1991-02-26

Mr. Speaker:: I have the honour to lay upon the table the report of the Parliamentary Librarian for the fiscal year ended March 31, 1990.



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Mr. Bob Hicks (Scarborough East):: Mr. Speaker, pursuant to Standing Order 34, I have the honour to present to the House the 21st report, in both official languages, of the Canadian NATO Parliamentary Association.


POINT OF ORDER
Mr. Nelson A. Riis (Kamloops):: Mr. Speaker, I know I am rising slightly late. I should have risen under Statements by Ministers. I wonder if I can put a question to my hon. friend, the Parliamentary Secretary to the Government House Leader, concerning the rather extraordinary events unfolding in the last number of hours in the Persian Gulf.
Does the member know whether the Minister of National Defence will be making a statement in the House any time during the day or indicating the government's view as to those recent developments in some other form?


Mr. Albert Cooper (Parliamentary Secretary to Leader of the Government in the House of Commons):: Mr. Speaker, I can advise my hon. friend that I am sorry I do not know if that is the government's intention. However, I can assure him that if such a situation arises I will inform him at that time.


CANADIAN SECURITY INTELLIGENCE SERVICE ACT AND SECURITY OFFENCES ACT CONCURRENCE IN REPORT OF SPECIAL COMMITTEE
Mr. John Brewin (Victoria):: Mr. Speaker, I rise to speak to a motion which I placed on the Order Paper in September. The motion is that the report of the Special Committee on the Review of the Canadian Security Intelligence Service Act and the Security Offences Act presented to this House on Monday, September 24,1990 be concurred in.
The effect of this motion is to ask the House to concur in the report called In Flux But Not in Crisis. I take this particular opportunity to bring this motion because yesterday-


Mr. Speaker:: Order, please. The proper procedure is that the motion be read and I think I should proceed to do that. It is moved by Mr. Brewin:
That the report of the Special Committee on the Review of the
Canadian Security Intelligence Service Act and the Security Offences
Act presented to this House on Monday, September 24, 1990, be
concurred in.


John F. Brewin: Thank you, Mr. Speaker. I apologize for having sought to pre-empt your role in reading the motion; it was inadvertent.


Mr. Speaker:: As the hon. member may know, I expected him to perhaps be making some remarks in another direction with respect to this motion. That is why I allowed him to go on. I appreciate the courtesy of the hon. member.


John F. Brewin: Mr. Speaker, I would like to speak to the report itself and, if it is not bending the rules, to comment in passing on the response of the government to it.

February 26, 1991
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The Canadian Security Intelligence Service Act was adopted in 1984 by the House of Commons. It essentially established a new regime for security intelligence in Canada. It provided that instead of the RCMP being responsible for security intelligence, a new agency, the Canadian Security Intelligence Service, would be created.
The 1984 legislation contemplated that there would be a review by a committee of Parliament five years after the act had passed. That committee was established in the summer of 1989 and was chaired by the distinguished member for Lethbridge, if I have his constituency correct. That committee worked hard for a year to produce this report, which is called In Flux But Not in Crisis.
I want to say at the outset that the committee report was unanimous. All members of the committee-Conservatives, Liberals and New Democrat-approved the recommendations in this report. It was the product not just of a unanimous report but of very extensive work by the committee. We had an extremely good staff, the committee worked very well together, and I want to pay a special compliment to the chair of the committee, who worked hard to draw us together to try to reach some constructive recommendations.
As with any unanimous report, it represents to some extent a compromise of various points of view. But we were very proud of the work that we did and felt that, in making this report, we were making a constructive set of suggestions and recommendations that would be for the good of this country and the good of the governing of this country.
Security intelligence is a difficult area, because essentially what we say to the government in establishing a security intelligence service is that we give you, the government, special powers in the interests of preserving the security of this country. But we have also learned over the years that it is essential to place certain restraints, constraints and restrictions on the special powers given to the government, to ensure that the rights of our citizens are not violated by the government.
As we in the committee got into the report, we actually found that there were two concerns. The first concern was in the area of civil liberties. It was whether CSIS, in the course of its work, was interfering with the civil liberties of Canadians; and whether there were adequate
checks and balances to ensure that on those occasions when citizens or residents of this country felt that their rights were being challenged and perhaps violated by CSIS, that there were sufficient remedies that would enable those actions to not only be reviewed and looked at but, where an error was found, to be corrected.
So, that was the first issue, civil liberties.
The second issue was whether CSIS and the government, in running this operation, was spending the public's money wisely.
By this current fiscal year, $190 million a year will be spent by CSIS. It has over 2,000 employees. What are those employees doing? What are they spending the money on? That leads to the question of why the secrecy, because we found the more we looked at it that the operation of CSIS was completely shrouded in secrecy and mystery.
Was the secrecy justified in the interests of protecting the country's security, was it covering up a government attack on the rights of citizens, or was it hiding a profligate waste of money on the part of this government agency? We found that CSIS was not going to tell us any of this. We found that the government was not going to give us any information on this. Now we find, when the government responds to the recommendation, that it has no intention of telling Parliament or the Canadian people what it is doing in Parliament's name and in the name of the Canadian people. We find that the government continues to hide behind the rubric of security and produces no justification for so doing.
Let me take a minute or two in summarizing some of the specific recommendations. The most important recommendation in my view is the recommendation that instead of a periodic review by Parliament there should be established a permanent subcommittee of the Standing Committee on Justice and the Solicitor General of the House responsible for security intelligence matters. The subcommittee would have a permanent security-cleared staff, have secure premises for its own work and would be able to receive information from the government in camera.
The subcommittee's role would be to focus on the question of estimates, is the government's and Parliament's and the people's money being spent wisely? It
February 26, 1991

would also focus on broad policy issues related to the interests of civil liberties and security in the country and the balance thereof. This particular recommendation owes its genesis to the McDonald commission which preceded the establishment of CSIS but was one in which all members of the committee concurred, one which makes good sense, one which is important if public confidence in CSIS is to be developed and maintained.
We found that the problem with a five-year review was that it took us some time as members of Parliament who were first coming to these issues to get up to speed. We found it took some time for the security agencies to develop some confidence in the committee and for us to develop a level of expertise necessary to ask the right questions of the right people. It seems to us that the system has matured to the point where a parliamentary subcommittee is important.
At one level the existing Standing Committee on Justice and the Solicitor General has the mandate from Parliament to review the work of CSIS and other security agencies, including that of the RCMP. But that committee has a mandate to cover a range of topics and it was our view that it was important that a group of parliamentarians, per force a small group of parliamentarians, develop the kind of expertise which we in the committee felt we had gained in the year's work on the committee. That recommendation has been trashed and rejected by the government. The wisdom of all members, not just NDP members, but all members of Parliament, has been rejected by the government and instead the government wants to go back to the five-year review.


Mr. Lee:: Seven.


John F. Brewin: Has it gone to seven? Seven-year review.
I have not even had a chance in the last 24 hours to read in detail all of the comments of the government. I read through it very quickly. I have some responsibilities now in another area.
A seven-year review.
One of the problems that the security people, the CSIS people, indicated to us was that there is sort of a lurching of response within the security intelligence
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community to the effect of imposing this special parliamentary review. There is no opportunity to get used to the fact of parliamentary review and, instead, what happens is they have to turn the House completely upside down trying to respond to the various questions and concerns that are exhibited by the committee.
When we went down to Washington and met with the CIA and other government people, we discovered that the senators and the congressional people in the States had found that they were able to develop over a period of time a level of confidence on both sides.
Let me say first, then, that I am extremely disappointed that the Solicitor General and the government have rejected this recommendation. I do not propose that it should be lost entirely, because in the final analysis it is within the jurisdiction of the Standing Committee on Justice and the Solicitor General to make a decision as to how it is going to order its work. I would hope that all members of that committee will review this particular recommendation and see if they cannot bring themselves to accept the wisdom of this unanimous recommendation.
A second important recommendation was to broaden the review and oversight capacities to include other agencies than CSIS. What perhaps many members of the Canadian public and even members of Parliament may not appreciate is that the mandate of CSIS is confined to a particular area. The RCMP is also involved in security intelligence work; the Department of National Defence is involved in security work, and other departments have various agencies and various components of their work involved here.
Those agencies do not have the special power of CSIS, but it seemed to us to make sense that where there are concerns, including the secret spending of money for example, the communications security establishment's spending is not reviewed by Parliament. For practical purposes the RCMP's expenditures in this area are not reviewed by Parliament. DND's other expenditures are not reviewed by Parliament, and perhaps for good reason. It may well be that by revealing the details of those expenditures, exactly the wrong people get the information.

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Again we saw the importance of giving this parliamentary subcommittee, which could meet in camera and could receive security information, the responsibility for reviewing these other expenditures and the work done by other departments. As well we thought it important that the Security Intelligence Review Committee be given that mandate. Again that recommendation has been rejected.
One of the constraints on CSIS is the definition section of the legislation which limits but by its effect CSIS's mandates to the specially defined threats to the security of Canada.
One of the most important recommendations was the proposal to delete section 2(d) of that act which gives the government, through CSIS, the authority to use its special powers to look into what is called subversion under the act.
The more we looked at this section, the more we asked people who came before the committee: "What kind of subversion? What kind of activities are you talking about when you mean subversion?" We all agreed that CSIS needs to worry about terrorism. CSIS needs to worry about espionage. We as a Parliament are doing our responsibilities correctly when we give to this agency the duty to look into terrorism and espionage.
The more we looked at it, the more we found ourselves saying: "For the life of us, we can't see what kind of subversion we are talking about here." Subversion becomes very close, in some people's minds, to what, in another way of looking at it, would be perfectly legitimate political activities.
What we really are saying here, when the report recommended the deletion of 2(d), is that when challenges to the state get to the point of the use of violence or the threatened use of violence that is terrorism, and we say look into that.
When foreign governments spy in this country, we should know that that is happening. The history of this country suggests we should become very concerned when the government has its own definition of subversion and gives to itself the licence to look into groups that may have some difference of opinion with the government line of the day.
The most revealing testimony was from a former public servant, John Stams, who was vigorously defending the continued inclusion of clause 2(d) in the legislation. When he was asked by one of the members of the committee to give an example of subversion, his suggestion was those who would favour separatism or independence for Quebec.
I suspect it was that answer which provoked the government members, as well as the opposition members, to see how there could be an abuse of the rights of CSIS and the rights of government as embodied in the legislation.
No matter how many of us, as do virtually all members of Parliament, disagree with the proposition that Quebec or any other part of Canada should separate, we are in a democracy. Those people are entitled to that view as long as they express it within the democratic parliamentary system. That is the way in which we should work out these ideas. We should not give to our government the right to spy on those who are working within the democratic system on an idea, albeit one with which we disagree.
If people who have that view begin to contemplate violence in the pursuit of that political aim, then that becomes something which we should look into. Therefore, the unanimous view of the committee rejected by the government was that this section should be deleted.
There are many other important recommendations in this committee report. There are suggestions about the appointment to the Security Intelligence Review Committee which is Parliament's alleged watch-dog in this area.
We have seen the fiasco of the last appointment. The committee unanimously came up with ways which we believe would avoid that and restore to SIRC the confidence that it is entitled to.
We have various recommendations with respect to CSIS employees. I note with some disappointment that even though the director of CSIS said he favoured collective bargaining for CSIS employees, the government has merely said that it generally has no objection to that. What we do not see is a commitment by the government to amend the legislation to ensure that that right is available to the members.
There are a number of recommendations to improve the warrant process and to improve the rights of those who have been rejected for security clearances. Much of what happens in the security area comes under the general heading: "Security Review" and gives security clearances to people who are seeking to become citizens
February 26, 1991

of the country, who are seeking to immigrate into Canada, and who are seeking jobs in the public sector.
Yet, that system is not only bogged down with an enormous amount of paperwork. Not only were we not able to really get to the heart of how the system was working but, further, the checks and balances against an abuse of that system have not been addressed by the government report.
In sum, the answer of the government to this very comprehensive and well thought through report by the special committee reveals perhaps why this government has been in office simply too long.
It is hard for me to imagine that the government elected in 1984, after the previous 25 years in opposition, would so quickly jump to the defence of the security establishment and the bureaucrats and would fail its duty to this Parliament to respond with a greater open mind to the recommendations of this committee.
The rights of Canadians ought to be the prime concern of this Parliament. This motion I have on the floor now calls for concurrence in this report. In effect, it will represent a direction by this Parliament to the government that this report should be enacted.
We now have a contrast. We have the report of the parliamentary committee and we have the report of the government. They stand in contrast. It is important, in our view, that this House stand behind the committee, endorse the recommendations of the committee, and enact this charter for the next five years for the security intelligence system in this country.


Mr. Derek Blackburn (Brant):: Mr. Speaker, I want to congratulate my colleague from Victoria on a very excellent address this morning on the Solicitor General's answer to the special committee looking into the affairs of CSIS. I have a couple of questions I want to put to my hon. friend.
The first one comes from a passage at page 76 in the Solicitor General's response, which is entitled "On Course". The last paragraph on that page begins: "The government recognizes the need for consultation with opposition leaders regarding appointments to SIRC".
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If memory serves, there was a tremendous verbal blow-up, to put it mildly, when the present chairman of SIRC was appointed a year and a half or two years ago. At that time the former leader of this party made it very clear that he had not, in fact, been consulted, although there was provision at that time for consultation. There was simply a phone call. He was away from his office. The appointment went ahead and then he was apprised of the appointment following it.
My first question to the hon. member for Victoria is: Does this insertion in this Solicitor General's response on page 76 lend any greater credibility to the process than was already there and as it was used or abused some two years ago?
My second question relates to a statement the member made with respect to the special committee's journey to Washington where it consulted with officials on the government side. That is the CIA and other federal U.S. agencies in the security field.
I want to put this question to him. Did he get any impression at all that members of the CIA or any other related groups, such as the National Security Council, had suffered professionally or had their work been infringed upon in any way by the fact that in the United States of America, both at the Senate level and at the House of Representatives level, there are what we would call parliamentary or congressional oversight committees on an ongoing basis that look into the operation and management of those secret organizations?


John F. Brewin: Mr. Speaker, I thank my friend for his question. I may say that as my duties changed, so did his. The member for Brant is now responsible within our caucus for matters of security intelligence. I would hope that if this subcommittee can in fact be established, he will have an opportunity to serve on it. I know he will serve with distinction in that event.
He asks two questions. First, with respect to the appointment of the Security Intelligence Review Committee, I could take the time to go through the whole sorry history of the last appointment. Instead, let me take my time to refer specifically to recommendation 80 of the committee's report. I will precede it by the comments of the committee.

February 26, 1991
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To appoint members to SIRC, the Prime Minister must first consult with the Leader of the Official Opposition and the leader of every party having at least twelve members in the House of Commons. The committee is aware that the process by which the current chairman of SIRC was appointed, caused some public concern.
That is an understatement. It goes on to say that the committee must hold the confidence of all Canadians.
In the end the committee recommended that section 34 of the CSIS Act be amended to require the Prime Minister: one, to notify in writing the leaders of each of the parties with more than 12 seats in the House of Commons that an appointment to SIRC is to be made; two, to request the leaders of each party so notified to put forward a short list of names of persons they believe to be qualified to be a member of SIRC; and, three, to communicate and discuss with the party leaders in the House so as to be apprised of their views on who should be appointed.
This recommendation specifically tightens up the procedures which would ensure that the opposition leaders are in fact consulted in the appointment of this important committee. I may say finally that the government merely recognizes the need to consult and fails to make a specific commitment that there should be an amendment to the CSIS Act in that respect. That is a cop-out on the part of the government.
The second question is the statement about the CIA and other intelligence agencies in the United States. What we found was that members of the security intelligence community in the United States who had been veiy apprehensive about the establishment of permanent committees of Congress to oversee their activities found that in the end it was in fact entirely helpful. They believed they were doing a good job and they found that the committees ultimately concluded that most of the time they were doing a good job. The committee served as a safety valve to deal with those issues where there was the inevitable screw-up on somebody's part.
We believed that as best we could find out CSIS was doing a good job. There were some safety valves established in the regime of the 1984 act, including the Security Intelligence Review Committee, but in our view those safety valves could be improved, in fact CSIS would benefit as with the rest of the security intelligence community from having permanent parliamentary overview, and they had nothing to fear from having permanent parliamentary review. I must say I ask when I look at the government recommendation of the government rejecting our recommendation: What is it that the government has to hide? Why does it not want us to look at how it is spending the money? Why does it not want us to look at what security intelligence is doing in Canada?


Mr. Benno Friesen (Parliamentary Secretary to Solicitor General of Canada):: Mr. Speaker, I want to thank the member for Victoria for affording us the opportunity to respond to this committee's report, the committee that was chaired by the hon. member for Lethbridge.
I want to say at the outset that I lived through the experiences of World War II as a young man. I would hope the member for Victoria would understand that the ethnic group from which I draw my roots and which I enjoy "enjoyed" considerably scrutiny during World War II and considerable public scorn at the time simply because of our generic names. I recall very clearly what it was like to be of Germanic extraction during World War II and the automatic suspicion that this incurred during wartime. Therefore, I and members of my caucus have first-hand experience of what it is like to be under unwarranted scrutiny.
I just want to say as forthrightly and as kindly as I can that we really do not need lessons from the member for Victoria about concern for civil rights in our society. While he is visiting with his seat-mate there, I would point out to him that those of us who have experienced that kind of scrutiny welcome the establishment of this agency, as well as of SIRC, as well as parliamentary review. We think it is a way of ensuring the civil rights of Canadians that these institutions be developed and these methods of review be developed. I just want to underscore to the member for Victoria that we as a government do not take this issue lightly. On the one hand we are accountable and responsible for the security of all Canadians from threats, but we are also responsible for the civil rights and the security of the civil rights of all Canadians.
We have a dual responsibility and we mean to discharge both of those responsibilities with vigour.
I debate the motion "that this House concur in the report by the special committee for the review of the

Canadian Security Intelligence Service Act and the Security Offences Act entitled, In Flux but not in Crisis".
This legislation is important to how we, as a society, deal with threats to our security, while protecting our democratic rights and freedoms. In 1984, when Parliament was studying the proposed CSIS and security offences legislation, it decided that there should be a review of the provisions and the operation of these acts five years after their coming into force.
I would like to commend the members of the special committee, chaired by the hon. member for Lethbridge, for the work that they carried out. The committee has made many observations and recommendations that deserve careful study by the security intelligence system of government.
Within the 150 days provided for by Standing Order 109, the government has tabled in Parliament its considered response to the committee's recommendations. I note that the chairman of the committee, the hon. member for Lethbridge, in a press conference following the tabling of the report observed that the "review revealed no crisis or improper activities within our security and intelligence community".
It is also interesting to note that at the same press conference the hon. member for Victoria, the sponsor of this motion, stated "CSIS gets good marks from us as a clear improvement on the past".
The world has seen dramatic changes in the past five years. The Berlin wall has fallen and the cold war is over, at least we presume it is over. What will rise from the ashes is yet undetermined. I recall seeing a press report at the time when the Federal Republic of Germany was celebrating the unification of the two Germanys and on the night before the final act of unification the Soviet secret police were still meeting with the East German secret police, urging them to carry on their secret police activities. So while we hope the cold war is over, it means that some of those activities still carry on and those old habits die hard. Security is still a primary concern for the Canadian people.
I note also that the Prime Minister recently said to the conference of Interpol here in Ottawa:
Where states were once preoccupied by war, they must now also
worry about other threats to their security. The drug dealer, the
terrorist, the environmental criminal, the money launderer, the
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technological spy, the syndicates of organized crime. We must be as
vigilant and vigorous in co-operating to meet those new challenges
to national security as we have been to meet the old.
For CSIS, their mandate includes two of these threats, the terrorist and the technological spy.
Despite these changes in the world, then, most people would agree on the need for a system to protect Canadians from threats to their security and the need for a security intelligence service. In the government's view there can be no doubt that Canada needs CSIS.
The special committee concluded there is a need for a security intelligence service like CSIS. I also note that the committee found no witnesses who took the position that security intelligence was no longer necessary or that the mandate of the civilian domestic security intelligence service should revert to the RCMP.
Threats to our security do exist. Consider the threat from terrorism. Canadian democracy depends upon a climate of freedom, where political objectives are pursued through open discussion, debate and lawful advocacy. This climate, as well as public safety, are jeopardized when any person or group seeks to gain their political objectives by carrying out acts of violence or by threatening to do so.
In the 1980s the threat of terrorism became an immediate security concern and this government has directed CSIS to treat terrorism as its first security intelligence priority. Our first line of defence must be intelligence.
The other major threat, espionage, has been an ongoing reality since the emergence of nation states. All nations seek to advance their position in the world. Some resort to covert means to do so, and this threat exists today despite changes in the international political climate. Despite these changes, the threat posted to the security of Canada by hostile intelligence services continues to be high.
Canada must have the means to protect itself from such threats, whether they take the form of traditional espionage or attempts to steal knowledge of sensitive high technology. The government owes it to Canadians who are devoting their careers to providing their country with scientific advances. The special committee also concluded that terrorism and espionage continue to threaten Canada and Canadians.

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When this parliamentary review began, the government stated it believed that the Canadian Security Intelligence Services Act and the Security Offences Act are sound pieces of legislation which are working as Parliament intended. The special committee has stated it is satisfied that the basic architecture of the act was sound, functioned well and should be preserved.
I would like to remind the House of some of the fundamental views the government took into the review process as outlined by the new Solicitor General when he appeared before the special committee.
The CSIS Act provides a statutory framework for balancing . effective national security with respect for individual rights and freedoms. The CSIS Act defines CSIS' mandate to collect intelligence and advise the government on threats to the security of Canada. It gives the service the powers necessary to fulfil that mandate.
The act that sets up a unique guidance system for the agency, consisting of a legislative framework that defines and limits the powers of CSIS, political control and accountability, a system of judicial controls and significant external review by the Security Intelligence Review Committee.
Finally, the act provides a mechanism for hearing the complaints of any person or group about any aspect of CSIS's activities.
The Security Offences Act confirms the security offences enforcement and protective security responsibility of the RCMP. These acts provide a well-conceived legislative framework that allows flexible response for changing circumstances, within an unprecedented legal and policy framework which is unmatched in the world.
The government has used policy direction to guide the interpretation and implementation of these acts. All of the key players in the security intelligence system in Canada have worked hard to ensure the legislation operates in a practical and effective manner.
The service has developed and operates on the basis of a sound and stringent targeting process. A rigorous process is in place for warrant applications, and the reporting function of the service is being enhanced to
improve and reflect better the process of policy development and decision-making within the government.
The Inspector General and the Security Intelligence Review Committee have carried out their roles in an orderly and rigorous way, and I think the member for Victoria would agree with that.
The reports of the Inspector General reassure the minister that CSIS is conforming to the law and ministerial policy directions while SIRC, by its annual reports, which the minister must table in Parliament, completes an annual cycle of public accountability for CSIS. To infer that another jurisdiction like the United States has a scrutiny that Canada does not have is a little bit misleading and I hope that the member for Victoria would agree with that.
Finally, the RCMP and CSIS have measures in place and a working relationship that ensures effective co-operation. This is how the legislation is working today.
As legislators, I think we can all appreciate that five years is not a long time to implement fundamental change. Nevertheless, a great deal has been accomplished. The CSIS Act and the Security Offences Act went through an initial working-in period. The new acts were a dynamic and self-correcting system which provided a sound security system for balancing effective national security with respect for rights and freedoms.
After three years of experience with the new CSIS Act, the need for accelerating the transition process became apparent in 1987 through internal warning signals and external reports of the SIRC and the Joint Parliamentary Committee on Official Languages. The government established an independent advisory team headed by the Hon. Gordon Osbaldeston to determine how CSIS should evolve more rapidly towards meeting the goals set forth by Parliament.
As you know, the Osbaldeston report, released in November 1987, concluded that the CSIS Act was basically sound and that CSIS is an important national institution staffed by dedicated professionals. However, after three years, the evolution of CSIS needed the discipline of an action plan to accelerate its transition to a modem security intelligence agency.
February 26, 1991

The government accepted the Osbaldeston report's recommendations as a mid-course correction for the service, and I hope the member acknowledges that.
I would now like to describe some of the major accomplishments achieved by the government since the act was proclaimed in 1984.
In the area of the internal management of CSIS:
1.	The director now plays a strong role in managing intelligence operations; for example, he personally chairs the key internal operational committees.
2.	CSIS has adopted a tighter and sharper operational policy on targeting.
3.	Deputy directors responsible for corporate management and for human resources and official languages have been appointed in order to improve CSIS's internal planning and accountability process, human resource development and official languages capacity.
4.	CSIS has been provided with an adequate budget, brought for the first time to a level commensurate with its requirements and CSIS personnel will be brought together in one headquarters building.
5.	CSIS's training academy has been re-established in Ottawa with a range of training programs in both official languages.
In the area of government control of CSIS, ministers have conveyed to CSIS, by formal direction, the following points: The government's national requirements for security intelligence to keep intelligence production in line with the needs of the government. The definition of threats to the security of Canada found in section 2 of the CSIS Act defines the parameters for collection of intelligence. These broad subject areas can be further refined to focus more directly on the intelligence needs of consumer departments. Consumer needs shall, in future, be organized under five national interest areas within which strategic information on threats to the security of Canada may be reported to the government.
This direction sets out five national interest areas: One, public safety; the ability of people to engage in ordinary social activity without fear of harm. Two, integrity of the democratic process; the functioning of those institutions, rights and freedoms fundamental to the political well-being of a democratic society. Three, security of government assets; the responsibility of the
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government to protect those human, intellectual and physical assets which it manages in trust for the Canadian people. Four, economic security; the conditions necessary to sustain a competitive international position, provide productive employment and contain inflation. Five, international peace and security; the ability of the international system to evolve while avoiding war, containing regional conflicts and minimizing violence.
The directive also specifies how ministers expect a director to be accountable. It gives direction of the general conduct of investigations which includes the principles enunciated by the McDonald commission. The investigative means must be proportionate to the gravity of the threat posed, and the probability of its occurrence. The need to use various investigative techniques must be weighed against possible damage to civil liberties and valuable social institutions.
The more intrusive the technique, the higher the authority that should be required to approve its use. Except in emergency circumstances, the least intrusive techniques of information collection must be used before the more intrusive techniques, and the rule of law must be protected.


John F. Brewin: Oh, oh.


Benno Friesen: The member for Victoria takes it lightly, but the government does not.
A direction on the use of human resources, the key principles which are-


John F. Brewin: You do not even read well.


Benno Friesen: I do.


An hon. member:: Yes, he does.


Benno Friesen: Sources are to be used when and to the extent that it is reasonable and necessary.
Second, the need to use resources must be carefully weighed against possible damage to civil liberties.
Third, sources must be centrally directed and controlled.
Fourth, sources must act within the law.
Fifth, sources are to be managed so as to protect both the security of CSIS operations and the personal safety of the sources.
Sixth, sources should be treated ethically and fairly by CSIS in terms of compensation and handling.

February 26, 1991
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The Acting Speaker (Mr. DeBlois):: One moment, please.


Some hon. members:: Oh, oh.


The Acting Speaker (Mr. DeBlois):: Order, please. The hon. member's time is up unless the House agrees to extend it. Is that agreed?


Some hon. members:: Agreed.


Some hon. members:: No.


The Acting Speaker (Mr. DeBlois):: Questions or comments.


John F. Brewin: Mr. Speaker, I will not say anything mean about the hon. member's speech which was, on the whole, very sound. He did it very well.
He said during the course of his speech that the government says that spying is still going on. I want to ask the member how he knows that. Are we expected to buy it just because the government says it is so? Did he read it in Time magazine?
We concluded in our report that there is terrorism and espionage, but we were not able to find out the extent of it. Is there sufficient spying to justify $190 million worth of expenditure? How are we supposed to know? The government will not tell us. How does the member know how much spying is going on in Canada?
He says the scheme is working as Parliament intended. What we said in the report was that it was doing fine as far as it went, but it still had a long way to go. Why does the government reject the rest of the road? Why does the member say we should get away with that? Even since our report came down, there have been dramatic changes in Europe. The Warsaw Pact just yesterday was officially disbanded. Maybe the hon. member had not heard that. Maybe he did not hear when the Secretary of State for External Affairs said that we must now treat the Soviet Union as an ally.
There surely is a better way to arrange for affairs between nations than to continue the exercise that this government continues.
In summary, I would ask the member: How do we know how much spying is going on in Canada, how much terrorism is going on in Canada? We worked at it for a
year and CSIS and the government would not tell us. How do we know?


Benno Friesen: These agencies advertise in the local paper, don't they? This is exactly why the Solicitor General reports to Parliament every year on his responsibilities.


Derek Vincent Lee: Mr. Speaker, I would like to address a question to the parliamentary secretary in connection with one aspect of the government's response to this report.
It relates to the agency called the Communications Security Establishment. In the committee's review of CSIS, it also took the opportunity to cast a glance at what we believed the operations of CSE were. It became apparent to us that CSE operates outside the ambit of any review mechanism. Parliament has no idea of all of the resources and dollars that go to CSE for its work, and we were unable to obtain from the Privy Council Office, which oversees the bulk of CSE's work product, precisely what CSE was doing and how it was spending its money.
This is an agency that was created under the Department of National Defence but its product goes principally to, and it appears that the management of CSE is done mostly by, External Affairs. They would consume the "foreign intelligence signals", intelligence information that CSE gathers.
This is an agency that has, if I read my papers properly and if I read between the lines of what we learned in the committee study, the leading edge of eavesdropping technology, is fully capable of listening to every telephone conversation in the country, and operates without any review mechanism whatsoever. The government acknowledges, generally, that this is so and says that it would like to deal with it and will make an announcement at some point. It refers to putting some procedures in place involving the Department of National Defence.
My question is: What precisely is the government going to do with an agency that now operates outside any of the controls that Parliament purports to oversee now and any that the government purports to have put in place outside of SIRC? What does it intend to do? How is it going to solve that problem involving the rights and freedoms of Canadians?


Benno Friesen: Mr. Speaker, I think the member has just answered his own questions, in a somewhat contradictory
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fashion. On the one hand, he seems to infer that it is beyond review and yet his own committee looked into the matter.
I would point out to him that this is an agency that is under the direction of the Minister of National Defence, and it would be proper to refer the matter to him-because it is properly referred to him. If he is really curious, he could simply read the report that was tabled yesterday, pages 53 and 54, where he will find the answers to his questions.


Derek Nigel Ernest Blackburn: Mr. Speaker, I have a question that I want to put to the Parliamentary Secretary to the Solicitor General. He said in his remarks, I believe it was in answer to a question just a moment ago, that Parliament has SIRC, the Security and Intelligence Review Committee, to report on the activities of CSIS. Yet the special committee found during its deliberations that it was difficult to get a lot of information both from CSIS and also from SIRC because SIRC was forbidden by law to reveal a lot of the information at its disposal.
Indeed, in this morning's Globe and Mail there is an article entitled "Official faults CSIS scrutiny". In this article the former researcher for the special committee, that brought forward its report last summer, is quoted as saying: "It proved during the special committee's work that despite its stated wishes to the contrary SIRC was not fully Parliament's man". In other words, he confirms what the committee stated in its report, that it could not get answers that it wanted from SIRC.
Therefore, SIRC, as far as this institution is concerned, as far as Parliament is concerned, is irrelevant because what information does come to this institution, this House of Commons, comes either from SIRC or from the Solicitor General. The Solicitor General has to vet everything that SIRC sends to the House of Commons so that indeed, what information does come to this place is vetted or sanitized by a minister of the Crown.
I put it to the parliamentary secretary: is that democracy? Does that make any sense at all in terms of democracy? Would he not agree that power and responsibility in a parliamentary system comes from the House of Commons, from the legislative branch and is given on behalf of the people of Canada to the ministers of the
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Crown who are directly responsible to this place exclusively, not to themselves or to cabinet?


Benno Friesen: I wish that the members of the New Democratic Party, rather than bringing this question forward today had first read the report that was tabled yesterday. He can read on page 68 of the report the answer to his question.


Derek Vincent Lee: Mr. Speaker, I thank you for recognizing me and I am pleased to have an opportunity to address in debate the motion by my colleague from Victoria.
Before I launch into the body of my remarks, I want to give some credit where credit is due. Credit is due to the relatively large number of individuals who work in the security intelligence establishment here. I am talking about the career men and women in CSIS, the RCMP, and those other agencies that, as far as we can see from our review, have operated and served well and are continuing to do so even in the current circumstances where a significant challenge has been presented to them.
That is not to say that mistakes have not been made. It is not to say that mistakes are not being made. One of the problems we have in this area is that if they are making mistakes, they are apparently not subject to the kind of scrutiny that other government officials would be in such circumstances.
Our committee, the special committee of this House, spent over a year working in this field. It was an intensive study. We operated within a framework that frankly caused a number of restrictions.
Ultimately, compromises were made that permitted us to achieve many, but not all, of our goals as a committee.
We encountered a learning curve. It took us a few weeks to realize that the area we were studying was an area none of us had truly had an opportunity to see previously. It took a while for us to realize that. Then we were able to proceed in our review of this relatively closed field of government activity.
The reason we were asked to do the review is contained in the original statute itself. This Parliament asked other parliamentarians to review this law after five years. This was not an ad hoc committee developed to

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review CSIS. It was planned well in advance by parliamentarians who knew and understood that the laws being developed in this area might well need some fine tuning.
The title of the government's response is On Course-National Security for the 90s. Well, national security is a combination of security intelligence and foreign intelligence. The title "National Security" is slightly pretentious because it appeared in our review that the whole field of foreign intelligence was kept pretty much away from CSIS, from the RCMP Security Offences Act, and resided for the most part with the the Department of External Affairs and the Interdepartmental Committee on Security and Intelligence within the Privy Council Office. So, we did not have a good look at national security.
One of the recommendations we made, to set up an office of national assessments, as other jurisdictions have done, was rejected by the government. We will not have that balanced, objective review of foreign intelligence and security intelligence that comprises a complete picture of national security.
We have already entered the age of technological big brother. I referred earlier today to the potential for electronic eavesdropping upon all Canadians. Well in-tentioned, I am sure, but electronic eavesdropping of the most intensive sort. A form of eavesdropping where anything that is said, anything that moves, whether it is audio or video, whether it is an electronic field, can be monitored through walls from distances of miles. I believe that the mechanisms Parliament has put in place, and I think all of the committee believes this, need fine-tuning, need updating. If the government thinks it is moving into the 1990s and ready for the 1990s in this field, it is my view it is doing it with a rear-view mirror. If the government had paid closer attention to the recommendations of the committee it would be much further ahead.
I would like to hope that after the next federal election, the next Government of Canada will be able to pay closer attention to this area.
I want to touch on five or six areas of recommendation that the government failed to deal with. The committee had hoped that the Solicitor General and the Director of CSIS would expand on the areas of ministerial direction. These directions are the framework operating documents that are prepared by the Director and put in place for CSIS as it carries out its work, both for work that involves interests of surveillance and work that is simply analysis.
We had hoped that those directions could be expanded. To give some credit to CSIS, since we made our report one of the more important areas of ministerial direction was created and put in place. That had to do with the definition of the threat mandate. There are many more areas where we had concern and there is still a lot of work to do.
In dealing with review mechanisms, I mentioned earlier that CSE does not even show up on the screen of review mechanisms. The parliamentary secretary said review is referred to in the government's response. Well, the four items referred to as scrutiny, or review, or monitoring are in-house legal counsel from the justice department.
That is not review. That is not supervision. That is not scrutiny. That is not monitoring. Every department in government has a Department of Justice counsel at the other end of the phone. That is a zero.
The second item is that CSE consults frequently with senior officials in the Privy Council Office, the Department of National Defence, and Department of External Affairs. They are the same people that they carry on their work with. That is not supervision, review, or monitoring.
The government says that CSE is subject to internal Department of National Defence administrative review, so is every other government department. The govem-ment also says that CSE submits strategic plan and policy proposals for review by the Interdepartmental Committee on Security and Intelligence; that is the Privy Council Office, the people they work with. That is a closed shop, and that is not supervision or review.
Let us not be misled that the government has replied effectively to that question. CSE is not monitored. It is not reviewed, and it is still operating out there without review.
We had a lot of time to look at the operations of the national security investigations directorate of the RCMP and it was our view that when problems or complaints arose with regard to the security work of the RCMP, those matters should be referred to the Security Intelligence Review Committee as a complaint, but that they
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should be investigated by the RCMP special complaints commission.
That is not interference with the RCMP. That is simply a procedural consolidation of the complaints process. We thought it would be easier if the public felt there had been an error made and a complaint warranted if it could be made to one location, the Security Intelligence Review Committee.
We felt that the Security Intelligence Review Committee should be able to make special reports to Parliament. It is the organization that works for Parliament, for Canadians. It should be reporting to Parliament whenever it feels the need, whenever it is appropriate.
Instead the law now says that it reports annually. I do not think that is adequate, our committee did not think it was adequate. It should have the ability, the jurisdiction, to submit a report to Parliament for us, for our constituents, whenever it feels so advised.
Government did not accept that recommendation.
We felt in the complaint process that the Security Intelligence Review Committee ought to have the ability to self-initiate a complaint. The government did not agree with that, nor did it agree with our view that a complaint could be made directly to the Security Intelligence Review Committee.
Although I referred to that process earlier, in fact the law requires that all complaints go to the director of CSIS. In other words, go right to the agency that you are complaining about in the first place. We felt there should be a way for a complaint to go to the Security Intelligence Review Committee directly.
I want to talk about the actual parliamentary review. The member for Victoria referred to our study of the review mechanism used in the U.S. Congress and I thought I detected some scepticism from the other side about that study.
In the United States 25 years ago they were roughly where we are now; there was not an effective congressional review of security and intelligence matters. They had some problems 20 years ago, 15 years ago, at the time of the Vietnam war, and some other problems occurred . subsequent to that. Legislators there then began to act. The result now is that a standing committee of Congress,
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a joint committee on security and intelligence, reviews all matters and reviews the appropriations and budget matters for all security and intelligence agencies within the U.S. government.
That, one would expect, could cause a problem; but I am advised by officials, experienced officials including the former head of the Central Intelligence Agency who visited with us, that that process works very well, that there are no leaks, that the security and intelligence establishment actually appreciates the oversight that exists. They appreciate the fact that they know we are looking, the legislators are looking at what they are doing at all times, and that helps to keep them honest. Shedding sunshine on the process has been effective in the United States. That is what we are told.
In terms of a further review here as an alternative to a parliamentary subcommittee which we had suggested, the government replies: "We will take a look at the matter again in seven years", near the end of the 1990s. One way to get through the 1990s is to have a review at the end of it.


John F. Brewin: They won't be around to hear it.


Derek Vincent Lee: They probably won't be in government then. You are right.
The Standing Committee on Justice and the Solicitor General has a mandate generally to work in this area. While there needs to be further consultation on it, the government has agreed that all committee functions are in the hands of committees. I know it will stand by that. It may well be that the justice committee may choose to set up that subcommittee and proceed with the kind of work that the committee recommended.
We made recommendations dealing with management and employee relations. I mention that because here is an area of Public Service employment where you are cut off, sealed off, from the rest of the Public Service. It is like a little island out in the Pacific inside CSIS. When you are in there, you do not get a chance to communicate very often with other government agencies. Because most of your work, for many of the professionals who work in it, are things that you do not really take home from the office, you are less inclined to communicate in a two-way basis with other people in government. We made recommendations that would assist management

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and employees in CSIS to overcome the psychological isolation that they have in doing their work.
Last, I want to address the issue of the appointments to the Security Intelligence Review Committee. We have had reference to the previous set of appointments. The government, in its reply on page 76, says-and it was read here earlier-that government recognizes the need for consultation with opposition leaders regarding appointments to SIRC. Isn't that nice of them to recognize the need? It is not a need. It is the law.
It is stated clearly in the section that there must be consultation. If my memory serves me correctly, the last initiative at consultation involved a letter sent to the leader of one of the opposition parties the day before the appointment. The leader did not even get the letter. That was explained to me in a letter from the Prime Minister as being consultation.
I drafted a claim in a lawsuit in court. I sent it to him and I said: "This is in my characterization of the effectiveness of your consultation process". I took no further action on that because I had hoped that the government might respond a little more fully in its reply to the CSIS review committee's report. It has not. I am disappointed in that and I am disappointed in the page 76 trite, light, wimpy discussion of that issue. I want Parliament to know that more work is going to have to be done in that area.
As we finish this debate and as we deal with it in a procedural sense, we are cutting loose this whole area, this committee report, the five-year review contained in the statute. We are sending it on. We are walking away if we do nothing further in the way of renewal or refining of the institutions that should be there.
Given the government's response, as thin and light as it is, there remains much work to be done in this area. I am hopeful that the justice committee will carry on with some of these recommendations. I urge adoption of this motion by all members and all parties in this House.


Derek Nigel Ernest Blackburn: Mr. Speaker, I welcome the opportunity to participate in this debate this morning. I do not intend to take my full 20 minutes, as I know there are two others who would like to make a contribution as well.
I do not wish to reiterate the very excellent arguments that my friend and colleague from Victoria presented at
the outset of the debate this morning in moving the concurrence motion. Rather, I would first of all like to speak in more general terms with respect to secret intelligence organizations, secret agencies and the secret world, itself, in a democracy, and the place and responsibility of those agencies in a democratic society.
I know that perhaps to some extent we are all captives or many of us are captives of current literature in the field and sometimes we are swept away by fiction as opposed to fact. But the facts still remain that most if not all countries, whether totalitarian or democratic, do have and indeed need secret intelligence services in order to keep them apprised of any threats or potential threats to the security and safety of the state. That goes without saying. We are not arguing, obviously, whether or not we should have a security and intelligence service. The crux of the matter surely is that service's place in our society, how it operates in our society and to whom it should be ultimately responsible.
I would argue this morning, in view of the Solicitor General's total rejection of the 117 recommendations of the special committee, that the ultimate authority for establishing CSIS was and still is the House of Commons and therefore CSIS is ultimately responsible to the House of Commons, its maker. That is theory but that is also practice. If we are to retain the basic precepts of democracy in a parliamentary system, all government agencies, whether it is the CSE or the intelligence networks of DND or the External Affairs Department or CSIS, or indeed SIRC, all must be ultimately responsible to Parliament.
How do we go about facilitating that relationship and that ability to be responsible to this Chamber? Obviously it would be cumbersome. It would be indeed impossible to force an agency such as CSIS to be responsible to the entire House, or to come before open committees of this House and present arguments or counter-arguments to questions put to it, or to justify its budget perhaps, or to justify its actions. But surely one way, a way in which our colleagues to the south of us in Washington have found an answer and have set up a system, is to have an oversight or a review committee of this House meeting, no doubt most of the time but not all the time in camera, and charged with the responsibility of maintaining confidences and having adequate research staff and advisers in order to facilitate its work. Then CSIS could be directly responsible to an appendage of this House or
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part of this House, which would be that all-party committee.
That all-party committee would have horrendous responsibilities. There is no question about it. It would not be a normal type of committee, but it would be a vital link and it would keep alive that very important relationship in terms of accountability and responsibility.
A government agency-in this case CSIS-responsible to a minister, yes, but also responsible directly to the body that created it and that is responsible for it, namely, a special committee of this House of Commons.
American congressmen in the House of Representatives, and indeed the senators, have already gone ahead and established such review committees. The committees have not in any way infringed upon the operations or the operational integrity of such organizations as the CIA or the National Security Council and the various military intelligence organizations or intelligence gathering organizations in that country.
Yet, in his response, the Solicitor General when he tabled his report yesterday, thoroughly rejected the idea that we should set up a special subcommittee in this House for that very purpose.
I am very disappointed because of that lack of sensitivity on the part of a cabinet minister in a very sensitive area. Yet, on page 77 of that very report, On Course, subtitled National Security for the 1990s, the Solicitor General writes: "To refuse to discuss national security issues publicly with Canadians is to encourage mistrust and ignorance".
That is the problem we are faced with this morning. We have a minister who recognizes that to deny public access to the workings of his department, specifically CSIS, is to encourage mistrust. That is exactly what he says in his report. On the other hand, he denies the veiy access that we are seeking in this House, that is the special committee. I do not understand his logic or indeed his lack of logic.
I could speculate that the Solicitor General has become a captive of his officials, that his deputy and the director of CSIS have said: "No way',' and the minister has had no choice but to go along with his senior officials.
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He has agreed with them. If my speculation is correct, that is indeed regrettable, and I am putting it very mildly when I say so.
Experts on the subject of secret intelligence organizations generally agree that upwards of 80 to 90 per cent, if not more, of the work that those organizations carry on is in fact not secret. The reason they insist on retaining the wall of secrecy around them, they meaning the officials within those bodies, is simply self-promotion. It is survival.
If you remove the emperor's clothes, he is no longer an emperor. If you remove the secrecy or a lot of the secrecy, the aura of secrecy disappears and it becomes just another agency of the Crown. Therefore it is doubly difficult to get appropriations and the proper funding.
While I am on that subject, I should insert here that CSIS is one of the few government agencies that for the past five years since 1985-86 and on into 1990-91 has consistently increased its funding with an average of 14.4 per cent a year. No doubt, this afternoon when the budget comes down, we will not see any decrease in that apportionment of public funding.
Yet, when we stand in this place or in a committee where we should be asking questions about the financing and funding of CSIS, we are told that they cannot give us the answers unless we are in camera. Even then I doubt whether they would give us specific answers to specific funding questions because it is contrary to the act.
I was here in the early 1980s and it was not the intention of Parliament at that time to prevent us from finding out in general ways what the Solicitor General, the deputy solicitor general and the director of CSIS were all about not in terms of specific operations, but in terms of policy and funding.
For what purposes were Canadian tax dollars going and were they going appropriately, honestly and fairly toward the legal execution of the duties of CSIS itself? We cannot find that out. We have no way of knowing whether or not public funding is not only wisely spent in CSIS, but that it is effectively spent. Every time the director comes back with his proposed new budget, it is all worked out in secret and in private. We have no input, but worse than that we have no say. We cannot reduce

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the budget and we cannot even ask why the money is being spent and for what purpose.
I also want to refer to another aspect of this which has already been dealt with this morning, that is the choosing process of members of the review committee. I do not know any of these people personally, although I believe one is a former member of the House of Commons. I have never met Mr. Bassett. I do not know what his capabilities are. The record to date certainly raises eyebrows, but that is as far as I will go; I will leave it at that. The process of choosing Mr. Bassett was totally unacceptable and, as has already been stated, it was not a result of consultation. It was take it or leave it. Even at that, we were apprised of the appointment after it was made and had no way of effectively opposing it in any way.
To choose a person for such an important office, to chair the Security Intelligence Review Committee which is charged with veiy serious responsibilities, to allow that choice to be done in such a haphazard way and to go to a party hack-and there is no other way of putting it; Mr. Bassett may have many fine attributes as a gentleman and as a human being, but he is a strong, and always has been, partisan supporter of the party in power-this is not the kind of person that calls out for that kind of appointment. It should be somebody in my view above politics, somebody outside the political arena, somebody who has a gift for that kind of office. It is very important that the head or the chairman of SIRC be seen to be totally removed from the political scene, and that did not happen.
There are several other aspects of the special committee's report that I could expound upon this morning, but I realize that time is limited and that there are two other members of the House who wish to speak. I do, however, in closing also wish to comment very briefly on the committee's recommendation to delete section 2.(d) in the definitions section, specifically the definition of subversion.
In a democracy we not only tolerate, but indeed promote healthy, lawful descent and controversy. We should not be afraid of it. We should stand up and accept it, argue with it if one wishes or support it, depending on which side of the argument one happens to be at any one time. But that kind of activity has been in the past and
continues to be interpreted by some individuals as being, if not subversive, at least borderline. The physical approach that the police and CSIS and other organizations, the RCMP for example, take in terms of demonstrations and marches, no matter what the purpose is for, is such that they are all suspect. The cameras come out, pictures are taken and are put away in some folder or filing cabinet or put on microfiche or something, in case somewhere down the line they may wish to withdraw those pictures and say: Ha, ha, so-and-so was at that demonstration at that point in time. Therefore, now we really suspect that he or she may be a subversive individual depending on the circumstances.


An hon. member:: You should see your file.


Derek Nigel Ernest Blackburn: Somebody has just said: "You should see my file". It is probably half a foot thick by now, I do not know. I have not been very active in street marches for a number of years, but it may be away in some dusty file some place. I hope it is. In fact, I hope some day I have a chance to look at it to find out just what a horrible person I am.
Mr. Speaker, I am going to close. I am profoundly disappointed in the Solicitor General's approach in answering the very excellent report of the subcommittee. His response, On Course is not acceptable as far as I am concerned. I sincerely hope that in short order we will take a different attitude towards CSIS and look upon it more or less as just another agency of the Crown which does bear scrutiny by a special committee of this House to make certain that the committee knows what is going on. Indeed, CSIS will have the advantage of having the security of knowing that members of the House of Commons do know what they are doing and therefore it is acceptable.


Mr. Blaine A. Thacker (Parliamentary Secretary to Minister of Consumer and Corporate Affairs):: Mr. Speaker, it is a privilege to rise and say a few words with respect to the government's official response entitled On Course which members know is a response to the committee report entitled In Flux. It was a unanimous committee report to which the government has now responded.
I can understand the frustrations of members. Our document had over 100 recommendations and the gov-
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emment has not come out with a chart responding exactly to every one of the recommendations that we have made. I want to say that I am still proud to have been a member of that committee. I believe that members of the opposition, who were mostly new members of Parliament, should be and can be immensely proud of the contribution they have made. I do not say that lightly because it needs to be seen in the context.
Many of us remember the pre-1980 regime that had gone on since the beginning of Confederation where the security issues were developed within the RCM Police. There was virtually no public accountability at all. Indeed, most members of Parliament did not even know what the CSE was, the Canadian Security Establishment, in the latter years. That was the way the system worked through all the many years before 1980.
As a result of events in Quebec and the McDonald commission, a new regime came forth and it became law in 1984. That regime really did provide a lot of accountability, primarily through an independent agency called SIRC, which has members of all three political parties. That was felt to be the primary mechanism to hold the civilian agency accountable.
We found in our group that in fact has worked very well. But again I really want to take members back to the point that the system has incrementally been getting better and better. There has been more and more information made available to members of Parliament, to the SIRC committee, which as I say, has representatives from all three political parties, and which does a tremendous job day after day. We members of Parliament become so busy and occupied with the many other pressures in our lives, we cannot put the time into that which we might like to and what the topic deserves. That is why our committee really felt that SIRC was an excellent agency and deserved to continue on.
With respect to the government's response, I think that the most important part of it is that for the first time we have a document that is available to every Canadian who wants to have it, with its major authoritative setting out of the whole area of security. Anybody who reads this document will know all of the players, they will know the mechanisms for control, accountability and responsibility. That in itself is very powerful information for people to have. As a result of my experience here in Ottawa, I
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am firmly of the view that if an agency or a government gets out of line, brown paper envelopes are very quickly leaked. Given the number of civil servants, the number of photocopy machines, one just cannot get very far out of line. Information gets out. As long as the opposition is vigilant and the standing committee on justice is vigilant, these things can be raised.
We have a vigilant media in Canada. Not only are they vigilant, but some members are very knowledgeable, indeed, experts in this area of security and intelligence. We have an ever-increasing body of researchers and academics who now have their own association called CASIS. They are very sophisticated, operated by fine women and men. So I believe it is impossible for the same mistakes that the RCMP made to occur again, that certainly on a broad basis information will get out.
Just that in itself, to my mind, makes the review that we conducted in 1990 worth it. But there are other advantages and I suppose the other most important was that the government has accepted the fact that there should be another review in 1998.
I know from the evidence we received from all the major players in the security intelligence field that they felt a parliamentary review was like the sword of Damocles over them. They really did have some fear and apprehension about coming before us because we do represent this whole Parliament. However, for the most part, I think our committees do very good work in that area.
The annual reports that the minister and the director have to give to Parliament directly is a major step forward. It lets the justice committee have another avenue to get the minister before the committee and ask specific questions. The last point I want to make is that it will really depend on us as members of Parliament. This Parliament has all sorts of committees. While I do not sit on the committee for disabled Canadians, handicapped Canadians, I trust that my colleagues on that committee are asking the right questions, are taking that area of our public life and advancing it step by step just as we who had the responsibility to do the security review. We were successful in getting more information out to the public. We have incrementally increased the knowledge that Canadians and our fellow members of Parliament have.

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To my mind that is the whole system. That is the way that democracy works. It is slow. It is tedious. We all sit for hundreds of hours on these committees and get absolutely no political credit back in our own riding in terms of votes. However, it does strengthen the public life of the nation and it does hold our bureaucrats more and more accountable. We all agree, including the bureaucrats, that accountability is the secret. It is a day by day, step by step building of the system.
I think the other major advantage of having gone through the process is that we have built the confidence level. It was most interesting when we started and the CSIS people were coming before us. You could see they were really nervous, perhaps to the point of being scared that the national security of the country would be somehow jeopardized by this committee. They do have an important role and we all recognize that we need to have security.
The world is not a playground. It is not an area where people are honest and straightforward. There is a lot of information that needs to be kept secret. We all recognize that. But they were somehow fearful that the whole system was going to collapse. The fact of the matter is the system has not collapsed. This is a result of very responsible conduct on the part of the members of the committee, both the government backbenchers and the opposition members.
As that process went on throughout the year we could just feel that they were prepared to share more and more information. We received some confidential briefings, the information from which has been held confidential and will always be held confidential because none of us is going to subvert our country just for the sake of a question in the House of Commons, or some narrow advantage to us personally, or our party. People do not work like that.
We found that was much more the case in the United States where, over a period of years, they had built confidence levels so that their elected congressmen had more information than we did.
It is true that the two systems are a bit different. A congressman in the United States system has more individual accountability back to the nation. They have an obligation, constitutionally, to make sure the government continues to operate. In our system, we are little different simply because the cabinet has to be chosen from this House and to be accountable to this House.
If the Prime Minister was elected separately and could choose the cabinet from all of the people in the country, that would be a different type of body. We would then be pure legislators and would have an obligation to make the system work; whereas here, there is not that same obligation. The opposition's objective is to point out all the defects of the government, but as well to try and bring the government down by way of a whole series of non-confidence motions.
If opposition members got secret information that could be damaging to the government, they would be in a very tough position and I think would almost have to reveal that information, because they have an obligation to bring the government down under these non-confidence motions.
That was what we debated. It is a troubling issue, and there is no easy solution.
I think we should move to a bit more of a congressional form of government, because I would like to be known as a legislator and I would like to be able to be held accountable by my own electors for how I stood on the issues. It would get away from a lot of this partisanship; we would then be working across party lines. There would be lots of times when I would be voting with the opposition, and vice versa.
I think that would be good for our countiy, but for other reasons.


Mr. Boyer:: Agreed.


Blaine Allen Thacker: The last point I want to make, Mr. Speaker-because I want my friend opposite to have the last few words-is that the opposition parties can do a lot with this report, if they are unhappy, by developing their own positions with respect to our document Influx and the government's response. If they could prepare a detailed reply, they could take it their caucus, to their shadow cabinet, and get their approval to say that "if we are the government, this is exactly what we will do".
I would advise them to do that, if they feel very strongly about it. What they will find is that when and if they become the government-I think some time around the turn of the century, perhaps-


Patrick Boyer: Don't rush things!


Blaine Allen Thacker: Their cabinet ministers, when they become part of the executive council, take on a different constitutional role, take on a different hat and have very different responsibilities. They have sworn special oaths of secrecy. It is amazing how quickly it makes them much more responsible-and much quieter, if I can put it that way. It is more difficult to get responses out of them because of the constitutional obligation that they have. I have noticed that many times.
It is the same with access to information and privacy. It was amazing the number of cabinet ministers who before, when they were in opposition, were very gung ho for freedom of information, but when they got to cabinet and got this constitutional responsibility-and also got a little bit more information on both sides of the issue- became much more reticent in their support for freedom of information.
Thank you, Mr. Speaker. It is a privilege to have been able to chair the committee. I once again thank the members for sitting on it because I believe that, collectively, we did do a good job. And I believe on an incremental basis, by 1998, our successors will look back and say: "They did a good job."
Thank you, members, for serving on that committee.


Mr. George S. Rideout (Moncton):: Mr. Speaker, in the limited amount of time left, I did want to make a few comments because I had the privilege of working on the committee. It was a good committee under the chairmanship of Mr. Thacker and it worked very well.
There were unanimous decisions on almost every point and it was a unanimous report. I think to a degree, what is a little upsetting in the final result is how the government has treated a hard-working committee's unbiased and unanimous recommendations. There were 117 recommendations and by my quick count I think the government responded to one and a half out of the 117.1 do not think that, quite frankly, is the proper approach.
The other interesting thing is we have matured in this country as far as CSIS is concerned. When the agency was first formed in 1983-1984, there was a large hue and cry about the land. That is not the case now, nor was it as
Routine Proceedings
the committee did its work. There were constructive suggestions from a number of individuals, but there was not the concern that existed in 1984. So with that in mind, I think the committee came up with the proper balance. The key element that came out of the report, which the government has chosen to ignore, is the one dealing with oversight.
Mr. Speaker, I would refer you to recommendation 108.
The committee recommends that the function of the subcommittee be to review the budgets of security and intelligence organizations with a view to providing reports to such committees as the House of Commons may determine and to review the work undertaken by SIRC and the Inspector General and to undertake reviews of a general nature -
That is a very positive recommendation and will go a long way, not only to protecting Canadians, but also to protecting the organizations that would be within the spectre of this review because they would have the benefit of parliamentary oversight.
It is shocking to look at the Estimates and see that this department has spent roughly $200 million over the last year and all we know is that it is a one-line item in the Estimates. That, quite frankly, is unacceptable. There must be more parliamentary involvement in that process. We should not allow $200 million to be spent and not have any idea where it went. Did it go for employees, for buildings, for equipment? What was it utilized for? Parliament has no idea at all.
In the United States, for instance, they have two oversight committees, one each in the House of Representatives and the Senate. They do check to see where the money is spent and whether they are getting a proper expenditure of funding rather than a cursory examination of funding.
We have heard it said time and time again that about 95 per cent of the information these agencies gather comes out of newspapers and 5 per cent is secret. If that is the case, I do not see where an oversight committee would be of that much harm to the organization.
Additionally, another important recommendation was to have SIRC actually review all of the agencies involved in security intelligence, not just CSIS. That was in Recommendation 87 and that becomes very essential.

February 26, 1991
However, parliamentary oversight is more critical because of what this government has done in the appointment process of SIRC. John Bassett's appointment, in effect, sullied the whole operation of SIRC. It is absolutely necessary that parliamentary oversight be provided, and provided so that Canadians have confidence in what is actually taking place.
We must remember we are dealing with human rights here, and we are dealing with intrusions into people's private lives. In those circumstances, we must be most vigilant. If you politicize the agency that is actually going to be checking on CSIS, by politicizing the appointment process, then you really are putting human rights in jeopardy. That is why parliamentary oversight must occur. That is why, I am sure, most members of the committee, including government members, were concerned that that recommendation was not picked up in the Solicitor General's response.
I think, too, that the whole committee system in Parliament is now under threat or on trial here. There is an obligation to respond to committees and to enact at least in part, what has been done by these hard-working committees. To be treated in this cursory way is unsatisfactory.
I know that my time is going by. In conclusion, I would like to say that maybe the justice committee should take the suggestion of the chairman of the committee and enact a parliamentary oversight committee in spite of the government. I hope that can be achieved.


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


[Stage Direction]
AFTER RECESS The House resumed at 2 p.m.

Ms. Catherine Callbeck (Malpeque):: Mr. Speaker, I rise today to urge the federal government to provide assistance to Canadian farmers on Prince Edward Island who are affected by the United States' decision to its
their borders to a majority of Prince Edward Island seed potato stock.
I call on the government to compensate those farmers affected by this ban, to provide assistance in the efforts that will be required to eradicate the disease, to clarify with the United States exactly what it considers to be acceptable for certification procedures and customs standards.
The federal government must also assist in efforts to reaffirm Prince Edward Island's well known reputation as the number one producer of potatoes in the world.
I am confident that if the federal government is willing to provide the necessary assistance, the potato industry in Prince Edward Island has the potential to emerge from this problem stronger than ever.
The federal government's failure to act is increasing the anxiety within the potato industry. Farmers deserve to know where they stand. We need action now.


HEART MONTH
Mr. Terry Clifford (London-Middlesex):: Mr. Speaker, I would like to take this opportunity to speak from the heart to all members and remind them, and Canadians, that February is heart month.
Cardiovascular disease is the main cause of death and a major cause of disability in Canada. Over 70,000 Canadians die from this disease every year. Many of these deaths are preventable by adopting healthy lifestyle habits such as good nutritional habits, physical activity and not smoking.
Control of high blood pressure and diabetes is also important. I am pleased to note that the Department of National Health and Welfare, in collaboration with the provincial departments of health, has launched a Canadian heart health initiative to help reduce the burden of cardiovascular disease.
For the heart, in my own riding of London-Middlesex, there were 3,000 volunteers canvassing for the heart and stroke foundation, raising a total of $244,000 reaching their goal, the biggest and best ever.
On March 1 in London there will be a luncheon, a soup kitchen, at the Century Theatre. One hundred businesses are donating to this cause. There will be a cookbook to help all of our healthy hearts by Ann
February 26, 1991

Lindsey and the Heart and Stroke Foundation called the Light-hearted Everyday Cookbook.
All Canadians should take part raising money and providing a healthy future for all of us.


SOFTWOOD LUMBER INDUSTRY
Mr. Brian L. Gardiner (Prince George-Bulkley Valley):: Mr. Speaker, in 1986, the Conservatives caved in to pressures from the United States government and signed the Softwood Lumber Thrift Memorandum of Understanding.
This tariff, together with the government's resource management and economic policies, have cost this country thousands of jobs in the forest industry, particularly in British Columbia and northern Ontario.
This Thursday, the trade minister will meet with Premier Vander Zalm who, on the day the MOU was signed, declared that it was a "great day for British Columbia."
Given the American administration's refusal to renegotiate the MOU, it is time for this government to say clearly that it now opposes this agreement and will take immediate steps to terminate the Memorandum.
We wish the minister success in trying to convince the Vander Zalm government to join with the Ontario government and New Democrats across the country to fight this regressive deal.


COMMUNICATIONS
Mr. Peter L. McCreath (South Shore):: Mr. Speaker, weekly newspapers are the backbone of the communications system of rural Canada. This is why, for years, the Government of Canada has supported through subsidization the distribution of what are called community newspapers.
Last year, the Department of Communications announced the withdrawal of a substantial amount of that subsidy. Unfortunately, this information failed to reach many weekly newspaper publishers who sold yearly
subscriptions last fall on the assumption that there would be no significant change in postal rates for 1991.
In December, notice came of massive proposed increases which, quite frankly, caught a lot of people off guard.
Indeed, the extent of the increase, combined with the removal of the subsidy from communications, places the future viability of some papers in question.
We need our community newspapers.
I urge the Minister responsible for Canada Post and the Minister of Communications to see what can be done to delay or ameliorate the new rates for community newspapers in order that those affected can properly prepare for the financial impact of these inevitable increases.


THE ENVIRONMENT
Hon. Audrey McLaughlin (Yukon):: Mr. Speaker, once again the United States is considering oil exploration and development in the heart of the Arctic wildlife refuge in Alaska.
The Arctic wildlife refuge along with the coastal plain and Canada's North Yukon Park constitutes the greatest most productive intact arctic ecosystem in the world. Oil development in the area will definitely jeopardize that ecosystem, and for what? For about 200 days worth of oil supply.
The Arctic National Wildlife Refuge is a calving ground for over 180,000 caribou which provide the basis of the economy of aboriginal communities in Alaska and the Yukon. The herd is also the largest in the world and a unique and priceless resource to all Canadians and Americans.
In July 1987, Canada and the U.S. signed the international agreement for the conservation of the porcupine caribou herd. The agreement calls on both countries to conserve both the animal and its habitat.
The Secretary of State for External Affairs has been an advocate for the preservation of these lands and I urge the government to continue its opposition to the development of these lands which could forever destroy a priceless heritage. I further urge the Prime Minister to notify President Bush that the United States could be in violation of the intent of this international accord if development proceeds.

February 26, 1991


GOVERNMENT AID
Mr. Guy Saint-Julien (Abitibi):: Mr. Speaker, speaking at the closing lunch of the Canadian Pulp and Paper Association's convention in Montreal, Mr. George Petty, president of Repap, accused John Crow, Governor of the Bank of Canada, of being downright stupid, adding that Crow was on the warpath, aiming his high interest rates at entrepreneurs and workers alike.
According to the Journal de Montreal of February 2, 1991, what George Petty conveniently forgot to say was that in 1986, 1987, 1988 and 1989, his company did not pay a cent of income tax on total profits of $509 million! On top of that, the company received $407 million in government assistance during that period, including $330 million in the form of investment tax credits and $77 million in subsidies!


THE ENVIRONMENT
Hon.   Chas. L. Caccia@Davenport: Mr. Speaker, Canadians by now have heard a lot about global climate change. After studying this threat, the environment committee last fall urged the government to take action to reduce one of the main causes; carbon dioxide emissions. Over 700 scientists from 120 countries at the Second World Climate Conference also called for immediate action. Despite the significant scientific evidence calling for reductions of carbon dioxide, all this government plans to do is to freeze emissions at 1990 levels by the year 2000. This falls far short of the recommendations by the scientific community.
The fact of the matter is that without a long-term energy policy, this government is incapable of responding to the climate change threat. Unfortunately, there is no leadership despite all the proclamations at home and abroad by the Prime Minister. This government is retreating from the responsibility of governing, unfortunately.


THE ECONOMY
Mr. Stan Keyes (Hamilton West):: Mr. Speaker, the finance minister is about to present us with a hologram budget. It is a vision of make believe that Canadians will see right through. The devastating combination of high interest rates, high dollar and free trade has forced the elimination of at least 1,500 manufacturing jobs in Hamilton and area; companies like Cameo, Dare Foods, Stelco, Greening-Donald, Canada Wire and Cable, Nabisco, Ball Packaging, just to name a few. This year, job losses have swelled the welfare case load in Hamilton-Werrtworth by 46 per cent over last year.
We say job prospects are bleak. The Minister of National Revenue tells us there is nothing to be concerned about, that businesses are expanding. Well, I wonder if has spoken to his own brother, Henry Jelinek, Jr., who has decided to expand his Ontario manufacturing plant, not in Oakville but in the United States-


Some hon. members:: Shame.


Stan Kazmierczak Keyes: -saying that all future hirings will take place in the state of New York.


CANADIAN INSTITUTE FOR RESEARCH ON CULTURAL ENTERPRISES
Mr. Ken Hughes (Macleod):: Mr. Speaker, the people of Macleod have been calling for restraint in government spending since before I was elected in 1988. We continue to call for more cuts. That is why I and so many of my constituents are so offended by a recent announcement by the Minister of Communications to create a Canadian Institute for Research on Cultural Enterprises.
This elitist, cosy, so-called cultural research institute will cost $45 million and is an insult to the common sense of the average Canadian, creating yet another subsidized lobby group to add to the clammer for government funds, will not help the deficit, nor will it help Canadian culture.
I call on the Minister of Finance to reduce the budget for this department by at least $45 million.


Some hon. members:: Hear, hear.


Mr. Bob Speller (Haldimand-Norfolk):: Mr. Speaker, this government's handling of the North American free trade issue gives all Canadians real cause for concern. Canadians have questions that need to be answered.
Does this government have any understanding of the implications the deal will have for ordinary Canadians? Apparently not. It has yet to release any detailed economic analysis.
Does this government have any idea what our negotiating position should be? Apparently not. One day the trade minister tells us that the free trade agreement will not be affected by any new deal and the next day he says there may have to be changes to the free trade deal.
Does this government realize that the Canadian public must be consulted on a potential North American deal? Apparently not. Although the start-up date for negotiations is fast approaching, the government shows no inclination to get any direction from ordinary Canadians.
Does this government have any idea what it is doing to Canada's trade and economic future? Apparently not.


COMMUNICATIONS
Mr. Ray Funk (Prince Albert-Churchill River):: Mr. Speaker, the readers and publishers of rural and farm weeklies are about to find out exactly what free trade means to them. The Minister of Communications, who found $45 million for the cultural enterprises debacle in Montreal, is now axing the distribution assistance for weekly newspapers. As a result, on Friday, March 1, Canada Post is to increase postal rates for farm and weekly newspapers in Canada by up to 700 per cent. Weeklies like the Western Producer and the Shellbrook Chronicle have played a crucial role in the economic and social development of rural Canada, but this government wants to put them out of business.
That is not the Canadian way. Rural members of the Tory caucus who have been home in their constituencies all know how people feel about this issue. They know that the Minister of Communication is costing them
votes. Therefore, I call on them to have enough courage to get this un-Canadian policy changed.



Mr. Bill Casey (Cumberland-Colchester):: Mr. Speaker, in my comer of rural Nova Scotia, the weekly community newspapers play a very important role. The Oxford Journal, The Citizen, The Truro Weekly and the Springhill Record protect and encourage the very fabric of our way of life.
Proposed postal rate increases for the community newspapers will increase their mailing costs for some papers as much as five times the previous rates and these smaller newspapers just simply cannot absorb it. Another problem is that although the increases were announced in the Gazette, many of the newspapers are just now realizing the impact on their businesses and require more advanced notice.
Collectively, these newspapers have asked that a two stage approach be taken to address this issue. First, that a scheduled postal increase be reduced and, second, that the resulting increases be phased in over a period of time with adequate notice so that they can adjust their rates and notify their customers accordingly.
I strongly support this position and urge the ministers involved to work with the industry on this issue.
 * *


CANADIAN SECURITY AND INTELLIGENCE SERVICE
Derek Vincent Lee: Mr. Speaker, yesterday the Solicitor General tabled the government's response to the report of the Special Parliamentary Committee to Review the Canadian Security and Intelligence Service Act.
That committee reported in September last with a unanimous report containing 117 recommendations. Of those 117, the government has accepted only two.
This is disappointing to the members of the committee. It should also be disappointing to this Parliament. However, many of the committee's recommendations can still be implemented by the Solicitor General, by

February 26, 1991
Oral Questions
CSIS, by the Security Intelligence Review Committee and by other agencies within the security establishment.
The Solicitor General has committed himself to making an annual report to Parliament on this subject and Parliament's concerns in this area are clearly set out in the original report as a touchstone for updating and reform.
Notwithstanding this failure of the government to fully and fairly respond to this parliamentary report, all members of Parliament and this committee and the committees of this House can, and we hope will, preserve the many unfulfilled goals of this report in the time that remains in this Parliament.



ORAL QUESTION PERIOD


Ms. Sheila Copps (Hamilton East):: Mr. Speaker, my question is directed to the Prime Minister. Not only are the Tories poor managers of our economy, they are poor managers without compassion. During this Prime Minister's two terms there has been economic growth throughout the world.
If the Tories were so good at managing the economy, why are more than one million children living below the poverty line? Why do 250,000 Canadians need help to find shelter? Why do the majority of native children live below the poverty line? Why do more than 500,000 Canadians have to use food banks every year? Why, Mr. Prime Minister?


Hon. Gilles Loiselle (President of the Treasury Board and Minister of State (Finance)):: Mr. Speaker, I think that on this side of the House we can stand proudly on our record on the economy over the last six years.


Some hon. members:: Hear, hear.


Gilles Loiselle: I am personally very proud to be part of the government that has created more jobs than any government in the past, that has caused the economy to increase faster than any other government in the past.
That being said, I would like to tell the hon. member also that the number of people below the poverty line has been reduced considerably and the wealth of this country has been increased considerably.


Sheila Maureen Copps: Mr. Speaker, the Prime Minister should realize that the victims of the Tories' poor management of the economy are not just statistics but real people.
I would like to ask the Prime Minister whether he is aware of the fact that in Saint-Henri, the average life expectancy is 11 years less than it is on the other side of the track, in Westmount. Is he aware of those statistics? And is he also aware of the fact that 99 per cent of poor children never go to college or university? After six and a half years in power, is the Prime Minister proud of his record as far as Canada's poor are concerned?


Gilles Loiselle: To hear the hon. member talk, Mr. Speaker, one would think her party had never been in power. I may remind her of the deplorable state of this country's economy when we came to power in 1984. It was terrible!
That being said, we realize there are still pockets of poverty in this country. And that is why it is so important to work together to increase the wealth of this country. However, every time we tried to do so, every time we wanted to take steps to reduce the government's presence and leave more room for business and small businesses, all we got from the opposition was opposition, nothing else.
This government is determined to improve this country's economy and its prosperity, for the benefit of all Canadians.


Sheila Maureen Copps: Mr. Speaker, perhaps at some point in the next few months this government is going to start taking responsibility for its agenda.


Some hon. members:: Hear, hear.


Sheila Maureen Copps: Last January when we were out consulting with the people we heard, for example, that a mere two blocks from Parliament Hill a soup kitchen serves 80,000 lunches a year to people who do not have enough to eat. That soup kitchen was not doing business at the time

that the Liberals were in government. They are doing business now and they are doing a business of 80,000 lunches a year.


Some hon. members:: Oh, oh.


Sheila Maureen Copps: Well, perhaps if you took the time to consult, you might hear what the people are saying about the situation in 1991.
Three out of five single mothers in the province of Manitoba live below the poverty line. If the government's economic agenda is so good, why are the facts on poverty so devastating? If the government's economic record is so good, why are there so many food banks, so many homeless, so many welfare cases, why so many poor Canadians?


Gilles Loiselle: Mr. Speaker, I would like to give to the hon. member certain numbers that will help her understand the road that we have taken since 1984.
Let us start with Newfoundland where employment has grown by 18.5 per cent from 1984, your regime, to January of this year, our regime.
If you go to Nova Scotia, there is an increase of 13.3 per cent employment; New Brunswick, 17.4 per cent from your regime to our regime. I could down the list: Ontario, a 12.4 per cent increase; Manitoba, a 6.4 per cent increase; Alberta, 11.9 per cent; British Columbia, a 21.4 per cent difference between your management and ours even in a time of recession.


THE ECONOMY
Hon. Roy MacLaren (Etobicoke North):: Mr. Speaker, my question is for the Minister of State for Finance.
In discussing interest rates, the government never mentions the fact that the difference between U.S. and Canadian interest rates has remained at unprecedented high levels over the past year. At four percentage points the continuing spread is contributing to an overpriced Canadian dollar, which resulted last year in the decline of Canadian exports to the United States of $1 billion.
How can the government seek to promote Canada's international competitiveness when the spread between Canadian and U.S. interest rates remains unchanged,
Oral Questions
when the government's high dollar policy is undermining our export industries?


Gilles Loiselle: Mr. Speaker, my colleague, the Minister of Finance, the Prime Minister and others in this House have indicated the importance of reducing the interest rates.
We have indicated to the opposition party how we were working at bringing the interest rates down. The result of our policy is that over the last two months interest rates have gone down by 200 points. This is not rhetoric; these are facts.


Roy MacLaren: Mr. Speaker, evidently the minister did not understand what I was asking. I am not saying that the interest rates have not come down. I am saying that the spread between Canadian and U.S. interest rates has not diminished. Canadian interest rate reductions have been tracking U.S. interest rate reductions.
The problem facing Canadian industry, Canadian exporters, is that that spread has remained the same for the past year. We are rendering ourselves-


Mr. McDermid:: That is totally wrong.


Roy MacLaren: It is not wrong. The spread has dropped from only 5 to 4 per cent and is still at an historically high level. When is this government going to bring down that spread so as to give Canadian exporters the opportunity they deserve to participate in world markets?


Gilles Loiselle: Mr. Speaker, it is indeed veiy important that we get these interest rates down. I take the point made by the hon. member that there is indeed a spread, but this spread is there because of the pressures.
We have been trying to explain to the hon. member that this country has been living under higher pressure than the United States. Our monetary policy was addressed a year ago. In this House I indicated to members that we found that demand was too high. The economy was slowing down but Canadians were still buying and buying. Demand was going up and we said: "This is very dangerous. We are living beyond our means". Every time we wanted to bring our contribution fiscally and otherwise to reduce this, we never got any support from the opposition parties. Far from it; all of our measures were refused.

February 26, 1991
Oral Questions
This is the result of our policy. Interest rates are coming down and the gap is narrowing.


GULF WAR
Audrey Marlene McLaughlin: Mr. Speaker, my question is for the Prime Minister.
Iraqi troops are now withdrawing from Kuwait, and yet President Bush has decided to pursue the war and to reject every proposal to bring this war to an end. I think Canadians would like to see the Prime Minister stand up and give an opinion on behalf of Canada and not simply echo the U.S. position.
Today the Prime Minister made a statement that he would like to see the Security Council hold a meeting to discuss compliance of Iraq with the resolutions.
I would ask the Prime Minister, in addition to that, will the government also support a cease-fire which can be monitored by the United Nations and support that cease-fire immediately? By any standards the war is won. When is enough enough?


Right Hon. Brian Mulroney (Prime Minister):: Mr. Speaker, enough is enough when an aggressor nation indicates once and for all that it is going to honour all of the resolutions of the UN Security Council.


Some hon. members:: Hear, hear.


Martin Brian Mulroney: Iraq's Ambassador to the United Nations was asked at 12.30 today whether or not Iraq intends to honour all 12 resolutions of the Security Council, and his answer was no. He said: "Some of these resolutions may be invalid. We have our own reservations. Some of them lend sort of themselves to different interpretations. So we really have to take it step by step."
All members of the coalition, from Denmark to Great Britain to the socialist Government of France, today said the position put forward by the Leader of the NDP is unacceptable.


Audrey Marlene McLaughlin: I have a supplementary question for the Prime Minister. At least, Mr. Speaker, the NDP has its own position and not just one that it copied from George Bush.

Mr. Speaker, all witnesses say the Iraqi army is withdrawing en masse. My question is still directed to the Prime Minister.
Will the Canadian government support the ceasefire to allow the withdrawal of Iraqi troops under UN surveillance?


Martin Brian Mulroney: Mr. Speaker, the hon. member for the New Democratic Party stated that the NDP has its own specific position. And indeed it does. It is practically the only party in this country and the only socialist party in the world that is taking this position. In France, they were saying this morning that France was favourable to putting a stop to the hostilities, provided all Security Council resolutions were strictly observed. However, it did not want to run the risk of dilatory manoeuvres at a time when its soldiers were engaged in combat. France believes it is up to the Security Council to take note of any official statements by the Iraqi authorities, that they agree to act on all the UN's decisions. That is France's position, it is Canada's position, and it is the position of any civilized country.


Audrey Marlene McLaughlin: Mr. Speaker, the Prime Minister and I are in agreement with one thing, and that is that the New Democratic Party is the only party that has had the courage to stand up and say: "Try diplomacy, try other methods and use war as a last resort".
We know that much of Iraq's military force has been destroyed, that in fact the UN resolutions that authorized force to ensure that Iraq withdrew from Kuwait, which is what the last resolution says, is being done, we understand, by the retreat of Iraqi troops. U.S. pilots have told reporters that while Iraqi troops are fleeing from Kuwait, they are bombing them with cluster bombs on the highways north of Kuwait City. In the words of one pilot, "we hit the jackpot."
My question to the Prime Minister is: Are Canadian pilots involved in this bombing of the retreat of Iraqi forces?


Martin Brian Mulroney: Mr. Speaker, Canadian pilots and CF-18 aircraft are fully engaged in the prosecution of the effort to ensure that the President of Iraq conveys, unmistakably, his complete acceptance of the 12 United Nations resolutions to

the Security Council. At that time and at that time alone would a cease-fire be appropriate, and would the Government of Canada instruct its CF-18s to cease and desist from the kind of action in which they are engaged in prosecution of the defence of the United Nations.
My hon. friend began with a prefatory remark that the NDP is the only party to try diplomacy and to try other methods. But she did not complete the NDP policy. It is also the only party that says that when we have to fight to defend freedom or the United Nations, count the NDP out.


Hon. Lloyd Axworthy (Winnipeg South Centre):: Mr. Speaker, I would like to pursue some questions with the Prime Minister on the same topic.
I think we all recognize that this is a very crucial time and that there is a hope that the fighting can be brought to an end.
It is my understanding that the Security Council is meeting this afternoon and will be inviting the Iraqi representative in New York to present the case that the Iraqi government has announced and to determine its judgment.
What I would like to know from the Prime Minister is: Has Canada, according to the statements just made, already rejected outright this announcement of withdrawal, or is Canada going to await the judgment of the United Nations Security Council as to whether it meets the conditions or not?
In other words, are we prepared to await whether the Security Council itself decides that the conditions are appropriate, or have we already made up our mind?


Right Hon. Joe Clark (Secretary of State for External Affairs):: Mr. Speaker, the informal meeting of the Security Council has just broken up. Iraq did not report. Iraq has not reported or responded to the Security Council. What Iraq has done is issue a radio broadcast. That is not the way to settle this dispute, and Iraq knows this.
The way that this matter can be brought to an end is for Iraq to come to the Security Council and to present its clear acceptance, as the Prime Minister said today
Oral Questions
unequivocally and clearly, of the resolutions of the Security Council.
As it has been from the beginning, the way to end this war has been in the hands of Saddam Hussein.


Lloyd Axworthy: Mr. Speaker, I want to ask the Secretary of State for External Affairs to clarify a point.
Is it not true that an outside country such as Iraq, while it is a member of the United Nations and not a member of the Security Council, cannot attend informal meetings of the Security Council, but that in fact there have to be formal meetings to which they can be invited? Under the rules of the UN that is not possible when it is in informal proceedings.
Will Iraq be specifically invited to make its case in front of the United Nations? Does the government believe that in crucial matters such as this it should be the UN Security Council that makes the judgments as to whether the requirements of the UN resolutions are being met, or is that a decision that is simply being made by the coalition partners? Where is the decision being made, by the UN or by the coalition?


Charles Joseph Clark: Mr. Speaker, to answer what the hon. member calls his technical question, the Soviet Union, as he should know, has made it known that it would be prepared to make itself available to convey a message to an informal meeting, if that is what Iraq chooses, of the Security Council with respect to Iraq's specific acceptance of conditions.
The point is not who will carry the message. The point is that there is no message. Saddam Hussein has not indicated that he is prepared to accept the will of the world as spelled out in the Security Council resolutions.
With regard to who decides, the Prime Minister of Canada has made abundantly clear on a number of occasions and again today that the decisions rest with the Security Council, with the United Nations, with no one else, but before the United Nations can decide on the response by Iraq, Iraq must respond positively, absolutely and unconditionally to all of the resolutions set forth by the United Nations.


Hon. William Rompkey (Labrador):: Mr. Speaker, my question is for the Minister of National Defence.

February 26, 1991
Oral Questions
Our planes in the gulf have had a number of roles throughout the war: air patrol, sweep and escort and, more recently, a bombing mission. I want to ask the Minister of National Defence: What is the role of the CF-18s in the gulf at this moment? Is it business as usual? Have any new orders been issued or are they contemplated to the CF-18s in the gulf by the minister or by the Canadian commander in the gulf?


Hon. Bill McKnight (Minister of National Defence):: No, Mr. Speaker. I have said on several occasions that the role of the CF-18 squadron, under the air tasking orders as agreed to by the Canadian commander in the Middle East, is that of combat air patrol, sweep and escort, and air to ground interdiction.
There has been no change, and I do not anticipate any until the results of the coalition effort have brought about a compliance with the United Nations resolutions under which the CF-18 squadron and all Canadian personnel are involved in enforcing.


VETERANS AFFAIRS
Mr. George Proud (Hillsborough):: Mr. Speaker, my question is for the Minister of Veterans Affairs.
Technically our country has not declared war in this Persian Gulf conflict. Consequently, that would mean that our men and women serving in the gulf do not qualify for veterans' pensions.
I want to ask the minister, through you, Mr. Speaker, to tell this House and the families of these service people today what they can expect in terms of veterans benefits. Will they qualify for the same benefits equally as veterans of the two world wars and the Korean war?


Hon. Gerald S. Merrithew (Minister of Veterans Affairs):: Mr. Speaker, naturally all members of this House hope and pray that there will be no casualties in this war, but we have to face that possibility, that reality, because that is the reality of war.
It is for that very reason that this government has declared the gulf area to be a special duty area. That gives the men and women serving there very special, preferential treatment with regard to pensions.
I should mention, so as to make it very clear to the families of the people who are serving there, what is covered under that. First of all, they are covered for 24
hours a day while there. They may qualify disability pensions, treatment services for their disabilities, survivors' benefits, attendance allowance, special clothing allowance, home modification, retraining assistance, and exceptional incapacity allowance.
Of course this is in addition to what my colleague, the Minister of National Defence, has announced in the way of benefits for those people who are so valiantly serving their country in the gulf area.


CANADIAN AVIATION INDUSTRY
Mr. Iain Angus (Thunder Bay-Atikokan):: Mr. Speaker, my question is for the Minister of Transport.
The Minister of Transport is proposing to give American airlines the right to undermine and possibly eliminate Canadian carriers through a change in the Canada-U.S. bilateral air agreement. This change which would give the Americans cabotage rights to provide scheduled air services between Canadian cities is opposed by the majority of the Canadian aviation industry and in fact was opposed by all members of the all-party special committee on transport.
Will the minister today instruct his negotiator that cabotage is not to be granted to the United States aviation industry under any circumstances whatsoever?


Hon. Doug Lewis (Minister of Transport):: Mr. Speaker, as the House well knows and the committee knows, we are renegotiating this agreement in an effort to get improved service for Canadian consumers, Canadian communities, and Canadian airlines.
The all-party report said that the status quo is not acceptable. That is what your hon. friend said.


Mr. Marchi:: What did they say about cabotage?


Douglas Grinslade Lewis: Well, let's get to cabotage. In discussing the negotiating mandate, the committee said in its report: "We have reached the conclusion that we are not in a position to recommend a specific negotiating option to the government. We will negotiate for a better deal for Canada".


Iain Francis Angus: Mr. Speaker, the report of the special committee states on page 12: "While we want to give the government as much latitude as possible in these negotiations, we do not think that
February 26, 1991

American carriers should be given cabotage rights under a new agreement".
That reflects the overwhelming opinion of the aviation industry, whether it is industry, labour or the community groups. The minister rejected this comment by the committee when he spoke not to Canadians, but to Americans, and said that cabotage was on the table. Why is he going against the wishes and the reality of the Canadian aviation industry?


Douglas Grinslade Lewis: Mr. Speaker, I repeat. The Canadian airlines have encouraged us to give them more opportunities to serve Canadians and to serve the routes. That is one of the recommendations of the committee.
My friend quotes from the committee report. He did not go on to read page 27 wherein it states: "We have recognized that the government must be given the maximum negotiating latitude and that limited cabotage exclusively for our carriers may be an advantage in the negotiations".


UNEMPLOYMENT
Mr. Len Hopkins (Renfrew-Nipissing-Pembroke):: Mr. Speaker, I have a question for the Minister of National Revenue.
The unemployment insurance legislation the government passed last year was supposed to produce the be-all and end-all for Canadians. In family owned businesses the regulations concerning non-arm's length relationships created backlogs in the Department of National Revenue where rulings had to be made on individual cases. It created hardships for many families who went without income for several weeks and who had to be supported by relatives, friends, and the municipal welfare offices.
Will the Minister of National Revenue today commit himself and the government to ceasing to treat Canadians in such a callous a uncaring way and see to it that National Revenue will never again hold up unemployment insurance payments to the unemployed?


Hon. Otto Jelinek (Minister of National Revenue):: Mr. Speaker, this government ceased treating Canadian taxpayers in a callous way the moment that one of my
Oral Questions
predecessors, the present Minister of National Health and Welfare, brought in the taxpayers' bill of rights.


Leonard Donald Hopkins: Mr. Speaker, I have a question for the Prime Minister.
An amendment to the Canadian Constitution in 1940 transferred the responsibility for the unemployed to the federal government. Many municipal welfare budgets have doubled and tripled in the last few months as a result of this government-created recession.
When is the Government of Canada going to live up to that constitutional responsibility and stop throwing the burden of unemployment in this country on to the backs of the municipalities and the provinces?


Otto John Jelinek: Mr. Speaker, the hon. member will know that Bill C-21 went a long way toward alleviating some of the problems to which he refers.
Unfortunately, there was a problem in the Senate in having this passed in an appropriate fashion. We have now taken every step to alleviate this problem. I can assure the hon. member and members of this House of Commons that this problem has now been resolved.


GAS PRICES
M. Bob Kilger (Stormont-Dundas):: Mr. Speaker, my question is directed to the Minister for Consumer and Corporate Affairs. The Competition Act has no regulations to deal with fraud concerning gas prices. The legislation only refers to price fixing. Why doesn't the department take the initiative and set up an agency to prevent fraud instead of merely acting in a monitoring capacity?


Hon. Pierre Blais (Minister of Consumer and Corporate Affairs and Minister of State (Agriculture)):: Mr. Speaker, the hon. member ought to know that retail gas prices are a provincial responsibility. The federal government's responsibility concerns competition and whether there is any collusion with intent to defraud or act against the interests of consumers. The provinces have plenty of room to intervene. Two provinces already have legislation to deal with this, and I have discussed the matter with my provincial colleagues. They have plenty of room to manoeuvre, and I hope, Mr. Speaker that it

February 26, 1991
Oral Questions
was not the hon. member's intention to ask me at this stage to intervene in what is really a provincial matter.


Mr. Bob Kilger (Stormont-Dundas):: Mr. Speaker, for the same minister.
Consumer groups and Canadians across the country are not satisfied with the government's assurances that gasoline prices are entirely the result of market forces.
Canadians deserve to have concrete evidence that the price of gasoline is fair. Will the minister establish an independent review board to investigate gasoline pricing in Canada?


Pierre Blais: Mr. Speaker, if the hon. member considers what has been happening across Canada during the past few weeks, he will notice that there has been a very real drop in the price of gas in most Canadian regions, which can only benefit Canadian consumers. This government has always believed that it was in the interest of consumers to have as much competition as possible in this sector, so that Canadians can continue to enjoy the benefits of price reductions and competition.


Mr. Steve Butland (Sault Ste. Marie):: Mr. Speaker, my question is for the Minister for International Trade and it involves Algoma Steel.
If the federal government wants positive proof that its economic policies are not working, it is Algoma and the effect of high interest rates, the high Canadian dollar and the free trade agreement.
Given the fact that provincial loan guarantees were listed as a subsidy by Americans in a countervail action against SYSCO Steel, what is the minister doing to reassure steel corporations in this country that loan guarantees will not be construed as a subsidy, and this will not happen to Algoma?


Hon. John C. Crosbie (Minister for International TVade):: Mr. Speaker, I do not know whether or not the hon. member made his presence felt when there was a five-month strike at Algoma Steel some time ago that certainly badly crippled Algoma Steel.
With respect to the subsidy question, I hope the hon. member is pleased that we now have the Canada-U.S. Free Trade Agreement in effect so that if there is an allegation of any subsidy, in connection with Algoma Steel or any other company, it can now go to a Chapter 19 panel which will have the final say on whether or not there is such a subsidy as they have done in the pork case, which establishes beyond any doubt the efficiency and the finality of the dispute settlement system and by itself shows how valuable the Canada-U.S. Free Trade Agreement is. I am delighted to relieve the hon. member's mind in that instance.


Steve Butland: Mr. Speaker, I will pass on the reassurance of the minister and indicate that you won a pork ruling but have lost all steel rulings, so it is no assurance at all.
My supplementary question is for the Minister of Industry, Science and Technology, and I do appreciate his personal involvement in this issue to this point in time.
In a meeting on February 11, he indicated to me that his department would serve on the task force studying the long-term viability of Algoma. In the ensuing press conference he indicated that in no way could the federal government involve itself in the long-term restructuring of Algoma. Now, these statements conflict.
Will the minister reaffirm his commitment to serve on the task force and what positive initiatives is he considering to ensure the long-term viability of Algoma and for Canadian jobs?


Hon. Benoit Bouchard (Minister of Industry, Science and Technology):: Mr. Speaker, I want to say first that I was pleased to work on the loan guarantee for Algoma with the three other partners. This government did this particularly for the people of Sault Ste. Marie.
Second, I made no conflicting declaration. I said that the people of Industry, Science and Technology would always be available to work with anyone to see if there is a way that we can helpful in terms of the future of the
February 26, 1991

Oral Questions BANKRUPTCY
company. I said also that there is no way that the Government of Canada, as my friend knows very well because of any countervailing action, could be involved, in light of the policy which was put forward in the steel industry in 1984. It has always been respected that the Government of Canada will not be involved in the restructuring of the company itself. But, if we can be helpful in terms of advice which could be given by the department, we will be pleased to do so.


GOODS AND SERVICES TAX
William D. (Bill) Casey: Mr. Speaker, my question is directed to the Minister of National Revenue. Just one of the many positive aspects of the GST is the federal sales tax inventory rebate and many businesses are anxiously awaiting their refund.
If an application for the rebate was received by the department in the middle of January, when could the rebate be expected? Second, what could a specific business do if the need is urgent?


Otto John Jelinek: Mr. Speaker, at the outset the claims for federal sales tax rebate on inventory exceeded expectations. There was a temporary slowdown in the processing of those rebate claims. Since then we have streamlined the process.
I can assure the hon. member that we are back on track and able to expedite them in the 21-day period as we had intended from the start. In fact, we have to date expedited 23,302 claims and those cheques have gone out to the businesses across the country to assist them with their cash flow.
May I just conclude, Mr. Speaker, by taking this opportunity to compliment the business sector, particularly the Canadian Retail Council, for doing such a tremendous job in assisting the business community with this massive tax change, to have made it as smooth and as efficient for the business community and the consumer as is possible.


Mr. Ron MacDonald (Dartmouth):: Mr. Speaker, my question is directed to the Prime Minister and it concerns the unprecedented level of bankruptcies caused by this government's own policies.
For every statistic, for every business that is driven into bankruptcy, there are employees who at the end of the day have to go home and tell their families there will be no more pay cheques. They will have to call the bank and say that the mortgage payment will be late. They will be hounded by bill collectors, suffer tremendous family stress, with many driven to become part of the statistics because they will have to declare personal bankruptcy themselves. My question to the Prime Minister is clear. Why does his government consistently and absolutely refuse to recognize and address the real tragedies, the human tragedies, caused by his government's economic policies?


Gilles Loiselle: I will not deny the fact that we are in a recession. I will not deny the fact that for many Canadians this is very tragic, and I will not deny the fact that we have to do everything we can to extricate ourselves from this sad situation.
That being said, I would like the hon. member to remember what the federal bankruptcy superintendent said, when you start comparing, for example, January with January. In January, 1990, we were booming, so going up. In this particular time we are in the midst of a recession. The superintendent said, and he is a neutral person, "I am very confident that come May, because we are not comparing apples with apples, come May we will be comparing apples with apples and the situation will be much improved".
That being said, I recognize that Canadians would like us to do everything we can and we are fiscally and financially to help Canada recover a good economy.


Mr. Rex Crawford (Kent):: Mr. Speaker, my supplementary is for the same minister.
The recession is hitting southwestern Ontario hard. Nearly 30 per cent of Chatham's automotive work force is unemployed. Motor Wheel has lost over 600 jobs. Welfare cases in Kent county are up over 400 per cent from 1981 levels.

February 26, 1991
Oral Questions
This is no ordinary recession. Many companies are shut down for good. Jobs are lost forever. How will the minister help workers and their families?


Benoît Bouchard: Mr. Speaker, I would like to come back to the first question my friend asked about bankruptcies in this country.
Yesterday the Minister of Finance insisted on the fact, and the Minister of State for Finance raised it today also, that since 1984 with the prosperity we had with this government, a lot of companies were starting up. For that reason it is obvious that we have more companies in bankruptcy today because there are many more starts in 1990 than there were in 1984.
He knows very well, Mr. Speaker, and the Minister of Finance said yesterday that we have closings, mergers, for a lot of reasons. Otherwise the bankruptcies themselves are due to recession.
Once again, Mr. Speaker, my friend and his party should look at what is the real economy and he will understand those figures.


AGRICULTURE
Mr. Joe McGuire (Egmont):: Mr. Speaker, I have a question for the Minister of Agriculture.
Prince Edward Island has been virtually locked out of all of its North American seed potato markets. This year is lost. Forty million dollars have gone down the drain.
In addition, the American and Canadian bans give no indication to the growers as to how they can recertify. What the seed growers need to know is where do they get certified seed for their spring plantings in order to stay in business?


Hon. Don Mazankowski (Deputy Prime Minister, President of the Privy Council and Minister of Agriculture):: Mr. Speaker, my hon. friend is aware I am sure of the work and the co-operation that has been going on between the two levels of government and indeed the producers. I think what is really necessary is summed up in the words of Mr. George Webster, the chairman of the P.E.I. Potato Marketing Board. He said: "This year may be lost but we have to start to salvage and rebuild our seed industry".
That is precisely what we are attempting to do. We are looking at a compensation package. An eradication program has been developed with the co-operation of the growers and the government. As a matter of fact, as of right now, there are further negotiations and discussions going on in Washington with the aim of restoring normal seed to our trade patterns.


Joseph Blair (Joe) McGuire: Mr. Speaker, I think George Webster would also like to know where he is getting his certified seed for his planting for spring.
Agriculture Canada does not know where the virus PVYN came from. The Americans do not test for the virus, but we do. The virus could very well have come into Canada from the United States. Why will the minister not demand the same rigid testing standards to potatoes coming into Canada from the United States as the Americans are demanding from us?


Donald Frank Mazankowski: Mr. Speaker, I am sure that the hon. member would be delighted to know that we are applying the same standards to the American product crossing the border into Canada as product going into the United States. He shakes his head in the negative. I indicate to him that that is the case. We are in fact doing that as of now.
The PVYN virus was detected in late summer last year. After further analysis and post-harvest testing and laboratory analysis it was identified to be prevalent on 14 farms in Prince Edward Island and three farms in New Brunswick. We immediately, in co-operation with the two provincial governments and with the producers, set out an eradication program, a certification program in an attempt to deal with this very critical disease. That is continuing.
I have assured both the growers and the two ministers of agriculture that Agriculture Canada would take all necessary steps to eradicate the disease and to save the producers harmless from their losses.


NORTHERN TAX BENEFITS
Mr. Rod Murphy (Churchill):: Mr. Speaker, my question is for the Minister of National Revenue.
In early December the government announced that a number of communities would be reinstated in terms of receiving at least a partial northern tax benefit. That was early December. No legislation has been introduced in
February 26, 1991

this House and no tax forms are available for those Canadians in order to fill in their taxation for that 1990 taxation year.
First of all, when will the legislation be introduced in the House and second, when will the tax form be available so those Canadians can fill in their 1990 taxation forms?


Otto John Jelinek: Mr. Speaker, I am sure the New Democratic Party will be supportive of the initiatives that the Minister of Finance, in conjunction with Revenue Canada, have been taking. We are now in the process of discussing this matter with our House leader and hopefully other House leaders as to when this can come before the House for consideration.
Revenue Canada is prepared and ready to deal with this matter any day. The sooner this passes through this House the better for northern residents.


Rodney Edward Murphy: Mr. Speaker, the minister knows that the government made a decision two and a half months ago to change this legislation. It has not introduced it.
We would like to ask the minister this. Will he guarantee that they will not blackmail people in the north and that there will be legislation introduced immediately which is specifically on the northern tax benefit and does not include other measures which implement the government's budget?
These people have waited two and a half months. Why not introduce the legislation now?


Otto John Jelinek: Mr. Speaker, that suggestion is just ludicrous. That should not surprise me coming from where it comes from.


Some hon. members:: Oh, oh.


Otto John Jelinek: There has always been and continues to be an ongoing attempt for widespread consultation on every issue that this government undertakes and the northern residents' benefits is no exception.
The hon. member will know, and his leader agrees with this, that we have embarked upon a most extensive consultation process with northern residents on this matter. That is why there has been a delay.
Tributes
The House resumed sitting after a short break just yesterday. If the hon. member will co-operate, as I am sure will the Liberals, he will have his legislation and northern residents will have their benefits.


Mr. Speaker:: The hon. member for Cape Breton Highlands-Canso, a single question.


FISHERIES
Mr. Francis G. LeBlanc (Cape Breton Highlands - Canso):: Mr. Speaker, my question is for the Minister of Fisheries who, in the midst of this made-in-Canada recession created by his government, is intent upon compounding the difficulties facing Atlantic fishermen with massive new dockside monitoring charges. These charges come at the same time as inshore fishermen throughout Atlantic Canada are paying for his government's mismanagement through quota cuts and falling prices.
Where is the fairness here? Will the minister not rescind these new dockside monitoring charges before hundreds of fishermen go out of business?


Hon. Bernard Valcourt (Minister of Fisheries and Oceans):: No, Mr. Speaker, I will not.


PRESENCE IN GALLERY
Mr. Speaker:: I wish to draw to the members' attention the presence in the gallery of His Excellency Ahmet Kurtcebe Aldtemocin, Minister of Foreign Affairs of the Republic of Tlirkey.


Some hon. members:: Hear, hear.


THE LATE GUS MACFARLANE
Ms. Beth Phinney (Hamilton Mountain):: Mr. Speaker, I rise today to pay tribute to Gus MacFarlane, a former member of Parliament who passed away this past weekend.
Gus proudly and diligently served the citizens of Hamilton Mountain as their member of Parliament between 1974 and 1979. Those who knew him during his years in Ottawa, and his many other friends, remember his cheerful personality and wonderful singing voice.

February 26, 1991
Privilege
He served with commitment as Chief Government Whip. His fellow parliamentarians will remember his special project fighting for the rights of backbenchers on both sides of the House.
Outside of politics, Gus MacFarlane was extensively involved in several national organizations. A member of the Canadian Paraplegic Association since 1985, he was also a founding member of the association's Prince Edward Island branch in 1986. For the last two years, he served as the Chairman of the Canadian Paraplegic Association's national fund raising committee.
Gus was also deeply committed to Canadian amateur football. A past president of Football Canada, he was most recently the President of Football P.E.I., working to resurrect the sport on the island.
The greatest tribute to Gus MacFarlane will not be in our words of sadness today, but in the memories of the many people to whom he provided so much encouragement.


Mr. Geoff Scott (Hamilton-Wentworth):: Mr. Speaker, following on the words of the hon. member for Hamilton Mountain, I wish to pay tribute to the late Gus MacFarlane.
I was a new member of Parliament when Gus was in the House. He was always extremely helpful to me, and a friend to me, as he was to all colleagues on this side of the House.
I am sure that the whole House, and all of his former constituents in the Hamilton area, wish his family their deepest sympathies at this moment of their sorrow. They should know that the House of Commons thought very highly of Gus MacFarlane.


Mr. Lome Nystrom (Yorkton-Melville):: Mr. Speaker, I want to join my colleagues in expressing my sorrow at the passing of Gus MacFarlane, whom I knew very well.
He was the Chief Whip of the Liberal Party at a time when I was the Chief Whip for the New Democratic Party a number of years ago.
Gus MacFarlane was one of those members who was very well liked by all members of the House of Commons, regardless of which side of the House they sat on. He was well liked, very outspoken, and very frank. He was also a great orator with a loud, booming voice. I am sure that all of us who were here remember him well.
He was also very interested in sports. It was an activity that he followed long before he was elected as a member of Parliament, that he was involved with as a member and, of course, after he was no longer a member in 1980.
Gus will be missed by all. I extend, on behalf of my party, our sympathy to his family and to his many friends.


George Albert Proud: Mr. Speaker, I just want to add a few words to those already said here.
Gus MacFarlane came to Charlottetown some years ago. He came to work for Veterans Affairs as a member of the War Veterans' Allowance Board.
Soon after his arrival in the city, he became very well known as a community leader. One of the first acts he did in Charlottetown was initiate the Charlottetown Winter Carnival, which has become a well-known annual event.
As my colleague has said, he was also responsible for the resurrection of amateur football in the city of Charlottetown.
I would like to express to his family my deepest sympathy. The youth of our country and of my home province were the beneficiaries of the many hours of hard work and dedication that Gus MacFarlane gave.


PRIVILEGE
Lloyd Axworthy: Mr. Speaker, I asked a question, which was answered by the Secretary of State for External Affairs, in which I took a direct quote from the transcript of a statement issued by the Secretary-General of the United Nations.
In response to that, the Secretary of State for External Affairs said that I was taking liberties with this statement, and furthermore that this was a repetition of an attempt to misrepresent statements of the Secretary-General and this was not an honest process of foreign policy.
Mr. Speaker, I would like to read to you directly the quote of the Secretary-General. It says:
-in consonance with the resolutions of the Security Council. Openings towards the cessation of the conflict have been clearly revealed during the past two days. It would be tragic in the extreme if
February 26, 1991

the opportunities that have been created were now being lost. I appeal most earnestly that this not be the case.
He then went on to say:
The United Nations and I, I may add as the Secretary-General, are passing through a most trying and painful experience. Since the beginning of the crisis, there has been devastation on a vast scale. The consequences for a vital and strategically most important region of the world are incalculable.
This is the quote I used:
We have the obligation to uphold the principles which prompted the Security Council's resolutions and we have to respond to the supreme moral imperative of preventing further destruction of life. These two objectives should not be irreconcilable.
Then he goes on to say how he hopes the decisions will be successful.
The point I am making, Mr. Speaker, is that I quoted directly from the Secretary-General. I quoted in the context that the Secretary-General was making an appeal that a peaceful resolution be found, as I have just quoted from his statement.
Unfortunately, the Secretary of State for External Affairs was unable to read these transcripts properly, or understand them, and I think it is an imputation against my privilege as a member that I was trying to misrepresent the Secretary-General and not deal with this in an honest way. I think it is unfortunate that the Secretary of State for External Affairs, when he is not able to answer a question, tries to impugn the motives of a member who asked it.
I ask that this privilege be examined by Your Honour under section 48 of the rules.


Charles Joseph Clark: Mr. Speaker, let me remind the House that my response to the member for Winnipeg was that it would serve the interests of us all if he did not take liberties with statements of the Secretary-General. This is not the first time, as he will recall that I had to call him to order in committee. This is not the first time that he has taken one phrase from a statement by the Secretary-General and then attributed to the Secretary-General a meaning quite different from what the Secretary-General of the United Nations had indicated.
This is what the member for Winnipeg said in the House, referring to the Secretary-General of the United Nations. He said: "that the UN resolutions against Iraq
Privilege
could be upheld while still addressing the moral imperative for preventing further destruction. And we know this appeal of the Secretary-General was not successful this past weekend".
The clear conclusion anyone would draw from that is that there had been an appeal made by the Secretary-General which was rejected.
Let me quote from what the Secretary-General of the United Nations has been saying on that subject.
In answer to the question "Do you think that the ground offensive cut off any chances for constructive diplomacy before they really had time to achieve anything?", the Secretary-General answered: "History shows that hostilities and diplomacy can live together. The one thing we have to be hopeful for is that something can be done in order to avoid losses of lives."
There was then another question asking about military operations. He said to the person posing the question: "You are probably more knowledgeable about military operations than me, but it appears it is something which is indispensable in order to obtain the objective which is exclusively to liberate Kuwait."
The honourable member, I know, is a reader of The New York Times. He will know that the interpretation of The New York Times in an article of yesterday, entitled "UN Chief Backs Strike" accepts my interpretation, not the interpretation he put on the record and tried to raise again today.
In the committee the other day, the member for Winnipeg said: "On the weekend the Secretary-General of the United Nations quoted in a BBC commentary that he is anguished that the lives of millions of civilians are in danger by confrontation, that civilian casualties are mounting, and that there is widespread damage to residential areas."
As a matter of fact, the statement was not made by the Secretary-General, it was made by a senior UN official. That was clear in the news article which I believe the hon. member was quoting, an article in the Sunday Citizen of February 10, by Mr. Trevor Rowe, which says:
A UN official who works closely with Perez de Cuellar says-
I went on in the context of that committee hearing to make the point.

Government Orders
I think it is correct to say that the Secretary-General of the United Nations expressed his anguish at the loss of civilian life.
Everyone in this committee would express that anguish. To translate that into a criticism or to make it something that it is not does no service to the facts or to the Secretary-General of the United Nations.
I think that, at best, this is a matter of debate, but since the hon. member put his version on the record I thought I would place mine.


Mr. Speaker:: The hon. member for Winnipeg South Centre wishes to respond. Very briefly, please.


Lloyd Axworthy: Mr. Speaker, the Secretary of State for External Affairs has, once again, going to sleight of hand, quoted from a different document. I am quoting from the statement the Secretary-General made on February 23, 1991, a direct statement where he said it would be tragic, in the extreme, if the opportunities that have been created were now to be lost and he appealed most earnestly that this not be the case. If that is not an appeal for a peaceful resolution, I do not know what is. I would simply say that it is up to the Secretary of State for External Affairs to start treating statements in this House with the seriousness with which they were presented and quit trying to distort them and smear them, as he always tries to do.


SPEAKER'S RULING
Mr. Speaker:: I listened very carefully to the exchange yesterday and I have had an opportunity to reread it. I have listened to the hon. member for Winnipeg South Centre and to the right hon. the minister.
One of the difficulties in brisk exchanges in this House is that sometimes there is an indication from one side or the other, and often from both sides, that neither version which they are counting on is as accurate as someone on the other side might wish it to be.
I have no doubt as to the sincerity of the hon. member for Winnipeg South Centre in putting the question he did. The right hon. Secretary of State for External Affairs replied and engaged the hon. member for Winnipeg South Centre in some argument as to what had been said at certain times and what meaning should be put
upon it. That, I am afraid, is a question of debate and in the absence of very clear words of defamation exchanged between members, that is where it must stay.
I thank both hon. members for their courtesy.



GOVERNMENT ORDERS


Right Hon. Joe Clark (for the President of the TVea-sury Board) moved: that Bill C-91, an act to amend the Financial Administration Act and other acts in consequence thereof, be read the third time and passed.


Mr. Dave Worthy (Parliamentary Secretary to Minister of State (Privatization and Regulatory Affairs) and Minister of State (Finance)):: Mr. Speaker, I would like to make just a few final remarks about C-91, the act to amend the Financial Administration Act and other acts in consequence thereof.
I think that not only people in this House but people across this country, business people and other citizens, recognize that any business that tried to function in today's environment with rules and procedures that were over 40 years old would find it impossible. It would be inefficient and would not be able to operate long. That is the situation, in effect, that the Government of Canada now finds itself in. Although it has been manoeuvring around it, the rules and procedures that it operates under are 40 years old. I think it is recognized on all sides of the House that those procedures must be updated.
Bill C-91, therefore, is largely technical in nature. It is intended to make the financial management processes more efficient and to modernize certain procedures. The ultimate objective is to bring financial administration in the federal government into the modem electronic world. By permitting the introduction of new efficiencies and the use of electronic technology, these amendments would assist departments to do more with less to the benefit of all Canadians.
More specifically, the bill will improve the management of the federal government's cash inflows and outflows, increase the efficiency with which government
February 26, 1991

programs and services are administered, streamline and modernize internal administrative processes, provide enhanced tools to facilitate the management of the public debt and provide more flexibility in the funding and delivery of services, thereby providing better service to the public.
For example, the amendments to section 17(4) and (5) contained in clause 5 will eliminate the current cumbersome process that is involved in settling with banks and other financial institutions for NSF cheques received by the government.
This amendment will also pave the way for streamlining the process of paying fees and commissions to agents who act on behalf of the government, thereby minimizing the paper burden imposed on them.
It has long been an accepted practice for agents in the private sector to withhold their fees and commissions from the funds collected. This applies whether one is selling a house, a ticket to a sports event or a concert, or even selling real estate. Even the provincial government permits retail outlets to withhold their administration fees from sales tax collected.
But not so for the federal government. The full amount collected must first be deposited in the Consolidated Revenue Fund and then a separate cheque issued for fees and commissions payable.
The changes contained in this bill are long overdue and essential to fostering an efficient and businesslike approach to day by day transactions.
The bill also includes amendments designed to streamline and modernize the payment process. The amendments to section 34 will provide greater flexibility to use modem principles of risk management when verifying invoices and other claims for payment, while those to sections 35 and 36 mean that the government would truly enter the electronic age and take full advantage of electronic payment techniques. This would be of particular benefit to the government suppliers since payment would actually be in their hands on the due date. It also has cash management implications for large contributions and other major financial assistance to industry. With electronic payments, large cash advances would be eliminated and funds held in the Consolidated Revenue
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Fund until the last minute. This means savings for the people of Canada and the Government of Canada.
Other improvements in the financial management process are aimed at streamlining the approval process for tax remissions, reducing internal red tape and other impediments to collecting at least part of the millions of dollars worth of debts currently deemed uncollectable. Those are dollars owed to the government, to the people of this country, that this government must make sure to collect if at all possible.
The bill provides uniform and consistent authority to waive charges and forgive money owed to the government on humanitarian grounds and where circumstances otherwise warrant. This, in fact, would make our government more human.
It also clarifies the requirements for recording and settling debts owed at the end of a fiscal year thereby eliminating any unwarranted overhead costs.
It reduces the paper burden by eliminating reports that nearly duplicate information already provided to Parliament through the expanded information now provided in part 3 of the Estimates.
In summary, this bill is designed to bring financial management practices in the government into the modem age and to increase productivity. This it will do without sacrificing or diluting the fundamental principles of parliamentary control of our expenditures.
I would, however, be remiss if in concluding I did not mention that during debate in this Chamber, and also in committee, certain concerns were expressed over the wording of clause 6 on user fees. These concerns related principally to ensuring that users would not be called upon to pay more than their appropriate share of the cost and, more specifically, that no one class of users would be expected to bear the cost of services provided to other users.
In addition, assurance was sought that the rules of the game would not be changed in mid-stream and that new adjustment factors would not be introduced without amending the original order and without providing users an opportunity to make their views known.

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The government has listened to these representations and it has made every effort to accommodate them. I am convinced that the bill, as now amended, meets the essence of these concerns.
I am now in a position to thank all hon. members who helped with the implementation of the bill to this stage. I would ask for speedy and positive support of the bill today.
fTranslation\


Mr. Peter Milliken (Kingston and the Islands):: Mr. Speaker, I welcome this opportunity to take part in this debate, and it is a pleasure to do so this afternoon, on third reading of Bill C-91.1 have a number of problems with this bill, but generally speaking, I think the government is to be commended for introducing this bill to amend the Financial Administration Act. This is very important. I agree with the parliamentary secretary when he says that the purpose of this bill is to bring this government into the twenty-first century, which is excellent, and in that case, I am delighted to support this bill. Not, however, as far as section 16 of the bill is concerned. That is why I would like to make some brief comments, and I also want to discuss another matter that concerns section 30 of the bill.

Perhaps, if I continue in English, it would be easier for me as well as for hon. members.
Clause 6 of this bill represents a serious power grab on the part of the government. I think it is apparent to all that it is so, in spite of the protestations of the parliamentary secretary.
I want to thank him for his consideration of the amendments I proposed in the House. I recognize that the government has accepted the principle of one of them, with a minor modification in language. In respect of the other, I submit that there is still disagreement between us as to the effect of the amendment, and certainly the effect of clause 6 of the bill that has been presented.
In my submission the new clause 6 represents an attempt by the government to take to itself the power to impose charges in the nature of taxes on Canadians in exchange for the services they receive from their government. The normal procedure, as everyone knows, is for the government to introduce a bill to provide for certain
services for Canadians. Parliament normally votes the funds on an annual basis through the Estimates for those services to be provided.
What the government has now taken on itself to do is the power to charge Canadians for those services based on the costs of those services without recourse to Parliament This is a fundamental objection I have to this clause. This clause in its amended form has enhanced the power of the government in this regard, and that cannot be denied. If it did not have to be enhanced we would not have this amendment before us. I think the hon. parliamentary secretary knows that full well.
What we have here is a case where the government has decided that it does not have to come to Parliament any more-it does not want to come to Parliament any more-in order to increase in effect the tax burden on Canadians. Parliament would have voted the funds to pay for the services and presumably those funds will continue to be voted. The government, on the other hand, can charge a fee for the provision of the service and thereby recoup the costs of the provision of the service and use the money presumably voted by Parliament for other similar purposes, such as enhancing other departmental programs and facilities that come under the same vote as authorized by the House.
I think it is important that Canadians realize that this House is losing power because of the actions of the government in proposing this bill and assuming for itself certain additional powers.
In my submission this amounts to taxation without representation. It is a subject that led to the American revolution, as we all know. It is a subject that is veiy important in a parliamentary democracy, that the elected representatives of the people are the ones that determine who shall pay taxes and on what basis. In other words, all tax bills are required to be introduced here and all taxes can only be raised after a vote of this House, except in cases where we have delegated that authority to the government.
What is happening here is the delegation of authority that submit is beyond reasonable limits. It gives the government far too much authority, more than it had before.
Having said that and having expressed my objection to that-and I will come back to that theme later in my speech-I want to turn to the specific clause that the
February 26, 1991

government has changed. Perhaps the easiest way is to look at the amendment I had proposed.
The words of the amendment that I proposed yesterday, which my hon. colleague, the member for Willow-dale, was so pleased to move on my behalf, requested a change in the wording of the bill and read:
"the service or use of the facility to the user or classes of user who
benefit thereby."
I am quoting the words and I know they sound out of context, but the purpose of the amendment was to ensure that where the government decided to charge a fee for the provision of a service only persons who benefit from the service would be required to pay the fee.
The government has raised an objection to the words of my amendment on the basis that the use of the word benefit is too vague in law and that it could be construed to mean that someone who used the service but was refused the privilege sought by the service would thereby claim not to have benefited and would therefore not have to pay.
I can understand the argument. I know that it is there. I can understand that perhaps the use of the term in law would cause confusion, whereas it was clearly intended that persons who use the service pay whether or not they actually gain in the sense of improving their lot by reason of the use of the service. Charges for the use of the service is clearly what is intended, and I will concede that.
I want to make it clear today in this House as far as I can that the amendment that the government proposed to my amendment, which was ultimately accepted on division by the House yesterday, was intended to cover the situation and ensure that people who use the service pay for it. Whether the benefit actually accrues to the people as a result of their use of the service may not be the criterion. Indeed it is suggested that is not. The user of a service may be charged, but the question of benefit will only be considered in the sense of one having had use, so the charge is to be paid by users.
I hope that that construction of the words which the government amendment contains will be in fact applied in the courts. I realize as a lawyer that the courts are reluctant to look at parliamentary debate as authority for what was intended in an act of Parliament when the
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words are in fact passed. However, if there is any reference in the courts to the use of this section, I hope that recourse will be had to my speech and to the parliamentary secretary's speech. Perhaps he wishes to clarify the point if I have misconstrued what he has said.
I would also refer, for the assistance of the courts, to the words uttered before the legislative committee that considered this bill. The person who was making the statements was the deputy comptroller general, Mr. McCrindell, on Tuesday, December 11, before the legislative committee on Bill C-91. In his statement he said the following as reported at page 1-15 of the transcript of the committee's proceedings:
When setting fees, program objectives and the effect on users and other directly affected parties are major considerations. The over-all objective will be to achieve greater equity in the financing of governmental activities by shifting the burden from taxpayers in general to those who benefit directly.
I stress the use of his words "benefit directly", which are not now in the bill because of the difficult construction of the word benefit in the English language. I hope when the matter comes before a court that the words used in the act will be construed very carefully to ensure that persons who do not benefit from the provision of a service-and I again use the word in its normal sense- are not charged for that service. Clearly that is not the intention of the government as stated by the deputy comptroller general in his statement to the legislative committee which we have attempted to put into this legislation by specific amendment.
There is one other item which I think has to be examined. We have not dealt with it in the House. I know we have now completed consideration of the amendments. They have been adopted in the bill. However, there is another item that was not included in the government's bill which is very important. Since this is an opportunity to amend the Financial Administration Act, I think it is one that we should look at in Parliament as something that should have been included in this bill. I refer to section 30 of the act which deals with the use of special Governor General's warrants.
I have dealt with this subject in Parliament before. I feel constrained to do it again today because the government has missed an opportunity to correct what I think is a serious flaw in our law. I do not think the flaw is actually in the law. I think it is in the government's

February 26, 1991
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construction of the law and its use, or should I say abuse, of the system that is in place.
Perhaps I could review for hon. members for a moment the substance of our system of financial control which is, after all, the root of the powers of this House. It is a matter that led to the execution of a king in the United Kingdom. It is a matter that goes to the very root of parliamentary democracy. That fundamental principle is that there are no supplies or moneys granted to the government without the consent of this House. That is embodied in the legislation, in the Canadian Constitution. It is known that all Estimates must be voted first by the House of Commons. It is specified to be so in the Constitution of Canada. We know that supplies are voted by this House based on the Estimates which the government tables in this House. We are expecting a new set of Estimates on Thursday of this week, as I understand it, for the coming financial year.
In the 1988-1989 financial year and the 1989-90 financial year things were a bit different. Members will recall there was an election in November 1988, and the government saw fit to recall Parliament for two weeks in December. It discussed only one item of business, really, and that was the free trade deal. Rather than call Parliament back in the new year to vote supplies to complete the financial year, the government saw fit first of all to use a special Governor General's warrant pursuant to section 30 of the Financial Administration Act. That is exactly what they did on January 19, 1989. It got the Governor General to sign one of these special warrants authorizing the expenditure of $80 million from the public Treasury without a vote in Parliament.
Then on February 16, it did it again for $507 million without a vote in Parliament. The financial year, as we all know, comes to an end on March 31. In other words, it cleaned up the work of the old financial year but to avoid the difficulty of having to meet the House and get supplies voted, it then prorogued Parliament. Parliament was then in session but not actually sitting because it was adjourned. Rather than face any further difficulty, it prorogued Parliament and set a date for recall on April 3 or April 4, 1989. I have forgotten the exact date. That was into the new financial year. It had to have money to
operate for the first few months of the financial year and Parliament would not be able to vote money right away. That would take a few weeks. Instead of calling us back in March, as it should have done so that this could all have been dealt with, it waited until April 3 or April 4. On April 1, April Fool's Day, it went to the Governor General and got another warrant, this time for $6 billion. It was $6,175,011,778 to be precise.
It took that money and ran the government until Parliament got an interim supply bill passed in, I believe it was May 1989.


An hon. member:: Shameful.


Peter Andrew Stewart Milliken: It was shameful. I am glad the hon. member for Bonavista-Trinity-Conception recognizes that, because really what happened here was the first abuse ever of these special warrants.
It was the first time these special warrants had been used between sessions of Parliament, except for one isolated case in the early part of this century when there was some problem with the roof of this building.
I want to turn to section 30 of the act, and I want to stress the words of this section. It says:
Where a payment is urgently required for the public good when
Parliament is not in session -
When it is "urgently required for the public good". There was nothing urgent about these payments in this case. Parliament could have been recalled to deal with them. In every case these were payments for the general operation of the Government of Canada.
It was not a war situation where there was an emergency. It was not a case of government buildings falling down that needed immediate and urgent repair. It was not a case of a catastrophic event occurring in some part of Canada.
This was a case of a government unwilling to face the elected representatives of the people in this House. It was unwilling to come back and have us consider the question of the Supplementary Estimates or the Main Estimates. It simply said: "We will help ourselves by special warrant to this money." Never before had section 30 of the Financial Administration Act been so abused.
February 26, 1991

I have raised this issue in the House under questions of privilege. The Speaker has made rulings, and I recognize that we seem powerless to effect a change in that respect.
However, as MPs we do have some power to change the Financial Administration Act. I am disappointed that the government in introducing a substantial revision of this act as the parliamentary secretary has called it-and I agree with him that it is-would not have taken the opportunity to correct what is a glaring problem with the act if the government's interpretation of the act is accepted.
It has clearly been accepted for certain purposes, at least limited purposes, by the House because there is nothing else we can do as a minority in this House to object to this interpretation. However, I think it is an opportunity that the government might have taken up to make the amendment. I would have been glad to move it. But for the record I want it clear that such an amendment would have been out of order because it amended a section of the act that was untouched by the government's own bill.
I was instructed accordingly that the amendment would have been out of order had I attempted to move it. I have on the Order Paper a bill to amend the Financial Administration Act to prevent that kind of abuse, Bill C-211. I know I indicated my enthusiasm to the parliamentary secretary to ensure that that bill be incorporated as an amendment to Bill C-91, but apparently it was out of order and that could not be accomplished without unanimous consent. That was not forthcoming.
The difficulty is compounded in this case, in my submission, by one other little example of government arrogance. The government is required, under section 30, having used special Governor General's warrants, to make a report to the House. In accordance with the act, the government duly tabled a statement on special Governor General's warrants. In fact it tabled two: one for its use of the warrants in 1988-89 and one for its use of the warrants in 1989-90.
In the case of the 1989 financial year, that is the one ending March 31, 1989, there had already been laid before Parliament the Main Estimates which had been approved by the House, I believe in June 1988, although I was not here. Then there were some Supplementary Estimates tabled in the December session. Then another
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set of Estimates, apparently Supplementary Estimates (C), were subsequently prepared but never tabled in Parliament.
They were referred to in the report that the government House leader, I believe it was at the time, tabled in respect of the use of the special government warrants. This happens to be Sessional Paper 342-1/258. The references in the opening summary where the portions of money not actually voted by the House are listed refer to a document as Supplementary Estimates (C), not tabled. Subsequent to the tabling of this document, one of the standing committees of this House conducted hearings in respect of the uses of these warrants. I may say that I had an opportunity at that committee to ask questions of the public servants who were responsible for the preparation of the special warrants and who obviously had something to do with the preparation of the supplementary estimates.
I asked at the committee hearing that copies of the Supplementary Estimates C referred to in the report be made available to members of Parliament. The witness before the committee on that occasion indicated that he would look into the matter and report.
Apparently he did report to the chairman of the committee and the reply that he sent to the chairman of the committee in June, 1989, which unfortunately did not get into my hands until I had sent some further correspondence on this in January of this year, indicated that, and I quote from the letter to Mr. Turner, the chairman of the consumer and corporate affairs committee: "I am advised that such a document, not having been tabled, constitutes a draft prepared only for the consideration of ministers and as such cannot be released".
That is where the matter was left. The document could not be released because, although it was Supplementary Estimates C, it was prepared in draft for tabling in Parliament had Parliament, in fact, been called to meet.
Although Supplementary Estimates C were referred to in the report we are not allowed to see them.
Why the secrecy? Why would the government seek to deny the production of these documents to Parliament? This is the body that is supposed to deal with the granting of moneys to the government for its purposes, yet it will

February 26, 1991
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not make those purposes clear in this House by presenting this document.
Surely it was a reasonable request that those draft supplementary estimates be made available. Of course they were draft. Everybody knew that. But why is the government seeking to conceal those supplementary estimates from us in this House? I think it is a question that might be asked. We should have an answer.
I realize that, strictly speaking, this provision is not in the bill. It has not been dealt with in the bill, but it is an omission from the bill. It is an omission on the part of the government to table these documents. It is an omission on the part of the government to deal honestly and cleanly with this House in telling us what it wants the funds for because the purposes are contained in the estimates. That is where they are supposed to be and that should surely be made available to members of Parliament, even if we did not get a chance to vote on the provision of the money. That was taken away by the use, or misuse in this case, in my submission of Section 30 of the Financial Administration Act.
It is my submission that having looked at the abuse of this act, it is not surprising that we have had a change in attitude on the part of the public toward politicians and toward members of this House in general. I have here-


Mr. Reid:: I have a hundred letters on it.


Peter Andrew Stewart Milliken: Yes, I get a lot of letters on it, too. I am glad the hon. member for St. John's East agrees.
I have here a quotation I would like to read from a recent article by Andrew Love who is a student at Queen's University in my constituency.. It appeared in the most recent publication of Policy Options magazine for January, 1991. On page 22 of his article Mr. Love makes the following statement. I will refer to the dates in a moment, but hon. members might want to hear about these dates:
Consistently over the last decade, Canadians have voiced an ominous degree of resentment against what they consider impersonal and inefficient intrusions by the state in their lives. The most recent Decima Quarterly Report on Public Affairs Trends reaffirms that, due to overt cynicism towards public programs, Canadians are becoming more self-reliant and are rejecting institutional and collectivist options. Close to 60 per cent of Canadians feel politicians are unprincipled, up from 28 per cent in 1980; and 81 per cent think politicians are more concerned with money than with people, up from 53 per cent in 1980. More seriously, only 32 per cent of the
respondents thought that politicians were competent, down from 57
per cent in 1980.
From a partisan perspective, it is easy to understand why there has been this loss of confidence, given the actions of this government for the last six years. You will notice the date of the early figures is 1980. Things were a little bit different then.
Now we are faced with a government that, frankly, has disappointed Canadians in so many respects that it is hard to imagine they have the gall to continue without calling an election and proceeding as suggested by the leader of my party a week ago.
The hon. member for St. John's East thinks that I am nervous about the prospect of an election. I want to assure him that that is not so, but it is he that is nervous about the prospect of an election because he knows, as my colleague from Bonavista-Trinity-Conception can tell him, that the Conservative Party is down at 6 per cent, 6 per cent in the maritime provinces including Newfoundland. I am sorry, 8 per cent. They are even lower than the prime rate in the maritimes and the hon. member from St. John's East knows perfectly well that if there was an election tomorrow he would be down the tubes with his colleague from St. John's West.


Guy St-Julien: I have 100 per cent in my region.


Peter Andrew Stewart Milliken: I don't doubt it. He has 100 per cent in Abitibi. That's great. In Kingston the figures are quite different, I can assure you.

We have a case here of complete loss of confidence and I suggest to the parliamentary secretary and to the ministers, if any of them were here, to listen, that part of the reason for that failure is the fact that the financial administration of Canada, through the use of these warrants and so on, has been fiddled with by the government. People are untrusting of a government that abandons established procedures, changes the arrangements for the protection of the public from the misuse of public funds and fails to come clean with Parliament in its financial dealings.
If there is any place where the government ought to be making clear what it is doing, being honest and forthright in its management of public funds, it is in this House. It is in this place that we are charged with an onerous

responsibility of ensuring that the government is acting properly and of bringing the government to account if it fails to do so.
We, as members of the opposition, are crippled in our efforts to do that if full and complete financial information and estimates and so on are denied to the House.
Here we have a case where Supplementary Estimates (C), which were in draft have never made available. Here we have a case where the government, instead of calling Parliament and dealing with estimates in the usual way, chose to carry on in an unprecedented manner and help itself to the public treasury of Canada by special Governor General's warrants.
I have no trouble mentioning what I have said. The hon. member knows full well that what I have said is correct. He knows that the government did this in a way that was completely unprecedented. I suggest to him it was wrong and the government knew it was wrong. They chose to do it because they had no interest in facing the music that they would have to face in this House. They would have to face Question Period. They would have to face members making speeches on subjects that they did not want to hear about. So they sent Parliament away and said, "never mind, we will just take our money by special Governor General's warrants." The hon. member knows that is correct. He knows that what I am saying is true and if he looked at the record in a non-biased way, he would see that he would agree with me.
What we have here is a case of a floundering government that has failed to deliver on its promises and which has caused this loss of confidence, documented by Mr. Love in the article. I urge hon. members opposite to read it and, perhaps, they could appreciate the position that I have taken in respect to this bill.
To recapitulate then, I have three points. The bill is unfair in that it takes away from Parliament the right to impose taxes on the people. That is a fundamental right of this House and the government is taking additional powers from this House by this bill and in that respect, and particularly in respect of section 6, I believe that is wrong.
We have tried to get some safeguards in it. The amendments that the parliamentary secretary has proposed to mine in which I have improved the bill in my view may help. But we can only hope that they will be
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construed in the way that it was intended they be when the bill, as it will undoubtedly be, is challenged in a court in Canada.
Second, the omission from the bill of the amendments to change the provisions aimed at special Governor General's warrants which would have stopped their use between sessions of Parliament in my view is a serious omission. Had the parliamentary secretary and his minister-who I am sorry is not here to hear my comments- got together and tackled this problem squarely, they would have realized that it would have restored some confidence in politicians, in this House and in its members.
Had they said: "We will in fact agree to such a restriction on our actions; we will come back to Parliament in future to get our money and stop dishing out the treasury to ourselves by the use of these warrants; we will come up with some amendment that will allow us to use them only in emergency situations, which was exactly the intention of the act", instead of acting as they have in violation of that act. I think we would have felt better about this bill, the public would have felt that perhaps things were not as bad as are shown in these polls, and we would have enhanced the reputation of the members of the House and the government.
I do not like to see the government always looking bad. I would prefer to see it look good and that is why we are here. It may look as though often times our criticisms are always negative, but they are intended to improve the government's performance.
The hon. member for St. John's East should be rejoicing in the fact that we try-


Mr. Duhamel:: He is. Look at his smile.


Peter Andrew Stewart Milliken: I notice he is smiling-try to enhance the performance of his government because if it is not improved considerably, and I mean perhaps more than we could reasonably expect, his chances of re-election are so slight that I can only sympathize with his plight.
I say in conclusion, we have a bill here that could have been improved in two particular areas. I am sorry that the government has acceded in part to one but failed to act at all in the other. Accordingly, we will be voting against this particular legislation for those reasons,

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although some of the initial clauses in the bill that deal with regular and normal administrative matters are sensible and wise. We feel that the omission and the one failure to correct the amendment that I had proposed, are insufficient to bring us to vote in favour of this particular legislation.


Ms. Margaret Mitchell (Vancouver East):: Mr. Speaker, I am pleased to have an opportunity to speak for a short while to this bill. I must say that Bill C-91 certainly took me by surprise when I was looking into the subtleties of how this would affect a number of things in my riding of Vancouver East, and in the country generally. I am sure that Canadians -and particularly Canadians in some of the industries that are directly affected and the workers that are directly affected-probably are not aware of the very negative and yet subtle changes that are being brought in in this bill.
I refer of course to the authority that is given under Bill C-91, an act to amend the Financial Administration Act of Canada. It gives authority to the cabinet to impose and increase user fees in a whole range of public services in Canada, services that the public has come to expect, and should expect, as their right and that should be paid for out of the general revenues by all of us who are taxpayers and should not be subject to user fees.
It is not surprising that this government is using this sneaky negative approach to get money out of people and they are imposing a marketplace approach so that people, regardless of their incomes, and corporations and businesses, regardless of their financial position, will be forced to pay user fees for services that they have rightfully expected to be public services and that should be available to them, regardless of income.
I think it is a very important principle of Canadian life and Canadian society. It is a principle that this Conservative government has continued to erode while they have been in power. It was bad enough under the Liberals, but it is becoming even worse under the present government.
Bill C-91 enables the federal cabinet to impose charges against users of government services without coming back to Parliament for parliamentary debate. They can do it in camera, in privacy of cabinet with no hearings or consultations with the people who would be
directly affected by these increased charges and, of course, with none of the committee process that we feel is very important when new measures are adopted. So in my view, it is a very dangerous bill. It gives the cabinet the chance to increase user fees which may seem to be token fees at this point in some cases, but I am sure will be increased under this budget and will continue to be increased with no public reference at all by the will of cabinet.
I would like to just take two or three examples. The more I thought about this and did a little bit of consultation into matters that I have a particular interest in and people on the west coast have a particular interest in, and I refer particularly to the Canadian shipping industry and also the shipbuilding industry.
I also would like to note that this reference to cabinet secrecy in imposing fees would mean that they could impose it on a whole range of social programs: health care, hospital care and certainly on rights of citizens. We already have user fees, for example, on applications for landed immigrant status, for passports, for taking out citizenship; things that have been the rights of Canadians and should still be the rights of Canadians. We should not be putting a monetary charge on them, they should be part of the services of Canada paid for out of general tax revenues.
I would like to concentrate first of all on the question of the shipbuilding industry. We know, of course, that the Canadian shipping industry is under attack from all sides, as is the shipbuilding industry itself. The government seems bent on destroying this industry.
I have been appalled, when I recall prior to the 1984 election, to when the Conservative platform said they were going to do so much to enhance and restore shipbuilding in Canada. They had what looked like a fairly good program that was part of their election platform at that time. They have gone on to do none of the things they promised and, in fact, step after step have eroded the industry, undermined it and removed the kind of essential subsidies necessary for any shipbuilding in a progressive and western country. I refer especially, of course, to the removal of all subsidies for shipbuilding that other countries know are essential if we are going to have a national shipbuilding program.

Second, of course, from a west coast point of view, the betrayal we felt and still feel because of the cancellation of the Polar 8. It is interesting to look back and see that the cost of the Polar 8 which would have been used to service our north in a peaceful way, to all of the community services in the north as well as act as an ice-breaker, was turned down. Yet, we have been able to find many more millions of dollars than that would have cost to conduct a war in the gulf. One wonders where our sense of values are in this.
I am told that the cancellation of the Polar 8 has already resulted in massive lay-offs of workers which could total up to 350 more workers, unless the government does something about this.
There has also been no assistance to the shipyards, which have been hit hard and many workers have been laid off. I know in the greater Vancouver shipyards have closed down as a result of this or they have had to curtail their operations and many workers have been laid off.
In the government policy on shipbuilding, and again I refer back to the negative impacts of Bill C-91. We have to remember also that the government has been really unfair in the allocation of contracts for the building, repair and refit of Canadian ships.
I would like to refer to a document I have here called: The Federal Government Response to the British Columbia Shipbuilding Action Group, dated February 1991.
The B.C. Shipbuilding Action Group proposed a number of amendments and stressed a number of problems. One of the things they documented was the unfair allocation of contracts that we have in Canada- the Coast Guard ships, the repair, refit and building of Coast Guard ships, icebreakers and naval vessels.
As you know, most of these contracts go to eastern and central Canada and it is, as is proposed in this brief to the government, essential that there be a fairer policy and that the shipbuilding needs, technology and facilities on the west coast be considered as well.
We know also, and this brief stresses it again, that there have been impacts from the free trade agreement on shipyards. This has certainly put B.C. shipyards at an unfair advantage. There is a need for a review of the tariffs on repair and maintenance of vessels. This bill, of
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course, will add a further hardship and penalties to shipping and to shipbuilding industries. They already, of course, are charged user fees for Coast Guard services, for government wharfs, and for the use of many government services. The use of government facilities for cranes to move containers is another area.
Under this bill not only will the present user fees not be removed, but they will be increased quietly with no public notice and with no chance for the public to appeal them or even be heard as to their impact on an industry that already is suffering greatly and finding it difficult to compete with the American ports and the American shipping companies.
Bill C-91 means that the cabinet will make decisions in camera and that it will undoubtedly increase user fees for government facilities and equipment. There is particular concern about the effect on the competition of the port of Vancouver, for example, with the ports of Seattle and Tacoma.
It will also mean added costs for cruise ships in particular. There is a large trade related to cruise ships which stop in Vancouver, and a lot of spin-off business. The cruise ship companies have already complained about the heavy tariffs charged by the Canadian government which risk discouraging their use of Canadian ports. Increased user fees for facilities, which in turn will be passed along to the cruise ships, are enough to perhaps tip the scale and there is concern about the loss of this extra trade in the Vancouver region. I am sure the same thing applies to east coast ports as well.
I would like to take a minute to quote the concerns expressed by the Chamber of Shipping of B.C. regarding Bill C-91. The Chamber of Shipping of British Columbia has a membership of 50 locally based companies, the majority of international shipping companies that serve the B.C. coast and ports. They provide the link for efficient movement of western Canadian resources and goods to overseas markets and are essential to the entire economy of Canada.
The Chamber in a letter of January 28 to the Hon. Michael Wilson states that it has a great sense of urgency to draw attention to the proposed changes of the Financial Administration Act under Bill C-91, which enables the federal government to exercise the imposition of charges against users of government services

February 26, 1991
Government Orders
without parliamentary debate. It goes on to mention a number of ways the increase in user fees and proposed charges will affect domestic and international shipping under the cost recovery program. It anticipates that this is just the beginning of the escalation of these costs, which will have a very negative effect on the industry. The letter states, and I quote:
We fear that unchecked imposition of charges against shipping, could well pyramid to a degree that will strangle the ports on both coasts of Canada. Shipping and trade is a major part of the Canadian Gross National Product and diversion of cargoes by United States ports can become a real threat if costs continue to escalate.
Our industry now pays one hundred per cent of the Pilotage costs on the west coast, plus about one hundred and twenty per cent of the costs of running the Vancouver Port Corporation and the Prince Rupert Port Corporation, et cetera.
We feel strongly that authority to levy additional taxes against shipping by way of "User Fees" should be dealt with by Parliament and not by Cabinet without debate.
There you have it. Our party agrees very strongly with the position that the Chamber of Shipping of B.C. has taken. We are very concerned, not only with the present user fees that are being charged, but the authority that is given to cabinet to continue to add to these costs.
We implore the government to give consideration to this. It is not too late. We are at third reading of this bill, and we would like to see this bill delayed until it can be reconsidered.
In view of the philosophy of this bill, it is with great trepidation that we think of what is going to be in the budget today, or even what is not in the budget but what is going to happen despite the budget.
We may see that, for example, there are not drastic cuts in some of these areas, but drastic increases in user fees to increase revenue can be just as devastating to industries and to workers who are being laid off from essential industries.
There are many other areas that will be affected by the increase in user fees and the authority that is given to the cabinet to do this without any reference to Parliament.
For example, in my own critic area of multiculturalism and citizenship, particularly citizenship and immigration, it used to be that Canadian citizenship was regarded as a
right. That is, of course, what it should be. It should be a right in Canada.
We should not have to buy citizenship in Canada. We should not have to buy a passport. Surely, being able to obtain a passport is a right. Now, of course-this is just the beginning-we have to pay $25 for a passport.
If a person is applying for citizenship after they have been here three years, if a new immigrant is applying for citizenship he or she has to pay a user fee again to apply for this citizenship, instead of being welcomed by Canada.
What kind of a message does this give to new Canadians who have settled in our land? I spent the last month in my riding dealing with immigrant cases, the very desperate situations of many immigrants-particularly refugees-who have no medical coverage, no money to survive on and who are desperately afraid of their future and who are feeling very insecure.
When these people try to apply for landed immigrant status, even the beginning of the process, even though they may be turned down later, they have to find $250. Undoubtedly, that is going to go up under this bill.
You may laugh on the Conservative side about this, but I am telling you that there are people in my riding who want so much to be in Canada that they will be giving up food for their kids in order to try to find $250 which this government is charging for the right of residency in Canada.
I think that is appalling. It really defeats everything that we care about in Canada as far as the rights of citizenship are concerned.
I could go on and on, and I am sure my colleagues will, about what this means for the erosion of medicare. We already know what has been done to erode transfer payments to the provinces, both under the Canada Assistance Plan and the Canada Health Act.
This government is already eroding health care and basic social services in this country.
Now, we know that the cabinet can go ahead and approve user fees for services for hospitals and for other health care services. Is this the kind of Canada that we
February 26, 1991

want? The Health Care Act says that there is supposed to be accessibility and universal access to health care.
Yet, it is obvious that quietly-and we do not want it to be quiet, we are going to keep screaming about this-this government is undermining the whole principle of universality, equal access, accessibility, and transferability between provinces, because it is allowing provinces to charge user fees.
I will conclude at this point. I just want to say again that I think Canadians are unaware of the implications of this bill. It is a very dangerous erosion of the very principles of Canadian citizenship. The whole question of the cabinet having authority to charge user fees for essential public services, which our country has regarded as the rights of citizens that should be paid for by the income tax we all pay and tax revenues, is a disgrace. We are very much opposed to this bill.


Guy St-Julien: Mr. Speaker, I understand that this bill is intended to help the government manage its finances more effectively and to help reduce the deficit.
In 1987, the federal government made similar proposals in Bill C-75. Today's policy proposal is very much the same, i.e. cost recovery in the marine and air transportation sectors. Mr. Speaker, instead of opting for additional charges, the federal government should consider implementing recent recommendations by the Auditor General of Canada, which suggested cutting costs and privatizing certain services to save money, instead of introducing additional charges.
Mr. Speaker, I also would like to point out that transportation should be considered within the global and intermodal context, instead of selecting specific sectors such as marine and air transportation. Railway and highway transportation are also very important.
Another aspect that should be considered is our national transportation policy as stated in Section 3 of the National Transportation Act. As I see it, the proposed fee schedule goes against certain elements of this policy. That is particularly true when we read that fares, rates and conditions set by each carrier or mode of
Government Orders
transportation shall not constitute an undue obstacle to the interchange of commodities between points in Canada. I must say the timing is very poor, now that shippers are being affected by the recession, soaring gas prices and the crisis in the Persian Gulf.
Mr. Speaker, they now want to charge overhead costs for the use of certain airports in remote areas in Quebec. This will hurt Abitibi and northern Quebec, where the price of a plane ticket will go up considerably.
Mr. Speaker, I received a letter from lawyer Jean Roberge with the Quebec mining association, who wrote the following to the Department of Transport: "In fact, cost recovery will mean increased costs for companies, which we will not be able to recover from customers who can find other suppliers on the international market. In Quebec, the expected cost increase would be at least 15 per cent on top of marine shipping costs of totalling at least 12 million. At this rate, Quebec companies will find it even harder to remain competitive.
The department explained that the cost recovery policy was developed in a spirit of fairness and efficiency. We disagree. We do not think it is fair to apply maximum distances of 300 nautical miles in Quebec, while other ports on our country's coasts are allowed a number well below those 300 nautical miles.
Mr. Roberge went on to say: "The proposed rates will cause considerable harm to the Canadian economy, especially in the primary sector. Canada and Quebec, which rank among the world's major suppliers of minerals and metals, may find their position will start to erode considerably". Those were comments made by Mr. Roberge of the Quebec mining association.
Mr. Speaker, in concluding, I would like to say that the federal Minister of Transport should consider the recommendations made by the Quebec mining association, the Quebec Minister of Transport and my own recommendations, to ensure that Quebec's and Canada's remote regions, as well as central regions like the Port of Quebec and the Port of Montreal, are not penalized by this bill.


The Acting Speaker (Mr. DeBlois):: Questions and comments. Resuming debate. The hon. member for Gander-Grand Falls.

February 26, 1991
Government Orders


Mr. George S. Baker (Gander-Grand Falls):: Mr. Speaker, I will try to keep this very short. In fact, I should be able to finish my comment in about five minutes.
It is to present a matter of great concern to me, and to Canadians if they knew what was in the bill. The Financial Administration Act is used not only to levy fees and make charges in this bill, but also to introduce a new element into our legislation.
This new element affects all moneys owed to the Receiver General of Canada-and there is no other way under our legislation to write a cheque to the Government of Canada except to write it to the Receiver General of Canada. All of our legislation that has been passed in this Chamber ever since Confederation, every bit of it, contains regulations that spell out how money is to be recovered by the Government of Canada when it is due to the Government of Canada.
The bill that is being passed here today brings a new element into the picture. The new element is found in a new clause in this legislation called clause 17.1. It brings into play, for the first time in our history, the words "collection agency". The words "collection agency" are defined as a member of the legal profession or as a collector of debts registered within a province.
All of our legislation and regulations that contain provisions whereby somebody can pay back money over a period of time, and each part of our regulations, at least most of them, have a limitation on the collection of debts.
The Unemployment Insurance Act has a limitation of three years, unless it is fraud and then it is six years. The collection of debts relating to the Department of Finance or National Revenue, in the case of somebody who owes money to the Receiver General of Canada for the advanced child tax credit, should never be collected.
People owe that advance because they suffered a tragedy that caused their children to be absent from their homes in the month of Januaiy of this year. The legislation we passed in this Chamber in 1988 said that in order to qualify for the advanced child tax credit you had to be a resident in that home and receive family allowance for the following January. Some of the reasons for this absence, most of them disastrous, were fire in the
home, family break up, or a death in the home. Sometimes the children were in foster homes. Women, mostly, are now told this month that they have to pay back $2,000 or $3,000 to the Government of Canada.
In the regulations of the Family Allowance Act it is spelled out how that money is to be collected. It is collected by taking the GST credit or the federal tax credit or family allowances over a period of time. Some of these widows who experienced the disaster of fire or death in the home in the month of Januaiy owe $4,000 or $5,000.
Now all of those regulations go out the window. All of those Acts of Parliament go out the window. All of those accepted, humane methods of collecting money-and if you do not collect it then you do not get it-now go out the window with the introduction of the collection agency. This is the collection agency bill of the Government of Canada.
The only thing that I can surmise from this is that the Government of Canada is suggesting that perhaps the occupation of the future is going to be with collection agencies. It is a terrible change to our legislation. The Government of Canada should rethink it or not use it when this act is passed.


Ron J. Duhamel: Mr. Speaker, I would like to remind our viewers that Bill C-91, of course, is a bill that deals with the administration of public moneys.

-the management of public funds and finances. [English]
I wanted to make three points and ask my colleague to react if he would, please.
Our colleague, the member of Parliament for Kingston and the Islands, indicated to the government that this was a good opportunity, if it chose to do so, to correct this special warrants concern he has raised a number of times in Parliament, that is where the government uses special warrants in order to use public funds without referring to Parliament. I am wondering whether or not he would choose, subsequent to my other questions, to comment on that.
February 26, 1991

The user fees issues is of course one of great concern to me because it is in a sense a camouflage tax. It is a hidden tax. It is an undeclared tax. Many of us will know that the government has introduced 33 tax increases since it came into power in 1984, including the goods and services tax, but no one has really looked at the number of undeclared taxes through user fees.
This is interesting, because if one looks at the public accounts one notes that the government was receiving in 1984 in revenue $70 billion per year. Now it exceeds $120 billion. There has been over a $50 billion increase in the "regular tax increases" of the 33 increases I have mentioned. How many other dollars are there in these hidden kinds of taxes? Is this not perhaps a less than on the table approach to taxation?
I have a number of concerns, being from western Canada, from Manitoba. I have heard colleagues in the House refer to the possible introduction of user fees in health and education, but they have also mentioned shipping and other modes of transportation such as airport and air transportation, transportation by trucks and other modes. They have also mentioned the possibility that user fees be introduced in agriculture, in mining, in communications and in forestry, and I will stop there.
What are the implications for western Canada-all Canada, obviously-where relatively speaking there is a fairly small population base and where the communities are dispersed, small, and frequently very far from each other. I would like to have a comment on that.
I would also like to complete my remarks by asking the following question.

I think it is clear the government should correct the deficiencies I just mentioned as, well as others identified by my colleagues, before proceeding with this bill.


George Baker: Mr. Speaker, if I understand the hon. gentleman's question, that they will have to correct deficiencies that are presently in place before this bill can work, I have to agree completely with the hon.
Government Orders
gentleman and highlight the following example from this particular piece of legislation.
I refer specifically to section 29.1 in a new clause of this bill, which states:
A department may, in respect of its approved programs or authorized expenditures, be authorized by an appropriation Act-to expend revenues that it receives in a fiscal year through the conduct of its operations to offset expenditures that it incurs in the fiscal year;
The hon. members who are close to me from Moncton, New Brunswick, know that at this very moment air traffic controllers are holding negotiations with the Government of Canada to talk about wages. If this were correct, it would mean that air traffic controllers in Moncton, New Brunswick-the two members from New Brunswick next to me know exactly what I am about to say-and in Gander, Newfoundland and those air traffic control centres are making a profit for the Government of Canada. They charge air traffic control in this country, in case hon. members are not aware, for every initial contact made on a foreign carrier that goes across the Atlantic from Europe or from Africa or from the Soviet Union. Each initial contact costs that foreign carrier at least $150 per initial contact because of the service provided by air traffic control. But what happens to that money: $150 per initial contact? At about 500 contacts a day, that is about $25 million. Where does that money go?


An hon. member:: A month?


George Baker: That is about $25 million, give or take $4 or $5 million. Where does that money go? That money goes into the Consolidated Revenue Fund.
What we have in this bill, as the hon. member just pointed out, is a big fib. The money that goes into the Consolidated Revenue Fund of the Government of Canada is not credited to air traffic control, or we would not have the disputes in air traffic control in this country of not paying adequate compensation, of having to hire air traffic controllers from the United States to come up here, air traffic controllers who were laid off or fired eight years ago by the United States. We are not training enough in this country today, while they make millions and millions of dollars for the Consolidated Revenue Fund of the Government of Canada.

February 26, 1991
The Budget
This bill which says the department can use whatever revenues it generates in the expenditures within its department is not correct. I cannot use the word lie, so I had to say it is just a fib in the legislation.


Iain Francis Angus: Mr. Speaker, I realize it is very difficult for you to hear, given the volume of the background noise in the House today as we are awaiting the budget.
In the few minutes I have available, I realize that I will not be able to do more than just start my remarks. One of the reasons we are continuing to debate Bill C-91, when it was thought that it was going to pass very easily, that it was only housekeeping measures, is that it was discovered that there is a key clause in the legislation that would allow the government wide-open latitude to charge user fees, to impose new, almost tax regimes on the various components of the government operation.
One in particular is that of the Minister of Transport in terms of the marine industry. Many of us in this House are concerned about its long-term viability. In fact, we are concerned about the short-term viability of the maritime industry, whether it be on the west coast of B.C., the Great Lakes, the St. Lawrence River or the east coast.
This legislation if passed in its current form, particularly clause 6, will make it more difficult for a lot of our industry to survive. In doing so, it will also make it more expensive for many sectors of our economy-the grain sector, the iron ore sector, the coal sector, the potash sector, the forest industry, all of which must rely on at some point in time the shipment of their goods by ships whether it is domestically or internationally. This particular clause 6 will allow the government, through the Minister of Transport and his policies of cost recovery currently working their way through the system, to put the maritime industry in jeopardy.
We might ask why the government is doing so. Why is this particular clause include in this particular bill?
If I can go back to 1985 and another bill, the amendments to the Canada Shipping Act, the government at that time tried to include in the bill a specific cost recovery clause, clause 4. We successfully defeated that clause. We got the government to withdraw it. Through the back door it is now trying to do with this bill what it
failed to do with with Bill C-75. There seems to be some confusion in the government's own minds as to what is needed. In responding to the maritime ministry, the Minister of Transport and the President of Treasury Board say that they currently have the legislative authority to enact user pay.
In a letter dated December 17,1990 to the President of the Treasury Board, the Minister of Transport said the following: "It is my understanding that no new legislative authority is necessary to permit implementation of the department's proposals should it be decided in due course to do so. In the opinion of the Department of Justice, the existing section 19 of the FAA provides a sufficient legal foundation".
The question I must ask is: If they do not need it today, why did they feel they needed it back in 1985 under Bill C-75, the amendments to the Canada Shipping Act?
The government really needs this particular clause in order to have a solid legal basis for implementing the cost recovery measures currently being proposed by the Government of Canada through the Minister of Transport.
It is obvious to me from all the communications I have received from the industry and the communities involved that this particular bill is a serious threat to their economic viability. I indicated yesterday during the clause by clause debate at report stage that the clause should be withdrawn and that we would be quite prepared to proceed to receive third reading as long as that particular clause was deleted from the bill.
I do not know how much time I have left, but perhaps, Mr. Speaker, you might want to call it 4.30.


Mr. Speaker:: It being 4.30 p.m., pursuant to order made on Monday, February 25,1991, the House will now proceed to Ways and Means Motion No. 18.


THE BUDGET
Hon. Michael Wilson (Minister of Finance) moved:: That this House approves in general the budgetary policy of the government.
February 26, 1991

The Budget
He said: Mr. Speaker, my previous budgets have introduced a wide range of fundamental economic and fiscal reforms. Today, I will propose further far-reaching initiatives.
Our policies have been challenging for Canadians and for the government. But they are essential to help our country manage the risks and seize the opportunities of a rapidly changing economic world.
The world economy continues to grow more fiercely competitive. A relentless tide of economic change is having profound effects on people, industries and countries. While the opportunities have increased, so have the risks.
Since my last budget, rising uncertainty has taken a heavy toll on both economic confidence and performance in Canada and around the world.
We have seen international stability shaken by military hostilities in the Persian Gulf and by political upheaval in Eastern Europe and the Soviet Union.

Vital negotiations to open up world trade have encountered serious problems, posing large risks to Canada's trade-oriented economy.
As in a number of other countries including the United States, our economy is now in recession. Many Canadians have lost their jobs; many others have lost confidence in the economic future.

And this is happening at a time when some are questioning the future of Canada itself.
And yet, we must deal with the world as it is, and not as we might wish it to be.
Toward recovery
In difficult times, it is easy to lose perspective as well as confidence. But it is times like this when a clear, realistic perspective is needed to rebuild confidence and to chart a sound, sensible course of recovery.
We must not lose sight of the fact that a strong foundation exists for optimism as we face the major challenges that lie ahead.

Internationally, the vast majority of countries continue to express their powerful, common interest in maintaining a stable world order and in developing more reliable and open economic relationships.
We are a resilient, resourceful country. A stronger, more confident Canada is well within our reach, if we are prepared to work for it.

During the past year, we have made encouraging progress in reducing both inflationary pressures and interest rates. As a result, the prospects are hopeful for an economic recovery beginning in the second half of this year.
But we must also recognize that hope alone will not be enough.
A time for action
This time of uncertainty and risk is also a time for action, at home and abroad, to solve our problems and restore confidence in our future.
Abroad, Canada will continue to play its part in co-operative efforts to provide greater stability in political and economic affairs. As a vital part of this responsibility, we will continue to support the United Nations' effort to restore peace and order in the Persian Gulf.


Some hon. members:: Hear, hear.


Michael Holcombe Wilson: We must and we will provide the men and women of our armed forces with all the support they need to complete this task. We must also be prepared to play a constructive role in the area after hostilities end.
Here at home, we must take further decisive action to move our economy toward early recovery and sustained growth.


RECOVERY, GROWTH AND PROSPERITY
[Stage Direction]
This budget sets out a Plan for Economic Recovery-a strong, confident recovery that not only puts the recession behind us but leads us forward to continuing growth and renewed prosperity.
[Stage Direction]
February 26, 1991
The Budget
Our priority is action to create the essential conditions for recovery. Ours is not a plan for increased spending. That approach has been tried in the past and failed.
Some hon. members:: Hear, hear.


Michael Holcombe Wilson: The key to recovery is lower interest rates. The Plan for Economic Recovery will bring about lower interest rates through the following actions:
We will set out clear, achievable inflation targets. Inflation will be reduced to 2 per cent by mid-decade.


Some hon. members:: Hear, hear.


Michael Holcombe Wilson: The result of lower inflation will be lower interest rates.
We will put government finances firmly on the course to a balanced budget. We will remove the build-up of the public debt as a source of inflationary concern.
The Expenditure Control Plan announced in the 1990 budget will be extended.
The government will legislate mandatory program spending limits.
We will establish a Debt Servicing and Reduction Fund solely dedicated to offsetting the costs of the public debt. By law, all revenues from the Goods and Services Thx and from privatization will flow into this fund.


Some hon. members:: Hear, hear.


Michael Holcombe Wilson: We will severely restrain the operations of government. Operating budgets will be frozen at current levels and the wages and salaries of Cabinet Ministers, Members of Parliament, all Order-in-Council appointments, and all federal public servants will be tightly restrained.


Some hon. members:: Hear, hear.


Michael Holcombe Wilson: These measures reflect a fundamental commitment to strong, effective government management and control which will serve Canadians well for years to come.
They will ensure that we achieve key fiscal goals in line with the plan set out in my 1989 and 1990 budgets.
We will eliminate new federal borrowing in financial markets after 1993-94.
We will tightly control spending. Extending the Expenditure Control Plan will limit program spending growth to 3 per cent per year after 1991-92.
We will hold the deficit to $30.5 billion this current year and next.


Some hon. members:: Hear, hear.


Michael Holcombe Wilson: That, Mr. Speaker, is despite the pressures of recession. In 1992-93, with recovery and lower interest rates, the deficit will fall below $25 billion for the first time in a decade.

This budget will result in a better balance between fiscal and monetary policy. It will provide the lower interest rates and greater confidence essential to our economic recovery.
The economy will recover in the second half of this year and grow strongly in 1992.
Restoring economic growth is essential. But we must go beyond recovery to attain our full measure of prosperity. To do this, we must find a way to get Canadians working more effectively together, in a broad national partnership to meet Canada's competitive challenges-a partnership for prosperity.
We must begin by being honest with ourselves about the challenges we face. We must see our problems as they really are.

The fundamental problem is this: our underlying ability to compete in the world marketplace has been falling behind that of our trading partners.
We have seen how living beyond our country's means can lead only to higher inflation, higher interest rates, less investment, lower consumer spending, slower growth and fewer jobs. All this in turn contributes to a growing burden of public debt.
It is easy to point the finger at others: business and labour at government because of the exchange rate, interest rates and taxes; or business at labour because of wage levels; or labour at business because of high executive salaries and bonuses or inadequate training.
February 26, 1991

But shifting the blame will get us nowhere. The problems are caused by us all and the solutions must involve actions and co-operation also by us all. There is too much at stake for anything less than a full, national effort.
The government will take the lead in a major national exercise to bring together the ideas and the efforts of Canadians in all walks of life and from all across our country, to strengthen Canada's ability to prosper in a tough economic world.
Before describing the budget measures in more detail, I want to be very clear about why, in a time of recession, it is necessary to call on Canadians to exercise patience and restraint.


FACING UP TO ECONOMIC REALITY
[Stage Direction]
Without doubt, this is the most difficult of the seven budgets I have presented. Particularly so because of the painful economic circumstances facing Canadians today.
It is clear that the weakness in our economy continued and deepened during the last quarter of 1990. I expect the economy to stabilize by mid-year after a total decline of almost 2.5 per cent in output. The unemployment rate will exceed 10 per cent in the first half of this year and then decline as growth and employment recover.
In the months leading up to this budget, I have talked with, and listened carefully to, people from all across the country. I carried out extensive pre-budget consultations with leaders of organizations representing a variety of business, labour, social and other interests. I hear directly from individual Canadians on a continuing basis, in my visits to various parts of the country, in letters and in many other ways. I have heard the anguish of people who have lost their jobs or their businesses.
While the views that we are hearing on some of the shorter-term policy issues range widely, there is little disagreement on basic issues.
Canadians want a strong, growing economy that provides good jobs and expanding opportunities for themselves and their children. They want a government with the financial means to maintain the essential programs that help to hold this country together.
The Budget
Canadians know that the deficit and the debt are serious problems that must be solved. They know that firm, determined action is needed to solve these problems. And they believe this should be carried out with the least possible adverse impact on those in greatest need.
[Stage Direction]
In designing our Plan for Economic Recovery, I have been mindful of these views. One of the best things we can do to strengthen the unity of our country is to strengthen our economic union and our fiscal position. Our approach also reflects careful sensitivity to the difficulties that many Canadiens are facing today. This is evident in the fact that program expenditures will increase by 6.9 per cent in 1991-92. While this is too high in purely fiscal terms, the reason for the increase can be clearly understood in human terms.
[Stage Direction]
Of a total program spending increase of $7.5 billion, here is where the bulk of the money will go: $3 billion for assistance to the unemployed; $1.6 billion for the elderly; and $1.3 billion for farmers in difficulty.
Some hon. members:: Hear, hear.


Michael Holcombe Wilson: We have also allocated $600 million for national defence to meet increased responsibilities in 1991-92.
These four areas will account for more than 80 per cent of the increase in program spending.
In short, the money is going where it is needed, when it is needed.
At the same time, we have acted to ensure that our medium-term goals will not be compromised, as they must not be if we are to achieve continuing economic growth.
Let there be no doubt: The actions in this budget are tough and they are challenging. And I can assure you that government and the people who work for it will feel the pinch. We will have to give better value for taxpayers' dollars.
*
But Canadians know that finding the solutions to Canada's economic problems will continue to demand the participation and effort of everyone.

February 26, 1991
The Budget
In this budget I am asking Canadians to share the burden of further fiscal restraint. I fully recognize the sacrifices that many Canadians have already made in the name of restraint. I know there will be some reluctance to accept the necessity for more of the same.
In earlier times, periods of economic weakness have been occasions for Ministers of Finance to put some extra money in people's pockets, spend more on programs, and worry less about the government's fiscal situation. But in earlier times, we did not have to face persistently high deficits, high public debt and the economic damage that would result from ignoring these serious problems. Let us not forget that during the last recession, Canada's deficit doubled from $14 billion to $28 billion. We are still struggling with the problems this caused.
Our public debt is forecast to reach $400 billion by mid-year-about $15,000 for every man, woman and child in Canada. The interest alone on the debt will eat up more than $43 billion next year-more than we spend on old age security, unemployment insurance and family allowances combined.

Since coming to office in 1984, the government has waged a long, uphill battle to reduce the deficit and bring the debt under better control. The growth of the debt has been substantially reduced. The deficit, though still too high, has been cut in half as a proportion of our national income.
Throughout this period, many Canadians have become increasingly concerned about what government can do for them, about the value they are getting for their tax dollars.
This is not suprising. In 1984, the federal government was handling out $1.33 in programs and services for every dollar it collected in taxes. That was no bargain.

We are now paying the price, over and over again, for too many years of consuming more government services than we were willing to pay for-and borrowing to make up the difference.
We must get off this treadmill.


Some hon. members:: Hear, hear.


Michael Holcombe Wilson: Decisions made in the 1970s and early 1980s that led to the massive debt of the 1990s have taken away many of the choices that Canadians and their governments might want to make today-choices about supporting priority programs and services or reducing taxes.
In my 1989 budget, I set out a medium-term fiscal plan to sharply reduce the deficit and bring an end to new government borrowing in financial markets by 1994-1995. My 1990 budget reaffirmed this plan and introduced a program of expenditure control to meet it. However, revenues are now lower than forecast, expenditures are higher because of the weak economy and debt charges are substantially higher.
If we did nothing to deal with this worsening fiscal situation, the deficit would be significantly higher than forecast over the next five years and the public debt would increase by at least $25 billion more in the same period. This would aggravate all of the fundamental problems that must be solved if we are to ensure a strong recovery. And if we increased our spending still further, the debt problem would be just that much worse.
Instead of lower inflation and lower interest rates, we would be sowing the seeds of higher inflation, higher interest rates and, unavoidably, higher taxes.
Instead of making more room for productive, job-creating investment, we would be crowding out that investment.
Instead of restoring the government's capacity to do the things Canadians want and need to build a stronger economy and a stronger country, we would be weakening that capacity.
Instead of building greater confidence in Canada's ability to deal with its problems, we would be assaulting that confidence in a direct and irresponsible way.
While the detailed policy choices facing the government are difficult, there is no doubt about the broad course that we must continue to follow. We must stay the course that we set out in 1984 and that we reinforced in 1989.


Some hon. members:: Hear, hear.
February 26, 1991


ACTION FOR RECOVERY AND PROSPERITY
Michael Holcombe Wilson: The first challenge is to ensure that interest rates continue to come down. This is the key to our plan for economic recovery.
We are making real progress in the battle against inflation. As a result, interest rates have declined more than four percentage points since their peak last May. But we must now build a stronger level of certainty that a further easing of monetary conditions can be achieved and sustained.
Restoring the financial stability of government is essential to build that certainty.
Extending the Expenditure Control Plan
Sustained expenditure restraint is the key to deficit reduction and debt control. Government program expenditures must carry the burden of restraint.
In the 1990 budget, the government introduced a two-year Expenditure Control Plan that affected a broad range of government spending, with some important exceptions.
The Expenditure Control Plan will be extended. Exemptions will be continued for income support programs for seniors, families and veterans, unemployment insurance, as well as the equalization program and Canada Assistance Plan payments to lower-income provinces. Indian and Inuit programs will also be exempted.
Under the Expenditure Control Plan:
We will extend the existing 5 per cent cap on the growth of Canada Assistance Plan payments to the fiscally stronger provinces of Ontario, British Columbia and Alberta for three additional years.
The existing freeze on total per capita cash and tax transfers to the provinces under the Established Programs Financing will also continue through 1994-95. These transfers will continue to grow with provincial populations.
A number of other programs will remain frozen, including payments under the Public Utilities Income Tax Transfer Act, payments to Telefilm Canada and concessional loan financing by the Export Development Corporation.
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Science and technology programs and cash payments under Official Development Assistance will grow by 3 per cent per year.
The existing 15 per cent reduction in planned funds for new social housing will continue.
Grants and contributions to businesses, interest groups and individuals will be reduced by $75 million next year and $125 million thereafter.
In summary, programs which are exempt from the extension of the Expenditure Control Plan, accounting for 60 per cent of program spending, will grow at an average annual rate of 3.9 per cent from 1991-92 to 1995-96. All other program spending will grow at an average annual rate of 1.7 per cent.
In view of our difficult fiscal circumstances, the government has decided to reconsider a number of recent decisions.
We will withdraw the previously announced contribution of $88 million to the Toronto Ballet Opera House, in line with the decision of the Ontario government.
Expenditures under the Green Plan will be spread over six years instead of five.
Funding for the Canadian Jobs Strategy will be reduced by $100 million in 1991-92.
We will delay the provision of financial support for the construction of concert halls in Edmonton and Montreal.
The cultural research institute in Montreal will be delayed.

Reforming government management
From the outset, we have recognized that fiscal responsibility by the government means fiscal responsibility in the government. Operating costs have been tightly restrained since 1984 and have actually declined in real terms. This was achieved by reducing the size of the public service, eliminating programs and improving efficiency.
This effort has ben intensified in recent years. Since December 1989, operational restraint measures have been implemented to achieve total savings of $6 billion over a five-year period. Budgets for travel, vehicles and

February 26, 1991
The Budget
equipment, supplies and office space have been cut. Government construction projects in the National Capital Region have been delayed.
We recognize that Canadians expect the government to bear its share of restraint. And we recognize that politicians and federal public servants must demonstrate leadership and resolve in helping the country through this difficult period. We are therefore taking further actions to restrain costs and improve efficiency.
The ministerial pay of the Prime Minister and Cabinet members will be frozen for one year.
The wage budgets of departments will not be adjusted in 1991-92 for any increases in costs arising out of new collective agreements. Departments will have to absorb any such higher costs from within existing budgets. Each increase of 1 per cent in average wage settlements across the public service could lead to a loss of about 2,000 jobs.
Over the next three years, the government is not prepared to contemplate wage increases beyond 3 per cent at an annual rate.
Rates of salary increase for the executive category in the public service, deputy ministers and heads of Crown corporations will be limited to a level no higher than the average of negotiated settlements in the federal public service.
The salaries of Members of Parliament and the Senate, which currently increase at the rate of inflation minus 1 per cent, will now increase at a rate which is the lesser of this formula or the average of negotiated settlements in the public service.


Some hon. members:: Hear, hear.


Michael Holcombe Wilson: We will eliminate layers of management and reduce the number of senior managers in the public service by 10 per cent.
Capital spending and non-wage operating budgets will be frozen at 1990-91 levels.
We will continue to seek an agreement with public service unions on a work force adjustment policy that will permit the contracting-out of government services where this is shown to be cost-effective. If such an agreement cannot be negotiated, we will introduce legislation to permit contracting-out.
This program of restraint will generate savings of $3.6 billion over the next five years.
Let there be no doubt the government and the people who work in government will be doing their part.
Details of these and related measures will be announced shortly by my colleague, the President of the Treasury Board.
Wage policy
Mr. Speaker, I want to deal briefly with the approach the government is taking in its wage-setting policies. Continuing wage restraint is a key element of our plan for economic recovery.
As a leading employer, the government has a responsibility to ensure that public sector wage settlements do not add to inflationary pressures in the economy. To this end, the government has exercised restraint in federal contract settlements, while maintaining the principles of collective bargaining. Wage settlements since 1987 have been lower than those concluded in the private sector and by provincial and municipal governments.
However, given the seriousness of the fiscal situation, the government believes it must exercise further restraint in concluding wage settlements with its own employees. In taking this step, the government wishes to stress that federal employees are not being singled out for restraint. All Canadians face difficulties during the present period of recession. In the past two months alone, more than 140,000 jobs were lost in the economy. In the current situation, the government must cut back in all areas of spending, including wages.
All levels of government have a responsibility to restrain their expenditures. Let us remember that we all serve the same taxpayer-the same taxpayer who must pay the price when our spending gets out of line. And we will all share the benefits of reducing government spending-the benefits of lower interest rates, stronger growth and lower taxes.
Pay restraint is particularly important at the provincial and municipal levels, including education and health services. Wages and salaries in these sectors account for 45 per cent of all expenditures. Wage settlements in these sectors have been running ahead of inflation and our ability to pay. Some provinces have already introduced programs to limit the pay increases of their
February 26, 1991

employees. It is vitally important that all provinces take part.
Wage settlements in the private sector have also been contributing to inflationary pressures. Reducing these pressures will help to lower costs and improve our competitive position. This will lead to more growth, new jobs and higher incomes.
Other management and efficiency initiatives
In addition to the measures I have described, the government will proceed with a number of other actions to streamline operations and encourage efficiency as part of our Plan for Economic Recovery.
Revenue Canada will take steps to improve the collection of tax revenues owed to the government. Changes will also be introduced to permit the recovery from tax refunds of debts owing to the government.
New cost recovery measures will be developed in the areas of transportation services and border crossings.
Privatization and Crown corporations
Since 1984, the government has privatized or dissolved more than 20 Crown corporations and improved operations of those remaining. As a result, the number of Crown corporation employees has been reduced by close to 80,000 since 1984-85. In the coming year, the government will continue to divest itself of investments no longer required as instruments of public policy.
The privatization of Petro-Canada will proceed now that legislation has passed.


Some hon. members:: Hear, hear.


Michael Holcombe Wilson: Legislation will soon be introduced to enable the government to proceed with the sale of its shares in Telesat Canada. The government intends to privatize CN Exploration, a subsidiary of CN.
The Canada Oil and Gas Lands Administration will be disbanded and its responsibilities transferred to other departments. Petro-Canada International Assistance Corporation will be dissolved. With these actions, the last remaining institutions set up under the National Energy Program will be wound up.
The use of Special Operating Agencies will be extended to improve service and efficiency and cut costs, particularly in activities delivering services to the public and to departments. Organizations or functions to be
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converted to this status include the Canadian Grain Commission, Race Track Supervision, and the Patent and Trademark Office of Consumer and Corporate Affairs. Further candidates for conversion to Special Operating Agencies will be announced in due course by the President of the Treasury Board.
We will also be considering the reorganization of certain aspects of government operations in order to bring government closer to those whom it serves. For example, the National Energy Board will be relocated to Calgary.


Some hon. members:: Hear, hear.


Michael Holcombe Wilson: The privatization program has been implemented to date through the Office of Privatization and Regulatory Affairs. Privatization remains a priority of the government. In keeping with our desire to streamline government operations, the functions of this agency will be redeployed. Ongoing and future privatizations will be managed by the Department of Finance under the responsibility of the Minister of State (Finance and Privatization).
Legislating spending limits
The expenditure restraint measures in this budget are crucial to our Plan for Economic Recovery. These measures build on a record of discipline that has reduced annual program spending growth to 3.7 per cent in the past five years compared with 13.8 per cent per year in the previous 15 years.
Having proven that we can manage spending responsibly, we can now provide Canadians with further assurance that future program spending will not get out of control again as it clearly was before 1984.
The government intends to impose mandatory, legislated limits on annual program spending for the next five years. By setting these limits in law, we will ensure that the budget's program spending track will be met. Flexibility will be provided only to meet a very limited set of contingencies that will be defined in the legislation.
This law will bring a significant change to the way government manages its expenditures. While the legislation will not preclude the introduction of new programs to meet new needs, it will mean that the government will

February 26, 1991
The Budget
have to fund new programs from within the total legislated spending ceiling.
The government will consult on the precise form this important legislation should take. I will release a draft bill in the next few weeks and at that time provide further details of the consultation process. Final legislation will be introduced later this year.
Allocating GST revenues to meet the debt challenge
The GST has improved the competitive position of Canadian-made goods in both Canadian and foreign markets. We have finally brought an end to the outdated manufacturers' sales tax and the damage it inflicted on growth and job creation in Canada.
I have been particularly encouraged to hear the positive response from a number of export-oriented industries already seeing the benefit of the new tax system. I am pleased, too, at the progress we have been able to make towards a harmonized system with the provinces. First Quebec and now Saskatchewan have decided to adopt the GST structure. This will pay dividends as businesses in those two provinces take advantage of the investment incentives the GST offers. The fact that provincial and federal taxes will be collected by a single administration will mean lower costs for taxpayers. Even more important, small business will be a big winner as the costs of compliance are reduced.
The competitive advantages offered by the GST are clear. At a time when Canada needs to fight hard to maintain its position in the world economy, it is all the more important for other provinces to harmonize their sales tax with the GST. It is good for the provinces. It is also good for Canada.
I am well aware that many Canadians have expressed concern that revenues from the GST might be used to finance new spending programs instead of helping to reduce the deficit. While the legislated spending limits I have just described should ease concerns about new spending programs, an additional safeguard will be provided.
As part of our Plan for Economic Recovery, we will ensure that all GST revenues are allocated solely to the effort to bring the public debt under control. This will be
done through legislation to establish the Debt Servicing and Reduction Fund into which all GST revenues will flow. Private contributions for debt reduction and other specified revenues, such as those from privatization, will also flow into the fund. An annual audit of this fund by the Auditor General will be presented in the Public Accounts of Canada.
Establishing national inflation targets
The government and the Bank of Canada have made a clear commitment to achieving price stability in order to promote stable growth, equity and prosperity in Canada. To achieve this, our Plan for Economic Recovery includes further action to reduce inflationary pressures.
The benefits of price stability are enormous. Stable prices will strengthen our ability to compete. They will protect those least able to protect themselves, such as the working poor, the elderly and others on fixed incomes. They will result in lower interest rates by removing the inflation risk premium that lenders demand, thus making home ownership more affordable for Canadians. They will lower the cost of capital, and particularly risk capital, to Canadian businesses. Price stability will help to avoid the wasteful "boom and bust" cycle that rising inflation triggers in the economy.
As the budget papers point out, Canada's inflation for much of the post-war period has compared favourably with other industrialized countries, including Germany. From 1950 to 1973, our inflation rate averaged only 2.8 per cent-better than Japan's performance. There are no insurmountable barriers to attaining price stability.
Accordingly, I am announcing today, with the Governor of the Bank of Canada, that we are establishing intermediate inflation targets to serve as key steps on the way to price stability. We are committed to lowering inflation gradually to 2 per cent by 1995 and to making further progress toward price stability thereafter.
Reducing inflation requires reducing inflation expectations. The adjustment to price stability can be significantly eased by providing the public with specific targets and a clear timetable so that people know what to expect, to rely only on market pressures to bring down inflation expectations, risks an unnecessary period of economic weakness. A smoother and more rapid downward adjustment of inflation expectations will permit a substantial

narrowing of interest rate differentials with the United States.
Reinforcing fiscal stability
The measures in this budget will ensure that expenditure restraint continues to make a major contribution to the restoration of fiscal stability. In my 1990 budget, there were no new taxes. In this budget, there are two specifically targeted revenue-raising measures.
Financing unemployment insurance
The unemployment insurance program is one of the most important elements of Canada's social safety net. In recognition of this, it is required by law that the Unemployment Insurance Account be maintained in a healthy condition on a self-financing basis.
Premium rates were set in 1989 for a three-year period beginning in 1990 on the basis of economic conditions expected at that time. At the current rate of contributions, the unemployment insurance fund would move from a surplus at the end of 1990 to a deficit of $6 billion by the end of 1992 because of higher than expected benefit payments.
We have seen the consequences of failing to act quickly to prevent debt problems from building up. Responsible stewardship requires that we take the necessary steps to ensure the fund remains self-financing. Accordingly, the unemployment insurance premium rate will rise by 55 cents per $100 of insurable earnings to $2.80 for employees. For employers, the rate will increase to $3.92. These measures will take effect July 1, 1991. The after-tax cost of the increase for employees with the maximum insurable earnings will be $2.70 per week.
Increased tobacco taxes
Our national strategy to reduce tobacco use addresses all aspects of the problem of tobacco consumption. In particular, it is aimed at discouraging young people from beginning to smoke.


Some hon. members:: Hear, hear.


Michael Holcombe Wilson: It includes initiatives in areas such as public awareness, advertising and crop substitution. This strategy has worked to reduce the use of tobacco by Canadians. Studies show that tobacco taxes
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are particularly important in discouraging young Canadians from smoking.
Effective midnight tonight, the excise tax on cigarettes will be increased by three cents per cigarette. The excise tax on other tobacco products will be increased proportionately. These increases will also apply to existing inventories of tobacco products.
As a result of an expected continuing decline in tobacco use by Canadians, revenues generated by the measures are also expected to decline in the years ahead. In light of the damage to health caused by smoking, this is one kind of revenue erosion that I am pleased to accommodate.


Some hon. members:: Hear, hear.


Michael Holcombe Wilson: As a result of these measures, it is estimated there will be about 100,000 fewer teenage smokers.

Provincial capital and payroll taxes
Over the past decade, the provinces have made increasing use of payroll and capital taxes as revenue sources. This has raised two issues for the federal government: whether the federal government should pay provincial payroll taxes; and the impact of increasing provincial capital and payroll taxes on federal corporate tax revenues.
After a review of the issues, I am announcing our intention to continue to pay voluntarily provincial payroll taxes of general application; and to limit the deductibility of provincial payroll and capital taxes from federal corporate income tax.
This limitation will be phased in to allow sufficient time for businesses and provincial governments to adjust, and will be the subject of consultations before it is implemented. It will treat payroll and capital taxes on the same basis as income taxes. This will remove the bias in favour of those deductible business taxes which have substantially eroded federal corporate income tax revenues in recent years. Small business will be protected from the impact of the change. No additional revenue will result for the federal government, but the reliability of federal corporate income tax revenues will be protected.

February 26, 1991

The Budget


THE PROSPERITY CHALLENGE
[Stage Direction]
Assisting disabled Canadians
Since coming to office in 1984, the government has taken major steps to promote equal opportunities for Canadians with disabilities. The Prime Minister has appointed a Minister responsible for the Status of Disabled Persons; we have passed the Employment Equity Act\ and we have put in place fairer, more generous tax assistance.
In short, this government has done more than any other to improve opportunities and to enable Canadians with disabilities to participate more fully and more fairly in the work place, in their communities and at home.
To build on the progress that we have already made, I am today announcing further positive steps to assist disabled Canadians:
The disability tax credit will be increased from $575 to $700 as of the 1991 taxation year.
Some hon. members:: Hear, hear.


Michael Holcombe Wilson: The definition of expenses eligible for the medical expense tax credit will be broadened and will include the cost of part-time attendants in the home.


Some hon. members:: Hear, hear.


Michael Holcombe Wilson: Costs incurred by employers in modifying their premises to accommodate disabled persons will become fully deductible in the year they are incurred.


Some hon. members:: Hear, hear.


Michael Holcombe Wilson: Benefits provided by employers to disabled persons to enable or assist them to work will no longer be taxable.


Some hon. members:: Hear, hear.


Michael Holcombe Wilson: Whether in the design of tax policies or in the development of legislation and new programs for individuals with disabilities, the government has benefited from extensive consultations with groups representing the views and interests of Canadians with disabilities. The government will continue to work with these groups to improve the effectiveness of the tax system in meeting the needs of disabled Canadians.
I want to turn now to the challenge of ensuring Canada's prosperity. It is a continuing challenge, but also an increasingly urgent one.
The key to prosperity is to increase our productivity, for this is what will determine our earning power in the years ahead. Despite strong economic growth in the past six years, the growth in our manufacturing productivity was the poorest among the Group of Seven industrial nations.
In our increasingly competitive world, there is no room for complacency; and there is no safe hiding place for uncompetitive industries or countries. We must adapt to the new world reality or fall behind in the effort to preserve and enhance our future prosperity.
This competitive challenge was central to the Agenda for Economic Renewal introduced by the government in 1984. The wide range of economic and fiscal actions taken to implement that agenda have provided a better framework for building new competitive strength.

But there are growing concerns from Canadians about our ability to compete. These concerns relate to the broad economic environment, including inflation, interest rates and the exchange rate, and to the structural problems with our productivity performance, including the effectiveness of our investments, the burden of government and the climate for business.
Governments have a responsibility to create an environment favourable to the growth of competitive enterprise. In this budget we are acting to restore fiscal balance and attain price stability. This will strengthen our ability to compete in a tough economic world.
Our ability to compete abroad begins at home. We must maintain and strengthen our economic union. In this and other areas, governments must step up the pace of structural reform. I have been working with my
February 26, 1991

provincial colleagues to develop shared approaches to basic economic issues. One of the key questions to be faced is this: How much government are people willing to pay for? In our discussions, we are already looking at the rising costs of government and at overlap and duplication. In addition, the Prime Minister has asked the Economic Council of Canada to carry out a major study of the impact of governments on competitiveness.
As a further positive step, I propose to encourage greater investment in Canadian equity markets by making changes to the tax environment affecting pension plans. The aim will be to eliminate the existing bias in favour of debt instruments by pension funds. This will encourage a larger source of capital for equity investments with the potential to make Canadian business more competitive. The government will discuss these proposals fully with interested parties.
But more needs to be done to assure our future prosperity. We need to look hard at the quality of our investments in infrastructure, machinery and equipment, training, education, and research and technology. There are signs that in some areas, such as private sector spending on training and research, we are not doing enough. In other areas, such as education, our level of spending compares well with international standards but our performance appears to be falling behind. In these and other areas, the co-operative efforts of Canadians in both the public and private sectors will be crucial to our competitive success.

This is not an issue only for business, labour and government. All Canadians have an enormous stake in strengthening Canada's competitive ability. The perspective of workers, consumers-people involved in every aspect of economic life-will be a valuable part of the process of identifying the problems and developing solutions.
To help assure our future prosperity, the government will launch a national effort to build a new partnership for prosperity that draws fully on the talents and efforts of Canadians in every sector of economic life. As a first step, we will release a discussion paper in the spring to help focus public debate toward the building of a broader consensus on the problems we face and the development of solutions.
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FEDERAL-PROVINCIAL FISCAL ARRANGEMENTS
[Stage Direction]
This budget has important implications for federal-provincial fiscal arrangements, and particularly for the system of major transfers: Equalization, Established Programs Financing and the Canada Assistance Plan. These programs account for more than 90 per cent of the funds transferred by the federal government to the provinces to help pay for a variety of programs and services.
For decades, the federal government has provided large and growing financial support to the provinces. Next year alone, total federal transfers to the provinces will reach $36.9 billion, including both cash and tax transfers. These transfers are simply too large to exempt from our expenditure restraint program. The deficit is a national problem and it demands a national solution.
The federal government is not asking more of the provinces than it is doing itself. Major transfers to the provinces, including both cash and tax transfers, will grow on average by about 3.7 per cent per year from 1991-92 to 1995-96. All other federal program spending will grow by 3.4 per cent.
I recognize that limiting the growth of transfers under Established Programs Financing raises concerns about the ability of the federal government to continue enforcing national Medicare principles under the Canada Health Act. Legislation will be introduced to ensure that the federal government continues to have the means to enforce these national medicare principles.
Some hon. members:: Hear, hear.


Michael Holcombe Wilson: The principles of the Canada Health Act will not be compromised.

The measures in this budget bring the growth of federal-provincial transfers into line with current fiscal realities. But it is also time to ask ourselves whether the system of transfers and tax arrangements can be reformed to better meet the emerging challenges, priorities and needs of the 1990s and beyond.

February 26, 1991
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In recent months, my provincial colleagues and I have been working together to address Canada's fiscal and economic problems. I have already referred to our discussions on the question of overlapping spending. We are also working in a co-operative way on a number of important taxation and fiscal transfer issues.

Reform of the major transfer programs
The federal government will consider reforms to the major transfer programs within the fiscal framework set out in this budget. We want to ensure that, in the future, the system of transfers:
provides for the sharing of the opportunities and benefits of
Confederation;
supports a more efficient and competitive Canada; and
maintains the principles and standards that are the basis of Canadian citizenship while respecting provincial flexibility.
All Canadians have a stake in these reforms, and we will be considering how best to seek their views.
Discussions on the updating and renewal of the Equalization program are already well under way, and will be carried forward as an integral part of this broader process.
Federal-provincial tax collection agreements
A number of my provincial colleagues have expressed concern that federal-provincial tax collection agreements do not provide enough flexibility for them to meet their own social and economic priorities. Some have suggested that provinces should have the right under these agreements to levy provincial tax on taxable income, rather than on basic federal tax. Indeed, the possibility of establishing separate tax collection systems has been raised by some provinces.
Given the importance of these and related issues, the federal government will seek the views of individual Canadians and tax professionals. We will release a discussion paper in the spring to explore reforms to the tax collection agreements. The objective will be to assess whether the flexibility of these agreements can be enhanced while maintaining the competitive benefits of a tax collection system that is simple, and consistent, and
that enhances the accountability of governments. Following these consultations, we will put forward specific proposals.


ECONOMIC OUTLOOK
[Stage Direction]
Our Plan for Economic Recovery will help ensure that Canada will be a stable, attractive place for investment in new growth, jobs and opportunities for Canadians.
Some hon. members:: Hear, hear.
Mr. Wilson (Etobicoke Centre) The components of our Plan for Economic Recovery reinforce each other. Lower deficits and less government borrowing will mean more favourable conditions for lower inflation and lower interest rates. This in turn will help to reduce the deficit by spurring stronger growth and reducing the interest costs of carrying the public debt.
The economic recovery will begin in the second half of this year and accelerate next year.
Inflation will decline. The inflation rate will decline to 3 per cent by the end of next year and average just over 2 per cent in the three years thereafter. Canada's inflation rate will be significantly less than that of the United States. This will strengthen the fundamentals of our economy and our ability to compete. It will also further ease the pressure on monetary policy.
Interest rates will continue to fall. Short-term interest rates are assumed to decline to an average of 9.5 per cent for 1991, well below the 1990 average of 13 per cent. This will contribute to a rebound in consumer spending and housing starts.
Strong economic growth will be secured. Real output will expand by 3.5 per cent in 1992 and average 4 per cent in the medium term. Real personal disposable income will grow steadily throughout the period. Employment growth will begin in the second half of this year and will strengthen in the years ahead.
I am tabling the budget document including Notices of Ways and Means Motions. Details of the measures are included in these documents.
I will also introduce a bill seeking borrowing authority for the 1991-92 fiscal year.

I am asking that an order of the day be designated for consideration of these motions.


CONCLUSION
[Stage Direction]
Mr. Speaker, this is a strong budget-a budget for economic recovery.
It deals resolutely with our fiscal challenges.
It imposes strong disciplines on government spending.
It requires vigorous restraint in government operations.
It sets out a clear path toward lower inflation and lower interest rates.
It is designed to give Canadians confidence that we are facing directly our immediate economic and fiscal problems.
[Stage Direction]
But it does more than that. It established a clear direction as to how we must face the more fundamental problems undermining the competitive position of our economy, and it is sensitive to those in greatest need.
In short, it will provide leadership and direction in our economic affairs at a time when Canadians are asking fundamental questions about the future of our country.
[Stage Direction]
Our Plan for Economic Recovery is different from those in previous recessions.
Our plan does not have the government throwing large amounts of money at problems. Those are band-aid solutions.
Some hon. members:: Hear, hear.


Michael Holcombe Wilson: This government is dealing in a fundamental way with the problems that it can directly influence. This is the best way to generate a positive environment in which Canadians can live and work.
It asks Canadians to do the same in the more positive environment which the plan will foster.
But I would add something else, Mr. Speaker. Too often Canadians complain that some other region of the
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country or some other group is doing better than they are. The challenge to all Canadians is to do what each of us can do to strengthen our country.
At this time of great stress in our national unity, it is important to put aside jealousies and defeatism and start working together for our country.
Canada has come a long way in 123 years. Let's not sell ourselves short. Let's start thinking positively and take heart from our past success.
We have forged a country that is the envy of the world-a tolerant and open society with the world's second highest standard of living.
This prosperity was put at risk by abandoning the traditional Canadian value of paying our way.
I believe that this budget will help us regain some of the key elements that brought us strong growth in the past-low inflation, responsible financial management and a desire to work together to succeed.
The realization of this can rekindle our pride and give us a solid basis for hope and confidence in the future- hope that is important at this time in our history. For a strong economy will strengthen our national unity-and faith in our national unity will reinforce our economic strength.
We all wish to see a strong, united and prosperous Canada. Our Plan for Economic Recovery will help us achieve that goal.


Some hon. members:: Hear, hear.


Hon. Herb Gray (Windsor West):: Mr. Speaker, the budget we have just heard is a disaster for the great majority of Canadians.


Some hon. members:: Hear, hear.


Herbert Eser (Herb) Gray: This Budget is a real disaster for most Canadians.

The Minister of Finance has just said to Canadians: "If you are out of work or if you fear being out of work, you are on your own."

February 26, 1991
The Budget
This Minister of Finance has just said to Canadians: "If you are sick or poor, you are on your own."
This minister speaks of national unity. He is telling Canadians they can be unemployed together. That is all he has to say to them in this budget tonight.
Last year, when the minister presented his budget on February 1990, we said that budget was a blueprint for a made-in-Canada recession. The minister disagreed with us, but we were right and he was wrong because we have a made-in-Canada recession. We are suffering from it because of the policies of this Minister of Finance and his government.
There is no reason to believe-none whatsoever-that the minister knows what he is talking about today any more than he did in that last budget, especially when he says that the budget he has just given sets the stage for recovery and growth.
After all, the minister admits that unemployment under his budget that he gave tonight will rise to double digit levels, to 10 per cent and be almost as high as 10 per cent next year.
This means misery and suffering for 1.5 million Canadians who will be unemployed, out of work, due to this minister's misguided sense of priorities.
He is abandoning working Canadians to the misery he has created and all he has to say to them is that they have to pay more to survive the devastation he has created for them. He is actually making them pay higher unemployment insurance premiums, in effect a tax increase, and at the same time he is cutting job creation programs by another $100 million. This is a real slap in the face for working Canadians.
This minister is extending, for another three years, the freeze in transfer payments to the provinces for medicare and higher education. He is continuing the cap on the Canada Assistance Plan. These are real cuts in federal transfers for vital programs for all Canadians.
This means that the government is not really cutting its deficit, instead, it is once again simply transferring it to the provinces. This means higher taxes for Canadians from their cities and their provinces.
This is a budget without hope, a budget of despair, a budget that leaves a growing number of unemployed
simply twisting in the wind. With this budget the Minister of Finance is washing his hands of any responsibility for the devastation he has created with his own made-in-Canada recession.
I say the minister's priorities are wrong when they ignore the need to help unemployed Canadians and when they ignore the need to help this country get out of the recession.
I say this minister with this budget is making it less likely there will be any real progress in reducing the deficit he claims to be so concerned about.
There is no certainty that the minister's policies announced tonight will work to bring about real recovery any more than exactly the same policies had when they were used by the finance minister of R.B. Bennett, the Conservative Prime Minister during the Great Depression. Those policies at that time did not bring recovery. They did not stop the devastation of the thirties and this minister's policies are likely to have no better effect.


Some hon. members:: Hear, hear.


Herbert Eser (Herb) Gray: Mr. Speaker, I say by way of conclusion this evening that the 1990 budget of this Minister of Finance created a made-in-Canada recession. But I say that the budget he has presented today is a blueprint for de-Confederation. It is a blueprint for de-Confederation because this budget, in cutting, to all intents and purposes, after a few more years all federal support for medicare, cutting out support in any real sense for higher education, for social assistance is what is causing all too many Canadians to question the need for a national government, a federal government.
I say that the problem is not with our national government. The problem is with this Minister of Finance and his Prime Minister and his cabinet.


Some hon. members:: Hear, hear.


Herbert Eser (Herb) Gray: Canadians see this and that is why Canadians will reject this budget. Therefore, I think it appropriate to move:
That this debate be now adjourned.


Mr. Speaker:: Is it the pleasure of the House to adopt the said motion?


Some hon. members:: Agreed.


[Stage Direction]
Motion agreed to.
February 26, 1991
[Stage Direction]
The Budget
Mr. Speaker:: Pursuant to the order made Monday, The House adjourned at 5.53 p.m. February 25, 1991, the House stands adjourned until tomorrow at 2 p.m.

Wednesday, February 27, 1991