1991-09-26

[Stage Direction]
TABLING OF DOCUMENT "CANADIAN FEDERALISM AND ECONOMIC UNION: PARTNERSHIP FOR PROSPERITY"
Hon. Don Mazankowski (Deputy Prime Minister and Minister of Finance):: Madam Speaker, pursuant to Standing Order 32(2), I have the honour to lay upon the table copies of the document Canadian Federalism and Economic Union: Partnership for Prosperity in both official languages.


VETERANS AFFAIRS
Mr. Peter Milliken (Kingston and the Islands):: Madam Speaker, there is a motion of mine standing on the Order Paper, Motion No. 383.
It calls upon the government to institute a medal for Korean war veterans which it has already done. I would ask leave of the House to withdraw the motion and its discharge entered in the Votes.


Madam Deputy Speaker:: The House has heard the request of the hon. member. Is it the pleasure of the House to accede to the member's request?


Some hon. members:: Agreed.
Motion withdrawn.


PETITIONS
Mr. Iain Angus (Thunder Bay-Atikokan):: Madam Speaker, I have two petitions to present this morning.
The first one, signed by Canadians from Nova Scotia, New Brunswick and Quebec, calls upon Parliament to support the NDP plan to restore VIA Rail services which were cut on January 15, 1990, to maintain and where appropriate upgrade remote services on which many Canadians rely, provide a legislative mandate for VIA Rail and make available to VIA the resources which it needs to become a modem passenger rail system in a class with those throughout the rest of the western world.


Iain Francis Angus: Madam Speaker, I have been asked by a number of citizens of my community of Thunder Bay to table a petition which expresses concern about the situation in eastern Europe, particularly in the Baltic States. It calls upon Parliament to allocate and activate credits for feed grain to Lithuania and the neighbouring Baltic states.


Ms. Lynn Hunter (Saanich-Gulf Islands):: Madam Speaker, I am pleased to present a petition today pursuant to Standing Order 36 in regard to the situation in East Timor.
Indonesia has occupied East Timor since 1975 in contravention of international law. This military occupation has caused death of hundreds of thousands of East Timorese men, women, and children.
Canada has shown its world-wide support in the work of the United Nations and has recently sent armed forces to aid Kuwait in the removal of an aggressor state.
Constituents from my riding and throughout British Columbia ask that the Canadian government work toward the elimination of the Indonesian military occupation of East Timor and the genocide of East Timorese people.

September 26, 1991
Government Orders MEMBERS OF PARLIAMENT


Mr. Lyle Vanclief (Prince Edward-Hastings):: Madam Speaker, I rise today in my duty as member of Parliament to present a petition with many hundreds of names. It refers to the action by the Government of Canada to introduce the pay and benefits of members of Parliament in January 1, 1991, and these Canadians are calling upon Parliament to rescind these budgetary measures and set a good example for the rest of Canada.


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


Madam Deputy Speaker:: Shall all questions stand?


Some hon. members:: Agreed.



GOVERNMENT ORDERS


Hon. Perrin Beatty (for the Minister of Finance) moved: that Bill C-19, an act respecting banks and banking be read the second time and referred to the Standing Committee on Finance.


INSURANCE COMPANIES ACT
Hon. Jean Corbeil (for the Minister of State (Finance)) moved: that Bill C-28, an Act respecting insurance companies and fraternal benefit companies, be read the second time and referred to the Standing Committee on Finance.


COOPERATIVE CREDIT ASSOCIATIONS ACT
Jean Corbeil: that Bill C-34, an Act to revise and amend the law governing cooperative credit associations and to provide for related and consequential matters, be read the second time and referred to the Standing Committee on Finance.


Madam Deputy Speaker:: The debate is therefore on the substance of all three bills.


Mr. Bill Kempling (Parliamentary Secretary to President of the Treasury Board and Minister of State (Finance)):: Madam Speaker, today marks an important milestone on a journey which began several years ago. The legislation before us today is a major work of reform, the reform of the legislation governing Canada's financial institutions.
We first want to indicate that we are fully aware of the contributions made by former Ministers of Finance and the finance committee of this House and the other place. We also want to pay tribute to the contributions made by countless individuals and groups, both in the industries affected directly and among the general public.
This particular stage of financial institutions reform includes four bills. The first of these was Bill C-4, which has already been considered in committee and which applied the principles of reform to the federally chartered trust and loan companies. The other three bills are C-19, which applies these principles to the chartered banks; C-28, which applied them to federally chartered insurance companies; and C-34, which applies them to federally regulated financial co-operatives.
In each case, the basic approach taken in the bill is the same. There are differences between the bills, however, because each applies the underlying principles of reform to a different type of institution. Shortly I want to look at the ways in which reform has been applied to each of these three bills which are awaiting second reading. Before I do this, however, I want to review the more general aspects of our reform which apply to all three pieces of legislation.
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One of the most important points is that this process of reform will bring all federal legislation governing financial institutions into harmony to a degree we have not previously experienced; a major achievement and one of which this government is proud.
The goals of reform are clear and easy to understand. They are: to enhance protection for depositors and policy holders; to benefit consumers by increasing competition and the spectrum of services offered by financial institutions; to strengthen the ability of our financial institutions to compete at home and abroad; and to lay the groundwork for discussions with the provinces about harmonization, because jurisdiction in the general field of financial institutions is a shared one.
These goals, Madam Speaker, are important and I am pleased that we have been able to embody them in legislative and regulatory reform.
I know that members of the House are familiar with the general outlines of the proposals. We have dealt with them already in Bill C-4 and its predecessor. But I do want to speak specifically about certain issues.
The first of these is the problem of self-dealing. Tougher rules will be implemented; the self-policing role of directors and auditors will be made more effective through mandated roles and responsibilities; the superintendent of financial institutions will have increased powers to require information that will enable problems to be anticipated; and the superintendent is therefore being given new access which has not previously been available.
Second, consumers will find shopping for financial services more convenient and will benefit from a wider choice of financial products since banks, trust and loan companies and insurance companies will be allowed to compete more directly with each other. By opening new avenues for growth of our financial institutions, the new provisions will strengthen the ability of these institutions to meet the new challenge that has evolved in the global marketplace.
Financial institutions will be able to diversify by owning institutions operating in other segments of the industry. For example, banks will be allowed to own trust companies and insurance companies; and insurance companies will be able to own other financial institu-
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tions. By virtue of their wide ownership, mutual insurance companies will be able to own chartered banks. Significant changes in the ownership of financial institutions will be subject to approval by the Minister of Finance, who will take account of whether transfers are in the best interests of the Canadian financial system.
Together, these proposals set out a framework for fair competition that will allow all institutions to have good opportunities for participation in financial sector activities. These bills and their regulations cover a very wide range of changes because of the size and the importance of the financial sector and the wide range of institutions and situations which have to be covered. After all, looking at the sectors as a whole, there are more than 3,000 Canadian financial institutions with assets of some $900 billion. Of the 25 largest institutions with total assets of $760 billion, 23 are chartered and regulated federally.
But it is not just the sheer size of the sector which gives it importance.
We must not forget that the health of these institutions is key to the vitality and strength of our economy as well as to our security and the security of savers and investors.
The activities of these institutions affect our mortgages and our purchases of goods and services. The financial sector shelters and invests savings and makes available investment needed for new and expanded industries.
I believe these institutions will operate more effectively and competitively and will meet the needs of Canadians more efficiently as a result of reforms we have put forward. We have recognized the importance of financial institutions in developing a legislative and a regulatory approach that protects the public while encouraging and not inhibiting innovation and competition. We have done this while also recognizing the competing interests within the financial community itself, and while we have sought as wide an agreement as possible not all interests could be completely reconciled. In such cases, we have looked to find a reasonable balance.
I want to go over the particular provisions of Bill C-19, Bill C-28 and Bill C-34 which are unique to each bill.

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Bill C-19, which applies to the chartered banks, is very similar to its predecessor, Bill C-95 from the previous session. There have been some relatively small modifications. I want to indicate what the specific changes are.
First, because it is based on Bill C-4, this bill recognizes and incorporates amendments made in committee to Bill C-83, the bill of the previous session relating to trust and loan companies.
Second, a number of changes affecting only banks have been made as a result of comments received since Bill C-95 was tabled.
Third, this bill contains new wording for the section which restricts the retailing of insurance by banks. This section was section 4.17 in the previous bill and is now section 4.16. The proposed new wording sets out clearly the intent of the government's policy. This has been done to meet concerns that the corresponding section of Bill C-4 relating to trust and loan companies on which the previous wording was modelled, does not constitute a clear and certain statement of the intentions to restrict deposit taking institutions from engaging in retailing insurance.
I should add that revised draft regulations issued with Bill C-19 reflect these changes as well as comments and submissions on previously issued draft regulations relating to retailing of insurance.
This means that the banks and the trust and loan companies will be restricted from retailing most insurance products in their branches. This ensures that insurance will continue to be sold by qualified licensed insurance brokers and agents working independently from any deposit taking institution.
Our general approach to the question of ownership of financial institutions has been applied to the special needs of the chartered banks. We have maintained the principle of wide ownership for schedule 1 banks, including the six largest Canadian banks. This ensures that no one person or group of associated persons can own more than 10 per cent of any class of bank shares.
The second bill, Bill C-28, affects insurance companies. In addition to the ownership provisions to which I have already referred, certain elements of the reform are tailored to meet the needs of these institutions. There will be enhanced powers given to insurance companies to make consumer and commercial loans.
In addition, this legislation recognizes the important place of mutual companies within the system. These companies are granted new powers to raise capital through the issuance of debt and preferred shares.
Finally, the legislation recognizes the position of participating policy holders and establishes new rules for communicating with them and seeking their approval for fundamental changes.
Bill C-34 applies the general principles to a third part of the sector, federally regulated financial co-operatives. To an even greater extent than the other parts of the sector, these institutions operate under shared jurisdiction with the provinces.
Currently, one federal association is governed by the act while six registered centrals are governed by both the federal act and legislation of their provinces. Local credit unions continue to be incorporated provincially and are governed solely by provincial legislation.
This legislation grants associations of power to provide a range of services comparable to those that may be provided by trust and loan companies under Bill C-4. A key difference is that associations continue to be restricted to providing their services primarily to their members.
The new legislation permits associations to provide services in the fulfilment of the trade association function which they service with respect to other co-operative institutions.
In adapting the investment rule set out in Bill C-4 to the particular situation of federally regulated financial co-operatives, this legislation takes into account the important liquidity function served by the associations.
Finally, this bill will increase the access of federal associations to capital by permitting them to issue preferred shares to non-members. These shares will be restricted from carrying full voting rights to ensure that control of associations remains within the co-operative system.
Returning to the general outline of our policy, I want to reiterate that our proposals represent a balancing of individual, national, international, federal, provincial, commercial and prudential concerns.
The proposals in this package serve the public interest very well. They will strengthen the financial institution sector and will permit our financial institutions to grow and prosper and contribute to the economic vitality of Canada.
September 26, 1991

I ask all hon. members to work together with the government to expedite consideration of these bills in this package.


Ms. Catherine Callbeck (Malpeque):: Madam Speaker, I welcome this opportunity to participate in second reading this morning on Bill C-19, the new Bank Act, and Bill C-28, the new insurance act. My colleague from Moncton will be discussing the co-operative act on behalf of my party.
I want to make it very clear at the beginning that the Liberal Party of Canada supports in principle this new legislation. The banking and the insurance industries have been waiting a long while for this new legislation. While our party has some concerns about both bills, we will seek to have those concerns addressed when the bills get to committee.
The current insurance legislation is already decades old and the Bank Act is more than a decade. Both are badly in need of modernization, although the insurance act is more outdated and this government has been dragging its feet for six years on financial sector reform ever since it was elected.
The government's reform process started in 1985 with the green paper. A year later it was followed by a blue paper, and last September the government released the white paper on financial reform. All in all, six years have passed since the first green paper was released. The legislation we are debating this morning is certainly long overdue.
When the government proposed in this new legislation, in the new Bank Act, that this legislation we are dealing with today would be reviewed five years after it comes into force, my party suggested that the review would be better three years after it comes into force.
We argued that by 1997 it will be 12 years after the publication of the green paper which started the whole process and seven years after the first financial reform bill was introduced into the House of Commons.
Twelve years is a long time in a fast moving industry such as financial services. The government members on
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the committee obviously felt differently about our proposal as they defeated our amendment.
For too long this government has been holding back federally regulated Canadian financial institutions with outdated legislation. Our financial institutions must be given the new powers they need to compete in the new global business environment. We must also ensure that our consumers are well served and that the strength of the Canadian financial sector is not only protected but enhanced. This is why our party is supporting this legislation in principle.
In addition to helping our financial institutions compete, another major objective of reform is to protect depositors. Here again the government's slowness in this whole area may have been damaging.
The government's new reform package gives the Superintendent of Financial Institutions more powers than ever before, powers such as the setting of accounting standards, the inspection of the books of the parent of a financial institution.
If this legislation had been passed it might have made a difference with Standard Trust. I questioned the Superintendent of Financial Institutions about this at the finance meeting on November 28. At that time I asked the superintendent if he felt that he had been hindered by inadequate legislation in dealing with Standard Trust. I want to read his reply directly from Hansard:
It is very difficult for me to go beyond that with respect to this particular company because, as I said, pretty well everything else we have done here, as with all of the companies, is confidential.
To stand back from this, however, there are a number of things contained in this bill that might, and I say "might", have made a difference to this or other situations in which there are or might be developing difficulties.
The first is the provision I referred to that gives us a lot more leverage on accounting policies. That might have made a difference.
The second is the provision that gives us access to information to parent companies and related companies. It is possible that might have made a difference.
The third is the establishment of business conduct review committees of directors to review any related party transactions, and finally of course there is the whole regime of prohibitions and bans of related party transactions. All of these might have made a difference. I do not know.

September 26, 1991
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No one knows for sure but the 150,000 Standard Trust depositors whose accounts were frozen on April 18 probably wish that the government had kept its promise and put those new accounting rules in place a few years ago.
Another example concerns the new insurance legislation. Under Bill C-28 the insurance companies, until that becomes law, will continue to have to make complex legal arrangements to accomplish things which the old act allows but makes very difficult.
Those extra legal bills are being charged to and paid for by the consumer or policy holders in the way of higher premiums.
With this new legislation that we have before us this morning insurance companies will be allowed to act more freely, and this should mean lower legal bills.
Just to give a simple example as to how outdated this legislation is, under the current act the board of directors of an insurance company must approve all employees' salaries who earn more than $40,000. Obviously that rule was established decades ago when in those days we probably had only two or three top executives earning over $40,000. Now that is a very simple example of how outdated this government has allowed Canada's insurance legislation to become.
I think those examples illustrate very well why the government must move as quickly as possible to improve financial sector legislation.
This morning I want to discuss both Bill C-19 and Bill C-28 in some detail. As I mentioned earlier, my colleague from Moncton will deal with the Co-operative Act on behalf of my party. Together these two acts, the Bank Act and the insurance act, comprise about 1,400 sections, well over 800 pages. Each bill is over an inch thick. This morning I want to try and highlight a few of the most important sections of each bill and some of the issues that they raise.
I will begin by discussing the sections that the two bills have in common and there are many.
The first major item is natural person powers. In other words, both insurance companies and banks will be able to do anything that is not clearly prohibited by legislation. Under the current legislation insurance companies can only do what is clearly permitted by their legislation. So that in itself is a big change.
Some of the other common elements in the banking and insurance company legislation are measures to protect the soundness of this legislation. Of course the main reason for having factors like this in these two bills is to protect the savings of the Canadian consumers. We do not want what has happened in the United States to happen here. We want to be sure, positively certain, that our depositors are protected.
In this legislation both types of institutions, banks and insurance companies, will be required to ensure that one-third of their board of directors is unaffiliated with the company. For example, if an insurance company has 21 directors sitting on a board, at least seven cannot be among other things an employee of the company, an officer of the company, someone who has a substantial investment in the company, or someone whose company does more than 10 per cent of his or her business with the insurance company.
By doing this the government of course is trying to ensure some degree of independence on the board, and we agree with that.
An insurance company or a bank will also need to have in place proper procedures for dealing with conflict of interest.
They will have to establish two committees: an audit committee and a conduct review committee. Of course these committees again will help to protect depositors and consumers.
The audit committee is there to review any problems raised by the auditor's report and the conduct review committee will review possible self-dealing situations.
Self-dealing might exist, for example, where a director of a company has influence over the company in such a way that it would benefit him personally.
One item that we in the Liberal Party were pleased to see in both bills was a consumer complaint section. This section is actually based on a Liberal amendment to the Trust and Loan Companies Act which the finance committee passed in March.
As I said, this was an amendment that we proposed in the finance committee to the trust and loan legislation. We are extremely pleased that the government has now included this in the Bank Act and the Insurance Act. What that does is ensure the legal right of customers to complain about a problem they have with the bank,
September 26, 1991

insurance company or other financial institutions. They can complain about service charges or other concerns that they have.
First of all, they take their complaint to the institution itself. If it is not resolved there then they can go directly to the Superintendent of Financial Institutions. They have the legal right to do so. For example, the bank forecloses on a loan to a farmer. The farmer thinks the bank's action was unjust. He now has the legal right to see the bank's consumer complaints officer. If together the officer and the farmer cannot resolve the problem, the farmer could take his complaint right to the top, to the Office of the Superintendent of Financial Institutions.
The superintendent now has to include in his annual report a section on these complaints. The number and types of complaints received by the superintendent's office will be detailed in this section, as well as a general description of how those complaints were resolved.
Certainly we on this side of the House hope that by legally requiring banks and other financial institutions to have complaint procedures in place we can ensure that customers who do have complaints will be better served.
There are some other elements of the insurance legislation that are also found in the banking bill, such as the new ownership rules. Insurance companies will now be able to own financial institutions such as schedule banks and trust companies. Of course, banks will be able to own insurance companies and trust companies. Both will also be able to own corporations that are in the financial services family such as the financial leasing companies and information processing companies.
The legislation limits the flexibility of insurance companies and banks to invest in these other corporations I have just mentioned. If these financial institutions do not wish to own at least 51 per cent, then they will not be allowed to own more than 10 per cent. For example, they cannot invest in 30 per cent of the company. It has to be 10 per cent or 51 per cent.
It seems that the government's goal here is to reduce the risk of a bank getting into a new kind of business that it is not familiar with and not able to control. The banks
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and the insurance companies argue that these new rules will prevent them from getting into joint ventures and getting into a business with a major partner or a partner who has the expertise to help them in running the company. Again, this is something that we certainly want to look at in committee.
There are many common elements to the two bills, but there are obviously some major elements in the new acts which are unique to the insurance and the banking industry. I want to start with the insurance bill.
Insurance companies will soon have full commercial and consumer lending powers. In other words, they will be able to make loans to the general public, not only to their policy holders.
Those insurance policy holders will also get new rights under the new act. Tliey will be treated more like shareholders of a corporation. They will receive regular notification of their rights as policy holders and those who express an interest will receive notice of company board meetings.
Policy holders will also have the right, where the numbers are sufficient, to make proposals to the board of directors.
In a very important change in this legislation, mutual insurance companies-and I am talking here about companies that are owned by their policyholders-will get the right to issue preferred shares and thereby raise much needed capital.
The government has also released a proposal that would allow mutual companies to demutualize or accept shareholders as well as policyholders. This alternative method of raising capital raises many issues, such as how would the policyholders rank as compared to the shareholders? There are several questions around this whole issue that certainly will have to be addressed in committee.
Briefly those are some of the major elements of the new Insurance Act. While we understand that the insurance industry is generally quite pleased with this new legislation, we have yet to hear from various interest groups.

September 26, 1991
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There is one group that we have heard from, the Canadian Bankers' Association. It has some concerns about Bill C-28, respecting the insurance act. It feels that it does not effectively restrict insurance companies from accepting deposits or offering cheque writing services. As we know, banks are prohibited under this legislation from selling insurance and they want insurance companies to keep out of the banking business.
The Canadian Bankers' Association also wants insurance companies to face the same requirements as banks and trust companies in terms of disclosure of service charges, networking arrangements and turning over unclaimed accounts to the government.
They have some other concerns as well, all of which we will be addressing in committee.
I would like to turn now to the main sections of the new Bank Act. One of the main provisions in the new Bank Act would continue to prohibit banks from moving any further into the insurance market.
We in the Liberal Party have heard arguments for and against, and I want to take a few minutes this morning to talk about some of these arguments from both sides of the issue.
We have been told that if banks could sell insurance, it would be cheaper and it would be more convenient for consumers.
We were told that there would be no risk of tied selling. What I mean by tied selling is that a bank would try to pressure a customer into buying insurance from the bank by threatening them that they would deny a mortgage.
We were told that around the world, and even here in Canada, deposit-taking institutions sell insurance with no consumer problems and they sell at very competitive prices.
We have also heard many reasons on the other side of this issue; why banks should not receive broad insurance powers. First of all, we were told that there is no evidence that banks could sell life insurance, the main product they want to sell, any more cheaply than insurance companies over the long term. It is argued that, yes, in the short term banks may undercut the prices of insurance companies in order to gain the market share and consumers would benefit in the short term. But in the long term, the argument goes, it is still
far from certain that banks would offer life insurance at super competitive prices.
For example, in 1989, there was a study done by the Public Interest Research Centre that claimed consumers could save a lot of money if banks could sell insurance. However, that study has been discredited by a 1991 study done by Eckler and Partners.
We have also heard the argument to give the banks broad insurance powers would be unfair because of the size of the banks. With assets of $126 billion, one bank, the Royal Bank, is larger than the entire insurance industry put together. There are six major banks involved. Together, the six big banks account for 90 per cent of the $584 billion in Canadian banking assets.
So it is argued that there is a very real possibility of unequal competition.
It has been suggested also that it is possible that there could be a very short but intense battle between the huge chartered banks and the much smaller life insurance companies which could lead to massive dislocations in the insurance industry.
The insurance industry in Canada comprises 170 companies and 20,000 agents, so a lot of Canadians could lose their jobs and a very successful insurance industry that serves rural and urban Canadians could be permanently damaged by such a battle between unequals.
There is also some evidence to suggest that tied selling, which I described earlier, could be a problem. There was a survey done by the Canadian Life Health Insurance Association. They did a study on the insurance regulators. This study was done in 1990. They wrote to and received letters from 22 United States' insurance regulators. The response confirmed that many states do not permit banks to enter the insurance business and those that do have significant concerns about the coercion and misuse of customer information.
That does not necessarily mean that we might have the same problem here in Canada, but it is certainly a factor which we have to consider when looking at this issue. One of the areas which is certainly related to insurance is the question of banks selling life annuities. Life annuities are a retirement product now only sold by insurance companies. The banks want a share of the market. They argue that as the Canadian population ages, more and more of their customers will require life annuities and they should be able to buy them from their banks.
September 26, 1991

The banks argue that Canadians will benefit if they enter the life annuity market. They feel that life annuities are crucial to any retirement plan. With their superior distribution system, the banks say it will be easier for Canadians to prepare for retirement. On the other hand, the insurance companies argue that life annuities should be part of the over-all ban on banks selling insurance.
This is another area that we certainly want to explore further in committee. As you can see, we have had some very conflicting views to date on whether banks should be able to sell insurance. Certainly, we are considering our position in the Liberal Party very carefully because there is a lot at stake.
The next section that I want to deal with involves consumers. That is whether banks and trust companies should be able to enter the auto leasing business. Again, we have heard arguments on both sides of the issue. We have heard that consumers would get lower prices, that it would be more convenient if people could lease a car through a bank rather than an auto dealer.
There are concerns again on the other side of this issue, that it might be unfair competition. A bank with a loan to a car dealer would have detailed information on that car dealer. Armed with that information on their main competitor, a bank could undercut the car dealer long enough to drive him out of business. Here again, we have to consider very carefully our position on this issue.
Leaving consumer issues and turning to international matters for a moment, the new Bank Act changes the rules for foreign banks setting up in Canada. The legislation now says in effect to qualify for a foreign Schedule 2 bank licence, an applicant must prove to the government it is a bank in its home country.
Given that definition, certainly we in the Liberal Party and others were quite surprised, extremely surprised when American Express was granted a foreign bank licence. AMEX is clearly not a bank in the United States as the spirit of the law and the government's own guidelines required. The government, however, said AMEX met its legal definition of a bank.
It is also curious that AMEX, a major supporter of the free trade agreement, received its licence on November
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21, 1988. All members of this House remember what day that was. Of course, it was election day. That is when AMEX received its licence.
This certainly raises serious questions about whether the government was playing politics with the Canadian financial sector.
Whatever the case, Bill C-19 could set the stage for more AMEXs because the new Bank Act says the government can grant a foreign Schedule 2 bank licence if the applicant is either a bank or it is a widely held financial institution, or is in some way engaged in the financial services business. This section runs counter to the government's September 1990 white paper where it is stated that a foreign applicant had to be either a bank or a regulated financial institution in its home jurisdiction.
The new Bank Act says nothing about being regulated, and this has Canadian banks very worried. They are worried that the new act could open the door to a whole range of unregulated non-bank foreign institutions, including the financial arm of huge American commercial companies like Ford, Chrysler, Sears, IBM and General Electric.
These foreign non-banks do many of the things that our Canadian banks do. They raise money not through deposits, but by taking short-term loans known as commercial paper. This sounds like banking, even though these institutions are unregulated and commercially linked.
They would obviously be regulated if they entered Canada as banks. Allowing such commercially linked companies into Canada raises concerns about fairness to Canadian banks and about the soundness of the Canadian financial institutions. One can therefore legitimately ask whether the government is putting our banks at a disadvantage with this new legislation.
We are also concerned about the degree of discretion that the new Bank Act gives the finance minister in handing out these foreign bank licences. The minister can decide what is a financial institution and what is meant by "widely held".

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What this does, of course, is leave the government open to intense lobbying by foreign institutions which maybe should not qualify for a Canadian banking licence and whose presence here in Canada could undermine confidence in the Canadian banking system. As we saw in the case of AMEX, when international politics and banking mix, Canadian financial institutions are often the losers.
All these questions are extremely important and they must be dealt with in committee. The government's changes to the foreign bank role raises the whole issue of international trade and financial services.
As Canadians know, this country is involved in two sets of international trade negotiations: first, with the United States and Mexico, and second, with other GATT countries. GATT of course, stands for General Agreement on Tariffs and Trade.
While this government has not yet revealed its strategy for these negotiations, it seems very clear that the foreign countries will demand similar treatment to that given Americans under the free trade agreement. We in the Liberal Party want to state once again that the government must not use these trade negotiations to weaken the competitive position of Canadian financial institutions.
I would like to conclude my remarks by briefly summarizing the stand of my party. The Liberal Party supports in principle the government's new Bank Act and insurance act, although we have some major concerns, many of which I have mentioned briefly today. Certainly we look forward to reviewing and addressing these concerns in the finance committee.


Iain Francis Angus: Madam Speaker, on a point of order. There have been some discussions and I think you would find unanimous agreement to allow my colleague, the member for Nickel Belt, to speak for 40 minutes on these three bills.
As you would appreciate, if they had been done separately he would have about 60 minutes. He is being very conservative today in the time he wants. You will notice that I did not ask for unlimited time because, as we found out in the past, he can go on at great length.


Peter Andrew Stewart Milliken: Madam Speaker, I agree with everything the hon. member said, particularly his last comment. We are happy to accede to the request.


Some hon. members:: Agreed.


Madam Deputy Speaker:: I understand that there is also agreement on my right. Therefore I will recognize the hon. member for Nickel Belt and he will be allowed his 40 minutes.


Mr. John R. Rodriguez (Nickel Belt):: Madam Speaker, I will try to stay within the 40 minutes I have been allotted.
These three bills are very complex. I thought long and hard as to how I could take such very complicated and convoluted legislation and put it in a way that people who are listening and watching could understand the complexities, the twisting and the turnings of the operations of the financial institutions of this country.
I thought I should put it in a way that people understood. I said: "Who best could describe things in a way that people could understand but Aesop?" Therefore I have put my opening remarks in the terms of Aesop's Fables.
Is everybody ready? Are we all gathered around? Once upon a time, shortly after 1929, certain animals were put in cages and there were four cages. In cage number one were the rabbits. These rabbits, I would say, are the equivalent of investment brokers. We have rabbits as investment brokers.
In the next cage was put lions, big, king of the beasts, and they are the banks. They were put in their cages and the lock was put on.
In the third cage was put the mongoose. I do not know what the plural of mongoose is. I think it is mongeese or maybe it is mongooses. They were put in the third cage, and they were the insurance companies, and a lock was put on the cage.
In the fourth cage was put the cobra, and the cobra were the trust companies, and the gatekeeper put the lock on the cage. We had the four cages: the rabbits, the lions, the mongoose and cobra. Everybody knows, there they are after 1929. Before 1929 they did terrible things to each other so they were put in the cages.
In 1987 somebody whose begins with t and ends withy, a four letter word, stealthily in the night went and opened the rabbits' cage and the lions' cage. Well, everybody knows that lions eat rabbits. That is what happened. The lions ate up the rabbits; the banks ate up the investment brokers.
September 26, 1991

That reminds me of a limerick:
A smiling young investment broker from Vancouver Went for a ride on a banker.
They came back from the ride with the broker inside And a smile on the face of the banker.
That is what happened. Maybe it was not supposed to happen, but everybody knows that if we put lions and rabbits together, the lions will eat the rabbits. That is what happened.
Here we are today, in 1991, and somebody beginning with a t and ending with ay, a four letter word, in Bill C-19 and Bill C-28 are stealthily going to open the cages separating the cobra, the mongoose and the lion.
We know what will happen. We know what mongoose do to the cobra; it kills them. Then what do the lions do to the mongoose? They are going to eat them. As sure as shooting, we are going to end up, when the dust settles, with a brand new animal.
It will have a lion's head. It will have the body of the cobra, the feet of the rabbit and the teeth of the mongoose. Do you know who it feeds on? Consumers. And who is there to keep this animal with all these attributes, this new creation, this new hybrid, to separate this monster from his feed.
Well, we call in somebody called OSFI. You see him there with his lion tamer's hat and his little whip, and that is all that is between this hybrid monster and consumers.
What I have tried to portray in this little fable is in fact the reality of Bill C-19, Bill C-28, Bill C-4 financial institutions which we previously called Bill C-83. What we are doing with these bills today is that we are opening up the cages. We in this party have always said when you do that, when you collapse the pillars, when you open the cages, what will result is a concentration of economic power.
One morning we will wake up and there are not going to be any Hulk Hogan's wrestling out there. There will just be one huge sumo wrestler, which we have cultivated to go and wrestle globally. That is a danger.
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I do not have to remind members of the realities in California where previous deregulation under Ronald Reagan there were many banks and financial institutions in California. If we go there today, it is predominated by two particular banks: the Bank of America and Securities Pacific. There is also a smaller one, First Interstate Bank of California. All of that is going to shake down and, sure as shooting, eventually there is only going to be one bank in California.
We have serious concerns. When you open the cages, you cannot control the animals, and the biggest and the most aggressive one will survive. We have said consistently that we have to keep the pillars in place. There is no problem, as far as we can see, with banks entering into joint venture arrangements to market insurance products. But the minute you allow this feeding frenzy, sure as shooting one morning we are going to wake up and there is only going to be one financial institution, one giant, super financial institution at which all Canadians are going to do their banking and their financial services.
That is not going to be healthy for the marketplace. I am absolutely amazed that a Conservative government that worships so grovelingly at the altar of the marketplace would in fact destroy the marketplace. In fact, the reason they were put in the cages after 1929 was because of their rampant behaviour in 1929. Now we are opening it up. We want a market that can be regulated, because we want it to make sure that it behaves in a socially responsible manner.
The Tories are destroying the market through this monopoly. Historically it shows that to control a monopoly you need another monopoly. Therefore the Tories, quod erat demonstrandum, are for big government. We are going to have to have a monstrosity to control a monopoly.
Look at the bills and the regulations. Everywhere in these bills and regulations you will see: "The minister shall" or "OSFI shall" or "the government shall". It seems to me we ought to be striving for built-in structures that by their very nature regulate the industry.
It seems to me that if you work toward getting those kinds of built-in rules, regulations and structures, then you have a check and a balance: for example, the pillar structure, for example the 10 per cent ownership rule.

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There is another concern that this deregulation will allow financial institutions to become so huge, so economically powerful that they will challenge the state. They become in fact major private governments. There are three powers which they are headed to control: the power to create money, the power to control productivity, that is real wealth, and the power to control technology. What we are developing here as I said before is a huge sumo wrestler.
If we listen to the banks, that is all they talk about. They want to go global. What we are going to have is a huge ubiquitous sumo wrestler. He will be everywhere because you will not be able to keep him inside your borders. He will transcend, cross borders. You think we have got a problem with cross-border shopping. Wait until we get cross-border financing because we do not have an international regulator that is going to keep an eye on them. I can just see BCCIs all over the place.
We are really dealing here with the destruction of the national market for the sake of global competition. Banks will be allowed to own insurance companies. The banks cannot retail insurance. I mean, how stupid. We have 7,000 branches. I can just see myself wanting insurance for my car. I do not see absolutely anything wrong with the bank marketing the insurance policies of insurance companies.
If I want insurance for my car, I go down to my bank branch and say to the clerk: "I want insurance. Here is my car, here is the year", and so on. There is no reason he or she could not crank it up on the computer, show me a whole rack of companies and pick the policy and the company that suit my needs. I could also suggest that it would be done at a better rate.
In fact playing this little verbal les jeux de mains, if I may, in trying to say that the banks cannot do it, there is not anything in there that they cannot dipsy-doodle around.
They are going to set up little subsidiaries of insurance companies. They are going to direct market through their credit cards to their customers. They are going to build up a customer base. It is stupid and ridiculous. It does not make any sense. I say you put them back in their
cage and put the lock on it. If they are bankers, they do banking; if they are insurance companies, they do insurance business; if they are trust and loan companies, they do trust and loan business. It is a simple matter.
All we have got to do is look south to what has happened. They wanted to deregulate. Well they deregulated the s and I's all right. They gave them all kinds of powers to go and get involved in real estate operations. This bill has got some real stuff on real estates for financial companies. Have they got stuff. We are going down the road. They are going to be developers too. Do remember what I said about the lion eating the whole gang? All right, we will come to it.
It seems to me that these bills are releasing the dynamism of the Canadian banking system, not to serve the consumer and the public but to predict the system. They eat it up. That is what I think these bills are all about. That is really the principle and the philosophy behind them. Already we are over-banked. We have banks banking. Now you are going to have insurance companies taking deposits. They are selling financial instruments. You have trust companies all over the place. For 26 million people we are over-banked.
I want to tell you very quickly that the feeding frenzy is going to start. It is not good when the end result is the development of a hybrid animal, one only, one super financial institution.


An hon. member:: The banks need competition.


John R. Rodriguez: They need competition among themselves and that is what we have to make sure they do. They are in the banking business. That is what they are in. Insurance companies are to sell insurance and are not to do banking. That is the principle.
I heard the former chairman of the finance committee expound that theory time and time again: "You are a banker, do banking. You are an insurance company, do insurance".


An hon. member:: Would American Express sell insurance?


John R. Rodriguez: I will get to American Express, don't worry.
September 26, 1991

We oppose changes to the financial institution structure that concentrate the economic power because we think in that kind of environment the consumers are the losers, the society is the loser. We say banks should not own insurance companies.
We have another concern and it all ties in. I am going to sort of weave this in like a mosaic. Brother, I cannot turn my back on that guy; he has got his sword. Excuse my back, do not get angry.
The other aspect of the bill that concerns me is the question of ownership. For financial institutions, we think one of the best safeguards and one of the best controls is wide ownership. That is why we put into the Bank Act that no group or individual shall own more than 10 per cent of the equity of a bank. That is what we said, and I think it has worked well. The major banks in this country are not the problem in terms of what they do, in terms of kerfuffling; it is the trust companies. Look at what we have done. We have allowed them to be closely held. The 10 per cent rule does not apply to trust companies, and yet in these bills we are giving them all the powers of banks.
They are laughing. They can do all the things. I do not need to remind you that when you start mixing up commercial operations with financial institution operations you are headed for trouble. We just saw Standard Trust. What is a guy who is an expert in the mining business doing in the banking business? That is what we have. How would you react to a Lavelin bank or, dare I say it, a Campeau bank or an Algoma bank? They could have established under these rules. Is that not wonderful?
This is very dangerous. I am not the only one who feels this way. This party is not the only one that feels this way. I want to quote a fellow by the name of E. Gerald Corrigan. He is the president of the Federal Reserve Bank of New York. He appeared before the United States Senate Committee on Banking, Housing and Urban Affairs on Thursday, May 3, 1990. This is what he said:
Second, I remain strongly opposed to the merging of banking and commerce and to any arrangements that would even remotely contemplate the ownership and control of bank holding companies or financial services holding companies containing depository institutions by commercial concerns. Here too, on a n earlier occasion, I spelled out before this Committee the reasons for my concerns in this regard, and I have provided an extract of that in earlier testament as Appendix V-1 still look with concern, if not alarm, at the economic, financial -and
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perhaps even social-implications of Exxon owing Chase Manhattan, Ford owning Citicorp, or RJR Nabisco owning J. P Morgan. Obviously, those examples draw more than a little hyperbole in order to stress the point. But once that door is opened, there is absolutely no way to anticipate how events will shake out over time. Therefore, and absent that compelling public policy reason I spoke of in my earlier testimony, I would strongly urge that we maintain a strict separation of banking and commerce.
Not only do we have in our banking and financial institution structure non-financial upstream ownership, but we are now heading down the road to downstream non-financial ownership. There are provinces that are actively contemplating that move.
That is a serious concern and it ought to be a serious concern for all members. We gave OSFI improved powers after the banks in the west failed. We gave Mr. Mackenzie additional powers, and yet in spite of that we have had an ineffective supervisory system. Still we have had the case of Standard Trust and we will probably end up with more.
The next concern we have is what I touched on before, and that is the financial institutions playing in the real estate market. Bill C-19 proposes that banks, financial institutions, can be allowed to invest up to 70 per cent of their regulatory capital in real estate holdings, 70 per cent. You are talking here about tens of billions of dollars because you are throwing into it trust companies, insurance companies and banks-tens of billions of dollars.
In the short run they may be bailing out developers in the industry at the moment with this, but think of the potential for conflict of interest. The same people who have developers as their customers will be competing with their customers.
Think of the stranglehold if you applied those tens of billions of dollars to three or four major cities in this country. Think of how you can control the real estate market. Think of the potential of that economic power. I want to bet the bottom dollar that when that happens, you will never see real estate come down in the major cities again, never.
We will have effectively kept the price up. What is this mad dash? It seems to me that the rules at the present time are quite sufficient. What do you think about them pulling in loans prematurely, seizing real estate, and purchasing it themselves?

September 26, 1991
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This again is opening the gates. I do not want to mix my metaphors here or as somebody would say open Pandora's box. Where will it end? We have a problem with that.
Another interesting thing is harmonization. These are the kinds of things we should be working on. Presently every province has its own rules for financial institutions. Superimposed on top of that are the federal rules. You have Ontario which gives the "Ontario equals" approach.
These are widely divergent. For example, look in this bill, Bill C-19. There is a 10-50 provision. If a bank wants to purchase a financial entity, it can purchase only less than 10 or more than 50.
The province of Ontario has a basket provision that says: "When you reach a certain level, you cannot go beyond it". So we have the possibility of while a financial institution is trying to maintain the federal rule it violates the provincial rule.
We have tons of examples of conflicts between provincial and federal regulations and rules with respect to financial institutions. We have an example: Scotia McLeod by the way was one of the rabbits. McLeod, Weir, Young is what it used to be called. It was one of the rabbits in the cages.
That was one of the rabbits that the bank or the hon. the Bank of Nova Scotia, ate back in 1987. They have called it ScotiaMcLeod. It is really a subsidiary of the Bank of Nova Scotia.
Under the present law, its investment broker can actually be right inside the golden tower. He has his counter right there in the golden tower in Toronto. He has his plaid jacket. It is called the McLeod tartan so you can recognize him on the floor of the stock exchange. They have team colours and everything. It is amazing. These animals have their own teams and wear little caps with colours on them.
He is allowed to be in the bank. The bank can refer its customers who want investment services to the ScotiaMcLeod guy. In British Columbia they now say that stock brokers and investment brokers can be trained and hold an insurance licence.
You are going to have this guy with this plaid jacket and hat. He is a broker and also an insurance agent, and he is on the property. You are not supposed to do that under the federal legislation. You cannot advertise your insurance services in the bank, so what are you going to do?
What we have is a spectre in British Columbia of the bank passing on to the investment broker information about the customer who wants investment services, and that broker is also the insurance agent.
This law says that the bank cannot pass on to its insurance subsidiary any personal information about its customers. It can only do direct mailing and advertising via its credit card. Isn't this amazing? We have this guy who is both broker and insurance agent and he is doing all kinds of things, all kinds of synergies around the cages. This is absolutely fantastic. But there it is.
There is another anomaly. If the banks set up an insurance subsidiary, the bank is not allowed under the legislation to pass information about its customers directly to the subsidiary. Yet an insurance company which owns a trust company can pass all sorts of information to its insurance company without any restrictions at all. There is an anomaly in the legislation if what is good for one is not good for the other.
We say there should be harmonization. It seems to us, and we have said this time and time again, that in fact there should be a national task force organized involving the provinces to harmonize the rules that govern financial institutions. In fact, Madam Speaker, I am prepared to go even further. I will stick my neck out and say that if the provincially incorporated financial institutions want access to the federal deposit insurance and to the clearing system, then they ought to conform to federal rules. If they don't, they can set up their own deposit insurance, as Quebec has done, and they can make their own arrangements with respect to clearing. But I expect that would be very difficult for them to do. But you have to have some standard rules by which everybody is playing. You cannot have one playing off against the other.
The next aspect of this bill that bothers us, Madam Speaker, is what is called foreign entities coming into Canada and entering the Canadian financial markets. Of course, we know that on election day 1988 the Minister of Finance of the time announced that American Express would be a bank. That opened up the door. This bill confirms that foreign non-banks can come in any time they want and they can choose how they want to come in. They can come in, of course, as an insurance company or a trust company; they can come in as Sears Financial or Toyota Financial or BCCI. They don't even have to be a bank, they can come in. And it seems to me that if none of these structures fit them-insurance company or whatever-they can always have the option, brother, they can always have the option of going provincial. So you can come in provincially. If what is
September 26, 1991

there federally does not fit you, you can go provincial and do all those things.
I might just say, with respect to the free trade agreement with the United States, that Canada gave away the store on financial institutions and we got no equivalent access to the American market.
Now, that is not just the NDP, Madam Speaker. I want to quote from Linda McQuaig's latest book The Quick and the Dead, page 172, when she says:
Canada also gave considerable ground in the key area of financial services where barriers to entry had traditionally been strongest. Under the Canada-U.S. agreement, for instance, American banks, security firms and insurance companies would be entitled to virtually the same privileges as their Canadian equivalents in the Canadian market.
And Doug Peters, who is the senior vice-president and chief economist at the Toronto Dominion Bank said this: "There is no particular breakthrough in the free trade agreement to allow Canadian banks any greater access to U.S. markets than they already have".
Nothing has changed.
The other area I want to touch on is the area of joint ventures. I have been very concerned about the fact that there are approximately 900 single industry towns across this country. In most of them the banks and major financial institutions have branches and they do very well. They take the deposits of the people of the community. But when the industry on which the town is based goes down the tubes, brother they are out of town, first on the Greyhound heading for Toronto. So where is the social responsibility?
I looked for some flexibility in this bill because I know that the Bank Act, for example, forbids a bank from any kind of commercial involvement in terms of taking equity. I looked for some flexibility within this bill to see if there is a provision whereby under certain very specific and approved conditions, banks can live up to their social responsibility in those single industry towns. I do not think it is fair that it has to be some government agency that gives a grant or backs a loan and takes the chances and the risks all the time. Them that has been getting ought to give sometimes.
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In conclusion, our concerns are very clear.


An hon. member:: No Sumo wrestlers.


John R. Rodriguez: Absolutely no Sumo wrestlers, my friend. Give this man the prize. He was listening. No Sumo wrestling, we want good old fashioned Yukon Erics and Hulk Hogans. We want these institutions to concentrate on serving Canadians, to do the things for which they have received the charter. We want them back in their cages and we want the locks snapped shut on them.
We want to apply the ownership rules to all financial institutions. I recognize that some are very small financial institutions. But one of the witnesses we heard was Canada Trust, which is as large as a bank and would like to become a bank, but in fact cannot.
I believe the 10 per cent rule should be applied to financial institutions. We should strictly enforce non-financial upstream ownership and no downstream financial involvement.
We want a restriction on their entry into the real estate market. That is very dangerous; very dangerous.
Harmonization; it has to come. I saw a reference to it in the constitutional proposal. It has to come. We cannot have this patchwork of rules all across the country and people dipsy-doodling and doing whatever they want to do all over the place. What they cannot do here, they will do there. You cannot have rules in conflict. You cannot increase the cost to financial institutions to comply with all of these rules.
Foreign entries into Canadian financial markets, I say, it is quid pro quo. You do not come in unless you are a bank. If you come in, you obey the Canadian financial institution rules. You have to be a financial institution.
Joint ventures-I appeal to the government to consider putting into the act some provisions with the appropriate safeguards to permit, whatever those safeguards might be. It may be a limited equity for a short period of time in a specific single industry area, but where the banks and financial institutions can live up to some community responsibility, a responsibility to the community in which they have operated.

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We intend to go to the committee to try and get these changes. In the last session, on Bill C-83, the last time we dealt with the Trust and Loans Act, which is now Bill C-4, we attempted to make some changes. I sensed there was no support among, particularly, the government members, so I did not put the amendments that I wanted to put. I am saving them for the report stage.
They deal with these questions. I do not see any problem with banks marketing insurance which is developed and owned by insurance companies, because they will get around it anyway and all you are doing is putting a cost up anyway.


An hon. member:: It will close small businesses.


John R. Rodriguez: The fact is it will not close small businesses. That is a good point, so let us deal with it. How will they close small businesses? The insurance companies will own the insurance policies. The bank is marketing their insurance. In any case, the bank is already setting up its subsidiaries to market the insurance. So if the brokers are concerned, they should be concerned with the banks doing what they are doing now.


An hon. member:: Come to Quebec, it is not too bad.


John R. Rodriguez: In other jurisdictions, in Europe, those same insurance companies that do not want the banks to market insurance have subsidiary financial institutions that market insurance, and it has not done anything to the marketplace.
In fact, I will tell you what the banks are doing: they are going right into the insurance companies and raiding their brokers. They are taking their brokers, who are already trained, and putting them into their insurance subsidiaries. So they are already doing it.
Madam Speaker, we are going to try in the committee to put a human heart into the bill and a human face on financial institutions. I hope I have explained it well here today so that everybody understands how these beasts operate. Now, Madam Speaker, let us get them back in the cages, put the lock on them, and that is it.


Madam Deputy Speaker:: That was a 40-minute speech and not a speech with unlimited time. I have to ask the consent of the House concerning questions and comments. Normally after a 40-minute speech there are no periods allowed for questions or comments. We extended his time. If the House agrees, I will call questions or comments.


Some hon. members:: Agreed.


Mr. Dennis Mills (Broadview-Greenwood):: Madam
Speaker, I listened with great attentiveness to the speech of the member for Nickel Belt and there were many points that he raised where I agreed with him completely-
However, there were also many parts of his speech when he talked about the concentration of power with the banking institutions, for instance, he reminded me of Conrad Black. I never thought I would see the day in this House when the member for Nickel Belt would be promoting such a concentration of power in the banking institutions. I really could not quite understand where he was coming from.
What I hear from many small, medium-size and even larger corporations in this country is that there is a concentration of power in the lending institutions and there is a perceived feeling that there is very little competition. In other words, if I am a small or a medium-sized businessman and I go to my comer Royal Bank or Bank of Nova Scotia, and if I am turned down, generally speaking I feel that this is the end of the road for me.
I think that is one of the problems we have in this country right now. The Minister of Finance can stand up here and quote statistics day in, day out, about how interest rates have come down to 9.5 per cent or 9.25 per cent and all the banks post these interest rates with posters and all the rest. Then small business goes in and tries to get a loan and they have no luck because the credit is limited in the country and the reserves of capital have been used up.
My understanding of this bill-and I am coming to my question for the member-is that the insurance companies with large pools of capital will now be able to come into the marketplace and be in a better position to assist those small and medium sized businesses with proper loans.
I would never have thought that the member for Nickel Belt would have seen that as a bad thing, to help small and medium sized business by giving the major banks more competition. I would like to ask him why he sees it like that. We have a regulator and we have a superintendent, so why is he against creating more hope, market or opportunity for the small and medium sized businessman to get at other sources of capital to expand business?
September 26, 1991


John R. Rodriguez: Madam Speaker, I thank my colleague for his question.
I want to suggest that he look at the plethora of options that a small business person has. I mean, there are credit unions and these credit unions are in every community. Their mandate is to serve the community. I am a member of the credit union where I live and we have a board. Small businesses apply and get loans. We have that.
What I am saying in my speech is that in fact what this bill does is open up the cages, and no insurance company is even close to the size of a bank. The danger is that the banks will eat them up. You will wake up one morning and the dream that you have of insurance companies actually having pools of capital that they want to get into will not be the story they are telling us. That is why they want to demutualize. With all these pools of capital, they want to become banks. But from all the evidence we have heard we are over-banked. They are going to start eating each other up, and that is the danger.
If you really want to protect the marketplace, do not open up the cages and let the lions eat the mongoose and the rabbits and the cobras, but have regulations built in that allow them to do the things that you want them to do.
I do not buy the argument that by allowing insurance companies to become banks this great competitive market will be created.
I mentioned to you in my speech what happened in California. When Ronald Reagan deregulated the whole idea was to allow more players to come in. There would be more money around, more credit and all the rest of it. What is the situation today? There are two major banks in California and soon there may be only one.
We have the same experience with the airline industry. Deregulate the airline industry, take the rules out, and you will encourage more people to put money into the airline business. Today we have two airlines. They are both shaky and there is talk that there will only be one. This bill is about deregulation, brother. I am telling you that if you let the animals out of the cage you will not have any competition in the long run. Sure, in the short run you are going to have a lot of little fish out there lending money, but in the long run they will all be gone like the dodo. That is what I am saying.


Mr. Phillip Edmonston (Chambly):: Madam Speaker, I
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would just like to clarify what my colleague has said dealing with the selling of insurance by financial institutions.
I understand that there were questions raised during this speech as to: "My gosh, would this be in the interest of the consumer? Would this be in the interest of even the insurance brokers?"
I have heard this debate before. In fact I have participated in in this debate in Quebec. Perhaps my colleague from Vancouver would be interested in this debate involving Quebec, because the Caisse Populaire Desjardins wanted to get into the business of selling insurance. We held hearings. They were lengthy hearings dealing with whether the Caisse Populaire Desjardins should sell insurance. Essentially the brokers came by and said: "If you do, we are going to lose our jobs. If you do we will not have a better price for the insurance that is being sold. Finally if you do, you are going to end up controlling the market".
I argued against these points because I said it was nonsense. It has been a very good experience for the past five years. The Caisse Populaire Desjardins has not abused its position. There has not been a single complaint of tied selling. We have been watching it very carefully.
Also, if we say that the bottom line has to be competition, and I agree it has to be, then as the hon. Liberal colleague had said it should bring down prices and make for better service, and it does. Not a single job that I can see has been lost from this increase in competition.
I just want to mention something concerning partisan debate. If we cannot accept that members of the NDP or members of the other parties can say things which other members might feel does not quite fit in ideologically as they see us, if we cannot get beyond that, how far can we go in this debate? In this House reasoned debate should prevail, and I mean reasoned debate, not just partisan debate. That is part of it. As someone coming from Quebec, I know the Quebec situation and have lived through this question of whether banks be allowed to sell insurance. Having had this debate, I would ask you to do your homework or at least come to Quebec.

September 26, 1991
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We know what the benefits are for consumers. If the bottom line for Liberals and Conservatives is protection of consumers, then get out of your partisanship and take a look at what happens elsewhere. Come to Quebec and you will see that the reasons that you invoked do not work. No one will lose their job. Prices will be more competitive and consumers will be better served in the long run.
Competition is where it is at. You should be in favour of competition and not just simply the NDP.


John R. Rodriguez: Very briefly, Madam Speaker, I just wanted to add that when my colleague, the hon. member Esquimalt-Juan de Fuca, was the premier of British Columbia, they brought in the public auto insurance. Who do you think was given the task of selling it? The credit unions and the agents. The brokers did not lose their jobs. People in rural communities and cities could get their insurance through their credit union or their broker. No one lost their jobs.
I just want to touch, for my good friend in the Liberal Party for whom I have a great deal of respect, on this question of competition. I want to say from the heart that this business of competition is not some altar where we have to go and genuflect and worship. Often when you open up things without proper regulations and controls, it is the strongest who will survive. There is no respect for those who are not able for one reason or another to compete. You need strong referees. You need strong rules. I think that is what we want, fairness in the system.


Mr. George S. Rideout (Moncton):: Madam Speaker, it is a pleasure to rise and speak on the legislation before the House dealing with financial institutions. It was also very enjoyable to listen to the hon. member for Nickel Belt give his rendition of financial institutions and his feebled fable about caging all of the different institutions. My worry is that if we carry the NDP approach to its logical conclusion, we would have all of our institutions caged. We have all been to zoos and seen exactly what happens with a bunch of caged animals. They have no life, no vitality, no will to really do anything. What we have to do is try to strike the right balance in our system
so that we do have that measure of competitiveness and aggressiveness and those types of things tied in with the proper regulations so that the consumer is protected.
My colleague from Malpeque has given a very extensive discussion on the pieces of legislation before the House. I want to talk in some measure about the Co-Operative Credit Association Act and what is going to happen there. As well, I just want to talk about our financial institutions generally and where they are going with the legislative program before the House.
As background, all agreed that we would come forward with legislation in all four pillars of financial institutions and deal with them all at the same time. We now have all those pieces of legislation before the House.
Quite frankly, it is hoped that we have the will to deal with all of this legislation quickly. I would not want to recount the history of how long it has taken us to get to where we are today, but I believe that most of the financial institutions have been worn down to such an extent that they are fully supportive of the legislation only to move forward and get something done as far as financial institutions are concerned.
In fairness, I think there is a good compromise in much of the legislation that was brought forward. We on this side of the House will be supportive of this legislation going to committee, getting the input that is necessary and giving us an opportunity to make the necessary changes to fine tune the legislation and allow us to come forward with better legislation.
In dealing with the Co-operative Credit Association Act and the legislation in that area, I think we are presented here in Canada with an opportunity to strengthen this organization. It is a good organization. A lot of people are members of credit unions or co-operatives. They know of their involvement in the community. They know the commitment that credit unions and co-operatives have to individual members. It is that approach that is going to help the consumer as we proceed in these very difficult times with globalization, increased competition from outside our borders and with all the problems associated with that particular area.
September 26, 1991

Co-ops can provide that measure of personalized service that is of concern to the individual which larger financial institutions may not provide.
I believe that the co-op movement has made a tremendous contribution to our economy and it is now opening up other opportunities. I think they can make that contribution to the small business person and to the individual because they make a lot of their decisions not on the basis of high-falutin theories and programs that have designations as to who qualifies and who does not. They do it on the basis of the individual. They size up the loan, in large measure, on the basis of the individual. It would be nice to see that at least one financial institution is capable of looking at loans on that basis.
This legislation also provides a benefit to the co-op or the credit union in the sense of allowing them to raise capital. One of the problems credit unions have faced, and indeed all co-ops have faced, is that the only way they can raise capital to do business is either through the sale of memberships or through debt. This legislation is going to give them an opportunity to raise capital through equity. That is a positive step and I compliment the government on that.
I look forward to hearing what the credit unions and co-operatives have to say in that particular area, as to whether the legislation works or whether there should be other ways to assist credit unions in raising capital.
All in all, the legislation is a very thick document that covers a broad range of items. I think it will bring the credit union into a situation in which it is competitive with the other financial institutions and will give it an opportunity to make its contribution to our economy.
If I can, I would like to move from the credit unions and talk generally about financial institutions. The buzzword that we hear all the time is this business of "competitiveness". It is interesting to watch the NDP trying to turn itself inside out and accomplish competitiveness in one sense and be non-competitive in every other sense.
It would be nice if it could get its act together and go down on one side of the issue or the other, rather than around the circle as it has this morning.
My hon. friend says that it does not know what it is doing, and I think this morning was a clear indication
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that it has not got the foggiest idea of how the economy runs. Its members have all left. I am sorry, I am not supposed to mention that they have all left. I guess they did, but I am not supposed to say that, so I withdraw that reference to the fact that they are no longer here.


An hon. member:: They went right for the gate.


Madam Deputy Speaker:: The more I listen, the more I think it is the hon. member for Moncton who is running around the rules.


George Saunders Rideout: Madam Speaker, I accept your admonition.
I would like to say that there is a tremendous opportunity for us to put our financial institutions into a very competitive mode, to deal with the things that are happening in the global economy and to bring benefit to consumers.
I think we all agree that competition will lower prices to consumers, present new and different products and do all those things that will ultimately be beneficial to consumers. In our attempt to heighten competition we must be very vigilant in order to have those protections in our system so that we may protect consumers as well from those types of calamities that have occurred in the United States, with the failure of the savings and loan organizations and with the number of banks that have gone under.
We in Canada have not escaped unscathed. We have seen what has happened with Standard Trustco and BCCI, the Bank Credit Commerce International. We have to be vigilant and we have to make sure that the supervisory role and regulations are in tact.
As we have heightened competition we must also protect the downside by heightened supervision so that those institutions remain strong and vibrant.
I notice as well in the recent document coming down dealing with our Constitution we have recognized the opportunity that a restructured Canada and a restructured Constitution will be present for financial institutions.
Reading a report in The Globe and Mail of September 25 in the "Report on Business", there is the hope that coming out of some of the constitutional changes there will be the removal of some of the duplication and harmonization of rules and regulations.

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I will quote from one of the articles in there which is headlined "A Ray of Hope for the Financial Sector: Ottawa aims to deal with duplication of trust company security regulations". The article goes on to say that the industry has long argued against duplication of financial service regulations and would prefer being governed by one national set of rules as the banks are.
I think that is a positive step, if we could move toward that particular area. That will require the provinces and the Canadian government to work out an acceptable arrangement.
It is mentioned in the document, talking about the streamlining of proposals and avoiding duplications between the different levels of government, and all will benefit as a result of that.
I should say as well that I am concerned about the Canada-Mexico-U.S. trade deal as it relates to financial institutions. We got caught in the last round of negotiations in which we opened our borders and the Americans did not. We did not get the access to the different marketplace items that we were supposed to obtain in the negotiations. I am very much concerned that as we proceed into the next phase and deal with Mexico, we will face roughly the same problems because Mexico has a very closed, restricted area of financial institutions. We will be opening up our institutions to the involvement of Mexico's financial institutions and we may not get the quid pro quo of being able to deal in that country and to have the financial institutions of this country in the Mexican economy.
As I have indicated, we in the Liberal Party are supportive of the general direction, the thrust of the legislation. We are looking forward to the opportunity of getting the advice and the contribution from the many institutions and sectors that are affected. We are looking forward to being able to make positive contributions to the debate on our financial institutions. We must do something to strengthen those institutions, to allow them to compete in the global sense, to allow them to provide to our consumers a wide range of products, and at the same time give our consumers the protection to know that their investments in those institutions are safe and that those institutions are sound.
Thank you, Madam Speaker, for the opportunity to address you on this matter.


Dennis Joseph Mills: Madam Speaker, I congratulate my colleague from Moncton. I want to come at this debate from a little different angle today because I think that most of us in this country have a different experience with banks than quite often we talk about in this House.
I have been walking the streets of my riding a lot in the last few months because the House has not been in session. Because we have a severe downturn in the economy a lot of the banking institutions have very tough lines of credit. What I hear quite often from businessmen and home owners is that the banks of this country seem to want to lend you money when you do not need it, but when you really need it they seem to want to shut you down; they do not seem to have any to give you.
A small businessman came to me the other day and said: "They announced the bank rate and the Bank of Montreal the other day reduced its prime rate to 9.5 per cent". The fellow got all excited and he went over to the bank and the bank manager said: "Yes, that is our rate but I do not have any money to lend you".
I hear this more and more and more in this country. I have had experiences myself with banking institutions in this country in which I have found on many occasions, not on every occasion, the bank managers to be very regimented in their thought process. I found them not to be very creative. I have found that their lives seem to be run by the central office, Bay Street. In other words, the head office will send out a memo that they are to cut back on lines of credit, or they are not to lend any more money out, or they are going through an added process whereby "before you advance money double check with us".
This does two things. It takes away from the creativity of the bank manager this centralized control. I am going to repeat myself a lot in the House over the next few weeks until I really feel that we can get to the government on this.
The second thing is that it really works against the hope factor that entrepreneurs need if they are going to grow, take chances and create jobs in this country. Quite often there is a fine line between continuing the fight to stay in business during tough times and just throwing in the towel.
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I had a very specific situation just a month ago. There were a couple of doctors in my community who rescued a manufacturing firm in Woodstock, Ontario. The name of the firm is Amertek. It makes the finest fire truck in North America, probably the most unique fire truck in the world, so unique that it has received orders from the U.S. military. It has outbid American and European manufacturers. Currently this Amertek fire truck guards the President of the United States at the White House and also at Camp David. This fire truck served in the Persian Gulf and when its competitor fell flat because of the heat and sand conditions the Canadian fire truck was the only one that rose to the occasion. As a result of that it got additional orders.
To get to that point it needed a lot of additional research and development and as a result there was a tremendous strain on its line of credit with the bank. I am not going to mention the bank because I do not want to cause embarrassment to the bank and I do not want to cause any backlash for this great Canadian manufacturing firm, Amertek.
It went through a shocking experience because as it was putting this new order on line, and just as it was getting it rolling, about to deliver its first batch of trucks, the bank manager came back and cut its line of credit by 20 per cent without notice. It had payrolls to meet, suppliers to meet, and it just could not believe it, without notice. I should not say without notice. It naturally had some discussion with the bank manager but obviously after losing in this discussion the bank manager just called up one day and said its line of credit was cut by close to 20 per cent.
Thanks to the Canadian Commercial Corporation which is under the minister of trade this company was rescued. It is delivering its fire trucks. It has another order from Egypt. It has 180 of the finest craftsmen in the country working in Woodstock, and on and on it goes.
I do not believe the centralized power of the banking institutions in this country is right. I do not believe it is serving the Canadian taxpayer. I do not believe it is serving small and medium sized businessmen. I realize that we need to have credit regulations. I support the idea of making sure that the Superintendent of Financial Institutions has access to books and records of all financial institutions, but what I am against is this feeling that there are five or six major banks in this country.
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There is a perception that they are a clique and they are all in the same bathtub. If you are shut out at one bank, you are basically shut out at all five.
Somehow we need to communicate to small and medium sized businessmen especially that there are other options. There are other options for capital out there. We can go back to the committee and make adjustments on certain aspects, but the main thrust of this bill I totally support. We need more competition in the financial arena. We need to create more hope in the marketplace for small and medium-sized entrepreneurs in this country.
Just this Monday I talked to the chairman of a major trading house in downtown Toronto. We talked about the fact that there seemed to be so little capital in the market, so little capital for banks to lend to get the economy going again. There have been such large borrowings because of our deficits, not only federally but provincially, which are causing a tremendous strain on our dollar, pushing it upward because of the offshore conversions. However, there are many insurance companies that do have large pools of capital. So, from my reasoning, any effort that would allow a restructuring so that those pools of capital could be more readily available to those smaller and medium-sized businesses is a good thing for the country.
If business has a feeling of confidence in the sense that it is properly financed, then the entrepreneurial spirit naturally is willing to take more risk, and in that process of taking more risk it is going to create more jobs. If we can create more jobs, it is going to put less pressure on our unemployment insurance disbursements, our welfare disbursements and our refugee fund for that matter.
Right now the problem we have in this country is that we have about two million people unemployed. We have entrepreneurship in this country that is almost in a frozen stiff mode. It is basically working from month to month. There is a nervousness and a low morale out there in terms of business. Their bank lines are tight, there is not a lot of cash going around and, as a result, they are not taking any chances.
I know the hon. member from Mississauga supports this. What we have to do is somehow figure out a way to get that entrepreneurial spirit unleashed again. Right now, I believe the best way to do that is try and let that

September 26, 1991
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entrepreneurial spirit have a feeling that just because businesses are turned down at one of the major banks in this country, it is not the end of the line.
The member for Mississauga South mentioned to me earlier today that there are about 55 banking institutions in this country to which business has access. That is an important point to know, because I believe that most of us who come from a small business background have a perception there is only the big five banks. Most people do not realize that there is a whole litany of financial institutions out there. I think somehow we, in this House, have to promote the fact that there are a lot of financial institutions.
However, I think that the insurance companies, which have these large pools of capital, should, with regulation, be given the opportunity-and maybe we can do this in committee-to organize their lending practices in a way that it can meet certain social objectives. The member for Chambly says it will not happen. The converse is that if we do absolutely nothing, we keep the status quo. Keep them in their cages. I cannot support that right now and I will tell you why I cannot support it. I have not seen any sign from the major lending institutions in this country that their attitude toward small and medium sized business es going to change without some other competitors coming at them.
The member has a different view than I do and I do respect his experience in Quebec. I would also like to refer to the experience in Quebec of the member for Chambly, and I stand to be corrected, where the caisse de depot et placement will actually go out and invest in smaller and medium-sized business and convert equity in that business into loans. Is that not correct?
I can handle something like that. I wish that our major lending institutions would be more progressive. You have to understand where I am coming from. I am trying to unleash the entrepreneurial spirit that exists in this country.
Right now the mechanisms we have in place are not doing that. I think that the caisse de depot system of investing in small and medium-sized businesses is a great one. I think that that idea should be promoted and
expanded to every region of the country. I think it is a progressive measure.
We need something similar in southern Ontario right now. If we had a situation like this, then an organization like Amertek, which was nearly put out of business a month ago had it not been for the rescue-and it was a constructive approach from the Canadian Commercial Corporation-we would have lost that potential. I am behind this bill. Until I am convinced otherwise, I have to stay my ground.
The other thing my colleague, the member from Prince Edward Island talked about was the commercial complaint section. Very few people who do business with banks realize that there is a commercial complaint section. This is a new feature of the bill, where all of the complaints have to be registered in the Superintendent of Financial Institutions' report. I think that is a very important feature for the people of Canada to understand.
If any one of us as members of Parliament or anyone in business makes a mistake, we certainly are accountable. If we are perceived to have done something wrong, we get up in the morning and read about ourselves on the front page of any paper of this country or see ourselves on national television. It seems to me that the financial institutions of this country have some kind of a special sort of status. They are protected from being challenged when they are not treating consumers fairly. I like that particular aspect of the bill, where there is a consumer complaint section, so that if someone feels that they are not being treated fairly, they have access. They have a recourse. In other words, if you feel the local branch manager is not treating you fairly under this new bill, you now can call the consumer complaint section, put your complaint forward and that actual complaint, whether it is justified or not, has to be reported by the Superintendent of Financial Institutions. I think that is a good thing.
I certainly support the New Democratic Party's view on credit unions. The credit unions in this country, which have done a fantastic job in western Canada especially, do not seem to be as high profile in my part of the country, the Toronto region. I think there is an option of opportunity there in putting forward the services that
September 26, 1991

credit unions have. I am certainly not against credit unions.
All in all, the point that I want to make is that the major banking institutions in this country right now, perceived or otherwise, do not seem to be putting forth an image that they are there to really motivate, to assist the entrepreneurial spirit in this country. I have met many bank managers in my career and some of them are downright smug. Can you believe it?
We have to communicate in a constructive way with our lending institutions the fact that as their attitude towards entrepreneurship in this country goes, so goes our general economy. Anything that will advance the competitive spirit, anything that will advance a greater respect to the spirit that drives this country and creates jobs, I must get behind. Unless in committee this bill can prove to me to do otherwise, I am in total support of it.


John R. Rodriguez: Madam Speaker, I would like to ask my hon. friend one question. He says he supports the bill because he has a real problem with the way banks have operated.
Can he explain to me how come he is in bed with the banks, because the banks want this bill. They want it. I want to know if he cannot see that the banks are the powerful ones now and they will become more powerful with these added provisions.
For example, already one of the banks is in the development business. It is going to build a big building for Ontario Hydro. The Canadian Imperial Bank of Commerce is already a developer. Can he not see that loosening up and opening the cages will do exactly what he does not want them to do? In fact, he is on the same side as the bankers with respect to this bill. Why does he think they want it?
If they thought it was in any way going to encroach on their power, they would be furiously lobbying every member of this House. Yet he is on the same side as the banks in wanting this bill. I find that rather contradictory.


Dennis Joseph Mills: Madam Speaker, I have enormous respect for the member for Nickel Belt. This is only the beginning of my fourth year in the House of Commons. I watched him for years before that when I had the privilege of working in Mr. Trudeau's office. I have always thought that he made a lot of sense.
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I cannot believe I am working against myself on this bill. This bill is going to committee and as I said in speech, if this bill is not going to meet the objectives of creating a more competitive market, if this bill is not going to do some of the things that the caisse de depots in Quebec are doing for smaller and medium-sized business, if this bill is not going to stimulate an attitude which will allow more capital to come into the market, then I have a different view of this bill than you do.
Just because bankers want it does not mean to say that there are not aspects of the bill that cannot serve the general good. I do not see this as consolidating the banking institutions any more. How can it be consolidating the banking institutions position when, in fact, we are creating more competitors for them?
It is not just the insurance companies. It is foreign institutions. I stand to be corrected on that by the member for Mississauga South. Is this not going to allow more foreign institutions-


An hon. member:: 


Dennis Joseph Mills: You can use BCCI as an example. I think AMEX, American Express, is a good example. I was reflecting on that when my colleague for Malpeque spoke earlier.
The American Express approval by the cabinet is something that I do not think we have ever taken full advantage of in this country. We think of American Express right now, most of us in terms of a green card or for a few of us, a gold card. But it dawned on me today while listening to my colleague from Malpeque in this House that the American Express is no different today from the Bank of Montreal or the Bank of Nova Scotia.
Maybe we should be telling that to all our small and medium size businesses, telling them to go out there and test it. This is again where we talk about broadening the competitive base. I am not against American Express having a banking charter as long as it lives up to the responsibilities and duties of a banking institution. If we find from small business and others across this country that it is not lending money, well then I think we bring it back to the committee and say it is a farce, it is a joke. However, we have not tested that yet.


Peter Andrew Stewart Milliken: Madam Speaker, I am pleased to have this opportunity to question my colleague from Broadview-Greenwood because I thought that in his brief intervention he made considerable sense.

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What I was having trouble with was the hon. member for Nickel Belt's speech which, while lengthy, left me confused as to the position of the New Democratic Party. I know that the hon. member for Broadview-Greenwood is not an expert on that, but he heard the speech of the hon. member for Nickel Belt and I wonder if he could illumine us. What is the position of New Democratic Party members? They say they favour increased competition, at least with insurance companies. I thought they said they were in favour of allowing banks to take over insurance companies and offer insurance as part of a package.


An hon. member:: Oh, no.


Peter Andrew Stewart Milliken: I heard the hon. member for Chambly say that he supported the fact that Quebec caisses were able to sell insurance as well. He said if it was good for them to be able to sell it, it must be all right for banks to sell it. Yet now they are saying that is not their position, that it is not okay for banks to sell it. Or, is it? I think the hon. member for Nickel Belt is terribly confused. I wonder if the hon. member for Broadview-Greenwood was able to make more sense out of that speech than I was.


Dennis Joseph Mills: Madam Speaker, my colleague from Kingston and the Islands is making this very difficult for me. I was, as I said in my previous question, a bit confused by the member for Nickel Belt. I can tell you that subsequent to his speaking I walked along the hall and spoke to him because I did not understand where he was coming from. To my colleague for Kingston and the Islands, in fairness he did-not in the House but behind the curtain-clarify some of his points of view. If I could dare-


Peter Andrew Stewart Milliken: To put words in his mouth.


Dennis Joseph Mills: To put words in his mouth, right. The member for Nickel Belt is not against competition. He is not against helping small and medium sized business. We have a different point of view. He is concerned about the fact that it is only going to be short-term competition by allowing these other financial institutions to compete in the free flow of capital.
I differ from that view. I think it will be more than a short-term gain. I think it will produce a long-term benefit to everyone. With respect to his point about being concerned about people losing their jobs, I would need more information on that because I cannot see that.
As far as the member for Chambly goes, I like his idea about the caisse de depot et de placement investing in small and medium size businesses. I wish we could figure out a way to steal that idea from Quebec and bring it to Ontario and other parts of the country. I wish our larger financial institutions would maybe take a page out of the caisse de depot's book.


Mr. Don Blenkarn (Mississauga South):: Madam Speaker, I enter the debate only for the purpose of going over in this House some of the history of this legislation and the great deal of work that has been done by members on all sides of the House in actually formulating the bills we have before us and Bill C-4 that has been dealt with by the finance committee.
First of all, this issue became an important issue in 1982. The then government formed a committee called the Dimma committee. It studied the re-regulation of banks and other financial institutions, trust companies, insurance companies and the like.
After the 1984 election, the Secretary of State for External Affairs, then Minister of State for Finance, produced a green paper. That green paper was an analysis of the financial companies that we had in the country. Immediately after that paper, the finance committee of this House made a thorough study of the financial implications of the green paper and produced for the House a very long report.
That long report was to some extent influenced by the collapse of the Canadian Commercial Bank, the Northland Bank, and the collapse in that one year alone of one trust company, mortgage company or insurance company every month in 1985.
We have done a great deal of work here. As a result of the report of the finance committee and as a result of the report of the Estey Commission inquiring into CCB and Northland as a result of the work by the Senate, the government produced a blue paper under the auspices of the hon. member for London West who was then Minister of State for Finance.
That paper met a great deal of discussion right across Canada, with every institution and members on all sides of this House. I particularly remember the efforts of the member for Kamloops who was leading for the New Democratic Party on the finance committee at that point. He was followed up by the hon. member for
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Ottawa Centre, Michael Cassidy, a former member. Raymond Garneau and Mrs. Nicholson from Toronto of the Liberal Party both worked very diligently with the committee trying to work out how these institutions might be organized and how the legislation might be worked out.
I want to say that the legislation that we have is non-partisan legislation developed as a result of a great deal of consultation and work by members of this House going back to the Parliament of 1981, 1982 and 1983 and moving forward since then.
This legislation has the approval of almost every person involved in the insurance industry in this country, almost every person involved in the credit union movement in this country, almost every person involved in the trust company industries in this company, and the approval of the Canadian Bankers' Association across the board.
They all have their own little extra that they would like out of the bills. We are going to have to make some arbitrage there, but the leading spokesman of every one of these organizations and their lobby groups has been to see me as the former chairman of the finance committee and other members of this House. They have said how important this legislation is in order to re-regulate and make things work in a more modern way for the good of us all.
While we have done a lot of work, we have more work to do in the finance committee in terms of making sure that the bills work as well as they can. I think this House should be commended for the effort particularly of members of the House for making sure that the bills are the kind of bills they are and are now before the House.
This is a non-partisan bill. This is not an NDP bill, a Liberal bill or a Conservative bill. This bill has been developed by this Parliament, the previous Parliament and the previous Parliament by members deliberately working together to come to grips with the issue.
I think we have some more work to do, but we ought to move ahead as quickly as we can to make sure the matter receives that detailed consideration that it must yet receive.


Philip Edmonston: Madam Speaker, I was listening very carefully to what the hon. member was saying. I also particularly respect what he has to say
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because of his experience on the finance committee as chairman.
He mentioned in passing-and I find it very intriguing-that he feels that there is some work to do. That means that he is not completely satisfied with the bill. I am sure that there is no bill which is perfect and there is always some work to be done.
I would like him to take this opportunity in a non-partisan way because he is right, it is not an NDP bill. It is far from an NDP bill, I can assure him of that, but it is not a Conservative bill and it is not a Liberal bill. If he has some reservations as he seems to have indicated, I would like to know what they are because perhaps we will find a certain commonality of objections. Perhaps that would also help the committee when it looks further into this question.


Donald Alex Blenkarn: Madam Speaker, as I explained to the member for Malpeque, these three bills that we have right here represent a little over three and one-quarter or three and one-half inches of compressed printing. The other bill we have already passed is another inch and a bit of compressed printing. We have a good four and one-half inches or more of compressed printing in trying to develop a financial system.
I think that there are some small conflicts. For example, I see no reason why banks should be required to have two auditors, whereas trust companies and insurance companies can get along with one. I have spoken to people in all of the industries on that. There has been some concern and there is room for some discussion. It just seems to me that it is really the depositor who pays. It is really the insurance person who pays and, if you increase the overhead of an organization, they can pay less in interest to their depositors and they are less efficient.
There have been some representations in connection with insurance companies and their right to borrow in the marketplace. I want to look at that and I want to look at their ability to take in what amounts to deposits.
I think there is some misapprehension around when you talk about insurance staying in insurance and banking staying in banking. None of these institutions have been operating that way for a very long period of time. For example, insurance companies in this country really only do 20 per cent of their business as insurance. That may seem strange but in effect our major life insurance companies are really in the business of selling annuities.

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They are in the business of selling deposit receipts and in effect they are operating as come to your home bankers.
This legislation brings that into line and so it is important that it be passed. It is important that we understand that the overlaps that already exist in the financial community are very significant. It is important that the regulation of that be as set out pretty well in the bills.
I want to say that at this point what we are really looking at is fine tuning legislation that has had a pretty good run over with the finance committee already. You may recall the hearings held well before Christmas of last year for all the witnesses dealing with a white paper produced by the present minister. It resulted in a great deal of agreement. We then spent a great deal of time on clause by clause consideration of what is now Bill C-4.1 expect that when you are talking about differences and things that must be changed, we are really talking about very minor matters.
To a large extent all of the issues have been in a sense brokered to make sure that it works out that each head of financial responsibility, each pillar if you want to put it that way, has its defined area. That defined area can be easily examined and inspected to make sure of the sanctity of depositors' money, the sanctity of the rights of people who pay premiums for insurance and so on.
We have to make sure that these companies that are given privileges and benefits and are allowed to do a certain class of business in Canada that is really for the benefit of the public, operate for the benefit of the public and operate in a way to ensure the protection of deposits. Our whole work has to be to make sure that these companies operate as well as they can.
I think we are getting there, so when you ask me what has to be done there are only a few things.


Philip Edmonston: Mr. Speaker, I was assuming that at this point we were resuming debate. May I have clarification from the Chair?


The Acting Speaker (Mr. Bernier):: Are there any more questions?


An hon. member:: No.


The Acting Speaker (Mr. Bernier):: Resuming debate. The hon. member for Chambly.


Philip Edmonston: Mr. Speaker, I listened attentively to my colleagues and particularly to the former chairman of the finance committee. I found him to be both to the point and concise, and I am going to try to follow his example and do the same thing.
I would like to mention that we must not play any semantic games here. This is a major piece of legislation. This is a piece of legislation that I believe will have major effects on consumers across this country. It is something that has taken three, four, five years to get to this point. It will certainly not harm these institutions which have had record years if we take the time to look seriously at the potential consequences. I feel that in doing so we will benefit consumers generally.
My general feeling here is that if something is not broken why fix it. I am not quite sure that the system as it is now needs the intervention of Parliament, needs this legislation at this time. I must say most emphatically that the NDP is not against competition. We want to see competition. After saying that, we are quite properly against this bill because, after rational analysis, non-partisan I believe because we have looked at the bill itself and not just the ideology, we do not think that this bill provides what it pretends to provide. That is why we have debate going on today.
I would like to mention certain aspects of Bill C-19 and in my comments I would like to target the question of abusive power, possibly, as well as the banks selling insurance.
On banks selling insurance, in one sense we are much in favour of that. As I said I used the Quebec analogy. As a Quebecer I am very pleased to see that Quebec has taken the lead in this. I must respond to what some of my Liberal colleagues have said: "That means that banks should be able to own insurance companies".
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I am saying that it does not mean that. Quebec has a caisse populaire system, which I am completely in favour with, selling insurance policies.
[ Translation ]
And I would like to explain for the benefit of my Liberal colleagues that a number of years ago, we in Quebec realized that letting credit unions sell insurance could be beneficial to the entire community. I remember we had the same kind of debate in the National Assembly. At the time insurance brokers told us that if we let credit unions sell insurance, they would all lose their jobs.
There were also consumer groups-and this was one of the few times I disagreed with them-who said: If we let credit unions sell insurance, it will cost us a lot more, because they will force us to buy insurance from them by engaging in tied-in selling, which means they won't give us a mortgage or anything else unless we buy insurance from them. They will take advantage of the power they have over the market.
Another objection was that the Caisses populates Desjardins were so powerful in Quebec that they would control the market. I heard my Liberal colleagues saying it can't be done and that jobs will be lost. There were the same old arguments that people would lose their jobs, that it would be a closed market, that there would be so many problems that it would restrict entrepreneurship. All I can say is that in Quebec, speaking of entrepreneurship, I don't think there has ever been any legislation that would be able to reduce the spirit of entrepreneurship in that province.
However, there is a difference when we are talking about letting banks sell insurance on the same terms as the credit unions. Credit unions, and especially the Caisses populaires Desjardins, do not have the same mandate as the banks. A credit union's responsibilities are different, because it is owned by its members. The Caisse populaire Desjardins and other credit unions are not banks. In other words, they are not bankers. My colleague referred to a smug, anti-consumer attitude. Credit unions don't have that attitude, not at all. They are truly integrated organizations, which is to say they are an integral part of the community and reflect the community's needs.
Government Orders
I think it is somewhat exaggerated to say that since the Caisses populaires Desjardins and other credit unions in Quebec sell or market insurance, this means that companies, and especially banks, should have the right to purchase insurance companies. I say no. As was said by the chairman of the Finance Committee-in fact, he was quoted by my colleague from Nickel Belt-let the banks do the banks' work and let other companies do theirs. I think that is very sensible, and I fully endorse my colleague where he quotes the former chairman of the Finance Committee.
I would like to say a few words about abusive powers, because I have worked for a long time as a consumer advocate. I have seem examples of abuse of power by banks. I remember clearly my experience with the Banque nationale du Canada, the BNC. I believe the president at the time was Michel Belanger, one of the joint chairs of the Belanger-Campeau Commission. In my brief to the commission, I mentioned the fact that the Banque nationale du Canada had a certain view of Quebec society, and that it was a corporate view. I do not endorse that kind of view nor the vision of the Banque nationale du Canada as expressed in its actions.
The case I quoted was mentioned in a judgment by the Supreme Court, and I am referring to Houle vs Banque nationale du Canada. The Supreme Court judgment contains a number of facts relating to abusive power, and they are absolutely terrifying. We have a bank that pushed the president or owner of a small business into bankruptcy because it did not give the owner of this small business a chance to pay its debts. It proceeded with a seizure before the judgment, and the gentleman was obliged to declare bankruptcy. !ALP/jcl300-2


Madam Deputy Speaker:: I am sorry to interrupt the hon. member for Chambly, for the time being, and I am sure he will wish to continue his speech later this afternoon.
It being one o'clock, I do now leave the Chair until 2 p.m.
At 1 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.
[Stage Direction]
September 26, 1991

Mr. Nic Leblanc (Longueuil):: Mr. Speaker, over the last 30 years, Quebec has acquired economic and political institutions to meet its needs. It did so in its own way, with its own resources. The general public and business people are proud of these achievements. Moreover, they are working very hard to make them more effective.
Today the federal government wants to meddle in our affairs. It wants to create new powers, new standards, new agreements and impose them on Quebecers. That is totally unacceptable. First, it will lead to new confrontations and aggravate the existing tensions. Second, it will make the political and legislative process more cumbersome, slow it down and hurt Quebec's economic development.
I therefore call on Quebecers to reject the federal government's constitutional proposal.


EL SALVADOR
Lynn Hunter: Mr. Speaker, the people of El Salvador has endured the devastation, destruction and death of a 12-year old civil war.
Yesterday, leaders of the FMLN and the Salvadoran government signed a peace agreement under the auspices of the UN that brings hope for a ceasefire before the end of the year.
As well, measures agreed to in this peace accord will set a constructive course towards the democratization of the political process in El Salvador.
New Democrats have long supported a peaceful resolution of the civil war and we have consistently raised in the House of Commons concerns of the Salvadoran people regarding human rights violations, international aid and Canada's policies in Central America.
We applaud the efforts of Secretary General Perez de Cuellar for his role in the negotiations that led to this accord and urge both the FMLN and the representatives
of the Salvadoran government to stay the course of peace.


POTATO INDUSTRY
Mr. Joe McGuire (Egmont):: Mr. Speaker, the PVY-N situation in the Canadian Prince Edward Island potato industry has become farcical. The industry has been thrown into chaos. Borders are closed and millions of dollars are lost and now we find that testing proceedings which led to all this are found to be flawed.
In a follow-up test, 8 out of 10 samples originally labelled positive have been found to be negative, an 80 per cent error rate. Agriculture Canada, badly understaffed in the technical area, made a call. That call was in large part wrong.
Now we have a case in Saskatchewan where a tuber imported from the United States has tested positive. This diagnosis was confirmed in three separate labs.
I ask the Minister of Agriculture to intervene in the situation and order a complete retesting program to eliminate the errors made, take action to have the U.S.A. institute a testing program the same as the one forced on P.E.I., apply the same import restrictions against the United States as they have applied against us and, finally, call a full-scale into the entire problem so that once and for all the air will be cleared and the industry will know where it stands, both nationally and internationally.


CROSS-BORDER SHOPPING
Mr. Ken James (Sarnia-Lambton):: Mr. Speaker, aggressive advertising, exchange rates and tax on gasoline are all major factors in the cross-border shopping issue.
Over recent years all members will know that crossborder shopping has been on the rise and same day trips to the U.S. are increasing at an alarming rate in border communities like mine of Sarnia-Lambton.
This trend cannot continue. Cross-border shopping has severe economic consequences for Canada, as well as serious implications for federal and provincial governments. Both are concerned about the negative impact on employment.
September 26, 1991

Both are also losing considerable tax revenues. A study by the consulting firm Ernst and Young estimated the total tax loss, excluding income taxes, was $15 million for 1990 in Sault Ste. Marie alone. So what does this figure mean again? It means tax loss for the provinces and, of course, the retailers are suffering, especially in border communities like mine that is on the leading edge of this phenomenon.


YUGOSLAVIA
Mr. Derek Lee (Scarborough-Rouge River):: Mr. Speaker, yesterday in Yugoslavia, federal forces in the Republic of Croatia attacked targets in the town of Vinkovci with napalm and cluster bombs.
According to western news sources, one of their targets was a bam that had been converted into a field hospital and was clearly marked with a red cross. Mr. Speaker, as a signatory to the Geneva Convention and the UN Charter of Rights, Canada must denounce the use of napalm and cluster bombs on civilian and Red Cross targets. We must use our influence in the world community to put an end to the atrocities being committed in Croatia.
This is a situation which poses a serious threat to world order. The world stood up and took notice when Saddam Hussein threatened the use of chemical weapons against the innocent people of Kuwait. It must do the same today for the inhabitants of Croatia, and Canada must lead the way.


THE CONSTITUTION
Mr. Jean-Pierre Hogue (Outremont):: Mr. Speaker, I sat on the Belanger-Campeau Commission for a long time. I kept quiet out of respect for my colleagues and the institution I represent.
Throughout this commission, people called for a plan for society. They kept asking for economic union. They demanded recognition of the distinct society. I can say that the document the Prime Minister has just presented gives Quebec all that.
The party poopers, bogeymen, eternal skeptics, wreckers, the Bouchards, Laroses, Brassards and their ilk are at work demolishing our house, which is part of our national heritage. The laws covering heritage, in Quebec as in Canada, will not allow these dream merchants, these charlatans to achieve their personal ends by demolishing what Quebecers cherish most: our feeling of belonging and our pride.
And to those who would not know that, I say it in French, in our Parliament in Ottawa.


MINISTER OF JUSTICE
Mr. Russell MacLellan (Cape Breton-The Sydneys):: Mr. Speaker, last week Canada's first female Minister of Justice compromised every feminist principle she claims to espouse. Recently her colleague, the Conservative member of Parliament from Burlington, referred to a female member of the Liberal caucus as a slut.
The Minister of Justice said this was okay because he was provoked. She said the hon. member-


Mr. Speaker:: We have a longstanding tradition that in statements by members there should not be a personal attack against any other member in the House. The hon. member is, I think, very much on that course and it does disturb me. If the hon. member wants to finish his statement and make a point, I will of course hear him.


Russell Gregoire MacLellan: The point is that it is inconceivable that such a dangerously partisan defence of the indefensible would come from the Minister of Justice, who convened a Women and the Law conference and who frequently refers to herself as a feminist.
May I suggest to the minister that she re-evaluate her own principles when she suggests that sometimes a woman deserves to be attacked with such venom and hatred because of her-


Mr. Speaker:: Just a moment. The hon. member is a long time and distinguished member of this House and I know that he feels very strongly on the issue. However, I think we ought to proceed and hear another member.
The hon. member for Portage-Interlake.

September 26, 1991


THE CONSTITUTION
Mr. Felix Holtmann (Portage-Interlake):: Mr. Speaker, when I asked Deborah Wehrle, a charming law student at the Ottawa Law Society, her opinion on the constitutional package, here is what she said:
The constitutional package presented to Canadians on Tliesday, September 24, sets out an innovative plan to remove barriers to interprovincial trade in Canada. This change will help ensure economic recovery and future prosperity. Let us take a cue from Europe. Diverse European countries have committed themselves to the elimination of trade barriers in a common market to enhance their competitiveness. This sets a fine example. In Canada we are already united as one nation. We have a great tradition of hard work and co-operation. It is time for Canadians to recognize the key to our 124 years old success story. Our country has prospered because of a commitment to rise above our differences, to overcome geographical distances, and pool our strengths.
The Conservative Party is committed to creating a strong domestic market which can compete globally. It is time to focus on creating an effective, internal market and strong economic union to ensure prosperity in Canada in the 21st century and beyond.


ALGOMA STEEL
Mr. Steve Butland (Sault Ste. Marie):: Mr. Speaker, I would like to talk about Algoma Steel.
In May of this year, I asked the Minister of Industry, Science and Technology what he thought of employee ownership. He endorsed the principle. He suggested I speak to the Minister of Finance about it. I asked him in the House of Commons, and he endorsed the principle.
I met with the minister last week. He said: "I cannot give you an answer. I am waiting for the Minister of Industry, Science and Technology", so it is back in his ball court.
If I may, I will quote the Minister of Industry and Science. He said: "I will help Algoma when I am convinced it will dramatically be restructured".
It has been restructured. It is in the process of being restructured. We will lose 1,600 or 1,800 jobs. What is the definition of restructuring to the minister, 3,000 people or when the whole plant is closed down?
We ask the minister to make a recommendation to the Minister of Finance to assist us now, be it tax credits, older worker adjustment, bridge pensions or whatever. We ask them not to be passive spectators at the table for Algoma restructuring. The federal government must participate.


EXTRADITION
Mr. Bill Domm (Peterborough):: Mr. Speaker, today I applaud the decision of the Supreme Court of Canada to send Joseph Kindler and Charles Ng back to the United States.
No longer will Canada be considered by the likes of Ng and Kindler as a safe haven to escape capital punishment.
No longer will the likes of these men consider sliding down the wall on bed sheets to escape justice in the United States.
No longer will the victims in the United States be denied justice in seeing Ng face the charges for the 19 violent murders he is accused of in California.
My thanks go out to all members of this House, the justice committee and victims of Violence International for assisting in this seven year fight to extradite Ng and Kindler. I am doubly pleased to be able to advise the United States victims in the Ng case that they will finally see justice.
In closing, a special thanks to the 185,000 Canadians and Americans who wrote to members of this House of Commons urging for justice to be seen to be done in the United States and to return Ng to the proper justice he deserves.


ARMENIA
Mr. Jim Peterson (WHIowdale):: Mr. Speaker, last Saturday Armenians voted 99.3 per cent in favour of independence, marking the end of 71 years of communist rule.
This was an historic moment for a people so touched by persecution, occupation and natural disaster.
September 26, 1991

In 1915, the genocide at the hands of the Ottoman Empire killed 1.5 million Armenians. Armenia gained independence in 1918, only to be occupied in 1920 by the Soviet Union.
Over the last three years, Armenians have suffered the worst ethnic violence in the republics, with 2,000 killed.
The people of Armenia and the Armenian community here in Canada have dreamed of the day when their country would be independent. Today, we share in that joy.
Armenia faces a number of economic challenges: the exodus of Armenians from Azerbaijan and the 1988 earthquake that left 500,000 homeless.
We look forward to the day when Armenians of Nagorno-Karabakh become part of Armenia. We seek recognition by the world community and Canada of the genocide.
We call upon the Government of Canada to recognize Armenia and to help Armenia achieve its aspirations of becoming a prosperous, democratic nation.


LEADER OF THE BLOC QUEBECOIS
Mr. Denis Pronovost (Saint-Maurice):: Mr. Speaker, Quebecers are starting to discover the real motives behind the negative attitude of the Bloc Quebecois leader. Every time he opens his mouth, we realize that he has nothing more to propose and that he is only seeking to destroy Canada. His national sport is rejecting out of hand any proposal that does not come from his small mind.
From listening to him, Mr. Speaker, the children and uninformed people in Quebec would end up believing that all the Caisses populates would move to Alberta. Nothing less than a scare campaign from the Bloc Quebecois.
Mr. Speaker, Quebecers will not accept for much longer the permanent indignation and half-truths that come out of the mouths of Bloc Quebecois members. Instead of making concrete proposals, the leader of the
Bloc Quebecois prefers to act in the federal Parliament like a puppet of Jacques Parizeau or Gerald Larose. What a shame for Quebecers!


HUMAN RIGHTS
Hon. Audrey McLaughlin (Yukon):: Mr. Speaker, more than five years ago this government had promised to amend the Canadian Human Rights Act to prohibit discrimination on the basis of sexual orientation. Canadians still await this important legislation. Yesterday, Judge Joseph McDonald ruled that the Canadian Human Rights Act is unconstitutional because it fails to protect lesbians, gay men and bisexuals from discrimination. The right to be free from discrimination based on sexual orientation has been put into law in Quebec, the Yukon, Manitoba and Ontario.
I call on this government and this Minister of Justice to introduce long-awaited amendments to the Canadian Human Rights Act. It is time to ensure that Canadian lesbians, gay men and bisexuals can live in dignity and freedom from discrimination.


FORESTRY
Mr. Dave Worthy (Cariboo-Chilcotin):: Mr. Speaker, yesterday was a very important day for anyone concerned with this nation's forests. Our minister announced in Toronto the new program Partners in Sustainable Development of Forests. This initiative will help establish a network of forests that will become working models for sustainable forest development. The model forest will demonstrate the most advanced scientific methods, techniques and forestry practices.
The partners program will promote a broad balance between all users of our forests and demonstrate Canada's commitment to our international responsibilities as one of the world's major forested nations. Through the key partnerships with provinces, with industry, with forest owners, with native groups and environmental organizations, this program is another example of Canada's support for the principle of sustainable development.
Oral Questions THE CONSTITUTION

September 26, 1991


Mr. Larry Schneider (Regina-Wascana):: Mr. Speaker, our government recently released a package of proposals to renew the Canadian federation. It is my hope that Canadians will look at these proposals and put forward their concerns and ideas in an open and rational manner. This should not be regarded as an emotional issue. This is primarily about federalism, economics and history.
Canadians are on the brink of undoing that which the European Economic Community has striven toward for 50 years. Quebec separation means the isolation of the maritimes. That could lead to a separate Ontario and a separate British Columbia and hence, the destruction of a country that has developed to become one of the two most preferred countries to live in in the world.
Our country's future is in our hands. Canadians, I urge you to grow up, wake up, familiarize yourselves with our history in order that we may have a future.



ORAL QUESTION PERIOD


Hon. Jean Chretien (Leader of the Opposition):: Mr. Speaker, my question is for the Deputy Prime Minister and Minister of Finance. The Bank of Canada Act says that the Bank's role is to use monetary policy to mitigate "fluctuations in the general level of production, trade, prices and employment-".
The proposals on economic union tabled this morning want to eliminate any reference to production, trade and employment. I therefore ask the Minister of Finance why he wants to take from the Governor of the Bank of Canada the obligation in setting monetary policy to ensure job creation for the unemployed in this country.


Donald Frank Mazankowski: Mr. Speaker, I think the hon. Leader of the Opposition would share the view that in order to achieve sustainable growth, one must have price stability. There is clearly historical evidence of that fact.
As a matter of fact, if one were to look at some of the leading industrialized nations of the world, particularly looking at Japan and Germany, one would find that they have had excellent growth and more than reasonable price stability.
What this attempts to do is clarify the mandate of the Bank of Canada. It has been criticized in some quarters as being overly broad, ambiguous and can tend to be contradictory on occasion. It is in that respect that we are attempting to clarify the role of the Bank of Canada to achieve price stability, and to achieve price stability, you can achieve sustainable growth with job activity.


Joseph Jacques Jean Chrétien: Mr. Speaker, this government and the Governor of the Bank of Canada have been obsessed with fighting inflation for five years now. Today we have a high for the last six years in unemployment, and we still have a very high level of inflation.
I want to know from the minister why he wants to take away the responsibility of the governor of the bank, in setting the monetary policy, the obligation to look at the unemployed. Why does he want to give a green light to the governor of the bank to not care at all about the level of employment in Canada?


Donald Frank Mazankowski: Mr. Speaker, there may be a fundamental difference in the goals and objectives of this government as compared to the position of the Liberal Party.
What the leader of the Liberal Party would advocate is high inflation, high interest rates, high deficits, slow growth and high unemployment. That is the record of the past. If one looks at the period in Canada from 1950 to 1973, one will note that there were inflation rates that averaged about 2.8 per cent with growth in excess of 5 per cent. When inflation was up around 9 per cent, the rate of growth fell to about 3 per cent or 3.1 per cent.
It is not only Canada that is pursuing this goal and objective. The over-all goal and objectives of the Group of Seven countries is designed to achieve price stability and sustainable growth. The goals and objectives of the OECD are likewise. Just recently, Mr. Laidler of the C.D. Howe Institute said that the target of price level
September 26, 1991

stability is both appropriate and feasible and the bank's mandate should be updated accordingly.


Joseph Jacques Jean Chrétien: Mr. Speaker, you can have growth and you can have price stability but you have to make sure in the process that you do not create unemployment in the country. One good way to achieve this is to have an economic union. I am very pleased to realise that at last the government has read the document Securing the Canadian Economic Union in the Constitution that I tabled in this House 10 years ago, and that was opposed by all the members of that party. Never in this document did we want to take away the responsibility from the governor of the bank to look after the unemployed in Canada.
Will this government change its policy and make sure that the monetary policy of Canada takes into account that we have to create jobs for Canadians and zero inflation will not do any good if we have 25 per cent of the population not working? What we want is jobs for Canadians.


Donald Frank Mazankowski: Mr. Speaker, the best way to create jobs is through sustainable growth and sustainable growth can be achieved through price stability.
I am veiy pleased that the hon. member is pleased about the over-all package. I am sure that he would be pleased to note that in connection with the question that he just put, the document at page 39, in consideration of price stability, says: "Monetary policy should be conducted with due cognizance of the path to price stability that best contributes to other Canadian objectives". One of those Canadian objectives is obviously growth, job creation and economic activity throughout the country from coast to coast to coast.


Hon. Herb Gray (Windsor West):: Mr. Speaker, I have a question for the Minister of Finance.
The minister speaks about doing nothing more than clarifying the mandate of the Bank of Canada, but in the document he tabled today he says "their references to mitigating fluctuations in production trade and unemployment-should be eliminated." That is not elimination, that is massacring.
Oral Questions
If the Minister of Finance is serious about encouraging jobs, production and growth, why does he want to take any references about them out of the mandate of the Bank of Canada? How can he be taken seriously if those words are eliminated?


Donald Frank Mazankowski: Mr. Speaker, it is being taken seriously because this issue is being taken seriously around the world. Whether it is the Group of Seven industrialized nations, whether it is the OECD group of nations, whether it is the United States, whether it is Japan, whether it is Germany, all are committed to the goals of price stability because if you have price stability you will have sustainable growth and if you have sustainable growth, you will have job creation activity.
Right here in Canada the C.D. Howe Institute which certainly is not a Conservative think tank-


Some hon. members:: Oh, oh.


Donald Frank Mazankowski: The hon. member quotes it quite often. I remind the hon. member that the recommendation that was published in a paper by Mr. Laidler said "the target of price level stability is both appropriate and feasible and the bank's mandate should be updated accordingly", and that is precisely what we are doing.


Herbert Eser (Herb) Gray: Mr. Speaker, the minister boasts about his policies of price stability. What have they brought us? A made-in-Canada recession, one and a half million people unemployed, our export industries in absolute crisis.
I ask the minister why, through the policies announced today, does he want to continue to enforce forever on Canadians policies of recession and unemployment and force the provinces to do the same thing. Can he explain that to Canadians who are already suffering the burdens of his misguided policy?


Donald Frank Mazankowski: Mr. Speaker, the hon. member is absurd in his interpretation. I have tried to make that clarification in response to earlier questions. What the hon. member is really proposing is a policy of high inflation, high interest, high deficits, slow growth and high unemployment. Canadians have had enough of that. The only way to achieve sustainable growth is through the containment of inflation and price stability.

September 26, 1991
Oral Questions
All we have to do is look at what has happened in Japan: low inflation, high growth, prosperity. Germany: low inflation, high growth, job creation.
You can go around the country and prosperity is linked very clearly with sustainable growth and price stability, and that is what we are attempting to achieve.


Audrey Marlene McLaughlin: Mr. Speaker, my question is for the Minister responsible for Constitutional Affairs. Price stability is indeed important but those people who do not have jobs, who cannot buy anything, are more concerned with getting a job and contributing their skills to society.
Yesterday the minister indicated in committee that he might be willing to reconsider the proposal to make reducing inflation the central priority of the Bank of Canada. I ask the minister if he will commit today, and convince his colleague the Minister of Finance, that this party's policy of full employment, is an important priority for the Bank of Canada.


Right Hon. Joe Clark (President of the Queen's Privy Council for Canada and Minister Responsible for Constitutional Affairs):: Mr. Speaker, if my memory is correct, what I said yesterday more precisely was that if the language in our document did not adequately reflect our intention then I would look at a chance to try to make the language more precise.
There is no question at all as my colleague, the Minister of Finance, has said about the commitment of this government to job creation. This is almost a red herring that members of the House are trying to bring across the trail of the House today. That, of course, is their privilege.


Audrey Marlene McLaughlin: Mr. Speaker, I have a supplementary question for the minister. It is essential that jobless men and women find a job, and the unemployment rate causes great concern across Canada. There are 1.5 million unemployed Canadians today. So, I ask the minister again: is he willing now to recognize that full employment should be one of the primary objectives of this government and that the Bank of Canada should do its share too?


Charles Joseph Clark: Mr. Speaker, I am prepared to do two things today. First, I will indicate that the government of Canada fully supports policies based on substantial and permanent employment opportunities across Canada. And it is policies such as the one my colleague the Minister of Finance has just described that can have that effect. Second, if the hon. member has an amendment, an improvement or anything else to propose, she is welcome to do so.


Audrey Marlene McLaughlin: Mr. Speaker, the Minister of Finance and the Minister responsible for Constitutional Affairs talk about the importance of price stability. We are trying to say, simply, open up the process, recognize the reality of Canada, that there are many people out there crying for this government to make sure that they can earn a respectable living. There are many others who need shelter in this country.
I ask the Minister responsible for Constitutional Affairs this: In the government's proposal it indicates that housing can be made an exclusive jurisdiction of the provinces. Many Canadians depend on the Canada Mortgage and Housing Corporation to finance social housing, so I want to ask the minister if his government is to go ahead with the idea of transferring its responsibilities to make sure that the funding that is presently spent for social housing will also be transferred to the provinces.


Charles Joseph Clark: Mr. Speaker, the purpose of our proposal is to indicate that not simply are we interested in changes in theory in the way federalism operates, we are also prepared to look at specific changes in the way powers are exercised. We are following certain principles here.
One of those principles that we want to follow is a greater respect for the constitutional jurisdiction that has been established. Another is one of efficiency, of trying to have policies carried out by the level of government that is most effective and most able to carry them out.
As I indicated yesterday, in other fields like the environment it is the determination of this government to continue to guard and to keep and to exercise all of the powers that are ours. But we have made it clear that we are prepared to discuss with the provinces means by which there can be a recognition of their exclusive jurisdiction in domains, in fields like housing.
September 26, 1991

I think that as the hon. member considers these proposals she will see that that is a constructive way to give reality to the principles that I think we all in this House espouse of trying to have a more effective federal system, including one that allows provinces like the province of Quebec to take account of the particular challenges and situation that they face.


Mr. Paul Martin (LaSalle -Emard):: Mr. Speaker, my question is directed to the Deputy Prime Minister.
In the debate on the economic union, we note a great discrepancy between the point of a new hold by Quebec which sees the role of the state as the driving force of economic development and that of the government as expressed in its plan which overlooks it.
So, here is my question: to close yesterday's debate, is the government prepared to entrench in the Constitution the right of the provinces not only to create, but to maintain and innovate on their own initiative, new economic development institutions such as the Quebec Deposit Fund or the Heritage Fund?


Donald Frank Mazankowski: Mr. Speaker, perhaps any confusion that may exist over what is in or what is not in the document can be dispelled today with the release of the document. There has been a lot of debate about what the document might contain or what its implications are. With regard to many of the concerns that have been expressed, for example in Quebec about the fact that the federal government would immerse itself into provincial budget-making, I don't think there is anything in the document that reflects that at all.
I think the release of the document will clarify many of the items that the hon. member has referred to.


Paul Edgar Philippe Martin: Mr. Speaker, perhaps something was lost in the translation. I asked, very clearly, if the government was prepared to guarantee within the Constitution the right of the provinces to develop their own economic institutions like the Heritage Fund and the Caisse de depot.
My question now is to the Minister of Industry and Trade. It is not enough to build an economic union that is done on the basis of yesterday's economy, and that is the linkage this government has failed to make. There is not
Oral Questions
much use advocating the free circulation of goods if there are no goods to circulate or nobody to buy them. Will the government undertake specifically in its forthcoming paper on competitiveness to target at least 25 per cent of our Gross National Product as a firm objective for manufacturing in order to give Canadians jobs?


Hon. Michael Wilson (Minister of Industry, Science and Technology and Minister for International Trade):: Mr. Speaker, the hon. member loses his credibility when he makes the statement he just made, that we have not made the linkage between unity and the strength of our economy. That is absolutely clear in the Speech from the Throne and it was absolutely clear in the Prime Minister's statement on Tuesday. It is absolutely clear in the document.
As the member also pointed out, we have these two documents coming out on competitiveness and learning which reinforce the statements we have already made. Clearly, we are going to be putting in place a consultation process that will respond to the questions the hon. member has been asking. In that way we will ensure that we have an increasing degree of export activity, of international activity which will affect the manufacturing sector the hon. member is concerned about.


PUBLIC SERVICE
Mr. George S. Baker (Gander-Grand Falls):: Mr. Speaker, I want to ask the President of the Treasury Board why the government has decided, while refusing to budge on the zero per cent increase of salaries to public servants, to continue to give performance pay to over 4,000 managers in the Public Service, in some cases up to 10 per cent of their salaries. Pourquoi ce double standard?


Hon. Gilles Loiselle (President of the TVeasury Board and Minister of State (Finance)):: For the managers of the Public Service, a former government, and I think it was a Liberal government, decided that they would be dealt with in two ways. They took away 15 per cent of the wage budget and decided to have a basic pay. Instead of having, as there is for the unionized employees, the seniority which will go up even if we have the zero per cent unionized, the same treatment is given to the managers.

September 26, 1991
Oral Questions
This is a system that was put in place for the managers who will get zero pay increase and will get the seniority the same as the unionized employees.


George Baker: Mr. Speaker, let us get this straight. The minister has already said to the press that there would be no increase in bonuses because that is rolled into and considered a part of the salary that would be frozen.
I want to ask the minister if this now means that the Chief Executive Officer of CN will now be frozen at his $80,000 Christmas bonus that he received last year on top of his $300,000 salary and the Chief Executive Officer of Canada Post will now be frozen at the $70,000 like he got last Christmas on top of his $250,000 a year salary? The poor fellows, frozen out in the cold. Why they will soon call the minister Mr. Freezie.


Gilles Loiselle: As he grows in years, the hon. member will become wiser and learn not to believe everything that is written in the newspapers.
As far as the top managers of the Crown corporations are concerned, we have not yet received the recommendation which is prepared by the Board of Governors. I can tell him what the decision of the government is. When we receive this recommendation, the answer will be zero.


Mr. Cid Samson (Timmins-Chapleau):: Mr. Speaker, it is obvious that this government has shown once again that it has a double standard.
While the Conservatives have forced restraint and hard times on most working people, the government has found the money to provide fat bonuses for Crown executives and senior managers.
The Treasury Board minister thinks it is fair to give a bonus, maybe as high as $84,000 to the President of CN, whose profits have taken a nosedive. Yet, to the clerks in the Public Service making only one quarter of Mr. Lawless' bonus, the government has said zero per cent, no matter how productive they are.


Gilles Loiselle: Mr. Speaker, I guess I am too smart. I gave the answer before I got the question.
If zero per cent is such a fat number, why does PSAC
not accept it?


Cyril (Cid) Samson: Mr. Speaker, I am sure if the members of PSAC were offered the same kind of bonus, they would certainly take it in a hurry-the same bonus.
If a $366,000 wage is not incentive enough, what is? If we figure 4,000 members, a 10 per cent bonus, that is $24 million.
There is a principle of fairness. You cannot on the one hand insist there is no money for pay equity while you throw away money on fat-cat bonuses. Will the government eliminate this double standard and put this money where it is most needed?


Gilles Loiselle: Mr. Speaker, I believe I have answered this question. When we get the recommendation for performance allowances for managers, whatever they are, the answer of the government will be that they will be zero per cent.


THE ECONOMY
Dennis Joseph Mills: Mr. Speaker, my question is directed to the Minister of Finance. Last week, Mr. Lou MacEachem from Calgary, Alberta received the Entrepreneur of the Year Award. Upon receiving his award he announced that because of the GST, because of the high dollar and because of all the other red tape in this country, he was selling his business employing 300 people and leaving the country.
When is this government going to stop drowning small business in red tape and high taxes?


Michael Holcombe Wilson: Mr. Speaker, I happened to be there that same evening
September 26, 1991

and Mr. MacEachem made it very clear that he was not leaving the country.
He did make some points and some of the points I have some sympathy with. I think that it is important to realize that-


Mr. Tobin:: Which ones do you have sympathy with?


Michael Holcombe Wilson: If you will ask the question, I will give you the answer.
If the hon. member had been at that dinner, he would have seen and heard from a large number of people who were at that function who are entrepreneurs who did not agree with what Mr. MacEachem has said, who are going to go out and build businesses, take on the opportunities and the challenges that are there and beat the world. That is the type of entrepreneurialism that is alive in Canada and it is going to be reinforced by the policies that will be flowing from our competitiveness agenda.


Dennis Joseph Mills: Mr. Speaker, my supplementary question is for the same minister. The minister talks about being sympathetic. He talks statistically week after week about a lower interest rate by the Bank of Canada. What good is a lower interest rate by the Bank of Canada when its own FBDB and other chartered banks, even with the lower rate, will not lend it out to entrepreneurs and Canadian companies?


Michael Holcombe Wilson: Mr. Speaker, I think the hon. member knows that this government does not have a policy of directing the chartered banks as to what they should or should not do with lending. That is not the way this government or any government has acted.
What we have been doing and what I would commit to the hon. member is that we are exploring every opportunity, every idea that comes in that will give us a better sense as to how we can encourage a greater amount of financing for venture capital, for entrepreneurs, for growing businesses.
If the hon. member has any suggestions to put forward as to how we can increase the amount of finance available, then I am quite prepared to look at them in a very serious way. If they are satisfactory ones, I would be happy to pass them on to my colleague, the Minister of Finance, and encourage him to bring in some of these in his budget.
Oral Questions INCOME TAX


Catherine S. Callbeck: Mr. Speaker, my question is for the Minister of Finance. Yesterday, when one of my colleagues asked if the federal government intends to allow all provinces to collect their own personal income taxes directly from individual taxpayers, the minister side-stepped the issue.
I ask the minister to provide the House today with a straight answer to this very serious question.


Donald Frank Mazankowski: Mr. Speaker, as the hon. member knows, there are in existence tax agreements between the federal and provincial governments wherein the federal government collects tax for the provinces. The provincial taxes are based upon the rate of federal tax.
It has been the desire of the provinces to seek a greater degree of flexibility and to examine these agreements. It is for that reason the federal government has issued a discussion paper on this particular issue, based on a number of principles, namely flexibility, transparency, harmonization and simplicity.
The hon. member should know that every individual province should withdraw from the tax agreements on its own accord. What we are attempting to do through this discussion is ensure that there is a harmonized tax system in place. If it needs improvement, we will improve it.


Catherine S. Callbeck: Mr. Speaker, my supplementary is for the same minister.
Will the minister at least tell this House whether he agrees with the Canadian Federation of Independent Business that this proposal could result in a massive tax grab and spawn a terrible, complex income tax system?


Donald Frank Mazankowski: Mr. Speaker, the President of the Canadian Federation of Independent Business does make a very valid point.
That debate is going on right now. She may want to check with her own provincial minister of finance, who was party to this proposal, wanting a full-scale discussion on this issue of tax on income and provincial tax agreements. Obviously the views of Mr. Bulloch will be taken into serious consideration by the group that is studying this. Certainly it will be taken into serious

Oral Questions
consideration by the federal government and I hope by the provincial governments as well.


MEME BREAST IMPLANTS
Ms. Joy Langan (Mission-Coquitlam):: Mr. Speaker, my question is for the Minister of National Health and Welfare.
Yesterday the food and drug administration announced that breast implant manufacturers must provide doctors with information for patients on the risks of implants. It must be written in easily understandable language.
His deputy minister has stated to the press that a similar move is not necessary in Canada. Will the minister now issue the same directive in Canada for products remaining on the market, while the safety and effectiveness data is reviewed on these products?


Hon. Benoit Bouchard (Minister of National Health and Welfare):: Mr. Speaker, the member from Coquitlam is aware that three years ago the Department of National Health and Welfare produced a booklet on breast augmentation. She also knows that information was available in Canada for women well before it was in the United States.
In answer to the specific question she raised, I was informed yesterday by the deputy minister about the U.S. directive to the implant makers. I will ask the same thing of the makers of the implants sold in Canada.


Joy Langan: Mr. Speaker, I thank the minister for that answer.
Is this the book we are talking about, the booklet that the Canadian Quebec Association of Plastic Surgeons, the Canadian Society for Aesthetic Plastic Surgery has put out? Is it the booklet that says: "In conclusion, in most cases the results of this operation are excellent and the level of patient satisfaction is high."
Surely the minister must ensure that this new information from the food and drug administration, which we have all been waiting for, is given to women in some straight talk, and not in suggestions that there is no problem with breast implants.
Hon. Benoit Bouchard (Minister of National Health
and Welfare): Mr. Speaker, I do not appreciate that the member said that what is in that document is not accurate information. It is very good information. The department updates the booklet periodically, and we will do it soon.
I just want to say that the information given by the Department of National Health and Welfare to women about breast implants has always been in terms of scientific reality.
I look forward to the member agreeing with me that that information is what should be provided. I repeat what I said yesterday. If there is any other information which can help women concerning the breast implant we will be delighted to provide it to women.


THE CONSTITUTION
Hon. Jean Lapierre (Shefford):: Mr. Speaker, my question is directed to the Minister responsible for Constitutional Affairs. With the Leader of the Bloc Quebecois, Mr. Claude B eland of the Federation des caisses populaires said that what bothered him was the proposal to legislate the economy, which was rejected as out of hand. Even Premier Bourassa of Quebec, in referring to the proposed economic union, said there were important risks and that the proposal was unacceptable in its present form.
I therefore want to ask the Minister responsible for Constitutional Affairs who is using scare tactics? Is he prepared to say that Messrs Bourassa and B eland are using scare tactics, telling lies and being dishonest? In fact, they were repeating exactly what was said by the Leader of the Bloc Quebecois yesterday. Will he admit that his proposal puts Quebec's powers in jeopardy?


Charles Joseph Clark: Mr. Speaker, Premier Bourassa said that the proposal was not acceptable in its present form. When he said that, he was not referring to the credit
September 26, 1991

unions or other specific areas. If the hon. member is suggesting that Premier Bourassa was making specific references, he is wrong. The hon. member asked me who is using scare tactics. Is Mr. Beland? No. Is Mr. Bourassa? No. Is Mr. Lucien Bouchard? Yes. Is Mr. Lapierre? Yes.


Jean-C. Lapierre: Mr. Speaker, I have a supplementary. Since the Minister responsible for Constitutional Affairs is trying to separate the sheep from the goats, I would like to ask him this: Yesterday, in response to a question by the Leader of the Bloc Quebecois, the Prime Minister said, referring to new federal powers, and I quote: "The third one states that if Quebec for instance did not support the legislation, it could opt out altogether".
However, it says in the papers this morning that his colleague, the Minister of National Health and Welfare said it was only meant to give a province time to adjust.
I want to know whether this third article is a transition measure or a right to opt out permanently. Who is using smoke and mirrors here, the Prime Minister or the Minister of National Health and Welfare?


Charles Joseph Clark: Mr. Speaker, the smoke and mirrors all come from the hon. member for Shefford, and he keeps trying to confuse the issue. This is an important question, and I answered it yesterday before the Parliamentary Committee when I said that the committee had the power to decide whether the right to opt out should be extended or established on a permanent basis. I hope, now that is clear, that the hon. member for the separatist party of Canada will stop trying to confuse Canadian citizens.


CROSS-BORDER SHOPPING
Kenneth Albert James: Mr. Speaker, my question is for the Minister responsible for Small Businesses and Tourism.
On July 18, 1991 the Minister for Small Businesses and Tourism attended the cross-border shopping summit in Toronto which brought together representatives of business, labour, consumer groups, mayors, and provincial cabinet ministers from Ontario.
Oral Questions
At that time a number of commitments were made on behalf of the federal government. One of particular importance was a commitment to look at the reduction or removal of third country tariffs on consumer goods that do not compete with similar Canadian made products, yet ultimately do affect the competitiveness of our retailers.
Could the minister report to the House on what progress has been made in bringing this commitment to fruition.


Donald Frank Mazankowski: Mr. Speaker, I would like to thank the hon. member for his question and advise him that the department is reviewing, on a case by case basis, the tariffs on non-U.S. origin consumer goods, particularly those that have had a significant effect upon retail prices.
As we do this review we will obviously be in a position to take the necessary corrective action.
I appreciate the interest of the hon. member and assure him that the matter is well in hand.


JUSTICE
Ms. Ethel Blondin (Western Arctic):: Mr. Speaker, my question is for the Deputy Prime Minister in the absence of the Minister of Justice.
Since the Manitoba justice inquiry report was released on September 8, the government has chosen to ignore the report's proposals which would serve greatly to improve the unfair treatment of aboriginals in the delivery of justice.
Will the minister commit today to establishing a joint federal-provincial-aboriginal task force to implement the urgent changes to the justice system?


Hon. Doug Lewis (Solicitor General of Canada):: Mr. Speaker, in the absence of the Minister of Justice, I appreciate my hon. friend's question.
The government is in no way ignoring the results of the inquiry in Manitoba, nor are we ignoring the results from the other inquiries that have recently been held. In fact, we are taking these into account.
My hon. friend will know that the Minister of Justice recently convened in Whitehorse a conference on the administration of justice for native people. It was quite worth while. I was in attendance myself and I think we all got a lot out of it. We are awaiting the results of the various seminars that were held. I can assure my hon.

Oral Questions
friend that the government intends to act on these matters.


Ethel Dorothy Blondin-Andrew: Mr. Speaker, my supplementary is for the same minister.
It is quite clear, from the minister's response and even from the government's constitutional package, that the government lacks the knowledge, the courage and the leadership to proceed with self-government for aboriginal Canadians.
Since the Manitoba inquiry is a model for self-government, will the minister recognize the right of aboriginal people to establish their own justice system as part of their inherent right to self-government immediately and not also delay that for 10 years?


Douglas Grinslade Lewis: Mr. Speaker, I can assure my hon. friend that the government, as do all members of the House, always seeks more knowledge and more ways to appraise ourself to help solve a problem; there is no question about that.
I would also tell my friend that we are not lacking in courage and determination to tackle this problem.
Finally, I would say to my hon. friend what has been said by the Minister of Justice and myself. We think that the present system of justice is flexible enough to take into account the concerns of native people. We are working on it and I would appreciate my hon. friend's co-operation.


THE ENVIRONMENT
Mrs. Marlene Catterall (Ottawa West):: Mr. Speaker, my question is for the Minister of the Environment.
Once again, Canada faces embarrassment on the world stage over its failure to act to protect the environment. The environmental group, Great Lakes United, feels it has to go as far as asking the United States to investigate the abysmal failure of the government to meet its international commitments under the Great Lakes Water Quality Agreement.
When and how will the government do something about the increasingly dangerous toxic state of the Great Lakes, or is it waiting to be forced to act by the court of world opinion?


Hon. Jean J. Charest (Minister of the Environment):: Mr. Speaker, let me first correct something. I think the hon. member may have made an error. She mentioned that the group asked the United States. I think it is the United Nations that they asked, not the United States.
There are obviously very important problems concerning the Great Lakes, but I think even the hon. member would recognize that some substantial progress has been made, although a lot remains to be done. This government is committed to pursuing its efforts in that area. Next week the International Joint Commission is meeting and I intend to be there, as does my counterpart, Mr. Bill Riley. We hope to update participation at the IJC and report on what we intend to do in the future.


Marlene Catterall: Mr. Speaker, in fact relationships with the American government on this issue were badly damaged by the repeated deferrals of this government on a joint pollution prevention plan and eventually Canada backed out totally of that agreement.
We have heard the promises. The minister made another one in front of the environment committee in June, saying that discussions on that agreement are on track and an announcement can proceed fairly rapidly. It is now September, nearly October. Poisons in the Great Lakes are not vanishing. What is the minister going to do about Canada's vanishing credibility on this?


Jean J. Charest: Mr. Speaker, I do not agree at all with the member when she says our relationship with our American counterparts is damaged on this issue. It is not true at all.
Just Monday of this week I was in New York with my counterpart to accept an award on behalf of all Canadians for the air quality accord. I think there is general consensus in this countiy and on all sides of this House
September 26, 1991

that that was a major achievement on which we can model other initiatives.
In the area of the Great Lakes, I also remind the member that we have been active. There has been the St. Lawrence Seaway initiative of $110 million. In 1989 the government announced the $125 million Great Lakes action plan and more recently the pollution prevention action plan, a $25 million initiative. There has been action on that front.


Mr. Ross Harvey (Edmonton East):: Mr. Speaker, in his response to the environment standing committee's report Out of Balance distributed today, the Minister of the Environment notes that Canada is committed to stabilizing its emissions of C02 at 1990 levels by the year 2000 and that that is a central element of the government's green plan.
Yet last week when I put the question to the Minister of Energy, Mines and Resources, he said: "It is Canada's policy to stabilize Canada's greenhouse gas emissions by the year 2000". There was no mention of C02 specifically and no mention of a 1990 cap.
My question to the Minister of the Environment is: Is there a 1990 cap as the government's policy for C02 emissions by the year 2000?


Jean J. Charest: Yes.


Ross Harvey: Mr. Speaker, I ask him how he can possibly square that answer with the report of the National Energy Board on its energy supply and demand in Canada figures released last week, which projects Canadian C02 emissions to rise by more than 1 per cent a year every year from 1990 to 2010.
Where is the cap? Where even is the stabilization?


Jean J. Charest: Mr. Speaker, I recommend that the member read the National Energy Board report. He would find that it does not take into account the projected actions the government intends to undertake to reach that objective.
The situation we are facing today with C02 emissions is very similar to the one that we face with C02 emissions in the case of acid rain. When we knew we wanted a cap, we did not know at the time exactly how that would be undertaken, but we knew where we wanted to go. It is the same situation today, and we will set out to do that as we progress.
Tribute
There is no contradiction there, none at all, and the member should read the National Energy board report. Then he will find that out for himself.


PRESENCE IN GALLERY
Mr. Speaker:: I draw the attention of hon. members to the presence in the gallery of the Right Hon. Peter Brooke, member of Parliament, Secretary of State for Northern Ireland.


Some hon. members:: Hear, hear.


Mr. Speaker:: I would also advise the House that the hon. member for Beaver River rises on a matter of personal privilege to pay a tribute.


THE LATE SENATOR STAN WATERS
Miss Deborah Grey (Beaver River):: Mr. Speaker, I rise today to pay tribute to Senator Stan Waters who passed away yesterday in Calgary after a battle with cancer.
Senator Stan Waters was bom in Winnipeg on June 14, 1920 of English immigrant parents. He was educated in prairie schools including Gameau-Strathcona High School in Edmonton.
In 1933 his parents sent him to England for one year to broaden his educational experience. He then entered the University of Alberta in 1938 before joining the war.
In 1941 Senator Waters left the University of Alberta to join B Squadron of the King's Own Regiment at Stettler as a private, and later that year as a corporal went overseas with his regiment.
On being commissioned in 1942, he volunteered for the newly formed Canadian parachute corps and after training was assigned to the U.S.-Canadian First Special Service Force which specialized in commando and parachute operations.
With the First Special Service Force, Stan fought through the costly mountain battles in southern Italy and the assault landing at Anzio. His unit was the first to enter Rome on June 4, 1944. Stan attained the rank of major when the unit was disbanded. He then joined the First Canadian Parachute Battalion and fought in northwest Europe in 1945.

Tribute
After the war he served in a wide range of command and staff appointments, including command of the Princess Patriot's Canadian Light Infantry and the First Canadian Infantry Brigade in Calgary. He also served on UN peacekeeping assignments and NATO duties in Europe.
In 1971 he was promoted to Lieutenant-General and from 1973 until 1975 he commanded the Canadian army. A series of larger appointments in Ottawa afforded Stan an opportunity to observe closely the operation of Canada's government and its departments.
Following a distinguished military career, he joined the Mannix organization in Calgary in July 1975.
His transition to the business world was both swift and successful. In just over six months he became president of the Loram Group engaged in national and international activities, in heavy construction, oil and gas, coal, engineering and manufacturing.
This private sector experience, with all of the driving forces of Alberta's complex economy, gave Stan invaluable knowledge and skill in developing policy for the west and for Canada.
To his private sector career, Stan brought the loyalty, leadership, sense of service and drive developed during an extensive military career.
In August 1989 he was nominated by the Reform Party of Canada to contest the election for senatorial selection in Alberta. On October 16, 1989 he was elected by a large margin, nearly double that of the votes of the next candidate. After a wait of nearly nine months the Prime Minister acceded to the wishes of the Alberta electorate and appointed Stan Waters to the Senate in June 1990.
I was here when Senator Stan came to Ottawa in June 1990 to be sworn in as Canada's first ever elected senator. How exciting it was to be part of that historical occasion. During Senator Waters' one year in the Senate I appreciated his deep knowledge and understanding on a wide variety of issues. What company and comfort he offered to me on a personal basis, as well as politically.
I will always remember Stan Waters' ram-rod straight, military fashion commanding respect from all he came in contact with. I will also always remember Stan whisking into my office, slumping, relaxed into a chair and saying: "Well, Deborah, what can we do for the nation today?"
Stan was honest, direct and took a no-nonsense approach to whatever had to be done. He never compromised his beliefs.
I was fortunate to know Stan on a very personal basis. We shared a platform often. We travelled together and ate supper together while here in Ottawa. He was genuinely concerned about me as a person and would jump to my defence on any issue as a father would guard his daughter.
In closing, my life has been enriched by knowing Stan Waters. He was a great proponent of Senate reform, and I was pleased to see the government put Senate reform on the constitutional table before his death. That is a tribute to him as a pioneer in the Senate reform movement.
Canada has lost a great statesman. To Stan's wife, Barbara, his children Claudia, Mark, Virginia, Caroline and their families, I want to say thank you for sharing Stan with ail of us.


Mr. David Dingwall (Cape Breton-East Richmond):: Mr. Speaker, on behalf of my party, we wish to associate ourselves with the regrets already expressed at the passing of Senator Waters.
Stanley Waters led an exemplary and straightforward life with strong convictions, and he had the determination to pursue those convictions.
He joined the army during World War II and he worked his way up rank by rank to the very top, holding the rank of Lieutenant-General, Commanding Officer of the army contingent of the Canadian Forces at retirement.
He then turned to the world of business, working as a general manager of the well respected Mannix group for almost 15 years.
He held strong political views and, even though we in this party do not share all of them, we admired him for his tenacity and determination in pursuing them.
Among his views that we do share is the desirability of an elected Senate. When the opportunity arose for him to contest an election for the Senate he had the strength of character not only to contest and to win that election but to wait patiently for the many months that it took the Government of Canada to accept the verdict of the people.
September 26, 1991

It is unfortunate that Senator Waters' health prevented him from serving longer in the Senate where he was an active spokesperson for a point of view somewhat different from the others found in the Upper Chamber.
We want to join with our colleagues in expressing our deepest sympathies to Mrs. Waters, their daughters and their son at this most difficult time.


Hon. Harvie Andre (Minister of State and Leader of the Government in the House of Commons):: Mr. Speaker, I too would like to join with the hon. member for Beaver River and the House leader of the Liberal Party in this tribute to the late Senator Stan Waters.
I knew Stan for a number of years. I basically knew him when he arrived in Calgary after retirement from the army and had met him prior to that when he was still serving in the army. He was an outstanding Canadian. Of that there is no doubt. His military service record established that clearly. He was a member of the famous Devil's Brigade, which was the subject of a movie. The Devil's Brigade was so-named by the Germans who found this Canadian-American group pretty fearsome. He rose to become the commander of the army, and upon retirement moved to Calgary and took a senior position with the Mannix group of companies. Another graduate of the Mannix group of companies was Peter Lougheed. That company seems to turn out politically active people.
Stan was an ally and a supporter for most of his politically active life. We differed in the last couple of years of his life but never about the question of the value of an elected Senate. In that regard his efforts are applauded and were a valuable contribution to the evolution of the constitutional structure of this country.
I too would like to join with other members of this House in offering our condolences to his wife and children, and say to them that in this difficult period they at least have the comfort of knowing that their husband and father was an outstanding Canadian who gave tremendously to this country.


Ross Harvey: Mr. Speaker, I would like to extend the condolences of the New Democratic Party caucus to the family and friends of Senator Stan Waters. Like most Albertans and the
Business of the House
overwhelming majority of Canadians I did not know Stan Waters but I sure as heck knew of him.
Stan was one of those giants whom occasionally Alberta-and other areas of the country but Alberta in particular-seems to produce: a person of monumental integrity, granitic determination with a dedication to what he thought was the right thing to do, which was sufficient to help him past virtually all obstacles. In this he exemplified what is best in the Albertan and the Canadian spirit.
We have all lost a champion with the death of Stan Waters. However, I am certain that his legacy will live far beyond him and stand Canadians in good stead for decades to come.


Dennis Joseph Mills: Mr. Speaker, I too would like to say that Senator Waters, whom I knew for about ten years, was always a person who was compassionate, approachable and caring. I would like to express my deepest sympathies to Mrs. Waters and the family and all of the grandchildren.


Mr. Alex Kindy (Calgary Northeast):: Mr. Speaker, on behalf of the people of Calgary Northeast I wish to express our deepest sympathy to the Waters family. We all knew Stan as a strong committed man of principles, a man who will take his place in history as one who contributed to raising the awareness of all Canadians about the undemocratic powers of some of our federal institutions.
General Waters represented Albertans with great dignity. We are especially proud of his contribution to political change and his place in history as Canada's first elected senator. He will be remembered as a great Canadian.


Mr. Speaker:: So that the House knows where we are proceeding next, I am going to take the usual Thursday afternoon question, and then I have a question of privilege which I must hear.


BUSINESS OF THE HOUSE
David Charles Dingwall: Mr. Speaker, would the government House leader indicate to the House the business for Friday and next week?

Privilege


Harvie Andre: Tomorrow it is my intention to call Bill C-32 for completion at second reading, Bill C-ll for completion at third reading, and Bill C-21 for completion at second reading.
On Monday it would be my intention to resume debate on the financial reform package. With the indulgence of the opposition I would like to have our usual discussions about the business of the House for the remainder of next week.


POINT OF ORDER
Dennis Joseph Mills: Point of order, Mr. Speaker. During Question Period today I directed a question through you to the minister of trade about the entrepreneur of the year, Mr. MacEachem, announcing that he was selling his business and leaving the country. The minister of trade stood up and denied that assertion.
My staff double-checked the claim I made and as late as yesterday afternoon the information I received was confirmed. I believe that the minister of trade inadvertently misled the House when he denied the assertion that I made. In fact, Mr. MacEachem is selling his business and leaving the country.


Mr. Speaker:: I will hear the hon. government House leader in a moment. I would just point out to the House that this is a dispute of fact and I have grave doubt as to whether it really is a point of order. The hon. government House leader.


Harvie Andre: Being a seat- mate of the Minister for International Hade I saw The Calgary Herald article in which Mr. MacEachem said that at 58 he was certainly not leaving Canada. He was not going to expand in the way he had in the past but he intended to carry on in Canada.


Mr. Speaker:: I thank the hon. government House leader. I think perhaps the exchange illustrates the difficulty we have where there may be a difference of opinion or debate on a question of fact.
However, I do not want hon. members to feel for a moment that they should be precluded from rising on a point of order on something they may have said which they may wish to clarify.
The exchange itself illustrates the fact that we must be careful in these matters.


PRIVILEGE
Jean-C. Lapierre: Mr. Speaker, I have been a member of the House of Commons for 12 years, and during that time, my interest has been, above all, the debate on the Constitution.
As an observer, I have attended all federal-provincial conferences on the Constitution, and I have always taken my duties and responsibilities as an elected representative very seriously. A few days ago, Mr. Speaker, a document was tabled in the House, a document said to be the most important one in this session, considering the future of relations between Quebec and Ottawa, whatever form that will take.
Mr. Speaker, I heard today-and this is why I wish to raise a question of privilege-I heard today that I, as an elected representative, was given access to this document at 10 a.m. on Tbesday, when the Prime Minister rose in the House. I also heard that Mr. Paul Desmarais, Mr. Roger D. Landry, The Globe and Mail and others who were not elected by anyone and whose only qualification is that they have either influence or a lot of money, were given access to this document, directly by the Prime Minister, sometime on Monday.
Mr. Speaker, I can hardly find words to express this affront to Parliament and to the people who elected me. How can people elected to represent 75,000 or 80,000 people, with a mandate to deal with issues that concern the future of our country, be ignored in this way and given this information at the last minute? Are there citizens in this country who, because of their influence, are more equal than others?
Are we as members, and especially as members of the opposition expected to tolerate having to rush through a document we are supposed to analyse? Unlike the traditional parties, we did not even have a briefing session, while other individuals outside this House, on the basis of financial or other influence, are entitled to certain privileges, and the rest- I am sure they are supporters of the government.
September 26, 1991

Mr. Speaker, I wonder how far this House can go in taking such an affront. How can we believe that the government respects the elected representatives of the people when it uses a double standard? And I must tell you, Mr. Speaker, that not having access at the same time as Paul Desmarais or Roger D. Landry prevented me from being able to react as quickly as all members who had access, or the party leaders. According to my information, only the party leaders had a briefing. There was unwillingness even to leave the document with them. The leaders of the official parties were not trusted, but the friends of the government were!
Mr. Speaker, I would like you, as the guardian of the rights of this House and the guardian of members' individual rights, to reflect on this lack of respect for Parliament, this infringement on democracy. I would like to submit to you copies of the articles that were published. I can even tell you that I am sure that Lysiane Gagnon had a very good idea of the text before all the members did, judging by her article of Tuesday morning.
Mr. Speaker, I think that this affront to Parliament and infringement on democracy deserves your consideration and I await word from you as to how this affront can be rectified.


Mr. Jim Hawkes (Calgary West):: Mr. Speaker, I would have appreciated some advance notice of this particular question from the member, especially as he began with an argument which he attempts to base upon the precedents of the House.
There is a longstanding precedent of giving warning when people are serious about engaging in a discussion of this kind. We do not usually raise these questions unless we are trying to make a political point. Then we raise them suddenly. If we are really concerned about the precedents of the House, we raise it in a different kind of way.
Mr. Speaker, I do not know what your attitude is but I fail to hear anything coming from the mouth of the member relating to the privileges of the House. The
Privilege
member has a grievance. Following his grievance to its logical conclusion would mean that the government could not discuss anything with anyone until it had tabled something in the House of Commons.
If the member searches his memory, he will find that some days in advance members were given more than adequate warning that at 10 a.m. on Tuesday of this week there would be ministerial statements and a document would be available to members.
The member may have noticed that I was in my place throughout the presentation by the Prime Minister and the responses by the leaders of the two opposition parties and had no copy of the document. He had it a good hour ahead of me because it was made available in the lobbies as quickly as possible after the commencement of the announcement, as promised.
If you are looking for parliamentary precedents, Mr. Speaker, you only have to go back to June 18, 1987, when, I think, the member for Shefford was in the federal cabinet. The Speaker rose on a question of privilege based on a set of principles much like the member for Shefford has alluded to based on the premise that there was some obligation on the part of the Crown to notify the House. That was about a financial statement rather than a budget.
The argument presented from the other side was an attempt to use budget precedents to deal with the financial statement. Mr. Speaker, I think you will find that there was no such obligation. Previous Speakers have ruled that there was no such obligation on the government. Certainly in this instance there was no such obligation on the government.
I could go one step further and remind the member for Shefford that in other parliaments based on the British parliamentary tradition when members choose to change their stripes from the party they were elected with they must resign their seats and run in a by-election. Then they can return to the House with some legitimacy.
The member was not elected to tear this country apart, yet he claims in this House that that is his intention.


Mr. Speaker:: I think we are getting away from the point of order.

House of Commons


Philip Edmonston: Mr. Speaker, I think that my colleague from Shefford has raised quite an important question of privilege, and I support him in it. Because last Monday, the Minister responsible for Constitutional Affairs clearly indicated, and I quote:

"We have given an indication in fairly general terms to a number of organization, including as she would know"-

-the hon. member who asked the question-

"-the Canadian Labour Congress, as to where we intend to move in this document". But the document has not been circulated.

It is important to emphasize that. Moreover, the Minister responsible for Constitutional Affairs continued in the same vein, saying:

"It will come first to the House of Commons". [Translation]
We would be the first to have the documents, except for 12 copies that would go to the provincial premiers, and we think that is appropriate.
Mr. Speaker, as members of the House of Commons, we need information, before those who are not members receive it. If you have some respect for the House of Commons, you cannot send such documents to Mr. Desmarais, the Globe and Mail or Mr. Landry. It is unparliamentary and undemocratic, and I think that my hon. colleague raises a very important question of privilege because this is not the first time it has happened. Not only the hon. member from the Bloc Quebecois but all members are concerned, because this government has acted in such a way many times.
Mr. Speaker, as chairman of this House, you are asked to rule clearly on this point, to avoid recurrences of this practice in future.


SPEAKER'S RULING
Mr. Speaker:: I listened with some concern to the statement by the hon. member for Shefford and the support given to it by the hon. member for Chambly. I also considered the comments of the hon. member for Calgary West.
We are faced here with a situation where several members are not at all happy that some people received the document in question before it was presented in the House of Commons. But I think that it is very important to consider immediately the difference between a document on constitutional proposals, for example, and the Budget. It is a very different situation. There is a difference. In fact, the members for Shefford and Chambly are not the only ones in such a situation, that is who did not receive the document in question before it was presented in the House of Commons. Indeed, this situation could apply to any member of the House, except some Cabinet members, perhaps. But the point made by the hon. member for Shefford is very clear. It may be grounds for a complaint, but I believe it is necessary to find out whether the grievance is serious enough that the hon. member was impeded in the performance of his parliamentary duties. The hon. member, who is a veteran here, well understands the difference between a grievance, a complaint and a question of privilege.
It therefore falls to me as Speaker to make a clear decision. According to the long tradition of this place and the circumstances involved here, this is not a question of privilege. I thank the hon. member for Shefford and the hon. member for Chambly for their presentation and also the hon. member for Calgary West for his statement.


Mr. Speaker:: I want to advise the House that as all members know the hon. member for Edmonton North-

I apologize to the hon. member and to his constituents- who is a veteran of this House and is of course one of the acting speakers is not able to be with us for some weeks having had an operation. We are looking forward to his return.
In the meantime, we have had to make some changes and we have had to seek the help of hon. members to take the chair from time to time during debate. I know that hon. members will, when it is not possible for me or others to be here and when we have called upon our colleagues in the House to take the chair, pay those colleagues who have volunteered to take this very dangerous position the greatest co-operation and courtesy.
It is in this sense that I advise the House that the hon. member for Elgin-Norfolk is prepared to take my place for at least an hour or so. Thank you very much.


Mr. David Barrett (Esquimalt-Juan de Fuca):: I am sorry to interrupt your leaving, Mr. Speaker. I wish that you would convey to the hon. member for Edmonton North the sincere best wishes of every member of this Chamber who recognizes that his illness will hopefully be only temporary and we will enjoy his chairpersonship as soon as possible again.


Some hon. members:: Hear, hear.


Mr. Speaker:: I want to say to the distinguished member for Esquimalt-Juan de Fuca, an old, old friend of mine, a former premier of my province and a veteran parliamentarian, that I appreciate very much his comments. I will pass them on to the hon. member who I think will also appreciate them with exactly the same sense of understanding as is extended by the hon. member.
Sometimes in this House we are disputatious, sometimes we have disagreements, but this is an example of the high regard that we hold for distinguished members of this place among each other. I thank the hon. member very much.
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GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motions that Bill C-19, an act respecting banks and banking; Bill C-28, an act respecting insurance companies and fraternal benefit societies; and Bill C-34, an act to revise and amend the law governing co-operative credit associations and to provide for related and consequential matters, be read the second time and referred to the Standing Committee on Finance.
Philip Edmonston: Mr. Speaker, before we had a brief intermission, we were talking about Bill C-19 relating to the Bank Act. I was talking generally about why we as a party are not in favour of this act but are in favour of allowing banks to market and sell insurance policies. I was supporting myself and my party in this position through the experience of the Quebec caisse populaires which have been doing it for so many years.
I have talked to some of my colleagues on the Liberal side as well as the Conservative side, and one of the things we do know about caisse populaires is that in marketing insurance the satisfaction of customers can vary depending on how the caisse populaire operates. Once again, because caisse populaires are responsible to their owners who are the people in the community, there can be some caisse populaires perhaps being more responsible and more competitive than others. I am willing to grant my colleagues that.
The important difference between what the caisse populaires do and what the banks would do if they

September 26, 1991
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became owners-and that is the key word-of insurance companies is that the banks would not necessarily be responsible to their communities. They would be responsible to their shareholders. Insurance companies would not be responsible to their communities per se but to their shareholders which would be the banks.
It must be understood that this is not a position which is anti-corporation. It is not a position which is partisan or is anti-bank. What we are trying to be is pro-consumer. We want to see competition. We want to see the banks get in there and market insurance as the caisse populaires have done because we believe, as with the caisse populaires as I said before, this would bring about competition, competitive rates, competitive services, and at the same time employees would not lose their jobs. As a matter of fact in Quebec it has done veiy well, particularly from 1985 to 1991.
I just wanted to explain why we are in favour of allowing the banks to market insurance plans but not becoming owners of insurance companies.
I would just like to mention one last thing for those of us in this House who are from the prairies, who have seen the kind-heartedness of the banks when it comes to farmers who cannot pay their mortgages. I am concerned about what happened with banks owning insurance companies and farmers or consumers not being able to pay their insurance premiums. What would happen? What power could be brought to bear?
I really think that where banks and co-operatives primarily deal as marketers that augments competition and at the same time it protects consumers. That is why our party, which wants to maximize consumer protection, is in favour of that aspect.
I want to bring to the attention of the House the point about abuse of power. I am concerned about the abuse of power as we give more power to the banks. As a consumer advocate, I have seen it work in the sense of being veiy much against the consumer interest.
I mentioned a very interesting Supreme Court case of Houle v. Banque nationale du Canada. The judgment is in French and English and it shows how the banks with the power they have can actually put a small business owner into bankruptcy. I was referring to the Belanger-Cam-peau Commission where the co-chairman was actually the head of the Banque nationale du Canada and he objected very strenuously to my presentation of a brief in
which I criticized the Banque nationale du Canada, referring to the Houle v. the Banque nationale du Canada decision in the Supreme Court of Canada. He had said that was not a proper complaint to make. I think it is.
Mr. Belanger referred to the fact that there is already a lot of protection for consumers. No matter what powers we give the banks today or with the passage of this legislation consumers will have a complaint mechanism. That is true. There is theory and there is reality. The reality is that there is not all that much protection.
Who protected them? I have a report here which is very interesting. It is actually a citation from a book called The Economics of Government Regulation, Theory and Canadian Practice. It is written by John C. Strick, and it is very interesting.
It says: "The increasing number of failures of financial institutions during the 1980s and the difficulties incurred by others brought the effectiveness of these early warning systems and the regulation of financial institutions into question. Mismatched assets and liabilities, the questionable quality of loans and lack of diversification were among the causes of failures of trust companies and the failure of the Northland Bank and the Canadian Commercial Bank."
I am worried about what little power we really do have over the banks as far as their practices are concerned, and I agree with my hon. colleague from Nickel Belt when he said: "Let's keep them in their respective cages. Let's give them the limited powers they have. Let bankers be bankers."
I think the central thing is that we should look at what happened with American Express. I wrote a letter to the president of American Express more than a month ago. I have not received a response. The letter that I sent to him was referring to restaurant owners of Quebec who found out that the 5 per cent that they were asked to pay American Express for clients to use their credit cards was exactly double that which restaurant owners have to pay in the United States.
They thought it was unfair. They are boycotting American Express in my province. I just asked the president of American Express to explain to me why we have this anomaly, and I have yet to receive a reply. TMk about complaint mechanisms.
September 26, 1991

When a member of Parliament cannot get a reply, who can?
In summation, I want to talk about American Express and interest rates.
Take a look at the lowering of interest rates that we all, as parliamentarians, have seen and that the other side has often reminded us of. I appreciate that reminder from the government side, but every time I see my statement from Visa or the other companies, I see the interest rates not going down appreciably, but staying the same.
What is our complaint mechanism? We have none. What is the social responsibility of the banks? I do not think it is very large in their estimation. What about the possibility of getting the banks to be socially responsible in bringing down their interest rates? If we are talking about 21 per cent, that is only the middle ground. Some of the interest rates are as high as 28 per cent. That is not socially responsible.
I referred to my hon. colleague from Nickel Belt. He presented a private members' bill trying to create a ceiling so that there will be only a certain number of percentage points above the general rate. That has not been dealt with but I think it is an interesting idea.
The summation is this. Our party is in favour of competition. We are in favour of giving the banks more diversification because through Third World loan problems, through the recession, banks need some protection, perhaps through diversification. We are not in favour of allowing the banks to become so globalized, such a predator or awesome creature that we all get eaten alive.


The Acting Speaker (Mr. Monteith):: The hon. member's time has expired. It is now the 10-minute question and comment period.


David Barrett: Mr. Speaker, I want to first of all make a couple of comments and then ask my colleague a question.
There is perhaps no other Canadian who has made a reputation as a consumer advocate as my colleague from Chambly has. As a matter of fact, Ralph Nader in the United States is known as the Phil Edmonston of the
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United States, just to show you how effective he has been.
My colleague has made a very, very good point about the role of credit union movements and the fact that ordinary people are represented through their participation in a co-operative effort in the financial institution they own and share in.
Their decisions are made not just on economic bases but on social bases as well. The case in Quebec has demonstrated an option of people power through the credit union movement.
I will be speaking later in the day about our own experience in British Columbia.
I would ask the member, in all the years of work that he has done prior to coming to this Chamber, why is it that the governments that he has experience in fighting have not been the kind of spokespersons and leadership people in advocating the expansion of the role of the caisse and credit unions in competition with the banks? Why are they afraid of that competition?


Philip Edmonston: Mr. Speaker, as a member of Parliament from Quebec I have seen, as a result of the last referendum in Quebec in which Quebec was forced to turn inward and pretty well give vent to its entrepreneurial spirit, Quebec deciding it was going to go on its own economically as much as the law allowed it to do at that time.
It was good because following the last recession, Quebec was full of ideas that were quite remarkable and many people, even one of my Liberal colleagues, had mentioned that it was more of a Quebec incorporated. It has been Quebec incorporated and I think it was a good thing for the country.
Quebec was forced to think of new ideas because it found itself alone. It was not really alone, but it felt alone, and it felt it had to take its own economic path.
I see a similar situation occurring in other provinces. I can tell you that when we are talking about what happened with the Caisse de depot in Quebec. The province of Ontario in the past few weeks has been sending out messages to the extent that it would like to have the same economic leverage and the same economic orientation as Quebec had using that fund in order to bring about economic reform, economic rede-

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velopment, industrial development, more or less making Ontario incorporated. I think it is a good idea.
What we are talking about essentially is, I believe, doing away with these myths of partisanship of "Well, if we are Liberal we have to think this way, or we are NDP so we have to think this way, or if we are Conservative-"
The points presented by this government and its Constitution proposition show that many things are on the table and many things will be looked at in a non-partisan way. I think that is a good beginning.
When we talk about the banks and economic philosophy I would like us to continue to try to stay away from pure ideology and-

Let me tell you, Mr. Speaker, that there is a phrase commouly used in Quebec: good common sense. That is what is called for. We must take a pragmatic approach, have a reasonable view on things. In a way Quebec is extremely pragmatic, if I may say so, and it never sought to curb entrepreneurship. Quite the contrary, it went as far as giving the Caisse de depot an opportunity and the tool to promote entrepreneurship in the province.
I am seeing the same thing with Bob Rae in Ontario. Especially given this social conscience in the sense that it not about just making money, but making money by creating jobs and trying to involve the people, the consumers, the businessmen and women, the union members, the grass roots, the people in the field.
I can tell you that, in Quebec, we have a solidarity fund. I expect Ontario to follow suit, as well as British Columbia and Alberta, because that idea makes good common sense.
In closing, Mr. Speaker, in response to my hon. colleague's question, I think that our present economic problems will inevitably dictate that we take Quebec and other provinces-like British Columbia with auto insurance-as models in the future.
I think that the people who are watching us are not interested in demagogy or partisanship. They do not want that. They want pragmatic, practicable ideas.
Mr. Speaker, I am most pleased by that, because I remember my constituents in Chambly telling me the
day I was elected: "Phillip, stay away from partisanship. Use good common sense. That is what we elected you for." I think that we can all benefit from such advice.


Hon. Ralph Ferguson (Lambton-Middlesex):: Mr. Speaker, I too want to add my congratulations to you for taking over the chair in the absence of our friend from Edmonton North. I wish to express my feelings and best wishes to the Acting Speaker and Deputy Chairman of Committees of the Whole for a full and speedy recovery. I see him not only as a competent Deputy Chairman in this House, but as a colleague of this House of Commons and a friend. I certainly wish him the very best.
I think that for the benefit of our other colleagues in this House, I would be very much remiss if I did not tell them about the International Ploughing Match last week in my riding. Mr. Speaker, you look every bit as much at home in the chair as you did on the seat of that tractor when you won the VIP competition in ploughing. I bow to you. I only finished second. I have to say it was against very experienced competition.
Mr. Speaker, you look almost as equally at home as you did in the cross-cut saw and the log sawing competition. I should explain to the minister of fisheries that it was a 16 inch hardwood log and the member for Kenora-Rainy River and I went through it in 22 seconds. The Speaker and his colleague went through it in a slightly longer time. When I say a 16 inch hardwood log, the minister of fisheries knows that we use the same ruler for measuring logs as we do for measuring fish. There can be some discrepancies. Of course, I did not say whether it was the butt of the log or the small end of the log that we cut from.
In any event, I was very proud of the way my colleagues participated in their competitions at the international ploughing match. It was an excellent match and one that I will always be proud of, as I am proud of the members who attended that event within my constituency.
We have heard several members today mention the company of American Express. I think it would be wrong if I did not point out one of the experiences I have had in just the last few days. When we have corporate concentration in the marketplace with huge companies involved, how do we resolve a problem? This goes back a few years when I used my card on numerous occasions.
September 26, 1991

As a result of a mistake made by the company in crediting the wrong amount, an amount other than what was written on my cheque when I paid the account, I was threatened and harassed. Finally we got it straightened out. To this day I do not know whether that experience is a blemish on my credit rating or not.
I was shocked and very, very upset when my new card came about three months ago -and because I am of Scottish ancestry I hate to pay for something I do not need-I decided that I was going to cut it up and send it back and ask to have my account closed.
The company charges $55 for membership. If we do not use the card, cut it up, and send it back. Naturally the account should be closed and that $55 should be written off.
Elowever, I received a notice the next month that I owed $55. Just yesterday, I received a notice saying that my account was going to be cancelled unless I paid that $55, in spite of the fact that I notified the company in writing, cut up the card and sent it back to them.
How do you deal with a company like that? The reason I am talking about this today is because this morning I wrote them a letter and sent it by registered mail explaining these details. Tomorrow morning I am going to send them another letter and include a copy of Hansard. We will see what action that brings.
I took part in the debate on the amendments to the last Bank Act back in the early 1980s and I welcome the opportunity to participate in the second reading debate on Bills C-19 and C-28.1 want to make it very clear that the Liberal Party of Canada supports in principle this new legislation.
The banking and insurance industries have been waiting a long time for this new legislation and, while our party has some concerns about both bills, we will not stand in the way of their passing. We will seek to have our concerns addressed when the bills go back to committee.
I just want to touch on a few of those concerns, the concerns that I as a farmer have, and which I am sure, Mr. Speaker, you must have as you represent a riding not unlike the one I represent.
I am very concerned because over the last several years our farm industry has been the subject of attack
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from various sectors. We have been the subject of an attack that accused our marketing systems of ripping off the consumer.
I conducted a study this summer. I did not take any time off my job as a parliamentarian, but I conducted a major study, with the assistance of my competent staff: Nick Heisler, my research assistant, and Susan Mogen-sen and Sue Richardson. We called this study "Compare the Share". One of the things shown very clearly, these figures are from Statistics Canada or Agriculture Canada, on a graph-and this is an illustrated study, it is very easy to read-is that farm input prices go up across the graph while income figures go the other way.
No business can survive with that sort of thing happening. A lot of those increases in inputs was a result of interest rates. There is a big difference between the interest rates in Canada and those in the U.S. There is also a big difference between the fuel prices in Canada and the U.S. However, some of the shockers-and they are all in this study-include that the producer price for milk went up by 19 cents a litre in the last 10 years, well below the rate of inflation, while the price between the producer and the consumer increased by 73 cents a litre, or 97 per cent. That is an increase in the inflation rate of 9.7 per cent per year, and that is not acceptable.
For cheese, the producer price increased by $1.53 per kilogram while the spread between the cheese factory and the consumer increased by $5.34 per kilogram, an increase of 86.4 per cent. Again, double the level of inflation.
For chicken, the processor-retail spread increased by $2.20 per kilogram, an increase of 87 per cent, while the producer price increased by 28 cents per kilogram. At the same time as com prices in Ontario declined over the last 10 years, the consumer price of com flakes increased by 97 per cent. The price of wheat to the farmer declined in the last 10 years while the retail price of sweet cookies increased by 111 per cent, solid cookies by 132 per cent, whole wheat cereals by 192.6 per cent and crackers by 235 per cent.
During this whole time, we experienced a period of high interest rates, which were raised to counteract inflation, to bring down inflation; interest rates which created hardship for countless Canadian people, particularly primary producers.

September 26, 1991
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We keep hearing the buzz word "competitiveness", that we have to be more competitive to compete in the global market. Yet, we see the devastation in our communities in close proximity to the U.S. border caused by cross-border shopping. The fact of the matter remains that, due to the concentration of the food industry, after the food leaves the processor there are increases in the price of these food products several times the rate of inflation, and they are ignored by government.
Why didn't the Governor of the Bank of Canada look into this cause of inflation? Where has he been? I keep thinking of the bird that flew the coop. Why was he not monitoring this increase, and where was the Bureau of Competition? We know where some of them were, they were criticizing our farm producers and telling us we had to be more competitive and attacking our marketing board systems, which are the most sophisticated systems in the world.
This study completely vindicates our farm marketing board systems. They have provided food to the Canadian consumer, high quality fopd at very reasonable prices. Yet, the consumer has been ripped off after the food has left the processor.
I am concentrating on the concentration in the marketplace. If this concentration is allowed to continue it is going to create more hardship for other sectors of society.
This is happening. We know the Minister of Agriculture has funded the Canadian Consumers Association to do a study of marketing boards, a study based on false assumptions. Why was there not an examination done of the concentration in the corporate sector? I want to emphasize that point. One of the retail food chains in western Canada-where there is a population of somewhere between 7.5 million people and 8.5 million people-serving the area from Thunder Bay west to the Pacific coast sent $545 million in dividends back to the parent company in the United States last year. How can we have it both ways, telling our own people that we have to be more competitive when $545 million is leaving this country in the form of dividends? It doesn't add up.
The Canadian farmer has to have a fair share of the consumer's food dollar or he will not survive.
I am deeply concerned about the concentration of power in the corporate sector. I fear that this will become a government of corporate decision. Who will provide the counterbalance to the marketplace if this concentration continues? Until now, in the rural sector, in the farm sector, those marketing boards provided that counterbalance to the marketplace. If they are traded away at GATT, where is that counterbalance going to come from?
It was just a year ago that the Minister for International Trade at the time, now the Minister of Fisheries and Oceans, chastized the Minister of Agriculture for the $8.8 billion worth of subsidies to farmers, $2.2 billion of that going to Canadian dairy farmers. That was not a subsidy. Their actual subsidy was $267 million. You know that, Mr. Speaker.
The government was using an aggregate measure of support, which was a concocted figure. It took the difference between what American fanners received for milk and what Canadians received for milk and called that a $2.2 billion subsidy, completely ignoring the fact that our input costs are 25 per cent higher on this side of the border. If that is a subsidy to our Canadian dairy producers, then I maintain that the fact that our interest rates in Canada are 25 per cent higher than those in the United States must be considered a subsidy to the banks. If it is sauce for the goose it is sauce for the gander. I hope this government realizes that before it starts giving away the store at the GATT negotiations coming up in the near future.
I fear the same thing is going to happen with the financial institutions.
I just want to make a quote from a news article. It is an editorial that says:
The growing monopolistic control of agribusiness and food companies continues. Our federal government has not only allowed this growing concentration but has often encouraged it. We believe this concentration of agricultural and food enterprises is depressing farm commodity prices and depressing our economic recovery. About six corporations dominate the grain business. The big three control 80 per cent of the fed beef business and four or five of these companies also dominate the poultry and hog business. Some of the biggest companies own cattle feed yards, plus hog raising and poultry raising facilities. They are grain traders, grain exporters, feed manufacturers and food processors. We still "wonder" because strange things are happening. Ibtal supplies of grains and beans are at the lowest levels in 30 years yet prices continue at record lows. During the past four weeks the bottom has fallen out of the cattle
September 26, 1991

markets. Meat packers say prices are lower because USDA reports show there is a glut of fat cattle in the feedlots.
Mr. Speaker, this must sound familiar to you because you are a farmer yourself, but that is an editorial out of The Thumb Farm News in the State of Michigan. I submit that the same thing is going to happen in Canada if this continues.
I also want to quote from another article in another issue of the same paper. The headline is "Feeding a hungry world from an empty shelf". I just want to say that this article points out very clearly that the supplies of grain and com in the U.S. at the present time are at very, very low levels. It says:
The only meaningful supply of surplus food is in Western Europe and Canada. We are approaching our fall harvest with indications we'll have a reduced com and bean harvest-.This in turn could reduce future milk, meat and poultry production. Meanwhile U.S. farm prices, adjusted to 1982 dollars, are the lowest in history and showing little signs of increasing.
The price discovery system in the marketplace is not working. Our Canadian farmers are the victims of this and they are the victims of the Export Enhancement Programs. I must say that even the United States Senate is now questioning crop estimates in the U.S., questioning the fact that USDA estimates are far higher than the actual fact and are misleading the market and misleading the American people and, consequently, reflecting on world markets.
This ties in with our Canadian farm income. When I look at the farm debt structure in Canada, I shudder. This industry cannot continue under current conditions and if this government trades away our dairy and poultry sector at GATT, you will see a tremendous erosion of assets immediately. I would suggest we look at the breaks the banks got on loans to Third World countries, a write-off in tax revenue of about $3 billion since the mid-1980s. I would suggest that the Canadian farmers should have the same treatment.
It is through no fault of the farmers or mismanagement that the grain prices collapsed. It is through no fault of theirs that they are in dire difficulties. Their dairy and poultry sectors are the only sectors in our Canadian economy that are showing a reasonable return on investment, management and risk, a return that has been questioned now in terms of aggregate measures
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support and other fancy names that are looked upon as subsidies. I want to make sure that this is on the record. We must stop this madness of thinking of trading away the best system of any country in the world, a system that has ensured ample quantities of high quality food to our Canadian consumers at reasonable prices and I ask specifically for this government to watch the corporation structure in this country and the concentration of power. More specifically, I ask the Governor of the Bank of Canada and the Bureau of Competition to examine more closely the causes of inflation and take action to prevent it so that the Canadian consumer is not being ripped off. The farmers of this nation have an income that is commensurate with the rest of society, an income that will allow them to survive and continue to produce ample quantities of food, not only for the people of Canada, but for the millions of starving people around the globe.


Mr. Joseph Volpe (Eglinton-Lawrence):: Mr. Speaker, I just want to make a very brief observation.
I was struck by the presentation of my colleague from Lambton-Middlesex. He highlights a point that has not been raised today with great vigour. While he has focused by way of explanation and by way of illustration on the circumstances that prevail in the farming community, he has touched a point that is central to all of us. The consumer, despite the fact that our party accepts this legislation in principle, has yet to receive the appropriate safeguards.
My colleague points to the inequities in our economy, especially as it relates to farm gate prices and to the conditions that ought to be nurtured so that we can give a fair return to a very important sector of our economy. The producers of agricultural products are finding themselves in a situation where they are reaping, in real dollars, much less than they were a decade ago. We have not been fortunate enough over the course of the last seven years to have a government that would address that reality.
Our colleague has pointed out so lucidly that we have seen a correspondingly high rise in retail prices, while the producer end of that whole process remains at a point inferior to that enjoyed a mere one decade ago.

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It appears to me that under this legislation we are doing the same thing again except on the banking side. We are not taking a look at the consumer and perhaps we are not paying sufficient attention to the infrastructure we are putting in place.
Had we looked at things much more carefully in the agricultural sector, we might have been able to provide our producers and the agricultural component of our economy with a fair return. This would seem to be justified by those of us from an urban area and by the end price a consumer pays for products which emanate from the agricultural community.
I wonder whether my colleague from Lambton- Middlesex could give us an indication of what we might do to rectify the absolutely low returns our producers in the farming community are getting and at the same time satisfy the requisites of the general consumer for lower prices than the ones we are currently forced to pay.
My colleague from Lambton-Middlesex did a tremendous job at the international ploughing competition. He was there as a competitor, a friendly rival and he gave an education to urban members such as myself. At the same time he highlighted the importance of the agricultural community and the overall economy of Canada.
I wonder if he would give us an observation on that.


Ralph Ferguson: Mr. Speaker, I have given this a lot of thought over the years. I have always been involved in farm organizations. I have seen the ups and downs. I have seen the stability that was brought to these organizations through the involvement of this House by providing legislation to the producers.
It was legislation that brought stability to both the poultry and dairy sectors and was introduced in 1935 under a Conservative government. It created the Canadian Wheat Board that brought stability to that sector in the prairies that is suffering extensively at this time. It is legislation that as I indicated earlier developed the most sophisticated marketing systems of any country in the world.
I am very upset that this legislation may be undermined by negotiations that are taking place behind closed doors. This House has no input into it, and I have to wonder how any democratic society can proceed to neuter legislation passed through this Chamber behind
closed doors in secret negotiations that do not involve those producers themselves.
I spoke on this subject on March 18 in a "late show" when I talked about the fact that this government has done nothing to counteract the export enhancement subsidies, provisions made in the free trade agreement under chapter 18 whereby a country is not satisfied with the action of another country.
I should refer back even further to the free trade agreement to when they agreed not to subsidize in each other's market. But the provisions are there in chapter 18 to ask for consultation and compensation for losses incurred. That has not happened.
I think, too, that we should support and enhance our producer marketing boards, agencies and commissions rather than taking away their legislative powers. There are rumours that they may lose their cost of production formulas. The rumours are that they may lose the protection of article 11, which provides that any country having a system of planned production within that same country can apply those same restrictions to imports.
It has been very effective in Canada. The United States has had such protection for years since the mid-1950s under article 22 of GATT. We may lose that. If they think it is a trade-off or a fair trade to trade article 11 with article 22, they are dreaming. Our input costs are 25 per cent higher here.
How do you break into another market in another country if your input costs are higher? It is impossible. I think what consumers should demand of marketing boards, is that the board of directors of those corporations be responsible for the huge increases in price to the consumers. Corporations have control of the food from the time it leaves the processor.
We have had 36 food processing firms close down in Ontario since January 1989. We know they are not the cause of the rip-off, but it is after it leaves that processor. Let us appoint consumers to those boards of directors. It is only fair. If you are going to have them on the one hand on producer agencies, let's have them on the other.
Those corporations are far more powerful than any of our marketing boards here in Canada. They control far larger dollar volumes of food.
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I think we should be looking at the possibility of calling a royal commission of inquiry into the food chain after the food leaves the processor until in fact it arrives in the consumer's shopping cart.
I think we have to even strengthen article 11 to the point where it will include provisions for those countries practising sustainable agriculture.
I believe too that if our farmers are going to have to compete against products from other countries, the same health regulations should apply in those countries. The same herbicides and pesticides, other chemicals and hormones that are banned in Canada should be banned on all imported foods. These are things we can do to ensure the quality of imported food arriving on a consumer's table if we have to import it. Our own food in Canada is some of the best and highest quality in the world. I for one want to see those quality standards maintained even in imported foods.
I could go on and on with my colleague here. His question was right to the point. I have to commend him on his display of expertise in horseshoe pitching at the international ploughing match last week. I was delighted to be his host. You saw his expertise. For a member from downtown Toronto he did extremely well-


An hon. member:: What's the matter with downtown Toronto?


Ralph Ferguson: -and I hear rumours that another colleague here who just commented was afraid to show his competence in the competition. He did not come in but I will take him down to the farm some day and I am sure you will come over and help me, Mr. Speaker. We will give him some instruction so he will be prepared to participate next year.


The Acting Speaker (Mr. Monteith):: It is my duty, pursuant to Standing Order 38, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Eglinton- Lawrence-Trade;	the hon. member for
Glengarry-Prescott-Russell-COSIC; the hon. member for Halifax-Port of Halifax; the hon. member for Cape Breton-The Sydneys-Rights of the Child; the hon. member for Parkdale-High Park-Canadian Passports.
Resuming debate, the hon. member for Willowdale.
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James Scott (Jim) Peterson: Mr. Speaker I want to take this House back and try to reconstruct as best I can from the facts we have on record a story which I believe is sordid and which requires rectification.
It began some time in mid-1986. A company by the name of 158792 Canada Limited with its head office at 101 McNab Street, Markham, Ontario applied for a bank licence. This was not an ordinary bank licence in Canada but a licence as a Schedule B bank, a foreign bank coming into Canada.
Many foreign bank licences had been granted under the normal provisions of the law, a law which had been opened up very widely since 1980. In the ordinary course of events these banks were automatically granted their charters and their rights to do business in Canada. It was part of the policy of the previous government and this government.
However, something happened. The application for this bank licence became stalled. For 27 months our officials here in Ottawa sat on this application and would not grant it.
Let us go . forward a couple of years. In the 1988 election, and the election campaign that took place on a very heated basis in 1980, there were some dramatic swings in the polls and the major issue facing Canadians was that of free trade. Canadians can legitimately be for or against free trade and were at that time because it was a major issue.
One thing that happened which I think is unusual in Canadian election history is that during the latter parts of that election campaign massive funds and massive lobbying started to pour in to Canada and smear campaigns were all over the television and the newspapers.
Who was launching this campaign? There was a massively financed campaign in the United States in support of free trade led by Mr. James Robinson and Mr. Ross Johnson. Mr. James Robinson is the president of American Express and Mr. Robinson, a director of American Express, was with J. R. Nabisco.
In Canada a lobby spearheaded by the Business Council on National Issues, whose chairman was David Culver, led the campaign for free trade. Is it any coincidence that Mr. David Culver was also a director of American Express U.S.? What we had on election day was not only the victory of the Conservative government which we all know about. Many Canadians, most people in Canada, did not vote for free trade. However, some-

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thing happened on November 21, election day, apart from the electoral results. An Order in Council was passed.
Elow could the Clerk of the Privy Council scurry around on election day in bad weather and get the signatures of three cabinet ministers on a particular Order in Council? This Order in Council passed November 21, 1988, election day, was an Order in Council to create the Amex Bank of Canada.
On December 17, 1988, published in the Globe and Mail-and that was a Saturday just before Christmas- was a small ad saying that 158792 Canada Limited intended to apply for letters patent in order to become Amex Bank of Canada.
The member for York Centre realized in January 1989 what was happening and called for an inquiry. On February 1, 1989 I raised this issue publicly, asking for full details. On February 3, the Minister of Finance-I do not know whether it was out of embarrassment or out of a sense of what he thought was justice, I certainly thought it was the proper thing to say at the time- said to Canadians through this House: "We will not grant letters patent to Amex Bank Limited until such time as all of the financial legislation dealing with the banks is in place". It had been on the table for many years but the government was working to bring it to a head.
Why did we object vehemently to this indication that American Express would be able to carry on business in Canada as a bank at this particular time? Very briefly, American Express was in breach of five out of nine of the government's own guidelines for the admission of foreign banks to Canada. That is why the competent members of the bureaucracy had sat on this application for over two years and had not allowed it to go through. Five out of the nine guidelines of this government were breached the moment Amex Bank Limited was entitled to carry on business in Canada.
This was unprecedented. No wonder the minister was embarrassed and said: "We will give you the legislation before they have a chance to carry on their banking business". This was not to be.
Later, in spring 1989, we were told "No, we cannot wait for the bank legislation to come down. It is too urgent that American Express be granted its licence to do business in Canada". Finally, on April 25, 1990, the
government bit the bullet-I am sure there were members of that government who did not want to have to bite that bullet-and issued the letters patent to American Express giving it the right to carry on the banking business in Canada in breach of five of the government's nine guidelines, which had not been changed. This was opposed by the Canadian Banking Association and by every person in Canada who believes that no person should be above the law.
Why this unseemly haste? Why did the government have to put the cart before the horse to grant privileges to a company. Did it have something to do with the free trade deal and the leadership shown by American Express both in Canada and in the United States in supporting the free trade deal? They are entitled to do that. Everyone is entitled to fight openly for the policies they want to see for Canada, but it is not fair for a government to give special privileges and break its own guidelines to anyone, regardless of how close they are as political cronies.
In this Bank Act amendment what do we see dealing with this particular issue, American Express. We see that the government has not even dealt properly with the issue at hand. It has tried retroactively to change the guidelines for the admission of foreign banks. It says: "You do not have to be a bank in your home jurisdiction. We will expand that. We will expand it to cover companies such as American Express".
American Express was not a bank in its home jurisdiction, the United States, nor was it regulated as a bank in its home jurisdiction of the United States. So what has the government done? It has said that pretty well any financial institution from the United States or abroad can come into Canada.
In the guidelines the minister brought down last fall for the reform of federal financial institutions, it said that schedule II bank designations would be expanded to include non-banks owned by widely regulated financial institutions that are not themselves banks.
The key phrase was "regulated financial institutions". Do we find that phrase "regulated financial institutions" in the new guidelines to deal with this type of situation? No, the government has taken out the word "regulated". So any type of so-called financial institution now has the
September 26, 1991

privilege to sweep through the door as a result of the legislation this government is attempting to pass to justify retroactively its privileged treatment of American Express. Is this good for Canada's financial institutions and for our financial climate? It creates a great deal of uncertainty.
Does it mean that institutions such as Ford Credit, Chrysler Credit, Sears, IBM and General Electric- which are huge financing institutions; they issue commercial paper and extend credit to the customers who buy their products-will be able to come into Canada to compete with our banks?
BCCI was a foreign bank that came into Canada. However, I believe there is some indication that maybe its ultimate owner was simply a non-bank holding company from Luxembourg.
Is it fair to impose upon bank regulators in Canada the obligation to supervise all of these foreign banks and the few that are Canadian? The vast multitude which are now doing business in Canada are foreign; over 60 of our banks are foreign. Is it fair to impose upon our bank regulators the necessity to regulate these and examine what they are doing in every other jurisdiction, in order to determine whether they are sound, whether they are obeying the laws, whether they are legal, and whether they are laundering money? No. We want at least to ensure, and the taxpayers of Canada want the right to ensure, that banks coming into Canada from abroad are regulated according to the high standards which we think are appropriate. In that way we will protect Canadian investors, Canadian users of the banks. That is right and fair. Why open this whole thing up?
That is not the only consideration. In the free trade agreement-and we did not see the final version in September-in the final version are contained some annexes. There is an annex B called "tourism services". Inserted in annex B, which extended free trade to various service industries, were tourism services including tourism related services of a financial nature. I would like to know who it was who lobbied the government to include tourism related services of a financial nature into the free trade deal at the last minute. Canadians have a right to know.
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Was it one of the giants of international tourism? Was it a foreign firm? Why was it put in? Who was going to benefit from it? Why was it not included up front when these documents were being considered in September? Why was it slipped in, in November 1988?
Another problem we face in terms of the free trade deal with the United States is that our banks did not receive reciprocity with American banks. They did receive national treatment. That means that American banks coming into Canada can do as Canadian banks do here. American Express can also do in Canada some things that Canadian banks cannot do. It can sell all sorts of goods on its plastic. It has the ability to be in the tourism business. Do Canadian banks receive the same treatment in the United States as American Express does here? They do not.
Under the Glass-Steagall Act, Canadian banks cannot acquire U.S. securities firms. We did not get that right under the free trade agreement. American banks have privileges in Canada that Canadian banks do not have in the United States.
Another instance is the McFeddran Act. In the United States there are certain limitations on interstate branch banking. Canadian banks going into the United States are still subject to those restrictions. American banks coming into Canada are not subject to those branch banking restrictions.
We did not even get a fair trade for our Canadian banks. Not only were the laws of Canada breached to grant special privileges to American Express, but our own financial institutions are put at a competitive disadvantage.
The banks are asking Canadians to give them extended privileges: insurance, the ability to get into auto leasing, and many other things. These are privileges they have not been granted.
The banks have a point: "Why can't you give us at least the same privileges you are prepared to give to American Express? Why should we be hamstrung as financial institutions?"
The bank serves two functions in Canada. One is as a service industry to help finance, as intermediaries of deposits from every one of us, investment and business and job creation.

September 26, 1991
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They are a key tool to a dynamic, growing economy. Let us look at them as an industry on their own, the employment and the innovations they are bringing, the technological changes and what they can do for our GNP, both in Canada and through their international banking operations.
When the banks come to the House of Commons and say to government "we want more privileges", how can this government with clean hands say: "No, we will not give them to you but we were happy to give them to American Express"?
I was hoping that the bank legislation would have dealt with this issue. I would hope that the committee would have a full opportunity to hear officials from American Express, the government and our bureaucrats as to why they held up this application for some 24 to 27 months.
I believe that this is an issue which needs a full airing, and I believe it is critical to restore confidence in a non-partisan operation of all our laws to all Canadians.


Mrs. Sheila Finestone (Mount Royal):: Mr. Speaker, I really listened with a great deal of interest to a very well presented, unemotional, clear yet carefully documented and thoughtful look at why Mr. Grinch has come to visit Canadians not only through the free trade agreement in one or two areas, but also in a very important sector of our society, the banking sector.
I really want to thank my colleague and seatmate here for having brought this to the attention of Canadians. It is certainly something that very few of us I know were aware of. I would like to ask you, seeing as how we do not have a level playing field in either this area or in a number of other areas because of the badly negotiated agreements done by our colleagues across the floor, to explain firstly why the major banks of this country did not intercede or intervene.
Second, can you assure that when this bill goes to committee the big boys are not going to stop the playing field and are going to pull in the kinds of reports or the kinds of openness which will allow us a little glimpse into why Father Grinch got cinched in this deal, or singed?


James Scott (Jim) Peterson: Mr. Speaker, I thank very much my seatmate, the member for Mount Royal, for this question.
First of all let me say this. When Canadian banks became aware of what was happening in this area they spoke out. The Canadian banks were the ones that were appalled by the lack of treatment according to law. They were appalled by the lack of rule of law, and they were appalled by the discretion which the minister took into his own hands in order to breach his own guidelines and grant favoured treatment.


Sheila Finestone: Five out of nine.


James Scott (Jim) Peterson: He broke five out of nine guidelines, and so the Canadian banks were on record on this particular
issue.
The Canadian banks are still on record because they are worried. Now that the government has passed these wide open guidelines to justify retroactively what it did in terms of American express, all sorts of other financial institutions are going to be able to sneak in through the back door and compete in Canada.
If this is the intention of the government, let it come forth and tell us why it wants to see the Fords, the Sears and the Chryslers coming in here with their credit unions as banks. Let it make the case, and a case might be made in many of these cases. I would like to hear what it is.
It will be a very different set of financial institutions that we have in Canada. It will impose very different regulatory requirements. It will be a very big burden on our regulators here if we are going to allow every type of financial institution, whether regulated in the home jurisdiction or not, to come into Canada.
Please, Canadians deserve to be told what they are getting and why they are getting it and have open discussion and debate on it. It was not sufficient.
The minister told us with respect to American Express: "It is already in Canada doing some financial activities, therefore we might as well give it a bank licence so we can regulate it as a bank". That is not a justification that washes. This is going to committee and I hope that the hon. member for Mount Royal will come with her usual probing questions and sense of justice to ask members of the Department of Finance and mem-
September 26, 1991

bers of the banking establishment how it was that this licence could ever have gone through.


Peter Andrew Stewart Milliken: Mr. Speaker, the hon. member for Willowdale, in his very able and lucid speech, talked about the granting of this nefarious licence to American Express that the government engaged in on election day in 1988.
Based on his extensive knowledge of world affairs, and particularly the dealings of the banks, could he inform the House whether in his view the granting of this licence had anything to do with funds that were contributed to those organizations that were advertising in favour of free trade during the election campaign, which necessarily implied a vote in favour of the Conservative Party?


James Scott (Jim) Peterson: I cannot stand in this House and say that it was a quid pro quo and that somebody said: "We will support you in free trade massively if you grant us a bank licence".


An hon. member:: It is a giant coincidence.


James Scott (Jim) Peterson: I do not know. The facts are that the leading advocates of free trade in the last days of the election campaign of 1988, south and north of the border, were very closely linked to American Express. Shortly after that, a special privilege was granted by the Government of Canada to American Express on election day, November 21, 1988, and that was not the best of weather. People did not want to have to be out doors.
A clerk of the Privy Council, in order to have an Order in Council passed, had to scurry around and get the signatures of three cabinet ministers. I would like to see who those three cabinet ministers were. I think we have a right to know.
Why was it so urgent that this Order in Council be signed on election day? Was it because maybe the results of the election were not certain and that regardless of what the electoral outcome was, American Express had to get its Order in Council. I do not know. Is it normal to have Orders in Council signed every election day? I would like to know what the practices of past governments were. How many Orders in Council are signed on election day?
An lion, member: Where did they find the ministers on election day? Surely they were in their ridings campaigning.
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James Scott (Jim) Peterson: They had to go to the ridings to find the ministers.
I think there are enough unanswered questions. I say this to the hon. member for Kingston and the Islands who knows so much about the procedures of this House, and I seek his counsel and guidance on this. What would the best procedure be? Would it be to have this come before the finance committee?


Peter Andrew Stewart Milliken: Yes.


James Scott (Jim) Peterson: Would it be a special committee of Parliament? I welcome your views on how we would proceed. I believe this is a way beyond being a partisan matter. It is something which has concerned the banks of Canada for a long period of time. Our reputation as a nation among a community of nations is one which above all else respects the laws. There are no privileges and all are treated equally. It is a reputation which has been among the word's finest and must continue to be unsullied. That is worth fighting for.
I believe as members of Parliament we have an obligation to ensure that is done.


Mr. Ray Funk (Prince Albert -Churchill River):: Mr. Speaker, I am pleased to be able to participate in this debate which is a very important one because it is only once every 10 years that we really get to take a broad view of the banking system in this country and how it operates.
I guess I found it ironic that I was on my way flying to Ottawa to speak on a bill on banking and I needed to drive from Prince Albert to Saskatoon to catch the plane. I stopped in my home town of Laird, Saskatchewan to see my parents who had just finished harvesting. They are still farming at 75 years of age because it is not profitable for young fanners to get started. My parents informed me they were quite distressed that the bank in Laird, Saskatchewan was closing, a bank that had been there I think since 1912 or 1914.
In my mind that serves as the backdrop as to what I wanted to say about this legislation. As with so much of the legislation that we see here, this legislation is directed at something that might solve a problem and might be helpful in inner Canada but might well be a total disaster again in what might be termed outer Canada. I want to give credit to the hon. member for Edmonton Southeast for introducing the terms inner and outer Canada. I think they describe things very well.

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When it comes to inner Canada perhaps there is an argument that can be made for the kind of things we are seeing in this bill: the deregulation, the allowing of different kinds of financial institutions to merge and carry on businesses and partnerships, and so on. Perhaps there is an element of truth in the fact that in order for Canadian financial institutions to compete at the global level, to be there in Geneva, Paris, Stockholm, Tokyo, and wherever you all have to be in order to function at that level of finance, we need bigger institutions to be able to play the game at that level.
What we are in danger of creating here is what the hon. member for Nickel Belt described today as a whole cast of uncontrolled sumo wrestlers. These beings that are being created here are so huge that just the physical size of them makes them virtually impossible to regulate. It makes it virtually impossible to bring them under any kind of public interest kind of umbrella.
Maybe that makes sense for the wheelers and dealers in Toronto, Vancouver and Montreal and those people who feel that the free trade deal that we have already signed and perhaps the free trade deal with Mexico is a bonanza for them and the people they represent as shareholders and so on. I do not represent those kinds of people so I have not had the opportunity to converse with them personally, but I know what people think about the banking system in outer Canada.
In outer Canada the banking system is viewed quite differently, Mr. Speaker, as you know, representing a rural constituency yourself. Small business people, main street people, abhor many of the practices that the banks carry out, particularly in smaller communities. When I talk to the business community in Prince Albert, a city of 35,000,1 hear nothing but a litany of tales about lines of credit being cut off, about loans being unreasonably turned down even for very worth-while enterprises by well established companies, but it seems that when somebody writes a stoiy in Toronto that says Saskatchewan is in trouble, all of a sudden all the money dries up in Saskatchewan. That is just a common pattern that has been happening to our province at least for the last number of years.
This fact is more than amply demonstrated in the surveys that we as members get from independent
business organizations that rank banking and banking services very low as far as helping them to do business.
Then we have the whole perception of the banking system in rural Canada. To rural Canada nowadays the banking system means foreclosure. It means being taking to court by the banks. What I am concerned about is that not only is the government not intervening in any meaningful way to enhance the financial situation of farmers, but in a situation where these financial institutions are all combining and forming conglomerates you could well end up getting your farm seized or machinery seized because you have not paid an insurance bill, for example. It will vastly widen the scope of what banks are able to do to the farmer and other consumers and business people because of the inter-relationships that will exist.
I might add also that this is made even worse by the fact that instead of having the stable agriculture system we once had, we have moved to increasing instability. This is not only because of the international factors but because we have got into the political ad hoc mode of supporting agriculture so that farmers have to go to the banker and try to convince them that yes there is an election coming in Saskatchewan and the federal government will likely be coming up with some money in order to get a loan. That is the kind of situation that we place the farm population in.
Another aspect of outer Canada that I would like to raise in this debate is that facing frontier Canada. Part of my constituency includes virtually all the northern half of Saskatchewan which is made up of 43 isolated communities in the forest, many of them Indian communities, mining communities and so on. There are a lot of communities spread out across Canada that are much like that.
Over the years the banking system has made untold billions of dollars out of those communities. There have been hundreds of millions of dollars in wealth generated by the mines, forests and fishing. Those banks have never seen a responsibility to return any part of that to those communities in terms of service. There are only three banking institutions in the north half of Saskatchewan. That means business people there are sometimes a two, three or four hour drive, sometimes even a flight away from a banking institution to do any banking. People who want to establish a line of credit simply
September 26, 1991

cannot because banks will not recognize anyone more than 50 miles away as being in their trading area.
We have a banking system that makes untold billions of dollars out of frontier areas but does not even show up to provide a service. I would like to comment on some breakthroughs being made in that area by peoples' own initiatives. I am speaking now of the major initiative being launched by Arctic co-operatives to develop credit unions in the Northwest Territories and also in my own constituency. The Buffalo Narrows Credit Unions will for the first time supply a banking service to northwest Saskatchewan.
My question comes out of this. We are now talking about the banking system in this country and it is clearly not working. We are seeing another retreat on another front that pertains to exactly the same question. That is the question that was raised in Question Period today by our leader, the member for Yukon, that is the move by this government to restrict the functions of the Bank of Canada. They are proposing to restrict the functions of the Bank of Canada to controlling inflation, to keeping inflation at zero per cent. That is a vast diminution in the role of the Bank of Canada.
Explicitly in the past the Bank of Canada had to pay attention to things like growth, unemployment and providing service to the regions. That is not in the Bank of Canada's mandate any more. I am asking in this legislation if we are not going to do it through private sector banking or through the Bank of Canada, what kind of mechanism do we have in this country to ensure that capital goes to the places where it is needed and to provide services some place other than where the big shots feel they can make some money? That question is fundamentally unanswered, and I think my basic criticism of this bill is that it is far too narrow in how it views the banking system.
In closing, my time is getting short. I would like to make some mention of what I think is a positive aspect of this legislation, and that is the changes to the Co-operative Credit Associations Act. The credit union system is a success story and does hold hope for outer Canada and for all those Canadians that will be marginalized in the post-free trade world.
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There are about 2,600 credit unions in this country with 9 million members. Over one-third of Canadians are members of credit unions. They have assets of approximately $69 billion in this country. They are a significant institution already. With this legislation I have to give the government, the finance committee and others credit. They have given the credit union movement some new tools whereby it can get into commercial lending and can have some of the same powers and advantages that trust companies have. It is going to be able to raise capital from outside its membership base in order to be competitive.
I believe these are steps forward. It will also make it possible for the credit union system to better finance the rest of the co-op movement in providing services and economic hope to many of the regions of this country.
With that and recognizing the time, I would just like to say that the government has taken one step forward in a very important area, and that is the area of ensuring that credit unions and co-operatives can play their legitimate roles.
However, on the other hand we are still continuing the headlong retreat from the kind of financial system and the kind of economic structure in this country that will allow each Canadian to know that this country's economy is there to serve them and not to just serve the wealthy and the powerful.



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INCOME TAX QUARTERLY INSTALMENTS Mr. John Harvard (Winnipeg St. James) moved
That, in the opinion of this House, the government should consider the advisability of changing the collection of income tax as it affects citizens whose income is not taxed at source so that senior citizens who are required to pay income tax in four quarterly instalments will be obligated to pay only one annual instalment.
He said: Mr. Speaker, I deem it a privilege to have initiated this motion and I am honoured to lead off today's debate.
[Stage Direction]
September 26, 1991
Private Members' Business
The senior citizens of this country are being denied a choice I think they deserve. They have worked long and hard for retirement and they deserve the option of not paying income tax in quarterly instalments. Senior citizens and self-employed individuals owing more than $1,000 in income tax must pay quarterly instalments of their estimated annual income tax. Payment dates must be strictly adhered to and estimates of the next year's income must be reliable. That is the law.
I was drawn to this issue by a number of senior citizens in my riding who, like thousands of other Canadian seniors, have miscalculated their income tax or accidentally or inadvertently missed a payment date.
When this happens the government slaps huge interest charges on the late payment. Instead of giving them the benefit of the doubt, Revenue Canada automatically assumes that these seniors are maliciously trying to withhold taxes and defraud the government.
The vast majority of Canadians do not ever have to worry about missing a tax payment. It is simply taken off every one of our paycheques. But most seniors do not have that luxury. Like the self-employed they have to do the calculating themselves.
The government would like everybody to pay income tax on the weekly or bi-weekly schedule because ideally income tax should be paid as income is earned.
On the face of it, quarterly instalments sound like a fair compromise between bi-weekly payments and an annual lump sum payment. But for many members of our society this compromise simply is not working. I will bring forward testimony to that effect in a few minutes.
The government justifies mandatory quarterly instalments by claiming that allowing an annual lump sum payment would be like giving seniors loans in the amount of the tax payable. In theory this is true but in practice many seniors end up actually lending the government money between tax instalments.
Often seniors will overestimate and hence overpay the government because they are unable to guess how much income they will be earning.
The other justification the government uses to support mandatory instalments is that it is trying to help Canadian seniors avoid possible budgeting problems.
Pardon my cynicism, Mr. Speaker, but I doubt many Canadians appreciate this government giving out financial advice. We hardly need to treat retired Canadians like adolescents. The majority of our seniors have been paying income tax for decades, and they have learned how to budget after living through the depression and several recessions.
Research has shown that seniors can generally be characterized as economy conscious and they are less likely to use credit cards. This is hardly an age group that takes the attitude buy now, pay later. They could probably teach this government a thing or two. Enough has already been taken away from our seniors. They face old age security clawbacks, a crumbling health care system and caps on the funding of other social programs.
Our country has not prepared itself for an aging society. We often treat the elderly as a burden, not as an asset, and then every three months we turn around and tell them to pay up. I think we are a bit callous.
It certainly would not hurt this House to demonstrate a little bit of compassion and flexibility for once. Yes, we would be making an exception for one segment of our society, but this is not a case of benefiting one segment while depriving another. All Canadians could eventually benefit from this motion.
I cannot believe that the option of paying taxes at one time would really be too expensive for the government. As it is, an army of Revenue Canada employees must be paid to assess and reassess every tax instalment a senior citizen makes. Even retired accountants must have a difficult time accurately predicting every penny they will earn in the coming year. The single payment option could eliminate this guess work on the part of the senior and eliminate the need for ongoing scrutiny of his or her account at Revenue Canada.
The government might claim that estimating income should not be difficult for a senior citizen; after all they are usually retired so their income should not change much from one year to another. On paper this should hold true and it probably works out fine for many seniors, I will grant you that, but there are plenty of seniors who do not have straightforward incomes. They have investments that change from year to year. They
September 26, 1991
[Stage Direction]
have part-time jobs and they can have enormous differences in medical deductions from year to year.
To top it all off, if they do accidentally pay less than they owe, they are not told so. They are simply told to pay the difference with interest-I underline that, with interest. No reminder, no statement showing where they erred; just give us the interest you owe us. No business in this country treats its customers like that. We are given 30 or 60 days to pay our bills. We are told in advance how much we will owe if we do not pay on time.
The government may justify this by saying that our seniors should know how much to pay and when to pay it because they are the ones who calculated the instalments in the first place. This argument lacks one crucial aspect, though. It does not take into account the fact that all of us, all of us, are likely to get a little confused and a little forgetful when we reach a certain age. This is not something that we should be punished for. It is simply a fact of life with many older citizens and it is something the government should learn to work around.
Because of quarterly instalments, it is very common to see people paying tax on income they have never seen. A number of my constituents have told me that although their Canada Savings Bonds and other investments do not mature until the fall, they are still forced to pay tax on them in the month of March.
One woman wrote: "Paying quarterly means paying on income I have not yet received. Thus, I am losing interest on money paid in advance while Revenue Canada collects interest on it. This to me is the same as my paying double interest".
Today's seniors grew up without the social programs that our young people now take for granted. Seniors do not blithely take what they can get from the government. Often they are too proud to ask for the services they deserve. On the other hand, they tend to give to this country. They volunteer. They fight hard on behalf of other groups and they pay their taxes.
It is rare that this Parliament has the chance to give something back to the people of Canada. So much of our time is spent debating policies that take things away from
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Canadians. For once we can do the right thing and make the lives of some senior citizens just a little easier.
If we can admit that the present system has failed many seniors, then we are on the right track. If we can save a few people from the headaches and confusion caused by quarterly income tax payments, then I believe we have succeeded.
I brought the motion to the attention of my constituents several months ago. I have received a lot of mail on this issue. With the Chair's indulgence, I would like to enter into the parliamentary record portions of letters I have received on this issue in support of seniors and in support of this proposed tax change.
Here is a copy of a letter I received. It went to Revenue Canada. A portion of it states:
"Enclosed you will find cheques totally $1,099.55. The cheque for $162.89 is so-called instalment interest which you have the unmitigated gall to charge me. The cheque for $936.66 covers two instalments of $468.33 for March 15, 1991 and June 15, 1991.
I am a senior citizen and for the many, many years that I have paid income tax, I have always paid in full on April 30, as required. I see no reason to change this procedure and I take exception to being told that I must pay quarterly or be charged interest".
That is a letter I received, dated June 7, sent to Revenue Canada and a copy of it was sent to me.
Here is another letter, dated July 30.1 will read just a portion of it:
"I have never been notified for my 1990 taxes that I should pay quarterly. My taxes for 1990 amounted to $6,046.38, of which $1,796.77 had already been deducted monthly from my pension, leaving $4,249.61 to be paid. I sent my cheque and Revenue Canada sent me a letter saying I did not owe anything.
Two months later I received a letter requesting $336.00, since I had not paid quarterly. I was told I should now pay $1,062 quarterly for my 1991 taxes. I have paid my $336 and I still maintain it is not fair".
Here is another letter I received from a constituent, dated July 25, 1991. The letter starts off:
[Stage Direction]
September 26, 1991
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"Five months to Christmas. I heartily agree with that proposal of seniors paying income tax once a year only. It is ridiculous for a senior person to pay tax in March on interest income received in November on Canada Savings Bonds".
Here is another letter in support of this motion. This letter is also dated July 25. It comes from a constituent of mine. In part it says: "We are on a fixed income and every $100 earned helps us to meet our daily expenses and stay off the welfare lines. We try to live from interest income, and if the quarterly payments we now make to Revenue Canada could be left invested for the full year, it would be a step in the right direction."
Here is a recent letter that I received on the issue. It is dated September 12. It is a very short letter, and it is to the point:
Re: Making a fairer tax law.
We agree with you that the law, as it presently stands is unfair and
should be corrected. You have our support, and we wish you every
success in your endeavour to correct this injustice.
I have still another letter. This one is dated July 24 and it says in part: "It will not be too many years before we, too, will be pensioners. Truthfully, we would not relish the bother of paying our taxes quarterly."
I have another letter dated July 25. I will read just a portion of it. "With this letter, I would like to advise you that I am in complete agreement with your proposed motion before Parliament to do away with the quarterly income tax payments for seniors."
We get an idea of the strong feelings that pensioners have on this particular issue. I will continue with a few more letters, since I have another four or five minutes.
This letter is dated August 6. "As a pensioner, I find it a real hassle each year trying to determine what tax I should pay to keep from being penalized. Your proposal is an excellent idea, and I wish you great success with the motion being put before Parliament."
Here is just the first paragraph of a letter I received dated July 29: "With reference to your recent bulletin regarding the income tax assessment for seniors, my wife and I strongly endorse your proposal."
I have another letter, also from the month of July: "It certainly lifts my spirits to know you are doing your best for the elderly people in Canada. My stepmother is almost 80 years old and has served in the armed forces, and worked for the government until her retirement. She has never collected unemployment insurance and neither did my father. Of course, they paid into it.
Now, when my stepmother has a few years of leisure time, she is very worried about all the red tape involved in this quarterly tax payment."
This letter is dated August 22 and is from another senior citizen: "I am a senior citizen and I do not like to be told to pay every three months. I think once a year is all we should have to pay our taxes."
This letter is dated August 12. It is very short and to the point: "I am writing in support of your motion that would relieve pensioners from making compulsory quarterly income tax payments."
Here is one that is a little longer, and this will be the last letter that I will enter into the record. This letter writer entered into some calculation. It goes like this:
Dear Mr. Harvard:
Here is a classic case where the federal government is beating up on an 86 year old widow because she is about $200 short on paying 75 per cent of her taxable income and $549.44 short on paying the full amount.
This was the total tax payable for 1990: $2,398.19 This was the total tax credits for 1990: $1,848.75 Balance due and paid by cheque in April, 1991: $549.44 Interest and/or penalties on $549.44 was: $61.44
The writer continues:
Every month from January to November, 1990, through deductions from her late husband's pension cheques, $100 was paid and in December, 1990, $175 was paid for a total taxes paid of $1,275 for the 1990 taxation year. The interest or penalty was charged because the amount paid ($1,275) over the 12 months of 1990 was not 75 per cent of the taxable income that should have been paid on the net income and therefore a note from the Federal Government, I quote, "have charged you instalment interest as one or more of these payments was late or insufficient".
Another person may owe $5,000 to $10,000.00 at the end of the year but if they have paid 75 per cent of the taxable income in that year, then there is no interest or penalty charges on the $5,000 to $10,000.00 that was not paid in that tax year.
The problem can be solved by general averaging over the last three years with no cost to all taxpayers.
September 26, 1991
[Stage Direction]
The writer of this letter finishes off by saying:
The Federal Government issue Old Age Pension cheques and C.P.P.
cheques every month by computer so they have the capability to
initiate deductions every month from those cheques. Thus seniors
remembering to write cheques four times a year would be eliminated.
I think those letters are a strong testimony that senior citizens in this country are in support of this motion and would welcome a change.
I would welcome support from Parliament on this motion and I think this is a chance for all of us to do something for Canadians who have worked so hard for their country. I know that they would welcome it.
Mr. Murray W. Dorin (Edmonton Northwest):: Madam Speaker, I am glad that I happen to be on House duty this afternoon so that I became aware of the hon. member's motion because I myself have an interest in this subject.
I imagine that there probably is not a member of Parliament who has not received representations from people and, in particular, senior citizens, who have come with their concerns about the fact that they have been required to pay instalment interest on their taxes or instalments on their taxes and in many cases they have been unaware of the need to do this in the past because perhaps they just, for the first time, came over the limit requiring such payments, and have been caught and have been required to pay interest and penalties.
I have, therefore, been considering this question of what might be done to relieve this matter. I would like to offer some comments to the hon. member as to why I do not think his particular method of solving the problem would be a good one, but I also would like to give him a suggestion as an alternative that might achieve the same end that I have been considering and plan to put forward myself through the vehicle of my own committee, the finance committee, of which I am the chair. I am hoping that perhaps I can convince him that my method might be superior and perhaps he would agree.
I think that we have to understand why we have instalments in the first place. By and large, they are for people who earn money that is not taxed at source. People who earn a wage receive a monthly pay cheque, have their taxes deducted monthly or perhaps more often from their salary and automatically remit it to the government. For people who are self-employed and
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receive income either through business that they are engaged in or through investments, interest, dividends and others, we require those people to pay income tax on a quarterly basis because to say that they only had to pay at the end of the year would be treating wage earners, who must pay monthly through their automatic deductions, unfairly.
In order to try to make it fair we say that people who earn income from interest and other sources should have to pay at least quarterly.
Over-all, I think that the theory is correct; for senior citizens or anyone else. I do not think we should necessarily identify senior citizens because there are many other people who may be required to pay instalments such as the operators of small business, just starting them up, where the amounts are relatively small.
The problem is that the $1,000 amount that requires people to pay instalment interest has been eroded by inflation to the point that a great number of people are being caught in the system who should not be in the system.
I would like to say to the hon. member that I think the objective here is to take a lot of people who are earning a relatively small amount of money, interest income or other income, and say: "You should not have to pay instalments, you should only have to pay once a year." I think that is proper. However, rather than apply a rule to all seniors that they do not have to pay instalments we should try to raise the limit from $1,000 of income tax owing to something more reasonable like a $10,000 annual income tax bill, at which point people will have to pay instalments.
That would be fair to everyone, seniors or people who are not seniors. It would also require that those earning investment income on amount-if someone has $1 million in the bank and is earning $100,000 a year- should have to pay instalment payments, just like wage earners have to pay monthly payments.
The difficulty in attempting to exempt a group of people is that it also exempts people who, some of us suggest, should be paying even more taxes. Those are people who are wealthy and perhaps have millions of dollars and are receiving dividends and interest of substantial amounts. We are not suggesting, or would want to suggest, that those people should somehow be exempted from paying their taxes on a regular basis.

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I would suggest that what we try to do is focus on raising the limit and saying only those people who owe tax over $10,000, as opposed to the current $1,000 rule, would have to pay. This would take off the tax rolls for instalment payments 95 per cent of seniors, probably, as well as a certain number of other people who would then simply have to pay at the end of the year when they filed their tax return.
I would invite the member to put forward this suggestion, either in the form that he has it now or in another form depending on how he feels about my comments to the finance committee. I would like to tell him that we intend-the hon. member for Ontario was actually here in the Chamber- to strike a subcommittee shortly in which we want to hear suggestions from members of Parliament and others. The member should pass this idea on to the member for Ontario. We are hopefully going to hold hearings in which we can take ideas like this, examine them carefully and be in a position to make recommendations to the Minister of Finance for his next budget.
We are hoping to commence that process shortly after Thanksgiving. I am hopeful that the member will take the opportunity to pass this suggestion on. Also, I would invite all other hon. members to forward their suggestions on this and other subjects. We are looking for ideas, not ideas that are going to cost the treasury a lot of money, but ideas like this one which do not involve a lot of money. It would relieve the administrative burden for a lot people who are caught in the system inadvertently simply because the rule has been in place for 20 or 30 years without adjustment for inflation. All those people have been brought into the system who were really not intended to be in the system when the rule was first put in place. This would provide fairness for all taxpayers.


Steve Butland: Madam Speaker, first of all let me congratulate my colleague from Winnipeg for this exceptional idea. I also thank my colleague from the government side for suggesting that the Tories would at least look at the concept the member has brought forward. I would suggest though that the government member's rationale that a 30 year old might take exception to a 75 year old getting a break that he or
she might not get is the only comment to which I would take exception.
This is an exceptional idea. It is something that has been brought forward to me by many seniors as well. It is an aging population and more and more people will not want to take advantage of this quarterly tax instalment the government has in place.
I wrote to Revenue Canada and asked why it is doing this. The answer was: "We don't necessarily want to do it, but it is Finance that is dictating to us". It said in the statement that the options to seniors are clearly defined in the enclosed instalment guide. I will get to that instalment guide in just a moment to show how clearly defined it is for seniors. I suggest that it is not even clear for an accountant who deals with this each and every day.
When I spoke to a senior official in Finance in Ottawa about this ruling against seniors and self-employed people, he said: "I do not believe this. It is dictatorial. I think seniors should have the choice. I think there is probably a mistake here. I will get back to you".
A week later he said: "I am sorry. I was mistaken. It is Finance. It is income tax legislation. There is nothing we can do about it. I am sorry". The fact that even Finance suggested that it is mean-spirited gives me some hope that the government and the department will take a serious look at a ruling that seniors would say discriminates against them because they are seniors.
Why does the government have to be a financial adviser to a senior citizen? They are suggesting: "Allow me to decide what I will do with my money". The government suggestion is: "We are doing you a favour. We will allow you to pay every three months instead of hitting you hard at the end of the year". However, the seniors are saying: "I do not want that option. Don't do me that favour, please".
The fact is that Revenue Canada will get it out of the senior anyway because it can withhold the GST refund as it so often does. It will hold it against the person for the next five years. There is no danger of Revenue Canada not getting its just desserts. It will get its money one way or another.
September 26, 1991

It was also suggested to me not to worry that seniors would get an invitation. They receive an invitation to get involved in this quarterly instalment. Here is the invitation. Now, I must admit it has been photocopied and it is not in its booklet form. It is a veritable semantic quagmire that defies understanding by anyone, let alone a senior citizen, who reads it. In fact, here is the notice of assessment: "You may be required to pay your taxes for 1990 by quarterly instalments".
As an ex-educator I see the operative word as you "may" be. Not you must or you are obligated to. A senior will read that and say: "Great, I don't have to do this". However, later on they will get hit and they will get hit hard.
These are not necessarily wealthy people. Someone who has a total income of $21,000 a year is not wealthy.
This is from the Declaration of Taxpayers' Rights: "You are entitled to expect that the government will make every reasonable effort to provide you with access to full, accurate and timely information about the Income Tax Act and your rights under it". It says: "You are entitled to an impartial hearing".
I have had seniors come in and say: "I want to protest this". So, I protest on their behalf. Revenue Canada says: "Okay, you may protest and we will hold everything up. But, if the ruling is withheld then the interest will accrue. So you are in big trouble". Wait until I get to the amount of interest charged these seniors when they do not get their quarterly instalment in on time.
Here it is: "A new penalty was introduced in the 1990 taxation year for taxpayers who make late or insufficient instalment payments. A penalty of 50 per cent is charged on the amount by which the instalment interest exceeds the greater or the following amounts". We thought finance companies were mean-spirited.
Here is an example for a senior citizen to follow. "Peter is required to make four instalment payments in 1991 of $1,535 on March 15, June 15, September 15 and December 15. However, he does not make his first payment until March 31", that is 16 days late. "To compensate for making a late payment, Peter pays his June instalment on May 29, rather than on June 15. By
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paying his June instalment early no instalment interest will be charged when his 1991 return is assessed next year, as long as his remaining payments are paid on time". Do you understand that, Madam Speaker? Nobody understands it.
This is a tip for seniors: "If you realize during the year that your instalments have been less than the required amount"-how would you realize that-"or if one or more of your payments had been late, you can reduce or eliminate an instalment interest charge by overpaying your next payment by paying it early". Again, nobody understands this, let alone a senior.
There is so much here that I am certainly not going to read all of it and I do not want to bore anybody with it. However, it goes on. Near the end of the document, this instalment guide, this invitation says it "uses plain language to explain the common income tax situation". Well, it is not plain language.
I think I am getting away from the principle. We believe that seniors should be given the choice. They should be able to opt out of this wonderful program that Finance has provided them. They should be able to opt out.
Finally: "Improving This Guide: This guide is reviewed each year. If you have any comments or suggestions to improve the explanations provided in this guide, we would like to hear from you". Seniors across this country, and it would appear many of our colleagues, are suggesting to Finance Canada that it should scrap the guide, scrap the quarterly instalments, and give seniors a choice because they want the choice. Surely senior citizens have earned the right to decide when they will pay their taxes. They are not trying to cheat the tax collector. They will pay one way or another, they just want the option.


Lyle Vanclief: Madam Speaker, I would just like to make a few comments this afternoon on the motion before the House. I just want to read the motion into the record again:
That, in the opinion of this House, the government should consider the advisability of changing the collection of income tax as it affects citizens whose income is not taxed at source so that senior citizens who are required to pay income tax in four quarterly instalments will be permitted to pay only one annual instalment.

September 26, 1991
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I want to commend my colleague from Winnipeg St. James for putting this motion before the House so that several of us can have a chance to comment on it and the House can consider it.
What is the issue at stake? The issue is that seniors no longer holding salaried jobs and who may veiy well be on pensions of some sort, some more than others, are required to pay income tax on a quarterly basis. They must estimate their annual income and determine from that how much they pay every three months.
What is the problem? Well, the problem is that many times they underestimate their payment. They may be late, and, when and if they do, they suffer harsh penalties and terms of interest that are imposed upon them by Revenue Canada.
The facts are that seniors and other individuals owing more than a thousand dollars in tax per year must pay quarterly instalments or pay the price for not doing so. Payment dates must be strictly adhered to and estimates of next year's income must be reliable. Each year, thousands of Canadians make simple errors in calculating what they expect their income to be for the next year, and they may at times miss the date. Yet, the federal government chooses to treat them, for what may be a very innocent mistake, as people who are attempting to defraud the government and punish them with interest charges on these late payments.


An hon. member:: Shameful.


Lyle Vanclief: On the face of it I admit that quarterly instalments sound like a fair compromise between the majority of people who have their income tax deducted at source and an annual lump sum payment, though we have to take a look at what it does.
Quarterly instalments are meant to act as equalizers to prevent the preferential treatment of one segment of society over another. However, for many members of our society this compromise simply does not work and is not fair.
As I said, often seniors will over-estimate and hence, they can over-pay because they are unable to guess-and that is what it is in many cases-how much their income will be. Interest rates fluctuate up and down. They do not know what their earnings will be for the year so what
is one-quarter of what they are going to make? I remember one gentleman who came in to my office and had sent $350 in every quarter. At the end of the year he got a printout back showing he had paid up in full as of April 30. Then it said that he should have paid by instalment in the previous year. Because he had not, they gave him a warning. In other words, do a better job next year.
As this gentleman said to me, Madam Speaker, he used to have a skylight in the roof of his family room, but after he read that letter, he now has another hole. He said he was absolutely livid after having sent the money based on his calculation, he miscalculated and then was penalized for having done so.
The government suggested the quarterly instalments assist Canadian seniors to avoid budgetary problems. I suggest that these people who have gone through depressions, the Second World War, recessions and are now coping with the government's high level of tax, do not need any lessons in budgeting. If they have problems, heaven help the rest of us.
Seniors are not adolescents needing a guiding hand to learn how to handle their money. They taught us, with the exception of the government that we have at the present time. I am sure they could teach them a few things if only the government would listen.
As my colleague from Winnipeg St. James has said, enough has already been taken away from our seniors. They have had old age security clawback, a changing health care system, caps on funding and other social programs. This government is treating its seniors as if they are a burden, not the asset that they are. Then every three months this government turns around and says: pay up.
Madam Speaker, it would not hurt this House to demonstrate a bit of compassion and understanding and appreciation to the seniors of this country for what they have done during their more active years. I compliment the chairman of the finance committee, the member for Edmonton Northwest from the government benches who just spoke a few minutes ago. As he said, he is chairman of the committee. I compliment him on his suggestion but I point out to him that he is chairman of that committee and I am sure my colleague who spoke earlier this afternoon will give some thought to the suggestion of raising the matter. If we are not going to
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annual instalments maybe the next best thing we can do is raise the limit somewhat above the $1,000.
Yes, we would be making an exception for one segment of our society, Madam Speaker, but I think we owe it to them. We have an opportunity here in this Parliament to give something back to the seniors in Canada. For once we can do the right thing and make the lives of our senior citizens a little easier. I recommend strongly to the finance committee that it listen to this motion, that it pay attention to this motion, and take some positive steps in that direction.


Mr. Rey Pagtakhan (Winnipeg North):: Madam Speaker, as I rise to speak I think of a certain Manitoba senior who recently said to me: "What is wrong with them in Ottawa? Why don't they listen to us?"
The government may not have been listening, Madam Speaker, but my hon. colleague from Winnipeg St. James is listening. I thank him for his initiative and for giving me the opportunity to speak on this motion.
I read again for the record:
That in the opinion of this House the government should consider the advisability of changing the collection of income tax as it affects senior citizens whose income is not taxed at source so that senior citizens who are required to pay income tax in four quarterly instalments will be permitted to pay only one annual instalment.
In essence, this motion asks this government to allow seniors to pay their income tax in one annual instalment and to be given an exemption if they wish to have one. I listen to the seniors. In fact I say this government better start listening to them.
Seventy years ago, only one in 20 Canadians was over the age of 65. By the year 2021, one of every five Canadians will be a senior. Unlike the stereotype most people have of seniors, they are not feeble and frail. Very few of them are actually frail. Sixty-seven per cent of seniors aged 65 to 74 years say their health is good or excellent.
These people are individuals who have led full lives. They have friends and family. They have grandchildren and hobbies. They like sports and stay tuned to current affairs and politics. They regularly watch us in Parliament, in this House. I am sure many seniors today are watching us as we debate this bill.
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Many seniors use retirement to go back to school. Unlike in the past when universities and colleges used to be places for the young only, these days every age group in society is represented.
Let us trample the myths that surround old age. These people are busy. They are too busy to be troubled by completing income tax returns every three months. They do not want to be married to a bookkeeper or spend countless evenings calculating estimated earnings. Why can they not pay their taxes once a year? Is it such a difficult wish to grant to our seniors who have helped build this country?
The Manitoba Society of Seniors often helps older men and women who are having trouble doing their taxes. Carol Roberts, Executive Director of the Society says the tax situation is "definitely very frustrating for seniors".
Seniors sometimes have to take money out of the bank early, or lose a month's interest on a bond in order to pay their taxes. At the same time, the Department of Revenue says: "Quarterly income tax payments are easier for seniors because it teaches them how to budget."
I repeat: "it teaches them how to budget." Have you ever heard anything so ridiculous, Madam Speaker? These people made a home in Canada and raised their families. Indeed, they have built this nation, as I said. They saw good times and bad, lean and plenty. Many saved money to see them through their retirement years. Many keep working until their final days, and the government believes that these seniors do not know how to budget.
This to say the least, is insulting. In fact I think seniors could teach the Prime Minister, this government and the Minister of Finance something about budgeting. Ms. Roberts says: "A yearly tax payment will cut down on expenses and worry. It is only common sense."
Where has common sense fled Madam Speaker? It is not only with taxes that seniors are having trouble. They are finding that the government has replaced the mailman with a superbox that sits on the comer, three blocks from their home.
In the winter in Winnipeg North, my constituency, that means three blocks of ice, snow and howling wind between them and a letter from their son or daughter. It

September 26, 1991
Private Members' Business
is three blocks of rain or subzero cold between them and their pension cheque. Little thanks Canada Post, for sacrificing service for profit.
It was not until the government tried to deindex pensions that it felt the full wrath of seniors. I was glad to see that the government had the common sense then to turn and flee from such a foolish plan.
The government now has another splendid opportunity to redeem itself, to cast off its cloak of arrogance and insensitivity. It can demonstrate that it listens to common sense and decency and accept this private members' bill.
Once in awhile there is merit in listening to our seniors. I hope the government will see that. In fact, if the government would listen more it would begin to learn fast because our seniors are trustworthy. They have experience and they have wisdom.
I strongly support this bill of my Liberal colleague, the member for Winnipeg St. James.


Mr. Rene Soetens (Ontario):: Madam Speaker, I rise to participate in the debate on this motion. I do want to thank the hon. member for Winnipeg St. James for bringing it forward. Back in April or May seniors had submitted their tax returns for the 1990 income tax year. They had met their obligations. They put their returns in the mail and, yes, many of them included the amount owing in their return, only, lo and behold, to receive a notice. Whether it be in late April or early May or mid-May, the government said to them: "Yes, we have your cheque. We have the amount. We agree with everything that you have said relative to the tax owing, but there is this problem. You did not pay these quarterly instalments as you should. You did not submit to us 75 per cent of the tax owing on an instalment basis and therefore, although we agree that you paid your tax bill, there is a penalty and there is interest". He and I think most members of the House received those kinds of submissions this spring.
Certainly it was a new submission that I had received. It is not one that I had run into last year or the year before. I am not sure why, but anyway it happened this
year. In that sense I can understand why the member brought forward this kind of presentation.
I should point out that I did have some seniors come into my office. One lady in particular in her late seventies came in with her husband who was in his early eighties. They had the problem that has been described. There was income earned, there was marginal tax paid, and at the end of the year they submitted their returns only to receive this letter that said: "You should have made quarterly instalments".
The question that was asked by this lady who did the return was: "Why was I not told? Why was I not aware that I had to make these instalments?" I mentioned to her that one of the things the government does annually-there are a number of documents, I think some of which were referenced by one of the other members who spoke- is to include in one of the OAS payments that is made by the Government of Canada a notice about the quarterly instalment requirements and how it is possible for a senior, in fact for anyone receiving government cheques, to create a deduction process so that they can make not only quarterly instalments but monthly if they prefer.
The lady mentioned to me: "Well, gee, I guess there should be more emphasis on that because I would like to take advantage of those quarterly instalments. I would like to because I find it difficult to write a cheque for $2,800 at the end of the year. We prefer to pay $700 a quarter". Yes, it is budgeting, and I can certainly understand comments from one of the members from Winnipeg that seniors certainly know how to budget. Nobody is debating that. They do, but some do have difficulty as I am sure all members in this House will agree, making ends meet. There is just not enough money to go around for all the things that they feel they need or would like to do.
Sometimes if you only have to make that quarterly payment there is a tendency to borrow that $10 from that bank account and replace it next month or the month after. Well next month comes and you do not replace it, and particularly for seniors it becomes very difficult. I understand what some of the members have said, that seniors pride themselves in paying their bills. You can just see it when the tax bill is due in a municipality. Who
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are the people who are lined up to make sure that they pay that bill on time? Senior citizens.
It is a problem if you allow them to make one payment a year. Some of them do prefer to have that option of making those quarterly instalments.
In this motion the member has put forward, nothing prevents that from happening if a senior wanted to make those quarterly instalments.
I come to the other side of this equation, quarterly instalments for simply a blanket suggestion of seniors, and there are very few seniors who fit into this category. Imagine a circumstance, as was described by several speakers, in which people receive the Canada Savings Bonds interest in October or November, but they really have to pay the taxes six months before, in March. Not just Canada Savings Bonds, there are many seniors who have registered retirement income plans that pay out toward the end of the year, or savings certificates at banks. Interest payments are like that.
Imagine another circumstance. For example, the Bronfmans are shareholders in large corporations and those corporations might only pay dividends in December. I do not know what the income of the Bronfmans is, but it is certainly substantial.
Imagine saying to them: "We realize you have a million dollars in dividends this year, which you got paid in December, but it is okay, you do not have to make any quarterly instalments on that kind of income".
I can tell you that members opposite and members on this side, I for one, would be rather upset to think of people like the Bronfmans, the McCains, the Irvings, the Reichmans only making payments once a year. I have great difficulty with that. That is why I have some difficulty with the concept of the motion the way it is presented.
We heard the hon. member for Edmonton Northwest talk about a proposal within the finance committee. I can tell you that when I started to receive these calls back in April, when we were setting up the agenda of the finance committee, that was one of the very clear suggestions I made. We should review a number of tax proposals that do not necessarily cost the government less revenue or more revenue. The way they are structured is not working.
I had this one in mind and a number of others. The committee agreed, with the support of all members of
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the committee, Liberal, NDP and Conservative members, that there are some tax things we ought to look at.
I can tell the hon. member that in support of what the member for Edmonton Northwest indicated, the committee will be receiving submissions and we hope to start our work on this subject and others that relate very closely to this within about the next three weeks, with the aim of producing a report with specific recommendations.
I guess I would comment that although I do not necessarily support this motion the way it is written, I do support the idea that there ought to be a group of people, seniors and others, who are on that very low threshold of income. Those who have to pay more than $1,000 a year of income tax should be given the option of only paying their tax once a year. They can choose that option. For that lady who came into my office who would prefer a quarterly system, I certainly would not want to deny that option to her if that is what she prefers.
I think there should be a mechanism in place whereby some people can make their tax payments once a year and that should be at income tax time, the end of March. I think there is a threshold that I am sure we in this House can come to that would be acceptable, so that a lot of seniors would not be faced with the challenge.
What is that threshold? I am not sure. I use the names of maybe four families whose names are well-known. I do not know how much they make. We can all only speculate on that matter. I guess what I am saying is that I do not think these kinds of things should be blanket rules for all people. There are a number of senior citizens who are still working. Seniors beyond age 65 who are gainfully employed on a monthly basis and receive cheques have to have their income tax deducted at source.
There are some seniors who have one method of income who have to pay monthly or bi-weekly, or however they are paid, and you would establish another rule for other seniors who receive their income in a different fashion.
I like the idea of what is being presented by the member. I can say that as a member of the finance committee we have discussed this in a preliminary stage. Our workload has not permitted us to get on to the subject yet. Even yesterday we had a discussion on the subject and said: "Okay, we want to get going on some of these other issues".

September 26, 1991
Adjournment Debate
There are a couple of other things on the finance committee agenda, but we are within the next week hopefully going to release a request for members of Parliament to deal with this kind of tax suggestion. I suspect in our work with our constituencies we know of a number of these kinds of things, where for a very minor change we would satisfy an avTul lot of people. It would not cost the Government of Canada really any money or any lost revenue, but it would be a very positive thing to do to make the system of taxation in this country as fair as possible to as many people as possible, if it is possible to have taxation fair.
Nobody likes to pay taxes. We all recognize that there are a lot of things we get from government that have to be paid for. People are willing to pay their share, but let us make it so that some people who find it a little more difficult to pay their share on a monthly or quarterly basis have an easier way to do it. I look forward to that debate in the finance committee.


Madam Deputy Speaker:: The time provided for the consideration of Private Members' Business has now expired. Pursuant to Standing Order 93, the order is dropped to the bottom of the list of the order of precedence on the Order Paper.



PROCEEDINGS ON ADJOURNMENT MOTION

[Stage Direction]
A motion to adjourn the House under Standing Order 38 deemed to have been moved.
['The motion to adjourn the House is now deemed to have been adopted. Accordingly, this House stands adjourned until tomorrow at 10 a.m., pursuant to Standing Order 24(1).']
Giuseppe (Joseph) Volpe: Madam Speaker, I want to take up a question that I raised March 31, 1991 with respect to international trade, specifically as it was impacted by the free trade agreement.
I was very specific on that day inasmuch as I asked the Minister of Finance to take a close look at the way that Customs officials on the American side of the border were monitoring Canadian products going into the American market. They were doing it with a severity that was being harmful to our own products moving south. At the same time Canadian Customs officials were being a
little bit more generous in the way that they were applying Canadian Customs regulations on products of American origin.
The Minister of Finance at the time gave me an indication that he would look into the matter. When I gave him very specific items of indication, especially relative to the printing industry and the impact on 70,000 employees of the printing industry, the minister at the time said that he would look into it with more precision and would get back to me.
Today is September 26. In the meantime, what we have seen is that there has not been any effort to level the playing field. The free trade agreement was supposed to level the playing field between Canadian and American marketplaces, between Canadian producers and American producers. We were going to open up the markets on one side and on the other. No such thing has happened.
I pointed out on March 31, and I gave very specific examples, that American clients of Canadian producers were actually closing accounts because the consumers in the United States were rejecting products marked "made in Canada". I find that absolutely shameful.
The tardiness of the minister's response is absolutely inexcusable. It is absolutely inexcusable because we have had a series of studies that have been produced since then that have indicated the impact of the free trade agreement on Canadian jobs and on Canadian manufacturers.
For example, one study gave us an indication that 315,000 manufacturing jobs in the first 29 months of the post-free trade agreement were lost, most of them from the province of Ontario. They moved south. There is a sorry admission by the senior advisory to the then Minister of Finance: "The problem now is that we are losing manufacturing activity itself to the United States and that once these jobs go outside Canada they aren't coming back". He preferred to remain anonymous for understandable reasons.
Not only are we losing trade, we are actually losing our ability to produce products so that we can generate trade. The main reason for it again is because what is happening is that the states bordering on Canada are engaging in a very competitive, aggressive, and I might say perhaps not totally ethical, attack on our manufacturing sector.
September 26, 1991

The Canadian Manufacturers' Association last spring surveyed some 635 members and 237 of them concluded that it would be cheaper to operate in the U.S., in states bordering on Canada. Some 156 of them had been approached by state governments to relocate south. The incentives are lower taxes, lower land costs, lower operating costs, and other kinds of subsidies that we cannot offer. Those kinds of subsidies were not supposed to be a part of the free trade agreement.
I was looking forward to getting a response from the Minister of Finance to give Canadians an explanation as to why we would tolerate those kinds of practices south of the border that drain away our manufacturing sector but we cannot do the same thing here.


Mr. Andre Plourde (Parliamentary Secretary to Minister of International TVade):: Madam Speaker, I want to take this opportunity to provide some clarification in response to the question raised by the hon. member for Eglinton-Lawrence regarding U.S. requirements for country of origin markings which have raised concerns in the Canadian printing industry.
According to the U.S. Tariff Act of 1930, all foreign goods imported into the United States must show the country of origin in a readily visible location and in as legible, indelible and permanent a manner as the nature of the item allows. The U.S. Congress wanted the ultimate purchaser to be able to know the country of origin upon inspection of the item, before he decides whether or not to buy it.
Madam Speaker, the government understands the concerns of the Canadian printing industry. During the free trade talks with the United States, we tried to reach an agreement on eliminating these requirements for Canadian goods.
The U.S. government refused to consider substantial changes in its marking regulations. We intend to raise the matter again with the United States and Mexico during the trilateral talks on North American free trade. We will make every effort to have these requirements eliminated for goods originating in Canada, but we are not very clear as to what kind of measures will be accepted during these talks.
Adjournment Debate
We also raised the matter with GATT in the Uruguay Round. Madam Speaker, the hon. member also raised the question of Canadian marking regulations. This is a matter for the Minister of National Revenue, but I can inform the hon. member that the hon. Otto Jelinek recently wrote to the president of the Canadian Printing Industries Association, giving the assurance that customs officials at Revenue Canada were reviewing the administration of the regulations on marking of imported goods to guarantee that the regulations are administered according to the same rules and in the same spirit.


Mr. Don Boudria (Glengarry-Prescott-Russell):: Madam Speaker, earlier, on September 23, I asked a question in this House about the notorious COSICS contract.
Let me refresh the memory of the House as to what we are talking about. In the summer of 1987 three bids were entered on the COSICS computer contract for External Affairs. Fenco-Lavelin was one of them, SHL Systemhouse was one, and DMR was the other.
In October 1987 the bidders were advised that there would be a bid recall and to re-submit bids by January
1988.	Unfortunately the bids apparently were visible from one bidder to the other, which means that the bidder who had the least advantage was able to find information to enhance the bid.
Be that as it may, there were three bidders-the same ones again-in January 1988. After the bidding process was over, the losing bidders alleged that there was bid rigging in the process and the RCMP was invited to investigate the situation.
With regard to another related inquiry, an alleged sting operation against a member of the other place, the Marin commission of inquiry heard testimony from one of the losing bidders, a Mr. Ducros, who said that he had lunch in a Montreal restaurant with, and I will read it from the transcript: "Senator Michel Cogger" and another Senator, and that name is blanked out. The name is on the court document that I have in hand. It is blanked out. The only thing that we know is that the last letter is "u."

Adjournment Debate
There have been numerous similar allegations with regard to this bid. There have been cost overruns of a magnitude which is unbelievable. We have now heard, in an interview that the Minister of Supply and Services gave earlier this week, that the whole system, after spending some $53 million for the first phase, not only does not work but will not work. The only thing it will do is connect Ottawa and Washington. To connect Ottawa and Washington all we need to do is put someone with a briefcase on a plane three times a day.

We don't need to spend $53 million and have all this scandal, and then be denied information. I am very anxious to know the answer. Who is this person with eleven letters in his name, the last one a "u"?


Mrs. Lise Bourgault (Parliamentary Secretary to Minister of Supply and Services):: Madam Speaker, the Department of Supply and Services, on behalf of the Department of External Affairs, signed a contract to acquire a Canadian on-line secure information and communications system.
To date, the Department of External Affairs has spent $53 million, not $140 million, of a budget totalling $56 million for the first phase of COSICS, a new secure telecommunications system to replace the old system that the department uses throughout the world on behalf of all departments.
Therefore, Phase I of COSICS is within the budget allocated by the Treasury Board ministers in 1987. The project is two years late. This is not an excuse, I agree, but it is one of the most complex and important data transmission projects ever undertaken in Canada. Phase I of COSICS is operational; since late 1989, it has become the mainstay of our North American secure communications system, with 1,100 daily users. Now that system installation is complete, we expect final approval of system security by the end of the year.
Madam Speaker, the department has not stopped the project, on the contrary. This project was designed in two phases, precisely for the purpose of checking system reliability. The rapid progress of technology in this field since 1987 well shows the wisdom of this approach, and the hon. member for Glengarry-Prescott-Russell will surely agree with me. The department is using personal
computers to make up for lost time and to complete the project within the limit set by the 1987 budget.
Madam Speaker, I will certainly not answer speculative questions about a twelve-letter name supposedly on a document we have not seen that the hon. member says he has. I have no information and it is not for me to play that role. Let the court do its job, Madam Speaker!



Ms. Mary Clancy (Halifax):: Madam Speaker, I rise this evening, as I have done repeatedly in this House this year and last year, in what is so far a futile attempt to convince this government that there is a crisis facing the port of Halifax.
The latest occasion was Thursday of last week when I asked the Prime Minister about a report that had been initiated by Ports Canada and that we understand to be completed but that was not going to be made public, was not going to be given to members of Parliament for the city of Halifax, the city of Dartmouth, and in Nova Scotia generally. I asked whether the Prime Minister had any words which could lead us to believe that there was an interest in saving one of the great ports of this country which is in clear and desperate distress.
The response, I am afraid, was again evasion. It is my submission that this government must act now to stop the decline into obscurity of what has historically been Canada's greatest port. It is not as though we are asking for a handout.
Halifax has managed to get by with a great deal less assistance than Some of our competitors. We do not mind that. We are not complaining but we do note that there are virtually free ice-breaking and pilotage fees for the port of Montreal. We note also that there have been MIL bailouts in the order of $350 million.
I note most particularly, as I have noted before, that there was a decision by the Government of Canada to assist CP Rail in the purchase of the Delaware and Hudson railway. This is a thorn in the side of Haligonians, and Nova Scotians generally.
This railway is now drawing business away from the port of Halifax. It is drawing it in great numbers, to the direct advantage of the port of New York.
September 26, 1991

This government speaks of competitiveness, presumably in an effort to rationalize our practices with those of the United States. That is fine, too. The port of Halifax has been and can be competitive if the government does not close it down as a result of its policy.
The Americans, for example, have invested $750 million to upgrade the ports of New York and Baltimore. What kind of environment is that subsidy to those ports going to create for Halifax? What is it going to do to Saint John? What is it going to do to Montreal?
Given the government's silence on this matter, apparently the government believes that the ramifications will not make much difference. I can tell you, Madam Speaker, they will, they do, and they have.
When will the government open its eyes to the fact that CN Rail is currently uncompetitive, grotesquely so? It is uncompetitive because of the National Transportation Act, because it took CN eight years to wake up to the fact that its rail rates were too high, and because the government taxes the railway far more than its American competitors are taxed.
We need the federal government to help us create the famous and oft talked about level playing field. Make CN Rail competitive. Lessen the tax burden, both on the port and on the vital infrastructure surrounding it.
If the government gives Halifax a fighting chance instead of subsidizing its competitors, then we in Halifax can do what we have always done best. We in Halifax want the chance to do what we have always done best. What is that?
It is to move the world's goods through our port, the port of Halifax, the port that is the best in the world if we only have the chance to show it.


Mr. Lee Richardson (Parliamentary Secretary to Minister of Transport):: Madam Speaker, I think we have answered the question on numerous occasions for the member.
Whether she cares to admit it the difficulty facing the port of Halifax is the product of a highly competitive global trading environment that all our ports are facing.
It is time that everyone who is concerned about Halifax started to work together. It is clear that we on
Adjournment Debate
this side of the House are doing so. As the Prime Minister told the hon. member last week, he met with the premier of Nova Scotia, who brought constructive and thoughtful proposals for the benefit of the Halifax harbour.
In addition, both the Canada Ports Corporation and CN have been working very hard to increase their marketing competitiveness. CN has firmly committed itself to the Halifax route and it is presently leasing double-stacked cars to service containerized freight traffic.
In addition, the railway is increasing the overhead clearances of the Halifax-Moncton portion of the CN main line. The provincial government of Nova Scotia has committed up to $11.1 million to acquire modem, double-stacked rail cars.
My hon. friend opposite in her question mentioned a specific report concerning competitiveness. As I understand it, the Ports Corporation conducted an analysis of the container situation. The Ports Corporation has made the decision not to release the report.
Instead, it is confident that what is more important for the port of Halifax is that it has undertaken an exhaustive program of consultations with the groups that have an interest and a role to play in the continuing viability of this great port.
I would like the House to know, for the record, that none of us is in the least bit complacent about the problems facing the port of Halifax. Nevertheless, it would be more useful to extol the virtues of this port rather than focusing on the negative at every opportunity-
The member could perhaps also admit that even with today's problems, the port output is still well above what it was five years ago. Indeed, since 1984, according to the Halifax Port Corporation, the port experienced continuous growth until this year.
I can assure the member, as the right hon. Prime Minister said, that this government will be working in partnership with the provincial government, the railway and the port officials for Halifax's future prosperity.

Adjournment Debate RIGHTS OF THE CHILD


Russell Gregoire MacLellan: Madam Speaker, this government, to the embarrassment of all Canadians, is refusing to ratify the UN Convention on the Rights of the Child.
Madam Speaker, as you know, we are signatories of this document. Our very own Prime Minister co-chaired the conference which produced the convention, yet he and his government steadfastly refuse to ratify it. I do not think that this is acceptable.
However, I believe I know why this is happening. Part of the convention reads:
Any child that is deprived of liberty shall be held separate and apart
from adults unless it is not in the interests of that child to do so.
These few lines are very progressive. It is a valuable document and our government, by not ratifying it, is preventing much needed protection for children. Why? Because these words stand in contrast to the government's own policy of transferring young offenders to adult prisons to serve their sentences.
There is a very great concern out there, particularly in the large cities, about young offenders and the fact that these young offenders are committing so many crimes and are back out on the street in a short period of time. However, what the people do not realize is that the problem with young offenders originates with the government and its policies, that the government incarcerates young offenders with adult criminals where they are assaulted physically and sexually, learn more about crime and how to commit it and are back out on the street in a relatively short period of time without any kind of rehabilitation.
This is wrong. Certainly the young offenders should be incarcerated until they have the proper rehabilitation and assistance. This may mean longer periods of time. Certainly that is acceptable. But what is not acceptable is to put young people out on the street again without proper assistance. To incarcerate them with adults is only exacerbating the problem and making these young people, when they get out of incarceration, more susceptible to committing other crimes.
It is being done because building youth detention facilities is not a politically positive move. It reflects, in all of us, the shortcomings of we as human beings, but it is necessary to have a youth program that is going to serve the needs of that youth. The problems of violence
in our cities is now rampant. We have to look at it realistically. We have to ratify this agreement and government has to look at this question.


Lee Richardson: Madam Speaker, I am pleased to respond to the question of the hon. member with respect to the ratification of the Convention on the Rights of the Child.
As you all know, the convention came into force on September 2,1990. Canada had signed the convention on May 28, 1990.
The Department of Justice has co-ordinated the review of federal legislation and policies in light of the convention. We are proud to underline the fact that Canadian legislation and policies dealing with children's rights are progressive and go far beyond the objectives of the convention.
With respect to the specific issue of the detention of children, the convention provides that a child deprived of liberty shall be separated from adults unless it is in his or her best interests not to do so. Although we are in agreement with this principle, we consider that it is necessary to enter a reservation. There are two reasons for that reservation.
The first one is that we must be able to take into account other relevant considerations, such as the wellbeing of other children kept in custody or the safety of the public.
The second one is that we are currently in the process of consulting with the provinces and the territories on the issue of the appropriate placement of young offenders.
We need time to complete this process in a responsible fashion. We are trying to develop a response which is the most appropriate, taking into account all of the circumstances of young offenders who have been transferred to the adult court and other young offenders.
The hon. member has suggested that the situation of young offenders being held in custody is going to be made worse by Bill C-12, an act to amend the Young Offenders Act and the Criminal Code, which is presently before the House of Commons. He refers to the proposed amendment to test for the transfer of a young offender to the adult court but which retains the principle of the interest of society and specifies that this

principle includes the objective of affording protection to the public and to the rehabilitation of the young person.
The objective of the federal government is to ensure that the best possible decision can be made at a transfer hearing in the interest of both the youth before the court and of the public. The proposed test is not advanced to secure more transfers, and transfer as an option is intended to remain an exceptional procedure.
Given the range of interpretation to date on the current test, it was viewed as highly desirable to lessen the unequal application of the test and to reinforce the notion that both the needs of the youth and the protection of the public are primary considerations.
It is our understanding that all provinces and territories support ratifications of this important convention and we are working together to promote and improve the situation of young offenders kept in custody. The reservation would permit us to ratify the convention before the end of the year, before awaiting the completion of the federal-provincial-territorial consultation.


CANADIAN PASSPORTS
Mr. Jesse Flis (Parkdale-High Park):: Madam Speaker, last week in this House I raised the matter of issuing false passports, as did the leader of my party, and as did the member for Scarborough West, our immigration critic. Since then I have been increasingly concerned by the attitude displayed by this government and the response received.
When I travel to other countries, I am treated very well, thanks to my Canadian passport. When my constituents become Canadian citizens, they are amazed at the respect the Canadian passport garners them at border points where before they had been less than welcome.
Will this continue? Will Canadians still be so welcome when the international community hears that this government will issue a false passport in three days if you go in person and in two weeks if you use the mail-in program?
The minister responsible said, and I quote: "Security is our highest priority in the issuing of passports".
I did some checking and security is not exactly air tight in the passport office. I was shocked to find that the guarantors are checked at random. In my career as principal and as member of Parliament, I have signed
Adjournment Debate
dozens of forms as guarantor. In over 30 years I only had two calls to check, to verify whether I knew the applicant applying for the passport.
When the guarantors are checked, after the passport is issued, how does the minister propose to get the documents back after the fact, particularly since the fraudulent passport was probably mailed to a false address?
I was also shocked at the ease with which birth certificates can be forged, sometimes with as little as a bottle of white-out and a photocopier. Clearly, there must be more stringent measures adopted.
I call on this government to immediately develop national standards for birth certificates, standards which are the same for all provinces. Huge amounts of money are spent in the printing process to ensure that Canadian passports cannot be forged. In relative terms precious little time is spent to ensure that the passports are not issued based on false documentation.
I call on this government to use the $5 million surplus in the passport revolving fund to hire enough people to call every guarantor personally on the telephone. Sometimes a constituent comes to my office asking for help getting some kind of a travel document while they are waiting for landed immigrant status in Canada. I cannot say how many times I have been asked: "Are you asking us to push this case without the proper security checks? Are you asking us to compromise the integrity of the Canadian travel document?"
No. I am asking that the integrity of Canada and of the Canadian passport be upheld at all costs. As a Canadian citizen, I expect this government to do something about the situation. I expect that only Canadian citizens will have our passport. Not spies, not criminals, not drug lords, not people whose only claim to our passports is that they are rich enough to be able to afford the $20,000 to $50,000 currently being charged on the black market for this document.
In closing, the Secretary of State for External Affairs says that she has asked her department to investigate and make a full report. I ask the parliamentary secretary if the minister will table that report in this House and when?
As well, will she assure this House that her minister will table one accurate report rather than the three or four versions she issued in the A1 Mashat report?

September 26, 1991
Adjournment Debate


Mrs. Suzanne Duplessis (Parliamentary Secretary to Minister for External Relations and Minister of State (Indian Affairs and Northern Development)):: Madam Speaker, on September 19, the hon. member for Park-dale-High Park asked the Secretary of State for External Affairs about reports in the newspapers pertaining to the issuance of fraudulent passports.
Internationally, the Canadian passport is reputed to be one of the most secure travel documents. As the Secretary of State for External Affairs pointed out, we are taking very seriously the matter of security as it affects the issuance of passports. The Passport Office works very closely with the RCMP to ensure the integrity of our travel documents.
I may point out that the procedures and technology we use are constantly being evaluated to respond to these challenges. No system, whatever security measures are taken, is entirely safe from fraud and false statements.
Hon. members should realize we must strike a balance between increased security and our ability to provide an efficient service at reasonable cost. It has always been our objective to maintain the right balance.
The Secretary of State for External Affairs has indicated that departmental officials will be drafting recommendations for improving passport security. We believe that such measures could be implemented at relatively low cost, with as little inconvenience as possible to the Canadian public.
Madam Speaker, in concluding, I hope that my colleague, the Secretary of State for External Affairs, will consider the positive recommendations made by the hon. member for Parkdale-High Park.


Madam Deputy Speaker:: The motion to adjourn the House is now deemed to have been adopted. Accordingly, this House stands adjourned until tomorrow at 10 a.m., pursuant to Standing Order 24(1).


[Stage Direction]
The House adjourned at 6.30 p.m.
[Stage Direction]
Friday, September 27,1991