1989-10-02

Mr. Albert Cooper (Parliamentary Secretary to Government House Leader):: Mr. Speaker, pursuant to Standing Order 106(8) I have the honour to table, in both official languages, the government's response to four petitions.
[Editor's Note: See today's Votes and Proceedings]


Hon. Alan Redway (Minister of State (Housing)):: Mr. Speaker, I would like to bring to the attention of this House a significant occasion in housing around the world. Today is World Habitat Day and it gives us the opportunity to focus our thoughts on just how vital the home is to each and every one of us.
For most of us Canadians, it is a day to be thankful for our good fortune, for by and large we are among the best housed people in the world.

Unfortunately, many do not share our good fortune. One billion people in the world do not have decent, safe, sanitary housing. That is why the United Nations General Assembly in 1985 designated the first Monday in October as World Habitat Day.

The United Nations Centre for Human Settlements, or Habitat, has developed an ambitious plan to address shelter issues, the Global Strategy for Shelter to the Year 2000. It was adopted by the United Nations General
Assembly in December 1988. The UN believes that no country can claim to have solved all of its shelter problems and therefore all countries should make a commitment to meet shelter needs.
The theme for World Habitat Day 1989 is "Shelter, Health and the Family". This highlights the link between these critical aspects of human welfare. Without proper shelter, including housing, clean water, sanitation and community services, the risk of disease is vastly increased and a stable family life becomes almost impossible.
As one of the world's best housed nations, Canada has experience in solving housing problems that we would like to share with developing countries and with developed countries alike. On the other hand, we have not yet solved all of our own housing problems and we too can learn from the experience of other countries. Canada supports the global strategy and regularly exchanges information with the UN on Canadian initiatives to address housing issues.
Since hosting the International Habitat Conference in 1976, the federal government has provided financial contributions to the information activities of the United Nations Centre for Human Settlements.

The Habitat Information Office for North America and the Caribbean was originally located at the University of British Columbia in Vancouver and later moved to York University in Toronto. We are pleased now to house it in its new quarters in Ottawa. I am happy to announce that Canada Mortgage and Housing Corporation has renewed the funding for the Information Office's activities by granting it $750,000 over three years.
I would like to close by borrowing a few words from the World Habitat Day message of the Secretary General of the United Nations. The home and family are the nucleus of the global community. The home is where we bring up our children, where we find our values, where we develop our abilities. The home is where the fabric of society is woven. In Canada, we share these principles and we continue to do all that we can here at home and

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internationally to ensure that people have adequate shelter.


Mrs. Beryl Gaffney (Nepean):: Mr. Speaker, on behalf of the Official Opposition, I am pleased to have this opportunity to draw attention to World Habitat Day. This occasion, the first Monday of October, was so designated by the United Nations General Assembly in 1985 as a means to focus the world's attention on the desperate battle to improve the shelters of hundreds of millions of people on this earth.
It is indeed shocking that a billion people around the world are in need of adequate housing, with facilities most of us here take for granted, such as clean drinking water, sanitation facilities and a safe environment for our children with educational and employment opportunities on our doorsteps.
Inadequate housing denies people the opportunity to lead fully productive lives and to help in the building of their communities. For many people throughout the world, our own country included, the lack of housing is a denial of life itself.
As the minister stated, the theme of World Habitat Day 1989 is "Shelter, Health and the Family". The theme recognizes the fact that shelter is a basic need to us all. In the absence of adequate secure shelter, there is anxiety, anger and frustration. One cannot dispute the linkage between adequate housing and good health. In the absence of adequate shelter and good health, how is the family to survive? How are parents expected to build a better future for their children when their thoughts are dominated by fears of losing what shelter, however inadequate, they possess?
The problems and heartbreak associated with inadequate housing are not limited to the squalid slums of the Third World. Here in Canada, hundreds of thousands of families and individuals live in inadequate housing, often at prices that force them to go without other necessities. The growing network of food banks and other emergency services in Canada can be directly linked to the shortage of affordable housing in this country.
This government has exacerbated the seriousness of the situation by its refusal to provide strong leadership and commit the necessary financial resources to substantially improve the living accommodations of the homeless. I might add that in this morning's The Toronto Star, the minister's statement that we do not need housing and that it is not a national issue in this country is totally irresponsible.
For those whose housing tenure is so insecure that they are in fact homeless and for parents whose children are denied the many joys which should accompany childhood, the task is great both here in Canada and around the world.
I urge the government to give this matter the attention it deserves. I applaud the initiative of the United Nations in pursuing a global strategy as a means of finding solutions to housing problems around the world. I am proud that Canadians have the opportunity to participate in this quest.


Ms. Lynn Hunter (Saanich-Gulf Islands):: Mr. Speaker, I welcome World Habitat Day on behalf of the New Democratic Party. We hope that the location of the Habitat information office in Ottawa will result in work which will improve our efforts to house people in decent conditions both in Canada and throughout the world.
Many of us have been shocked at recent media reports of death squads in Brazil preying on the more than one million youngsters who are forced to sleep in the open each night. Another media report, most recently in The Vancouver Sun alludes to the hypocrisy of the Canadian government in its dealings with the issue of asbestos.
The United States plans to ban the use and the importation of asbestos by 1997. There is no safe level of asbestos exposure, according to health experts. The Conservative government angrily disagrees. The hypocrisy of the Canadian government in supporting a dangerous industry that is worth $300 million a year and some 2,600 jobs extends far beyond the U.S. border.
Canada's asbestos industry has busily built up export trade in the Third World, where less sophisticated societies are not so scrupulous about safety. Countries such as Pakistan, Korea and Thailand use asbestos to provide housing for the poor. This is the kind of contradiction in which the Conservative government is embroiled.

It is significant that the United Nations, which has declared this to be World Habitat Day, has found that one billion people are not properly housed. No one nation is immune from shelter problems. For Canada, which has seen substantial cut-backs to both international assistance and housing budgets this year, the ground that has been lost.
A government that stands today to celebrate an international day of shelter might also be called to account for some of the following issue which it alone has responsibility for: budgetary cuts for the one program which renovated housing for low income Canadians. The Rental Remedial Action Plan, a program which brought basic improvements to the rooming house and low-income rental housing and is vitally important in our cities, is now terminated. What will replace it? There is reduction of co-operative housing from the proposed target of 5,000 units per year, which was never attained, to a now paltry 1,700 units which is supposed to serve all of Canada. How can we tackle affordable housing this way? It is a crushing blow to housing affordability that present high interest rates and the future goods and services taxes will bring to Canadians. It is no overstatement to say that the goal of housing Canadians to a decent standard is receding despite our unparalleled affluence.
The government, in its wisdom, cannot even fund such worthy self-help projects as Project Beaver, an organization which has specialized in training people in rural and remote parts of Canada to house themselves. My colleague, the Hon. Member for Surrey North, who is our housing critic, is fond of saying that there is no housing problem for the wealthy in Canada. The market does provide everything beyond our wildest dreams but increasingly, the market which this government puts its faith in has nothing to offer in terms of affordable accommodation.
I wonder if this is to be our message to the world on World Habitat Day, put your faith in the magic of the market, and if that does not work, then hope for some charity. It is not the way forward that we in the New Democratic Party endorse. We will be pressing for a housing policy which will house all Canadians and one which will be an example to the world. That would be a
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goal worth striving for on succeeding World Habitat Days.



CANADIAN LAWS OFFSHORE APPLICATION ACT


Hon. Doug Lewis (Minister of Justice and Attorney General of Canada) moved: for leave to introduce Bill C-39, an act to apply federal laws and provincial laws to offshore areas and to amend certain acts in consequence thereof.


Mr. Speaker:: Is it the pleasure of the house that the hon. minister shall have leave to introduce the bill?


Some Hon. Members:: Agreed.


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

Mr. Jean-Robert Gauthier (Ottawa-Vanier):: Mr. Speaker, I have the responsibility to table a petitions with regard to the impending announcement on VIA Rail and the savage cuts the government is proposing. These petitioners would like this House to consider the following.
The Government of Canada has decided to eliminate many of VIA Rail's existing routes and thousands of jobs. The people of Canada deserve a high quality passenger rail service, including modernized equipment throughout the network and a rapid rail system for the Windsor-Quebec City corridor. The Government of Canada, in acting in the way it is going to act in a few days to come, are indeed cutting into a very essential service. These petitioners pray and call upon Parliament to urge the Government of Canada to not cancel in whole or in part rail passenger services in Canada.


Mr. Derek Blackburn (Brant):: Mr. Speaker, I too have the honour and duty to rise under Standing Order 36 to present several petitions containing several hundred names of constituents of mine from Brantford and Brant county, but also from other centres in southwestern Ontario, severely criticizing, indeed, condemning the

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government for even tampering with VIA Rail, let alone shutting it down to cities like Brantford.
At a town hall meeting yesterday afternoon, at which over 300 people turned out to a tri-level meeting, this petition was signed by many more people. The petitioners call upon the government not to terminate rail passenger service to Brantford, Woodstock and other communities in Ontario, but indeed to expand this environmentally-friendly and cost-effective means of transportation, if it was properly administered, properly funded and properly set up. Every other country is doing it. There is no reason why this country cannot do it.


Hon. Ralph Ferguson (Lambton-Middlesex):: Mr. Speaker, I rise today to present a petition on behalf of the Canadian constituents across this nation who are violently objecting to the proposed cuts to VIA Rail. VIA Rail is an essential service to those rural communities across Canada. Older people depend on this to keep their medical appointments at hospitals, particularly from Sarnia to London and in other areas of Canada. The petitioners humbly call upon this Parliament to urge the Government of Canada not to cancel in whole or in part, rail passenger services in this country.


Mr. Russell MacLellan (Cape Breton-The Sydneys):: Mr. Speaker, I would like to submit a petition signed by many Canadians who are voicing their opposition to the proposed goods and services tax and who say that the proposed tax is just unacceptable. They just cannot bear the increased taxation. Many small businessmen and women feel that their businesses not only cannot handle the new tax but cannot handle the cost to them of collecting the tax.


Mr. Jim Jordan (Leeds -Grenville):: Mr. Speaker, in accordance with Standing Order 36, I am pleased to present a petition certified correct as to form and content and signed by dozens of constituents, ordinary Canadians, objecting to the government's intended plan to decimate VIA Rail. It is a pleasure to present this document on behalf of these petitioners.
[Translation\


Mr. Fernand Robichaud (Beausejour):: Madam Speaker, it is also my duty to present a petition from people in the Windsor area who, just like those in the riding of Beausejour, want to express their unhappiness with the Government's planned legislation to tax goods and services.

The petitioners want to express their concern, whereas the imposition of this tax will create an onerous burden on small business and will also cause serious and unfair hardship to low and middle-income Canadians.


Mr. Peter Milliken (Kingston and the Islands):: Madam Speaker, I have the pleasure to present a petition signed by residents of my riding of Kingston and the Islands and the neighbouring riding of Hastings-Frontenac-Lennox and Addington.
I may say that I collected these petitions personally on a VIA train going to Toronto one morning in August, and the persons I requested to sign the petition were persons who boarded the train at either Kingston or Napanee. There are 54 signatures on the petition, though a few others came along and asked to sign it because they had heard there was one on the train. This train deposited a large number of these people in Toronto and then presumably they came back by a train later in the day.
The rumour is that the government is considering cutting this train and it seems to me to be the height of folly because all these people do have to take the train back, so if they cut this train, how are they going to go?
These people who have signed this petition are praying for the government to avoid any cuts to VIA Rail and to save the national rail service to which Canadians have contributed for so long.


Mr. Nelson A. Riis (Kamloops):: Madam Speaker, I too have the honour to present a petition pursuant to Standing Order 36 from people from Victoria, Vancouver, Coquitlam and Port Moody in British Columbia, who are distressed with the decision by the government to curtail VIA service in parts of the country, and to begin the dismantling of VIA. They are simply calling upon the
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government to reconsider these cuts. They are asking the government to actually give VIA a sufficient budget in order to enable it to maintain its national mandate to provide passenger service.


Nelson Andrew Riis: Madam Speaker, on a different topic, again it is an honour to present petitions on behalf of the residents of Kamloops, British Columbia, who are concerned about the government's proposed sales tax and are asking the government to simply back off from proceeding with this punitive tax.


Mrs. Marlene Catterall (Ottawa West):: Madam Speaker, I have the pleasure to introduce a petition from Canadians who are concerned about the new goods and services tax, about its effect on higher inflation, higher interest rates and higher unemployment and in particular, the unfair hardship it will place on low and middle-income Canadians. They ask that the government abandon this proposal.


Mr. Iain Angus (Thunder Bay-Atikokan):: Madam Speaker, I too have the honour and privilege to table a petition that has been certified correct by the Clerk of Petitions pursuant to Standing Order 36.
The petitioners are all residents of the north shore communities of Rossport, Schreiber and Terrace Bay who are currently, and I emphasize currently, served by The Canadian. They point out that the Progressive Conservative Party said in its report on passenger rail services that the federal government has a responsibility to ensure that rail passenger services in Canada be retained, modernized and expanded as an important part of our national transportation system, and to that end, it is recommended that the federal transportation spending priorities be reordered to put a greater emphasis on rail passenger services. Obviously, the petitioners pray and call upon Parliament to reject the cuts to VIA Rail so that they can keep their only option in the wintertime.


Beryl Gaffney: Madam Speaker, pursuant to Standing Order 36, I am pleased to present a duly certified petition with 65 signatures from the city of
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Kingston protesting the Government of Canada's proposed cuts to VIA Rail.
These petitioners are most concerned for the economic health of their community and feel that the annual subsidies provided by the Government of Canada to VIA Rail are not disproportionate to subsidies required for roadways or airports. The petitioners urge the Government of Canada not to cancel VIA Rail.


Lynn Hunter: Madam Speaker, it is my duty and honour, pursuant to Standing Order 36, to present this petition to the House. The petition is in support of VIA Rail. I was in my riding on the weekend observing the one hundred and third anniversary of the E & N Railway in my community.
This petition is from many people from both the lower mainland and from Vancouver Island who want the VIA network upgraded, both VIA equipment and the sufficient support to VIA to carry out its mandate to provide passenger service.


Mr. Pat Nowlan (Annapolis Valley-Hants):: Madam Speaker, I too rise under the provisions of Standing Order 36 to present a petition which has been certified correct. It is a very even petition without any pejoratives in it.
It is from constituents from my riding, mainly from the Windsor and Hants County area, commenting on the rumours and plans to curtail VIA service and asking the Parliament of Canada to maintain VIA Rail at its present national network, to upgrade the service, to have new equipment, and to revise the costing arrangement with the railway companies.
In the meantime these petitioners will join the efforts of Transport 2000 and Rural Dignity of Canada in order to obtain fairness, justice and satisfaction for their legitimate demands.


Mr. Ronald J. Duhamel (St. Boniface):: Madam Speaker, I have the pleasure and the honour to present a petition on VIA Rail that has been submitted according to the rules and regulations governing such. This railway system has bound the nation together over the years and has played a key role in economic and social development of the nation.
If the latest information with respect to its possible reductions are carried out, there will be harsh and brutal effects on workers across Canada. I think particularly smaller communities in Canada, as well as large centres

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such as Winnipeg, will be victimized. We call upon the government to invest in our rail system as opposed to destroying it.


Mr. George Proud (Hillsborough):: Madam Speaker, I rise pursuant to Standing Order 36 to present a petition on behalf of a number of constituents asking the government to reject this proposed goods and services tax.


Mr. Cid Samson (Timmins-Chapleau):: Madam Speaker, it is my pleasure and duty to rise pursuant to Standing Order 36 to present a petition on behalf of a number of constituents in Timmons who humbly pray and call upon the government to reject the current proposals for a goods and service tax and further to reform the taxation system so that there is an effective minimum tax on wealthy individuals and corporations.


Mr. Joe Comuzzi (Thunder Bay-Nipigon):: Madam Speaker, I have the privilege today to table before this House a petition signed by the required number of signatories from the city of Belleville. It has been properly certified.
Signatures were received when the Liberal party embarked on the task force across this country to ensure that passenger rail service would continue. Obviously, from announcements that we anticipate in the next 48 hours, it is going to be severely cut. The petitioners ask this government to reconsider its position.


Mr. Steve Butland (Sault Ste. Marie):: Madam Speaker, it is my honour and privilege to present a petition on behalf of citizens of Ignace, Ontario, hopefully not another lonely voice in the wilderness.
There are many, many voices in Canada that are rejecting the VIA Rail cuts and the proviso "Use it or lose it" has become "Lose it or lose it".
I am very honoured to present this petition rejecting these VIA Rail cuts.


Mr. Joe McGuire (Egmont):: Madam Speaker, I have the honour and duty, pursuant to Standing Order 36, to present a petition to this house for the people of
Kingston, Ontario, on behalf of the Hon. Member from Kingston and The Islands who are asking this government to retain our national passenger rail service in Canada.


Mr. Joseph Volpe (Eglinton-Lawrence):: Madam Speaker, it is my honour and duty to present to this house, pursuant to Standing Order 36, an attached petition which has been certified correct as to form and content, from various citizens in southern Ontario from cities, towns and communities, both rural and urban.
They petition this government to reconsider its decisions regarding VIA Rail and to protect those interests of Canadians that have been generated by the rail system and passenger transport system, that have promoted tourism and economic activity, have tied Canadians together and have kept the lifeblood of this country running.
They petition this government to reconsider its decisions to cut VIA Rail and to instead infuse more productivity, funds and resources to making a very effective means of transportion even more so.


Mr. Rex Crawford (Kent):: Madam Speaker, I am honoured and pleased to rise in the house today, pursuant to Standing Order 36, to urge the government not to cancel in whole or in part VIA Rail passenger service.


QUESTIONS ON THE ORDER PAPER
Albert Glen Cooper: Madam Speaker, I ask that all the remaining questions be allowed to stand.


The Acting Speaker (Mrs. Champagne):: Shall all questions be allowed to stand?


Some Hon. Members:: Agreed.


The Acting Speaker (Mrs. Champagne):: Before recognizing the next member, I wish to inform the house that because of the ministerial statement, Government Orders will be extended by 13 minutes beginning at one o'clock.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Turner (Vancouver Quadra):
That this House condemns the Government for its mismanagement
of the Canadian economy, including:
1)	the threat to impose a new 9 per cent sales tax that is regressive, inequitable, invisible and inflationary;
2)	an unjustifiable high interest rate policy, with an interest rate spread between Canada and the United States that is at record highs;
3)	negligence in the management of Canadian trade causing unparallelled reductions in our trade balance and a loss of jobs, and threatening the survival of many formerly thriving Canadian industries;
4)	abondonment of Canadian primary producers with resulting undermining of the farming, fishing and forest industries; and
5)	continued neglect of regional disparities.
Mr. Bill Kempling (Parliamentary Secretary to Minister of Employment and Immigration):: Madam Speaker, I am pleased to address the house considering the government's economic record, in particular our record on job creation. I welcome this opportunity because since this government took office Canadians have experienced a wide economic expansion combined with steadily decreasing unemployment that, despite what the prophets of doom and recession may say, the economic expansion shows no signs of letting up.
One reason we have succeeded in turning the economy around was that five years ago this government committed itself to economic renewal and to the sometimes difficult measures needed to effect change and generate growth. In short, we had and still have a coherent comprehensive economic game plan based on the direction Canada must go if our labour market is to succeed today and in the future defined by new skills and demands and growing international competition.
On the evidence it would seem that the government's blueprint to generate meaningful long-term economic change is proving to be the right one. The simple fact is
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that since the government took office in September, 1984, unemployment in Canada has fallen from 11.6 per cent to 7.4 per cent and continues to fall. In this period the total employment has risen by 1,555,000 jobs and 87 cent of them are full-time jobs. More important, of all the new jobs created since 1984, 56 per cent have been filled by women.
When this government took office we recognized that youth employment was an area of particular concern, not only for our young people themselves but for the long-term health of the Canadian labour market. With this in mind the Minister of State for Youth has implemented far-reaching youth strategies with the provinces of New Brunswick and Newfoundland and is considering other initiatives to ease the transition of young people into the world of work.
On the broader front we have also successfully initiated two comprehensive agreements which have signalled a new era in federal-provincial economic co-operation. I am speaking of course of the Atlantic Canada Opportunities Agency and the Western Economic Diversification agency. These two initiatives, along with the industrial adjustment service and the Community Futures Program, have established a co-operative, pro-active approach to dealing with inevitable industrial or sectoral adjustment. Their successes in revitalizing companies and communities and saving jobs is directly related to involving the very people affected- employers, union representatives and community groups.
This government understood from the outset that the long-standing regional disparities could no longer be addressed through the traditional piecemeal so-called make work programs administered from central Canada.
Over the past five years progress has been made to minimize these disparities and, while much remains to be done, the processes and the programs are in place along with a new spirit of co-operation to generate long-term regional growth. Since 1984, employment has risen in every province, by 19 per cent in British Columbia and by more than 10 per cent in seven other provinces.

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Just as significant as the number of jobs for Canadians is the type of jobs they have been getting. Through the Canadian Jobs Strategy, which we introduced in 1985 as part of our long-term economic blueprint, almost
1.500.000	Canadians have received training and on the job experience. After participation in a Canadian Jobs Strategy project most have gone on to permanent employment in positions relevant to today's labour market needs.
Consistent with the mandate of the Canadian Jobs Strategy, the large majority of participants have been those Canadians who are most in need-women returning to the workforce, young people who are unemployed or underemployed, the disabled and native Canadians. By turning decision making and budgetary leverage over to the regions, Canadian Jobs Strategy programs are operating with maximum impact and cost effectiveness.
It is clear that Canadians are responding to what they perceive as a necessary and workable package of initiatives to bring about economic renewal. The Canadian Jobs Strategy is part of that package. Comprehensive tax reform to bring about a more competitive tax system, including the GST, is part of the package. The free trade agreement is also part of that package.
I should say at this point that sales tax reform could raise employment from the start and create more than
60.000	in the private sector. The opposition always talks about the 4,000 people they say will be added to the public roll. I say again that they say that; we do not say that it is 4,000. That is their estimate. The fact is that there will be at least 60,000 new jobs created by the GST in the private sector.
Statistics Canada labour force surveys released since the agreement was signed in January show that total employment has risen by 209,000 jobs so far this year. This growth, moreover, is reflected in almost every sector of the Canadian economy, including manufacturing, construction, agriculture, communications, trade and real estate.
And for those determined pessimists across the floor who insist on seeing, indeed it seems almost hoping for, an economic downturn, let me quote some more recent statistics if I may. Over the last period for which figures are available, July to August, 1989, employment was up again by 73,000 jobs, all of them full-time, shared among men, women, young people. And during this period
Quebec among all the provinces experienced the strongest growth. Obviously the remarkable expansion in the Canadian economy is not a temporary thing, but the government is determined to build on this growth, because we understand that to continue to prosper in the future a far-sighted approach to the skills requirements of our labour force and our labour market is needed.
In this regard the Minister of Employment and Immigration introduced an important initiative last spring designed to prepare our workforce for the future. I am referring to the labour force development strategy. As members of this House are aware our labour market is undergoing tremendous change. Canadian business and industry face challenges posed by technological change, expanding global markets and world competition. The labour force development strategy is part of the government's ongoing response to those challenges.
For the unemployed the strategy marks a significant shift away from passive income support toward programs and services which will help Canadians get working as quickly as possible. For those Canadians who do have jobs the priority will be to equip them with the skills the changing labour market demands. To do this we will be enlisting the involvement of the private sector, unions, educators and other groups as never before. Let me add that this involvement of Canadians from all sectors has been another cornerstone in our economic policy from day one.
It is the enterprise of Canadians that has fuelled and will continue to fuel our national economic renewal. The labour force development strategy is a massive and complex undertaking. I will not touch on the details at this time, many of which are still being worked out in consultation with Canadians from all sectors. But I will add that the strategy is fully consistent with our belief in long-term, fully integrated economic activity.
Canadians are well aware and appreciate this government's commitment to the economy and job creation. Our labour force development strategy underscores that commitment. By tackling the realities of a changing labour market we are working to ensure that Canadians will have the opportunities for productive employment in the 1990s and beyond. This and other contemporary economic issues are simply too large and crucial to address with the haphazard, stop gap programs of the past or programs that leave Canadian business and
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industry on the sidelines when decisions must be made and policies developed.
The government recognized the need for long-term comprehensive planning when we took office in 1984. We recognize it today as we continue to take the necessary measures to build a foundation for economic success.


Mr. Mifflin:: Madam Speaker, I would like to convey to the hon. member for Burlington that I listened with great interest to what he had to say. We have discussed this matter on several occasions.
I have two fairly simple questions. They are legitimate questions and are not made for any particular purpose. I would like to have the member's response if I may.
The first one is that to my knowledge the de Grandpre report, for which I think the government paid somewhere in the vicinity of $1.5 million to have completed, made a recommendation which was very much in keeping with the action that the government was taking, i.e., to combine the safety net of unemployment insurance with the trampoline offered in the sense of training. It was my understanding that we made that recommendation and that there were five members I believe on that committee; only one representative of labour, the rest were business. The recommendation was made that the training should be done but that the money should come out of a tax on business. I believe it was 1 per cent. I would like to know why that was not followed.
The second item is a legitimate question. I cannot understand why the government is getting out of unemployment insurance altogether in a very short time frame.


William James Kempling: Madam Speaker, what the hon. gentleman says is not quite correct. Bill C-21, which is another matter that we are going through in committee right now, puts a limit of 15 per cent on the amount of money that may be used for training. The balance of the training funds will come from the Canadian Jobs Strategy. I would venture to say there will be a lot more money paid out of the CJS than out of UI funds.
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But that whole discussion is another argument that is being put forth by many people who comment on whether we should in fact use UI funds for training. When you boil it all down it is a matter of what you consider a benefit, whether benefits are just dollars or whether you can take someone who is presently contributing to the UI fund and becomes unemployed and use some of those funds to train him so that he can get back into the fund. In other words, benefits can be training as well as dollars. That is the legal opinion we have, and that is the way we are going to proceed in that regard.
The de Grandpre report had many things in it, some of which we agreed with and some we disagreed with. Consequently we did not put it all into effect. I think if we had we would have a larger howl from the members opposite than we have today with Bill C-21.
We are going to proceed with training, and that training is going to be supplemented by people in the areas and regions to indicate to us what training should be done there to enhance future employment of people who are presently unemployed.


Giuseppe (Joseph) Volpe: Madam Speaker, I have never heard so much gobbledegook and tripe on this discussion as I have heard from the member opposite. I feel offended as a member of Parliament, especially when the member opposite quotes a whole series of Statistics Canada figures that have already been contested in committee, and I am going to have to do it again.
The lower unemployment rate to which he refers is still higher than that which was experienced in Canada prior to the recession. For six years prior to the recession we had a lower unemployment rate than we have now. For six years prior to the recession we had a higher employment rate than we do have now. Those are the kinds of figures the government is using to justify withdrawing from unemployment insurance, even though constitutionally the purpose of unemployment insurance is to provide income support for those who find themselves without jobs in a period of duress.
What the minister and the member opposite are trying to do is boondoggle Canadians into thinking that that money is actually going to go into training. That too is not true, especially when he quotes figures like 15 per cent. The 15 per cent of premiums, according to 1989

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estimates, will net the government $1.8 billion. Last year and for 1989 estimates under CJS for job training programs, the government has slotted less than $800 million. It has cut $700 million over the course of the last four years.
The Conservatives expect us to believe that while they are cutting funds from training they are going to use moneys that are derived for insurance purposes and for income purposes for training. I do not think Canadians are that stupid. We are certainly not gullible.
The member opposite is perpetrating an absolute untruth when he talks about the constitutionality of using that 15 per cent of funding because first of all that 15 per cent of funding is going to net more moneys than they anticipated. It is a windfall that they are going to abuse, and I say that deliberately because there is already some legal opinion that that 15 per cent constitutes a complete and total fundamental change of the UI system.


William James Kempling: If that was a short question I will give you an example of a very short reply.
When we took over the government in 1984 the UI fund was $4.5 billion in deficit. That has been repaid. It is now $500 million in surplus through fiscal 1989 and it will be $500 million in surplus after this year. What you have just said is total nonsense.


The Acting Speaker (Mrs. Champagne):: The period for questions and comments is now over. Resuming debate with the hon. member for Nepean.


Beryl Gaffney: Madam Speaker, it gives me great pleasure to rise in the House today to speak on the motion of the member for Vancouver Quadra. It reads: "That this House condemns the government for its mismanagement of the Canadian economy", more specifically, the threat to impose a 9 per cent goods and services tax, high interest rates, negligence in the management of trade, abandonment of farming, fishing and forest industry and, finally, continued neglect of regional disparities.
I will first address the 9 per cent Mulroney sales tax. What we have here is a massive shift of responsibility from the federal government to individuals, to small business, to low income people, to our elderly and to other levels of government.
Let us first look at how this imposition will affect municipal government which of course the same taxpayer supports but from a different pocket. If I could I would like to refer to a brief submitted by the Federation of Canadian Municipalities to the minister of revenue.
The finance minister assured the Canadian municipalities that local government would not be used as a source of new revenue. The technical paper indicates that municipalities are to be rebated a substantial part of the remitted GST. But even so, there are considerable inequalities which cause a contradiction to the minister's over-all commitment.
According to the FCM report it is the failure of the proposed government formula to recognize the extraordinary administrative burden confronting municipalities under GST. There are several types of tax collection and remittance requirements to which they will be subjected. To name a few, they will be faced with the task of tracking the applications of any good or service acquired in order to determine the appropriate GST treatment, and the government formula will vary from municipality to municipality. Some municipalities will be winners and other municipalities will be losers.
Second, compensation for administrative costs applies to small business. Why not municipalities?
Third, cash flow costs are ignored while waiting for the rebate.
Fourth, the burden of a federal tax on top of a provincial tax will increase costs to municipalities beyond the amount recognized in the formula.
Fifth, the commitment of the Minister of Finance to municipalities was that services such as telephone systems, natural gas, hydro, water-they sell their water- would not be subjected to the tax increase, and yet the technical paper states the contrary. The Minister of Finance, in spite of that commitment to the municipalities, has reneged on all those commitments to those municipalities. Their only source of revenue is from the property tax base and whatever grants they are at the mercy to receive from the province and the federal government.
Government members have no one to blame but themselves when faced with a public that has nothing but doubt and cynicism over the government's true motives. First they said it would be revenue neutral then they said it would be visible. On both counts the government lied,
October 2, 1989

and therein lies the lack of trust the public has for this government.
Further, the government's misleading sales tax ad campaign shows contempt for Parliament and undermines the democratic process. Financially depressed regions of the country will be given not a double whammy but many, many whammies. First the 9 per cent GST, then a massive reduction in the federal government spending on regional development. Cut-backs on the UI program and transfer payments will be reduced to the provinces by one percentage point. Finally, those outlying regions will be the hardest hit with far higher transportation costs for all their goods.
High interest rates will go hand in hand with the GST and will for some time to come. Other ill effects will be higher taxes, higher inflation costs and fewer jobs. The government itself has admitted that the GST will raise inflation by two and a quarter per cent in 1991. We know that the Bank of Canada sets its interest rate by the inflation rate.
The GST will seriously affect trade in Canada. The Conference Board of Canada estimates that 72,000 jobs will be lost because of the GST.
My time allocation does not allow me to mention all the negative aspects of the GST, but is it any wonder that taxpayers are concerned?
The government has doubled tax revenues in five years, and yet has doubled the national debt in the same period of time. In addition, these five years were ones of unprecedented economic growth. The government earned billions of dollars in excess revenue over estimate in the past five years. What did it do with this money? It certainly did not go to reduce the deficit. This government has mismanaged the affairs of the country to such a horrendous measure that they are now panicking and moving forward to a disastrous GST.
I hope this government gains its senses before the citizens of this country revolt. The imposition of a 9 per cent sales tax, a consumption tax that will hurt those who can least afford it, is not acceptable or is a 7 per cent or a 5 per cent or a 3 per cent GST acceptable. This government must negate this whole plan and go back to
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the drawing-board to find a more equitable way of replacing the manufacturers' sales tax.
I have a motion which I would like to put forward. Given the importance of this debate and given the great opposition to the GST and the number of people who wish to speak, I move, according to Standing Order 26(1):
That the House continue to sit during the lunch hour.


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


Some Hon. Members:: Agreed.


The Acting Speaker (Mrs. Champagne):: I declare the motion carried.


[Stage Direction]
Motion agreed to.
Mr. Ross Reid (Parliamentary Secretary to Minister of Fisheries and Oceans):: Madam Speaker, it gives me great pleasure to stand here today and address the motion that we see before us, a motion that some of my friends opposite spoke to last week which gave me the opportunity to respond at that time.
If I could, what I would like, is to take this opportunity to speak in the inevitably short 10 minutes specifically on the fishery. The fishery is such a critical part, not only of my province of Newfoundland and Labrador but, indeed, of Atlantic Canada, parts of Quebec, certainly British Columbia and growingly, provinces in the areas that we do not traditionally consider part of the fishery. It is an industry that I would suggest is finally being recognized as a national industry. It is an industry that is important to all Canadians no matter where they live and whatever they do to make a living.
I am horrified by the motion we see before us which states:
That this House condemns the Government for the
mismanagement of the Canadian economy, including -
The relevant phrase here is:
-abandonment of Canadian primary producers with resulting
undermining of the farming, fishing and forestry industries;
Absolutely nothing could be further from the truth. This government has shown time and again that its concern is not only with those industries but the people and the communities that depend so heavily on those industries.

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The policies of this government are focused on the long-term benefit, the long-term survival of these industries, of the fishery, to ensure that our people in our communities can depend upon a fishery that gives them a stable, a predictable and a worth-while remuneration for their efforts and which ensures the long-term benefit to those people and the long-term survival of those communities.
You cannot take short-term measures to exact longterm gain. There are no immediate responses to what is a complex and historical problem that has resulted from a myriad of a factors. We face in Atlantic Canada, and therefore in Canada generally today, an industry that looks towards some very difficult times, an industry that will demand consultation. It will demand imaginative and constructive public policy. It will demand strong response from government, from industry, from all of those who participate in and benefit from the fishery. It is that leadership that this government is and will provide to that fishery.
I look at the west coast in terms of the development of the Pacific salmon fishery. We had four good years of runs. We have gone from 13,000 metric tonnes in 1986 to
35,000	metric tonnes today. We have a strong shellfish and groundfish industry in western Canada, in British Columbia.
The free trade agreement panel is hearing the process there. Unfortunately, because of the death of one of the commissioners, there has been a problem. But with the appointment of Mr. Don Tansely who was a long-serving and is a well-recognized senior public servant that process will move ahead. This government has represented the interests of the British Columbia industry with vigour and determination.
The current situation in the Atlantic fishery has grown out of a number of interrelated and complex, scientific, economic, and historic factors. There are some things that we cannot control, such as exchange rates and lower margins of profit. But at the same time this government has moved ahead with a policy to address the problems in our fishery. That is specifically what I would like to discuss for a few minutes.
There are four cornerstones to that action. Particularly in recognition of this problem, the challenge that we all
face in dealing with the problems in the Atlantic fishery, the Prime Minister has appointed a special committee of cabinet, senior ministers from a variety of departmental backgrounds to address the problem that we face in dealing with the scientific results on the northern cod stock. That committee will look at exactly what the situation is. It will look at what the options are for all of us, be we government, the industry, or those who depend on the industry. Then, we will develop the response of this government and lead those participating in this debate, this consultation, in dealing with this issue to ensure that we have the stocks that are necessary to protect the long-term availability of the resource that we so fundamentally depend upon, particularly in Atlantic Canada.
Second, the special task force that has been set up to deal with the fishery in Nova Scotia, known as the Hache task force, is designed to examine the state of the fishery off the Scotia shelf. This task force has been consulting broadly with a number of people. There have been public hearings. Mr. Hache will report to the minister and his findings will be discussed by the special committee.
Third, the government has made the problem of foreign over-fishing a priority of the highest order. From the Prime Minister to the Secretary of State for External Affairs, to the Minister of Fisheries, to the Minister for International Trade we have made it clear to the Europeans that the ongoing overfishing is of a disastrous nature. It is of such serious concern to this government that it substantially affects the relationship between two very good friends. This diplomatic effort has been carried out with the European Community generally and with specific members of the European Community, as well as with the United States of America which too, in the past, has refused to honour the necessities of sustainable development and the necessities of protecting that resource. That process continues.
The fourth cornerstone of our policy, something that will benefit both the Pacific and the Atlantic fishery, is to take steps to strengthen fisheries management and to introduce amendments to the Fisheries Act to protect the resource. That will involve increasing deterrents and the effectiveness of enforcement, updating and strengthening fisheries management systems generally.

As I am sure you and my colleagues opposite well know, Madam Speaker, we have taken a number of actions already to deal with some of the these problems. Enforcement has been substantially increased along the 200-mile limit. Fines have been increased. Our ports remain closed. We have increased the spending on science, particularly in response to the Harris commission report, by 80 per cent. We are spending $3 million more to ensure that the science that is carried out now is as good as it can be and that areas that have not been dealt with in the past are dealt with in the future. That particularly relates to things like hydro-acoustics and oceanography.
I would like to talk briefly about the goods and services tax that we have heard so much about and how it relates to fishermen. Neither farmers nor fishermen will charge tax on their sales of food-related products. Fishermen will get back the tax that they pay on anything they buy to use to run their businesses in the prosecution of the fishery. In the past the tax has been payable and been accumulated and people have not seen it. Not only will the GST not apply to the fish they sell, but any of the tax they get back on boats, gasoline, nets or anything at all they use in the fishery will come back.
To conclude briefly, this government recognizes that the fishery in Atlantic Canada is an integral part of the economy of this country. Problems that are faced by the Atlantic fishery are problems that all Canadians share. The policy of this government is designed to directly address that today and in the future.


Mrs. Campbell (South West Nova):: I have listened to the Parliamentary Secretary to the Minister of Fisheries and a colleague from the Atlantic quite attentively. It amazes me that we can both represent a fishing area and come from the Atlantic yet we can both stand up in this House and declare that there is a very acute crisis in the fisheries on the east coast. Not only is it in fisheries, it is in other areas. It could be infrastructure because of VIA, or a decrease in air services or any of a multitude of areas.
I listened to his colleague talk about unemployment and what a great record their government has. The Member for St. John's East said, "There is nobody hurting in the fisheries. It is only a matter of different rates, the economies of scales, because the dollar has
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gone up against the American. We are suffering that hardship".
The municipal leaders of three counties, Shelburne where his colleague the Member for South Shore comes from, Yarmouth and Digby, met this summer. They asked to meet with the Minister of Fisheries. They have not had an answer to their request, which was made over two months ago. They have had no recognition from the government opposite. They have not been able to meet with his minister, the minister to whom he is parliamentary secretary.
I say this because there is a hardship. I met a man who has fished for 38 years, 18 or 16 of them with his father and over 20 on his own. He has had seven weeks of employment. That is unheard of in southern Nova Scotia. It is absolutely incredible that in this year-because he had his boat in the boat shop-he has only fished seven weeks when we are there where the fish are and we see the Cape North 30 miles away.
Could the parliamentary secretary implore the Prime Minister to come down and meet with the people in Lockeport, meet with those people who are unemployed, meet with all the plant workers who have not worked for two and a half months this year and two months last year because of the policies of his minister on the fishery, because of the bad management plan? Will he look at the Hache report that he talks about and present the people who came before that commission to the cabinet committee? It is out of the minister's hands. When you set up a cabinet committee to look at the policies of a minister you have taken it away from the minister. It is up to that cabinet committee.
Would he, as a member from the east coast, ask the Prime Minister to act quickly to ease the hardship in the fishery, look at what is happening with many, many thousands of people? I think it is about 11,000 in those three counties who had work in the fisheries who are not working in the groundfishery because of the policies of his minister.
Would he ask the Prime Minister to go to Lockeport this week, Wednesday night, or the Minister of Fisheries and Oceans who we have not seen on the east coast? There is an east coast. I do not think he was there all summer. We were off all summer. We asked to meet with him. We have not seen him. Maybe the Parliamentary secretary could be sent to Lockeport on Wednesday night to go with his colleague from South Shore who has

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to face those many unemployed people. Would he ask him?


Ian Angus Ross Reid: Madam Speaker, first and foremost, I would like to correct one thing that my colleague opposite has said. She put words into my mouth. She claims that I have said that nobody is hurting in the fishery. I said no such thing. It would be folly to even think any such thing. I know, as she knows, that people are hurting in the Atlantic fishery. I know, as she knows, that there is the potential that a lot more people could hurt in the Atlantic fishery.
But I know, as perhaps she does not know, that there are not immediate, instant solutions. I also know that the people who understand the fishery, who know what the fishery is all about, recognize that there are no instant solutions. The problems that have emerged over years and years result from a variety of reasons, some of them management, some of them science, some of them caused by foreigners, some of them caused by ourselves. But our solutions will come only with a reasoned and reasonable, well-thought out, informed position to start from, and a concerned, conscientious approach to the problems over the longer term.
The hon. member opposite has no comer on concern and, clearly, no corner on knowledge of the fishery. This minister and this government have shown by reacting, by forming a cabinet committee, by appointing the Hache Commission, by dealing with the problem in a consensus-based, organized fashion, not by sitting bleating, putting words into other people's mouths.


The Acting Speaker (Mrs. Champagne):: The period for questions and comments is over. There is only five minutes and the hon. member for South West Nova took four of them.
The hon. member for Winnipeg South Centre on debate.


Hon. Lloyd Axworthy (Winnipeg South Centre):: Madam Speaker, the problem with fanaticism is that it blinds one to reality. It is unfortunate that the last member who spoke, a new member of the House who came in with great expectations, has so quickly been absorbed into that fanatical obsession that this government has had about its own peculiar way of managing the economy of Canada. It has blinded him and others to the hard reality
of what is taking place in this country. It is too bad that a gentleman who feels so passionate about his region is so blind to decisions taken by his government which are totally eroding the position of the fishing sector, the primary agricultural-forestry sectors of this country, not by some act of God's will, not by some long-term change in the atmosphere, but by direct decisions undertaken by ministers of his government over the last four or five years. These decisions have put the fishing sector in a precarious position. They are now doing the same with agriculture, and with all our primary producers, all our commodity sectors in the economy.
I put to the hon. member the simple but clear decision taken by his government under the free trade agreement to surrender the right of Canadians to apply export taxes to protect their own primary producers on processing. How does he get up and say that somehow someone made us do it when, in fact, it was the signature of his Prime Minister on that agreement that surrendered the one area that would provide, under the fish processing decision, the processing industry on the west coast and, ultimately, the east coast, the right to protect their own industry? It was not some far off, distant, foreign, unknown stranger who did it. It was his Prime Minister.
We now face a situation where we already have an interim report on the fish processing dispute on the west coast, where we clearly see where the decision will go, that the Americans are going to win the case. In the meantime we have given up. We have surrendered. We have voluntarily thrown away the legitimate means at our disposal to protect our processing industry.
Yet that member has the gall, the effrontery and the nerve to stand up and say, "It is somebody else's fault". Sir, it is your fault. It is your government's fault that the the fishery industry of Canada has been put in jeopardy. It is about time you started answering honestly for your responsibilities.


Some Hon. Members:: Hear, hear!


Lloyd Axworthy: I say the same thing when you go to agriculture. Once again, we are pretending that somehow there is some far distant secret move afoot to undermine agriculture. Well, Madam Speaker, I point to you the decisions being taken in the

dairy industry. We talk about the fact that we now have a GATT decision saying we cannot use import controls.
That man of great integrity, the Minister of Agriculture and Deputy Prime Minister says, "Well, it has nothing to do with free trade. It is that GATT decision. What am I going to do about it?". What he forgets, and what the members opposite forget, is that during the debate on free trade, his predecessor, the former minister of agriculture got up and said, "Now, look it, I recognize that by taking the tariffs off on all these agricultural products, on food processing, on dairy products, that that will put our supply management system in jeopardy". Those were the words of the Hon. John Wise, former Minister of Agriculture. He said, "But I have a solution. I will give you a guarantee. I will put a control on imports of yogurt and ice cream." Well, we all said, "We do not think it is going to work, but let us give it a try".
They knew right from the start that that was a phoney, that that was a placebo, that that would disappear. Now it is being challenged and the government has no recourse. It knows that the entire supply management system of Canadian agriculture is under attack. They say, "We did not have anything to do with it". It was their signature on that agreement. They put their name on the document. They knew full well what they were doing. Now they put the entire dairy industry-in fact the entire supply management system-under jeopardy.
Similarly, let us take the pork decision. Once again, we on this side of the House said, "Now, wait a minute. What the free trade agreement is going to do when it is signed is entrench into law U.S. trade requirements. We are going to have to administer U.S. trade law". The Americans, who are pretty smart and shrewd about these things, slipped in the new law last summer, the omnibus trade bill. They rewrote their trade law just before the free trade agreement came into being. They rewrote the definition of what a subsidy is. They rewrote what we could do. So we signed the agreement. The Prime Minister stands up flag-waving, bands beating, saying alleluia, it is a great day for Canadian agriculture. In the meantime, knowing that what we have signed ourselves to is a sentence which says that we can no longer have agricultural stabilization programs, or regional development programs, or agricultural support programs. It is no
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longer allowed because the free trade agreement, inscribing as it does U.S. trade law, prevents it. Now, there is all this fuss and bother, "We have got to go to the GATT again".
I recall during the election campaign as I debated across the country with the Hon. John Crosbie said, "You know, the reason why Canadians should accept the free trade agreement is because we do not have to worry about the GATT any more. It is going to give us secure, guaranteed access to the U.S. markets".
Now, when we get into trouble, who are they running off to? We had better go back to our old friends, the GATT. What a difference a couple of months makes.
It is no wonder the minister does not want a report card. Because under that report card, whoever would be authorizing it would not only fail the minister, they would send him back for remedial training. The fact of the matter is they knew what they were doing. At the same time in agriculture they were saying, "Well now, we are going to protect all of these agricultural programs". Yet, they had put together their own position paper at the GATT, under the Uruguay round, suggesting that they were going to negotiate away all these subsidies. There it is in their own documents that they tabled in Geneva. They now think we have to renegotiate all this.
The Hon. Member gets up and says, "Hey, we are doing everything we can for the primary producers in this country". They are the forgotten people in this country. They are the ones who feel that this government does not speak for them. There is no voice, there is no one to listen, they simply ignore them.
Of course, when you come down to the fundamental question as to why a lot of this is happening, let us talk for just a moment about the interest rates in this country and the exchange rate that goes along with it. I put on the floor of this House, Madam Speaker, this direct charge and I want the government to answer it. As part of the negotiation, as a side part, while the minister and others were off negotiating free trade, the Minister of Finance was off negotiating with his American counterparts an understanding that we would substantially increase the exchange rate on the Canadian dollar. That was part of the deal. It was not written in words, but that

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was part of the deal. That is the reason why, right now, that we sit with an 85-cent dollar.
It is why in the last report from Stats Canada, exports in this country nosedived by 8 per cent. We now have a maximum of $127 million surplus in our trade account. That is the lowest in ten years. We are almost at the point of running a deficit in our trade account. That is no accident. It is no coincidence. It does not happen by some manipulation amongst the gods. It happens directly. One of the prices we are paying, a consequence of our new economic relationships, is the fact that we now have the highest point spread on interest rates in the history of this country and an exchange rate which has no basis in the economy whatsoever, except the fact that we made a deal. As a result, whether you are a fisherman, a farmer or a lumber producer, you are paying the price.
On Friday afternoon I quoted in this House figures from British Columbia which pointed out that the profit margin in the softwood lumber industry of British Columbia fell from a high in 1987, $357 million to $6 million in 1988. That is a direct consequence, a direct result of this government's signature on a piece of paper with the Government of the United States.
How often can we have members from the opposite side stand up and somehow pretend that our export market is dropping in a barrel, that primary producers are losing their markets, losing their protection, losing their supply-management, losing their right to market, that all these things are an act of will? There is only one place where the responsibility must be carried and that is on the government opposite. It put their finger on the button. The government signed the paper. It is about time that it gives up this fanatical obsession with the goods and services tax which will only exaggerate the problems all the more, and got back to some serious management of this economy so that once again we can show our primary producers in this country that they are not the forgotten people of Canada.


Steve Butland: Madam Speaker, I would like to thank my colleague for Winnipeg South Centre for refocusing on the free trade agreement, which I understand the government no longer wishes to talk about. The government suggests that it has won the public relations battle and are into a new public relations battle, the goods and services tax. So, it is important that we refocus again on
the free trade agreement and report cards should be issued. Indeed, it will be labelled a failure.
On the rulings that are going to come before the panel in the not too distant future, it would appear that we are going to lose the fishing ruling.
Very important to my constituency is the steel rail ruling which one year from now I understand, in all likelihood, we will lose. Despite the fact that there is an airtight case, there is every indication that it is an unwarranted, illogical, ridiculous, no proof kind of a judgment by the commerce department of the United States. They are suggesting that there is no basis in fact for the ruling, but it is likely to injure the Canadian steel producers in the future. But, nevertheless, application of American trade law suggests that in fact we will probably lose that ruling as well.
I would ask the member for Winnipeg South Centre, given his free trade expertise, what would his reaction be should we lose both of these rulings? Were he given the opportunity to act, what alternatives would he take?


Lloyd Axworthy: I suppose the opportunity is one that we clearly stated during the election campaign. We have to get rid of a deal that sells out Canada. That is the starting point.
Unfortunately, what we have found in this deal-and now it is coming home to roost-is that it is skewered against us. The member just pointed out the decisions on steel, on pork and on other areas. The fact of the matter is that what FTA requires us now to do is basically implement U.S. trade law. They changed their law. They rewrote their law to give them the advantage. Therefore, we have substantially weakened our ability to make claims in the international circles, in the international tribunals.
The GATT panel on pork, on dairy products, or steel, is going to say: "Hey, Canadians, you were consenting adults. You got into this relationship with the United States. You knew what you were doing. Don't ask us to bail you out of a bad relationship, a bad deal". All of a sudden we will be forced into a position where-we could normally have referred these kinds of questions and got a reasonably objective decision-we have to recognize now as Canadians that every decision taken at the GATT will be substantially influenced by the existence of the free trade agreement. It is there and it will set the tone. Furthermore in many cases it will supersede
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any GATT decisions. Therefore, we may get a decision on pork favourable to us under the GATT, but it would not apply to the United States because of the free trade agreement.
We will be forced into a position where we are the odd person out. We will be standing out as one of the eccentrics in the world of international trade because of that agreement. It puts us in a perpetual inferior relationship in gaining proper secure guaranteed access to world markets and to the American market. Clearly, as we said right from the outset, it is time for Canadians to take a hard look at what they got themselves into and take a hard look at how we can get out of it.


Mr. Speller:: I thank the hon. member for his wise comments. Is he aware that the American wheat growers are also planning to file a request under section 409(b) of the free trade agreement that could lead to a countervail by the U.S. administration against Canadian wheat farmers? Canadian wheat farmers have always grown and traded fairly. Is the member aware of that?
Could he tell me whether or not, given that we have seen the Americans retaliate recently on pork and given that we have seen the decisions regarding the dairy industry, he feels that in fact the government knew what it was doing when it signed this free trade agreement? Were they merely trying to mislead Canadians, or did they actually know what they were doing prior to signing the free trade agreement?


Lloyd Axworthy: I am never sure that this government knows what it is doing, certainly when one considers its track record. I can tell you what it has done. By becoming involved in that agreement it has put the prairie regions, and in fact the wheat growing and grain growing areas of the entire country, in a position where we are going to lose the structures that we have taken 50 years to build .1 am speaking of the Canadian Wheat Board marketing systems, two-price wheat system, all those areas where we have carefully moulded a framework in which we could ensure price stability and active marketing of our products. They are now the number one targets of the United States. Of course what happens, again going back to the U.S. trade legislation, is that they gave themselves new
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weapons to use which we did not and which we in the opposition warned about.
For example, Durum wheat farmers had the Department of Commerce doing their research for them. They are now getting free assistance from their government and all we get from our government is standing on the sidelines in a fit of absent-mindedness while those kinds of attacks upon the basic structure of our wheat growing areas go on.


Iain Francis Angus: Madam Speaker, it is my pleasure to participate in the debate today of the opposition motion. In part, the Liberal motion states:
That this House condemns the government for its mismanagement
of the Canadian economy, including-
5) continued neglect of regional disparities.
I do not agree with that statement in its entirety. What this government has done is not just neglect regional disparities, but it has gone on an outright campaign to attack the regions of this country. Nothing is a greater example than what it is doing with rail passenger services.
I want to spend a few moments going through the list of routes that every document that we have seen would suggest that the government is going to cut. It is my understanding that those cuts will be announced later this week. Let us start with Atlantic Canada, an area of the country that I have been spending a fair bit of time in learning how it is different and how it is similar to the area that I come from and seeing from riding the train there and talking to people the direct impact that these cuts will have.
For example, the Halifax to Sydney run currently accommodates 102,000 people every year; an incredible number of people using a very small and antiquated train, a train that we gave up in the central corridor years ago. They have got our hand-me-downs, but 102,000 people are using it.
When I talked to the people I found out why they were using the train. From Sydney alone there are over 10,000 men and women, but primarily men, who must go to Halifax for worker's compensation reasons, either for assessment, treatment, or for rehabilitation. Ten thousand people a year use that train. This government, in its wisdom, is going to force those people on to the highways of Nova Scotia, highways that are becoming ever crowded with major trucks including the haulage of coal,

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becoming less safe, less sensitive to their needs in terms of injured workers. Thousands more take the train to go to Halifax for medical care unrelated to on the job injuries.
Throughout the whole Atlantic, the Atlantic route itself, 267,000 people a year use that train.
The Deputy Prime Minister told the people of Atlantic Canada a few years ago: "Use it or lose it". He gave them a target of 200,000 riders for the year 1990. Two years ago they met that target and now they are exceeding it. They used it, but now this government wants them to lose it.
The other interesting aspect of the Atlantic region is that 20 per cent of the passengers who use the Quebec City to Windsor corridor come off the Atlantic. It is fine and good to say that we will keep the corridor, but there are 20 per cent of the corridor passengers who will not be coming by train. The chances are they will not be continuing by train, but they will have been forced into using the air or bus modes and more than likely will be driving their cars.
The Halifax to Yarmouth line, 47,000 people; the Moncton to Edmundston line, 10,000 people. Clearly, a vast majority of the people of Atlantic Canada use the train on a regular basis. But, instead of providing them with the equipment that will make their riding more comfortable, instead of ensuring that they have the money to do the proper marketing to attract more and more tourists into Atlantic Canada, not just from the New England states but from Europe and from Asia, this government is going to pull the plug on the Halifax to Sydney run, the Halifax to Yarmouth run, and the Moncton to Edmundston run.
Even the Ocean Limited train that travels the North Shore, which is a very scenic route, is going to be reduced to three times weekly. It is ideal for the tourist trade, but because of the meandering nature of the trackage it is not designed to move people from point a to point b in a reasonable length of time. It will see a decline in usage, which I am sure is what the government wants, and in three or four years from now, if they get their way on this one they will say that people were not using it, our deficit is too high, so we are going to have to cut it.
Let me skip to the other end of the country to British Columbia and Alberta. This weekend on Vancouver Island the one hundred and third anniversary of the E & N Line was celebrated. As a passenger service, it is 103 years old. That line, the only line on Vancouver Island, is to be eliminated by this government in spite of the fact that I am told that it was part of the agreement between British Columbia and Canada when British Columbia joined Confederation. Therefore, there may be more that will happen if the government tries to go through with its plan.
On that line 45,000 people a year use that train. I am told by my colleagues from Vancouver Island that that is in spite of the fact that it goes the wrong way at the wrong time of day. Instead of providing a service from the northern parts down to Victoria so that people can come into Victoria for cancer treatments or for economic reasons, it goes the other way. We think it should do both, so that we are using the service as a tourist facility to take people throughout the island but at the same time take the residents of the island into Victoria for the business they have to concern themselves with. But 45,000 people are already using it.
In northern British Columbia the Jasper to Prince Rupert run is going to be reduced to a summertime operation only. This shows once again that this government does not understand the nature of rail transportation in this country. They will quickly point and say: "But those people along that line have other modes of travel. They have air, roads". The people who are saying that are people who drive around in chauffeured limousines on major expressways or who fly in a government plane somewhere. They do not understand that in the wintertime in some of these smaller communities along that line you take your life in your hands getting into a car and driving some place because of the treacheries conditions that exist there, particularly for senior citizens who have driven for years but now recognize that they would like to stay around on this earth a while longer and feel that it is better for them to ride the rails. They are not going to have that option any more.
That is no different from what this government is going to do to my region of the country in northwestern Ontario. The historic Canadian is also the only rail transportation around the north shore of Lake Superior. It parallels the Trans-Canada Highway, a highway where we literally kill dozens of people every winter in automobile accidents. The people in Terrace Bay, Schreiber, Rossport, White River, and all along the north shore, at least today and so far for the first part of this winter, will
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have the option of catching the Canadian into Thunder Bay. But thanks to this government they will lose that option. Most of them do not have air transportation as an option, so the only recourse they have is to use the bus or an automobile, and studies have shown that people will use an automobile before they use a bus.
Clearly this fundamental destruction of rail passenger service in this country is an attack on the regions, even in southern Ontario, which will do okay because the corridor will be saved. My colleague, the member for Brantford spoke this morning when he was tabling petitions. His community is going to lose VIA Rail service. The community of Havelock will lose VIA Rail service. From the community of Niagara Falls, all the way up to Toronto, including Hamilton, will be served by Amtrak. How ludicrous, or is it?
Is it all part of that grand design that started with deregulation and then free trade to allow the Americanization of our transportation services? Freight railroads have running rights up into Canada now. Now Amtrak is going to come up to Toronto. Not just like it does in Montreal to make the connection with the American system, which makes a lot of sense, nor like it did when the corridor train at Windsor becomes an Amtrak train to provide that connection into the States, but this is to provide service within Canada. That is our job. It is our job to provide that service.
The impact on the regions will be devastating. We know that in tourism alone, passengers who use VIA Rail who are tourists from outside the country spend in excess of $600 million a year. That will be gone. That will not be replaced by some entrepreneur who will pay an arm and a leg to use CN or CR
I could go on and on. It is a subject dear to my heart, almost as dear as it is to the member for Regina-Lums-den. In conclusion, we will not give up. We are going to fight this to the bitter end.


Mr. Geoff Wilson (Swift Current-Maple Creek-As-siniboia):: Madam Speaker, I am pleased to be able to participate in this debate from the perspective of a
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person who represents an area dominated by agriculture and small business.
Noting that my colleague from Brandon-Souris very eloquently addressed the agricultural end of this motion last week, I would like to talk from the perspective of small business.
What we are hearing is a recitation by members opposite of tax increases and expenditure reductions and the suggestion that there is something inherently wrong with that twin thrust. Surely it is time for a little bit of back to basics reality in this country.
At this point in time we have approximately a national debt of $330 billion, probably in the area of $350 billion by spring. Every cent, every nickel represents overspending by previous Liberal governments plus the unpaid interest on it.


Jean-Robert Gauthier: You
have doubled it in the last five years.


Geoff Wilson: Madam Speaker, I appreciate the input from the opposition member who suggests that it has been doubled in the last five years. Yes, it has, because of the effect of compound interest on Liberal overspending. I challenge the members opposite when it comes time to question me to ask me about the composition of that debt, and I will be very happy to respond to you. I challenge you to do so.
I think it is clear to most reasonable Canadians-not to the opposition but to most Canadians-that we have to take in more revenue and spend less. That is the only way we are going to dig ourselves out of the economic mess which we have in this country.
Yes, Madam Speaker, taxes have increased. Unlike our profligate predecessors, however, we are spending far less on government programs than we take in in revenue at this point in time.
A number of other significant measures have been undertaken. Approximately 12,000 positions have been taken out of the federal bureaucracy, thus reducing its size to approximately the level it was back in 1973. There has been privatization of a number of non-essential Crown corporations, and I think here about enterprises like de Havilland and Canadair, which as Crown corporations were a continual millstone around the necks of the

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Canadian taxpayers. They have been sold off the private sector and are flourishing today, employing more people than ever before. There is no reason why government has to own these enterprises. A government that can tax and can regulate surely has no need to own these things.
There have been further measures taken. The budget of this spring is the impetus for this debate. Yes, there are government spending reductions. They have been mentioned here: VIA, various military bases, CBC, other programs. How on earth can you reduce government spending if you do not eliminate some programs? It seems quite obvious to this side and to most rational Canadians that there has to be a response to the debt and the deficit problem, the cause of which I think we all know.
In addition to the measures that have been set out, tax reform is an important factor. It is part of our program whereby we are going to discipline spending and reduce the deficit. Sales tax reform means that the goods and services tax will replace the existing federal sales tax. There is nothing new about it at all. There has been a federal sales tax in this country since 1924. For 65 years Canadians have been paying a sales tax and it is a lot of money-$17 billion in federal revenue coming in this year as a result of the federal manufacturers' sales tax. That is the second largest source of revenue which the federal government has, and obviously it must be replaced by something else.
There is only one thing that all parties agree on in this House, and that is the recommendation that the existing federal manufacturers' sales tax is fundamentally flawed and therefore ought to be replaced. The finance committee unanimously passed a motion last year saying exactly that. Therefore, the Minister of Finance, quite responsibly, has brought forward a proposal for a goods and services tax. Thank goodness it has prompted debate in the country. For the first time many Canadians are becoming aware of the fact that there is a sales tax in existence, that it gathers in a lot of money, but it is hidden and people do not know about it. The more debate, the more discussion, and the more consultation we have about it the better. The proposal is out there.
There are some people who are saying that perhaps the base for this sales tax ought to be broadened. There are people who say to eliminate basic food, keep it out of there. They are the same people now who hypocritically
are criticizing government in the grey areas of take-out food and restaurants versus basic food.
Either you tax everything, or if you narrow the base you are going to have problems with exemptions. That is common sense but certainly I suggest not worthy of criticism from the people opposite.
Under the current federal sales tax we have four rates: 9 per cent, 11 per cent, 13.5 per cent, and as high as 19 on some goods. We are taxing the business inputs of our domestic companies while our foreign competitors are not similarly handicapped. This puts our companies at a major marketing disadvantage, both at home and abroad. That costs us jobs.
In addition, for most products the import price on which the tax is calculated does not include the foreign manufacturers' costs of marketing and distribution, while the price on Canadian manufacturers' products generally does. The result is that on average the tax paid on most taxable Canadian products is fully a third higher than the tax on competing imports. The importer pays less tax and thus can charge less. That makes us less competitive and it also costs us jobs. That, of course, is why the Minister of Finance has referred to the existing federal sales tax as a silent killer of jobs. That is why I believe most responsible Canadians, and indeed the opposition parties as well, have suggested that that tax has to go, that it should be replaced.
Other industrialized nations have recognized today's economic realities and have changed their tax systems accordingly. No other industrialized nation, with the exception of Canada, continues to have a manufacturers' sales tax. Why would we want to continue to shoot ourselves in the foot?
The first proposals for changing the federal sales tax were made back in the early 1940s. There are all sorts of problems with it. What to do about it? Why introduce a GST?
First, it will contribute to the deficit reduction effort and help ensure that we can continue to pay for the programs and services that Canadians value. Second, the GST is an essential element of this government's plan to make the changes necessary to ensure that Canada can compete in the modem world. The GST will fully remove federal sales taxes from the production process in Canada. It will reduce the cost of investment and improve the ability of Canadian producers to compete both in foreign markets and against imports from other countries. The GST will end the anomaly of a tax system
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that favours foreign producers over Canadian businesses on our home turf.
There are some 750,000 small businesses in this country. They are the key, the generator, the engine for economic growth. They are the ones who have responded positively to the policies of this government and have expanded their businesses and created new ones with the result that there are over 1.5 million more Canadians working today than was the case five years ago. I salute the small business entrepreneurs, small business investors in this country, because they are the people who are responsible for that incredible record growth.
These businesses will be able to claim input tax credits to get back the tax paid on the purchases that they require for their businesses. They will simply deduct the tax paid on their purchases from tax owing on sales and remit the difference in each filing period. This will ensure that all tax is totally removed from inputs in the production process.
There will be a suggested threshold so that businesses with sales of less than $30,000 can choose to be in the GST system or not. There are streamlined accounting procedures ready. The government will help out with compliance costs. There will be assistance to businesses that wish to purchase more sophisticated point of sale equipment in order that they can write these expenses off for tax purposes. They will receive an administration fee to assist them in the remittance process. All of these measures are designed to keep compliance costs down and increase fairness between small and big business.
Third, it is a fair tax. There are some who have suggested that it is regressive. I fail to understand this. I think it is a knee-jerk reaction from those who have nothing better to do than criticize this government, no matter what. Surely a tax where the more you spend the more you pay is the fairest possible tax, the consumption tax. The people who have money spend more and pay more tax. Those with less income, lower income families, will be protected through a generous refundable tax credit in order to shelter them. It seems to me an eminently fair and progressive tax.
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The GST is an essential part of this government's plan to build a stronger economy for Canada, an economy which is not overburdened with a massive debt and debt service charges which threaten future growth and our ability as a country to withstand changes in world economic conditions.
It will improve the fairness of the over-all tax system by putting in place measures to protect lower and modest income Canadians. The benefits of sales tax reform will be substantial, the GST will result in higher incomes and a higher standard of living for all Canadians. It is the right thing to do and that is why this government is proceeding with it.


The Acting Speaker (Mrs. Champagne):: On questions or comments, the hon. member for St. Boniface.


Ron J. Duhamel: The hon. member referred to this as a fair tax. I wonder if he could indicate to me in what way it is fair to students who will be attending colleges and universities, who will be paying additional taxes on a number of services and goods, whereby the education that they are trying to pursue so that they can contribute to our society will in fact be costing them more.
How will it be fair to seniors and those on fixed incomes who will have to pay a disproportionate share of their income in order to survive in Canadian society? How will it be fair to small businesses that will have to handle this nightmare, for they will be given roughly $600 a year to do so and it will cost them three to four times more?
I could give some other examples, but I want the member opposite to go on record and tell me how it is fair to students, seniors, people on fixed incomes and small businesses, and no gobbledegook, please.


The Acting Speaker (Mrs. Champagne):: The hon. member for Swift Current-Maple Creek-Assiniboia.


Geoff Wilson: There will be no gobbledegook from this side. All the turkeys are sitting opposite there. This is a tax which is fair to all Canadians. The fact is that the people over there saddled this country with a debt which is approaching $350 billion through constant program overexpenditure year after year after year. They handed out the goodies, and they did not have the gumption to tax Canadians sufficiently for that.

October 2, 1989
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Now, for the first time in 25 years, we have a government which is prepared to face up to the music, to get back to reality, to try and bail this country out of the economic chaos that it is in. Is there any co-operation over there from the guys who did it? Not on your life. They are laughing their heads off over there, Madam Speaker.
There is not a single positive suggestion coming from members opposite. All it is is that mindless, mind numbing criticism: "The tax is terrible. It is awful. Don't cut VIA. Don't cut transfers. Don't reduce government programs. Increase taxes. Build the deficit". Let us have a higher national debt. Let us keep going until all the tax revenue in this country is used to pay interest on the national debt and there will not be a single nickel left over for seniors, not a nickel left over for students and the small business community is going to say, "Why bother? Let us all go and work for the government". That is the kind of nonsensical approach that we were going to get and that Canadians were heading for when they had the boys across the way in charge of things.


Jim Jordan: Madam Speaker, my hon. friend attempts to play down the effect that this GST is going to have on ordinary Canadians. This is not my basic question-I will get to that-but if it is so commonly accepted then why is there so much furore from his own caucus?
It is a good idea to do this, he says. Perhaps he can answer my question.
It was supposed to be up front and it is not. Why not? Why is the tax not up front? Canadians were promised that. It was supposed to be revenue neutral. Remember that? It is not. It was supposed to be simple. Ask any small comer store operator if he so far has envisaged this as being simple. Could the hon. member answer those three basic questions?


Geoff Wilson: Madam Speaker, I welcome the opportunity. First of all, who likes taxes in this country? I do not, and I am sure the people opposite do not like it. The member expresses some amazement that there are people in the country who do not like the thought of what is perceived as a tax increase. I think, first of all, it is time that the opposition stopped persisting in this fallacy that this is a
new tax. What we have is a replacement for a tax which-


Ron J. Duhamel: Get serious.


Geoff Wilson: -they themselves agree is fundamentally flawed, cost Canadians jobs, is mining our economy and must be replaced and which they, in all the years they were in charge, did not have the gumption to face.


Some Hon. Members:: Oh, oh!


Jean-Robert Gauthier: You are comparing bananas and carrots.


Ron J. Duhamel: Answer the question.


Geoff Wilson: Oh, they are aroused over there. Madam Speaker, may I have more time because what I would like to do is outline some figures that I have here relative to government spending. On a current account basis because that is the basis for everything here, talking in terms of a current account-


Some Hon. Members:: Oh, oh!


The Acting Speaker (Mrs. Champagne):: The Hon. Member is asking if there is unanimous consent for him to continue with his answer.


Some Hon. Members:: No.


Jean-Robert Gauthier: With that nonsense? Of course not.


Geoff Wilson: There is the answer, Madam Speaker, they do not like to hear the truth.


The Acting Speaker (Mrs. Champagne):: The period for questions and comments is now over. Resuming debate.


George Albert Proud: Madam Speaker, it certainly is a privilege to be back in Parliament and I appreciate the opportunity today to speak to the motion that is before the House.
Contrary to what the member across has just said, the state of the Canadian economy at present and the effects that a myriad of government proposals will have on Canadians for years to come is certainly not a pleasant theme to address.
As I travelled through my constituency of Hillsborough and other regions of Canada this summer, I was inundated with a barrage of complaints from the average hard-working Canadian. People are furious with the government for trying to impose upon them a completely new and unfair tax system. They are furious with the destruction of their national rail system. They are furious with the proposed changes to the unemployment insur-

ance program. They say, "What right does the government have to take 15 per cent of the workers' contributions to UI given in good faith and use them for retraining programs that are the government's responsibility to provide?"
My home province of Prince Edward Island is reeling from the economic impact of the CFB Summerside closure. No solutions or alternatives have been offered or even suggested to them. And how will they recover and replace this massive loss? And will they ever recover from the sense of betrayal and alienation?
All of the government initiatives outlined in today's motion are playing havoc with an already vulnerable economic base in various regions of Canada. I submit that the future is especially bleak in Atlantic Canada where deep regional disparity already abounds. Prince Edward Islanders, Newfoundlanders, New Brunswickers and Nova Scotians do not mind paying their fair share, but in return they deserve and expect fair treatment from their government. They have received none. ERDA, ARDA, DREE and ACOA moneys barely began to address the problem, and now even they have been slashed. Does this government believe that people can live on salt water alone?
According to an Industry, Science and Technology Canada document entitled Regional Disparity in Canada 1989, and using their definition of deep disparity as: "Below 70 per cent of the Canadian average of earned income per capita", Newfoundland had the highest rate of deep disparity in Canada at 95 per cent; and Prince Edward Island and New Brunswick were next at 50 per cent in 1987. These numbers remained unchanged from the previous year.
These numbers represent more than one million Atlantic Canadians who are living below the Canadian average of earned income. These statistics are quite startling. What is interesting about these numbers is that the government continues to hide behind the claims of
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creating 1.5 million jobs since September of 1984. What we are asking is, where are all these jobs located?
What we have in Atlantic Canada is more than one million taxpayers who have to maintain an existence on incomes well below the national average. These people are subjected to the same government proposals that are dipping into pockets all over Canada. Canadians in the Atlantic region and elsewhere have been telling me and trying to tell their government that they have had enough.
The government definition of a sound fiscal policy has left us with a total public debt that has doubled in just five short years. After increasing our taxes some 31 times, this government now wants Canadians to dig deeper to pay for its disastrous handling of the economy. At the same time we are losing more and more services and social programs.
Now we are presented with the government's newest magic trick, the goods and services tax. What arrogance, Madam Speaker, to assume that Canadians will fall for this and that they will believe it is a better system when things are only getting worse for the average Canadian.
As the hon. Leader of the Opposition stated last Thursday in the House, Canadians have fraudulently been told that they will be taxed at a lower rate when actually it will be higher. We all know that this tax will not be revenue neutral and that it will not be visible. The tax will not be visible but the hardships that it will create certainly will be.
What is clear and visible to everyone but this government is that Canadians will not be fooled by the latest rabbit pulled out of the hat. We have been told many times over the past five years that our economy is booming. The growth should have improved the government's fiscal situation. Over the same period of time billions of dollars have been slashed from public spending by this government. Yet we are now told that we need a new consumption tax to reduce the deficit.
The GST is nothing more than an unprecedented plunge into the pockets of ordinary Canadians. These people will be hit by higher taxes, higher inflation, higher interest rates and fewer jobs. It would cause chaos in the business community and create a paper nightmare for small business. Over 82,000 small and medium-sized businesses, as members of the Canadian Federation of Independent Business, are opposed to the imposition of the GST.

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Let us touch briefly on how the proposed GST would affect the average working Canadian family. The Minister of Finance was quoted in thtlFinancial Post? on September 19, 1989 as saying: "Families earning less than $30,000 a year will be better off under the tax". The great favour being granted to these working families by the minister is the enhanced refundable sales tax credit.
I would like to relate some statistics that were presented to the Standing Committee on Finance by the National Council on Welfare in a submission entitled Help Wanted: Tax relief for Canada's poor. Their analysis found that single parents with incomes in the $10,000 to $15,000 range paid approximately $388 in federal sales tax in 1984. In 1991 even with the sales tax credit taken into account, these low-income families would still end up paying about $553 in net GST.
That is 42 per cent more than they paid in 1984. The reality is that the poorer families will be worse off in 1991 if the GST comes to fruition. They will be worse off than they were before the various so-called reforms of the past five years. By 1992 they will be in even more desperate shape, because inflation will begin to gnaw away at those much-lauded tax credits.
Everyone in this House knows that almost 80 per cent of the Canadian population is opposed to this sales tax. Can that many individuals be wrong, while the Minister of Finance and the Prime Minister are right? Only the most arrogant would think so. I could give an entire litany on individuals and organizations that have studied and researched the GST, including groups in my own riding with which I have met. They all give the same reasons for opposing this so-called tax reform.
I say, and my colleagues on this side of the House say to this government: scrap this deal and come back with a better tax plan, one that Canadians can live with.
Given that I have only a few more minutes, I would like to speak briefly on the proposed changes to the unemployment insurance plan. Once again, this government is trying to put the boots to the ordinary Canadian worker. Specifically, these UI changes will have a disastrous impact on the Atlantic economy and especially on Prince Edward Island. As you are undoubtedly aware,
the workforce on P.E.I. is predominantly employed in seasonal operations-tourism, farming and fishing. Thus, unemployment insurance forms an integral part of our province's income profile.
Unemployment insurance was established as a no fault insurance program. It is a safety net and one that workers readily pay into for their protection in case they lose their jobs. I would like to cite an incident that occurred in my riding a few weeks ago. The members of the UI committee that were in Charlottetown heard this from a group that appeared before them.
A worker at a construction site collapsed with an apparent heart attack. An ambulance was called, but the fallen worker did not want to go to hospital. His reason was that he needed the week's work to ensure that he would qualify for benefits. Many employees do not have sick leave coverage or long-term disability plans. Thus they are forced to work when they really should seek medical attention. Their only recourse is to stay at work until they qualify for UI benefits. Now, with the proposed changes a worker will have to put in more weeks to qualify for fewer benefits.
Another concern with the proposed UI changes is the reallocation of $1.29 billion to job training programs. This proposal can only be seen as a slap in the face to Atlantic Canadians. What can Prince Edward Islanders be retrained for that will allow them the opportunity- the right-to continue working and living in their home province?
The bottom line is that they will be paying into a program that will force them to migrate to central Canada to find employment, thus continuing the erosion of the social and economic structure of our province. Our region of Canada is unique. It is unique because of its high unemployment, seasonal work and low wages. The government has failed to recognize this fact and continues to refuse to implement full employment programs which would offer meaningful, long-term employment in the Atlantic region. It makes little sense to force people into job retraining when there are no jobs to move into. What Atlantic Canada really needs is an adequate labour force development strategy. Until then we need to keep the unemployment insurance program as it is.

The present rate of unemployment in P.E.I. is 14.1 per cent. I do not see much prospect for improvement. The government should be advocating more flexibility and increased benefits to reflect the tough economic times that Islanders must face. Atlantic Canadians await proof that this government recognizes and respects their special needs. We have seen none thus far.
In conclusion, I support the motion by the Leader of the Opposition and I call upon members of this House to listen to their constituents, to condemn the government for its destruction of the socioeconomic system that Canadians built, and thus for its betrayal of the people themselves.


Mr. Ross Belsher (Fraser Valley East):: Madam Speaker, it is with pleasure that I rise to speak on this motion that we are debating today. I am proud that this government is committed to building a strong economy, an economy which is competitive with the world's trading nations.
In order to achieve this goal, we must create a solid base on which to allow our economy to flourish in the coming years. Measures which seek to control the deficit and. reduce the national debt are an essential element of this foundation for the future. Equally, measures which seek to establish a sound, fiscal framework to sustain continued economic development are also essential to our purpose. These objectives are reflected in this government's commitment to a sound transportation policy.
Transportation is and always will be at the heart of our nation's economy. That is why we have undertaken to provide Canadians with a safe, effective and efficient transportation system. This system is the core around which our policy of economic regulatory reform was built.
With the advent of free trade, the role played by transportation in our economic development has become increasingly vital as we enter the next decade and the next century. A cost effective transportation system is essential if Canada is to preserve and enhance its position in world trade.
In order to meet this challenge we must make the best use of each mode of transportation: air, rail, marine, car, truck and bus. Continued subsidization of a mode of transportation which costs more and more and is used less and less is not a sound investment in our future, particularly when that investment is being made with the
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Canadian taxpayers' money. That is exactly the situation we are facing with respect to our national rail passenger network.
VIA Rail's subsidy rose to an unprecedented $644 million in 1988. This translates into an average subsidy of $100 for every passenger that used the system.
We are asking all Canadians to pay this subsidy, but only 3 per cent of the travelling public uses this mode of transportation. Canadians have demonstrated their preference for other modes of transportation. With a market share of 84 per cent, the automobile is clearly the mode of choice.
Contrary to all the rhetoric which has been bandied about in recent months, VIA Rail's performance is worsening. It is not improving. While 1988 revenues did increase by 13 per cent or $26 million, operating costs increased by 15 per cent or $94 million, with the result that government subsidies to VIA for its operations alone had to be increased by $68 million. This means that for every additional dollar earned by VIA in 1988, the government has had to dispense an additional $2.62. So, for every dollar of additional revenue we spend $2.62 more.
Now the NDP, in their economic model, say because the revenue is better in itself then you should keep it, but they never mention the costs that are associated with that. That is the logic that they are putting forth in this argument.
As you can see, prompt action had to be taken to stop this drain on the public purse. That is why the government announced a new policy approach for VIA and asked the corporation to prepare a new business plan which would reflect its new reference levels. VIA was asked to consider all options that would allow it to operate within its budget, including such actions as fare increases, route abandonments, reductions in services on some routes and the take-over of services by private parties.
The government, however, does recognize that in a country as large and as diverse as ours there are some truly isolated communities which do not have access to any other mode of transportation. In order to meet this need, nine routes in five provinces will be maintained and subsidized. VIA Rail's corporate plan is currently under consideration and an announcement will be made in due course. The government expects the financial and

October 2, 1989
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operation performance of VIA to improve and to function in a more cost effective manner.
This government has distinguished itself during the past four years through fiscal responsibility and judicious allocation of federal financial resources. When money is scarce it is spent where it is most needed, where it is most likely to produce results.
I invite the members opposite and indeed all Canadians to look at the facts and to judge for themselves the validity of the fiscal realities under which we currently labour. If we have had to make difficult decisions, it is because in 1984 we inherited a legacy of debt. This is a legacy that I personally do not care to pass on to my children and to their children. The difficult choices we have had to make allowed us to reduce the rate of growth of the deficit and bring the rate of inflation down to a more acceptable level.
Responsible fiscal management combined with sound economic policies have paved the road to a rate of economic growth which ranks among the highest in the industrialized world.
As responsible Canadians, we owe it to our children to leave them with every opportunity for development that we ourselves have enjoyed, and I am committed to working toward that end as part of the Government of Canada in 1989.


Ms. Albina Guarnieri (Mississauga East):: Madam Speaker, I rise today to speak on behalf of my constituents, small business, all those who will not get the opportunity to appear before the finance committee and who will not be allowed to express their outrage at the proposed goods and services tax. This government was first elected in 1984 in large part because of the Prime Minister's promise of tax reform.
It was argued, with some justification, that Canadians were being unfairly taxed and that the burden of financing government services was poorly distributed across the tax base. The Prime Minister sold himself as the great economic manager, the hero of big business. Five years later Canadians now realize that the Prime Minister has doubled the national debt, introduced crippling and regressive taxation policies and has launched an all-out assault on the pocketbooks of the middle class.
Now in 1989 we have begun to realize the Prime Minister and his colleagues in finance have a far different notion of tax reform than the rest of us. Over the summer I distributed a survey sheet in my riding and asked constituents what they felt were the most important issues facing the country today. I assumed, perhaps naively, that the responses would be primarily about abortion, Meech Lake, or the local issue of Pearson International Airport. Though there were some responses concerning these issues, the overwhelming concern, 90 per cent of the responses, focused on this government's unfair taxation policy.
My constituents are horrified that after five years of empty Tory rhetoric about tax reform, the most progressive concept this government could come up with is the goods and services tax, a tax that is being called regressive, inflationary and the greatest one-shot tax grab in Canadian history.
At a recent Tory convention in Ottawa, Mr. Wilson told the party faithful that the GST is unpopular but necessary. Well, Mr. Wilson is only half right. The tax is unpopular, but it is not necessary.
A quick look at the history of the Tory record shows this government has failed dismally on its promise to bring about tax reform. For example, Tory tax reform since 1984 has meant that an unmarried individual living at the StatsCan poverty line has had his taxes increased by 38.9 per cent under this government. By contrast, a single individual earning a salary of $60,000 has had only a 6 per cent tax increase. This is Tory tax reform?
Another example is the one-income family with two children who live at the poverty level of $24,000. The Prime Minister and Michael Wilson have increased the tax bite on this family by a whopping 61 per cent.


The Acting Speaker (Mrs. Champagne):: This is the third time that the hon. member has referred to the Minister of Finance, the member for Etobicoke Centre by his name. She should know by this time that this is not done and she should refer to the Minister of Finance as such. I thought at first it was a mistake but now, the third time, I think it was deliberate. The hon. member for Mississauga East.


Albina Guarnieri: I assure you, Madam Speaker, I stand corrected. It was not deliberate.
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Once again, by contrast, the family earning $100,000 has had its taxes increased by only 7.7 per cent.
Canadians are learning to say: "If this is the Renaissance take us back to the Dark Ages". The new goods and services tax appears to be the silver lining in a full metal jacket. When the finance minister first introduced the idea he promised that the GST would be a tremendous advantage over the manufacturers' tax because it would be visible to the consumer. Well, more trickery, more treachery awaits. The premiers recognize that this is an ill-conceived administrative nightmare of a tax and they are simply not prepared to participate in the finance minister's folly. This tax has not accomplished any of its intended and promised goals.
The GST will not be visible because, as the minister himself stated, the federal government does not have the legal authority to impose a method of collection on Canadian retailers. Consumers will be left in the dark about tax. Is the price pre-taxed, un-taxed or re-taxed? The only thing consumers will know is that they are over-taxed. This government's vision of tax reform is nothing more than raze and pillage.
It is estimated that the GST will plunder at least $6 billion more from the taxpayers than the old manufacturers' tax. This figure, which was rounded off from the government's own technical paper, flies in the face of the finance minister's other promise that the value-added tax would be revenue neutral. This tax is not neutral. It is acid for most Canadians.
Like this government's other tax measures it is nothing more than a thinly veiled attempt to gouge the average Canadian. Not long ago you may remember the bank robber who wore a transparent plastic bag over his head when he approached a teller. Canadians can see through the finance minister's disguise.
It is distressing to listen to the Prime Minister's glib statements in defence of the proposal over the past few months. He has repeatedly tried to mislead Canadians by saying that a 9 per cent goods and services tax is a major improvement over the manufacturers' 13.5 per cent and that consumers may even see costs go down. I wonder if after receiving so many reports, so many failing grades from everybody, from the Canadian Chamber of Commerce to the National Anti-Poverty Organization, the GST will mean lower prices for Canadians. The Prime
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Minister, like old Ebenezer, will find his conscience after seeing the ghost of elections yet to come.
Let me explain how the new tax will work. Under the current manufacturer's tax, a sofa which costs $500 to produce will be taxed at the rate of 13.5 per cent, or roughly $67, for a total shipping cost of $567. Under the GST any tax that is paid in the transfer of product from producer to producer will be rebated to the manufacturer or retailer with the entire value-added tax placed on the final retail price, which is saved for the consumer, the average Canadian, to pay. So our example of the $500 sofa shipped to the retailer and marked up 100 per cent on the store floor will have the consumer shelling out $1,090. That is $90 in tax compared to the original $67. That is, of course, assuming that the manufacturer will not just alter his original price structure and continue to ship out the sofa at $567.
Perhaps the Prime Minister's mathematics may fool his cheerleaders on the finance committee but it does not seem to have fooled anyone else. If this is the Prime Minister's vision of tax reduction then we can understand the debt doubling under his direction. The minister has countered these complaints by saying that all taxes are unpopular. No one, he says, likes new taxes and so the thousands of ordinary Canadians who have signed petitions written to their MPs and have appeared before the committee do not matter.
If the Prime Minister will not listen, then perhaps he should listen to some of this former allies. He should listen to what business groups have to say about the GST. Groups such as the Canadian Chamber of Commerce and the Canadian Real Estate Board. What more does the minister need?
Mr. Bulloch of the Federation of Independent Business which represents 82,000 small businesses has said- and this has been confirmed by many businesses in my own riding-that Canada will witness an unprecedented number of small business closures. Companies that are already operating on narrow profit margins will be cut to the bone. The hairdresser, the variety store owner, the shoe repairman are all examples of business people who will find themselves absorbing the cost of a new tax in order to remain competitive. This is not to mention the extra cost of the paperwork needed to administer this paper nightmare. The small business will be hurt in other ways as well. The GST will reduce the over-all buying power of Canadians, raise unemployment levels and generally slow economic growth. These combined factors

October 2, 1989
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will devastate the viability of most small businesses because they do not have the financial security to absorb even short-term losses.
An example of how this will affect independent businessmen is well laid out in a letter I received from the Western Canadian Wheat Growers Association. They point out that the GST will drastically reduce the profit margins in a number of ways and will drive farmers off the land.
For example, land sales will be taxed forcing up the price of land which the farmer will have to finance. Although the government has promised to reimburse the farmer for the GST, the carrying costs between the time of purchase and the reimbursement will not be covered. Farm implements will increase in price as a result of the inflationary nature of the GST. In fact, the grain farm organization states that the culmination of price increases for all foreign input purchases will prove disastrous. There is a growing sense-


The Acting Speaker (Mrs. Champagne):: I am sorry I must interrupt the hon. member. Her time has now expired.


Albina Guarnieri: Can I beg the indulgence of the House, since I was interrupted earlier, to finish my closing remarks?


The Acting Speaker (Mrs. Champagne):: Is there unanimous consent?


Some Hon. Members:: Agreed.


Albina Guarnieri: There is a growing sense of despair sweeping the country and it is causing what has been called a tax revolt. It is not a politically motivated force, but it is organized by independent Canadians who are horrified about the direction this government is taking us.
This government has talked a lot about the concerns of the grass roots. It is time the Prime Minister lived up to the rhetoric. Even some Tory back-benchers are taking to the hustings to protest the GST. How do Canadians survive hurricane Brian?


Ms. Langan:: Madam Speaker, I would like to ask the hon. member, as she comes from a riding where rush hour traffic is appalling and in fact all day long is abysmal, if she would agree with the comments of the hon. member from the government side of the House who spoke before her who said that this is the age of the automobile and dismissed out of hand the need for rail transit and the need for commuter transit. I would ask the hon. member if she agrees with those sentiments or if she has other comments to make about that.


Albina Guarnieri: Madam Speaker, I thank the hon. member for her question. Coming from a riding which has limited access to such facilities as the subway, anybody who has travelled in Mississauga and has been caught in the 401 parking lot will know that our system is far from adequate. Of course I would have to disagree with the hon. member opposite who made those statements.


Mr. McDermid:: Madam Speaker, I listened with great interest to my neighbour from Mississauga East. Obviously the government still has a tremendous amount of work to do in educating particularly members of the House of Commons because today she gave facts and figures which were totally wrong.
She figured out the sales tax system featuring the manufacturers' sales tax which is being replaced by the goods and services tax, and she had the figures all wrong. I would invite the hon. member to drop over and we will go through her speech. I will show her where she was wrong in her figures, transposing the two taxes, because she was way off base.
I might also comment on small businesses. She referred specifically to small businesses and to the problems that small businesses are going to have with the goods and services tax. In fact small businesses will be paying no input tax on their purchases as they are now. They will be tax-free in all of their purchases and therefore they are going to be far better off, far more competitive with the imports. That is what this tax reform is all about. They will be far better off under the new system than they are now. If the hon. member would examine how the new system works, I think she have to admit that.
October 2, 1989


Albina Guarnieri: Madam Speaker, I am all in favour of education. I gladly take up the minister's invitation to meet with him and review the figures. Perhaps we can agree to resume debate after we have done so.
I have one question for the minister. Is this GST or is it the FTA tax?


Nelson Andrew Riis: I listened with interest to the hon. member's presentation. I wonder if she could elaborate on a point. The Conservative government indicates that the reason for this tax is to replace the manufacturers' tax which is a killer of jobs. I think that is the name the Minister of Finance used when he described it, yet it is my recollection that when the Conservatives took office it was at 9 per cent, which is the same level that has been proposed for GST. Over the years it was raised to 10 per cent, 11 per cent, 12 per cent, 13 per cent, and then 13.5 per cent. If the government is serious about saying that this tax is terrible, that it mitigates against our exporters and favours foreigners, that it is a killer of jobs, why would the government increase it four times during its term of office?


Albina Guarnieri: I can only conclude that some of the finance minister's economic advisers have perhaps studied in Argentina and their theories should be tested on animals.


Lynn Hunter: Madam Speaker, I am pleased to stand in the House today to speak to this motion. I would like to reiterate what the motion is: "That this House condemns the government for its mismanagement of the Canadian economy", and then it cites five aspects of that mismanagement.
I want to point out that this mismanagement is not an accident. It is consistent with the government's political philosophy. It is consistent with the government's vision and it is consistent with the government's overconfidence in the market as the device to solve all problems.
This approach to our economic woes, this vision, this mismanagement, represents what we are now facing in Canada. As my colleague from Sault Ste. Marie said earlier this morning, the government does not like to talk about the free trade agreement any more. We in my party are going to continue to talk about the free trade agreement. The measures that this government is bring-
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ing in now are components of that trade deal with the United States. This is what harmonization means.
I will address my comments to just two of those components: first, the changes to the Unemployment Insurance Act. The Canadian Labour Congress last week released startling new figures which demonstrate just how bad the impact of the government's Unemployment Insurance Act will be. While Bill C-21 takes a number of harmful steps, the CLC figures examine only one aspect, and I should be clear about that, that is the increase in the number of weeks of work required to be eligible for benefits.
According to government figures there will be only 30,000 people who would not be able to get enough weeks of work to qualify for benefits. The CLC, however, paid Statistics Canada to produce a study based on the impact of Bill C-21 on people who received benefits in 1988. According to Statistics Canada 128,724 people would not have had enough weeks of work to obtain benefits. This is four times the government's figure.
In British Columbia the government says only 3,000 will be affected. Statistics Canada figures demonstrate that the real figure is 15,845 people. On Vancouver Island where I come from the figures are 3,060 people. This has an economic impact of $15 million lost to my region of the country. When we talk about mismanagement, we also have to talk about the careful manipulation of figures. The government has been withholding this information. It released only some of it in August, four months after tabling the proposal, only because of an access to information request.
The second component of this free trade agreement is the goods and services tax. When any major policy is introduced, it is wise to look at who will benefit and who will suffer. I think Canadians, in spite of a $7 million plus ad campaign, know that they are not going to benefit. It is going to be big business, not small business, that will benefit from this.
It is small business that was talking to the finance committee in droves. I was there when the Chamber of Commerce group came, when the Home Builders Association gave its presentation, and when the construction industry came to give its presentation. They understand

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in spite of this $7 million ad campaign that this is not good news. I think, though, that we have to understand that this is a component of the free trade agreement.
My colleague from Edmonton East in a question in the House on Friday alluded to some of the dimensions of the free trade agreement and the goods and services tax as relates to energy. In the free trade debate last year a lot of focus was put on energy. As my colleague from Edmonton East pointed out, the goods and services tax is adding 9 per cent to energy costs, the same energy that we sell to the United States. But the goods and services tax is not included in exports, so the United States purchasers do not have that GST added and will get the energy for 9 per cent less than what Canadians pay for it. These issues are components of a free trade agreement. You can be assured that on this side of the House the free trade agreement is going to be there to haunt this government for many years to come.
Some colleagues of mine have stated that this government is going to be among the most hated of governments come the next election, and we in our party are going to be there to make sure that the people understand that and that we provide an alternative.


The Acting Speaker (Mrs. Champagne):: Questions and comments. Resuming debate. The Hon. Member for Champlain (Mr. Champagne).


Mr. Michel Champagne (Parliamentary Secretary to Minister of State (Forestry)):: Madam Speaker, I welcome the opportunity to speak to this Opposition motion of censure, presented mainly by the Liberals, and I want to read the motion, which says:
That this House condemns the Government for its
mismanagement of the Canadian economy, including:
4) abandonment of Canadian primary producers with resulting undermining of the farming, fishing and forest industries;
Madam Speaker, I find it rather ironic that an Opposition motion, mainly sponsored by the Liberals, should deal with this subject, especially the forestry sector. Let me provide some background. Twenty-nine years ago, in June 1960, the Right Hon. John Diefenbaker, Prime Minister of Canada, rose in this House to propose a bill that would create a department of forestry for the first time in Canada's history. On July 11, 1960, the bill was passed unanimously by the House, on both second and
third reading. Royal assent was given on August 1, and the new department was established on October 1,1960. And it was a Liberal Government, Madam Speaker, that invalidated this major step, that abolished the Department of Forestry so that we now have to go back and repeat the process.
The motion presented by the Liberals condemns the Government for abandoning the forestry industry. I think we should condemn the Opposition for ignoring the forestry sector, especially as far as interest rates are concerned. Remember the period from 1980 to 1984, when interest rates were so high that most people in business had tremendous trouble recovering from the impact and people in the primary sectors such as farming, fisheries and forestry suffered considerable losses and in some cases even went bankrupt.
Madam Speaker, it is indeed ironic that the Liberals should present this kind of motion. If we look at what happened in 1984 when the Progressive Conservative Party came to power and what has happened since then in the forestry sector, I think it is clear that some very important initiatives have been taken.
First of all, when we came to power in 1984, we had promised during the election campaign to appoint a minister of State, and we did, Madam Speaker. Second, when we came to power in 1984, federal provincial relations, or what was left of them, were very troubled. Quebec was no longer on speaking terms with the federal Government. The provinces were no longer on speaking terms with the federal Government, and vice versa, because of the unmitigated arrogance with which the Liberals approached the provinces and the areas under their jurisdiction.
What we have done in the forestry sector since 1984 has been to sign federal-provincial agreements with each province, agreements that represent nearly $1 billion invested over five years, from 1985 to 1990, of which $662 million is federal funding, with the remaining $500 million contributed by the provinces. Madam Speaker, in Quebec, and more specifically in the region I represent-Region 04-the Canada-Quebec Agreement, which, I may add, is worth $300 million, of which $150 million is federal money, has generated nearly $29,279,860, which breaks down as follows: public forests, $19,833,950; private forests, $8,381,530 and $1,064,380 on Indian reserves and federal land.

That is the situation in my riding. Producers in the farming and forestry sectors know that the Progressive Conservative Government has done a great deal for the forestry industry since 1984, and contrary to the motion presented by the Liberals, they realize how conscious we are of their concerns and how anxious we were to reach a compromise with the federal Government that would make it possible for our producers, our businesses, our young people and our business people to invest in a prosperous industry, in one of the activity sectors that generates the most jobs in Quebec, 1 out of 17, and is also very important in terms of economic spinoffs.
Madam Speaker, in the riding of Champlain, the Canada-Quebec Agreement on forestry development has provided nearly $17,433,860 in funding, which breaks down as follows: $14,539,430 for public forests and $1,830,006 for private forests. Plus $1,064,380 for Indian reserves and other federal land. Madam Speaker, this proves without a doubt there is no hint of partisanship here since we are dealing with a provincial-liberal government that when it was necessary to reach a consensus with the provinces and provide for the recovery of an economic sector that had been abandoned by the Liberals, this federal Government was able to find ways to reach that consensus.
If I may refresh the memory of the Liberals with respect to forestry, we established the Canadian Council of Forestry Ministers in 1985. We developed a national forestry strategy in 1987. And finally, as I said earlier, we are now setting up the legislative committee for Bill C-29, a proposal to establish a full-fledged department of forestry. In fact, both Opposition parties support us on a proposal, once implemented in 1960 and later demolished by the Liberals.
The goods and services tax is a vital part of the Government's long-term strategy for establishing a viable economic policy. Once the goods and services tax is in place, the federal tax system will be more progressive, and low-income Canadians will be better off. This will be achieved thanks to a new refundable credit. The credit will be paid quarterly, before the goods and services are purchased by households.
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Implementation of the goods and services tax should have the following impact on the forestry sector: production costs will drop, since the new tax will not apply to goods required in the manufacturing process, thus making our producers more competitive on domestic and foreign markets. Wood products for export will not be taxed, thus making them more competitive on international markets. Furthermore, as in other sectors, manufacturers of wood products will be able to claim input tax credits on goods and services acquired for use in manufacturing their products. Indeed, the goods and services tax will encourage a more effective use of our economy's resources, promote exports and make Canadian products more competitive, both on Canadian and foreign markets. It will also encourage new investment, while an increase in the number of jobs in the forestry sector is expected.
Removal of the manufacturer's tax will strengthen the position of Canadian products, including wood products, on Canadian and international markets. The result will be increased productivity and more jobs for Canadians. And finally, Madam Speaker, increased productivity, improved competition and lower capital costs will affect the growth of investment and strengthen foreign trade. These factors will increase production and employment from the first year the goods and services tax takes effect. We also expect that the goods and services tax, by replacing the present manufacturers' sales tax, will result in lower industrial and commercial construction costs, which should increase the demand for this type of construction. Note that this kind of construction is exempt from the GST because the products used are not at the end of the consumption chain. Note that the lumber and paneling used in non-residential construction is very important for the lumber industry. About half of these products are for the domestic market and used for non-residential construction. This is especially important for Quebec and Ontario which are much more dependent on the Canadian market than are the other regions of the country are.
We also expect lower costs for writing and wrapping paper, for cardboard not used for food packaging and for tissue and toilet paper. The tax on these products is now 13.5 per cent at the manufacturer's level, but it will be 9 per cent with the GST. Tax reform will thus benefit

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producers and consumers of these products. Note that these products have a high added value compared to most other forest products.
Also, Madam Speaker, the GST or goods and services tax reform will cancel any sales tax now imposed on goods used in manufacturing. Let us mention motor fuel, vehicles, computers, office furniture, services, telecommunications. At present, taxes on these products are invisible in the selling price and reduce the efficiency of investment.
Madam Speaker, in conclusion, because I know that my time is running out, I would like to say to the whole House that the goods and services tax will have a positive effect on employment and job creation, especially in the forestry sector, Madam Speaker.
I would like to remind the Opposition that the Government's record in recent years is positive because it has given this industry its rightful place in Canadian industry and the Canadian economy, namely first place.


The Acting Speaker (Mrs. Champagne):: Questions or comments. The Hon. Member for Gatineau-La Lievre (Mr. Assad).


Mr. Mark Assad (Gatineau-La Lievre):: Madam Speaker, the Hon. Member who just spoke was talking about forestry policy, but I have the impression he was trying to lose us in a thicket of figures and facts. And I think he was also being overly optimistic when he said that the new tax, the GST, was going to improve things. That is not how we see it, especially since 79 per cent of Canadians are not happy with the way you are managing public funds, and why should they be?
However, what is really at issue in this debate is not forestry policy. I can inform the Hon. Member that the provinces have their own forestry policies and have had them for many years. If you intend to enter into agreements with the provinces, as you propose to do with this new tax, we will really be up the creek.
Basically, the motion says that the new goods and services tax will be a menace because, first of all, it will lead to inflation across the board and is regressive, inequitable and invisible. Of course it is!
What we must consider with this goods and services tax is that the Government's only strategy in this instance is
that it does not want to deal with the real problem in this country, which is that we need a complete tax reform, from A to Z.
All the observers and tax experts tell us that every year it is getting more and more difficult and complex for the average Canadian to complete his income tax return, especially when he sees his taxes going up every year. We don't have to quote figures all day long to realize there is something wrong with the tax system in this country. We have statistics indicating that thousands of Canadians don't pay income tax, that Canadian companies don't pay income tax, that all kinds of companies have managed to defer income tax payments for years, which of course has an impact on the federal Government's revenues.

This tax on goods and services is the greatest cover-up I think we will have ever seen in the House of Commons. The basic problem that we have here is that the whole tax system is out of control. You do not have to have an economics degree from any university to realize that the tax system is the most detrimental thing against the middle class that we have seen in the last 25 years.
All that you have to do is take a look at the last 25 years to 30 years, especially after the Carter commission that was unfortunately not published, to see that the tax system even then needed an overhaul. Here we are coming along with an additional proposed tax of 9 per cent. It is obvious that 79 per cent of the people of this country feel that it is unjust and that it is going to create more difficulties for the average Canadian.
The basic problem that we have to face is to admit, to begin with, that our tax system needs to be completely overhauled. I admit I have been influenced by a book called Behind Closed Doors which was written in conjunction with the best tax expert in this country who indicated that the so-called tax loopholes were because of nothing but lobbyists in this country.


The Acting Speaker (Mrs. Champagne):: As it is now 2 p.m. the House will proceed to Statements by Members pursuant to Standing Order 31. The Hon. Member will be able to continue after Question Period.
October 2, 1989


STATEMENTS PURSUANT TO S. O. 31
Giuseppe (Joseph) Volpe: Mr. Speaker, five weeks ago I and a committee of Liberals from RE.I. took up the Tory challenge of coming up with alternatives to the defence department closing of military bases as a means of satisfying the finance minister's deficit cutting requirements.
After much research and study we proposed that one of the military bases, Summerside, be used to establish a UN international peacekeeping training centre. Funding would come primarily from the UN and participating nations, and while Canadian government contributions to the camp would drop from $40 million to about $10 million, there would be little drop in personnel.
The proposal was received with great acclaim by many experts in the arms control and disarmament community. That is not surprising because there are many up sides. Canada would be able to apply and share its internationally recognized expertise and experience in peacekeeping. It would be afforded a leadership role in an increasingly important aspect of external affairs, and foreign capital would replace the funds from DND and breathe life into the local economy.
I urge the Minister of National Defence to take a serious and hard look at our alternative and he can call on our committee for help.

[Translation\


HONESTY
Mr. Jean-Pierre Hogue (Outremont):: Mr. Speaker, a few months ago, something happened to me that turned out to be very important.
I lost a wallet which contained my credit cards, identification and also a substantial sum of money. When I got home, I received a telephone call advising me of this fact.
I promised the finder I would report this in the House, so that the widest possible audience would know that our
society still has honest upstanding citizens deserving of everyone's admiration and respect.
In a world like ours where we so often have to contend with all kinds of disagreeable situations, it is a pleasure to see that our country also has people like Mr. Claude Brabant of Montreal, who has the real civicspirit and a keen sense of honesty. He deserves to be mentioned as a shining example.


NATIONAL FAMILY WEEK
Joy Langan: Mr. Speaker, I would like to bring to the attention of the House the fact that today is the start of Family Week in Canada. As we enter the 1990s the definition of family is changing. The number of children being raised in one parent families and the number of children living in poverty are on the rise. There are 1.2 million Canadian children living in poverty. Internationally, 40,000 children die each day because of the poor economic conditions in which they live.
Children are poor because their parents are poor and family benefits are being eroded by this Tory government. The claw-back of family allowances, destruction of UI, the failure to provide national child care strategy, the lack of affordable housing, and the introduction of the goods and services tax makes the job of parenting more and more impossible for Canadian families.
While we celebrate the week of the family we must remember that much more needs to be done to support families in Canada and throughout the world. It is a sobering thought to recognize that in the one minute I have been given to make this statement, 27 children around the world have died from poverty.


GORDON TOWERS
Mr. Doug Fee (Red Deer):: Mr. Speaker, last Saturday night the Red Deer Chamber of Commerce honoured David and Linda Hueppelsheuser as farm family of the year, and Wayne Lalor for his dedicated service to youth and sports programs.
They also paid tribute to the person chosen as citizen of the year, a man who has dedicated a lifetime of service to the community of Red Deer. In the words of the

presenter, even in his political position, he constantly went far beyond the normal expectations to help his fellow citizens.
I am sure you will be pleased to know that Red Deer has honoured as its citizen of the year a former colleague, Mr. Gordon Towers, Mr. Speaker. In his acceptance speech for the award, a surprised Mr. Towers accepted humbly, quoting Tennyson, saying that he had "received much from others as each of us is a part of all we have met". He went on to say that he is not yet finished and he still has work to do. It is obvious, Mr. Speaker, that he did not intend to let his service stop when he left this place and Red Deer will reap the benefits of that service.


PORK INDUSTRY
Mr. Maurice Foster (Algoma):: Mr. Speaker, the recent decision by the United States International Trade Commission to impose a 3.6 cents per pound, countervail duty on Canadian fresh chilled and frozen pork is one of the best examples of the failure of the free trade deal to protect our farmers from the whims of U.S. farm lobby groups.
The free trade deal was going to provide certainty instead of uncertainty in the face of U.S. trade protection as we were told by the Prime Minister. The only certainty Canadians can expect out of this government and this trade deal is more challenges to our food security and to our farmers and their farms.
This countervail duty is sure to affect farm gate prices and cost millions to Canadian farmers. Farmers can hardly afford to stay in business with the way things are going. U.S. legislators made it clear last fall after the Congress passed the free trade deal that they had no intention of guaranteeing access to the U.S. market for Canadian pork when they amended the omnibus trade bill.
It is high time the government went back to the drawing board before its ineffective trade policies spell certain doom for Canadian farmers.


DEVELOPMENT DAY
Ms. Dawn Black (New Westminster-Burnaby):: Mr. Speaker, today marks the second annual Development Day, a day designated by the federal government to shed light on international development issues and to reflect upon what we can do to better the living conditions in the Third World.
Canadians are justifiably proud of our record as a caring and as a compassionate people. Our record in the field of international development is unrivalled. In the developing world the maple leaf is a symbol of hope and co-operation.
Unfortunately, this record is in jeopardy. Since the April budget the over-riding thought has been cutbacks. Instead of helping people to help themselves, the development community is struggling to cope with far fewer resources. Multilateral food aid was cut by $32 million, bilateral food aid was cut by $24.4 million, our contribution to international institution by $56.5 million and humanitarian assistance by $4.5 million. The list goes on to total over $360 million in cuts with many more on the way next year.
Development Day is the day for all Canadians to reflect on our role in the developing world. More importantly, it is also a day to send a clear message to the government that the time has come to restore funding for development assistance.


PROPOSED GOODS AND SERVICES TAX
Mr. Blaine A. Thacker (Parliamentary Secretary to Minister of Consumer and Corporate Affairs):: Mr. Speaker, the European Economic Community consists of 320 million people in 12 sovereign nations and languages who in this century alone were at war twice, killing millions of people. Yet they have fewer barriers to trade and other differences than we do here in Canada. In spite of a GST tax of up to 28 per cent they are buying

stereos, cars and houses in record numbers. The reason is that the GST is the most equitable and fair tax. By 1992, they will have an economic and social union which will make Canada look like 10 separate and feuding nations.
We are clearly wasting time in Canada over Meech Lake and other petty differences. Meech Lake should have been passed months ago, and we should already have dealt with women's issues, native issues, fisheries and Senate reform. I call upon the opposition parties to start thinking of Canada as a whole rather than always being concerned about the separate, narrow, selfish interests of special groups.


THE LATE MARK SMERCHANSKI
Lloyd Axworthy: Mr. Speaker, I would like to take a moment of this House to remember a distinguished Manitoban and a former parliamentarian who just recently passed away. Trying to recount all the contributions of Mark Smerchanski, who served in this House from 1968 to 1972, is a difficult task for he was a man of many talents and interests who provided remarkable public service.
A geological engineer by training, he was one of the pioneers in opening up Canada's north to mineral exploration. He was later a professor of engineering and a builder of new techniques in that area.
As a member of the provincial legislature for Burrows and in this House as the member for Provencher, he won the respect and praise of his constituents and was certainly a strong voice for western Canada.
Mark Smerchanski will also be remembered for his major contributions to the Ukrainian-Canadian community. He was instrumental in establishing the Department of Slavic Studies at the University of Manitoba and perhaps took greatest pride in his accomplishment as the founder of the Holy Family Nursing Home in Winnipeg. Mark Smerchanski is survived by his wife Pat and three daughters, Joan, Rhonda and Patricia.
I am sure the House will join me in wanting to send our condolences to his family and thanks to Mark Smerchanski for a life of service to his country.


Some Hon. Members:: Hear, hear!


CANADIAN INTERNATIONAL AIRLINES
Mr. Howard Crosby (Halifax West):: Mr. Speaker, Nova Scotians will view with alarm the announcement that Canadian Airlines International intends to close its pilot base at Halifax International Airport and reduce the staff of flight attendants stationed there. These pilots and flight attendants are a community resource and they contribute to the economic, social and cultural life of Nova Scotia. Canadian Airlines International is a private enterprise but its future success depends on the support of government and public good will.
I call upon the officials of Canadian International Airlines to assess the corporation's decision and consider the welfare of these employees in the community at large. Otherwise public support will be severely damaged.


VIA RAIL
Lynn Hunter: Mr. Speaker, this past weekend I attended the one hundred and third anniversary of the Esquimalt-Nanaimo Railway in Victoria. It was an occasion with little cause for rejoicing; a wake rather than a celebration. The news of the cuts to VIA Rail and the complete elimination of the E & N dayliner served as a grim reminder of the government's lack of interest in the wishes of Vancouver Islanders.
The elimination of the E & N is an attempt by this government to extract itself from obligations on Vancouver Island and reflects its unwillingness to make the E & N a viable service. It is also contrary to historical agreements.
The preservation of the E & N is an obligation rooted in B.C.'s entry into Confederation. The agreements of 1883 are based on contractual and constitutional conditions between federal and provincial jurisdictions. The federal government is bound to provide passenger service on Vancouver Island in perpetuity. Support for the dayliner is clearly demonstrated by the increased number

October 2, 1989
of passengers despite inconvenient schedules, bad service and appalling management. Rather than ending over 100 years of service, the government should upgrade the dayliner in the interests of tourism, community pride, the environment and national unity.


NATIONAL FAMILY WEEK
Mr. John E. Cole (York-Simcoe):: Mr. Speaker, I am pleased today to lend my wholehearted support to National Family Week which starts today and runs through to October 8. This government provides support to the Canadian family in many broad and diverse ways. We run programs for seniors and the disabled. We administer comprehensive income support networks. We are working on a national strategy to reduce violence in the family. Our child care initiatives fund is supporting quality child care services across Canada.
National Family Week asks us to be more sensitive to the needs of our families and to celebrate the strength, the joy, and the vitality of the Canadian family.
I would like to ask all members of the House to join me in support of National Family Week and to enjoy the riches our family lives offer each of us.


CHILD CARE PROGRAM
Ms. Barbara Greene (Don Valley North):: Mr. Speaker, on Friday, September 29, the Minister of National Health and Welfare and I toured three day care centres in the city of North York and met with representatives of the North York Interagency Council. We visited a workplace infant and toddler centre with rent and building costs paid for by the city. This centre took six months to fill as a result of the freeze on subsidies caused by the lack of provincial funding. As a result, only 19 of 58 spaces are available to low income families.
We visited a day care centre in a high school designed to keep teen mothers in school. This centre, which is subsidized and assisted by the board of education, had empty spaces for part of last year due to a lack of subsidies. We visited a neighbourhood centre, also in a public school, where full fee-paying parents were subsidizing low income parents because of the lack of adequate subsidies for low income families. As a result, spaces for parents needing subsidy have been limited. Eight-five per cent of the families needing subsidy are single parent families. Day care subsidy help families to help themselves.
As part of National Family Week, I strongly urge the minister to bring forward a child care program which will ensure that low income families have access to day care and will provide disadvantaged children with the benefits of early literacy, good nutrition and good child care.


HOUSING
Mr. Sergio Marchi (York West):: Mr. Speaker, yesterday's unbelievable pronouncement by the Minister of Housing that affordable housing is not a national priority in Canada is truly irresponsible as numerous Canadians for a variety of reasons cannot afford to buy a home at all.
Do those living on the streets in cities across Canada find affordable housing not a priority? Do single mothers looking for reasonable accommodation find that affordable housing is not a priority? Do the many families in major centres across this nation who cannot begin to afford a new home because of the skyrocketing prices also find that affordable housing is not a priority?
What belies the statements made by the minister is that he was, before becoming a cabinet minister, a mayor who fought for such issues. He was an outspoken critic of the Conservative government's housing policy right here in the House of Commons. His comments do little to help those in need of basic shelter and are a rebuke of their pleas for action.
I suggest that the minister consult with those he purportedly serves and take concrete measures to house the many Canadians in need. Affordable housing is a national issue. What we need is a minister who recognizes that fact.


PROPOSED GOODS AND SERVICES TAX
Mr. Stan Keyes (Hamilton West):: Mr. Speaker, almost a year has passed since the last election when the Prime Minister declared that social programs were a sacred trust. However, the government has begun a process of clawing back the safety net and has embarked on an initiative that will severely affect lower and middle-income Canadians.
The Conservative government is blindly committed to a new tax to replace the manufacturers' retail sales tax which would be placed on almost every good and service. One week ago I held a meeting in my riding of Hamilton West on the subject of the proposed tax. Three hundred and fifty people filled the room and not one person was in favour of the government's plan. So far over 5,000
October 2, 1989

signatures have been collected from constituents opposing the tax.
As one of my constituents put it, when a family buys a new home it takes on a deficit. When they buy a new car, it takes on a deficit. What the Minister of Finance is telling Canadians is that they must now increase their deficit to reduce his. And happen it will, as the government proclaims its tax as fact in newspaper ads, circumventing my privileges as the elected representative for the constituents of Hamilton West who say enough is enough.



ORAL QUESTION PERIOD


Mr. Brian Tobin (Humber-St. Barbe-Baie Verte):: Mr. Speaker, my question is to the Prime Minister and concerns the moral legitimacy of this government.
During the last election the Prime Minister promised a child care program, promised a revenue neutral national sales tax, promised continued universality of social programs, and continued support for VIA Rail. After the election the Prime Minister terminated the child care program, delivered another massive tax increase, destroyed universality of social programs and is now in the business of gutting VIA Rail.
Given that Canadians have no opportunity to pass electoral judgment on this massive fraud for another three years, will the Prime Minister agree today to withhold implementation of the planned route eliminations of VIA Rail and the planned 2,900 lay-offs of VIA employees until public hearings are held across this country on this very important matter?


Right Hon. Brian Mulroney (Prime Minister):: Mr. Speaker, it is astounding for the House and the country to hear a Liberal rise in this House and talk about moral legitimacy. That is a contradiction in terms. The fact of the matter is that this House passed a child care program which was killed by his Liberal friends in the Senate.
We have a mandate from the people of Canada to deal with matters which are not necessarily popular, but which are right for Canada. Some of these mean reversing some attitudes and some trends of the past, not all of
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them pleasant and not all of them easy. We are not going to do them because they are popular; we are going to do them because they are right for Canada.


Brian Vincent Tobin: Mr. Speaker, according to Webster's Dictionary the word "probity", which used to be a favourite of the Prime Minister's, means upright, upstanding, forthright and honest. It is no wonder he never uses the word anymore.
It staggers the mind to realize that while every other nation in the western world prepares to meet the year 2000 with efficient, environmentally clean, high speed rail passenger service, Canada and Canada alone pursues a policy of increasing reliance on already congested highways and skyways.
I ask the Prime Minister whether or not he will make available all environmental impact studies carried out in preparation for this decision to terminate VIA Rail. In fact I ask whether or not he will give the House, and through the House the people of Canada, an assurance that such environmental impact studies have been carried out pursuant to the government's recently announced policy of doing just that.


Hon. Benoit Bouchard (Minister of Transport):: Mr. Speaker, I have always said to the House and outside the House that when the decision is known I will provide all necessary documents so that Canadians will understand. It will be the best decision we can make.


Brian Vincent Tobin: Mr. Speaker, neither the Prime Minister nor the Minister of Transport have been prepared to tell Canadians that they will have a right to be heard on the decision, which was never discussed or announced in advance of the election last November.
I put my question to the Chairman of the Standing Committee on Transport. Given that we cannot receive an answer in the House, an assurance of public hearings on this important question from either the Prime Minister or the Minister of Transport, will the chairman of the Standing Committee of Transport refer this important question to the Commons transport committee immediately?


John Patrick (Pat) Nowlan: Mr. Speaker, the question was to the chairman of the committee and all I can tell my hon. colleague is that the

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transport committee is meeting tomorrow morning at 9.30 to discuss that very thing.


Mr. Maurice A. Dionne (Miramichi):: Mr. Speaker, I am astounded today to hear the Prime Minister say that savaging VIA Rail is the proper thing to do, but my question is for the Minister of Transport.
According to the multiplier factor used by VIA Rail to gauge job losses, the 2,900 job cuts projected to be announced on Wednesday will grow to 10,200 jobs as the effects mushroom through the economy. The minister knows it because he received these figures months ago from VIA Rail.
Will the minister give us a clear and unequivocal answer, for the first time on this issue, as to why he has kept this vital information from the Canadian public and from the House of Commons?


Benoît Bouchard: Mr. Speaker, of course we always release good information to Canadians. Normally, though, it is not based on leaked documents.


Joseph R. (Joe) Comuzzi: Mr. Speaker, I rode VIA Rail this weekend to talk particularly to the employees of VIA Rail. They all know that over half the routes will be cut and 2,980 employees will be fired.


Some Hon. Members:: New rider.


Joseph R. (Joe) Comuzzi: Perhaps the hon. gentleman over there should take a turn and ride VIA Rail also, so that he knows of which he speaks.
Another 10,000 Canadian jobs will be directly affected. They all expect this to be announced on Wednesday just before Thanksgiving, and the lay-offs to take place just after Christmas on January 15. All Canadians have the right to know why the minister is doing this to VIA Rail. The minister is duty bound to explain why he is eliminating passenger rail service in Canada. Will the minister appear before the transport committee to explain to the committee and, in fact, to all Canadians why he is doing this to passenger rail service in this country?


Benoît Bouchard: Mr. Speaker, that is pretty obvious. Last spring, I appeared twice before the Transport Commitee. I answered all kinds of questions at the time the Hon. Member was there and the vast majority
of the questions were about VIA Rail. I answered the questions, and, at the time, I felt that this was one way of consulting. However, Mr. Speaker, I still feel I cannot give the Hon. Member the answers he wants, because they are not the kind of answers I will give, first of all, but-


Joseph R. (Joe) Comuzzi: The announcement on Wednesday!


Benoît Bouchard: He says: The announcement on Wednesday! I have yet to announce when the announcement will be made and so far I have given no indication. Announcements will be made at the appropriate time, as I said earlier, and will be based on valid documents. I just hope the Hon. Member will take VIA Rail more often than he must have done when he was a member of the task force on transport.


Iain Francis Angus: Mr. Speaker, obviously, the minister does not know when it will be because he has not found a place in Montreal that will hold 1,500 people for the meeting on Wednesday.
My question is to the Prime Minister. On Friday, the Minister of Transport said, "Normally, when the cost is over the revenue there is a problem". This government has repeatedly promised to buy modem trains for VIA Rail instead of just throwing away hundreds of millions of dollars by maintaining obsolete 35 year old trains resulting in high costs and a waste of taxpayers' money.
Clearly, the Minister of Transport has failed to live up to his responsibilities and that responsibility must now fall on the Prime Minister. When will he act to protect Canadians who use VIA because it is affordable, safe, accessible, environmentally friendly and convenient?


Benoît Bouchard: Mr. Speaker, I would like to correct something that my friend said about VIA Rail.
Over the last 10 years the former government and ourselves have put more than $5.4 billion into VIA Rail. Our own government has put more than $.5 billion into the equipment alone. He says that we have not put money into it.
Last week my friend talked a lot about ridership. For the first six months of 1989, the increase in the number of passengers was 2.7 per cent. I would like to be able to manage a corporation with that kind of figure. I would
October 2, 1989

have to know exactly what is the cost; but my friend never gave the costs of the operations of VIA Rail.


Iain Francis Angus: Mr. Speaker, it is nice to know that the minister has confirmed the information I gave the House on Friday. I have another supplementary to the Prime Minister.
Last week we heard that bus companies are predicting significant fare increases as soon as VIA Rail is cut. Today, we learned that airline fares are about to go up by hundreds of dollars per ticket.
Will the Prime Minister acknowledge that his government's policies of deregulation and the destruction of VIA Rail are an attack on consumers in all regions of this country. Will he act to protect these consumers by cancelling plans for the elimination of VIA services across this country?


Benoît Bouchard: Mr. Speaker, I would like to draw your attention to a letter I received from the Canadian Bus Association, in which the association's director general says the following:

"I am writing to you to state in clear terms that the telephone interview conducted on September 27 did not contain any reference to the prospect of the bus industry increasing price simply because VIA Rail services are changed".
I believe it is very clear. Once again, we have to tell the truth. We have to use real documents as I am doing here this afternoon.


UNEMPLOYMENT INSURANCE
Cyril (Cid) Samson: Mr. Speaker, since according to the Minister of Transport, it is very hard to know who is responsible for what in this Cabinet, my question is directed to the Prime Minister. Under the proposed changes to the Unemployment Insurance Act, nearly 5,000 people in Montreal will no longer be eligible for benefits. Over 8,000 people depend either directly or indirectly on VIA Rail for their employment in this city. We see the same scenario in Halifax, Winnipeg and elsewhere in this country. Does the Prime Minister intend to take the necessary measures to protect Cana-
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dians who may be out of a job and without any financial support?


Hon. Barbara McDougall (Minister of Employment and Immigration):: Mr. Speaker, I think that my friend, the Minister of Transport, has been forthcoming about what the government is looking at in connection with VIA Rail. We will be there, as we are with any other organization, should there be any need for the services of the Department of Employment and Immigration and the Industrial Adjustment Service, and so on. We are here now for businesses across the country. We are here for other businesses, should the need exist.


TOURIST INDUSTRY
Mr. Ron MacDonald (Dartmouth):: Mr. Speaker, my question is for the Minister of Finance. It concerns the devastating effect on the tourism industry of the proposed GST.
In the Atlantic region alone over $2 billion are infused into the local economy because of tourism. In Nova Scotia, 1.6 million tourists leave over $760 million in the local economy.
The effect of the proposed GST will be to send many of these tourists who are seeking a seaside holiday stateside. That is where they will be leaving their money. What measures will this government take to protect this industry which is so vital to a region that has already been battered half to death by this Government's economic policies?


Hon. Tom Hockin (Minister of State (Small Businesses and Tourism)):: Mr. Speaker, the first thing we are doing is we are exempting foreign tourists from the GST on products they buy in Canada, as well as accommodation that they buy in Canada. They will not be taxed, either, on their plane flights into the country.
I will tell the hon. member something else. We have worked hard with the tourism industry to make sure that it has a competitive advantage with other countries. France, Britain, Germany, for example, have tax programs just like we have. We are going to have a GST. Their tourism has increased by almost 100 per cent over the last four years. Let us make sure that our industry is

October 2, 1989
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helped and not pulled down by exaggerations, by defective attacks like this.


Some Hon. Members:: Hear, hear!


Ronald MacDonald: Mr. Speaker, that is a tremendous amount of gall. Some 74 per cent of the travelling public that go into Atlantic Canada are Canadians. What the minister has just said is that Americans will be given preferential treatment over Canadians under this government's economic policy.
My question is again for the Minister of Finance. Given that your government has gutted regional development programs, has mismanaged the fisheries into a state of complete collapse and probably Wednesday or Thursday of this week is prepared to drive the last spike into the heart of the travelling rail public in Atlantic Canada, will you finally not now say that the GST-


Mr. Speaker:: I must ask hon. members to put their questions through the Chair.


Ronald MacDonald: Will the minister now not see that his GST proposal is fatally flawed and withdraw it immediately? Or, is he hell-bent in shutting down yet another industry in Atlantic Canada? That is the question.


Some Hon. Members:: Hear, hear!


Geoff Wilson: Mr. Speaker, the content of the member's question with a large amount of exaggeration on the various things related to the gutting of regional development is nonsense. This government has maintained a veiy high level of regional development spending, 50 per cent higher than it was in previous years. The hon. member knows that.
The hon. member also knows that there has been no mismanagement whatsoever of the fisheries industry in Atlantic Canada. In fact we have been working very hard with the industry and with our representations to people in other countries to ensure that we maintain a healthy fisheries industry in Canada.
The hon. member would do his region a good deal more credit and a give a good deal more assistance if he would avoid the exaggerations and start talking facts.


PROPOSED GOODS AND SERVICES TAX
Mr. Jack Iyerak Anawak (Nunatsiaq):: Mr. Speaker, my question is for the Minister of Finance. The 9 per cent goods and services tax proposal discriminates against the residents of the northern regions of Canada. Because our cost of living in the north is the highest in the country, each northerner will pay more of this unfair tax. None of the public documents of the proposed GST have assessed the impact of this tax on northerners.
My question for the minister is this: Why was the north omitted from the government's technical paper? Has the government done any background studies on the impact of this tax on the north? If so, will the minister release these studies to northerners?


Geoff Wilson: Mr. Speaker, I should draw to the member's attention that we have done a good deal of work on the impact of the tax on the north. If the hon. member did not just isolate one element but looked at the over-all impact of the tax on the economy of the north, I could tell him that the impact on the north is about the same as the national average. In other words, it will improve the economic fortunes of the north by about 1.5 per cent. That is equivalent to what the national average is.


PRESENCE IN GALLERY
Mr. Speaker:: I wish to draw to the attention of members the presence in the gallery of Mr. Anders Bjorck, President of the Parliamentary Assembly of the Council of Europe.


Some Hon. Members:: Hear, hear!


Mr. Speaker:: The hon. member for Churchill.


Mr. Murphy:: Mr. Speaker, my question is for the Minister of Fisheries and Oceans. Given that today the minister is aware that the-


Mr. Speaker:: The hon. member for Western Arctic.


PROPOSED GOODS AND SERVICES TAX
Ms. Ethel Blondin (Western Arctic):: Mr. Speaker, it is quite clear that we did not get an answer from the Minister of Finance so I my supplementary to him.
October 2, 1989

It is quite obvious that the government did not give any consideration to the north even though the effects will be devastating. I would like to know if the minister will commit to determining the impact of the tax on tourism, on inflation, on the cost of transportation, on construction, on housing, and justify why northerners should pay a much higher dollar value for the tax on the same item than in the south.


Some hon. members:: Hear, hear!


Geoff Wilson: Mr. Speaker, in fact I did give her colleague an answer, and I got quite a precise answer.
The answer is that if you take into account all aspects of the tax-not just one or two or three different aspects of the tax but all aspects of the tax-and the impact of that on the economy of the north, the answer that I gave her colleague and the answer that I will give her is that there is a positive impact on the region of the north. The amount is about a 1.5 per cent increase, which is about the same as the national average.


FISHERIES
Rodney Edward Murphy: Mr. Speaker, the Minister has had notice of this question now.
Given the fact that the fish workers in Nova Scotia in attempting to save their jobs are stopping the export of raw fish from that province, what is the minister going to do to live up to his responsibility and keep jobs in Canada?


Hon. Thomas Siddon (Minister of Fisheries and Oceans):: Mr. Speaker, the hon. member would know that fish harvested in Canadian waters on both of our coasts and in the central areas as well leave Canada in various forms, including fresh fish which goes into many markets where it commands a higher price than processed fish.
We believe that we should gain maximum employment advantage from our raw materials, but a recent ruling by the GATT makes it quite clear that Canada cannot restrict the export of unprocessed fish to certain markets which demand it. In fact, many fishing companies and many fishermen benefit by this practice. Nonetheless, we encourage maximum processing and maximum opportunity being extracted from the resource in Canada.
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Rodney Edward Murphy: Mr. Speaker, that is simply not good enough. Since July of this year over 8 million pounds of B.C. raw salmon have gone to the United States. Last year, over 80 million pounds of raw fish went from Nova Scotia to the United States. The thing is that the minister has not taken his responsibility. He has done nothing to save those jobs. When is he going to start acting?


Thomas Edward Siddon: Mr. Speaker, the hon. member would know or should know that the Pacific coast fishing industry, which he mentions, has enjoyed its most abundant year in history in the quantity of fish harvested and the amount of employment provided to Canadian workers. That is a fact.
Were it not for certain problems with exchange rates and international fish prices, we would have far more employment in Atlantic Canada. Nonetheless, we have a very healthy fishery in this country, and the member knows that.


RAILWAY TRANSPORT
Mr. Guy St-Julien (Abitibi):: Mr. Speaker, my question is for the Minister of Transport.
Nearly 700,000 litres of fuel were spilled in a derailment that occurred in Press, Abitibi around 1981. Today, eight years later, some of that fuel is coming back to the surface.
My question is as follows: Could the Minister assure us that Canadian National will install a permanent reservoir immediately, before next winter, to separate the oil from the water and to recover the petroleum spilled?


Benoît Bouchard: Mr. Speaker, I am pleased to tell my colleague from Abitibi that the reservoir in question should indeed be installed by next winter-that is, within a few weeks.


PROPOSED GOODS AND SERVICES TAX
Mr.   Brian@: Mr. Speaker, my question is for the Minister of Finance. Farmers in Elk Island want to know more about the GST. How long will they wait for the input tax rebate-60 days, 90 days, six

October 2, 1989
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months? Our farmers are important. How long will they have to wait?


Mr. Wilson (Etobicoke Centre):: Mr. Speaker, the position of the farmers in the goods and services tax proposal is, I think, quite a good one. Because food is not taxed, and because the products that these individuals sell is tax-free, they will receive a full credit on all these business inputs.
The credit will come not in the length of time that the hon. member has suggested but 21 days after they request the credit. If they do not receive it after 21 days they will receive full interest, so they will get their cash flow well looked after during this period of time, and very quickly.


FISHERIES
Hon. Roger C. Simmons (Burin-St. George's):: Mr. Speaker, I have a question as well for my good friend the Minister of Fisheries fresh from his, if I may say so, pitiful performance at the NAFO talks a couple of weeks ago. In my riding of Burin-St. George's alone, 16,000 plant workers and fishermen are looking down the barrel of permanent unemployment, thanks to the minister's bungling of the fisheries crisis.
I want to ask him this question: Has he had discussions with National Sea and with Fish Products International about options to ensure that those plant workers and fishermen are able to keep their jobs? Also, can he assure us that the Canada-U.S. free trade provisions will not prevent the minister and the government from honouring its obligation under the 1983 fisheries restructuring agreement to keep certain fish plants open?


Thomas Edward Siddon: Mr. Speaker, the hon. member knows full well that he does no service to his constituents by exaggerating and spreading fear that 16,000 workers, as he characterized it, will be without work.
We have certain difficulties in the fishery this year resulting from a number of factors, some of which involve international supply and demand and exchange rates because our fish products from Atlantic Canada are largely exported.
The hon. member knows that a special committee of cabinet on which several of my colleagues and I participate is looking into all facets of this problem. The hon. member also knows that in most respects fishermen in Atlantic Canada are enjoying a year which is prosperous and adequate for their needs in many parts of Atlantic Canada but not as abundant as it has been in the last three or four years in relative comparison.


Roger Simmons: Mr. Speaker, they will be delighted to hear that they are enjoying it because they did not know that. Now cut out the baloney, Tom; cut out the bombast.


Mr. Speaker:: The hon. member will put his question.


Roger Simmons: Mr. Speaker, last spring the Secretary of State for External Affairs was appointed to head up a fish committee. We have not heard from him since.
I ask the minister this question: Can he now finally tell the House what specific plans he has to bring in an assistance package to keep those fishermen and plant workers working, even if we have to share the work until such time as the fish stocks rebound?


Thomas Edward Siddon: Mr. Speaker, as I have indicated already, the special committee continues its deliberations. When the quotas are set for next year, 1990, we will have a far greater indication of the availability of supply to the industry, and at the same time any measures which might be required supplementary to those available from existing programs will be announced, if required, at that time.


BIOTECHNOLOGY RESEARCH
Lloyd Axworthy: Mr. Speaker, in the spring of 1987 in a speech to the University of Waterloo the Prime Minister said the following and I quote:
We know that foreign controlled subsidiaries conduct less R and D than Canadian controlled companies.
And he went on to note that:
The strategic development of Canada depends upon information technologies, industrial materials and biotechnology.
In light of the Prime Minister's own statements in that speech, I want to ask him this questions: Why is the government standing idly by while the acknowledged
October 2, 1989

flagship of Canada's biotechnology industry, Connaught Labs, is being subject to a foreign takeover?
Will the Prime Minister outline today what steps the government intends to take under the authority of the Investment Canada Act to stop the takeover of Connaught and to ensure that Canada has a Canadian owned centre for biotechnology research?


Hon. Harvie Andre (Minister of Regional Industrial Expansion and Minister of State for Science and Technology):: Mr. Speaker, as the hon. member knows, under the Investment Canada Act full authority is there to ensure that any foreign takeovers, including this one, are to the net benefit of Canada. That examination is under way.


Lloyd Axworthy: Mr. Speaker, let me ask the minister, then, a specific question.
As he knows, under section 15 of that act the government has the right to stop any takeover that affects cultural heritage and national identity.
Let me ask this question of the Minister. Does the Minister agree that Connaught Labs, the home base of Banting and Best, is part of Canada's national identity? As a result, will he put on notice today that this government intends to use section 15 to stop the takeover of Connaught Labs and keep it under Canadian ownership?


Harvie Andre: Mr. Speaker, I will certainly give commitment to the House that the Investment Canada Act will be followed. After the proper kind of examination which is called for under the act a decision will be taken. The hon. member seems to be suggesting we should take a decision now and do the analysis later.


THE ENVIRONMENT
Mr. Jim Fulton (Skeena):: Mr. Speaker, my question is for the Minister of the Environment. On January 31, the Minister promised Canadians: "Where environmental considerations will conflict with economic ones the environment will prevail".
Canadians know that the GST fails to recognize the difference between environmentally friendly and polluting products. Canadians know that the cuts to VIA Rail will force the travelling public to depend more on
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polluting forms of transportation. Bad environmental policies are being forced on Canada by the Minister of Finance.
Will the Minister today show some leadership and announce that he is going to subject the GST to a full environmental impact assessment?


Hon. Lucien Bouchard (Minister of the Environment):: Mr. Speaker, the Government's existing environmental assessment directives involve several aspects. But the aspect on budgeting in particular does not fit in at all with already existing mechanisms.
That is why we are preparing legislation for the House to give the country a flexible, comprehensive, professional mechanism to deal with any eventuality.
As for the GST in particular, Mr. Speaker, I believe that a measure that will enable Canada to take its rightful place on international markets so that we can create jobs here and improve the sales of Canadian products abroad will put the country's economy on a sound footing to deal with the great environmental challenge.


James Ross Fulton: Mr. Speaker, the Minister obviously does not know that the tax system is one of the most effective places, not least effective places, to assist in promoting environmentally friendly products.
My supplementary is to the Prime Minister who, on October 15,1988 said: "We are prepared to subject every federal undertaking to a full environmental impact study".
Last week the Secretary General of the Brundtland commission noted: "Canada is a country noted for leading with rhetoric and following others with action".
Will the Prime Minister live up to his promise and subject the GST to his own promise and to his own words from last year?


Martin Brian Mulroney: Mr. Speaker, I have not seen the comment from the Secretary of the Brundtland commission, but I have seen comments from Prime Minister Brundtland herself who chaired the commission. She said that Canada's record led the industrialized world. It should be viewed by all

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Canadians with pride in regard to what we have done in the environment.


Some Hon. Members:: Hear, hear!


Martin Brian Mulroney: With regard to the matters raised in respect of taxation and others, the Minister of the Environment has responded fully about his intention to bring forward what I believe will be an important and landmark piece of legislation as it affects the environment. I hope my hon. friend and members of the Liberal Party who profess to support the environment will at that point in time rise and give it the enthusiastic support of which they are capable.


FOREIGN AID
Mrs. Christine Stewart (Northumberland):: Mr. Speaker, my question this day, Development Day, is for the Secretary of State for External Affairs in the absence of the Minister for External Relations.
As demonstrated in the April budget under cuts to overseas development assistance, this government has cast a blind eye to the world's poor and sanctimoniously throws them but scraps from our table. Dozens of Canadian non-governmental organization projects have had to be cancelled. Millions of the world's poorest will suffer because of these foreign aid cuts. The poor do not understand our minister's double talk about quality versus quantity of assistance. They do understand the fine line between life and death.
Will the government not review its foreign aid priorities and return to Canadian NGOs the funds chopped in the April budget enabling them to meet their grass roots assistance projects budgets?


Right Hon. Joe Clark (Secretary of State for External Affairs):: Mr. Speaker, Canada's program of delivery of aid to the poorest is one of the most effective in the world. We intend to keep it one of the most effective in the world.
Now there were budget cuts in the last budget. I would have preferred, as everyone in this government would have preferred, to have inherited an economy that was strong enough and that was free enough of deficits that we would not have had to engage in the kind of major
cuts that we have had to engage in across the board. But that was not the situation we inherited.
We came into office after a period of reckless spending by the Liberal Party and government. We have to take account of that for several reasons, including the capacity of this country to maintain the kind of economic growth that will allow us to deliver effective aid in the world including particularly to the poor.


Christine Susan Stewart: I challenge the minister to tell that to the thousands of the world's poor, the rickshaw drivers in Bangladesh, the purse sellers in Ivory Coast, the malnourished children in Lima, Peru.
My supplementary is to the same minister. It is interesting that the budgets directed to the poorest individuals at the grass root level are cut, yet CIDA's own budgets for administrative costs and publicity have risen by $114 million.
Our foreign aid target is gone. Which is the greater need, the need of this minister and the government to promote itself and its structure or the needs of the poor?


Charles Joseph Clark: Without any doubt and without any argument, the greater need is the need of the poor. That is why the policies of this government have been directed so consistently and so effectively toward helping the poorest in the world.
I suppose what we will hear next from the hon. member is a suggestion that we should not be proceeding with the decentralization in CIDA that was proposed unanimously by a committee of this House.
It was proposed for the very reason of ensuring that we are making our policy based upon the needs of the poor in the regions where Canada is trying to contribute to development assistance and not in relation to the whims or the partisan comments of the day that might arise here in Ottawa.


Mr. Kaplan:: Mr. Speaker, the former Prime Minister is disgracing himself with an answer like that.


JUSTICE
Robert Phillip Kaplan: My question today is for the Minister of Justice. It is generally admitted that Bill 61 on profits from crime is not working well, certainly not as well as in the United States and not as well as the Minister promised. On September 29, the Minister himself admitted in the Toronto Star that local

police are not using it. Is the Minister prepared today, instead of keeping all the confiscated profits of crime in Ottawa, to turn them all over to the government or police force that did the work to confiscate them?


Douglas Grinslade Lewis: Mr. Speaker, I am pleased that my friend has differentiated between the successes we are having in the money laundering legislation and the legislation that in particular his party talks about with respect to proceeds of crime.
In fact, when I was in the United Kingdom this past summer I discussed that very aspect with them over there. There was an editorial as a matter of fact in The Toronto Star about two weeks ago which led me to ask officials of my department to bring to me the rationale upon which the act was originally drafted, to advise me as to how it was working. I intend to look into that very matter.


Robert Phillip Kaplan: Mr. Speaker, after admitting himself that the law needs to be looked at, and recognizing the Prime Minister calling for a war against drug crime and against crime in general, the minister should be aware that no change in the act is necessary for the federal government to decide to turn over the proceeds of crime to the order of the police force that fights to confiscate them.
I want to ask him again: is he ready now simply to announce that he will do that, recognizing the shortcoming that he referred to himself and to get the local police forces on side for this important operation?


Some Hon. Members:: Hear, hear!


Douglas Grinslade Lewis: Mr. Speaker, my hon. friend was on the committee. My information is that it was never raised at that point by himself. It was raised by the chiefs of police.
As I said, we are looking into the matter. As soon as we have established the rationale on what action could be taken we will take that action.
Oral Questions INDIAN AFFAIRS


Mr. Robert E. Skelly (Comox-Alberni):: Mr. Speaker, in the absence of the Minister of Indian Affairs I would like to direct my question to the Prime Minister as well.
Today, 1,200 elementary school children of the Six Nations near Brantford have entered the second month of their boycott of Department of Indian Affairs schools because the schools have failed to meet fire code standards, basic safety standards, health standards with respect to water, to drainage and to washroom facilities, and asbestos content.
A study by the Department of Indian Affairs in 1985 condemned four schools and proposed substantial repairs to the two remaining schools and replacement of the condemned facilities. This became a promise of the Department of Indian Affairs. After four years, Six Nations children have been forced to go to school in condemned schools that are unhealthy and renovations to only one of the remaining schools has been completed.
What will the government do to keep its promise to replace the condemned Six Nations schools and to completely renovate the remaining schools so that Six Nations children can go to school under the same safe, healthful, decent conditions as non-Indian children in this country?


Mrs. Dorothy Dobbie (Parliamentary Secretary to Minister of Indian Affairs and Northern Development):: Mr. Speaker, I would like to inform the hon. gentleman that the department is fully aware of the situation, that it has it well in hand, and that the situation is being addressed.
The hon. member might be interested to know that the students are being well taken care of and that then-long-term objective will be met over time.


Robert Evans Skelly: Mr. Speaker, my supplementary questions is for the Parliamentary Secretary to the Minister of Indian Affairs and Northern Development.
Does that parliamentary secretary consider it adequate for kids to be taught at home because government controlled Department of Indian Affairs schools are unsafe, are infested with rats, with snakes, have floors

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and ceilings and walls that are infested with asbestos? Would she like to see her children go to school under these conditions? Is that what she means by taken well in had?
I would ask the parliamentary secretary: When are those schools going to be upgraded to the standards enjoyed by the rest of Canadians?


Dorothy I. Dobbie: Mr. Speaker, once again the hon. member exaggerates the circumstances. The students are being looked after. We are aware that there are problems with the conditions of the school but temporary measures have been taken to ensure that those students are properly housed in the mean time.


AGRICULTURE
Robert (Bob) Speller: Mr. Speaker, I have a question for the part-time Minister of Agriculture.
Over the past few months we have seen the U.S. retaliate against our dairy industry, our pork industry and our steel industry. Now we hear the American wheat growers are going to ask for a countervail. All this has been under the umbrella of the free trade agreement.
Why did the government tell Canadian farmers during the last election that free trade would protect them from U.S. harassment and that they would have open access to the U.S. market when they clearly do not? Were they deliberately misleading Canadians, or are they just too naive to know?


Hon. Don Mazankowski (Deputy Prime Minister, President of the Privy Council and Minister of Agriculture):: Mr. Speaker, if the hon. member spent at least a quarter of his time looking at agricultural issues and studying in particular the free trade agreement as it relates to trade of grains between our two countries, he would know that until such time as the subsidy level on the two countries is equal there will be controls maintained.
In this particular case with regard to Durum, the United States is a much higher subsidizer of Durum and wheat products than Canada is. Therefore, we are penetrating that market simply because of the quality and the price. I think that demonstrates clearly the
energy and the enthusiasm that our farmers have displayed in exploiting the U.S. market.


Robert (Bob) Speller: Mr. Speaker, they promised that there would be no harassment. Clearly, there has been.
In the past, Article 11 of GATT has protected our right to have marketing boards and bodies such as the Canadian Wheat Board. By allowing the U.S. to question these programs under the FTA, the government has opened the door to challenges and doubt. In the meantime, Canadian farmers are financially bearing the cost of their actions. How does the government intend to defend our interest to stop this harassment from their buddies to the south?
Will the government vote for Canada and Canadian farmers when the GATT panel decision on ice cream and yoghurt goes before the full GATT body?


Donald Frank Mazankowski: Mr. Speaker, The hon. member cannot have it both ways. He is suggesting that this is a free trade initiative. It is strictly a GATT initiative. I answered that question twice in the House last week to the Hon. Member for Algoma. It has been the subject of a late show in which we outlined very clearly the position of the government. I would invite the hon. member to read those answers.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Turner (Vancouver Quadra):
That this House condemns the Government for its mismanagement of the Canadian economy, including:
1)	the threat to impose a new 9 per cent sales tax that is regressive, inequitable, invisible and inflationary;
2)	an unjustifiable high interest rate policy, with an interest rate spread between Canada and the United States that is at record highs;
3)	negligence in the management of Canadian trade causing unparallelled reductions in our trade balance and a loss of jobs, and threatening the survival of many formerly thriving Canadian industries;
4)	abandonment of Canadian primary producers with resulting undermining of the farming, fishing and forest industries; and
5)	continued neglect of regional disparities.
October 2, 1989
Mark Joseph Assad: Mr. Speaker, to continue the speech I had begun before oral question period, I would just like to say that the GST is not a solution, but rather a problem. It does not get rid of the deficit, far from it. Instead, it creates a situation where Canadian business people are in great disagreement with this approach to taxation. Obviously, the burden borne by the middle class will grow. That is also a very important factor. Obviously, all provincial finance ministers disagree with this approach to taxation. All Canadians have shown their disagreement.
Mr. Speaker, a few minutes ago, the Secretary of State for External Affairs (Mr. Clark) referred to the reason why Canada cannot give more money to the poor countries. He said that the budget would not allow it but if they had inherited a better financial situation, they would have been able to do so. It is rather strange to hear the the Secretary of State for External Affairs, who has been in this House for over 15 years, say such a thing, given that the present Government has been in office for more than five years. How can you explain such a statement knowing that they have been in charge of this country's public affairs for five years, but they are still using that argument that they cannot give more money to the poor countries?

The Canadian people expect an alternative; not alternatives, but rather an alternative. It would be in the best interests of any government in this country to take heed that the Canadian people want their government to reconsider this whole goods and services tax completely.
It has been echoed by many economists in this country that one of our big problems is the fact that the tax system has become so complex that nobody seems to understand whether we are coming or going.
I am sure that an alternative could be looked at. When we see the controversy over the goods and services tax we can go to an alternative. We can be inspired by a document whose principles are still good today, namely, the Carter Commission of 27 years ago. With this document we could make a complete and true reform of the fiscal system in this country. That is an alternative we have to look at and that is going to take a tremendous amount of political will. Unless we have this political will, we are going to lose the confidence of all Cana-
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dians, no matter what government is sitting on your right-hand side, Madam Speaker.
In conclusion, obviously this is a subject that could be debated for months on end but, nevertheless, the last opinion should come from Canadians at large. They are not happy with the situation. It is time that the alternative be looked at. It is the only alternative left that can be of any value in bringing back the confidence of the business people and the confidence of Canadians, especially the middle class.


The Acting Speaker (Mrs. Champagne):: On questions or comments the Hon. Member for Broadview Greenwood.


Mr. Mills:: Madam Speaker, my question is directed to my colleague. My colleague has studied Behind Closed Doors on the Carter Commission and other examples of comprehensive tax reform. In his opinion, why does he not think the Government of Canada, which was so adamant on this change from 1984 to 1988, has not rallied and gone for a comprehensive tax reform, and why has the government just gone for this added bureaucracy of an extra 4,000 to 6,000 public servants on GST? Why do you think the government is not acting in a simpler, fairer and more efficient way?


Mark Joseph Assad: Madam Speaker, I would say it is very simple. As you mentioned, Behind Closed Doors certainly brought out a lot of facts. The financial elite in this country have been dictating to this government, and to previous governments, in the last 25 years. Under this government with its ideology, I would say the basic problem is that there is no political will nor political courage to look at the matter face to face and say that we need a complete reform because there has been a disproportionate influence from the financial elite in this country.


Maurice Brydon Foster: Madam Speaker, I was very interested in the hon. member's speech, and I was especially interested in the impact because of the importance in his area of the goods and services tax on the tourism industry. I would like to know if the hon. member knows just what the impact will be.
Clearly, the government has made moves already this year which have increased the cost of gasoline and those increases will continue in the next year. In my area I hear a lot of complaints about the amount of taxes which have been added to gasoline in the last four years. This move

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now with the goods and services tax will hit eveiy kind of tourism item, such as restaurant meals.
For instance, I recently stopped overnight at a motel in my constituency. The owner pointed out to me that if I returned in 1991 after the goods and services tax is in place to stay overnight, had a cocktail before dinner and then had dinner, the following taxes would be imposed. On the room in Ontario there will be a 5 per cent tax; a cocktail before dinner will have a 10 per cent tax; on dinner there will be an 8 per cent tax. On top of that and on top of all these other taxes plus on the meal itself there will be a 9 per cent federal goods and services tax.
My concern is twofold. Our season for tourism tends to be very short in this country, and so we have a very short period of time in which to make a good living for the small tourist operators.
I want to know from the Hon. Member if he feels that the combination of administrative problems plus the additional goods and services tax will be detrimental to the tourism industry because it is a very important one both in his constituency and in mine.


The Acting Speaker (Mrs. Champagne):: A very short answer from the Hon. Member.


Mark Joseph Assad: Mr. Speaker, I appreciate the opportunity- Of course, his question is most appropriate. There was a very interesting article in today's La Presse reporting that the last two years have been disastrous for the tourism industry.
Of course, in the last few weeks I contacted the various tourism organizations in this country, especially the Tourism Industry Association of Canada, and the Conference Board of Canada, which published their reports showing that this tax would indeed be disastrous, especially for the tourism industry.
Despite what the Minister of Tourism is trying to tell us, the facts are there. Everyone else cannot be wrong and they are the only ones who are right! That is impossible! The issue is very simple. This tax will be a nightmare for tourism operators and we will live with it-


The Acting Speaker (Mrs. Champagne):: The period for questions and comments is over. Resuming debate, the Hon. Minister.


Hon. Otto Jelinek (Minister of National Revenue):: Madam Speaker, I rise to intervene in this debate to put a perspective, in the brief ten minutes that we have, on my department's involvement in so far as the administration of the GST is concerned. Before I do that I would like to answer the question: Why is the government going ahead with a goods and services tax?
First, let me say that I come from a small business family and I was a small-businessman myself for many years. The answer to the question is very simple. In the good natured rhetoric that takes place in this chamber and outside we sometimes forget why the government is committed to moving ahead instead of staying with the status quo. The easiest thing for any government is to stay with the status quo and not move forward in a progressive and aggressive way for the benefit of future generations and for the benefit of allowing Canadians to reach their full potential.
I think it is a universally accepted fact that the existing federal sales tax is an obstacle in the way for Canadian manufacturers, producers and exporters. I know because I was an exporter, a manufacturer and a producer in Canada. There is nothing more damaging to the potential of the Canadian manufacturer and producer than the existing federal sales tax. I think that is universally an accepted fact. Even our friends the Liberals and New Democrats who agreed on that a year ago are now suddenly asking that this whole GST be dropped.
I cannot understand suddenly the opposition parties coming here for their own political reasons and saying: "No, we cannot go ahead with this, we cannot go ahead with that," without coming forward with any alternatives.
I see one of the Liberal members shaking his head. Obviously, he has not been in the business community because if he had been he would know very well that the existing federal sales tax, while the world changes around us, is a major, obstacle for us to be able to produce and compete on a level playing field with the international market-place and for us to to have free trade.

We are not re-inventing the wheel. There are 48 countries around the world which have a value-added tax. If we do not change, move forward and accept the fact that we have to give our producers an opportunity to compete on a level playing field then we are not going to be able to keep up with the rest of the world and we will fall further and further behind. I do not want that to happen to my children or to anybody else's children in this country without them having full opportunity.
Now what we must do from the standpoint of an administrative situation is make the GST system more workable. It must be understandable and it must impose the least possible addition to the paper burden of both government and the taxpayer and, in particular, the small business community.
To achieve this goal, we have designed a program that emphasizes two key points: consultation and information. In order to facilitate this initiative I have established within the Department of National Revenue a special industry consultation group. The consultation group has begun individual meetings with major national trade and industry associations and professional groups on whom the GST will have a significant and immediate impact. We will be putting special emphasis on sectors that have unique needs, I have already mentioned small business but also charities, financial institutions, farmers and so on.
I can assure all those who accept this open invitation that their views and concerns will be seriously considered because in my view the best way to avoid problems is to consult and we are going to do just that.
I believe by doing that, the consultation process will benefit the government and, more importantly, it will benefit the business community and the taxpayer.
We will also be providing information to those taxpayers who request it. It is for this reason that our information campaign, including registration and information programs which will begin later next year, will be far-reaching. In addition to registration kits and printed information that will be available early in the 1990s, we must provide local seminars and one-on-one assistance to as many registrants as possible. We will do just that. We will provide a service never before witnessed in this country.
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This service, this support, this assistance will need additional resources. I spoke to a group of chartered accountants earlier today. I announced the steps necessary for us to be able to meet this requirement to provide the service, and to be able to meet the needs of an estimated 1.6 million taxpayers as compared to the 75,000 who are currently paying the federal sales tax. By the way, Madam Speaker, that is the reason it is unfair. Why should the tax burden, in this instance of $18.5 billion, fall on the shoulders of 75,000 Canadian producers and manufacturers who will be then hampered in producing more products and creating a better economy and, therefore, establishing greater job opportunities in an international competitive market? So in order to provide this service, we are shooting for a target of between 3,400 and 3,900 additional person-years in order to be able to: (a) administer the goods and services tax; and (b) provide the services that are so necessary particularly to the small business community.
I would like to point out that the ratio compared to the International Monetary Fund is not bad. In fact, it is pretty good. Because I and my officials in this government have spent the last six months or more in looking under every rock, to use that term, to utilize existing facilities, to utilize existing resources, to look forward to innovative methods and ways of dealing with the GST, to find the most state-of-the-art technology possible. That is why our ratio, compared to the IMF, is considerably better. The ratio on the IMF for a value-added tax such as ours is one person for each 250 taxpayers; ours is one person for each 300 plus taxpayers.
So I feel very positive that instead of sitting on the status quo as the opposition parties would want us to do, we are moving ahead. It is very clear that this government is moving ahead with the GST.
The Finance Committee hearings continue. We continue to consult with Canadians, but when we put this measure in place by next year, when we have the one on one involvement with the Canadian taxpayer and the Canadian businessmen, I can assure you that we will be far better off as we move toward the next century. If we had stayed with the status quo, we would not have had a Free Trade Agreement with the United States. If we had stayed with the status quo, we would not be reducing the deficit by $10 million. If we had stayed with the status quo, we would not have created over 1.5 million jobs in this country in the last five years. If we had stayed with

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the status quo we would not have been able to give our children and our grandchildren the opportunity that they deserve.
All of us who are elected to this chamber must put political persuasions aside because if we were doing this only for political reasons we would not be doing it. We are doing this because we believe in Canada and we believe what we are doing is right for the future of Canadians and right for my children and your children. That is why we are not putting any emphasis on a popularity contest.
This is not a simple thing. This is not an easy matter. It is not a popular matter today. But when Canadians see that it is going to give our children the opportunity to reach their full potential I think they will understand that this is the right thing for Canada and for future generations.


Mr. Pagtakhan:: Madam Speaker, the hon. minister for the government indicated that this side opposite should have an alternative. Some 80 per cent of Canadians are asking the government to have an alternative, to go back to the drawing board on this proposed tax. Does the government not want to listen? We believe that in the best tradition of parliamentary government when some 80 per cent of Canadians are opposed to this tax, there is a clear message to the government which has the first responsibility to draw up an alternative to what obviously is an obviously wrong tax proposal go back to the drawing board.
I would like to ask the hon. minister some specific questions. Can the minister guarantee Canadians that this proposed tax will not be a powerful and tempting tool to grab taxes from the people?
Second, how can it be workable when even the small businesses say that truly this type of tax is a "gouge and a squeeze tax"? How can you then tell them that this tax is simple when in fact all testimony has told us that it will be confusing, it will be complex as far as record-keeping is concerned, and that there will be many other nightmares in the administration of it?
Third, would not the minister agree that this tax will be a vehicle for greed and dishonesty on the part of government to increase taxes in the future? Last, I submit the minister has to agree that tax even only on
some food, when some people cannot even afford to buy food with their type of meagre earnings, will be a threat to their physical health. A tax on the tools of learning, for those who want to study but can barely afford to study, will threaten their intellectual health. That a tax on death is truly a reflection of insensitivity on the part of government to collect taxes from the dead.


Otto John Jelinek: Madam Speaker, I would probably need half an hour to answer in detail all those questions but I will try as quickly as possible to answer the last part of the hon. member's question about basic groceries and low-income Canadians paying tax.
I do not know where he has been for the last three years since this tax proposal began to be debated because it is three years and more specifically since the technical paper came out. But the member will know that basic groceries are exempted. He will know that consultation still continues with the food industry to eliminate any grey areas that exist in that industry. He will know that there is a GST tax credit being offered as early as this December when my department will be mailing out income tax forms to all Canadians for low-income Canadians to be able to register for tax credit. He will know that the low and medium-income Canadians in this country are going to be better off as a result of the GST. He should know as well that by eliminating the obstacles to Canada's manufacturers and producers and opening up greater opportunities for trade and competition all Canadians are going to be better off. So that answers the first part of the question.
Second, will we raise the tax? What a silly question. We have a federal-sales tax, if we wanted to raise taxes, and sometimes you have to raise them, if you are left with a bankrupt economy like the party that he represents left us with five years ago. We cannot continue to put the burden of our deficits on the shoulders of my children and yours. What is the difference whether we raise the GST or whether we raise the existing federal sales tax except for the fact that the Minister of Finance has already stated that the GST is not going to be raised, except under exceptional circumstances, until 1993-94.
Finally, the question that the member asked about grab bag taxes. How can he say that a GST which is a broader based tax is some sort of a grab bag of taxes when we have a $18.5 billion tax grab in the federal sales tax on the shoulders of 75,000 Canadian manufacturers

and producers? That is the unfairness of the existing tax. That is why it is being changed.
We will receive out of the GST some $24 billion, $5.5 billion of which will go back into the economy through tax credits for people earning low and middle incomes. Part of it will go back to assist small business collect the tax. Therefore, the net revenue will wash out in the process while assisting Canada's economy to grow and prosper so that we can all be better off instead of the regressive policies of the Liberals, not to mention the New Democrats. That is why we are doing this, for the betterment of Canada.


Ethel Dorothy Blondin-Andrew: Madam Speaker, it is almost a year since the election. During that time, I have risen in this House in numerous debates to explain to the government opposite and to the members about the unfairness of a proposed government program, the harshness of some new policy on the devastating effect of the budget on people who live in the north, on people who live below the poverty line, on aboriginal people, and on women.
The free trade agreement, the deregulation exercise, changes to the post secondary education policy for native people, the Budget, the unemployment insurance changes and now the proposed tax reform. In every instance it is the same story. Those who get hurt the worst are always the women, the poor, the aboriginals, the northerners, Canadians who live in the far extended regions of this country. There are Canadians who cannot pay their mortgages, and most young people cannot afford one.
Students cannot afford the education they need. There are elderly people who cannot afford to pay for their health care and for their rent and food also. People sleep in the streets. The number of homeless is increasing. Farmers are closing down their farms. It is a story as old as history.
The difference between the Conservatives and the Liberals: Tories divide the nation in half, into those temporarily better off and those worse off before and call it recovery; Liberals speak for the minorities and for those who have not yet entered the mainstream, for ethnics who want to add their culture to the mosaic that is Canada, for women who are 52 per cent of the population and 52 per cent of the talent of this country, for young people demanding an education and a future,
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for senior citizens terrorized by the idea that their only security, their social security is being threatened, for millions of reasoning people fighting to preserve our environment from greed and stupidity and fighting to preserve our very existence.
This government has become so arrogant and so elitist that there is no hope for grassroot Canadians to catch up. I read the speech which the Minister of Finance gave recently in New York to the Economic Policy Council of the United Nations Association of the United States. He proudly recited all the "destruction" that this government had caused in our country in the past five years and then said: "We have introduced income tax reform, and are moving ahead to replace our antiquated manufacturers' sales tax with a multi-stage goods and services tax, a value added tax, that will come into effect on January 1, 1991".
The Minister did not even pause, let alone explain to the UN delegation that the entire process is in the hands of Canada's parliamentarians and its citizens. He misled the Canadian public in every ad which he placed in newspapers across the country stating that this tax would be implemented in January, 1991. We as members on this side of the House have become accustomed to these lies and we are no longer surprised at the contradictions and the redundancies. But to lie to his friends in New York, I thought the Minister would be a little more sensitive.
If one of them were to ask how Canadians feel about this tax or how it affects Canadians, would he not have to tell them? I think he would have to tell Americans what they will learn from Canadians: that as a result of the goods and services tax, the gross domestic product will be cut, wage and price increases will spiral, labour costs will increase, as will the Consumer Price Index. There will be employment losses, inflation will rise, interest rates will be pushed up and, contrary to what the finance minister told this UN economic polity group, Canada will have the slowest growth rate in the Group of Seven, which consists of the U.S., Japan, Italy, West Germany, Britain, France and Canada.
This cut in growth will mean a sharp decline in domestic demand which will be reflected by retail sales, housing starts, business investment and government spending. Perhaps government spending will soar when revenue from this alleged revenue neutral tax gets added

October 2, 1989
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to the federal coffers. I bet this government gets even bigger when it is handed another cash cow.
I want to mention quickly two more contradictions in the minister's speech which he gave in New York because they illustrate just how redundant this government's policies really are. He talked about the rebirth of belief in market economics.
I was interested in an article in the Toronto Star which expanded on the federal government telling Canadians to put their faith in the market. It said that free trade is good for Canada because it creates one big North American market. The new Progressive Conservative goods and services tax will be a bonanza because it will remove distortions in the market caused by the existing sales tax. For the most part the government's policy is based on a belief that the market makes better economic decisions than a bunch of politicians in Ottawa, but apparently even the Tories do not think that is always the case.
During the last election, for example, the Tories decided they knew more than the market about oil prices and prospects. The market was telling Canadians that energy megaprojects were too risky at the prevailing price of oil. But, since the Tories thought they knew better, they proceeded to commit megabucks to megaprojects. How does that interventionist spirit square with the Tory vision of one big happy market?
Studies have slammed the government for risking billions of taxpayers' dollars on the highly questionable assumption that crude oil prices will rise substantially over the next two decades. If that does not happen, Canada will lose a substantial portion of its megaproject capital. In other words, billions of taxpayers' dollars will go down the drain.
It is too bad the free trade deal does not allow Canada to pass on the Tories' new 9 per cent sales tax to U.S. consumers who may end up buying subsidized Canadian oil.
The third flaw in the minister's speech that day in New York was one we are all akin to: "If we expect to prosper, we shall have to control the destruction of our natural
environment". Is it not ironic that on the eve of shutting down parts of VIA Rail service, the most environmentally friendly means of transportation, the Minister of Finance dares to present to a delegation at the United Nations his government's passionate commitment to environmental protection?
It is like this government's commitment to the poor of this country. The so-called beneficiaries of the tax are to be lower income earners according to the Minister of Finance, but the poor of this country have already lost so much during the reign of this Conservative government through increasing taxes that, on balance, they as well as others have become big losers.
The poorest of Canada's poor are women, for instance. Moving away from a progressive income tax toward a regressive tax on consumption hurts women most because they are in the lower income groups. The credits for those earnings less than 25 per cent are insufficient. It does not compensate for the cost of the sales tax.
For instance, although day care is exempt, the cost of the service could increase because day care operators will pay tax on many items, such as diapers, toys and any other services that they need to carry on their business.
Another group of low-income earners are aboriginal people. I want to mention that credits to low-income earners are not tied to inflation. In reviewing the details of the proposed national sales tax, there does not appear to be provisions to exempt off-reserve treaty Indians from such a tax. Therefore, I do not know whether the government will be implementing a process to reimburse the tax to native people affected. These people have a unique constitutional position on such things as taxation.
Certainly, northerners are not exempt. The proposed tax will cause tremendous problems for consumers and small businesses in the Northwest Territories. It will have a devastating effect on tourism, inflation, transportation and construction costs. Northerners want to develop politically and socially in a way that eliminates uncertainties and encourages northern people to participate fully in achieving self-reliance. We are looking for new avenues to strengthen our economy and to assert our pivotal role in Canada's future.
October 2, 1989

This government is making it almost impossible for the north to develop and for northerners to catch up economically with other Canadians. We have the same right to opportunity as any other Canadian citizen. This government continually implements programs that keep us down.
The budget and this tax reform disproportionately hurts northerners more because we already have the highest cost of living. The dollar value of the tax paid in the NWT will be much higher than the tax on the same item in the south.
Today the minister said the impact of the GST will be minimal on northerners. Yet, after six invitations to the north, this minister has not complied to see for himself. He has not, in fact, tabled the analysis that was done on the GST and the impact it would have on the north.


Mr. Malone:: Madam Speaker, the hon. member listed a number of people who, according to her perspective of society, will need some assistance. I think it is important to draw the distinction that what is important is not that we stare at our feet and look only at those who need assistance, but that we put in place systems that are long term so that a nation and its government have the capacity to give that help. While I do not disagree or debate with the member on some areas where we might be more generous as a nation, I do debate some of the specific examples she gave. She said she knew of a whole host of elderly people who could not get medical service in this country. I dispute that. I do not believe that.
I would not expect her to name them in the House of Commons, but I challenge her to supply the names, because I believe that Canada can be of help. We are helping today and I do not think it is appropriate or fair to suggest otherwise.
She indicated that there is along list of European countries which are doing better than Canada or will be as soon as the GST is through. She should know that when the party she belongs to was last in government, in 1984, Canada's rate of economic growth was in thirteenth place just behind Luxembourg. Today we are second and ahead of every country in Europe.
I would like to ask her what authoritative economic evidence she can put forward. Canada is the only country in the world that has the manufacturing sales tax, the
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only country that taxes its manufactured products. We were similar to Argentina which put export assessments on all of its exports, trying to put together a wall around the country. Canada was the only one which tried to export into an external world by taxing against its manufacturing.
Can the member give us one authoritative document that will show that when we make a change to that tax we will lose our competitive edge? Having gone from the position when her party was in government of eleventh in competitive factor to today being fourth in the world, how does she think that this will put us back to where we are behind all the countries in Europe? Can she cite the source that is economically credible, anything at all other than the newspaper articles that she may have read at some time?


Ethel Dorothy Blondin-Andrew: Madam Speaker, I would like to say to the hon. member across the floor that I am not the Minister of Finance. If I had the resources of the ministry of finance, I would certainly produce documents to sell the goods and services tax and its merits, which the government is not doing. When this government is willing to give me the statistical analysis it did of the impact of the GST on the Northwest Territories, I will be very happy to try to answer some of your questions. I am not the Minister of Finance. All I can give as evidence is to say if your goods and services tax is so good, then all the Canadian people would be endorsing it. They are not.


Mr. Neil Young (Beaches-Woodbine):: Madam Speaker, I want to say a few words on this motion that roundly condemns the government for a variety of issues that would properly fall under the topic of how the government is managing the Canadian economy. I want to say at the outset that I was interested to hear the remarks of the Minister of Revenue a few minutes ago. He said the reason this government was bringing in a 9 per cent sales tax was for the good of Canadians. Over the last several months I have not talked to one Canadian who feels that this 9 per cent sales tax should or could be supported.
That is not quite true. I issued a questionnaire in my constituency. I have begun receiving responses to that

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questionnaire. So far about 2,000 questionnaires have come back opposing the sales tax. Four, perhaps five questionnaires have come back supporting what the government is doing. I do not think this government was either elected on a mandate to introduce such a sales tax or should have the right to proceed with such a sales tax, particularly when you consider the impact that sales tax is going to have on poor and middle income Canadians.
I had an opportunity several weeks ago to be in Nova Scotia, just outside of Sydney on Cape Breton Island. Six out of every 10 individuals in that community are unemployed. The average income in that community is around $24,000 a year. In one of the communities I visited, a mine which employed about 1,300 people is being threatened by closure. This government is not only imposing another 9 per cent levy on disposable income for people who can hardly afford to live now, but on top of that is slashing funding for VIA Rail. VIA Rail very often is the only means of affordable transportation in that region of the country and elsewhere.
Apart from the fact that it is affordable transportation, it is good transportation. I have heard the Minister of Transport make the argument that the government had to cut back on funding for VIA Rail because of heavy government subsidies. There is not a transportation system in this country that could operate without government subsidy, and that applies to the airline industry as well as every other means of transportation in Canada. In fact that is why governments, by public policy, have always supported that kind of transportation.
Years ago Tories believed that transportation held this country together. They also used to believe that the CBC was a vehicle for holding Canada together. I still happen to believe that. These people are hell bent on slashing funding. It is an organization that has proved to be of invaluable service in providing information to Canadians, regardless of whether it be on Vancouver Island or in Newfoundland and Labrador. All you have to do is to go into northern Canada to discover how valuable those institutions are to holding this country together as a nation.
I want to go back to the sales tax because it is so unfair that it is, for me, beyond belief. We are talking about removing another 9 per cent of disposable income from
senior citizens' pockets, from people who are disabled, people who can least afford it.
In Nova Scotia, which I spoke about a few minutes ago, if this sales tax goes through, sales taxes are going to be around 19 per cent. In Ontario, this 9 per cent increase will mean a 17 per cent sales tax.
The Toronto area is supposed to presently be in a very affluent situation. It is not. There are an awful lot of people in Toronto, for example, who are working in part-time jobs, who cannot find full-time work because they do not have the skills. Another area this government is cutting back on is skilled training programs.
Toronto, compared with some other areas of the country, is, generally speaking, better off. However, when you scratch the surface and get underneath, there are an awful lot of people in the Toronto area hurting just as badly as people in other areas of Canada, and this government is not providing solutions. In fact, it has very much been a part of the problem.
I am talking about single-parent families, headed mainly by women, who are having a hard time putting shoes on their kids' feet, clothes on their backs and meals on the table. If this government gets away with this 9 per cent sales tax, it is going to make life even more difficult for those women and their kids. That is one of the reasons why we in the New Democratic Party are going to do everything in our power to prevent this government from doing that to average Canadians.
The Minister of Finance said a number of things prior to the election. He said if they did go ahead and implement this sales tax that it would be visible to consumers, that it would show up on the sales slips at the sales desk. Number two, it would be revenue neutral; that is the government would not be looking to have additional revenues other than what it had prior to eliminating the manufacturers' sales tax, and that it would not go toward decreasing the deficit.
Well, the chairman of the House of Commons finance committee during the election campaign said that the sales tax would prove to be a boondoggle for the government, an increase in revenues. The next day the Minister of Finance was on national television saying that the hon. member for Mississauga South was a loose cannon, he did not know what he was talking about and denied that the government would ever proceed to go into the pockets of Canadians who could not afford it
October 2, 1989

and do that to them. He asked Canadians to trust him. Well, as we all know, they trusted him once again and put this government back into power.
They trusted the Conservatives as well in 1984 when they were first elected. The Prime Minister made the declaration that universality and social programs were a sacred trust. They were not elected two days when they started trying to slash senior citizens' pensions, mothers' allowances, family allowances, and everything else that prior to election day this Prime Minister said was a sacred trust that he was going to protect for average Canadian families. We all know what he did subsequent to that.
In fact, I want to read a quote that I came across this morning. The chairman of that finance committee whom I just spoke about now says that: "the government has killed universality and is dragging the corpse out the back door."
I think the hon. member for Mississauga South is an honest gentleman, and I think he not only calls it the way he sees it, but the way he analyses the evidence that he has before him. I think he is absolutely right on. If this government has not actually killed universality, it is fast on the road to doing it.
I hope the Prime Minister does not make any more promises to Canadians about things being a sacred trust because as soon as he does, you know that sacred trust and that program is going to go right down the tubes.
When that Prime Minister was elected and said "Canada is now open for business", no one in the country thought he meant he was going to sell the whole damned country down the tubes. That is exactly the direction he is heading. Every policy that comes out, whether the government wishes to acknowledge it or not, can be tied to that free trade agreement that these guys negotiated and have not yet concluded.
I think an awful lot of Canadians are beginning to wake up and find that the Prime Minister's assurances once again not only were not to be believed, but were going to be reversed.
Finally, the Minister says that health care is exempt. I met with a group of psychologists two weeks ago who told me that if they provide that kind of service in then-office, it is not exempt from the 9 per cent sales tax. If they do it in a hospital facility, it is exempt. I think at the
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very minimum the Minister of Finance should come clean with Canadians and tell us exactly what is exempt, what is not exempt, how it is going to apply it and last, but not least, that he is going to withdraw it in the face of the opposition that there is in the country to that kind of fiscal measure.


Blaine Allen Thacker: Madam Speaker, my friend opposite is more fair minded than many others in the House. I would like him to comment on the fact-this is a basic fact-that Canada is the only industrialized nation in the entire world that puts this special tax on its manufacturers, so that we have 75,000 manufacturers paying over $18 billion in tax.
Would he comment on that in light of the fact that 48 other industrialized nations have moved to this type of tax, often for the very reason that I have just given to him. Do they have more poor people in France, Sweden, Norway and those types of countries for having this tax? That is what he is saying. He is saying that we are going to have more poor people if we do this. I do not think the factual record shows that. Would he please comment.


Neil Young: Madam Speaker, I do not think I said it would make more people poor. I think I said that it would make poor people poorer yet. I think that is a more accurate reflection of what I said.
I think there is general agreement that the thirteen and one half per cent manufacturers' sales tax is unfair and it should be dealt with-


Harvie Andre: How?


Neil Young: How about fairness, for one?
I understand the Minister of Consumer and Corporate Affairs would not understand that word, Madam Speaker, but how about fairness. They ask me again, what would we do. How should we replace it. I say simply with fairness.


An Hon. Member:: Spend more.


Neil Young: No, I never said that either. I never said spend more. But I would argue very strongly against some of the changes that have taken place in the tax system over the last number of years, where this government is more and more clearly being seen as a government of big business. If you shifted some of that tax load back to the corporate sector, from where you have placed it on middle and low-income Canadians,

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I think that is how you deal with that unfair thirteen and half percent manufacturers' sales tax.
You do not remove the burden from big business in this country and transfer it over to people who are already being nickeled and dimed to death, to the tune of about $1,800 or more a year in personal income taxes since this group got elected, then come along now and say you are going to ding them for another 9 per cent. That is exactly what this government is doing. When you ask what we should do, I ask you to ask yourself what would you do in terms of bringing fairness back into an unfair tax system that this government primarily created?


Blaine Allen Thacker: My friend has said that the poor would be poorer. I do not think the factual record will bear that out either. As he knows, since we have become the government, we have moved to these refundable tax credits rather than deductions. A $4,000 deduction against income helps a very rich person far more than a flat tax credit. That's a good thing and the facts show that people under $30,000 are better off than they would otherwise have been given the fact that more revenues were going to have to be collected. If we had had to collect the revenue under the old system, the poor would be far worse off than with the changes we made.
Under the new program families making less than $30,000 will again get this refundable tax credit which, in principle, I am convinced is the right way to go. How can he say that the poor will be poorer given the fact that they are actually going to get a cheque every few weeks?


Neil Young: Well, Madam Speaker, the logic of that argument is not acceptable to me at all. Rather than deal with that specifically, I would like to remind the member that it is built into the White Paper, as I understood the proposal, that because the tax credit is limited to anything in excess of 3 per cent increase in the cost of living, that tax credit will be reduced eventually until it exists no more, as I understand it. As I understand the White Paper, that is exactly what is set out in the formula. There is no doubt in my mind as well that if this government brings it in, whether they bring it in at 6 per cent and everybody thinks "Oh, my God, thank God it wasn't 9", then within two or three years that thing is going to increase, because it is a cash
cow for governments and that has been the way it is in every other country in the world that has that kind of sales tax. I can see the poor getting even poorer, so I don't accept at all the argument that we will be better off as a result of this measure.


Mr. Pierre H. Vincent (Parliamentary Secretary to Minister of Finance):: Madam Speaker, I welcome this opportunity to speak on this Opposition day, when we have a chance, if one can call it that, to hear the same old cliches.
Those of us who have been here during the past five years will remember that we have had five budgets. After every budget, during the period set aside for Opposition speeches, the Opposition told us that jobs would be lost, that the poor would become even poorer, that Canada was going down the drain, that Canadians wouldn't stand for it and that we would be beaten in the next election.
Madam Speaker, you will of course remember Mr. Wilson's economic statement in November 1984, a statement that identified four major challenges: First, reduce the deficit; second, increase Canada's economic growth; third, promote investment, innovation and competitiveness in business; and finally, help Canadians in need.
These are the four major challenges Minister Wilson identified in 1984. We have made considerable progress since that time, but there is more to do yet. What we still have to do, Madam Speaker, is implement the goods and services tax, Part II of a tax reform that is already under way.
Last year, we introduced a tax credit for the first time, and as you know, Madam Speaker, a tax credit is twice as attractive and twice as profitable as an exemption. And above all, it is the fairest way to treat Canadians, because when you have two Canadians, one who earns $100,000 annually and the other who earns $10,000 annually, under the previous Liberal Government both were entitled to a basic exemption of $3,000. This worked out to a savings of about $300 or $400 for the person who had an annual income of $10,000 but the individual with an annual salary of $100,000 was able to save at least $1,500 on his income tax. This was criticized by the Liberals and the NDP. They said it wasn't fair, while we feel that with a tax credit of $1,000 for everyone, the same amount,
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whether you earn $10,000 or $100,000, the system is fairer and more equitable.
It is often said that sales tax is regressive. For instance, going back to my first example of a person with an annual income of $10,000 and another person who earns $100,000, when these people have to buy a pair of shoes, for instance, the 9 per cent tax will take a proportionally larger chunk out of the income of the person earning $10,000. And that is why, Madam Speaker, our proposal to change the federal sales tax includes a tax credit, but in this case a refundable tax credit, while today, we have a tax that is hidden, a tax that distorts, that provides for 22,000 exemptions and which at the manufacturing level is as high at 13.5 per cent, a tax nobody sees and nobody knows about. We are removing that tax. We are going to remove it completely and replace it with a 9 per cent tax at the consumer level. Not a ripple effect tax, not 9 per cent at each level and cumulative. It will be 9 per cent from start to finish. Nine per cent is paid once, that's all. And only on new goods, not on used goods! Canadians will see the tax and know why they are paying it.
People on low and middle-incomes, all those people and households with incomes of less than $30,000 per year, will receive a tax credit. They will receive it before the tax comes into force. They will receive the tax credit in December 1990, while the tax becomes effective on January 1, 1991. They will receive the credit on a quarterly basis, so that individuals and families on low-incomes will not be hit by a regressive tax as was the case under the previous Liberal Government, because the 13.5 per cent at the manufacturer's level was paid by everyone, both rich and poor.
Under our system, Madam Speaker, those who can afford to pay will pay, while the others will receive a refund for the amount paid. That is important. That should be emphasized. And that is part of the tax reform that was started last year.
On Saturday, I was in my riding, and I had an opportunity to go to a lunch at the Traverse des ages where about 300 senior citizens are members, and several asked questions before lunch, a lunch where they serve beans which are always very popular, and they said:
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So what is this GST? What is this 9 per cent? And when I pointed out to those people that if they make $30,000 or less, they would receive a tax credit four times a year, I can assure you, Madam Speaker, that opinion polls and everything else mattered little to them, because they understood that this tax was for the good of the country and would not penalize them-that is important. That is what makes a tax not regressive: when it applies to those to whom it should apply and is refunded to those who cannot afford it.
Again on Saturday afternoon, Madam Speaker, I was in Pointe-du-Lac to meet with the Mouvement Action-Commerce, the association of Pointe-du-Lac business people, who had an exhibition. Small and medium-sized businesses will be paid by the federal Government to collect our tax, the GST. At the end of the month, if they paid out more in tax than they collected, they will be refunded the difference within 21 days. Madam Speaker, that is what makes a tax right, good for the country, applicable, simple and fair. Small businesses with annual sales of less than $30,000 will not even have to collect that federal tax. The tax is fair, non-regressive broadly based and accompanied with tax credits!
I was listening to the Hon. Member for Beaches- Woodbine (Mr. Young) say just now that they admit the present federal sales tax is not good. They admit that 13.5 per cent is not good. And the Liberal Opposition critics say the same thing. Everyone in this House and on the Standing Committee on Finance agrees that the present tax is not good because it is hidden, it is harmful, etc. But while they agree with that, they do not agree that the alternative tax we are proposing is good, although it meets all the normal criteria that an economist, a tax specialist, a sociologist or a political scientist would wish for a federal sales tax imposed at the consumer level, a tax which has proven itself in 48 other countries. I think that must be emphasized.
More than nine million Canadians earning $30,000 or less will receive cheques from the federal Government before this tax is implemented. You know that nearly 65 per cent of Canadians earn $30,000 or less. So if 65 per cent of Canadians receive a tax credit, it means that the 35 per cent with higher incomes will pay their fair share of the federal sales tax. I think that must be emphasized.

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The amount given out will be about $1 per working day for adults and of course somewhat less for children. The new federal sales tax, the GST, was introduced to replace an existing 13.5 per cent tax with a more broadly based 9 per cent tax that is much less regressive. This fits in with what has been done since 1984.
Look at the reduction in public expenditures. In 1984, they were 19.5 per cent of our gross national product. This year, they are 16.5 per cent. Therefore, government spending has gone down in the past five years. We deregulated both the energy and transportation sectors to boost the Canadian economy and help Canadian industries. We privatized Crown corporations which were neither important to nor necessary for Canadians and used to compete directly against the private sector. The Government collected taxes from the people and took that money to offer overly generous grants to companies.
We signed the Free Trade Agreement with the United States and, as you would know, this agreement is bound to help Canadian business. Unemployment declined from 11.2 to 7.8 per cent. A million and a half new jobs have been created in Canada over the past five years. Earlier I heard the Hon. Member for Beaches (Mr. Young) say that unemployment is rampant in Toronto and that people can feel its impact Mr. Speaker, I would suggest the Hon. Member was kidding when he said that. We all know everything is going along just fine in Toronto. Were the riding of Trois-Rivieres experiencing the kind of economic boom they now have in Toronto, I think we would not be complaining. Even at that, we are not that badly off in the riding of Trois-Rivieres.
Well, Mr. Speaker, I see you indicating my time is drawing to a close. The deficit stood at $39 billion when we took office, it is now down to $28 billion. To put it another way, we trimmed the annual deficit down 25 per cent in four years. What does that tell us? That we have had a sound economy. And we have had a sound economy precisely because our policies did encourage investors and Canadian business alike. As I said, the 9 percent GST is part and parcel of the over-all plan.
Seen from that vantage point, Mr. Speaker, I think it is imperative that the legislation to implement this tax be
adopted as soon as possible just so we can be like the 48 other countries which have a fair and acceptable tax system.


Ron J. Duhamel: Mr. Speaker, I would appreciate the Hon. Member's comments on the following.

This morning, one of his colleagues indicated that he felt that this tax was fair to youths seeking an education in spite of the fact that they will be paying more for then-education. We are talking about 500-plus students from universities, 300-plus students from colleges. He thought it was fair for seniors and people on fixed incomes. Some of them will be hit by this tax in addition to the clawback. He thought that it was fair to small businesses. Small businesses have, almost unanimously to my knowledge, said that the tax will be a nightmare, an absolute disaster. It will be extremely costly. It will make them less competitive.
Canadians generally are going to be subjected to this tax by roughly $600 for the average Canadian family in addition, I might add, to $2,800 in additional taxes during the last five years. I suppose that the member who spoke this morning, and I hope that my hon. colleague here can disagree with him, would suggest that the VIA Rail cuts that will affect 2,900 people if they go as proposed is fair, that the unemployment insurance changes that will affect over .75 million Canadians are fair.
The tourism industry, the food industry, the building industry and many others are opposed to this tax. They recognize that it will increase inflation, that it will shoot up the interest rate, that it will cause a loss of jobs. I would like to have my hon. colleague's reactions to these comments. Please, I beg you not to tell me that the Liberals made us do it.

Try a different approach!


Pierre H. Vincent: Mr. Speaker, it is rather unusual to hear such comments from a Liberal Member, the Hon. Member for Saint-Boniface (Mr. Duhamel).
Maybe they are afraid of the truth, but after all, the debt we have today is their fault. And as it happens, the federal sales tax is their fault as well-


Ron J. Duhamel: Just as I said, that's all you can say!
October 2, 1989


Pierre H. Vincent: They didn't have the guts to make any changes.
Mr. Speaker, in 1978-


Ron J. Duhamel: They should take a course-


Pierre H. Vincent: You had your chance. It's my turn now.
Mr. Speaker, in 1978, I was studying for a master's degree in tax law, and that was eleven years ago. At the time, we were taught that the federal sales tax system was a disaster for Canada, and that was eleven years ago. Who was in power eleven years ago? Was it Social Credit? No, it was the Liberal Party of Canada which appointed all kinds of commissions but never had the guts to say: This is bad for Canada and we are going to change it. That is what we are doing now. The federal sales tax is bad for Canada, we are going to change it and we are going to have a tax system that is fairer and more equitable for Canadians. And that, Mr. Speaker is what the goods and services tax is all about.


The Acting Speaker (Mr. Chartrand):: Since the Hon. Member's time has expired, we shall resume debate with the Hon. Member for Hamilton West (Mr. Keyes).


Stan Kazmierczak Keyes: Mr. Speaker, I rise today on the motion proposed by the Leader of Her Majesty's Loyal Opposition, which states the total lack of confidence in how the Conservative government is managing our economy.
We are already witnessing the piece-by-piece dismantling of the social safety net. This is a net built with care and concern over decades, yet it is being destroyed in just a period of months. Canadians have long believed in government responsibility to provide systems of health and welfare benefits. We have believed in the right of every citizen to such benefits. We have understood well the Liberal concept that the disadvantaged should be able to free themselves from the excessive burdens of misfortune and should be provided every opportunity to pursue a decent standard of living including a higher education and health care.
What troubles Canadians today and what should concern all of us here in the House is that a new and more dangerous weapon against this right to an afford-
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able, decent way of life, this cannon at the heads of families, is a tax that the government proposes to introduce on virtually every good and service.
The grimiest thing about this proposed tax is that it would amount to a tax on those in our society who are most in need of caring government support. The government boasts that lower and middle-income Canadians would receive tax credits to compensate them. However, the credits would not be indexed to inflation.
Just two weeks ago, I organized a town hall meeting in my riding of Hamilton West to give my constituents the opportunity to present their views and concerns on the GST. Of the 350 people who completely crammed the hall, not one person was in favour of this proposed tax. In fact, my constituents took it upon themselves to present me with over 120 petitions containing the signatures of over 5,000 people, and more are yet to come. The petition calls upon Parliament to reject the proposed goods and services tax.
I invited to this town hall meeting several groups representing various areas of interest in Hamilton. Not only did invited guests make presentations but several other showed up at the last minute to give evidence against this regressive inflationary tax measure. Each group gave presentations which lasted between five and ten minutes, and at the end of all the presentations, I invited questions from the floor.
I might add that the town hall meeting was moderated by Sue Patterson of the chartered accounting firm Peat Marwick Thome. She was there with me at my side. She has over a decade of experience at Revenue Canada in excise taxation. Ms. Patterson provided accurate and unbiased answers to many questions which constituents had regarding the proposed tax.
The groups at the meeting included the Downtown Hamilton Business Improvement Area, the Hamilton Chamber of Commerce, the McMaster University Students Union, the Hamilton and District Funeral Services Association-yes, Mr. Speaker, this tax has you coming and going-Hamilton psychologists had their say, the Hamilton and District Homebuilders' Association, the Hamilton YWCA representing the volunteer sector and the United Senior Citizens of Ontario.

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My solemn promise to my constituents and to those in attendance was to carry their message to this government here in the highest court in the land. At the time of the meeting, the Hamilton Chamber of Commerce advised us to watch the newspapers because the Canadian Chamber of Commerce was preparing to announce its position on the tax on the very next day. Well, it did and what people learned was that this large constituency, the Canadian Chamber of Commerce, is very concerned about the effects of the tax. In fact, in a press release dated September 21, 1989, the Canadian Chamber of Commerce said that it could not support the government's proposals unless a number of conditions were met. These included the harmonization of the federal-provincial tax base, a common means of collecting the tax by both provincial and federal governments, that the tax be revenue neutral and that it must be visible to consumers.
The Canadian Chamber of Commerce raises some important concerns. It suggests that any new tax must be brought in with co-operation between federal and provincial governments because, as the system is currently proposed, it is estimated that as many as 10,000 individuals would have to be hired to administer the tax.
The Chamber also demands that the tax be visible which the finance minister promised it would be in this very House back in June of 1987. However, the Minister of Finance has left it to the discretion of retailers to either put a sign in their window or a sticker on the till. Last, the Chamber insists that the tax be revenue neutral. Yet, as appears to be the case, the tax will be used to raise revenues for the Government of Canada.
The Minister of Finance proposes to replace an $18.5 billion tax with a $24 billion tax and, according to figures released by the Department of Finance, the GST will take a bigger bite out of poorer Canadians than rich ones. In the case of a couple with a single income of $15,000, the GST will consume 8.1 per cent of that income compared to a couple with an income of $75,000 of which the GST will only consume 4.8 per cent. These are Department of Finance statistics.
On behalf of over 10,000 students, the McMaster University Students Union gave a presentation at our town hall meeting. Students strongly opposed the GST.
Their president, Stephen Longo, summed up the feelings of the students when he said: "It seems strange to us that at a time when education and skilled developed are said to be a priority of this government, that they are promoting a tax initiative that could reduce participation in our post-secondary institutions".
At a recent meeting of the Conservative Party of Canada right here in the capital, the Prime Minister's address underlined this glaring conflict between the GST and access to higher education. The Prime Minister said that higher education was a top priority for his government. He also said that in order to remain internationally competitive, our system must be the best. Hollow words, easily said, but hard to swallow in the face of the GST, because if implemented, the GST will do serious damage to students and education. If Canadians wish to enhance their education by taking upgrading courses, they will be taxed. What will this do to the idea of job retraining for people put out of work due to this regressive tax? Even student service fees will be taxed, increasing the cost of the mandatory fees.
Perhaps most hurt of the students will be the imposition of the GST on student textbooks, which as you know, Madam Speaker, are extremely expensive these days. As Mr. Longo told the meeting, this would mean a tax on the very vehicle of education, the printed page.
Beyond this, the tax will also hurt students because the GST will be placed on restaurant meals, because there is no rebate for student housing, because student transportation and telephone charges will be taxed. This is the government's commitment to education? The students say it expresses a lack of commitment to education.
The government has also made great promises in relation to affordable housing. The Hamilton and District Home Builders Association told our town hall meeting quite a different story. While the Minister of Finance says he will soften the blow somewhat through a proposed rebate system, the Home Builders Association says that housing will become less affordable under the GST. The association says that the new tax would add $3,000 to the cost of a new home, more than six times the cost estimated by the Minister of Finance. The association concedes that the added cost to a new home in Metro Toronto and region under the GST will be over $9,000. The Hamilton and District Home Builders Asso-
October 2, 1989

ciation also said that Canadians should expect their rents to go up significantly under the GST.
Not only will the price of a new home increase, but so too will the cost of renovations. Is the government so naive as to think that while the price of new homes increases, the price of older homes will not increase to keep pace with the market? To quote the Canadian Federation of Independent Business, the tax proposals are: "triumph of greed and politics over reason and sound planning". There you have, Madam Speaker, a message from the constituents of Hamilton West through their elected representative to this government. They say enough is enough.


Robert (Bob) Speller: Madam Speaker, I congratulate the hon. member for his very informative words here today. There was one subject that I kept hearing about back in my riding this past weekend. We had a county fair at which thousands and thousands of people lined up to sign a petition. This is something I think all hon. members would agree is one of their basic rights. A few people came up to me and mentioned the fact that they were not too sure of what this GST would do to disabled people and those less fortunate than us. I am wondering if the hon. member knows exactly what effect this will have on the disabled.


Stan Kazmierczak Keyes: Madam Speaker, I thank the hon. member for Haldimand-Norfolk for his questions. The disabled community in this great country had better brace itself for the onslaught of this proposed GST. It appears that personal attendant care will be taxable, except where the attendant is an employee receiving wages. Now this would not be affected by the GST but if the person is receiving a fee for his service which is, in this particular case, more common, it will be a taxable service.
Another example relates to adapted vehicles, such as vans. Vehicles bought to transport disabled persons are subject to the same 9 per cent tax as those bought to transport others. Now if a lift is bought such as those you see on the side of vans to aid people into the van, they are not charged the 9 per cent tax on that lift. Under the Ontario sales tax, the entire vehicle is exempt, but under this situation, it is not.


John Horton McDermid: Wrong.
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Stan Kazmierczak Keyes: It is not, check the technical paper. Computers fall into a similar category. A disabled person buying a computer would have to pay the extra 9 per cent. Software would be free but the computer is taxed at 9 per cent.
By increasing the cost of computers and vans, this government is placing these items even further out of reach and thereby restricting the participation of disabled people in our society. Although renovations to make a home accessible would not be taxed, there will be a tax on the material used in the renovations. A business that wanted to renovate would be taxed on the contractor's services and this will also, of course, discourage people from making buildings accessible.
I stood here and listened to hon. members across the way speak of concerns. One member said that the Official Opposition was giving us these sony and sad tales. Well, let us have a look at the suggestion of tax credits referred to by government members.
Since the credits and income thresholds are indexed only to increases in the CPI minus 3 per cent, fewer and fewer low-income Canadians will be protected. Let us make for a moment the not-so-unbelievable prediction that inflation is more than 3 per cent annually for each year after 1991. The $24,800 threshold at which families begin to lose the refundable sales tax credit will fall to $21,297 after five years, and to $18,288 after 10 years in constant 1991 dollars. This will mean that within five years, the over half a million low-income Canadians who will be eligible for the full refundable sales tax credit in 1991 will lose either part or all of this credit. After 10 years, over one million low-income Canadians who will be eligible for the full refundable sales tax credit in 1991 will have lost either all or part of this credit.
As more low-income Canadians lose the refundable sales tax credit over time, the value of these credits will also fall since the actual dollar value of the credits is only partially indexed to inflation increases in the CPI minus 3 per cent. Within five years the $275 adult credit will have fallen to $236 in constant 1991 dollars. In 10 years, this $275 credit will be worth $203 in constant 1991 dollars. Fewer low-income Canadians will be eligible for fewer and fewer credits over time, making the GST more and more regressive.


Mr. Garth  Timer@Halton-Peel: Madam Speaker, it is a pleasure for me to participate in a debate on the economy, the management of the economy and the goods and services tax here in the House of Commons.

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One of the reasons that I entered politics was that I think taxes are too high. I agree with many opposition members that a lot of middle-class people in this country feel quite burdened by taxation.
I guess what got me into politics was the desire to find some kind of alternative, some economic alternatives to simply the old methods which have ended up accumulating a massive amount of debt in this country at the same time as we have high taxes.
Taxes are not too high because the economy is being mismanaged, but rather because we have an intense debt situation which politicians have failed to address over the past few years, and it takes a lot of political guts to reverse old trends and to think about new ways of reforming the tax system in order to make it more equitable and more fair.
Political guts have been in short supply many times. A lot of politicians in this country have felt that they could stand here on the floor of the House of Commons and they could defer taxation, they could take taxation that should have been imposed today to pay for programs that we have now and just push it off into the future, cast it off into some nebulous and fuzzy generation that they would not bear ultimate responsibility for.
We have accumulated high debt which has resulted in high taxes. Right now we spend 35 cents of every tax dollar we collect just to pay the interest on the outstanding debt. Now that hamstrings this economy. It causes our government to have a very great problem. We have a balanced budget in terms of spending and revenue and yet we have this debt monkey on our back that is just siphoning off tax dollars. It has to change.
Our new debt equals $83 million a day. That is equivalent to roughly $1,000 a second. That is a new debt in this country that is being added on to the $350 billion that is already there. It is totally irresponsible to do that. I am sorry the hon. member who just spoke is leaving because he will benefit a lot from this.


Stan Kazmierczak Keyes: I have a phone call. I will be in the lobby.


Mr. Turner (Halton-Peel):: We will see you in a few minutes. We need to address these problems. We need to have discussions with the opposition members on meaningful, constructive, alternative ways that we can reform the tax system to accomplish national goals, and surely the first national goal that needs to be accomplished is the economic survival of this country.
We are debating a resolution now that states that there has been economic mismanagement. Maybe the government has not done everything right, but the government has attempted sincerely to cope with problems that it did inherit, to cope with an economic environment that had extreme difficulties when the government did take office.
What I want to say, and if no other message gets through to the opposition I hope this one does, the status quo is not an option. We have to change. The GST is one example, it is one alternative, it is one attempt to put a new form of taxation, a more equitable form on the table for discussion. The kind of debate that we are having now is a healthy one. It is exactly the kind of debate, in many ways, I think we should have had during the last election campaign. I think we should have been talking then about the economic destiny of Canada and about these particular problems which we need to solve.
The GST, the goods and services tax, is a proposal that is on the table as a constructive attempt to achieve fairness in the tax system. It comes not standing on its own but it comes as part of a measure of practices and proposals that the government has before us. First and foremost, if we are to tackle our debt situation, we have to stop the growth in the new debt and that means addressing our budgetary deficit, our shortfall, our annual shortfall. This must be done and the government, as you know, through this proposal and through its budget has been attempting to do that, relentlessly trying to reduce government spending. At the same time it removed obstacles to economic growth. This as well is a very important part of GST, removing obstacles to increased growth.
A third element that the government has had in mind in designing the GST has been to protect those people at the lower end of the income scale. I know the argument is made that sales taxes are regressive because they hurt

those people who spend the greatest percentage of their money on surviving. There is validity to that argument, there is substance to it, and we must care about those people.
I submit to you that the finance minister has been attempting sincerely to cope with the regressivity of sales tax reform.
The Minister of Finance has been looking at an enriched tax credit for low-income people. If anything, a lot of critics are saying that it is perhaps too rich at almost $2.5 billion a year, a series of cheques being sent to millions of low-income families which would put money in their pocket before they go out and buy something. It will more than offset the effects of GST and we will have lower-income families in this country better off as a result of the reform.
I would like to say a couple of words about the effects of GST on small business. This is an area that has caused some of us concern. We have heard an awful lot of fearmongering, a lot of myths that have been perpetrated by those in the small business community who must have their own political agenda because what they are saying to the Canadian people is simply a gross distortion of the truth. The truth about GST and small business is that the government has been extremely concerned about not increasing the paperwork for individual businesses but to make sure that individual business operators in this country are given the greatest opportunity to concentrate on doing business and not pushing papers around.
We are going to have a streamlined accounting form for the goods and services tax for small businesses, a one-page form, one page which business people will be able to fill out in a relatively short period of time. It will be based on the difference between the tax collected on sales and the tax paid on inventories; simple, streamlined accounting procedure. The government will show by that one page form how sympathetic it has been to the concerns of small business people. Vast numbers of businesses will have the ability to do a very, very simple calculation.
In the case where there are refunds from the government, those refunds will be prompt. There will be interest paid on those refunds which are outstanding over 21 days. There will also be, for the vast number of businesses, a positive cash flow situation as they are able to go out and collect the GST on sales and remit it quarterly. So there will be an advance cash flow situation.
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The most crucial element though is that businesses do not pay the GST, consumers pay it. It is a pure tax on consumption. It is a change in the way that we look at taxation in this country. It is a tax on spending, not on income. This brings me back to my first remarks.
Middle class people feel quite put upon in terms of the income tax system. They feel that they are taxed without an alternative, taxed without a way to decide how they are going to pay that money to the government. With a tax on consumption, a tax on spending, we give consumers a choice.
Let us not forget that when the GST comes into effect there is going to be a $700 million income tax reduction for middle-class people, a reduction in income taxes. People will have more money in their pockets, in their pay cheques, in their pay packets, after GST comes into effect. That means they have the choice of how to be taxed.
A tax on spending hits the big spenders, not the savers, not the hard workers. It hits the people who spend the most. Those who spend money on the big houses and the big cars and the large restaurant meals are the ones who inevitably pay more tax. It is without loopholes for the rich. It is fair and even across the board. If we shelter low-income earners and if we tax those who spend more, then we have an improvement in the system. By reducing income taxes and by imposing a spending tax, we put the choice for taxation into the hands of those people who spend.
Back to business for a moment. Because businesses do not pay the tax and consumers pay the tax, we have a situation which is far preferable to the one we have now. Now we have a manufacturers' sales tax that is buried deep in the price of products and services that businesses purchase. It raises the cost of their doing business. It makes them less competitive. It makes our exports less competitive on the world market.
The elimination of an old $17 billion bad, buried, invisible tax and a replacement of that with a visible tax that takes tremendous political will and courage to implement can only help this economy in the long run, and I know that the opposition parties who have given us no viable alternative will have to end up supporting it.
Mr. Duhamel Madam Speaker, I would like to commend my hon. colleague for having made a sincere attempt to explain his government's initiative. There is a certain gentleness there which I think has probably been absorbed by virtue of the fact that he is sitting on this

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side of the House and close to colleagues from another party.
My question is as follows. You will recall perhaps that two of your colleagues have indicted that this is a fair tax. I would ask you whether or not you have heard any student, any senior, any single parent, mother or father, any of the 3.5 million to 5 million poor in this country, any of the handicapped, any of the VIA Rail employees, any of the unemployed, anyone from the construction trades, tourism industry, or the foods industry, or farmers say that this was a fair tax. I guess what I am really trying to find out is whether or not you agree with your colleague's comments that on the record this is a fair tax to these groups.


Garth Turner: In answer to the hon. member's question, I have to say yes. I have heard people on both sides of the argument, on both sides of the debate, those who support the tax and those who do not support it. In my own riding, I might mention, I had seven public meetings. The hon. member beside me alluded to his meeting earlier. I had seven in my riding, two meetings specifically on the GST. We solicited briefs from all groups, not just business but social groups and so on, and all that response was then forwarded to the government in terms of a representation of what the people in my riding think.
I can tell the hon. member that I heard the debate on both sides. I did hear it from single parents and I have heard it from seniors. I have heard it from a lot of people who have said they are sickened that our country is so indebted, and are sickened that governments, not just this government, not just the past Liberal government- let's get rid of that stuff-but governments for the past two decades have found a real inability to wrestle with these social problems.
We have demands put on by taxpayers for social programs, we have the response by politicians who wish to give the taxpayers what they want, but they do not wish to impose a burden on those taxpayers for the costs of those programs. As I mentioned, we pushed the problem into the future. The future is now here, the future is upon us, our time-frame is running out. The debate goes on and with every second of the debate we are another thousand bucks in the hole. We have to end it at some point and take action. What I am saying is we have a proposal on the table now that will accomplish
real action. Will some people be hurt? Yes. Will some people benefit? Yes. Is it fair? Absolutely, it is fair.


Stan Kazmierczak Keyes: Madam Speaker, far be it from me to stand and interrupt the hon. member for Halton Peel on a point of order to point out that we do not point out to this House when hon. members come and go, but he is a new member and maybe hasn't read the book. I will explain to him that I had to leave because of an important call from the constituency and I then returned to my seat.
The hon. member and one-time fellow journalist and I have discussed this issue in the past, and that issue is that we are dealing with a tax, a proposed tax-unlike the newspaper articles that say it is practically a fait accompli-a. proposed tax of 9 per cent replacing the 13.5 per cent manufacturers' retail sales tax.
Now, replacing the one with the other leaves a gap between the 9 per cent and 13.5 per cent. Does the hon. member have a suggestion for the House and for Canadians on just how to ensure, or can we ensure, that the savings between the 9 per cent and 13.5 per cent is passed on to all Canadians, or do we just leave it to the discretion of the manufacturers to take that difference and pass it on?


Garth Turner: My colleague raises a very valid point and I must say that many of my constituents share his concern. Allow me to answer you as I answer my constituents.
There are basically two thrusts that we have to consider here. One is that we have an extremely competitive economy and none of us here would diminish the importance of competitive pressures; certainly, for example, in the price of an automobile, which is expected to fall. After the implementation of the GST and the removal of the sales tax that currently exists, there should be a price reduction for consumers.
I can guarantee with the extremely competitive automobile industry, for example, that that will in fact be passed along. Should it not be, should business people in this country decide not to play ball with the government, should they decide in a moment of weakness to take advantage of a change in a tax system to take money from the people of Canada, should that happen, then there is a mechanism being set up to safeguard against that because an agency within the Consumer and Corporate Affairs Department will be monitoring price
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changes. It will be investigating complaints and it will be reporting to this Parliament.


Jack Iyerak Anawak: Madam Speaker, I am pleased to have an opportunity to speak on this important motion put forward by the Leader of the Official Opposition. I will use my time to express to the House and to Canadians who may be watching the strong objections of the people of the north to the government's proposed 9 per cent goods and services tax or GST.
Shortly after the Minister of Finance released his technical paper on the 9 per cent tax in August, the Leader of the Official Opposition, along with 70 members of our caucus, came north to my constituency in the Northwest Territories for a special caucus. This was the first time that any federal political party has held a caucus in the north. I am proud this happened in the Northwest Territories in Nunatsiaq, in my constituency, and I appreciate the tremendous support and interest of my colleagues.
Throughout our meetings and discussions with organizations and individuals, the topic of the new 9 per cent tax was raised. Northerners are deeply concerned because this tax is going to very severely affect northern residents. Across the north opposition to the government's proposal is widespread. The Yukon is opposed, the Northwest Territories is opposed.
I would like to share with the House the following comment from a well-known Yukoner:
(We are) opposed to the federal government's new goods and services tax because it will only add to our already high cost of living, which currently is one of the highest in Canada. The Yukon economy is based predominantly on the provision of goods and services that are being targeted by this new tax. Our two major industries of mining and tourism will be hit as a result. Consequently, the goods and services tax will have more of an impact here than in southern Canada. This isn't fair. We shouldn't be penalized and have to pay more than southern Canadians just because we choose to live north of 60.
The House may be interested to know that the quotation I have just read is not a comment from the hon. member for Yukon, nor even the government leader of the Yukon. That comment was made by the
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leader of the Progressive Conservative caucus in the Yukon.
The Northwest Territories finance minister believes the new 9 per cent GST will have a particularly devastating effect on the north. Compounding the precarious economic future of the Northwest Territories is the fact that the federal government is threatening to substantially reduce its transfer payments to the NWT government. The NWT finance minister has said and I quote:
It is a fragile, evolving economy up here, and it's just been dealt a double body-blow. The first is the goods and services tax, the other is (potential cuts to) the formula financing agreement that defines how the federal government pays our grants to us. I can't talk about one without the other, because the timing of the double body-blow is veiy serious.
If I may add a third body-blow, it is the government's proposed changes to the unemployment insurance system. These changes are going to seriously affect northern workers because of our high levels of seasonal employment.
We in the north are wondering why the federal government wants to reduce the deficit on northern backs. Northern residents live and work in the harshest climate of this country. By living in the north we contribute to Canadian sovereignty in the Arctic. We also have the highest cost of living, the greatest unemployment level and the highest suicide rates in Canada. The 9 per cent GST is an additional hardship we do not need imposed on us.
The Northwest Territories is one-third of Canada's land mass. We have 62 communities spread across three time zones. Only six of these communities have continuous year-round road transportation. Thirty-six communities depend entirely on air and marine links, all of the communities in my constituency of Nunatsiaq.
In my constituency in the central and eastern Arctic there are no highways. All our goods are shipped in by air or sea and we pay high freight rates on these goods. The freight and transportation costs increase the prices of goods in the stores. In Pangnirtung, eggs cost $3.81 a dozen, a loaf of bread costs $3.27, a five-pound bag of potatoes cost $9.49. In Coral Harbour, one pound of butter costs $3.79. A bag of 32 diapers costs $19.60. In Cambridge Bay, two litres of milk cost $5.35.

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At its annual general meeting last April, the Northwest Territories Association of Municipalities unanimously passed a resolution concerning the proposed new tax, urging the government to give special consideration to the needs of northern Canadians who already bear the burden of this country's highest cost of living. The association has pointed out that due to higher northern costs, northerners will pay more of this tax per capita than southern Canadians.
The residents of the Keewatin region face living costs that are between 50 per cent and 70 per cent higher than those of the residents in their supply base of Winnipeg. Kitikmeot residents face even higher costs ranging from 70 per cent more than Edmonton prices for Cambridge Bay residents to a high of 139 per cent for residents of Pelly Bay. While I do not have the cost of living figures for the Baffin region, I do know that the residents of Iqaluit pay 31 per cent more for food than residents of Yellowknife and the Yellowknife food price index is approximately 35 per cent higher than that of Edmonton. Spence Bay has a food price index 96 per cent higher than that of Yellowknife.
Northerners already bear a large tax burden because of the extremely high cost of living in the north. Incomes are higher but are taxed by the federal government at the same rate as if they were earned in southern Canada. Northerners pay more in federal fuel taxes because the climate demands we have to use more fuel. Northerners pay more in federal telecommunication tax because we have to phone long distance more often. The slowness and unreliability of postal service in the north means we use facsimile machines and telephones more extensively.
Because of our higher costs, the dollar value of the tax paid in the north will be much higher than the tax on the same item in the south. The federal government estimates that families earning less than $30,000 will be better off. Questionable as that is, by the government's own admission, the reverse is that families earning over $30,000 will be worse off. Thirty-thousand dollars may be a comfortable income in southern Canada but it is not as high in real terms in the north.
With excise taxes on gasoline and diesel fuel, the air transportation tax and the goods and services tax, transportation will be taxed at a higher effective rate than other goods and services. This higher taxation will have a
disproportionate impact on the northern territories and other isolated communities in Canada.
The costs to small business to administer this tax will be high. A $600 administration fee the government will pay to these businesses is not going to cover the additional costs. With respect to food, while the technical paper says basic groceries will not be taxed, the government appears to be wavering on this now. I urge the government not to tax groceries, especially in light of the high prices northerners now pay for their basic groceries.
Northerners are also concerned about the effects of the 9 per cent on new housing. There is a tremendous housing shortage in my constituency and housing is extremely expensive and hard to obtain.
The president of the Canadian Home Builders Association has predicted that rents will go up significantly and has said that the price of new homes will go up by three times what the finance department claims. In the north, the tax on transportation will drive up the cost of materials and already high prices mean fewer buyers will be eligible for rebates compared to the south.
The government will also apply the 9 per cent GST to all goods and services supplied by Canada Post. We resent having to pay tax on post services which already are inadequate. These are some of the more serious concerns.
While finally the committee on finance examining the tax proposal went to Whitehorse, Yukon, it has not visited the Northwest Territories. This is shameful and I urge the committee to include the Northwest Territories in its travel schedule.
The north cannot absorb this 9 per cent increase. The government must go back to the drawing board. The proposed 9 per cent GST is a nightmare for northern businesses and northern consumers. It will hurt our economy. Tourism, which is a growing part of our northern economy, will suffer with the imposition of this tax.


Mr. Flis:: Madam Speaker, I was veiy impressed and was listening very attentively to what the Member for Nunatsiaq had to say because this summer I had the opportunity of visiting Iqaluit and another area, Pangnir-tung, near there. You and I, Madam Speaker, could probably not survive there even on our salaries. I was

shocked at the price of staples such as milk, bread and potatoes.
Tb give an example, there was some fruit on the shelf. One banana was going for $1. One pear was going for $1. I was very pleased that the Member for Nunatsiaq stood up in this House and told the government, on behalf of the constituents he represents, to scrap this GST, not to exempt foods going up north, but to scrap it. I think that is the message that we on this side of the House would like to give the government.
For God's sake, scrap this GST and go back to the drawing board because it is creating nightmares not only in the Arctic but all over Canada.


Mr. Stan J. Hovdebo (Saskatoon-Humboldt):: Madam Speaker, I appreciate the opportunity to speak for a few minutes on this opposition motion.
This opposition motion is a litany of the kind of effort that this government has made over the last few years to deal with the problems of the country. It indicates the kind of effort not only that has not been made but that needs to be made to put the country in a condition so it will survive.
I am particularly interested today in putting on the record a few words about rural Canada. Most of us do not realize this, but over 90 per cent of Canada is rural. Even on the most modest basis, more than a quarter, something around 35 per cent depending on how you define it, of the people of Canada are rural Canadians.
It is rural Canadians who will be most affected by the policies of this government and by the GST, the goods and services tax which this government is proposing to put on the goods and services bought by the people of Canada. There are three basic primary industries that are all rural industries. One is farming which, to many people, is the basis of rural Canada. But it is much more than that.
Many of the fishing communities of Canada are rural communities, and can be considered as rural communities, Much of the forest industry of this country is rural industry.
So we have the three major industries of this country related to the rural population of this country. Although we have had a tremendous amount of talk about how
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well these industries are going to be treated and how well they are going to be taken care of, these three industries have been the butt of the main attack of this government over the last four years.
I point to these three industries because all three of these industries are in a crisis position. In many parts of the country these industries are worried about survival. They have already, in many cases, given up the idea of survival under the kind of circumstance being produced for the last good many years. They have already adapted to a variety of changes which have made their lives less productive and their quality of life less good than it was before. A good portion of this can be laid at the policies which the government has put before us in the last few years.
If you live outside of Canada's main cities you are dependent upon a distribution and a transportation system that is necessary for you to survive. Up until the last few years our transportation and communications systems were policies of this country. The provision of transportation to rural and remote areas was a policy which the government accepted as a responsibility. It has turned away from that policy. In the process of dealing with transportation the government has made the cost of transportation so high that in many places it is not available. Or, in some cases, by deregulation the government has made it an industry which is dependent entirely on the market system.
If you are living in a remote area, the transportation system is the basis of your survival. If you attack that transportation system by removing it or making too expensive, you put it out of reach of those people and you reduce the income and the quality of life in those rural areas. That is true of farmers, of fishermen and of foresters. They are all affected by this government's policy on transportation.
I was very pleased to hear the member from the Northwest Territories speak on matter. The goods and services tax-in fact, all taxes in this country-have a detrimental effect upon rural and remote areas. If you bought a stove that cost you $200 from the manufacturer, you paid 12 per cent or 13 per cent, maybe $27 in tax on that. That was $27 added to the $200. For that stove sold in Stony Rapids in northern Saskatchewan or in Yellowknife, you would be paying $600-$600 for the transportation, the distribution and the mark-up for that stove.

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Suddenly, that stove has a tax of $54. Before you paid $20; now you are paying $54.
The increase in tax is more than double. That tax is not on the product; it is on the transportation and the distribution costs of that particular product. The further you are away from the source of the manufacture of that product the more you are going to pay in tax on that product. This is true of every product that you can think of.
We have a good example that is already in place. This government put a 10 per cent tax on communications, on telephone calls. In my community every call that my neighbours make is a long distance call. If they want to call their doctor, or their school, the machinery agency or their dentist, they have to call long distance. Every one of those calls is taxed at 10 per cent. If you live in the city none of those calls are long distance. So you have put a 10 per cent tax on rural areas with that communications tax. We are now perpetrating a tax that we have already tried out. We already know it is wrong because we put it on communications. Yet we are proposing to put it on every other item making it that much more difficult for people to live in remote and rural areas.
I started out by talking about three basic primary industries. I have been talking about two policies of this government, the transportation policy and the goods and services tax policy that affect, detrimentally, directly upon rural and remote areas. But there are other things, other policies of this government to be considered. This particular opposition day motion points to many of those.
For instance, let us take the agricultural industry. This government has a policy of free trade. It has in the last year allowed into Canada an increase in products that are agricultural. I know the government will tell you that they are processed products. But they are agricultural products because they were made from agricultural products here in Canada. They are now made from agricultural products in the United States. They allowed them into Canada by refusing to protect them under the marketing boards that are already established. In fact, the agricultural industry right across Canada is feeling very insecure as far as marketing boards are concerned because the agricultural policies of this government have undermined the basic structure of that.
To conclude, this government has attacked the primary industries of rural and remote areas because it is planning to put in place a tax on goods and services. They have attacked it because they have put a tax on communications. They have attacked it because they are eliminating transportation-or making it so costly that you cannot afford it. They are even putting a tax on energy. Because we live where we do, it costs us more to travel. It costs us more, therefore, we are going to pay more. We abhor not only the goods and services tax but all of the attacks that this government has made on rural and remote areas.


Mr.   J.W. Bud Bird@Fredericton-York Sunbury: Madam Speaker, I have read the motion of the Hon. Leader of the Opposition made on Thursday last. I must say that this motion could not be more the pinnacle of irony or, perhaps, even of hypocrisy at a time when the Canadian economy is performing as productively as never before in virtually every region of the country, following more than almost two decades of a Liberal government in which economic misdirection seemed to be the norm. Deficits reached proportions of $38 billion. The national debt became entrenched and grew almost like a vicious national cancer. It ultimately resulted in the worst recession in this country since the Second World War.
By comparison, we find ourselves today at the very heart of a comprehensive, integrated and committed Conservative government strategy toward economic responsibility and integrity which I believe will ultimately unshackle Canada from the insidious financial consequences which we inherited from the Liberal regime of the 1970s and the early 1980s.
I believe that the course which the Conservative Government is now on will lead us from deficits eventually to a balanced budget, and perhaps then eventually to surpluses. That is the only way to commence to pay down the debt which will irretrievably consume the economic potential of our future generations if we do not deal with it.
I would like this afternoon to speak briefly about two aspects of the hon. Leader of the Opposition's motion. One is with respect to regional development. The other is with respect to the goods and services tax on which there has already been a great deal of comment.
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With respect to regional development, particularly in Atlantic Canada today, it is hard to talk about neglect and disparities when in fact this government is spending more money on regional development in Atlantic Canada today than has ever been spent before. That is the truth. The budget projections for 1989-90 estimate that we will touch one-half a billion dollars in regional development spending. That is the first year and the bulge year of a program that will average $425 million as projected in the space of the five-year budget plan. It compares to a regional development average of $285 million over the previous five years. It compares to an average of $185 million in regional development spending by the Liberal Government in the period 1979 to 1984.
The pinnacle, the bastion, of our regional development spending in Atlantic Canada right now is the Atlantic Canada Opportunities Agency which is a $1 billion shot in the arm for Atlantic Canada.
I would like to tell you, Madam Speaker, just what the state of the Atlantic economy is at this stage when the Leader of the Opposition has made a motion that is so far out of touch with reality. In New Brunswick, 39,000 jobs have been created since September of 1984. In comparison there was a net loss of 2,000 jobs by the Liberal Government between 1980 and 1984. The unemployment rate in New Brunswick today is down to 12.5 per cent from 16.3 per cent in September of 1984. Manufacturing shipments in June of 1989 were up 61.6 per cent compared to the same month in 1984.
In Nova Scotia, 35,000 jobs have been created since 1984. The unemployment rate has fallen by 3.7 percentage points, and was down to 10.1 per cent in August of 1989.
In Prince Edward Island, 5,000 jobs were created in that same five-year period. Manufacturing shipments in June of 1989 were up almost 22 per cent compared to the same month in 1984.
In Newfoundland, 29,000 jobs have been created since 1984. In contrast, 1,000 jobs were lost in the last five years of the Liberal administration in Newfoundland. The Newfoundland unemployment rate has fallen from 23.5 per cent in September of 1984 to 15.8 per cent in August of 1989. Manufacturing shipments in June of 1989 were up 15.8 per cent compared to the same month in 1984.
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The Atlantic economy, while still not at the pace that we would like to see it and still not at the pace of central Canada, or perhaps even of western Canada, is certainly steaming along at a far greater pace than it ever experienced in the latter years of the Liberal administration, and is progressively improving all the time.
One of the saddest facts about life in the Atlantic provinces is the exodus of our young people. One of the great purposes of the Atlantic Canada Opportunities Agency is to provide the sustenance, the opportunity and the wherewithal to encourage our young people to contemplate staying in our region, taking the initiative, seizing the entrepreneurial spirit and becoming productive and sustaining of themselves in our region. ACOA has been quite successful in that respect. I would like to cite a few quick examples.
I would like to talk about the example of Terry and Judy Adair of the Kingston Peninsula in New Brunswick who had a dream to furnish a lodge and log cabin complex that would invite tourists to the Kingston Peninsula to enjoy the quality of life which they enjoy there. With the help of $95,000 from ACOA and an interest buy-down worth $36,000 they have been able to construct that project which will accommodate up to 20 guests at a time. By their third year the Adairs will be realizing revenues from that venture of $160,000 per year.
The Leveret family of Joseph Du Moine in Cape Breton with more than $75,000 worth of grants from Enterprise Cape Breton and the investment tax credits available have been able to expand and upgrade their abattoir business. They are now generating annual sales to co-ops and restaurants in the Cape Breton area of more than $350,000.
I would like to tell you about Vincent Court from Prince Edward Island who had tried farming. In the course of farming he decided that he would like to go on and become a furnace manufacturer, to find ways to heat farm buildings more efficiently and more economically. The result is the bio-blast woodchip furnace which he developed with the help of an ACOA grant and ACOA financing which he is now selling to greenhouses, farms, motels and sawmills in Nova Scotia, New Brunswick and New England. He cannot produce them fast enough. Gross revenues will soon be measured in the millions of dollars.

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There are many other examples of such success stories. There is the Harmon family of Queenstown, New Brunswick and their family-operated custom cabinetmaking business. There is Gilbert Levesque of Grand Falls, New Brunswick and his profitable family-run bakery. There is Kathym Small of White Hills, Newfoundland and her dream to build a ski resort in her home province. All of these examples emphasize the success which ACOA has had in encouraging residents, citizens of Atlantic Canada, to stay at home, to not contemplate the exodus to central Canada which has become the norm and to build their futures and our future.
Atlantic Canada has demonstrated that its entrepreneurs can be world-class when given just half a chance. With people like the Sobbys, the Irvings, the Crosbies, the Cohens, the McCains and the Joudreys, to name a few, we have an example in Atlantic Canada of just what entrepreneurship can become. That is the direction and the thrust of the Atlantic Canada Opportunities Agency which the Leader of the Opposition has criticized so vigorously, so unfairly and so incorrectly.
I will not have time to speak on the goods and services tax to the extent to which I wished, but I would like to say this. It is a balanced and integrated program which will eliminate a regressive and damaging federal sales tax that should have been gone long ago. It will provide a new series of major tax credits to more than nine million families at the lower levels of the earning scale. It will reduce net taxation for every family of income of less than $30,000. It will shift the burden of taxation more fairly to those best able to pay. It will improve indexation benefits for any inflationary impact. Lastly, it will provide special rebates to ensure affordable housing all in one encompassing package.
In due course, when the provinces see fit to recognize the opportunity for creation of a single national sales tax, I predict that Canadians will accept the GST program as one of the most effective alternatives for a progressive consumption tax system so essential to the attainment of our country's financial stability.


Mr. Boudria:: Madam Speaker, I listened with interest to the comments of our colleague, in particular when he said that this was a good tax because it would provide, as he referred to it, a single national sales tax. I want to know if he is aware of something that some of us are not. Have all the provinces joined in overnight or perhaps
earlier today? If they have done so, I am surprised that the Minister of Finance would have not brought this fact to the attention of the House because it would have been, indeed, an achievement on his part that he would have probably wanted to raise in this House. It would have been interesting to see all the provincial finance ministers all of a sudden agree to this horrible tax. It would surprise us. I ask the member if that has happened as of late, or if it is just a wish of his for the provinces to go along with this grief and suffering tax.
I also want to ask him about something he said. I am paraphrasing here, I do not want to pretend to use his exact words. He said that this tax would make a fairer tax system. I believe he said something to that effect right at the end of his remarks. I want to know if he is aware that the government's own sales tax document which was provided to the committee indicates that a family of four-in other words a family of two adults and two children-with the combined two incomes of $45,000, one person making $27,000 and one person making $18,000, will pay-after this tax is in place $629 more in tax each year as a result of the grief and suffering tax. Is that the Tory definition of fairness?


Mr. Bird:: I am happy that the hon. member has asked me those questions because it permits me to get to a part of my speech that I ran out of time to deliver. First of all, the hon. member did not hear me correctly. I said that when the provinces see fit to recognize the opportunity for creation of a single national sales tax, I predict Canadians will accept the GST program as the most effective alternative for a Progressive Conservative tax system.
The Minister of Finance consulted with the provinces for two years. The onus is on the provinces to join in this tax system. I want to tell you that if you had read in last Thursday's Quorum the article by W.A. Wilson, you would see he predicts that the provinces will have their feet to the fire when the citizens of Canada realize that the reason for two tiers of taxation is because the provinces failed to come to a consensus with the Minister of Finance. The Minister of Finance has no alternative but to proceed with the implementation of the federal financial strategy in this country. I respect him for the courage he has had in doing so. I would certainly express the wish and the hope-I think all of us would-of seeing a single integrated tax system. But the onus is now on the provinces to step up and to come forward with

proposals. I believe we have already had indications from the Minister of Finance that he will listen.
I would like to address the second part of the member's question in which paraphrased me. I will tell you exactly what I said. It was that this tax will shift the burden of taxation more fairly to those best able to pay.
We have talked about how business does not like this tax. We have talked about how the opposition does not like this tax. But there are nine million Canadians who are going to get cheques every quarter under this tax system who are going to like it very much. There are families making less than $30,000 who will have a net benefit from this tax, and they will like it very much. Not enough attention has been given to the benefits that they will receive.
A family of one wage earner with two children making $30,000 will have a net tax saving under this program of $214, contrary to the examples the hon. member so selectively picked.


Don Boudria: The one you selectively picked is better than the one I selectively picked.


John Williston (Bud) Bird: The example I selected certainly makes my point a lot better than the one one you selected to make your point on.


The Acting Speaker (Mrs. Champagne):: The time for questions and comments is over.


Jesse Philip Flis: Madam Speaker, I would like to address my remarks to the first portion of the motion moved by the member for Vancouver Quadra that this House condemns the government for its mismanagement of the Canadian economy, including the threat to impose a new 9 per cent sales tax that is regressive, inequitable, invisible and inflationary.
As someone who has spent much of my working life in educating pupils between the ages of 6 and 19, as well as adults, I want to address the affect of the GST on learning because this proposed 9 per cent tax will be regressive on learning. It will be inequitable on learning,
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it will be invisible, and it will be inflationary on our education process.
There is no other country in the world, the western world especially, that has shown as much disrespect for education and for learning as this country has shown in the last five years. Education is an investment and the students of today are the leaders of tomorrow. This reality is not present in any action this government has taken in the last five years with respect to education. In our era, students realized that higher education meant more secure employment, a more secure future.
It is costing more and more for students to attend a post-secondary institution. According to the Canadian Federation of Students, the average cost per student now is around $10,000. With standard inflation this figure will rise at an incredible rate as this government indulges in its philosophy that only the rich should go to universities and colleges, and the poor should go to work. Otherwise, why would this government, in this new proposed tax, deliberately exclude students from receiving additional refundable tax credits above and beyond the general credit that it is making available to low income singles?
On page 15 of the technical paper we see that starting at the minimum level of $6,175, the additional credit will be paid at the rate of 2 per cent of net income up to the maximum of $140. I understand that finance officials have privately conceded that the minimum was set at $6,000 to specifically exclude students from receiving this additional credit.
Our students will not be eligible for the additional credit even though they will be paying the additional 9 per cent on all their textbooks. They will be paying the additional 9 per cent on their writing paper, their binders, their pens, their pencils, student activity fees, their tutorial fees, their rents, their courses and on their typewriters and word processors.
I understand that some members might wonder if a student can afford a word processor, the student should be able to afford 9 per cent sales tax. There are many gifted and bright students, but because of a learning disability require the assistance of a computer, a word processor, so that they can write their essays neatly and these students who were failing before are now going on to universities. These students, under this proposed 9 per cent sales tax, may not be able to go on to post-secondary education.

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Tories laugh but they have no idea of what is happening in education today.
As legislators we should be aware to some degree of what it is like to be a university student or college student. There is not much time to cook for yourself, just like the MPs, so you tend to eat out. But it is not in fancy restaurants like MPs because you can't afford it. They eat in fast food restaurants.
With the proposed 9 per cent on prepared foods and foods eaten in restaurants students will essentially be paying the 9 per cent tax on most of the food they consume.
Many people would argue that education is a privilege, not a right. The interesting thing about that argument is that is supported mostly by those people who have never had to work too hard for what they have got.
I do not agree with this particular philosophy, I believe very strongly that in this country education is a right. It is a right because people are our most important resource. Anybody who does not realize that should go back to school because they couldn't have learned anything when they were there in the first place. The future of our country depends on how much and how well we educate our young people.
This tax will hit each and every pupil as he or she goes through one of our educational levels, right from junior kindergarten on to university. There will be less money to maintain and improve the learning environment as the various school boards use up more money to administer-and I stress, to administer-the tax when applying for their rebates: rebates for general maintenance services such as cleaning, painting; rebates for desks, chairs, books, pencils, right up to the supply of milk for the younger children.
This government does not realize that there are school boards that must provide breakfast for students before they can be taught. The hon. member for Brampton does not realize that. Maybe in Brampton they do not have to provide breakfast. But in the inner cities of Toronto, the Toronto Board of Education has to provide breakfast for children coming to school. Before they can learn they must have a good breakfast.
There will be less money available to the municipalities to provide day care and community centres as they in
turn apply for their rebates for their own services. From day one, when the child goes to school, his or her parents will have less money to buy books that cost more; less money to buy clothes that cost more; less money to provide tutoring that costs more, but may be necessary; less money to take the kids to the zoo, to the museum, to the art gallery. These things are not a luxury. Educational excursions are not a luxury. Books are not a luxury. In a country where our illiteracy rate exceeds 26 per cent, we cannot afford to make books inaccessible to people in general, let alone our children.
This government has acted in contempt of every single person and every single institution in this country. It has acted in contempt of the seniors citizens of this country. It has acted in contempt of the poor people of this country and less fortunate regions of this country. It has acted in contempt of Parliament on more than one occasion. Now it is acting in contempt of the future of this country, our children and their right to a better life and a better world.
The students of this country are not deceived. They cannot be deceived. What does the Prime Minister think that our students would make out of his statement just a few weeks ago when he said at their national convention that education was a priority in the next four years of his government. What does he think they made of that statement? Does he really have so little respect for the intelligence of the audience? I suppose his direct audience was the Progressive Conservative Party at the time. Does he have so little respect for the intelligence of our students that he thinks they believe him?
He really does think that the people of Canada are going to believe him when he says that we will all be better off with this new tax. However, if he really thinks that, he should make a personal note of all the petitions that are coming in from right across Canada and tabled in this House daily. He should make a personal note of all the protests that are being organized across this country.
The Prime Minister does not have any choice if he wants to win the next election. Although his credibility is shot, he had better scrap the tax and go back to the drawing board. There should be no discussion in this House or outside this chamber whether to include all foods, whether to reduce the 9 per cent to 6 per cent. The bottom line is that the GST must be scrapped.
October 2, 1989


Garth Turner: I am interested in a couple of points raised in the hon. member's comments.
First, he talked about the students of today being the leaders of tomorrow. I hope the hon. member also realizes that the students of today are the taxpayers of tomorrow who will have to deal with the issue of deferred taxation which is mounting daily. I wonder how the member proposes to give us constructive alternatives to the GST and the government's tax reforms.
Second, I wonder if the hon. member recognizes that the government proposes to bring in a system of tax credits which will, of course, help students. Do you have any evidence that students will be excluded from the $140 single person tax credit? Do you have any evidence of that? If so, could you table it for us.


Jesse Philip Flis: It is very clear that the member did not listen to a word that I said. He asked whether the students of today will be the taxpayers of tomorrow. Yes, they will be. That is why we have to provide the best education possible to these students, so that they will be in higher income brackets and will be able to afford to pay the taxes. If we do not have that, we will have a tax revolt in this country and no one will want to pay taxes.
May I quote to the hon. member from his minister's document, the technical paper, on page 89. This is how the government hides things. They talk about what is being exempt, and then they say that hence, as a general rule instruction and training in sports, recreational or cultural activities such as dancing, skating, cooking, sailing or swimming will be taxable.
Private ballet lessons, is this not an investment in our country? Could this not lead to a very profitable vocation for that person? That person will be taxed and may have to drop private ballet lessons. Students may have to drop private music lessons. Yet that could be their vocation. It could be their occupation.
What about the students who will not be able to go on to university because of the 9 per cent tax? Whereas if they finish university, they could be in the hon. member's category earning $60,000 or more instead of earning $20,000 and not being able to afford this tax. I am glad the hon. member posed this question. Let us educate our
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young people so that they can afford to pay those terrible taxes put on by this Tory party.


Peter Andrew Stewart Milliken: Madam Speaker, I listened with interest to the hon. member's excellent speech and I am sorry that the hon. member who asked the last question did not. He might have understood the problem. I wonder whether I could ask my hon. friend from Parkdale-High Park a question concerning the fairness of the imposition of this tax.
The government has said that this is all necessary and that it is part of their budget cutting process. This is stage two of tax reform. Stage one was introduced before the election. That was lowering the income tax. The details of this tax have only just been released.
In his area of Toronto, is it his view that if the details of this tax had been released before the election that the present government would have been elected, or is it safe to assume that if these details had been made public some time before November, 1988, we would have seen the defeat of the present government? In fact, we might not be enduring these taxes at this time.


Jesse Philip Flis: I think the answer is self-evident. If the Conservative party was honest during the election they would be sitting on this side and not where they are today. They deceived the public, and it is all coming out now, on VIA Rail cuts, on promising not to increase taxes and now on the 9 per cent. They deceived the public on universality. They will not touch pensions and so on. Now they are clawing everything back.
Here is a party that got in by default and by deceit. They will not be there long. Come 1992 they will be on this side of the House.


John Horton McDermid: Madam Speaker, I could not sit here all day without getting into the debate because I have sat and listened to the opposition ad nauseam today. Although I was not here last Thursday, I read the record from Hansard.
It is very obvious that what this government has to do first and foremost is to take the opposition on a training program so that they can understand how the goods and services tax works and how it will benefit this country. The examples that were given this afternoon by the members opposite were totally false.

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I find it rather amusing that the Leader of Her Majesty's Loyal Opposition, the man who goes around this country bragging that he was the last one to have a balanced budget in this country was also the individual who raised government spending some 27 per cent in one year and started deficit financing. He does not talk about that. Yet, he comes in here and has the nerve to bring in a motion that states:
That this House condemns the Government for its mismanagement
of the Canadian economy,-
History has shown that he was probably one of the worst managers of the economy in this country. That is absolutely true. We today in this country can thank him because he fathered deficit financing. He fathered the deficit that we are experiencing today and the Liberals thought that was pretty good, and we keep on borrowing, and keep on borrowing, and keep on spending and adding to the debt by some 24 per cent a year.
We have a tax system in this country that needed revision and a man with foresight and with guts, our finance minister, in November 1984 made it very clear to the Canadian public that this government was going to grab this terrible tax system that had been established over the years and reform it to the betterment of this country. He has done just that. I will put his record in finance up against any finance minister this country has ever had, especially the Chretien, Lalonde, MacEachen and Tbmer that we have had over the last number of years. I will put his record against any of them any day.
This new tax is replacing a very outdated manufacturers' sales tax, absolutely outdated, and all three parties agree on that. All three parties unanimously have said in the House that it has got to go, that it penalizes the economy of this country, absolutely. It has been stated in the House by the finance Committee. There is no question about that.
The Liberals flirted with it back in the early 1960s. Back in the 1950s they even suggested perhaps they should do something about this tax. But this is the first government that has had the guts to tackle this major problem that Canadians have with the manufacturers' sales tax. This could destroy our exporting, and we are an exporting nation. We export 35 per cent approximately of what we produce.
If we cannot maintain competition with the nations that buy our goods and services, then we will be out of the market-place. Number one, the manufacturers' sales tax places us at a great disadvantage in exports. Number two, the goods and services tax makes imports less expensive than a comparable product made here in Canada. That puts our producers very much at a disadvantage because they are taxed entirely differently. Third, we are the only country in the world that has a manufacturers' sales tax.
We are late in doing this. This should have been done years ago. Forty-eight other countries have a goods and services tax, the countries that we compete with, and their businesses and their services have no input tax costs and sales tax. Ours do.
The examples that were given today by the members about trying to compare the manufacturers' sales tax with a goods and services tax I must say were totally wrong, totally misleading-I will not say deliberately so because I just do not think they understand. I just do not think they understand.
The goods and services tax is going to make our economy more competitive, both in our export markets and at home. That is very important. Any economist looking at this will tell you that it means jobs. There is no question about an increase in jobs, an increase in productivity in this country, and it is going to help the gross national product of Canada. There is no question about that.
Look at the groups that are appearing before the committee. None of them are arguing that there should not be a GST. They are not arguing there should not be a GST. Well, some of them want it a little lower. Some of them want exemptions. They want to be exempted. They think that they should be exempted but everything else is fine. They think we should have a lower rate, but that is impossible. This government is on the right track. It is going to be implemented in 1991 and by 1992 the Canadian public will understand how good this is for Canada and this government will be re-elected for decades to come.


The Acting Speaker (Mrs. Champagne):: It being 5.45 p.m., it is my duty pursuant to Standing Order 81(14) to interrupt the proceedings and put forthwith all questions necessary to dispose of the supply proceedings now before the House.
October 2, 1989

Is it the pleasure of the House 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 nays have it.
And more than five Members having risen:


The Acting Speaker (Mrs. Champagne):: Call in the Members.


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

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It being 6.15 p.m., this House stands adjourned until The House adjourned at 6.15 p.m. tomorrow at 11 a.m., pursuant to Standing Order 24(1).

Tuesday, October 3,1989