1992-03-11

Mr. David Dingwall (Cape Breton-East Richmond):: Mr. Speaker, the Terry Fox Achievement Award honours an individual or group that best exemplifies the spirit, dedication and determination for which Terry Fox will always be remembered.
Tonight this national award is being presented to Joey Saccary, a grade 12 student from Glace Bay High School, a victim of spina bifida.
Joey has been active at Glace Bay High with the Circle of Friends and is the founder of the Disability Awareness Group.
He is a volunteer with the IWK Telethon and a camp for disabled children. He was a member of the first Youth Focus Group sponsored by the Nova Scotia Youth Secretariat.
Joey has served on the University College of Cape Breton task force on problems pertaining to the disabled and has worked with the Department of Tourism in studying accessibility of buildings for those who are blind or wheelchair bound. He is a member of the Spina Bifida Society and The Wheelchair Sports Association.
Mr. Speaker, I want to express through you to him how proud I am of this courageous and determined young Canadian. Congratulations, Joey.


SALMON FISHERY
Mr. J. W. Bud Bird (Fredericton-York-Sunbury):: Mr. Speaker, I wish to commend the Minister of Fisheries and Oceans and his colleague in Newfoundland for their responsible and forthright conservation decision announced last week to close commercial salmon fishing in Newfoundland.
This virtually completes the closure of commercial salmon harvesting throughout Atlantic Canada, except for Labrador, following earlier bans in New Brunswick and Nova Scotia over past years. This recent decision must be recognized as a particularly difficult one in view of the cod tragedy now being experienced in Newfoundland waters. Therefore, the accompanying joint government proposal to purchase salmon licences for permanent retirement is both a compassionate shortterm measure to provide relief to the financial burdens of many fishermen, as well as a sound long-term investment in the conservation of the Atlantic salmon resource. Slowly but surely we all are learning the hard lessons about conservation in Canada. The Atlantic salmon will ever be an important symbol of our environmental mission. Let us ensure that we build that resource on the moves now made and that we permit no other challenge to impair its conservation.


CONSTITUTIONAL RENEWAL
Mr. Lome Nystrom (Yorkton-Melville):: Mr. Speaker, I was disappointed yesterday when I heard the Minister of National Defence criticize the three-party report on a renewed Canadian Constitution. The Prime Minister of Canada supported the report in Quebec, but where are the other 12 cabinet ministers from that province? Who speaks for a renewed Canada in Quebec? It is high time the other 12 spoke up as well.

March 11, 1992

It is important since we have 12 ministers from the province of Quebec who sit in this federal cabinet that they go to the province of Quebec and speak in favour of a renewed Canada. So far the only person who has done that from the government across the way has been the Prime Minister, who has gone out and said "yes" to the report of the three political parties. That is important, but it is important also that the other 12 ministers do the same.
I ask this question: Who speaks for Canada? Who speaks for a renewed Canada in the province of Quebec? It is important that the 12 ministers get out there and sell this idea of a renewed Canada that we talk about in our report to the people in the province of Quebec. It is important that they do so.
Mr. Speaker, I ask this: Who besides the Prime Minister is speaking for a renewed Canada in the province of Quebec?


SHABBAT ZACHOR
Mr. Bill Attewell (Markham-Whitchurch-Stouff-ville):: Mr. Speaker, this Saturday marks Shabbat Zachor, a sabbath set aside by Jews around the world to remember the plight of all oppressed Jews.
I believe very strongly that we must remember the struggles of the people who face daily discrimination because they are Jewish. Syrian Jews are in this intolerable situation.
It was at this time in 1974 that four young Syrian women were caught trying to escape Syria into Lebanon. Their raped and mutilated bodies were dumped in sacks in front of their parents' Damascus homes.
Jewish students from across Canada will be on Parliament Hill tomorrow lobbying to make us aware of the terrible plight of Syrian Jews.
We must support them and work together to ensure that Syrian officials stop this persecution. Syrian Jews
must no longer be denied important and basic human rights.


VETERANS AFFAIRS
Mr. George Proud (Hillsborough):: Mr. Speaker, when the Minister of Finance announced the winding down of the Veterans Land Administration's recent budget, he caused a great deal of grief to the employees of this agency by the manner in which the elimination of the agency was announced. At the time no clear path was announced for the future of the agency or its employees. Other employees of the Department of Veterans Affairs are also wondering what the future holds for them.
I call on the Minister of Veterans Affairs to assure the employees, both of VLA and other sections of the Veterans Affairs portfolio, at the earliest possible time that there will be no staff cuts in this department.
I want the minister to also assure the House that he is not planning to shuffle departmental positions around the country to satisfy short-term political gain. The people in this department deserve to know what the future holds for them. The veterans of Canada also deserve to know that the high level of service to which they have become accustomed since the end of the wars will continue.


TRURO, NOVA SCOTIA
Mr. Bill Casey (Cumberland-Colchester):: Mr. Speaker, Chatelaine magazine recently chose Truro, Nova Scotia, as one of the 10 best communities in Canada in which to live. Truro was selected based on being one of the safest, most affordable, most neighbourly towns. I would like to add that Truro is also innovative, positive, generous and independent.
Currently Thiro groups are working on economic development projects, environmental projects, and immigration projects that are unique for all of Canada.
During the application period for the Atlantic women's prison, Truro groups came together and developed a very comprehensive application involving many sectors of the community. Even now, after the decision to locate
March 11, 1992

the prison in Truro has been made, the community is determined to make it the best in the country.
Chatelaine's endorsement of Truro was well earned and Truro and its people should be proud of their community.


CANADIAN CENTRE FOR OCCUPATIONAL HEALTH AND SAFETY
Mr. Bob Wood (Nipissing):: Mr. Speaker, would you spend $8 million a year to help save $20 billion? Apparently this government will not. I am referring specifically to the Canadian Centre for Occupational Health and Safety.
The centre, as you know, is a model organization in that it exemplifies the spirit of co-operation that can exist between government, labour and business. All three share in its administration.
It has in its mandate the promotion of health and safety and disease control in the workplace. It is a Canadian success story that is world renowned for its objective research and it provides useful information to all segments of society.
Indeed, of its total sales, 43 per cent of them were to foreign markets. Yet this government is threatening to shut it down by calling off its funding.
This government likes to talk about productivity, competitiveness and the need for co-operation but does very little about it. Here we have a centre the work of which helps to prevent over $20 billion a year in lost productivity to the economy for a nominal cost of $8 million, and declining.
With the spiralling costs of health care, it makes sense to take preventive measures through education and information campaigns. If anything, perhaps the government could use the centre to help correct its shortsightedness.


THE BUDGET
Mr. Guy Saint-Julien (Abitibi):: Mr. Speaker, I wish to draw the attention of Quebecers to highlights of the 1992 federal budget. The reduction in the personal income surtax will benefit 4.7 million taxpayers in Quebec.
We are going to simplify, streamline and enhance federal support for 2.9 million families and 2.3 million children in Quebec.
The negative aspects of the present tax system for the average family will be eliminated.
We will make it easier for people to own their own homes by allowing families in Quebec to use funds invested in their RRSPS.
We will reduce the tax burden on 11,000 Quebec companies in the manufacturing and processing sectors; we will increase the capital cost allowance rate for machinery in those sectors; and further measures are planned to assist small businesses and farming operations in Quebec.
We will improve assistance for some 42,000 disabled persons in Quebec.
And finally, Mr. Speaker, we will provide additional assistance for about 170,000 students at the post-secondary level in the province.


ELLIOT LAKE
Mr. Maurice Foster (Algoma):: Mr. Speaker, today Denison Mines is shutting down its mining operations in Elliot Lake, Ontario, resulting in the loss of some 1,000 jobs.
The number of jobs lost during the last two years is over 3,400 or 85 per cent of the mining jobs in that community. One cannot exaggerate the adverse impact these lay-offs will have on the community in terms of loss of competence in the future and loss of hope that new employment can be found for these workers.
Making things even worse, the government has announced it is closing the Atomic Energy Control Board office in Elliot Lake at a time when it should be expanding its operation to ensure that the decommissioning of these uranium mines is done in a proper way to protect the long-term safety of the community.
I call on the Government of Canada to reverse its decision regarding the Atomic Energy Control Board office. I call on the Government of Canada to put in place new effective adjustment programs to assist workers who have lost their jobs and to take new initiatives to diversify the economy of Elliot Lake and the north shore communities.

March 11, 1992


S. O. 31 FEDNOR
Mr. John A. MacDougall (Timiskaming):: Mr. Speaker, since 1987, the federal government through a regional program called FEDNOR has created a total of 474 projects worth $127 million, with $36.2 million from the federal government, and created over 3,000 jobs.
In my hand today I have hundreds of letters endorsed by the Chamber of Commerce, town councils, residents and business people urging that this program continue.
I have yet to hear from the other side, from the member for Sudbury who has a regional office there, from the member for Thunder Bay who has an office there, or from the member for Sault Ste. Marie who has an office there, about whether or not they support FEDNOR.
It is a program that was brought together by northern Ontarians for northern Ontarians to develop the north. We need FEDNOR.


SHABBAT ZACHOR
Mr. Svend J. Robinson (Burnaby-Kingsway):: Mr. Speaker, this year's commemoration of Shabbat Zachor, the sabbath of remembrance and prayer for the Jewish community of Syria, will be held on March 14 in synagogues across Canada.
On that day, not only Jews but all Canadians are reminded of the oppressive treatment of 4,300 Syrian Jews, including surveillance by Syrian secret police, economic restrictions and denial of basic human rights such as the right to vote, freedom of assembly, freedom from arbitrated tension and the right to emigrate, in contravention of the UN Declaration of Human Rights.
The plight of two brothers, Selim and Eli Swed, serving six and a half year sentences after unfair trials, is particularly grave. Recently members of this House and the Senate from all parties joined to form the Canadian Parliamentary Friendship Group for Syrian Jewry.
As vice-chair of this group, I join with my colleagues in commemorating Shabbat Zachor, and in strongly urging the Syrian government to release the Swed brothers and ensure that at last there is full respect for the fundamental human rights of all Syrian Jews, including the right to emigrate.


REFORM PARTY
Mr. Felix Holtmann (Portage-Interlake):: Mr. Speaker, the Ides of March are not yet upon us, but I, like the soothsayer, want to warn all Canadian senior citizens that Preston Manning and his retreads want to benefit from you when you die. That's right folks. Just call up some Reform Party office and you will be given the name of an insurance agent who will assist in a peaceful way, especially if you are aged and ill. They will transfer your life insurance policy directly to the Reform Party instead of your loved ones.
Preston then will likely send you a beautiful letter stating that when the time comes you will be dearly missed but heaven is waiting. Signed with anticipation, Preston.
P.S. Have you any older relatives we could contact? God bless.


INTERNATIONAL WOMEN'S WEEK
Ms. Lynn Hunter (Saanich-Gulf Islands):: Mr. Speaker, this is International Women's Week. We should be celebrating the advancement of women. Instead, this government is continuing its shameful record of contempt concerning Canadian women.
This week we have been debating a budget which tells working women they do not deserve retraining by cutting the Canadian Jobs Strategy by another $100 million; circumvents the Human Rights Tribunal and the Federal Court by reneging on a billion dollars of pay equity payments; reneges on the government's promise to promote equality rights by killing the Court Challenges Program; kills family allowances in favour of a targeted benefit which does nothing for families on social assistance, many of whom are headed by women; condemns more women and their children to homelessness by eliminating co-op housing. It has also reneged on its promise of child care.
March 11, 1992

This government signed the UN Convention on the elimination of discrimination against women. Canada should be implementing policies here at home which would serve as a model for the world. But no. What this government is saying to women is: "Wait a while longer".


CANADIAN BROADCASTING CORPORATION
Mr. Ross Belsher (Fraser Valley East):: Mr. Speaker, it is reported that the CBC refuses to run a paid ad promoting Canadian unity. It says that it does not want to get political, it might offend someone.
This corporation, which does not want to get political, is quite happy giving publicity to Loretta Swit of MASH fame as she sits on an ice floe beside a seal.
Apparently it is not too political to give publicity to the affluent Hollywood star while giving short shift to the beleaguered Atlantic cod fishery.
Without a united Canada there will not be $1 billion in taxes to pay for the CBC. There will not be any need for a national network because there will not be a nation.
Without unity in Canada there will not be a need for the mother corporation. Perhaps the CBC should consider why it exists, who it exists for and spend a moment thinking about the "Canadian" in their name.
Without getting too political, I think the CBC should get its priorities straight.



ORAL QUESTION PERIOD


Hon. Jean Chretien (Leader of the Opposition):: Mr. Speaker, I have a question for the Prime Minister.
I have not always agreed with him in the past, and I still feel there are a number of major issues on which we disagree strongly. However, I do agree with the Prime Minister that we must use all the means at our disposal to achieve reconciliation and put together a set of proposals for this country that are acceptable to all Canadians. And that is why all members of the parlia-
Oral Questions
mentary committee voted for the Beaudoin-Dobbie report.
I would like to ask the Prime Minister whether the Minister of National Defence was speaking on behalf of the Canadian government when he attacked the Beaudoin-Dobbie report yesterday.


Right Hon. Brian Mulroney (Prime Minister):: Mr. Speaker, I have the transcript of last night's broadcast of Le Point, where Mr. Masse was a guest. He said the following: "Looking at this from an historical perspective, I entirely agree with the Prime Minister that the Beaudoin-Dobbie report goes further than any other in terms of being open to the needs of Quebec and taking into account the particular situation in Quebec".
Mr. Masse confirms what I said on Mr. Coumoyer's radio show last week. I said that although Beaudoin-Dobbie was the product of a parliamentary committee and thus not necessarily government policy, it nevertheless remains a document that is very important as part of Canada's constitutional development and in my opinion, its approach to the provinces, to aboriginal people, to institutional reform-and here I am thinking of the Senate-and to the distribution of powers is the most generous and the most open approach this country has seen in 125 years.
The report and the parliamentarians from all political parties in this House, whose efforts and spirit of co-operation were exemplary, deserve our respect.


Joseph Jacques Jean Chrétien: Mr. Speaker, I like the statement of the Prime Minister, but I would like to ask him this question.
After 18 members of his caucus, plus members from this side of the House, the NDP and Liberals, signed the report and the Prime Minister and the minister in charge of the Constitution said last week it was a good report, is it not the obligation of every member of the government to defend what the Prime Minister calls "the best constitutional proposition since 1867"?


Martin Brian Mulroney: Mr. Speaker, it is a parliamentary report and it is not a question of government policy. We are examining it very carefully. As I have just indicated, I quite frankly am very impressed by the work of the committee.

Oral Questions
The Minister of National Defence indicated last night on television-
"I entirely agree with the Prime Minister. This report goes further than any other in terms of being open to the needs of Quebec".

This is a substantial statement of agreement and an endorsement of the position of all of the people who worked so hard to put together the report. At an appropriate time, the House will be-


Mr. Lapierre:: Come on.


Martin Brian Mulroney: The Bloc Quebecois does not agree. The poor Bloc Quebecois is trying to destroy a great country and it is going to be surprised when Quebecers are confronted with the real question and they say "We want to remain Canadians.".


Joseph Jacques Jean Chrétien: Mr. Speaker, I would like to know from the Prime Minister whether it would not be better for all Canadians if the members of his cabinet did what they had to do to be applauded by members of the Conservative Party, instead of being applauded by members of the Parti Quebecois, as was Mr. Masse.


Martin Brian Mulroney: Mr. Speaker, I just said twice that the Minister of National Defence, on Le Point last night, fully endorsed the position I had defended on Jean Cournoyer's program. Now if my friend is complaining that there may be differences of opinion from time to time within a political party, I am sorry, but I would point out the huge difference between his position and that of the hon. member for Saint-Henri-Westmount.


Some hon. members:: Oh, oh.


Martin Brian Mulroney: Yes, it happens in the best of families. It is not perfect. You do not have total solidarity yet. So those are things that happen. The Minister of National Defence said last night that he fully supported the Prime Minister's position, and I congratulate him on his good judgment.


Hon. Roy MacLaren (Etobicoke North):: Mr. Speaker, in 1988 the Prime Minister said that the dispute settlement mechanism in the free trade agreement was: "a genuine shield against new U.S. protectionism.". Yet in the case of softwood lumber and of Honda automobiles that shield against new U.S. protection is obviously not there.
When will this government recognize that the free trade agreement is not providing the secure access to the American market which was its original justification? What is this government going to do to ensure that such protectionist abuse is eliminated in trade between Canada and the United States?


Hon. Michael Wilson (Minister of Industry, Science and Technology and Minister for International Ihade):: Mr. Speaker, it is clear that under the free trade agreement, and I am sure my hon. friend would not have it any other way, each country has its own trade protective laws, laws to protect its own interests. We have applied ours in certain cases, the Americans applied theirs in other cases.
As I have said on many occasions, no other country in the world has a dispute settlement mechanism. We have it to ensure that the trade laws are applied in a fair, open and equitable way as far as both sides are concerned. That is what we have in the free trade agreement. That is a very important step forward with the free trade agreement, as we have seen most particularly with the pork decision not too long ago where Canadians interests were protected when they were under attack from protectionist forces in the United States.


Roy MacLaren: Mr. Speaker, the free trade agreement merely provides for the evaluation of the fair application of U.S. trade law. When the government signed the memorandum of understanding in 1986 on softwood lumber, it did so largely because there was no agreement between Canada and the United States on the question of what is a subsidy. There is still no such agreement today.
Without a clear definition of subsidies, how can there be an effective process for dispute settlement?
March 11, 1992


Michael Holcombe Wilson: Mr. Speaker, one of the key things that we did not have in 1986 was a free trade agreement with a dispute settlement mechanism. Now we have that important balance, important factor in the free trade agreement that allows for these disputes to be settled in a fair and equitable fashion.
My hon. friend talks about a definition of subsidy. We provided in the agreement, because we could not get an agreement at that time as to what would constitute the subsidy, five years within which we would establish that.
Since that time we have been discussing this under the auspices of the GATT and the Uruguay round negotiations. As my hon. friend knows from reading the Dunkel proposals of December 20, we have made a very important step forward as to what constitutes a subsidy. There is still more work to be done, but it is a major step forward in establishing the definition of subsidy.


THE BUDGET
Hon. Audrey McLaughlin (Yukon):: Mr. Speaker, my question is for the Prime Minister. As the House knows, we are celebrating International Women's Week this week. Unfortunately the government's recent budget, with the total elimination of a national child care program and its refusal to honour the government's pay equity to the women in its employ, gives women little reason to celebrate.
The government has fought its female employees every step of the way, refusing to pay the $1 billion in pay equity that is owing to the women working for this government.
My question to the Prime Minister is this. Why is the government willing to give a $1 billion tax break so that corporate executives can have lunch with each other but it refuses to give the $1 billion to those women who have earned it?


Martin Brian Mulroney: Mr. Speaker, I think there would be general agreement in the House that the concept of equality for all Canadians, and particularly the one raised by my hon. friend, the
Oral Questions
advancement of the cause of equality for women, is a most important and very noble undertaking and the government and parliamentarians are committed to it.
I think in fairness my hon. friend should acknowledge that since this government came to office there has been an increase of over 100 per cent in the appointment of women to agencies, boards and commissions in decisionmaking positions.
When we became the government there were three women who were deputy ministers, there are now 21 at that level. There were two women who were ambassadors, there are now 16 or 17 heads of mission. We have added women to the Supreme Court and at the next cabinet meeting tomorrow-when we formed a government there were 37 women appointed to the federal bench across Canada-this government will be naming the one hundredth woman to fill a senior judicial position in Canada.
These are all very important advancements of women in our society into the decision-making process, making the decisions and exercising power where it really counts. That did not exist in the past. We have made very major steps forward but we have a long way to go.
I hope my hon. friend will bear these realities in mind and place them in context when she is asking her questions and commenting on the status of women in Canada.


Audrey Marlene McLaughlin: Mr. Speaker, the context is that business executives get a $1 billion tax break and women with lower incomes who work for this government do not get the pay equity that they deserve, that the courts have said that they deserve and that this government owes to these women. Those are the facts and noble intentions do not put bread on the table.
Because it also affects these lower income groups in our society, not only do women suffer from not having pay equity within the government and outside the government, but the government's tax changes that are announced in this budget also mean that lower income families are paying more taxes. The de-indexation of tax credits, which continues, means that more families are paying higher taxes in the lower income bracket, approximately $200 more in taxes.

March 11, 1992
Oral Questions
I ask the Prime Minister a simple question: With this de-indexation of tax credits, why has the government continued a hidden tax on the poor and working Canadian families?


Hon. Don Mazankowski (Deputy Prime Minister and Minister of Finance):: Mr. Speaker, that conclusion is absolutely false. There are two parts to the question. The first part deals with pay equity.
I remind the hon. member that we have made adjustments to pay equity on a retroactive basis going back to, I believe, April 1, 1985 of in excess of $400 million. I do not believe that there is any other administration or government in Canada that has undertaken that.
In addition to that, we provide for an additional $81 million for future pay equity provisions. Again, there is no other administration in Canada that is as generous as that.
With regard to the second part of the question, the hon. member should take a look again at the child benefit program. This is clearly designed, together with the earned income supplement and the very generous offerings as a result of the consolidation of the family allowance, the child credit and the refundable tax credit, so that working poor families with children will certainly be a lot better off.
Furthermore, unlike the family allowance which is now taxed away, the payments of up to $144 per month will be provided to 3.1 million families without being taxable. That clearly indicates this is a generous program. It is focused and it is simple.


Audrey Marlene McLaughlin: Mr. Speaker, the truth remains that in this budget on which we will be voting today and on which this party will be voting against, not only is social housing cut back, not only is co-operative housing cut out, not only is pay equity not in it, the avenues that people have had to even challenge the government and to challenge those authorities is cut back.

Two years ago, the federal government said that it would continue to fund the Court Challenges Program, which helps the most disadvantaged.
The government explained that it wanted to reaffirm its commitment to promoting human rights.
I would like to ask the Prime Minister a question. This program was just cancelled in the budget. Does this mean that the government is no longer interested in promoting human rights in Canada?


Donald Frank Mazankowski: Mr. Speaker, it does not surprise me at all to learn that the New Democratic Party will be voting against tax cuts for 14.6 million Canadians.
It does not surprise me at all that the NDP will be voting against reducing deficits and reducing the size and scope of government. That does not surprise me at all.
The hon. member suggests that there are some programs that are being cut. Yes, indeed there are some programs that are being cut.
These are very difficult and tough decisions to make, but the fact of the matter is that Canadians do not want to see the deficit rise and they do not want to see their taxes rise. So the tough choices mean that you have to cut some programs. You cannot cut spending without cutting programs.


Mr. Jim Peterson (Willowdale):: Mr. Speaker, the Honda syndrome will drive out not just automotive but all other manufacturing in Canada that is producing for the U.S. market.
In light of this, has the trade minister obtained the consent of the United States to binding arbitration of the Honda dispute? If not, why not?


Michael Holcombe Wilson: Mr. Speaker, the concern that my hon. friend is expressing about the Honda issue is precisely the same concern that we have as a government and that we are acting on in the activities that we have undertaken in dealing with this matter with the United States administration.
We have initiated discussions with them under chapter 18 of the free trade agreement. Those consultations continue in two senses. Once those consultations are
March 11, 1992

completed we will decide whether or not it is appropriate to have some other form of consultation.


James Scott (Jim) Peterson: Mr. Speaker, the minister's idea of talking tough with the Americans is to beg on his knees and prostrate himself in Washington.
He still cannot get the Americans, as he admitted today, to agree to binding arbitration on the Honda dispute under chapter 18. Will the minister at least admit that his much lauded dispute settlement mechanism under chapter 18 of the free trade agreement just is not worth the paper it is written on?


Michael Holcombe Wilson: Mr. Speaker, the excessive rhetoric is totally inappropriate. TTiere are three ways that we can have consultations with the United States administration.
One is through the normal operations of the U.S.-Canada Trade Commission which meets at least two times a year. The second is chapter 18-


James Scott (Jim) Peterson: Which you are using, you said.


Michael Holcombe Wilson: If my hon. friend would be patient for a minute, I will give him the full answer.
Chapter 18 is the second basis on which we can have consultations which are not binding. Chapter 19 is a binding dispute mechanism that is the final stage.
My hon. friend should understand that prior to the free trade agreement we had none of those three means by which we could have this type of consultation. We now have a free trade agreement with these ways with which we can discuss these issues which are bound to come up in a trade relationship as broad and as deep as we have with the United States. That is the value of the free trade agreement in dealing with this type of dispute.


ATLANTIC FISHERIES
Hon. Roger C. Simmons (Burin-St. George's):: Mr. Speaker, during Monday's Question Period, the Prime Minister indicated that he and the government are considering a number of options with respect to the foreign overfishing issue.
Oral Questions
At that time he invited me to make some suggestions to him. I have one for him. Take immediate steps to extend functional jurisdiction over the nose and tail of the Grand Banks. There is my suggestion. Is is ready to act on it?


Hon. John C. Crosbie (Minister of Fisheries and Oceans and Minister for the Atlantic Canada Opportunities Agency):: Mr. Speaker, this is indeed a unique suggestion. The hon. gentleman is going to take over functional jurisdiction of international fishing activities outside the 200 miles when there is no other nation in the world that has said it would agree to Canada or any other country taking that course of action.
That is an invitation to conflict. That is not reasonable or sensible. That is simply trying to make oneself appealing to those who would like to see direct action when this is a complicated world and direct actions are not always the kind of actions that one can take.
For example, we were down in New York pursuing this matter at the UNCED conference where we have a chance of getting the rest of the world to agree with us. The rest of the world is not going to agree with us if we simply go out making heroic gestures that the rest of the world is bound not to observe, including all of the powerful industrial countries of the world, all of whom believe in freedom of the high seas.


Roger Simmons: Yes, Mr. Speaker, he has been down in New York and last year he was over in Strasbourg. Last week, some of his colleagues were in Strasbourg. They have come back this week to tell him that our lobbying effort over there is absolutely non-existent or to the degree it exists, it is an absolute joke.
The best proof of that is the cockamamie stuff that the British MPs are saying these days about seals and sealing. The government has no lobby campaign. It is a joke.
I ask him, would he now return to his position of some weeks ago when his Prime Minister was not listening, when he was in Newfoundland and he said he was running out of patience. Has he run out of patience? Is he now prepared to do what I suggested just now and what he himself suggested in little groups back in Newfoundland?

March 11, 1992
Oral Questions


John Carnell Crosbie: Mr. Speaker, the hon. member becomes more imaginative as he goes on.
We can adopt either an attitude of posturing or beating our chests. The hon. gentlemen reminds me of King Kong except he is not quite the same size. I am more in the Kong size myself. I see there is general agreement with my reply so I am sitting down.


HOUSING
Mr. Ross Harvey (Edmonton East):: Mr. Speaker, there will be those who make claim that what you get now is Kong II.
I have a question for the Minister of Finance. On January 27, a mere four weeks before the budget killed the co-op housing program, the Minister of Finance wrote to the president of the Co-operative Housing Federation of Canada, indicating the program would continue for 1992-93 with a new funding commitment of $6.1 million.
On February 19, less than a week before the program's public execution, the Minister of Public Works wrote a similar letter to the president of the Conseil de la cooperation du Quebec.
Did the Minister of Finance truly not know the program would be eliminated when he wrote his January 27 letter? Had no one bothered to tell the minister responsible less than a week before the budget? If the two ministers did know, how can the wholly incorrect assurances contained in their letters possibly be explained?


Mr. Dave Worthy (Parliamentary Secretary to Minister of Public Works):: Mr. Speaker, the cuts that were necessary in the budget reduced the social housing spending to 3 per cent. This is unfortunate but it was a move that had to be taken. People in this country understand that.
Obviously there are alternatives. We could take the money from the seniors and apply it. We could take money from other places. This government has decided not to do that. We feel this is the proper move for the proper time.


Ross Harvey: Mr. Speaker, that is a fascinating, if somewhat inadequate, answer but it completely ignores the question unfortunately, as did the minister to whom it was directed.
Might I ask the Minister of Finance whether he really believes that the depths of a protracted recession is the right time to cut funding for new social housing by half over the next two years? Does he not think this is both socially cruel and economically lunatic, especially when, in another part of the budget, strenuous efforts are undertaken to spur new housing construction? Or does he believe that the poor and those of moderate income characteristically have wads of cash stashed away in RRSPs?


Donald Frank Mazankowski: Mr. Speaker, the hon. member knows, I am sure, that the Government of Canada spends in excess of $2 billion annually on social housing and will continue to do that.
With respect to social housing, I think the hon. member would also know that 50 per cent of those living in co-op housing would not be eligible and, therefore, do not really qualify for social housing under the criteria established.
It is important to ensure that we channel scarce resources to those in most need. That is exactly what this budget does. That is exactly what is happening under the continuing support for the social housing which will increase this year by $70 million and $45 million every year thereafter. That creates an ongoing obligation for 35 years.


Mr. Joe Fontana (London East):: Mr. Speaker, no wonder this minister killed the co-op housing program. He does not even understand what it is all about and what need it fills for Canadians. One week ago-


Mr. Speaker:: Perhaps, the hon. member would want to put his question appropriately.


Joseph Frank (Joe) Fontana: Mr. Speaker, this government made a commitment and a guarantee to provide $6 million to the co-op housing program in 1992.
There are 164,000 Canadians on a waiting list for co-op housing. By eliminating the funding for co-op housing this government is abdicating its responsibility to those Canadians and, in fact, is causing 4,500 jobs to be lost in the construction industry.

My question is a very simple one. Will the minister honour the commitment to the co-op housing program for 1992. Can they keep one promise to this country?


Donald Frank Mazankowski: Mr. Speaker, the government will continue to support the 14,800 housing units that are in existence as a result of the co-op housing program and we will continue to support social housing to the tune of $2 billion a year.
When it comes to creating activity in the housing industry, the reduction in the CMHC down payment to 5 per cent and the RRSP initiative are clear initiatives that will support and stimulate housing in all parts of the country. I think the hon. member would welcome that.


Joseph Frank (Joe) Fontana: Mr. Speaker, the $6 million promised for 1992 was for the additional 1,800 badly needed units in this country.
The minister surely knows that the Co-op Housing Program is cost efficient and that the program is well targeted to those people who cannot own a home.
In Montreal, Toronto and other centres the Co-op Housing Program provides support for single parents, the disabled, seniors, and groups that cannot find affordable housing.
Will the minister reinstate the funds for 1992? Will he reinstate this program that helps Canadians with affordable housing?


Donald Frank Mazankowski: Mr. Speaker, the hon. member may want to reconsider his comment when he suggests that the housing provided for under the Co-op Housing Program is well targeted.
Truly 50 per cent of those who occupy housing provided under this program would not qualify under the social housing criteria. I ask him then: How is it that it is well targeted when 50 per cent of those who occupy these units are not in effect qualified under the provisions of social housing?


PEARSON INTERNATIONAL AIRPORT
Mr. John Manley (Ottawa South):: Mr. Speaker, my question is for the Minister of Transport in light of his announcement this morning concerning Pearson airport.
Oral Questions
The timing of the minister's announcement of the privatization of terminals 1 and 2 has to be questionable at best, given the recession, the problems in the Canadian airline industry, the far from certain commercial success of terminal 3, and the ongoing environmental review of runway expansion.
Why is the minister rejecting the advice of the private sector, provincial and municipal officials, as well perhaps as some of his own officials, in going ahead with privatization now?


Hon. Jean Corbeil (Minister of TVansport):: Mr. Speaker, it is rather amusing that members on the other side have been saying for weeks and months that this government should spend money to create jobs. Now we come forward with a project that is going to create 3,200 jobs for five years in well paying industries in the Toronto area and this member is complaining again. I do not know what he is doing.


John Paul Manley: Mr. Speaker, we will be interested to hear his explanation of those numbers in another forum, but I would like to know now not only about his timing but also about the process that he has introduced today.
The minister proposes to turn over Canada's most profitable airport to private developers and he is giving interested parties only 90 days to submit comprehensive proposals which contemplate two different environmental review results.
How can the minister seriously expect Canadians to believe that within 90 days this process is open to all possibly interested parties and that this action will produce the best possible result for travellers and for Canadian taxpayers who have already put a lot of money into terminal 2?


Jean Corbeil: Mr. Speaker, obviously a development of this kind is not to provide for the needs of today but the needs of tomorrow.
In 1988 these were the same people who were complaining that the government had not exercised enough foresight in not making more space available to accommodate the traffic that was increasing. It created congestion that no one wants to go through again.
We have studies that indicate that the traffic in the airline industry has been increasing by 4.5 per cent a year for the past 10 years. Our present forecast of 3 per cent a year for the next years indicates that we will lack capacity

March 11, 1992
Oral Questions
in 1997-98 without the new runways. This is why we are proceeding at this time.
We indicated four years ago that we were going to transfer all airports in areas where people want it to local airport authorities. We are following the course that we implemented four years ago and it is working well.


BEAUDOIN-DOBBIE REPORT
Hon. Lucien Bouchard (Lac-Saint-Jean):: Mr. Speaker, I wish to ask the Prime Minister a question.
What the Minister of National Defence said yesterday is that the Beaudoin-Dobbie report is unacceptable for Quebec.
He is not the only one to think so because right now members of the Quebec Liberal Party and the Parti Quebecois are voting unanimously on a motion which concludes that "the National Assembly disapproves of the Beaudoin-Dobbie committee report."
When will the Prime Minister stop pretending with the Leader of the Opposition, the leader of the Liberal Party of Canada, that something good can come of a report that English Canada considers too generous and Quebec considers not enough?


Martin Brian Mulroney: Perhaps it is the hon. member who should stop pretending. The Beaudoin-Dobbie report reflects the five conditions of the Meech Lake Accord, I repeat, the five conditions or proposals that he supported barely a year and a half ago.
Besides, the Beaudoin-Dobbie committee report contains a series of provisions, of new measures for the provinces, native people and institutional reform in Canada, including, for example, Senate reform. Mr. Dubuc, as well as Mr. Auger of the Journal de Montreal, think that these provisions are a very serious step forward for Quebec and the other provinces.
No one claimed that it was a final position. The House itself will be presented with the document and the
House will decide in due course. But for someone, especially someone who already vigorously supported the five conditions of Meech, to now denounce a document as insufficient when it already contains much more than Meech is unprecedented hypocrisy in the House of Commons.


Lucien Bouchard: Mr. Speaker, whatever our allegiances, we will all agree that an essential element in this debate is truth and that if we had more respect for the truth, we would go further.
The one who most vigorously approved the Meech Lake Accord is one of its signers, Robert Bourassa. Today he says no to the Beaudoin-Dobbie committee report because it does not reflect the five conditions of Meech Lake.
When will we stop wasting time and money and frightening people in Quebec as in English Canada and when will this offer that is supposed to come finally be tabled?


Martin Brian Mulroney: Mr. Speaker, I think that no one in Canada or in Quebec would believe that we have anything to learn from that member when it comes to truth and loyalty.


Some hon. members:: Hear, hear.


Martin Brian Mulroney: He has become a legend and we will talk about it for decades to come. He will always be mentioned as a model of truthfulness and loyalty for generations to come, I am sure.
As for the document and the position that the Parliament of Canada is to take, in due time, of course, Quebecers will be called upon to decide their future. In 1980, they were presented with a question. Perhaps there will be another one in 1992, to be decided on with proper reflection, in an unbiased, objective, serene way. Quebecers will be presented with a basic question. And if you allow me to speak now just as a Quebecer, a guy from the North Shore, if the question is "Do you prefer a renewed Canada or an independent Quebec?", Quebecers will choose a renewed Canada ten times out of ten.


Some hon. members:: Hear, hear.
March 11, 1992


NATIONAL REVENUE
Mr. Rod Murphy (Churchill):: Mr. Speaker, my question is for the minister answering on behalf of the Minister of National Revenue.
Yesterday I gave the Minister of National Revenue a copy of the Reform Party mailout which explains how the political tax credit can be used to pay for insurance policies that benefit the Reform Party. At that time I asked the minister for an inquiry. I believe that the document, while it pretends to be a report of one person's generous gift to the Reform Party, is really a slick, sophisticated and sleazy step-by-step guide on how to abuse the tax system.
Will the government order an inquiry?


Hon. John McDermid (Minister of State (Finance and Privatization)):: Mr. Speaker, the Minister of National Revenue is in Newfoundland on government business today.
Upon the member presenting this to the minister, he immediately asked his deputy minister for taxation matters to review it. According to the evidence that has been presented so far, they find that this scheme the Reform Party has dreamed up does not qualify as a political tax credit.
It is perfectly legitimate for charities. It is perfectly legitimate for universities, hospitals, churches, for example, to do this type of thing, but for a political party it is not.
It is rather interesting that the Reform Party which advocates the abolition of political tax credits is using a method to raise funds that does not appear to be acceptable to Revenue Canada officials.


Rodney Edward Murphy: I have a supplementary question, Mr. Speaker.
Just so that the minister is perfectly clear because many Canadians will want to know the answer, it is perfectly legal for individuals to give through their wills or through their insurance policies to universities, to political parties, to charities. It is the abuse of the political tax credit that is in question. Is that correct?


John Horton McDermid: That is correct, Mr. Speaker.
Oral Questions
As a matter of fact the way the scheme works, as I understand it, is that they are encouraging their members to take out life insurance policies naming the Reform Party as the beneficiary and claiming a tax credit on the premiums paid on that polity.
To our way of thinking it is highly unethical and on first blush, on investigation, we find it totally illegal within the tax system of Canada.


ESTIMATES FOR THE HOUSE OF COMMONS
Guy St-Julien: Mr. Speaker, my question is directed to the hon. member for Lachine- Lac-Saint-Louis, as the representative of the Board of Internal Economy of the House of Commons. During the past week the media have been discussing the Estimates for the House of Commons for 1992-93, as they apply to members of this House. Could the representative of the Board of Internal Economy confirm when I will be able to receive a copy of this document, which is being held back by Parliament?


Hon. Bob Layton (Lachine-Lac-Saint-Louis):: Mr. Speaker, near the end of the last fiscal year the House management committee called the Speaker and his administrators as witnesses in its review and approval of the estimates for the House of Commons. Copies of the estimates were made available to members of Parliament upon request.
But a copy of this year's report entitled How the Budget is Spent-1992-93 has inadvertently or deliberately been released to the media prior to its being presented for review by the House management committee.
The matter of the unauthorized release of these estimates has been placed on the agenda of the Board of Internal Economy at its next meeting later this afternoon.


CHILDREN'S RIGHTS
Ms. Albina Guarnieri (Mississauga East):: Mr. Speaker, in the absence of the minister responsible for children, my question is for the Prime Minister.

March 11, 1992
Oral Questions
The Caledon Institute of Social Policy has revealed that since 1986 this government has snatched $3.5 billion from Canadian children by not fully indexing child benefits.
Meanwhile, last February 11 the Minister of Finance announced a new loophole for wealthy Canadians to avoid paying tax on their private trusts for another generation.
When will this government end its policies of depriving Canadian children to finance new loopholes for the richest Canadians?


Hon. Monique Vezina (Minister of State (Employment and Immigration) and Minister of State (Seniors)):: Mr. Speaker, I would like to repeat that the new approach taken to our social programs in the latest budget stresses this government's commitment to setting a priority on families and children. We can say that starting with this budget and this recommendation, families will have an additional $2 billion to spend in the next five years, which means $500 million for the current year.


Albina Guarnieri: Mr. Speaker, the new Tory ritual must be sacrificing children to the corporate gods.
The Budget Papers show that two-wage earner families with two children having a combined income of $30,000 will gratefully receive an extra $3.67 a month next year in child benefits. But, with inflation of just 3 per cent, this increase will vanish within the very next year.
I ask the minister if he will immediately move to index child benefits fully so that members on this side of the House will have one less thing to fix next year.


Monique Vézina: Mr. Speaker, the measure we are proposing reflects the needs of Canadian children and was identified with the beneficiaries in the course of the usual consultations.
I maintain that the best way to protect the quality of our social programs is to keep inflation rates low and have a thriving economy, and that is what we are working on.


Mr. David Walker (Winnipeg North Centre):: Mr. Speaker, the Prime Minister will know that his government's 12-page child benefit white paper dealing with close to $5 million of expenditure is the shortest white paper in parliamentary history. He also knows that this minister will be meeting behind closed doors with the provinces and that not one of the many dozen anti-poverty or children's rights groups has been contacted.
In the absence of the Minister of Health and Welfare, could the Prime Minister indicate how Canadians will be involved? Is this yet another public relations gimmick or is the government for once going to speak to Canadians seriously about the future of their children?


Monique Vézina: Mr. Speaker, we are not in the House for a public relations exercise. We are working very hard to improve the quality of life of Canadians, their families and their children.


MOTOR VEHICLE SAFETY ACT
William D. (Bill) Casey: Mr. Speaker, my question is for the Minister of Transport and it is regarding proposed amendments to the Motor Vehicle Safety Act which currently provides two standards for safety in Canada: one for U.S. vehicles and a stiffer one for Canadian vehicles.
Will the new amendments remove section 902 which allows for this double standard and give the Canadian industry a level playing field?


Jean Corbeil: Mr. Speaker, as my hon. friend knows, we will shortly be bringing forward some amendments to the Motor Vehicle Safety Act. The intention of this act, after it is adopted, is to consult the people on the new regulations. I am sure that through this consultation process we will be able to address the well intentioned concerns of the member.
March 11, 1992



ROUTINE PROCEEDINGS


Mr. Albert Cooper (Parliamentary Secretary to Minister of State and Leader of the Government in the House of Commons):: Mr. Speaker, pursuant to Standing Order 36(8), I have the honour to table, in both official languages, the government's response to 38 petitions.
[Editor's Note: See today's Votes and Proceedings.]


BUSINESS OF THE HOUSE
Mr. Andre:: Mr. Speaker, I would like to designate tomorrow an opposition day or allotted day.


HOUSE MANAGEMENT
[Stage Direction]
27TH REPORT OF STANDING COMMITTEE
Albert Glen Cooper: Mr. Speaker, I have the honour to present the 27th report of the Standing Committee on House Management.
[Editor's Note: See today's Votes and Proceedings.]


SOFTWOOD LUMBER INDUSTRY
Albert Glen Cooper: Mr. Speaker, I believe that you will find consent for the following motion:
That, notwithstanding any Standing Order of this House, on Wednesday, March 11, 1992 immediately after the final vote on ways and means Motion No. 11, the House shall proceed to a special debate on the situation now facing the softwood lumber industry;
Routine Proceedings
That, for the sole purpose of this special debate the question before the House shall be that this House do now adjourn;
That, under the provisions of this order, no member shall be permitted to speak more than once;
That, the first three speakers be permitted to speak for 20 minutes and that all speeches thereafter be no longer than 10 minutes;
That, under the provisions of this order, the Speaker shall not entertain any dilatory or superseding motions or quorum calls; and
That, when no member rises to speak, but no later than 12 midnight, the Speaker shall adjourn the House until the next sitting day.


David Charles Dingwall: Mr. Speaker, there have been consultations with the various parties and we would concur with the motion.
Just to clarify, I am sure that the parliamentary secretary could indicate that the first speaker will be a Minister of the Crown representing the Government of Canada, followed by the Official Opposition and then the regular rotations.


Albert Glen Cooper: Mr. Speaker, I can confirm that our lead-off speaker will be the Minister of State for Forestry.


Mr. Blaikie:: Mr. Speaker, I would just like to rise on behalf of the NDP caucus and give our consent to this motion and pay special tribute to the member for Prince George-Bulkley Valley who has been putting this issue before the House ever since we came back. This debate exists, in large part, due to his efforts.


Jean-C. Lapierre: Mr. Speaker, it is indeed a very important debate for us, since the Quebec softwood lumber industry is hit unjustly and for no reason. We agree with that motion, provided that a speaker from our group can express himself because in the last few days the situation has been very unfair. If there is not immediate agreement to allow us to have a speaker, namely the hon. member for Rosemont, we are not interested in simply giving an opportunity to others without being able to present a perspective from Quebec.
[English)


David Charles Dingwall: Mr. Speaker, I take the intervention of the hon. member quite seriously. I wish to indicate to him that the motion has been put with the best of intentions so that all members of this House will have an opportunity to debate a very important subject matter which affects certain regions more so than others. But to suggest that there ought to be preconditions before a

March 11, 1992
Routine Proceedings
consent motion would be approved, I do not know if that is in the best interest of the House.
I wish to say, through you, Mr. Speaker, to the hon. member that we would be more than willing to try to co-operate with all members of this House to give everyone an opportunity to speak. If need be, perhaps certain provisions of the Standing Orders could be looked at in order to give greater opportunity to members who might want to speak for a shorter period of time rather than the 10 minutes which has been indicated in the consent motion.
I would hope that my hon. colleague will want to look at the motion, the spirit in which it has been given by the parties and he as a representative of a particular group, that we would have no difficulty whatsoever in trying to accommodate all members of this House.


William Alexander (Bill) Blaikie: Mr. Speaker, I do not think this should be a problem within the context of a debate that goes on all evening. There can be co-operation among all members of the House to ensure that all viewpoints are heard. I would certainly make that commitment to the member who raised the point.


Albert Glen Cooper: Mr. Speaker, I too would like to confirm that we were more than happy to accommodate the hon. member and that is the entire purpose of this debate. It is to give every member of this House an opportunity to participate in the debate if it is of interest to them and their constituents.


Mr. Speaker:: Does the hon. parliamentary secretary have the unanimous consent of the House to move the motion?


Some hon. members:: Agreed.


Mr. Speaker:: The House has heard the motion. Is it the pleasure of the House to adopt the motion?


Some hon. members:: Agreed.


[Stage Direction]
Motion agreed to.
Mr. Angus:: On a point of order, Mr. Speaker. I am wondering, before we proceed to Government Orders, if you could seek the consent of the House to revert to tabling of reports from committees. One of the standing committees was not ready to table a report at the time you called it and we would like to get on with our press conference later this day.


Mr. Speaker:: The hon. member has sought permission to revert to tabling of reports from committees.


Some hon. members:: Agreed.


TRANSPORT
Mr. Ken Atkinson (St. Catharines):: Mr. Speaker, as a member of the Standing Committee on Transport, I have the honour to present the second report of the Standing Committee on Transport which deals with the issue of high-speed rail.
We are pleased that we have a unanimous report on this important transportation issue and we appreciate the co-operation and support of all members of the committee.
I believe that the committee's findings and recommendations will make a valuable contribution to the ongoing debate on the feasibility of high-speed rail service in Canada.


EXTERNAL AFFAIRS AND INTERNATIONAL TRADE
Albert Glen Cooper: Mr. Speaker, I have a motion here that will require the consent of the House for one of our committees to travel. I move:
That notwithstanding the order made on February 6, 1992, the
subcommittee on arms export of the Standing Committee on
External Affairs and International Trade be authorized to travel to
Victoria, Vancouver and Winnipeg from Monday, March 30 to
Wednesday April 1, 1992, and to Halifax and Montreal from
Monday, April 6 to Tuesday, April 7, 1992.


Mr. Speaker:: The House has heard the parliamentary secretary. Is there agreement?


Some hon. members:: Agreed.


Some hon. members:: No.


Mr. Speaker:: There is not consent.
March 11, 1992


PETITIONS
Right Hon. John N. Timer@Vancouver Quadra: Mr. Speaker, I have the honour to table 90 petitions representing over 2,000 students at the University of British Columbia which is located, as you know, in my riding of Vancouver Quadra, a good many of them living, I am sure, in your own riding, Mr. Speaker.
It was bad enough when students were hit with the GST on their textbooks and the 3 per cent surcharge on student loans. The government has made matters worse with its plans to increase the burden of the cancelled 3 per cent surcharge by eliminating the interest-free repayment period.
On behalf of all of these students, I urge the government to reconsider its position.


Mr. Don Boudria (Glengarry-Prescott-Russell):: Mr. Speaker, pursuant to Standing Order 36,1 have the honour and the privilege to table petitions signed by hundreds of farmers from Glengarry-Prescott-Russell who, of course, ask the Canadian government to pursue the strengthening and preservation of article XI of the GATT The petitioners certainly do not want the government from across to let this article be abolished in favour of tariffs.
Mr. Speaker, I am pleased, on behalf of all my colleagues, to support this petition from constituents of Glengarry-Prescott-Russell.


Hon. Lloyd Axworthy (Winnipeg South Centre):: Mr. Speaker, I have the privilege of submitting to the House 61 signatures of residents of Manitoba who petition and request that Parliament immediately ask the government to reinstate the foreign domestic program that was introduced back in 1981.
As you will well recognize, Mr. Speaker, the change in the regulations affecting domestic workers is both discriminatory and unfair and will seriously affect the child care system of this country. These 61 petitioners ask this
Routine Proceedings
Parliament to make their voice strongly heard to change that very unfair regulation.


Lloyd Axworthy: While I am on my feet, I have 951 signatures, primarily from residents of Manitoba, but also from other parts of Canada where the petitioners humbly pray Parliament to give priority support to Bill C-230, an act to amend the Criminal Code of Canada, which provides for the appointment of an independent counsel to report to the Minister of Justice in cases where the minister receives an application for mercy.
If I might just say, we are all very aware of the daily newscasts of the proceedings in the David Milgaard case, the Nepoose case and certainly the Marshall case previously in Nova Scotia. It is quite clear that we need to reform the system whereby individuals who have been wrongly treated or in which their sentences and trials have not been to the proper standards of judicial rightness can make an appeal and not put the Minister of Justice in a position of having to deal with that, but have an independent counsel.
I humbly submit on behalf of these petitioners that request.


William D. (Bill) Casey: Pursuant to Standing Order 36, it is my honour and privilege to table a petition from the people of Stewiacke, Nova Scotia, where they have experienced a history of level crossing accidents in their community.
This petition urges increased safety standards at level crossings and also makes specific recommendations to the Railway Safety Act.


William Alexander (Bill) Blaikie: Mr. Speaker, I have the pleasure of presenting a petition which, when it was circulated, had to do with the desire on the part of the petitioners that the Canadian government immediately recognize Ukraine following the referendum on December 1, 1991.
Of course that has been done, but I am sure the people who signed this petition would want to send a new message to the government, having to do with the need for continuing Canadian support for the new nation of Ukraine and the newly formed government there.

March 11, 1992
Routine Proceedings FAMILY VIOLENCE


William Alexander (Bill) Blaikie: Mr. Speaker, I also have a petition which is signed by many residents of my riding and which arose out of the murder of a young woman there by the name of Marilyn Jensen.
These petitioners are concerned that whereas bail review provisions in the Criminal Code of Canada currently set out grounds for the release of accused offenders unless it can be proved that individual is a danger to society at large or it is likely that the accused person will not reappear in court; and whereas the problem of conjugal and family violence is a matter of grave concern for all Canadians, these petitioners humbly pray and call upon Parliament to amend the Criminal Code of Canada to permit the courts to prevent the release of individuals where it is shown that there is a substantial likelihood of further conjugal or family violence being perpetrated.


Mr. Mac Harb (Ottawa Centre):: Mr. Speaker, I have the pleasure of introducing in the House a petition signed by constituents of Ottawa, Gloucester, Nepean, Kanata and also from the constituents of Manotick, Cornwall, Carlsbad Springs and so on.
These constituents are upset because they are paying high prices for gasoline when compared with those in the rest of the province.


Mr. Sergio Marchi (York West):: Mr. Speaker, I have the pleasure of submitting for the attention of the government and the House of Commons the signatures of hundreds of petitioners who are constituents of York West.
These petitioners are urging the government to revise and amend the Narcotics Control Act so that all assets and cash seized as a result of drug convictions do not go back, as they do now, to general revenues in Ottawa but instead become shared with local police forces and local organizations. They are on the leading edge of combating drugs on our behalf and on behalf of families who unfortunately have fallen victim to the drug malaise, particularly our young.


Mr. Vic Althouse (Mackenzie):: Mr. Speaker, I have a number of petitions from residents of western Ontario.
The petitioners call on the House of Commons and Parliament of Canada assembled, requesting that food irradiation not become part of the food processing business in this country until we have unbiased, independent agencies and scientists do complete studies on the safety of consuming such food. They ask that the effects of long-term consumption and environmental dangers involved be studied as well.


Mr. Dan Heap (Trinity-Spadina):: Mr. Speaker, I have 94 signatures on a petition from people who are concerned with the continuing and increasing low-level flights over Labrador.
The petitioners ask us to join with the Assembly of First Nations, the Innu of Labrador and other aboriginal peoples of northern Canada in opposing the use of their lands for NATO-NORAD attack training.
They also demand that the government end all NO-RAD-NATO low-level flight training in Canada and redirect the funding of it to aboriginal uses and to protecting the environment of Canada.


Daniel James Macdonnell Heap: Mr. Speaker, I also have 164 signatures on petitions from people in quite a number of municipalities in Ontario, British Columbia and other parts of Canada.
The petitioners are concerned for the situation of the spouses and children of people who have been accepted in Canada as refugee claimants. They ask that the minister issue minister's permits to bring the spouses and dependant children of refugee candidates here when these people have been permitted to apply for landing rather than delaying perhaps several years until the landing has been effected. They ask that these families be allowed to be reunited now in Canada.


Mr. Ross Stevenson (Durham):: Mr. Speaker, I have the honour of presenting three petitions from people in the constituency of Durham who request that the Parliament of Canada recognize that crimes of violence against the person are serious and abhorrent to society, and they ask the government to amend the Criminal Code, the

Bail Reform Act of 1972 and the Parole Act to reflect these societal attitudes.


Ms. Beth Phinney (Hamilton Mountain):: Mr. Speaker,
I have here over 500 petitions on which there are well over 20,000 signatures. This is to add to the over 250,000 signatures that I have already presented to the Clerk of the House and the thousands that have been presented by other members in the House of Commons.
These petitioners feel that there are serious deficiencies in the criminal justice system in Canada. They ask that Parliament recognize that crimes of violence against the person are serious and abhorrent to society and they ask the government to amend the Criminal Code of Canada, the Bail Reform Act of 1972 and further amend the Parole Act.


Ross Harvey: Mr. Speaker, I have the honour to present a petition signed by numerous Canadians, including many who are resident in my own housing co-op of Sundance in Edmonton and many residents of a neighbouring co-op, the Art Space Co-op.
This petition was circulated before the budget and it calls on the House to recognize housing as a shared provincial-federal responsibility and to support the federal non-profit co-operative housing program and to maintain the Canada Mortgage and Housing Corporation.
I do hope the government takes the words of this petition to heart.


Mr. Rod Laporte (Moose Jaw-Lake Centre):: Mr. Speaker, this government continues to systematically ravage rural Canada. One of the ways of doing that is with respect to rural post offices. The citizens of the community of Drake in Saskatchewan are very concerned about the future of the post office there. It is a very poorly kept secret that their post office is going to close imminently.
The petitioners call on this government to ensure that the Drake post office remains open and that in fact all rural post offices remain open. They want a place for their children to live and grow up in the future instead of ghost towns.
Routine Proceedings


Mr. Simon de Jong (Regina-Qu'Appelle):: Mr. Speaker, it is also my pleasure to introduce a petition signed by several hundred of my constituents. These constituents are fighting back. They are fighting back to keep their post office and the postal service in Dysart, Saskatchewan. The petitioners are not just from Dysart but many of them are from communities such as Lipton, Fort Qu'Appelle, Lebret and many from Regina and other communities.
I should hope that the government will take heed of these petitioners and that they leave the postal service in Dysart the way it is.


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk)
Albert Glen Cooper: Mr. Speaker, the following questions will be answered today: Nos. 177 and 209.


Mr. Young (Acadie-Bathurst): With respect to the Public Service, at March 31 of the year prior to the establishment of the Senior Management (SM) group, (a) what was the number of executive level positions (EX or SX) (b) deputy minister (DM) positions?


Albert Glen Cooper: I am informed by the Privy Council Office and the Treasury Board of Canada as follows:
(a)	At March 31, 1981, the year prior to the establishment of the Senior Management (SM) Group, there were 1,272 SXs (conversion to EX did not begin until April of 1981).
(b)	The number of Deputy Ministers (DM) as of March 31, 1981 was 98.


Mr. Casey: In the preparation of the bill to amend the Motor Vehicle Safety Act, is the government considering a requirement whereby importers would be required by regulation to demonstrate that a used vehicle has been converted to Canadian standards before a registration permit can be issued and the vehicle registered in a province?


Jean Corbeil: Yes, consideration is being given to establishing authority under the Motor Vehicle Safety Act for regulations that would require importers to certify that used vehicles have been converted to meet all Canadian safety standards. The actual registration of a vehicle is wholly a provincial government responsibility.

March 11, 1992
Routine Proceedings


Mr, Albert Cooper (Parliamentary Secretary to Minister of State and Leader of the Government in the House of Commons):: Mr. Speaker, if Question No. 175 could be made an order for return, this return would be tabled immediately.


The Acting Speaker (Mr. Paproski):: Is it the pleasure of the House that Question No. 175 be deemed to have been made an Order for Return?


Some hon. members:: Agreed.


Mr. Young (Acadie-Bathurst): With respect to the Public Service (a) in what year was the Senior
Management (SM) group created (f>) what was the number of senior
SM personnel, by department, at March 31 of that year (c) at that
same year end what was the number of (i) Executive level positions
(EX) (ii) Deputy Minister (DM) positions?
Return tabled.


Albert Glen Cooper: Mr. Speaker, I ask that the remaining questions be allowed to stand.


The Acting Speaker (Mr. DeBlois):: Shall the remaining questions stand?


Some hon. members:: Agreed.


Mrs. Venne:: Mr. Speaker, I rise on a point of order.


The Acting Speaker (Mr. DeBlois):: The hon. member for Saint-Hubert on a point of order.


Pierrette Venne: Mr. Speaker, I would like to know if you have asked that my notice of motion for the production of papers be reserved at the same time? Was that the issue a few moments ago?


The Acting Speaker (Mr. DeBlois):: Indeed, we are now
dealing with notices of motion for production of papers, as the hon. member for Saint-Hubert rightly pointed out.
The hon. parliamentary secretary.


Albert Glen Cooper: Mr. Speaker, would you be so kind as to call Motion for the Production of Papers No. P-10, in the name of the hon. member for Ottawa West.

P-10-Mrs. Catterall:
That an Order of the House do issue for copies of all studies, reports or other analysis of the financial implications of possible changes to the pension plans of the Public Service, Armed Services, Royal Canadian Mounted Police and of the changing demographics of the Public Service.


Hon. Gilles Loiselle (President of the Treasury Board and Minister of State (Finance)):: Mr. Speaker, on December 12,1991, the government gave notice to table an act to amend certain acts in relation to pensions and to enact the Special Retirement Arrangements Act and the Pension Benefits Division Act. This pension bill (Bill C-55) was tabled in the House of Commons on February 14, 1992. Among other things, the bill addresses some long-standing fairness issues such as the division of pension credits on marriage breakdown, pension coverage for part-time employees and an early retirement program for Correctional Service officers. The financial implications of this bill will be made available during the legislative process.
The President of the Treasury Board has indicated that the government will review the fundamental elements of the federal public sector pension plans, such as the rate of return to be credited to the pension funds, future inflation protection arrangements and plan management. As part of that review, the financial and other
March 11, 1992

implications of possible changes to the various pension plans would be assessed with all stakeholders.
The estimated costs of the existing plans and the demographics of their membership are contained in the actuarial valuations of the plans which are publicly available in the Library of Parliament.
I therefore ask the hon. member to withdraw her motion.


The Acting Speaker (Mr. DeBlois):: Since the hon. member for Ottawa West is not here, is the House willing to transfer this motion for debate?


Some hon. members:: Agreed.
Transferred for debate.


The Acting Speaker (Mr. DeBlois):: The hon. member for Saint-Hubert on a point of order.


Pierrette Venne: Mr. Speaker, I would like to ask the representative from the government when he intends to present the documents referred to in my motion P-13 concerning research contracts for the Royal Commission on New Reproductive Technologies?
I made this request and I would like to get an answer from the government as to when it intends to present these documents, or does it simply refuse to provide them?


Albert Glen Cooper: No, Mr. Speaker, we are not refusing to bring them forward. We will answer it soon.


Pierrette Venne: Mr. Speaker, I would really like to know what "soon" means. I have come to realize that when the word "soon" is used in this House, that may mean that it will take a long time.


The Acting Speaker (Mr. DeBlois):: I believe the hon. member has made her message clear. We can now proceed with the order of business.


Mr. Tremblay (Rosemont):: Mr. Speaker, I would like to remind the Chair that in the first three days of debate on the budget, 41 main speakers have spoken, but no member of our group has yet been recognized. It seems clear to me that such a practice is both discriminatory
Routine Proceedings
and unacceptable. Mr. Speaker, I want to make sure that you will recognize-


The Acting Speaker (Mr. DeBlois):: I would ask the hon. member to be careful when he says that the Chair has acted in a discriminatory and unfair manner. I take note of the interest shown by the member and the Speaker will endeavour, throughout the afternoon, to recognize in a fair manner all those who want to participate in this debate.


Mrs. Marleau:: I rise on a point of order, Mr. Speaker.


The Acting Speaker (Mr. Paproski):: The hon. member for Sudbury on a point of order.


Diane Marleau: Mr. Speaker, I would like to remind the hon. members on my left, here in the back, that we have been debating the budget for three days already and only now does one of them rise to speak on the issue. If you wait that long to speak-


An hon. member:: He was not here!


Diane Marleau: -and if you are not here, you miss your turn.


Mr. Gerin:: On a point of order, Mr. Speaker.


The Acting Speaker (Mr. Paproski):: On the same point of order, the hon. member for Megantic-Compton- Stanstead.


François Gérin: Mr. Speaker, first of all, I want to correct the record. We were here all along. In fact, notice has been given that the finance critic for the Bloc Quebecois wanted to speak. The problem is, and that is the point I wanted to make-incidentally we are not "members in the back", but full-fledged members of this House, actually elected with the same powers, duties and obligations as all other members.
Mr. Speaker, with all due recognition of the Chair's goodwill, though the Chair is different every day, there is a problem here. The list of speakers changes daily, the Bloc Quebecois having its turn every 13 or 14 speakers. That it is a bit late, because by then the day is over. The next day, there is a different Speaker or Acting Speaker in the Chair and we start all over again. Certainly this is done in good faith. I move that the hon. member for Rosemont be now heard.


The Acting Speaker (Mr. DeBlois):: The Chair has taken good note of the comments made by the members

March 11, 1992
The Budget
representing the Bloc Quebecois and, as usual, will try to be fair. Now, let us proceed with the orders of the day.


Benoît Tremblay: I rise on a point of order, Mr. Speaker.


The Acting Speaker (Mr. DeBlois):: On a point of order, the hon. member for Rosemont.


Benoît Tremblay: Mr. Speaker, before anything else, I would ask the member for Sudbury to withdraw her statement. The Chair can testify that, at the beginning of every sitting dealing with the budget, I have approached the Chair to request permission to speak. Each time, my request has met an answer along the same line as this one. I want the member to withdraw her allegation to the effect that we were absent, since I did ask to speak.
I want to have the assurance that our right to speak-


The Acting Speaker (Mr. DeBlois):: I do not think that a retraction is necessary. Our Standing Orders are quite clear. We have no business indicating whether a member of this House is absent or present. I call upon the co-operation of all hon. members on this point. That being said, the orders of the day have not been called yet, and I can recognize no one until they have. Orders of the day.


François Gérin: I rise on a point of order, Mr. Speaker.


The Acting Speaker (Mr. DeBlois):: The hon. member for Megantic-Compton-Stanstead on a point of order.


François Gérin: No, Mr. Speaker, I have a motion. I move that the hon. member for Rosemont be now heard.


The Acting Speaker (Mr. DeBlois):: I should not have to remind an outstanding lawyer like the hon. member for Megantic-Compton-Stanstead that, until such time as the Orders of the Day have been read by the Clerk, they are deemed not to be before the House. Orders of the Day.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed from Tbesday, March 10, consideration of the motion of Mr. Mazankowski that this House approves in general the budgetary policy of the government.
Ms. Margaret Mitchell (Vancouver East):: Mr. Speaker, at a time when Canadians across this country are yearning for a new spirit of co-operation and unity within Canada, this Conservative budget unfortunately divides and discriminates. It discriminates against the most vulnerable people in our society.
I would like to say that the impact of this budget on the people in my riding of Vancouver East and other ridings like it where there are many people unemployed and on low incomes is particularly devastating.
There is no job creation for the millions of unemployed Canadians and job development funds are cut by another $100 million in this budget.
There is no help for farmers, fishermen and forestry workers whose work is the backbone of this country.
The recession, we know and it is predicted, will continue with less research or retraining programs to help people who are the victims of restructuring in industries.
Last week I attended Vancouver Tech High School in my riding. The students asked me particularly to raise the matter that they are very concerned that student loans have been cut and they will not be able to continue on into post-secondary education.
Women have been slapped down once again and betrayed as pay equity is denied them, pay equity which is owing to women public servants who have been underpaid over the years. This was, of course, required by the courts and yet the government is refusing to pay this debt to women.
Funds for litigation of equality cases are terminated as well.
March 11, 1992

The federal co-operative housing program also is being terminated. This is one of the most important and successful means of developing decent affordable housing for low income people, but also for a mixed income range of people in healthy communities.
As a British Columbian I want to particularly mention to the government that the termination of co-op housing and social housing programs have been strongly condemned by Premier Mike Harcourt of British Columbia and by the mayor and city council of Vancouver.
We know that this program and also native housing programs are particularly important and essential to homeless people and to develop affordable housing for families, particularly in communities like Vancouver East where we have had a lot of good co-op housing developments.
The Conservative budget also pits families with middle incomes, the middle class if you like, against low income people.
The budget does away with family allowances, which have been a right to families in former years and replaces this with the child tax credit, which is very limited and unfair. This credit is targeted presumably to low income people, but we learn that it is only for working people, not for people on welfare.
The de-indexing of the child tax credit we learn also means that over the period of the next few years the value of the tax credit will decrease, and this means in effect that families will get less than they receive now. So any way you look at it this is an unsound public policy.
The credit is supposed to be an incentive for parents to move off welfare and into the work place, but where are the jobs for these people who are unemployed? Where is the training for people who have been locked into welfare, to get into the work force? And how can single mothers hope to work when the government has done nothing about helping to develop child care programs across this country? They also have capped the CAP for three provinces.
So this child tax credit which presumably is to help solve the problems of child poverty are typical Tory hypocrisy. Are poor kids on welfare less deserving than the children of working parents, I ask you?
The Budget
The government gives lip service to the elimination of child poverty. However, I want to say that one in four of the children in Vancouver who are poor, and 60 per cent of these attend inner city schools in my riding, will not get help from this budget.
Federal cuts in transfer payments for health, education and social services also eliminate future opportunities for these families to break this poverty cycle.
If this government wants Canadians to feel better about Canada and about Conservatives, then this budget had better be scrapped right now.
As NDP spokesperson for multiculturalism and citizenship, I want to strongly protest the budget measures that are designed to stifle advocacy and advice, that terminate advisory groups to the government, that kills the Court Challenges Program, and that once again betrays Canadians of Japanese origin who were promised a race relations foundation as part of their redress settlement.
Ethnic communities were also promised a heritage language institute to partially compensate for the cuts that this government made to community language programs. They have also been betrayed since the implementation of the new Race Relations Institute which we passed in this house will also be indefinitely postponed.
I want to concentrate my remaining time on the question of the termination of the Court Challenges Program and the Race Relations Foundation. These two decisions show that this government has no real commitment to social justice and to human rights.
When times get tough the government chops the programs that are vital to implementing the goals of our charter. It makes a mockery of the present constitutional negotiations when the government can so readily ignore human rights and protections for minorities which should be defended under our Charter.
I have raised the question of our very serious concern about the termination of the Court Challenges Program on two occasions in this House. On February 27, the minister for multiculturalism replied to me: "There is now a solid base of jurisprudence and the remaining finer points are those of provincial jurisdiction." The

March 11, 1992
The Budget
federal government is not doing its job. It is going to presume to pass it along to the provinces.
This is not the opinion of the former justice of the Supreme Court, Bertha Wilson, an outstanding judge, who said the following in a recent letter to the Minister of Justice:
- it is totally illusory to confer rights on people who do not have the means to enforce them and I assumed that the expansion of the Court Challenges Program following the advent of the Charter of Rights and Freedoms was an effort to address this problem.
I saw for myself when I was a member of the Supreme Court how invaluable this program has been to minority groups and to the disadvantaged. It has clearly been well and efficiently administered and has resulted in an excellent input into many very significant "test" cases-the public has unquestionably received full value for its money on this particular program-may I respectfully add my voice to what I am sure is a chorus of disapproval of the cancellation of this very imaginative and worth-while program.
This is from Bertha Wilson, an outstanding former judge of the Supreme Court.
The Race Relations Foundation was a commitment by this government, as I said earlier, to the redress settlement for the Japanese-Canadian community. Art Miki, president of the National Association of Japanese Canadians says the following:
Racism is a major concern for many Canadians, especially those from minority groups who are often the victims. There is a grave need for the foundation to facilitate the development, sharing and application of knowledge and expertise in order to achieve the elimination of racism and racial discrimination in Canada. This delay will have serious consequences in our efforts to fight racism.
It is in these periods that racism becomes more prominent in our society.
He goes on again to appeal to the government to retain its promise and to implement the Race Relations Foundation.
In conclusion, I would like to say that this government's budget policies seem to be trying to out-reform the Reform Party, hoping perhaps to gain votes. A government which attacks the poorest people in society, which refuses to protect the rights of minorities and women, which reneges on its stated priority to fight racism and which continues to work only for the wealthy and privileged is not going to regain the respect and
support of Canadians. It will be defeated and soon, we hope.


Jean Corbeil: Mr. Speaker, I welcome this opportunity to take part in the budget debate today. I would like to start by congratulating my colleague, the Minister of Finance, on his firm and clear emphasis in this, his first budget, on reducing the deficit, strengthening Canada's economy and building toward increased prosperity for all Canadians.
This budget reflects the ongoing commitment of a fiscally responsible government to an increasingly competitive Canadian industry within a global economy and a spirit of equity in all sectors of our society.
A number of government initiatives are aimed at expenditure reduction and enhancing competitiveness and prosperity. As Minister of Tbansport, I am proud to play a role in this respect.
As you know, the Minister of Finance announced a 3 per cent reduction in non-wage operating budgets for 1992-93. Transport Canada and the agencies for which I am responsible will contribute about $14 million, with $9 million directly from Transport Canada, $3.2 million from VIA and $1.6 from Marine Atlantic.
I am glad to say that VIA and Marine Atlantic will continue to reduce their dependence on federal subsidies.

I might note that reduced revenues from sources such as the air ticket tax in 1992-93, over $100 million, will result in an additional cut in departmental spending beyond the 3 per cent over-all cut.
In order to deal with this revenue shortfall, a combination of measures will be required to reduce or defer costs. As the economy improves, additional revenue will reduce the department's over-all requirement for government funds and permit more capital investment.
To streamline government, some 46 new government agencies, boards, commissions, corporations and advisory bodies will be eliminated, consolidated, deferred or privatized.
March 11, 1992

In Transport Canada, the ministerial task force on international air policy, the Marine Advisory Board on Research and Development and CN West Indies have been terminated.
Transport Canada will generate savings to management improvements and enhance the government and industry co-operation at the Motor Vehicle Test Centre at Blainville, Quebec. The government will be examining the feasibility of privatizing the centre.
As part of the rationalization of government assets, the government also will be speeding up the pace of surplus property disposal including surplus lands held by Transport Canada at Pickering, Ontario.

Mr. Speaker, transportation has a very important role to play in Canada's economic recovery. In fact, transportation is what helped build this great country of ours.
Railroads extend from coast to coast. Ships maintain our links with Europe and the countries of the Pacific Rim. Airports move people and goods quickly and efficiently.
As Canadians, we must carefully review our investment in this vital infrastructure.
The Government of Canada is working closely with provincial and territorial governments on ways to meet this very basic challenge.
At the last First Ministers meeting, a number of governments emphasized the importance of having an infrastructure in keeping with our need to be competitive.
As far as our national road network is concerned, a federal-provincial-territorial process has already begun. Transport ministers will be meeting in the fall to discuss various options for financing the improvements needed to bring the network up to contemporary standards. In its 1992 budget, the federal government indicated that we are prepared to work with the provinces on exploring ways to improve our national road network in a way that is financially responsible.
The dialogue on renewing transportation infrastructure in general is already well under way with the provinces. I am confident that our discussions will be useful and help us identify appropriate methods of funding, given the present financial environment; in that way, we might have the monetary resources required for
The Budget
the highway infrastructure that is essential to our country's economic prosperity.
Mr. Speaker, our government is actively committed to establishing a fixed link between New Brunswick and Prince Edward Island, with private funding.
Transport Canada also works very closely with the private sector to develop airport facilities while reducing government spending.
At Pearson International Airport, the development and funding of terminal 3 by the private sector are an example of successful co-operation between the private and public sectors.
This very morning, Mr. Speaker, we launched an official request for proposals process, asking the private sector to finance the upgrading of Terminals 1 and 2 and to manage them under a lease.
We are also looking into the possibility of increasing the capacity of Vancouver International Airport, as part of a transfer of this airport to a local airport authority. The transfer agreement includes provisions concerning airside and landside expansions through a private source of funding.
In the coming days, we will proceed with the transfer of Dorval and Mirabel airports in Montreal and the Vancouver, Calgary and Edmonton airports to local airport authorities. Other cities such as Moncton, Quebec, Windsor, Thunder Bay, Winnipeg and Kamloops are also being carefully considered for similar transfers.
As the Minister of Finance said, Canadians know that sound social and economic policies must be complementary.
In this regard, the budget provides several important measures to help disabled Canadians. These measures are part of a national strategy officially launched last September by the Prime Minister, the Right Hon. Brian Mulroney, which provides $158 million to integrate the disabled.
This is a field which interests me greatly. An advisory committee on accessible transportation, representing several organizations of the disabled, is working within my department to advise me specifically on this very important area. Last fall, I was pleased to announce to that committee that Transport Canada, through the government's national strategy, would provide $24.6

March 11, 1992
The Budget
million to the transport industry in order to improve accessibility for travellers.
Our involvement in this national strategy will encourage the industry to design and use material that will promote accessibility to transports. The commitment made by Transport Canada will complement the existing initiatives regarding accessibility and will give concrete results that handicapped people will benefit from.
Mr. Speaker, there is no doubt that this budget is a responsible one, both from a social and financial perspective. The direction that we have taken is clearly a road toward economic recovery. Canadians can expect an enhanced competitiveness as well as growing prosperity. In spite of what some might say, we are on the road to unity and, together, we will recognize the benefits of a united Canada through co-operation, as well as the sum of all its parts. Prosperity is clearly the result of a concerted effort, not of some irresponsible action to divide the country.
It is together that we will be able to meet all the challenges of the future, and I urge all Canadiens to be united.


Mr. Dennis Mills (Broadview-Greenwood):: Mr. Speaker, I listened attentively to the minister's remarks and I share some of his sentiments toward the Minister of Finance's first budget. I have the highest respect for him.
However, I have concern about the minister's department, transportation, and the effect this budget will have on it.
I want to be very specific. For me the Department of Transport has always been a great anchor for the Canadian presence in every region of our country. The airports and marine ports, all of those instruments which come under the responsibility of this minister, have always been instruments that the national government was able to use to promote tourism and welcome people here from all over the world. Now we are in the process of privatizing these instruments.
I refer specifically to the example the minister used in his remarks, terminals 1 and 2. For the life of me, I cannot understand why we are privatizing terminals 1 and 2 when we just finished spending $140 million of
taxpayers' money on them. The market is depressed. I do not know how much money we are going to get for terminals 1 and 2. Terminal 3 right now, according to the owners, is a tremendous financial burden for them. It is not working out, there are law suits all over the place. But I do not want to get into the privatization aspect of this. We can debate it another day.
I need to ask the minister a very specific question. Does he not think that as we dismantle the Canadian presence in every part of this country that it is going to make it much more difficult to sell the idea of Canada as a whole, when all of those federal presence instruments are being ripped away from us or sold? Does he not think it is going to make his job as a federalist to sell Canada more difficult?


Jean Corbeil: Mr. Speaker, I would like to congratulate the hon. member for his concern about the unity of this country and the job that we all share as members of this House and also as Canadians to assure that this country remains united. We have accomplished a lot over the last 125 years despite our diversity and our weaknesses in some respects and our strengths in other respects.
I think that Transport Canada, through its various institutions and facilities, has greatly contributed to the achievements that we have attained over the past 125 years.
I believe we are still very much involved in maintaining this very valuable relationship between all regions of Canada through the facilities of Transport Canada. However, at the same time, we have to face up to the reality that we have accumulated a very high national debt over the years and that we are living through a very difficult period where we are wrestling to reduce the enormous annual deficit. Because Canadians have indicated in many areas that they are not prepared to accept any more taxes, that they have reached their limit, we therefore have to find ways and methods of doing what we have to do with less financial resources.
Therefore, we have to be more inventive, more innovative. This is what we have been doing over the past few years. For instance, this idea of leasing the airports to local airport authorities is one way we can maintain our presence. Transport Canada is not going to abandon the airports, it will retain its responsibility for safety and security and will therefore maintain a very strong presence. But at the same time we will leave to the
March 11, 1992

commercial enterprises what they do best, which is operating the commercial aspect of the airport.


Mr. Benno Friesen (Parliamentary Secretary to Secretary of State for External Affairs):: Mr. Speaker, I too want to pay tribute to the Minister of Finance on his first budget, not only because it is a budget which he gave in eminently fine style and content but also because he is the first westerner to present a budget to this House in almost living memory, as far as I can trace it back. In recent memory he is the first westerner to present a budget. I am proud to be associated with him and to say that he has done westerners proud in presenting it.
As I reflect on budget night, I would draw members' attention to the reality of the experience. It is a bit of theatre, a bit of a show outside the Chamber. We have scrum upon scrum, where television personalities and interviewers are interviewing all the interest groups that come to Ottawa on the evening when the budget is presented.
It seems as though our narcissistic society reads the budget, almost exclusively, almost entirely in the context of their own immediate sphere of self-interest.
If fishermen are not specifically mentioned in the budget then there is nothing in it for fishermen, even though the benefits of previous budgets are still continuing on to this day. If there is not something in it for this day, then there is nothing in it for fishermen. If it is not quite to the expectations of the business community, if the tax cuts are not quite as big or quite as broad as they would like, then it is not a good budget and it has to be roundly condemned. If labour sees it as not having enough input in the responses, then it is not a good budget and it is rejected holus bolus.
It is a bit of a tragedy that we are treated on that night with an instantaneous appraisal of a very complex document and it is supposed to be accepted or rejected on the spur of the moment on the basis of a person's own self-interest.
I recall watching it that evening. They are walking down the corridor to meet another businessman whose name I think all members here would recognize if I mentioned it. He is in an industry that is under a great deal of competitive pressure and is a very heavily taxed
The Budget
industry. As I say, people would recognize his name if I mentioned it.
So I said to him: "What do you think of the budget tonight?" Immediately he said: "Well, it is doing nothing for me but it is good for Canada". You can imagine my pleasure, the tonic it was for me, to have one businessman who could have justifiably looked for some kind of relief in this budget for his particular industry, yet he said it did nothing for him but it was good for Canada. Surely we can use a lot more of that in our country.
So I say this is refreshing. It is refreshing because he saw that this budget contained a reaffirmation of the values that have made Canada the great country that it is today, some very important values. First of all, let me quote from a report. Since most members would not want me to quote from a government document, I presume, I will quote Deloitte & Touche. There is a reaffirmation of values and it has to do with minimum intrusiveness. Listen to what the commentary says:
Resisting the entreaties of the provinces and special interest groups for quick-fix spending to jolt the economy out of its lethargy, finance minister Donald Mazankowski has repeated the message of his predecessor, restrain costs, cut the deficit and some day soon a reduction in the government debt will be the result.
He goes on to say:
Sound policies for times of economic uncertainties is one way of briefly describing finance minister Mazankowski's maiden budget speech. After last year's tough-minded budget with its extension of expenditure control to five years, tax increases and wage freezes, this year's speech seems like a relatively cheery affair. In essence though, it hides a frugal government's spending program behind fiscal goodies which sound expansive but which will not over-stimulate the economy.
The key sentence is this.
Full marks to the minister for a politically astute budget with minimum intrusive effects on the economy.
All of us know that whenever a budget is brought down, you cannot avoid intrusiveness in the economy. The trick is to bring down a budget that minimizes that intrusiveness. That is something which I think the business community values and is very important.
The second value that is important is it is a budget to enhance competitiveness in our economy. Taxes are meant to increase revenue for the government to carry on its programs. That is the their purpose. I think that is a fairly accurate truism. But if the taxes become too high, they become a disincentive to business and the very purpose of those taxes is frustrated because the more taxes imposed on people, the more it creates a disincen-

March 11, 1992
The Budget
tive to function. Rather than increase the revenues it tends to decrease the revenues and makes businesses uncompetitive.
By reducing taxes, by improving the capital cost allowances to industry, by improving the benefits to industry if it carries on R and D and by reducing the surtax, the budget is increasing the competitiveness of the business community. Already we have heard the business community across Canada give approval to that. There is increased competitiveness and that is a value for Canadian society.
Third, there was an increase in consultation. It has been a pattern with our ministers of finance to carry on consultations across Canada with all interest groups that would be affected by a budget. Historically the Minister of Finance or his officials meet with one particular group. Whether it is a manufacturing sector, the agricultural sector, the labour sector or the social housing sector, they meet with them independently of each other and hear what their views are. This time they added a new process and put numbers of these together in a room. When one interest group was asking for one provision, it was balanced off with another interest group in the same room saying: "Wait a minute, guess what you will do to me if we introduce that provision".
There was not only an increase in the amount of consultation but an increase in the intensity of that consultation. It was a pre-budget consultation. It was a face-to-face consultation. It pitted one interest group against the other so that we would reduce it to what it ought to be. It was very important.
These are the values largely on the business side. Then there are those which are on the social side. We have heard it said many times that the purpose of a good economy is to spread the benefits to those who may have less advantage.
I would like to focus on the fact that this budget re-establishes and focuses on the integrity of the family unit. Already I have received mail from people who have said: "I am glad this Minister of Finance has recognized, for example, that previous budgets have been prejudiced against the traditional family unit".


Mr. Karygiannis:: How many? One, two?


Benno Friesen: I have received some. The public is slow in responding but it is responding. It is encouraging when people write and say: "You are recognizing the strong historic values and the place of the family in our society". This budget does that in addition to the fact that we cany on the child care programs.
Finally I want to mention that the next step is that provinces are now going to bring in their budgets. While there is slack which our Minister of Finance has introduced into the tax regime, such slack as reducing the surtax, I would urge or I would challenge provincial governments not to take up that slack and impose that extra tax by way of the provincial treasuries. I challenge my own province of British Columbia which is bringing down its budget in about two weeks' time to resist that temptation. Whereas the Minister of Finance here has relieved the tax burden on businesses and individuals, I urge the provincial Minister of Finance not to pick up that slack and impose from the provincial side a tax burden on our people.
I compliment the Minister of Finance on a budget that has been well received across Canada. I know it will be a stimulus to our economy and our people.


Jim Karygiannis: Mr. Speaker, I could not help but listen to the member give us a great big speech about how he admires the budget that was brought down by the minister. I, on the other hand, did not see anything good about the budget.
I received hundreds of letters from my constituents. I received just as many telephones calls from my constituents. They are asking for one thing: get some sense back into the budget and, if not, why doesn't this government not resign or why doesn't it call an election?
One thing the hon. member did not talk about is something that is very sensitive to me as a member of Parliament from Toronto. I am referring to what was in the paper today: "Ottawa seeks private tenders on two Pearson terminals". We have seen what this government did when it came to power in 1984. It took CN Express which was losing money. Then it gave it away and privatized it. It was sold for $29 million. What did the people who inherited this white elephant do? They went
March 11, 1992

to the bank and they said: "Mr. Banker, we want to borrow some money". The bank looked it over and said: "Don't worry about it. We are going to give you close to $200 million on the land and on the assets of the company".
What was the end result? These people who took over this institution which was in existence since 1930 drove it into bankruptcy. Hundreds of employees, some 3,700 employees, were let go. Their pension funds were dealt in and we saw charges by the RCMP.
I am questioning whether this will be the same situation. It states that 3,200 jobs would be created. Now I am questioning myself on how the privatization of two terminals would create 3,200 jobs. The real answer is that it is not going to create 3,200 jobs. The other thing is-


An hon. member:: Oh, oh.


Jim Karygiannis: I have five minutes, five minutes for questions and comments.


The Acting Speaker (Mr. DeBlois):: Yes, but if you want an answer you will have to conclude your question.


Jim Karygiannis: I will put my question. After Canadian taxpayers spent millions of dollars on renovations to terminal 1 and terminal 2, doesn't the member across the way agree with me that they are going to give the two terminals away to some consortium only to benefit themselves? They are going to give these two terminals away to some consortium that supported the Conservatives during their first and second election bids.


Benno Friesen: Mr. Speaker, in answer to your question to the member, no, he does not want an answer. He wants to make a speech. That is all right. I do not mind that.
The first part of his question dealt with the budget and spoke to the fact that I was so enthusiastic about it. I simply point out to him that I was talking to one of his own colleagues a day or two later. I met him in one of the buildings here. It was during Question Period and I said: "Listen, aren't you going to go down there and harangue the Minister of Finance on his budget?" He said: "No, I am not going to do that. That was a good budget". That was one of his own colleagues so he had better confer
The Budget
with his colleagues and maybe get a second opinion about the budget.
The second part was about the airport. He asked: "Are you going to privatize this and let individual people benefit from it?" Tell me, what is the market system all about? Is it a crime to make a profit? Is this the new philosophy of the Liberal Party, that if it is government owned people will not benefit, but if it is privately owned people will benefit? It seems to me that the beauty of the market system in North America is that everybody benefits if the market system works properly. Why would the member be against that?


Mr. Jack Iyerak Anawak (Nunatsiaq):: [Editor's Note: Member spoke in Inuktitut]

Mr. Speaker, I am pleased to have this opportunity to speak in today's budget debate. The February 25 budget was really a "do-little" budget. After several years of big budget takes from taxpayers, the government's most recent budget gives a little but only a little. What it gives is so small the impact will be negligible, especially in my own constituency.
The budget provides some small assistance to mining companies, but the measures will, according to the Yukon Chamber of Mines, only benefit existing mines. There is no major boost to stimulate the exploration which is really needed in the north. Since the Canadian Exploration Incentive Program was cancelled by this current government in February 1990, mining exploration levels in the north have dropped substantially. The high Canadian dollar has also affected exploration levels.
In 1988, when the flow-through share incentive was in place, about $50 million in exploration was done in Yukon. Last year only $16 million was spent. This year the Chamber of Mines expects to see only about $5 million or $6 million spent in exploration.
In the Northwest Territories the outlook is similar. Small exploration companies could have used a break. For small business at least there are no tax increases.
There is a small increase in a lending program for small business, but it is really nothing significant. In the Northwest Territories there were 13 more bankruptcies in 1991 than there were in 1990. Now, 13 may not seem

March 11, 1992
The Budget
like a lot, but in the Northwest Territories one has to understand that there are not as many businesses as there would be down here.
Throughout Canada, and particularly in northern Canada, we were looking for a major commitment to infrastructure and we did not get it. In fact the federal Minister of Northern Affairs in media interviews following the release of the budget ruled out a major commitment to northern infrastructure because it would be too expensive. He said high costs in the north make it hard for the federal government to justify spending big amounts of money on northern transportation. That attitude merely demonstrates the shortsightedness of this current federal government.
Without the necessary basic infrastructure, the economies of the territories do not have a chance of becoming self-sufficient.
To paraphrase a former Conservative finance minister, the short-term pain of investing now in the north would bring long-term gain to all of Canada. High costs are a fact of life in northern Canada. The federal government must be prepared to deal with these costs so that northern Canada can be dealt into the Canadian economy as a contributing partner. The longer the federal government waits, the higher the infrastructure costs will become.
The north's infrastructure needs are not going to go away. They will only increase with time. By taking action now this government could reduce future costs.
I hope the government is not waiting for a northern megaproject in the belief that private enterprise will do what the government is not prepared to do for northerners. The north does not want a megaproject economy. It does not want a boom and bust economy. The north wants a community based, diversified economy, but it is getting no help from this federal government.
I hope the government is not waiting for the settlement of the TFN land claim in the hope that the settlement moneys will be used to address some of the needs it is currently ignoring. The land claim settlement is an obligation to Inuit over and above what the regular federal obligations are to all northerners.
When the leader of the Government of the Northwest Territories spoke at the First Ministers' conference on
the economy last month, she pointed out that the employment rate in the Northwest Territories has dropped by 3 per cent since 1989. Spending in the NWT has fallen 15 per cent since 1989. She pointed out that a federal commitment to the north infrastructure would mean not only more jobs for northerners but jobs for people in southern Canada as well.
A Conference Board of Canada study has estimated that for every job created in the north another 1.7 jobs are created elsewhere to support it.
All Canadians would benefit from increased federal investment in the north.
Members of the government would have us believe there is a significant tax cut in this budget. That is hardly the case. First of all, the cut is to the federal surtax which is a tax the Conservative government imposed on top of the basic federal income tax. Basic federal income taxes are not cut in this budget. The surtax will be reduced by 1 per cent on July 1 and it will be reduced by a further 1 per cent on January 1, 1993. Over an 11-month period the surtax will be reduced from its current level of 5 per cent to 3 per cent.
We appreciate this tax relief even though it is minimal, but we have not forgotten that there was no surtax before the Conservatives came to power. The government wants people to be grateful that the surtax is being reduced from 5 per cent to 3 per cent. The people know that next January they will still be paying a federal surtax of 3 per cent, a tax they did not pay before this government was elected. They know that this tax is just one of a total of 33 tax increases, including the GST, imposed on them by the Conservatives since they came to power in 1984.
Look at the actual savings to taxpayers of the surtax reduction. A table on page 135 of the government's own budget papers sets out the impact of the surtax reduction. The biggest benefits go to those who earn the most.
For example, a single taxpayer earning $15,000 a year now pays $66 in surtax. That individual's surtax will be reduced by $7 in 1992 and $27 in 1993. A single taxpayer earning $75,000 now pays $966 in surtax. That individual's surtax will be reduced by $80 in 1992 and $318 in 1993.
March 11, 1992

A one-eamer couple with two children earning $40,000 a year will have their surtax reduced by $27 in 1992 and $110 in 1993. A one-eamer couple with two children earning $75,000 a year will have their surtax reduced by $74 in 1992 and $297 in 1993.
A $7 reduction for the single person earning $15,000 and a $27 reduction for a couple with two children earning $40,000 is peanuts in my constituency. Seven dollars is just slightly more than the price of a litre of milk in most communities in my riding. Seven dollars does not buy very much in the major cities of southern Canada, but it buys far, far less in remote northern communities.
My constituents pay twice and three times as much as southern Canadians for basic goods, including groceries. The surtax reduction is better than no reduction at all, but it is not as good as no surtax at all. Its impact on low income earners in general is minimal and its impact on low income earners in the north is next to nothing.
Working Canadians and their employers are also paying more this year in unemployment insurance premiums. On July 1, 1991 the employee rate was increased from $2.25 to $2.80 per $100 of insurable earnings.
In January of this year, the employee rate was further increased to $3 and the employer rate was set at $4.20. The increase in the premium rate amounts to an additional $1 per week for employees whose insurable earnings are $26,000. Such employees will actually pay more for their premiums this year than they will get back under the surtax reduction.
Potential home buyers now have the opportunity to use their RRSPs to purchase a home. This is basically a good idea, and it was suggested by the Leader of the Opposition long before the budget was tabled by the Minister of Finance. However there are problems with this proposal as well. This plan runs only for a year and only benefits those who have RRSPs. Only those people who are working are in a position to contemplate buying a home.
How many of the 1.5 million unemployed Canadians will this plan benefit? How many northerners will this plan benefit? This proposal will only benefit those who live in areas where there is a housing market. This may seem self-evident in southern Canada where housing
The Budget
markets are taken for granted, but throughout most of northern Canada there is no housing to buy.
A severe housing crisis exists in the north. Affordability is an issue, but availability is a major problem. With the exception of a few larger communities there is no private housing market. The housing shortage results in overcrowding. Houses in the NWT are more crowded than in the rest of Canada. They are more crowded in the eastern Arctic than in the rest of the NWT. Since private housing is not affordable or available, social housing is the only alternative for many people.
Two weeks ago the Inuit Tapirisat of Canada made an excellent submission to the House of Commons aboriginal affairs committee on the issue of housing. It pointed out that in the eastern Arctic social housing cost-shared by the federal government is the only option available to the 80 per cent of the population who do not have housing provided by an employer.
Housing conditions in the north are nowhere near housing conditions in southern Canada. Funding currently provided for housing in the north is not sufficient to bring northern housing to the level of southern housing. The social housing budget for the north must be increased.
Yet, in the federal budget, the Canada Mortgage and Housing Corporation was cut back. The growth in social housing expenditures will be limited to 3 per cent through to 1997. In 1990 $91 million was available for new units. The government has reduced that amount to $70 million in 1992-93 and to $45 million in subsequent years until 1996. This amounts to a cut of over 50 per cent in just three years.
In addition this government has eliminated the co-operative housing program. These cuts are occurring despite the fact that CMHC's social housing budget currently reaches only 6 per cent of Canadians and 15 per cent of Canadians, over one million people, are still in need of social housing.
The increase in the child care deduction will benefit some people, which is good. However, the deduction only benefits those who are paying income tax and the more someone earns the more value it has for them.
Women not currently working outside the home will not benefit from this and their opportunities to work outside the home were not increased by this budget.

March 11, 1992
The Budget
The budget did nothing to alleviate the serious shortage in day care spaces throughout the north and the whole of Canada. A severe day care space shortage exists in the north. There are no measures in the budget to alleviate this shortage. Despite repeated promises by the current Conservative government to provide more child care spaces, this budget has proved that these promises are dead. There will be no national day care program. The Minister of Health and Welfare has confirmed this. Once again we have broken promises.
This budget provides no hope for the unemployed. There is no job creation and the budget itself projects that unemployment levels will remain high.
The Northwest Territories is currently in a financial squeeze. The NWT government is cutting back because the federal government has cut its transfers to the territorial government. Unemployment is rising and this budget provides no help. This budget provides no hope for the poor and the hungry.
A couple of weeks ago a 41-year old single mother from Baker Lake in my constituency took it upon herself to raise money for the poor and hungry of her community. Baker Lake has a population of about 1,200 and an unemployment rate of about 85 per cent. Susan Toolook-took walked 50 miles through freezing temperatures, minus 38 degrees, and endured a blizzard which turned her planned three day journey into a week's journey. She raised more than $2,000. Donations have apparently not only come from the residents of Baker Lake and other NWT communities but from Vancouver, Toronto, Saskatchewan and elsewhere.
She said that she did it for the less fortunate because the costs of basic necessities such as food and hunting supplies is often too high for most people. She said that she did it for the people who sometimes do not have any food to feed their children, for those who can never find jobs, and for those who are actually working but are finding it hard to buy the things they need to keep alive or the equipment necessary for hunting because they are too expensive.
In this community some children and their parents go to bed hungry. It saddens me to say it, but hunger is a fact of life for many children and people throughout the north.
I would like to quote a document that was adopted by the United Nations on November 20, 1989, entitled: "Your Rights as Children of the World". It says that one of those rights is the right to adequate nutrition, shelter
and medical care. Our Prime Minister was one of the signatories of this document.
I want to recognize Susan Toolooktook for her courage and caring. I wish the federal government cared half as much as she does.
Just before Christmas the Prime Minister ratified the document I just quoted, the United Nations Declaration on the Rights of the Child. That declaration says that children should not go hungiy. That declaration is being contravened in our very own country.
Canada must live up to its commitments in that declaration by eradicating the hunger and poverty in our midst.
The government's proposed new child benefits package could be a start in that direction. It is supposed to come into effect in January 1993. The Minister of National Health and Welfare will be discussing implementation of this benefit with his provincial and territorial counterparts and other interested parties. I will reserve judgment on the real value of this benefit until more details are available.
I do want to say that I regret that a national day care program was the government's price for this package. I am sorry the day care program was sacrificed because I believe that the children of Canada and their mothers need more child care support as well as increased child benefits. It is too bad the government made these issues into an either-or situation.
Major changes are needed to the formula financing transfer payments to the territorial governments. However, this budget did not announce any changes and that is rather disappointing. Two years ago the federal government imposed a new financing arrangement on the territories reducing funding to them and the consequences are unfair.
Under the formula, the Government of the Northwest Territories loses $1.20 for every dollar it raises. This is clearly regressive and the Government of the Northwest Territories is currently negotiating with the federal government seeking adjustments to the formula.
Recently the federal government announced increases to the transfer payments to the provinces. I urge this government to be as forthcoming with the territories.
Green plan funding has suffered another set-back in this budget. The original green plan program announced in December 1990 was funded by $3 billion over five years.
March 11, 1992

In last year's budget the government decided to spread that funding over six years instead of five. This year's budget reduces the green plan by $150 million over the next two years, although the government does say that it will spend that money later. Given this government's record of broken promises, why should we believe it? There are also cuts to the Department of Indian and Northern Affairs and other areas, such as education.
Mr. Speaker, I thank you for your indulgence in allowing me to say what I have to say.


Dennis Joseph Mills: Mr. Speaker, I want to compliment my colleague on his summary of the budget and his comments on those areas adversely affected in his region of the Northwest Territories, the eastern Arctic, Iqaluit.
The government is always challenging this side of the House saying that we only criticize and never put forward ideas about how to improve the situation or make it better. We are constantly putting forward ideas on this side of the House but it seems that they always fall on deaf ears. That can be the frustration of having ideas in opposition.
However, one of the areas that I think even the government would not refute is that of tourism. Tourism is one area that can galvanize this country. It is one area that can give us back the feeling of dignity and pride as Canadians that we need to have so desperately in this country. I do not care what region you are from, that is an essential requirement today because of the economic disaster that touches all of us and tends to depress us.
The area that my colleague comes from is one of the environmental heavens of the planet. It has a potential for environmental tourism beyond imagination. I would like to ask my colleague if he feels that the government was once again negligent in not paying attention to that potential to not only promote spirit and pride but also to generate more foreign exchange which would improve the quality of life for Canadians in the north and make us all feel proud of the nation as a whole.
I wonder if my colleague could comment on the environmental tourism potential which the government has ignored?


Jack Iyerak Anawak: I would just like to say one thing before I get on to explaining how we can benefit from a tourism marketing strategy by this government. That is, it does not really help us very much in our tourism potential when every day for two and one-half months we have 24
The Budget
hours of sunlight and the Minister of the Environment is telling us that we should be telling our kids to stay inside. That basically tells us that we should stay inside our house for two and one-half months, during the best two and one-half months of the whole year.
In terms of potential for the north, it is there. We have national parks, bird sanctuaries, great fishing, sports hunting and specialized tours in the north. However, there have been some problems in the last three or four years where the tourism potential has been severely cut back because of measures that were introduced in terms of the GST and others and the high cost of travel in the north.
When you add whatever taxes have been added since the time this government has been in power, that travel has been severely restricted. I know, because before I got elected as a member of Parliament I used to operate a tourism company in my hometown of Rankin Inlet.
We used to have people coming up from southern Ontario. We had people from the Federation of Ontario Naturalists. We had people coming by VIA Rail from Winnipeg. We had people coming from Horizon Tours. We had people coming through Fiesta Holidays.
But in the last few few years we have not had that. People are not travelling as much because of the high cost of travel and because of the imposition of further taxes either on the fare itself or the increase in fare because of having to pay more for the services, gas, or whatever to operate the trains or planes and whatnot.
I thank my colleague for asking that question because the potential is there. I know it, he knows it and I am sure that most of my colleagues on this side of the House know it because we were in Iqaluit for a caucus meeting.
I invite any member of this House to come to Whitehorse next week for the Arctic winter games. I cannot remember the exact date, but I urge members from this side of the House and the other side to come to Whitehorse and see the Arctic winter games as well as to contribute to the economy of the north.


Mrs. Suzanne Duplessis (Parliamentary Secretary to Minister for External Relations and Minister of State (Indian Affairs and Northern Development)):: Mr. Speaker, I am very pleased to participate in the debate today on the federal budget for 1992. I am pleased with the concrete measures that were announced and with the realistic approach of this budget.

March 11, 1992
The Budget
Allow me to congratulate the Minister of Finance. This budget shows once again that the minister listens to the people, is aware of the economic difficulties that Canadians must face and, above all, uses imagination and a realistic approach to come up with solutions which, in the short and medium term, will accelerate economic recovery and restore public confidence.
I also want to point out the excellent work done by the previous Minister of Finance. Indeed, starting in 1984, that minister took initiatives that now enable the government to take positive measures. Today, more than ever before, I am convinced that we were right in defending an economic recovery plan aimed at controlling government expenses and, therefore, the deficit once and for all.
Mr. Speaker, like any Canadian family, the government cannot use credit forever. It is easy to always borrow more; in fact it is a lot easier than to take unpopular measures.
But there comes a time when you have to pay your bills. That time came in 1984 when we formed the government. The situation in public finances was appalling. The federal government was simply living above its means.
However, thanks to very tight controls and sound management practices since 1984, our government was able to announce a tax reduction in this budget. This is certainly very good news for everybody. Moreover, this tax reduction is not reckless borrowing or passing on the debt to others, but rather a rigorous control of the government administration. Once again, we succeed by cutting government expenditures; the salaries for the Prime Minister and cabinet members were reduced by 5 per cent, those of all members of Parliament were frozen; we eliminated, consolidated, deferred or privatized a total of 46 government agencies; we cut operating costs in various departments, etc.
We are also tightening our belts and we require government services to do the same, making sure however that service to the public is not affected.
I now come to an important part of the budget, the family assistance programs. I am one of those who believes that families form the social fabric of our society and that we should do everything possible to help them.
I was among those who appealed to the Minister of Finance to take the necessary steps in order to do away with the injustice which prevailed for many years because married couples with children and unmarried couples with children were not subject to the same taxation.
In the present budget, the minister recognized our demand and corrected that situation. From now on, all couples, married or not, will be treated equally.
This certainly shows how high a priority we place on families from Quebec and from all over Canada. However, the commendable initiatives of the Minister of Finance did not stop there. He announced a complete restructuring of the family allowance and child tax credit systems so that parents will now receive a single non-taxable monthly benefit of up to $144.
This is certainly good news for low income families because it represents an increase of the annual amount they receive and furthermore, they will get their money monthly. They will no longer have to wait for weeks before they can use it and they can budget accordingly.
On that same subject, and in accordance with our government's policy regarding assistance to families, the child care expense deduction has been raised significantly-
This measure will help traditional families but will also greatly help the one parent families. In that area, there is a fact that no one can deny; most single parent families are headed by women. Many of them have the total responsibility for the education of the children and for all other parental activities. A study published in the papers on February 24 showed that poverty strikes hard at many one parent families that, in most, cases have a young woman at their head.
During the 1980s, the number of one parent families skyrocketed in Canada. At the last census, there were 252,680 single parent families in Quebec; that is 21 per cent of all families with children. What is most troubling is that in 1989, in Quebec, 40 per cent of the families headed by a woman were considered poor. Our government is very conscious of those social problems and the changes in fiscal deductions are certainly proof of that. Also, a great many families hope to buy their first house, again, it is often in order to find a better environment for bringing up children. The purchase of a home is, for the majority of people, the most important investment of their lives. Sometimes though, they need help if their dream is to come true. That is the purpose of our home buyer's plan which allows the owners of a RRSP to
March 11, 1992

withdraw up to $20,000 from it in order to buy their first house.
This initiative certainly helps families, but it also fulfils another purpose, that is revive the home building industry. As they say in French-"Quand le bdtiment va, tout va". If we give those who own a RRSP the possibility to use it for that specific purpose, we will encourage job creation in a number of home-building related industries; we will stimulate the building industry itself and we will contribute to a quick and sustained recovery of the economy.
On budget night this announcement was welcomed enthusiastically by everyone. I am sure the results will be visible soon and will have a positive impact throughout the country.
Canadians want to work, but we cannot make it happen by creating a paper recovery, a recovery based on injecting borrowed money into the economy. What we need is a real recovery, not an artificial one, and I am very confident about the measures contained in this budget.
In addition to helping the construction industry and families, the government has also tabled proposals to help business. The capital cost allowance rate has been raised from 25 to 30 per cent, and $230 million in new money will be committed to research and development. The ceiling for loans under the Small Business Loans Act has been increased to $200,000, and business owners who are temporarily in financial difficulty will be able to obtain financing more easily.
To meet international competition as we enter the 21st century, businesses must be able to purchase the most technically advanced equipment available in order to produce high quality goods at the lowest possible cost.
Having been Parliamentary Secretary to the Minister of Science and Technology from 1987 to 1991, I can appreciate the importance of investing in more efficient machinery. This budget will make it possible to meet this fundamental requirement. The positive impact of these measures, Mr. Speaker, is a foregone conclusion. If small businesses improve their cash flow, sooner or later they will be able to expand and create new jobs. That is the recipe for genuine economic recovery-not a paper or
The Budget
artificial recovery but a genuine, sound and, above all, durable recovery.
This budget is realistic. While its ultimate goal remains reducing the deficit, which is undeniably the answer to all our problems, the budget has taken an innovative approach and proposes specific measures directed at all Canadians. We did not want to play favourites. We included everyone. This budget is fair to all Canadians. The Minister of Finance should take a bow. This is a serious and realistic budget and a perfect response to the challenges Canada must meet.
Mr. Speaker, I intend to vote for these budgetary measures, and I say so with great enthusiasm.


Dennis Joseph Mills: When the member talks about this budget being a fair budget, and she went through a list of some of the things that this budget will do, we should be very careful not to mislead Canadians. Most of the budget measures the member talked about really do not kick in until 1993.1 had some people come in to my constituency all excited about this family plan which by and large I think is pretty good. But you must tell them that it is not until 1993. You have to be careful that you are not creating a false expectation there.
My question has to do with the people who are unemployed, the 1.5 million who we still have recorded and the other two million who are on welfare or some other form of social assistance. The problem that I have when I listen to members of the government is they tend to pat the Minister of Finance on the back and pat themselves on the back for this great budget. There are parts of the budget that I think are responsible and I will give them that. But we keep forgetting in this House that we are not here to look out for those people who are advantaged. We are here to look out for those who are disadvantaged. I, for the life of me, cannot find what good or what specific program in this budget will help the three million people who are out of work.
I would like the hon. member to tell me what she says to her constituents who are unemployed, are on welfare or social assistance and how this budget will help them.

The Budget


Suzanne Fortin-Duplessis: Mr. Speaker, I appreciate this question from my hon. colleague opposite, the hon. member for Broadview-Greenwood. I want to tell him that Canadians who are unemployed or on welfare can place great hopes in this budget because it provides strong foundations for recovery.
We have taken several initiatives since 1984, including an increased emphasis on training so that people are better qualified to take up new jobs, be it in high-tech areas or elsewhere. We have asked our industries to improve their productivity and facilitated their achievement of this goal. We have also facilitated the emergence of new high tech-businesses, supported the pharmaceutical sector as well as research and taken steps such as creating excellence centres to ensure the immediate communication of research results across the country.
We have taken all kinds of steps, including some regarding financial matters to facilitate a number of things, thus laying strong foundations on which to build the future so that, in the years ahead, Canadians can compete internationally and globally.
My colleague says that we pat ourselves on the back for this great budget. Personally, Mr. Speaker, I must say that I do find it excellent because we listened carefully to Canadians. We carried out public consultations and Canadians have asked for the following. They want realistic, lasting solutions to our economic problems, not quick fixes. They want us to cut the deficit. They want government streamlined and made less wasteful. They want opportunities to improve their skills. They want steps taken to ensure that our social programs meet their basic needs. Most of all, they want a renewed basis for confidence.
So here is what we have done. We have substantially reduced the deficit. We are cutting spending and taxes. We will restructure and streamline the operations of government. We will increase support for research and development. We will reduce the tax burden for the manufacturing and processing sectors. We will help small business. We will simplify and substantially enrich our support programs for families and children. We will assist Canadians with registered retirement savings plans to buy a home. We will increase our support for Canadians with disabilities.


The Acting Speaker (Mr. DeBlois):: I am sorry for interrupting, but the five minutes are up.


Mr. Ken Hughes (Macleod):: Mr. Speaker, it is a real pleasure to participate in the debate here today on the budget and to speak on behalf of the people of Macleod.
It is an important debate on an important budget. This budget is consistent. It is realistic. It is sensible and, above all, it is fair.
I would like to touch on each of these points. I would also like to discuss how this budget affects the people in the province of Alberta and the people in the constituency of Macleod which I serve.
The first thing to note about the budget is its consistency. Perhaps this was the most difficult budget for this government since it was elected in 1984. We know some Canadians, we heard this from a small minority, called on the government to abandon its policy of fiscal restraint. They asked for higher government spending at the expense of a higher deficit. They wanted to shift greater costs on to the shoulders of our children.
They were a vocal and a sadly misguided minority. They did not speak for a majority of sensible Canadians. A majority of Canadians asked the government to maintain the fight against the deficit.
I met with many constituents in the months prior to the budget. They told me above anything else to continue the fight against the deficit. Certainly a majority of my constituents want the government to continue with its policy of fiscal restraint. In this way, the budget is fully consistent with the fiscal prudence of the seven previous Progressive Conservative national budgets.
Not only is the budget consistent, but it is also realistic. It does not offer the quick fix or shortcuts to prosperity that some would have us provide. Some would have us believe that is possible. History proves that just is not possible. It just does not work. The reality is that Canada's debt is over $400 billion. The reality is that the budget deficit will be down to $27.5 billion in 1992-93 and dropping year by year after that. The reality is that the Government of Canada should no longer need to borrow money after the mid-1990s. My constituents continue to encourage the government to look for ways to reduce spending. They know that increased spending means increased deficit and increased taxes. They find that to be unacceptable. They know that reduced spending means a reduced deficit. This budget responds to those concerns. A $1 billion cut in spending in this
March 11, 1992

budget for 1992-93 is a realistic response to the needs of the country today.
The budget is also realistic because it is sensitive to Canada's current economic situation. It provides a framework for a lasting recovery.
The Minister of Finance had to deal with these realities in preparing this budget. In the face of very difficult economic times, he has done very well, just as those of us from Alberta would have expected.
The budget is sensible. It offers some sensible solutions to the problems that Canada faces today. For example, on the question of streamlining of government, small business people in my riding tell me, and I know from having been a business person before getting into public life, there is just too much red tape in the dealings with the federal government. I know that all other members in the House will have heard that as well. The sensible thing to do is to streamline. Cut duplication and make government more efficient and easier to deal with for business people. The budget takes those steps. Those are sensible steps.
It makes it easier for small business to deal with government. It makes it easier for small business people to stay in business and to contribute to creating new jobs, new economic opportunities and leading the way to economic recovery.
This is a fair budget. It gives taxpayers a break through a reduction in the income surtax. Every Canadian taxpayer benefits. Across the board cuts ensures that all Canadians are treated fairly.
The budget also addresses an area of fairness which I have been concerned with for some time, the treatment of families under the tax system. Many people in my riding of Macleod wanted this situation changed. They felt that it was unfair that the traditional family unit was being penalized by the tax systems.
Many other members of my caucus from Alberta also realize the unfairness of the situation. A caucus committee was formed and under the guidance of my colleague the member for Calgary North, a series of recommendations were made this past autumn. This is from the
The Budget
family caucus. The finance minister listened and made some of the recommendations aspects of the budget we are currently debating. Fairness has been restored in this area.
This is another good example. People often ask how one member of Parliament can have any positive impact on the Government of Canada. Well, here is a good example. Members of the Alberta caucus are effective representatives of our province and as chair of the Alberta caucus, I am proud of our contributions to this budget. I thank the Minister of Finance, who happens to come from Vegreville, for having listened to his colleagues from Alberta.
He has also listened to all Canadians. The budget is the product of consultation over a period of months. Albertans as well as Canadians from other provinces played a very important role in those consultations. The finance minister travelled across the country and he listened.
As well, I worked in my constituency listening to the people from Macleod. I heard many suggestions in phone calls and letters I received daily. As you might imagine, the people of Macleod are more than willing to offer useful advice, something that is true, I am sure, in all other constituencies. I took that advice and I passed it along to the minister. The minister listened and this is the result.
What did I hear? I have touched on some of the points already, but let me just hit the highlights. The people of Macleod told me that above all else, continue the fight against the deficit. They want this government to stand firm and not give in to pressure to increase spending at the cost of a higher deficit. They want realistic solutions. They realize there are no quick fixes, no shortcuts to facing the economic problems we have.
Albertans have asked for a leaner, more responsive federal government. In fact, it is true that they have asked for the same thing from provincial governments as well. The federal government is listening and we are working hard on that.
People want a government that does more with less. Small business people tell me there is too much red tape

The Budget
and duplication when dealing with the federal government. The budget responds to all of these concerns.
What are people saying about this? Here is one example. A businessman from Lundbreck, Alberta sent me a fax shortly after the budget came out. It read: "I am very pleased to see the budget highlights. It is exactly what we had hoped for in the direction it has taken. Keep up the good work".
The Calgary Chamber of Commerce issued a news release that read in part: "There are some good signs of leadership in today's budget, such as no tax increases. A decrease in the surtax, a child tax credit increase of $1,000, a capital cost allowance increase from 25 to 30 per cent for manufacturing and processing equipment and a $20,000 RRSP homeowner loan are all conducive to mildly stimulating spending. The 5 per cent rollback in minister's salaries, although modest in dollar terms, is also symbolically important".
Mr. Speaker, I know that my time here is quickly coming to a close, but I want to let you and all members of the House know that I stand firmly behind this budget. I believe it has come about as a result of thorough consultation with Canadians. It is contributing to a stronger economy. It is contributing to the recovery of the economy in Canada and it continues to supply the kind of leadership this country needs.


Mrs. Coline Campbell (South West Nova):: Mr. Speaker, I listened to the member from Alberta who praised his fellow colleague, the finance minister, on his budget.
I have spoken several times during this budget debate and I have to say that I cannot praise it. I have been here a long time and the Minister of Finance has been in this House a long time. I heard him, when he sat on this side of the House, criticizing budgets.
I am sure he understands why we have to criticize this minister's budget. There is nothing in it for ordinary Canadians.
The ordinary Canadian today is looking at Parliament and asking what goes on here. Why is this not a flexible enough institution to deal with the every day problems that are afflicting ordinary Canadians' every day lives.
I say that because he talked about fairness. Where is the fairness to the unemployed? Where is the fairness to the small businesses that are going under daily across Canada? Where is the fairness in that there are no new incentives to create jobs?
There is no extra money to go into research and development and this country needs so much of that. We have all the expertise.
Let us look at fishing. We have over-capacity, we are told by the Minister of Fisheries, onshore and in the water. Yet we allow the foreigners to come in within our 200-mile limit when the jobs are there onshore to handle that fish.
There is nothing to put a new direction into the marketing of that fish. If the foreigners can come over here, catch the fish and eat it at home, why can we not catch it and sell it to them? It needs a bit of turnaround by this government to see the opportunity that is there for us.
I ask the hon. member this question. Where is the fairness from the government's side to the people in Canada who are homeless, hungry and who have been unemployed for the first time probably in all their working lives. Where is the fairness in this budget that the member is talking about?
Where is the creativeness that is needed which we are not seeing from this government? Where is the creativeness to get Canada going again?


Kenneth Gardner Hughes: Mr. Speaker, I am delighted to respond to the points made by the hon. member for South West Nova and I appreciate her intervention.
She should know that I would be a little bit out of my depth spending a lot of time talking about fishing, having not a great number of fishermen or people involved in the fishing industry in the riding of Macleod.
Let me deal with the question of fairness head on. The hon. member asks about fairness. What this government is providing is a fair economic climate that allows everybody the opportunity to take advantage of the opportunities that are there. Let us look at the interest rate policies that have brought us the lowest interest rates we have had in nearly two decades.
Let us take a look at the training programs that this government has put in place. I am sure they are taken advantage of in the hon. member's riding as they are in my riding. There are parts of my riding where there is chronic unemployment, and we have taken a creative look at the way in which training programs should work.
March 11, 1992

We have taken a creative look at the ways we should assist people in chronically underemployed areas and I must say that it has resulted in significant opportunities in the Crowsnest Pass area. In fact, what has resulted is the opening of a new plant, Strand Industries with a considerable amount of assistance from the Government of Canada.
These are Canadians who have faith in the opportunities that are there, that are marketing internationally, that are looking for things to do, that are looking out, that are not part of the doom and gloom that the CBC and my colleagues opposite would have us all believe is bringing us to the end of this country. These are the people who are taking the opportunities.
There are many other examples but I see I am getting the eye from the Speaker so I will sit down.


Mr.   Benoit@: Mr. Speaker, I am pleased to be able finally to take the floor as a full participant in this budget debate As finance critic of the Bloc Quebecois, I cannot help pointing out the democratic deficit in this House, which seems to me to be as chronic as the government's budget deficit.
Forty-one major statements have already been made during the first three days of the budget debate, not one of them by a member of our party. Parliamentary democracy in the House of Commons is practically as sick as the federal government's finances, Mr. Speaker.
In spite of that, I can assure you that I will continue to be present, to demand fair treatment and to defend Quebec's interests. We know the political legitimacy of our party in Quebec and we know that after the next election, there will be more than 60 of us to express Quebec's interests even more strongly.
Until that day comes, and I hope it is soon, let us look at the February 25 budget. All in all, this budget got a better reception than any of Michael Wilson's, at least for a few hours, while the Minister of Finance got an initial media reaction that was not too disastrous.
The Budget
The day after, the rather moderate earlier comments were heard less often. Two days after, the Canadian dollar started another slide that the Bank of Canada is still trying to stop with a gradual increase in interest rates.
The Minister of Finance wanted to leave the public with a first impression of a government that had managed to reduce the deficit while lowering income taxes slightly. But this first impression gave way as analysts and ordinary citizens learned what was really in the budget.
The camouflage lasted only a day and the disenchantment will last all year. Why such disenchantment? First, because all agree that the budget's economic forecasts are too optimistic. This government has a habit of announcing that it sees light at the end of the tunnel. The problem is that the tunnel is getting longer every week, every month, every year.
Indeed, if this government's budget forecasts since it came to power had been realized, we would already have a budget surplus, although the projected deficit for next year is still $27.5 billion. We all know that this estimate will be exceeded.
Let us quickly compare the finance minister's forecasts with the data now available. In his budget of February 25, the minister expects business investment to grow by 0.5 per cent in 1992. However, on February 28, three days later, Statistics Canada published the results of its business survey and predicts that business investment will decline by 1.5 per cent.
Concerning the labour market, the budget predicts an increase of the work force, a higher number of jobs and a decrease in the unemployment rate, to 10.1 per cent. On March 6, 10 days after the budget, Statistics Canada announced for February a decrease of the work force, a decrease in jobs and a higher unemployment rate which rose to 10.6 per cent. In fact, there were 3,000 fewer jobs in February at the worst part of the recession.
The budget predicts for 1992 a continued decrease of interest rates, down to an average of 6.9 per cent for short term and 8.5 per cent for long term. During the last few weeks, we have seen the interset rates rise; they are now at 7.85 per cent for shot term and at 9.1 per cent for long term. The dollar is still going down and there is a chance the interest rates will keep increasing if the

March 11, 1992
The Budget
Governor of the Bank of Canada maintains his suicidal policy.
The budget predicts a vigorous recovery of residential investments with an 11.9 per cent increase. On March 9, two days ago, only 13 days after the budget, the Canada Mortgage and Housing Corporation announced that the market had not reacted at all to the lower interest rates of the last few months and that the slight increase in construction starts we observed in Febuaiy for the whole of Canada was due to the high number of social housing projects launched in Ontario thanks to the budget of the Ontario government so strongly criticized by the federal Minister of Finance.
According to me, it is useless to go on with this analysis of the minister's predictions. They are already outdated and, as always, the economy is worse than expected and the deficit will be higher than anticipated.
Why such a disastrous outlook, Mr. Speaker? Because the government rejects the most powerful tool it could use to stimulate the economy: the monetary policy. Even though there is no convincing sign of economic recovery, the governor of the Bank of Canada is sticking to a policy of high interest rates, an ultra-conservative and suicidal behaviour in the present circumstances. The fight against inflation has been over for months and the Canadian dollar must come down to a level where the Canadian economy can be really competitive. Economists seem to agree that such a level should be between 75 and 80 U.S. cents.
The financial sector has already nicknamed the governor of the Bank of Canada Rambo because of his merciless fight against inflation which has resulted in 1.5 million unemployed in Canada. Even Rambo stops when the war is over, but not Mr. Crow. To him, high interest rates and a high dollar are a religion. The financial sector had to find a new name to describe his suicidal blend of religion and monetary policy. He is now known as the Bank of Canada's ayatollah.
Mr. Speaker, nothing in the finance minister's speech leads us to believe that he will exercise his statutory responsibilities and put an end to this policy which is a disaster for our economy. On the contrary, he has only praise for his monetary policy's ayatollah. They practise
the same ultra-conservative religion, convinced that they are right and everybody else is wrong.
With the inflation rate at 1.6 per cent, the real interest rates in Canada are 3 to 5 points above those in the United States, a level totally unbearable for the Canadian economy. When we talk about a lower deficit, Mr. Speaker, we must also look at recovery. When interest rates go down 1 per cent, the government can save more than $4 billion on the cost of servicing our enormous national debt. When there is a recovery and the unemployment rate goes down 1 per cent, the additional revenue for the Treasury as a result of this 1 per cent drop in unemployment totals $5 billion. We have to look at the impact on economic recovery, not just the cutbacks.
Are there more disappointments in this budget? Of course. Private citizens and businesses initially believed there would be a modest tax cut, as announced in the budget, but they were soon disillusioned. First of all, cutbacks in transfer payments to the provinces for health care and post-secondary education will make it practically impossible for provincial and municipal budgets to avoid tax increases.
For Quebec alone, the potential loss is nearly $2 billion for the coming year, while municipal taxes payable in April, which is quite soon, are substantially higher as a result of last year's cuts. Furthermore, the unemployment insurance account's deficit is expected to lead to another increase in employee and employer contributions in 1992, after a 32 per cent increase in 1991, since the government has withdrawn altogether from financing the unemployment insurance fund.
The prospects for tax relief have faded and will disappear altogether when provincial budgets are tabled at the end of April and in early May.
Once we analyse the few concrete measures in this budget, our disillusionment will be complete. First of all, we see the government abandoning its commitment to a genuine family policy, which it did without any consultation with the provinces, although we all know perfectly well that family policy is a fundamental issue, at least for Quebec. The family allowances system has been replaced by an income support plan for low-income families. This decision points to a significant change in values and a new concept of the role of the state in society,
March 11, 1992

especially with respect to the family, a concept that reflects an ultraconservative about-face, while there was no opportunity for a real debate on this issue.
The government is doing gradually and in a roundabout manner what voters would never tolerate if they knew exactly what was at stake. In the short term, families whose income is the equivalent of the average family income will receive a benefit on a level with benefits under the present system. However, since income levels will not be indexed, there will be a gradual erosion of the amounts available to families. As is the case for other measures already implemented by this government, the negative impact will be felt only gradually.
The changes involving unemployment insurance and the jobs strategy announced three years ago are a case in point.
When it tabled Bill C-21 on unemployment insurance reform, the Canadian government made a big promotional drive concerning its employment strategy with funds of $1.8 billion. On numerous occasions, the government promised that the unemployment insurance reform would not affect the funds targetted for the employment strategy.
The Minister of Finance remained silent on this issue in his speech. We had to wait for the tabling of the Estimates by the President of the Treasury Board two days later to find out that the funds for the strategy had been reduced to $1.3 billion. That represents a cut of $350 million compared to last year and $475 million compared to the original commitment.
The government is trying to make us believe that these cuts are compensated by supplementary funds for job training under the unemployment insurance program. In fact, the funds provided under the unemployment insurance program are only for those who are eligible to unemployment insurance benefits, which excludes all the workers who have been unemployed for a long time, as well as those already on welfare. Thus, the cuts in the funds for the employment strategy directly affect the programs for the have-nots that wanted to join the labour market again and were hoping to improve their lot.
The Budget
From now on, this responsibility will increasingly have to be borne by the provinces and municipalities, even though they do not have the necessary tax base to provide such help. This is a good example of the gradual consequences of the new programs implemented by this ultraconservative government. It is not the only example of unfulfilled promises. The fate of the co-op housing program is just as eloquent.
That program, which was originally at the experimental stage for five years, was the subject of an in-depth study in 1990 and, given its social usefulness and economic efficiency, eventually became a permanent program. The co-op groups, which were reassured as to the future of the program, undertook to submit concrete projects. Last December 17, the minister responsible for housing confirmed that the program was now permanent and he even announced a slight budget increase for 1992. Yet, in the budget speech, the Minister of Finance announced unequivocally the elimination of that program in order to make annual savings of $5 million, an amount which is 30 times less than the increase in the national defence budget. This is a brutal violation of a commitment renewed on the very eve of the budget. It is no wonder that people no longer any confidence in this government.
For Quebecers, there is another way of evaluating the performance of this government, and that is to see how it fulfils its responsibility regarding regional development. How is Quebec treated compared to other regions? Without considering the billions for western farmers and the hundreds of millions for fishermen who are in particular difficulty-I am only considering the regular budget funding to fight the imbalance in regional development in 1992, the Atlantic Canada Opportunities Agency receives $447 million, the Western Economic Diversification Department $301 million and Quebec $191 million. The Atlantic region gets 25.2 per cent more, the west 3 per cent more, while Quebec gets 18.3 per cent less.
Where were the defenders of Quebec's interests in this government when this budget was being prepared? According to any criteria of fairness, Mr. Speaker, Quebec is literally being robbed when it comes to regional development. For Quebec industries, especially those that do research and development, this budget continues to penalize them seriously. At the recent first ministers' conference, the Quebec finance minister asked the federal government to harmonize its taxation of research and development with Quebec's. Why? Because now, the federal government taxes back 39 per

March 11, 1992
The Budget
cent of Quebec government funding for companies that do research and development in Quebec.
How can that encourage Quebec's long-term economic development, when we know very well that the federal government's spending on research and development is concentrated very heavily in Ontario?
We Quebecers have only one consolation. In view of such a situation, the referendum on Quebec sovereignty in the fall of 1992 will finally give us a chance to get out of this madhouse, to take back all our taxes and to assume all our responsibilities.


Mrs. Sheila Finestone (Mount Royal):: Mr. Speaker, I welcome this opportunity to express my views on the budget that was brought down about a week ago, if I am not mistaken.

I have the privilege and honour to speak partly on behalf of the citizens and constituents in the Mount Royal riding as well as those people which one has the privilege and pleasure of meeting across this country in the role of member of Parliament. It is important for all of us to address this budget and to do it in a way that is somewhat analytical while at the same time perhaps a little philosophical.
We must be made aware of the fact that this budget we are addressing is clearly designed as a short-term budget. It is not based on the reality of the lifestyle and living conditions we find in our country, which is faced with an incredibly high rate of unemployment and is very unstable in terms of its sense of belonging, its sense of self and its place in an evolving society. The political interests of this government have never been so blatant as they are in this particular budget.
Serving that particular political interest is a great disservice to the long-term social, economic and cultural interests of this country. Let us be reminded of the fact that this government has constantly said that it is going to reduce the deficit. It has done little of that. This government has said that it is going to create jobs, jobs, jobs, and we know it has done very little of that.
This budget is deadly silent and puts nothing in place to prepare our society, our population, our workers to deal with the newly evolved society in which we find ourselves. The international world today is a globalized market, it is a post-industrial market, it is a high- tech world. We have not organized and have no industrial strategy to properly help our workers make the kinds of adjustments that are needed.
There are no adjustment measures in here. There are cuts in research and development. There are no mechanisms to aid the transition from old jobs to new, no training for the 1.5 million unemployed, let alone an attempt to address the problems facing the over two million Canadians now forced to live on welfare and the thousands of Canadians joining them every single week because there just are not jobs out there. Our economy is falling flat on its face.
This critique of what the government has done and has failed to do is just a short snapshot.
This government often says that the Official Opposition does very little except criticize, that it puts forward no new ideas or new projects. That is really not the role of an Official Opposition in this House. It is here to analyze what the government is doing and to make constructive observations on what the government is doing. In this case our party chose to make some very constructive suggestions as to what we should do just before the budget came up. As a matter of fact, at the end of January the Leader of the Official Opposition and the Liberal Party put before this government an emergency economic plan for its consideration in the creation of the budget.
It was thought about very carefully with the thought of addressing the deficit so that we would not add to the deficit in any significant way while at the same time put the country back to work. That economic and social balance is required.
As the Canadian economy was mired in the worst economic crisis since the great depression and we had not heard any specific plans or goals on the economy, to get the economy kick-started again, we put forward a plan of action in these tough economic times, in which it is so much harder for first-time home buyers to afford a down payment on a home, to help the weak housing market move forward and stop the negative spin-offs affecting the whole economy.
March 11, 1992

We also said that there were hundreds of towns and cities across Canada with infrastructure projects waiting only for adequate funding. We need a good, solid, healthy infrastructure if we want industry to come in and grow around that infrastructure and get the best of modern service. What is the point of high technology if we cannot move it after we have made the widget?
Many workers have lost their jobs permanently and lack the necessary skills to be competitive in the marketplace. This House will recognize the fact that 40 per cent of Canadians have difficulty with basic reading, writing and arithmetic and the illiteracy in our population must be addressed if we want to face that global competition and have a new prosperity, that famous new word this government loves to use.
There were two million Canadians and more 700,000 children relying on food banks in 1991. Someone has said that we have more food banks than we have McDonald's restaurants across this country right at the moment. We came up with a program, the elements of the one-year emergency plan I am going to outline as they were submitted by the Leader of the Official Opposition.
First, a 5 per cent minimum down payment for first-time homeowners. Lowering the required down payment from 10 per cent to 5 per cent would help boost the beleaguered housing industry and open up ownership to those who have never before had a chance to own their own home. The direct cost of that program to the taxpayers is zero.
Second, allow the use of RRSPs to finance first-time homes. I was a little bit leery when I first heard that but then I looked at how the RRSP was to be used. It was not the same as this government's approach which allows $20,000 each to buy any kind of home at any price. That is highly irresponsible, but our approach was very responsible. Our plan would help to stimulate the housing market, and it was endorsed by the Canadian Real Estate Association. In our plan the maximum allowable withdrawal would be limited to $7,500 which would go along with the 5 per cent down payment. The direct cost of this program to taxpayers was zero.
The Budget
Third, a shared cost infrastructure program. Funding for these projects would be shared one-third each, which is only fair and logical, between the three levels of government. The federal share would be $1 billion, and there would be a provincial and a municipal share. Half to two-thirds of the jobs created in these projects would be in construction and in manufacturing and 90 per cent of the materials required are manufactured in Canada.
Studies have shown that the net cost to the federal government, after considering increased tax revenues and decreased unemployment insurance payments and welfare payments, would be about $300 million. That $1 billion upfront cost would be funded through reduced debt service payments which would have resulted from lower than expected interest rates.
Fourth, intensified training initiatives. Canada is still one of the lowest per capita investors in training among the OECD countries. Then in this budget we went and cut anything that would lead to research and development or training.
The government must increase the scope and availability of basic skills programs and find new ways to get Canadian companies to invest in their workers. It just makes good sense to invest in one's workers. This $150 million program would be funded through the existing training programs cancelling the $20 million prosperity initiatives along the way-that road show is totally unnecessary-and reduced debt service payments. It was a very good initiative.
Fifth, emergency federal funding for food banks. In 1990 the federal government spent $67 million on advertising and millions and millions of dollars more on polling. If we redirected merely $25 million of this money to food banks we could help to provide immediate short-term relief to thousands of suffering Canadians. The direct additional cost of this program to taxpayers would also be zero. I would suggest that those were very positive suggestions. It is just regrettable that this government chose to ignore every single solitary one of them.
What did the government choose to do instead? There are many, but I just picked a few for your own information, Mr. Speaker, and for the information of my constituents.

March 11, 1992
The Budget
The government chose to kill off some key agencies like the Economic Council of Canada, the Science Council, the Law Reform Commission, the Canadian Institute for Peace and Security.
All those organizations and commissions that had generated national discussion, invited independent thought, gave different perspectives than that which came forth from the government, gave helpful ideas and helpful opinions from top researchers and top thinkers in this world and not only in Canada.
The ideas that came forward, the research that was embarked upon perhaps at times seemed to sting and to bite the government. Perhaps it felt that the hand that was feeding it got bitten too often.
Therefore, the government decided it did not like the advice it was getting. It did not like the direction in which these organizations and councils were heading. So it decided to silence the voices of dissent and took a very dangerous step in cutting out those particular councils and commissions. I would suggest that that was a very dangerous thing for the government to have undertaken.
One of the other things that was cancelled was that of the charter challenge program. Cutting out the charter challenge program is fundamentally showing lack of respect for the poorest and the most vulnerable in our society.
That charter challenge program was to ensure that we would build a body of information of jurisprudence that would enable us to have a base from which we could judge the equality of individuals, and fairness and equity in our society. To cut out the charter challenge program is an extraordinarily cynical move.
Tb prove that the cynicism was well-founded in the budget documents, we also found it passing strange to note that this government decided to renege on its obligation as directed by a court decision and is refusing to pay the $1 billion which it owes its female employees, its own employees. I would like to know what organization or what business could get away with not paying its own employees.
The government seems to feel very comfortable. Most of those workers were women. In fact, all of them were women because it was a charter case, and the government is refusing to pay them half of the salary that they
deserve. Because it did not like where it came from, it closed down the dissent. It closed down the charter challenge fund. I would say that it just indicates the kind of thinking that went into this budget.
I was curious to know how the government was planning to look after the people of this country. I indicated all the things that the government has cut and many of the things that it did not put into place, the adjustment programs which were supposed to be put into place for free trade.
We know that the free trade agreement, because of its poor negotiations, because of its bad application, has had serious negative effects on Honda, on many major sectors like magnesium and softwood lumber.
Quebec is suffering greatly under these particular challenges as is British Columbia and other parts of this country.
We need for these workforces that are being challenged and for the thousands of manufacturing jobs and the thousands of bankruptcies that have taken place- just look at the clothing industry, look at the clothing stores across this land. We need to have some kind of retraining program, some innovative programs.
I remember in my riding when the Conservatives were running against me they kept talking about the incubator programs that they were going to put in. I said: "Good, do it. I don't care. Just do something to help the people in my riding". I have so many thousands of people in my riding who are on welfare, who are on unemployment insurance. If this government were to do something that would help them, I would be the first to compliment it.
Did the government do that? No. It did not reduce the GST. It let interest rates go up one point which over the course of a year will cost about $1.8 billion in added debt costs instead of targeting-I think I am right. I have my gurus over here and they will correct me if I am wrong.
The government could have taken that $1.8 billion that will add to the debt and if it felt comfortable in doing that by raising the interest rates, why did it not use that money in a more creative way?
Why could it not have used it for social housing and co-op housing? In my riding social housing and co-op housing have been responsible for incredible changes.
March 11, 1992

Yet I have some of the oldest housing stock in the city of Montreal and it is in serious need of repair.
There are low income people. The black community tells me it has close to 45 per cent unemployment in the category of young people between the ages of 18 and 24. The multicultural community and the other visible minorities tell me they have an unemployment rate of close to 27 per cent.
I know, and the members of this House know and I do not like to say the Maslow's hierarchy of needs, but the primary needs of a family are decent housing and decent food as bottom line minimums and we are not responding to them. When we cut out social housing and co-op housing, we are cutting out one of the fundamentals in needs.
So the co-op got chopped, social housing got cut and we still have 360,000 housing units needed in Quebec. In my riding, I want co-op housing to fix up the apartment buildings and make them usable for people today.
I talk to you about unemployment which is staggering. I talk to you about the fact that because there is this recession and because many of the unemployed in my riding are visible minorities who suffer from discrimination-unfortunately, we have not evolved enough to see people with their ability and their competence, not the colour of their skin or their disability-these people need help and this budget does nothing.
This budget is a masterpiece of workmanship done by creative bookkeepers and program packagers. But if you take a look at what is inside that box, as pretty as the design might be, there is nothing of quality, there is nothing of any value that can be used in today's society.
In this House the government has talked about the new child benefits program. I am sorry I have only two minutes left, I could go on now for hours. Gee whiz.
This new child program-I cannot believe this minister decided to say, and he stood up here and he said it and then he tried to apologize for his language. I remember his language around deranger, now I remember his language about killing VIA Rail and now he is killing child care. Let me tell you that a building block to become integrated and fully acceptable on a footing of equality in this society is a family and particularly for women is proper national child care.
The Budget
Now, the government chose not to do that just to increase the interest rates. Then it has the gall to put forward a child benefit package. It rolled together family allowance and the refundable child tax credit and it said to everybody that it was going to give them something that is great, something that is new.
The government is going to deliver a new program to their door. They are going to get a cheque that they are going to love. Sure it is the same $1,020 dollars it was before, divided into 12 parts.
But the one thing that this government did not mention is a little nasty undertaking it has put into every social program, into every tax benefit program.
Ask the seniors who know what I am talking about when they got a 75 cent increase on their cheques last month. Ask them how much that purchased for them. It is called deindexation over 3 per cent. It is called a deindexation bug that this government has put into everything that is worth while which indicates that it really does not care for the kinds of social programs that we need in this society.
If we want a decent society, we need to balance the economic with the social and I would add the cultural, because in the sense of the dynamics in which we are living, the cultural is as political as the politics in the whole question of the Constitution.
I find this budget very disturbing. I find it full of trickery and flim flam. I would like to say that with the smoke and mirrors used now, do not worry, the Liberals are coming in and we will change things, I promise you that. Poor people will be the target for us too, better than the government is doing.


Dennis Joseph Mills: Mr. Speaker, I would like to thank my colleague for Mount Royal for her summary of all of the deficiencies of this budget, especially the charter challenge program.
In my riding I have heard so many complaints and concerns from legitimate groups and organizations that are concerned about this particular aspect of the budget that was cut out. I thank her for bringing this to the nation's attention.
My question has to do with her area of responsibility in the national Liberal Party of Canada and that is culture and communications. Everyone in this House would

March 11, 1992
The Budget
agree that she has done a fantastic job in supporting that vital sector of our economy.
It seems to me that this government tends to want to diminish the federal presence in this country. It tends to want to shove off responsibility. In its cutting it is not only eliminating things but it is also pushing responsibility on to the provinces.
I want to ask my colleague, does she not think that this diminished Canadian presence by not really supporting arts and culture in this budget that we have lost one of the most vital instruments this country has ever had in galvanizing us as a nation?


Sheila Finestone: I thank you for your warm comments. Yes, I would like to make a comment. I was planning to do the speech on the estimates in this light.
I tried to indicate that the constitutional perturbations that we are going through right now are as much cultural as they are political.
When I read the budget report I realized that there was a $55 million cut in one area, another $35 million cut in another area, and a third $21.5 million cut. These are all in the cultural field. The government seems to have something stuck in its head about 3 per cent. The cuts in each one of the agencies adds up to a total of over $6.5 million annually over five years, which is about another $35 million. It is even more than that actually.
The interesting thing is that this government does not seem to appreciate that many of the institutions which our government put into place and promoted were in the interests of developing the artistic expression in all fields of expression.
It is the individual artist, through his freedom of expression, through his creative and intellectual thought who enriches the whole population. Individually a collective is formed which then becomes this highly diversified and unique heterogeneous multicultural society that is Canada and that is so enriched by all these talents being added in.
The government does not seem to feel that is a good idea. It put forward policies that do absolutely nothing to enrich this country in that regard. Just have a look at the film policy it put in that was terrible and that did not go through. The book publishing policy of which it is very proud ended up being a 10 cent on the dollar investment.
I would say that the indications all along the way are although it wishes to maintain the national institutions and although there is definitely a recognition on everyone's part that culture is not just the high arts, it is everyday living and everything else, from the couch potato through to whatever else one wants to do-go to the hockey game. There is a role for the municipalities, there is a role for the provinces and there is a role for the federal government. The over-arching goal of the federal government is to enable us to know, understand and appreciate each other from coast to coast to coast. The role of the provinces is to enable the institutions and organisms that are within that province to flourish and grow, particularly museums, libraries, local arts festivals and things of that nature. Artists, by the very nature of their independence must, should and shall maintain the right to knock on every door, federal, provincial, municipal and private sector.
I hope that in a sense I have answered the question. I can only say that the $2.6 billion that we spend on arts and culture in this country, which includes the CBC, is certainly not enough. We must improve in that area. Allan Gotlieb told us that we need $47 million as a beginner in Canada Council alone if we want to do anything. What does the government do? It cuts the Canada Council I think by $260 million.


Mr. Geoff Wilson (Swift Current-Maple Creek-As-siniboia):: Mr. Speaker, it is an honour to be able to participate in this budget debate and to share this time slot with my hon. friend from Sarnia.
I would like to address this budget from the perspective of someone representing an agricultural riding in the west. I want to especially stress the concerns of people in that area, not just as they relate to agriculture but to the economy generally, their concern about the family, about fairness and taxation, wanting to see a reduction in the duplication and waste in government agencies.
At the outset it has been suggested by some in opposition that this budget does nothing for agriculture. Of course that is a complete falsehood. Not only do we have support for agriculture in terms of policies leading to lower interest rates-these not just for agriculture but for all Canadians-but we have a revised child tax benefit which is targeted to those who need it. We have a continuation of agricultural policies which we are deliv-
March 11, 1992

ering to the grains and oilseed sector this year, something in the order of $4 billion.
It is true that in the minds of some and indeed for some producers that is not enough to sustain them. In the minds of many taxpayers it is far too much. The problem lies beyond our borders. We all know that the difficulties in agriculture are caused by this disastrous trade war that has been going on between the United States and the European Community. That problem lies beyond our borders and indeed in many ways the solution will be found there as well through multilateral negotiation, hopefully through a GATT deal.
Another concern for people in my area of Swift Current-Maple Creek-Assiniboia is western diversification. Part and parcel of the concern that we have with agriculture, with our over-dependence on the export of grain, is the search for other things to do for diversification in an area which basically lends itself very much to the growing of grain for export.
In that regard we have the continuing support of the Department of Western Economic Diversification which is a $1.2 billion revolving fund that was established some years ago by this government with the express view of trying to stimulate, as it names implies, diversification in the west so that loans are made to individual and corporate entrepreneurs for new market, new product, new technology, import replacement, innovation and job creation. That program, I am happy to say, has been extremely successful in my area and many people continue to be enormously supportive of it. So support continues for agriculture and it continues for diversification.
Having said that, I want to touch on some of the highlights of this budget document as I believe people in my constituency see them. First and foremost is the taxation of families. There is an element of fairness in this because finally married couples are going to be treated the same way as those who choose to live common law. Unfortunately over the years a number of elements have entered into the taxation system which have combined to place a much greater tax burden on married couples compared to those who choose to live together. I point to the GST credit, the child tax credit, principal residence, attribution rules, the equivalent to married exemption and so on.
The Budget
As was pointed out by a number of my colleagues in the Conservative caucus, I want to pay tribute to my colleague, the member for Calgary North, for chairing that caucus which has brought forward a number of very useful suggestions.
Based on those recommendations, we do have these measures in the budget which I think will find considerable favour, not just in my constituency but across the country. Why should there be a bias away from the traditional married couple?
The second element in the taxation of families which I think is extremely important is the child care deduction. The maximum available has been increased. I will not go into the details of it, as it is contained within those documents.
The third area is the enriching of benefits for families with children. In that regard, we have a major reform of the existing system in that one monthly child tax benefit will replace the current patchwork of assistance. The family allowance, the child tax credit and the refundable child credit will be amalgamated and the single monthly payment will make the system simpler and more responsive to family needs by targeting more fairly the low and middle income families.
Child benefits will increase by $400 million a year in a cumulative way. There will be a maximum of $144 a month per child for low and middle income families and a new earned income supplement of up to $500 for the working poor as well as the increases in child care deductions which I referred to earlier.
I believe this will find favour with my constituents who have questioned for a number of years the point of continuing to pay family allowances to well-off Canadians. They will applaud the idea of taking these moneys and instead targeting them for those who are most in need.
Other areas that my constituents have indicated concern about and which I believe this budget addresses are the streamlining of government and expenditure restraint. In regard to the streamlining of government, I am happy to point out that in this budget there will be eliminated, consolidated or deferred about 46 government agencies, many of which have been referred to in this debate and contained in the documents. They are agencies such as the Petroleum Monitoring Agency, the Pay Research Bureau, the Law Reform Commission, Canadian Institute for International Peace and Security, the Economic Council of Canada and so on. As well, there will be a consolidation of a number of departments

March 11, 1992
The Budget
and agencies in order to save overhead and to focus resources.
I have just one example. Right now, there is the Patent Appeal Board, the Trade Marks Opposition Board and the Copyright Board. These will be merged into a new intellectual property tribunal. A number of advisory councils are going to be terminated. There will be 160 fewer government appointments, 500 fewer employees and savings of $22 million a year.
The government is going to continue to privatize those Crown corporations which are not serving an essential public purpose. It is going to sell surplus land at various places and properties abroad that are no longer needed. I believe these are initiatives which reflect the wishes of Canadians as expressed to members of Parliament.
In regard to the restraint of expenditures, the Expenditure Control Plan which was announced in the budget in 1990 and enlarged last year will be carried forward. As a result of the defence review and taking into account the conditions, the startling events, especially in the former Soviet Union and eastern Europe, we will be able to reduce the commitment to the armed forces and defence spending will be cut by over $2 billion over the next five years.
As well, the non-wage operating budgets of government departments will be cut by 3 per cent which will save $150 million next year and $800 million over a five-year period. This is on top of the wage restraint measures which are well known to Canadians. All in all, these are measures which answer the public need.
As well, listed in the budget are a number of actions for investment initiatives and jobs. The manufacturing and processing sectors have been hard hit. A fifth of the Canadian economy and jobs depend on this area. As a result of globalization, as a result of intensive international competition and world-wide recession there have been difficulties. The world economy is profoundly changing. The barriers to movement of goods, services, capital and information are coming down everywhere. Industry all around the world is restructuring to take
advantage of new opportunities. The Canadian work place, like others elsewhere, is being transformed.
Mr. Speaker, I realize the time restraints. I simply want to point out that the manufacturing and processing sector is one which is in intense competition with the rest of the world. We owe it to that sector to modestly reduce the income tax rate applying to it from 23 per cent to 21 per cent, to increase the rate of depreciation on processing and manufacturing equipment from 25 per cent to 30 per cent. This will put the manufacturing and processing sectors of Canada in a better position to compete, along with the imposition of the GST, which will relieve those sectors of the unfair burden of paying sales tax input costs.
These measures together will help to ensure the competitiveness of our manufacturing and processing sectors compared to those in other nations which have similar tax regimes.
I believe this is a very realistic budget for the times. It is, I think, an answer to the requests of Canadians who want to see restraint on the part of government, who do not want to see new taxes and who want to see moneys that are put out universally, targeted instead toward those who most need them.


Mr. Ken James (Parliamentary Secretary to Minister of Labour):: Mr. Speaker, it is a pleasure for me to stand in the House and speak today on the budget. I am very pleased to have this opportunity because the budget can have a very special and positive impact on the business opportunities that could come to my riding.
I want to applaud the Minister of Finance on the measures he announced in this budget. As has been noted by most everyone throughout this country, it is veiy positive. The general tone and direction that it takes is right. It proposes realistic, long-lasting solutions to our country's economic problems. It does not propose quick fixes, which is something that is very important to Canadians, and they have responded positively to that. It also represents a commitment by our government to adjust to the same economic realities which Canadian
March 11, 1992

households and businesses face each day. That is why so many people can relate to this budget.
Of course it means belt tightening, responsible management, not simply carefree, wanton spending. It responds to the desire to have a more expansive economy and a less expensive and more efficient government. We must constantly and continually work to that end.
Canadians across the land are telling us that they want a more efficient government. They want a less expensive government and they want an expansive economy that has some long-term structure to it.
In my mind the budget delivers on a number of fronts. It delivers on what Canadians have told us in our consultations across the country, including the residents of my riding. I have received letters from organizations and people in my riding of Sarnia-Lamb ton thanking me for taking their thoughts forward because their suggestions ended up in the budget.
The equation to help boost our economic recovery is really simple in this budget. The federal government is cutting spending to cut taxes. I think it was a real surprise to the opposition that we were cutting taxes. Sometimes they have a little bit of trouble responding to that but it is what Canadians are looking for and certainly we have given them a very strong message that we are doing that.
Local residents are concerned also about the spending and the size of government, as I said, and we are responding to that.
The budget outlines measures to restructure, to streamline and to improve the operations of government. The budget proposes to cut spending, just the opposite of what really has gone on in the past. It will be cut by $1 billion this year and by over $7 billion in the next five years. It is very important to Canadians to see that. It seems to me it is quite the opposite in some of the submissions I have heard from across the way today. They are saying that we should be spending more money on this or we should be spending more money on that. That is not what Canadians are saying.
Thrning to defence spending, we are going to take advantage of the peace dividend for Canada. There will be a substantial peace dividend for all of us and we will
The Budget
be able to cut the spending in defence. That is very important.
Residents in my riding like all Canadians are concerned about taxes. They do not want to pay more taxes. They are concerned about the taxes that they are paying and they understand that that comes from this increased and ever-increasing spending of government.
As I noted earlier, personal income taxes will be cut. Over 14 million individual taxpayers will enjoy higher disposable income as a result of this budget. Having higher income means there is more disposable dollars. Those disposable dollars help the economy because people have to buy if we are going to stimulate manufacturing. These reductions will put $500 million back into the hands of the taxpayers this coming fiscal year. That is very important. The total benefit will increase to almost $1.2 billion in subsequent years. That kind of injection of money back into the economy certainly will help.
My constituents looked also for a cut in the deficit. The government has made a commitment to address the deficit. Despite the economic slowdown, the government had held the deficit and will reduce it by up to $4 billion this coming year. Certainly we are moving on the right track. Canadians are saying they want this done, and we are responding.
I am particularly encouraged by the assistance to the local petrochemical and refining industry which is certainly a very important industry in my area of Sarnia- Lambton. It is a major industry there. It is a very capital intensive industry. It costs a lot of money to build those plants.
In this budget the federal government has moved to reduce the tax burden for the manufacturing and processing sectors which will include the petrochemical and refining industry. The budget proposes these important changes. The basic corporate income tax on manufacturing and processing will be reduced from 23 per cent to 22 per cent on January 1,1993. It will also go down to 21 per cent on January 1, 1994.
There is another very important one, the capital cost allowance rate. That is the opportunity for companies to write off this major investment that they make, especially in the petrochemical industry. To build a world scale petrochemical plant today costs up to three-quarters of a billion dollars and takes up to two years. Certainly they

March 11, 1992
The Budget
have a very heavy capital investment and they want to be able to have the capital cost allowance. They did want it changed.
I had representation made to me by constituents who represent the companies in my area. They said to me: "If we are going to have new world scale plants built in the Sarnia-Lambton area to produce world scale production for North America then the after tax situation needs to be changed. We would like to see some change in the capital cost allowance".
I want to let my constituents know, and also you, Mr. Speaker, and my colleagues in this House, that I took their representations. I took representations from Canadian chemical producers and I made my representation to the Minister of Finance. I indicated that this was the kind of change we needed to attract investment, to have the write-off. I indicated that the capital cost allowance had to be changed to a higher rate. The Minister of Finance listened and responded by including this in the budget. I want to thank him for listening and responding. That is as tremendously important as it is for a lot of other areas too, but especially in the high capital intensive industries like we have in Sarnia-Lambton.
Additionally a couple of other important areas were added to help with the building of new world scale plants in my area. There is a reduction in the tax rate that will help us, but also we have the reduction of the withholding tax rate on direct dividends to 5 per cent. This will also encourage investment.
A day or so before the budget was announced the government was to reverse the order of the credit currently provided for large corporations tax especially in part VI, the tax on financial institutions, the corporate surtax and income tax. That is another complicated tax. Those four areas will mean substantive changes to after tax situations for investments by multinationals in the petrochemical and refining industry.
We also need the provincial government to assist us in this area. We are saying that we have made these substantive changes. We are asking the province of Ontario not to move into that tax room. We are also saying: "Hey, you come on board and give us a hand.
Make some changes now in the after tax situation". I think Premier Rae is hopefully interested in working for this. Then Sarnia-Lambton and other areas-of course I am particularly interested in Sarnia-Lambton-will attract new world scale petrochemical plants to be built there. There is a major plant in the offering and we are competing with Texas for this plant.
A combination of the kinds of changes we have made and the after tax changes that hopefully the province of Ontario can make will provide with us a greater opportunity to have investment, which means a world scale plant, which means jobs in Sarnia-Lambton, jobs for Canadians.


Mr. Steve Butland (Sault Ste. Marie):: Mr. Speaker, I certainly wanted the debate to go forward until I heard the member suggest that Bob Rae should lend the government a hand when in fact the federal government slaps the provincial government. The member would know that over the course of three years the transfer payments will be reduced by $10 billion. How does he anticipate lending a helping hand when that kind of reaction from the federal government to the provincial government is in place and has been in place with the cap on CAP and the cap on transfer payments?
He would know because I am sure it is happening in his riding as well as mine that hospital beds and hospitals services are being reduced. Teaching staffs are being hit right across the board. How can he possibly suggest that the provincial government should lend a hand to the federal government when the federal government is battering provincial governments?


Kenneth Albert James: Mr. Speaker, I am very surprised by that statement. I do not think Premier Rae is reacting in that manner. Certainly my provincial colleague in Sarnia who is a member of the NDP is not. We are acting as a partnership in moving ahead to do the kinds of things to attract investment. The member may want to be partisan, but my colleague and partner, the MPP for Sarnia, is not reacting in that way. He is working very hard, as I think the province of Ontario will be, not to change and move into the tax room but to look at ways they can be helpful in working with the federal government to attract the major kind of build we are talking about in Sarnia. They are some very major builds that will provide jobs.
March 11, 1992

The province of Ontario is as interested as the federal government in providing jobs. I would think the member, though I suppose late in the day, might want to get into some partisan rhetoric. Knowing him personally I am surprised at that statement. He can make it, but I do not think he is speaking for the Government of Ontario because I would think that its thinking is somewhat different from that.


Mr. Len Taylor (The Battlefords-Meadow Lake):: Mr. Speaker, today I welcome the opportunity to speak on the budget introduced by the Minister of Finance in this Chamber on February 25, some 15 days ago.
We have now had ample time to review, to analyse and to discuss the provisions in that budget and what it means to us and to our constituencies.
I have heard during the debate in this House and in conversations I have had in my constituency that the response to the budget is not very good. The message from northwest Saskatchewan which I represent is very simple and I can relate it very quickly to members of this House.
The government must be aware that regional resource based economies like ours in Saskatchewan require greater attention than that which it is receiving at this time. The problems in the national economy have a greater impact on the west and therefore the root causes of the national problems, that is the GST and the free trade agreement, must be addressed and they have not been addressed in this budget.
If we scrap the GST and get out of the FTA we will all be better off. That is a message that comes from my constituents in The Battlefords-Meadow Lake. I have to mention that the government opposite had better prepare for greater agricultural support during 1992-93. I am glad that the Minister of Agriculture has indicated to me his desire to listen to my words today.
As I have already said in this House, this budget does not address the financial problems faced by agricultural producers on the prairies. The uncertainties that exist in the countryside and in the world marketplace will lead to further calls for agricultural assistance during 1992. The government is foolish to think that it can avoid programs like the interest-free cash advance and deficiency assistance programs this year.
The Budget
Earlier this week, in fact on Monday, I made a brief statement in the House of Commons concerning one small provision in the budget, that is the provision relating to the removal of the excise tax on the ethanol portion of blended fuels. I want to take half a minute to expand on the comments I made on Monday, elaborate a little on the statement I made, and indicate my support to the Minister of Agriculture and others on the government side for the moves that have been made on ethanol.
I want to do this because I am quite impressed with what I see as the future for ethanol in Canada. It is a future that can help provide for a cleaner environment and greater economic benefits for smaller, rural based communities like those that make up my constituency.
After the introduction of the budget I had great pleasure to tour the Poundmaker ethanol plant and feed lot at Lanigan, Saskatchewan with a group of people from Big River and Debden, Saskatchewan, two communities in my constituency. During that tour we learned a lot and recognized that with the right economic climate similar plants could be located in numerous communities in Saskatchewan and across Canada.
The advantages are almost too numerous to mention but in a moment I will try to outline a number. Ethanol is not a new product. It has a number of useful purposes, but what we are most interested in at this time is its use as an automotive fuel enhancer.
Some members in the House today may recall that when Henry Ford designed the Model T he had expected it to be powered by ethanol, a fuel made from renewable biological materials. However gasoline powered engines took over and ethanol has been an industry trying to get off the ground ever since. Its time has come and I think it is time we all recognize that Canada would be well advised to get into the act of producing ethanol immediately or risk losing the opportunities to the Americans.
Already dozens of ethanol producing plants have sprung up in the United States. Some state legislatures have even passed bills making ethanol blended fuels mandatory. As a result ethanol blended gasoline now accounts for about 9 per cent of total U.S. gas consumption.

The Budget
The use of ethanol blended gasoline fuel has been actively encouraged in the United States because it helps to reduce U.S. dependence on oil imports, that is a 10 per cent blend acts as a gas extender. Ten per cent ethanol means that there is 10 per cent fuel oil left over for use elsewhere. It addresses a number of environmental concerns including, first, emissions and, second, it lessens the environmental hazards of fossil fuel exploration, extraction and transportation. Also, the U.S. is actively encouraging ethanol production because it provides a market opportunity for surplus agricultural crops.
The Poundmaker plant that I visited, for example, uses a starch heavy, not protein heavy, grain as its stock, while other plants in Canada will use corn instead of wheat for its feedstocks.
The value of ethanol as a fuel increases every day because of the world's concern for the environment, the health of this planet, its people and its wildlife, and the need to seek alternatives to the megaproject mentality that has limited job opportunities for people in this country for too long. This means there are sound economics as well as sound environmental reasons to get into ethanol production. As I see it, there could be six basic economic reasons to support a change to ethanol.
First, the high octane-blending value of ethanol makes it an excellent replacement for the octane enhancers with known or suspected health concerns, now widely used in Canadian gasoline following the removal of tetra-ethyl lead by legislation here in Canada. Ethanol can substitute for aromatic hydrocarbons, which includes MMT, a compound containing manganese which, like lead, is a potential neurotoxin and accumulates over time in the environment. MMT already is banned in the United States.
Second, the Government of Canada projects that by the mid-1990s Canada will be importing about 550,000 barrels of light crude oil per day by tankers to meet transportation fuel needs. This is even with the added supply to be created by the new megaproject developments. This importation will cost about $5.5 billion a year, assuming a global crude oil price of about $27 a barrel due to increasing dependence on OPEC imports.
Third, the cost, financial and environmental, of megaprojects is too great for enhancing Canadian domestic supplies of light crude oil. Fuel ethanol compares favourably, in both capital and operating costs of production, to Hibernia and the tar sands projects, which can only proceed with a lot of government assistance.
Fourth, the abundant supply of Canadian grain is available for fuel ethanol production and is renewable, endlessly renewable.
Fifth, the by-product of ethanol production from grain, which is a high-protein livestock feed ingredient, could be used to replace Canadian imports of high-protein feeds.
Sixth, and last, the effect of ethanol additions to gasoline on environmental quality is incredible. Its potential to reduce net carbon dioxide emissions into the atmosphere is considerable.
There is great concern about global warming in the country. Among the greatest contributors to the problem of the greenhouse effect is the burning of fossil fuels. By adding ethanol to those fossil fuels burned in automobiles, the amount of carbon released into the atmosphere is reduced substantially.
I am a member of the environment committee's subcommittee on acid rain. Because we are looking at air qualities and emission problems, I will be recommending that our committee take a look at ethanol production and its use during its work over the coming year.
I know you are signalling me that my time is almost up. I want to add in closing that the budget's removal of the excise tax is a step in the right direction but the journey is far from complete. There has to be a further federal commitment to the ethanol industry, and that includes a commitment to promote the product as well as to legislate in the product development.


Mr. Greg Thompson (Carleton -Charlotte):: Mr. Speaker, the obvious question to the member is simply this: After listening to him, I have come to the realization that he does not have a whole lot of criticism of the budget introduced February 25. Is the member willing to support our budget based on his observations, particularly in his own riding? Obviously there are some positives in this budget for his riding, his part of the country. That is the question.
March 11, 1992


Leonard William (Len) Taylor: Mr. Speaker, in order to address the budget adequately, I need about an hour and a half of the House's time to discuss all of the things that I find wrong with the budget.
What is very important to me are the two lines the government put in an otherwise very long and difficult budget. Two lines indicate a desire to move in the right direction as far as energy and the environment is concerned and relating to the production of ethanol.
If I can take one moment of the House's time to add that I do believe that the government should be actively involved in the legislative process regarding ethanol. A mandatory 10 per cent blend is part of a legislative process in the United States. I believe this government must take the same steps here in Canada. In fact, we should see the government legislating mandatory blends for Canadian ethanol production here in Canada. We would see the potential of creating up to 3 billion litres a year of ethanol if we were to ask for 10 per cent of the 30 billion litres of fuel oil consumed in this country per year.
I will be actively asking the government to consider moves in this direction.
The government's budgetary moves were a signal to the industry that the government wants to take steps in this direction, a signal to the industry and the country that ethanol is a product that should be supported. I want the government to understand that if it takes steps to assist the communities involved in ethanol development, and the industry itself, it will have support from this comer.


Mr. Rene Soetens (Ontario):: Mr. Speaker, I would also like to ask the member a question in light of the very positive comments he made about the benefit to his riding of this tax or of this budget and the clear benefits that will occur to many of the members from Ontario who are part of his party that represent automotive ridings.
There is a reduction in the income tax for automotive companies, a reduction in the capital gains or capital cost allowances, the reduction in the dividend withholding tax, all of which are very good employment creation ideas for NDP-held ridings in Ontario. I wonder if in light of the fact that it is good for his riding in Western Canada and in Saskatchewan and it is good for all his colleagues' ridings in Ontario if he is now going to rise
The Budget
when the occasion happens to vote on the budget to support the budget as he should, based on all of the good things that are in it?


Leonard William (Len) Taylor: Mr. Speaker, I cannot give the hon. member the answer which he so desperately wants to hear.
I am signalling support for a small measure within the budget that I otherwise find distasteful and most difficult for us to accept. I indicated there will have to be measures taken like the interest free cash advance again this year for farm producers in Saskatchewan and elsewhere. I have indicated in my response on this ethanol matter that community-based assistance is the type of economic development assistance that the government must be involved in. When producers on the prairies or in Ontario get together to form co-operatives to develop ethanol plants, the government should be there to help them with the start-up costs to ensure that the benefits from such production come back to the communities and support community employment activities.
These are the kinds of things the government should be moving on to further the development it has started in those couple of lines in this budget.


Steve Butland: Mr. Speaker, first of all, I want to congratulate my colleague for the excellent lesson on ethanol.
Obviously he has a tremendous amount of expertise that he wants to share with the members opposite. I think his philosophy is that if you have nothing positive to say about something do not say it.
I would like to follow his philosophy but I did have a few negatives written down so I may have to be slightly negative as my time wears on. I do want to start by being positive. I am going to quote several excerpts from a speech given about a month before the budget came out. I must admit that I am going to quote out of context.
"We must have a short-term plan to address our immediate needs and heat up the economy. We need a long-term plan to keep the combustion going and to guarantee our place in the world economy". Skip a paragraph. "Further, for the untold number of hardworking, responsible workers and businessmen and women who have been forced to go without needed bank loans-" I will talk about banks later on- "the banking

March 11, 1992
The Budget
credit crunch must end. I have directed cabinet departments and federal agencies to speed up pro-growth expenditures as quickly as possible. This should put an extra $10 million into the economy in the next six.months and our transportation bill provides more than $150 million for construction and maintenance projects that are vital to our growth and well-being. That means jobs building roads, jobs building bridges and jobs building railways. I said my plan has two parts and it does, and the second part is the heart of the matter for it is not enough to get an immediate burst. We need long-term improvement in our economic position".
These are excerpts from a speech made by President Bush. I only wish that the Prime Minister and the finance minister had used some of the content from the President's speech as they so often do. They are wont to follow the President on a very regular basis. This is one time they did not and perhaps they should have.
To continue in a positive way. This is not a bad budget. It is not a bad budget in good times, but these are bad times, terrible times. The "R" word is almost a "D" word. It is a budget that has a little bit of something for just about everybody. I call it a tinkering budget. You tinker here with the system, help somebody over here and take away over here. However, the system and the country need an overhaul. There are 1.5 million people unemployed, personal and business bankruptcies are at record levels, welfare case loads were up 32 per cent in Ontario in January 1992 compared to 1991, 32 per cent. The number of individuals collecting UI in November 1991 was 486,000, up 23 per cent over November 1990. The number of individuals who have exhausted their UI is 32,500-this is just in Ontario-up 111 per cent over November of the previous year. One and three-quarter million people ate at food banks in this country in one year.
How could one continue to be positive? I salute the member for The Battlefords-Meadow Lake. He avoided the budget because it was so difficult to proceed in anything positive. What will this budget do for those people I have cited? Absolutely nothing. The transfer payments from the federal government to the province of Ontario, one of the so-called have provinces, the cap on CAP and the EPF transfer payments will result in a $10.5 billion reduction over three years.
It is a pass the buck budget but there are no bucks being passed. There was nothing passed to the provinces. What do the provinces have to do? They cannot pass the buck to the municipalities. The finance minister has the gall to lecture Premier Rae saying: "I hope he follows our path". What does he suggest we do? Close the hospitals completely, cut out the education system? He is saying: "We are practising restraint and we want you to follow our lead". Does he want to practise what John Engler has done in Michigan? He basically cut the welfare system and said: "People get out on the streets. Live in tents. It is not a problem".
Even one of those folks who is a supporter of John Engler, the governor of Michigan, says: "Well, pulling the safety net probably will not be a money saver". He pulls out a study from a brief case and throws it on the table. He points out research that says: "Five per cent of those cut off welfare, if they end up in prison and another 5 per cent end up in mental institutions, the state will pay out more than it saves in welfare payments". In fact, says Hollister, an aide of John Engler, in a steady voice: "Cutting people off welfare was not an economic decision, it was an ideological decision. It was an abandonment of the social contract". Because the federal government abandons the social contract it then says to the premier of Ontario: "Do the same thing. It does not matter about these people, allow them to live in tents. Cut back medical services in your community".
I am sure that all of our communities are suffering those medical cutbacks. Staff is being cut in hospitals and schools right across the country. Is that acceptable? I think not. That is what Canadians in my constituency are telling me. The Prime Minister and the finance minister have passed that buck but they have not passed the money. They have soured federal-provincial relations, federal-Ontario relations when they should not be doing so. They should be begging to co-operate. The government should be promoting a spirit of co-operation rather than saying: "Follow our lead, look what we have done, look at the wondrous things we have done".
I suspect that the provincial government will not follow the federal government. The federal government is crossing this country as it is wont to do every month or so with a prosperity agenda. The committee came to my city, and I believe there were 12 people there. It described how to become more competitive: "You know, all we have to do is retrain our people. We have to retrain them. That will make us more competitive". What did the government do in the budget? It said that
March 11, 1992

we have to reduce job training by $100 million. Now that will make us more competitive. It should have taken a positive step because nearly everyone in this country- and if its members are indeed consulting those in their constituency the government would have invested in the infrastructure of this country.
Several years ago the price tag was $15 billion. It is now $20 billion. I hope we do become prosperous again-and I suspect we will. I long for those days and I am sure all Canadians long for those days. If we do not have the infrastructure to support a prosperous economic situation-will our infrastructure be able to support it? Is it possible? A hundred and some communities are still pouring raw sewage into the waterways of this country, is that acceptable? If we did not do it in good times we are not going to do it in bad times. When are we going to do it? There was a great belief that this was the time to do it, everybody was onside and prepared to participate. The only non-participant was the federal government.
This budget is a maze. I think it is too positive to say that it is smoke and mirrors. It is a maze that leads from one spot to another. On one hand the government will do something for you and on the other hand it will take it away. It has increased the education tuition credit for students and parents from $60 to $80 a month and in the same breath it removed the 60-day grace period to pay back student loans which existed prior to the budget. Give with one hand, take with another.
Disability credits have been increased for those who are disabled in this country. Give with that hand. With the other hand cut out co-op housing to house disabled people. The family allowance has been removed. The government says: "We are going to increase your child tax credit". If you work it out, and it has been worked out by Mr. Shiffrin, The Toronto Star social affairs writer, the amount that is given will amount to the very same amount. Those most in need of it will get less. It is the working poor who will be helped and we praise that, but again it is an attack on universality.
I want to speak for the last 30 seconds on banks. The government has done something for small business, that
The Budget
is again a positive. However the banks in this country have a tight money policy. George Bush says they have it in the United States but the banks in Canada make the banks in the United States appear like Mary Poppins. They are squeezing the small businesses in this country.
If any member goes out in their constituency and asks, that is exactly what small businesses will tell you. Banks are not only squeezing, the small businesses say: "I will not talk to my banker because I am afraid". The budget is terrible. I rest my case.


Jim Karygiannis: Mr. Speaker, I have a very short question to ask the member.
Will he not agree with me that this government is going across the globe spendthrifting? It is going across the globe saying to everybody: "We will give you this, we will give you that". The Prime Minister is acting like he is a wondrous human being. He went to Paris and he let them have a drawing for $1 million. Will the member not agree with me that charity starts at home and this is where we should look after our children, today and not tomorrow?


Steve Butland: Mr. Speaker, it may have begun as a simple question but the answer could be very complex. I think that all of us in here believe that charity does begin at home, but we cannot ignore charity overseas.
For instance, if the banks forgive loans to Third World countries we can be assured that they have already received the principal on those loans. They may be forgiving the interest. Do not worry, the banks have gotten their share. Also, they are able to sell off this Third World debt.
I suspect I could go on for a long time with that answer. It started out simple but the answer is complex.


Gregory Francis Thompson: Mr. Speaker, I wanted to comment on the member's reaction to the transfers to the provinces.
I would like to debate that point and that point only in relation to the figures. He represents one of the richest provinces in Canada, that being Ontario. I want to

March 11, 1992
The Budget
examine the figures in the last number of years of the transfers from the Government of Canada to the province of Ontario.
It is interesting to note that the average annual increase from 1984-85 to 1992-93 in growth of those transfer dollars to Ontario has been an annualized one of 6.2 per cent. We are looking at a total increase from 1984-85 to 1992-93 of $3.7 billion.
On a per capita basis it is a transfer of approximately $283.1 cannot see the logic in his argument. I know he is projecting ahead to what they might or might not get, but those are merely projections. The truth is that we are going to continue to increase our support to the provinces.
I hope the member will address that.


Steve Butland: Mr. Speaker, I would be happy to address the problem.
I think the member is, as we all do, using statistics to his own advantage. I suspect I may be guilty of that at times too. However he has to get real. Everyone keeps saying that Ontario is a wealthy province.
Any members from Ontario will tell you just the opposite. Sault Ste. Marie is one community that is desperately hard hit. He throws statistics at me but the number of people who have exhausted their UI in the past year, just over the past 12 months, is up 110 per cent. That is a staggering statistic.
He throws these global figures at me and asks: "How do you react to these hundreds of millions of dollars in increases?" That may very well be true, but it does not begin to address the real problem. That is the problem with the members opposite. They are in some imaginary world saying: "We are listening to our people. Do you know what they are telling us? We are doing a great job".
That cannot possibly be true. I know the member is a very sincere individual but I think he is trying to deceive the House. I retract that, Mr. Speaker.


Miss Deborah Grey (Beaver River):: Mr. Speaker, I rise today to convey my sympathies to the Minister of Finance on this recent budget. I can only imagine what a horrendous job it must have been trying to repair an economy that unfortunately his own government has virtually destroyed. No doubt the minister has done his best in trying to produce an effective budget. I cannot
fault him for that. But as the Canadian Chamber of Commerce has said: "The budget falls short; it is simply not good enough". The chamber could not be more correct in its analysis.
This budget attempts to be all things to all people and in so doing does nothing for anyone. In short, this budget is a non-event, there is no significant attempt to either reduce spending or stimulate the economy.
In a recent Maclean's article the Minister of Finance has said: "If the Reform Party supports the budget that is fine. I guess the important thing is that we (meaning the Conservative government) are here and we are able to implement these things".
First let me say unequivocally that the Reform Party cannot support this budget. Second, I would like to ask the minister what he means by being able to implement these things. What things? Is he talking about implementing the so-called spending cuts mentioned in the budget speech?
Are Canadians supposed to be impressed that the government has cut spending increases only, not actual spending? Canadians are looking for real reductions in government spending, not simply a reduction in the percentage increase. In fact, the government's program expenditures are forecast to rise by 4.7 per cent in fiscal 1992-93, well in excess of the 2.7 per cent inflation rate we are experiencing now. This represents a real increase in spending, not a reduction as the government would have Canadians believe.
It would be unparliamentary, of course, that I cast aspersions and say that the government, perhaps, is lying to Canadians about spending reductions. So I could not and would not say that. But how can Canadians have any confidence that this government is serious about deficit reduction when spending is actually on the rise. This government's projection for 1992-93 expenditures represents a real increase of $4.1 billion or 2.6 per cent.
The 1991-92 deficit is nearly a billion dollars higher than previously forecast and the 1992-93 deficit, now forecast at $27.5 billion, is also significantly higher than had been predicted in earlier budgets. What we have in effect is a government that every year paints a picture of declining deficits and every year fails to deliver on this promise.
March 11, 1992

How much longer can Canadians tolerate the failure of this government to actually reduce the annual deficit? Not much longer, I would argue, especially when the accumulated total debt is approaching half a trillion dollars. That is right, Mr. Speaker, half a trillion dollars, edging in on $500 billion that we are in debt. It is time for the government to take action on this economic crisis before it is too late. The government's tired excuse of "we will get the deficit down next year" simply will not cut it with Canadians any longer.
Part of the rationale for the government's deficit reduction projection is its overly optimistic economic forecast. While I have every confidence in the entrepreneurial spirit and work ethic of Canadians, I have serious reservations about the government's forecast of real GDP-GNP growth achieving 4.5 per cent, as we have seen in the budget papers for 1993.
This is a rather bold prediction and Canadians can, therefore, only hope the government is accurate in its analysis. If the government has over-estimated this GDP figure, inevitably it has also over-estimated its ability to reduce the deficit. Moreover the minister has built his budget on the foundations of a very low inflation rate. If he is wrong, if the inflation rate increases and if high interest rates follow, the foundations will give way and the whole structure will collapse.
The government expects this phenomenal growth to be led by a strong increase in residential construction and consumer spending in response to lower interest rates. But what has the government done to encourage construction and consumer spending? The short answer is very little.
Under pressure from the Liberal Party to accept its one and only idea to stimulate the economy, the minister threw in a token homebuyer's plan that would allow Canadians to use existing funds from their registered retirement savings plans to buy a principal residence. Under this plan, individuals may withdraw up to $20,000 to buy a home and would have to repay this amount within 15 years. Is this the best the government could do? Or should I say is this the best the Liberal Party could come up with to encourage growth in the economy? Perhaps it is just a bad joke.
The Budget
I do not want to condemn the government for absolutely everything that it has done. There were some positive moves in this. But one does have to answer the question, does anyone in his or her right mind think that this plan is going to pull our economy out of the recession. I cannot think of anyone who has been putting money into their RRSP in anticipation of a magnanimous gesture by the government.
It would also seem to me that anyone who has $20,000 in their RRSP fund more than likely already has a principal residence. The converse of that is true as well, that young families that want to buy a house and are prepared to do so do not have a lot of savings in their RRSP. I wonder where this great infusion of capital into the housing sector is supposed to come from.
The most disturbing element of this proposal, however, is that the government is telling people to use their retirement income to buy a home in what is already a very uncertain market. The government has already mortgaged the future of Canadians through the public debt and now it is asking them to mortgage their future privately as well through their RRSP plans.
There is absolutely no guarantee over this 15 year payback period of what interest rates will be and I think people are very nervous about taking that money which was safe in their RRSP fund out to put toward a mortgage.
Perhaps the government believes that consumer spending will increase because of an insignificant symbolic personal income tax cut. The Canadian Chamber of Commerce has concluded, and I quote: "That small personal tax reduction and the provisions to encourage business would be too small to have a meaningful impact in stimulating growth, yet large enough to call into question the real strength of the government's commitment to deficit and debt reduction."
According to the government's own figures, a single taxpayer earning $30,000 will receive a tax reduction of $76 in 1993.1 wonder if this single taxpayer is going to be terribly excited in receiving this generous tax break after having been hit by the GST last year.
What the government is effectively saying through this measure is that the GST is making them so much money that a tax reduction of such minuscule proportions will not adversely affect revenues. The government is taking a dollar from every Canadian in the form of the GST and

March 11, 1992
The Budget
then handing them back a penny saying: "Here is your tax reduction".
The government has also neglected to mention the fact that personal income taxes as a percentage of total federal spending have increased from 41.2 per cent in 1984-85 when this government took office to 47.7 per cent in 1992-93. This indicates that more and more the government has been shifting the burden of federal spending on to the backs of the middle class.
This so-called tax break is much like the government's attempt at spending reduction. These policies are designed to have Canadians believe that taxes and spending are actually being reduced but in reality both taxes and spending are actually increasing.
To be entirely fair to the government, however, as my colleagues have been saying, there are some good things in this budget for which we need to give them credit. One of the areas that I would like to give the government credit for is adopting the new child benefit. This new benefit finally targets child supplements more fairly to low and middle income families. The government must have been reading our Reform Party polity book where it states: "The Reform Party supports greater focusing of social policy benefits. We prefer to target benefits on those who need the help and do so in a rational and compassionate manner."
It is about time the government woke up to the need for this type of efficient method of providing for social benefits rather than clinging to the NDP dogma that allowed high income earners to receive family allowance cheques regardless of their need. Sometimes I wonder if the New Democrats really mean what they say about helping the poor. Why do we not target benefits to the poor rather than having those of us who are very comfortable in our income bracket still collecting government money when it is totally unnecessary?
At any rate, the government is certainly moving in the right direction with this new consolidated child benefit.
My only question is this. If this new benefit is to be streamlined and more effectively focused as the government says it is, why will it cost taxpayers an additional
$400 million per year? I thought the government said it was reducing expenditures, not increasing them.
Besides this new child benefit, the government has also attempted to appropriate other Reform Party policies in this budget and nobody says it more clearly than the press because they know what is going on and it is very interesting to read what some of their articles say. I say attempted because the government has not really done the things that it says it actually has. Ihke, for example, this budget's privatization initiative or streamlining as it is referred to in the budget speech. The government is obviously gearing up for an election so that when the time comes it can go to the Canadian public and say: "Oh look, the Reform Party has nothing on us. In this last budget, we wound up, deferred, merged and privatized 46 government agencies, boards, commissions, corporations and advisory boards."
This all sounds very good on the surface, but when you look a little closer at what they are talking about, you really begin to see how insignificant many of these agencies actually are. CN (West Indies) Steamship Limited is a good example. Apparently it hardly exists except on paper. I ask then, how can the government "wind up" something that actually wound up a long time ago and then go back to the Canadian people and tell them about the government's great efforts toward privatization.
The real question should be this, why is CN (West Indies) Steamship Limited still on the books in the first place? Are Canadians supposed to be impressed that after seven and one-half years the government has finally awakened to this fact. I think not. I am quite sure Canadians see through this transparent budget and the veil of responsiveness to the Canadian people, but unfortunately, a veil only.
To conclude, let me say this. The government has promised spending reductions. In reality, we have seen spending increases. The national debt is now approaching half a trillion dollars, as I mentioned, and this budget does almost nothing to deal with it. The government says: "We are cutting $1 billion.".
Neither has this government done anything to actually stimulate the economy. The best it could come up with unfortunately is a half-baked scheme for a limited
March 11, 1992

number of people to use their RRSP money for buying a house.
Unfortunately, this budget provides no leadership whatsoever and that is what Canadians are crying out for more than anything else. Perhaps the government would now consider seriously stepping aside so that real leadership may be gained and the people of Canada given a budget that they can actually live with and be given some optimism as we move towards the 21st century.


Hon. Bill McKnight (Minister of Agriculture):: Madam Speaker, I note my hon. colleague's suggestion that leadership should be given. I listened intently through the whole 10 minutes of my colleague's address. I did not hear one suggestion where reductions should take place.
I did not hear a criticism in specifics to the increase in government expenditures in agriculture. I know her party's policy is an over-all reduction of 15 per cent of all government expenditures instead of an increase in agriculture and instead of an increase in child benefits of some $400 million, which she criticized. I would like to ask her what she would have cut to address that $400 million. What would she would have reduced beyond the 15 per cent to have an increase in agriculture, an increase in the other expenditures to make up for the reduction in government income with lowering taxes. That has to be a benefit to the people of Canada.
The other thing I would ask the hon. member is if she could identify what her party would have cut and what her party would have put forward if it had the opportunity to lead.
I know her leader has turned down six invitations to appear before the Standing Committee of Finance to explain this presto magic that he is prepared to work for the Canadian public. I will sit down now, Madam Speaker, and allow the member ample time to explain the cuts that the Reform Party would put in place in old age pensions, old age security and assistance to agriculture and other economic forces in the country.


Deborah C. Grey: Madam Speaker, without sounding facetious, I think as we look through these budget papers, I would recommend probably that the very first place the hon. Minister of Agriculture could make a very significant cut, not simply a 5 per cent cut, would be to his ministerial salary. That is to take place on April 1.
The Budget
The budget also said that the government would cancel all first class travel seats for members of Parliament and senators. I understand from some of the airline companies that most of those first class seats are actually being taken out on all domestic flights.
I think that is probably a good place to start. I am not sure whether there are first class seats any more on flights back and forth to Saskatchewan. I have not seen any for a very long time on aeroplanes moving in and out of Alberta at any rate.
Those are the types of things that people in the Canadian public are looking at. He asked me about specific places where we can cut. There will be nothing in our blue book that will say there will be 15 per cent cuts across the board. This minister unfortunately is going around the country saying: "There we are. The Reform Party is going to take grocery money away of seniors. It is going to cut hospital beds" Nothing is further from the truth.
In areas especially with agriculture that this minister asks specifically about, we believe agricultural input costs must be lowered. We are talking about lower interest rates. I give this government credit that it has gone down somewhat. There is still a fair spread. We are looking at somehow coming up with negotiations with the GATT that we do not necessarily need to be talking about domestic agricultural policies when we are at the GATT negotiations. We are looking forward to seeing what this government is really going to do at the GATT negotiations rather than flying from Mexico over to Europe and saying: "This is how we are going to address this problem".
We believe that this federal government also specifically could get rid of many Crown corporations. Again, this has been a start in this budget. When we are still running a $27.5 billion debt in this country, it is simply not good enough.
The Canadian public wants equality of sacrifice across the country in the agricultural sector as well as in the public sector, as well as people in the private sector. I am a teacher by trade and I know that many teachers whom I speak with would stand up in this Chamber if they were here with me and say: "I would take a cut across the board if I knew that every single Canadian, if every

The Budget
sector in Canada were to say that they are serious enough about this debt situation".


Some hon. members:: Oh, oh.


Deborah C. Grey: These people may laugh, but I belong to a teaching union. Unfortunately here we are having a problem, but I believe that every sector if they were hit could write on note paper: "We are willing to take a cut right across the board so that there would be equality of sacrifice in every sector of Canadian society". Those are some specifics. I know that the agricultural community needs to deal with this.
We are looking forward in the long term. Farmers are not keen about subsidies. They do not want government handouts. What we do want to make sure is that we are able to see equality of sacrifice in every sector in society. It is unfortunate that I hear the hoopla from the agriculture minister. It sends a very sad signal to every community across the country that really cannot afford to be laughed at any longer.
We are running $30 billion deficits every year. Even teachers are not pleased with that. They understand how important it is to get this debt situation under control. They are teaching the young people who are going to be burdened with such an incredible debt load as we move toward the next century. I do not think anybody would have that.


John Paul Manley: Madam Speaker, I listened to that exchange with some interest. Of course, here in Ottawa the secondary school teachers are about to strike, looking for 11 per cent over the next two years. Perhaps the trustees ought to contact some teachers in Alberta and ask them to come down.
I am distressed because the Reform Party does present itself as a different kind of political movement. I listened to a very clear question on what the Reform Party intends to cut and I heard a very long answer containing nothing. There was no explanation of where these cuts are going to fall. Of course, that is the easiest way of avoiding a question known to humankind.
I would be very interested in hearing whether the member for Beaver River would answer two very simple, very clear questions. What government spending specifically does the Reform Party intend to cut and, second,
what does the Reform Party say about the supply management systems in Canada, in particular the marketing board system that exists in dairy and poultry in this country? Are they for it or would they dismantle it, yes or no?


Deborah C. Grey: Madam Speaker, I am always interested. I have a great deal of respect for my colleague from Ottawa South and in his critic's position he will be interested as they are riding rather highly in the polls right now. What is going to happen if he were for instance to become the next Minister of Finance? He would stand up in his place right now and say: "I can't tell you specifics until I look at the books". That is most interesting. That is exactly what has happened as they have been sitting in opposition for so many years now. He gets very tired listening to the government carry on about "you Liberals left us with this incredible debt", and so on and on it goes.


Some hon. members:: Oh, oh.


Deborah C. Grey: Madam Speaker, we are hearing great shrieks across the way again. I have already said that I think that supply management is an area that is domestic agricultural policy and we are looking at international disputes right now. I believe that many people in the supply management industry would say in all honesty right now that we do not want unfair subsidies. We are looking for very comfortable methods of making a living. People who are continuing to fight against this whole idea of supply management are seeing people at a level who are saying: "We are really looking after you". People in the supply managed industries are saying: "We want a fair shake and we do not want unfair government subsidies". Therefore, I think it would be very interesting.
As I spoke with people who came here for the great rally a couple of weeks ago, they gave very good representations. I think when we look at all agricultural industries, moving down the road, not next Thursday afternoon but down the road, to eliminating and working out subsidies so that we would be on a more fairer playing field with other countries, that is what is important.
I also have to say that a Liberal colleague was dying to get his speech in here tonight and asked me if I would take a shorter amount of time. I certainly was prepared
March 11, 1992

to do that but I have to apologize to my friend in the front bench here if he does not get a chance to speak.


Madam Deputy Speaker:: There are 45 seconds left for questions.


René John Soetens: Madam Speaker, I will make mine very quick, because I know the member has been a member of Parliament for about the same period of time I have, all but for a few months. We have the lowest deficit that we have experienced since we have been in Parliament together.
In her three years of experience, we have identified 45 agencies we are closing which is going to cost 500 people their jobs and affect 2,000 in total. Has the member in her three years of diligent work on behalf of her constituents found other agencies she would like to recommend to us today that she would be prepared to see us close down?


Deborah C. Grey: Madam Speaker, I am certainly not prepared to give names of agencies. If this is in fact a serious question, there are many, many areas. I could take the hon. member on a 10 minute walk from Parliament Hill and identify-


William Hunter (Bill) McKnight: Which one? Name them.


Deborah C. Grey: Name one agency. I will do more than that. I will name every federal cabinet minister in this. I would say the best agency we could cut a lot of spending in is trimming this over-bloated federal cabinet from 40 down to at least 25 members. I think that would be a wonderful start.


Madam Deputy Speaker:: The time has expired. [Translation]
Resuming debate. The minister will take 10 minutes?


Hon. Pierre Blais (Minister of Consumer and Corporate Affairs and Minister of State (Agriculture)):: Yes, Madam Speaker.


Madam Deputy Speaker:: Very well. The minister has the floor.


Pierre Blais: Madam Speaker, I welcome this opportunity to support the budget brought down by my hon. colleague. Incidentally, I think it is rather interesting to see how skilfully members of the Reform Party avoid taking a stand on the supply management issue.
The Budget
People who are listening should realize that the Reform Party both objects to and agrees with the Dunkel report on tariffication. According to them, we should abandon Canada's historic position. That is the Reform Party's position, because there was a question about it just now. Unfortunately, we could not get a specific answer. However, Canadian farmers from all over Quebec and especially from Ontario, where the Reform Party- This party is not interested in Quebec, for reasons which escape me, or perhaps I should say its interest in Quebec is limited to getting up on the same table with the leader of the Bloc Quebecois. Both leaders want two Canadas. They agree on that score, but when it comes to telling us how we should run the country, they are not as forthcoming.
Under previous governments, Canadians were often misled by people who promised them proper control of public spending, which was seldom successful because of all the spending they did. We inherited a $38 billion deficit in 1984, which had gotten completely out of control. It is too bad the hon. member for the Reform Party can't hear me, Madam Speaker. It is too bad, but I will mail her a copy of the text.
Since 1984, we have been involved in a fierce struggle to control the deficit. We reduced the size of government bureaucracy and the number of government employees. We made the bureaucracy "lean and mean". I think we have made its operations more effective and, above all, we realized the danger of letting deficits escalate freely. However, we decided against leaving this sinister legacy to the next generation. As the latest attempt to stop the spiralling deficit, this year's budget is a model of restraint, a document that maintains the programs Canadians hold dear while taking the fat out of the government bureaucracy and controlling the deficit.
Thanks to the 1992 budget, Canada will seek to achieve sustainable growth, and we will have laid the foundations for the prosperity of future generations, Madam Speaker.
The budget brought down by the Minister of Finance in this House elicited an unusual reaction from the media: nothing but praise and approval. In the newspapers, on television, observers throughout the country have approved of the direction taken by the federal government. Business reacted positively to the lower tax burden on manufacturing and processing and also, to the stronger support measures for research and development. In a difficult fiscal situation, finding more money

March 11, 1992
The Budget
for research and development is an objective in itself and that we did it deserves praise.
Consumers also reacted favorably to the reduction this year and next of individual income tax. The financial community was glad to see the deficit limited to $31 billion, even in this recession year. We made a mistake, it is true; we predicted $30 billion and got $31 billion. That is 0.7 per cent of a $150 billion budget. Compare that to the Ontario government, which is $5 billion out on a $50 billion budget, or 10 per cent. I think that our projections are much better and the results are there to prove it.
As a result of the finance minister's prudence and wisdom, when the markets opened the day after the budget speech, the Canadian dollar made substantial gains on the world's currency markets. Madam Speaker, given such a vote of confidence, does one need more evidence that our government's budget, albeit imperfect, is surely a step in the right direction?
Admittedly the reaction was not unanimous. Some people, including the hon. Leader of the Opposition, said that they were very disappointed with our budget. I dare say, Madam Speaker, that if our government were able to walk on water, I think that the Liberal leader would say that it was because we could not swim. When they see others try to innovate, some people can only criticize and rarely, as we just saw, suggest concrete solutions to help the country improve the situation.
As Destouches said, criticism is easy, art is difficult. [English]
Apparently a contemporary of Destouches, Voltaire, told us as well: "Common sense is not so common". This is particularly true in the Commons. How else can we explain the reaction of the hon. leader of the NDP on the budget. Undaunted by either common sense or economic reason, my hon. friend opposite declared the 1992 budget a massive failure.
It seems that the New Democratic Party would be satisfied only with a veritable explosion of spending following the inspiring example of her friend, the Premier of Ontario. Presumably she is concerned that the resulting bloated deficit would likely mean that Canada's future fiscal policies would be dictated by the International Monetary Fund. Fortunately, however, they are in
the minuscule minority. To say that their reactions run contrary to the mainstream would be an understatement.
The merits of this year's budget are clear. It provides real benefits to Canadians through programs for business as well as through measures that help taxpayers where it counts most, their pay cheques. It is a tribute to the skill of the Minister of Finance that at the same time as he has held down the deficit, he has managed to give Canadians a break on taxes.
Taxpayers' after-tax income will increase by $500 million in 1992-93 and by more than $1.2 billion in the following year. Some 14.6 million Canadians will benefit by this cut in personal income taxes. Most important, these tax cuts will not increase the deficit. TTiey are funded by reducing government spending.

That was the secret, Madam Speaker. Raising the deficit, borrowing money at the expense of our children who will come after us to maintain Canadians' standard of living and the level of programs is not a solution. It was tried in the past and did not work.
We had to reduce our spending. That may be why we have been unpopular for a year or two, because we said no. People who were used to being told yes for one or almost two decades suddenly were told no by a government that wanted more reasonable spending in line with what the country could afford.
At the same time that the Minister of Finance gave Canadian taxpayers some necessary tax breaks, he resolutely attacked the cost of government. Since no government can ask citizens to tighten their belts without setting an example itself, the Prime Minister and all the ministers in his cabinet have taken a cut, as was just mentioned.
Since my time is going very quickly, Madam Speaker, I would conclude by stressing an important point in the budget.
We have been criticized for attacking the sacrosanct principle of universality, as was mentioned several times. I think that we must approach this question in the most open-minded way. Indeed, we used money that went to the wealthiest in society and use it now for those in greatest need. I believe that it was necessary. We did it. It will give $500 million more to the neediest families and
March 11, 1992

workers. This reform of family benefits is an outstanding success.
Madam Speaker, I still have a very long list of the benefits of this budget. In closing, I think that we must all applaud the Minister of Finance and support him most warmly.


Mr. Gaby Larrivee (Joliette):: Madam Speaker, I am very pleased to participate in the debate on the budget tabled by our government for the 1992-93 fiscal year.
First, I want to thank my colleague, the Minister of Finance, for a budget that takes into account the concerns of the population of Joliette and of all of Canada.
Last January, during the Christmas recess, I had the opportunity to meet several of my constituents. These people told me about their main concern, namely the economy. They told me that the government should reduce its expenses and learn to live according to its means. They also told me that they felt overburdened with taxes. Today I can tell my constituents that the government listened to them.
Madam Speaker, we cannot review this budget without taking a quick look at the way the previous federal government managed public moneys in the last 20 years.
The deficit that Canadians have to live with did not simply appear. This deficit is the result of bad management that started in the mid-seventies and went on until the mid-eighties. From 1975-76 to the 1984-85 fiscal year, Canadians watched their government incur operating deficits that increased year after year, going from $2.25 billion to more than $16 billion within 10 years.
It was not easy for the Conservative government that was elected in 1984. When it came to power, the accumulated deficit stood at approximately $206 billion. The budget deficit was $38 billion, that is an operating deficit of $16 billion and $22 billion in interest payments on the debt.
The Budget
As early as September 1984, the Conservative government put some order in the management of public funds. It gradually reduced the operating deficit and eventually converted it into an operating surplus in 1987. Since then, the federal government has not had any operating deficit.
This good management of public funds was not enough to keep the accumulated deficit that stood at $206 billion in 1984 from climbing to $420 billion in 1991. To understand that, we must look at what is this accumulated deficit for 1991-92. This deficit includes an amount of $206 billion which represents the national debt that we inherited. If you add to this debt compounded interest of $239 billion and subtract our government's operating surpluses, which total $25 billion, you arrive at that national debt of $420 billion.
Madam Speaker, this government has come a long way since it tabled its first budget and it was no small task. We had to reduce our spending while continuing to provide Canadians with the services they are entitled to. That is what this government has been striving to do since 1984. As was so well put in an article by Georges Angers in Le Soleil, "the economic and financial situation the Conservatives inherited in 1984 necessitated the drastic procedure carried out by the fine surgeon that Michael Wilson has been."
Madam Speaker, had our government allowed revenue and program expenditures to remain at their 1984-85 level relative to the Gross National Product, in 1991-92, the deficit would have been $83 billion instead of $30.5 billion and the accumulated debt would have risen to $728 billion.
In the public interest, some difficult decisions had to be made by this government. As could be expected, a number of these were not very popular, quite the contrary. But we were not elected to win popularity contests. We were elected to provide sound government.
Some would probably have liked us to settle for solutions of the past, such as increased spending to boost the economy. But government can no longer afford to spend and spend and spend. At any rate, economic recovery does not proceed from greater government action but rather from an appropriate climate in the domestic economy.

March 11, 1992
The Budget
The government made the wisest choice in deciding to cut spending which Canadians had been requesting for months.
These cuts will enable us not only to reduce the deficit and to cut taxes, but also to pay a social dividend to Canadians and Canadian families.
Madam Speaker, following the last Speech from the Throne, the Conservative caucus committee on family issues, chaired by A1 Johnson, set out to find ways of providing support for families. What the committee recommended was simple enough. Government was to make the tax system simpler and fairer in order to respond to the needs of families.
The work of our caucus committee was not in vain. The Minister of Finance did take its recommendations into account. In fact, several very major proposals regarding the family are included in the budget.
For one thing, it makes the tax system fairer for married couples. Starting in 1993, common law couples will be treated the same as married couples for the purposes of the tax system, thus eliminating any past discrimination against married couples.
Then the budget proposes a major reform of the present family benefit system to make it simpler, better targeted and more generous toward lower income families.
This does not put an end to the universality of social services, rather it focuses our efforts on families most in need. This is a question of fairness and social justice.
With his budget, the Minister of Finance clearly shows that our government is responding to the needs of Canadian families. I also see in this budget, Madam Speaker, a package which will allow the economy to reach cruising speed again. A government can no longer artificially prime the economy by throwing money right and left. This was tried by the previous government, in the early 80s, with the catastrophic results we now know.
A responsible government can no longer afford such measures. Economic success cannot come from expedients leading nowhere and too often tried by others.
The citizens of Joliette and Canadians in general know that an increase in spending would mean a larger debt, and that a larger debt would lead to tax increases. This is
not the way my constituents want the government to follow.
The 1992 budget reflects the good suggestions received from Canadians by the government during pre-budgetaiy consultations. This budget provides Canadians and Canadian businesses with the means to achieve a strong and sound economic recovery.
Personal income taxes will be cut. The reduction in the general surtax will affect more than 14 million taxpayers who will enjoy increased purchasing power.
The Home Buyers Plan will allow Canadians to use their RRSPs to buy or build a home, which will make it easier for people to own their own homes and at the same time stimulate the construction industry.
The budget also contains a number of measures to encourage initiative and productive investment. These measures will encourage the development of the private sector which, after all, is the sole real source of economic growth and job creation.
Small business is included in this budget as well. First of all, the Small Business Financing Program will help small businesses in financial difficulty. In addition, the ceiling for loans to individual small businesses under the Small Business Loans Act will be increased to $200,000.
Madam Speaker, the federal budget was well received by the business community. The president of the Quebec Chamber of Commerce, Mr. Denis Mercier, said the budget was very good, while the ex-president and now administrator of the Conseil du patronat du Quebec, Mr. Sebastien Allard, said the budget was responsible, considering the current economic and financial situation.
In concluding, I would like to comment briefly on the role of the budget committee of the Quebec Conservative caucus in preparations for the federal budget. In recent months, the committee I had the honour to co-chair with Senator Bolduc examined the government's spending programs.
In a report submitted to the Minister of Finance, we suggested ways to bring public spending into line. Upon reading the budget, I was delighted to see that the Minister of Finance included several of our recommendations, and by the way, we fully intend to submit another report some time next year.
March 11, 1992

Finally, I believe this budget is a step in the right direction and that it will accelerate economic recovery. However, more has to be done, and I think we will have to continue our policy of strict controls on public spending if we are to introduce programs that respond to the new needs of our society and especially programs that will help us prepare the future of generations to come.


Mr. Gabriel Fontaine (Levis):: Madam Speaker, the hon. member for Joliette talked about the government spending cuts announced in the last budget. I also heard him mention a social dividend. I know that many small-and medium-sized businesses are established in the area he comes from, and that this budget contains measures for those experiencing hardships as a result of the recession.
The budget provides for measures such as the Small Business Financing Program that would allow businesses to benefit from substantially lower interest rates, the revenue from the amounts loaned to them being considered as dividends on the part of the lending institutions. I would like some clarification on that point.
The budget also provides for an increased capital cost allowance rate on small business equipment acquisitions, which will actually differ or reduce the amount of tax that would otherwise have to be paid.
Furthermore, I believe a reduced tax rate for small business was also announced in this budget. This reduction is important because besides Canadian investors, some foreign investors do also invest in small businesses in our ridings and these foreign investors can figure out the cost of settling here as opposed to settling in the U.S. for instance. Hence the importance of reducing tax rates in the budget.
Finally, the budget also contains a measure providing that the withholding tax rate on dividends payable to foreign concerns be eventually reduced to five per cent, again, to attract and promote foreign investment in Canada. The question I ask the member for Joliette is this: during the weekends he spends in his riding, what comments did he hear from his constituents on these fiscal and economic government measures to improve and accelerate the growth of small business?
The Budget


Gaby Larrivée: Madam Speaker, let me reply to the member for Levis. As I mentioned in my presentation, there are numerous measures bringing relief to small businesses and, as he very well said, there are mostly small businesses in my riding.
We all know that small businesses create most of the jobs. That is why government adopted those measures, to help them.
As my colleague mentioned, numerous measures were adopted. I believe our small businesses have been requesting for quite some time now that we modify, that we increase the government guaranteed loans. We multiplied by two the limit, bringing it up to $200,000. That limit was modified not only because the needs had increased so much but also because, in the present situation, small businesses needed more help of that nature.
It is all very well to help them, to allow for easier borrowing, but it is even better to offer them an acceptable interest rate. And just now the minister responsible for small businesses announced that they will have the opportunity to borrow at a rate below the prime. That, I think, is really helping small businesses.
We will also be able to help by increasing the capital cost allowance rate for machinery. I feel that this is another veiy important measure. We know that manufacturers must modernize, buy new equipment. These programs will help them acquire more sophisticated machinery, equipment better adapted to today's markets. Manufacturers will then be allowed to depreciate their equipment at a higher rate and that is an incentive to modernize.
Madam Speaker, you are signalling me my time is over. Of course there are more measures concerning our small businesses; I thank my colleague for raising that question.


Hon.   Chas. L. Caccia@Davenport: Madam Speaker, with 1.5 million unemployed Canadians, many of whom are running out of benefits and many of whom are being placed on the welfare rolls, no wonder there is a sense of anxiety and even a sense of anguish across this country. Those who are working are worried about their future. What we find is that Canadians have lost confidence in their future. They have lost confidence in this government, as revealed in poll after poll. In other words,

March 11, 1992
The Budget
Canadians are now counting the days until the next election.
It is legitimate to ask how come we have reached this point in the evolution of our history. Evidently there are good reasons. This is the government which has gutted co-operative and social housing programs. This is the government which has deindexed family allowances. This is the government which has reneged on child care programs.
This is the government which has dismantled or is planning to dismantle through this budget the Science Council of Canada, the Economic Council, the Environmental Advisory Council, the Law Reform Commission, the Ocean Institute, and the Institute on International Peace and Security, to name a few. This is the government which has dismantled the energy division of the National Research Council, Canertech, Petro-Canada International.
This is the government which has given away the publicly owned Telesat, Petro-Canada, Air Canada, and de Havilland. This is the government which has weakened the national fibre through cuts to the CBC, through cuts to VIA Rail, and through cuts to the National Research Council.
This is the government which has cut services to the public. It has cut services in a way that it has deteriorated the quality of postal services, in a .way which has prolonged the waiting period for those who apply for Canadian citizenship, for those who want to apply for immigration services, for those who depend on unemployment insurance offices.
This is the government which cut air traffic controller training, resulting now in costly delays both to travellers and to our national air carriers flying into and out of Pearson International.
This is the government which signed a bad trade agreement with the United States, an agreement which does not give Canadians any special access to United States markets, which gives the United States a greater advantage over us, which causes unemployment in Canada, which commits to the United States Canadian energy resources whether we like it or not.
This is the government which wastes money on a prosperity committee at $24 million a year; for one year $20 million to hold seminars, to travel, to advertise to pay fat per diems. This amount of $24 million a year would more than cover the cost of all the advisory
councils which are being killed and would cover the cost several times of the Court Challenges Program which has been demolished.
This is the government which tolerates 10.5 per cent unemployment, having promised jobs and campaigned during an election promising jobs, jobs, jobs.
This is the government which promised in 1984 to cut the deficit by more than half. The deficit today has hardly been reduced while this same government has managed to double the debt since coming to office.
This is the government which blames everybody else where things go wrong. When an ex-ambassador, Ambassador Al-Mashat, is allowed to come into Canada under special measures, it blames an official in the Department of External Affairs.
For the length of this recession this government blames the consumers. For high interest rates it blames the Ontario economy. For the failure of the environmental green plan it blames individual Canadians. For the fishery crisis this government blames scientists and seals.
This is the government which increased taxes at least 33 times since coming into office, consistently punishing low and middle income Canadians.
This is the government which promised to double research and development spending in 1984. Instead it has starved post-secondary education, research and development, the National Research Council, and other governmental scientific programs.
This is the government which has weakened Confederation by freezing payments to the provinces, thus forcing budget cuts for hospitals, universities, social programs, you name it. The dismantling of Canada has started here in Ottawa by starving transfer payments to the provinces.
This is the government which through the present Minister of National Defence, the former Minister of communications and culture, removed from the Canadian Broadcasting Corporation the mandate of promoting national unity. This is the reason why the CBC today cannot accept advertisements that promote national unity.
This is the government which gave Canadians the GST which taxes books, which discourages consumers, which prostrates retailers, which slows down the economy, which encourages cross-border shopping, which taxes indiscriminately, which imposes a regressive tax and
March 11, 1992

taxes indiscriminately products whether friendly or unfriendly in environmental terms.
This is the government which jeopardizes Canada's unity by reopening the constitutional file, producing the ill-fated Meech Lake proposals, and recreating now a crisis atmosphere with unrealistic timetables. Once again the Prime Minister of Canada will likely roll the dice.
These are part of the answer. They are just a few of the many reasons why Canadians have lost confidence. This government has broken faith with the electorate of Canada. This government no longer enjoys public support as demonstrated poll after poll.
The sooner an election is called, the better for Canada and for Canadians. This is a very brief assessment of the quality of the budget that has been put forward lately by the Minister of Finance.
Canada is in a very sad shape. The sooner we get rid of this government, the better it will be for the country.


Don Boudria: Madam Speaker, I have listened with great interest to the comments of my very distinguished colleague from Davenport who has just set straight the record of the government across the way. Seldom have more eloquent words been stated in this House than by the hon. member for Davenport who has just spoken.
I want to raise a number of issues with the member for Davenport and ask him to respond at this time so that Canadians can understand the depth of knowledge of my colleague, especially compared with the government across the way.
In the budget the government announced this Registered Retirement Savings Plan to "create more housing". However at the same time it cancelled the co-op housing program, thereby cancelling out housing construction that would have otherwise been created by that program. If I understand it correctly, there is a net loss if we take the gains of one program and the loss of the other.
Given that the MP comes from the city where there is a tremendous housing shortage, namely Toronto, I want him to indicate more fully to our colleagues across the
The Budget
way just how wrong-headed the government's cancellation of the co-operative program is.


Mr. Caccia:: In thanking the hon. member for his question I would like to stress the fact, as he has already done, that the co-op housing program and the social housing programs across Canada have done a lot of good for Canadians who have taken very good advantage of them. The co-op housing is a very profound tradition that has been established in the country over the decades. The social housing provides for a population mix which has proven to be one of the greatest successes not only in Canada but, by comparison, with other parts of the world.
By cancelling these programs the government has shown a callousness and a sense of indifference to social needs that is unthinkable, that is unbelievable. It is one example of many as to why Canadians have lost confidence in this government.


Madam Deputy Speaker:: It being 7.45 p.m., it is my duty pursuant to Standing Order 84(6) to interrupt the proceedings and put forthwith the question necessary to dispose of the main motion now before the House.

Is it the pleasure of the House to adopt the motion?


Some hon. members:: Agreed.


Some hon. members:: No.


Madam Deputy Speaker:: All those in favour of the motion will please say yea.


Some hon. members:: Yea.


Madam Deputy Speaker:: All those opposed will please say nay.


Some hon. members:: Nay.


Madam Deputy Speaker:: In my opinion the yeas have it.
And more than five members having risen:


Madam Deputy Speaker:: Call in the members.


PAIRED MEMBERS
[Stage Direction]
Assad
Clifford
Kaplan
Milliken
Robitaille
Tar d if
Cadieux
Fee
Lee
Pickard
Rompkey
Vankoughnet
Madam Deputy Speaker:: I declare the motion carried. Pursuant to the order passed earlier today, the House will now proceed to the special debate on the situation that is now facing the softwood lumber industry.
 *
*


SOFTWOOD LUMBER INDUSTRY
[Stage Direction]
++NAYS

[Stage Direction]
Members
Althouse
Angus
Axworthy (Saskatoon-Clark's Crossing) Belair
Anawak
Arseneault
Axworthy (Winnipeg South Centre) Bellemare
Madam Deputy Speaker:: For the purposes of this special debate the question before the House is the following one:
That this House do now adjourn.
March 11, 1992


Hon. Frank Oberle (Minister of Forestry):: Madam Speaker, as we are all aware by now, the United States department of commerce has made a preliminary determination that prices charged by Canada's provincial governments for the timber used in softwood lumber production provide countervailable subsidies to their products.
The U.S. department of commerce determined that log export restrictions in British Columbia as well provide countervailable subsidies to British Columbia lumber products.
It estimated the net subsidy at a rate of 14.48 per cent of the final value of all lumber shipments from Canada excluding, of course, the Atlantic provinces.
Permit me to put the problem in a bit of a historical perspective.
The first dispute we had with the United States over our lumber trade was back in 1892. Throughout the intervening years there have been disputes. In fact, in some cases the Americans complained that we were deliberately curtailing shipments to the United States, thus retarding their ability to build homes.
Let me quickly come to the more recent round of disputes in our lumber trade with the United States which really takes us to the 1980s.
It was in 1982 that the first action of the kind we are dealing with was launched. At that time the coalition of lumber producers in the United States, particularly led by the Pacific northwest producers, laid claims that we were subsidizing our lumber through procedures of collecting economic rent through the stumpage procedure.
Now one would quickly ask what brought on the action in 1982. Well, the action was brought on in the main because of a recession in 1982, a recession of the same kind we are suffering right now.
That recession put extra pressure on the producers in the United States who would have preferred to bring about an increase in the price of lumber and increase the demand which would have created and saved the jobs that were being lost.
At that particular time we launched the same kind of appeals and actions that we launched at this particular time. The findings at that time by the tribunal that was set up determined that our stumpage rates do not provide a subsidy in the sense that they are not specifi-
Softwood Lumber
cally targeted at one industry or specifically targeted at one company.
That ended the issue at the time but it was reinitiated in 1986 and again we asked ourselves what the reason for that would be because nothing had changed. The stumpage rates stayed the same, the way we allocate economic rent stayed the same and in the main, we carried on in the same fashion.
What did change, however, was an increase in our market share in the United States from roughly 28 per cent to 33 per cent. Of course, there was a very, very significant change in the exchange rate. You will recall that in 1985, the Canadian dollar in comparison to the U.S. dollar was at 73 cents which of course gave our industry an advantage which in turn made it more competitive in the U.S. market. In turn that resulted in an increase in our market share.
That brought on the countervail action in 1986. It was not that there was a new light shed on the subsidy question. Everybody remembered 1983. There was no subsidy. But it was because our industry had carved itself out a larger market share.
At that particular time after the preliminary determination of injury and subsidy, it was determined that there was a 15 per cent advantage to Canadian companies.
The process was launched to impose a duty on our lumber entering the United States which, in turn, to make a long story short, ended up in the MOU. That was really quite an innovative way for us to protect our provinces and our industry from this haemorrhage of losing the 15 per cent to the treasury of the United States.
What we did instead was impose an export tax on our lumber and kept the 15 per cent subsidy in our own treasury. That is, the federal government collected it and quickly turned it over to the provinces.
The MOU also made provision that for any province that wished to bring about offset measures either in increased stumpage rates or in a greater imposition of silviculture costs to the company, that over time or as these off-set measures were implemented, the export tax would be reduced.
In fact, a lot happened since 1987 in that area. Looking at British Columbia, for instance, a year after the tax was imposed, it did restructure its whole stumpage arrangement, increasing its economic rent from the industry

March 11, 1992
Softwood Lumber
from between $600 million and $700 million a year. It went far beyond what it had to do in offsetting the 15 per cent.
In addition to that, it imposed on the industry which was proper and right to do, the entire responsibility for the renewal of our forests, a cost of between $4.5 to $6 a cubic metre which also should have been, could have been, and was considered as an offset.
In fact, immediately after that happened, British Columbia no longer paid the 15 per cent. The offsets were sufficient.
About the same situation occurred in the province of Quebec. In 1987, that province brought in a totally restructured stumpage appraisal system, and again passed on to the industry certain responsibility for the management of the forests.
All in all, the offsets in Quebec reduced the 15 per cent perceived subsidy tax down to 3.1 per cent. That was really the situation which we found ourselves in now.
Incidentally Alberta as well made some changes in its forestry act which could also have been considered as an offset, but it never applied for it.
All in all, 92 per cent of all the shipments to the United States were really affected by the initiatives taken by the provinces of Quebec, British Columbia and Alberta. We were merely dealing with 8 per cent of the shipments which came from Alberta in the main, and the prairie provinces.
That is not all. That is not the only thing that happened between 1987 and 1992. What also happened is that our dollar increased from 73 cents or 75 cents to a high of 88 cents which of course created a serious problem for our industry. All of us are painfully aware of that.
As well, as a result of this currency exchange rate change, our market share dropped again from 33 per cent, which it had been at the height in 1987, to 27 per cent.
In other words, from an American perspective the MOU had served its purpose. We were down to our traditional market share of 27 per cent-incidentally it was 28 per cent in 1980-and our industry had imposed
upon it much higher economic rent and a much greater imposition in terms of management costs.
It was for that reason that we sent a signal to the United States that it was our intention to implement or exercise our right under the MOU to terminate the MOU. We sent that message on September 3, 1991, and the termination came into effect on October 4 of the same year.
Let me give a sense of the magnitude of this particular trade with the United States. In 1990, that is one and one-half years ago, we shipped to the United States 11.8 billion board feet of lumber. To put this in another perspective, that amounted to $3.2 billion. That is just in the softwood lumber trade, not considering all the other trade in forest products that we do with the United States. Incidentally that is 52 per cent of the total Canadian production of softwood lumber.
To give an idea of the importance of the solid wood sector in Canada, there are roughly 1,000 firms right across Canada, from Vancouver Island to Newfoundland. They pay $2 billion in salaries to 75,000 people who directly work in the industry. They have roughly $9.5 billion to $10 billion in sales. It is a very critical, a very important industry in terms of our dependence on it for our economic well-being.
What triggered this new round of countervail action? As I said earlier, the main reason is the recession. We are now back in the same boat that we were in 1982. It is a serious recession. It is very stubborn in the United States.
Because of the fact that it just so happens that our solid wood producing sector is a lot more efficient than that in the United States, we do have a bit of an advantage despite the fact that our dollar from the perspective of the wood converting industry is at an exceptionally high level.
There is another factor that has entered the equation. That is all the environmental pressures that have put a real serious pressure on the log supply situation. There are timber supply shortages everywhere in the United States caused by this, the set asides, the spotted owl and all those great debates creating real problems for the United States industry, problems for which it is looking for a scapegoat to blame.
March 11, 1992

Really what the industry in the United States needs is a massive increase in lumber prices. What it needs is a massive increase in log prices.
It works particularly well for companies like Georgia Pacific which have large tracts of privately owned land. Every time log prices go up, the price of the property goes up. It is the consortium Georgia Pacific in the south that is pushing and that created the problem this time in the United States. It is not the Pacific northwest producers because they know what their problems are.
There are some people in the United States who have a great incentive to bring about this action, despite the fact that this action will also result in an increase of between $1,000 to $3,000 for every home that is going to be built in the United States.
The cost of this imposition, this tax, has to be passed through to the consumer of the United States. It cannot be any other way. Our industry cannot absorb it. It will either shut down and create new demand or else the price will go up and the result will be the same.
What the Americans want is a level playing field, they tell us. How can that be? How can there be a level playing field? It is not possible. We have 90 per cent public ownership in our country. It is up to provincial and federal governments to establish the economic rent that we want for this natural resource. Public ownership in the United States is roughly 26 per cent. It has mostly a privately owned resource. There is a profound difference.
In our country we have roughly 453 million hectares of forest land. A quarter of that is under timber management. We have horrific problems in our country living up to the very serious international obligations we have as custodians of 10 per cent of the planet's forests. We do not just manage our forests for timber. We manage them for the ecology in terms of the environmental equations and in terms of all the other measures that are there. So there cannot be a level playing field between Canada and the United States.
As I said, we also have a much different view of our obligations to manage. We have agreed in the green plan to set aside 12 per cent of our entire space, huge areas of
Softwood Lumber
forest land that have never been accessed with roads and other infrastructure.
To put it bluntly, we do not intend to allow our good neighbours to the south to manage our forests and to tell us what our obligations are not just to our neighbours but to the rest of the people of the world.
Some say, and we will hear it tonight, that we should not have got ourselves into this mess in the first place or that perhaps we should not have terminated the MOU when we did. Some will say that the free trade deal is at fault too. I have heard that said by some of our opposition colleagues.
Let me remind them that when the situation was dealt with in 1986 we did not have a free trade deal. If they would have mounted the effort we are mounting now in 1986, there would have been a great risk and the provinces did not want to take the risk.
In the first eight months of the 15 per cent MOU tax we collected and sent back to the province of British Columbia over $300 million. This was money that would have accrued to the treasury of the United States. We did not have a dispute settlement mechanism. We did not have a tribunal to go to as we have now. We are in a much different situation. Thank God for the free trade deal because we now have access to doing these kinds of things. Now we have a dispute settlement mechanism at the end of this current process.
How does this current process work? It is important that we put that into its proper perspective. There are four steps to it as there were the last time. There is a preliminary round which determines first of all injury. It has to be proven by the proponents in the United States. Then there is a preliminary subsidy determination.
That is the stage at which we are now. We have had now a preliminary subsidy determination which imposes a tax of roughly 15 per cent on top of what we have already had before.
One could argue that in the case of British Columbia and Quebec we would have been better off not to offset the previous determination and paid a tax over the years and perhaps we would have escaped the new finding. It is grossly unfair because B.C. and Alberta will have a new imposition of the same amount as the other provinces have that did not offset. I am not entirely sure that this is not a cynical design to break the solidarity of the

March 11, 1992
Softwood Lumber
Canadian coalition of the provinces, the industry and the federal government.
There are two other steps, the final determination of injury and subsidy. The whole process will be complete in July of this year. We are appealing at every step of the way. We are sending armies of lawyers and mountains of paper to the United States. It is not a foregone conclusion that this process will result in what everybody expects it will result in, although I have to confess that considering the political interference in this process I do not have very much faith in it. When all is said and done we fully intend to fight this proposition tribunal under chapter nineteen of the free trade agreement. It is an independent judicial process. It is a joint Canadian-American process. There will be Canadian judges and adjudicators sitting together with the Americans to look not at politics, not at exchange rates, not at any other factor, but at the facts that are before them. And the facts will bear out that we should be vindicated.
As well we have already launched an appeal with GATT. A panel has been established and that panel will report in June. Again I am confident that it has to rule in our favour because the facts are so overwhelming.
But all of that does not relieve all of us here, particularly the industry, of our anger and our disgust with this process, this behaviour of our friends. This is scandalous, to say the least. We are mad about it and they should know that we are.
The commerce department in fact initiated this latest round. It was not initiated by a lumber coalition as it was the last time. It was the department of commerce, middle management officials in the United States who initiated it themselves.
There is the bonding requirement which is illegal under GATT and any other tribunal. The log export component is hypocritical, because there is a ban on the export of logs from the United States from federal lands. Why should they throw that into the equation? But, worst of all, they are hurting their own people. As I said, the result has to be an increase in prices of lumber for their own people.
Why would they do these things? I can only conclude that it is perhaps for the same reason that our opposition colleagues here tonight will attempt to lay blame entirely on the federal government for this particular situation, instead of giving recognition to the fact that the world has changed. We have to consider our trade prospects in
a global context. We live in a different world today. The Americans had better learn, and learn fast, or else they will be left behind for good, to get out of the situation they are in, mired in their dreams of past glories when they could always have their own way. The world has changed. They are no longer top dog in every area.
No doubt we have benefited immensely from living so close to the most potent and powerful market in the world. So have the Americans benefited from living close to us and from having us as good friends. They must re-leam who their friends are in the world and start playing by the rules that are now written for a new world.


Roy MacLaren: Madam Speaker, we have heard the minister's defence of the government's mishandling of what is a fundamental issue for Canadians: the question of how we trade with our principal trading partner, the United States.
The issue before us manifests a problem with the free trade agreement that is not only reflected in the specific issue of softwood lumber but of course is also reflected in the automobile problems that have arisen in the last weeks, and further the question of the treatment of magnesium exports from the province of Quebec to the United States. I speak in effect of the whole issue of how Canada and the United States regulate their trade under the free trade agreement.
Let me first say a word about the specific question of softwood lumber exports from Canada to the United States, the specific issue that is before us this evening, before I turn to the broader question of the inadequacies and shortcomings of the free trade agreement as a method of providing a framework for Canada-U.S. trade.
We have seen in these last days the response of the United States to the decision of Canada, the belated decision of Canada in October, to terminate the 15 per cent export tax on softwood lumber exports to the United States. I say "belated" because in our view the government should never have accepted the practice of imposing an export tax on our exports of softwood lumber to the United States. There was-and the minister touched on but did not elaborate on the government's reasons for rejecting the alternative-the alternative of the GATT. It might have been a solution to the problems we are encountering today if the government had had the courage to pursue the GATT alternative back in the years when this issue first arose.
March 11, 1992

All Canadians have had reason to regret the absence of the commitment to the GATT that the government exhibited on the occasion of its acceptance of an export tax to deter Canadian softwood exports to the United States. Why it chose that route instead of the GATT route can only be a matter for speculation, at least on our side of the House, but I would have to think that the fact the decision to impose the export tax came at the same time as the final negotiations were going forward on the free trade agreement itself may not have been entirely coincidental.
In retaliation for the Canadian government's cancellation of the memorandum of understanding on softwood lumber including the 15 per cent export tax, the United States department of commerce-and I want to stress that it is the United States department of commerce itself, the United States government-has acted to impose by coincidence a 14.48 per cent duty on Canadian softwood lumber.
This obviously is going to require immediate response from Canada, from Canadian producers and Canadian exporters, in the sense of posting bonds immediately on shipment of softwood lumber to the United States. That alone is a major burden for the Canadian exporters to assume. We export currently about $3 billion worth of softwood lumber to the United States annually and the duty now imposed could cost Canadian exporters almost $500 million in annual duties. That is clearly a major deterrent to the effective continuation of our exports to the United States.
Time and again during the free trade debate of not many years ago, the Conservative government promised Canadians that the free trade agreement would secure access in the United States market. Well, what have we today? We have the exact opposite.
I mentioned a moment ago the evidence that is accumulating of barriers that are being placed in the way of Canadian exports to the United States market despite the existence of the free trade agreement. We have seen the issue of Canadian pork being hindered from entering the United States market. The resolution of that issue was a matter of almost two years, during which time the interests of Canada were adversely affected. We need not only look at the question of pork. The instance of
Softwood Lumber
automobiles is before us all. We are conscious of the obstacles that have now been placed through the United States customs service on the export of Canadian built automobiles into the U.S. market. We have seen more recently still the question of Quebec Hydro and magnesium exports to the United States. In the free trade agreement we obviously did not win secure access to the United States market, and that was the whole justification for the free trade agreement.
The Conservative government should certainly not have signed the memorandum of agreement even though the free trade agreement was not then in place. The government says that in effect it had no real option because it did not have a free trade agreement at that time. It was under intense pressure from the United States to restrict exports of softwood lumber to the United States and it caved in to American pressures and imposed our own export tax on Canadian exporters.
Having finally recognized the folly of its own ways and also having recognized that as the Canadian dollar has increased in value one of the principal complaints of the United States has evaporated, the government finally got the courage to remove the export tax.
In so doing it has brought about substantial damage to the future prospects of Canadian exporters because it immediately invoked in the United States the import duty which will have a particularly severe effect on the provinces of British Columbia and Quebec.
The Leader of the Opposition in the province of British Columbia has consistently drawn attention to the importance of softwood exports to the United States. He has also drawn attention to the fact that the situation today is that B.C. and Quebec exporters are not only paying higher stumpage fees as a result of the actions of the provincial government but are now faced with the additional 15 per cent duty imposed by the United States. As a result the cost of doing business has effectively doubled.
I want to stress that this action was taken by the United States government itself, which is rare in trade between our two countries. It is not in response to a complaint by the U.S. industry but is rather an action taken by the United States government, which is in effect acting as the investigator, the prosecutor and the

March 11, 1992
Softwood Lumber
judge in this case. There is no way in which the free trade agreement can be offered as an adequate answer to that particular practice of the United States. It has rendered the Canadian exporters of softwood lumber more and more vulnerable to American pressures.
I want to quote the Minister for International Trade. He said: "We have argued strenuously that Canadian stumpage practices and log export restrictions do not constitute subsidies. We will continue making that argument to the U.S. department of commerce and, if necessary, to an impartial, bi-national panel provided for under the free trade agreement".
The minister says "-if necessary to an impartial, bi-national panel". However, the fact is that the existence of the free trade agreement and the so-called impartial, bi-national panel has not acted as an obstacle or a hindrance to the United States in pursuing its protectionist commitments in the case of softwood lumber, or in the case of automobiles as I mentioned a moment ago.
We have in the free trade agreement a dispute settlement mechanism that is seriously flawed. The purpose of the dispute settlement mechanism was to provide a way in which trade disputes between our two countries could be settled amicably and by common understanding. In fact, that is not the case at all.
The agreement which instituted the bi-national panel merely provided for a panel to consider whether U.S. trade law is fairly applied. It is not to decide whether some objective, third party standard is met but whether U.S. trade law itself is being fairly applied. The decisions of the panel, even in that limited area, are not binding unless the two governments have a prior agreement that the decision of the panel should be binding. The result is that we have a dispute settlement mechanism that is both biased and flawed.
In the specific case of softwood lumber we will very likely see a decision to resort to the bi-national panel. However, that decision will be made only after a further process is completed within the United States itself.
A moment ago the minister drew attention to the fact that in this process we are only at the second of four stages. It will be several months yet before reference could be made to a bi-national panel. At which time the bi-national panel will take some time to complete its consideration of the Canadian case against the U.S. import duty.
What does this mean in practice? It means that in the provinces of British Columbia and Quebec, and the western provinces generally, it will be necessary to pay the U.S. penalties in the meantime. What is this government prepared to do? It got itself into this situation in which Canadian exporters are being penalized. It has got itself into a situation in which the Canadian softwood lumber industry is going to be adversely impacted, adversely affected by the agreement. Will this government offer the industry some assistance in seeing it through what is obviously a very difficult interim period until, as we all hope, a satisfactory resolution is reached?
What is the Canadian government's commitment to help companies with bonding requirements? What is the Canadian government's commitment to assist the workers, employees and companies with the assistance they may need during this period of review of the arbitrary U.S. decision?
One of my colleagues in the course of our discussions in the last days has drawn attention to the Employment Support Act of 1971. Does the government choose to employ that opportunity to direct assistance to an industry, and I quote: "whose exports are subject to unfair duties and harassment by foreign countries?" The Prime Minister has described this issue and the automobile issue as vexatious harassment of Canadian industries. By saying that the industries are being harassed by the American government is the government saying that it will assist the industries through this period of adjustment?
Let me turn for a moment to the more fundamental question. I will touch for an instant on the question of the effectiveness of the dispute settlement mechanism within the free trade agreement. I noted its flaws and I noted its ineffectiveness. I want to pursue that point.
The government chose that route. It accepted an inadequate response to the U.S. demand that it retain within itself its own sovereignty in the question of dispute settlement in foreign trade matters.
March 11, 1992

The United States was not prepared to concede to any tribunal or third party the opportunity to pass judgment on U.S. trade practices. The basic reason the United States government chose to make that a condition of the completion of the free trade agreement was that it would not subject its own subsidy practices to the surveillance or consideration of any third party or any impartial tribunal. The major flaw in the free trade agreement is that there is no provision in the agreement for the definition of subsidies or for the treatment of subsidies in an impartial tribunal considering whether there should be penalties for such subsidies.
That is the basic flaw in the case of the softwood lumber question we are considering this evening. It is equally the basic problem in the question of the export of the North American content of Canadian-built automobiles being exported to the United States.
The government chose in its wisdom or in its folly to complete an agreement which was in effect incomplete. The government said: "We will not pursue the matter of subsidies with the United States. We'll leave that question aside, recognizing of course that it is a major question, but we will leave it aside hoping that somehow the GATT will reach agreement and offer to the United States and Canada a definition of subsidies which we can later insert into the free trade agreement".
That theory may be fine. It may be a good idea but unfortunately the world goes on. Questions arise on subsidies in the meantime. Questions arise on countervail. Questions arise on penalties for subsidies. We see that inadequacy of the free trade agreement increasingly today. We see it in the issues of softwood lumber, we see it in the issue of automobiles. It is a result of the failure of this government to reach an agreement on subsidies and how those disputes on subsidies should be settled through an impartial panel with binding powers.
The result is that the government has chosen to use a bi-national panel which has no binding powers unless the two governments choose to recognize a binding requirement. The further result is that Canadian exports are subjected to harassment and unfair trading practices without any immediate appeal to those practices. The result is that Canada is at a severe disadvantage in the Canada-U.S. Free Trade Agreement.
Softwood Lumber
I ask the minister, who has spoken this evening, and the government generally: What does it intend to do? What does it intend to do to counter the ineffectiveness of the free trade agreement as has been so clearly demonstrated in the case of softwood lumber today, and last week in the case of automobiles manufactured in Canada?


Mr. Brian L. Gardiner (Prince George-Bulkley Valley):: Madam Speaker, I am pleased to participate in the debate tonight. I want to thank all members in the House for agreeing to this debate. I called on Monday and Tbesday for a debate similar to this so that members of Parliament could send an important message to all Canadians, in particular those Canadians in over 300 forest communities in this country who are dependent on the forest industry for their livelihood and are being affected dramatically by this recent trade decision by Washington, and the U.S. commerce department.
It is important tonight as well to make sure that we do send that message to Washington, D.C. so that they understand our concerns and the representations we make on behalf of our constituents.
Third, I see as a very real and important part of tonight's debate that we must keep pressure on our own federal government to ensure that we do not get into the situation we were in in 1986 when it sold out Canada, and sold out Canada's forests, by signing the memorandum of understanding with the United States.
Tonight, after a weekend of cabinet meetings to discuss this issue, with sabre rattling from the Prime Minister and claims by the trade minister that they are going to fight all the way, I am disappointed. We did not get a clear game plan tonight, a line of action from the minister.
Canadians and people concerned about this issue must be able to see clearly that the Government of Canada, with the provinces and the industry and in particular the people who work in the forest industry, know that as partners in this debate we are there to make sure that we fight for Canada's interests. That is important because the debates we have had in this House in just the past week or so have been about our resource industries.

March 11, 1992
Softwood Lumber
They have been about our farms, the fishing industry and now our forest industry and forest workers.
It is clear that the decision by the U.S. commerce department on Friday is unfair and is unjustified. The decision by the U.S. commerce department is going to add almost 15 per cent to the cost of our lumber exports to the United States. This imposition of the tariff across all of the provinces in Canada, but Saskatchewan and the Atlantic provinces in particular, will have a dramatic impact on the forest industry and the workers in that industry.
In fact it is going to hurt Americans. It will add some $1,500 to the price of a home that Americans want to purchase and will mean that President Bush's game plan to try to get home starts going in the United States will falter as his election campaign is.
In particular, the singling out of the British Columbia log export policies is hypocritical and ridiculous. As has been pointed out, both Washington and Oregon states control log exports. Washington, D.C. approves it and its move to include the log export policy from British Columbia is, and I underline it, a hypocritical policy. It is one that I am certainly pleased the new government in British Columbia, forest minister Dan Miller and Premier Harcourt, have already discussed. They have made their voices clear and loud about how they view this issue.
It is an important issue to us. This country exports over $3 billion in lumber exports to the United States. It is clear just how dramatic and important this issue is when it is in dollars alone.
We have to take a brief step back in history to see just where we are and to set the stage for where we are now. Members know, of course, that these lumber disputes go back a long time. We had one in recent time, in 1982, when Canada actually won the case.
As has been pointed out, the issue resurfaced in 1986, provoked by U.S. lumber interests through the memorandum of understanding, the infamous memorandum of understanding. I say "infamous" because of the dramatic impact that agreement had and how we ended up in the mess that we are in today.
If our governments of the day had dealt with the issue at that time, no one is to say we would not have another dispute but we certainly would not have yet another cloud over the heads of our industry and the workers in the forest industry.
At the time, you will recall the now Prime Minister said it was a good deal for Canada. In interviews later on, the current forest minister said that the MOU was not a major worry for the forest industry, but we take issue with those views. We do not believe they are an accurate reflection of just what the situation is in the forest industry or in the whole matter of the trade disputes surrounding this issue.
We even had the most unfortunate situation where the former Socred government of British Columbia actually sided more with the Americans than it did with Canada. There have been published reports, astounding reports, which stated that when a Canadian team was negotiating and working out its strategy, the then premier and his forest minister in those meetings would later that night call the Americans to tell them what the Canadian strategy was.
That is an appalling approach for the premier of a province to take. I for one would say thank goodness that government is gone and that we now have a government in British Columbia that is prepared to fight and to defend the interest and the forests of our province.
Those who were deeply involved in the negotiations of the memorandum of understanding and the free trade agreement will tell you that the pressure from Washington at the time on Ottawa and the provinces was tremendous. The federal government and the provinces basically sold out our forest industry in order to get a very flawed free trade agreement.
Information we have obtained through the access to information legislation shows that the American commerce department would use the memorandum of understanding to challenge virtually anything that they considered to be a subsidy to our industry.
When Canadian National Railways and B.C. Railway decided to encourage more freight traffic, the Americans challenged the right of our railroads to reduce freight rates. They alleged that it was yet another subsidy. At that time our government told the Americans to shove off, it was none of their business. We supported them for that because it is just ridiculous given the mess we got into with this memorandum of understanding.
We supported the government as well when last fall it gave notice to the United States that the memorandum of understanding should be cancelled. We should never have been in that situation in the first place but the decision to scrap the MOU came too late and cost thousands of jobs. In the case of British Columbia,
March 11, 1992

estimates from B.C. ministry of forests are that over
7,000	jobs were lost in British Columbia alone.
The accelerating integration of mills, that is bigger mills swallowing up smaller operators is a dramatic change in policy in British Columbia and particularly in my area. Our industry was hit by dramatic changes within the province from which it is still reeling.
In northern Ontario exports to the United States are down by 45 per cent. The memorandum of understanding was a big mistake and was the forerunner to the problems we are in now with the United States.
We supported the decision of the government to scrap the MOU because clearly it is a question of sovereignty and our right to be able to manage our forests the way we want to and not to be dictated to by Washington, D.C.
I know the message Canadians are telling their members of Parliament. It is clear the free trade agreement is failing Canada. It seems we have more disputes now under free trade than we ever had. They are either ongoing or have been dealt with. We have had disputes over salmon on the west coast, magnesium, lobster, aluminum, beer, pork, plywood, automobiles and now of course, we are dealing with perhaps the trade issue between Canada and the United States and it is softwood lumber. If we take a look at the record and the facts in this particular softwood lumber case, it is a particular concern just exactly how vexatious, to use the words of the Prime Minister, that the Americans are being on this particular issue.
I would like to quote an article in the March 6 edition of The Wall Street Journal, written by Mr. Gordon Ritchie, who was formerly the Canadian ambassador to the U.S. and deputy chief negotiator of the free trade agreement. Let us take a look at what he says:
In a further example of the kind of treatment that has astonished America's Canadian friends, the Commerce Department summarily refuse to consider 323 of 334 routine applications for duty exclusions filed by Canadian companies unconnected with any program being investigated in the softwood lumber case. The Commerce Department said it did not have the time or the resources to consider the applications.
Softwood Lumber
They have certainly had the time and resources to start a trade war with Canada over softwood lumber. Further, quoting from the same article: "Still not satisfied, the administration-"
It is not just the functionaries that the Prime Minister is talking about. If it is just the functionaries, who is running the government of the United States? It is the Prime Minister's friends obviously. President Bush clearly has to call some functionaries into his office to straighten them out and tell them who his big friend is up north in Canada and to just to lay off a little bit.
Let me quote:
Still not satisfied, the administration invoked the draconian provisions of section 301 of the Omnibus Tirade Act of 1988-often brandished but never used against either Japan or Europe-to impose customs liabilities on Canadian lumber, even before any preliminary determinations of injury or subsidy were made. This action clearly violates American obligations under the General Agreements on Thriffs and Hade and the Free Hade Agreement.
These are our great friends to the south, our great trading partners. They are making these kind of decisions prior to any determination from their own commerce department. It is a pretty clear indication from the government of the United States just how it treats the free trade agreement and how much care it really gives to the Canadian government and its views on this whole particular issue.
The Conservatives say do not worry, free trade will save us. Of course we have had some time for the cabinet to consider this particular issue. It has had months. It has had weeks, knowing that this decision was impending, but there is a sense of the quiet before the dawn. Do not worry, this whole thing will not happen. We have the free trade agreement. That is going to save us because we have the dispute settlement mechanism and that is going to solve all of our problems.
The government did not use the time, it would seem, to build bridges with the homebuilders' associations in the United States that are now working on our side to make the point to their own lumber interests and their own commerce department. It was not this government, it was the government of British Columbia and Premier Harcourt who made overtures to the governor of the state of Washington on the log export policy. On that one we have a clear position. It has been the government of British Columbia that is leading that fight, not this

March 11, 1992
Softwood Lumber
government because it has its free trade blinders on to any particular issue like this.
Domestically, while the Conservatives talk the good fight, talk about how they are going to take this to the wall, what does the government do? It continues to encourage a domestic policy of a high dollar that is killing our exports to the United States and is adding to the problems. The government would appear to be putting all of its eggs in the free trade basket. It is pretty clear that is what it is hinging this whole thing on, and let us hope so. For all those people who are dependent on the jobs in the forest industry, we are going to have to hope and pray for something a lot more than what this government has been able to offer so far. Let us take a look at a couple of the concerns and at some of the opportunities that could have been used or should be used. I refer members to an article in the March 8 edition of The Toronto Star that reviewed the concerns over the dispute settlement mechanism and some of the advantages. In this case Mr. David Crane argued why we could use an existing mechanism and why it would be better. With regard to the dispute settlement mechanism he wrote about the scope of the panel, if it is ever established. Not to be an alarmist, an article by Mr. Ritchie makes reference to U.S. officials suggesting that they may refuse to be bound by the decision of the bi-national panel. As one person suggested, it is like having an ugly, vicious dog just sitting there and waiting. They are saying: "If you do not do what we say, come to the table and sell out to us like you did in 1986, we are going to sick this ugly dog on you and you are never going to get your so-called favourite dispute settlement mechanism and resolve this problem".
The scope of the dispute settlement mechanism has been mentioned before. The concern is that the main purpose of the panel would be to determine whether the United States has properly applied its own trade law against Canada. It would not conduct a new investigation. Under GATT it is talking about a faster and quicker decision, one that judges disputes on the basis of the rights and obligations of member countries under the GATT system, not on the basis of any one country's law.
We have to continue our fight at GATT. Our leader has already said that the message to the United States should be that we are out of the NAFTA talks. We have to give a message to Washington, D.C. that we are not going to roll over and play dead on this particular issue.
Through debates in Parliament we have to keep pressure on our own government so that it does not repeat the sellout of 1986. Our forest communities and workers depend on it. People who work in communities like Prince George, Robson Valley, Fort St. James, Bums Lake, Fraser Lake and Houston want the government to fight it all the way. They do not want fine words. They want a government that is going to stand up for Canada, that is going to fight for the interests of our forests, and keep up the fight for the sovereignty of our forests.


Hon. Tom Hockin (Minister of State (Small Businesses and Tourism)):: Mr. Speaker, I would like to speak on behalf of the government tonight in this very important debate. I would like first of all, if I could, to extend my congratulations to the Minister of Forestry and the member for Prince George-Peace River for his masterful summary of what has taken us to this situation, his analysis of it, and his explanation of our options and of our strategy. The masterful address he gave should be printed and sent to all these Americans who are harassing us, as well as sent to the members of the opposition who should read it carefully because in there are the kind of facts that the opposition would benefit from reading.
I am speaking on behalf of the Minister of Industry, Science and Technology and Minister for International Trade tonight because of the importance of this program from the point of view of our over-all industrial structure and indeed our trade performance.
I want to make a couple of preliminary comments and just centre my remarks primarily on a key facet of the American complaint, that is their objection to our lack of exports of raw logs. This apparently is a large part of what they call their countervailable case, and I want to centre my comments on it.
Before I get to it I really should remind the House, especially when I listened to the Liberal Party talking a few minutes ago, that when the MOU was signed in 1986
March 11, 1992

we brought in a process whereby we would collect the tax and we would turn it back to the provinces for them to put into the forestry industry, and guess what happened? In the province of Ontario, under the Peterson government, the Liberal government collected-I have a letter here that calculates this-$63 million of revenue since the memorandum of understanding was signed in December 1986 until October 26,1989. This is a letter to the member of Parliament from Timiskaming. Of the $63 million in revenue, $18 million only, $18 million, that is all, was returned to the forestry industry by that Liberal government.
So when Liberals stand up and tell you how concerned they are about the forestry industry, remember that ratio: they collect $63 million and put a very small amount of it back into the industry.
The hon. member for Prince George-Bulkley Valley from the New Democratic Party made a couple of points that I want to make a couple of responses to.
He asked a very interesting question. He asked: "Why are we having all these troubles with the Americans, all these cases-hogs, raspberries, strawberries, Hondas- when we have the free trade agreement?" He is giving the impression that somehow the free trade agreement creates these problems. In fact we have had, I think the last time I looked, 18 different bi-national panels established to deal with problems with the Americans. One might ask: Is this because of the free trade agreement? Well, of course only someone who knows nothing about the American political and social and economic problems today would say it had anything to do with the free trade agreement. What it has to do with is the mounting fever of protectionism in the United States.
Virtually every part of the American economy is going through a convulsion of protectionism. We foresaw that. We foresaw that this would be the case increasingly in the late eighties and the early nineties. This is why we were determined to put in place a framework that would give us something new to deal with it. The free trade agreement did that by putting in place the bi-national panel.
Mr. Speaker, I would like to tell you a little story about the bi-national panel. I remember having a luncheon meeting with the Japanese Minister of Trade about a year and a half ago. He said: "Tell me something. How does this bi-national panel work when you have a trade dispute with the United States?" I said: "Well, you have
Softwood Lumber
one American judge, we have a Canadian judge, we have a neutral chairman and they decide". He said: "Does it take forever for them to decide?" I said: "No. It must be decided within 315 days".
The Japanese minister said to me: "Now, let me just get this straight: You have equality with the Americans when you have a dispute? But they are 10 times the size of Canada." I said: "You've got it right, they are 10 times bigger than we are but we have equality now when we have a dispute". As a result, the minister said to me: "That's a pretty good deal; we would certainly like to have something like that".
That is the reality and that is the power of what the free trade agreement has given us in the middle of this fever of protectionism that we are facing from the United States.
One other comment. The NDP made a complaint that we are putting all of our strategy here on this matter into what he calls the "free trade basket". He completely overlooks the fact that we have a GATT panel that has been struck for this. It is going to be pronouncing in June, or July at the latest. We have used our GATT options. Then he complained "but the problem with the free trade bi-national panel is that it is not binding". Well, just a minute. I have heard, by the way, the Liberal Party say and Mr. Crain said this in the Toronto Star the other day: "The problem is we should let GATT do all this, not the free trade agreement". The problem with GATT, and anybody who has dealt with GATT knows, is that GATT is not binding. GATT is a very powerful piece of moral suasion when they come up with a decision, but it is just that, it is not binding.
The free trade agreement bi-national panels are binding.
We are not putting our strategy all in the free trade basket. We are putting it into the GATT basket, we are putting it in the free trade basket, plus we will be revealing our strategy as the weeks and months unfold. What I really wanted to address in terms of substance and put on the record is the particular absurdity of one part of the American complaint with regard to this matter. It is really quite astonishing and I would like the House to be aware of just how absurd it is. The preliminary countervailing duty on softwood lumber was determined by the Department of Commerce, as the Minister of Forestry said, at 14.48 per cent. Of this, 8.23 per cent or 57 per cent of this whole countervail amount was determined to be the result of what? Of what they

March 11, 1992
Softwood Lumber
call an indirect subsidy to producers as a result of logged export restrictions in British Columbia.
Now, what is this? The Americans are saying to us: "You won't ship raw logs to the U.S. or Japan or wherever. You restrict them and, as a result, you should be countervailed". We are shocked that the United States would allege this. We find it ridiculous. They say that the subsidy is alleged to result from the following: By not shipping raw logs you depress domestic log prices as a result of artificially reduced demand. That is their argument.
The fact is that both Canada and the United States have restricted the export of logs from public lands for decades. This is not something new. We have done it for decades. We do not do it alone, the Americans do it. As a matter of fact, they do it for conservation reasons. They have got the spotted owl for example that they want to protect and they do not allow the export of raw logs in certain areas because of that. These restrictions have never been a problem up until now. In fact, log export restrictions were explicitly acknowledged and accepted as part of the Canada-U.S. Free Trade Agreement.
Why do we not export raw logs? The reasons are that we want to conserve a valuable natural resource to meet multiple uses that the public increasingly demands of our forests such as wilderness for hunting, tourism and timber supply. In fact, sawmilling interests in the Pacific northwest want increased controls on log exports. They recognize that the United States' actions against Canada could undermine any efforts to strengthen domestic controls.
In conclusion, in this part 57 per cent of their whole case is based on an absolutely ridiculous contention. We are absolutely positive we are going to win this. It is ridiculous that the Americans have taken this to the stage they have taken it. I am confident that we may not even have to reach a bi-national panel because of the strength of our position.


Mr. Reginald Belair (Cochrane-Superior):: Mr. Speaker, I too welcome the opportunity to say a few words on this very important issue not only for northern
Ontario but also for northern B.C. and Quebec where the industry holds a very special place.
Before going any further, I would just like to bring a correction to what the forestry minister said in his opening remarks. He said that in 1982 the Coalition of Lumbermen's Associations in Canada was centred and came mostly from B.C. He forgot to mention that the Ontario Lumbermen's Association was directly and very actively involved in this action in Washington as well as La federation des manufacturers de bois du Quebec.
Just to give you a little background, the issue and the problem go back to 1982 where the industry fended off by itself an attempt by the American lumber producers to have a duty put on Canadian lumber. It should be mentioned that at that time the industry spent some $7 million and won its case. The government did not help. In 1986, the Americans started again and this time the government negotiated, on behalf of the industry, the softwood lumber agreement where it bowed to American pressure instead of letting the Americans impose the duty on Canadian softwood lumber and go immediately to GATT. Then the second error had not been made yet. The memorandum of understanding was grandfathered into the free trade agreement. Like other speakers have said, the free trade agreement was there to abolish tariffs and barriers, not to increase them.
Of course, there have been serious consequences to this memorandum of understanding. In my riding alone six sawmills have been closed and 2,500 jobs have been lost. Exports to the U.S. plunged from a high of 88 per cent in 1986 to a mere 5 per cent in 1991. The remaining sawmills are operating at half capacity, not only because of the recession, but primarily because of the 15 per cent export surtax.
At the national level, from 1988 to 1991 Canadian exports have declined steadily, 12 per cent between 1988 and 1991 and 5 per cent in 1991 alone. The share of the U.S. market has dropped from 33 per cent in 1987 to 26 per cent in 1981. When one considers that lumber exports to the United States account for $4 billion a year, 7 per cent is the equivalent of $280 million a year less that the industry is making. This explains the thousands
March 11, 1992

and thousands of jobs that have been lost to date and the risk of losing more in the very near future.
Today the province of British Columbia is mostly affected by this countervailing duty. It has some 333 sawmills and 700 small ones, which employ a total of
28,000	people in normal conditions and a further 25,000 are employed in the logging industry.
I would just like to remind the government that on top of the increases in stumpage fees that the B.C. industry was already paying, some $650 million had been paid since the inception of the memorandum of understanding and which then bottomed down to a zero per cent surtax because of the increase in the stumpage fees. Today they are back at 14.48 per cent.


An hon. member:: A double tax.


Réginald Bélair: Many northern Ontario mills and B.C. mills, as well as Quebec mills, will feel the crunch. There will be thousands and thousands of lay-offs across the country. Who should be liable? Who should be responsible for those? This government should be responsible.
During Question Period yesterday I asked the Minister for International Trade what his government was prepared to do for both the industry and the workers. He avoided the question and now those people are left to fend for themselves and wait for a ruling which we are not all so confident will be in our favour.
This countervailing duty was initiated by the U.S. commerce department and the U.S. in this case, as in all other cases, is at the same time the judge, the prosecutor and the jury.
Given that my time is quickly running out, I would just like to make a few proposals of possible actions or remedies that could be taken by this government. There could be some rigorous inspection of American products crossing our border. What comes to mind readily is fruit and vegetables. There could be rigorous inspections to the point where the transport trucks would back up right down to the the Napa Valley in California. Talking about California, why not impose an import tax on California wines that are in direct competition with Canadian wines? Then the largest state in the United States would receive the same medicine that the U.S. commerce department is serving to us today.
Softwood Lumber
Second, Canada should embark on an aggressive promotional campaign of our softwood lumber and other forestry products in the United States. It should stress the quality of our paper and our fibre and it should underline the impact on home construction to Americans.
To this effect I received a press release today from the National Association of Home Builders, put out by its president, Mr. Robert Buchert and I quote him: "In the last two months we have seen prices soar over 30 per cent" and "As a result of the countervailing duty, home buyers will have to pay as much as $1,000 more on an average priced new home". Then he calls the countervailing duty a protectionist measure.
Therefore, there is a possibility here that we could have the American public on our side.
Just to conclude, I still strongly believe that this is an unjustified provocation. It is an unfair trade practice which is totally contrary to the spirit of the free trade agreement. The Americans are interfering in our politics and we also differ very much on the interpretation of the words "free trade" as both definitions are not compatible at all. For the Americans it is a one way street leading straight to the United States.
To conclude, I would just like to say that this countervailing action, this harassment strikes directly at the core of rural Canada, which is all of northern Canada.
It directly affects the quality of life of 100,000 Canadians. These Canadians are only asking for job security. They want to earn a decent living in a dignified manner.
The least this government could do, with our support of course, is fight until we have used our last ounce of energy in order for ordinary Americans to benefit from the high quality of Canadian softwood lumber.


Pierre Blais: Mr. Speaker, I am pleased to participate in this debate this evening. I rise not only as minister, but more importantly as the member for the constituency of Bellechasse, which I have the honour to represent and in which there are hundreds and even thousands of jobs related to the forest industry which, over the years, has experienced some prosperity but which is now undergoing an important restructuring for various reasons. That restructuring, especially following the decision that we are dealing with now, could jeopardize many companies whose main operations are in my constituency as well as in other

Softwood Lumber
ones, such as Abitibi-Temiscamingue, and could also put many jobs at risk.
Mr. Speaker, the real issue has to do with the differences of opinions concerning the ability of the Canadian industry to gain a fair share of the market for public forest resources. Our American neighbours seemed to be of the opinion that if our system does not exactly reflect theirs, then it has operating problems.
In fact, Mr. Speaker, the leasing and pricing systems of the Canadian provinces have evolved over time to reflect the unique perspective and social reality of Canada. Those systems work for Canada. The approach of our American neighbours as regards forest management is simply difficult to accept for our government and for Canadians.
Mr. Speaker, I would like to take a few minutes to review the basic management initiatives that were taken, among others, by the Canadian provinces, and compare those to the American way of doing things.
The systems of forestry management in Canada and in the United States may differ, but they pursue the same objectives, namely to draw revenues from public forest lands, to promote the stable and non-speculative development of forest resources and investments in the infrastructure, and to elaborate profitable but also environmentally acceptable practices to protect the numerous uses of forests for future generations.
Mr. Speaker, both systems are aimed at achieving those objectives, but the Canadian system has enabled us to avoid many of the problems experienced in the United States. Let me give a few examples. The revenues from the sale of softwood lumber from most of the American national forests are lower than the administrative costs for each of those forests. Canada is much more successful in achieving its objective, which is to make a profitable venture of the forests that belong to the state and that we call public lands.
In the short term, the American system of cutting lends itself to speculation cycles. At the end of the 70s, American timber companies engaged in a war of speculative submissions to obtain the cutting rights on public lands. That war drove the cost of those rights well over their estimated value at the time. On the other hand, our system of forest management relies more on programs requiring companies to make investments based on longterm commitments and not on short-term forecasts as is often the case with our American neighbours.
The Canadian system prevents the type of shortsightedness and short term speculation that forced the American government to provide massive aid to timber companies. It is the American government that pays for the regeneration of most American national forests that have been cut, as well as for most of the access roads.
In Canada, the provinces have passed most of the costs on to industry. This has been done gradually, in a rational way so that these costs can be borne in the long term. For example, Quebec changed its forestry policy so that Canadian industry must now pay more for wood. On December 19, 1986 the Quebec National Assembly passed a new forestry law which took effect on April 1, 1987. It led to a thorough review of forestry policy and of cutting rights in the province. The charges for wood harvested on public lands are now based on prices in the private sector.
Implementation of this new rate system resulted in a 300 per cent increase in the price of wood. Furthermore, the new Quebec rate structure is based solely on the market price. Quebec producers have also had to pay higher costs for protection against insects and diseases and had to meet stricter environmental standards that increased operating costs.
The American system, however, makes it difficult to enforce environmental standards because the American government long ago transferred most public forest lands to private companies. For its part, Canada maintained control over public forest lands. The Canadian provinces have chosen to maintain most of their forest lands in the public sector, so that the resource can be managed in the long-term public interest.
March 11, 1992

Therefore, Mr. Speaker, the provincial governments can more easily supervise forests to ensure that companies apply the appropriate cutting practices and honour their forest management obligations. The American system promotes over-exploitation because it is based on short-term contracts. It is less interesting for companies to delay harvesting or to manage their cutting programs so as to make subsequent cutting activities easier and less costly.
On the other hand, the Canadian system promotes a sustained yield over the long term because Canadian provinces require most forestry companies to plan their cutting and silviculture activities on public lands over much longer periods of time. In fact, it is in the interest of those companies to maintain the long-term productivity of the forest that they exploit. This is very simple and the fact that they have reached that level has precisely made Canadians and managers of Canadian forests, both public and private, more aware of the long-term problems of that industry, and it has led them to take measures to preserve that renewable resource.
Not only is the Canadian system of forestry management better than the American model, but it also gets no subsidizing and this is what Canada intends to demonstrate by every possible means. Fortunately, thanks to the Free Hade Agreement, we now have an independent panel for dispute settlement. Canada is the number one ally and commercial partner of the United States. Our two countries have signed the most comprehensive Free Trade Accord in the world. It is not surprising that the way the inquiry is being conducted gives rise to more and more concerns since Canada is being treated like an enemy rather than an ally.
Mr. Speaker, honest trade is based on abiding by equitable, coherent and similarly applied rules. Since my time is running out, I will conclude by saying that again today I received representations from forestry companies in my riding. I want to tell them, on behalf of my government, that with the help of my hon. colleague, the Minister of Forestry, we will take every possible action to protect the interests of Canada and of the provinces. The Free Trade Agreement will precisely enable us-


An hon. member:: You should have done it earlier.
Softwood Lumber


Pierre Blais: The hon. member says I should have done it earlier. I have been working on this for five years now. I have even worked with the hon. member in the past and he had seemed quite pleased with my involvement with the U.S. government, especially considering that we won. We won then, and we will win again this time because I am confident in the minister and in this government. Perhaps it is about time for us to bang on the table with our fist. If need be we will do it and we will get the Americans to play fair, Mr. Speaker.


Bob Wood: Mr. Speaker, we are here tonight to discuss the dismal state of perhaps the most important industry in our country, that being forestry, and the actions and really the inactions of this government.
It is no secret that the policies that this government has been pursuing have crippled this most vital sector of our Canadian economy. All one has to do is really to read the headlines in newspapers from all across the country to get the flavour of what has been happening.
All this has happened with a government that pays lip service to the need for international competitiveness, while at the same time throwing hundreds of thousands of people out of work with its high interest and high dollar policies. Now it wants us to believe that the recession is over.
Somehow I do not think that the 1.5 million Canadians out of work are going to take stock in the government's claims. Moreover, I do not think that the many mills that have closed all across the country from B.C. to Quebec and the tens of thousands of forestry workers who find themselves with no jobs are going to believe this either.
This government has single-handedly destroyed our forestry industry. And just how important is the forestry industry to Canada? Well, over 900,000 direct and indirect jobs are provided by this industry and over 350 communities across Canada depend on forestry for their survival.
This is a critical industry for us, but tonight I would like to focus on a more specific aspect which is why we called for this debate tonight, namely the softwood lumber industry, an industry that has been ravaged by the federal government.

March 11, 1992
Softwood Lumber
Why did this government bend to U.S. pressure? They used the old the devil made me do it excuse, explaining that the Americans would have levied the tax anyway and that it would be better for Canada to collect the money instead.
Let me assure you that this is little consolation for our forestry industry. Why did it accept the allegation of subsidy at face value without challenging it after it had vowed to fight? Can you imagine what would have happened if the government did not fight? No doubt our forestry policy would be coming out of Washington.
In trying to answer these questions the only answer that comes to mind is that the government wanted to smooth the progress of the free trade talks which were on the Canada-U.S. agenda at the time. It did this by taking a two by four to our forestry industry.
At the time most trade experts felt that Canada would have won this lumber dispute if it had taken it to the GATT, the body governing world trade, for a ruling. Even people like Adam Zimmerman, who is president of Noranda Forest, publicly stated that we should have taken our chances at the GATT.
What has the MOU done for Canada? It has caused countless mill closings and tens of thousands of people to be thrown out of work. It has seen Canadian market share of softwood lumber in the U.S. decline from 33 to 25 per cent, its lowest level in 13 years. But wait, just when you think its bad, it gets worse.
The most important aspect of the MOU and its most dire consequence is that Canada's sovereignty has been directly threatened. Under the terms of the MOU the 15 per cent duty called for could be reduced or rescinded only with American approval. This effectively meant that a piece of Canadian tax legislation reflecting Parliament's sovereign right to levy taxes could only be amended with the consent of a foreign power, in this case the United States.
Somehow in its drive for free trade this government managed to set the most disturbing and dangerous precedent in Canadian history. Big Brother to the south is alive and well and he is watching very closely after all.
There can be little doubt that provincial forestry practices have changed significantly over the five years.
Our industry is picking up a greater share of the cost. For example, British Columbia has increased its stumpage fees by 156 per cent. Thank goodness that the leader of the Liberal Party in B.C. has been pushing the government toward action while we still have a softwood lumber industry to rely on. It concerns me that in an effort to move to a more market-based pricing system for timber it is the Americans dictating the pace and our practices. When their practices do not suit them they change them unilaterally. However, it seems we do not have the same luxury.
U.S. companies bid for their timber rights in three to five year contracts. If they guess wrong on what the price of timber will be in the future, and they quite often do, it can be very costly for them. Consequently, in 1984 the Timber Contract Modification Act came into being in the United States to give lumber producers some relief. I wonder if this will be considered a subsidy.
On September 3 of last year the Conservative government formally notified the U.S. administration that it was cancelling the MOU. It took the government five years, after bleeding our softwood industry for almost one billion dollars in additional taxes, to find the spine to cancel an agreement that should never have been in place. All of a sudden, out of the blue our government was talking tough.
On the other hand, the Americans wasted no time in taking action against Canada in response to this decision. They wasted no time in playing domestic politics with international trade. The day that the memorandum of understanding was scheduled to be terminated the Bush administration announced that it would impose provisional countervailing duties on the provinces of Ontario and Quebec and the prairies. After all, the U.S. administration had to be seen to be tough on trade issues if it were to gain the necessary approval to enter into the North American free trade talks with Canada and Mexico. With its latest decision, which slaps on duties of
14.48	per cent, the U.S. administration has reaffirmed that it is more important for it to pander to special interest groups than to honour international trade agreements.
Unfortunately, these acts of political bravado were taken at Canada's expense by giving our already battered forest industry a black eye.
March 11, 1992

In good times the U.S. is the world's free trade crusader. However, in economic downturns and in election years it seems to suffer from PMS, protection mood swings.
The latest American action effectively undermines our ability to make decisions affecting our resources. The U.S. has sent us a clear message that we need its approval and must play by its rules before establishing our own policies. What is our government doing? How is it responding to the Americans to protect our interests? You had better buckle up, Mr. Speaker, because we have taken the bold initiative of asking the GATT to rule on whether or not stumpage is a countervailable subsidy. To put it another way, the government has asked an organization that the United States has openly shown disdain for and whose rulings the U.S. never abides by to tell us that the way we value our natural resources is okay, even if it displeases the Americans.
To give members an idea of exactly how ridiculous are the claims of the Americans, consider the following. They are now saying that because we have in place a policy that restricts exports of raw logs, this amounts to an unfair subsidy to our industry. This is the next stage of the battle. The argument is that by limiting the amount of raw logs to export markets, more are available to our companies and this keeps the price artificially low.
In other words, we should be penalized for being blessed with an abundance of natural resources and for wanting to develop our economy as opposed to shipping everything out and buying back the finished product. This claim is so unreasonable that the American Coalition of Fair Lumber Imports is split on the issue. The states in the Pacific northwest have similar laws in place because they are facing severe lumber shortages. Indeed, just last December a Portland, Oregon newspaper published an editorial which actually supported Canada's side of this issue.
Not long ago I stood in this House to question the government on another trade threat by the U.S. concerning plywood exports. The government's answer to this was to tell me to stop trembling every time the Americans threatened us on a trade issue. When Congress was threatening an omnibus trade protectionist bill, this government trembled so much that it gave us a free trade agreement where the only thing free was the
Softwood Lumber
ability of the Americans to challenge and change any programs we had as a country.
After all is said and done, the fact remains that we are stuck with a free trade agreement with the U.S., an agreement that was supposed to give us free and secure access to the U.S. market. Clearly this has not been the case, as we were promised, and the softwood dispute only serves to illustrate the point. Our government told us when it gave notice to cancel the MOU that it was on solid footing. If that is the case, why has it not responded in a more forceful manner to this latest attempt of harassment by the U.S.?
Finally, the time has come for all members of this House to stand together and deliver a message to the Americans. We must let them know in no uncertain terms exactly what we think of their actions. Nobody wants a trade war because no one wins in one, but perhaps it is time that we started protecting our interests and living up to the spirit of the free trade agreement in the same way that they have. Today it is our softwood industry that is being insulted. Tomorrow, who knows what it will be?


Mr. Michel Champagne (Parliamentary Secretary to Minister of Forestry):: Mr. Speaker, I am delighted to participate this evening in this debate on what the Prime Minister in his speech rightly called the U.S. highhanded approach towards our Canadian wood producers. It is always most disturbing to see a country which claims to be a leader in international trade, in the elimination of subsidies distorting the export markets and an advocate of so called fair play rules, resort to an absolutely arbitrary and discriminatory 14.48 per cent duty on Canadian softwood lumber.
Mr. Speaker, one cannot help but really wonder about what the Americans think of their trade partner-in this case Canada-in such situations. Their move is almost inexplicable, especially considering its protectionist nature and the fact that it might accentuate distortions on international export markets. It is also a roundabout way by which the Americans do not trade fairly.
This softwood lumber saga is nothing new. The 14.48 per cent duty imposed by the U.S. is not their first attempt at destabilizing our economy. It all started in 1982. In 1986 we had a MOU, and today we have this

March 11, 1992
Softwood Lumber
infamous 14.48 per cent provisional duty which, according to what we hear, should become permanent later this year.
In 1986, when we put into place the MOU, the Memorandum of Understanding with the United States, it was a shared responsibility with the provinces for, as you know, forest management like all resource management is under exclusive jurisdiction of the provinces. Of course, under the Constitution, the federal government can enter into international treaties or negotiate international agreements, which is what it did when it accepted the MOU with the consent of the provinces.
Americans were claiming then that we were giving unfair subsidies to the industry, which had the effect of distorting the American market. This was discussed with the provinces and we came to the conclusion that by imposing a 15 per cent export tax, we could keep the proceeds on this side of the border. This was a compromise, since the Americans were requesting a 30 per cent tax. We managed to bring it down to 15 per cent. In every Canadian province new structures were put in place, including extensive changes to the way this natural resource was managed, the way the forest was developed. I am thinking about Quebec in particular which passed a new law on stumpage fees in public forests. Stumpage fees charged to companies were increased. Much stricter measures were put in place with positive results. We managed to reduce the 15 per cent tax imposed at the start to 3 per cent.
The government decided to terminate that agreement at a certain point in time because it then believed, and it still believes, that Canada's way of managing its forests did not create any trade distortion and that free market could now give way to competition, to the delivery of Canadian wood on the American market. In any case, the Americans are not doing us any favour when they buy Canadian wood, they need it. They are not being neighbourly, they are buying our wood because it is of high quality, because we can offer it in good enough quantities and because their building industry has needed it at a rate of between 25 and 30 per cent over the last few years.
The Americans are saying we are damaging their industry, so they impose that new 14.48 per cent tariff. A look at our exports show they have decreased in recent years. How much of a "distortion" can we create on the local American market when in fact our exports to the U.S. are decreasing? Mr. Speaker, I think this excuse makes no sense, it does not stand analysis, it can only be
explained by narrow partisanship, by the fact that there is an election campaign going on in the States. If one practices excessive protectionism, Mr. Speaker, one reaches a point where the situation becomes extremely paradoxical.
I am thinking of course of all those Americans who will want to build a house during the coming year. By decreasing substantially their importation of Canadian lumber, by adding a 14.48 per cent tariff to the cost of the product, the United States is creating a situation where the onus will be on the consumer, he will have to foot the bill. It will not be only Canadian consumers or Canadian workers, but also American consumers.
You know, Mr. Speaker, that in the United States the economic development or recovery is as bad as ours, if not worse. I think that the Americans took totally arbitrary decisions. I maintain my position. I also agree with what the Prime Minister said, that this is not the way to treat an ally, a friendly country which has signed a free trade deal, the most comprehensive one that exists and that is a model in the present GATT negotiations. You do not treat that way an ally who supported the Americans in several issues these past few years. You do not act that way by giving the excuse that, for a few moments, for a few months, a neighbouring country will develop a higher protectionnist measure than is within the norm in order to satisfy political interests.
Mr. Speaker, the presidential election will come and go, but there will always be people who will have to work with other countries. At the GATT, we also sit with other countries. We know that when Americans decide to be virtuous, as they enjoy explaining it to us at the GATT, we can remind them that it's fine to speak of virtue, but it's another thing to practice it, particularly when they try to impose on us a preposterous 14.48 per cent duty.
I can give examples, because it is possible to say that we, on the Canadian side, are not 100 per cent objective, but rather biased. Take for example companies in Quebec-for the province is greatly affected by this American decision-and think about what Americans have done last March 6. You can state the criterium approximately as follows to apply this 14.48 measure: "are exempted from the countervailing duty all businesses which get their lumber supply exclusively from the U.S., or from private woodlots situated in Quebec, or partly from public forests in Quebec, but in quantities such that the financial advantages of these purchases, according to the American method of calculation, are minimal or insignificant, representing what is known as the de
March 11, 1992

minimis rule in the international trade jargon". This minimal advantage equals 1/2 of 1 per cent.
Let's take for example a company from the riding of the hon. minister, Mr. Blais. For the reference period used in the study made by the U.S. department of commerce, between April 1, 1990 and March 31, 1991, here is how the volume of wood supplies for the Malbeque company was distributed: from the United States, 87.2 per cent, from private woodlots in Quebec,
9.9	per cent, from public forests in Quebec, 2.9 per cent. The so-called financial benefits from such a distribution are only 0.11 per cent, well under the 0.50 per cent tolerated by the department of commerce.
Mr. Speaker, this is another striking example of why, in the government, in the House of Commons, why all three parties have agreed to take part in this important debate on softwood lumber and on the way we have been treated. That is why we will join forces to fight this battle.
We have appealed to a GAIT panel. We know that the bi-national panel established under the free trade agreement will go into action as soon as the Americans make a final decision on the countervailing duties, which they should do in late May or in June. At that point, Mr. Speaker, we will fight tooth and nail, we will continue to make sure Quebec and Canada forest industries win their case, which will enable them to continue to export first quality products in the United States according to honest and fair international trade regulations regarding softwood lumber. We will then be able to keep our jobs in this country and allow our families to earn a living with dignity.


Ms. Joy Langan (Mission -Coquitlam):: Mr. Speaker, we have heard the Minister of Forestry outline the history of the softwood lumber tariff. He gave us a virtual chronology of events; not an analysis of the problem, not a clear plan for a resolution of the problem, but a chronology of events.
Softwood Lumber
We have heard the minister for science and technology outline a story about equality at the table: a Canadian judge, an American judge and an independent chair. "We are equal", he said. We are equal all right, equal under American law. It does not take a minister of rocket science to figure out just how equal that means we are.
The softwood memo of understanding has been grandfathered into the free trade agreement, and the minister said: "Thank God for the free trade deal because there is a dispute mechanism".
Let me remind the minister that Simon Reisman, our negotiator in the free trade negotiations, was never able to get Peter Murphy to agree to a common set of rules to govern our trade deal. The rules are based on American laws and the U.S. interpretation of those laws. The dispute settlement mechanism that the minister spoke of, that the minister is relying on to protect our lumber producers, was Canada's fallback position and fall back we did.
Simon Reisman conceded, in Linda McQuaig's book The Quick and The Dead:
- if he had known at the outset that the Americans would not agree to a common set of rules, he would never have gone through the whole exercise. "If they had said (at the beginning), "There's no way we are going to do that', I'd have thrown in the cards. I'd have gone to the Prime Minister and said, 'Get yourself another boy'."
The Americans won at the table and we find ourselves today in an emergency debate about a new tariff on Canadian softwood lumber.
I would like to thank my colleague, the hon. member for Prince George-Bulkley Valley, for his perseverance and hard work in achieving tonight's emergency debate. I noted with interest the Minister of Forestry who represents a riding in British Columbia, a very softwood dependent riding, did not mention the impact the tariff would have on the beleaguered forest industry in his riding. Worse still, he did not even mention the tremendous burden this tariff would have on the workers in his riding or the small businesses dependent on their incomes.

March 11, 1992
Softwood Lumber
I would like to ask the minister: What about the workers in Chetwynd and Dawson Creek? More than
7,000	workers in the industry have lost their jobs because of the MOU before this tariff in British Columbia.
I would like to speak to the impact of this tariff in my riding of Mission-Coquitlam. This 14.5 per cent tariff translates into $75 per $1,000. Many people wonder just what is softwood lumber. There may be some people really wondering that. What we are discussing here is 2x4s and other home construction woods.
Some B.C. employers in the industry have said they can absorb some of the extra cost of this tariff, but what will the cost be to the workers? While the industry has said that if it has to pick up the extra costs there will have to be a reduction in production, that means jobs lost.
In my riding in the Fraser Valley lumber mills run from Mission to Coquitlam along the Fraser River. One mill is operating at full production. That mill is Hammond Cedar and it is operating full tilt because B.C. cedar is second to none as a decorative lumber. Every other mill in my riding, the White Wood Mills, the ones that produce housing material, are on half production.
When I spoke today to Dave Tones, president of the IWA Local in my riding, he told me that 40 per cent of his membership is laid off; 40 per cent laid off before the tariff last Friday. He said that every woodworker understands who got them into this mess. They know that the way to turn the industry around is to reduce interest rates, to lower the Canadian dollar, and to get rid of this unfair tariff.
Peter Murphy, the American negotiator in our Cana-da-U.S. Free Trade Agreement, has been heard to say that he does not think Canada will be successful in fighting this tariff under the dispute mechanism. That is interesting because Canadian lumber does not injure the U.S. The countervailing duty investigation, self-initiated by the Department of Commerce, is not about economic injury caused by Canadian imports but about retaliation against Canada for its lawful termination of the memorandum of understanding on softwood lumber.
The allegations that imports of lumber from Canada cause injury to the U.S. lumber industry are derived from five basic myths. The first myth is that Canadian imports are growing during a period of weakening demand in the U.S.
The fact is that during the past three years, Canada's export volume to the U.S. has declined steadily, falling nearly 12 per cent between 1988 and 1990 and an additional 5 per cent this year.
The second myth is that the U.S. lumber producers are facing a cost price squeeze caused by imports from Canada as log costs rise faster than lumber prices.
The fact is these cost price pressures exist in certain regions of the United States but not because of imports from Canada. They result from a withdrawal of harvest lands for environmental reasons and substantial exports of U.S. logs to Japan.
The third myth is that U.S. lumber prices are falling. The fact is both U.S. and Canadian prices have increased more than 8 per cent since 1988 and were near their peak level in the third quarter of 1991.
The fourth myth is that Canada's alleged subsidies caused Canada to overproduce. The fact is over the last decade Canada's lumber production as a share of total North American lumber production has remained constant.
The fifth myth is that B.C. and Quebec will undo the replacement measures implemented under the memorandum of understanding and reduce the over-all cost to Canadian industry. The fact is that changes in stumpage and forestry measures have been introduced in several Canadian provinces since 1986 for compelling domestic reasons and have become law. There is no reason to expect any changes, nor is there an increased economic incentive to undo replacement measures.
The workers in the forest industry in British Columbia were just offered zero per cent in the first year, zero per cent in the second year, and 85 cents on the base rate in the third year of a three-year agreement. That 85 cents translates to 4.9 per cent on the base rate in the third year of a three-year agreement.
This is clearly private sector industry on the ropes. These are workers and whole communities that are on their knees. They are depending on this minister and the government to defend them. My colleague from Prince George-Bulkley Valley said that we have to keep up the fight at GATT and we have to stand up for Canada, the forest industry, small communities and businesses, and forest industry workers. I concur with that.
March 11, 1992

We have this government to hold accountable for this serious problem. We will continue to pressure this government to do the proper and right thing, to take the measures that are required and to ensure that this industry does not go the way of the dodo bird because this government is incompetent and incapable of leading this industry out of this problem.


Mr, Francois Gerin (Megantic-Compton-Stans-tead):: Mr. Speaker, I welcome this opportunity to take part in this emergency debate on softwood lumber, an extremely important issue for many workers in Canada and in Quebec as well, especially in the eastern townships and Beauce, which are my particular concern.
I fail to understand why the government did not agree to an emergency debate on such an urgent matter when it was first requested. The opposition parties, including the Bloc Quebecois and a few government members, actually had to get together and tell the government this didn't make sense, that we had to react, that there was a serious problem and that we needed an emergency debate. The government resisted and postponed the debate. Today the debate is on. Incidentally, Mr. Speaker, when the Mulroney government gets together with the Group of Seven, it pretends Canada is a really important country, but when we are talking about GATT, all of a sudden Canada is only a very small country, one of 108.
This goes to show how little the government is concerned about the damage it is doing to this country's workers. Well, in any case, we got this emergency debate, a bit late, but we are having it today. This reminds me of what the Minister of State for Agriculture said earlier: Now we are going to act. Yes, but it's too late! Now we are going to act, when the deed is done. And this is more or less what the government is doing all the time. Now we are going to act. Well, it's pretty late to do anything at all, isn't it?
I suggest that members with sawmills in their ridings go and explain to those workers who are going to lose their jobs why this government did too little, too late. Thousands of jobs in Quebec are at stake.
Tonight I want to tell you how off-hand this government has acted with the interests of those workers on this whole matter of softwood lumber. I don't understand this behaviour. I don't understand why they acted
Softwood Lumber
this way. Does it have hidden interests? Does it have something it wants to deal under the table, giving up in the process an industry employing thousands of people in Quebec? Because Quebec is a bigger loser in this whole matter of softwood lumber than any other province. Quebec could have dealt with this problem without any help from the Government of Canada and would have done much better.
Ibday a sawmill sent a closing down notice to the Quebec labour minister; 55 jobs are lost. They had just received this notice about a 14.48 per cent tax, and I will talk to you about it. I can tell you also that I have some ideas about what the Government of Canada should do to try to pick up the pieces.
Now, Mr. Speaker, this government's off-hand way of dealing with the problem of course has been denounced by the Quebec Lumber Manufacturer's Association. Prior to the American action, the association told the Canadian government: Do not give away the 3.1 per cent tax agreement we have with the Americans. Do not do that, you would make a serious mistake. The government ignored it. The Canadian Forest Industries Council had told the government: Do not give away this 3.1 per cent tax agreement we have with the Americans. It's just what we need. If you remove it, we will have a serious problem. And you know our Finance Minister who has more than doubled the national debt, when he had said in his first budget speech that there would be no more deficit in 1990-1991.
That same person, the lord from Toronto, without paying any attention to the Quebec government or to the association representing dozens of sawmills in Quebec, decided unilaterally to terminate the agreement that we had with the Americans at 3.1 per cent. The Prime Minister, decided to do that unilaterally. He said, and so did his minister, that they took political precautions. He had met Mr. Bush who had not given him any answer. As they say today in most American newspapers, maybe he did what Mr. Bush had told voters to do a few years ago, "Read my lips", but he did not read much. One thing is sure, either President Bush is a liar or Prime Minister Mulroney was completely mistaken. But one of them has gone wrong somewhere, and I think he is on this side of the border because, after the American government decided to impose a 14.48 per cent duty on all softwood lumber exports to the United States, the Canadian Prime Minister said that it was the doing of some bureaucrat. Well, the director of the Quebec association told me that more than 65 American senators had signed the petition

March 11, 1992
Softwood Lumber
circulated by the American organization asking for a countervailing duty on softwood lumber.
If 65 American senators are just bureaucrats, I wonder what kind of political image the government of Canada and its Prime Minister have of the United States, our trading partner. Based on all the information that we had, the American government had agreed that the countervailing duty be imposed province by province. It had even decided what that rate would be. For the government of Quebec, the province of Quebec, the sawmills of Quebec, the sawmills in my constituency, the sawmill Paul Vallee Inc., the sawmill A.D. Bernier, the sawmill Beau Chene, which all employ some 50 people, it was 3.78 per cent.
The difference between 3.78 per cent and 14.48 per cent means survival for our sawmills. That is the way it is in the constituency of Temiscouata and Bellechasse. The Minister says: From now on, we will act.


An hon. member:: It is a bit late.


François Gérin: Where I come from we would use terms that are very close to the word "stupid".
Mr. Speaker, the government of Quebec was not consulted. It complains that it was not consulted and it had an agreement with the Canadian government. So I ask you who is to blame?
The problem for sawmills in Quebec is not the same one as for sawmills in British Columbia and it must not be treated in the same fashion. Gordon Ritchie was the Canadian negotiator for the agreement, among others, on softwood lumber and the GATT. When asked by officials of the Quebec Association: "If there is a countervailing duty, will it be at least a duty imposed by province rather than a national tariff?", Mr. Ritchie replied: "It will be a national tariff because the unity of the country is at stake." Well, Mr. Speaker, national unity just cost 55 jobs at Paul Vallee Inc.. National unity also cost 50 jobs at Beau Chene and it will soon cost a hundred jobs or so at A.D. Bernier. That situation is not
unique to my constituency and I might add that there are 75 constituencies in Quebec.
Mr. Speaker, is it worth it in the name of national unity, for something that could have been done differently, to waste so many jobs and to affect regional development so much? I tell you that it is not worth it. Mr. Wilson claims that Canada is too small to do normal business with the United States. I tell him that Quebec would have been able to do a lot better.
I will conclude by urging the minister to immediately tell Americans that Quebec has jurisdiction over its forests, that Quebec is capable of negotiating an agreement for its own province, that Quebec agrees with the 3.8 per cent rate, and to immediately restore the exemptions for those who import their lumber from the United States to give it an added value in Canada and then export it back to the United States. I am talking about the sawmills from the eastern townships and the Beauce region that are close to the border. I realize that my time is up.


Mr. Yvon Cote (Richmond-Wolfe):: Mr. Speaker, like my colleagues who have already spoken, I believe we all share the same indignation, the same disappointment over the event which many consider very serious. According to them, this issue originates from Mr. Bush or, at least, certain of his supporters. So I share this indignation with all my colleagues. In a free trade agreement, where there is a partnership, where the exchange should be fair, it is inconceivable that one partner would take advantage of the other, often in an all too obvious manner.
To all my colleagues, Mr. Speaker, to the government, to the Prime Minister and to those who have spoken before me, I express my disappointment and my indignation.
I must say, however, to clarify the circumstances, that this decision was taken in a particular context. I can imagine, as is the case in some businesses, that you have shareholders who have a more or less twisted way of thinking, who have hidden, circumstantial, or electoral interests, and who have, momentarily maybe, goals which are not those of their companies, but their own. And I understand that in certain political circumstances, one can suspect, since there is a lot going on in the
March 11, 1992

United States at the present time, that there were, in my opinion, attitudes, decisions and strategies which led to this. Nevertheless, this must not stop us from being against and denounce everything the United States have done in this matter.
I would like however, Mr. Speaker, to recall how all this happened. Everything started on December 30, 1986. The United States and Canada signed, that day, a memorandum of understanding on softwood lumber by which Canada accepted to impose a 15 per cent duty on Canadian softwood exports to the United States. That duty could be reduced or eliminated, and I stress this point, if the provinces applied replacement measures having the effect of increasing stumpage fees or other fees charged to softwood lumber producers.
Consequently, there were, along the way, two measures which were taken, but which would take too long to explain. So when we cancelled the memorandum of understanding, most Canadian exports of softwood lumber to the United States, indeed more than 92 per cent, were subject to much higher stumpage fees and other related taxes. On September 3, 1991, Canada exercised its right under the terms of the MOU to denounce the agreement and it consequently advised the United States that the MOU would be terminated on October 4,1991.
Before coming to this decision, Canada went as far as using the American accounting method in order to compare the cost of forestry for the provinces to the revenues produced, and this for the four main softwood lumber producing provinces. That analysis, Mr. Speaker, demonstrated indeed that in all those provinces stumpage revenues far exceeded their forestry costs, a situation which gave our government the reasons it needed to pull out of the agreement.
I know, Mr. Speaker, that this decision of the United States has enormous consequences for our industry. The two provinces most affected are British Columbia and Quebec. I share with my colleagues from these two provinces, but also from the rest of Canada, a sense of indignation when faced with the very negative impact of this measure. We will not stand still.
The previous speaker feels free to speak now that he has left the government party, but he might have expressed a few years earlier the concerns voiced by producers that he has just mentioned. It is a shame that, a few year later, a Bloc Quebecois member would come
Softwood Lumber
and denounce a policy when he already knew the arrangements we had made with our U.S. trade partner.
I agree with him about the harm done to Canadian businesses, particularly in the eastern Townships and the Beauce area which I know well. Ib show you how much I share his outrage, I must point out that the Americans seem to be peddling a number of myths to excuse, defend or justify such a move. One of these myths, Mr. Speaker, is to claim that a decrease in the demand in the United States produces an increase in Canadian imports, which could indeed justify the move by the United States to block or slow the flow of exports from Canada into the U.S.
But that is not the case. Quite the contrary. I have a breakdown here of the softwood lumber production and consumption in the United States versus their imports. Let us start with the American production in relation to their consumption. Over a 10 year period, the volume of softwood lumber produced in the United States, in thousands of board feet-that is the measure I have- has gone up from 24.7 to 35.8, an 11 per cent increase in production. We can assume the demand reached at least that level. What about the consumption or the demand in the United States? At the same time, within 10 years, the demand went from 32 billion board feet to 45 billion.
If you remember, Mr. Speaker, I was talking earlier about a domestic-only production of 38 billion, with a simultaneous domestic demand of 45 billion. As you see, there was a surplus in demand. Hence, in 1990, the United States had to find a supplier. They turned to Canada, and to two provinces in particular. But let's look at what we produced and exported to the United States. Within that 10-year period, we increased our production only by 0.3 billion board feet. If you add it all up, the demand in 1990 was of 45 compared to a production of 35. That is a difference of 10, and we only increased our production by 3. So, Mr. Speaker, the United States have absolutely no reason to make such a drastic and unjustifiable decision.
But then, I come back to my initial argument. We can assume, and that will be my final point, that this decision, this initiative, is not justified since the figures and the table I quoted earlier show that, with a demand in the United States in excess of the American domestic production, Americans had every reason to import Canadian softwood lumber. And I want to insist on that in order to correct the mistakes made by my hon. colleague from the Bloc, who seems to have a totally different

March 11, 1992
Softwood Lumber
vision, which he could have, of course, compared to figures he was, however, very careful not to quote.
We all recognize that something went wrong along the way, and that we have to put things right. Let me assure you that this government, our government and our Prime Minister will see to it.


Mr. Joe Comuzzi (Thunder Bay-Nipigon):: Mr. Speaker, thank you for the opportunity to add my comments to this debate presently before the House.
As we all know, the forestry industry is Canada's largest single industry. It employs over 8,000 people throughout this country. It contributes over $40 billion a year to our national revenue. Of that $40 billion a year, $20 billion of it is in the transfer of payments and comes into Canada as a balance of payments into our account. Not only that, the forestry industry in this country has
8,000	companies, businesses both small and large, that are a direct result of all the products of the forestry industry.
Since my colleagues and I have been in this House of Commons we have pretty well defined the forestry industry into four major areas: the pulp and paper business, the fine paper business in which we are attempting to increase our sales at this time, the speciality paper business like corrugated boxes and so on that are produced by specialty plants in every province in this country, and softwood lumber.
The softwood lumber business and the industry is the reason for this very special and important debate that we are holding tonight on behalf of every sawmill worker and every sawmill from the province of British Columbia, from the shores of Victoria to the province of Newfoundland. It is vital to the future. It is the artery of our economy. If that stops, the economy of Canada stops. We must pledge ourselves in an absolutely nonpolitical way this evening to do whatever we can in order to ensure that the softwood lumber business in this country continues to be viable and strong.
We have heard in the debate tonight how we got into this terrible situation at this time in the history of Canada. My comments are not going to be a dispute on
we should not have done this or we should not have done that.
I agree with the minister when he said that the problem we face today is not a direct result of the trade agreement entered into approximately a year and two months ago. By way of historical background we had a very good softwood lumber industry with our friends in the United States, and with other countries. If there was any dispute it was settled by GATT and through normal negotiating processes between the countries with which there could have been some problem, particularly the United States.
That operated for over a hundred years in a very fine manner. If there was a dispute it went to GATT and we presented our case, the United States presented their case, GATT heard the case, there was a ruling and both countries decided to live with that ruling.
Prior to 1986 there were three disputes in which the Americans claimed, your friends in the United States, that there was an unfair subsidy to our forestry industry because of stumpage. Those disputes went to the dispute resolution mechanism in the GATT process. Each time, and after many hundreds of thousands of dollars, those disputes were found in favour of Canada. There was no unfair subsidy in British Columbia, there was no unfair subsidy in Alberta, there was no unfair subsidy in Ontario and all the other provinces in this country. We won that argument. We won that fight on three different occasions before 1986.
Then what do we do? We take a memorandum of understanding entered into prior to the trade agreement being entered into, that caused us some concern, that said that they wanted to go through a fourth hearing before GATT because the United States still felt that there was an unfair subsidy. We chose at that time not to fight it and enter into a memorandum of understanding. This is the folly of where we find ourselves today. The folly of this memorandum of understanding is that it was incorporated into the free trade agreement. By incorporating it into the free trade agreement we lost that wonderful mechanism in which we had been successful on three previous occasions. We now are forced to go
March 11, 1992

through the dispute resolution mechanism under section 18 of the free trade agreement.
That is how we find ourselves in this position today. All we have heard from the other side of the House throughout this entire debate and for the last two years is what we have gained in this free trade agreement. What we have gained in the trade agreement as it relates to the softwood lumber industry, to our sawmills and to our employees in the sawmills in this country, is simply a method of settling disputes which we had before the trade agreement. We were successful in negotiating those agreements under GATT, very successful, prior to the trade agreement.
That is where we stand today. We did not make any gain. It is a smoke screen when we say that this dispute settling mechanism that we did not have before is what we gained. That is sheer folly. We did have a very adequate dispute settling mechanism that worked to the benefit of all countries.
In my research for this little talk I discovered that there is only one country in the world that has ever brought a countervail against Canada, only one country in the world. That country is our friend the United States of America. In the entire history of the GATT only one country in the world has imposed a countervail duty on Canada and that is the United States of America.
The issue we have before us is supposed to be the softwood lumber industry. Before the memorandum of understanding the United States imposed a 15 per cent surtax on all the lumber we produced in Canada and exported to the United States. By their own admission- and we said on so many occasions that the 15 per cent surtax was an unfair one. We thought it should have been zero. We were quite willing to fight that dispute and take it through the GATT process, but that was now prevented because of the trade agreement. In its new calculation we see how it arrived at 14.48 per cent.
Although I am very concerned about northern Ontario and all the sawmills there, the province that is truly being hurt by this agreement today is British Columbia. In its calculations its stumpage is 6.88 per cent. With that 6.88 per cent and the real issue being logs, what happened is we refused to ship our raw products to the United States for manufacturing so it can then ship them back to us. The dispute is truly centred around the logs.
Softwood Lumber
Having said that, I want to offer this to the House and I do it with a certain amount of respect. I wish they would understand. There is only one thing we can do at the present moment in Canada to get us out of this terrible situation we find ourselves in. I want to end my speech on a positive note. This is not the first time things like this have happened.
In 1971 when the Americans imposed a surtax of 10 per cent on all exports from Canada to the United States, under Jean Luc Pepin we passed a law in this very House of Commons called the Employment Support Act. It had to do with raw materials that were converted as well as manufactured goods. It is a simple act. It is only five pages.
The act is administered by the Minister of Industry. It states what happens if we convert raw materials into another product for export. The purpose of the act is to provide a means by which to support levels of employment in Canadian industry when other countries impose-in this instance being the United States of America-temporary import surtaxes or take other actions having a like effect that adversely affect employment in Canadian industry.
I say that they should set up a board as the act calls for. I wish there were as many people looking into this program in the sawmill industry.
I will just take another minute, Mr. Speaker. Just let me read this section. "Upon application therefore to the board by a manufacturer who establishes that the workforce at his plant is or is likely to be significantly reduced through layoffs during a specified period by reason of the application of measures taken by other countries, that they can make an application and their application will be heard".
I implore this government to take immediate action to employ the Employment Support Act.


Mr. Gabriel Desjardins (Temiscamingue):: Mr. Speaker, it is with great interest that I join in this emergency debate tonight. I must say though that it is not with great pleasure, because it is the third time in about 10 years that this debate has come up in our country. I must tell you that, on October 21, 1986,1 made a statement here, in this House, about a preliminary decision by the United

March 11, 1992
Softwood Lumber
States to impose a countervailing duty on softwood lumber exports from Canada.
So my intervention today is nothing new since, in 1986, when the United States acted the same way with regard to our softwood lumber exports, I rose in this House to express the concern of the forest industry and of workers from my area. I said at that time, on October 21, 1986, that the decision made by the Americans was unjustified and unacceptable and that the government, along with the industry, the unions and the provinces, had to express its dissatisfaction and even threaten to take political and trade measures to retaliate against the Americans if they did not reconsider their decision.
So, Mr. Speaker, I would never have thought at the time that, six years later, on March 11, 1992, we would have yet another debate on that dispute with our American friends.
Since the U.S. commerce department imposed this new 14.5 per cent tax on all exports from Canada, the Prime Minister, the Minister of Industry, Science and Technology and the Minister for International Trade have reacted angrily to the U.S. decision to spring this tax on an industry that is so important to a riding like mine.
Mr. Speaker, if you happened to be a worker in the resource industry in Abitibi-Temiscamingue, you would be living in very anxious times.
When I look at our farmers and what they have to go through with the GATT talks and article XI-it is pretty obvious there is a lot of concern among our farmers. They told us all about it, and they know that the government will stand by its position and will continue to fight for clarification of article XI, so our farmers can have some peace of mind.
But now we have another crisis involving the forestry sector. God knows we didn't need that in a recession that has had a severe impact on remote areas. I know how worried they are. I would like to give them the assurance-people have been saying this since the beginning of this dispute a few weeks ago-that we will not back down and that we are going to win, just as we won in 1982 and with the memorandum that was signed in 1986. We will argue our case again, because we know that we are not
engaged in unfair competition with the Americans as far as our softwood exports are concerned, and we will prove it.
The problem is that there is always a delay, and every day or week that goes by is one too many when exports are your living, and especially when you have a sawmill that employs 15, 20 or 25 workers. Big companies, although it isn't easy for them either, are in a better position to absorb this kind of tax, especially since we know that in the end it will be refunded because we will win our case.
The situation is quite different for the smaller sawmills which are getting very nervous because they are starting to wonder whether they are strong enough financially to deal with this incredible decision by the Americans. And I think that is where we should start, Mr. Speaker, because we heard several times this evening that this is the third time in 10 years we are having the same kind of debate all over again. Unfortunately, our American friends didn't realize they don't have a good case and that we do.
What are the alternatives, what should we do to try to put an end to this type of harassment by our American neighbours, who as we know are tough business people to deal with? That is why we put in place a framework, like the free trade agreement, with at least some kind of mechanisms to make sure we would have in the future a tribunal to examine any litigation or trade dispute we might have with the United States.
But how can we, at this point in time, help our businesses and our workers, specially the most vulnerable? I think there may be a way. As you know, Mr. Speaker, companies and businesses now have to pay a 14.5 per cent bond, which many small businesses are unable to afford.
Since small businesses in Quebec and in my own riding do not have the financial means to come up with that money, why not ask the government to keep a close eye on this issue? Why do we not ask the government to help pay the bond of those companies, especially since we are sure to win? It is not a big risk for the government to take, but what sense of security would it bring to small and medium businesses which cannot afford to pay that bond. So the government, through the Department of Finance, could help these businesses.
March 11, 1992

I think that has been said earlier, but it is important to repeat it, nobody wins in that war. In Canada, jobs are at stake, industries which have difficulty making ends meet are affected, but on the American side consumers are the ones who are affected. It is they who, ultimately, will have to pay this 14.5 per cent duty. In this regard, I wonder, if our government should not undertake a huge lobbying and advertising campaign directed at American consumer groups, send delegations to the United States and pay for full pages, if need be, in the New York Times, in order to warn American consumers that, ultimately, they are the hostages of that duty. I think that the government should also get involved in this advertising or marketing campaign to warn American consumers that, ultimately, they will be the losers. We should bring them to understand, and they know it, that Canadian lumber is of higher quality. That is why people want our lumber and why we have a good record, Mr. Speaker.
I ask the government to look at these possibilities, helping small companies pay their security bonds while at the same time flooding our American friends with massive advertising aimed at consumers. We should remember, however, that the findings are only preliminary and we should not give up, we should continue to do what the Prime Minister and other ministers have done over the last few days, voice our dissatisfaction, our bitterness and our anger toward the Americans so that they stop this inquiry immediately and not wait till July for the four steps to be completed.
I think we can make them withdraw that decision and it is up to us, as parliamentarians, in co-operation with the industry and the provinces, to let the United States know that it is acting wrongly, that it is not in its interest, nor ours, and that it should review that decision unfortunately taken irresponsibly, without knowing precisely what was involved.
I am convinced, Mr. Speaker, that we will be vindicated as we were in 1982 and again in 1986. As I said earlier, each passing day or week is one too many for our workers to bear. I ask the government to continue putting pressure on the United States administration and commerce department to cease immediately this unwarranted harassment.
Softwood Lumber


Mr. Len Hopkins (Renfrew-Nipissing-Pembroke):: Mr. Speaker, this issue that is before us tonight is one that is very, very important to many small and large communities across this country.
In retaliation to Canada's October 4, 1991 decision to terminate the 15 per cent export tax on softwood lumber exports to the United States, the memorandum of understanding, the U.S. department of commerce immediately initiated a countervailing duty investigation.
The investigation has resulted in a 14.48 per cent American duty on Canadian softwood lumber exports to the United States. The department of commerce is also demanding that Canadian exporters in all but the four Atlantic provinces start posting bonds immediately on shipments to the United States. They call it the good neighbour policy.
Time and time again, during the free trade debate in this House, the Conservative government promised Canadians that the free trade agreement would secure our access to the U.S. markets.
Look at the reality. Canadian pork producers, steel producers and in the past week Honda automobiles and now our softwood lumber producers are being subjected to this harassment. Obviously we did not get secure access to the U.S. market.
We also mention the non-tariff duties that the Americans are suddenly implementing at the American border for Canadian products going into the United States.
I bring up the case again of a company in my own riding, Eddy Match of Pembroke whose product was stopped at the U.S. border because the "Made in Canada" logo was not in the right place.
That affects many lines of industry in this country. This is the third time the U.S. has induced a countervailing duty challenge against Canadian softwood lumber, and also the third different methodology used in a decade of hassle and harassment of Canadian lumber exports. We were far better off when we had the GATT because at least we could take it to GATT for a ruling.
The Mulroney government should never have signed the memorandum of understanding in 1986. It never even let the case come to a decision. It hurried and signed the memorandum of understanding. We won the

March 11, 1992
Softwood Lumber
softwood lumber dispute before and we probably would have won it again. Undoubtedly we would have.
The federal government's position was motivated by a desire to avoid any action that might jeopardize the free trade negotiations. This government sold the soul of Canada in order to get a free trade agreement. It said it was going to give us great access to the American markets and it was going to be the greatest thing since sliced bread.
Look at the shape the country is in today. Look how many industries are crossing the border into the United States. This country has to stand up on its own feet and fight in a united way.
We cannot be harassed every time the Americans have an election. I say to them that if they have not any more originality than to bring forward an election campaign in the form of policies, then as the leading democracy in this world, it is time they were looking at their inner souls instead of picking on their next door neighbour in the manner in which they are.
Although Liberals in the forest industry argued for the elimination of the memorandum of understanding on softwood lumber, which should never have been signed by the government for a number of years, given that this is a presidential election period, the timing of the termination could not have been worse.
We have been demanding that this memorandum of understanding be cancelled ever since it came into operation on the first day of 1987. The government waited until election year, and now it is tied up in the domestic politics of the United States. That is bad timing.
The U.S. department of commerce has absolutely no grounds for this decision which is politically motivated and seriously undermines the spirit of the free trade agreement. Some people say: "You should not talk about the spirit of the free trade agreement. You should not talk about the problems surrounding it." Why should we not? It is here. It is reality. We have to talk about it.
In response to this unfair ruling the Canadian ambassador to the United States, Derek Burney, accused U.S. officials of a tortured attempt to manipulate the facts in order to maintain a pre-ordained result.
The Prime Minister himself went into a lashing of the United States on it and then ended up by saying he was aiming at lower officials and not the President. Give me a break. Who is leading the United States?
This is getting so silly. Here we are in a serious situation in our trade negotiations, in our trade relations with the United States and we are blaming junior officials.
Just last Friday, Stone Consolidated, head office in Chicago, announced the closure of its mill at Braeside in my riding in the Ottawa valley. Ironically, when was that announcement made? The announcement of the closure of the mill at Braeside was made at three o'clock last Friday afternoon.
When did the Americans announce the 14.48 per cent duty on Canadian softwood lumber? It was at 12 o'clock noon. The timing leaves a big question mark in my mind as to what is going on and who knows what is going on around here ahead of time. The U.S. commerce department came forward with that announcement and put 140 people out of work, but that is only part of it.
Our members from northern Ontario have spoken here tonight. I know what they have been going through. I have crossed northern Ontario with them. I have seen those one industry towns.
I have seen in my own riding in a village of 1,200 or 1,400 people, the welfare rolls increased by 2,000 per cent in one year. Why? Because the lumber industry was the real base of the economy of that community. When it went down, the community was left without work for its people. As a result, through time their unemployment insurance runs out. Where do they go? They go to the municipalities for welfare.
The issue before us tonight on trading relations with the United States is affecting far more governments in this country than this government. The problem has been inflicted on the provinces because the provinces have to look after the municipalities. The problem of unemployment in the forest industry across this country has been inflicted on the municipalities and the taxpayers in those communities. It is unfair. It shows how ill-conceived moves can disrupt the entire lives of tens and hundreds of thousands of people across this country.
March 11, 1992

The small communities in my riding, such as Barry's Bay, Wilno, Madawaska, Cumbermere, Golden Lake, Killaloe, Braeside and Calabogie are all affected by this. The forest workers are willing to drive for miles if necessary to get a job. They are workers. But even now when they become unemployed there is very little place for them to go. It is a serious business.
Forestry's contribution to the economy cannot be over-emphasized. It employs almost a million Canadians both directly and indirectly. For example, in 1989 the forest industry provided for 348,000 direct jobs and
540,000	indirect jobs or roughly 1 in 14.1 could go on and give other statistics but it is not necessary.
Three key things have affected the forest industry. There is the 15 per cent export tax that was put on under the memorandum of understanding at the end of 1986 and the Canadian high dollar. Another thing that has really hurt has been Mr. Crow's contribution from the Bank of Canada, the high interest rates. The combination of these events and these factors has taken a tremendous toll on jobs and the economy of communities all across Canada and to a degree is the end, temporarily at least, of a very productive way of life. We were better off when we worked under the GATT.
I want to end with this. We talk about the disputes panel under the free trade agreement. That panel will make its decision based on U.S. law. It will be a question of how U.S. law is interpreted. If the U.S. law is not interpreted right, then the American Congress can simply change that law and come back at us again. We were much better under the GATT for decisions like this.
I suggest it is time that the United States, as the biggest democracy in the world, started having a heart with its neighbours. If it cannot run a presidential election without running it on the backs of the international community, then it is time for it to show a little originality in its thoughts.


Dave Worthy: Mr. Speaker, it has been very interesting for me tonight to be listening to my colleagues from right across the country speaking from the heart for the people who they represent, the industries that are in their ridings and the impact that it has on them.
Softwood Lumber
Most Canadians realize the softwood lumber industry has a huge impact on all of us because it is in fact truly the most important, the major industry in the country. It was for this reason that I joined with a number of others in asking the House leader to have discussions with the other parties in hopes that we would be able to reach agreement on having a debate such as we are having tonight. So it really is. my pleasure, Mr. Speaker, to be here.
Why is it of such interest to me? There are a couple of reasons. It is where I am from, British Columbia and my riding of Cariboo-Chilcotin. It is common knowledge that 75 per cent of the softwood lumber that is shipped into the United States that is at issue in this dispute comes from British Columbia.
Most people think of the lumber coming from British Columbia as coming from the huge trees they see on the coast of Vancouver Island or the coastal mainland. That is far from the truth. In fact more than 80 per cent of the softwood that leaves British Columbia comes from the interior and the north of the province. My riding alone, one riding out of just under 295 in Canada, is responsible for shipping over 10 per cent of the softwood lumber that goes into the United States.
It is an issue that is critical to my province. It is an issue that is critical to my riding. My constituents all work either in the mills or the economy of the communities in which they live are dependent on the mills. They have not had an easy time of it of late. This continuing trade dispute is having a devastating impact on them and we must get it resolved.
There is another reason why I have such a key interest in this issue. To my knowledge I am the only person in the House who was actually involved for most of this dispute from within the forest industry. I was one of the senior management people within a company. I watched, observed and suffered through the dispute in 1982 in which it was found through the U.S. panel that there was not abuse of the system. We were not subsidizing and that dispute passed on into history.
As several people have talked about today, I was also sitting at the association boardroom tables as we wrestled with the terrible problem in 1986. We knew that we had right on our side. We knew that we should win. We were not subsidizing. Canada does not subsidize its forest industry. We were faced with a dilemma. It was the same dilemma that the provinces were faced with as well as the federal government. We realized that we were in a kangaroo court in the United States, that politically we could not win. We had to make a choice as

March 11, 1992
Softwood Lumber
to whether we negotiated the memorandum or faced what appeared to be imminent loss of that dispute. Unfortunately, and with great reluctance, the industry, the provinces and the country had to settle for the memorandum.
Since 1988, as a member of Parliament involved with the forestry committee and along with some of my colleagues and other people in the House who have pushed hard to have this memorandum resolved, we have been able to observe the offsetting systems that have been imposed in different parts of the country in different ways. Of course in every part of our country we do operate the industry differently.
Last Monday when I returned to the House in anger, I must admit, I tried to express the outrage I think all Canadians including my constituents felt. At the time I said that the decision had little to do with facts and reality and had everything to do with politics based on the greed and hypocrisy of a few large U.S. lumber companies. I still maintain that is the case.
I am not going to try to substantiate all the data. There have been tons of it delivered down to the U.S. in the last few months, but it is well known that in Canada we do not subsidize the industry. If we did, since 1986 we have more than offset that subsidy. One of the leading officials in the U.S. department of commerce submitted evidence just a year ago that if we had been abusing it in 1986 there had been more than enough offsetting mechanisms put into our system so that we were no longer abusing it, if we ever had been.
I would like to just use a document that actually infuriated me. I will not read it all, of course, but it was put out by a coalition for what it calls fair lumber imports into the United States.
It addresses the house costs. It realizes of course that the U.S. consumer is the one who ultimately pays a big part of this price and it discussed that. It said: "Well really it is not $1,000 or more like people are saying, it is probably more like $200 or $300." But obviously it concedes that it is going to go up by at least the $200 or $300.
Of course what the coalition is not saying is that if it does not go up the full $1,000 then it is the people in my
community and in all communities across Canada who are going to be suffering the impact. Somebody has to pay the price for that. It is either the consumers of the United States or our communities.
This coalition from the U.S. goes on to state that it believes that this of course is a very small price to pay and a viable alternative to the serious threat Canadian imports pose to the 15,000 U.S. lumber jobs that were created while the offsetting measures of the MOU were in force. It is indicating how much they have actually taken advantage of the memorandum when it was put in. So while we were losing jobs in Canada, they have been gaining 15,000.
It claims that those are again threatened, but all of the measures that were put in under the memorandum of understanding are still in place and they will remain in place. If anything, they are increasing in nature, not decreasing.
The coalition then goes on to say that putting Americans out of work while importing subsidized lumber will not lead the United States out of a recession. What it is saying is that they are prepared to do it on our backs. This is not a fair representation being made. It is something to suit some of their major industries. It will not be tolerated here in Canada. I am sure it will not be tolerated long even in the United States.
I would like to close by asking whether we will win. Yes, we will. As I said, I agonized through the decision in 1986. We would have won then if we had had the dispute settlement mechanism that we have won now through the free trade agreement.
Over the last few days, I have heard many people say that that is not enough for the free trade agreement to give us, that dispute settlement mechanism. But I can tell you, coming from the forest industry, when I heard initially about the terms of the free trade agreement, I can assure you that in my mind, as well as in the minds of most of the leaders in the industry, it was recognized that the free trade agreement with the dispute settlement mechanism was the best protection we had from those in the United States who would try to take advantage of those of us in Canada.
March 11, 1992

I say it is unfortunate the United States had to pick on us in Canada, their closest neighbour, their closest ally and friend throughout the world, and yet they chose to pick on us. It will not be soon forgotten by those of us in Canada.


Réginald Bélair: Mr. Speaker, considering how late it is, I believe you would find unanimous consent in order to free the pages.


The Acting Speaker (Mr. DeBlois):: Is there unaninous consent?


Some hon. members:: Agreed.


Mr. David D. Stupich (Nanaimo-Cowichan):: Mr. Speaker, this is a very serious discussion we are having this evening, rather than a debate as it was characterized by several of the previous speakers.
It is very serious for Canada as a whole, but particularly serious I would suggest for the province of British Columbia.
In the last 10 years at the most, perhaps even a little shorter period, some 40 per cent of the 30,000 IWA members who were working in the woods of British Columbia and in the sawmills have lost their jobs.
Part of it was due to technological change and part of it was due to the depressed markets we are experiencing right now. Who knows where it is going to end?
We do not need this MOU dispute right now. We do not need this dispute with the Americans about selling our lumber to the States. I can recall attending a tourism presentation in the community of Ladysmith in my riding a year ago last summer. When the representative of the tourist department was introduced, she said: "Tourism is increasing to the extent that one day tourism will take over as the most important economic activity in British Columbia". When it came my turn to speak, I said: "I hope that day never comes because if the forest industry sinks so low that anything overtakes it in British Columbia then we are in real serious trouble".
Softwood Lumber
The same thing applies to the whole of Canada. It is by far the greatest generator of foreign exchange that we have. Grains and oilseeds come second but a poor second. It is the products from our forests that we must keep producing if we are to be able to maintain the standard of living we have in Canada, if we are to maintain the level of economic activity we have in this great country.
There have been several disputes and the government is relying totally on the dispute resolving panels, the dispute settling panels, and saying that when it goes there we are bound to win.
I can recall the first one. It had to do with west coast fisheries. Of course we were confident there too. We knew right was on our side. We knew we had to have control of that resource if we were going to be able to husband it properly.
We did not win. We lost partially. We lost control of 20 per cent of the fish, and the American response through their trade representative was to the effect: "Well, that is all right for now, but we are not going to rest until we remove those restrictions entirely so that we have access to all of the fish being caught in British Columbia".
They do not mind us husbanding the resource. They do not mind us managing it and spending the money on it, but they want access to it for processing. They want the jobs that go with the processing industry. It was the processing industry representatives themselves who made that argument in Ottawa as well as in British Columbia. They know what is happening. They know that the Americans want those jobs down in the States.
During the free trade debate before it became law in this country or in the States, the arguments being put forward were to the effect that what was really at stake, or what the issue really was, was the tremendous trade imbalance between Canada and the U.S. The U.S. wanted to correct that imbalance from its point of view. It wanted to reduce the imports from Canada and increase the exports to Canada. To do that it has to make sure that we more than ever before become simply hewers of wood and drawers of water; let them do all the processing and let them send the processed goods back to Canada.
I fear this is what the Americans have in mind with respect to our softwoods because they have said that one of things bothering them is the fact that we control the export of round logs. They are doing the same thing but that does not matter. What they are doing is okay, but for us to do it is wrong because it does not give them the access that they want to our raw material. It goes not give them the right to manage our forests in the way they

March 11, 1992
Softwood Lumber
want, in the way they want to look after the fish to their own best advantage.
I am afraid that is where we are heading: to the point where the U.S. will once again win this battle for control of our sovereignty, take control out of our hands of the way in which we manage our forests.
The government has a responsibility and I know it is going to fight this. It keeps telling us it will fight it. Let us turn to the history of the dispute so far. We have lost with the west coast salmon. We lost with the east coast lobster. We won on the pork temporarily, but we have been told over and over by American trade representatives that the battle is not yet finished because they have not yet won. It is not over until they win. That is their attitude.
The beer issue is not totally resolved yet but so far they are winning. They are winning on the Honda cars. They are winning on magnesium and aluminum and they are winning on steel. They are winning every dispute. The only one they have lost, as I say, they are taking to be just an interim matter until they can have another go at it and win eventually. They are determined to win on all of these issues. There is little doubt about it.
The Americans are going to come to us and want our lumber in the not too distant future. This recession/de-pression will come to an end. Things will improve. They are going to need more houses. If they are going to build more houses, they cannot produce their own lumber fast enough to do it. They are going to need some of ours.
In the meantime, we are slaughtering our forests, in some cases high-grading in order to ship lumber out at a minimum loss, not at a profit. None of the companies in British Columbia, none of the large ones at least, are making anything out of their logging and sawmilling these days. It is just a matter of trying to recover not all but some of their fixed costs while they keep operating and hoping for a turnaround.
There are jobs to be done. There is a tremendous job of reforestation still to be done in the province of British Columbia. There is a lot of work that could be done to improve the productivity of our forests all over the
province of British Columbia and, I would suggest, all over Canada. The government, in its budget that came down just a couple of weeks ago, went through a process of foregoing some $1.5 billion in tax money. It cut taxes that are really not going to help anybody very much. It is cutting income tax to the extent of half a billion in one year, $1.2 billion in the second year. It does not put much into the pockets of those of us who are spending the money. We will not really notice the difference. It is putting money into the pockets of the manufacturing and processing industries which are profitable enough to be paying taxes. The ones that are not making any profits do not get any help. It is just the ones that are paying taxes, those profitable enough.
If all that $1.5 billion it is going to forego in the one year from these items, as well as the cuts in National Defence, were put into a project to rebuild the forest, to make the forest more productive throughout Canada using the same workers who are out of work, using the same companies which are suffering right now with their administration, we could be building our forests up to the point where, when the market turns, when the demand is there and when the prices make it worth while cutting these trees and making this lumber and shipping it out, we will be able to do it to much better advantage than we are doing right now.
That takes planning. It takes a government with confidence in the future of Canada, some confidence in the workers of Canada, some confidence in the industry of Canada. It could be done; the money is there. We need not have given it back to people who are not going to notice the difference. We could have put it to good use, as I say, rebuilding our most important renewable natural resource that we have in this countiy, apart from the people.
It takes planning, it takes determination, it takes intestinal fortitude. Unfortunately, I see little evidence that this government has any of those things sufficient to do the kind of job that has to be done to save our forest industry, to save our forest workers and even to save the forest industry itself.
March 11, 1992


Guy St-Julien: Mr. Speaker, the region of Abitibi-Temiscamingue-


Some hon. members:: Hear, hear.


Guy St-Julien: I appreciate the applause from my friends, the Canadian foresters.
Mr. Speaker, the region of Abitibi-Temiscamingue is one of the largest forest areas of Quebec and Canada. Following the shameful decision taken by the Americans against the Canadian forest industry workers, I would like, for all economic stakeholders and workers of my region, to explain how the American forestry management system works.
Quebecers know very well how the system works in their province, but many do not know how the American system. The Canadian and American forestry management systems may differ, but they aim at the same thing: make money with public forests; encourage a stable and non-speculative development of forestry resources and investments in infrastructures; and elaborate viable and environmentally rational practices which preserve a multiform use of forests for future generations. Both systems try to achieve all this. However, the Canadian system has avoided many of the problems which its American counterpart ran into.
Canada provides for the needs of the United States. In the last 40 years, the United States have used more lumber than they have produced. The American forests simply cannot supply the current and future domestic needs. The homebuilders and other American users of lumber products are considering Canada as a second source of supply. Canada has maintained for a long time its share of the American market, and succeeded in keeping it quite steady, since the United States have to import softwood lumber. Its share has been around 30 per cent for 10 years.
Mr. Speaker, the American revenues from softwood lumber sales do not exceed costs. The revenues from the sale of lumber coming from most national American forests are lower than the management cost of each of these forests. A study commissioned by a sub-committee of the House of Representatives concluded that $5.6 billion U.S. had been wasted in the last 10 years by the
Softwood Lumber
American Forest Service as part of the wood selling program, mostly because of its expensive and heavy bureaucracy.
The study also concluded that according to the Forest Service's accounting system, only 18 out of the 120 public forests have covered their expenses in 1990. As for the 102 remaining forests, the american government actually lost over $365 millions U.S.
With the American system, it is hard to control the respect of environmental standards. The American government transferred long ago most public forest lands to private companies. As most of these lands are no longer supervised by the American government, it is much more difficult to enforce environmental regulations in the U.S.
The American system invites over-development because the system is based on short-term stumpage contracts. Companies have less incentive to delay harvesting or to manage their cutting program in such a way that the following cuts require less effort and less cost.
In the U.S., the bidding system furthers speculation and instability. In the short term, their cutting system lends itself to speculation cycles. At the end of the 1970, American forest companies started a war of speculative bidding to obtain cutting rights on public lands, which pushed up their price well above their approximate value. In 1984, the U.S. Congress had to buy back $2.8 billion worth of these purchase contracts at a net cost exceeding U.S. $400 million to the taxpayer.
Under the American countervail legislation, the total amount of $2.8 billion would be considered a subsidy. The U.S. government assumes a higher share of the forest management and development costs. The U.S. government pays for most of the regeneration cost of its national forests. It also pays for most of the access roads, which is a major cost as this 360,000 mile system are nearly eight times the length of the interstate highway system and would go 14 times around the world. In 1989, the U.S. spent $97 million on access roads.
In summary, softwood lumber imports from Canada have not hurt the American industry, and nothing subtantiates the allegations concerning Canadian subsidies. Every year since 1988, on average the American softwood industry has been performing better than other industries in the construction sector.

March 11, 1992
Softwood Lumber
Mr. Speaker, two factors can account for the difficulties of the American industry, especially the softwood lumber industry: the diminishing demand, which was aggravated by the economic recession, and the shortage of softwood lumber supplied to the western states.
In conclusion, the United States apply a very simple standard to locally produced softwood lumber. When their softwood lumber industry needs a subsidy, it gets it. When it needs export controls on raw logs, it gets them, but it applies a different standard to softwood lumber imported from Canada. What is fair trade one day can become unfair trade the next.
Testimony given under oath to the American Congress in February about the absence of subsidy was the excuse for instituting an inquiry for the purpose of establishing a countervailing duty in October.
Canada is the first ally and main trading partner of the United States. Both countries have signed the most encompassing Free Trade Agreement that exists in the world. It is not surprising therefore that the way it conducts this inquiry would worry Canadians since Canada is considered more a foe than friend.
Loyal trade implies a respect for equivalent and uniform rules applied equally to everyone.
Mr. Speaker, we must ensure the survival of the forest industry in Abitibi, in Quebec and in Canada. We must fight this American measure which is a disgrace; we must fight it all the way and win the case for the lumber producers of Quebec and Canada.


Mr. David Kilgour (Edmonton Southeast):: Mr. Speaker, let me stress for a moment how important forestry is to many Canadians. In Alberta alone there are 66 forestry manufacturing companies. A spokesman for the B.C. Council of Forest Industries today told me that there are 333 larger softwood sawmills in the province and hundreds more smaller ones. In normal conditions the B.C. mills employ about 28,000 persons directly and another 25,000 in logging operations.
The viability of all sectors of our forestry industry must be preserved at all costs because there are about 350 Canadian communities which are forestry dependent. The total forested area of our four western provinces alone equals the combined land area of France, West Germany, Spain, Austria and Hungary.
It is, of course, a vital industry in Ontario and Quebec and the Atlantic provinces as well.
As of this week, Canadian mills outside Atlantic Canada shipping softwood products to U.S. consumers must pay an import bond equivalent to 14.5 per cent of the shipment's value. Competitors in the U.S. thus reap an overnight price advantage of whatever tariff amount is eventually decreed to apply. Keep in mind, sir, that in the case of, say, B.C. the provincial stumpage fees have gone up about 15 per cent as a result of the infamous Washington-Ottawa memo of understanding of 1986. Keep in mind also that the B.C. mills have seen their revenues on U.S. exports drop by an estimated one-fifth since 1986 as a result of the rise in the exchange rate of the Canadian dollar.
A mining engineer friend of mine puts the point here quite well, and I quote: "Those running the Government of Canada are now dumping about 300,000 ounces of the Bank of Canada's gold reserves monthly in an effort to keep the dollar above 84 cents U.S. The high dollar has wrecked our manufacturing exports and is now doing the same thing to our natural resource exports." The situation which has now developed could result in the closing of B.C. and other softwood mills across Canada.
At the end of the Tokyo round of GATT I am told that approximately 90 per cent of the lumber products entered the United States duty free. In 1983 U.S. lumber producers instigated a countervail action against our products but the U.S. commerce department held that the exports at issue were not subsidized by the stumpage arrangements of the provincial governments in place. I am told by Mel Clark, who has been professionally involved in trade issues for successive Canadian governments for three decades, that one reason for the favourable ruling was because the American officials worried that the Canadian government of the day could have won the issue before the GATT tribunal. That GATT tribunal had previously held that stumpage is not an export subsidy.
In 1989 the Canada-U.S. Free Trade Agreement of course began to apply, thus taking us out of GATT for purposes of countervail. Under the FTA if Canadians have a complaint about U.S. countervail, article 1902 of the FTA provides that panels must decide the legality of U.S. countervailing duties on the basis of U.S. law. They are limited to deciding whether the U.S. government has correctly applied American law. Under GATT, the legal-
March 11, 1992

ity of U.S. countervail duties are judged on the basis of GATT law.
In addition, FTA article 1902.2 permits the U.S. to change its countervailing duty without Canada's agreement. In contrast, again, GATT rights and obligations can only be changed by agreement among the countries that negotiated, of which of course Canada is one.
I understand that section 409 of the FTA establishes a new track for U.S. industry to petition for non-tariff measures to gain an advantage over Canadian exports.
This can be used to nullify Canada's GATT rights relating to subsidies and countervail duties and is unique in that it applies only to Canada. The adverse implications for Canada can be illustrated by two examples.
First, section 409 nullifies the GATT injury tests and establishes a much softer alternative criteria for action against perceived subsidized Canadian exports. Second, GATT limits counter-subsidy action to a countervailing duty equal to the subsidy, but section 409 permits the use of a range of non-tariff measures that could provide much more protection than the duty equal to the subsidy.
In short, under the FTA, Canadian exporters, including softwood lumber producers, are much more vulnerable to U.S. harassment and restriction that they were under GATT. The longer term consequences to U.S. countervail laws could be very detrimental to Canada-U.S. trading relations.
We have heard much huffing and puffing from the Mulroney cabinet about going to the binational dispute panel under the FTA. They do not mention that other remedies must be exhausted first. More important, they do not say that the binational panel can only say if the U.S. applied its own law correctly.
If the U.S. loses the case as it did on the pork case, it can under section 409 of the U.S. implementing legislation simply change its law. It is worth noting here that it was the U.S. federal government itself that began the countervail action against our softwood lumbers last week, a very rare occurrence.
Softwood Lumber
In short, Canadians should be very skeptical about our chances of winning before a binational panel four, five, six months from now or longer. Similarly, concerning the retaliation bluster against the U.S. from various cabinet ministers, do they know that under the FTA we can only have retaliation if we have a legal right to do so?
There is no right to do so until the binational panel first renders a decision, likely as I indicated, many months away. If Canada retaliates without a legal basis for doing so, the Americans can invoke other provisions of the free trade agreement against us. In short, they get the right to retaliate against us. As we all know, they have lots of guns in their arsenal.
It is very late, almost twelve o'clock. I understand that you will by unanimous agreement not be seeing the clock until all speakers have spoken. I understand that is the case.
In conclusion, the United States department of commerce has absolutely no grounds for its decision which is politically motivated, unjustified and hypocritical. It also seriously undermines the U.S. government's commitment to the raison d'etre of the present Canada-U.S. free trade agreement.
I could not agree more with the words of our present Ambassador to the United States who has accused U.S. officials "of a tortured attempt to manipulate facts in order to obtain the pre-ordained result". I hope that our friends and trading partners south of the border will come to their senses before they wreak absolute havoc among literally hundreds of thousands of Canadian families.


The Acting Speaker (Mr. DeBlois):: The hon. Parliamentary Secretary to Minister of Forestry rises on a point of order.


Michel Champagne: Yes, Mr. Speaker. Given the importance of the debate tonight and following discussions with my honorable colleagues from the Liberal Party and the New Democratic Party, if anyone wishes to rise after the scheduled time, I think there is unaninmous consent to allow this.


The Acting Speaker (Mr. DeBlois):: The honorable members have heard the honorable member's suggestion. Is there unanimous consent to go on past midnight,

March 11, 1992
Softwood Lumber
which was the time mentioned in the motion passed earlier in the day?


Some hon. members:: Agreed.


Benno Friesen: Mr. Speaker, the United States is the bastion of free enterprise, right?


Iain Francis Angus: What century?


Benno Friesen: It all depends on how you define free enterprise in American terms. We have seen plenty of examples on how they modified the definition of free enterprise in the United States.
In the agricultural industry, if they are short of water, they bring in the army corps of engineers. They level the land, they bring in the water and it is free to the farmers. Of course, that is not a subsidy, the Americans have the power to do that without billing the farmer.
Then they can produce cheaper products and ship them into Canada. However, that is not a subsidy, it is free enterprise. I have seen it all too often. They impose non-tariff barriers at the border and simply allow tracks to sit there for a while while the customers wait for the product. The merchant in Canada is waiting for a product and finally cannot wait any longer and gets a different supplier. However, they believe in free enterprise.
There are land banks in the United States which reduce the amount of acreage which they put into crop and therefore create an artificial supply. They pay the farmer to keep that land in a land bank. They create that artificial shortage and thereby keep the price up. However, that is not a subsidy, no, no. That is free enterprise in the United States. Who says that they are fair traders?
For them, might makes right. They think they can get away with it. Many times they do and it encourages them to do it some more.
The background to this particular issue, the countervail on softwood lumber in Canada which probably hits my province the hardest, is not the last few years. The U.S. department itself agreed that this is not a subsidy. It goes back several years to the practices of the U.S. forest industry. U.S. forestry companies bid on the price of the
woodlots which supply their logs. In the late 1970s the U.S. timber companies engaged in a speculative bidding war for stumpage on U.S. forest lands. That drove the cost of these cutting rights far above their appraised values because there was a short supply.
They have fear in their free enterprise system. They were afraid that they would have a shortage of logs and therefore the price went up.
In the intervening years between the end of the seventies and the beginning of the eighties there was a slump in the market and they had bid far too high for their timber rights, for their logs, for their supply. They could not sell, the market was depressed and the timber companies were in trouble. In 1984 the U.S. Congress had to buy out $2.8 billion worth of these purchases at a net cost to the taxpayer of over $400 million. Of course, that is not a subsidy. When the U.S. timber companies are in trouble and are bailed out by the U.S. taxpayer, that is not a subsidy. However, a stumpage based on fair price is a subsidy.
Somehow there was a redefinition of the free market system and free enterprise by the Americans. The trouble goes back to the mid-seventies when they were bidding too high and they could not afford to pay those prices in a depressed market in the early 1980s.
That continues to the present day. One of the issues is the supply of timber for the American companies. Oddly enough, they refuse to export logs outside their states or outside their country because they need them all. I do not blame them. They need them all for their industry.
However, the same provision holds true for Canada and that is deemed to be unfair. They need our logs to keep their mills going. There is a shortage of supply. One of the reasons is because of the spotted owl decision in the United States which resulted in thousands of square miles of land being taken out of production. The U.S. court system took it out of production and the timber companies cannot get at it. TTierefore they need timber. If they cannot get at theirs they want to get at ours. If they do not export logs, that is okay. However if we do not export logs, that is wrong.
The problem with the American free enterprise system is that if they cannot beat their competitor they beat up their competitor.
March 11, 1992

We have seen it with the Japanese and the semiconductor problem where the Japanese created an incredibly efficient industry in Japan and were shipping products into the United States. The American industry could not compete any more. So what did they do? They dumped on the Japanese as though it were the Japanese who were wrong.
We saw it a few years ago in Detroit when the American car industry was no longer competing with the import industry because the import industry from Japan was very smart. The Americans were still building gas guzzlers and nobody wanted to buy them.
What did they do? The American workers bought a brand new Toyota. It was parked outside the plant and then the workers paid one dollar each to smash the Toyota as a symbol of their anger against Japan for competing against their inferior product.
Their system is if you cannot beat the competitor, beat up the competitor. That is what they are doing to the lumber industry in Canada today.
We have a very efficient industry. As my friend from Nanaimo-Cowichan mentioned, there has been a reduction in the workforce many times over since I worked in it years ago. When I worked in it at the turn of the century, about 1950-


An hon. member:: Which century?


Benno Friesen: Which century. There was a workforce of
75.000	to 100,000 in British Columbia. Today it is down to
30.000	or 25,000 partly because of restructuring the industry, partly because of ersatz materials, but it is creating a problem for our workforce.
We have a very competitive industry, a high-tech industry in Canada. If the Americans cannot compete, that is their problem as long as there is a level playing field. But what is fair to them is not necessarily fair to any other outsider who was watching the way they carry on.
For all that has been said about the free trade agreement, we would be in terrible shape today if there was no opportunity to go to a higher court of appeal. There we can take part and be part of the dispute settlement mechanism itself. We can have our people on the panel so that there is a fair election of the chairman of that panel and we become part of the decision-making
Softwood Lumber
process to make sure that it is fair and honest, with objective criteria, rather than the way they have functioned.
So I say that we have to carry on and be united in this country in our opposition to the American tactics. We cannot let their artificial shortage of logs allow them to create an excuse to destroy our industry. We cannot allow them to smash us just because they cannot compete any longer.
I appreciate the kind of debate that has been going on here tonight. Members from all sides of the House have banded together in a show of unity that we cannot allow the Americans to do this to us.
We are united in our concern for the employees, the workers, the companies, the payrolls, the products of our country. We stand together to make sure that we win this battle against the United States.


Mr. Guy H. Arseneault (Restigouche-Chaleur):: Mr. Speaker, before starting I would like to say to the hon. member who just finished that the speech he gave was an excellent speech. It is one of the better ones I have heard from that side of the House in a long time. I was very pleased to hear it.

Before getting into details about the way the United States treat our softwood lumber exports, I would like to say a few words about the forest industry in Canada and its importance to our economy.
You will agree, Mr. Speaker, that this will be the canvas that will allow us to better illustrate what is at stake in the matter we are debating tonight in this House. So when considering the importance of the forest industry, it is important to realize that our country was built partly on that industry. In fact, for a long time, it was the pillar of our economy. It still remains today one of the main building blocks of our country.
The importance of the forest industry to the Canadian economy is undeniable. Canada has 4.36 million square kilometres of forest. That represents about 176 square metres for each of the 25 million Canadians. Our wooded territory covers more than twice the area of the European Economic Community, nearly twice the area of Mexico and accounts for 15 per cent of the world's forests.

March 11, 1992
Softwood Lumber
The forest industry provides employment for nearly
300,000	people directly and 750,000 indirectly. In 1988, more than $30 billion of forest products were exported. One seventh of manufacturing income is forest-related and forests contribute more than $17 billion to Canada's net balance of trade-more than agriculture, fishing and mining combined.
Forestry is a bigger industry than automobiles and oil. Canada has the second largest supply of softwood in the world, after the former Soviet Union, and is the leading exporter of softwood lumber. By the way, this fact reminds us of the importance of what we are debating tonight.
Furthermore, Mr. Speaker, Canada produces one third of pulp exports and 63 per cent of all newsprint.
Canada produces about 16 per cent of all the world's softwood lumber and should continue to do so during the next decade. In addition, Canada accounts for about 40 per cent of all the international trade in this product, since it exports 70 per cent of its production.
In 1989, Canadian production of softwood lumber amounted to some 59 million cubic metres, compared to 45 million in 1980. Scattered across the country, most sawmills are small and employ fewer than 100 people. British Columbia provides 61 per cent of the softwood lumber produced in Canada, followed by Quebec, with 18 per cent; Ontario, with 10 per cent; Alberta, with 7 per cent; and New Brunswick, with 2 per cent.
Nearly three quarters of British Columbia's production is exported, compared to half of the production in other provinces.
What is most troublesome about our present trade situation with regard to forest products remains its vulnerability.
This weakness is evidenced, to some extent, by the limited number of markets and even more so by the concentration of production around just a few products. Besides, since wood is a commodity which is becoming increasingly scarce, thus bringing closer the cost and the price of products of a lesser value, there might be a possibility for improving our exports by eventually resorting to products with a higher added value.
Moreover, the industry should decide to diversify its products and markets by using new technologies in order to be protected from economic fluctuations.
The future of this industry is at stake and Canada has resolutely entered into a transitional period of forest ressources management and development. So the pace of this transition-in this case, the change from essentially extracting forest products to adopting a more cultural approach-must be accelerated without forgetting however the importance of adhering to the principles of integrated management for the entire Canadian forest ressources.

Mr. Speaker, you and others may wonder why a member from Atlantic Canada would stick around here all night to speak on this issue since it does not affect Atlantic Canada. I must say that I have a very strong interest in forestry. My riding is very intensely based on the forestry industry. Also, as a Canadian member of Parliament I have an interest in Canada. This a national issue. It is not just because British Columbia, Alberta, Ontario or Quebec is having a problem. It is an issue that all Canadians must address.
I think that we have to look at it also as an issue of sovereignty, an issue where we must protect what we have. I do not mean by following some of the ideology that the Americans are using at the present moment. I am saying that we must not look at it in an anti-American movement. We must start looking at a pro-Canadian movement. If other countries are going to harm our industries then we have to start taking some action.
With regard to British Columbia, I want to speak in a little more detail. I know that the Liberal leader in the province of British Columbia, Mr. Gordon Wilson, has expressed his very deep concern with the state of affairs. The Liberal critic for the forestry sector in the province of British Columbia also issued a press release recently. I would like to quickly quote his statement. He says: "Lumber manufacturing operators in B.C. will be devastated by the new tariff on softwood lumber". That in itself is reason for me to stick around this evening to say something about it and try to convince our neighbours to the south that what they are doing is completely wrong and immoral.
March 11, 1992

I would also like to commend the members of the House who have spoken so far in trying to build a unified type of approach to the issue here. Maybe government members could go back to their ministers and say that it is a very national and very important issue, as it evidently is as we are all here this evening debating it so late, and that we should take some lobbying action in the United States and internationally.
My colleague from Cochrane-Superior put it very well earlier this evening when he mentioned that we must start looking at some type of retaliation, whether it is on fruit and vegetables that are coming in from California, whether we must start enforcing Canadian standards on American forest products that are coming in, whether we must just take that advertising campaign with regard to advising the Americans that their home costs are going to escalate because of their own tactics. I think it is important that we take some very definite steps.
I congratulate all members from all parties for the positions that have been taken here tonight. It has been very responsible and it is very refreshing to hear some of the comments this evening.


Iain Francis Angus: Mr. Speaker, I believe it is important that I take the opportunity this morning to add my perspective to the decision made by the officials in the United States this week with regard to softwood lumber exports from Canada to the U.S. In doing so, I want to go back in time a bit.
I have been in this House since 1984. Early in my tenure here I remember my colleague from Skeena who, quite frankly, was a voice in the wilderness warning all of us, not just the government of the day but our own caucus and the Official Opposition, about the potential threat from the American Congress, the American administration and the American lumber lobby as they agitated toward an attack on Canada's softwood lumber producers. The member for Skeena was very persistent. Regretfully, everything that he warned us about has come to pass.
When he said back in the mid-1980s that we had to fight to the end the attacks by the American lumber industry, he was right. The Conservative government caved in. Instead of going through with the existing, dare I call it, dispute settlement mechanism in the States, the government caved in and imposed our own 15 per cent
Softwood Lumber
softwood lumber tax. It has been suggested that part of that caving in was because of pressure from the Government of British Columbia, the then Social Credit government that saw a windfall profit for itself because eventually the money from the 15 per cent tax would come to it.
My colleague, the member for Prince George-Bulk-ley Valley, has taken on the mantle from the member from Skeena. He has done a remarkable job in terms of keeping the issue alive and of making sure we were on top not only of the issue and not only of American politics, but of the wheeling and dealing among Canadian provinces and the federal government. It was he who raised the fact that Bill Vander Zalm and the Socred Minister of Forestry were keeping the Americans in touch with the negotiating strategy of the Canadian provinces and the Canadian government. In other words, they were selling us out as fast as we could make a tactical decision as to how the American pressure could be dealt with.
My colleague from Skeena-and this is in response to the member from the Liberal caucus who just spoke-pointed out the fact that years ago, before the imposition of the 15 per cent surtax, one of the ways in which we could have defeated the American pressure was to launch a massive government funded advertising campaign in the United States to point out to American consumers what they are now being reminded of, the fact that it is now going to add $1,000 or $1,500 or whatever it is to the price of a home because of the decision by the American government.
We wanted to do that back then to help make our case, but the government of the day, the same government there is today, said: "No, that is not the way to go".
I come from northwestern Ontario where after the fur industry, lumber became the next most appropriate means of creating wealth. We use our forests for both primary and secondary industries, so softwood lumber is extremely important to us. All of us in the northwest have sawmills in our ridings. All of us in the northwest have logging operations. All of us have pulp and paper manufacturing facilities. They are all inter-related. Even though we are talking today about softwood lumber which is really the sawmill operations, there is an inter-relationship because the chips and the waste products go off to the pulp and paper industry to assist it in its

March 11, 1992
Softwood Lumber
viability. Every sector is affected by the American decision.
In the riding I have the honour of representing I have a range of forest based industries. I want to use as an example one community, Atikokan, and more particularly Suphowie, a neighbourhood settlement where Atikokan Forest Products has its base. Not too long ago that sawmill was in real danger of disappearing, in large part because of the original 15 per cent softwood lumber tax. As part of an economic impact analysis and as part of an attempt, a very successful attempt, I might add, thanks to the Bob Rae government in Ontario, we were able to ensure that mill and a neighbouring mill were going to survive. We looked at the economic impact of that one sawmill. It was not a very large sawmill, it had 160 full-time workers commuting from Atikokan about 30 miles out. The economic impact was quite incredible.
Let me just deal with the Treasury of Ontario and the Treasury of Canada. If Atikokan Forest Products was allowed to close the province of Ontario would lose $7.9 million in 1991. In the following years it would lose $9.1 million. That is a combination of a loss of income taxes and whatever corporate taxes there are and an increase in the outputs in terms of UI and social assistance.
The cost to the federal government would be $11.4 million in the first year and $5.6 million thereafter. These are very serious economic impacts on a very tiny community.
If we extend that across all of northwestern Ontario, with all of our sawmill communities, we can begin to get a sense of the impact on the Treasury, let alone the impact on the economy of the community the sawmill is located in or near and the regional economy. It is extensive.
The Government of Canada has no choice. It has to fight this latest attack by the Government of the United States. Quite frankly, I do not accept the argument that this decision was made by low-level functionaries who were not following the tune of their master. This is an election year in the United States. George Bush is being hammered by right wing Republicans and by the Democrats. People are looking for "Buy America" and "America First" and he is quite prepared to sacrifice his buddy, the Prime Minister of this country.
The importance of the debate tonight is to say to the Government of Canada that there are thousands and thousands of people out there who want this government to be on their side. This House has a responsibility to ensure that is the case. We in my caucus will continue to put the pressure on the Conservative government to make sure that it starts to speak for Canadians and fight for Canadians, rather than saying yes to George Bush and his buddies.


Mr. Lawrence MacAulay (Cardigan):: Mr. Speaker, it is with sadness that I stand in this House this evening. The softwood lumber industry in this country is in a sad mess because the Americans have imposed a 14.48 per cent tariff on our lumber. This will be devastating to the lumber industry and it appears that it violates this disastrous supposed free trade agreement.
We were all told that the deal would secure our markets with the United States. It is certainly obvious tonight that it has not secured anything and it has left this country, specifically the lumber industry and many other industries, in a sad situation.
It is very important to note that we probably had 90 per cent free access to the American market in the lumber industry before the free trade agreement was signed. It is very difficult to call this a free trade deal because in free trade everything moves back and forth freely.
It is quite obvious that this is not exactly how it is. It is only what the Americans choose to take from us. If they choose not to raise the size of the lobster and if they decide there is nothing wrong with the potato then they slap a tariff on the lumber.
When this government put a 15 per cent export tax on Canadian lumber we did so because the Americans said our stumpage fees were too low and this was a subsidy. Since that deal, provincial governments have increased their stumpage fees and the Americans turn around and impose a 14 per cent tariff.
If Canadians eliminate the problem, why are Americans doing this to us now? I say they are doing this because they can get away with it under this deal. The dispute settlement mechanism is so full of holes one could drive a car through it.
March 11, 1992

The dispute settlement mechanism can only say if the American law is correctly applied, not if the law was fair. As well, it says the Americans can change their laws, and that is just what the Americans did. The U.S. changed its laws about subsidies and used the charges against us. A deal like that is no good at all.
We are subject to American import laws, which as an exporting nation puts us in a sad situation. I well remember during the last election, during the numerous debates in my district of Cardigan, Prince Edward Island, we were talking about supply management and free trade. Things were going to be protected. Well today the dairy industry, the poultry industry and the egg industry are on the verge of financial difficulties.
I can assure you that it looks very obvious that the free trade agreement again is not going to be of any help, if not harmful. As I stated during the election campaign, free trade and supply management are two opposites.
Free trade, or what free trade should be, is the removal of tariffs and controls. But it is quite obvious tonight that it is not the removal of tariffs, only when the Americans decide to remove them, and to put them back in place when the Americans so desire.
Why I spoke so strongly for supply management was because I felt they were two opposites. Supply management meant that you could put protection in place to control the importation of certain products into the country. No, we were told, this was going to be protected. But, here again we could lose or jeopardize our dairy, egg and poultry industries.
It looks to me that supply management, along with softwood lumber and many other industries in this country, has come to a crashing halt because of this notorious trade deal this government got us into.
During the election we were told that with the trade deal the Americans would become our partners in international trade. This is simply not the case.
Look at GATT. Our problems there over supply management are caused by the Americans who want to destroy our system of supply management. It was the
Softwood Lumber
U.S. that challenged us on ice cream and yoghurt. It was the U.S. that challenged us on the B.C. salmon processing. Now it is the Americans who are imposing tariffs on our softwood lumber.
The province most affected by this government's spineless attitude in dealing with the United States over softwood lumber is British Columbia.
But the people in the softwood lumber industry in British Columbia have a powerful ally in Gordon Wilson, the leader of the Liberal Party and leader of the opposition. Gordon Wilson has stood firm in his opposition to these protectionist measures and he stands proudly with the primary producers in demanding this government take action.
The Prime Minister must stop being the lap-dog of the United States President and start defending the interests of those Canadians who work in this vital industry.
The Americans are only interested in protecting themselves. The U.S. is not going to look after Canadian interests. The sad thing is that this government is not looking after our interests either.
The government has signed a deal that is unlikely to provide a favourable decision in this lumber dispute and until this government is willing to defend Canadian interests, I am afraid we will suffer.
Before the trade deal was signed, trade seemed to be going reasonably well between Canada and the United States. Today we have great problems with the Honda issue, the furniture industry, the manufacturing industry, and for sure with supply management. And it looks like the lumber industry is in a disastrous situation.
So I ask the government to stand and defend the lumber industry in this country.


The Acting Speaker (Mr. DeBlois):: It being 20 minutes after midnight, this House stands adjourned until later today at 10 o'clock a.m., pursuant to Standing Order 24(1).


[Stage Direction]
The House adjourned at 00.20 a.m.