1989-10-23

Mr. Eugene Bellemare (Carleton-Gloucester):: Mr. Speaker, I rise on a question of privilege.
I wish to lodge an official complaint and request an investigation by yourself or by the RCMP through your office, Mr. Speaker, regarding a postal delivery occurrence originating from this local post office.
Last Saturday, the editor of the West Quebec Post, a weekly paper in the Wakefield area, Mr. Ernie Mahoney, called my home to inform me that 21 parcels with post frank on them, containing information on the proposed goods and services tax, were found in a ditch in the Farrellton area which is near Wakefield, Quebec. These were found by a local farmer by the name of Connor Plunkett.
Mr. Mahoney, the editor, with the help of the farmer returned 20 of the 21 packages to the Wakefield post office. These parcels all bore, as I said, the post mark and addresses in the Navan-Orleans district in Ontario, in the opposite direction.
I find the situation, of course, unacceptable and obviously a criminal act. I would appreciate if you would investigate. I will be forwarding to you a letter with the details.


Mr. Speaker:: The hon. member has brought to the attention of the House, through the Speaker, a situation with respect to the disposition of certain parcels of mail. It is a matter which is probably of some considerable concern to.all hon. members.
I shall take it under advisement and return to the House as soon as I can with either recommendations or
some further information which may be helpful. I thank the hon. member.



ROUTINE PROCEEDINGS


[Stage Direction]
Hon. Doug Lewis (Minister of Justice and Attorney General of Canada and Leader of the Government in the House of Commons:) Mr. Speaker, pursuant to Standing Order 36(8), I have the honour to table, in both official languages, the government's response to 44 petitions.
[Editor's Note: See today's Votes and Proceedings.]


Hon. Doug Lewis (Minister of Justice and Attorney General of Canada):: Mr. Speaker, I am pleased to table, in both official languages, a number of Order in Council appointments which were made by the government.
Pursuant to the provisions of Standing Order 110(1), these appointments are deemed referred to the appropriate standing committees, a list of which is attached.



INTERPARLIAMENTARY UNION


Mr. Jean-Marc Robitaille (Terrebonne):: Mr. Speaker, pursuant to Standing Order 34(1), I have the honour of tabling, in both official languages, the eleventh report of the Canadian Group of the Interparliamentary Union.

October 23, 1989
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The report was prepared by the official delegation representing Canada at the eighty-second Interparliamentary Conference held in London, in the United Kingdom, from September 4 to 9, 1989.
Mr. Speaker, I may add that the Conference put special emphasis on the Interparliamentary Union's centennial, and that the Canadian delegation was very proud to represent Canada at the opening ceremonies which took place in the presence of Her Majesty Queen Elizabeth and the Prime Minister of Great Britain, the Right Hon. Margaret Thatcher.
[.Editor's Note: See today's Votes and Proceedings.]


PETITIONS
Mr. Rod Murphy (Churchill):: Mr. Speaker, I have the honour today to present yet another petition in support of VIA Rail.
It is signed by a number of Canadians who express their concern with the fact that the railway passenger service as carried out by VIA Rail is essential for many Canadians and has been part of Canada for more than 100 years.
They believe that the Government of Canada has announced a $500 million cut-back over four years, which will reduce the service and seriously affect the ability to have railway service in our country.
Therefore, the undersigned call upon Parliament to maintain the existing VIA network, to upgrade VIA equipment, and to guarantee VIA sufficient support to carry out its mandate to provide passenger service.


Mr. Tom Wappel (Scarborough West):: Mr. Speaker, I have the honour today to rise to present two petitions which have been certified correct, both dealing with the proposed goods and services tax, both signed by members of the riding of Scarborough West.
There are a total of 53 signatures, all of them calling upon the government not to introduce this heinous tax.


Mr. Scott Thorkelson (Edmonton-Strathcona):: Mr. Speaker, I have the honour today to present, under Standing Order 36, petitions calling upon the government to revise our extradition laws.
They have been signed by 3,037 residents of Edmonton-Strathcona.


Mr. Joe Comuzzi (Thunder Bay-Nipigon):: Mr. Speaker, I have the honour to present a petition today signed by the people of Thunder Bay who on January 15 will be losing their passenger rail service through the city of Thunder Bay.
It is more important now inasmuch as over this past weekend they had their first snow fall in the north. Several communities were denied access to airplane and highway transportation. The only available means of transportation was the railway. Had this happened on January 15, those people would have been denied access to any means of transportation whatsoever.
I have the honour of presenting this petition, signed by the people of Thunder Bay, which has been properly certified.


Mr. Alfonso Gagliano (Saint-Leonard):: Mr. Speaker, I also have some petitions from people in Thunder Bay who call upon the government to reverse its decision and continue passenger rail services.


Mr. Fernand Robichaud (Beausejour):: Mr. Speaker, I also have the honour of presenting a petition from the people of Thunder Bay in which they express their dissatisfaction with the government's plans for cutbacks at VIA Rail.

These people are afraid that many routes will be lost and thousands of jobs will also be lost. They request that the government take another look and cancel its plans to dismantle VIA Rail.


Mr. Robert E. Skelly (Comox-Alberni):: Mr. Speaker, I have the honour to present a petition from 475 of my constituents, asking the government to maintain the existing VIA Rail network, to upgrade its equipment and to guarantee VIA sufficient support to carry out its mandate to provide passenger service.
October 23, 1989


Mr. Stan J. Hovdebo (Saskatoon-Humboldt):: Mr. Speaker, it is my honour and duty to present, on behalf of a number of constituents in Colonsay, Bruno and Viscount near my constituency, a petition which asks the government to reject the proposed goods and service tax that would tax things like reading materials, haircuts, diapers, coffins and home heating fuels, and to put in place a fair tax system.


Mr. Jean-Robert Gauthier (Ottawa-Vanier):: Mr. Speaker, I have the duty to table this morning another petition from Canadians, 80 per cent of whom oppose the project of the Tory government to impose a sales tax on goods and services.
These people signed the petition in the hope that this Parliament will reject the proposed goods and services tax.


Mr. Robert D. Nault (Kenora-Rainy River):: Mr. Speaker, on behalf of the people of Kenora-Rainy River, pursuant to Standing Order 36, I would like to present this petition.
The people of Kenora-Rainy River have asked that the government reconsider the removal of the Canadian, the VIA transportation that runs through the riding of Kenora-Rainy River, based on the fact that throughout the whole summer it was completely booked and there was a lack of cars.
We ask that the government reassess its reasoning for removing a service that is lacking in cars, not lacking in people who are interested in using it.


Mrs. Beryl Gaffney (Nepean):: Mr. Speaker, pursuant to Standing Order 36, I am very pleased to stand here this morning to present a petition on behalf of 107 petitioners who are concerned about the proposed cutback in VIA Rail.
These petitioners are from the province of Ontario. They come from the Toronto area, Brockville, Agin-court, Willowdale, Cornwall, all over Ontario where the line between Toronto and Montreal very seriously affects them.
The petitioners are asking that the federal government please consider rescinding a decision to cut back on VIA
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Rail as they feel the service is very necessary to the people of Canada.


Mr. Peter Milliken (Kingston and the Islands):: Mr. Speaker, I have the pleasure to present a petition signed by a large number of residents of Kingston and the Islands.
These electors object to the government's goods and services tax and, along with 80 per cent of Canadians who oppose this tax, they call on the Parliament of Canada to reject it. In the petition they say that it will hit them not only with higher taxes but with higher inflation, higher interest rates, and higher unemployment.


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Douglas Grinslade Lewis: Mr. Speaker, I am pleased to announce that Question No. 128 will be answered today.


Mr. Karpoff: In the Tbronto housing project known as the Prince Charles project, was an application made to Revenue Canada for the refund of the federal manufacturer's sales tax and (a) if so, (i) to what person or persons (ii) for what amount was the refund granted (b) if not, for what reasons was no refund made?


Hon. Otto Jelinek (Minister of National Revenue):: Revenue Canada, Excise has no record of receiving any applications for refund of the federal manufacturer's sales tax related to the Prince Charles project.
(a)	(i) not applicable (ii) not applicable
(b)	not applicable.


Douglas Grinslade Lewis: Mr. Speaker, I ask that the remaining questions be allowed to stand.


The Acting Speaker (Mr. Paproski):: The question as enumerated by the government House leader has been answered. Shall the remaining questions stand?


Some Hon. Members:: Agreed.
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GOVERNMENT ORDERS


Hon. Gilles Loiselle (Minister of State (Finance)) moved: that Bill C-20, an Act to amend the Excise Tax Act and the Excise Act, be read the third time and passed.
He said: Bill C-20 implements the changes announced in the Budget of April 27, 1989, concerning the federal sales tax and excise taxes and duties. These measures are an important component of the fiscal plan established by our Government to deal with the problem of our substantial and increasing national debt.
During the past four years, Mr. Speaker, this government has made considerable progress in reducing the annual deficit and slowing down the growth of the public debt. Additional measures are needed, however, if we are to sustain economic growth in this country and maintain the programs valued by Canadians. The fiscal plan we presented in the budget will achieve both goals, by reducing spending and increasing revenues. The proposed measures were carefully chosen to ensure a balanced approach that imposes the heaviest burden on those who are most able to bear it. Additional revenues will be drawn from a broad range of sources, including personal and corporate income tax and sales and excise taxes. Meeting the challenge posed by the debt by reducing spending and increasing revenues is a responsibility that we have to present and future generations of Canadians.
In view of the serious financial problems we are facing and in order to spread the burden of controlling the public debt as broadly as possible, this bill implements a number of increases in the federal sales tax. These increases include a 1 per cent increase in the federal sales tax rate on construction materials, from 8 to 9 per cent, effective January 1, 1990. The sales tax on alcohol and tobacco products will be increased from 18 to 19 per cent, effective April 28, 1989. The general sales tax rate is increased by 1.5 per cent, from 12 to 13.5 per cent, as of June 1, 1989. Taxes on telecommunications services and on programming services provided by telecommunications lines are also raised by 1 per cent, from 10 to 11 per cent, as of June 1, 1989.
These measures will contribute nearly $1 billion in 1989 and $2 billion in 1990 to deficit reduction.
Mr. Speaker, in the February 1986 Budget, this Government established the refundable sales tax credit to help Canadians of modest means. To offset the effect of increased federal sales tax rates on low-income individuals and families, the Bill to amend the Income Ihx Act will considerably increase the refundable sales tax credit both in 1989 and in 1990. The sales tax credit for adults will be raised from $70 to $100 in 1989 and $140 in 1990. For children under 19, it will go from $35 to $50 in 1989 and $70 in 1990. Furthermore, the income cutoff for the credit will be raised from $16,000 to $18,000 in 1990 so that more Canadians can claim the credit.
This bill also increases some excise taxes and duties imposed under the Excise Thx Act and the Excise Act. The excise tax on unleaded gasoline is raised one cent a litre as of April 28, 1989 and the excise tax on leaded gasoline two cents a litre. An additional increase of one cent a litre will take effect on January 1, 1990.
Excise taxes and duties on tobacco products are increased substantially by $4 a carton for cigarettes and proportionally for cigars. The duties and taxes on manufactured tobacco products are increased by $5.30 a 200-gram container in two stages to generate revenue and reduce the difference in tax between cigarettes and fine-cut tobacco.
These changes to the excise taxes and duties will bring in some $0.9 billion in additional revenue in 1989 and $1.6 billion in 1990. Furthermore, they meet Canadians' concerns about the environment and dangers to health and tie in with the Government's overall strategy to reduce smoking in Canada.

This bill provides tax relief for Canadians. The sales tax portion of the fuel tax rebate program for primary producers is being extended one additional year. This program provides rebates of federal sales and excise taxes on motor vehicle fuels to primary producers in respect of fuels they use for off highway production purposes.

The program was introduced in the fall of 1984 as a temporary measure and is scheduled to expire at the end of this year. While the rebates of excise taxes will be allowed to expire as scheduled, the sales tax rebates are being extended to December 31, 1990.
A new sales tax exemption is being introduced for machinery and apparatus purchased for use in the processing or treatment of toxic wastes in toxic waste treatment plants. This measure will respond to Canadians' concerns about the environment by reducing the cost of equipment acquired by toxic waste treatment plants to process toxic wastes in Canada.
This bill also implements several minor technical amendments to the Excise Tax Act and the Excise Act. A number of amendments to this bill were proposed by some hon. members at report stage. Most of the proposed amendments related to the deleting of various clauses of the bill.
Interestingly, some of the motions would have deleted measures that would reduce taxes, such as clause 4 which extends the sales tax portion of the fuel tax rebate program for one additional year and clause 7 which provides a new exemption for machinery and apparatus for use in the treatment of toxic wastes.
On the other hand, some interesting proposals were made in the course of the debate on the merits of using the tax system to further the government's environmental objectives. While the House did not adopt any of these motions, hon. members may be assured that I have noted their comments on these issues.
This is an important bill. It will raise substantial additional revenues and implement a significant part of our plan to deal with the serious problem posed by the public debt. By reducing annual deficits and controlling the debt, we will be able to maintain the valued social programs and high standard of living Canadians have come to expect for themselves and for their children.


Mr. Russell MacLellan (Cape Breton-The Sydneys):: Mr. Speaker, I appreciate the opportunity to reply to the hon. minister's address on this bill, Bill C-20. As a Canadian I would like to think that this government was interested in the finances of this country, but its entire record since taking office has indicated that it could not
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care less either about the welfare of this country or the welfare of Canadians.
The minister is trying to tell us that through some enlightenment he is now concerned with reducing the deficit.
When this government came to power there was a $22.6 billion interest tab on the debt that existed in this country. At the present time the interest on the deficit amounts to over $39 billion per year. The interest alone on the debt has increased by over $17 billion per year.
The government is now talking deficit because the election is behind it. It wants Canadians to believe that it is concerned about the economy of this country, that it is concerned about the welfare of Canadians. I find this deception of the government very difficult to accept.
The facts indicate that this is a government that callously and without concern for the people of this country has followed its own agenda. It has the people of Canada to look after themselves. It has an agenda that is going to open up our trade with the United States and link its interests with big business. The Tories say: "If in the meantime we act in your welfare it is coincidental and we wish you all the luck in the world".
This bill is nothing more than a preview to the gross deception that is yet to come, and that is the goods and services tax. A former friend of the government calls it "the gouge and squeeze tax". This bill is just a preliminary step to keep the pump primed until this government can get the big dollars. That is what it wants.
How can Canadians possibly believe that this government wants that money for any other reason than to squander it on what it considers its friends would like to have and on what will be in its best political interest?
Canadians will not accept that this government is interested in the welfare of this country or in the welfare of Canadians until it cleans its own house, until it deals with the management of this country in a way that Canadians feel is not only prudent but absolutely necessary. Until this government does something about bringing about government, bringing back political will to Canada, the country and its people will never accept tax increases in the nature that this government is putting forward.

October 23, 1989
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We are asked to accept these increases in the federal sales tax and the excise tax. This is not the first time we have been asked to accept tax increases by this government. It is not the second time. It is not the third time. It is the fourth time that this government has come to the people of Canada and stated that it wants to increase the sales taxes and the excise taxes. This is the same form of consumption taxes that the Prime Minister himself "called the silent killer of jobs". In this case, the Prime Minister might ultimately be correct because if this government follows through with a goods and services tax, then there will be a silent killing of jobs and a noisy reaction from the people of Canada.
This is not going to be acceptable no matter how much this government tries to advertise and to make Canadians think that this is all in their best interests. We Canadians are no longer surprised to see such hypocritical action and double talk on the part of the government. The government is not going to deceive Canadians into believing that the goods and services tax, and these constant taxes, one after the other, time after time, are going to be in their best interests.
What are we going to get when we get the goods and services tax? We now have excise tax on gasoline at 13.5 per cent, the maximum, as if it were machinery manufactured in Canada. We have the sales tax at 13.5 per cent. We have the excise tax now at 8.5 cents a litre for non-leaded gasoline and 9.5 cents a litre for leaded gasoline. These taxes are tremendously high. Is this government going to take them off when the goods and services tax comes in? No, the government is not going to remove them. What it will probably do is tell Canadians that we need an environmental tax. We have to look after the environment.
The minister is talking about this tax as being an environmental tax for what we have to do for the environment. The environment is tremendously important. I just wish that the government realized how important it is. Canadians do, certainly on this side of this House we do. We only wish the government did. But the government will realize it, or at least it will in its pronouncements when it feels it has to issue a new tax. In addition to the goods and services tax we will undoubtedly be dealing with an increase in the sales tax and the excise tax in gasoline to justify keeping that tax where it is at the present time.
This government has a history of double talk. We have seen broken promises in other areas. We have seen it with VIA Rail. This government has said that it would improve rail services in this country and would never create second-class citizens. Well we have seen what has happened to that promise. The government has slashed rail services in this country and the people in the Atlantic and the north and in certain parts of western Canada are certainly second-class citizens in the minds of this government.
Everybody's favourite line is when the Right Hon. Prime Minister told voters: "Social programs were a sacred trust never to be tampered with". Canadians have come to realize that there is nothing sacred to this government, nothing at all.
Why, time after time after time, have we as Canadians, not only been misled, but have had the intelligence of everyone in this country insulted by the misleading policies and the misleading pronouncements of this government?
I would like to just go over this GST and talk about the inconsistencies with respect to what this government has said the goods and services tax would do and what this tax will actually do.
On October 8, 1988, during the election campaign, the hon. Minister of Finance said: "The bottom line is that the sales tax will not be used to raise the revenues of the Government of Canada". The reality is that the revenue is going to be used to raise the revenues of the Government of Canada. The revenue from the present tax is going to be increased from $18.5 billion to $24 billion. At the same time that the government is saying it is not going to raise revenues with the new sales tax, the revenues of the new sales tax are going to be used to fight the deficit. Now, if you do not have new revenues how are you going to fight the deficit? And even if you believed the government were interested in fighting the deficit, that record.
Second, the technical paper on the GST says that the GST will improve the over-all fairness of the tax system, that lower and modest income Canadians will be better off once the GST is in place. How can that be when the Standing Committee on Finance, at its hearings across the country, has literally had welfare groups and social interest groups from one coast to the other denounce it as being a flagrant tax grab that will position than they are today?
October 23, 1989

Even the Deputy Minister of Finance admitted that many low and middle income Canadians will be worse off when the GST is put into place. That is from a deputy minister. How can we ever believe that this government was actually concerned about the welfare of low and middle income Canadians?
In another segment of gallantry, the Minister of Finance also promised that: "Sales tax reform will eliminate the hidden tax in the prices consumers pay". But again, reality stands in the way of believing the words of the minister. The government is going to allow these retailers to state whether the tax is to be included in the price or is going to be added separately when the item is purchased. The government cannot have it both ways. It cannot say it is not going to be a hidden tax and then, at the same time, leave it to business to determine whether it is going to be a hidden tax or not.
These are the things we were told before election day. We were told this so that it would not become an issue, so that the government could feather out this whole question of the sales tax to make it palatable for Canadians so they would not ask questions. Whenever a question was asked the government came out with an answer that it thought we, in the Liberal Party, or Canadians wanted to hear, not the truth. That was not the important thing. It was getting through the election campaign and telling people what they wanted to hear. Then, once the election was over, sock it to them.


Fernand Robichaud: Good-bye Charlie Brown.


Russell Gregoire MacLellan: Good-bye Charlie Brown is right.
Another infamous document, the White Paper on sales tax reform states: "A good sales tax should not impose heavy compliance costs on business or create undue administrative costs for government". Well, what have we seen? What we have seen is that small businesses are going to be devastated by the cost of complying with this tax. We are going to impose upon small business a tremendous tax. We are going to impose on business in this country a $2 billion cost to comply with this goods and services tax. The president of the Federation of Independent Business, a former friend of the government, is now saying that the allowance that this government is going to pay to small business is not going to come close to compensating small business for the cost of having to comply with this tax. But this government is saying: "Well, that is the only thing we can do. The present 13.5 per cent tax on manufacturing is not working. We have to find an alternative and this is the only alternative." This is what is being forced down the throats of Canadians. It is unacceptable. If it were true, it
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would be unacceptable. The tax we have now is certainly better than the one this government is going to gouge from the Canadian people.
How do we know that this government has done its homework? Every indication seems to indicate that it has not. The Minister of Finance will stand in his place and say: "We tried to get it worked in with the provincial sales tax, but the provinces would not agree". I am afraid that the Canadian people have taken a poor second place to the government's determination to maintain its honeymoon, such as it is, with the provinces.
Can you, Mr. Speaker, just picture the Minister of Finance saying to his provincial counterparts: "We do not have to impose the GST. Why do we not work together and try to work it all into one national sales program? You do the collecting and we will split the revenues," and the provinces saying: "Stick it in your ear". Then the Minister of Finance says: "Oh, well, I tried". That would be end of the dialogue.
That is the determination that this government has tried to work on developing a national sales tax. What do we have? We have this complete and utterly unworkable situation, gouging the Canadian people, costing small businesses millions and billions of dollars to try to implement and put it into place, not to mention the additional public servants that we are going to need to bring it about and enforce it.
The government, by its own admission, says there are going to be over 2,500 new public servants. That is only what the government admits. We know from experience what the government admits we can multiply by quite another number. It is not acceptable by any stretch of the imagination.
I think it is time, and I think that Canadians feel it is time, that the job of the opposition, and certainly of the Canadian people, is to remind the government of what it is supposed to be doing, to remind the government that it made commitments prior to the election; that it has obligations that it has to honour; to remind the Prime Minister that the mark of good government, Mr. Speaker, is not how well you cozy up to big business, but how you represent the people of this country. It is a challenge to this government of restoring decency, honesty and integrity to government. For this government, that is going to be one heck of a big job. But the sooner it does it, then the sooner we are going to be able to get this country back into the profile we want it to be, the profile it used to have.

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Right now the government is going in the other direction. It is taking all of its time, and all of the money it can get its hands on, to convince Canadians that they should want something that they do not want. The government has spent $20 million on an ad campaign to try to force down the throats of Canadians the acceptability of the goods and services tax. Canadians have listened. Canadians have heard. Canadians are repulsed by what their own government is trying to do. The Canadian people will not accept the line of advertising and the line of "hoi polloi" and hocus-pocus that this government is putting forward.
This is not going to be another free trade debate. The Canadian people now know what the free trade arrangement has meant to this country. They now know that they cannot believe what this government wants them to believe.
Let us make no mistake, Canadians from sea to sea, regardless of economic status, background, party affiliation or ideology, reject this tax completely and utterly.
In just the few short months since the technical paper on the goods and services tax was released thousands of petitions have been signed and registered. There have been letters to the editors in all of our national newspapers. Members of Parliament of all political affiliations have received hundreds of letters in total, denouncing this goods and services tax and the protests are not diminishing. We have heard the petitions today. We have heard the voice of Canadians. It says: "Don't implement this goods and services tax. It is not acceptable". Canadians are fed up with being taxed to death while this government squanders the money that being paid in taxes on things that are in its own political interest and to the advantage of its own political cronies. We saw this during the last e lection campaign with the money for ACOA a five-year program, almost all spent in the election campaign. Not one year's worth of funds spent, not two, but three, four, maybe even five years' funding
spent in an election campaign to try to buy the votes of Atlantic Canadians. Well, we saw what happened.
This government is misreading Canadians. Canadians want fair government. They want good government from their representatives. They do not want to be told and convinced of something they do not want. When they tell the government they do not want something, they do not want this government to yet again try to convince them that it is in their best interests and what a wonderful thing it its.
In the history of this country there have been few proposals that have received such massive opposition as has this GST proposal. It is overwhelming as a member of Parliament to speak to people. In a recent poll it was determined that 80 per cent of Canadians are opposed to this tax. Yet, the government forges on, trying to convince Canadians of what a wonderful thing it would be. It is trying to cut a hole through a wall of water and the government is going to be oblivious to the torrential downpour that is going to come down on top of it.
This is yet another case of this government not listening, not wanting to listen to the people of Canada. It is a completely, utterly flagrant abuse of democracy. We have the Prime Minister and the Deputy Prime Minister stating that they have something that they want to force Canadians to accept, but 26 million people or 80 per cent of the 26 million are saying no. A few members in the government are saying yes, and to them that is the democratic process that they are going to force down the throats of Canadians. They expect Canadians to say one morning when they wake up: "My goodness, I was wrong all along about the GST. What a wonderful thing it is".
Well, Mr. Speaker, if you believe that that is going to happen, then there is a bridge in Brooklyn I will sell to you at a very reasonable price. The opposition to the GST will not collapse. It has not even begun to waver. Canadians refuse to be coerced into accepting something that they do not feel is in their best interests or is even going to do what this government says its is going to do. This is in spite of the millions that is being spent to try to force this upon Canadians.
October 23, 1989

The manufacturers' sales tax as it exists right now at 13.5 per cent, as the government would say, is the only alternative. It is not the only alternative.
The people of Canada feel that the government has not managed the country properly and they are not going to accept this completely oppressive and obscene tax, knowing that the Government of Canada has no conception in its own mind of how to manage the economy.
What this government wants to achieve through this advertising campaign is a great example of what George Orwell in his novel 1984 put forward when he talked about double speak, which was the tool of big brother. Once again we have double speak by the Minister of Finance and by the Prime Minister. Just last month we saw double speak in action, in a way that I think big brother would have been very proud.
The Minister of Finance on Monday, September 25, introduced new terminology to the English language. He spoke of the goods and services tax as being a "fairness package" and having "fairness features". If it wasn't so pathetic, it would almost be funny.
The Minister of Finance referred to the goods and services tax as a "fairness feature". Doesn't that sort of makes you warm and tingly all over, to think that our government is going to put forward a fairness feature. Perhaps what he means is that Canadians will not suffer abject poverty. If Canadians do not really suffer abject poverty, are not completely down and out, then this taxis fair. If he leaves them with a few loonies in their pockets, then this tax is fair.
That is not what Canadians think is fair. In fact, even with the minister's fairness feature, which is his tax credit, 300,000 families living at the poverty level right now are going to be worse off. That is his fairness feature. Sure, he is going to give a few dollars back to the people, but only a portion of what he is taking away from Canadians, who can least afford to lose this money. The reality is the fairness feature tax credit that the Minister of Finance is going to give back will still require an average family of four, two parents, two children, with an income totalling $45,000 a year to pay $629 more in each tax year.
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The minister referred as well to the fairness feature tax credit for business to help them recover the cost. I have already referred to what small business thinks of that. As I stated earlier, this fairness feature is just going to give small business back a portion of the amount that they are going to have to pay to collect this tax.
Canada will be the only country in the world with two different sales taxes, a sales tax provincially and a sales tax federally. Imagine the complications that this is going to cause to small businesses.
Why then, in view of the problems that this tax is going to create, is this government constantly subjecting the people of Canada to psychological manipulation? Why is it trying to force this down the throats of Canadians? We have seen the saga of the Standing Committee on Finance, led by that redoubtable crusader, the chairman, flying across the country speaking with Canadians, insulting them one by one as he goes, leaving a trail of bad feelings and complete disgust everywhere he lands.
It was the dubious privilege of the Atlantic provinces, just a few days ago, to have this caped crusader in their midst, the Batman of politics. He landed in Newfoundland and when witnesses came before him he kept saying: "Hurry up, hurry up, I have got to catch a plane. I cannot listen to all of this". He did not tell them, of course, that the plane was at his disposal and the plane would only go when he said it could go. He was pushing Canadians. He had allowed two days for the four Atlantic provinces on an issue as important as this. He was not even going to hear from the tourist industry of Nova Scotia. He still did not hear testimony from the Canadian Federation of Independent Business, an organization that represents 8,000 businesses in Atlantic Canada. This is the Batman that we talk about. I am telling you that this Batman may be fortunate to be able to hang from the ceiling of a cave by his feet when the people of Canada go looking for him.
This is insulting to the people of Canada. Yet, why is this being done? Why is all this attention being directed to our fearless crusader who is going across Canada and to the Minister of Finance? I suppose the more attention that we can attract to these fellows, then the more heat is taken off the Prime Minister. What a wonderful ploy.
If we were to look at the last five years of this government, we would find it very difficult to sum up exactly where it has gone because it has been like a balloon flying through the air with the air coming out of it. It has been zigzagging all over the place helter-skelter.

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We cannot look at this government as having any concern for Canadians. We cannot give it a tag which says that this is a government that really is interested in the people of Canada. We cannot do that because it is not true. We cannot say it is the government of the depression years or the war years. Probably the best tag we could give this government would be related to the $1 piece that it brought out and call them the "loonie years". That is really what it amounts to.
There is nothing in this government for the people of Canada other than abuse and absolute misleading policies, redundancy, and absolute abandonment of principles. Why? Because this government is interested in following the course of the United States, marching in lockstep with the government of the U.S. as if it really believed that it knew where it was going or even where the Government of the United States was going.
I think it is interesting to read the October 23 edition of Time magazine. The cover story relating it to the American government states: "Is Government Dead?" There is a little caption saying: "Unwilling to lead, politicians are letting America slip into paralysis". This is what we are following?
Is it not evident that this is exactly what we are following? Before it is too late, we must start to pull this country together, to develop a financial package and a financial program that is going to help this country, not to completely and forever take Canadians into the wilderness and try to convince them of something that every Canadian knows is not helpful and is not true.
Before it is too late, will this government do something decent for this country? Will it do something decent for Canadians? Will it be honourable enough to develop policies that are going to help Canadians and not try to destroy this country?


The Acting Speaker (Mr. Paproski):: I would just like to bring to the attention of the House that we are on Standing Order 43. The first two speakers had unlimited time. The next speakers will have 20 minutes plus 10 minutes for questions and comments.


Mr. David D. Stupich (Nanaimo-Cowichan):: Mr. Speaker, on behalf of the New Democrats, I want to join the opposition to this bill which is really a product of the
budget, and reflects so much what was in the budget material, and follows the pattern set by the Conservatives ever since they were first elected in 1984.
Certainly the trend was established before that. It was bad enough before, this continuing process of loading more and more of the cost of maintaining government services in Canada upon the lowest income people, upon the middle income people, and relieving those at the top of the heap from paying their fair share. It was bad enough before 1984, but the process has certainly accelerated in every budget since the Conservatives produced their first budget after the 1984 election.
Their whole thrust, it would seem, has been to get revenue out of the people's pockets by adding on to consumer taxes of one kind or another. The estimate that we have produced is that up until this budget they have taken an extra $900 in tax from the average Canadian family between the years 1984 and 1988 through sales and excise taxes alone. It is part of the pattern that existed before but has been increased since to get more and more of the government's revenue from such taxes.
The increase in the sales tax on construction materials, equipment and building materials from 8 per cent to 9 per cent is an increase in the rate of tax of 12.5 per cent. That begins January 1,1990. The increase in the sales tax on alcoholic beverages and tobacco products from 18 per cent to 19 per cent begins on April 28. An increase in the sales tax on telecommunications and programming services from 10 per cent to 11 per cent begins June 1, 1989, another increase of 10 per cent. There has been an increase in the sales tax on all other goods to which it applies from 12 per cent to 13.5 per cent, the manufacturers' sales tax. That is an increase of 15 per cent in the rate of tax.
This is the tax that other members and the Minister of Finance himself have referred to as the silent killer of jobs. It would seem as though the minister felt that he has done enough to kill jobs in Ontario, so he is increasing the rate of taxation alone by 15 per cent and making all the rest of the country pay the cost of his attempts to keep the lid on what is happening in southern Ontario.
October 23, 1989

Our estimate is that in this one budget alone the increases in sales and excise taxes is going to add another $500 per family on to the $700 that the Conservatives have already levied against every average Canadian family.
Consumption taxes are unfair. I think everyone will agree with that. Even the government will lend some measure of agreement to the idea that taxes should be based on the ability to pay and should not simply be a general sales tax.
There are other methods. We have talked about them during the budget debate. We have talked about other methods the government could have used to increase its revenue, if increasing its revenue was the main aim of the government in the first budget after the election campaign. We mentioned several of them. I mentioned several of them myself.
There is still some 50,000 profitable Canadian corporations that will be paying no tax even under this budget. There are very wealthy, high income individuals who because of the various allowable tax expenditures will pay no tax in spite of the increases. There is no point putting a surtax on an income tax if the individual is paying no income tax to start with.
I am not opposed to the idea of putting a surtax on the income of wealthy individuals, but I am opposed to them not paying the tax in the first place, the tax upon which the surtax can be levied. To talk about making it fairer by bringing in a further tax on consumption, the goods and services tax of course is the greatest misleading statement of all.
The increase in the federal services tax from 3 per cent to 5 per cent I cannot find too upsetting. It is another personal tax increase, and we have always argued that it should be based on the person's ability to pay. People who are paying that kind of income tax can pay the other surtax.
An additional 3 per cent for individuals with incomes over $70,000 will begin July 1. When you add that to what is already there, that will mean they will be paying an 8 per cent surtax. Those are the people who can afford to pay more revenue to the government.
On the other hand, when we look at the pattern of what the government has done, we realize that in the five-year history of the government it has reduced the maximum tax for people with incomes over $100,000 by $3,500 and, even after putting this increase into effect, those people will still be paying less income tax than they
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were when the Conservatives were first elected. It is obviously unfair.
It is part of the process of putting the weight more and more on the lowest income and on the middle income people and of continuing to provide relief to those with the highest incomes. They have done nothing to close the loopholes that exist for the 6,250 individuals in the highest income tax brackets who have not been hit by this government, indeed who have been relieved.
Other legislation is before the House that I might just refer to briefly. The shift from general revenue to premiums for regionally extended UI benefits adds another $1.7 billion tax on payrolls. For individuals with maximum insurable earnings this will mean a direct tax hike of about $90. It is another way of loading the cost of government upon the lowest and middle income people so that it will not be necessary to hit those at the highest levels.
A large corporations tax is to be levied on corporate capital in excess of $10 million, creditable against the existing 3 per cent federal surtax on corporate income. At least it is getting something, but we have to realize that this is not a minimum tax on corporations. Like the capital tax on banks, it taxes assets, not profits, and it will only apply to 3,600 corporations leaving tens of thousands still not paying corporate tax.
Speaking of banks, I recall the concern expressed by the banks or at least by the people who were buying bank shares before the last budget. They expected the government to come in with a new tax on banks and trust companies. Unfortunately that did not happen and the price of bank and trust company shares went up markedly in the market the next day. They were expecting to be paying some $4.1 billion-that was the finance minister's own figures-but it did not happen. His explanation was that it was going to be too difficult to administer. So easy to get more money out of the people at the bottom of the heap, so difficult to administer some new tax that is going to hit the wealthiest of all corporations in Canada. I wonder why it was so difficult.
They took a little bit off the corporations. They hit a few of them. They go to the bottom again and they hit small business. There is an increase in the effective small business tax rate from 12.4 per cent to 12.8 per cent and an increase in interest charges for overdue income tax payments of individuals by 2 per cent, which is simply following the increase in the prime rate that perhaps has had the greatest effect on the budget. Without that the deficit this year could have been substantially lower than it was the year before.

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I recall that during the election campaign we expected the deficit to be $28.9 billion and then we found out when the budget came down that the latest figure was $35.5 billion, an increase of $6.7 billion in what the deficit was expected to be. It was totally attributable to the increase in interest rates and there would have been a substantial reduction had interest rates not increased so much.
They are passing some of that on to the people who are behind in their income tax instalments. Still, there is nothing to go after the $36.1 billion in deferred income taxes corporations have been allowed to postpone. As some of them say, they do not expect ever to pay it and, as some have argued, we cannot really collect that because it is never going to be paid. Yet, the corporations are able to claim this, to report it.
We could at least-I have argued this before as have others on our side of the House-charge interest on that deferred corporation tax. As long as it is sitting there on the balance sheets, let the Conservatives get some interest from it and let them get it at the same rate as they are getting it from individuals at the bottom of the heap. But I do not expect that to happen. That is contrary to the direction in which the government has been going since it was elected some five years ago.
According to the National Council on Welfare, sales and excise taxes have been the predominant source of new tax revenues since the Conservatives came to office, reflecting a 55.5 per cent increase in the revenue from those sources. The contrast is that revenue from personal income taxes increased by 33 per cent since 1984 and from corporate income tax by 17.7 per cent, not that the rates have gone up but rather that there had been that much more money or inflation. That is why the amount has increased.
The government should have followed up on what it was saying. It should have tried to make the tax system fairer. A more appropriate target, rather than going after the people at the bottom of the heap, would have been to have gone after the $30 billion patchwork of tax credits that are allowed to individuals and corporations.
The government then comes up with this proposal of bringing in a new tax system that is supposed to be fairer, the goods and services tax, and once again, going after the people at the bottom of the heap. I know that what I have said on this subject previously has been quoted in the House and has come back to me. I think that some of it bears repeating from my mouth as opposed to coming from somebody else's.
The goods and services tax, as it now stands, is not a fair way of getting more money from the Canadian public. We should be going to the individuals and corporations that have it, that can afford it, that are earning the incomes and are not paying tax at an appropriate rate.
There was a proposal which came out some 22 or 23 years ago in a report that was three years and a couple of months in the making, the Carter report. The report had good proposals for making the tax system fairer. As a matter of fact, the proposals were going to be so good for the people in the low and middle income brackets and so fair for the ones at the top that neither the Liberal nor the Conservative governments paid any attention to that report since. The Conservatives might well go back and look at that, if they want to be fair, to see whether there should not be for the first time in the history of Canada a truly fair system of getting revenue for government services.
The goods and services tax is not fair. The lower the income, the higher proportion of income one will pay in this tax. The government says we are going to mitigate that by having a system of credits, but we are going to make sure that we keep getting more money out of the lowest income people because that tax credit is not going to be fully indexed, only partially.
That way year by year, while the people in the lowest income brackets are getting credits paid to them, nevertheless they will have them clawed back each year through the government's failure to fully index these payments.
There is another way. I have spoken of this before and I am going to try it again. The government said that it was really going to be great, that it was going to give the credit every three months. It was not going to make us wait until the end of the year. Mr. Speaker, I do not know if you have any people in your riding who are on welfare, or whether you have ever had any experience with this, whether you have ever known anybody in that circumstance, but they are operating on a pretty tight budget. To have to wait for three months to recover the money that they spent on the first day after they got the previous cheque is asking a bit much of them.
October 23, 1989

A lot of single parents with very low incomes, raising families, trying to educate them, are going to be asked to somehow or other budget so that three months from the latest one they will get another cheque from the government to reimburse them for the cost of paying the GST. They are getting other payments every month. Is it that difficult to pay them monthly rather than quarterly?
I am not speaking in favour of the system. I am still opposed to the fact that it is not fully indexed, but there ought to be a way of getting those cheques into the hands of the consumers who need them so desperately more frequently than once every quarter. I hope that plea will not fall on deaf ears. I do not suppose we really know the answer to what the government is going to do about groceries. On the face of it at the moment it looks as though the most exotic of foods, if you buy them in a grocery store, will be tax-free. I hope I do not offend anybody, but if you buy the lowly hamburger in a fast food outlet you pay tax on it. Now it is the lowly hamburger that provides so many meals for families that cannot afford anything else. In some cases it is cheaper to buy that hamburger in a fast food outlet than it is to prepare it at home, though the quality would be a lot better at home. Nevertheless it is more economical. Those foods are taxed the way the system is now while the most exotic of foods bought in a grocery store will not be taxed. That is not fair.
People who have the means and are close enough to the border to drive across and load up with groceries will not be paying any tax on anything they bring in that way. If you cannot get across the border and have to buy goods in a store on this side-I am not talking now about groceries; I am talking about all goods generally-then you pay tax. That is not fair. There has to be a better way of handling it.
I recall reading a story when I was in the Victoria legislature written by someone in Montreal who was talking about various stock markets across Canada. Does anybody in the Vancouver exchange have a hope of making a profit? The average investor has better odds of making a profit if he bought Lotto Canada tickets. Yet
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that is tax-free. You can play that kind of gambling where a lot of money changes hands by the people who can afford it and pay no taxes, but if your mother goes out and plays bingo for an evening she pays taxes. That is not fair. If one form of gambling is going to be taxable then the other should be as well. Indeed it should be the other way around if anything.
The GST is supposed to be visible. Well it is like taxing the banks. It is difficult so we abandoned that idea. Anything that the government does not want to do, it says it is too difficult. If it means that the people at the bottom of the heap will know how much tax they are paying as compared to those at the top who do not really care, then it is difficult because the government does not really want to do it. The government does not really want them to see a cash register tape which identifies the amount of their income that is going to that tax. It is too difficult so it will not be done.
It is supposed to be revenue neutral. As we read the material that has come out recently we see that some $5.5 billion will be available for deficit reduction. Well that is not fair. It is not intended to be fair. We said from the beginning that it was intended that this would help reduce the government's deficit. It is so much easier to do it by taking more money from the people at the lowest and middle income brackets through this goods and services tax than it is to reduce the interest rate.
Then of course labour is supposed to carry the brunt of it. Its members are supposed to be the good people. They are supposed to say: "We know it is in the interest of government as a whole. We recognize we are paying more than our share, but we are not going to ask for any increase in wages to make up for this shortfall". It is not fair to go to that group in our community and say it has to pay the cost of the government's mismanagement of finances.
There are better ways of getting more income from the people who can afford it. The government should abandon this excise tax bill and come back with a proper plan that will get a higher proportion of its revenue from those who are best able to afford it.

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Stanley J. Hovdebo: Mr. Speaker, sales taxes are regressive and consumer taxes are regressive. They have an adverse effect, as the member has indicated, on the people who are least able to afford them. They also have a much larger adverse effect on regions that are remote from the central areas, because the very process of putting on taxes increases taxes for those who are further away from the source of the product in many cases.
I would like the member to comment on the impact of this particular series of budget tax increases on those areas that are somewhat remote and how those areas will be affected by not only this tax in this particular bill but the goods and services tax generally.


David Stupich: Mr. Speaker, I think we have all heard stories of various groups coming before the finance committee and talking about the expected effect of this goods and services tax on their communities. It is not just a matter of the final point of levying a 9 per cent tax on the cost and saying that it will cost 9 per cent, the same as it will cost the people in Toronto or wherever. We know it does not work that way.
We know that the 9 per cent will be added at every stage including the cost of transportation, the cost of maintaining the structure of the transportation system, of getting goods particularly to the more remote areas of the country. It is easier to point to them because it is so obvious that the effect is very marked in these areas. Certainly the closer you get to Toronto the less it is, and the worse it is each step you get farther away.
When you get into the northern areas of the country or the most extreme east or west ends of the country, the cost of the goods has increased so much by that time. Transportation is only part of it. Financing it and the structure of the organizations that are doing it all cost more the farther you get away from the centre. The 9 per cent is applied to that total so the GST will be even more unfair with respect to the people who live farther away from the centre of activity than it will be here in Ottawa or Toronto.


Mr. Wilbee:: Mr. Speaker, I would like to congratulate the member for a very rational approach to the problem. Of course I disagree with him in many areas.
One thing that the people have been talking to me about in my constituency of Delta is the fact that government is not cutting costs enough. The member seemed to be disturbed that part of the proceeds from the GST were to cut the deficit. I would ask him just where his party would plan on cutting government expenditures.
We often hear about the costs of government and that they object to raising taxes. We cannot have it both ways. I would ask the member just what his party would do to reduce government expenditures in its policy.


David Stupich: Mr. Speaker, I mentioned one method during the course of my presentation and that was the very high cost of interest in the deficit. Some $34 billion or something was the interest bill for last year. It is so high because of the government's determination to keep the value of the Canadian dollar up, no doubt as part of the free trade deal.
Certainly one way to reduce the cost of government would be to reduce that interest rate and save some $3 billion for every point that the interest rate was reduced. It is not an insignificant sum.
The member has never heard me talk in generalities about reducing the cost of government. I have sometimes quoted Sir Anthony Eden when he was Prime Minister. He said that everyone is in favour of general economy but not particular expenditures. It is easier to talk about ways in which we would like the government to spend more money. Certainly with respect to general economy, reducing the rate of unemployment by creating more employment opportunities would reduce the cost of government substantially. One way of doing that would be to reduce the interest rates.
From my point of view the biggest thing the government could do would be to reduce the interest rate. It would affect not just the cost of interest, but it would also get the economy moving in other parts of the country. It would reduce the costs of unemployment and make a bigger contribution to our economy if the government could just bring itself to forget about the free trade deal to the extent of letting our interest rates drop, at least down to the point where they were some years ago when there was just a four point spread between us and the United States.
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Robert Evans Skelly: Mr. Speaker, over the past 30 years it seems that the proportion of the tax burden in this country has shifted dramatically. Some 30 years ago, 50 per cent of the burden was paid by corporations, 50 per cent was paid by individuals. It seems that over 30 years of successive Liberal and Tory governments that burden has now shifted to the point where 80 per cent of the tax burden is paid by individuals, much of it through consumption taxes such as the one we are dealing with today, and 20 per cent of taxes are now paid by corporations. There seems to have been a dramatic shift in the direction of forcing the burden of taxes on to individuals in this country.
At the same time there has been a parallel development. Ownership of the Canadian economy has been more and more vested in a very small group of people or a small handful of holding companies. Diane Francis mentioned in her book Who Controls Canada that something like nine families and a small handful of holding companies control 50 per cent of the assets on the Toronto Stock Exchange, so the economy is very tightly held. Even El Salvador is owned by 14 families. Canada's economy is even more tightly held than the economy of El Salvador.
I am wondering if the member can suggest to us ways in which, by redistributing the tax burden in this country, we can also redistribute the ownership and democratize the ownership of our economy so that more Canadians can feel that they own our economy and have a democratic interest in the directions that our economy is going. Flas the member any suggestions in that direction?


David Stupich: Mr. Speaker, this ties in to the question by the hon. member for Delta when he was asking what expenditures could be reduced.
The expenditures we could reduce are the tax expenditures. The ones that made it possible for the very situation described by the member for Comox-Alberni to happen. It has not been anything else other than succeeding Liberal and Conservative governments making it easier for the wealthy individuals and the wealthy corporations to avoid paying income tax through various tax expenditures, all legal. They have steadily shifted the load, as I said during the course of my remarks earlier, from corporations and wealthy individuals to people in the lower and middle income tax brackets. They are the ones who are paying through this system of tax expenditures for corporations and individuals.
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Beryl Gaffney: Mr. Speaker, I feel very privileged to be able to stand here this morning and speak on Bill C-20. This bill contains the legislative amendments required to implement the federal sales tax and excise and duty changes announced in the budget.
This government proposes a 9 per cent goods and services sales tax to replace what it deems to be a regressive and economic liability to Canada in the 13 per cent federal sales tax. The federal sales tax was 9 per cent when this government took over in 1984. If it was so hurtful to our economy, why was it increased from 9 per cent to 10 per cent, to 11 per cent, to 12 per cent, and now to its present 13 per cent? It does not make sense. The Prime Minister called it a silent killer of jobs, yet he went ahead and increased this silent killer of jobs.
The government's opening speaker this morning commented on how this tax will help reduce the deficit. Is this something new we have been hearing recently? When it was originally proposed, there was no mention that this goods and services tax would help reduce the deficit until a few people, other than those on the government side, started checking into it and suddenly realized that there were billions of dollars in excess revenue over what was required from the FST that would be earned. So the government finally had to admit that it was not revenue neutral. I guess Canadians are saying, "Can this government ever make up its mind?"
We all went through an election in the fall of 1988. Unfortunately, nothing was mentioned except free trade. There was no mention at all that this country was faced with the largest deficit it has had in its history, that from 1944 to 1988 that deficit had doubled in size. There was no mention of this at all by the government. Yet here we are now into the Thirty-fourth Parliament, and all of a sudden the government is finally coming clean and saying that there is a serious problem with regard to the deficit and that we must reduce it.
I think that all of us as concerned Canadians are interested in reducing this deficit. But in 1991, if this goods and services tax goes ahead as planned by the federal government, Canadians will pay a new tax whenever they make purchases from a wide range of goods and services. The new sales tax, for most Canadians, will be applied in addition to the existing provincial retail sales tax, especially here in Ontario-I guess in all provinces except Alberta-with which they are now so familiar.

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The proposed GST will also be a new experience for businesses. Today some businesses collect and remit retail sales tax, while those which produce or import manufactured goods collect and remit the federal manufacturers' sales tax. There are still, however, numerous enterprises which never see the current taxes directly because they never sell nor buy taxed products at the retail level, nor do they produce or import manufactured goods. This tax would then dramatically affect the way in which sales tax revenue is collected at the federal level.
The GST, as outlined in the August technical paper, is predicted to generate $24 billion in 1991, this amount being based on the rate of 9 per cent. Of this total revenue, about $18.5 billion would replace the revenue lost by the elimination of the existing MST, which by 1991 would have been levied at a rate of 13.5 per cent for most products. The remaining $5.5 billion would be returned to taxpayers in one form or another. By far the most important element in this regard would be the greatly enhanced sales tax credits. The existing system of credits would have cost $1.2 billion in 1991, and the proposed credits would cost about $3.6 billion. The difference of $2.4 billion was be financed by GST revenues. Finally, about $2 billion in revenues would be transferred to individuals and provinces as a result of the GST's impact on the price level.
The introduction of the GST is expected to raise prices by about 2.25 per cent. The remaining $200 million in GST revenues is slated to pay for additional administrative costs which include hiring at least 4,000 people to administer the GST.
There are many arguments both for and against. As the most recent poll has indicated, 80 per cent of Canadians say that there are more reasons against than for initiating this GST. As I stated earlier, all Canadians are concerned about our deficit and all Canadians will gladly find measures to reduce that deficit, but this is not the way to go. This is what they are saying. They are saying it in spades, and I think it is high time that we started listening.
The argument against revenue neutrality is further strengthened by noting that the federal government, in proposing a reform of the sales tax, has recognized the serious problem associated with the erosion of the MST base. The 13.5 per cent MST rate might well be viewed as untenable over time. Rather, it is only a temporary measure until such time as the GST can be put in place.
Tax expenditures are increasingly being substituted for program expenditures and loose interpretation of the concept of revenue neutrality allows tax base measures to be unnoticed in a way that expenditure measures could not be. By stressing the alleged revenue neutrality in the tax reform, the government is pointing out that there are structural problems inherent in the present tax system which need to be addressed. But these are two distinct issues and, unfortunately, the government is confusing them.
Let us look at the case of two sets of adults living together, one couple married and one couple living common law. The married couple would be entitled to a maximum GST credit of $550 which would be reduced on the basis of family income. Each individual of the couple would be entitled to an adult credit reduced on the basis of individual income. Rather than having the credits start to diminish at $24,800 of total income, as in the case of a married couple, their credits might not start to diminish until total income reached $49,600 if both adults earned the same amount.
In addition, the unmarried couple would be treated as single individuals. The common law couple would then be entitled to two tax credits. In other words, members of this House, it is far more beneficial tax-wise to live together as an unmarried couple than it is to live together as husband and wife. Now I think that is disgraceful.
We know there will be an impact on housing and, undoubtedly, housing accounts for the single largest expenditure made by families. This is true whether one rents or whether one buys. The GST would impose a 9 per cent tax rate on the retail price of a new house purchased from a developer. Thus, the GST has the potential to increase the price of new houses substantially. To offset this impact the government is proposing to rebate up to one-half the GST otherwise owing, subject to restrictions on the price of a house.

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Clearly the tax implications of the shift to a GST would vary across Canada since house prices vaiy greatly. As the technical paper notes, home buyers in Toronto would face the greatest adverse effect of this change. The imposition of the GST on new housing would then raise house prices and confer a windfall profit on owners of existing housing.
On rental accommodation, in 1991 or later all aspects of the construction of a building would be subject to the GST, as would the cost of the land. Long-term residential rentals would be exempt from the GST. No tax would be collected on these rents and the landlord could not claim an input tax on any GST paid.
The introduction of a new and larger tax on new construction should raise rents across the land. As the tax drove up the prices of new apartments, some demand would shift to old apartments. But an increased demand for older apartments could not increase the fixed supply, obviously so the consequence would be fully reflected in price hikes in that market also.
The GST is a value-added tax rather than a sales tax. A sales tax can be thought of as a tax on a transaction rather than a tax on a product. Thus a provincial sales tax might be applied to a product numerous times. Think of an automobile which is sold new and taxed and later resold through a dealer and taxed again. This kind of multiple taxation should not occur with a GST type of value-added tax.
Why then would used products be taxed under the GST? There are several reasons. Used goods compete with new products and are often sold by the same retailer. If one were taxed and not the other, compliance costs for the seller might increase and an opportunity for tax evasion might present itself. Thxing one and not the other might also distort the relative prices of the two types of goods, especially if an untaxed source of used goods, say through imports, were available. As, well the sale of used goods often involves the creation of some value-added, and by taxing this sale that value-added can effectively be taxed. It is confusing stuff. I do not know who the heck is going to understand and know what to tax and what not to tax.
Last week I spoke on the GST and how it would affect municipalities. It is going to have a very, very grave effect on them. I will not go into this again. The municipalities have only one way of raising taxes, namely, through the property tax. What this government is doing is looking for revenue from municipal government, a government that is not able to raise its revenues. And yet, this government wishes to make gains on the backs of a municipal government.
In conclusion, the provinces are almost faced with a fait accompli. Ottawa plans to introduce unilaterally a sales tax of 9 per cent. It is obviously going to have a serious effect on provinces because there is already a sales tax in all of them except Alberta. The provinces would have to bear the full weight of resentment toward a tax of between 9 and 18 per cent. But even more important for the provinces, their refusing to participate in this sales tax leaves the federal government on its own to carry the borrowing of the money.
The intent of the goods and services tax is to provide the federal government with an efficient alternative, so it says, to the MST. Efficiency would be achieved by taking a fairly broad base, thereby minimizing distortions and consumer choice. By crediting the tax paid on business inputs, the GST is also intended to remove from capital and thus enhance productivity. I do not think it is going to do any of these things. It is going to have one of the most deleterious effects on the economy of this country. We know it is going to raise the inflation rate. We know it is going to raise the interest rate. We know there is going to be a slow-down in business. Why, oh why, is this government insisting on it? Eighty per cent of Canadians say "stop" say "no". For goodness sake, let's listen to them.


Alfonso Gagliano: Mr. Speaker, first of all, I would like to congratulate the Hon. Member on her speech and on her grasp of the subject of the goods and services tax. She has really done her homework and understands the problems involved.
I think it is somewhat ironic that today we should be talking about tax increases and this particular tax, when this is the first day of Small Business Week in Canada. My question is directed to the Hon. Member, who I know has many small businesses in her riding, and I

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wonder whether she could tell the House about the attitude of small businesses in her riding. What does small business think of the new GST, the new tax on goods and services? I think everyone in this House agrees it will be an administrative nightmare.
Mr. Speaker, with your permission, I would like to hear what the Hon. Member has to say about small businesses in her riding.


Beryl Gaffney: Mr. Speaker, I thank my colleague for the question. One of the things that I have done in my riding is to try to analyze the business community's attitude toward the GST. I did that by circulating a copy of the government's pamphlet on the GST to every business in my riding. I, in turn, also circulated the Liberal response, the opposition party's response, to the government's proposed goods and services tax. This way I was providing them with both sides of the spectrum, the government's side and the opposition's side. I was not trying to influence the business people, I was allowing them to make up their own minds with the information presented.
I also asked that if they felt, as we on this side of the House feel, that it was going to hurt business, would they sign a petition which I would be pleased to present in the House of Commons. These petitions are coming in on a daily basis. The small business community in the riding of Nepean is very, very concerned about the business tax.
There is not enough rebate being allowed to small business. The paperwork is going to be horrendous. The costs are going to be horrendous but much more important the community is telling me that business will suffer, and suffer badly. People see a definite downturn and I feel quite confident in standing here this morning and saying that I am speaking for the majority of the small business people in the riding of Nepean in that they do not wish to see this GST imposed upon them. They cannot afford it. Many have told me that they will literally be forced out of business.


Stanley J. Hovdebo: Mr. Speaker, the budget on which this particular Bill C-20 is based is an illegitimate budget to start with in that it gave advantage to people across the country who are in the privileged position of knowing what was in this budget before it was presented to the
House of Commons. Consequently, people had opportunities. We do not know much about that. Therefore, we should consider Bill C-20 an illegitimate bill in itself. What it does is increase, as the member put forward, the tax in areas which are already regressive. Would the member give us some indication of how she feels the direction is impacting on her particular constituency?


Beryl Gaffney: Mr. Speaker, there are probably several ways in which these will be impacting upon my constituency. I have mentioned the business people. Maybe it was in a previous speech, I forget, but the senior citizens of our country are probably the people who are most concerned and will suffer the greatest with the GST. I have had literally hundreds of calls and hundreds of letters in my offices. Some are from the adult population in Nepean saying that they will not be able to afford it.
One senior said to me "My wife and I have raised a large family. We worked hard. We never took a holiday. We never wanted to leave our children." He had an average income, and told me that they had never bought a new car but bought Canada Savings Bonds because they believed in Canada. They did this consistently for years until their children were grown and through university. Here they are at a stage in their lives-they are both retired-when they can afford to take that holiday south. They can afford to buy that new car. Their income is over the $50,000 range and they are saying to me, "I will sell my Canada Savings Bonds. Why should I keep them? I will sell my Canada Savings Bonds and reduce my income so that my old age security pension cheque is not clawed back." I do not blame those senior citizens. I can guarantee that this government is going to lose billions of dollars through people selling their Canada Savings Bonds or through the non-purchase of new bonds. I think that will have a dreadful effect on all Canadians.


Stanley J. Hovdebo: Mr. Speaker, I appreciate the opportunity to speak. I can look into the future. I know you did not know that but that is it.
I see on bookshelves across Canada a story of "the taxingest government in the history of Canada" or maybe a book that is named "the grabbiest government in the history of Canada".
October 23, 1989

This chapter of Bill C-20 is chapter 7 of the grabbiest government in Canada's history. If you look over the last five years of government, you will see that chapter 1 was the initial budget. Actually it was not a budget.
It was a statement by the Minister of Finance, who started the process of increasing the taxes for the people of Canada, reducing the taxes for the corporations of Canada, and developing a system which impacts particularly on those who can least afford to pay taxes.
Chapter 7, Bill C-20, is an act to amend the Excise Tax Act, and an act to amend the Excise Act. It sounds dull and sounds innocuous, but the taxpayers are going to find it a particularly interesting chapter because it amounts to one more tax grab. We have indicated on many occasions that any kind of sales tax, any kind of consumer tax, is a regressive tax. This book that I am speaking of started during those last four years. It started increasing the very taxes that are being increased again today in this particular bill.
I can list for you, Mr. Speaker, if you want to hear them, exactly what each of the tax increases were over those five years. Do you want me to do that, Mr. Speaker?


The Acting Speaker (Mr. Paproski):: Not particularly.


Stanley J. Hovdebo: I am not sure that I want to do it either. In any event, this chapter is peculiar as well as interesting. As I said a few moments ago, the budget on which the bill is based, is an illegitimate budget. The leak of the budget gave many people in privileged positions information which they could use to their advantage. Never in the history of Canada, in the history of parliamentary governments, has that been allowed. Whenever it is found that somebody had a previous and early look at a budget, the indication was that it should not be passed. Therefore, it would be withdrawn. But not with this government.
The idea of taking advantage of a budget is not acceptable in a parliamentary government. This particular government did not seem to want to remove its budget from the books. It has gone further by bringing in Bill C-20 to further take advantage of not only the lower-income Canadians, but those on welfare and those without any income because the moneys they get will not go as far in keeping them alive.
Government Orders
The arrogance of the government is expressed very succinctly here. We have had no change. Surprisingly, the government made no real attempt to justify the fact that it had allowed people to take advantage, or allowed the situation where people could take advantage, of the budget. It made no effort to justify that. Consequently, we have here an illegitimate budget and an illegitimate bill. But the arrogance of this government is such that we are forced to look at this as if it were a legitimate operation.
Let us have a look at Bill C-20. I live in northern Saskatchewan, and I have spent a considerable amount of my life in northern Canada, places like Inuvik, Whitehorse in the Yukon, and in northern Quebec. I recognize that there is in this particular budget a far-reaching impact that is much greater on remote and northern areas than there is on downtown Toronto or Ottawa, for instance. There are a number of areas in which the taxation in Bill C-20 will have a direct impact upon the people of the Yukon or Northwest Territories. It increases the tax on fuels, on aviation fuel. One of the real differences between the southern part of Canada and the north, and you do not have to go too far north to recognize this difference, is the cost of fuel for travel and for heating. This bill increases the cost of fuel. It increases the cost of fuel by increasing the tax on that fuel. Consequently, it is a tax which is much greater on those northern, remote areas of the country. Transportation costs are greater to get the product to those places and this additional tax has been added to that cost.
Tourism is a major industry in many northern parts of Saskatchewan, Ontario and British Columbia. Tourism is a major industry in all the northern parts of Canada. This tax is going to increase the costs of all of the tourist industry across the country. It is going to increase the costs by increases in the cost of gasoline, fuel for ground transportation as well as air transportation.
It is not as if we did not know the impact of this kind of a tax. Last year, the government put on a communications tax. That is the kind of tax we are looking at now, a communications tax on every long distance telephone call in these areas. If you live in a northern community and you want to talk to your doctor, to your school about your children's progress, or to somebody who is going to supply you with gasoline or parts for whatever your industry happens to be, you are going to call long distance. If you live in Ottawa and you want to do any of these things, not one of those calls will be a long distance call and there will be no tax on them. But if you live in a northern community you will pay 10 per cent on every call that you make for every substantial item that you require to survive. That is an increased tax on northern

October 23, 1989
and remote communities much greater than the 1 per cent increase on gasoline. But it is an increase which is there and it behooves us to look at it. It is the same kind of tax as the GST. It is going to be on all products and it is going to impact on northern communities much more than southern communities.
I will continue after Question Period.


The Acting Speaker (Mr. Paproski):: The hon. member from Saskatoon-Humboldt will have ten minutes in his debate plus ten minutes for questions and comments.
It being one o'clock I do now leave the chair until two o'clock this day.
The House took recess at 1 p.m.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.

Thomas (Tom) William Wappel: Mr. Speaker, 33 years ago on October 23, 1956, the flame of freedom briefly burned to light the darkness of Stalinist Hungarian communism.
The freedom fighters were just that, men and women who fought to bring freedom to their beloved homeland. The world watched with bated breath as a handful of patriots dared to challenge the mighty Soviet giant in pursuit of democracy and human rights. Despite promises made, the western world stood by while they fought on valiantly, courageously, heroically, to the death. The blood of these patriots seeped into the ground but was not forgotten.
Now, 33 years later, the tree of democratic reform has begun to bear fruit, thanks to the nourishment it received from those who fought and died in 1956.
Much is happening in Hungary today. Reforms thought impossible only a few years ago are enacted almost daily. We in Canada and the western world watch with hope. But we must also be ever vigilant that the fruits of the sacrifices of the freedom fighters will not be spoiled by renewed repression.


IMMIGRATION
Mr. Dan Heap (THnity-Spadina):: Mr. Speaker, on October 5, the Minister of Employment and Immigration announced that she had lifted the moratorium on deportations of Haitians. She said she believed the political situation in that country had returned to normal since a great wave of violence disrupted the November 8, 1987, attempt to hold elections there. Therefore,50 rejected refugee claimants are to be deported from Canada to Haiti, the first one tomorrow.
For decades, Haitians were terrorized by the Duvalier regime. Since 1986 they have had four successive governments installed by force of arms.
According to the June 1989 Overview on Haiti published by the Immigration and Refugee Documentation Centre, human rights violations continue under the latest regime. These include torture, extrajudicial executions, disappearances, arbitrary arrests and detentions.
The Tontons Macoutes still roam Haiti, possibly sanctioned by the military government.
I call on the minister to read the Immigration and Refugee Boards's report and to talk with Amnesty International before returning Haitians to risk death.


NATIONAL TRANSPORTATION AGENCY
Mr. Bill Casey (Cumberland-Colchester):: Mr. Speaker, I am pleased to announce that the National Transportation Agency has today issued Order No. 1989-R-326 apportioning costs for the reconstruction of the overhead bridge crossing the CN lines near Truro, Nova Scotia.
October 23, 1989

This bridge is in a serious state of deterioration and has had its capacity reduced repeatedly to the point where it cannot legally accommodate any more than a light truck. Everyone involved agrees that the bridge must be replaced immediately. The tracks in question divide the community of Salmon River right down the middle and are a barrier for school buses, ambulances and firefighting equipment.
I now call on all the parties involved, including CN, the National Transportation Agency, the province of Nova Scotia and the municipalities to work together to ensure that construction of the new bridge begins immediately and this problem is brought to a logical and safe conclusion.
I commend the National Transportation Agency for its determined efforts which have resulted in this order today.


PROPOSED GOODS AND SERVICES TAX
Alfonso Gagliano: Mr. Speaker, today is the first day of the week dedicated to small business. The government has selected the following slogan for this occasion: Grow today for tomorrow.
The government's cynicism is truly incredible, Mr. Speaker. It talks about growth for Canadian small businesses, when it is trying to impose a tax on goods and services, the GST, that will be a nightmare for small businesses.

I ask this government to withdraw the GST. That would be the best way to show that it cares for small business, which in the last 10 years has accounted for 93 per cent of the new jobs in the private sector.

Small businesses are the motor of our economy, Mr. Speaker. During the past ten years, small business created 93 per cent of the new jobs in the private sector.
If the Conservative government is anxious to defend the interests of small businesses, it should immediately withdraw its new goods and services tax.


COMMUNITY FUTURES PROGRAM
Mr. Brian O'Kurley (Elk Island):: Mr. Speaker, the Minister of Employment and Immigration has shown her commitment to the riding of Elk Island through the Lamont-Two Hills Community Futures Program. Community Futures is geared to helping workers in communities which have serious economic problems but show potential for growth.
In order to maximize a community's economic potential the program is guided by local board representatives who assess community needs and recommend support for business development, skills training or job relocation.
As part of the program, the Lamont-Two Hills Business Development Centre will receive $400,000 in federal funding to continue assisting small business in the area. During its first year 11 businesses were either started or maintained through the technical and financial services available at the centre. As a result, over 28 full-time and part-time jobs were either created or maintained.
Community Futures is solid evidence that the Government of Canada is committed to our rural communities.


NATIONAL UNIVERSITIES WEEK
Mr. Rey Pagtakhan (Winnipeg North):: Mr. Speaker, this year's National Universities Week, which ended yesterday, caused Canadians to think about what universities mean to Canada's future and to realize that investment in our universities is at risk.
University classrooms are overcrowded. Professors have less time for individual students and existing research grants are insufficient. Yet advances in science and technology-particularly in medicine, biotechnology and communications-depend on university education and research.
Thus, I welcome the inclusion of education on the agenda of the upcoming First Ministers' Conference, considering that education has not been discussed at these conferences since 1973.

October 23, 1989
However, I am concerned because education will merely be one item among many to be discussed during only half a day of the two-day conference.
A First Ministers' conference should be convened which will focus specifically on the topics of education and research, to adopt a definite commitment to fund them so that we will experience a budget boost in this area instead of a budget blow.


THE ENVIRONMENT
Scott Jon Thorkelson: Mr. Speaker, countless Albertans from all walks of life have expressed their concerns to me about the environmental impacts of the proposed pulp mills for northern Alberta. Edmontonians have written letters, telephoned and expressed their concerns directly to me.
The federal government and the province of Alberta have embarked on a joint environmental review. The review panel is presently holding hearings in towns throughout northern Alberta. This forestry investment will have major social, economic and environmental impacts on the whole of Alberta. Yet the review panel will not be holding hearings in Edmonton or Calgary.
All Albertans are subsidizing the forestry projects. All Albertans own the resources of the province. Debate must be encouraged, not discouraged.
I call upon Alberta Environment Minister Ralph Klein and the federal Environment Minister, the member for Lac-Saint-Jean, to ask the review panel to at least hold public hearings in Edmonton. All of Alberta is affected. All Albertans must be heard.


SMALL BUSINESS WEEK
Mr. Jack Whittaker (Okanagan -Similkameen-Merritt):: Mr. Speaker, I rise on the occasion of Small Business Week, October 22 to 28, to express the New Democratic Party's recognition of the vital contribution of the small business community to Canada's economic growth and well-being. It is significant to note that in the past 10 years almost 70 per cent of all new jobs have been created by small businesses, many of which have less than five employees.
How ironic that Small Business Week-this celebration of entrepreneurship in Canada-takes place at a time when the continued economic viability of the small business community is under attack by the federal government's proposed goods and services tax. The GST will effectively turn individual small businesses into Revenue Canada tax collectors, forcing small businesses to carry the overwhelming burden of administering this tax. The GST will add to the mountain of paperwork already faced by small businesses and will substantially increase accounting costs.
I would suggest, Mr. Speaker, that Small Business Week is an appropriate time for the government to demonstrate its commitment to small business by withdrawing the proposed goods and services tax.


CANADA POST
Mr. Guy St-Julien (Abitibi):: Mr. Speaker, once again, Canada Post wants to terminate the local air service that carries perishable goods to the Inuit and Cree in New Quebec. Although it has not announced its intentions publicly, Canada Post has already increased postal charges by 30 per cent, 45 per cent and even more. The situation will become critical after November 13, 1989, and will have a direct impact on consumers in Northern communities. This is a complex situation which concerns Canada Post, the Department of Indian and Northern Affairs and the Department of National Health and Welfare.
If the government is trying to save money, it is in fact creating more serious problems that will affect the health and well-being of Northern residents. Mr. Speaker, this is another instance of people being unfairly penalized, compared to those living in southern communities.


VIA RAIL
Joseph R. (Joe) Comuzzi: Mr. Speaker, in a major snow storm on Friday, 36 centimetres of snow fell, paralyzing northern Ontario between Marathon and Sault Ste. Marie for more than 24 hours.

Northern Ontario residents were denied access to any road or air travel. The only transportation system operating for those residents was VIA Rail.
Had this taken place on January 16,1990, the day when the VIA Rail cuts come into effect, the residents of northern Ontario would have been left without any means of transportation whatsoever, and this will happen in this year. This government obviously did not consider the weather of northern Ontario in its decision to eliminate the Canadian and the CP line which services close to 400,000 people.
Friday's storm illustrates all too well that this government has chosen to isolate these communities because of, for lack of a better word, a stupid decision. The people of northern Ontario implore this government to change its mind before it is too late.
Do not stop passenger rail service in northern Ontario, depriving the people in Wawa, White River, Marathon, Terrace Bay, Schreiber, Nipigon, Red Rock, Hurkett, Dorion, McKenzie, Thunder Bay, Ignace, Dryden, Ke-nora and many, many small communities of less than 500 people of passenger rail service because it will be eliminated.


EATING DISORDER AWARENESS WEEK
Ms. Barbara Greene (Don Valley North):: Mr. Speaker, today marks the beginning of Eating Disorder Awareness Week.
The National Eating Disorder Information Centre is working to sensitize Canadians to the serious health hazards associated with such disorders as anorexia nervosa, bulimia and overeating.
Anorexia and bulimia are reaching epidemic proportions across Canada, affecting one in five college women and an increasing number of men. Between 10 and 20 per cent of anorexics die as a result of their eating disorder.
The National Eating Disorder Information Centre and the Bulimia and Anorexia Nervosa Association are working to help Canadians combat the low self-esteem and other psychological, physiological and societal factors that lead to these disorders.
The Minister of National Health and Welfare along with all hon. members supports these organizations in their endeavours and wishes them every success in their education campaign this week.


OFFICIAL RESIDENCES
Beryl Gaffney: Mr. Speaker, now the National Capital Commission wishes to establish an eighth official residence in Canada, this newest one for the Chief of Defence Staff.
This proposal comes at a time when the federal government is preaching restraint, at a time when we have thousands of homeless, at a time when our soup kitchens are overflowing. What will be next? Will the Clerk of the Privy Council want a residence? What about the Deputy Minister of Finance, or perhaps even the chair of the National Capital Commission?
We see the government dismantling the national infrastructure with cuts to VIA Rail, the CBC, the privatization of Air Canada and the refusal to aid municipalities in their problems with infrastructure decay. We see this government failing to prepare for the future by drastically cutting back on research and development and weakening environmental legislation.
Yet it seems to think that these things do not matter as much as subsidized housing for the Chief of Defence Staff. For a government that is constantly calling on Canadians to tighten their belts, we never see a sign of it doing this. It seems to have removed its own belt so as to lash out at Canadians. I demand that it put it back on, tighten it and begin to look at important issues affecting all Canadians.


SMALL BUSINESS
Jean-Marc Robitaille: On the first day of the tenth annual Small Business Week in Canada, I want to take this opportunity to salute millions of Canadians who take risks in order to start small businesses.
Mr. Speaker, since 1984, more than 150,000 small businesses have been created each year in Canada, and according to a recent study, more than 65 per cent survived the first three crucial years.

October 23, 1989
Oral Questions
Four Canadians out of ten employed in the private sector work for a small business. In fact, 80 per cent of the new jobs created between 1978 and 1987 were in the small business sector.
Mr. Speaker, these figures spear for themselves and demonstrate the vital role played by small businesses in Canada's economy. The federal Government is aware of this contribution, and that is why it has done more than any other government to help small businesses in the past five years.
Mr. Speaker, this government firmly believes that in Canada, small business is big business.


INTER PARES
Ms. Lynn Hunter (Saanich-Gulf Islands):: Mr. Speaker, Saturday's The Globe and Mail displayed a front-page photograph of the Prime Minister and his spouse sitting in a rickshaw. Below the photo was the caption "riding in style". The imagery is an anachronism. It speaks volumes of this government's insensitivity toward the developing world.
Does the Prime Minister know anything about rickshaw drivers and the poverty in which they live? Rickshaw drivers are among the poorest people in the world. The development organization Inter Pares was doing something about the impoverished state of rickshaw drivers. Most drivers must rent the rickshaw from fleet owners at exorbitant prices.
Three years ago Inter Pares set up rural co-operative workshops in Bangladesh to enable them to become self-sufficient. This is what real development means.
The Prime Minister's budget put an end to the Inter Pares project. This Canadian organization is now looking to Europe to continue financing the co-operatives.
It is a sad day indeed when a Canadian organization running a successful program must appeal to other governments to keep development projects alive. I hope the Prime Minister left a big tip. Undoubtedly the driver could use it.



ORAL QUESTION PERIOD

['Mr. Speaker, I rise on a point of order.\nI wish to advise the House that an agreement could not be reached under the provisions of Standing Order 78(1) and 78(2) with respect to an allocation of time to the report stage and third reading stage of Bill C-21, an act to amend the Unemployment Insurance Act and the Employment and Immigration Department and Commission Act.\nUnder the provisions of Standing Order 78(3) I give notice of my intention to move a time allocation motion at the next sitting of the House for the purpose of allocating a specified number of days for consideration and disposal of proceedings at those stages of the bill.']
Hon. Lloyd Axworthy (Winnipeg South Centre):: Mr. Speaker, I have a question for the Minister of Energy, Mines and Resources.
Last week, the minister indicated in this House that the supply of natural gas reserves in this country were so vast that despite the NEB approval to export 9.2 trillion cubic feet we would have no problems for future energy security.
That statement has now been contradicted by a senior official in his own department who said that the minister's comments and assessments were, in fact, academic and meaningless because of the difficulty of developing these resources for economic needs.
Under these circumstances I would like to ask the minister this. Is he prepared now to revise his comment, revise his advice to cabinet and give a commitment in the House today-that the cabinet will not approve the NEB decision until there can be clear evidence provided that this export of natural gas will not endanger the security of energy supply for Canadians?


Hon. Jake Epp (Minister of Energy, Mines and Resources):: Mr. Speaker, in reference to what I said in the House those figures taken from the Geological Survey of Canada. The 9.2 tcf were placed against the 11.65 tcf of known and proven reserves of up to 56 tcf which was given by the Geological Survey of Canada. In fact, I have been given figures today by the Geological Survey of Canada which puts both numbers even higher.
The issue that we are dealing with is the question of how much of that gas is extractable in deep water conditions as well as northern conditions. That I think can only be determined if and when there is a pipeline application by either a company or a consortium of companies and the conditions that they would place.
What the NEB did with the export licence application last week-on the basis of the reserves that it had proven and the amount asked for on the application-was approve from its perspective an export licence. As I said, the GSC has figures today that could put them even higher than the figures I gave last week.
October 23, 1989


Lloyd Axworthy: Mr. Speaker, the issue is much simpler than that. It is whether we will be putting at risk the security of energy supply for Canadians. It is the responsibility of the cabinet to make that decision.
I ask the minister specifically, will he commit that before any further development or decisions are taken that the government will provide publicly to this House a clear indication of what the level of reserves are, and that it will not provide any approval of an export licence or permit until it can prove that there is sufficient reserves for Canadians and that they will not be put at any risk by this pipeline application?


Arthur Jacob (Jake) Epp: Mr. Speaker, the member and I both know that cabinet has to approve the export licence.


Jean-Robert Gauthier: That is the weak link.


Arthur Jacob (Jake) Epp: If the Whip is speaking about a weak link, I am sure he lives with it personally every day.
I am saying that cabinet will have to examine the export licence. I say to the Hon. Member that the NEB in its mandate obviously has to take a look at reserves, as well as the applications before it.
I say to the hon. member as well that he should be careful in assessing the matter as he did in his question because it goes back to the National Energy Program. The underlying argument of the National Energy Program was that if it was kept in the ground we were going to maintain reserves, and we were going to maintain the 25 year figure for Canadians in terms of security of gas.
I think all of us recognize that the activity in the oil and gas fields and the reserves are best increased if we allow that activity, which will also allow the cash flow that is needed in order to have further exploration and to have reserves built up.
I guess what I am saying directly to the member is that the plan of the NEP did not increase reserves. It gave a false sense of security about reserves in the future. It did not give us the reserves that we have now.


Lloyd Axworthy: Mr. Speaker, we are not arguing about the NEP. We are arguing about
Oral Questions
the NEB, and the decision to authorize an export permit which could put energy security at risk.
As the minister clearly knows, because of the free trade agreement any export to the United States-including the 9.2 trillion cubic feet-would increase the level of exports to the United States to close to 60 per cent of our normal reserves.
Does the minister really believe that the best interests of this country are served by locking away in perpetuity 60 per cent of the natural gas energy reserves of this country to another country? Is that really defending the security and best interests of Canadians?


Arthur Jacob (Jake) Epp: Mr. Speaker, I do know what helps with the security of supply. One way is to have activity in the gas and oil fields. A second way is to give a return to those who are doing the exploration. Third, Canadians will have to re-examine in terms of long-term contracts that they have access to that gas.
If the hon. member looks at the export licence that was granted by the NEB, he will note very clearly that the NEB put down conditions whereby before an export contract could be granted to the United States, Canadians would need to have access to that information and to that gas as well. I say to him that I believe the market-place is the best place in which to have this function. It functions best with the NEB putting forward the conditions that it did on the export licence.
The last point that the hon. member should know is this. Before there is going to be any export, it will be based on a pipeline application. Those conditions are going to be raised and caveats obviously will be considered by the NEB to maintain security of supply for Canadians.
He should recognize, as I think all of us do here, that we cannot and should not consider that after the number of years we have been in the frontier we can simply continue having exploration and delineation without finally bringing that gas down and having the cash flow we need.


Ms. Catherine Callbeck (Malpeque):: Mr. Speaker, my question is to the Deputy Prime Minister. The Prime Minister has repeatedly said that no major economic initiative will be undertaken until the government has a complete environmental assessment.

October 23, 1989
Oral Questions
Now that the National Energy Board has given preliminary approval to the export of 9.2 trillion cubic feet of natural gas from the Arctic, will the minister guarantee that the Prime Minister's word will be honoured? Will there be a complete public review before the export licence is given approval by Cabinet?


Arthur Jacob (Jake) Epp: Mr. Speaker, I think we have to differentiate again as to what happened. What happened with the NEB was that it had before it an application on an export licence and approved 9.2 trillion cubic feet.
What the hon. member is relating to, I would think more logically, is that when a pipeline application is made and heard by the NEB a full environmental assessment is done, as we have done on every other megaproject, whether in the north or for that matter any other part of Canada. It was done with Hibernia and Lloydminster. It will be done in the north if, first, an application for a pipeline is made and, second, a pipeline application is approved. It is at that stage that the environmental questions, the socio-economic questions, and the land claims questions all come into consideration. They will then have to be discussed and evaluated by the NEB.


Catherine S. Callbeck: Mr. Speaker, this is potentially the largest export of energy in the history of our country. My question is quite simple. Is there going to be an environmental assessment? How is it going to be carried out? I think this issue is important enough for the future of the north and for the future of all Canadians.
Is the government going to take this environmental assessment more seriously than it took the one on VIA Rail? In other words, is the Prime Minister's word going to be honoured this time?


Arthur Jacob (Jake) Epp: Mr. Speaker, if the hon. member looks at the record with respect to energy projects, she will find that an environmental review was done on OSLO, Lloydminster and Hibernia. In fact, the point that I make to her is that in every one of those projects, as well as if there is any pipeline bringing gas down from the frontier, there have to be the environmental assessments as well.
The answer to the environmental question is, yes. But I say to her very directly, do not confuse a pipeline or potential pipeline with an export licence.



Mr. Lome Nystrom (Yorkton-Melville):: Mr. Speaker, my question is to the Minister of Finance about government secrecy.
Last Friday, the minister confirmed that he would not release the 500-odd pages of documents about economic forecasts in 1988, made prior to the election for the year 1989. That answer was just not good enough.
I want to know today from the Minister of Finance why he promised the House of Commons on October 10 that we could have the information when nine days later he was denying the information to the House of Commons. What happened between October 10 and October 20 that made the minister change his mind? Is there all of a sudden some new version, the Wilsonian version of the truth in this country?


Hon. Michael Wilson (Minister of Finance):: Mr. Speaker, nothing changed from October 10 until last Friday. If the hon. member looks back to what I said on October 10, he will see I said that the information that the applicant was entitled to would be released. That is what has been released to the applicant.


Lorne Edmund Nystrom: Mr. Speaker, it was the party across the way with Walter Baker and Ged Baldwin which was so concerned about openness and secrecy in government many, many years ago.
What I want to know from the minister is this. Since I filed a request for access to information in March for the government's communications plans for its budgets of 1985, 1986, 1987, 1988, and for its plans for the White Paper on Taxation last year I want to know why he turned down that application in June. Why do we still not have that information? Why is he also withholding information on the unemployment insurance cutbacks from this House? I want to know why he is not forthcoming. Why this secrecy? Will he stop playing his silly little games and be open and honest with the people of Canada?


Some Hon. Members:: Hear, hear!
Mr. Wilson (Etobicoke Centre) Mr. Speaker, I would have to review the particular reasons and the content of the application for the turndown which was given, as he has referred to, in June. I do not have that information readily at hand.

What we are looking at here is a very important principle of parliamentary responsibility. That is that the minister is responsible for the management of his department. The minister is accountable to Parliament for the management of his department.
Along the course of those activities of managing the department, there will be information and advice provided by the public servants to the minister to allow the minister to do his job, to carry out his responsibilities. Ele is not bound to accept all the advice of deputy ministers, nor is he required to hide behind the advice of deputy ministers. Those decisions have to be made each time decisions are taken. But it is absolutely essential that there be confidentiality of the advice between the deputy minister and the minister so that that free flow of information will continue. It is on that basis that the access to information provides for the confidentiality of that information.


Lorne Edmund Nystrom: Mr. Speaker, that is just not good enough. We are really seeing a Wilsonian version of the truth, and I can tell you that even Conservative backbenchers are upset with him.
I will give him a third try. The minister, according to his own calculations, said that at least one province will suffer a negative impact under the GST.
I want to know today whether or not the minister will confirm that that province is Alberta, give us the dimensions of the negative impact and, while he is on his feet, tell us whether or not he will release all the documents pertaining to the impact of the goods and services tax on all 10 provinces and both territories in this country?


Michael Holcombe Wilson: Mr. Speaker, the hon. member is quite aware that I have been very open in all the dealings that I have had with Parliament and I will continue to be very open in all the dealings that I have with Parliament.
The hon. member has made reference to the impact of the GST on the provinces. I have commented on that in a general way in this House. I have also said that we do have a tradition in our dealings with the provinces to discuss information with them before we go public with it in order to ensure that the information that is released
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to the public is not misleading. Until we have that discussion with the provinces, no, I am not prepared to make the information available.


Mr. Douglas Young (Gloucester):: Mr. Speaker, the Minister of Finance is aware that the vast anti-GST coalition is growing every day. My question for the Minister of Finance is this: Is he prepared to acknowledge today that the government's proposal to tax goods and services has been rejected by people across the country, and is the Minister of Finance prepared to put an end to the confusion of consumers and the uncertainty created in the private sector by withdrawing this terrible tax?


Michael Holcombe Wilson: No, Mr. Speaker, I am not prepared to withdraw the goods and services tax. We have put forward a technical paper. The finance committee is hearing comments on that technical paper.
I think the hon. member will agree with me that there is broad agreement that we must move from the existing manufacturers' sales tax, which is deeply hidden in the production process, and move to the goods and services tax. People have disagreements with this. Some say there should be no exemptions and others say there should be exemptions, and many people have said they would like a lower rate, but there is no agreement whatsoever on how to get the rate down. Some say we should reduce the credit while others say the credit is not large enough, it has to be increased. Some say reduce the housing rebate and others say the housing rebate is not large enough.
Clearly, the disagreement with our proposal is on both sides of the proposal. I believe that the package that we have put on the table represents a very carefully constructed balance and a balance that is proving itself as we hear these recommendations from other people.


M. Douglas Young: Mr. Speaker, my supplementary question is for the Minister of Finance.
Speaking about being on the table, the Minister of Finance has insulted his counterparts, the provincial Ministers of Finance of the provinces across this country, by saying they are playing political games with the goods and services tax.

October 23, 1989
Oral Questions
Canadians do not believe for a moment the minister's contention that the provinces rejected a national sales tax proposal. Just to make sure we can make the record very clear on this, my question for the Minister of Finance is the following.
If, in fact, the provinces rejected the government's national sales tax proposal in April, would the minister make public the proposal that was rejected by the provincial Ministers of Finance? Then we will know who is telling the truth in this matter.


Michael Holcombe Wilson: Mr. Speaker, we have been working with the provinces since the early part of 1987, discussing all aspects of the goods and services tax. At the stage that we are talking to the provinces, we are talking about a federal-provincial tax which has a large number of the attributes of the goods and services tax that is in the technical paper proposal today.
It became very clear from the comments that have been made in the past week and last August when the premiers met that the provinces do not have any sense of urgency, any real desire to move ahead with a goods and services tax proposal. When we saw that that was the case, and because of the very real sense of urgency that we have as a federal government to move away from an existing tax which is broken and which the finance committee of the House of Commons agreed on two occasions had to be changed, on that basis we felt we should move ahead with a federal only proposal.


PUBLIC ACCOUNTS
Mr. Len Hopkins (Renfrew-Nipissing-Pembroke):: Mr. Speaker, recently the Deputy Prime Minister sent a letter to the chairmen of the various House of Commons standing committees referring to the deficit and requesting that the chairmen submit any ideas that they might have on deficit reduction. However, as chairman of the Public Accounts committee, I did not have the honour of receiving such a letter.
Why did the Deputy Prime Minister fail to send a letter to the chairman of the Public Accounts committee? Is he afraid that he might get some constructive suggestions from this committee which, after all, is the
watchdog committee of the spending of this government?


Hon. Don Mazankowski (Deputy Prime Minister, President of the Privy Council and Minister of Agriculture):: Mr. Speaker, I wish to apologize to the hon. member. I did not snub him deliberately. I assure him that we follow the deliberations of the public accounts committee on an ongoing basis.
If the hon. member feels so disposed to offer some suggestions, I will certainly receive them with a great deal of interest and gratitude.


Leonard Donald Hopkins: Mr. Speaker, I thank the Deputy Prime Minister for that answer. The Auditor General's report will be tabled in this House tomorrow. It will be permanently referred to the Standing Committee on Public Accounts, as is the custom.
Will the Deputy Prime Minister give this House and all Canadians a commitment that this watchdog committee of the public purse will be given the free and independent role that it has exercised historically in the Parliament of Canada? Will he assure us that no road blocks will be put in the committee's way as we witnessed to a degree in the early stages of this Parliament?


Donald Frank Mazankowski: Mr. Speaker, I can certainly give the hon. member that assurance. Unlike the former Liberal government that red circled a number of staff positions and categories that the Auditor General had and reduced the number of people that they had at their disposal to do the job properly, I can assure him that we will not take that course of action.


PROPOSED GOODS AND SERVICES TAX
Ms. Joy Langan (Mission-Coquitlam):: Mr. Speaker, the Minister of Finance said just a moment ago that it is becoming "very clear" regarding the GST. I agree with him. It is becoming veiy clear every day that middle and low income Canadians will, under the proposed goods and services tax, fall farther and farther behind each year because of the caveat that tax credits will only be increased if Canada's inflation rate is more than three percentage points. Even government members of the finance committee are quoted as recognizing that low and middle income Canadians will be hurt.

Will the minister finally acknowledge the truth and agree the GST will hurt low and middle income Canadians, or is it going to take us five years under the Access to Information Act?


Michael Holcombe Wilson: I have to fundamentally disagree with that. The goods and services tax does not hurt low and middle income Canadians. Those same people will be receiving a rebate cheque four times a year amounting to $275 per adult, $100 per child.
That is quite different from what was the case with the sales tax system that we inherited five years ago. In 1986 we introduced the notion of a rebate, a refundable sales tax credit. We have increased the size of that and the number of people who will receive that rebate by a large amount. In fact, the total amount of the rebate will be $3.6 billion.
That is a clear indication to Canadians that we are concerned about the impact of sales taxes on low-income people, but we are also acting to protect those same people.


Joy Langan: Mr. Speaker, I remind the minister that even his back-benchers would disagree with him on this point. I would like to point out to him that the only number increasing is the number of poor and working poor Canadians who are already heading for the overloaded food banks as more of their income is eaten up by this tax.
Is this government committed, through taxation of the poor, to make the food banks the fastest growing banking chain in this country?


Michael Holcombe Wilson: Mr. Speaker, I think the hon. member is concerned that the indexation is CPI minus three.
She should understand also that we have made a commitment to review this on an ongoing basis and adjust that low-income threshold as is appropriate. We started off the refundable sales tax credit with a low income threshold of $15,000, we increased it to $16,000, then to $18,000, and now with the GST proposal to $25,000. Surely she can understand that we are being responsive to the needs of the same people she is talking about.
Basic groceries are not under our proposal, that is food that is acquired by food banks, and will not be subject to
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tax. Clearly, we have the interests of lower-income people in mind as we constructed this proposal.


CANADA POST
Guy St-Julien: Mr. Speaker, my question is directed to the Minister responsible for the Canada Post Corporation.
Major changes are being made by Canada Post with respect to the shipping of perishable goods to Inuit and Cree communities in the northern areas of Abitibi and Manicouagan.
Mr. Speaker, my question is as follows: Could the Minister tell me today whether a meeting could be arranged, between now and the end of October 1989, between this department, the Department of Indian Affairs and the Department of Health and Welfare, and economic intervenors representing the Cree and Inuit, for the purpose of hearing their claims and finding a solution that is in the best interests of Northern Canadians?


Hon. Harvie Andre (Minister of Regional Industrial Expansion and Minister of State for Science and Technology):: Mr. Speaker, I will certainly ask the managers at Canada Post to participate in such a meeting.
I should point out that Canada Post has already met with Makivik and the Federation des cooperatives du Quebec during September. In terms of any other meetings on this issue, I will certainly ask the post office to co-operate and I am sure it will co-operate.


AGRICULTURE
Hon. Ralph Ferguson (Lambton-Middlesex):: Mr. Speaker, the United States Secretary of Agriculture recently expressed that the United States has a longstanding desire to increase subsidy disciplines on Canada. This government has already allowed the United States to discipline our pork producers, milk producers and our fish industry, unjustifiably. Now the United States wants to discipline our Canadian Durum wheat producers.

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Will the Minister of Agriculture stop allowing our resource industries to be bullied by the United States and start objecting to their subsidies, or is he going to continue to accept these unfair United States trade law actions that supersede the free trade agreement?


Donald Frank Mazankowski: Mr. Speaker, I can say to the hon. member that I believe the charges made by the Durum producers of North Dakota are totally unjustified and patently false.
The fact of the matter is that the United States has a much higher level of subsidy paid to its wheat producers and Durum producers than does Canada, by about $40 to $50 a tonne. That has been calculated and agreed to under the auspices of the free trade agreement. The fact that there have been significant shipments of Durum to the United States is the result of a lack of high quality Durum in that country and the fact that we have been able to produce it in a very efficient manner. We have penetrated that market because of our high quality and because of the demand.
If there is any issue that has to be contended with, it is the United States continued use of the export enhancement program and its non-commercial credit terms, which are very generous and which in effect distort the market-place in grains and oilseeds in the world.


Ralph Ferguson: Mr. Speaker, on October 16 the Canadian farm leaders, through a letter to the minister, asked him to look into this issue. The Alberta wheat pools, the Saskatchewan and Manitoba pools and the Canadian western wheat producers pointed out what the minister has just said, that the United States has higher subsidies than do the Canadian producers.
When will the minister stand up for Canadian farmers and start disciplining the United States for its programs, particularly the export enhancement program that is taking away Canadian markets in other countries, while at the same time protecting its domestic markets in the United States?


Donald Frank Mazankowski: Mr. Speaker, I am sure the hon. member will agree that the United States authorities can see and can listen. I have made our position very clear. We have made very clear through our embassy contact in Washington the facts of the matter. We have made
strong representations to the United States in that regard.
I might just add in passing that the Secretary of Agriculture in the United States shares the view of the hon. member and me. He has been reported as saying in a headline in the Manitoba Co-operator. "Yeutter says Durum sales not unfair", meaning Canadian sales to the United States are not unfair.
That is a clear recognition of the fact that their subsidies are at a much higher level than ours. There is a clear indication that, because of quality and short supply, we have penetrated that market. It demonstrates to the people of the world that Canada can compete with the best of them, and we will continue to do it in the future as we have in the past.


NATIONAL CAPITAL COMMISSION
Mr. Gilles Rocheleau (Hull-Aylmer):: Mr. Speaker, in the latest Mulroney-Wilson Budget, funds for the National Capital Commission were cut by $5 million, so it had to reduce some of its operational activities.
Closing the Gatineau Parkway between Tache Boulevard and Gamelin Street in Hull makes no sense, since the road network in the area has not been completed and this decision will result in major traffic problems for the people of the Outaouais.
Can the Minister tell me, Mr. Speaker, whether he will review this decision which is unduly harsh and, furthermore, is unacceptable in the circumstances?


Donald Frank Mazankowski: Mr. Speaker, on behalf of the Minister of Public Works, I will take that question as notice and get back to the hon. member as soon as possible


Gilles Rocheleau: Mr. Speaker, could the Deputy Prime Minister tell me whether the Minister responsible for the National Capital Commission will be able to give me an answer in the next few days to this question which is very important for the people of the Outaouais?
October 23, 1989


Donald Frank Mazankowski: Mr. Speaker, I will give that undertaking to the hon. member. I will consult with the minister as soon as he returns, and perhaps he can contact him personally.


FISHERIES
David Stupich: Mr. Speaker, I have a question for the Minister of Fisheries and Oceans with regard to the free trade panel decision on our fishing regulations.
The minister has had 38 days since the release of the preliminary report; 23 days remain before we have to make a decision. Can the minister give to the House, and to the thousands of industry workers whose jobs depend on this decision, some indication of the government's plans in this regard, or will we have to wait, as we are still waiting for the preliminary report, until the Americans tell us?
Hon. Thomas Siddon (Minister of Fisheries and
Oceans): Mr. Speaker, the question is not unlike several questions we answered last week. The Minister for International Trade has returned to the House. He would have been the appropriate one to answer the question.
The hon. member is very concerned about the clock ticking, but I think he wants us to ensure, even more so, that Canada makes the right decision in this matter. When we have decided, the hon. member will learn the outcome.


David Stupich: Mr. Speaker, I will direct my supplementary question to the Minister for International Trade.
The Minister of Fisheries and Oceans has heard from the processing companies and from the union to the effect that they would prefer to compensate the Americans rather than give up our right to control and manage our own resource. They say we must continue to land all of the salmon if we are going to have proper control. The benefits to Canada exceed any penalty.
Can the minister support this option as an alternative to knuckling under to the Americans?
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Hon. John C. Crosbie (Minister for International Trade):: Mr. Speaker, I am glad to return to the House, but I find it has not improved much while I have been gone as far as the quality of questions are concerned.
With respect to the hon. gentleman's question, there are a number of options being looked at. The panel that was appointed under the free trade agreement, which consisted of a Canadian chairman, two Canadian representatives, and two American representatives, found that our regulations were supportable as regulations in aid of the conservation practices.
In accordance with the decision, we are looking at the options. It is suggested that there is an option about compensation. I am afraid it is not as easy as the trade might have us believe, that we could simply propose some small amount of compensation to the Americans that they would accept, but that is an option that is being looked at.
A decision will be taken that will be in the public interest, and in the interest of the fishermen and fish processing workers of British Columbia.


AGRICULTURE
Herb Breau: Mr. Speaker, my question is for the Minister of Agriculture.
I understand that some U.S. farmers have raised concerns over a perceived threat to their market by Canadian Durum wheat. In fact, North Dakota farmers may be airing their complaints and their desire to close the border to Canadian Durum imports to Sam Gibbons, trade subcommittee chairman in the near future.
Can the minister tell the House what we can do to stop such unfounded and unfair U.S. aggression?


Donald Frank Mazankowski: Mr. Speaker, as I indicated earlier, the charges that the U.S. Durum farmers are making against the Canadian producers are totally unfounded and unjustified. There is about a $40 to $50 differential in support for Durum wheat in favour of the United States. That has been clearly ratified under the auspices of the free trade agreement.

October 23, 1989
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The markets that Canada has penetrated in the United States are largely due to the result of a shortfall in high-quality Durum wheat. We have a lot of it, and we are going to continue to penetrate that market in a fair and proper manner.
We have made representations to the United States authorities and we will continue making those representations. As well, we will continue to pressure the United States to stop using the EEP program and its non-commercial credit programs which have distorted international trade on a large scale.


TORONTO HARBOUR
Hon.   Chas. L. Caccia@Davenport: Mr. Speaker, it seems to me that it is the quality of the answers that improve every time the Minister for International Trade is absent from the House.
My question is for the Minister of Public Works, or his substitute, on the subject of the Crombie report on the future of Toronto's waterfront. The report offers hope that millions of Canadians living between Oshawa and Burlington can secure and regain access to their greatest ecological asset, namely Lake Ontario.
Last week Premier Peterson was reported as stating: "Not an office tower, a condominium, or even a tool-shed will be constructed without provincial agreement". Unfortunately, this veto on development cannot apply to federally owned lands.
Will the Government of Canada also place a similar veto on development on the large block of lands administered by Harbourfront and the Toronto Harbour Authority, lands which, as we all know, are ultimately owned by the Canadian people?


Hon. John McDermid (Minister of State (Privatization and Regulatory Affairs)):: Mr. Speaker, as the hon. member knows, the plans that he refers to with the province of Ontario and Harbourfront are two separate issues. The Harbourfront situation has had a freeze on its development for some time now, and what we refer to as the pipeline projects.
There have been negotiations with the city of Toronto regarding Harbourfront and those negotiations are coming to a conclusion in the very near future. An announcement will be made at that time as to the future of Harbourfront.


Mr. Caccia:: Mr. Speaker, the hon. minister should know that under the authority of the Toronto Harbour, there are 1,200 acres. These come finally under the jurisdiction of the federal government.
Therefore, my question again, which I hope the minister will answer, is the following. Will the Government of Canada undertake to place the same development freeze on federally owned land under the Toronto Housing Authority so as to permit the proposals in the Crombie report to become a reality? Will he undertake at least that?


John Horton McDermid: Mr. Speaker, I apologize to the hon. member. There is a difference between Harbourfront Commission and Harbourfront, as he knows. I thought he was referring to Harbourfront and not the Toronto Harbour Commission. I apologize to him.
There is a royal commission headed by David Crombie. We are awaiting his report before we take any action.


ACCESS TO INFORMATION
Hon. Bob Kaplan (York Centre):: Mr. Speaker, my question is for the Minister of Finance. Last week, I asked the minister about the release of documents requested under the Access to Information Act which would show whether the Tory campaign promises were made in good faith.
The department prepared the necessary documents substantially by July and recommended their release. Earlier in Question Period the minister said that ministers are not bound to take the advice of their deputies. That, of course, is true for the minister in the case of economic advice, but the question of release of documents under the Access to Information Act is not economic advice but legal advice.
The minister has a legal obligation to release documents. I want to ask him to confirm, as he seemed to say earlier, that he was rejecting the advice of his deputy about what documents should be released.


Michael Holcombe Wilson: Mr. Speaker, the advice that is rendered by a Deputy Minister flows back and forth as a result of discussions, consultations and a range of other matters that end up forming that advice. It does not matter whether it is on policy matters that relate to the economic policies of the government or other broader ranging policy matters, it still falls under the category of advice. As the hon. member knows, as a former minister, that is protected by the Access to Information Act for very obvious reasons.

It is very important that that free flow of information and advice between the minister and the deputy minister is maintained. That is the basis on which I have acted in relation to this particular access to information question.


Robert Phillip Kaplan: Mr. Speaker, I think the House can only take it from that answer that the minister has indeed rejected the advice that he has received about what documents should be released.
Was his decision to reject advice about the interpretation of the Access to Information Act based on independent legal advice that he has obtained?


Michael Holcombe Wilson: Mr. Speaker, here we are talking again about advice.


Robert Phillip Kaplan: Legal advice.


Michael Holcombe Wilson: Well, legal advice comes through the deputy minister through the departmental legal officers. This information is still by nature of advice, but clearly I am not going to be acting in ways that are totally counter to things that have been said to me in the department.


TRANSPORTATION
William D. (Bill) Casey: Mr. Speaker, I have a question for the Minister of Transport. In December 1986 CN sold its trucking division to Route Canada which ceased operations shortly after in 1988. Many former employees of CN lost all or part of pension plans, vacation pay and severance funds earned over as many as 35 years of work with CN.
Can the minister indicate to the 45 former employees in my riding if and when a resolution can be expected to this ongoing frustrating issue?


Hon. Pierre Blais (Solicitor General of Canada and Minister of State (Agriculture)):: Mr. Speaker, as my hon. friend knows, the matter is still under investigation by the RCMP. I think it is not appropriate for me to make any comment on it.
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PROPOSED GOODS AND SERVICES TAX
Mr. Neil Young (Beaches-Woodbine):: Mr. Speaker, my question is directed to the Minister of Finance. I am sure the minister will be interested to know that on Saturday I had an opportunity to meet hundreds of people living in my community who wanted to talk to me about the government's proposed sales tax.
The minister should know that with few exceptions it was unanimous that the minister does not have support for this measure or for 7 per cent or 5 per cent or any percentage of sales tax. I want to ask the minister what my constituents asked me to ask him: Will the minister now come to his senses and withdraw what is a totally unfair, unacceptable sales tax?


Michael Holcombe Wilson: Mr. Speaker, I gave the answer to that question to one of his colleagues earlier.
I ask the question of the hon. member himself: Did he put up a proposal, an alternative proposal, on which his constituents could weigh the alternatives and say they preferred this proposal as opposed to something else that he was recommending? I see he is nodding his head. Let us hear what he had to say.


Mr. Speaker:: The hon. member for Edmonton East on a single question.


Mr. Ross Harvey (Edmonton East):: My question is directed to the Minister of Energy, Mines and Resources.
Will the minister confirm that, in consequence of the policies of deregulation instituted by his government starting in 1985 most of the cheap gas available in Canada has rapidly been sold off at fire sale prices just to keep up the cash flow that he was talking about, so that when the pipeline comes on track from the Arctic, even if that gas is dedicated to Canadian markets, there will be no way you can get it to market at less than double the current gas price?


Arthur Jacob (Jake) Epp: No, Mr. Speaker, I do not agree with what the hon. member put forward. If he takes a look at gas sales, both domestic and exported to the United States, he will see the increase to both. However I say to him as well that if he believes the domestic market in Canada is large enough to pay for the kind of costs which would have to be incurred to bring that gas down, he obviously does not know anything about economics.

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Obviously we need the export market so we can use that gas for our domestic market. He should look at it from that point of view.


UNEMPLOYMENT INSURANCE ACT
Douglas Grinslade Lewis: Mr. Speaker, I rise on a point of order.
I wish to advise the House that an agreement could not be reached under the provisions of Standing Order 78(1) and 78(2) with respect to an allocation of time to the report stage and third reading stage of Bill C-21, an act to amend the Unemployment Insurance Act and the Employment and Immigration Department and Commission Act.
Under the provisions of Standing Order 78(3) I give notice of my intention to move a time allocation motion at the next sitting of the House for the purpose of allocating a specified number of days for consideration and disposal of proceedings at those stages of the bill.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Loiselle that Bill C-20, an act to amend the Excise Tax Act and the Excise Act, be read the third time and passed.
Stanley J. Hovdebo: Mr. Speaker, I will not go to the next chapter of my book on "the grabbiest government in Canadian history".
I just want to continue to a certain extent with the impact of Bill C-20 on the more remote areas of the country. As I pointed out before, we have in place already a communication tax which discriminates against rural and remote areas of the country, a discrimination tax which will operate very much like the GST the government is proposing. Its impact will be much greater
in remote and rural areas than it will be in much of central Canada. That is part of the reason we think that the whole approach of Bill C-20 is probably the greatest tax grab of any Canadian government.
Another area of concern, particularly for Canadians in remote areas but for all Canadians to a certain extent, is the increase on building materials because that tax affects every area of the country. It affects those areas where the costs of building are already extremely high. Constructing of a building in the Northwest Territories will cost more per square foot and consequently you are going to pay a larger proportion of tax than someone building in the south or in a more densely populated area.
The increase of the tax from 8 per cent to the 9 per cent, which is provided in this particular bill, is not fair in the sense that it is a larger tax on people who are required to spend more than others on construction.
It is difficult to talk about this bill without talking about the impact of the GST as well. In the northern and rural areas the GST will be a tax on the final product and, since that final product is going to be much more expensive than it would be ordinarily in downtown Regina, for instance, it will cost those people more than other Canadians. In fact, if you look closely at the budget, you will find that because of a 40 per cent decrease in regional development all regions of the country except central Canada and the larger cities will be impacted negatively by this bill, by this tax, and by the policies of the government.
There are other things we should talk about with this bill besides its impact on northerners and rural people. This grab is going to have the greatest effect on middle income earners and in fact will have the opposite effect on large profit making corporations.
The government has been talking about the goods and services tax since before the budget. It made a lot of promises during the election period and following. For instance, it was going to eliminate the surtax. Now we are told it will not eliminate the surtax but will leave it in place. It is a tax which in itself is discriminatory because the surtax does not really mean very much to a large corporation with a good tax lawyer. If you end up paying no tax, as 60,000 corporations have indicated, an 8 per cent surtax on nothing is nothing. The impact of the surtax was minimal. They were told it would be taken off, and now it is going to be left on.
October 23, 1989

In addition, all Canadians are going to have to pay a surtax, particularly those who are on salary. There is no way. Regardless how good a tax lawyer they have, people on salary will find a loophole large enough not to pay any tax.
Also, the social programs are being attacked. A good example is the Unemployment Insurance Act which is being changed, worth a 15 per cent increase in premiums being paid. That is a 15 per cent increase that is being taken directly out of the salary of the workers who pay those premiums. The total effect of all these changes range from $700 to $1,700 a year. This is a major impact resulting in much less money that can be spent on keeping the economy going and flowing into the coffers of the government, where it seems to disappear while doing very little good for anybody at all.
Since this government has been in power taxes have increased by 171 per cent. That is a huge increase in taxes. With this bill the government is continuing in the same direction. That is why our party and the people of Canada believe that more time and effort should be put into establishing a fair taxation system which would tax those people who are able to pay and relieve those who find it difficult to pay even a small increase in taxes.


Mr. Fisher:: Mr. Speaker, I want to say that I enjoyed the member's remarks.
The government, in supporting its measures and then listening to the Opposition, always asks us what we think it should cut. This government seems to be able to think of nothing but cutting. Will the member remind the government that there are other measures besides cutting?
For example, in a committee where I was a member one of the members opposite suggested that either we had to go through with the government's programs or else add to the taxes of the aged. I am sure the member has some ideas on what we could do other than cutting social programs, such as increasing taxes to those who can very well afford to pay them.
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Stanley J. Hovdebo: Mr. Speaker, I can think of some things that can be cut. One of them is the interest rate. If there was a one point decrease in interest rates, it would amount to $3 billion in the coffers of the government. That is the kind of cut that would be of some value to the government.
There are other things that can be done. One of them is to put in place a fair kind of taxation which collects, for instance, the $34 billion which the large corporations are holding as deferred taxes. Something that we have been suggesting for years is a minimum corporation tax. Even the Reagan government in the U.S. made some move in that direction by putting on a 20 per cent minimum corporation tax.
The large corporations have been able to escape paying any kind of tax by using the tax loopholes that are in place. The 20 per cent minimum tax would be there regardless of whether they were able to sneak through those loopholes. Those are the kinds of measures that will make the difference in bringing in the money by other means instead of cutting away from the social services and programs that people need and increasing taxation on the low and middle income Canadians who can least afford it.


Robert Evans Skelly: Mr. Speaker, I was impressed by the member's comments just prior to the dinner adjournment when he was discussing how the goods and services tax would have a compounding impact on the high cost of living in northern Canada. This was brought home to me a couple of weeks ago when I went with one of my Liberal colleagues up to northern Quebec to talk to the Cree and Inuit communities there.
I found out that when you go a certain distance north in Quebec, you no longer get free access to the federal government telephone lines. For example, to contact Health and Welfare Canada or to find out about your pensions or family allowance cheques, you have to make a long distance toll call from northern Canada in order to deal with those departments of the national government to which you would have free access if you lived in southern Canada.
Now, in addition to the toll call, you are going to be obliged to pay the telecommunications tax under this Excise Tax Act. When the GST comes in, you are going to be required to pay a 9 per cent tax on the toll calls you make just to get federal services and advice from federal agencies that are free if you were living in the southern part of Canada. It shows the kind of compounding effect that this tax will have on the unfair treatment we give to northern communities. I appreciated the member's comments on that.

October 23, 1989
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I was really surprised to hear the member for Abitibi, in whose riding I was a visitor, talk now about the air parcel staging rate that the government through the Canada Post Corporation has just increased by 32 per cent. This is a parcel delivery system in the north where Canada Post ships groceries and medications to northern communities that have no other means of getting those goods other than through air service or through the Canada Post system. This government has now increased those rates by 32 per cent. Furthermore, it has cut back on the subsidy that used to be available through Indian Affairs or through Industry, Science and Technology by about $1 million a year over the last year.
This government appears not to value northern Canada at all and discriminates especially against native communities in northern Canada. In this legislation we are seeing a government that wants to compound the cost of living in the north, compound the cost of living in native communities. It seems to provide no useful relief at all to those who live in the north at much higher rates than in the south.


The Acting Speaker (Mr. Paproski):: I believe that was just a comment. The hon. member for Essex-Kent on a question or comment.


Mr. Pickard:: I want to make my presentation on the bill.


The Acting Speaker (Mr. Paproski):: The hon. member can make a comment or pose a question to the hon. member.


Jerry Pickard: Mr. Speaker, when I look at what has happened with the excise tax I have to consider the increases that have gone on over the last five years. The basic premise of our taxation policy in federal sales tax was 9 per cent five years ago and now it is being raised to 13.5 per cent. I think that is a tremendous cost to all Canadians. Would the member comment on that particular avenue?


Stanley J. Hovdebo: Mr. Speaker, it is very interesting that the government has been saying for years-and we have agreed with it quite often-that the manufacturers' tax has some problems. It is not a particularly good tax in some ways. The government's answer to it in Bill C-20 is to increase it and make the bad tax worse. Since the government came into power the maximum tax in this particular area was 9 per cent and now, as you point out, it is 13.5 per cent. Every one of those increases were to what the government says was a regressive and a bad tax. To make things worse, the GST that is to be put on is the same kind of a bad tax, and it will put it on at a level higher.
For instance, if you buy a stove for $200, under the present manufacturers' tax the tax cannot be more than $26 or $27. But if you buy that stove after the GST is in place, when it costs $500, there is going to be a tax of 9 times 5. In other words, you have doubled the amount of tax.
The tax has gone down from 13.5 per cent to 9 per cent, but it is applied to everything else like transportation, distribution fees and profit. You have doubled the tax that the consumer is going to pay on those items. That is true for every consumer item that is being taxed now. The manufacturers' tax was at the manufacturers' level. Now it will be at the final consumer level. A 4 per cent decrease is actually, almost, a 100 per cent increase in many cases.


Mr. White:: Mr. Speaker, I have two brief questions I would like to pose to the member for Saskatoon-Humboldt. They deal with the comments he made in his closing remarks about tax collection and companies that perhaps do not pay their fair share.
I would be interested to know his party's or his personal opinion about loss deferral on companies, in particular the smaller resource companies in Alberta, and whether he is opposed to loss deferral for those companies.
The second question deals with the NDP's opposition in the last Parliament to the removal of flow-through shares and the tax deduction that individuals and companies were able to get through flow-through shares. They fought tooth and nail against the elimination of that particular tax loophole. Is he reversing his or his party's position on that particular tax deduction?
October 23, 1989


Stanley J. Hovdebo: Mr. Speaker, first, regarding the flowthrough shares, the member should read his literature and read the literature of our position. He would see that the statement he made would be quite incorrect.
We have had a lot of experience with resource companies in the New Democratic Party, because we were in that position in Saskatchewan where we had to deal with those taxes. We recognize that every company and every primary resource is different and that you have to deal with it on a different basis.
We also recognize that those resources do not belong to those companies. They belong to the people of the provinces and they should get from it a major portion of the profits. Consequently, I would say, yes, we have to deal with every one of those situations differently and individually, but we must recognize the value of those resources which belong to the people of that province. They have the right to a major share of those profits.


Jerry Pickard: Mr. Speaker, it is a real privilege and honour to stand today and discuss Bill C-20, an act to amend the Excise Tax.
From the commencement of this session of Parliament we have been involved in debates over taxes, and the legacy continues. What we and the Canadian public are witnessing is an unparalleled part of Canadian history. What we are witnessing is the government parading through, bill after bill, legislation after legislation, cause after cause, with one thing in common-a continual increase in taxes, all sorts of taxes that are eating into the incomes of low and middle income Canadians.
How many times this session will we hear from the government that no one likes to pay taxes or taxes are not popular, or that it needs to raise taxes, because of the financial mess this country is in? When will the tax parade stop? Is it the intention of the this government to make tax grab the catch word of the 1990s?
I use the parade as a comparison as well. We in Canada look on parades as a group of floats and bands going by. This government has brought forth a float of taxes-tax, after tax, after tax-and stood on the bandstand telling Canadians how well they are doing. Let us look at this specific float known as Bill C-20.
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Bill C-20 contains the necessary legislative amendments to implement the federal sales tax, excise tax and excise duty changes announced in the budget of April 27, 1989. Nice rhetoric. What it means to all Canadians is: hold on to your wallet, hold on to your purse, hold on to your cheque book, the tax grab continues. What it means is that cigarettes will cost more, gasoline will cost more, using your telephone will cost more, home construction and repairs will cost more, a drink will cost more, many manufactured goods in this country will cost more. Indeed an impressive offering. Almost everything you do, buy, or dream of will cost you more. The proposed tax increases in Bill C-20 will affect all Canadians. All Canadians will pay more for almost every purchase.
These increases will hurt low and middle income families more because of the percentage of income spent on necessities like housing for a family, for the gasoline used to drive to work. These taxes are not aimed at luxury items. These tax increases are aimed right at the heart of the consumer market, and the parade continues.
Last November the government stated that the economy of Canada was in good shape. It said its spending commitments made during the election campaign were not going to cost Canadians more. That was November 1988. In April 1989 the Minister of Finance introduced the federal budget that would reduce government programs by $2 billion and increase tax revenues by $5 billion. At the same time the government told us that the deficit reduction and public debt reduction were foremost in the government's mind. That was on its mind in November. What was there?
When the government told us everything was okay, what was the drastic change in five months? In May or June the parade of legislative tax proposals began and it continues today. Increase of sales, an increase here or higher excise tax there, a little more duty charged here, while by the way, making the average Canadian the brunt of that tax burden. The government, even with this legislation, will not simply say: "Here is the plan, pay up". No. The government tells us Bill C-20 is necessary as a revenue bridge to sales tax reform.
A revenue bridge is interesting terminology. It means let us get the tax and excise revenues hiked up very high so that the rest of its tax reform proposals, such as the GST, will not be so painful. At least, they will not appear so painful. How does this revenue bridge really work? Let us look at the goods and services tax proposal and the current manufacturers' sales tax.

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In 1984 the manufacturers' sales tax was 9 per cent. By the time the 1989 budget rolled around, the Conservative government had it up to 13.5 per cent, an increase of 4.5 per cent in just five years. Talk about revenue bridge, this is a revenue rocket.
If inflation on average is 5 per cent per year for the last five years, and the current manufacturers' sales tax is 13.5 per cent and is used to raise $18.5 billion, then in 1984-85 terms, the manufacturers' sales tax would have raised less than $10 billion. It would appear that the manufacturers' sales tax, raising less than $10 billion in 1984 and raising $18.5 billion in 1990 and having its rate go up from 9 per cent in 1984 to 13.5 per cent in 1989 is being used as far more than just a temporary revenue bridge. The tax is being used by this government to generate almost twice as much money today as it did five years ago. The problems attributed to the MST by this government have been compounded by its own initiatives.
The finance minister has called the MST a silent killer of jobs. Little wonder when you consider the rate has gone up 50 per cent and the revenues have doubled since 1984. The government has created a monster with which it must now deal. How does it choose to deal with it? Simple, call it a killer. Blame past governments and make Canadians pay for it, then introduce a new tax. Sell Canadians on it. Call it revenue neutral, but generate another $5.5 billion in taxes for Canadians. The average Canadian pays again.
I love a parade, but this parade has to stop. Bill C-20 will do the following; increase federal sales taxes on construction material from 8 per cent to 9 per cent, increase alcohol and tobacco taxes from 18 per cent to 19 per cent, increase the manufacturers' sales tax from 12 per cent to 13.5 per cent, increase telecommunications services from 10 per cent to 11 per cent, increase the excise tax on gasoline by one cent a litre as of March, 1989, another one cent a litre in January, 1990, plus an additional one cent a litre on leaded fuels, increase excise taxes and duties on tobacco products by $4 per carton of cigarettes and a similar amount on cigars, and place a $5.30 levy on a 200-gram container of manufactured tobacco.
The estimated take on the excise taxes and duties alone is $.9 billion in 1984 and has been increased to $1.6 billion by 1990. That increase again is $.9 billion from 1984 to $1.6 billion in 1990.
While the bill proposes increased tax credits and raising income thresholds from $16,000 to $18,000 in 1990, Canadians will not maintain their purchasing power. Farmers, for example, will lose their farm fuel rebate program. In my riding of Essex-Kent, farmers will pay more for such things as fuel by 1990 than they do today. This holds true for farmers everywhere in Canada.
Today, fuel rebates are 8.5 cents a litre and 7.5 cents a litre for diesel fuel. Yet in 1990, the rebate will be reduced to 3.5 cents per litre and by 1991, if the government has its own way, the rebate would be, based on the GST, reduced to 2.8 cents a litre, more than 5.5 cents per litre reduction in just two years, or two-thirds of that rebate being reduced.
The government claims a savings here of $200 million. What type of saving is this? How is this a saving if actual costs are just foisted on the already beleaguered agricultural community? A fault savings indeed. Yet, the government claims that these are necessary legislative amendments, that they are necessary to implement the federal sales tax, the excise tax and the excise duty changes that will provide a revenue bridge to the sales tax reform, a reform that is regressive, discriminatory, ill-conceived, and impossible to nurture. It is a tax that the members opposite would have us all sit back and enjoy while we sacrifice segments of the Canadian economy that can ill afford such expensive initiatives.
Bill C-20, in many respects is a forerunner of the government's proposed goods and services tax. The government needs the legislative changes proposed in Bill C-20 to pave its way for the introduction of the new GST. Is it not odd that we are reviewing legislation to make it easier to introduce a GST that has not yet been considered by this House? Is it not odd that Bill C-20 lays the groundwork for legislation which, although in draft form, has not been finally prepared? The GST legislation may receive wholesale revision at the committee stage before final consideration, or, more preferable, if the government were truly tuned to Canadians, the GST would be scrapped altogether and not introduced at all.
October 23, 1989

Is it not strange that we are hastily arranging legislation now for something yet to happen, if it happens at all? That is all a part of the tax parade, a parade that will have us muddle through a myriad of legislation, a tax reform prerequisite before the real crunch is brought in.
Today, one-fifth of Canadian youth, about 1.2 million live below the poverty line. Today, the National Council of Welfare states that current pension plans do not meet the needs of seniors with over 600,000 seniors living below the poverty line. Today, financing costs in Canada are higher on average, between 3 per cent and 4 per cent, than their U.S. counterparts. Today, inflation in our country has risen by .5 per cent to 1 per cent in the second quarter of 1989 due directly to today's tax initiatives by the government. Today, the government continues to increase taxes that will be a direct assault on Canada, its youth, seniors, businesses and farmers. Is this the type of government that we can afford? What does Bill C-20 do to alleviate the burden on these people? Nothing. It does nothing. Enjoy the parade.
Where does the bill really lead us? It leads us further and further along the tax reform road, a road that has as its ultimate destination the GST, a tax reform that has partially indexed thresholds and credits, a tax reform that is hidden, a tax reform that is regressive and discriminatory, a tax reform that will strangle our economy, have taxes rise at a rate higher than inflation, cause more and more Canadians to lose their tax credits, remove billions of dollars from disposable incomes and investment incomes and sacrifice thousands of Canadian jobs. The tax reform which commences with Bill C-20 will have devastating consequences.
The government's parade of tax legislation will not stop until it is all in place. It is a tax reform that does not address the issues of the homeless, farm stabilization, lower interest rates and the protection of universal social benefits. This is no tax reform. It is just a parade.


Mr. Bob Speller (Haldimand-Norfolk):: Mr. Speaker, I rise today to speak in strong opposition to Bill C-20, an act to amend the Excise Tax Act and the Excise Act.
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This bill is a result of tax changes that were announced in the recent federal budget. This bill provides for increases in the manufacturers' sales tax from 12 per cent to 13.5 per cent and a tax on cigarettes and gasoline.
I rise to speak on behalf of my constituents in Haldimand-Norfolk, especially those in the tobacco industry who have been hard hit by this government's taxation policy. Once again, this government is attempting to reduce the deficit through heavy tax increases which hit middle and lower-income Canadians the hardest.
The manufacturers' sales tax is a regressive tax that impacts more on lower income Canadians than it does on the more affluent. As we have heard many times in this House during this debate and other debates, the Minister of Finance himself has referred to this tax as the silent killer of jobs. I can agree with that.
The budget was an ominous one. The Prime Minister promised tax fairness. The Minister of Finance's budget proposals made massive increases in personal taxes while corporate taxes continued to decline.
Since 1984 the average-income Canadian family is now paying an extra $2,000 in taxes as a result of the finance minister's budget. I ask the government, is this a progressive tax when Canadians have had to pay over $2,000 more in taxes since this government has come into power?
A progressive tax system means you pay taxes according to your ability to pay. This helps reduce inequality and helps raise the standard of living on the bottom end of the income scale. This is not being done at all through these tax increases. A regressive tax is one which makes the poor pay a higher percentage of their income in tax. This is what the Conservative government is doing to the poor.
Let me address the issue of agriculture because, as you know, Haldimand-Norfolk is one of the finest agriculture constituencies in this country. This regressive excise tax without a doubt will have an adverse effect on the people and on the agriculture and farming in my riding.
According to 1986 statistics, 20 per cent of the people of my riding depend on agriculture for employment. I strongly believe that this government is trying to get out of direct support for the family farm as a centrepiece of Canadian agriculture. The drive to incorporate farming accelerates the decline of rural communities. The small towns depend on and are affected greatly by this government's tax measures.

October 23, 1989
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High interest rates devastate net farm income. Farm debt must be restructured to ensure the continued survival of the family farm. Debt write-down is necessary. The budget outlined a number of drastic cuts to agriculture programs which will have a devastating effect on farmers, especially those in my riding such as tobacco farmers, daily farmers and grain farmers.
Let us look briefly at some of the budget cuts this government has decided to implement. I believe that we have to look at the whole system. We have to look not only at what programs this government is providing to farmers but we also have to look at what is cut, especially in this last budget.
In the Crop Insurance Cost Sharing Program, the federal government will be cutting down from $90 million to $110 million its share in the next two years by rebalancing of the cost. Producers, suggesting a one-third tripartite funding proposal, were squarely rejected by this government. Without an equitable funding mechanism such as the crop insurance premium cost, it will remain too expensive for many growers, especially in the poorer provinces. This means a continuation of low participation percentages among producers of many farm commodities.
Without a high participation percentage the economic and political need for ad hoc disaster relief programs will continue just as it has in the past.
Of course, we all know about the removal of the interest free provision to the Advance Payments for Crops Act under Bill C-36, which we debated earlier last week in this House. Farm organizations and members of our party have strongly opposed this legislation, but in doing so have been accused of depriving farmers of advance payments for the 1989 crop year. We called upon this government to withdraw that bill. Unfortunately it is still pressing on but we will continue to fight it. In reality, the present act authorizes such payments and only reluctance by this minister to exercise authority spelled out in the existing legislation prevents funds from now being disbursed to producers across this country. I do not like to say that the minister directly misled this House but he directly told farmers something that was not true.
We have asked this government to withdraw this legislation and to allow consultation on this matter. Unfortunately, this government does not have the insight to see the negative impact of this bill on agriculture. It is obvious that this government's strength does not he in insight or understanding. Perhaps I am being too kind. Perhaps it does understand the negative impact of its so-called progressive changes and it just does not care. It has to be one or the other, and I am not quite sure which it is.
Coming from an agricultural riding, I am naturally concerned about the increased excise tax, and how this will affect farmer's actual cost of production. It has been estimated that the cumulative effects of the tax and the rebate changes will have very negative impacts on our agricultural industries. For example, the budget stated that leaded gasoline would increase by 2 cents a litre April 28, 1989, and as a result of federal sales tax, it would increase by a further .39 of a cent per litre June 11, 1989. The federal excise tax is to increase again on January 1, 1990, by one whole cent. On top of all this, the federal fuel rebate of 5 cents per litre will be eliminated effective January 1, 1990.
It does not take a rocket scientist to know that farmers, especially farmers in my area of Haldimand-Norfolk, will be affected greatly by this. The cumulative fuel cost increase to farmers works out to be 8.39 cents per litre between April 1, 1989, and January 1, 1990. That is 8 cents a litre. Can you imagine going to the gas pump and finding that your gas has gone up 8.39 cents a litre?


Thomas (Tom) William Wappel: Shame!


Robert (Bob) Speller: The member is right, it is shameful. We call on this government to do something about it.
Similarly, product prices for unleaded gasoline will increase by 7.1 cents while diesel will climb by 4.32 cents. This government says that we should bring down the deficit. Why is it bringing this deficit down on the backs of Canadian farmers, on the backs of those people who can least afford to pay?
Estimates by the Ontario Federation of Agriculture, based on Statistics Canada data, put the additional cost to farmers of the fuel tax rebate changes to Ontario at more than $25 million. This is just for Ontario farmers. As you can see, we are not talking about small pennies here.
October 23, 1989

A spokesman for the Canadian Tobacco Manufacturing Council has said that the increases are abusive, inflationary, regressive, and counter-productive. I could not say it any better myself. Farmers are telling this to this minister. The poor who are heaviest per capita smokers will be hardest hit by these measures. The new taxes come four months after the federal government banned most forms of tobacco advertising.
Mr. A1 Bow, vice-chairman of the Ontario Flue-cured Tobacco Growers Marketing Board has indicated: "I don't know if we can recover this time". This is somewhat surprising because this Minister of Agriculture came to my riding and said: "Ottawa wants to send a strong signal to the industry that we are here to support tobacco producers in their time of need and in their time of adjustment". My colleagues know when he said that. He said that during the election campaign. Sure enough, after the election campaign he tells tobacco farmers, "Yes, we are going to support you but we are going to tax the heck out of you. We are not only going to tax you on the top end by taxing cigarettes, we are also going to tax your fuel. We are also going to increase your cost of production." That to me does not seem like support for our agricultural community. The government estimates reveal that there will be an increase of over $6 million in 1989-90 in assistance towards the orderly diversification of the tobacco-producing industry. This is a program set up to help tobacco farmers adjust into other farming sectors because of the conditions brought upon the industry by this government's adverse taxing policies. You would think that if you are asking tobacco farmers to move into other areas of production, and if you are going to over tax them, you would use some of that money on the bottom end to help them move into other crops. What the government has done is it cut out that program. It has slashed it.
What they have done is they have cut that out, slashed it. The government is telling tobacco farmers that it wants them to get out of the industry but it does not want to help them get out, they are going to have to find then-own way out.
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This government takes billions and billions of dollars out of tobacco each year. Surely it could put a little of that money back into the industry.
Why is it that this government promises one thing before an election and immediately afterwards goes back on its word? How can anyone trust this government? It is obvious that Canadians can no longer trust this government's word. If it promises one thing to farmers, it should stand by that promise. Farmers expect this, as do all Canadians.
It is this government's policies that have put the agriculture industry into the fragile position it is in today. A great deal of that has to do with this government's policies. Let us for a minute take another look at another promise.
During the free trade debate, this government promised Canadian farmers that they would have total access to the American markets. The Minister of Agriculture came into my riding and told dairy farmers that supply management would be protected by this government. Right in my own riding, he told the pork farmers that the Americans would stop harassing them, now that we had this free trade agreement we did not have to worry about American harassment.


Peter Andrew Stewart Milliken: It is a fraud.


Robert (Bob) Speller: That is right, it is a fraud because, quite frankly, Canadian farmers want this government to live up to its words, stand up and tell the Americans, "We are not going to take this any more".
We have seen since free trade, and since the election was over, Americans harassing us on steel, pork, ice cream, yogurt and fishing. How can any agriculturalist believe the word of this government? The people believed the word of the government during the last election. They said, "Sure, we are going to give up all these things under free trade, but look what we are going to get in return. We are not going to get harassment". Well, we have seen over the past few months exactly what has happened and how good this government's word is.
Actions by this government clearly show that it does do not give two cents about agriculture. In fact, the quicker it can destroy the industry, the better.

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This government is one of total regression. It is exemplified in the proposed goods and services tax. This ominous legislation is on the lips and minds of people from all walks of life. I had the opportunity during the past month to go to two fall fairs in my riding. Fall fairs are places where you can see thousands and thousands of people. Last year, the fairs were held during the election campaign so it was a good opportunity for us in rural Canada to sit down and talk to individual Canadian constituents.
I had some petitions on the side of my booth and quite frankly, we had to have a police officer to direct traffic because there were so many people signing petitions. The petition called upon this government to get rid of the goods and services tax. Thousands of my constituents, as have the constituents of my colleagues on this side of the House, were signing petitions. I am sure that if we have had thousands of petitioners, there must be thousands from the other side of the House calling upon this government to get rid of this tax.
This is just one adverse way that this government continues in its bad taxation policies. Time after time before the House of Commons committee looking into this issue, witnesses have appeared warning the government that this proposed tax is flawed and unworkable. Does this government listen? No, it does not, not any more than it listened to us when we warned it not to rush into signing the free trade agreement. You can see the commonality between the two issues. The government did not listen then and now we regularly find ourselves being challenged by the United States.
Raising $9 billion to combat the burgeoning deficit is not a mean feat for any finance minister, especially when this government has doubled the national debt in four years.
We saw in the newspaper today figures that show this government's deficit has increased another few billion dollars. It seems that when this government gives a projection as to what the budget deficit will be, it is always off by a billion or two. I do not understand. I think it takes a little common sense to know that if you bring down interest rates, the deficit will also come down.
This government's policy on interest rates is flawed. If the Conservatives would listen to the Canadian people, they would let them know that in fact it is a flawed program. Unfortunately, the only way to lower the deficit, from the government's point of view, is to reverse fundamental policy positions from its election campaign. We have seen that throughout this session.
I am unsure of my time, Mr. Speaker. I have three more minutes, thank you.
Over the last five years, this government has gone to great lengths to blatantly insist that its tax measures have been part of a master plan to broaden the tax base, lower income tax rates, eliminate special preferences and curb opportunities for tax avoidance. This is what the government says. This government has exhausted its tax grab opportunities on personal income tax. Now it is going for a tax on consumption.
Canadians are getting wiser. Some taxpayers, notably small entrepreneurs, are starting to realize that they cannot afford to rush too enthusiastically after tax and other incentives offered by this government because, quite frankly, they cannot believe them. Specific measures introduced in previous years to encourage investment in certain types of activities or in certain regions of the country have been limited or removed altogether.
Over the years, several programs to encourage individual taxpayers to invest in scientific research were gutted. This government stressed and continues to stress that research and development is vital for the growth and competitiveness of our businesses, but it has cut all the programs. This is just another example of how it is hard for Canadians to believe what this government says.
Sales tax reform is heralded as an improvement to the fairness of the tax system by allowing the application of lower rates to a much broader tax base. However, this $1 billion tax grab is highly regressive despite the proposed tax credit system for lower income taxpayers.
We also saw in the paper recently a study done by the Globe and the CBC, I believe. The study said that 80 per cent of Canadians were against this tax. Surely, the government can see the ill of its ways in trying to bring in this tax reform. Canadians clearly do not agree with this.
I see my time is almost up. I want to leave by reiterating what I said about the effects of this tax on agriculture. Farmers in my area told me clearly, and I am sure all the members on the other side have been told, that they do not mind paying their fair share of taxes, but they are sick and tired of being the ones who are always taxed. They do not want this tax. They are the whipping boys of this government and, quite frankly, they are not prepared to stand idly by this time. They are prepared to stand up and let this government know that it is not doing the right thing. They told me that next election it will be this side for whom they will be voting.
October 23, 1989


Thomas (Tom) William Wappel: Mr. Speaker, I wanted to congratulate my colleague for his usual fine performance and, of course, for his lucid and correct arguments. I want to go one step further and congratulate the people of his riding who, notwithstanding the fact that the minister came during the election campaign and made an appeal to the people of his riding, they had the good foresight to elect my friend to represent them in the House of Commons, and a fine job he is doing.
We all know that these proposals, from the goods and services tax to the increase in the excise tax, are cleaning us out, if I can put it that way. Not only are they cleaning us out but they are cleaning Canadian taxpayers completely. It is interesting, talking about cleaning, that this bill intends to increase the wholesale tax on laundiy detergent. Not only are we going to get cleaned but we are going to have to pay for it to boot.
I wonder if my friend would have any comments on that.


Robert (Bob) Speller: Mr. Speaker, I thank the hon. member for his comments. He is absolutely right when he says that this government seems to be going after all those small little areas to tax, such as cleaning detergent. Quite frankly, I want to explain to him that people in my area were not fooled by these government promises because they have heard them all before. They have heard promises by this government. I do not think a lot of people in rural Canada were fooled by this. If you look at this side of the House you will see that we well represent rural Canada. Rural Canadians were not fooled by this government's policies.
I do want to say though that what I heard from the people in Haldimand-Norfolk during the fall fairs, and I will end with this, is that people can understand that a government has to tax. They can understand that there are certain problems with the deficit. They can understand all of this. What they cannot understand is why it is them. Why does the government tax programs, such as the advance payments program? Why would it cut out an interest free area to save on the deficit? Twenty-seven million dollars is not a lot of money in the whole, especially when that $27 million means the orderly
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marketing of grain in Canada. That is important because although the cost of $27 million may go back to the government, we now have no way to orderly market grain in Canada and we are going to see grain flooding onto the markets. Grain is not going to be able to be traded and, quite frankly, farmers will be going under because of this. This all relates back to deficits and taxation. Farmers cannot understand the logic behind these moves by the government.


Brian White: Mr. Speaker, I listened with interest to the comments of the member for Haldimand-Norfolk. I have a few comments because some of the things he said about agriculture specifically cannot go unchallenged.
I would like to begin with his comments about the public debt. If it were not so tragic, it would be laughable. When the Liberal party was in government back in the 1970s and up until 1984 we were forever on an uphill escalator of public debt. I shudder to think of what our finances would be like if the Liberals were still in government today.
Second, I am sorry to say that the member has shown a very sad lack of knowledge of the free trade agreement when it comes to red meat and supply management. The free trade agreement gave Canada and the United States mutual exclusion from the Meat Import Act. It did not mean freedom from American harassment but it gave us a recourse for those disputes. In addition, supply management is going to be saved by work in the GATT on Article 11. The free trade agreement will not destroy supply management. It is ridiculous to say so.
The other matter he mentioned was a Conservative saying one thing before an election and another thing after. Those Canadians with an interest in political history in Canada remember back in the 1970s when former Prime Minister Trudeau campaigned tooth and nail against wage and price controls. As soon as he won the election, what did we have but wage and price controls? In the 1980 election, former Prime Minister Trudeau again campaigned against the Conservative Budget to increase the price of gas by 18 cents. Within a year it was up a dollar. There is an old saying about the pot calling the kettle black and I think we have a perfect example here.

October 23, 1989
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Just to close the comment, I am proud to say that this government served the farmers of Canada well. If you look at the rural ridings across Canada and the members they elected, I rest my case on the number of Conservative rural members as opposed to the number of Liberal rural members.


Robert (Bob) Speller: Mr. Speaker, I do not need any lessons from the hon. member on either debt reduction or this free trade agreement. Quite frankly, it surprises me how a member on the other side can get up and talk about debt when his government, over the past five years of being in power, doubled the nation's debt accumulated from Confederation to date. That government doubled it, right from Confederation. In five years his government has doubled that debt, so I do not need any lessons from the hon. member on debt.
As for free trade, the hon. member is right. Unfortunately, his agriculture minister and his minister of trade went from riding to riding to riding saying that there will not be any more harassment by Americans. That is what they promised. What we have seen in steel, pork, fishing and dairy is harassment after harassment by Americans on Canadian products.
The hon. member said Article 11 is not negotiable. What do we see at the GATT negotiations? Surprise, surprise, now we are negotiating Article 11 of GATT. There is no guarantee by this government that supply management is protected. This government said all throughout the election campaign that supply management would be protected. Government members came into my riding and said: "Dairy farmers, you do not have to worry about it, it is not negotiable".
Well, we see now that it is on the table. Supply management is on the table at GATT. What have we left to negotiate with? We have nothing left. There is nothing left on our side with which to negotiate because we have given everything away.
This government has sold out Canadian farmers and Canadian fanners have said they are not going to take it any more.


John R. (Jack) Whittaker: Mr. Speaker, I flipped through Bill C-20 which I will be speaking on today to see what is in the bill. It seemed like a rather innocuous title, an act to Amend the Excise Tax Act and the Excise Act. But when I looked in the contents, I found sort of a wolf in sheep's clothing. The government was trying to trick us, I would suggest, into believing that it is something without very many teeth, that it is something very quiet with no problems for the people of Canada.
But when you look a little deeper, it is clear that this particular bill is part of the agenda that we have seen under this present government since 1984, a constant tax grab from the lower and middle income people of Canada. We look at what is in the bill and we see that it contains a tax on telecommunications. Well, on the surface that does not seem so very serious. People who use telecommunications are probably large corporations and they are going to be taxed. But if we look at who this is affecting, we find out that the people in the Northwest Territories and the people in the Yukon are the ones using telecommunications constantly to keep in touch with their relatives in the rest of Canada and the United States. The telecommunications tax is going to hit people in the far regions, in the Atlantic Provinces, in the west, including British Columbia where I come from. Often people in these regions, particularly in the north, have come from areas such as Ontario, southern British Columbia, Alberta, Saskatchewan, Manitoba and Central Ontario and they want to keep in touch with their friends and relatives. With this particular bill the government has, in fact, taxed the person who has moved out of those areas and is populating our frontier areas, areas to which we must look for our future growth. They are being hit, I would submit, by this telecommunications tax.
I looked further to see what else the government has hit. It has taxed gasoline. If we look at the environmental aspect of that, it is not such a bad deal because the environmental argument is that it discourages the use of fossil fuels. But let's face it, here in Canada where we have such a broad area to cover, where we have miles and miles between communities, between families, it is not, I would submit, a luxury to be able to drive a vehicle from the outer areas into town for groceries. Sometimes, particularly up north, that requires miles and miles of driving, but they are the people who we are hitting with this tax. It is not a luxury tax, it is an essential part of living, an essential part of life.
October 23, 1989

It is unfortunate that the government cannot see that by adding the excise tax on gasoline it is hitting families, it is hitting the poor, it is hitting those on fixed incomes. Although from an environmental point of view the increased excise tax on leaded fuels is a desirable thing, many people across Canada who are among our poverty-stricken, among those who are on fixed incomes, cannot afford cars that use unleaded gasoline. They have the old beaters, the old pick-up trucks from prior to 1978. Those are the types of vehicles they must purchase to get their families around, to go in to town to get groceries and the very necessities of life. As well, perhaps they have to take a spouse to the hospital for an operation, and so on. They are the people who are going to be hit with this tax. It is a tax again on the poor.
The tax on cigarettes and liquor I really have very little argument with. I feel those are things that Canadians can do without. It, in fact, is similar to a luxury tax. I cannot object to that.
But I look over the last few years since 1984 to find out what has happened to the taxes. I see that corporate taxes are down a percentage point from 13 to 12 per cent. I see that upper-income earners' tax has dropped from 34 per cent to 29 per cent. I look at the other side of the ledger to see what has increased. We have increased all of these taxes I have just spoken about. But, in addition, since 1984 we have increased the manufacturers' sales tax from 9 per cent to the present 13.5 per cent. Building materials under this bill would go up to 9 per cent from 8 per cent. What effect is that going to have? On the manufacturers' sales tax end of it, there will be a 1.5 per cent increase from the 12 per cent it is at present, up 3 per cent from what it was in 1984. We have had three consecutive increases in the manufacturers' sales tax since 1984.
Who does that hurt? Where does it hit? Again, it is a consumption-style tax. It hits the poor. It hits those on fixed incomes, those in the middle-income groups. The people who can least afford to pay are the ones who are hit by these consumption taxes.
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We see, since 1984, that revenues from consumption taxes have increased from 19 per cent to 25 per cent. Those, of course, are going to rise now in the advent of the goods and services tax if it is brought in against the wishes of those 78 per cent plus which number is growing of those in favour of scrapping the goods and services tax. What is the effect on Canadians?
The manufacturers' sales tax, of course, gives people less disposable income, the ability to purchase fewer things. The 9 per cent tax on the building goods makes it more and more difficult for average Canadians to own homes. In fact, it increases the rent of those who cannot afford to own homes, thereby again depressing available income. It is a vicious windmill that we have put these people into.
Now what have we got? We have now raised the taxes to such an extent that the National Council on Welfare has estimated that at the present time sales taxes take
11.5	per cent of the incomes of families earning $10,000 or less; 6.7 per cent of the incomes of families earning $40,000; but only 4.4 per cent of the income of families earning $100,000.1 wonder, is this fair? Is this where we want to go in Canada? Is this the Canada that we want to see for the future? Is this what we want our children to have to put up in the next generation and generations thereafter? I would suggest that it is not.
We have seen this constant agenda of turning more and more to consumption taxes. The government now argues that the manufacturers' sales tax is not fair, that it is a silent killer of jobs and we have to do away with it. It is now 13.5 per cent so the government will make it 9 per cent.
However, the government does not tell us that the
13.5	per cent, of course, is on the manufacturers' level and as everybody in the chain up to the retail level takes his piece of the action that 13.5 per cent does not increase. However, with the value added concept that we are now getting into, at each stage we are adding the 9 per cent onto the value that we have added to the price of the good. So a $100 good out of the manufacturer would normally bring in $13.50 in tax. By the time it gets to the retail level it has increased to $200. By my multiplication, we will now pay $18 in tax instead of $13.50. But that is not what this government has told the people of Canada. It has said it was going to be a smaller tax. The issue, I would suggest, is not whether we should have a value added tax, which in this case we are calling a goods and services tax, but whether Canada can afford to have a value added tax.

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In one of the finance committee hearings we listened to a group called the Tax Executive Institute and we questioned the members of the group about what was happening. This group was made up of 80 per cent U.S. tax executives along with a vice-president to talk to us about a value added tax. We asked the vice-president what the Americans have done in the area of a value added tax; how far it had ever gone. It has been tried a few times, we were told, but unsuccessfully. It won't float past the first stages of discussion. Why? Because this is a tax that will be almost impossible to administer, the complexity of implementation will be enormous.
Within their own group of tax executives they could not get agreement that a value added tax was the route to go. Yet, in Canada, although we are tying our kite to the string of the United States and trying to fly everything that they fly, we are going to try a value added tax that is unlikely to come into the United States in the foreseeable future, and I would suggest probably not for at least 20 years down the road or perhaps never. Yet, here in Canada we are going to try it, but we are going to try it in a manner that has never been tried in the world before; we are going to use a two-tiered system. We have a provincial tax, but we are not going to go with the provinces, we are going to try it on our own federally. So we are going to make it totally impossible for those out there who are gathering it to bring this in.
That is a problem with what we have done, but the problem is the tax itself. It is a regressive tax. It hurts the poor, the middle income earners, and those on fixed incomes such as the old age pensioners. It is not the answer to what we in Canada need for the future.
I looked at some of the problems with some of the witnesses who have appeared before the finance committee hearings on the technical paper. We have talked to farmers and the farmers tell us they do not want this tax. If we have to bring it in then they need certain exclusions. But the basic message is that a value added tax is going to hurt everybody up the line in administration.
We talk of the input credits and the government says, "Well, it does not really matter because you are a farmer and you are going to get back all of your input credits". I wonder where those people in their little ivory towers have been all their lives because they sure as heck have not been out on the farms talking to the farmers. They have not been in the small businesses talking to the business people. Those are the people who have to administer this.
You hear the bureaucrats in the Department of Finance, who have written this technical paper, telling us it is going to be simple, it is going to be easy to administer. It is so simple, you simply take the tax and you take your input credits and you subtract and you add and you send away this money and you get it all back. Nonsense! The people who have to do it are frightened to death of this administrative nightmare that the government has put them in.
They have bookkeeping problems. We talked to a potato farmer in Prince Edward Island. He said, "Look, I work from dawn until dusk. Although I run a farm with 1,100 acres of potatoes, my wife and I still do our own bookkeeping. Even though we may go out and spend $100,000 a year on equipment, we do not have the time to fill in the paper to get back our rebate".
A lot of farmers tell us they are not computerized, as are a lot of small businesses. So what happens? The farmers tell us that a lot of them will not be getting back the input credits, so it is simply going to cost them the 9 per cent more. I say that this is shameful. This is only one example of what is happening under the goods and services tax.
One of the other examples, is in the area of the poor. Government members on the committee constantly tell us, "Well, we have worked in this nice tax credit system, rebates for those with incomes under $24,000". Well that is all well and good. Go up to the Northwest Territories or the Yukon where they tell us that the illiteracy rate is higher than anywhere else in Canada. The trappers out on the traplines live a subsistence living I am told. They do not file income tax returns. They know nothing about tax credits. But, in order to run their traplines they buy snowmobiles, gasoline and their traps, and they have to pay the tax on top of that. They are not going to get any of their rebates back. It is simply going to cost those people more and they are already paying 25 per cent more for all of their goods and services than we, down in the southern regions, are paying. So it is a double taxation on those from the outer regions.
October 23, 1989

In Atlantic Canada they tell us that they are paying approximately 15 per cent more than what those of us in the rest of Canada are paying. Again this is double taxation.
We read in the newspaper that the Alberta Minister of Finance has said that the government has substantially underestimated the once-only bulge in inflation. It will be substantially higher, he tells us, than 2.25 per cent, and there will be a continuing spiral with the increases in costs through manufacturers' added costs, administrative costs, implementation costs, as well as the wage costs. These are going to bring up the inflationary spiral. It is going to have a devastating effect, the minister tells us, in the future, an effect that in the short run will hurt so badly that over the long run we will never gain back what we have lost. I wonder, is that what we need in Canada?
There are some definite alternatives at which we should look. Those alternatives do not have to be a value added tax system. They do not have to hit the poor. It is not a consumption type tax. One alternative is to cut the wasteful spending habits of this government, a government that increases taxes and spends more than it earns. We need not hit the social programs which we in Canada want, have fought hard for, and will continue to fight for; there are other methods. We can tax capital gains. We can phase down special tax breaks used primarily for upper-income people. We can revise the income tax rates and restore a full indexation system. Those are only some suggestions for the government. Another would be perhaps a wealth tax.
But Bill C-20 is simply part of this government's agenda, I would suggest, to fund its wasteful spending on the backs of the poor and the middle class.


Mr. Mills:: Mr. Speaker, I would like to compliment my friend for his terrific speech this afternoon. The one thing that he addressed that I have strong views on as well is the fact that the disincentive factor in the administration of the tax system is so high and is depressing people, whether they be farmers, seniors, or families. The government's objective is to try to address the deficit but at the same time it admits that the taxes it is proposing in this current system are inflationary. The government admits that inflation will be a minimum of
2.5	per cent, which is going to have an effect on our interest rates. We know that every time the interest rate goes up an extra $1.4 billion is added to the cost of servicing the debt.
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Does the member not think that the tax system has become so cumbersome because the government is basically using a band-aid technique? Has the government not put itself in a position where any potential advantage that it sought has basically now become a total disadvantage? I wonder if the hon. member could comment on that.


John R. (Jack) Whittaker: It is an interesting proposition, Mr. Speaker, and I think quite correctly stated, that in fact what has happened is that the government, in its rush to gain added income, has ignored some of the things at which it should have been looking. The problem with the inflationary aspect of course is this. I fully believe, after hearing a number of economists as well as people from across Canada, that this 2.25 per cent that they have talked about in the inflationary bulge is substantially under estimated. Perhaps the Canadian Federation of Independent Business was closer in its estimate at 4 to 5 per cent and the once only bulge. Certainly, from past experience we have seen-although we cannot get an assurance from the Governor of the Bank of Canada- he will not increase the interest rates as a result of inflation.
Past experience shows us very clearly that when inflation goes up, interest rates will also go up. As interest rates go up, consumption will drop. When consumption drops, of course, we have the domino effect: employment drops, businesses fail and we are into a major recession. A recession has been predicted. We already have all of the recessionary trends that show us, starting now, that probably by the end of 1990 and the start of 1991, with the advent of this tax-and without it even-we are going to have a recession. But with the goods and services tax it is going to be devastating. It is going to be something that we did not even see back in 1981. It is going to be totally devastating for the economy.
I think this is the type of thing that Mr. Johnston from the government of Alberta, a Progressive Conservative government, was talking about. He spoke of the effects of this tax and the wounds that will not heal even over a period of time. I think that is what Canadians have to be made aware of and made aware of now. It is not a matter of dropping the tax to 7 per cent and dropping the base. The very concept of this tax leaves a bad flavour in my mouth, and I would suggest in the mouths of most Canadians. It is something that we have to spit out and get rid of now.

October 23, 1989
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Mr. Skelly (North Island-Powell River):: Mr. Speaker, I must say that I, as well almost everyone in the House, enjoyed the thoughtful and clear presentation put forward by my colleague. It certainly brought to mind some of the communities in the riding I represent, places such as Bella Bella, Bella Coola and Klemtu communities that are going to have in excess of 10 per cent of the cash ripped right out of them. The price of goods that is already beyond the reach of many people in those communities will be again increased by at least 10 per cent by excises taxes and by the goods and services tax of this government.
I know that you, Mr. Speaker, were shocked and horrified at the scenario that my colleague laid out. But we take some comfort in the fact that there are solutions. The carefully proposed solutions that my colleague put forward are certainly reasonable. A reasonable government would adopt them.
The people in my riding, and not to the tune of 80 per cent, but almost to the tune of 100 per cent, are saying that there is a solution beyond the ones that my colleague has put forward. One is to get rid of this government. The Conservative Government is absolutely the worst organization that has ever been inflicted on the Canadian people. I know you would agree with me, Mr. Speaker. This outfit has come along and imposed income taxes and excise taxes far in excess of what is reasonable. It then turns around and threatens the very livelihood, the economic stability of this country with this terrible goods and services tax, or as it is called-the grief and suffering tax. My colleague would probably acknowledge that it is going to finish this government. It is certainly going to finish the Canadian economy and the well being of many citizens in it.
I wonder if my colleague would be prepared to comment on the real solution, that getting rid of the Conservative Government is the route to go in order to solve this major problem.


John R. (Jack) Whittaker: Mr. Speaker, unfortunately, as one of my colleagues over here has said, we cannot afford to wait three years. It is very difficult when you have a majority government. Hopefully, we can propose alternatives and have the government accept them.
One of the things that my friend stated in the preamble to his question concerned the small communities that he named off. It brings to mind one of the other things that will be hard hit in small communities besides some of the things that I have already mentioned such as tourism and small business, motels and hotels. It will be the cultural aspect. We are told by the radio broadcasting people that small town radio stations will now be threatened as a result of this tax, the things that small towns look to for communication between themselves and among themselves. Not only has the government cut down on what it is putting into the CBC, one of the things that many small communities depend on, but with the goods and services tax it is going to be hitting out at the communications of small communities, radios newspapers and some things such as theatre, art, the various things that people in small communities are so dependent upon.
Again, they talk about not having to charge the tax because you are under $30,000. It is all complex. It is much too complex for the person in small communities. All it does is cause them more problems. It causes more business failures. In the area of culture and communications, it causes failure. Again, it is hitting at the small communities. We are not the same out there in those little communities. We need much, much different things than they do in the large cities. Those are the things that are being hit now by this particular tax.


Dennis Joseph Mills: Mr. Speaker, I am happy to have the opportunity to rise to speak on Bill C-20 today. I think we have heard enough today about the specifics of Bill C-20 in terms of the federal sales tax increases, the 18 per cent to 19 per cent on alcoholic beverages and tobacco products, the 10 per cent to 11 per cent on telecommunications, the 8 per cent to 9 per cent on construction materials and the 12 per cent to 13.5 per cent on all other taxable goods.
I would like to address another issue today which I think the government is overlooking. There is a feeling in the community that the government has really lost its sense of caring. There is a feeling that the government has really lost the sense of compassion that a government should have. There is a feeling that the government is just plain indifferent to the frustration that all Canadians face when it comes to taxes and tax reform.
October 23, 1989

I, for one, think that most Canadians respect the fact that it is the government's responsibility, its duty, to make sure that we handle the economic affairs of this country in a proper and productive way. I do not believe that Canadians really begrudge the government attempting to do its job. I think what people were looking for, and I think what people trusted during the last election, was that the Prime Minister and the Minister of Finance when they approached tax reform would approach it in a more comprehensive way. We all know that-and I speak for my riding and I know there are many other ridings that feel the same way-the entire tax system is flawed.
When you take a look at the act, you see it is 1,666 pages. There are another 140 different sections on interpretations. There are exceptions to exceptions. There are guidelines to the rules and interpretations of court decisions that have been taken. People have such a frustration with the tax act and the tax system in general right now that there is a mood in the country that is providing a lot of disincentive. It is providing disincentive to our senior citizens who have worked their lives to make this country great. There is a disincentive to our entrepreneurs who want to be free to create and utilize their energy in making products that will, in turn, create jobs for Canadians. These products have to be made at such a level of quality and productivity that we are world class competitive. Just as we were coming out of the tough years of 1982 to 1984 and heading into a period when the economy was starting to really move again in 1985 to 1988, there was a sense of hope held by the entrepreneurs and many others in this country that we were finally going to put ourselves back on track.
What we have done with this tax system is shackle the entrepreneurs. We have provided a tremendous frustration level. I do not just point to entrepreneurs. Seniors citizens come to my constituency office. They do not know where to begin when they have 45 pages of rules and regulations and they try to figure out the tax system we have in this country. The frustration is just absolutely incredible. I know Revenue Canada does provide some service during peak periods, but this government should
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be approaching tax reform in a comprehensive way. It has not had the courage to do so.
I listened to the Minister of State for Finance speak this morning. He talked about the fact that this government has made progress on reducing the debt. I could not believe my ears. This is a man who understands the financial affairs of this country. It is no secret that there were some tough times in this country from 1980 to 1983. The debt ballooned because we had the worst recession in Canadian history. Our social service programs were called on with vigour. We needed those systems in place to ensure that unemployment insurance and all other social services were there to look after the disadvantaged in this country. That situation was not unique to Canada. It was a world recession.
From 1984 to 1988, one of the best periods in our economic growth, the government managed to double the nation's debt. In a period when the government should have lived up to its commitment of 1984, when it said it was going to address the deficit, it just basically ignored it. There was no reason to ignore it because the economy was booming along quite nicely.
Not only has the government doubled the debt, and continues to add to the deficit, but it comes into this Chamber and states it has made progress on the debt. I find that strange because I believe the central issue in the next election will be trust. Just like free trade was the issue in the last election, the issue in the next election will be trust.
When the Minister of State for Finance comes into this House today and states that the government has made progress on reducing the debt, I think he is really setting his government's trust factor back tremendously.
He went on to say that those who cannot carry this tax will be exempt. He has missed the point again. The hon. member from the New Democratic Party, the hon. member from the Okanagan, talked about the frustration farmers were having in filling out rebate forms. It is not just farmers who do not want to go into the business of filling out rebate forms every quarter. What about the taxi drivers? What about families? They do not want to go into the business of constantly having to fill out rebate forms.

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In my city of Toronto there are over 10,000 taxi cab drivers. This system that the government and Mr. Wilson is proposing is bureaucratizing the entire nation. It is an incredible thing, and I just cannot fathom why they would want to have everyone in this country bureaucratized. It is a mystery to me.
The thing that really bothers me is the tone of the government. A colleague of mine who is travelling the country with other colleagues was telling me just before I came into the House today that the level of passion from all sectors, not just from seniors and entrepreneurs, but from tax experts, tax lawyers who are experts, the Canadian Federation of Independent Business, the Canadian Race Track Association, some of whom have been traditional supporters of the government, is something that has never been seen in committees before. They are saying, "Please, Mr. Wilson, come to your senses and do what is right". Doing what is right would be going back to the drawing-board.
I for one do not think it is any big mark on one's career to stand up in this House after listening to the people of Canada for many months to say: "Look here, I have listened to the people of Canada. I am withdrawing this and going back to the drawing-board".
I have immense respect for the Minister of Finance. I have known him for many years. I think he is a great public servant. But I cannot understand his rigidity, his lack of willingness to explore other options. He is sitting in the Department of Finance with a staff of about 3,000 public servants, some of the best and brightest people in Canada. He has access to whatever he wants in the country because of his position. I cannot believe that in his heart of hearts he believes that what he is doing now is the only way and the right way for Canada.
I think that he knows in his heart that this is not good for entrepreneurship. It is not good for senior citizens. It is not good for the regions. It is not a good system. I am hoping that eventually he will muster the courage to go back to the drawing-board. We as constructive parliamentarians who must listen to all people, would have a lot more respect for the minister if he stopped walking along this current road, in an almost in a self- righteous fashion, something which has not been his tradition.
When I think of Bill C-20, which I am addressing mostly, I see there is absolutely no sensitivity to the north. We on this side of the House spent several days in the eastern Arctic during the summer. We had a policy meeting up there. We all love the north but we do not realize-and I for one forget-that it costs more in the north to buy vegetables, meat, and turkey. We saw a turkey that cost $120. In most parts of the country we might pay about $30 or $40, but in the north it costs $120. How do mothers and dads clothe their kids in the north? How do they pay for groceries? It is not right.
The way this country was built was by being regionally sensitive. If ever there was a region in this country today that needs special sensitivity it is the Northwest Territories. I would urge all my fellow members to take a trip to the north. I can tell you, you will come back with a totally different perspective. You will come back with pride, but at the same time you will have a feeling that all too often we in this House forget about some of the hardships, the frustration and the lack of opportunity for northerners. When we went into the supermarket in the north, yes, there was a good selection, but it was certainly not the kind of selection that you can get at Boushey's in downtown Ottawa or some of the other stores, or some of the stores in my riding on the Danforth.
The Minister of Finance and the Minister of State for Finance are projecting an attitude that is too insensitive. It is turning people off. I have mentioned before we are not the government. All we can do is bring the views of other Canadians to this chamber. Yes, they do have the majority vote. Just because you have the majority vote does not mean you have to continue with blind arrogance. It is not right.
We have to get a style and a system going in government where once we realize that we are doing something that is incorrect we fix it. We have the courage to fix it.
I think Canadians want their government to come up with a responsible plan. They want an end to the 50,000 pages that comprise the tax act. I do not think this feeling is unique to any one region, sector or social group. I think it is all Canadians. They want us to come forward with a system as the Minister of Finance promised in 1985, 1986 and 1988, which is more fair, simple, efficient and workable. If the Minister of Finance and the Government of Canada came up with a system like that we could reignite our economy.

The Minister of State for Finance said: "The additional revenue raised through these measures, the measures to amend the excise tax, are estimated at $2 billion in the first full year". The thing that I did not hear him deal with was the inflation factor of 2.5 per cent. If we went along with the Canadian Federation of Independent Business, we would see it estimates 5 per cent. We are talking about an extra three or four percentage points on the interest rate. That could be an added cost to the deficit of as much as $4 billion to $5 billion.
I stand to be corrected on that. But I know one thing. The $2 billion in revenue will virtually be eliminated for sure. It will be eliminated by the interest rate differential because of the increase in inflation.
My hon. friend from Halton-Peel shakes his head "no". He is a respected business commentator and now a member of Parliament for whom I have great feeling. If I am not accurate in that, I stand to be corrected, but I would like a thorough explanation on that. I have talked to economists and bankers. They are afraid that the inflationary effect of the GST is going to really affect our investment climate from abroad. That investment climate, once it is affected, will have an effect on our interest rate. Even now the Minister of Finance does not really have a will strong enough to give a direction to the Governor of the Bank of Canada. I presume that the reason why he is not doing that is because he is naturally concerned about inflation.
If he is concerned about inflation with the current interest rate, then why would it not be logical with an added inflation rate, because of this complicated tax system, that it would also affect our interest rates? That is the point that I am trying to make.
At any rate, I think that all too often in this House we forget about the disincentive factor. We are through Bill C-20 and the goods and services tax demoralizing our nation. I know that because I hear from people all the time. I will give just one short story.
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Mr. Speaker, how much time do I have?


The Acting Speaker (Mr. Paproski):: Your time has expired. Since it is getting awfully close to five o'clock I will let you have another couple of minutes.


Dennis Joseph Mills: I would like to tell one final story, Mr. Speaker.
Last weekend I met a man who was in the marble tile business. His business was doing well. But his problem was that he could not find quality trained people who would work on weekends because of the disincentive factor of the tax system. People are saying: "I work all weekend but I end up keeping only 30 per cent to 40 per cent in my pocket". That is what I mean by the disincentive factor. I think it is time that we look at that when we approach this tax system. I think it is time that the government go back to the drawing board and worry about turning on the nation rather than turning it off.


Mr. Turner (Halton-Peel):: Mr. Speaker, I just want to respond a little to the hon. member's views on interest rates. I will do it very quickly.
I know that the member has done a great deal of work on the issue of tax reform and I salute him on that. The issue of the inflationary effect of the proposed tax and the response to it by the Bank of Canada needs to be more than a knee-jerk one.
The Bank of Canada Governor has appeared before a parliamentary committee. He has said that he understands the threat of having higher interest rates responding to any GST induced inflation. He has told the parliamentary committee that he will not respond to GST induced inflation by jacking up interest rates. So we have some assurance from the Governor of the Bank of Canada himself on that.
We all recognize the real threat posed to the government's long term ability to manage the debt that is posed by interest rates. I agree with the hon. member on that very real threat. The only way we can get lower interest rates in the long term is to address the debt problem. Simply lowering rates to accomplish that is a very facile solution.


The Acting Speaker (Mr. Paproski):: The hon. member has 30 seconds.

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Dennis Joseph Mills: I did not want you to think that I was ignoring the debt. But, at the same time, I would like to know how the Governor of the Bank of Canada can differentiate between GST inflation and whatever other inflation is out there. If he can, then we will try and draft it.


The Acting Speaker (Mr. Paproski):: The hon. member will have another six minutes remaining in questions or comments when we take this matter up again.
It being five o'clock, the House will now proceed to the consideration of Private Members' Business as listed on today's Order Paper.


PRIVATE MEMBERS' BUSINESS - MOTIONS   FOOD AND DRUGS LABELLING OF DRUGS
[Stage Direction]
The House resumed from Monday, June 19, 1989 consideration of the motion of Mr. Dorin:
That, in the opinion of this House, the government should consider the advisability of amending the Food and Drug regulations in order to require the labelling of all drugs, irrespective of their intended use, so as to include a qualitative list of all medicinal and non-medicinal ingredients.
The Acting Speaker (Mr. Paproski):: Is the House ready for the question?


Some Hon. Members:: Question.


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


Some Hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.
The Acting Speaker (Mr. Paproski):: We have a deferred vote this evening pursuant to Standing Order 45(6). We can either start ringing the bells now, if we have unanimous consent, or suspend the sitting until six o'clock.


Some Hon. Members:: Suspend.


SITTING SUSPENDED
The Acting Speaker (Mr. Paproski):: I hereby suspend the sitting until six o'clock.
The sitting of the House was suspended at 5:02 p.m.


SITTING RESUMED
[Stage Direction]
The House resumed at 6 p.m.


[Stage Direction]
The House resumed from Friday, October 20, consideration of the motion of Mr. Mazankowski that Bill C-36, an act to amend the Advance Payments for Crops Act and the Prairie Grain Advance Payments Act, be read the second time and referred to a legislative committee; and the amendment of Mr. Foster:
That the motion be amended by deleting all the words after the
word "That" and substituting the following therefor:
"Bill C-36, an act to amend the Advance Payments for Crops Act and the Prairie Grain Advance Payments Act, be not now read a second time but that it be read a second time this day six months hence."
The Acting Speaker (Mr. Paproski):: It being six o'clock, pursuant to Standing Order 45(6) the House will now proceed to the taking of the deferred division on the amendment in relation to Bill C-36.


[Stage Direction]
Call in the members.
The Acting Speaker (Mr. Paproski):: I declare the amendment lost.
The hon. member for Elk Island on a point of order.


Mr. O'Kurley:: Mr. Speaker, I was not able to make it until after the vote started. I would like my vote to count with the government side, please.


Douglas Grinslade Lewis: Mr. Speaker, we have now had reasonable discussion on this bill and, in the interests of being able to put it to committee and get on with the very valuable committee work, I wonder if there would be a disposition among the opposition parties to apply the result of the last vote in reverse to the motion for second reading ,in order that the farmers of Canada will receive these payments.


Mr. Gray (Windsor West):: Mr. Speaker, the farmers of Canada have already spoken. They have said no to this bill. Therefore we cannot accept my hon. friend's suggestion.
We did make some suggestions to him on how it might be possible to deal with the needs that are supposed to be dealt with by this bill. We put forward three suggestions. We have not received a positive response. If we get a positive response we will be willing to talk about expediting second reading.


The Acting Speaker (Mr. Paproski):: I do not believe that there is unanimous consent.
It being 6.30 p.m. this House stands adjourned until tomorrow at eleven o'clock a.m., pursuant to Standing Order 24(1).


[Stage Direction]
The House adjourned at 6.28 p.m.
[Stage Direction]
Tuesday, October 24, 1989