of a program that we would have to consider as a federal Government, as would our provincial counterparts, if indeed the situation developed into a fullblown drought.


MONITORING OF LIVESTOCK PRICING
Victor Fredrich (Vic) Althouse: Mr. Speaker, with regard to the monitoring of livestock pricing, can the Minister tell us what action if any will accompany this price monitoring system? Will the Government begin buying to hold the price up, and what has been the reaction of feedlot operators to this proposal?


John Wise: Mr. Speaker, again I think the Hon. Member is putting the cart before the horse. We will have to consider all these aspects. We will not consider them in isolation. We will not act unilaterally. Rather, we will follow the same pattern we have followed since early February.
Matters of this kind will be worked out in consultation with our provincial counterparts and members of the drought committees. In fact, at our meeting in Calgary on Tuesday, during which I hope to schedule time to go out and view some of the affected areas, I am insisting that we have representatives of livestock groups and producer groups there.


Mr. Alan Redway (York East):: Mr. Speaker, my question is directed to the Minister of the Environment. Is it true that Environment Canada has discovered a very substantial and significant thinning of the ozone layer over the Canadian Arctic? As well, can the Minister assure the House that the ozone layer treaty will be on the agenda of the economic summit meeting in Toronto next month?


Hon. Tom McMillan (Minister of the Environment):: Mr. Speaker, I can confirm that Government of Canada scientists and others have expressed great concern about the thinning of the ozone, both in the area the Hon. Member referred to and elsewhere. For example, there has been something like a 2 per cent to 3 per cent thinning in the ozone layer over the city of Toronto from 1976 to about 1983, the last year for which we have data in that particular case.
The Government of Canada will be raising at the G-7 summit, through the Prime Minister, the question of ozone depletion. In particular we will be urging the G-7 countries to ratify the Montreal protocol. We ourselves want to do so beforehand but are being prevented from ratifying because Liberal members of the Senate are holding up the Canadian Environmental Protection Act. Until the Senate acts expeditiously, as the House of Commons has done, we are prevented from taking world leadership on a most important global problem.


NATIONAL DEFENCE
André Ouellet: Mr. Speaker, in the absence of the Minister of National Defence, my question is for the Deputy Prime Minister. Yesterday, we learned that 59 per cent of Canadians oppose the purchase of nuclear submarines. After more than a year of propaganda, the Conservative Government has not been able to convince the people that buying these submarines is a good deal. Is the Deputy Prime Minister prepared today to listen to the voice of the people and give up this ill-conceived policy?


Hon. Don Mazankowski (Deputy Prime Minister and President of the Privy Council):: Mr. Speaker, as the Hon. Member knows, there is quite a discrepancy in polls taken in the country these days. I have a poll here conducted by Angus Reid which indicates in April, 1988, 47 per cent supported the idea and 47 per cent opposed it. On April 20, 1988, Decima Research showed 42 per cent in favour of the initiative. When
May 26, 1988

asked whether Canada should rely on the U.S. submarine force to provide security under the ice in Canadian waters, only 10 per cent agreed.
I think one must look at the polls in their fullest context rather than simply singling one out, because there are discrepancies from time to time.


COSTS OF ACQUISITION
André Ouellet: Mr. Speaker, it is quite clear from the figures just given to us that, despite the efforts of the Government, successive polls have shown more and more people are opposing this venture as they become aware of it.
I want to remind the Minister that the proposed submarine program is supposed to cost $8 billion. That figure does not include the cost of maintaining the fleet or providing refuelling facilities. Will the Deputy Prime Minister come clean with the Canadian people and give us the cost of this program? Is he ready to admit today that the total cost will run into the tens of billions of dollars?


Donald Frank Mazankowski: Mr. Speaker, I think the Hon. Member was in the House on a number of occasions when the Opposition challenged the figures with the Minister of National Defence. I think he made very clear and precise what figures were allocated to the purchase of the nuclear submarines.
May I simply remind the Hon. Member and the House that this Government produced a White Paper on National Defence, the first one in 16 years, which clearly outlined Canada's defence policy. We committed ourselves to a three ocean defence policy, as well as to the ongoing commitments to NATO and NORAD. We also committed ourselves to the domestic revitalization of our regular and reserve Armed Forces. I think it is quite obvious that the White Paper in total has been very well accepted by Canadians.


NATURAL RESOURCES
Mr. Simon de Jong (Regina East):: Mr. Speaker, my question is directed to the Minister of the Environment. His Department and the Province of Saskatchewan are engaged in a study, a copy of which I have in front of me. The study speaks of the possibility of diverting water from the South
Oral Questions
Saskatchewan River and the Qu'Appelle Valley River into the Souris River to meet the needs of a dam which the Premier of Saskatchewan insists should be built on the Souris. The Souris River also flows into North Dakota.
Can the Minister give us the assurance that his Government would never approve diverting water from the South Saskatchewan or Qu'Appelle River Basins into the Souris River to be exported to the U.S?


Thomas Michael McMillan: Mr. Speaker, I am a little puzzled by the last part of the question where he talks about water exports. My understanding is that the purpose of the project in question is not to export water in the sense that term is used in the federal water policy. Indeed, if that is the purpose, and I do not think it is, it would be in violation of the federal water policy we articulated in great detail some months ago.


REQUEST FOR ASSURANCE GOVERNMENT WILL NOT APPROVE DIVERSION OF WATER
Simon Leendert de Jong: Mr. Speaker, the federal water policy is opposed to any inter-basin transfer. Yet this study talks about an inter-basin transfer. Let me quote:
The available draft in the Souris River is not sufficient for projected longterm requirements. The future development of the Qu'Appelle River to the
Souris River diversion therefore appears to be a viable source of supply.
The director of the study was canned by the provincial Government because he embarrassed the provincial Minister by mentioning there was not enough water in the South Saskatchewan River to meet the needs of the Souris River.
Again, can the Minister give us, and especially the farmers of southern Saskatchewan who are experiencing short-term drought and the possibility of long-term drought, the assurance that his Government will never approve diverting water which could eventually be exported to the United States? Give us that clear assurance.


Thomas Michael McMillan: Mr. Speaker, the Hon. Member is excelling himself in confusion. We are talking about an international waterway which covers at least three jurisdictions, two of them Manitoba and Saskatchewan, and two countries. The federal Government has an obligation to satisfy itself that every environmental consideration is being factored into the equation because we administer the International River Improvements Act.
The permit has been applied for by the Province of Saskatchewan. I received it in January. Every due process is being followed, and I am honoring my obligations as a Minister of the Crown in that respect.

May 26, 1988
Oral Questions


CANADA-UNITED STATES FREE TRADE AGREEMENT- CANADIAN WATER RESOURCES
Hon.   Chas. L. Caccia@Davenport: Mr. Speaker, my question is for the Minister for International Trade. A couple of days ago in this House his Parliamentary Secretary, in answer to a question on the trade deal and export of water, consistently made reference to bottled water in relation to Item 2201 of the tariff schedule.
If the Minister reads the tariff schedule carefully he will see that the term "bottled" is only in the mind of the Parliamentary Secretary. There is not one reference to "bottled" on that page.
Therefore, would the Minister for International Trade tell this House why, if water was not intended to be in the deal and the legislation, there is no reference to the exclusion of water in both documents in order to give this reassurance to Canadians from coast to coast?


John Carnell Crosbie: Mr. Speaker, we have repeatedly stated the fact that there is absolutely nothing in the U.S.-Canada Free Trade Agreement which compels Canada, forces Canada, or directs Canada to sell water to the United States of America. As a matter of fact the Minister of the Environment has announced the Government's policy which, although I do not have the exact wording before me now, is not to permit large-scale diversion of water to the United States or any other country.
That is in contradistinction to what the Leader of the Opposition, in his book in 1968, Politics of Purpose, said at page 183, about water:
And if someday we can agree to the sharing of this continent's water by offering some of our water for export, we might want at that time to insist that if water is to be considered as a continental resource, markets should also be considered on the same basis. We might wish to export water not for money- but in return for access to your markets.
That, as I see it, must be our position. I don't want to sound tough.
He certainly didn't sound tough in those days. The Member should be taking this matter up with his Leader. He should be concerned about his policy.


Mr. Caccia:: Mr. Speaker, it would be a sad day if the policy of the Government of Canada in 1988 were to be inspired by a statement made 20 years earlier.


TERMS OF AGREEMENT
Hon.   Chas. L. Caccia@Davenport: Mr. Speaker, the Minister for International Trade has to clarify in this House why there is a reference to sharing of natural resources under Section 409 of the trade deal. If the Government found it necessary to exclude explicitly beer, unprocessed fish, and logs, why was water not included in that list?


John Carnell Crosbie: Mr. Speaker, I will come back to the words of the Leader of the Opposition, who is now in a position of some considerable power, although we all realize that the hon. gentleman asking the questions does not want him there. He is one of the dissenters.


Mr. Gray (Windsor West):: Have the guts to answer the question directly.


John Carnell Crosbie: The Leader of the Opposition said:
Water will occupy the best minds-
-so you can forget it, Herb-
-of our two countries for the next generation. It will be a constant topic of discussion over our neighbourhood fence. I am sure that we will be able to resolve the future use of the water of this country in a spirit of realistic friendship.
That is what the Member's Leader wants to occur.


Lloyd Axworthy: What do you want? You want to sell hot air.


THE ENVIRONMENT
Mr. John Parry (Kenora-Rainy River):: Mr. Speaker, my question to the Minister of Environment is about the $41.6 million paid to Noranda, supposedly to build a gaseous pollutant recovery plant.
Could the Minister indicate to the House whether this amount is considered as a loan or a subsidy for accounting purposes? Is he willing to table in the House the Quebec-Canada-Noranda Agreement?


Thomas Michael McMillan: Mr. Speaker, I do not think there is any secret about this. The company in question accounts for something like 45 per cent of the acid rain causing emissions in Quebec. The Hon. Member will know that Quebec and Ontario account for about 80 per cent of the total domestic emissions relating to acid rain.
The Government of Canada worked very closely with the Government of Quebec and, through the Government of Quebec, with Noranda to finance the building of a sulphuric plant to address the problem directly.
The negotiation was conducted, in very large measure, by the Province of Quebec. It was, in effect, their deal to negotiate because it was within provincial jurisdiction. Our role was one of supporting that province and helping with the funding.
May 26, 1988


REQUEST THAT MINISTER TABLE DOCUMENTS RELATING TO AGREEMENT AND ANALYSES
John Edmund Parry: Mr. Speaker, my supplementary question is directed to the same Minister.
Could the Minister table in the House all relevant documents, not just the agreement, but also the analytical reports showing that this agreement respects the polluter pay principle whereby pollution clean-up costs should not be paid with Government subsidies?


Hon. Bernard Valcourt (Minister of State (Small Businesses and Tourism) and Minister of State (Indian Affairs and Northern Development)):: Mr. Speaker, I find it strange that the New Democratic Party should criticize the Government for trying ...


An Hon. Member:: Let him answer, we do not need dummies!


Bernard Valcourt: Mr. Speaker, I find it strange that members of the NDP, Canada's uncompromising party, should object to the Goverment taking steps to protect Quebec's environment. It is my first comment.
As to the disclosure of the terms of the contract, I must say this is a contract between the Government and a private corporation. We know what the Socialists think of private enterprise, but as a rule there is no disclosure of the terms of such a contract because this could affect the competitivity of the company.


DISASTERS
Don Boudria: Mr. Speaker, my question is directed to the Deputy Prime Minister and is concerning the Gander air disaster. Several members of the Canadian Aviation Safety Board have signed a report rejecting the air crash investigators' theory that icing was the cause of the crash that took the lives of 256 people in Gander, Newfoundland.
In view of the fact that half of the Board members are complaining that they were restricted in their review of the investigators' finding, coupled with the fact that eye witness reports have been rejected as irrelevant, will the Minister now assume his responsibilities on behalf of the Government?
Will he make available to the Canadian Aviation Safety Board all the information that the investigators have on hand? Will he personally ensure that all members of the Board are provided with all of the information?
Oral Questions


Hon. Gerry St. Germain (Minister of State (Transport)):: Mr. Speaker, as the Hon. Member knows, the Canadian Aviation Safety Board is an autonomous body set up by this Parliament in 1983. He may recall that it was set up with unanimous agreement.
The investigation is ongoing. At the present time a draft report of this accident has been issued to interested parties which are responding. We are awaiting a final report. Until such time, I think it would be premature to judge the final outcome of this investigation.


Don Boudria: Mr. Speaker, as interesting as that may be, that is not the question that I asked.


REQUEST FOR ACCESS TO ALL INFORMATION
Don Boudria: I would like to ask the Minister of State (Small Businesses) a straight forward question: Why did the Canadian Aviation Safety Board and its members not get access to all information? We have here, Mr. Speaker, a foot of information. And some is missing! Why was this information not given to members of the Bureau to make sure that everybody would know all about that terrible accident? Why not make all information readily available? Is the government hiding something?


Gerry St. Germain: Mr. Speaker, we have said, and will repeat again, that the results of this entire investigation will be made public. I repeat that the Minister will be receiving a report from the Canadian Aviation Safety Board and the Minister will have 90 days to respond. This investigation will be completed with the wellbeing and safety of all air transportation in Canada in mind.


Don Boudria: There is interference.


WESTERN DIVERSIFICATION FUND
David Orlikow: Mr. Speaker, in the absence of the Minister responsible for the Western Diversification Fund, my question is directed to the Deputy Prime Minister. Last week the Conservative Premier of Manitoba confirmed what we had claimed weeks ago, that in fact Manitoba received virtually none of the funding from that fund while tens of millions of dollars have gone to British Columbia and Saskatchewan. When will the Government get its act together to see that Manitoba gets its fair share of the funds?

May 26, 1988
Business of the House


Donald Frank Mazankowski: Mr. Speaker, I am advised that in Manitoba approximately 350 applications have been received from a variety of sources. To date, 35 projects worth about $12.6 million have been approved for Manitoba. Details will be announced shortly.


John Edward Broadbent: He just happened to have them with him.


Donald Frank Mazankowski: That is right, I just happen to have them. I guess that is good anticipation, Mr. Leader of the New Democratic Party.
I think it is most unfair when one does these periodic comparisons, because the response to the western diversification initiative has been overwhelming. There have been some
55,000	inquiries and a number of applications. The fact that it is a new initiative means that we have had some growing pains. However, I think that quite clearly applications are being processed in a much more expeditious manner and announcements are being made. I am sure my hon. friend will welcome that. I am sure Manitoba will be well looked after in the process.


DECISION MAKING PROCESS
David Orlikow: Mr. Speaker, the fact is that Manitoba has not received its fair share. One of the major claims about this fund was that decisions would be made at a regional level. The Premier of Manitoba claimed last week that many of the decisions are tied up in the bureaucratic mess in Ottawa. When will the Government gets its act together and let the regions do the things they are prepared to do?


Donald Frank Mazankowski: Mr. Speaker, that has clearly been the intention. As I said, the response to the program indeed has been overwhelming. There have been tens of thousands of applications submitted, and many inquiries. There has been a pipeline to fill and I think my hon. friend will see that in the next short while the approvals will be announced in a much more expeditious manner. As I said earlier, I am sure that Manitoba will be receiving its fair share.


Mr. Speaker:: This will be the last question of Question Period.


RESEARCH
Mr. David Berger (Laurier):: Mr. Speaker, in the absence of the Minister of State for Science and Technology I will put my question to the Deputy Prime Minister. From the time the Government took office it has cut funds for research, science, and technology, and done its level best to drive scientists out of the country. In January a board set up by the Prime Minister
and chaired by him recommended a 100 per cent increase over two years in funds for university research.
How can the Deputy Prime Minister justify a 7 per cent annual increase which rejects the advice of a board chaired by the Prime Minister and which will drive more scientists out of the country?


Bernard Valcourt: Mr. Speaker, I find it quite appalling to listen to the Liberal Opposition. Instead of congratulating the Government for having injected more than $520 million in our universities for research and development, they complain that this is not enough. The Liberal Party should remember that during its many years in power it never gave the field of science and technology the attention it deserved. Instead of complaining today, the Hon. Member should congratulate the Prime Minister and the Conservative Government!


GOVERNMENT POSITION
David Berger: Mr. Speaker, under the Centres of Excellence Program announced yesterday, many universities will not even be able to apply for funds because the Government refuses to fund research costs fully. Will the Minister explain why the Government has rejected another critical recommendation made by the board chaired by the Prime Minister to fund fully the cost of university research?


Bernard Valcourt: Once more, rather than complain in the House the Liberal Party spokesman in this area should congratulate the Government for what it has done for university research. Of course, when the previous Liberal Government totally neglected R and D in Canada, we will not be able to correct the situation in a matter of a few months. It is good solid progress that is well received by universities all across Canada.


BUSINESS OF THE HOUSE
Herbert Eser (Herb) Gray: Mr. Speaker, will the Deputy Government House Leader give us the statement of business for the coming week?


Hon. Doug Lewis (Minister of State and Minister of State (Treasury Board)):: Mr. Speaker, this afternoon we will resume debate on Bill C-l 17, the Excise Tax Act. There is an understanding among the Parties that the debate will be
May 26, 1988

concluded at or before 5 p.m. today, and a division will take place at that time.
Tomorrow, between 10 a.m. and 11 a.m., we will resume debate on Bill C-126, the Bretton Woods Act. It is the understanding between the Parties that there will be a division before 11 a.m.
Subsequent to Routine Proceedings tomorrow, we will continue debate on second reading of Bill C-129, the Air Canada Privatization Act, until 2 p.m. There is also an understanding among the Parties that there will be no motion under Standing Order 9(4)(a).
It is our intention on Monday to commence what might be called the procedural debate on Bill C-130, the free trade legislation. It is our intention to call the legislation. I do not think there is any secret that my colleagues opposite may wish to put some questions to the Chair. Naturally, we are in a position to respond. There will be no effort to proceed with the motion being put and the debate ensuing on Bill C-130 in order to give Your Honour an opportunity to reflect upon the procedural matters.
We will then follow that with continuation of debate on Bill C-129, unless it should finish tomorrow.
There is a tentative agreement that I am reasonably sure will go ahead, that on Tuesday we will recommence debate on the Meech Lake Accord. On Wednesday we will resume debate on Bill C-129, the Air Canada Privatization Bill, unless it should pass second reading either tomorrow or Monday.


Jean-Robert Gauthier: Mr. Speaker, since the Minister has told the House that the Government does not intend to use Standing Order 9(4)(a) tomorrow on Bill C-129, will the Minister give us an undertaking that he will utilize no rules in the book that could extend hours, including Standing Order 69?


Douglas Grinslade Lewis: Mr. Speaker, when I discussed this matter with Members opposite and officials of their Parties, I gave my word that there would be no effort to extend hours. I am not completely au courant with Standing Order 69. I can make myself au courant.
I assure my colleague that there is no intention to extend hours tomorrow.


Lorne Edmund Nystrom: Mr. Speaker, I have three brief points. I am in full concurrence with what the Government House Leader has just said-not the Government House Leader but the guy who controls the shop over there.


Mr. Speaker:: The Hon. Member might at least say the honourable guy.


Lorne Edmund Nystrom: I just want to concur with the list that has been given to us by our friend across the way. He gave us his word that there would be no move to extend the hours tomorrow on the Air Canada debate.
Excise Tax Act
There is something that I want to clarify for the record publicly. It is my understanding that if we debate the Meech Lake Accord Tuesday, in all likelihood it will be a Leaders' day if the three Leaders are available.


Douglas Grinslade Lewis: Mr. Speaker, we have made every effort to cooperate with the Opposition Parties in order that we could arrange what might be called a Leaders' day. Until we have an opportunity to confirm this with the Prime Minister (Mr. Mulroney) when he gets back from Europe, I do not want to say it is a firm deal as of yet.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Wilson (Etobicoke Centre) that Bill C-117, an Act to amend the Excise Tax Act and the Excise Act, be read the third time and passed, and the motion of Mr. Clinch (p. 15788).
John V. Nunziata: Madam Speaker, I appreciate the opportunity to conclude my remarks on Bill C-117. As you will recall, Madam Speaker, prior to the luncheon adjournment I was indicating how dishonest the Government has been with respect to its position on tax increases.
For example, on March 6, 1984 the Minister of Finance, a member of the Conservative Opposition at the time, said: "We will reduce spending. We will refrain from increasing taxes which are already too high". The Prime Minister himself said on November 29, 1984: "Canadians pay a good deal of money for government services. They are already paying quite enough". However, the moment this Government was elected to office it systematically, in each subsequent Budget since the election of 1984, increased taxes. The record shows that from 1984 to fiscal year 1988-89, taxes have increased by $32.4 billion. This was done by a Government which said: "We will refrain from increasing taxes. Canadians are already paying quite enough". The Government has increased taxes by $32.4 billion, an increase of 46 per cent, in three and one-half years.
If one analyzes where those tax increases have occurred, one sees that personal income taxes have risen by $16.1 billion, an increase of 55 per cent. Corporate income taxes have only gone up 2.6 per cent, an increase of 28 per cent. Sales and excise taxes have gone up 77 per cent in four years. That is what Canadians are being forced to pay as a result of the economic measures of the Government.
The Government, through the Minister of Finance, the Prime Minister, and other members of the Cabinet, indicated

May 26, 1988
Excise Tax Act
it wanted fairness in taxation. If that was their goal and if they were being honest and forthright with the people of Canada, why would they then increase personal income taxes by 55 per cent while at the same time only increase corporate income tax by 28 per cent? Individuals throughout the country are being forced to pay $16.1 billion more in taxes while corporations are only paying $2.6 billion more in the three and one-half years the Conservative Party has been in power.
Where is the fairness, equity, or economic justice with respect to the economic measures of this Government? Is it any wonder the people of Canada have lost complete trust and faith in the Government? Is it any wonder the Prime Minister has lost his moral right to govern?
After saying that Canadians were already paying too much and that it would not increase taxes, the Government started out in 1984 by attempting to deindex senior citizens' pensions. It increased the sales tax from 9 per cent to 12 per cent, a very regressive tax measure. On October 1, 1984 it went up 1 percentage point, again on January 1, 1986, and again on April 1, 1986. The Government extended the sales tax on candy, soft drinks, fast food, and snacks on July 1, 1985 and again on July 1, 1987. What a birthday present for the people of Canada.
There was a sales tax increase from 8 per cent to 12 per cent on paint, wallpaper, and toys on January 1, 1988. I am sure the Minister for International Trade was very concerned about the increase in the sales tax on toys. There was an increase in gasoline excise tax of two cents per litre on September 3, 1985 another cent per litre on January 1, 1987, another one cent per litre on February 19, 1987, and another cent per litre on April 1, 1988, for a total of five cents per litre since the conservative party came to power three and one-half years ago. the list goes on and on.
The bottom line is that both the Minister of Finance and the Prime Minister misled the people of Canada when they said they would hold back increases in taxation by indicating to the people of Canada that taxes were already too high. This particular piece of legislation, Bill C-117, is an attempt to increase further excise taxes which have already risen a significant amount since the Government came to power. They have gone up 77 per cent which amounts to $10.6 billion. This legislation only exacerbates the already serious problem the Government has with credibility.
I urge Hon. Members, considering of course that the Government holds a substantial majority, to look at themselves in the mirror and ask themselves if they are being truly honest with the people of Canada with respect to Bill C-117.


Don Boudria: Madam Speaker, I had the distinct pleasure and honour of listening to the remarks made by my colleague, the Hon. Member of York South-Weston (Mr. Nunziata). I want to congratulate him on an excellent speech. I am sure I speak on behalf of all Members, even the Minister for International Trade (Mr. Crosbie), when I do so.
I want to ask my distinguished and learned colleague if he is aware of the fact that in Bill C-117 there is a measure that will tax long-distance telephone calls to the tune of 10 per cent. I wonder if my colleague is aware of the negative impact of such a measure on rural Canadians?
Rural Canadians often have to make long-distance telephone calls to contact the doctor, hospital, as well as friends and relatives. I am sure you know that, Madam Speaker, because there is a rural component in your constituency as well. Does my colleague not agree with me that this is a reprehensible tax measure designed in a discriminatory way and is unfair to rural Canadians of the constituency of Glengarry-Prescott-Russell and elsewhere?


John V. Nunziata: Absolutely, Madam Speaker. The Hon. Member for Glengarry-Prescott-Russell (Mr. Boudria) asks me whether I was aware of this regressive tax measure. How can any Canadian not be aware of a regressive tax measure such as the 10 per cent tax on long-distance telephone calls which came into effect January 1, 1988, as well as the tax increase on cable television from eight per cent to ten per cent?
This tax measure might be understandable and reasonable to people living in larger urban centres who have the ability to make local calls in order to communicate with their friends and families. Where the inequity arises is when those who live in rural communities in northern Canada do not have the opportunity to make local calls in order to keep in contact with families and friends. It is these people who are being hit the most in terms of this regressive tax measure.
Notwithstanding the fact that the Finance Committee, which includes members of the Progressive Conservative Party, recommended that there be a cap on the level of taxation on long-distance calls, the Minister of Finance refused that very reasonable request.


Michael Morris Cassidy: Madam Speaker, I want to raise one point which perhaps relates a bit to an exchange that the Hon. Member for York South-Weston (Mr. Nunziata) and I had before lunch. It seems to me that there was alderman of the same name as his who stood and was elected as a New Democratic Party candidate to the municipal council in the Burrough of York back about 10 years ago. Am I confused or was that not the same gentleman who now represents York South-Weston for the Liberal Party here in the House of Commons?


John V. Nunziata: Madam Speaker, as always, the Hon. Member is confused. We did have an exchange earlier. I told the Hon. Member that he was being dishonest with Members of the House. He is being dishonest again.


Michael Morris Cassidy: Answer the question.


John V. Nunziata: It is absolutely not true. I was never elected as a New Democrat alderman. I would ask the Hon. Member
May 26, 1988

to check his facts. On more than one occasion he has deliberately misled the House and misled the people of Canada- typical NDP crap.


Sheila Maureen Copps: Madam Speaker-


Michael Morris Cassidy: Madam Speaker, I rise on a point of order-


The Acting Speaker (Mrs. Champagne):: The Hon. Member for Hamilton East was seeking the floor.


Michael Morris Cassidy: On a point of order, Madam Speaker.


The Acting Speaker (Mrs. Champagne):: The Chair recognizes the Hon. Member for Ottawa Centre on a point of order.


Michael Morris Cassidy: Madam Speaker, thank you for recognizing me. I ask Your Honour for your advice. To accuse another Member of deliberately misrepresenting, I believe, is unparliamentary. I would appreciate a ruling on that. If it is unparliamentary would the Chair ask the Hon. Member to retract his comment?


The Acting Speaker (Mrs. Champagne):: The Hon. Member for Cowichan-Malahat-The Islands was seeking the floor?


James Douglas Manly: On the same point of order, Madam Speaker.


The Acting Speaker (Mrs. Champagne):: At this point in time the Hon. Member for York South-Weston, I must agree albeit in an amusing way, or in a light tone, has used words that should not be used in the House of Commons. I am sure that he will find a way to withdraw.


John V. Nunziata: Madam Speaker, yes, I will withdraw the word "crap" as perhaps not being parliamentary. However, the Hon. Member made the statement that I was an NDP alderman. That is a falsehood. It is a lie. It is a misrepresentation. I refer to that statement. I am not calling him a liar or someone who might spread falsehoods or misrepresentations. The fact that he made the statement speaks for itself.


John Carnell Crosbie: Shameless piece of pettifoggery.


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


The Acting Speaker (Mrs. Champagne):: The Hon. Member for Ottawa Centre is rising on a point of order.


Michael Morris Cassidy: Madam Speaker, I do believe that you asked the Hon. Member to withdraw some other words. Perhaps that could be dealt with now.


Sheila Maureen Copps: Why don't you withdraw your falsehood?


Michael Morris Cassidy: If he wishes to intervene again, he can indicate whether or not he was ever a member of the NDP.


The Acting Speaker (Mrs. Champagne):: The Chair feels it is a sad case that we would have returned this afternoon to the subject which I had hoped would be closed after the exchange
Excise Tax Act
this morning. When the hon. gentleman for Ottawa Centre was recognized on a question I would have thought that we would be staying within the relevant elements of the Bill at hand. However, I wish that the Hon. Member who has spoken about misleading the House will please withdraw.


John V. Nunziata: Madam Speaker, I do not want to waste the time of the House of Commons. I think the people of Canada will understand what has occurred here in typical NDP fashion. However, for your sake and for your sake alone, Madam Speaker, I will withdraw whatever you consider to be offensive and unparliamentary. As they say in Latin res ipsa loquitur.


The Acting Speaker (Mrs. Champagne):: The Hon. Member for Hamilton East.


Sheila Maureen Copps: Madam Speaker, I actually had a question for the Hon. Member relating to a previous subject. It is amazing how members of the NDP have such incredibly thin skins. The Hon. Member for Ottawa Centre (Mr. Cassidy) was not satisfied to spread false statements this morning; he had to come back and repeat the same falsehoods this afternoon. When challenged he hid behind the shroud of parliamentary decency to claim that there is a withdrawal. Do Hon. Members hear the Hon. Member stand up and say; "I am wrong. I am sorry. I falsely accused the Hon. Member"? No, he hides behind the so-called parliamentary practice: "Yes, I cannot call anybody a scoundrel. I cannot call anybody a scalawag. It is okay if you call them any other kind of 20th century name".
In any case, my question relates to the question of longdistance telephone calls.


Some Hon. Members:: Oh, oh!


Sheila Maureen Copps: There is one issue that I do not wish to remain on the public record. My friend and colleague, the Hon. Member for Glengarry-Prescott-Russell (Mr. Boudria), was perfectly correct when he said that the imposition of a 10 per cent tax was a tax on rural Canadians. However, he may also be aware, and this is one thing I wanted to point out to my hon. friend from York South-Weston, that not only does it discriminate against rural people; it also discriminates against Canadians living in suburban communities.
For example, I have a sister living in Dundas. The area around Hamilton is not even as large in circumference and population as is Ottawa. However, if one is living in Dundas and wants to phone one's brother in Stoney Creek, one has to pay a long-distance charge. That is different from the City of Toronto where one can call 2.5 million people without using long distance. However, in many suburban areas and other communities long distance must be used.
Does the Hon. Member not agree that not only does this measure discriminate against rural Canadians, it also discriminates against those Canadians living in communities such as Dundas, Stoney Creek, and in the Niagara region?

May 26, 1988
Excise Tax Act


The Acting Speaker (Mrs. Champagne):: A short answer from the Hon. Member for York South-Weston.


John V. Nunziata: How can I help but not agree with the statements made by my friend and colleague from Hamilton East? She is quite correct. This regressive tax measure ought not to be in place. It discriminates against people in the North. It discriminates against seniors. It discriminates anyone and everyone who uses long distance.


Sheila Maureen Copps: Not in Toronto.


John V. Nunziata: In Toronto as well, we make long distance calls as well.
The point is that the Government misled the people of Canada when it said that it would not increase taxes. It has increased taxes right across the board. It is patently unfair. All those Tory Members across the way should hang their heads in shame.


The Acting Speaker (Mrs. Champagne):: Resuming debate with the Hon. Member for Winnipeg North Centre (Mr. Keeper).


Mr. Cyril Keeper (Winnipeg North Centre):: Madam Speaker, it is good to get some relief-


John V. Nunziata: Comic relief.


Cyril Keeper: -from this partisan bickering which has been dominating the Chamber for the last little while. I hope that "partisan bickering" is not an unparliamentary phrase. I would not want to get immersed in what has just been taking place over the last few minutes.


The Acting Speaker (Mrs. Champagne):: The Chair also hopes that this is not contagious.


Cyril Keeper: Madam Speaker, I thank you for your assistance.
Some of those people who are watching may be surprised to know that the piece of legislation before the House is an Act to amend the Excise Tax Act and that it has to do with sales taxes. I just want to mention a few of the things with which these increased taxes have to do.
There is a 10 per cent tax on telecommunication services, telephones, telex services. There is an increase in the telecommunications programming tax on cable and pay-television services. There is an increase in the sales tax on paint and wallpaper products. There is an acceleration of federal sales tax and excise tax remittances. There is an increase in the federal sales tax on beer, spirits, wines, and tobacco. The list goes on and on.
These increased taxes did not come about as an act of God. They came from a series of Budgets that the Conservative Government imposed upon Canadians. The Acts that we are
dealing with today concern the Minister of Finance's Budgets of February 18, 1987 and February 10, 1988; his June 18, 1987 White Paper on tax reform, and his December 16, 1987 tax reform paper.
What we have here are a series of tax increases coming out of papers that the Government called "tax reform". In a nutshell, that is what this debate is about. It is the Mulroney Conservative Government imposing tax increases upon Canadians in the name of tax reform. In the next few months, by sleight of hand, the Conservatives hope to create the opposite impression from what they have in fact been doing. We all know that in July people will be receiving some small measure of tax relief. When one looks at the over-all balance of things and takes into account all of the increases in tax burden that the Conservative Government has laid upon the backs of ordinary Canadians, the tax relief that will be delivered this summer is but a fraction of the tax increase. The over-all balance will mean tax increases.
In sum, Madam Speaker, tax reform to Tories spells tax increases. As a result of the Conservative Budgets over the last few years the average family is facing an increase in tax burden of $1,500. This might be justifiable if everybody else had been required to bear the same burden, or the money was being spent so wisely that it was evident to every Canadian that a tax increase was necessary.
Let us look at the first aspect of that proposition. Is everybody else carrying their fair share of the burden? What about corporations? What about large, profitable, powerful multinational corporations in Canada that make millions of dollars in profits and end up paying no taxes? In 1987, Xerox Canada made millions of dollars of profits and paid no taxes. The same holds true for a whole series of large and profitable corporations. Not only did those corporations pay no taxes and therefore set the tax burden that ordinary Canadian families have faced as a result of Tory policy in an unfair context, but many of those corporations received tax credits. They received dollars from the taxes of ordinary Canadians. In some cases, large corporations which made hundreds of millions of dollars in profits received tens of millions of dollars in tax credits as gifts from the Conservative Government of the day.
I do not wish to be overly partisan and say that this idea was originated by the Conservative Party, because I am aware of the fact that this trend was started under previous Liberal Governments. This policy of going easy on profitable corporations and going tough on ordinary Canadian families was started by the Liberals.
When Canadians voted for change in the last election, it is unfortunate that they did not receive real change. They did not get a government that was going to bring about real tax reform. Instead, they got the same old Liberal policies under a new partisan label. They got tax reform that translated into tax increases.


Alan Redway: Pass it and we will get some tax reform.
May 26, 1988


Cyril Keeper: How can the Conservatives justify the fact that they have increased the tax burden on the ordinary family by some $1,500 over the last three years? Have they asked everyone in the country to pay their fair share? Clearly they have not had the courage, the will, or the intention to ask corporations to do that, not just any corporation, but profitable corporations. What about wealthy individuals? There are people in this country who make more than $50,000 and $100,000 in personal income and who, because of tax writeoffs pay no taxes.
During the last federal election the then candidate for Prime Minister, now Prime Minister, (Mr. Mulroney), promised a minimum income tax, after he was prodded in that direction by the Leader of our Party who was calling for real tax reform. In the televised leadership debate the now Prime Minister then stated that he would bring about a minimum income tax. Once he got into office he moved as slow as a snail, as quick as a turtle, and eventually did bring forward some form of minimum income tax. At that time we welcomed the fact that he was taking action. But we also wanted to take some time to see whether or not this tax was going to bear fruit.
What studies and commentators have found is that the minimum income tax on wealthy individuals introduced by the Conservative Party is having a marginal impact. Because of exemptions, many of those wealthy individuals continue to pay no taxes. How can the Conservatives ask the ordinary Canadian family to pay more taxes, while many wealthy individuals who earn $50,000 or $100,000 pay no taxes? The whole question of taxation is one that leaves the ordinary Canadian with a sense of unfairness, that they are being asked to pay more while others are getting a free ride.
I would like to address the matter of tax reform and this matter of the continual pattern of tax increases by the Conservative Government from another perspective, that is, from the perspective of revenues, and what revenues could be collected if we asked those people who are getting a free ride now to pay taxes.
For example, in his annual report the Auditor General has identified $30 billion to $40 billion of tax write-offs which he says are questionable; there are serious questions about whether or not these tax expenditures achieve the public purpose objectives for which they were put in place. I am referring for example, to incentives for investment to create growth and employment. The Auditor General, who is an objective officer of Parliament, has stated that these tax writeoffs do not achieve the objectives for which they have been established. Those are tax expenditures, forgiven taxes in order to achieve certain objectives, and the Auditor General says we do not know whether those objectives are being achieved and there is no basis upon which we can confidently say that they are being achieved.
Excise Tax Act
We are giving up revenues. Instead of giving up those revenues for questionable purposes and collecting them we could provide some tax relief for the ordinary families. I want to assure you, Madam Speaker, that, based on my experience of talking to hundreds of citizens in my own riding of Winnipeg North Centre, the average family today is feeling the burden of taxation. People are fed up with this burden and they are angry that they are continually being asked to pay more and more and more. We allow these tax expenditures of $30 billion or $40 billion to leak through the tax system sieve. If we collected those revenues, a portion of them would provide the money for some tax relief for ordinary families who would not have to face such a heavy burden of taxation.
Now, $30 billion or $40 billion is a significant amount of money. Not only could we provide tax relief with it but we could also use it to attack some of the most glaring social problems in society. Canadians are compassionate. We have a sense of justice and a sense of fairness. It is shocking that we have people who are homeless and that there are children who do not have a roof over their heads. Some families do not have enough to eat. There are extremely acute social problems which could be attacked if we collected the tax revenues which are now being expended in a questionable way, according to the Auditor General. What about the tax increases which the Conservatives have brought about? We ought to look at revenues which the Conservatives are allowing to slip away. People who are getting a free ride in our society, the powerful and the wealthy, should pay their fair share, then we could give some relief to the ordinary family and take action on some very acute problems such as those of the homeless and hungry.
I want to approach this question of Tory tax increases, so-called tax reform, from another perspective. What are our priorities for the revenues once we collect them? If we are increasing taxes, the Government must have a purpose for the money which is being taken out of the pockets of ordinary Canadian families.
This Government has embarked on a program of having nuclear submarines. Estimates of the cost of this program are in the neighbourhood of $8 billion. When I consider that, I have serious questions about the Government's judgment that it has to increase the taxes for ordinary Canadian families. Is the reason for increasing taxes that the Conservatives want to play this macho game of nuclear submarines, spending billions of dollars to purchase them so they can play in the big leagues with the Americans and Soviets? Could they not find an effective, more modest and realistic way of achieving the security objectives of Canada without wasting the money of hard pressed families on the purchase of nuclear submarines?
It is ironic that we are embarking on the possibility of purchasing very expensive subs from France, for example, a country which is giving us such a hard time with the fishery in Atlantic Canada. Why are we offering to give billions of dollars to a country that says it does not care what happens to

May 26, 1988
Excise Tax Act
our inshore fishermen and does not care about negotiations because it is bigger, more powerful and more significant on the international stage than Canada? Why are we taxing ordinary Canadian families to give bushels of money to a country that is pushing us around when it comes to the fishery? Fundamentally I do not think the Government can justify the tax increase on ordinary Canadians by $ 1,500 over the last three years. I do not think the Government can justify that, given the priorities it has established on spending and given the fact that the Government wants to use so much of this money to purchase nuclear submarines. I believe the majority of Canadians would reject this nuclear program out of hand. It is a program about which Canadians have not been consulted in any effective way. If they were, I am sure they would say no to it. The Government is wasting money when it comes to expenditures. Money could be saved and the Government could take a more modest and yet effective approach to them.
The Government is allowing revenues to go uncollected. The Government is allowing a whole series of tax write-offs to continue to exist for which there is no documentation. Billions of dollars of revenues are flowing away. A recent study was done by an economist from, I believe, Newfoundland in which he indicated that for every dollar of tax revenue that is given up only 21 cents of new investment is generated. That raises the question of the effectiveness of tax write-offs when only 21 cents of investment is generated each time a dollar is spent. That does not sound like a very economical approach to me because every time you go down that road you lose money.
The legislation before the House today to amend the Excise Tax Act is a series of tax increases. It is from a number of Budgets, a couple of which have been called tax reform papers, but when it comes down to it what tax reform means to Tories is tax increases. The burden on the ordinary Canadian family has increased over the last few years since the Conservative Government has taken office and this legislation is implementing that policy. There is no way you can justify tax increases without first indicating that everyone is paying his or her fair share. We know that profitable corporations in Canada are getting away with paying no taxes. Corporations that make profits and pay no taxes end up getting tax credits and are walking away with the money of ordinary Canadian families. That is unfair. It has to stop and the way to do it is to throw those chaps on that side of the House out of office. That will happen in short order, just as soon as the Prime Minister gets up enough courage to call the next election.
I wish that the Conservative Government would own up to the fact that when it says tax reform, it means tax increases. At least then it would have the virtue of honesty and frankness. It should back away from the policy and give some tax relief to ordinary Canadian families.


Jack Wendele Shields: Madam Speaker, I wonder if I could pose a short question to my hon. friend. He railed on about taxes and tax increases. Yet his Party, in supporting the National Energy
Program, supported the biggest tax transfer from western Canada to Ottawa ever perpetrated on any region of this country in the history of Canada. I wonder how he can square that.


Cyril Keeper: Madam Speaker, my understanding of the facts is that we voted against the National Energy Program. The Hon. Member should acknowledge that rather than try to lay on the New Democratic Party the sins of the Liberal Party.
At the same time, I want to challenge the Hon. Member to live with today rather than with the past. Will he explain to the House how he can justify the fact that his Government has increased the tax burden on ordinary Canadian families at the same time as it leaves profitable corporations paying no taxes whatsoever? How can he justify those tax increases while giving a free ride to profitable corporations?


Jack Wendele Shields: Madam Speaker, it is true that the NDP did vote against the National Energy Program, but I would refer my hon. friend to House of Commons Debates of October 23, 1981, when the Hon. Member for Vancouver-Kingsway (Mr. Waddell) who was the energy critic for the NDP said:
Today I want to begin the debate on the Canadianization parts of Bill C-48. These clauses of the bill lie at the heart of the National Energy Program. They are the ones under a barrage of unparalleled criticism from our American friends.
1 want to tell the government on behalf of our party, and indirectly the United States government, that the objectives of the National Energy Program will get our support, and I think public support, provided the legislation is tightened up to fully reflect that...
I regret to say there has been evidence in the last few days that the Canadian government is backing off the National Energy Program and its objectives under American pressure.
It is obvious that although the NDP did vote against the National Energy Program, it was not because NDP Members disagreed with it but because the Liberal Government, they said, was not going far enough. How does he square that or what does he mean by that?


Cyril Keeper: Madam Speaker, I am glad that my hon. colleague acknowledged the fact that this Party voted against the National Energy Program. After he did that, my hon. colleague engaged in a time-honoured parliamentary ploy which is to take a speech from many years ago, find a quote and seek to embarrass someone. We see that going on in the House every day. Someone on this side reads a statement of a Minister on that side made when he or she was in Opposition, someone on that side reads what the Leader of the Opposition (Mr. Turner) said when he was in such and such a position. This goes on all the time.
While the Hoti. Member is engaging in this game, I will point out one thing about the quote that he read to me, and that is, that the quote was qualified. There was a specific reference to the phrase "provided that". Obviously when my hon. colleague was speaking at that time, there were some conditions attached to what he was saying. I do not claim to
May 26, 1988

know the contents of all of the speeches of all of my colleagues back throughout history.
I would like my hon. friend across the way to deal with the fact that his Government has increased the tax burden on ordinary Canadians over the last three years by some $1,500. How could he do that at the same time that he allows profitable corporations to get away with paying no taxes whatsoever?


John V. Nunziata: Madam Speaker, while one cannot expect the Hon. Member to remember all the speeches given by his colleagues, surely Canadians should be able to expect that members of the NDP remain consistent in every regard with regard to their national policy. I do not want to get into another battle with members of the NDP and their inconsistencies and hypocrisies. 1 want to ask the Hon. Member a question.
I listened to the Hon. Member's speech very carefully. I wonder if he could comment on the smoke and mirrors used by the Minister of Finance (Mr. Wilson) and the accounting trickery used by the Conservative Government with regard to the deficit. The Government likes to boast about the fact that the deficit has decreased over the last several years, but I am sure the Hon. Member will agree with me when I say that, to a large extent, it is all smoke and mirrors. It has all been done very surreptitiously, using accounting tricks.
One such trick is the acceleration of employer remittances. As the Hon. Member knows, up until this pseudo-Government came to office, employers were required to remit income tax, UIC and CPP payments once a month. As a result of an accounting trick and in order to reduce the deficit by over $1 billion, the Government has required employers to make those remittances, first, every two weeks and, I understand, now weekly, to give the impression that the deficit has been reduced when in fact it is all tricks and smoke and mirrors. The deficit really is not reduced by the figure $1.6 billion; it is just reduced for a period of a week or two weeks in order to make the Minister of Finance look good. In so doing, the Government is affecting the cash flow of many small businesses. I wonder if the Hon. Member has any thoughts on that.


Cyril Keeper: Madam Speaker, I find it interesting that my hon. colleague from the Liberal Party applies a moral standard to the NDP that of course no one would even try to apply to the Liberal Party, and that is consistency. If there is any Canadian who believes that Liberals hold consistency to be the highest principle, then I will seek to answer the question the Hon. Member asked about consistency.
Clearly the Government is engaged in smoke and mirrors with the deficit, but it is also engaged in something else. It is pursuing a policy that was started by the previous Liberal Government, in particular a policy that was started by the Hon. Member who is now the Leader of the Liberal Party (Mr. Turner), and that is the policy of giving a free ride to profitable corporations.
Excise Tax Act
If the Conservative Government and the previous Liberal Government had required profitable corporations to pay taxes, then there would be revenues so that the books could be balanced. There would be a way to reduce the deficit significantly and at the same time provide tax relief for ordinary Canadian families.


The Acting Speaker (Mrs. Champagne):: Resuming debate.


Sheila Maureen Copps: Madam Speaker, I am most happy to be able to speak to this issue. I cannot believe the statements coming from the mouths of NDP Members in the House of Commons today. We hear the Hon. Member talking about tax burdens and corporate tax rip-offs. When members of the NDP saw the effectiveness of the flow-through shares that were introduced by the previous Liberal Government, that so-called tax loophole, they did a quicker flip-flop on that issue than we have seen in a very long time. They do not mind standing up and preaching "no tax loopholes" except when it is a tax loophole that happens to be working.


Simon Leendert de Jong: That makes sense.


Sheila Maureen Copps: We do not mind people on either side of the House saying they are going to close off all tax loopholes, but please do not try to have it both ways. The NDP House Leader was actually wearing a button which said "save the flow" at the same time as the NDP finance critic was standing up in the House blasting away at corporate tax exemptions.


John V. Nunziata: What hypocrisy.


Sheila Maureen Copps: I think the NDP owes this House an explanation. I hope for goodness' sake that when they talk about consistency they do not follow the pattern of their socialist colleagues in New Zealand who were the first in the western world to impose a tax on food. The socialist Government of New Zealand imposed a tax on food, and that was defended in this House. I am glad the Hon. Member for Ottawa Centre (Mr. Cassidy) is here because he will recall that when I asked him whether his Party, if it were the Government, would follow the example of the Government of New Zealand, he defended that socialist Government and its imposition of a tax on food.


Michael Morris Cassidy: I did not defend the tax on food and would not do it now.


Sheila Maureen Copps: As a matter of fact, if the Hon. Member with thin skin will look it up in Hansard, he will find that I asked him what he thought of this move by the socialist Government of New Zealand. He thought that Government had its own political agenda, and he was not prepared to criticize, God forbid, that socialist Government.
That is not what we are dealing with in this legislation but I think it has to be dealt with in the over-all context of tax reform because it is very easy for the NDP to stand up and rail

May 26, 1988
Excise Tax Act
away at what past Liberal Governments have done and the general tax propositions of the current Government. However, it is also transparently obvious to taxpayers that the NDP wants to have it both ways. They cannot because they have to be consistent in their tax policy.
Also on the question of consistency, there is one inconsistent spokesperson for the Government whose public statements boggle the mind. I refer to the Prime Minister (Mr. Mulroney). On November 29, 1984, he said that Canadians pay a good deal of money for government services and feel they are already paying quite enough. Both he and the Minister of Finance (Mr. Wilson) campaigned on a promise that they would not raise taxes. Here is a direct quote from the Minister of Finance on March 6, 1984: "We will reduce spending. We will refrain from increasing taxes which are already too high." Instead, we have a Government which has increased taxes in probably the largest amount of any government in the history of Canada.
In January, 1988, the Government imposed a 10 per cent tax on telecommunication services, that is, the telephone. We have already heard the very articulate Member for Glengarry-Prescott

Russell (Mr. Boudria) point out how inconsistent that tax measure is because it penalizes in particular those Canadians who must, by virtue of where they live, use longdistance to communicate with family, friends, doctors and others. It is basically their lifeline to the community. Yet the Government implements a 10 per cent tax on telecommunication services.
We had an increase on tax on telecommunication programming services; an increase in the sales tax on paint and wallpaper products, and acceleration of federal sales and excise tax remittances, a scam which was just referred to by my colleague, the Hon. Member for York South-Weston (Mr. Nunziata).
The Minister of Finance stands in his place and says the Government is paying down the deficit. What it is doing is robbing the cash flow of small Canadian companies already living on the edge, scratching by their fingernails for mere existence. Instead of being able to collect their receivables and pay their payables, in many cases they have to pay the Government before they even receive it themselves. This accelerated payment is actually costing hundreds of millions of dollars in lost cash flow for small Canadian businesses, which are the life-blood of this country. It is not the large corporations which have created jobs in the 1980s. It has been the small businesses, in particular those started by women. Those businesses are being gouged by a Minister of Finance who claims he is paying down the deficit when in fact he is merely speeding up the collection process which robs the cash flow which is so crucial to the life of many small businesses.
We also see further increases in excise taxes on tobacco products, beer, spirits and wine. There is an air transportation levy. That tax discriminates against northerners and those who, by virtue of their distance from major centres, have to use
air transportation to visit hospitals or doctors. There is an increase in the excise tax on gasoline and aviation fuel.
The amount of money the Government has raised in tax measures over its years in office is unbelievable. There has been a 46 per cent tax increase from 1984 to 1989. If you take into account personal income tax increases amounting to 55 per cent, a 77 per cent increase in sales and excise taxes which the Minister stated were job killers, and an increase of 16 per cent in other taxes, the total increase is 46 per cent from a Government which promised no tax increases.
Who is paying these taxes? Is it wealthy Canadians who are in the best position to pay? My Leader pointed out only a few days ago in the House that the only group who seemed to be getting a break by way of a reduction in tax burden are those earning over $100,000 a year. The Minister of Finance wants to slap a tax on people earning $15,000 a year and less, but he does not mind giving out $500,000 in capital gains exemptions. That was reduced finally to $100,000 in the last Budget, but it is an indication of government priorities. He is prepared to tell a single parent earning $15,000 a year that he or she should pay taxes, yet if you happen to be in the top 2 per cent of income earners you can have a $500,000 capital gains exemption. Most people in my riding do not even know what a capital gain is. Yet the top 2 per cent are getting a $500,000 tax write-off from a Government which claims it is not going to increase taxes. Well, it did not increase taxes for that group, but for most Canadians the effect of the Government's tax policies has been a double whammy.
The 77 per cent increase in sales and excise taxes in particular is damaging to those with low and moderate incomes. That is obvious. If I happen to be earning $70,000 a year and a waitress in my community happens to be earning $17,000 a year and we both decide to wallpaper our living room, the cost in excess taxes to that person is going to be the same as it is for me. Is that fair?
I submit that when the Minister of Finance said that sales and excise taxes were the silent killers of jobs, he was in fact speaking the truth and that, unfortunately, in his quest to help wealthy Canadians get richer by applying the capital gains exemptions, in his quest to show on paper that he is reducing the deficit, he has decided to penalize Canadians who are in the weakest position to fight back, those being, in particular, low and middle-income Canadians.
Many people in my own riding who have just filed their income tax were shocked and have written to me. They did not realize that over the tenure of the Government, the last four years, the Government has been silently chipping away at their earning power. They were surprised and shocked, when the time came to pay their income tax, to find that their tax bill was up to $1500 more than what it had been under previous Liberal Governments.
May 26, 1988

Look at the tax grab of major tax increases for individuals introduced by the Conservative Government. It picked up $1 billion in 1984 with a 1 per cent increase in sales tax. That was the first whammy. It picked up another $1 billion with the second increase of 1 per cent in sales tax in 1986. A third increase in 1986 picked up another $1 billion.
A two cent a litre increase in gas resulted in $930 million in excess revenue to the Queen's coffers. The second increase on gas earned $450 million, and the third in 1987 earned $450 million, for a grand total of $1,830 billion in gas tax increases alone.
The equalization of sales tax on unleaded and leaded gasoline in 1987 resulted in an extra $30 million coming into the federal coffers. The kiddy tax on candies and soft drinks and the sales tax on pet food earned $400 million. The extension of sales tax on snack foods earned $60 million.
The first increase in cigarette and tobacco taxes earned $320 million. The second increase in the so-called sin taxes resulted in a $150 million increase in tobacco and alcohol taxes. The third increase in 1987 amounted to $70 million.
The elimination of the RHOSP has to take the cake. I congratulate the Member from Toronto who is decrying the cost of housing in Toronto and would like to see a Toronto based Registered Home Ownership Savings Plan launched. Where was the Member when, in the Government's first Budget, it eliminated the Registered Home Ownership Savings Plan and the Liberal Party in Opposition demanded that the Government reinstate it? Where was he when the Canada Mortgage and Housing Corporation doubled the cost of guaranteeing the purchase of a home, which effectively added $800 to the price of a new home anywhere in Canada?
Where was the voice from Toronto when the Government decided to pay down the deficit on paper on the backs of working Canadian men and women who are trying to be in a position to own their own homes?
Where was he when his own Finance Minister, from his beloved City of Toronto, the same city that does not warrant designation as a financial centre, increased the tax on building supplies and materials, which added a further $400 to $800 to the average cost of a home anywhere in Canada? The RHOSP would have potentially given tax breaks of $1,000 per year per person, $2,000 per year per family which, over 20 years, amounts to a tax break of $20,000.
Now that they are going to have some kind of international economic summit in Toronto the Member jumps on the bandwagon and claims to be fighting for working men and women in the City of Toronto when he sat in his seat silent for three and one-half years while the federal Government did everything it could to try to increase the cost to the Canada Mortgage and Housing Corporation by eliminating the RHOSP, by increasing building supply materials, and by standing back and allowing the burden and responsibility for a
Excise Tax Act
national housing strategy to fall back on the shoulders of provincial Governments.
The elimination of RHOSP was another $105 million benefit to the federal coffers. The deindexation of the tax system earned $635 million. The elimination of the federal tax reduction amounted to another $650 million. Changes to marital exemptions saved the federal coffers $20 million. The general 3 per cent surtax of 1986 amounted to $1.2 million. The general temporary 5 per cent and 10 per cent surtaxes of 1986 amounted to another $500 million. The 10 per cent tax on long-distance calls of 1988 earned $945 million. Increases on other sales taxes amounted to $370 million. This list, long and complete though it may be, does not include the new federal sales tax imposed on June 18, 1987.
As soon as the Prime Minister got elected on a platform of no tax increases, on a platform of protection of senior citizens, on a platform of protection of universality, he immediately waged a campaign to increase taxes, to cut back on senior citizens' pensions and to damage and destroy universality.
Is it any wonder that the Canadian taxpayer is getting a little bit cynical about governments? Is it any wonder that when the Prime Minister stands up to give a speech, people ask themselves whether this man can be trusted to keep his word? He campaigned in 1984 on a simple promise that he was not going to increase taxes. Yet he has increased taxes more quickly and more unjustly than any Prime Minister since Confederation.

I do not believe, Madam Speaker, that Canadians can trust a Prime Minister who during the election campaign claimed that he hated tax increases, whether on personal income or on direct taxes like the sales tax, because we can see very clearly that even before the election, he was claiming that there would be no tax increases, but once he was elected, since his Government took power, we have had specific tax increases: a 55 per cent increase on personal income, a 28 per cent increase on corporate income, a 77 per cent increase of sales taxes, Madam Speaker, between 1984 and 1989, and a 16 per cent increase on other income, for a total average tax increase of 46 per cent; this from a Government that claims it does not want to increase taxes for Canadians.
Furthermore, Madam Speaker, we must consider the fact that the most affected, those who suffer most from tax increases are the least wealthy because, if one looks at the figures, the greatest tax increase is for the sales tax and the excise tax that we are now discussing; the poorest are the hardest hit. For example, someone who needs to buy something to repair his house pays the same tax, whether he is a millionaire or poor. That is why the Minister of Finance claimed that the sales tax kills jobs. Indeed it does. But why did the Government and the Prime Minister take office promising Canadians that they would not increase taxes? But since they have been in power, Canadians have had the biggest tax increases since Confederation. People are wondering, Madam

May 26, 1988
Excise Tax Act
Speaker, and I think that Canadians will reject this Government once the Prime Minister has the courage to call an election.
[English)


Alan Redway: Madam Speaker, I was fascinated by the Hon. Member's comments, particularly as they refer to myself. I was particularly interested because I was not aware that the Hon. Member even knew that I was in the House these days. However, I seem to have hit a nerve. As a result of that, I would like to pose a question or two to the Hon. Member.
The Hon. Member referred to a number of items in her comments. She knows that Canada faces a lot of problems, many of which were created by her Party when it formed the Government.
One of those problems in particular is the deficit. Many of the comments she made obviously referred to efforts of the Government to deal with the deficit, which would be approaching some $40 billion a year at the present time if action had not been taken by this Government. The deficit has been reduced by some $10 billion a year.
Does the Hon. Member and her Party want to see the national annual spending deficit of Canada reduced? If so, is it her position and the position of the Liberal Party that that deficit should not be reduced by raising taxes? Is she prepared to say now that the Liberal Party would not raise taxes if it formed the Government?
In conjunction with that, is she prepared to say specifically what expenditures would be cut back by the Liberal Party-if in fact it is interested in reducing the deficit-in order to reduce the deficit by $10 billion as it has been reduced on an annual basis in the last three and a half years?
Will the Hon. Member answer those questions? Does she and her Party support deficit reduction? If so, will she give us a commitment today that if and when her Party forms a government again in this country they will not raise taxes, unlike her provincial colleagues in Ontario where she served previously? Will she also tell us specifically what government expenditures would be cut by the Liberal Party in order to reduce the deficit by some $10 billion a year?


Sheila Maureen Copps: Madam Speaker, herein lies the difference between the Conservative and Liberal Parties. The Liberal Party is not prepared to make promises that it cannot keep.


Some Hon. Members:: Oh, oh!


Sheila Maureen Copps: During the 1984 election, the Leader of the Liberal Party, who has integrity and is accepted as an honest person across Canada, did not travel from St. John's, Newfoundland, to Chilliwack, British Columbia and tell people that he would keep taxes down and reduce the deficit at the same time.
The person who made that promise was the Leader of the Conservative Party. He tried to talk out of both sides of his mouth.
In fact, the Leader of the Liberal Party said quite bluntly that if the deficit is going to be reduced, he cannot make the promise that taxes will not be increased.
Consider the situation in the City of Toronto from the point of view of the Minister of Finance. The Government is telling Canadians that it is introducing fairness in tax measures. Yet for the first time it is slapping a tax on a single mother living in the Jane Finch area who is earning $15,000 a year. She is paying tax for the first time, while those wealthy enough to be in the top two per cent of the population and can accrue $500,000 in capital gains can get a tax holiday. Most of my constituents do not even know what a capital gain is.
The Government talks about tax fairness. Where is the fairness in a policy that offers a write-off to someone in the top 2 per cent of the population while telling a mother in the Jane Finch area that she must pay taxes?
The Member stood up in response to my direct challenge to him, but he did not answer my question. While I say, more power to the Member for calling for reintroduction of the Registered Home Ownership Savings Plan just in advance of the economic summit, and only in the City of Toronto, where was he when the opposition Parties were in the trenches fighting the Government's decision to withdraw the RHOSP? Where was the Member when the Government doubled the guarantees that were forced on home owners who want to get CMHC insurance? The Government introduced successive Budgets in the interest of so-called deficit reduction, which did not translate into actual dollars. Where was the Member when the Government increased the sales tax on building materials that directly translates into increased cost of housing in Toronto?
The Hon. Member was standing on the sidelines, telling the Minister to go ahead and reduce the deficit on the backs of poor Canadians so that wealthy Canadians can get a half a million dollar capital gains write-off.
If the Member is serious about his intent to see a reintroduction of the RHOSP, he should throw off that Conservative yoke and join a real Party that will fight for working people, instead of the hypocrisy of the Conservative tax policy.


David Orlikow: Madam Speaker, the Hon. member criticized the Conservative Government for the increase in taxes it has imposed on most Canadians. There are two groups of Canadians whose taxes have not been touched.
One group is that of wealthy individuals. There are over
5,000	wealthy Canadians who earned more than $50,000 last year and paid no income tax. There are 250 Canadians who had incomes of over $250,000 and paid no income tax. Is that not the same situation as existed in all the years the Liberals formed the Government?
May 26, 1988

We know that some of the largest corporations in Canada paid no corporation tax, including Alcan Aluminum, Brascan, Hees International, Power Financial, Xerox, Wardair and Union Carbide. They paid no corporation income tax in 1986 and in 1987, neither did the Hudson's Bay Company, Brama-lea and Cadillac-Fairview.
Is that not the same situation as existed in all the years the Liberal Government was in office? In fact, the biggest giveaways were instituted when the present Leader of the Official Opposition was Minister of Finance.
Why should Canadians believe the Liberal Party now when it criticizes the Conservatives for doing exactly what the Liberals did for so many years when they were in government?


Sheila Maureen Copps: Madam Speaker, I cannot believe what I am hearing. The Member talks about what the Leader of the Liberal Party did as Minister of Finance. The senior citizens of Canada will be very surprised to hear that the New Democratic Party does not support the indexation of senior citizens' pensions.


David Orlikow: Who said anything about that?


Sheila Maureen Copps: The NDP should be aware of the fact that the then Minister of Finance, the Member for Vancouver Quadra (Mr. Turner), introduced indexing because the Liberal Party believed that the poorest of the poor should have a quarterly increase in their income which was equal to the Consumer Price Index.
It was the introduction of Conservative policies which cut back on that indexation.


David Orlikow: Answer the question. Talk about the corporate hand-outs.


Sheila Maureen Copps: The Member says that I am avoiding the question. The Member wanted to talk about what our Liberal Leader did when he was Minister of Finance. He introduced a policy to protect the incomes of the poorest people in our society. I am very sorry that the NDP is opposed to that policy. I am very surprised that the NDP does not believe that senior citizens' pensions should be indexed.
The ultimate in hypocrisy is when the Member talks about corporate taxes and corporate write-offs. The absolute hypocritical flip-flop of the New Democratic Party on the flow-through shares issue is an indication of how phoney it is.


David Orlikow: Why don't you answer the question?


Sheila Maureen Copps: I suppose the Hon. Member has not heard of the flow-through shares. The flow-through shares are that corporate tax rip-off which the New Democratic Party is supporting by wearing buttons in the House, and is supporting because those Members recognize, through representations by the mining industry and by other industries, that flow-through
Excise Tax Act
shares was a corporate tax loophole which was supported not only by the Liberals, obviously not totally by the Conservatives since they have cut it back, but by the New Democratic Party.
The NDP House Leader was wearing a button in the House supporting this corporate loophole. So could the Member explain to me which loopholes he is in favour of now and which ones he is against? Is he in favour of the loopholes when people visit him? When the NDP received a visit from the Canadian Mining Association, it did an absolute about-face. The week before it was against flow-through shares. After the industry showed it that flow-through shares have resulted in exploration of young and new mines and the creation of jobs in northern Canada, the NDP changed its position completely. Could those Members give me a list of which corporate loopholes they are against and which they favour?


George Albert Proud: We are waiting for the answer.


The Acting Speaker (Mrs. Champagne):: The questions and comments period is now over. The Hon. Member for Regina East (Mr. de Jong) on debate.


Simon Leendert de Jong: Madam Speaker, it was with interest I heard the Hon. Member for Hamilton East (Ms. Copps) expounding on the virtues of the Liberal Party and its history when it comes to tax reform. One Liberal attempt at tax reform in response to the Carter report was quite quickly shot down. I must say in all honesty that I think it was shot down because the Conservatives at that time, representing the vested interests, led quite a concerted attack against Carter's proposals, and the Government did back down.
Then we had the 10-year period when the Right Hon. Leader of the Opposition (Mr. Turner) was Minister of Finance in the Liberal Government. In fact, there was quite a turn-around in government policy during the rest of the 1970s. Many of the tax loopholes which now exist in the Income Tax Act, particularly those affecting the large corporations, were introduced at that time.
The Hon. Member for Hamilton East asked us what sort of loopholes we would close. I could mention to her that we would certainly have closed the loopholes that existed in 1982 which allowed the Royal Bank of Canada-and it was not the only one-to rack up some $360 million in profits and not pay one cent of tax, in fact, receive a tax credit of some $20 million. A woman working as a teller for the Royal Bank in 1982 would have actually paid more in taxes than the Royal Bank of Canada. That was in 1982. It was a result of the Liberal tax policies which allowed the Royal Bank to make a profit of over $360 million and not pay one cent of tax.
We would have closed down or never introduced the type of loophole that the Hon. Marc Lalonde introduced in 1983 to encourage research and development. That resulted in a loss of public revenues of close to $2.5 billion in less than six or seven months. That loophole became such a sham that when the Tories came to power, they recognized the type of abuse that

May 26, 1988
Excise Tax Act
was occurring and attempted to shut it down in October of 1984. However, in shutting it down they left the door open for those schemes that had been thought out, and so they introduced a grandfathering clause, and about one-third of the $2.5 billion lost in public revenues were lost in the period of time the Tories were in government.
Finally, the Tories themselves recognized they had not shut down this loophole tight enough, and in May of 1985 they shut it down completely. Of course, they should have done that in October of 1984 and would have saved the public Treasury well over $1 billion. That is the history of tax reform in this country. Unfortunately, we have never had proper tax reform. We have never accepted the notion that a buck is a buck, which was presented by the Carter Commission on Tax Reform. We continue to see inequities in the tax system which allow large and very profitable corporations not to pay any income tax whatsoever. We see inequities that allow high income wage earners in Canada to pay little, if any, tax, and inequities that see middle and lower income wage earners increasingly carrying the tax burden. That is true whether under a Liberal Government or under a Conservative Government.
The tax burden has increasingly fallen on middle and low-Canadian income earners. I think it is fair to say that in the 1950s, roughly half of public revenues came from the corporate side and half came from the individual taxpayers. Now, through successive Liberal and Conservative Governments, we find the proportion roughly to be 20 per cent, 25 per cent being paid by the corporate sector and some 75 per cent or 80 per cent being paid by individual Canadian taxpayers. That is the imbalance that has occurred over the years. Certainly, when we deal with the present legislation, Bill C-l 17, we can see it is just one more step in the road to extending the tax burden on ordinary Canadians.
This Bill brings together various budget proposals we have had placed in front of us in the last number of years. In fact, it seems that every time the Minister of Finance (Mr. Wilson) stands up to make an economic statement, present a White Paper or introduce a Budget, there is invariably an increase in sales tax. Either the base is broadened, meaning that new items are now being taxed, or the rate has increased.
We can go down the list of all the various items the Government has introduced which increases the tax load on ordinary Canadians. There are such items as the 10 per cent tax on long-distance telephone calls and on paid television services. This will net the Government some $870 million a year. There is a sales tax on paint and wallpaper products, which has increased from 8 per cent to 12 per cent. It is estimated that this will bring the Government in an extra $60 million a year. Then there are taxes on beer, spirits, wine and tobacco products, which were previously announced, but not all in this Bill, which will bring the Government some extra revenue of $240 million a year.
One of the major increases the Minister of Finance, particularly, this Government, seems to like, is to increase the sales tax on gasoline. Since the Government has been in power it has raised the price of gasoline by some 23 cents a gallon. That is over and above what the Canadian taxpayers were paying before the Conservatives were elected. That is 23 cents a gallon extra going to the Federal Treasury.
We can discuss at some length the merits of the sales tax as opposed to other ways of gathering government revenues. I am certain there will be differences of opinion among all Members of the House as to whether the Government should raise its revenues more directly through the income tax and the corporate tax or whether it should do it through things like the sales tax. There are arguments in favour of having a sales tax. Most industrialized countries in fact do have a sales tax. It ensures that those individuals who pay little, if any, income tax, and I am referring to those higher income Canadians, at least pay some tax. In other words, the tax man stands in front of your pocket as the money leaves your pocket rather than as in the case of income tax which is taken before the money comes into your pocket.
Certainly, having a sales tax ensures that all those who spend money will be paying some tax. There are, of course, arguments against the sales tax. One of the major arguments is that it is regressive. That means that we are being taxed not on our ability to pay tax but on our needs. A person who has an income of $8,000, $10,000, $12,000 or $15,000 a year still needs to buy a gallon of milk and a loaf of bread. He must use the telephone. Perhaps he has a television set and is hooked into a cable company. He has to buy shoes and clothes for his kids. He has to buy a house or rent an apartment. He has to have a car. On all these items there will be, in some form or another, sales tax. He or she is being taxed at the same rate as the person who has an income of $100,000 or $1 million. Of course, those earning $100,000 or $1 million will be spending more and therefore will be paying more tax. However, on the basic necessities very often the low-income Canadian person will be paying the same amount of tax as the higher income Canadian person. That is not fair. It is regressive. It is one of the aspects of the sales tax that I find unacceptable.
The Government has said, and points out with some pride, that it has introduced the sales tax credit. It is supposed to compensate those with low incomes the money they have spent on sales taxes. But of course the sales tax credit is nowhere near what people are paying in sales taxes. The sales tax credit introduced by the Government does not touch the increases in the sales taxes that people will be paying because of various Tory Budgets. As with most other Canadians, they are paying more in tax but they are getting a little bit of it back now.
As well, the Government has failed to make a commitment that the sales tax credit will be indexed to inflation. That is something that the Government has to do as it increases its revenues from sales taxes. It has to guarantee to lower and
May 26, 1988

middle-income Canadians that as the sales tax increases, either through increasing the rate, the base or through inflation, low-income and middle-income Canadians will not be hurt any more, and that the sales tax credit will be indexed to ensure that they will get back the increases in taxes that they will be paying. Unfortunately, the Government has failed to move in that area.
There are some thorny issues dealing with sales tax in Canada. We have one of the most antiquated sales tax regimes in the world. I think everyone will admit that the present system is not a good one. I will now outline some of the various problems that we have.
One area with which we have difficulty in terms of the present sales tax regime concerns the difference in sales tax burden. The federal sales tax is levied on the manufacturers' selling price. However, the selling price may vary for the same product depending on whether the manufacturer sells it to a wholesaler or to a retailer. Selling to a retailer brings to it a higher relative tax burden. When a manufacturer sells his or her product to a retail outlet, higher costs will be incurred than if the product were sold to the retailer. In other words, what the present sales tax system does is to create distortions within the market-place. Therefore, some manufacturers who have set up their operations to sell directly to retailers will be paying one level of taxes, or taxes on a certain number of activities, whereas in another system of operating the business where the manufacturer sells to the wholesaler and the wholesaler sells to the retailer, one saves a significant amount on taxes.
In 1977, it was estimated that fully 44 per cent of taxable manufacturers' sales were directly to retailers. To reduce this discrimination there is now an extensive list of what are called notionable values which are used to discount the price at which a manufacturer sells a product to the retailer to the price that would have been paid by the wholesaler. But introducing notional value creates a lot of distortions within the system. The Federal Court has found that using notional value is discriminatory. It means that the Department of Revenue is able to place notional value on some goods. It is arbitrary. The court has found this to be unconstitutional. I would tend to say rightly so. That is one of the problems that we have with the present sales tax regime.
The other problem that we have is that the Government taxes the production of goods. In other words, those who produce capital goods have to pay the sales tax. There is no other country in the world that really taxes its capital goods. When purchasing intermediate goods to be used in the production process, the manufacturer inevitably ends up paying hidden sales taxes on some goods. It was estimated recently that 42 per cent of federal tax revenues were collected on intermediate and capital goods. What is particularly harmful about this is that in those industries that export their goods part of the export price includes the sales tax on the capital costs. No other country in the world puts a sales tax
Excise Tax Act
either directly or indirectly on the goods that they manufacture for export. But in good old Canada we do. There is something quite dumb about this.
Another area with which we have difficulty in our present sales tax regime is that it gives an advantage to importers. In other words, while we are taxing our exporters, we are giving advantages to importers. Canada does not include the cost of transporting goods to Canada as part of the cost base for the calculation of federal sales tax. Consequently, those imports competing with domestically produced goods often pay less tax than goods produced in Canada. Again, it does not really make much sense.
Another area with which we have concern is with respect to the complexity of the sales taxes. The licensing requirements on manufacturers and the documentation that this entails, the special exemptions for certain goods, the system of notional values, all tend to make the federal sales tax administratively very burdensome and unnecessarily complex. As a member of the Finance Committee I can say that we have been dealing with the Government's attempt to fix the present tax regime and some of the anomalies in it. There is a recognition on the part of the Government that taxing our exporters and giving advantage to the importers is something that the Government has to deal with.
As we have been going through the proposals and meeting with the manufacturers and the producers of many goods and services, we hear over and over again that what the Government is producing is even further complexity. As well, it is making the unfairness even more so. The difference between the imports and the exports and the unfairness there will be extended further with the proposed legislation that the Government is introducing. Again, it seems clear to us that the Government has no precise notion of what it wants to do with some of the inequities and some of the problems that exist in the sales tax regime.
One can go on as well about the extent to which the Government has relied upon the sales tax. As I mentioned before, the sale tax is essentially a regressive tax. It is unfair to low-income Canadians. However, it is also unfair to people living in remote communities. In fact, I would say it is unfair to those in all rural communities.
I see that the Hon. Member for Winnipeg-Assiniboine (Mr. McKenzie) is in the House. He represents a district of many small rural communities. He surely must be concerned on their behalf at the type of increases in the sales tax. For example, there is the 10 per cent tax on communications. He knows and I know that when those people use their telephone it is often for a long-distance call.
I note that you are indicating to me, Madam Speaker, that my time is up. I wonder if I could just complete my thought on this and then there might be some questions that Hon. Members might wish to pose.

May 26, 1988
Excise Tax Act
The point I want to make is that all of us who represent wholly or in part rural districts must be concerned with increasing sales taxes because they have such a negative effect on rural communities. People in rural communities use longdistance telephone calls much more than city dwellers. A doctor may be in the next town. A cousin, mother or aunt perhaps lives down the highway and to call him or her requires a long-distance telephone call. People in rural communities are being taxed, not city dwellers.
The increase in the cost of gasoline means that if one is driving to the next town, more gasoline is being used. The cost of bringing in foodstuffs to the local store will be higher because of the increase in the gasoline prices that a trucker will have to pay. Sales taxes discriminate against those people living in rural and in remote communities.
Therefore, I urge those Conservative Members who represent districts with many rural areas to oppose this legislation.


Alan Redway: In his remarks, the Hon. Member spent a good deal of time dealing with the unfairness of sales tax. I am aware, and I know the Hon. Member is aware that socialist Governments representing the same philosophy as the NDP, for example, the Government in New Zealand, imposed a sales tax on food and groceries. In Sweden, the socialist Government with the same philosophy as the NDP also imposed a sales tax on groceries and food products. I am not aware of the rate of tax in New Zealand, but I am aware that there are different rates of sales tax in Sweden, and that groceries are taxed at the highest rate.
In the event that the Hon. Member and his Party ever formed a Government, or if he and his Party had the balance of power in a minority government, would the NDP Members in Canada, like their colleagues whom they support regularly in Sweden and New Zealand, impose a sales tax on food?


Simon Leendert de Jong: That is a fair and honest question. I was with the Finance Committee when we visited New Zealand, and saw the operation of its sales tax. When the Labour Government in New Zealand introduced tax reform, it did it quite differently than tax reform in Canada. First, changes were introduced to the sales tax, to the income tax, and to the corporate tax. That Government also increased its subsidies or programs to help middle and low-income families. This was done at the same time, as opposed to what the Minister of Finance is doing and stretching it out.
When socialist democratic governments throughout the world introduce a sales tax on all goods and services, they guarantee that low and middle-income citizens are fully compensated. One might make a theoretical argument in favour of having a universal sales tax, but that can only be done when there is a full guarantee that low and middle-income citizens are fully compensated. For that, citizens have
to be able to trust their government to do that. The problem that I have is that I do not trust the Government.
After promising senior citizens that they would not have their pensions deindexed, the Government attempted to deindex their pensions. The Government deindexed family allowances and many social support systems. If there is not full indexation on the sales tax credit, then low-income Canadians will eventually lose. There can be a sales tax credit to fully compensate them this year, but if it is not fully indexed, next year it would be a little less, and the year after that a little less.
In part, Madam Speaker, it is a question of trust. Do you trust the Government to index fully the compensation that low-income people will receive? I do not trust the Government to do that. Therefore, I would be opposed to the Government imposing a tax on food and other basic necessities.


The Acting Speaker (Mrs. Champagne):: Is the House ready for the question? The question is as follows: Mr. Wilson (Etobicoke Centre), seconded by Mr. Jelinek, moved that Bill C-117, an Act to amend the Excise Tax Act and the Excise Act, be now read the third time and passed, and the amendment thereto of Mr. Clinch, seconded by Mr. Hawkes:
That this question be now put.
The question is on the amendment. Is it the pleasure of the House to adopt the motion?


Some Hon. Members:: Yes.


Some Hon. Members:: No.


The Acting Speaker (Mrs. Champagne):: All those in favour of the amendment will please say yea.


Some Hon. Members:: Yea.


The Acting Speaker (Mrs. Champagne):: All those opposed will please say nay.


Some Hon. Members:: Nay.


The Acting Speaker (Mrs. Champagne):: In my opinion, the
yeas have it.
And more than five Members having risen:


The Acting Speaker (Mrs. Champagne):: Call in the Members.
[ Translation]
And the ringing of the bells having stopped:


The Acting Speaker (Mrs. Champagne):: As requested by the whip of the official Opposition, the vote is deferred until 6 p.m. today and shall be held following the other vote deferred yesterday until the same time.
It being five o'clock p.m., the House will now proceed to the consideration of Private Members' Business as listed on today's Order Paper.
May 26, 1988


PRIVATE MEMBERS' BUSINESS-MOTIONS   FINANCIAL ADMINISTRATION ACT
[Stage Direction]
SUGGESTED REPEAL OF SECTION 17 Mr. Alan Redway (York East) moved:
That, in the opinion of this House, the government should consider the advisability of repealing Section 17 of the Financial Administration Act and require that all remissions of taxes, fees or penalties be submitted, each year, to Parliament for approval.
He said: Madam Speaker, I appreciate the opportunity of speaking in support of this motion which you have read calling upon the House to consider the advisability of asking the Government to repeal Section 17 of the Financial Administration Act, and to require that all remissions of taxes, fees or penalties be submitted to Parliament for approval each year.
The basic principle underlying all tax law is that it will apply equally and fairly to all Canadians regardless of who they are, where they live, or who they know; whether they be rich or poor, whether they be famous or notorious. The basic principle is that these laws should apply to everyone equally and absolutely. I would hope that that principle means, and I believe that it does, that each tax law will apply the same way to my neighbour next door, my neighbour across the street, or my neighbour in another part of the country in the same manner as it applies to me, and that I can expect that there will not be any favouritism offered to one person or another person.
That begs the question in my mind, and I hope in the minds of everyone in this House, as to whether the tax laws in Canada not only are supposed to apply that way equally to all but they actually do. In that respect I suggest, Mr. Speaker, that you should take a close look at Section 17 of the Financial Administration Act of Canada. That Act has a number of provisions which cause me concern. I would suspect it would cause you, other Members of this House and all Canadians concern.
Section 17(1) of the Financial Administration Act states:
The Governor in Council, on the recommendation of the Treasury Board, whenever he considers it in the public interest, may remit any tax, fee or penalty.
That means he can forgive it, he can make a gift of it, he can make sure that it is not paid, that is if he considers it in the public interest. I am not certain as to how this process actually works in Parliament. I would assume that if a member of the bureaucracy draws up a list and provides on that list all of the people who are taxpayers who should have their taxes wiped out, then that list is submitted to the Governor in Council and the Governor in Council puts a stamp of approval on it and it is done. I do not know who is on that list particularly, Mr. Speaker. I do not know whether you know who is on that list, but apparently from time to time each year and every year the
Financial Administration Act
Governor in Council, through some process like that, forgives some people their taxes. Of course, other people in exactly the same circumstances may actually still be having to pay taxes. I would not suggest that it happens that way. There is the availability and there is the possibility in Section 17 of the Financial Administration Act for that sort of abuse, the kind of abuse where somehow or another, as a result of who you know or what you know, you may have your taxes forgiven and I may not, even though we are in the same circumstances or, for that matter, I may have my taxes forgiven and you may not, Mr. Speaker. I think this is a matter of serious concern and should be to you and all Canadians.
Subsection (3) of Section 17 of the Financial Administration Act goes into some detail as to how the Governor in Council can go through this forgiveness of taxes, or remission of taxes as it is called. It talks about not proceeding with a suit to recover those taxes. The Governor in Council might levy the tax but then decide not to pursue the recovery of it. He could delay or discontinue any proceedings to recover those taxes that are already commenced on the part of the Government. He could not enforce, or abandon any effort to collect those taxes, which is another provision in Section 17. Another one is to just write in the books that the tax has been paid, that it has been satisfied and that there is nothing owing on that particular tax. Another provision is to pay back money that is already paid. If somebody paid his taxes to the Government, to the Receiver General, there is the right in Section 17 of the Financial Administration Act to take the money and send it back saying "Thanks anyway. We don't need your money. Forget about it. We are sending it back". This is the sort of thing that Section 17 provides for.
I wonder how many people in this House and across Canada realize that there is in Section 17 of the Financial Administration Act, the authority to forgive somebody's taxes and not have to seek the approval of Parliament first in order to do it. In other words, Parliament has already given the Governor in Council that authority not to do it once in a particular case but to do it time and time again, day after day, month after month, year after year. That is what Section 17 has the effect of doing.
Does the Government ever act on this authority in Section 17 of the Financial Administration Act? It certainly does. But it has been very difficult to know about the action which the Government has been taking. You may know, Mr. Speaker, that every year in the fall the Government publishes something called the Public Accounts of Canada. It comes out not as a single volume book but it is in four separate volumes at the moment. I suppose that as the complexity grows there may be five and six volumes, whatever number, but it is a lot of paper. I am not sure how many people ever sit down and read through it all.
I tried to find the material on tax remissions in the Public Accounts of Canada a few months ago and had to seek assistance from the Library of Parliament because I could not find it in the Public Accounts when I looked. The reason I
[Stage Direction]
May 26, 1988
Financial Administration Act
could not find it is that it is in Volume II, Part 2 of the Public Accounts of Canada under something called Additional Information and Analysis. Section 3 in the middle says "Supplementary Information Required by the Financial Administration Act". Section 3 is 36 pages of tax remissions or tax forgiveness of one sort or another. It is 36 pages of the Public Accounts of Canada hidden under the title Supplementary Information Required by the Financial Administration Act.
You would not only have to get a Philadelphia lawyer or a parliamentary expert, you would have to be the Auditor General to figure out where this information is in the Public Accounts of Canada. There are 36 pages in the last Public Accounts which were for the fiscal year 1986-87. Another financial year has gone by now and we do not know how many taxes have been given away under Section 17 of the Financial Administration Act since that time. But in the 1986-87 fiscal year there was almost $ 1 billion worth of taxes remitted under the authority of sections like Section 17 of the Financial Administration Act. An amount of $914,278,119 was given away, tax money that was levied under the tax laws of Canada. Everybody is supposed to be treated equally under those laws, but $1 billion was given back to people who were supposed to be paying taxes under those provisions. That is just for the fiscal year 1986-87.
Back in 1986, the Public Accounts Committee of this House took a look at one particular tax remission. It dealt with Hudson's Bay Oil and Gas Company Limited and Dome Petroleum Limited. It was found that a remission order had been issued pursuant to Section 17 of the Financial Administration Act in February, 1985, to Hudson's Bay Oil and Gas, a subsidiary of Dome Petroleum Limited. Over a 10-year period Hudson's Bay was authorized to deduct for income tax purposes the financing costs that Dome incurred in acquiring it. This is actually the cost of one company acquiring another. This was forgiven under one of these provisions of Section 17 of the Financial Administration Act. The value of that remission order was considered and estimated at the date of this report back in 1986 at some $400 million. This $400 million was given back under the provisions of Section 17 of the Financial Administration Act. Parliament's permission was not required.
These tax laws would have applied the same way to other companies, but other companies would not have got a tax gift of $400 million. Hudson's Bay Oil and Gas Company, however, got this tax benefit. This expenditure never came to Parliament for consideration or approval whatsoever.
In the report of the Public Accounts Committee dealing with that one tax remission, the Public Accounts Committee suggested that the Government should give consideration to amending the Financial Administration Act to require: first, the tabling in Parliament of all income tax remission orders; second, the preparation of an explanatory note to accompany
each remission order so tabled outlining why the remission order is in the public interest; third, the reference of all remission orders so tabled to the appropriate Standing Committee; and finally, the prior approval by Parliament of all income tax remission orders exceeding $20 million in value.
The thrust of my motion is not just that tax remissions exceeding $20 million should be approved by Parliament, but in fact that all tax remissions should be approved by Parliament. I am not suggesting that we should spend the entire parliamentary year debating tax remissions. It may be that the vast majority of them, and maybe all of them, flow from rational and understandable decisions on the part of the Government. If the facts were placed before the House, perhaps we would all agree to them without question.
My suggestion is merely that we devote some limited time of the House to allow a little debate each year and to actually pass an approval motion so that it just does not happen behind curtains, behind closed doors or under the veil of secrecy where the Privacy Act and the Access to Information Act do not apply. We should be getting these things right out on the floor, making sure that we understand and know why these tax remissions are taking place, and not only those for $20 million but all tax remissions. If it makes sense, sure, we will approve them in short order, and that will be the end of it.
The Minister of Finance (Mr. Wilson) responded to the report of the Public Accounts Committee in a letter addressed to the Chairman of the committee on March 9, 1987. I would like to quote certain portions of the letter. The Minister of Finance wrote:
Before dealing in turn with the specific recommendations in the report I should note that I share some of the committee's concerns respecting the remission order process. My responses to some of your recommendations reflect my commitment to improving the process.
The Minister of Finance went on to say:
As you know most remission orders are currently published in the Canada Gazette within 23 days from their passage by the Governor in Council.
In response to your recommendation that all income tax remission orders be tabled in Parliament, I propose that they all be published in the Canada Gazette and that the orders above a $20 million threshold be tabled in Parliament on a regular and timely basis. Secondly, I propose to present to Parliament periodic reports of all remission orders. These periodic reports will contain all information that is currently available in the annual public accounts reports, namely the registration number, date, nature and amount of remission (where an amount is available).
These reports would also contain information that is not currently required for public accounts purposes. In keeping with your recommendation 7b and 17, the proposed reports would include an explanatory note setting out the reasons for the order and, where an amount is not specified in the order, an estimate of the amount to be remitted where an estimate is practicable.
Your Committee's principal recommendation is that all income tax remission orders should be approved by Parliament.
That was not really the thrust of the recommendation. It was only that those over $20 million be approved. The thrust of my motion, however, is that all of them be approved by Parliament. The Minister went on to say:
May 26, 1988
[Stage Direction]
While I recognize that Parliament needs to be fully informed with respect to remission orders, I believe that the power to grant remission orders was given to government for valid reasons that continue to exist. Indeed, it is desirable to maintain the capacity to respond swiftly, effectively and unequivocally where it is necessary to rectify anomalies, unintended results and injustices in the tax system. To require Parliamentary approval of all or some remission orders could seriously impair the effectiveness and timeliness of remission orders and would limit considerably the flexibility of our tax system.
The Minister went on to say:
One recent example was the remission order granting withholding tax relief for interest on government and long-term corporate debt pending the necessary changes in tax law. Thus, my response to this recommendation is the same as my response of the Eighth Report of the Joint Standing Committee on regulations and other statutory instruments concerning the use of general remission orders. That is, while I have and will continue to avoid the use of remission orders to implement government policy I believe that such orders are an appropriate method for the government to use to grant timely relief.
In effect, the Minister said two things. He said first that he thinks Parliament should have more information about these tax gifts, but he said as well that he does not think that Parliament should have the right to approve them because it is more expeditious for the Government to deal with them.
In fairness to the Minister, just a few days ago, I received a report to Parliament on remission orders approved in the six-month period ending March 31, 1988, and that indicates that it is in response to the recommendations of the Public Accounts Committee in connection with remission orders. It indicates as well that the Minister has decided to table semiannual reports in Parliament on these tax gifts and that such reports will be for a six-month period ending March 31 and September 30 each year. We will get one of these reports and it will set out some explanations about what it is all about and how much the tax gifts have been and that sort of thing.
In fairness to the Minister, he has proceeded with that, but in my view, the Minister misses the point, which is, that it is not necessarily necessary to curtail the authority of the Government to make tax remissions for these wonderful purposes that he outlines here, including correcting anomalies and injustices. It is not necessary to curtail that, but surely it should be necessary for us as a Parliament to approve them, to have this information before us and to be able to ask questions about whether or not everyone is being treated fairly, and to be assured that they are before we actually approve them and enshrine them, whether retroactively or before the fact.
One of the things that bothers me is something that was reported in today's Globe and Mail. One of our colleagues, the Hon. Member for Etobicoke-Lakeshore (Mr. Boyer), raised the question of tax remissions to the Goodyear Tire and Rubber Co. There was a report in The Globe and Mail today, as reported in Quorum, dealing with this issue. Part of the end of the article reads:
Gerald Wright, senior policy adviser to Mr. Hockin, said it has not been decided whether Ottawa will help Goodyear Canada. Any federal aid would be extended through a duty remission program for tire manufacturers.
That certainly was not the purpose of Section 17 of the Financial Administration Act, but that in effect is what it is being used for. Surely Parliament should have the right to
Financial Administration Act
approve these tax gifts and giveaways to ensure that every Canadian is being treated exactly the same way and to provide that because of something that goes on behind closed doors, one may not be getting a break that no one else gets.
1 hope that the House will approve this motion and that we can get on with repealing Section 17 and getting Financial control back in the hands of Parliament and out of the hands of the bureaucracy.
Don Boudria: Mr. Speaker, I am pleased to participate in the debate on the Hon. Member's suggestion to repeal Section 17 of the Financial Administration Act and "require that all remissions of taxes, fees or penalties be submitted, each year, to Parliament for approval."
This is a motion, not a Bill, and so the language is not perhaps the same as it would be in a Bill.


Ross Belsher: No doubt in my mind.


Don Boudria: There is in mine. The phrase about submitting "each year to Parliament for approval" means to me that it would have to be submitted for approval prior to the remission actually taking place. If that were not the case, it would not be approval per se.
If that is what the Hon. Member intends, I have some difficulty with it. Remission of penalties, fines, fees of all kinds sometimes has to be done simply because they were collected erroneously to start with. Of course, that is the reason that it is sometimes necessary to remit taxes, fees and penalties to the person who paid them in the first place.
The Hon. Member referred to these remissions as tax gifts to Canadians. That could very well be true in a number of cases. However, not all remissions are tax gifts. If an amount were erroneously collected, then it is not a gift, it is simply reimbursement.

I would however like to commend the Hon. Member for having brought to our attention this matter of some importance since it is obvious, as he has noted, that when these policies on tax remissions were established, when the House, by way of Section 17 of the Financial Administration Act, empowered government to make such tax remissions, it was not the legislator's intention to grant Government the power to use the back door to hand out grants. And this is indeed happening in certain cases.
My colleague has just given us a concrete example, that of Goodyear, where federal Government officials, speaking for the Minister of State (Finance), have indicated that if a grant was to be made, it would be made by way of tariff remissions.
In that case, Madam Speaker, I have to agree with the Hon. Member that when a remission is in fact used in lieu of a

Financial Administration Act
grant, then Parliament certainly has the right, and the duty as I see it, to have a say on the establishment of the program.

However, we should note that the Standing Committee on Public Accounts did not ask for exactly what the Hon. Member is suggesting today. I think he recognized that when he said a little earlier that he was going beyond the request made by that committee, of which he is a member.
The committee asked that all income tax remission orders be tabled in Parliament. It said nothing about remission orders other than those dealing with income tax. The committee asked also for a preparation of an explanatory note to accompany each remission order in order to explain to legislators why the amount was remitted to start with. That is entirely reasonable. The committee also requested that there be a reference of all remission orders tabled in that way. In other words, the remission orders relating to income tax would be referred to the standing committee. That did not apply to duties or penalties or anything else, just those related to income tax.
As well, the committee asked that there be prior approval by Parliament of income tax remission orders exceeding $20 million. In other words, with respect to amounts less than $20 million, the remission orders would be tabled in the House, but not to obtain approval. We could review them as we review Order in Council appointments, perhaps. However, the House would have a say on whether or not amounts in excess of $20 million would be remitted. That is far narrower, as I understand it, than what the Hon. Member has suggested today.
When the committee made this recommendation to the Government, the Minister of Finance (Mr. Wilson) replied that the committee's principal recommendation is that all income tax remission orders should be approved by Parliament. Obviously he misunderstood what was in the committee's report. The committee said it wanted all income tax remission orders to be tabled in Parliament, but that only those involving amounts greater than $20 million would require approval. I do not think the Minister's reply was adequate, but that was so because he did not seem to have understood what the committee was asking. In any case, the Minister made his response and concluded with several remarks to the Chairman of the committee. Basically we are not very much further ahead than that today, except that certain documents are now being tabled in the House.
We have a request made by a committee of Parliament which was misunderstood by the Minister. He of course then arrived at the wrong conclusion. On the other hand, we have a Member asking that we go well beyond what the committee requested and that we seek parliamentary approval of all remission orders.
There are questions that beg to be asked. I do not know whether it was the intent of the Member to go this far, probably not, but I pose the following question. Under the
May 26, 1988
suggestion he has brought to our attention, would the gasoline tax which is remitted to farmers have to be tabled in the House prior to being remitted? As I read his motion I would come to that conclusion. I do not think that is what he wants because it is a remission of taxes-


Alan Redway: There is legislation authorizing it.


Don Boudria: That is true, but I read here, "All remissions of taxes, fees or penalties"-[DOT]


Alan Redway: Under Section 17.


Don Boudria: He now says "Under Section 17". Of course that narrows it down. The motion is to repeal Section 17 and says that all remission of taxes globally, not only those collected under Section 17, be approved by Parliament. I hear the Member saying now that that is not really what he wants. This would create something a little onerous, even with the further explanation now offered by the Hon. Member. I have some difficulty supporting this proposition.


Pierre H. Vincent: Madam Speaker, I welcome the opportunity to respond to the proposal in this motion to change the existing procedure for granting remissions of taxes and tariffs.
Madam Speaker, I think it is fair to say that there is a rather low level of public understanding of the workings of the tax and tariff remission system. Therefore I hope that this debate can shed some light on the subject and focus attention on the important issues that are involved, and that my colleague from Glengarry-Prescott-Russell (Mr. Boudria) will be able to follow the debate and fully appreciate the nature of the problem.
As the House is aware, the Standing Committee on Public Accounts has concerned itself with the question of tax and tariff remissions. The Hon. Member for York East (Mr. Redway), sponsor of the motion before the House, has taken an active role in the committee's discussions. Madam Speaker, the motion deals with one of the issues that were discussed in the committee-that of the approval process for granting remissions. But the committee was also very much concerned with other remission issues, and notably the need for greater accountability and openness by government in advising Parliament about remission orders that have been made. I would like to deal with that aspect of the matter in my opening remarks because of its importance.
The accountability of government to Parliament for its actions is of foremost concern to all of us. In the area of tax and tariff remissions, I submit that this Government has made a major advance in ensuring a high degree of openness and accountability for its actions. In March of last year, in response to concerns expressed by the Public Accounts
May 26, 1988

Committee, the Minister of Finance took three major commitments: first, to publish all income tax remission orders in the Gazette; second, to table all income tax remission orders involving more than $20 million; and third, to implement a new reporting process to Parliament covering all new remission orders.
In carrying out his undertaking, the Minister is taking steps even beyond those commitments. All remission orders, and not just those for income tax remissions, will be Gazetted. Similarly, the promise to table in Parliament orders involving more than $20 million will also apply to tariff remissions as well as those for income tax. These steps have already been implemented. The third step-to put in place a timely and practical process of reporting to Parliament all new remission orders-will be implemented in the very near future. This will involve a report after every six months on orders issued during that period. It will provide all of the information now given in the annual Public Accounts, and also set out the concise reasons for making the order and, where possible, the amount of tax or tariff being forgone or an estimate of the cost to the Treasury.
These measures will be a large improvement on the former practice. Most orders have in the past been listed in the Gazette although some were not-those affecting an individual or orders not of a continuing nature. Now all orders will be published. Moreover, publication in the Gazette did not provide very easy accessibility to Members. Nor did it provide important information that Members should know. The new system demonstrates the real concern of the Minister of Finance in bringing greater transparency to the remission process and creating the basis for real accountability by governement for its actions in this area.
Madam Speaker, I should add that this new reporting system is only part of a much broader approach by the Minister to opening up the process of budget making and tax reform. In his first budget in 1985 the Minister issued a paper setting out proposals for improving the budget process. That process has involved very broad consultation with the public on potential new tax measures prior to every budget since then. The consultation process showed its value particularly in developing the important measures of tax reform which were announced last year. The widest possible range of interested individuals, groups and associations were consulted and had an opportunity to make their views known. The Standing Committee on Finance and Economic Affairs also made important contributions in the process of consultation.
So what is being done in relation to tax and tariff remission orders is in keeping with the government's overall approach to greater openness and accountability.
The Public Accounts Committee and the Auditor-General were also concerned about the need for evaluating remission orders and ensuring that they do in fact achieve their purposes. Here too the Government has taken action. A new Tax
Financial Administration Act
Measures Evaluation Division has been set up in the Department of Finance. Its purpose is to evaluate not only tax measures but also the more significant tax and tariff remission programs. This new division was itself a response to one of the concerns of the Public Accounts Committee.
So it is very clear, Madam Speaker, that the Minister of Finance shares many of the concerns of the Public Accounts Committee and has been responsive to them. He has not, however, supported the kind of approach proposed in the motion by the Hon. Member for York East (Mr. Redway). There are good and valid reasons for the position taken by the Minister.
First, however, I should comment on the specific proposal that is embodied in this motion. It would do away with the remission process provided under section 17 of the Financial Administration Act. In its place, it proposes an annual submission to Parliament, for its approval, of all requests for remissions of taxes, fees or penalties.
I should note that the Financial Administration Act remission system applies only to tax remissions. Since January, tariff remissions have been provided under the Customs Tariff and thus would be outside the scope of this motion. The House should know that about 95 per cent of the amount of all remissions involve tariffs.
In considering this motion, however, the important point is whether it would serve the public interest. I submit that it would not, Madam Speaker. And one has only to look at the nature of the great majority of remission orders to realize that a system that requires prior Parliamentary approval would be quite inappropriate.
The large majority of remission orders, for either income tax or tariffs, are granted for reasons of equity-cases, for example, where there has been over-payment of taxes and duties and the letter of the law does not permit a refund or other relief. There are plenty of examples in the remission orders that have been made public. Cases like that of a mother with a claim for $654 in tax refund in respect of child tax credits for 1979. Because she had not filed her claim within the deadline required by law, as you would know, Madam Speaker, there was no way legally to pay the refundable child tax credit which she very much needed. The only recourse was through a remission order.
Another example involved a fairly new product on the market-beer coolers-and the Government decision to remit the excise tax payable on wine that is blended with beer in a brewery. Without that remission there would have been double taxation: the excise tax paid on wine purchased by the brewery to make its beer cooler, and a further excise duty paid on the end product shipped from the brewery. A remission order was the only, the quickest and most direct way of correcting this inequity created by the advent of a new product. The brewery needed relief from a double tax situation that could not have been foreseen when the excise tax and duty legislation was

May 26, 1988
Financial Administration Act
written. Of course, the legislation could be amended, and this no doubt will be done if the situation persists.
But as Members know, changing legislation is a timeconsuming and costly process. And in the meantime it could not help the brewer who wants to develop a market for this product now, not in six months or a year.
This requirement for prompt relieving action is a common thread running through most remission cases. The Public Accounts Committee has also been concerned that relief in remission cases should not be delayed.
The Government's position was well summarized by the Minister of Finance in a letter dated March 8, 1987 to the Public Accounts Committee in response to a committee report. Allow me to quote from that letter: "While I recognize that Parliament needs to be fully informed with respect to remission orders, I believe that the power to grant remission orders was given to government for valid reasons that continue to exist. Indeed it is desirable to maintain the capacity to respond swiftly, effectively and unequivocally where it is necessary to rectify anomalies, unintended results and injustices in the tax system. To require parliamentary approval of all or some remission orders could seriously impair the effectiveness and timeliness of remission orders and would limit considerably the flexibility of our tax system."
Madam Speaker, the Minister was referring to the great majority of remission cases which involve situations of inequity, hardships and injustices. And I am convinced, Madam Speaker, that my colleague from Saint-Denis (Mr. Prud'homme) would not condone unfair taxation.


George Albert Proud: Yet this is what you are doing.


Pierre H. Vincent: In addition, as Members know-and I hope they know, Madam Speaker-there are a relatively small number of tariff remission cases, usually involving quite substantial amount, which are more in the nature of industrial programs. They are usually conditional on the industry carrying out specific undertakings or performances such as major investments.
Under the tax system, such cases will be reported promptly to Parliament. And like any government action they will be open to questioning and challenge. That is the essence of government accountability, which is fully supported by the Minister. This Government will not be making any remission orders that it is not fully prepared to explain and defend in Parliament.
Members should be aware, however, that the number of such so-called duty remission programs will substantially decline. That is because of the Canada-U.S. Free Trade Agreement. The Agreement specifically provides that no new or expanded tariff relief provisions which include performance requirements by an industry shall be introduced after next June 30 or after congressional approval of the agreement. Such remission programs that are now in effect are to be
terminated before the end of the 10-year term of the agreement January 1, 1998.
In conclusion, Madam Speaker, I submit that we should not adopt the major change to our remission system proposed in the motion before us. The present system is a good and workable one, improved as it has been with the recent changes ensuring much greater openness and answerability to Parliament by the Government for its remission orders.


Michael Morris Cassidy: Madam Speaker, I am glad the Member for York East (Mr. Redway) has raised this particular issue. While I have reservations about the specifics of his proposal, his effort to bring greater openness, open government, and accountability on the question of tax remissions is very desirable.
I respect the kind of quixotic way in which he continues within the Conservative Party to carry on this campaign. However, after three and a half years in the House, I think he should have realized that the Conservative Party, like the Liberals before it, is beyond repair, and he should either join his colleagues on the independent benches on this side or come over to the New Democratic Party.
I believe the whole question of openness is fundamental to many Canadians in terms of their sense of whether or not the tax system is really fair. The Hon. Member for York East cited the case of Dome and the remission order of Hudson's Bay Gas which involved the forgiveness of some $400 million.
The Government is saying that in the future, remissions that have a value exceeding $20 million will be reported in some way or another to the House of Commons. I suppose that represents some progress. I am unaware of the mechanism to be established and, as finance spokesperson for my Party, I have yet to see any of these reports about how taxpayers' money is being spent through remissions under Section 17 of the Financial Administration Act.
There are several questions with which we must deal. For example, should Section 17 be repealed? Section 17 is exceedingly broad. I will read a couple of paragraphs into the record. Section 17(1) states:
The Governor in Council, on the recommendation of the Treasury Board, whenever he considers it in the public interest, may remit any tax, fee or penalty.
For example, if the Cabinet decrees that returning all the income tax to people who are registered members of the Rhinoceros Party or other political Party is in the public interest, it can do so. While there may be some criticism from the public, it has that power.
Those orders are rather frequently gazetted in the The Canada Gazette which is a publication of mind-stupefying complexity and opacity. It is very difficult to understand in order to know what is happening.
May 26, 1988

The Canada Gazette in February, 1988, contained a lengthy amendment order under Section 17 of the Financial Administration Act, dealing with commercial vehicles. It is apparently justified because of the need to ensure consistency with the new customs tariff. Perhaps there is no specific value to that because the new order has the same value as the old order. However, the point is that, apart from gazetting, the House of Commons was not consulted or informed.
On the other hand, in 1973 and 1974, a number of trade union members on the Victoria Colonist were on strike and set up a union paper during the period of the strike which I believe was known as the Victoria Express. They were compelled to pay tax and, for various reasons which are not spelled out, the current Government decided to remit the tax that was either owing or had been paid by those trade union members. Patricia Turnbull is gazetted as receiving $1.14 for tax paid for the fiscal year 1973 and $40.60 for 1974.
I believe the Hon. Member for York East would agree that a few tens of thousands of dollars in taxes remitted in this particular case is somewhat small for the House of Commons to deal with by means of a vote or legislation. On the other hand, I think he would also agree that stating that only those remissions worth more than $20 million would be studied is a little too large an amount.
For example, I do not know the value of the remission cited by the Parliamentary Secretary, which he said was to avoid double taxing, where wines are used for wine coolers and are mixed in various ways with beer. That is something I would welcome right now. That is not a relevant comment, but it may be appropriate at the end of the day.


Mr. Dorin:: A point of order.


Michael Morris Cassidy: There are no vineyards in Alberta, Madam Speaker.


Murray Dorin: Madam Speaker, I rise on a point of order. The Hon. Member continues to suggest that this information and these various amounts are not available. In fact, all of these amounts, not simply $20 million, are listed and published in a report provided by the Minister of Finance (Mr. Wilson) and the House of Commons every six months. The latest report is one ending March 31, 1988, to which all Members have access. It gives an indication of the scope and reason for the order.


The Acting Speaker (Mrs. Champagne):: That is not a point of order. I am sure the Hon. Member realizes that it is debate. There are three minutes left to the Hon. Member for Ottawa Centre (Mr. Cassidy).


Michael Morris Cassidy: Madam Speaker, I think you will agree that the intervention by my colleague on the Finance Committee, while totally out of order, was in fact a helpful intervention. I am glad to learn about that. It illustrates the complexity of the issue.
Financial Administration Act
Should Parliament have the right to review major remissions? In my opinion, the answer is yes. I believe we must go beyond that and look at the whole question of tax expenditures, which include these remissions and far beyond.
The Auditor General pointed out in his 1984 report that the federal Government now spends about 30 cents to 50 cents through the tax system for every $1 of government spending. The Nielsen Task Force in 1983 estimated that 1983 tax expenditures totalled $36 billion compared to direct expenditures of $57 billion. So if we are now getting a report every six months from the Minister of Finance (Mr. Wilson) of the value of all remission orders, that is just a very small start to the kind of openness I believe we should be looking at.
In the minority report which my colleague from Regina and I submitted on the question of tax reform, we urged that every tax expenditure should be reviewed first by the relevant Department, so it could be looked at with respect to alternative policy instruments. Then there should be an appropriate tax expenditure analysis presented annually, along with the spending Estimates in the budget of the Public Accounts, and tax expenditures of all kinds-and we are talking about $40 billion or $50 billion a year-should be integrated with the spending envelope system and, therefore, subject to cabinet committee control. Finally, they should be subject to the approval of Parliament.
I note, and this is a sign of the kind of weakness of the system, that the Nielsen Task Force, which my Party criticized because of the way it handled this question of public spending, was looking at the trees and not at the forest and in fact spent a total of about 3 per cent or 4 per cent of the number of pages they produced in commenting on government expenditures, commenting on tax expenditures, which amount to some 30 per cent or 40 per cent of tax expenditures. It would certainly amount to far more than that when one looks at program expenditures.
While I have questions about eliminating Section 17 of the Financial Administration Act, I believe that the thrust of the argument of my friend from York East is an appropriate one. If he will join with us in bringing about greater accountability and openness, if he will go beyond this question of the remission orders under Section 17 of the Financial Administration Act to the whole question of tax expenditures in general, and if he will join us in trying to ensure that all tax expenditures are voted upon every year, then regardless of whether or not he joins the NDP caucus, I know on this issue we can work solidly and very positively together.


Robert E.J. Layton: Madam Speaker, the Government welcomes this chance to consider remission orders in the context of the Bill presented by the Hon. Member for York East (Mr. Redway). It has been, and continues to be, this Government's objective to increase openness and accountability in the tax and tariff system. Let us look first at the budget

May 26, 1988
Financial Administration Act
process. Members will know of the steps we have taken specifically to open up the budget process as far as possible and to have widespread consultation and examination of potential tax measures. In line with these objectives, in our very first Budget in 1985 we presented a paper entitled The Canadian Budget Process: Proposals for Improvement.
Our approach was also illustrated in the tax reform process. Before undertaking reforms, the Minister of Finance (Mr. Wilson) made himself and officials available to a large number of groups covering most social interest groups, the business community, volunteer organizations, economists, representatives of small and medium-sized businesses, unions and so on. After the proposals were published in the White Paper, the Minister again undertook to meet representatives from affected sectors who had things to say and representations to make.
Next, the proposals in the White Paper were examined in the Standing Committee on Finance and Economic Affairs, which was chaired by the Hon. Member for Mississauga South (Mr. Blenkarn), the committee on which I am happy to serve. This committee traversed the country and held hearings. Almost every imaginable group was heard from. The report of the committee contained 81 recommendations, to which the Minister of Finance in turn responded.
We have said that this process of tax reform has been one of the most open in the history of the federal Government. All affected individuals, taxpayers and citizens had several opportunities to speak with decision-makers. The process followed on tax reform also is a good example of how the Government's policy of widespread consultation interacts with the wider powers given to committees of this House.
With respect to remission orders, the Public Accounts Committee in its first report was extremely critical of the remission's process in an income tax order concerning the acquisition of Hudson's Bay Oil and Gas by Dome. This was an order passed by a previous Government. In responding to the committee on behalf of the Government, the Minister of Finance indicated that he also had concerns about accountability in the remission process. The Government immediately took steps to open up the process and make it more accountable. It specifically undertook to publish all income tax orders in The Gazette, to table in Parliament all income tax orders over $20 million, and to report periodically to Parliament on all new income tax remission orders and to give as much information as possible on their costs and rationale.
As my colleague, the Hon. Member for Edmonton West (Mr. Dorin) reported to the House a few moments ago, one of these six month reports to Parliament on remission orders is available to all Members of Parliament. It was specifically in response to the recommendations of the Public Accounts Committee.
In the course of carrying out these commitments, it was realized that any report on income tax remissions would be a pretty slim report. A review by the Office of the Comptroller
General indicated that income tax orders, for instance, comprised less than 5 per cent of the value of all remission orders. It was also hard to see why other remission orders should not get the same open treatment as income tax orders. The Government, therefore, decided to table all remission orders worth $20 million or more in the House, to publish all remission orders in The Gazette and to issue a six-monthly report on all new remission orders to the House.
Let me say in conclusion on this point that the Government can claim credit for making the remission process more accountable, for promptly responding to concerns expressed about this process in a committee of this House and, indeed, for going much further than its original commitment to Parliament to make the remission process more accountable. Instead of just having an open process for income tax remission orders, all remission orders, including tariff, excise and sales tax orders, are now included in a more accountable process.
Placing the remission order process in a wider context, this is only one of the steps the Government has taken to increase accountability and openness in the tax and tariff system. Other steps include increased and wider consultation and the increased role of committees of the House.
It is important not only to be accountable but to be seen to be accountable. In the latter respect, the Government has also been increasing its efforts to make information on remissions accessible to Members. I have already remarked on some of these efforts such as the six-monthly report on new remission orders and the tabling in Parliament of all orders over $20 million. At the same time, efforts have been made to increase the usefulness of information in the annual Public Accounts.
For instance, these accounts will now give the annual amounts remitted under an order for the duration of its life. Some information will also be excluded to make the accounts more meaningful. Thus, a recent order remitted some $60,000 of tax paid on strike benefits to 298 members of a union. Previously, the Public Accounts would have listed all these individuals and the amounts they received. This information will still be available at Revenue Canada for any member of the public who wants to inquire about the order, but the Public Accounts will not list the individual beneficiaries of this order over several pages.
In conclusion, emphasis has also been put on increasing the meaningfulness of information in the Public Accounts without sacrificing public access to information.


The Acting Speaker (Mrs. Champagne):: The time provided for the consideration of Private Members' Business has now expired. Pursuant to Standing Order 36(2), the order is dropped to the bottom of the list of the order of precedence on the Order Paper.
May 26, 1988



[Stage Direction]
[Translation\

[Stage Direction]
The House resumed from Wednesday, May 25, consideration of the motion of Mr. Mazankowski that Bill C-129, an Act to provide for the continuance of Air Canada under the Canada Business Corporations Act and for the issuance and sale of shares thereof to the public, be read the second time and referred to a legislative committee.
And the amendment thereto by Ms. Copps:
That the motion be amended by striking out all the words following the word "that" and substituting the following therefor:
Bill C-129, an Act to provide for the continuance of Air Canada under the Canada Business Corporations Act and for the issuance and sale of shares thereof to the public, be not now read a second time, but be read a second time six months hence."
The Acting Speaker (Mrs. Champagne):: It being six o'clock, pursuant to Standing Order 13(4)(a), the House will now proceed with the deferred division vote on Ms. Copps's amendment to Bill C-129, an Act to provide for the continuance of Air Canada under the Canada Business Corporations Act and for the issuance and sale of shares thereof to the public.
Call in the Members.
The House divided on the motion (Ms. Copps), which was negatived on the following division.
(Division No. 368)
++YEAS
Members
Allmand	Epp	OrlikowAlthouse	(Thunder Bay-	OuelletAngus	Nipigon)	ParryAxworthy	Fulton	PennerBlaikie	Gagliano	Prud'hommeBoudria	Gauthier	RodriguezCassidy	Hopkins	SkellyCopps	Hovdebo	Young-26de Jong	Keeper Murphy Nystrom
NAYS Members	Belsher	Collins	GustafsonBertrand	Cooper	HallidayBlais	Crosbie	HamiltonBosley	(St. John's West)	HawkesBradley	Darling	HockinCadieux	Dorin	HornerCardiff	Fennell	JamesClinch	Girard	Joncas
Excise Tax Act
Kempling	McDougall	SparrowKilgour	(St. Paul's)	ThackerKindy	McMillan	TowersLandry	Nicholson	VankoughnetLayton	(Niagara Falls)	VezinaLesick	Nickerson	VincentLewis	Nowlan	WarnerMacKay	Ravis	WeinerMartin	Redway	WilsonMayer	Reid	(EtobicokeMazankowski	Scott	Centre)-56McCrossan	(Hamilton-Wentworth)	McDermid	Scowen	
Shields


The Acting Speaker (Mrs. Champagne):: I declare the amendment lost.


EXCISE TAX ACT
[Stage Direction]
The House resumed consideration of the motion of Mr. Wilson (Etobicoke Centre) that Bill C-117, an Act to amend the Excise Tax Act and the Excise Act, be read the third time and passed, and the motion of Mr. Clinch (p. 15788).
The Acting Speaker (Mrs. Champagne):: Pursuant to Standing Order 13(4)(a) the House will now proceed to the taking of the deferred division on the motion of the Hon. Member for Gloucester (Mr. Clinch), in relation to Bill C-117. Shall I dispense with the ringing of the bells?


Some Hon. Members:: Dispense.


The Acting Speaker (Mrs. Champagne):: Accordingly the question is as follows-


Some Hon. Members:: Dispense.


The Acting Speaker (Mrs. Champagne):: Shall I dispense?


Some Hon. Members:: Agreed.


Jean-Robert Gauthier: Madam Speaker, I rise on a point of order. I think if you ask, you will find there is unanimous consent to apply the results of the previous vote to this one.


Some Hon. Members:: In reverse.


Jean-Robert Gauthier: In reverse, of course.


Some Hon. Members:: Oh, oh!


Jean-Robert Gauthier: I apologize, in reverse.


The Acting Speaker (Mrs. Champagne):: Is there unanimous consent to apply the result of the preceding vote in reverse to this question?


Some Hon. Members:: Agreed.

May 26, 1988
Excise Tax Act


The Acting Speaker (Mrs. Champagne):: Shall I dispense with the ringing of the bells?


Some Hon. Members:: Dispense.


Douglas Grinslade Lewis: Madam Speaker, I think you might find agreement in the House to apply the same vote to the main motion as on the amendment.


The Acting Speaker (Mrs. Champagne):: The House has heard the suggestion by the Hon. Minister of State (Mr. Lewis). Is there unanimous consent?


Some Hon. Members:: Agreed.


The Acting Speaker (Mrs. Champagne):: I declare the	Hamilton Hawkes	Nicholson (Niagara Falls)	motion carried.	Hockin	Nickerson	Horner	Nowlan	I he next question is on the main motion. Is it the pleasure of	the House to adopt the said motion?	NAYS


Some Hon. Members:: Agreed.				Members


Some Hon. Members:: No.


The Acting Speaker (Mrs. Champagne):: All those in favour of the motion will please say yea.


Some Hon. Members:: Yea.


The Acting Speaker (Mrs. Champagne):: All those opposed will please say nay.


Some Hon. Members:: Nay.


The Acting Speaker (Mrs. Champagne):: In my opinion, the yeas have it.
Allmand	Epp	OrlikowAlthouse	(Thunder Bay-	OuelletAngus	Nipigon)	ParryAxworthy	Fulton	PennerBlaikie	Gagliano	Prud'hommeBoudria	Gauthier	RodriguezCassidy	Hopkins	SkellyCopps	Hovdebo	Young-26de Jong	Keeper Murphy Nystrom


The Acting Speaker (Mrs. Champagne):: 1 declare the motion carried.
Bill read the third time and passed.
May 26, 1988

Excise Tax Act
[ Translation]	The House adjourned at 6.26 p.m.


The Acting Speaker (Mrs. Champagne):: It being 6.26 p.m., the House stands adjourned until tomorrow at 10 a.m., pursuant to Standing Order 3(1).

Friday, May 27, 1988


[Stage Direction]
Prayers