1993-05-11

Mrs. Barbara Sparrow (Parliamentary Secretary to Minister of National Health and Welfare):: Mr. Speaker, I am very pleased this morning to table, under Standing Order 32(2), the report of the Committee on the Investment of the Canada Pension Plan Fund, May 1991, in both official languages.
[Editor's Note: See today's Votes and Proceedings]


GOVERNMENT RESPONSE TO PETITIONS
Mr. Charles A. Langlois (Parliamentary Secretary to Leader of the Government in the House of Commons and to Minister of National Defence):: Mr. Speaker, pursuant to Standing Order 36(8), I have the honour to table, in both official languages, the government's response to six petitions.
[Editor's Note: See today's Votes and Proceedings.]


PETITIONS
Mr. Ronald J. Duhamel (St. Boniface):: Mr. Speaker, in this first instance petitioners advance the following. They would like the government to help the writers of our country, the artists of the nation, the publishers, as well as the students.
They believe they know how to create jobs, stimulate the economy and increase productivity and competitiveness. How would they do that? They would eliminate the GST on books and reading material.

That is what your petitioners ask the government today.


Ron J. Duhamel: Mr. Speaker, in the second instance, the petitioners are concerned about the violence on television and radio.
Whether it be the inappropriate language that is used or acts of violence, they believe that it must be reduced and preferably eliminated.

They point out that violence on radio and television is unnecessary and often undermines their efforts to help their own children.


Mr. Vic Althouse (Mackenzie):: Mr. Speaker, I have certified petitions from a number of people in Canada who are calling on the government to maintain the wheat board as a marketing entity for export grains, to keep barley under the responsibility of the wheat board, to return oats to the wheat board and to look at actively marketing other crops through the Canadian Wheat Board.
They advise that the current government is near the end of its mandate and should not be making major decisions affecting this body. They therefore call on the government to leave barley under the jurisdiction of the wheat board.


Mr. Nelson A. Riis (Kamloops):: Mr. Speaker, it is my pleasure and honour to present a petition on behalf of residents from Blue River, British Columbia; Calgary, Alberta; Vancouver, British Columbia; Nanton, Alberta; Maple Ridge, British Columbia; Edmonton, Alberta;

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Saltspring Island; and a variety of other communities in Alberta and British Columbia.
They are simply concerned about the fact that the North American free trade agreement makes it easier to sell water to the United States and Mexico. They are asking the-


Barbara Jane (Bobbie) Sparrow: You have to get off that one.


Nelson Andrew Riis: My hon. friend tells me I have to get off this one. I cannot get off this one. It is a very serious issue made more serious by the fact that in committee just the other day one of the witnesses indicated that the NAFTA would take precedence over domestic and provincial legislation. That is what the officials are saying. That is what the experts are saying.


The Acting Speaker (Mr. DeBlois):: I remind the hon. member that we are on presenting petitions.


Nelson Andrew Riis: I am sorry, Mr. Speaker, but I was being distracted by my friend across the way. They simply urge the government to state categorically that it will not permit our fresh water rivers to be dammed or diverted into the United States and to state that our Canadian rivers are not for sale.
I guess stating categorically will not be adequate. We have to actually change the NAFTA.


Mr. Ross Harvey (Edmonton East):: Mr. Speaker, I too rise yet again under Standing Order 36 to present a petition signed by residents in and around Calgary, Alberta, and Vancouver, British Columbia.
They too wish to draw to the attention of the House, especially members opposite, that if implemented the North American free trade agreement will result in further restrictions being placed on the ability of Canada's federal, provincial and territorial governments now and in the future in assisting Canadian industry, conserving Canadian natural resources for Canadian benefit and advancing needed social programs. For this among many other reasons, some of which are noted in the petition, the petitioners call on the House to reject the proposed North American free trade agreement and recommend to the government that it use the termination clause to end the U.S.-Canada Free Trade Agreement.
These petitions are going to keep coming because the people of Canada know what free trade has done to this country and they do not like it.


Mr. Jim Karpoff (Surrey North):: Mr. Speaker, I have the honour to present two petitions pursuant to Standing Order 36. The first one points out that Bill C-91 and Bill C-22 which were passed in this House have resulted in higher drug prices for Canadians and for provincial and private drug plans. It asks the government to repeal both pieces of legislation.
My second petition deals with the same subject. It points out that the North American free trade agreement will prevent any future government from reinstituting generic drugs and extending licensing to generic drugs. This will of course result in the continuing escalation of drug prices in Canada.
It therefore calls upon this government to reject the proposed North American free trade agreement and to terminate the U.S.-Canada Free Trade Agreement.


QUESTIONS ON THE ORDER PAPER
Charles A. Langlois: Mr. Speaker, I ask that all questions be allowed to stand.


The Acting Speaker (Mr. DeBlois):: Is it agreed?


Some hon. members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed from Monday, May 10, consideration of the motion of Mr. McDermid that Bill C-124, an act to amend the Currency Act, be read the second time and referred to a legislative committee in the Economics envelope.
The Acting Speaker (Mr. DeBlois):: The parliamentary secretary has a total speaking time of not more than 36 minutes. The parliamentary secretary has the floor.
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Mr. Jean-Marc Robitaille (Parliamentary Secretary to Minister of State (Finance and Privatization)):: Mr. Speaker, I thank you for your great generosity this morning. We will make sure that we do not abuse it. I also thank you for giving me the opportunity to continue my speech which was interrupted yesterday on the second reading debate on Bill C-124. As I said yesterday this bill amends the Currency Act and the amendments affect Part II of that Act which defines the investment powers of the Exchange Fund Account.
As I said yesterday as well the present act contains some restrictions on the maturity of securities issued by governments other than the U.S. government and by international organizations. With Bill C-124 these restrictions would be lifted so that securities issued by all governments, international organizations and institutions, as well as eligible government organizations, would be treated the same way as those issued by the American government are treated now. In this regard, let me point out that most investments by the Exchange Fund Account are denominated in currencies of industrial countries with the strongest economies such as the United States, Japan and Germany.
The amended act would allow the Exchange Fund Account to lend the securities it holds and to conclude repurchase agreements for these securities with the appropriate counterpart organizations.
The account would thus have more latitude in managing its assets. For example it could lend some of its securities instead of selling them in cases where the assets must be quickly converted into cash for intervention in the currency market.
Finally the Exchange Fund Account will be authorized to conclude agreements involving products derived from securities that it holds or may hold. This means that it can conclude option and futures agreements. The advantage is that these instruments, which are gaining importance on the major financial markets, can help increase revenue and spread the potential risks of fund assets.
In summary, the bill amending the Currency Act is essentially technical and seeks to update the investment authority of the Exchange Fund Account so as to increase the potential profitability of eligible assets held by the account. Furthermore, the bill does not change
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the strict investment standards that now exist and are necessary for Canada's official currency reserves.
I believe that this bill deserves the support of hon. members and I ask all hon. members of this House for their support to pass this bill.
[English)


Mr. Derek Lee (Scarborough-Rouge River):: Mr. Speaker, I have listened carefully to the remarks of my friend opposite.
The government characterizes this particular bill as one of simple technical amendments. Unfortunately at this point in the debate and in the procedure I cannot agree it is merely simple technical amendments.
The bill purports to expand the powers of the Minister of Finance and his or her agent to deal with the assets and in the assets of Canada's exchange fund. The exchange fund is the pool of liquid currency and other liquid financial assets maintained by the Government of Canada to regulate and balance the value of the Canadian dollar abroad.
Most of Canada's foreign reserves, that is currencies of other nations that Canada's bank holds, are kept in the exchange fund. This bill purports to give to the minister a whole raft of new powers. Ordinarily one would not object to giving the minister the necessary powers that he or she needs to do the job, but here are some of the powers and some of the assets the Minister of Finance will be authorized to deal in.
In a moment or two I will go through the act as it is now just so we can see the difference. The act will permit the Minister of Finance to deal in and generally, to use the terms of the statute, to sell, lend, borrow or otherwise deal in currencies, units of accounts, gold deposits or securities, et cetera. That is a pretty wide definition.
Some of the financial instruments in which the minister will be authorized to deal include SDRs, deposit instruments authorized by the World Bank. Right now Canada holds foreign currencies of three foreign countries: the United States dollar, the German mark and the Japanese yen. Somewhere in history the pound sterling dropped out. In any event that is where we are now.
These powers would expand the ability of the Minister of Finance through the Bank of Canada or any agent. I

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point out the agent in the act is simply not defined. The agent could be in law, based on what is here, the brother-in-law of the Minister of Finance. I am not saying that would ever happen. I am just saying the statute as it is now proposed does not define who the agent of the Minister of Finance may be.
Some of the other instruments include securities issued which in layman's terms may be stocks, shares or financial instruments issued by the government of another country or an agency or institution of any other country designated by the Minister of Finance. The Minister of Finance would first have to designate, and I will mention in a moment just what constraints there may be on the designation. That institution can be broadened to include any institution. There is no further definition.
Turning to the discretion of the minister to designate the country, the institution or the organization, the act says the minister may do any of the lending, borrowing or otherwise dealing in any of those financial instruments on any terms and conditions the minister thinks fit. There is no constraint on what the minister or his or her agent can deal with. That got the alarm bells ringing right away.
I want to compare what is here to the present act and the current provisions in the Currency Act which authorize the creation of the exchange fund and the acquisition of assets for the exchange fund for purposes, as I said, of keeping and securing our foreign exchange reserves. Those powers include, it should not surprise anyone, the ability to buy gold, the SDRs which are special bank deposits created and issued by World Bank organizations that are very safe, U.S. dollars and other "usable currencies".
At the moment the definition of which currencies may be used is the term freely usable currencies, and at the moment Canada only uses three: the U.S. dollar, the German mark and the Japanese yen. The minister in theory could purchase Russian roubles now if that were a freely usable currency, although right now from a practical point of view I am sure we would all agree that currency is not a freely usable currency. The minister would at least be constrained under the existing act.
Let us move to the present act. How would the minister be constrained? As I have just read, the minister under the new provisions would not be constrained at all because he or his agent may deal in any of these instruments or any currency for any country he or she thinks fit. There is no definition of the discretion, no limitation of the discretion.
The government has described the bill as being one that provides greater flexibility for the Minister of Finance. Given that there is no restriction put on the minister's discretion, I would have to agree it provides greater flexibility. In fact the sky is the limit.
Essentially the problem I have at the moment with the bill is that in return for the greater powers, the greater flexibility, there is no reciprocal increase in accountability to Parliament or the Canadian taxpayer. The same mechanism of accountability that existed previously will continue. That accountability involves a financial report on the exchange fund being prepared every year within five months following the end of the calendar year, that report being audited by the Auditor General of Canada, and that report and the audit being tabled in Parliament again within five months of the calendar year.
We have approximately at the greatest distance a 17-month time-lag between a transaction and the date when the bottom line is reported to Parliament. That is getting a little long in the tooth in terms of modem financial transactions.
I suggest even in that area there may well be room for more accountability to Parliament on the operations of the exchange fund, but that appears to be the extent that exists now. In return for the greater powers, greater flexibility, the sky is the limit in flexibility. There is no change in those accounting mechanisms to Parliament.
I know the provisions of this bill are proposed to this House in good faith. No one is trying to blind side the Canadian taxpayer. We have a ministry that is trying to get on with its job in a rapidly changing world. I guess that phrase is a bit of a cliche around here and probably in legislatures all around the world: Yes, do we have change for you.
The Department of Finance would be looking at of the financial transactions taking place globally, which transactions are now taking place 24 hours a day electronical-
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ly. I guess the Bank of Canada traders will have to stay awake all night now. The Bank of Canada will need a night shift, and I suppose it does.
Between the time of hitting the sack and waking up in the morning you might have lost your shirt. Holding gold is one thing, but if you are holding one of these other instruments proposed in the new bill how do you know where you are going to end up the next day? Things can change overnight. The taxpayer, the owner of these assets, is therefore at risk.
We are not talking about conservative instruments like gold, gold certificates and U.S. currency. We are talking about something called futures, forward options, repurchase and reverse repurchase agreements, derivative or associated instruments or products. That covers a lot of territory. I have not even exhausted my imagination yet as to what those terms will comprehend, a derivative or associated instrument or product.
I am almost at the point of saying that pork bellies owned by a foreign country can be included in that definition. As long as it is designated, as long as the country is designated, as long as the issuer of the instrument, be that any unit or security invested in pork bellies, they have an investment in pork bellies. Now some people do quite well in commodities. I just do not think the Bank of Canada and the Minister of Finance need the authority to get into that play. Therefore I am very cautious.
Last week I gave a speech in Ottawa to the Canadian Institute for the Administration of Justice conference on legal drafting. I chair a parliamentary committee that spends almost all its time looking at the drafting of regulations trying to determine if the subsidiary laws, the subordinate laws that are the regulations made pursuant to statutes, are made within Canada's laws as enacted by Parliament. From time to time, believe it or not, we find laws that are not made within the ambit of the general law of Canada.
For the first time in Canadian history last year the committee disallowed a government regulation. It did not do it once; it did it three times. That was in the face of the refusal of the government to withdraw those regulations because we were of the view they did not comply with the law of Canada.
Speaking from that perspective, I gave a little speech and made light of how there was a trend in modem law making to give more and more powers to the Governor in Council or the executive branch of government. The tendency was to let the executive branch figure out the small details and make regulations governing what it does.
I told the true story of when a labour government was last elected in the United Kingdom. One prominent member of Parliament suggested publicly the government and Parliament should not get bogged down in fine details of legislation in Parliament, that they should simply pass a bill stating: "the Secretary of State may by regulation nationalize anything the Secretary of State sees fit".
That provoked a little bit of laughter at this event. It was a bit of a reach because the suggestion at that time was made in jest, but it was made in jest from an awareness that there is an increasing tendency to do it. We all had our little laugh at the expense of history.
The day before that event I was forwarded a copy of Bill C-124 which was introduced on April 21 last. Lo and behold, as I read clause 1(2) of this bill, keeping in mind what I just read about this suggestion in the United Kingdom, I read that the minister or an agent on behalf of the minister may sell, lend, borrow or otherwise deal in currencies, units of account, deposits, securities or notes, et cetera, on any terms and conditions the minister thinks fit. I suppose we were all laughing at what was taking place in our own backyards because that is exactly what this statute offers to the Canadian public, anything the minister sees fit.
In that same speech I made reference to a provision in a statute under the farm improvement and marketing co-operatives loans and fees regulations. Those regulations were made pursuant to a statute of this Parliament. In those regulations there is an authorization for the minister to deal with seized collateral that occurs after there is a material default in the loan of a borrower from the government backed financing of farms for the farming community.
I made note of the authority given to the minister to deal with this seized collateral, whether it be land, buildings, barns, farm machinery, banking assets, whatever is seized, whatever had been collateral, maybe even Canada Savings Bonds. In it the minister is authorized to

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deal with any remaining security for the loan held by it in such a manner as the minister may direct. There is no other suggestion, no other reference in the regulations, as to what the minister should do with the seized collateral, these goods, these farms and farm machinery that have been owned by farmers, their whole livelihood.
At the time I said that kind of authority was the same as that given by King Richard to the sheriff of Nottingham in fictional days of yore. It was that kind of authority to do whatever the heck the sheriff wanted. That is the authority the Elouse gave to the minister under that act and that authority is exercised in such a manner as the minister may direct.
I am of the view that kind of authority given by the House is inappropriate. I realize the House would find it impossible to legislate what should happen with seized collateral in every different type of circumstance that could occur. However the regulations ought to be breaking down the scenarios and providing for certain procedures to be used when this collateral is disposed of.
In any event my purpose in raising that is not to deal with that particular set of regulations. It is to point out that this House has to be careful about the authority it delegates out of this House. When we give it, we give it on behalf of Canadian taxpayers. We cannot simply accept the wording and provisions put forward by officials in the Department of Finance. They have proposed here that the minister can designate whatever he or she wants and can deal in these items in whatever way he or she wants. I am sure most people would agree that is inappropriate.
I want to itemize for the record the concerns we have in relation to this statute. I know I could have read the bill in less time than it is taking me to talk about it. However I regard this as a veiy important issue. It is not the first and will not be the last time Parliament has had to deal with an issue like this one.
The first item is that clause 1(3) of the bill gives the Department of Finance infinitely more power than it has now. I say infinitely because there is no restraint whatsoever. The minister only has to designate. Those powers are not monitored at this time, not even under the current act, but at least we are only dealing with
overnight loans, some deposits, some stand-by lines of credit, gold, gold certificates and SDRs.
I should say that the people at the Bank of Canada want to be able to purchase and sell another unit. I have not mentioned it yet. It is the ECU, a financial instrument generated in the European Community. It is a solid, well backed currency and does not vary conceptually from the FDR. I agree our bank ought to be able to buy and sell ECUs as the need arises. At the moment it is not authorized to do that. However under the new act it certainly will be able to do that and more.
Perhaps it would have been easier had the bank and the ministry of finance simply recommended a specific list of things they wanted to do. Then we could have said yes or no. If they wanted to arrange for an expansion of the list then a regulation should have been provided that would authorize further expansion with notice to Parliament. They chose not to do that. They chose to use the constitutional counterpart of what is called the basket clause where everything, including the kitchen sink, is now included. That was one item.
There is no more monitoring of the bank as agent for the Minister of Finance than exists now, notwithstanding the desire to give it new powers.
An underlying problem we have is that guidelines currently exist for use by the Bank of Canada in investing our exchange fund and in dealing with our foreign reserves. That is what I am told. As I understand it, however, no one in this House other than the Minister of Finance, the Minister of State for Finance and perhaps the parliamentary secretary has seen those guidelines. I believe that is inappropriate, but that is another issue for another day.
The point I want to make is that the guidelines currently being used by which the Minister of Finance directs the Bank of Canada as his agent to deal in the exchange fund and in foreign reserves are not public. I have difficulty in giving more power or more authority to the Ministry of Finance and the Bank of Canada when we do not even know the rules under which they now operate.
I say this from the point of view of the taxpayer. I do not want them monkeying around any more. They have monkeyed around not too badly with the gold. I gather
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we made a fair bit of money in liquidating some of our gold reserves but I am being very cautious. I have two examples which I will give later about why I am cautious.
Another point I want draw to the attention of the House is that at the moment when the minister decides he wants to use what is now called the freely usable currency, or in the future under this bill if it is passed a designation, there is no official mechanism for notifying the House or Canadians when a designation or a decision of that nature has been made. It simply does not show up on the Richter scale.
The bank publishes its annual report. If we read the report and if we see that the bank in its asset statement has invested in xyz instrument we can infer pretty easily that xyz instrument has been authorized. We may not know about it until a whole year has passed. I do not know whether it is appropriate for that degree of privacy inside the bank transactions to occur.
I accept the bank could not carry on its day-to-day business if it had reporters and parliamentarians looking over its shoulder. In order to carry out financial transactions in the medium and even in the short run, there must be a degree of confidentiality, and that is recognized around this House. It is certainly recognized when the government deals with financial and commercial institutions. There is such a thing as commercial confidentiality which is necessary.
Apparently last week word that the Government of Canada wanted to buy back some of its medium term bonds leaked out on the street. These bonds had sold at relatively high interest rates, the rates of three or four years ago. The government prudently wanted to buy them back and refinance at the current lower interest rate thereby saving the taxpayer a whole lot of dough. We do not know how word leaked out. Without the confidentiality, the price of those longer run bonds was bid up. If Canada had proceeded the bank would have had to buy those bonds back at the higher price. That is the price we have paid by the lack of confidentiality. I mention this simply to acknowledge that the bank requires a degree of confidentiality and privacy when it carries on its work.
I want to say that over all we require a bit more disclosure, maybe a lot more disclosure, from the bank and from the Minister of Finance on how the bank and the ministry conduct their affairs in these markets. I suggest that one report per year is not adequate. There
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should be more. I am sure that if those wizards over at the Bank of Canada, as many of them are, would put on their thinking caps, they would easily devise a mechanism to better inform Parliament of what they are doing.
I want to mention two scenarios and I take full responsibility for authorship. Any connection between any individual alive or dead is unintended. I do not suggest that anything like this has happened or will happen. These are hypothetical scenarios of what I think could happen under the provisions of the bill.
In the first scenario the Bank of Canada has indicated to the minister and the minister has indicated to me that the bank would like to be able to place, among other financial instruments, these foreign reserves into income yielding securities. Rather than having dollar bills sitting around in a vault it wants to invest in a security that will earn a small income. By the way, it has been indicated this could produce $10 million to $12 million income a year if the bank had these increased powers.
What is being proposed is the buying of an instrument which is like a bond. It is issued in the United States. It is a bond issued by a U.S. government agency to finance residential mortgages. I do not think we have anything like that here. Maybe we should.
They have become known as Fannie MAEs. These bonds are backed by the U.S. government. They are just about as secure as we can get. The yield, the interest rate paid, the coupon rate, is not half bad. It is not great, but it is better than a lot of other things. Therefore the bank wants to be able to buy some of them from time to time. Under this bill those Fannie MAEs would have to be designated as an instrument and the United States would have to be designated as a country in whose currency those securities would have to be so we could buy them.
There is another provision in the bill which I have mentioned and that is called the derivative or associated instrument or product. Let us hypothesize that a mutual fund in Canada decides to invest exclusively in Fannie MAEs. What would happen is that unit of the mutual fund would then be, as I read it, a derivative or associated instrument.
It is then possible for the Minister of Finance to buy that associated instrument, that unit in the Canadian mutual fund investing exclusively in Fannie MAEs. I do not have any real problem with that until we start to

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realize that the Minister of Finance is about to set up office on Bay Street. What happens when the hypothetical brother-in-law of the brother-in-law says: "I have a great rate on these Fannie MAEs. I have the ones you want. My commission rate is lower than you are going to get anywhere else"?
At this point we have a situation I think we would rather not have, of the minister being authorized to do whatever he thinks fit and being tempted to authorize or permit or simply acquiesce in his agent, the Bank of Canada, and of course there is not an institution or a man or woman in the Bank of Canada who has a brother-in-law who has just presented a great deal for the taxpayers being tempted to deal in a certain way with our foreign reserves. I do not think that clause ought to be there. That is scenario number one.
In the second scenario there is so much flexibility being offered to the Minister of Finance that there may be a temptation to have the Minister of Finance do political quid pro quo in the future. Here is the scenario.
The hypothetical Prime Minister of Canada visits the hypothetical country of Russia and the hypothetical president of Russia whose currency is roubles says: "You have to bail me out. I will do you a favour, Mr. hypothetical Prime Minister of Canada. I am prepared to send my armed forces to a hypothetical UN hot spot, no names mentioned. I can get them there within eight days. I can get this through my hypothetical parliament. I know you need the troops. I know you are having trouble there and these troops are exactly what you need for that hypothetical hot spot. But in return, Mr. hypothetical Prime Minister of Canada, you have to do me a favour. I have some problems in New York with the rouble. I want you and this hypothetical other country, or if I can get three other countries onside, to do a favour with the hypothetical rouble. Then we have a deal on the armed forces. You buy the rouble. You bail me out in New York and everybody is happy".
Then the hypothetical Prime Minister of Canada calls the hypothetical Minister of Finance and says: "Hypothetical Bob, you have to pick up these roubles through such-and-such a brokerage house on such-and-such a
day. It is a deal. Get the bank to do it". The Minister of Finance hypothetically designates the Russian rouble, may designate a derivative instrument and may authorize someone in the Bank of Canada to cut a deal with some brokerage house dealing with banks of other countries.
The deal is done; the money is invested. I do not care whether it is a purchase or repurchase, a lending or deposit, but the deal is done for an international political reason. It is not a selfish political reason necessarily but an international political reason. However the deal may be done to the great prejudice of Canada's foreign reserves.
Maybe the hypothetical Prime Minister thinks it is worth it in terms of international stability. Maybe those hypothetical foreign military forces would be just what the doctor needed to get a hypothetical international deal together, but the Minister of Finance and the Bank of Canada are then authorized and would in that hypothetical situation be doing something we in the House would probably not otherwise authorize.
I want members on both sides to be aware of this particular problem, not the hypothetical one because as far as I know it has not happened and no one is planning to do it. Under these rules this is what is proposed.
Regrettably I cannot offer the support of my party at this time on such a small, easy technical amendment, as the government says. I cannot offer that support. This bill will clearly have to be looked at more closely at committee. A decision will be made at that time.
I encourage the government. I encourage the member opposite who led off the debate, the Minister of State for Finance and Privatization who proposed the bill and officials in the Bank of Canada to take a look at a couple of other sections of the Currency Act to see whether or not they can do better in the way they account to Parliament, to make Parliament feel that in return for this massive new authority to deal in financial assets there is a reciprocal giving back of accountability to Parliament and the people of Canada. I know there will be a way to do that because I have seen it happen in other ways around the House in the last three or four years. There is more than one way to skin a cat, and if there is goodwill on both sides I think that can be found.
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Having said that, I encourage the government to respond before or after this bill gets to committee.


Hon. Lome Nystrom (Yorkton -Melville):: Mr. Speaker, I want to say a few words on behalf of our party about Bill C-124, an act to amend the Currency Act. It deals specifically with the exchange fund account that is part of the Currency Act.
I do not want to spend more than a few minutes on it this morning. I think the appropriate place to examine this bill is in the finance committee where we have a chance to call expert witnesses and put some very specific questions to them, be they from the Department of Finance or the Bank of Canada. I think that is the appropriate place to deal with it.
This bill is highly technical, dealing with the powers of the Minister of Finance concerning our exchange fund. In addition to being highly technical it is also a fairly sweeping bill in terms of the new powers the Minister of Finance will be given if Parliament approves the amendments to the Currency Act.
The Currency Act was first passed back in 1935. It was introduced to try to bring some stability to the Canadian currency at that time in terms of the ups and downs of the Canadian dollar. It dealt with foreign exchange and monetary items of that nature. The assets the exchange fund now deals with are primarily the American dollar, the German Deutschmark and the Japanese yen.
We in this House are being asked to provide the Minister of Finance with fairly sweeping new powers in terms of the exchange fund. For example, the minister could designate currencies other than the yen, the Deutschmark or the American dollar to be used in the exchange fund. He could designate the French franc, the British pound or whatnot as appropriate currencies for the fund.
The minister would also have other powers in addition to that, powers which would concern the units of the account to be designated by the minister, powers to deal in gold, to deal with a number of other deposits, to have a lot more flexibility in dealing with securities, and so on. In reality it would give a lot more power to the Minister of Finance to deal with the exchange rate and the exchange fund.
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My main concerns are the ones I will now talk about. I ask these questions not in a critical nature but in the nature of trying to scrutinize whether or not these powers are necessary.
I would like the government to explain why it needs these additional powers given to the Minister of Finance, whoever it is in the future. When this Parliament passes this bill, as I assume we will, we will not really be giving the Minister of Finance from Vegreville these powers because in all likelihood he will not be the minister for very long. We will be giving these powers to future ministers of finance through the end of the century and into the next century.
First, I am not sure whether these powers are necessary. I know some of them probably are, but are we going too far? Is this really appropriate? These are the kinds of questions we should probably get answers to in committee.
Second, how do these changes compare to the laws of other countries around the world? How do they compare with the way that the Americans deal with this particular issue in terms of their exchange funds, or the British, French, Germans, Japanese or Scandinavians? Are these powers roughly similar to the powers in other countries?
The argument made by the government and the Ministry of Finance is that there have not really been many changes at all since 1935 in the exchange fund account in terms of the Currency Act and the world has changed radically since 1935. It has changed radically over the last 10 years or 15 years in terms of globalization, the movement of currency around the world and the movement of stocks and bonds around the world, the liberalization of trade laws and so on. The government argues we have to update the Currency Act so that we have the same flexibility in our country through the Ministry of Finance.
Those may be and indeed are very appropriate arguments. The world has changed very rapidly, but are these the appropriate powers? That is the question we must have government officials respond to before the committee.
Another concern I have is whether these new powers given to the Minister of Finance will affect the relationship with the Bank of Canada. I would like to see the Governor of the Bank of Canada or the appropriate officials from the bank appear before the committee and tell us how they feel about these new powers being given to the Minister of Finance in the future. The relation-

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ship among the Department of Finance, the minister and the Bank of Canada is a very sensitive important one to the future of the country. I would like to know what this does, if anything, to the relationship between the Minister of Finance and the Bank of Canada.
This bill does modify the exchange fund account, giving powers to the minister in four different areas: the types of securities that are eligible, the maturities that are eligible, the lending and repurchase of securities held by the fund, and the investments in derivative products of eligible securities.
A lot of that is very technical. We could have the officials from the Department of Finance and the Bank of Canada tell us why it should be done, how these powers would compare to the powers now held by the Minister of Finance, and how these new powers, if they are given to the Minister of Finance by Parliament, will compare to countries that we trade with, to other countries in the western world.
Another question I wanted to ask, which my colleague in the Liberal Party has raised, is the question of accountability, the accountability of the exchange fund and the accountability of the Minister of Finance to Parliament.
One of the major reasons we are elected as parliamentarians is to hold government accountable. The government has to be accountable for all departments and agencies it is responsible for. In this case the minister is getting a lot of new powers, a lot more flexibility, and a lot more mobility in terms of world markets. How is that minister going to be accountable to Parliament for what is done?
Currently the Auditor General looks at the books, audits the exchange fund account and makes an annual report to Parliament. I am not sure if that is enough accountability. That is also a question we should be asking.
The main reason being given for this bill is that it would give the minister more power and more flexibility, but another reason that is being given is that it would increase the profitability of the exchange fund account.
I gather the estimates are that the annual profits for the exchange fund as a result of this increased flexibility would increase by between $5 million and $10 million per year, which would be a positive thing for the Canadian people. Again I would like to see the experts explain that case at the committee level.
My last point, and I am thinking of some of these questions as I am trying to speak about this bill, is that monetary policy is the purview of the federal government under our Constitution. Monetary policy affects not only the federal government but all the provinces and territories. I would like to know whether the Ministry of Finance has conducted the appropriate consultations with the provinces, with the various departments of finance across this country, to determine whether there is some input from the provinces that might be useful and whether the provinces agree with the proposed amendments before the House today.
Over the years we have seen provinces affected quite drastically by monetary policy. A lot of monetary policy is beyond the scope of accountability in the House itself. We need some democratic reforms to make sure that the Bank of Canada is more accountable, that the Minister of Finance is more accountable to this House and that there is some input from the provinces in terms of important monetary decisions.
I am not suggesting any kind of permanent constitutional change that would make this a concurrent power or shared power or anything of that sort. All I am saying is that there should be a mechanism whereby there is meaningful input through meaningful consultation with the provinces by the federal government before any significant change is made to monetary policy.
We do not have to spend much time on second reading of this bill in the House. I think we can pass this bill very quickly through the House and send it to the committee where we can ask the appropriate questions and call the appropriate witnesses. At that time we can either agree to the bill or make the appropriate changes or amendments to the bill as proposed by the government and then have it return to the House for third reading.


Mr. George S. Rideout (Moncton):: Mr. Speaker, I am sure that as people listen in, if there is anyone listening in who has not already fallen asleep, they would be

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wondering about this bill and the excitement it would generate.
What we are talking about is an amendment to the Currency Act. What is being indicated is that these amendments and changes are necessary to bring the bill up to current investment standards, to improve the quality of investments and the types of things that the fund can do in order to increase earnings. There are even suggestions that we could see earnings increase by $5 million to $10 million. Those things are all positive. I think all of us in the Elouse are anxious to see a degree of flexibility with respect to investment so that we can maximize the available opportunities.
However we must be mindful of the fact that with flexibility also comes some risk. It is important to analyse and examine the legislation to see exactly what can happen. Subclause 3 of the amendments to section 17 of the act says:
The minister or an agent on behalf of the minister may sell, lend, borrow or otherwise deal in currencies, units of account, gold, deposits or securities or notes described in subsection (2), on any terms and conditions that the minister thinks fit -
We can see that very broad powers are being given to the minister. Then we can compare it to what existed before and see that now they can:
(a)	enter into and participate in
(i)	futures, forward, option, repurchase and reverse repurchase
agreements, and
(ii)	derivative or associated instruments or products -
(b)	accept any of those currencies, units of account, gold, deposits or securities or notes as security for any loan or undertaking-
We can compare that to what existed in the previous legislation in which American dollars, Canadian dollars and currencies designated by the minister were described as freely usable currencies and deposits. Now we are getting into the new economic instruments that are generating all sorts of discussion as to whether they are viable and whether they actually work.
What we are saying on this side of the House is that at this particular stage for us to say we approve in principle the broadening of these powers to such an extent that the minister is in effect unchecked and not accountable
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until a much later time is the wrong approach. We feel there has to be more information and a more detailed explanation as to the purport of these very broad powers.
The problem we face is that if things start to go wrong we are really not going to find out about it for a considerable length of time. My understanding is that under section 21 of the Currency Act the minister is required to report to Parliament within five months of the end of each calendar year on the operation of the exchange fund account.
It is conceivable that if we get ourselves into trouble by allowing the minister these very broad powers it would take almost 17 months for us to find out about it, if it happened in the first month of the calendar year. There are some other protections under section 22 which give the Auditor General the right to come in and take a look.
However the time periods, with the rapidly changing exchange circumstances and currencies going up and down overnight or within minutes, depending on whatever the latest rumour might be, and these very broad powers indicate why we on the one hand have to broaden the powers to allow the minister some flexibility but at the same time have to find out whether the proper balance has been achieved. We must determine whether we have just opened the door sufficiently to take advantage of the opportunities or whether we have opened the door so widely as to not be in a position to really control the finances of the exchange fund account.
We also understand that there are investment guidelines, but interestingly enough these guidelines are not public. If these guidelines are there to protect the Canadian taxpayers then one aspect that should be examined very quickly is whether we should make those parameters public.
This will obviously go to committee for further consideration. We on this side cannot support the bill in principle at this particular stage, but we do look forward to what will take place in committee because the committee evidence may allay some of the concerns we have at this time.
I am sure everybody has now been put to sleep by this exciting debate on the Currency Act. I will now sit down.

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The Acting Speaker (Mr. DeBlois):: Is the House ready for the question?


Some hon. members:: Question.


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


Some hon. members:: Agreed.


Some hon. members:: On division.


[Stage Direction]
Motion agreed to, bill read the second time and referred to a legislative committee in the Economics envelope.

[Translation\

Hon. Paul Dick (for the Minister of Finance) moved: that Bill C-122, an act to amend the Customs Tariff (textile tariff reduction), be read the second time and referred to a legislative committee in the Economics envelope.


Jean-Marc Robitaille: Mr. Speaker, thank you for this opportunity to lead off the debate on second reading of Bill C-122.
Bill C-122 is an important bill that will cause to come into force a number of tariff reductions announced by the government in its December economic and fiscal statement. The purpose of this bill is to implement tariff reductions on textile fibres, yarns and fabrics, effective January 1, 1993.
I will now touch briefly on the main factors that led to the drafting of Bill C-122.
In February 1989 the government asked the Canadian International Trade Tribunal to provide advice on the level and pace of textile tariff reductions that would be necessary to maintain the competitive position of the Canadian apparel industry and other downstream users of textile products. After a year of extensive public hearings on the matter, the tribunal recommended that a simpler tariff structure be adopted with maximum rates of 5 per cent for fibres, 10 per cent for yams and 16 per cent for fabrics. I may add that Canada's current rates
are, respectively, around 8 per cent, 13 per cent and 18 to 25 per cent.
The tribunal suggested that tariff rates on certain specially constructed textiles be reduced by one-third and that the complex, annually calculated rate on certain wool fabrics be fixed at 11.8 per cent. It also proposed that the reductions be phased in at a rate of one percentage point a year, once the results of the Uruguay Round of multilateral trade negotiations are known, but not later than 1991.
Under the tribunal's recommendations, Canadian textile tariffs will be reduced by an average of 26 per cent, leaving them, on average, slightly higher than those in the U.S. and substantially higher than those in the European Economic Community and Japan.
The tribunal concluded that its recommendations would provide overall net benefits to the Canadian economy, with only a relatively small impact on the textile industry.
The government expressed its agreement with the general tenor of these proposals when it announced that it would act on the tribunal's recommendations within the framework of decisions to be made in the course of the Uruguay round of multilateral trade negotiations. The textile and apparel industries have therefore started to make the appropriate adjustments with this in mind.
This bill contains legislative amendments to implement the tribunal's recommendations, effective January 1, 1993, with the following modifications.
First, to compensate for the delay in implementation, tariff reductions are being phased in at a rate of 1.5 per cent per year, rather than the 1 per cent recommended by the tribunal.
Second, to further simplify the tariff structure, all textile yams, fabrics and fibres are being treated the same. That is, tariffs on them are being reduced to maximum rates of 5 per cent, 10 per cent and 16 per cent, respectively, with no special treatment for specialty textiles or certain wool fabrics, as recommended by the tribunal.
Third, in accordance with our international obligations, margins of tariff preference are being maintained for Australia and New Zealand for six tariff items in which there is significant trade from these countries.
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In a nutshell, Bill C-122 is important legislation that contains the long-awaited textile tariff reductions.
If adopted, the bill will have the effect of amending the Customs Tariff so as to implement textile tariff reductions effective January 1, 1993. The bill as such constitutes a fair and reasonable approach to the question of textile tariff reduction.
For years, Canadian textile tariffs have been significantly higher than those of other industrialized countries, and this has affected the international and national competitiveness of textile-using industries and increased costs to Canadian consumers. To help strengthen the competitive position of the Canadian apparel and textile industries, the government announced certain tariff relief measures in March 1988. The measures included a commitment to reduce textile tariffs to levels comparable with other industrialized countries, particularly the U.S., whose textile-using industries compete more directly with Canadian industries.
These tariff reductions will help gradually to lower the cost of production factors for the apparel industry and other downstream industries. At the same time, the Canadian textile industry would have only limited adjustments to make. Reducing textile tariffs is the best way to ensure that Canadian companies that use substantial quantities of textiles are able to compete on an equal footing with other companies, on the North American market and elsewhere. Reducing tariffs on textiles will lower costs for Canadian companies in the apparel industry, thus making them more competitive and able to market their products at prices that are more attractive to the consumer.
The textile tariff reductions are a constructive measure that will help improve the competitive position of the apparel industry and other textile-using industries in Canada, while having a limited impact on our domestic textile industry. Furthermore, these reductions are in line with the general free trade policy pursued by this government.
In response to comments by textile using industries, in 1988 the government announced its intention to proceed with textile tariff reductions. It then started extensive consultations to ensure that the interests of all parties would be considered.
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Mr. Speaker, I want to thank you for your attention and I would urge all members to ensure that this bill is passed as quickly as possible.


Mr. Joseph Volpe (Eglinton -Lawrence):: Mr. Speaker,
I am pleased to make a brief statement on Bill C-122.
I would like to begin with a little comment on the bill itself. It is said that this bill has become necessary because of conditions that have so far been ignored by the government, industry or consumers who want or demand changes in our industrial policy with respect to this basic industry.
Our government colleague tells us that the Minister of Finance is presenting this bill to meet some requirements which were presented on December 2, 1992. He tells us that:

To protect our competitive position, Canada must work to lower economic costs where possible. One way is by lowering tariffs on goods we import. In response to recommendations of the Canadian International Trade Tribunal, the government will reduce textile tariffs to bring them more in line with those in other industrialized countries.
One might have been more disposed to accepting the value of the bill were it to fit precisely into the parameters outlined by this quote. Unfortunately that is not the case. The Canadian International Trade Tribunal is not altogether enamoured with the outcome of the statement as expressed through this legislation.
I think common sense would tell us as well that if we were addressing, as the government would have us believe, the cost inputs in the clothing industry by reducing those costs as they are represented by inputs on imports, the government's industrial policy in this regard is frayed and faulty at its very best.
Here is what we would be doing by accepting this in principle, if we were to accept it and we are not going to, and saying that the Canadian government ought to reduce tariffs because it suggests that they are much higher than that of other competitive nations. If we reduce tariffs unilaterally today in order to reduce inputs for some of our manufacturers in the clothing industry and at the same time decrease the competitiveness of textile manufacturers on the other hand, we are in

May 11, 1993
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essence doing damage to Peter in order to provide a healthier environment for Paul.
That might go with some logic in some circles. I find it difficult to accept most especially since the same people who government suggests are in favour of the bill are the first to complain and say no, that the faults in the bill underscore the fact we have been negotiating in a rather foolhardy fashion.
Let us imagine this for a moment. With the tariff reductions listed under clause 1 of this bill Canada is unilaterally cutting the tariffs on products coming offshore and unilaterally cutting tariffs. The justification is that the items then imported will enhance the value added product or the value added component of subsequent products.
What are we telling our other partners to the south, the United States and Mexico with which we are currently engaged in negotiations in the NAFTA? All partisanship aside for a moment, the fact of the matter is that there is an ongoing negotiation and that negotiation will have an impact on these tariffs. We are telling them we have already withdrawn from the particular position we had when we entered into negotiations with them. In relation to the tariffs our two partners to the south have on these items, we have introduced a reduction. It is a unilateral reduction. Our two partners to the south, most particularly the United States, have already indicated they will call for a renegotiation under NAFTA if this bill goes through because of the disadvantage they see for their own entrepreneurs.
Where then is the sense in this kind of legislation? Where also is the sense of legislation that unilaterally cuts tariffs on imported products offshore without seeking for Canadian manufacturers, for Canadian producers, for Canadian exporters equivalent advantage overseas?
If we are suggesting we believe in total free trade then let us make a statement in that vein. I have not heard the government suggest for a moment that we open up all of our ports. I have not heard the government suggest that the best way to negotiate is to lay our wallets on the table and ask our partners opposite to take whatever they will.
Why then introduce legislation that says unilaterally: "Here is schedule one. We are going to reduce tariffs"?
As the parliamentary secretary was so kind to suggest, we are going to reduce them by 1.5 per cent per annum over the course of the next six years. We are doing this despite the recommendations of the Canadian International Trade Tribunal that we go slower at a rate of 1 per cent, and only if the government insists on doing this prior to the conclusion of the discussions with GATT and on the NAFTA.
We should note that the same people the government cites as having urged us to come forward with such legislation are saying strongly there is no need for this tariff reduction until the GATT discussions are finished and the NAFTA is concluded. However the government is persisting as it has in so many other things.
The reduction should not exceed 1 per cent per annum in order to give Canadian producers enough time to make the appropriate adjustments to the increasing competition that will come from offshore suppliers and producers. The government did not take that into consideration either. It says it is going to go ahead at a 1.5 per cent reduction per annum.
The government cannot say it wants our counsel, our expertise and will abide by what we say and then ignore it. It cannot say what it is going to do in the negotiations is try to develop a level playing field and then provide to our competitors an advantage that deprives our own producers and manufacturers.
It is insane. The government cannot unilaterally withdraw an advantage for our producers, for our manufacturers, knowing that partners in the negotiation forum with it are going to see that not only as an advantage to others but as an item that must be renegotiated with respect to their own relations to suppliers, to our consumers in Canada.
Why aggravate our negotiating partners unnecessarily? If the government is doing this to try to get some advantage in the negotiations then let us do it. The CI'l'i; the Canadian International Trade Tribunal, suggested that we should not be bound until the GATT negotiations are completed, but the government is rushing through with this bill.
Outside, non-partisan organizations are suggesting that we move a little bit more slowly, that we tread a little bit more carefully and that we be much more deliberate in the way we make decisions that impact on
May 11, 1993

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Canadian jobs, on Canadian industries and on Canadian tries, Canadian consumers and the general growth of the wcrilth.	Canadian economy.
I am sure the government will be anxious to get the bill quickly through the House, but for what purpose? All of us are here to represent the interests of Canadians first and foremost. What is the advantage for Canada in this bill? I think the government has already answered that question. It might think the question rhetorical, but it advises all of us in clause 5 that some parts of the bill are not going to come into effect until the NAFTA is introduced, is passed in this House and comes into effect.
However, why prejudge what the House will do and say with respect to the NAFTA? Is this yet another in a long litany of examples of government arrogance? I dare say the public mood is critical-and I am being kind, to say the least-with respect to the impact of the free trade agreement and the potential impact of the NAFTA without any of the safeguards that we have been arguing for over the course of the last four years and which we clamoured for leading up to the 1988 election. Yet again the government is asking to have legislation passed with a view to ensuring that NAFTA is going to become a fact of law.
The government opposite might well expect, given its majority and its propensity to use closure, the bill will go through and NAFTA will follow in due course. However there is a higher principle at stake here and that is the effrontery to Parliament as an institution and all the democratic processes it represents.
A bill has come before the House that says on one hand, in clause 1, that a whole series of tariffs are going to be reduced to the disadvantage of Canadian consumers and producers. On the other hand, another clause states that all the following items will kick in the moment the NAFTA is passed. The NAFTA may never pass in this House, yet we are going to consume the energies of this place in considering a whole host of items in this bill.
I might remind the House and all Canadians interested in a bill such as this one that might seem innocuous at first, that what is at stake is the higher principle of a direction we are about to establish for Canadian indus-
My colleague from Broadview-Greenwood yesterday and today has suggested that a whole series of these legislative initiatives represent a tremendous loss for Canadians. On the balance sheet they are absolutely a negative in terms of our growth and the realization of Canadian potential.
One need only look at what has happened in southern Ontario, and specifically in greater metropolitan Toronto. It was once the workhorse, the engine, the manufacturing centre, the generator of great wealth, source of revenue for myriad government programs, balance of payments programs, EPF financing, CAP, all kinds of systems and safety nets for the purpose of balancing out regional disparities.
Following the free trade agreement many of the industrial sectors of metropolitan Toronto are closed, completely shut. Many of the factories have signs indicating lease free for three years, four years, five years, for rent, for sale, please take this building off our hands. The biggest industry in the city of Toronto is demolition. If buildings are demolished, the tax liability is much less. Cash flow has become an enormously difficult problem. Government members can suggest all they want that the free trade agreement had nothing to do with what has happened in greater metropolitan Toronto and other industrial manufacturing centres, but the facts speak louder than their rhetoric.
People who once depended on these factories, on these enterprises for jobs, are now without jobs. They have become the charges of the state through the unemployment insurance system or through the welfare system, and neither one of them can hold on much longer. As a result the strain has caused increased pressure on the social policies that have supported the social safety net for many decades.
The government can say the free trade agreement and the elimination of tariffs with our largest trading partner are not to blame. The government can point to increased trade even though yesterday speaker after speaker on this side of the House cited statistics from the Department of International Trade and Statistics Canada that

May 11, 1993
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there has been a net loss in trade. Our current trade balance has gone from a plus $3 billion in 1984 to a negative $28 billion last year alone. Last year was 1992.


Barbara Jane (Bobbie) Sparrow: Our trade balance is up.


Giuseppe (Joseph) Volpe: Yes, the trade balance is up; it has gone from $19.8 billion on the plus side in 1984 to a mere $9 billion in this last year, all this because of our free trade agreement.
These kinds of initiatives erode the pillars of our manufacturing base and in fact of our industrial base. It is time we took a harsher look at bills such as this one and asked ourselves whether Canadian interests are well served by pushing through items like Bill C-122 or whether a more reflective approach is not more appropriate. The advisers, the institutions that the government has consulted, condemn it. I think we can do no less.


James Capsey (Jim) Karpoff: Mr. Speaker, I rise to speak on the bill this morning. I am not our party's critic in this area but unfortunately the member for Chambly is not here. He will be here after Question Period and will be speaking with a lot more detail concerning the bill than I will be this morning.
I want to talk for a few minutes about the impact of this bill. It is another piece of legislation that is really assisting to implement the free trade agreement and to anticipate the NAFTA with Mexico. We have already seen the devastation that has taken place in our industrial and manufacturing sectors with the free trade agreement.
A great deal of the clothing and textile industry is centred in the province of Quebec. The garment part of that industry employed 95,000 people in 1988. By 1992 employment had dropped to 62,000, a drop of one-third in the work force. Industry after industry reflects this right across the country.
As we look toward competing with Mexico we know that 87 per cent of our trade with Mexico is in imports to Canada from Mexico. Canada exports very little to Mexico in the way of hard consumer goods. That is quite logical if one thinks about it. Very few Mexicans are capable of purchasing Canadian made goods because they do not have the income. Only 10 per cent or about 8.5 million Mexicans have any capability of purchasing Canadian made goods or have the equivalent purchasing power of Canadians.
These pieces of legislation are basically setting us up to compete against low wages and low standards in Mexico. It is not possible to do so on an ongoing basis.
This legislation was supposed to assist by reducing certain tariffs over a period of time. However when one looks at it a lot of false premises were made in proposing this legislation. My understanding is the government made assumptions that Canadian textile tariffs were twice as high as the textile tariffs in other industrial countries including our major trading partner, the United States. That turned out to be not so. Therefore the whole notion of this bill, of unilateral tariff reduction, was based on a false premise.
It is also ironic that when the government is trying to negotiate agreements within bilateral trade agreements either through the Uruguay round at GATT or even in its wimpish way of trying to do it through the North American free trade agreement, the government unilaterally gives away its negotiating tools, its powers. Therefore the situation is that the government in the way it has been approaching trade with the United States is simply giving in before even being asked.
It is interesting the government has said during the Uruguay round that it will ensure the textile and clothing industry enjoys over-all protection equivalent to what is available for the major trading partners, but particularly the United States. This is not so because the apparel industry claims that the NAFTA rules of origin will prohibit them from taking advantage of free trade and that there is going to be an inundation of cheap Mexican clothing imports.
This whole notion we can enter into trade agreements on an equal basis would be fine if we were countries with equal footing. The areas I am concerned about are not only the cheap wages in Mexico but also the working conditions. Eighty-five per cent of the American companies now located in Mexico violate the Mexican law on environmental standards. Labour standards as to the age of working are not maintained. There are all sorts of examples in Mexico of children under the legal age for employment working and being exploited.
The government backs the reduction in wages and working conditions for ordinary workers. There has been a 60 per cent reduction in the actual wages of Mexicans in the last few years. There have been examples on the docks where workers actually won through free collective bargaining the right to reasonable and adequate
May 11, 1993

wages. The government came in and through legislation cut the wages to one-seventh of what had been won through free collective bargaining.
The fact that we continue our whole trade policy in looking toward Mexico is particularly galling to us in British Columbia. Fifty per cent of our trade right now is with the Pacific Rim, and there are far more trade opportunities in the Pacific Rim than there are for Canada going south to Mexico or to the United States. I will give a very concrete example.
A year ago I had the opportunity to travel to India. We were in an area in the Punjab not frequented by tourists. In the marketplaces I began to realize there were vast quantities of fairly expensive consumer goods, good quality electrical appliances, tremendous fabrics, clothing and all sorts of other traditional consumer goods. I tried to figure out who purchased them because my understanding of India was that it was a very poor, backward country.
I found out that in India there are 50 million very wealthy people. They are the old families, many of them landed class families. They are owners of manufacturing concerns and are exceptionally wealthy.
There are another 250 million middle class people living in India. These are the professionals, the more wealthy farmers, particularly in the Punjab and the more productive parts of India. They have buying power comparable to that of Canadians. There are 250 million of them.
Yes, there are 300 million poor in India. They have very little. Below those 300 million poor, there are 300 million who have nothing. The difference between being poor and having nothing in India may be as simple as having a blanket. The reality is that in India there is a pool of over 300 million people who have more consumer buying power or equivalent consumer buying power of Canadians.
Looking at the world dynamics in trade right now we have to realize that the Soviet Union as we knew it has collapsed. Much of the outside trade India had with the world was with the Soviet Union and much of it was in the form of barter, the exchange of goods. This has
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collapsed and India now has to go out into the world market to purchase goods.
For the life of me and many of us in British Columbia, we cannot understand why this government is not putting the same time and energy into expanding into that type of market. That market could use not only the goods we manufacture but also a great deal of our expertise in other areas, such as technical help, education and training, engineering and farming.
This government seems to be fixated on doing what the United States wants. It seems to have the fixation that we must almost be an appendage to the United States, that we will not develop independent policies or independent trade patterns. Maybe this is because we have allowed so much of our industry to be controlled by American or foreign based companies that we do not have an industry that has any independent economic stance on behalf of Canada.
We are starting to pay dearly for that. Companies established in other areas do their research and development in their home countries. They do a great deal of their financing and other services for their Canadian subsidiaries in their home countries. With the increase in communications technology they do most of their work with computers and high-tech information systems in their home countries, and Canada becomes more and more a country that is seen as a source of good raw materials.
If you do not believe that, then this week's ruling on the softwood lumber tariffs should be read very carefully. On the surface it looks like a victory for Canada, but it may be one of those things where we have won the battle and lost the war. The ruling said that yes, the tariffs were unjustified and asked that they be reviewed. They may be reviewed but there is no guarantee that they will be rolled back simply because they are unjustified.
The Americans have all sorts of records of ignoring international treaties relating to tariffs and to trade when it does not suit them. Nothing is stopping them from killing the existing tariff and re-implementing another tariff 24 hours later at a different rate. The real crux in that decision came when they talked about one thing they viewed as a subsidy, which was Canada's refusal to export raw logs.

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When the members from Esquimalt and Prince George visited Washington nearly a year ago to meet with American senators, Congressmen and officials to talk about the softwood lumber tariffs they were surprised by how up front people in Washington were because they said clearly: "You can get rid of the softwood tariffs tomorrow morning. They will be gone if you simply allow the export of raw logs from British Columbia".
We all know that with every log exported, either raw logs or squared logs, we are exporting jobs. What the United States is now putting together in the North American free trade agreement is its ideal concept of trade: that is, Canadian raw materials, Mexican cheap labour, Mexican non-environmental standards and Mexican non-existing labour standards. American companies can put those together with American capital and American control. They put those together to the benefit solely of multinational companies.
The Mexicans, labour leaders, church leaders and community leaders say this trade agreement is nothing but an agreement to exploit Mexicans. Canadians know it is an attempt to undermine our manufacturing section. It has done this.
tariff reductions required under the NAFTA and is not appropriate at this time. It is inappropriate to continue to accelerate the reduction of tariffs in this manner.


Mr. Dennis Mills (Broadview-Greenwood):: Mr. Speaker, I would like to begin my remarks today by reading the words from a song written by Bruce Springsteen. It is a song called My Home Town. I am going to read two verses:
I was eight years old and running with a dime in my hand into the bus stop to pick up a paper for my old man.
I'd sit on his lap in that big old Buick and steer as we drove through town. He'd tousle my hair and say: "Son take a good look around. This is your home town" -Main Street's white-washed windows and vacant stores, seems like there ain't nobody wants to come down here no more. They're closing down the textile mill across the railroad tracks. Foreman says: "These jobs are going boys, and they ain't coming back-This is your home town"-Last night me and Kate, we laid in bed, talking 'bout getting out,
packing up our bags, maybe heading south. I'm thirty - five, we've got a
boy of our own now. Last night I sat him up, behind the wheel, and said: "Son, take a good look around, this is your home town".


Barbara Jane (Bobbie) Sparrow: Get off it. Come on.


James Capsey (Jim) Karpoff: I hear the member getting very excited. Since the free trade agreement was brought in 23 per cent of manufacturing jobs in this country have been lost. Does the member know that during the Great Depression we lost only 29 per cent of our manufacturing jobs?
It says it is because of the recession. During the same period the United States lost 6 per cent of its manufacturing jobs and we lost 23 per cent. Who got the best end of the deal? Even the Conservatives should begin to understand that if we lose 23 per cent of the manufacturing jobs, almost the same amount as in the Great Depression, we did not get a very good deal.
I see you signalling, Mr. Speaker, that my time has expired. This bill is an attempt to accelerate the kinds of
Last week in Toronto we lost for the first time ever a complete assembly plant. It was the Scarborough van plant; 3,500 skilled workers walked away from the plant last Thursday. On the previous Saturday they had a rally-I called it a funeral-to remind people of the community this was happening.
I must confess it was not until I saw the looks in the eyes of those men, women, husbands, wives and children at the plant that day and I listened to their feelings that I really understood how devastating it can be when an entire plant is shut down. It was an entire plant that in terms of spin-offs-in other words suppliers to the plant-might be affecting another 8,000 to 10,000 people who we do not see. They are nameless, but they are out there and they will be going on the long list of unemployed. Ultimately from unemployment insurance they move on to welfare.
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In the face of what is happening in our country today, with the real lack of confidence and the real hopeless feeling that is out there, I do not know how the government can bring forward another bill that is undoubtedly going to lead to further plant shut downs or further plant closures.
The textile manufacturers or the people who are dealing in textile products in the province of Quebec must be scratching their heads when they see a bill like this one going through the House of Commons. When this kind of a mood is in the economy and the confidence level is so low, I do not know why the government would not say time out and let us go back to the drawing-board. That is the reasonable thing to do.
The government extended its mandate in terms of the election by a year. We should have had an election a year ago but it decided to take that extra year. That is fine. Constitutionally we realize and the people realize it has that right. However, during this period why would it not take the time to go back to the drawing-board with some of the obvious defects that are related to the free trade agreement?
There is absolutely no one on that side of the House who can say we would not make amendments to the free trade agreement. I defy one of them to stand and say: "We think all aspects of this free trade agreement are working well". They cannot say it because they know it is not working well. What would they rather do?
It seems to me that spending $200 million of taxpayers' money to do some retrofitting of the Scarborough van plant and allowing it to continue to operate versus spending $700 million the first year on unemployment insurance and welfare means that there is not much choice. I would go for the retrofitting of the van plant, which is the same thing we did in 1981 when we had a similar problem in terms of a deep recession and we had a choice. We spent, on behalf of the Canadian taxpayers, close to $800 million in the Brampton superplant and it became the envy of the world. Right now it is the anchor around which the Chrysler Corporation is manufacturing and exporting. That superplant in Brampton is one of the envies of the world. It was done through a decision taken
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by the Government of Canada at the time and it was done with taxpayers' money, but we kept people working in the automotive parts business.
What has that to do with the bill on the floor of the House of Commons today? This is a further reduction of tariffs in the textile business. I just do not see the logic of where the government is coming from when we are competing against the Mexican market right now, when there is absolutely no focus on environmental standards and absolutely no focus on labour standards.
It is not just the Liberal Party of Canada saying this. The government likes to brag about its closeness with the United States government. Even the United States government right now is saying: "Time out on NAFTA until we look at the labour standards and at the environmental standards. There is no way the NAFTA is going through Congress until we have a handle on what is going on there and what it means in terms of all the manufacturing jobs that are directly or indirectly related in the United States". Why the government could not get a cue from that action is beyond me.
I have to say on behalf of my party that I am disturbed by the bill today because it is a symbol of what is happening across the country. It shows carelessness, a lack of sensitivity.
We have to start building hope and building confidence in the country. The government has a couple of things it can do quickly to get that hope and that confidence going. I refer specifically to the small business sector. I have deep respect for the Minister of Finance. I believed him when he said in mid-December in his economic statement that he was going to make sure financing for the small business sector would be looked after through the amendments to the Small Businesses Loans Act.
We missed the January period to put the bill through because the House was adjourned. We understand that, but when we came back toward the end of the February the bill went through committee and the House inside of seven or eight days. However, one of the conditions that we attached to our total support for the bill was that the Government of Canada would make sure the the banks and financial institutions of Canada would co-operate and get behind the Small Businesses Loans Act.

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You were sitting in the House of Commons during those debates, Mr. Speaker, and heard many members on that side of the House agree with us that this instrument was only going to work if the banks were part of the equation. I know the Bank of Nova Scotia took a small ad out in most of the newspapers of the country saying it was involved with the Small Businesses Loans Act, but day after day many members of our caucus are hearing from small businesses that say it is not working. The banks are not co-operating with the Small Businesses Loans Act.
For those who are not familiar with the Small Businesses Loans Act, it is an instrument that has been in existence for many years but the Minister of Finance amended it to make it much more meaningful for today's marketplace. If the owner of a business where the sales are $5 million or less wants to expand it with new technology or if someone wants to start a business, the Government of Canada will guarantee 90 per cent of a loan up to $250,000. The maximum rate is 1.75 per cent over prime.
The Minister of Finance focused on this area because he knows that the small business sector is where the new jobs are going to be created. The 1.3 million operating businesses out there are going to create some hope and opportunity when we are losing plants like General Motors and when textile operations are shutting down in south Toronto and different parts of Quebec.
We cannot just bring in a bill like this one and throw away all the safeguards as we define them without having the rest of the economic equation in place. The small business sector is one part of that economic equation that really must be in place, must feel confident and must be flowing, but it needs access to capital, to the banks of Canada, to the financial institutions of Canada.
I have repeated this message to the government no less than a dozen times in the last two months and it is still not playing ball. Who are the losers? The losers are not only our nation and the people within our nation but quite frankly the banks are losing too.
The banks are losing because all bank presidents three months ago in their annual report bragged about the fact they had to put something back into this recovery. They had to show they were committed to the new spirit, the
new economy, the new entrepreneurship that was developing. We know that unless that new entrepreneurship is functioning we are not going to be able to cope with the job losses that are inevitable with Bill C-122. It effectively reduces tariffs to the point where whole sectors of our economy are going to be boarded up and whitewashed.
Earlier today my colleague for Eglinton-Lawrence talked about for lease or for rent signs not by the dozens but by the hundreds and signs indicating rent free for three years. This has a compounded effect. It is like a brush fire. Today most people with jobs are as nervous or more nervous than the people without jobs. When they drive to work in the morning they see more for sale, for lease, or rent free for the next five years signs every day. This does not encourage the few consumers we have left to go out and buy, go out to restaurants or buy new cars, all the things we need to make our community function.
The government has made a bad mistake in the way it has ignored the whole aspect of adjustment. It moved forward on this flawed free trade agreement without any kind of adjustment process. I would even include in the notion of adjustment a terrific emphasis on a thrust from small business across the country. The fact that the government just talked about it but did not really make it happen is another example of a lack of sensitivity, connection, caring and compassion.
I know that after the next election-and we Liberals are not perfect- the greatest responsibility we are going to have is to put people back to work. When we look into the eyes of those people who lost their jobs at the Scarborough van plant last week, we have to remember the Scarborough van plant was a highly profitable company within the General Motors operation. The Minister for International Trade always likes to talk about global competitiveness and how we have to be lean, mean and globally competitive. This was an example of a company that won environmental standards and productivity awards. It made money for that transnational corporation General Motors and it still got the axe. It still got the knife.
Those people do not just fade away like the machinery that went on the trucks to Flint, Michigan. Those people are our constituents and there are people like that right across the country. It is going to be our responsibility
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with all our imperfections to put them back to work after the next election.
The government would be doing something responsible if it withdrew the bill and let us go back to the drawing-board. Let us see what all the ramifications are as they relate to the NAFTA. When we see that General Motors in one year went from 6,000 to 60,000 people in Mexico there has to be a reason for it. When tariffs have been taken down in the textile industry we should not think the same thing is not going to happen in that sector. That is going to be the next sector to expand in Mexico. At whose expense? The people of Canada.


Mr. Gilbert Parent (Welland -St. Catharines-Tho-rold):: Mr. Speaker, my learned colleague has set out the problem for us quite clearly. All members on this side and I are as opposed to this NAFTA process as we were to the free trade deal. My colleague just mentioned that the jobs at General Motors went from 6,000 to 60,000 in one year in Mexico. I am from a riding where we have lost 8,000 jobs in General Motors. These were not just menial jobs. They were jobs for highly skilled machinists, tradesmen and electricians. To people who say they will find jobs elsewhere I say those jobs have gone south.
I would point out another thing my colleague probably already knows. It is a fact that today as I speak in this Flouse of Commons there are more General Motors workers in Mexico than there are in Canada. Why has there been this great shift and what has been the over-all effect? We who are close to the American border have felt the full brunt of this free trade deal that was supposed to give us access to the American market and did not. Now what are we told the North American free trade agreement is going to give us? More of the same.
Just the other evening the past Minister of Finance said he supported a candidate in the leadership race who was going to carry on the policies of this government which have proven in the last years to be bankrupt.
My hon. friend mentioned small businesses and the fact that the banks-he did not use this word but I will use it-are virtually raping the small businesses of this country. The loans they give them are usurious. They are
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always sitting on top of them for proof that they do not need the money so they can give it to them.
My question for my hon. colleague is straightforward. What could we possibly do to ensure that our small businesses get a fair shake in this our beloved Canada?


Dennis Joseph Mills: Mr. Speaker, we can do a couple of things. First we passed a bill in the House about six months ago called the Bank Act. There was a Liberal amendment the government accepted that very few people in Canada know about.
The amendment indicates that if a small business feels it is not being treated fairly by its financial institution it has the right to call the Superintendent of Financial Institutions and give him the case and the reason it is not being treated fairly.
The Superintendent of Financial Institutions by the law of this land and this Parliament is bound to investigate that case. If the Superintendent of Financial Institutions finds that small business or individual is not being treated fairly, the Superintendent of Financial Institutions is by the law of this land bound to report that bank in the annual financial report of the Superintendent of Financial Institutions.
As long as the banks feel they can muscle small businesses and their customers they are going to continue to do whatever they want on their own terms. We have to give the people of Canada confidence that we respect the stability of the financial institutions. They are part of our community and as such have a responsibility to work with us and honour the laws of the land that have been made in this Parliament.
One of those laws that all parties agreed to in the last 90 days-they are not working under it yet-is the Small Businesses Loans Act. If a bank is not co-operating, call the Superintendent of Financial Institutions.


Giuseppe (Joseph) Volpe: Mr. Speaker, I find my colleague from Broadview-Greenwood most stimulating in debate as usual. He raises some issues that are absolutely crucial to the well-being of this country. He pointed out that we have another 3,500 skilled, well paying jobs from a consolidated revenue perspective. These are jobs that generate much needed tax moneys for our beloved social programs.

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I ask him and I ask myself what we do in the House when we consider legislative items like Bill C-122 that do not take into consideration the necessary safeguards when we establish an industrial policy, what we are doing when we consider bills like Bill C-122 that is establishing industrial policy, as much as the government opposite would suggest we are not doing anything.
The free trade agreement, the NAFTA and others are expressions of industrial policy. This plant was identified as one of the most efficient in North America and certainly the most efficient in Canada. It was the most productive, the most cost efficient. All of the accolades and adjectives that go with an economic and financial environment were applied to this plant.
Someone made a decision who was outside the boundaries of our country, outside the range of our political system and outside the patriotic emotions that keep people here and make them responsible corporate and private citizens. Someone outside those parameters suggested and effected a guillotine on 3,500 jobs.
There were 3,500 families no longer with incomes. Close to $50 million in tax revenues were lost. A similar amount per annum at least over the course of the next year in social benefits must be paid out at a cost to the taxpayer. I ask my colleague: What should we encourage the government opposite to do when faced with such faulty industrial policy?


Dennis Joseph Mills: Mr. Speaker, I thank my colleague from Eglinton-Lawrence for the question.
I have enjoyed the last five years being a member of Parliament. It has been a great experience and I thank my community for the privilege. However I will say one thing has really bothered me about my experience being an MP. It is that I believe the lobby system is out of control. For the people who are watching, lobbyists are usually paid a large amount of money to work on bureaucrats, MPs and ministers to make sure their particular objective is met. The lobbyists who tend to be the most successful are the ones who get the most money. They have the best access and usually as a result have the most impact on government.
Let us face it that the people who have the most money are the larger corporations and they tend to be transnationals. These transnational companies are basically circumventing the elected members of Parliament.
I have to say that I know members of Parliament in the Conservative Party who share my view about lobbyists. We need to review the Lobbyists Registration Act and we need an accountable and transparent system so that we know what is going on.
Only when we get that part of the economy organized can we get to deal with the real reasons decisions were taken like the one on the Scarborough van plant.


Mr. Tom Wappel (Scarborough West):: Mr. Speaker, what are we doing here this morning? My constituents might ask that question. I want to give them an idea of precisely what occurs in the House on occasion and what we as their representatives are asked to do.
Today we are talking about Bill C-122, an act to amend the Customs Tariff, textile tariff reduction. If that is not the title of a bill that whets one's appetite for further investigation then nothing is. I am sure everybody in Scarborough West is sitting on the edge of their seats to find out what in Heaven's name is in the bill.
I say that sarcastically. I point out to my constituents and to those listening that there are 327 pages in this legislation and it is just an amendment to the Customs Fhriff. Of those 327 pages only the first 8 deal with specific amendments to specific sections. Of those first 8 pages, 5 are simply a series of numbers which would look as if they have been generated by a computer in some game or in some child's mind.
What does that mean? It means this bill was brought forward for first reading on April 19, 1993. That is less than a month ago. Here we are considering it for second reading debate, which is approval in principle, in May. Why? One might ask why. How do we as members of Parliament, as political parties and as critics decide whether or not to approve a bill like this one in principle? That is what I want to discuss this afternoon. It is how we come to these decisions.
We often hear those who are critics of this place and of the parliamentary system saying that we should reflect the views of our constituents. I do not disagree, but are
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we mere voting machines of the parties as some would allege or are we mere voting machines of the majority of the electorate as others would like us to be?
If we are the latter and are simply sent here to reflect what the majority at any given time wants us to say without in any way thinking about the issues ourselves then I ask the people of Canada: What should we do with Bill C-122? I ask the people of Canada to tell us what to do with 327 pages of amendments, 99 per cent of which are numbers and relate to previous tariffs. What do the people of Canada want us to do? Do we hold a referendum and find out what the people of Canada want us to do on Bill C-122? How do the people of Canada come to a decision as to whether or not we should support in principle Bill C-122?
I think I made my point. The people of Scarborough West and all other people of Canada sent members of Parliament here not only to reflect the will of the majority at any particular time. They gave us the responsibility to investigate a bill such as Bill C-122 and in fact all bills. They gave us the responsibility to sit on committees to examine all 327 pages of this bill and the existing Customs Tariff upon which this act is based and to come to a reasoned decision on whether or not the bill in principle should be allowed to proceed through the House of Commons. That is what they sent us here to do. At least that is my proposition.
If we assume for a moment that is accurate, how do I as the member of Parliament for Scarborough West approach an examination of Bill C-122 on whether or not we should have approval in principle? Obviously we have to know what it is all about, and we know it is about the Customs Thriff.
Many people will know that one cannot be an expert on everything in this world. In fact there are very few people who are experts on anything in this world. Where do we go? What do we do? I must confess that one of my burning interests is not the amendments to the Customs Tariff.
All parties have people who are responsible for different areas of legislation. We look to them to give us some advice and guidance as to what we should be looking at. In this case the Official Opposition critic for revenue under which this bill falls is my colleague from Eglin-ton-Lawrence. He has been charged with the responsibility by the Liberal Party of reviewing this legislation and making certain recommendations to us as to what we
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should be doing. Indeed he has done that and he has done a very fine job. However we are independent people. We have the opportunity to review a piece of legislation like this one and come to our own independent conclusions. Our critic has provided us with the opportunity to do so because he has given us background information on this material.
I want to go through this so that the people of Scarborough West and those who are listening can see how we analyse a bill like this one and the listeners can come to their conclusions as they may.
What is the background of Bill C-122? The Minister of Finance at some point in the history of the world decided that he would direct the Canadian International Trade Tribunal. Everything has a short form. In this case the Canadian International Trade Tribunal is CUT He directed it to provide him with advice on how to reduce textile tariffs down to levels comparable with those of Canada's major industrialized trading partners. We will leave the issue of why he directed them to do that for a moment.
What did CITT find out? CITT found out that the average most favoured nation textile tariff for Canada was 15.7 per cent compared to 10.5 per cent for the U.S. One might ask: "So what? What does that mean?" One has to put it in context.
Of course these are the people who have some interest in this textile industry. They have some knowledge in the textile industry. They make their living at it so one would hope when they did their investigations they would come up with some reasoned recommendations, and indeed they did.
First, they recommended that Canadian textile tariffs be reduced by an average of 26 per cent by moving to a simpler rate structure with maximum duties of 5 per cent for fibres, 10 per cent for yams and 16 per cent for fabrics. I confess I do not know too much about fibres, yams and fabrics. I rely on Cm to make that recommendation.
Second, they recommended that the average tariff on speciality textiles be reduced by 33 per cent and that a complex annually calculated rate on certain wool fabrics be fixed at 11.8 per cent. So what? What would happen? Under these proposals average Canadian textile tariffs would remain higher than U.S. duties and be significant-

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ly higher than those of Japan or the European Economic Community.
Nothing much happened but they made a third recommendation. This may be why nothing much happened for the time being. CITE agreed with the Canadian Textiles Institute-another group of people who are interested in this particular subject matter-that the implementation of the tariff cuts they recommended should wait until the current round of GATT negotiations had been completed.
What is the GATT? There is another series of initials. It means the General Agreement on Tariffs and Trade. It is a large international body that discusses tariff and trade issues. In any event they recommended that until those GATT negotiations had been completed the tariff cuts should wait. Why? It was in order to make full use of the proposed tariff reductions as bargaining levers in the negotiations.
Are we waiting? No, we are not. Here we are talking about Bill C-122 today, in May 1993. It is one month before a leadership convention will choose a new Prime Minister and certainly not more than two or three months from the next general election. Where is the fire? What is the hurry? Why do we have to deal with this bill today? Why is the House not dealing with something else today? Hopefully we can find out by looking at the bill.
What does the bill do? I have reduced these 327 pages down to a manageable few pages simply so that I can handle it. To absorb this in one sitting is asking too much.
Here is the first thing it does. It would phase in the tariff reductions that CITT recommended at the rate of 1.5 percentage points per year rather than the 1 percentage point recommended by CITT. Why and when? There is no explanation for why it is half a percentage point higher. It would start January 1, 1993 and not January 1, 1994. It is retroactive legislation, which is something that is anathema to the House most times. This is unless we are talking for example about Bill C-91 because in that case it is perfectly okay to back date legislation as far as drug patents are concerned. Here we have back dating again, January 1, 1993.
The second thing the bill would do is treat specialty textiles and certain lightweight wool fabrics in the same manner as other fibres, yarns and fabrics. What manner
might that be? 'tariffs would be reduced to maximum rates of 5 per cent, 10 per cent and 16 per cent respectively.
Finally the legislation would maintain the margins of tariff preference for trade with Australia and New Zealand on six tariff items in which there is significant trade.
What am I supposed to do? How am I supposed to decide on behalf of the constituents of Scarborough West whether what I have just said is an excellent idea, whether this House should approve it in principle and whether I should vote to approve it in principle? How do we put it into context?
Let us look at the section. Forget the sections that have innumerable numbers. Let us read this interesting section which is section 4. If Bill C-115 introduced in the third session of the 34th Parliament and entitled "an act to implement the North American Free Trade Agreement" is assented to, schedule I to the Customs Thriff as enacted by that act is amended.
One whole section deals with various amendments to the Customs Tariff if the NAFTA is assented to. I ask again: Where is the fire? What is the hurry? I know what the hurry is. We are in the dying days of a Parliament with a dying government. It wants to-and I use the words advisedly-ram through with the least amount of debate the NAFTA and all peripheral legislation that supports it.
We know the NAFTA is not supposed to come into force until January 1, 1994. That is in the future. At least we are dealing with a piece of legislation that is going to be in the future, we hope. This bill wants to go back a year earlier to January 1, 1993. It mandates certain actions if the NAFTA is passed.
What if the NAFTA is passed by this Parliament but is not acceded to by the United States? Do we have to come back and amend this? It says: "If Bill C-115, introduced in the third session of the 34th Parliament and entitled NAFTA is assented to, schedule I to the Customs Tariff as enacted by that act is amended". What do we do? Do we pass the act and let it sit on the shelf until it is assented to, presumably after the United States has agreed to it?
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If we are going to have it sit on the shelf anyway and wait for royal assent, why do we not give the people of Canada an opportunity to decide whether they wish to proceed with the NAFTA and have royal assent to some piece of legislation that is building on a foundation that may never be there? What is the point of discussing this bill, taking up the time of the House when we are really talking about legislation that implements certain aspects of the North American free trade agreement?
I ask my constituents what they would have me do when we are voting on principle of the legislation.


An hon. member:: Resign.


Thomas (Tom) William Wappel: The hon. Solicitor General says: "Resign". That will not be up to the hon. Solicitor General but to the good people of Scarborough West.


An hon. member:: He is echoing what his constituents are telling him.


Thomas (Tom) William Wappel: At least the hon. Solicitor General is finally listening to what the Official Opposition critic of the Solicitor General has to say. I congratulate him for that.
How do I determine whether or not we should approve this bill in principle? I guess we have to see what it is going to do and what various industries that will be most affected are going to do. What is their point of view?
We are told the textile industry took the view that if the tariff reductions were to proceed they should be delayed as long as possible and back end loaded-I guess that is an industry term-with the weight of duty reductions imposed in the second half of the 1990s. It is now 1993, which is not in the second half of the 1990s.
The view of the textile industry would permit more time to adjust to the free trade agreement reductions. Any proposed tariff cuts under the GATT negotiations should also become evident by that time, including any relaxation of the multi-fibre arrangement.
What about Canadian clothing manufacturers who also have an interest in this bill? They would have preferred to see larger tariff cuts implemented immediately, although they were prepared to accept a five-year phase in period.
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We have a little bit of controversy within the industry as to which way we should be going. The Canadian textile institute, which has some interest in these topics, believes the unilateral tariff cuts at this time are "inappropriate and potentially damaging" to the Canadian textile industry. There is something we can hang our hats on.
To a person who does not know too much about this industry like me and is being asked on behalf of my constituents to decide whether we should approve this in principle, that carries a significant amount of weight because it is the people in the industry who are making these comments.
What sort of ramifications would occur? The bill fails to address the need for deep tariff cuts on fabrics which are not available in Canada. For example, the most favoured nation duty on imports of most broad weave cotton fabrics will be cut from 17.5 per cent to 16 per cent. Yet according to a particular expert in the industry these fabrics are no longer manufactured in Canada. What does that mean? Does that mean it is not a relevant provision?
It means that when we have difficult pieces of legislation like this one we do not want them brought forward in the dying days of a Parliament based on an agreement which is yet to become law, presupposing it is going to become law, only to have it sit on the shelf until it is given royal assent.
Under all of these circumstances it has become clear to the person best informed in my party, namely the Official Opposition critic for revenue, the hon. member from Eglinton-Lawrence, that we should not approve this bill in principle for some of the reasons I have enumerated. That is how the process works as far as I am concerned in terms of determining whether or not I should accept a bill in principle.
From my perspective based on the advice given to me and the analysis I have done, I will not be supporting this bill in principle.


Mr. Ray Funk (Prince Albert-Churchill River):: Mr. Speaker, the hon. member's remarks certainly reflect my own thinking in this case. Anything that comes before this House that will deepen and widen the effects of the free trade deal already in place or serve to entrench what is going to happen under the NAFTA legislation is something that my party and I are 100 per cent opposed to.

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We are opposed for a number of reasons. Certainly what has happened to the manufacturing industry including the textile industry is one of them. The facts and figures are clear. Since the FTA came in we have lost 23 per cent of our manufacturing jobs, including massive job losses in the textile industry.
Although the government may argue these losses are due to world-wide recession, that argument is revealed as bogus by the fact in the same period of time the United States has only lost 6 per cent of its manufacturing capacity. The loss of manufacturing jobs since the FTA came in almost ranks with the job loss that occurred during the Great Depression of the 1930s when 29 per cent of the manufacturing jobs were lost.
Some people may ask how this loss of manufacturing capacity affects a constituency like my own in northern Saskatchewan, Prince Albert-Churchill River. Certainly we do not have a great deal of textile manufacturing in the constituency. We do have one small plant which is an Indian owned organization called Silver Mountain Industries. It is doing very well because perhaps Indian people are more sensible than the rest of Canadians and tend to support their own, which Canadians in general could do well to learn. Nevertheless free trade which has caused the loss of manufacturing capacity has hurt my constituency by what it has done to the economic structure of the country.
The economy of the prairie provinces, particularly Saskatchewan, has always been very dependent on resources. Therefore the economy is subject to a great number of fluctuations because resource prices and commodity prices tend to rise and fall dramatically.
The whole process of equalization has always been the strength of this country and has always maintained the ability of the people of Saskatchewan to enjoy the same standard of living as the rest of Canadians. The process of equalization has always depended on manufacturing in Ontario doing well through good times and bad times. It has always been the stabilizing point of Canadian economic life.
I would like to challenge the member as a member of the Liberal caucus. Elis caucus has taken the position that the free trade deal and legislation like this that flows from it should be renegotiated. Flow does the hon. member's party propose to renegotiate the free trade agreement when the Americans have no incentive to renegotiate? They have already won everything they
wanted, particularly the control of our resources under the existing free trade agreement.


Thomas (Tom) William Wappel: Mr. Speaker, it is very interesting how my hon. friend the member for Prince Albert-Churchill River has managed to ask a question on Liberal philosophy when we are talking about Bill C-122, dealing with amendments to the Customs Tariff.
Far be it for me to ever shirk from a legitimate question, so let me answer the question. It is very simple. In any series of negotiations one simply approaches the other side and asks if they will open up negotiations because of certain sore points that have developed which could not have been foreseen, were not foreseen or discussed at the time the original agreement was entered into.	,
Of course we can talk about the future, I put to the hon. member very frankly. One sits down with the American trade representatives and says: "Look, it has been five years. We do not have a definition of subsidy. We do not know what we are talking about with antidumping. Every time the Canadians seem to do something good, your industry gets into a tizzy and takes us right to the final arbiter before you back down and pay back the tariffs that you have illegally taken from us".
If the Americans were to say, perchance: "Drop dead, we have you by the throat", we always have the option that the hon. member's party has as its only option, to get rid of the deal and abrogate. We do not need to get to that point because that automatically assumes bad faith on the part of our greatest trading partner. There is no reason to assume bad faith. In fact we should assume good faith until bad faith is proven.
We simply sit down with our counterparts in the United States, point out the sore points and ask them if they will renegotiate. Should they take a bull-headed, hard-headed unreasonable, unexplainable position, we still have the opportunity to abrogate.
I say that is the Liberal position, unlike the fawning position of the Tories which is to simply lie down and sign the deal without in any way dealing with the very major problems in the FTA on which it is based. We do not fawn all over the Americans. We do not fawn all over the agreement. We do not say it is perfect. We also do not do what the NDP does and close the door before we even know who is knocking. No, we take the reasonable position, ask that the problems be dealt with and simply leave the hammer in the back of our pocket until it is necessary.
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Giuseppe (Joseph) Volpe: Mr. Speaker, it is my pleasure to compliment my colleague from Scarborough West on a most incisive presentation on what happens to a bill when it reaches this House.
It is also noted in its brilliance by the didactic fashion of determining just what the issues at hand are. I hearken for the attention of those opposite. He made the point regarding the impact of a decision made precipitously on a bill of this complexity and size.
I would like to go back for a moment to the kind of process we followed when we agreed to the FTA, and I mean we collectively agreed to it even though my party voted against it. That particular bill was rammed through this House very early on in the session.


The Acting Speaker (Mr. DeBlois):: I am sorry to interrupt the hon. member, but it being one o'clock I do now leave the chair until two o'clock, pursuant to Standing Order 24(2).
The House took recess at 1 p.m.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.

Mr. Marcel R. Tremblay (Quebec-Est):: Mr. Speaker, let me join all those who will pay a stirring tribute to a great Quebecer and a great Canadian, Pierre Talbot, on May 17.
This man, a native of Quebec City and recipient of the Governor General's Medal, has dedicated his talent and his energies throughout his career to promoting the development of the Quebec City region. He has particularly distinguished himself as a catalyst and promoter of
the renovation and enhancement of the historic district of Quebec City.
With the tireless tenacity that has always characterized him, he has worked through various associations and groups, more specifically the Metropolitan Quebec Chamber of Commerce and Industry of which he has been the vice-president and general manager since 1961, to promote the project for preserving and restoring the Place Royale, the Parc de l'Artillerie and more recently the redevelopment of the old port of Quebec.
The list of his achievements is too long to give in such a short time, but let me mention a few: the establishment of the Societe Parc-Autos, of the first convention centre in Canada, of the tourism board, of the Quebec Inter-Port Corporation, of the Quebec Economic Development Corporation and of GATIQ.
A man of this calibre deserves to be thanked and emulated.


BOSNIA-HERCEGOVINA
Ms. Albina Guarnieri (Mississauga East):: Mr. Speaker, in barely a year 150,000 people have died in the war in Bosnia-Hercegovina. Many of these people were the victims of some of the worst atrocities against human life seen since the Second World War.
Canadian peacekeepers have endured very difficult and uncomfortable circumstances to bring relief to the survivors while political efforts to end the conflict continue to falter.
To date the only western military intervention has been an arms embargo that has maintained a military advantage for the Bosnian Serb forces. By imposing this embargo the UN has already intervened militarily to the detriment of countless civilians and bears responsibility for the defence of those people who have been deprived of the means to protect themselves.
As a party to that arms embargo Canada must now exert its influence to sponsor decisive action to bring an end to the killing while at the same time safeguarding our own troops currently deployed in the region.

May 11, 1993
It is time that humanitarian resolve overwhelms diplomatic restraint.


MINING EXPLORATION
Mr. Guy Saint-Julien (Abitibi):: Mr. Speaker, the headline of the "Mining week in Abitibi-Temiscamin-gue" column of La Frontiere for May 5 reads: "1992, a difficult year, but 1993 looks better".
Mining exploration has never really recovered from the stock market crash of 1987. According to the president of the Quebec Prospectors' Association, Michel Bouchard, not enough exploration to renew reserves is going on. Exploration investment leveled off at $100 million last year, although it is estimated that Quebec should invest $250 million a year in exploration.
To forget this gloom, the industry takes comfort from the coming into production of the largest Quebec deposit in the past ten years, the future Louvicourt Mine of Aur Resources and Novicourt, about ten kilometres southeast of Val d'Or.
Another hopeful sign is the arrival of the federal Canmet mining laboratory in Val d'Or, which since it opened a year and a half ago has undertaken some twenty research projects that could make Quebec mines more productive.
sjt sK *


THE PRIME MINISTER
Mr. Jim Jordan (Leeds -Grenville):: Mr. Speaker, the results are in. It was swift, it was blunt and it was unanimous.
The people of Leeds-Grenville have overwhelmingly registered their disapproval of the Prime Minister's current European tour at taxpayers' expense. One hundred per cent of those responding to an invitation to register their opinion did so with complete condemnation.
What else, they wondered, can this Prime Minister do before he takes his much awaited leave? What else, they
wondered, can the Prime Minister do to augment his total lack of credibility in the eyes of Canadians? What else can the Prime Minister do to show his utter contempt for the realities his government has imposed on Canadians over the past several years? Whether it is his last trip or his last hunt most Canadians are anxious to see the last of this Prime Minister so they can get this final puzzling moment in Canadian history behind them and get on with their lives.


MULTIPLE SCLEROSIS MONTH
Mr. Stan Wilbee (Delta):: Mr. Speaker, it is my pleasure to remind the House that May is Multiple Sclerosis Month. An estimated 50,000 Canadians suffer from multiple sclerosis, a disease that affects the central nervous system. There is currently no known cure.
Founded in 1948 the MS Society of Canada is the only national voluntary organization in Canada that both supports MS research and provides a wide variety of services for people with MS and their families. Its mission is to be a leader in finding a cure and to enable people affected by the disease to enhance their quality of life.
The annual MS carnation campaign has been a national fund-raising event since 1976. More recent events such as the MS Bike Tour and the Super Cities Walk for Multiple Sclerosis offer people an opportunity to get involved and have fun at the same time.
I would like to wish the Multiple Sclerosis Society of Canada and its volunteers a very successful Multiple Sclerosis Month.


CESAR CHAVEZ
Mr. Bill Blaikie (Winnipeg TVanscona):: Mr. Speaker, the recent death of Cesar Chavez marks the end of a life that will be remembered for all time wherever working people gather to celebrate their struggles for justice and human rights.
For decades he was an inspiration to many in the Canadian labour movement, Canadian churches and the public at large. Many activists cut their teeth in boycotts organized on behalf of the farm workers that Cesar Chavez devoted his life to.
May 11, 1993

In his David and Goliath fight against U.S. agribusiness he was for Hispanic workers their Martin Luther King in the struggle against oppression.
The struggle continues for justice, health and safety and the environment. California grape growers now have the memory of a good man to contend with and that can be powerful indeed.
It would be nice if they just cleaned up their act but it seems that the lion is not yet ready to lay down with the lamb.


HOUSING
Hon. Alan Redway (Don Valley East):: Mr. Speaker, a year ago I visited a housing project for former drug addicts and convicts in San Francisco called Delaney Street. It is financed entirely by a small number of businesses and operated by the residents themselves with no government assistance.
Last week I helped to open Meegwetch Place, a federally and provincially assisted apartment and townhouse development for low income families, singles and disabled persons in Toronto.
The refreshments for this event were catered by a new business organized by the residents of Street City, another housing project in Toronto for the homeless.
This is the kind of revenue-generating innovation we need if we are to hold our own and hopefully produce more housing for low income and homeless Canadians at a time when governments are fighting enormous debt problems. Delaney Street has proved it can be done. Street City is pointing the way here in Canada.


HEALTH CARE
Mr. Rey Pagtakhan (Winnipeg North):: Mr. Speaker, I am appalled at the suggestion that medicare user fees might be condoned by the Conservative Party leadership contenders, though having watched the Tories over the last few years I should not be surprised.
The Tories voted in this Chamber against a 1991 Liberal Party motion to reaffirm the commitment of the
House of Commons to universal medicare. The Tories resolved at their 1991 policy convention to introduce user fees.
It will be a black day for Canada when user fees are introduced in our prized medicare system. The 1984 Canada Health Act will be violated as user fees will hinder accessibility to health care, particularly for the poorest and most needy. A two-tiered health system will be created: one for those who have cash or a credit card and another for those who have neither. Many Canadians will suffer and some will prematurely die.
The evidence is clear. Let the Tory leadership candidates not hide behind musings and considerations, but let the Conservative Party come clear on this policy with the people of Canada so that it may be judged accordingly-


Mr. Greg Thompson (Carleton-Charlotte):: Mr. Speaker, Canada's recent victory before a Canada-U.S. FTA panel has seriously damaged U.S. protectionist measures used against Canadian lumber exports.
Tom Buell, the chairman of the Canadian Forest Industries Council is quoted in The Globe and Mail as saying:
The ruling is so one-sided in Canada's favour that the U.S. administration should consider giving up the fight.
This decision simply illustrates how important the Canada-U.S. Free Trade Agreement is to business people in this country.
The Financial Post states:
The value of the free trade dispute panel is abundantly apparent in its determinations about the merits of the [U.S.] case-Without the panel, we would be at the mercy of politically inspired trade actions.
Protectionism hurts not only exporters but importers as well. As a result of the U.S. tariff American consumers saw the price of a new home rise by an estimated $4,500. Hopefully this FTA panel decision, combined with the effects of higher lumber prices, has convinced our American friends that trade without barriers is best not only for the U.S. but Canada as well.

May 11, 1993


NATIONAL DEFENCE
Mr. George Proud (Hillsborough):: Mr. Speaker, I would like to bring a point to the attention of the Minister of National Defence and Minister of Veterans Affairs.
I have received no response, regarding my Questions on the Order Paper about the re-establishment of a naval reserve base in Charlottetown. Residents in my riding have heard promises of a naval reserve base twice before and still there is no base.
Last February the minister's department issued a news release stating recruitment for reservists will start in January 1994 and that they will use ' emporary buildings until a new waterfront facility is completed in 1997.
Last week a news report from a DND official said construction will not begin until 1997 at the very least. Budget estimates from the minister's department show a contradiction on plans for the naval reserve base. One page says it will be established and on another page it is blatantly absent.
If plans to re-establish this base are cancelled a third time by this government there is no doubt in my mind and in the minds of my constituents that this government continues to cry wolf.


JUSTICE
Mr. Scott Thorkelson (Edmonton -Strathcona):: Mr. Speaker, Canadians have clearly indicated that they are concerned about safety on our streets. The proposed criminal harassment law is the latest in a series of strong pieces of legislation that respond to these concerns.
We are all familiar with cases in which one person will simply not leave another person alone. They threaten, they phone, they follow and they frighten.
Until now there was not much that the police could do until the stalker actually committed a criminal act. Too often this meant that an innocent person would end up injured or even killed, and friends and neighbours would say that they could see this coming.
This new legislation will protect Canadians from this type of harassment. Police will be able to arrest and charge the stalker with criminal harassment as soon as there is intent on the part of the stalker, harassing behaviour and fear on the part of the victim for his or her own safety. This provision is fair, workable and enforceable.
My constituents have been asking for changes of this type for a long time. I look forward to informing them of this excellent legislation.


PEACEKEEPERS
Mr. John Brewin (Victoria):: Mr. Speaker, often in dangerous situations Canada's peacekeepers continue to make an outstanding contribution to peace throughout the globe. All members of the House join in paying tribute to our peacekeepers and their families.
Yesterday the Canadian Peacekeeping Veterans' Association noted that 135 Canadian peacekeepers have died while serving on UN peacekeeping missions. The association president, James MacMillan-Murphy, has proposed that August 9 be set aside as a national peacekeeping memorial day in honour of those peacekeepers who gave their lives in the service of peace.
I ask the House to give this imaginative proposal its enthusiastic support.


SUPPLY AND SERVICES
Mr. Bill Casey (Cumberland-Colchester):: Mr. Speaker, I would like to report some progress in the reduction of trade barriers in the maritime provinces.
The Department of Supply and Services has recently changed its interpretation of the regulations to allow businesses in northern Nova Scotia to buy from the Moncton office of the Department of Supply and Services. Prior to this change Nova Scotia businesses were excluded, even though we were located very close to the Moncton office.
After a detailed examination of the area-buy policy the minister and officials came to the conclusion that the use of provincial boundaries as criteria to establish source lists was inappropriate and the regional source

May 11, 1993
lists should reflect the realities of the supplier's proximity-
The Moncton office of Supply and Services Canada is aware of this change in interpretation and I would urge businesses in northern Nova Scotia to contact the Moncton office of Supply and Services Canada. The inquiry should be addressed to the sourcing officer, Box 746 in Moncton, or people could contact my office and I will be pleased to assist.
I would like to thank the Minister of Supply and Services for responding to our request to have this policy reviewed and for his quick action in changing the interpretation.


THE LATE GENERAL JACQUES DEXTRAZE
Hon. Marcel Prud'homme (Saint-Denis):: Mr. Speaker, we were very sorry to learn of the death of a great Canadian, General Jacques Alfred Dextraze.
He enjisted as a soldier in the Fusiliers Mont-Royal, of which he was always a very distinguished member. He served with very great distinction, obtained the highest military honours for war and peacetime service and won many decorations. At the age of 25, he became commander of the Fusiliers Mont Royal and his career reached its peak in September 1972 when he became Chief of the Defence Staff, in which position I had the honour to know him very well while I was chairman of the Standing Committee on External Affairs and National Defence.
He was noble, proud and patriotic. I extend our sincerest condolences to his family, his many friends and especially the Canadian Armed Forces, which, like him, I learned to respect. Quebec and Canada have lost one of their most eminent sons.

All Canadians owe him a debt of gratitude.


Mr. Larry Schneider (Regina-Wascana):: Mr. Speaker, the recent furore about whether or not the exclusive right to sell barley should continue to be with the Canadian Wheat Board continues to smoulder.
What is before us is whether individuals as well as the Canadian Wheat Board should have the right to sell barley to the United States. So-called sides to this issue have hired economists to counter each other's position.
Perhaps Parliament is best guided by these comments which come from producers. Stan Stewart, a 29-year old barley grower from Stettler, Alberta says:
I do not support a plebiscite as the study has already shown the benefits and we do not need more delays and expense.
Herb Axten, a rancher from Minton, Saskatchewan says:
This barley marketing has got to go through or all the cattle industry is in the sewer.
Sheldon Cooper from West Bend, Saskatchewan says:
Please provide me with the opportunity to extract my barley dollars from the marketplace, not from the government.
Finally, C. W. Ausenhus from Didsbuiy, Alberta says:
It was interesting to note the first ever attendance of the Canadian Wheat Board at the California Feed Industry Convention last Thursday, May 6. Competition works.


GOODS AND SERVICES TAX
Mr. Rod Murphy (Churchill):: Mr. Speaker, just to respond to the last speaker, I could also quote farmers from western Canada who want to keep barley under the Canadian Wheat Board. If the government is afraid of a plebiscite on this issue, it should state that.
I get on my feet to speak about something else. Yesterday we had a debate on the goods and services tax. It is very obvious from that debate that the Conservative Party would keep the goods and services tax.
It was also very obvious from that debate, as led off by my colleague from Winnipeg Transcona, that the New Democratic Party would get rid of the GST and replace it with other tax measures that are known to the Canadian public.

May 11, 1993
Oral Questions
In yesterday's debate the Liberal Party policy became clear too. It would establish a committee. This is a public issue. The Canadian public is worried about the goods and services tax. Canadians want to get rid of the goods and services tax. All parties have had time to study their position and to make it known to the people.
Finally the Liberal Party made clear what is its position.



ORAL QUESTION PERIOD


Ms. Sheila Copps (Hamilton East):: Mr. Speaker, my question is for the Minister of Finance.
For those Canadians who thought that a change in Tory leadership would mean a change in economic direction, yesterday they got a sad surprise.
The prime minister-in-waiting in her embrace of the former Minister of Finance has embraced every single one of this government's devastating economic policies: high interest rates, the GST, economic policies which in the month of April left 1,500 people looking for work every single day.


Paul Wyatt Dick: She's at it again.


Sheila Maureen Copps: I want to ask the Minister of Finance: How can his government cling to disastrous economic policies that are costing thousands of Canadians their jobs every single day?


Hon. Don Mazankowski (Deputy Prime Minister and Minister of Finance):: Madam Speaker, the hon. member talks about high interest rates.


Sheila Maureen Copps: Real interest rates.


Donald Frank Mazankowski: Interest rates are the lowest they have been in 20 years and inflation is the lowest it has been in 30 years.
I note that just the other day her leader said he would accept inflation as high as 5 or 6 per cent. What would that do to interest rates? We also know that he would accept a deficit to GDP of 3 per cent which would be in perpetuity a deficit of $25 billion per year.
The policies followed by this government are the right policies for the time. They are the right policies in terms of the need to restructure. They are the right policies for growth. They are the right policies for expansion and the right policies for job creation.


Sheila Maureen Copps: Mr. Speaker, my supplementary question is for the same minister.
Fifteen hundred Canadians lost their jobs every single day during the month of April. One of the reasons that thousands of Canadians are being thrown out of work is that the government was foolish enough to sign a trade agreement with no subsidies code and no definition of dumping.
We know that in Hamilton alone Dofasco made a major investment decision in a mini-mill in the United States precisely because the current trade agreement is not working.


Mr. Wilson (Etobicoke Centre):: Wrong.


Sheila Maureen Copps: I want to ask the government why does it continues to defend trade policies that are driving Canadian companies to export their jobs and Canadian work south of the border?


Donald Frank Mazankowski: Mr. Speaker, the bright spot in the Canadian economy is the matter of exports. Exports to the United States of America have increased by over 20 per cent since the free trade agreement has been put in place.


Mr. Harvard:: Where are the jobs?


Mr. Fontana:: Where's the beef?


Donald Frank Mazankowski: Even last month when we had a decline in the number of jobs created, there were 28,000 new jobs created in manufacturing. That is up 4 per cent over the last six months or 70,000 jobs. Thirty-three per cent of those surveyed indicated that there would be additional manufacturing jobs because order books are filling up. That is good news not only for exports but that is good news for jobs.


Mr. Speaker:: I do want to ask hon. members to remember that I recognized the hon. member for Hamilton East who was asking questions. I am sure hon. members would want to be sure that she receives the proper courtesies and I am sure that the House would expect that the minister answering would receive the same courtesies.
May 11, 1993


Sheila Maureen Copps: Mr. Speaker, I would like to put the same question to the Minister of Industry, Science and Technology and Minister for International Trade. He knows perfectly well that Dofasco, which stands to lose 5,000 jobs in five years because of domestic free trade policies, has decided to make a major investment in the U.S. to avoid international trade problems.
Why is this minister clowning around about the trade situation while the Americans are playing hardball, which is costing Canadians thousands of jobs?


Michael Holcombe Wilson: Mr. Speaker, I would like to put on the record the reasons why Dominion Foundries made the decision that they have.


Sheila Maureen Copps: They already put it on the record at the annual meeting.


An hon. member:: Why does she speak all the time?


Michael Holcombe Wilson: I would prefer to have this put on the record by this side of the House rather than by the hon. member's twisted logic.
The factors for this are the availability of quality scrap metal which is required to operate a mini-mill; proximity to markets located within a 300-mile radius of its primary markets; excellent road, rail and water transportation; inexpensive electrical power; local and state government support for infrastructure, access to a highly skilled and flexible work force. Those are the reasons why Dofasco has made that decision.
My hon. friend criticizes the free trade agreement with the United States. Just last week we had a major victory in the free trade agreement with the United States when the decision of the free trade panel came down in favour of the bulk of the Canadian arguments in support of the softwood lumber decision.
It is beyond me why we never hear one thing positive about the free trade agreement with the United States when the facts are there very clearly.
Oral Questions YOUTH EMPLOYMENT


Ron J. Duhamel: Mr. Speaker, my question is for the Acting Prime Minister.
Today there are 20,000 more unemployed young Canadians than there were a month ago. Today there are 64,000 more unemployed young Canadians than there were a year ago. Young Canadians are desperate for work. They have lost hope.
What is the government doing to put the over 400,000 young men and women who are without work today back to work?


Donald Frank Mazankowski: Mr. Speaker, obviously the best way is to create a climate where the private sector will generate the economic activity that will create jobs. We have been seeing in the last six months or so some pretty positive signals.
We have had growth of 3.5 per cent in the last quarter of 1992. We have had growth in the last three months of something in the order of 4 per cent. There has been considerable strengthening in the export sector, considerable strengthening in housing starts. Construction spending is up. The infrastructure projects are now starting to take hold. The energy sector has increased its activity by roughly 100 per cent over last year. The lumber sector is strong. Retail sales are picking up.
These are the kind of indicators which should provide some hope and confidence, not only to young Canadians but to all Canadians.


Ron J. Duhamel: Mr. Speaker, where are the jobs? Where are the jobs for the young people?

My supplementary is directed to the same minister. Obviously, current student assistance programs are inadequate. In Quebec, in the western provinces and everywhere else in Canada, thousands of young people are jobless. Across the country, thousands of young people will not earn enough money to be able to continue their education this fall. The government has no plan and no strategy. Why has the government abandoned Canadian youth? More than 400,000 young Canadians are jobless and are anxious to work.

May 11, 1993
Oral Questions


Donald Frank Mazankowski: Mr. Speaker, obviously there is a fundamental difference in philosophy and in our approach in how to deal with the economy.
The hon. member is a member of a party that advocates higher inflation, higher interest rates, more government spending and higher deficits. We do not share that view. We have to deal with the deficit. We have to put in place the kind of economic policies that will nurture growth and create jobs.
In terms of opportunities for young people, just today the 1991 census shows that 43 per cent of people 15 years and older had a university degree or some post-secondary education, compared to 36 per cent a decade earlier. This indicates, notwithstanding the difficulties we have in terms of providing the appropriate kind of education and the shared responsibility, we are clearly seeing progress based upon the 1991 census.


PUBLIC WORKS
Mr. Jim Fulton (Skeena):: Mr. Speaker, my question is for the Minister of Finance regarding the fixed link project.
At a time when the government is forcing cuts and services while squeezing Canadians with high taxes, it is planning to give $1.5 billion in federal subsidies to a handful of wealthy developers for a defective bridge to Prince Edward Island.
Would the minister explain to Canadian taxpayers why they should be forced to pay; first, cash to the developers up front; second, the entire cost of interest; and third, the entire cost of the principal, $800 million in loans, while the developers get guaranteed rights to all the profits for the next 35 years?
What kind of a business deal has the Minister of Finance cut?


Mr. Dave Worthy (Parliamentary Secretary to Minister of Public Works):: Mr. Speaker, the taxpayers of Canada under the Constitution have always been responsible for the transportation of the people of Prince Edward Island to the mainland.
Under the fixed link agreement taxpayers will be responsible for paying no more and no less than we would under existing circumstances. The difference is that at the end of 35 years, Canadians will own the fixed link and taxpayers across the country, including those on Prince Edward Island, will be better off.


James Ross Fulton: Mr. Speaker, now we know what the problem is. The ferry last year cost $22 million. This deal starts at an initial payment of $42 million per year. Sure we get a rusting bridge at the end of 35 years. Some deal.


Mr. Peterson:: If God didn't want us to have bridges, He wouldn't have given us islands.


James Ross Fulton: My supplementary question is for the Minister of Finance. The Gordon Capital Corporation confidential memorandum prepared and distributed to investors concludes that the federal government will guarantee all payments even if the bridge is stalled or if the bridge has to close for any reason.
Will the Minister of Finance explain why the taxpayers should carry all of the risk and pay all of the bills? We would like to hear from the Minister of Finance.


Dave Worthy: Mr. Speaker, I have just indicated that it is the taxpayers of Canada who are responsible now.
The profits will be to all taxpayers of Canada. The people of Prince Edward Island will be brought back into the mainstream of Canada. They will benefit from it. Right now they are excluded.
We heard many witnesses throughout the hearings indicate that the economic well-being of Islanders is at stake and that they want this fixed link.
In fact it is the taxpayers of Canada who will gain over the long term.


James Ross Fulton: Mr. Speaker, my final supplementary is for the Minister of Finance.
We now know why the Minister of the Environment is ducking this one. It is because this bridge concept was turned down on environmental grounds as being defective. We now know why the Minister of Public Works will not come in and answer questions about this, but we want to hear from the Minister of Finance.
May 11, 1993

Why should Canadian taxpayers fork out $1.5 billion, take all the risks, pay all the bills and then turn over all the profits for 35 years to a wealthy group of investors who were already paid? Come on, Maz, come clean.


Dave Worthy: The member raises the environmental concerns he has with the link. In fact, the Department of Public Works is investigating or reviewing the environmental concerns under section 12 and will be reporting back on that.
With respect to the economic concerns the member raises, I say again and again, the taxpayers of this country are the ones funding the transportation to the island. Nothing is new. It will not be more; it will not be less. It will, in fact, be exactly the same amount that we are liable for now.


Hon. Roy MacLaren (Etobicoke North):: Mr. Speaker, a moment ago in response to the deputy leader of the opposition, the Minister of International Trade once again claimed victory in the lumber dispute with the United States. The fact remains as the minister knows perfectly well that another 90 days must pass before there is a final conclusion at which time this dispute will have dragged on for two years and will have cost the Canadian industry at least $200 million.
Recently several U.S. congressmen and senators called for a re-opening of the free trade agreement in order to speed up the dispute settlement process.
Does the minister now agree that the current dispute settlement process must be accelerated, as the opposition has long urged, by the negotiation of an effective subsidies and anti-dumping code so as to reduce for example what the president of Dofasco has called "all these stupid trade disputes"?


Michael Holcombe Wilson: Mr. Speaker, I listen with a good deal of patience to the questions of the hon. member. I have to say to him that without the free trade agreement we would have no dispute settlement system so that what we saw last week
Oral Questions
was a positive result, a success of a negotiation, the free trade agreement, which is benefiting Canadians.
I understand what the hon. member is saying. He said: "Go back to the United States and open up the dispute settlement system". Has he not been listening to what congressmen have been saying? They would like to scrap the dispute settlement system. Therefore, if he is saying that he would like to re-open it, he had better think about what the risk is of doing that and putting that before the United States Congress.


Roy MacLaren: The minister says in effect that we have negotiated a bad agreement but it was the best we could get, that it was not much, but it was all we had and if we are the government not to go back and try to renegotiate it. That patently is rubbish. The minister knows that in the U.S. Congress and Senate there are many who would seek an accelerated dispute settlement mechanism as Canada would do.
In any event, what is the rush? What is the rush of this government to push through the NAFTA legislation? In earlier agreements, whether in the GATT or in the FTA, we in Canada waited to be certain of the U.S. implementing legislation. In this case we should be waiting to be certain of what the side agreements involve. Instead, this government is rushing forward. What is the rush? Why is this government giving away Canada's bargaining position before we know what the final U.S. position is going to be?


Michael Holcombe Wilson: Mr. Speaker, let me tell him why the rush. Let me quote from the Vancouver Province. Like many other engineering firms, "Vancouver's Chemetics International is anxiously anticipating increases with Mexico".
The Calgary Sun, mentions that the oil giant, Pemex, is pursuing a $23 billion upgrade in its vast infrastructure over the next five years. Delta Catalytic recently won a $500,000 engineering contract because we now have access to Pemex in the government procurement under the NAFTA. Jonathan Bamberger of Canada Malting said: "From our point of view the Mexican market is a big opportunity". In Kelowna, Tree Fruits Limited is busily selling millions of apples to Mexico in a trade deal worked out ahead of the NAFTA.

May 11, 1993
Oral Questions
That is because now people can see there are opportunities under the NAFTA. It is to take advantage of these opportunities that we are putting the legislation in place, so that Canadian companies have confidence in what they are going to be dealing with. Now they can go down and negotiate these deals which are creating jobs back here in Canada.
If my hon. friend stands for what they would do if, God help us, they were ever in government in saying to throw this all back and let us wait for everything to happen, then we are going to lose job opportunities here. Those opportunities will be lost if we do not have the legislation in place.


Mr. Paul Martin (LaSalle-Emard):: Mr. Speaker, my question is for the same minister.
I suppose those are the same opportunities he told the Canadian steel companies they were going to get in the Canada-U.S. Free Trade Agreement.

Thousands of jobs have been lost because of this government's failure to prepare for the free trade agreement with the Americans, and I am referring to a lack of adjustment measures, a suicidal monetary policy and obsolete anti-dumping regulations. And now the government is about to repeat the same mistake with NAFTA.
My question is this: why is the government in such a hurry to sign the agreement with Mexico before Canada is in a position to benefit from the agreement?


Michael Holcombe Wilson: Obviously, my hon. friend had drafted that question before he heard the answer to my last question.


Dennis Joseph Mills: We have heard it all before.


Michael Holcombe Wilson: The answer I just gave his colleague was hot off the press this morning, so he could not have heard it before because I have never given it before.


Joseph Frank (Joe) Fontana: It's the same bull.


Michael Holcombe Wilson: But the essence of the answer which can be spread by industry in all regions of the country, is that there is opportunity in Mexico. The important thing is to get down there and generate this business. My hon. friend as a former businessman should understand that certainty and knowing what the agreement is going to say is the important part of business in going down there and having the confidence in knowing what the ground rules are.
We are providing that confidence by putting the legislation in place, in that way making sure that Canadians who want to do business in Mexico are able to do it with full confidence.


Paul Edgar Philippe Martin: Mr. Speaker, the Canadian business community is going to be severely handicapped because the governments in the other two countries are backing their private sectors and this one is chickening out. That is what is happening.
President Clinton has said that NAFTA will not pass in the United States unless it is accompanied by massive retraining and adjustment programs. Meanwhile, this minister says that we in Canada do not have to do a thing, that there is no need to strengthen our already too weak trade rules, no need to have adjustment measures. That is baloney.
How many job losses, how many bankruptcies, how much human suffering has to occur before this government recognizes the tremendous cost of its failure to act in the Canadian interest?


Michael Holcombe Wilson: We understand all these histrionics, Mr. Speaker. The hon. member has to put these shows on to see if he can move along the aisle here toward the leadership position.
When he talks about the massive retraining programs in the United States I ask him to reflect upon the reasons for that. The United States do need massive retraining programs because the Canadian programs which have been increased from $2 billion to $3.8 billion this year since the start of the free trade agreement are now two to three times more generous than the United States on a per capita basis. That is why they need those massive programs in the United States.

May 11, 1993


NATIONAL DEFENCE
John F. Brewin: Mr. Speaker, my question is for the Minister of National Defence.
As the House knows the terms of reference of the board of inquiry which was established to look into the operations, discipline and training of the Canadian Airborne Regiment do not expressly permit the board to look into issues of racism and white supremacism in that unit or in the Canadian military.
Will the minister stand up today and say she is prepared to amend the terms of reference so that the board is directed to look into those issues of racism and white supremacism in the military?


Hon. Kim Campbell (Minister of National Defence and Minister of Veterans Affairs):: Mr. Speaker, the hon. member will be very pleased to know it is not necessary to amend the terms of reference. The terms of reference are sufficiently broad and include the kind of inquiry the hon. member has suggested should take place.


John F. Brewin: Mr. Speaker, at the invitation of the minister I attended the press briefing held by the chief of defence staff when the board was set up. He was specifically asked about that. He refused to confirm that the terms of reference included racism and white supremacism.
The simple thing for the minister to do is to get up and say that the terms will be clarified. If she fails to do so, the board and the Canadian public can only conclude that she does not want the board to look into those issues.


A. Kim Campbell: Mr. Speaker, I repeat that the board of inquiry was put in place precisely to examine every factor, every consideration relating to the training and the ethics of our Airborne Regiment during peacekeeping in Somalia.
In every aspect of the environment that includes the kinds of issues the hon. member has raised I can assure him they will be the subject of the inquiry carried out by this board.
Oral Questions


Mr. Fred J. Mifflin (Bonavista-Thinity-Conception):: Mr. Speaker, my question is for the Minister of National Defence.
I want to ask the minister if members of the Canadian forces are permitted to participate in meetings or gatherings of racist organizations and if so, why are they?


A. Kim Campbell: Mr. Speaker, as the hon. member knows, racism or racist attitudes are completely unacceptable to members of the Canadian Armed Forces. That is the policy of the Canadian Armed Forces. I want to repeat a number of steps that have been taken to deal with that.
First of all our harassment policy was reinforced last week when I tabled the report and response to it in the House of Commons for the review of members. It reinforces that racism and any kind of personal harassment based on racist attitudes are unacceptable.
The board of inquiry concerning Somalia which I put in place also will deal with that question.
We have another policy in place. I want to be very clear on this because it is a very important issue the hon. member raises and it has created concern on both sides of this House. In terms of recruiting, applicants demonstrating extreme attitudes of intolerance are rejected. We also carry out investigations in the Canadian Armed Forces of any attempts to infiltrate the ranks of the Armed Forces by groups promoting racism.
My hon. colleague, the government House leader, has responded to questions about whether it is acceptable for members to belong to organizations that profess certain attitudes. In my opinion it is not acceptable. In our recruiting to date, we have not deliberately asked people about their memberships. I am instituting a review of our recruiting policies to ensure that is done.
The hon. member will understand that there is a distinction between what people think and the organizations they belong to. I believe there may be some charter problems but they are not insuperable in ensuring members of the Canadian Armed Forces are not in fact members of such organizations.


Fred J. Mifflin: Mr. Speaker, I want to remind the minister that the head of one racist organization, the leader of the white

May 11, 1993
Oral Questions
supremacist group, Heritage Front, has said that the Canadian military-and I am quoting-is a good recruiting ground for his organization. He has claimed that members of the Canadian forces belong to white supremacist groups including his. It has been reported that some members of the Canadian forces have been training the paramilitary wings of the racist organizations.
I ask the Minister of National Defence: Is this activity considered to be actively participating with a racist organization and what action is the minister taking to deal with it?


A. Kim Campbell: Mr. Speaker, I would agree that yes, it is considered to be actively participating. I am undertaking a review of the policies of the Department of National Defence, particularly a review of the policy with respect to recruiting.
I have, indicated that there may have been some concern about the difference between attitudes that are held and groups that are belonged to. I believe that with respect to the second category it is completely inconsistent for members of the Canadian Armed Forces to belong to groups that profess those attitudes.
I am in the process of ensuring that that practice, which runs completely counter to the stated policy of the Canadian Armed Forces that racist attitudes are not tolerated, is carried out in all of the activities of the Canadian Armed Forces. In particular I am instituting a review of our recruiting policies to make sure that that factor is taken into account.


Mr. David Dingwall (Cape Breton -East Richmond):: Mr. Speaker, section 3 of the policy for personnel on peacekeeping duty states, and I quote: "The Canadian forces is called upon to perform peacekeeping duties because of its ability to respect the cultural, religious and other sensitivities of the countries in which it serves". This policy has been used in the past to deny Canadian Jews, Muslims and women the chance to represent their country in peacekeeping activities in the Middle East.
I ask the Minister of National Defence: Why does the minister prevent Jews, Muslims and women from serving Canada in the Middle East, but permits a known white supremacist to serve in Somalia?


A. Kim Campbell: Mr. Speaker, I have never permitted a known white supremacist to serve in Somalia. I am in the process of ensuring that members of the Canadian forces who wear this country's uniform do not have those kinds of attitudes.


David Charles Dingwall: Mr. Speaker, my supplementary is to the same minister.
I would hope the minister would avail herself of the opportunity to explain to all Canadians the appropriateness of the Minister of National Defence to allow a known white supremacist to go to Somalia and serve there for the sole purpose of trying to protect nonwhites.
Will the minister please explain to the House the appropriateness of allowing that kind of action to take place?


A. Kim Campbell: Mr. Speaker, I would like to say to the hon. member that this is a very serious issue. It will perhaps come as a source of disappointment to the hon. member to know that I of course do not approve of such a thing and have never approved of it and he knows that.
We are now in the process of trying to get to the bottom of a series of allegations and concerns that have been raised by the Canadian people and within the Canadian forces themselves about the attitudes of our forces.
There are criminal investigations under way as a result of certain activities in Somalia. I have instituted a board of inquiry to look very broadly and very deeply into the background training and ethos of our forces which serve on those missions.
I have also indicated that I am reviewing our recruitment policies to ensure that the explicit and stated policy of the Canadian Armed Forces that racist attitudes are absolutely unacceptable is in fact carried out in all of the activities of the Canadian Armed Forces.
May 11, 1993


HEALTH CARE
James Capsey (Jim) Karpoff: Mr. Speaker, I have some further questions for the minister of health respecting his opposition to user fees for medicare.
The Minister of National Defence has said on at least two occasions that Canadians will accept user fees and that one or two provinces should be allowed to experiment with user fees. Given these repeated statements has the minister of health concluded that his cabinet colleagues who seek the leadership in the Conservative Party no longer support the opposition of the minister and the Prime Minister to user fees?


Hon. Benoit Bouchard (Minister of National Health and Welfare):: Mr. Speaker, I believe that the member should be more worried about his colleagues than I am about my colleagues.
I answered that question yesterday concerning my clear position on user fees. I also said that many Canadians raised the problem of the health care system and the way that we should face the increasing costs of this system. It was raised first by the provinces. It was raised by premiers, by ministers and it can be raised by any Canadian including ministers or members of Parliament.
The question for me is to examine the system. Basically I will repeat what I said yesterday: I do not believe that a user fee is an answer to the problem of the health care system in Canada.


James Capsey (Jim) Karpoff: Mr. Speaker, I have a supplementary for the same minister.
I note that Marcel Cote, the head of the platform committee for the Conservative Party in the coming election, has said that health and education services should be put on a fee basis. Will the minister now concede that there is no longer any commitment within his party to provide medicare without user fees.


Some hon. members:: Shame.


Benoît Bouchard: Mr. Speaker, unlike his colleague, the member from Windsor, Mr. Cote is not my colleague. He did not speak on my behalf.
Once again I repeat what I said and I can even add that I was very pleased to hear the member for Vancouver
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Centre saying she was of the school of Benoit Bouchard, which means she does not agree with user fees.


FORESTRY
Mr. J. W. Bud Bird (Fredericton-York-Sunbury):: Mr. Speaker, I have a question for the Minister of Finance.
The April budget contemplates that the structure of economic regional development agreements in forestry will be discontinued as the present generation of those agreements expire. The minister is aware that the Canada Forest Accord which was signed in 1992 contemplates a very close partnership between the federal and provincial governments with respect to forestry.
The minister is also aware that forestry is our most important economic and environmental resource. I would like to ask the minister what measures are going to be taken to maintain and intensify the federal government presence in forestry in Canada.


Donald Frank Mazankowski: Mr. Speaker, the national forest strategy is very much a part of the government's policy as enshrined in the Canada Forest Accord. We will continue to carry out the policy objectives of that accord.
I should say as well that we will focus our attention to a large extent upon the competitiveness aspect of the forestry industry, on research and development, and on the promotion of export markets, particularly international export markets.
There is certainly a role for the federal government to continue to play in a supporting way. What we are doing here is trying to sort out the jurisdictional responsibility and obligations of the two levels of government so that we can do it more effectively and in a more cost efficient manner.


HOUSING
Ms. Mary Clancy (Halifax):: Mr. Speaker, my question is for the Minister of Finance.
In Nova Scotia over 50,000 people will be hurt by this budget's freeze on housing programs. In addition, CMHC has confirmed that $27,680,700 in Nova Scotia alone will be cut from economic activity after the freeze. My question is what alternative programs will this

May 11, 1993
Oral Questions
government provide to make up for these devastating cuts?


Donald Frank Mazankowski: Mr. Speaker, as I have said in this House on many occasions the federal government will continue to support social housing to the tune of in excess of $2 billion in support of the 650,000 units that are in existence.
As well CMHC will continue to provide social housing, particularly in those areas of the disabled and family violence, et cetera. Also it will put a program in place more along the lines of a pay as you go basis rather than committing future generations of taxpayers to a burden of 35 years which becomes intolerable and unacceptable.
What we are trying to do here is put in place a system that is affordable and will allow us to continue to support social housing but in a more affordable way.


Mary Catherine Clancy: Mr. Speaker, it looks good on paper but one of the things we would like to know is what consultation took place with the Government of Nova Scotia and the Government of Canada regarding this gutting of CMHC.
Can the Minister of Finance share with the House the position of the Government of Nova Scotia on these cuts, particularly those cuts to senior citizen units, the RRAP program and the emergency repair program if indeed there is so much care as the minister has suggested?


Donald Frank Mazankowski: Mr. Speaker, I appreciate the hon. member's concern and I appreciate the concern of the province of Nova Scotia.
In many respects we chose not to reduce transfer payments and to establish a formula for the transfer payments commensurate with other levels of spending. There is certainly some cushion for the provinces to pick up some of the slack and I expect that they will do that.
On the other hand there has been criticism about the fact that this budget did not cut enough. I am glad that the hon. member does not share that view. Indeed some provinces have suggested that this budget did not reduce government expenditures sufficiently.
We have tried to be fair. We have tried to be realistic. We brought down a budget that was achievable, one that was realistic and one that was responsible. All Canadians I hope will share in the sacrifice necessary to get our fiscal house in order.


CANADIAN MAGAZINE INDUSTRY
James Scott (Jim) Peterson: Mr. Speaker, since 1965 our laws have promoted Canada's magazine industry, protecting it against unfair foreign competition for Canadian advertising dollars.
On April 1 of this year the communications minister promised "to ensure that the 1965 policy is respected and that the Canadian magazine industry is fully protected". Why then has this government allowed Sports Illustrated to publish its second edition in Canada and take away 23 full pages of advertising from the Canadian industry?


Hon. Gerry Weiner (Minister of Multiculturalism and Citizenship):: Mr. Speaker, the minister is away on government business today. I will take note of the question and make sure that he responds on his return to the House.


James Scott (Jim) Peterson: Mr. Speaker, I think all Canadians should take note of what is happening. This government could have stopped Sports Illustrated but it did not want to hurt its American friends. Instead it allows this magazine to carry on business in Canada as usual, doing an end run of our Canadian laws and even worse, this government has become an active financial supporter of Sports Illustrated.
I ask this government why it allows the Royal Canadian Mint to buy a full page of advertising in Sports Illustrated?


Hon. Otto Jelinek (Minister of National Revenue):: Mr. Speaker, the hon. member will know that no laws are being broken. The hon. member knows as well that the commitment of the Minister of Communication to the protection of the Canadian magazine industry is there. That is why a commission has been formed to study the over-all aspect instead of band-aid approaches to deal with the situation.

May 11, 1993

What the hon. member forgets to tell the House and Canadians in regard to advertising in Sports Illustrated and other foreign publications is that Canadian advertisers cannot write off the cost of advertising in foreign publications and that is to the protection and advantage of Canadian publications.

[Translation\


CANADA LABOUR CODE
Guy St-Julien: Mr. Speaker, my question is directed to the Minister of Labour.
Every week a woman calls my offices in Abitibi to ask me or my staff about the inclusion of preventive withdrawal of pregnant workers in the Canada Labour Code.
Could the minister tell the House today when this legislation, which is so important for all Canadian women, will be put on the agenda for debate on third reading in the House of Commons preferably as soon as possible?


Hon. Marcel Danis (Minister of Labour):: Mr. Speaker, I can inform the hon. member that the committee reported the bill back to the House last week. I discussed this with the government House leader, and I am sure that with the support of opposition parties, we will be able to adopt the bill on third reading by June 10 at the latest.


RONALIN DF
Godfrey Stanley (Stan) Wilbee: Mr. Speaker, my question today is for the minister of health.
Mould infestations of snap beans destroyed 25 per cent of the bean crop in the Fraser Valley while just across the U.S. border American farmers are permitted to use the pesticide Ronalin DF which controls the infestation. However it is banned in Canada. This gives U.S. producers and processors a real advantage. Canadian farmers want a level playing field.
Will the Canadian government allow the use of Ronalin DF in Canada or, if not, stop the import of fresh or
Oral Questions
processed beans that have been treated with the pesticide?


Sheila Maureen Copps: Karen Morgan has already raised that issue.


Benoît Bouchard: Mr. Speaker, I share the concerns with farmers in British Columbia. The problem with Ronalin was that we did not have the necessary data to give the authorization because there were problems with the toxicology of the compound-


Sheila Maureen Copps: Karen Morgan has already said that.


Benoît Bouchard: -but we have now received the necessary data. I can assure the member that the answer will be given within the next two or three weeks.


GENERAL AGREEMENT ON TARIFFS AND TRADE
Victor Fredrich (Vic) Althouse: Mr. Speaker, my question is for the minister of trade.
The minister hosts his counterparts from Japan, the United States and the European Economic Community this Thursday in Toronto to discuss the GATT.
Since new positions and compromises are liable to be part of that meeting, can the minister assure us that Canada's balanced trade position in agriculture will remain intact? In particular, is Canada still supporting a strengthened and clarified article XI(2)(c)(i) which permits the supply management marketing boards to function?


Michael Holcombe Wilson: Mr. Speaker, the meeting is on Friday, not Thursday.
The simple answer to my hon. friend's question is yes. There is no change in the balanced position of Canadian agriculture under the Uruguay round. I should point out to my hon. friend that I expect the discussions on Friday will be focused essentially on market access questions relating to industrial products and services. Other matters may come up as part of that discussion but these are the primary focus of the meeting.

May 11, 1993
Tributes


Mr. Speaker:: I wish to advise the House that there is a disposition among parties and members that tributes be paid to a former member of this place and a colleague of many of us, Harold Danforth.


THE LATE HAROLD DANFORTH
Mr. Jerry Pickard (Essex-Kent):: Mr. Speaker, I wish to take this opportunity to pay tribute to the late Harold Danforth.
Mr. Danforth served fellow Canadians as a member of Parliament for the riding of Kent and the riding of Essex-Kent for 15 years between 1958 and 1974. Prior to his service in the House of Commons, Mr. Danforth had a successful career both as a farmer and a municipal councillor.
His keen interest in agriculture was an integral part of Mr. Danforth's life and this was evident in many of his accomplishments. Educated at the Ontario Agricultural College, he was able to combine his formal and practical farming experience not only in the operation of his own farm but also as a member of the Institute of Professional Agrologists, President of the Ontario Fruit and Vegetable Growers' Association, Chairman of the Blenheim District Agriculture Fair, Director of the Kent-Elgin New Potato Marketing Board, Chairman of the Seacliff Growers Co-op, South Essex Growers' Co-op and the Essex County Federation of Agriculture.
Mr. Danforth's distinguished parliamentary career included his service as the Conservative critic for agriculture and chairman of the agriculture committee and committee of trade and commerce.
Throughout his public life, Mr. Danforth's emphasis was on serving the needs of his constituency. His diligence and thoughtful approach to public service set an example for his peers. He shall be remembered for his contributions and respected for his accomplishments.
It is with sadness that we mourn the loss of our colleague, Harold Danforth. But his memory shall live in the hearts of his family and friends, and his contributions to this institution and the betterment of Canadians shall live on forever.


Hon. William Scott (Parliamentary Secretary to Minister of Veterans Affairs):: Mr. Speaker, it is with deep regret that I rise today to remember the late Harold Danforth.
Harold Danforth first came to Ottawa representing the riding of Kent, which later became Kent-Essex. He joined the Diefenbaker team in 1958. After a defeat in 1962 he rejoined us again in 1963.
I had the privilege of serving with him from 1965 until the 1974 general election. From the time we first met it was apparent that we had a lot of things in common. He had a farm background and had served in various positions on the fair boards and local and provincial federations of agriculture. He was veiy committed to the agricultural community and had served on municipal council before entering politics.
I remember Harold as a kind man who placed an emphasis on duty to his constituents. He had a way about him that made him very approachable and his jovial nature attracted people to him.
As I often say we all come into this world with the same contract with the Almighty. There is a beginning and an end. None of us knows when that end may come so it is up to us to make the best of the years we have.
Harold Danforth certainly made the best of his life. He made the world a better place in which to live for those whom he touched.
On behalf of the Progressive Conservative Party, I express my condolences to his family and friends. Harold may be gone but his memories will remain in these halls forever.


Lorne Edmund Nystrom: Mr. Speaker, just a word on behalf of the New Democratic Party. I remember Harold Danforth veiy well. When I was first elected in 1968 he had been a member of Parliament since 1958. He sat over here as the Conservative Party's agriculture critic.
He was one of those members who knew his critic area very well. He was university educated in the area. He was active in many associations in his home community in Ontario, as has already been pointed out.
Later on he became the chairman of the agriculture committee and throughout his time in Ottawa was very
May 11, 1993

active in that area. I remember him as a reasonable man who was respected. He was a very dignified man in the House of Commons.
On behalf of our party I want to extend to his family our condolences and our deepest sympathy.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Mazankowski that Bill C-122, an act to amend the Customs Tariff (textile tariff reduction), be read the second time and referred to a legislative committee in the Economics envelope.
The Acting Speaker (Mr. DeBlois):: When debate was suspended, two minutes were left for questions and comments. I suppose the hon. member for Eglington- Lawrence will finish his comments and put his question, if he wants an answer from the previous speaker.


Giuseppe (Joseph) Volpe: Mr. Speaker, the hon. member never misses an opportunity to finish what he was saying. I must say my colleague from Scarborough West gave us a very incisive and devastating commentary on this bill.

I would like to ask a question relative to the circumstances surrounding this legislation. It would appear to those of us who are viewing the method by which legislation is presented in the House at this late date in the life of this Parliament, that we are ramming through items that have great consequences later on, for example, the implication of tariff reductions in the environment of negotiations on NAFTA.
It is an environment that sees many of our factories, many of our industries, many of our entrepreneurs ending and suspending their activities and moving south in anticipation of a better economic environment, where the government of those areas is more attentive to the needs of both business and jobs available through business.
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I wondered if my colleague, who is incisive in his analysis of the intentions of government and on the ramifications of this kind of legislation, would take a moment to comment on the type of impact that this process as well as the substance in this type of legislation would have on the Canadian economy and the consequences therefrom on Canadian taxpayers.


The Acting Speaker (Mr. DeBlois):: The hon. member has 20 seconds.


Thomas (Tom) William Wappel: Mr. Speaker, in the moment that I have left, let me just say it is clear that the answer to the question is, where is the fire? There is no fire.
The Conservative government is ramming through legislation that there is no need to ram through. It is not in the best interests of Canadians. That is sufficient reason why we should not let them continue with their sorry game plan.


Mr. Phillip Edmonston (Chambly):: Mr. Speaker, it is with a great deal of reflection upon reading Bill C-122 that I rise to speak today. The purpose of this bill which is called an act to amend the customs tariff precisely with the textile tariff reduction, is supposed to bring Canadian textile tariffs more into line with textile tariffs in other industrialized economies.
These reductions are supposed to benefit the Canadian economy by making Canada's apparel and other textile-using industries more competitive. The tariff changes we will be discussing this afternoon are also supposed to benefit consumers by lowering the cost of clothing and other finished products.
I said "supposed to" in prefacing my remarks in the last two examples. I want to explain why I am saying that. I do not believe that these tariff reductions will make clothing less expensive. I do not believe it will make Canadian workers more competitive. I do believe that if we pass this customs tariff act, Bill C-122, we will be putting many more workers in the textile industry out of work.
I would like to stress the point that the NDP is not against freer trade. We are in favour of fair trade. If you look at the bill before us, you are looking at the clearest example of unfair trade as has been brought before this House in many a year.
It boggles the mind that when we have so much unemployment we are presenting a bill to lower tariffs.

May 11, 1993
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This will affect the textile industry which has been devastated to such a degree in my province that the government has not even been able to come up with a sufficient amount of money to provide a cushion for those workers who are supposed to have been recycled under government programs. That was the promise the government gave us initially when it proceeded with the free trade agreement.
Further on in this tariff reduction act that we are asked to support by the government we will also have NAFTA coming in-I will explain how it comes in-which further complicates the possibility of our textile industry surviving.
Canadian textile tariffs are not, as the government's 1988 policy decision assumed, twice as high as the textile tariffs of other industrialized countries, including our major trading partner the United States. That is what this bill is all about, unilateral tariff reductions taken by Canada. For the first time we see both labour and industry united in opposing a particular bill. They are opposed to it because they do not think that reducing these textile tariffs is appropriate at this time. They see it as potentially damaging to our industry.
The tariff negotiations we have already had normally would put us in a good position to get something in return for our tariff reductions. Remember that Bill C-122 is a tariff reduction bill. What are we getting? We are getting absolutely nothing from our other trading partners. In fact, even calling this a kind of trade negotiation is a misnomer because there is hardly any negotiation.
We are saying to the United States, and under NAFTA we are saying to Mexico, that Canada is open for business; come and get it. We want you to compete. We are lowering our tariffs. Come in, even if it means the ruination of our textile industry in Quebec and elsewhere in Canada. So be it.
That is what the government calls free trade. I call it unfair trade. I believe that if this bill is passed it is going to be the final nail in the coffin of the textile industry in Quebec, which I speak for, and elsewhere across the country. It is a very unfair bill.
The Minister for International Trade said during the Uruguay round transition that the government will ensure the textile and clothing industries, and I quote
the minister, "will enjoy over-all protection equivalent to what is available to our major trading partners, particularly the United States".
This is not so. The textile industry in this country will be put at a tremendous disadvantage with this unilateral reduction of tariffs in the textile industry. We will be inundated by Mexican clothing imports. The factories we already have are smaller factories rather than larger factories. Most of the factories have less than 20 workers and many have four or five workers. The industry is going to continue to be fragmented and it is going to be very difficult for workers to survive in this industry.
Let me give a little bit of a history about how this bill came about. Bill C-122 is an act to amend the Customs Tariff (textile tariff reduction). It was introduced in the House of Commons on April 19, 1993, less than one month ago. It has been speedily put through the House mainly because the government sees it as a major response to the United States and other countries coming into the free trade agreement and with Mexico coming into the NAFTA.
This bill comes as a result of the tariff reduction recommendations that were made to the Minister of Finance by the Canadian International Trade Tribunal back in February 1990. So we are dealing with this a little bit more than three years after the initial free trade agreement. There is no doubt about it that this is, if not the son of free trade, one of the cousins or daughters of free trade because we are going to see more and more of these bills. They are a kind of quid pro quo agreements with the United States as we get these so-called advantages, although I am not quite sure we have really received that many advantages from the free trade agreement.
When the Senate conducted a study of the free trade agreement it looked at the advantages and disadvantages and was not able to come up with any advantages or disadvantages because it found the picture too cloudy. Once we see the other trade-offs we will be engaging in, and this Bill C-122 is one of those trade-offs, we are going to be more easily able to see what the trade-offs are as far as jobs are concerned. We are going to be trading jobs all the way down into Mexico. They are going to go there and to the United States.

May 11, 1993
Borrowing a line from Ross Perot, we are going to hear that huge sucking sound as those jobs go south. It is unfortunate because it did not have to be that way. If we had a finance minister who really protected Canadian workers' interests first we could have had not a free trade but a fair trade agreement with the United States, Mexico and other countries under which we would protect our workers, particularly our textile workers. No, this government is not interested in fair trade.
In analysing the bill in a technical sense I would like to give the following highlights. Bill C-122 would implement the Canadian International Trade Tribunal recommendations with some modifications. First, starting on January 1, 1993 legislation would phase in the tariff reductions at the rate of 1.5 percentage points a year. That has been stalled a bit because we are getting into the bill a little bit later now. However the important thing to remember is that the Canadian International Trade Tribunal recommended that we only lower the percentage by one percentage point a year for a maximum of six years. We are actually reducing tariff rates on textiles by a much higher percentage than even the CUT, the Canadian International Trade Tribunal, suggested.
We are in such an all-fired hurry to get this tariff reduction bill passed in order to get on friendlier terms with the United States that we are even willing to exceed recommendations that I would assume were prudent and reasonable by about 50 per cent.
Second, Bill C-122 would treat specialty textiles and certain lightweight wool fabrics in the same manner as other fabrics, fibres and yarns. The tariffs would be reduced to maximum rates of 5 per cent, 10 per cent and 16 per cent respectively. The tariffs are currently at 8,13 and 18 to 25 per cent respectively.
It would seem at first glance that the tariff reductions are not all that great, but when it gets down to the average piece of clothing then we are looking at substantial reductions and at the same time we are looking at substantial losses leading to a loss of jobs.
I previously said that industry and labour were united in their opposition. I should have been more precise. I am talking primarily about the major unions in Quebec and Ontario but I am also talking about the CTI, the
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Canadian Textile Institute, which is the primary challenger of this legislation.
The Canadian Textile Institute is one of the major industry associations. It does not encompass all of the firms but is one of the major industry associations that has challenged the need for any tariff reductions. The Canadian Textile Institute does not think that tariff reductions are necessary. It understands because it is in the industry. It understands just how severely devastated the textile industry is across Canada.
Here for the first time we see a rather strange comradeship between business people and unions opposed to a bill that would lower tariffs on textiles. I say it is strange because we do not see it that often, but we do not see legislation that is so devastating that often and Bill C-122 would have that effect.
I can understand why the Canadian Textile Institute would challenge the need for any tariff reductions. It is having enough problems with unemployment and competition as things stand right now.
When the fait accompli was placed before the Canadian Textile Institute, and I am talking about Bill C-122, it took the view that if tariff reductions were to proceed anyhow then these reductions should be delayed as long as possible and back end loaded with the weight of duty reductions imposed in the second half of the 1990s.
It is being fairly conservative here because it does not want this thing to hit it all at once. It is not prepared for it. I do not believe the government has any programs to provide the cushion these workers are going to need, that fantastic cushion we were promised three years ago that would help workers who need to be recycled and would help workers who need to get into industries to have the training to get into other industries in which they would have more of a future. We have not seen those programs.
I believe the Canadian Textile Institute when it is saying that if we are going to reduce tariffs let us do it in a slower way than is proposed in this bill. It was reflecting its concern about how little is out there for those workers who are going to be displaced. Many of those workers in the textile industry are women who are going to be thrown out of their jobs and are going to have to look for some recycling into other jobs and the government is not

May 11, 1993
Government Orders
there for them. The Canadian Textile Institute is well aware of this potential problem.
The Canadian Textile Institute also has manifested a great deal of concern over the free trade agreement generally and the harm it has initially done to the textile industry. It is concerned that this addition to the free trade agreement would cause the industry even greater harm.
The Canadian Textile Institute does propose that any proposed tariff cuts under the GATT negotiation should also become evident by that time, which is later, including any relaxation of the multi-fibre arrangement.
It is essentially saying let us slow down, let us take a look at these tariff reductions in a general way, let us perhaps go with what the Canadian International Trade Tribunal said, which is that the percentages be less than they are and not 1.5 percentage points but 1 percentage point. By gaining time, we would see under the GATT negotiations whether there would be any relaxation of the agreements that we have under the multi-fibre arrangement.
The Canadian International Trade Tribunal appeared initially in its recommendations to favour a compromise between the positions of the clothing makers and the textile industry. I should say that the clothing makers and the textile industry are a bit opposed on Bill C-122. The apparel manufacturers are in favour of it. The textile manufacturers are against it and they are the ones who are linking arms with the unions in order to preserve jobs in the textile industry.
The Canadian International Trade Tribunal in giving its reasons for a slower approach was well aware of the fact that by any quick reduction of tariffs we could dislocate this industry to an extent that recovery would be next to impossible.
The Canadian Textile Institute in defending its position as to why it is opposed to this bill gives four reasons.
I think the four reasons bear looking into today when we are looking at this bill.
First, the Canadian Textile Institute says that general preferential rates of duty, called the GPT, for textile imports from less developed countries does not apply the generalized system of preferences to textile imports.
Second, Canada provides lower duty rates for certain textile imports under schedule 2 of the Customs Tariff already.
Third, Canada has duty remission programs affecting import of fabrics used in garment manufacturing while the U.S. does not have any such programs.
Fourth, the free trade agreement tariff reductions have had a greater impact on Canadian trade-weighted tariffs because more than half of Canadian textile imports are purchased from the U.S. while just 8 per cent of U.S. textile imports are from Canada.
Finally, as if that was not enough to demonstrate the disadvantages that Canada is already suffering in the textile industry vis-a-vis the United States, the United States has a more extensive quota system on textiles than Canada. This type of import protection is not captured when simply comparing tariff rates.
It is obvious we need to compete in a global economy. It is obvious we need to have fairer trade before free trade. We need to lower tariffs but at the same time, and this is the one thing that has escaped this government, we need to look out for the people who are going to be most displaced, dislocated, and thrown out, and many times at an age, 40 or 50 years old, when it is very difficult to recycle.
The face of poverty and the face of unemployment is no longer the odd person who does not want to work. The faces of unemployment today are our brothers, sisters, families, and neighbours. We see it every day. When it comes time to making this country of ours more competitive we have to keep in mind that there is a fragile balance between free trade and unemployment and keeping people with jobs. This government has lost track of that subtle, fragile balance and that is the reason we have over one million unemployed people.
I would suggest that this bill go to committee. Perhaps there is something we can salvage from it. This kind of unilateral tariff reduction when we do not get anything in exchange, which will do so much to harm textile workers, has been a hallmark of this government's approach to the economy. It seems not to be concerned about the walking wounded of its policies but with currying favour in other countries.
I am against this particular bill but I will allow it to go to committee.

May 11, 1993


Mrs. Shirley Maheu (Saint-Laurent-Cartierville):: Mr. Speaker, for many years the textile industry in Montreal has been profoundly important to the growth and development of our city. It has been a driving force in an economic engine that has stalled under the economic mismanagement of the Conservative government.
Under nine years of Tory rule the textile industry in Montreal has suffered immeasurably. Thousands of men and women have been thrown out of work because of the failure of the Conservatives to address the real problems facing the Canadian textile industry.
Bill C-122 was introduced subsequent to the disastrous economic statement tabled by the Minister of Finance last December. The purpose of this bill is to implement the changes proposed by the Canadian International Trade Tribunal.
We have to ask ourselves why we are moving ahead with the reduction of tariffs at this particular time. We are hurting our own textile industry on the assumption that the North American free trade agreement will be a fact of life. Well, it is not a signed deal and I do not know why the Conservatives are assuming that it is.
The contempt that they have shown for this Parliament is remarkable. They have included provisions in this bill that will not come into effect until after certain agreements have been made both as a result of the GATT and the North American free trade agreement. Why are we giving up this potential bargaining chip so easily?
One really has to wonder how or why this government has managed to conduct the negotiations in the interests of Canadians if it is willing to sign on the dotted line before agreements have been reached on either NAFTA or on the GATT.
The government tries to tell us that this bill will protect Canadian firms' competitive advantage. No one could be opposed to that especially if that were in fact the case. However as with many other things that this government does it only tells us half the story. It does not tell us that this bill is taking away from one industry in favour of another. We know that it does not have to proceed with these tariff reductions until it is obliged to either by the GATT or any other trade agreement.
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If we are trying to address the cost inputs for the clothing manufacturing industry that is only one side of the story. We also have to look at how this will affect the textile producing industry in this country.
If we unilaterally reduce the tariffs to the benefit of one industry at the expense of another all we are doing is robbing Peter to pay Paul. Hardly a just thing to do.
What are we doing? Are we lowering the tariffs to appease our neighbours to the south once again? It seems that as soon as there is a request from the United States for Canada to provide American manufacturers with an advantage, the Conservatives are only too happy to oblige.
The people of Saint-Laurent-Cartierville simply do not trust this government to negotiate on behalf of Canadians because they know Conservatives are willing to sell all of us short.
They are willing to sacrifice the protection of our industry without any benefit for Canadians. This is typical of how the Conservatives have dreadfully mismanaged our economy. It is this total regard for the common Canadian worker that has devastated the Canadian economy and has created a sense of mistrust for politicians.
It is time for this government to stand up to the lobbyists and work in the interests of all Canadians. Even the CITT suggested that we wait until the passage of the North American free trade agreement and the anticipated changes to the GATT, before we go ahead with these amendments to the tariffs on textiles coming into this country from overseas, and more importantly textiles imported from the United States and Mexico. We must move more slowly and deliberately in the treatment of this issue. Thousands of jobs in Quebec depend on how we proceed today. We must put this whole issue on hold. We have to wait to see how the United States Congress deals with the North American free trade agreement before we commit ourselves directly to these proposed changes.
What is the rush? We are here to represent the interests of Canadians and quite frankly I do not see any advantage here for the people of Saint-Laurent-Cartierville, nor for anyone else in Quebec.

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Since this government came to power the direction of Canadian trade policy has worked against the interests of all Canadians. Conservative trade policy has resulted in record high unemployment, millions of Canadians on social assistance and a sense of despair that has to be turned around.
Canada should be an open and active trading nation. We should not, however, be irresponsible in our trading practices. We must not lay all of our cards on the table to the advantage of our competitors. We must do whatever we can to give Canadians and Canadian industry an advantage in a global economy.
The textile industry has argued that if tariff reductions were to proceed they should be delayed as long as possible and back end loaded with the weight of duty reductions imposed. This would give them time to adjust to the new rules and be fair to them and their employees.
The Canadian Textile Institute does not oppose the reduction of tariffs. They believe that the government should take a more intelligent and careful course of action. They do believe that unilateral cuts are "inappropriate and potentially damaging to the Canadian textile industry".
I share this industry's concern. I do not understand why the government is proceeding with tariff reductions at this time when it knows full well that the result of their actions could be more unemployment, more hardship and less opportunity for Canadians.
We have to go back to the drawing board. We have to start from scratch. It has to go to the negotiating table with our trading partners for the North American free trade agreement and the GATT with the attitude that Canadian jobs and Canadian workers come first.
If the Conservatives do not want to take on that challenge it is time that they step aside and give the opportunity to a government that cares for average Canadian workers and their families. It should give a chance to a government that knows how hard it is to hold a job in an increasingly competitive global economy.
I say no to this bill because it will hurt the people of my riding and my province. I say no to this bill because it is ill-conceived and brought forward at the wrong time. Let us hope the committee can do something to change it.
Canadians come first, at least in my book. It is time that the Conservatives learned the same thing. To do any
less would be a betrayal of Canadian workers and companies and I want no part of it.

Mr. Speaker, it is pretty clear the Tory government is at the end of its term and is going all out to please everybody, especially the Americans, while neglecting Canadian industry. If clothing manufacturers will benefit somewhat, textile manufacturers will lose on this deal.
What happens when we have to manufacture Canadian clothing without being able to find fabric made in Canada? Is this how the Canadian economy is supposed to recover? Is this how the country will become economically strong? I doubt it.
Once again, we have a bill that strikes at Quebec and especially at the greater Montreal area, where unemployment is bad enough as it is.
This government is proving, day in day out, that it has no idea of what running a country involves. Canadians are fed up, and in the next election, they will vote in a new government that will make this country economically stable.


The Acting Speaker (Mr. DeBlois):: Is the House ready for the question?


Some hon. members:: Question.


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


Some hon. members:: Agreed.


Some hon. members:: On division.


[Stage Direction]
Motion agreed to, bill read the second time and referred to a legislative committee in the Economics envelope.

[Stage Direction]
Hon. Benoit Bouchard (for the Minister of Industry,
Science and Technology) moved that Bill C-89, an act to amend the Investment Canada Act, be read the second time and referred to a legislative committee in the Economics envelope.
May 11, 1993
Mr. Peter L. McCreath (Parliamentary Secretary to Minister for International Trade):: Mr. Speaker, Bill C-89 proposes three amendments to the Investment Canada Act which reflect the increasing role and importance of investment to Canada's prosperity.
These amendments are intended to help Canadian companies attract the capital and technology they need to grow and compete while protecting our sensitive cultural sector. The first amendment will extend to investors in the oil and gas sectors the same review thresholds that apply to other sectors of the Canadian economy under the Canada-U.S. Free Trade Agreement.
For U.S. investors this will raise the thresholds above which a direct acquisition becomes subject to the act. There is no review for indirect acquisitions. All other international investors' thresholds for review will remain unchanged. The over-all result will be an enhancement of the value of the resource base for all investors and a stronger Canadian exploration and producing industry.
The second proposed amendment will enable Investment Canada to enter into agreements with Canadian companies or business associations to share the costs of programs and initiatives designed to attract international capital and technologies to those same Canadian companies.
Such international investments and investment partners are critical to the ability of Canadian companies to compete, grow and provide jobs for Canadians. Investment Canada facilitates deals between Canadian companies and the international investors as part of the federal government's investment development program.
An increasing number of Canadian companies and business associations is now prepared to share the costs of seeking international investment and funding investment partners.
The third amendment relates that the support of a strong cultural sector is a priority of this government. The amendment will give the minister new powers to determine whether or not a business entity in the cultural sector is Canadian controlled.
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The retroactive provisions are designed to discourage an investor from quickly completing an investment which could not withstand the scrutiny of the minister using new powers as of June 19, 1992.
To summarize, the main thrust of these amendments to the Investment Canada Act is to increase the attractiveness of Canada's investment environment and facilitate the cost-sharing between the private sector and governments in seeking investment initiatives. Thus Canada will continue to grow as an attractive investment destination and I commend this legislation to all members.


James Scott (Jim) Peterson: Mr. Speaker, this bill cleans up a few small problems that have come to light under the regime of Investment Canada. As such, it is difficult to take exception to what it has done specifically here.
This government has failed to come to grips with the real economic issues of Canada. Part of its economic approach to creating jobs and growth in Canada since it took office in 1984 was to get rid of Investment Canada which screened foreign takeovers of our already very heavily foreign-owned Canadian economy. It was to screen them to insist that there be a significant benefit for Canada if there was going to be another takeover. It replaced the Foreign Investment Review Agency with Investment Canada. The government says it was designed to encourage more investment and particularly more takeovers of Canadian industries.
The result we have seen is that since June 30, 1985 when Investment Canada replaced FIRA, we have seen a total of over 6,000 takeovers and new businesses started. But the new businesses started by foreign owners have only been 30 per cent of the total.
When there is an international takeover by foreigners with a foreign head office, Canadian industry becomes extremely vulnerable. Having practised tax law in this area for a number of years, I know the tricks that are used. I am quite familiar with most of the ways revenue can be bled out of Canada to get it free of Canadian tax into either offshore jurisdictions or the home country.
We have also found in this period of downturn in the global economy that, when rationalization takes place it is the Canadian branch plants that get rationalized out of

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existence. Over the past four years we have seen the deindustrialization of Canada with the loss of 16 per cent of our manufacturing jobs and those are the best jobs we have.
The Tories try to blame world economic conditions, globalization or whatever. We can say these are factors over which Canadians have no control and therefore they are just going to take place anyway. But during the same period that we have lost 15 per cent of our manufacturing jobs, how do the Tories explain that the Americans have lost only 6 per cent of their manufacturing jobs? Our jobs have gone south.
It is important that we try to indicate why this has happened. What lessons can we learn from nine years of Tory government and why have we lost so many jobs? Why is the economic future of Canada dim, especially for the thousands upon thousands of Canadians who were active members of the work force and can no longer get a job? Thousands upon thousands of young Canadians are graduating from our post-secondary schools, CEGEPs, high schools or universities and have no hope of getting a job here in Canada.
Since 1989 Canada's ability to compete globally has fallen from 4th to 11th place. Since 1984 when the Tories took office our manufacturing productivity has grown at only two-thirds the rate of the manufacturing productivity in the G-7 countries that are our biggest competitors.
In that nine-year period we have seen our high-tech trade, which is really an indication of our future ability to compete, go from a surplus of $1 billion in 1984 to a deficit of $30 billion last year.
The Tories make much of the fact that they have the fundamentals right and our trade is picking up. When they took office in 1984 our trade surplus was $19.8 billion. Last year it was $7.4 billion.
This government has emphasized the umbrella or macro policies and what has happened? Its obsession with the deficit, which has failed to produce a reduced deficit. Its deficit to this day is about what it was when it took office. Meanwhile, Canada's federal public debt has grown from about $170 billion to $470 billion.
Its monetary policy has emphasized driving every ounce of inflation out of our economy. It has jacked up interest rates to their highest spread over U.S. rates that Canada has ever seen. At many times over the past four
years Canadian interest rates in real terms, taking inflation into account, were more than 6 percentage points higher than the American rates.
What has been the effect of this? First of all Canadians were at a real competitive disadvantage vis-a-vis their major competitors, the Americans, when it came to borrowing to upgrade their plants and equipment and expand. So our manufacturers were hamstrung.
In terms of the public debt, a recent study has shown that if the Tories during their terms in office had kept Canada's interest rates at the historic spread of about two percentage points higher than American rates, their deficit next year, instead of being $34 billion as predicted by the Minister of Finance, would be $4 billion. That is because the added cost of interest on the debt is one of the biggest nuts that has to be broken. Their monetary policy has not worked.
With regard to their fiscal policy, there have been over 35 tax increases since the Tories took power, the last one being the GST.
The Liberals do not claim to have supported the previous tax, the federal sales tax or the manufacturers' sales tax as it was called. In certain cases-and we admit to this-it penalized domestic production over importation. There were ways the Tories could have dealt with that and gotten rid of it, but instead they went for wholesale tax reform and gave us the goods and services tax.
They could not have brought in a worse tax at a worse time in Canada's history. First of all this tax required the government to hire an extra 4,000 federal public servants to introduce, implement and administer the GST. It expanded the bureaucracy by 4,000 public servants. Also the cost to industry of this tax in the first year alone, according to a report by the Canadian Federation of Independent Business, was $9.5 billion. It cost the private sector $3 billion to implement the new tax and $6.6 billion for compliance within the first year.
In the last 12 months that the CFIB has studied the tax it has shown that the cost to our private sector for just collecting and remitting this tax and keeping the records was well over $4 billion at a time when that tax collected only $15 billion or $3 billion less than the MST it replaced.

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Let us compare the 25 per cent or greater compliance cost to business with similar taxes we have seen. In Germany the cost to business of compliance with its VAT, value added tax, is 0.4 per cent and not over 25 per cent. In the U.K. the cost of compliance is 3.2 per cent.
The Tories have argued that because other countries had a VAT we should have the GST, except they failed to tell people one thing. It may be okay for Europe but our biggest trading partner that takes 80 per cent of our exports, the United States, does not have a value added tax.
What have we seen? We have seen tremendous growth in cross-border shopping. There has been a tax-driven flight from Canada so Canadians can purchase their goods in the United States. There has been absolute shock when American tourists come to Canada to purchase things or go to a restaurant and find they have to add the PST, GST and then a tip on top of that. Ask any border community that has been devastated what the costs have been in terms of lost revenue and jobs.
That was the stupidity of not looking at the competitive realities vis-a-vis the United States. We end up being the only country in the world that has two tax systems at the retail level: the provincial and the federal. European countries have only one tax at the retail level. The costs of administering this provincially are indeed high.
What is happening? We see more cross-border shopping and a burgeoning underground economy. Canadians do not want to be tax evaders but they have just said: "Enough is enough". Many transactions take place by cash or by barter and escape the net. That is what is going to happen when one hits the ceiling in taxation. People who are normally law-abiding Canadian citizens and want to be just feel they can no longer comply.
Also this tax is extremely difficult for small business to administer as opposed to bigger business. Bigger business has in-house accountants and lawyers who, with a little extra work, can handle the paperwork. Small businesses do not have that luxury. They had to go outside and hire accountants and lawyers and pay for them in order to undertake compliance with this tax.
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Therefore I cannot think of a worse tax. The GST has to go. However, we are not going to, as the Tories did, impose a tax on Canadians or the provinces without consulting. It is critical for getting the costs of compliance down to integrate this tax with provincial needs and respond to their needs as well because we cannot afford a double bureaucracy to collect retail taxes. That is why it is critical that we have the time to consult with the provinces.
We saw the study by the C.D. Howe Institute a few days ago that said that our federation can no longer withstand the strains of the federal government dumping its deficit-cutting measures onto the provinces by reducing transfer payments. This is cutting the ability of the provinces to fund medicare, education and welfare. The welfare situation is caused by the mismanagement of our economy by our federal government.
This is why the only sane approach to replacing the GST is to ensure that we involve Canadians in the process by explaining to them what the needs are and letting them buy into a program of co-operative federalism involving the provinces whereby we can get the tax burdens or the burdens of compliance of the GST down to acceptable levels.
What else has this government done? It says that it has been able to deal with unemployment insurance. In the past the federal government usually paid about 30 per cent of the cost of unemployment insurance but this government-


Peter L. McCreath: I rise on a point of order, Mr. Speaker.
I wonder if my hon. friend is aware that the bill before the House is Bill C-89, which is amendments to the Investment Canada Act. It is not a bill about the GST. It is not a bill about unemployment insurance. It is about Investment Canada about which I know my hon. friend has a great deal of expertise. I would appreciate an opportunity of hearing his comments on Bill C-89 which is I believe what is before the House right now.


James Scott (Jim) Peterson: Mr. Speaker, it is impossible to consider Bill C-89 without considering it within the context of the entire needs of Canada's economy. I will come back to Bill C-89 and this government's abortive policies regarding foreign investment in Canada, but part of what has gone wrong is not just a single issue but a mishmash of

May 11, 1993
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Tory economic mismanagement. Therefore it is critical that we put it in the context that even my friend I hope will understand. I can understand why he is sensitive about these attacks.
It privatized unemployment insurance. This means now that employers pay about 60 per cent of it and the employees pay about 40 per cent of it. It is just an added tax to the private sector. It promised when it privatized unemployment insurance that it would not increase the burden that the private sector had to pay for the fees. It broke that promise twice.
Here is another thing that has gone wrong. I am sure my hon. friend the parliamentary secretary will want to know this. When this government took office in 1984, research and development in Canada was at the level of 1.41 per cent of our gross domestic product. Today it is at 1.37 per cent of GDP. It has actually fallen in spite of the promise of the Prime Minister that during his first four years in office he would double R and D.
Why did he promise that? It was because he knew that all our major competitors have levels of research and development that are at least twice the level of Canada's. His intentions were good, as so many of the intentions of this government were, but they have failed miserably. Our R and D is going down rather than going up.
Trade is another aspect of what this government has been all about in terms of its economic program. It felt that all we had to do was to introduce freer trade agreements and bring them into effect so they would immediately spill over their benefits to Canadians. We have seen how the deindustrialization of Canada has taken place at more than twice the rate of that of the United States.
There are a number of lessons that spring to us. I believe that we have learned or should have learned these during our more than four years since we have been dealing with the free trade issue. These are important because we are on the eve of entering into another agreement involving Mexico and the United States. I would hope that first of all we have learned in the last four years under free trade that Canada's abundant natural resources do not of themselves assure Canadians a high standard of living. We are going to
have to do better in the knowledge-based value-added manufacturing sectors.
Second, surely we have learned that we should not enter into a new free trade deal without having detailed impact assessments and specific adjustment programs in place. The government should come clean on where we are going to lose more jobs and what measures we can undertake to assist those workers. Also, perhaps if some industries are going to benefit, what can we do to maximize those benefits? Surely that is just sound planning.
Third, we have learned that a free trade agreement does not necessarily mean secure access to our foreign trading partner. Since this agreement with the United States was entered into we have had a spate of trade disagreements and an unprecedented level of trade harassment by the United States. But the Tories say: "It is wonderful that we have a dispute settlement mechanism". My God, we have a dispute settlement mechanism but it will be two years before the softwood issue will be ultimately resolved.
We have no supplementary agreement or side deal in the NAFTA dealing with environmental standards so that Canadian workers do not have to compete against people who can pollute to any extent they want. We want a side agreement on labour standards as do the Americans. The Americans want that side agreement on labour standards so that Mexican working conditions, child labour, salaries of only $1 U.S. an hour and conditions of plants can be brought up so that it does not create unfair competition for American workers.
Canadians should be insisting on a supplementary agreement dealing with the labour standards not only in Mexico but in the United States. In 20 states in the U.S. the minimum wage is $4 U.S. an hour or less. In six states there is no minimum wage. In 20 states they have right to work laws that have made it impossible for unions to respect the collective rights of workers. Those are the working conditions we are going to be competing with in the southern United States.
Why are we not insisting on a side deal for labour standards that would elevate the low U.S. standards that we would never tolerate here in our country? Instead, are we just going to say that the world should unfold as it
May 11, 1993

should as we lose more and more jobs south of the border?
Fourth, surely we have learned that U.S. trade harassment has a chilling effect on Canada's economy. Who is going to invest here if, for example, they can bring actions against our steel industry for dumping or for subsidies and effectively stop Canadians from selling to the U.S. market where we have been so successful and were successful before the FTA. There is no subsidies code in the NAFTA. There is no anti-dumping code. This government will not make it a condition or a precondition of enacting the NAFTA bill that we have a steel pact.
It is little wonder that Dofasco faced with all of these problems sets up its new mini-mill in the United States rather than in Canada. That is what is happening. The new investment to service the North American economy is not coming to Canada in the measure that it should because U.S. trade harassment can deny nine-tenths of the North American market to a Canadian manufacturer. That could be fixed up with a decent trade deal.
Fifth, as I mentioned earlier, when international rationalization does take place it is the Canadian branch plants that get closed down and not the American head offices. More than 50 per cent of our manufacturing sector in Canada is foreign owned. Most of it is in the States.
Sixth, we have learned the hard way that trade does not take place in a public policy vacuum and we have learned that when the dollar went from 76 cents to 90 cents-a 25 per cent hike in the value of the dollar- under the Tories' monetary policy that that was a greater disincentive to Canadians exporting to the United States than any of the U.S. tariff barriers that the trade deal might have removed. After all they stood at about only 2.5 per cent on a very small percentage of our products before the free trade agreement was brought in. This government had to pursue a monetary policy that was driving up the dollar and the value to make it almost impossible for us to compete.
Finally, and most important, I hope we have learned that trade policy is only one of the many elements of any economic strategy and not the major driving force.
Over the past nine years this government has been obsessed more with whom we trade with than what we
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trade with. None of their policies conduce us to have a strong base that is necessary to allow us to take advantage of enhanced trade opportunities.
Lest one thinks the Liberals have their heads in the sand, we are the party of free trade. We are the party that over the decades has supported freer trade but also we have not supported unfair trade deals, uncompleted trade deals or trade deals that did not produce a level playing field for Canadians. But regardless of whether we have a free trade deal or not, Canadians have to compete. Regardless of whether NAFTA or the FTA are in place, we must still compete. Therefore, our onus will always be to become more productive on a global basis. This is where this government's policies have done just the opposite.
First of all, its tax policies have been high. Its monetary policy has driven up the value of the dollar. Its monetary policy has made our interest rates much higher than our competitors in the United States. Research and development was actually cut back. It has imposed new taxes and burdens on the private sector, including the unemployment insurance which it promised it would not increase.
It did not bring in adjustment programs. It has not put in place the type of teams that can go into a place like Scarborough when a GM plant closes down. It has not put together multipartite bodies involving labour, management, governments at all levels, community leaders to work with the people to find new jobs and new ways of making things happen. It has not expanded the Program for Older Worker Adjustment.
One of the things it has neglected very sorely in its term of office is not only cutting back the amount of money it transfers under the EPF to the provinces for education, but it has not brought in national educational standards or ways that a young Canadian who graduates from a high school or university in Alberta, Newfoundland or Quebec can necessarily receive full accreditation for the studies they have done in other provinces.
We have seen as well that 38 per cent of Canadian students do not make it through high school, drop-outs. What has it done to address this issue? What has it done to address the Mexican challenge, the challenge that Mexico today, with which we are going to be a free trade

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partner, is graduating four times as many scientists and engineers as is Canada?
Has the government introduced comprehensive training programs for our young people which would allow them, if there were jobs that demand skill, to be able to fill them? No. It believes the private sector will probably look after that in spite of the fact that the organized training programs in our private sector are not up to the standards of most of our international competitors, certainly not, for example, Germany where the state and business take a co-operative role in providing then-young people with a combination of on the job training and classroom experience.
The things I talked about are all umbrella programs that deal with our long-term ability to compete. We are going to have to invest in them today in order to see the benefits down the road. There is no magical cure. There is no magical wand I could wave today, although I wish I could to get the people back to work immediately.
The things we talked about so far are the programs that if we do not do them today, 10 years from now we will be even worse off than we are. We have to invest now in our greatest resource, our human capital.
As well, the government could act quickly to help get our economy moving again and creating some of the jobs that we need now.
Small business includes about 85 per cent of new jobs created in this country. There are about a million small and medium-sized businesses. If a program could be put in place whereby over the next two years only half of these small or medium-sized businesses would hire just one extra person, we could take 500,000 Canadians off our unemployment rolls and it would be the private sector doing it, which is the way it should be.
The greatest need of small business today when times are tough is the access to capital to sustain them through this difficult period and provide capital to entrepreneurs who may not have huge real estate holdings in order to provide collateral to a bank, may not be able to bank their ideas, their education and their good character in order to get funding to help them expand and do the things that are critical. I think these areas probably have the greatest potential for getting Canadians back to work quickly.
This government would not go along with an infrastructure program for municipalities whereby the federal government puts in one-third, the provinces put in one-third and the municipalities put in one-third. That would be $1 billion a year each over five years.
We need that infrastructure. We need to refurbish our sewers so they do not pollute our environment. These are things we are going to have to do anyway and the municipalities want that program. They are the ones which urge us to do it and the provinces have too. But no, this government will not do that infrastructure program which would get a lot of people back to work and whereby we would get them off unemployment insurance.
Every person we take off unemployment insurance or UI would save us about $13,000 to $15,000 a year in outright expenditures and in return they would become taxpayers. We are spending in Canada today about $36 billion a year for unemployment insurance and welfare. If we could get every person off unemployment insurance and welfare we would have no federal deficit. That is where the future lies. In terms of other programs that would work today this government should be implementing-


The Acting Speaker (Mr. DeBlois):: I am sorry to interrupt the hon. member but I want to remind the hon. member that the title of Bill C-89 is an act to amend the Investment Canada Act. I want to be open-minded about this but I hope that the hon. member will come to the subject.


James Scott (Jim) Peterson: Mr. Speaker, how much time do I have left please?


The Acting Speaker (Mr. DeBlois):: A few minutes.


James Scott (Jim) Peterson: I have a few minutes.
This is a government that said it would get rid of FIRA, it would open up Canada to investment and it has not worked. The jobs are disappearing faster than the jobs in the United States. Why are they disappearing? Because of a combination of all Tory policies, the sum total of which means economic mismanagement of Canada over nine years of Tory rule.
We cannot just look at the one narrow bill which has been a failure in itself. Let us find the way that we are
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going to get Canadians reinvesting in Canada and creating the jobs here. That is what our economic policy should be doing rather than simply opening the door and saying we do not care who comes into Canada, takes over control of an existing Canadian business, downsizes the Canadian operation and takes functions such as payroll, advertising, legal and marketing back to the United States so they can do it there and putting Canadians on the street.
We have to pay the American parent company for it. When we pay them for it we do not pay withholding taxes on it in Canada. They get a deduction here in Canada and we lose corporate taxes here in Canada. Is that what you want me to talk about? I am happy to talk about that. It is all part of a ruination of the industrial base of Canada.
Nor has this government committed itself to one of the few good programs that it brought in, a program it stole from a former government in Ontario. This is a program of the networks of centres of excellence whereby universities and researchers right across this country co-operate and do fundamental basic research, a good program which costs $240 million over a five year period. It will not commit to renewing that amount of funding or to expanding it without basic research. Things are not going to go ahead. This again is a shortcoming of this government.
There are some other areas which I would like to commend to hon. members of Parliament. Our primary industries are still our biggest exporters in many ways; not the biggest creators of jobs, not the biggest creator of value-added, not the highest paying jobs in Canada, but Canada is still highly dependent on its primary industries for its economic wealth.
We are blessed. We are fortunate to have those goods. We are more fortunate than our foreign trading partners which do not have them, except they have learned to live without them. They have learned to buy them from us, add the value in the jobs there and sell us back the finished products, creating many more jobs abroad than we have in Canada.
We have proposed to this government that it establish a primary industries enhancement council immediately which would look at what every one of our foreign
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customers is doing with our raw products abroad to create the jobs there. Why can we not just create a few of those jobs here in Canada? Does it make sense?
We proposed the manufacturing productivity council. I talked at the beginning of my speech about how Canadian manufacturing productivity is on the decline. We are growing at only two-thirds the rate of the G-7. What do you say to a young person about going into a manufacturing sector that is growing at only two-thirds the rate in terms of its productivity with that of our competitors?
This is not an original idea. The gist of it comes from Taiwan where a Canadian by the name Dr. Casper Shih introduced in the early 1980s a program whereby they went into the small and medium sized manufacturers and offered ways to show them how to increase their productivity and their exports. Much of this work by this Canadian in Taiwan has been credited with the tremendous surges in the manufacturing sector and the economic growth and dynamism in Taiwan.
This is a model for us. We have proposed that the government fund up front private sector consultants who are experts that can go to various manufacturing companies to show them ways to enhance their productivity and their exports. The company would pay that back out of enhanced productivity and exports. This would cost the taxpayers nothing and would create no government bureaucracy.
We have also asked this government to look at the ISO 9000 program for the introduction of quality standards in Canada, total quality management. We cannot sell to the European Community unless we meet those ISO standards but very few Canadian firms have them.
The Canadian Manufacturers' Association wants to introduce that ISO 9000 program in Canada and is prepared to do it without creating a government bureaucracy. The minister for industry has given them the back of his hand.
There are a lot of things we can do without spending money and without creating government bureaucracies. The PIEC, the MP and the ISO 9000 programs are just examples of how we can deal with the fundamental problems of productivity and exports. They do not involve the government in picking winners. They involve us in creating winners out of the people we already have.

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The nine years that have been ruined by this government can be undone but it is going to take a brand new approach whereby all the factors such as fiscal policy, monetary policy, trade policy, R and D, science and technology, adjustment programs, training, education, all of these are evaluated in light of their ability to make us more productive, more competitive and better able to compete.
The program of just allowing holus-bolus more takeovers of Canada is bankrupt. It was bankrupt in its inception and we have seen those effects. This is why this government must never tell us that it will hang its entire economic policy on this as opposed to an entire economic strategy.


The Acting Speaker (Mr. DeBlois):: Before resuming debate, it is my duty pursuant to Standing Order 38 to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Saskatoon-Clark's Crossing-the Economy; the hon. member for Cape Breton-East Richmond-Somalia;	the hon. member for
Fredericton-York-Sunbury-Indian Affairs; the hon. member for Sault Ste. Marie-Public Works; and the hon. member for Willowdale, Magazine Industry.


Mr. Steve Butland (Sault Ste. Marie):: Mr. Speaker, I want to inform you and the House that I will be sharing my 20 minutes with the member for Edmonton East who has a great deal of expertise in the energy field.
We are talking about Bill C-89. If anyone is following the debate out there I am sure they have lost the fact of what Bill C-89 might or might not be about.
Mr. Speaker, I appreciate your admonition to the hon. member for Willowdale because I do not think we should trivialize the contents of this bill. With the fear of being pedantic I would like to read the mandate of Investment Canada:
The mandate of Investment Canada is to promote investment in Canada by Canadians and non-Canadians, to undertake research and provide policy advice on matters relating to investment and to review major foreign investments to determine if they are likely to be of net benefit for Canada.
Over the years the term "benefit for Canada" has gone from reviewing significant benefit for Canada to
reviewing as to whether it might be of some net benefit for Canada. That is a considerable change of wording in any act. I am sure it is a very onerous chore to decide just what exactly would constitute a net benefit for Canada.
It is time once again, because this debate comes before the House and before Canada from time to time, to discuss the issue of the amount of foreign ownership that is acceptable to Canadians. I do not think anyone should chastise Canadians for saying we are fearful about being too foreign dominated or too foreign controlled in our industrial and business sector. It should give all Canadians concern. I am sure that government members would also be concerned if we became too foreign dominated.
Just how involved is foreign investment in Canada? I wish to cite a few statistics that are now dated but nevertheless they were prevalent from 1985 to 1990. I suspect the statistics show even larger numbers at the present time, meaning that Investment Canada is not something to disregard and we cannot suggest that the bill has no consequence whatsoever.
From 1985 to June 1990 a total of 3,374 Canadian companies with assets of $81 billion were taken over by foreigners. Only 853 of those takeovers, representing 89 per cent of those foreign takeover assets, meaning $72 billion, were ever reviewed to determine net benefits to Canada and none of them were denied.
I spoke to a gentleman who was extremely helpful today, Mr. Caskey in the review division. He told me that up to this point in time it still has never denied any request for foreign investment, foreign takeover in Canada. Despite the hundreds and even thousands of reviews there has never been a denial.
I am not going to condemn that but at the same time all thoughtful Canadians would have to say that one would think that it would come up with one out of 10,000 that might give grave concern so that maybe that foreigner should not come into this countiy and own that particular business. I do not think this is something that is foreign to Canadian thought and it is certainly not foreign to us over here in the New Democratic Party.
Should we be concerned if these foreign takeovers become quite prevalent, as they are? Statistics show that R and D expenditures of Canadian-controlled firms are
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double that of foreign-controlled firms. That should automatically give all Canadians some concern.
There is a positive aspect to the bill. The cultural aspect of this bill is very positive. It allows the minister in charge of Investment Canada to decide whether or not the takeover bid or the investment in a Canadian firm such as a publishing firm is in the best interest of Canada. The minister has a large amount of discretion and we support it. We think it is great.
There is a non-avoidance clause in the bill that practically precludes any foreigner from getting into the cultural industry in Canada unless the minister in his or her lack of wisdom allows the investment to go through. We salute the government for this particular component of the bill. We think it is very positive. We only wish we could support the entire bill as we at least agree on this aspect of the bill.
Clause 2 of the bill allows Investment Canada to circumvent the provincial governments of this country or any arm of the provincial governments of this country. That gives us concern. It can now deal with an entity, whatever entity it might be, or a person, which really means in the vernacular of the lay people that once again the government is privatizing. It is saying that it will disregard what government might think about this and just deal with the marketplace, with the entrepreneurs of the world. That is what the free trade agreement did. That is what NAFTA would do. This aspect of Bill C-89 is once again part of the government's effort to take it out of the hands of government and put it in the hands of private individuals.
We believe that Canadians want a say. They want to control their destiny. They do not want just to allow that control perhaps to some unscrupulous people out there. There are some and Canadians realize that. They want to know that their government in its wisdom can protect them from foreign takeovers. We do not agree that the provinces should be circumvented in this bill. We do not feel that should be accepted.
The American-Canadian component is the most consequential aspect of the consideration of this bill. It is the most significant aspect of foreign investment in this country and Canadian investment in the United States. Those are the large dollars.
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Canadian investment in U.S. businesses in 1992 was $4.7 billion. U.S. investment in Canadian business was $4 billion. We are out-investing the Americans. The Canadians are investing more in the United States than they are in Canada. There must be some responsibility from Canadian investors to have confidence in this country.
Trade agreements that encourage them to invest elsewhere, such as the United States, Mexico and beyond if the government has its way, are bad for Canada, for Canadians and for Canadian investment.
As for unresolved investment issues, this comes from a very great supporter of the government who is an economist. He says: "Canadian negotiators were not as successful in other areas of negotiation with the U.S. For one thing the Americans continue to refuse to abdicate their rights to apply extra-territoriality to American subsidiaries operating in Canada. In other words, the U.S. government reserves the right to apply American laws to subsidiaries of American companies operating in Canada".
That is totally unacceptable. I am sure every Canadian would say that I am absolutely right. We know that American law applies in the United States because it uses it to our detriment each and every day with these trade harassments, and steel is the most recent one. However when it can apply American law on Canadian subsidiaries then that is not acceptable, so we do not support that.
The other thing is that indirect investment in Canada is precluded from review by the Investment Canada Review Board. If a British company buys a U.S. firm that happens to have a subsidiary in Canada there is no review, that is okay.
With regard to the review process that Investment Canada undergoes, I am told a negotiation goes on. The proponent presents a business plan to Investment Canada and Investment Canada might say that it is not quite acceptable and that it wants the proponent to give more training for the employees, or not to have as serious a downsizing as it is proposing. There is a certain amount of give and take.
However, no one, as far as we know, has ever walked away. One has to wonder just how many teeth Investment Canada has if it does not say no to anybody. The

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individual I spoke to is extremely involved and obviously has a great deal of expertise but he and Investment Canada are provided with a mandate by which they must abide. If it could change the mandate itself I am sure it would probably do so but this government is suggesting that the mandate is as is and, if anything, it will allow this free enterprise that fits right into the scheme of globalization, which nobody truly understands.
The government has done a tremendous job of telling Canadians that it is globalization, folks. There is nothing they can do about it. We have to be more competitive. What is the rationale? It is that we have to be more competitive so we can make more money on our investment but I am afraid people's wages are going to have to go down a little bit. The government is saying that we are going to have to restructure, people's wages are going to have to go down and it is a little concerned about the benefits they receive. It is going to have to reduce those benefits.
That is an oversimplification but that is a little bit about globalization. I think this bill will permit a little more globalization. I know my friend from Edmonton East will talk about the energy sector to which this bill has some direct reference. It is giving the Americans another special treatment. Free trade was not enough, we are going to open up that agreement. Side accords are no good. The government said there would be no side accords on labour and environment but it introduced this bill that gave them exactly what they wanted in the energy sector.
We heartily support the cultural aspect of this bill and salute the government for introducing that. However, as for the rest of the bill, we do not believe Investment Canada has done the job it should have done and should be doing and we do not feel that it has enough teeth at this particular time for us to whole-heartedly give our support. With that I will answer a question.


Giuseppe (Joseph) Volpe: Mr. Speaker,
I followed the intervention of my colleague with some attention. I am a little perplexed because at one point I thought I heard him say that he was pleased that the legislation gives the minister a lot more authority. I wondered why he would say that in light of the rest of his intervention which indicated, and I think quite properly, that there has been some major disappointment with
respect to what has happened in Canada since the dilution of FIRA, the Foreign Investment Review Act.
He would probably agree that since the Tories came into power in 1984 we have seen a total dismantling of what is now called Investment Canada. When the Tories came to power they said that not only is this country open for business but it is now up for sale.
Given the fact that there has been an increase in Canadian investment across the border, primarily to escape the tax disincentives in southern Ontario and elsewhere, how could he agree that we should vest even more authority in the hands of a minister whose job it will be to oversee investment here.
He knows, and he would agree with me, that over the last seven years investment at least from the United States has been little more than leveraged buy-outs of existing plants. It has not been investment in new enterprises or investment that represents a new initiative. In fact, it has been the kind of investment that has used the tax system to gain a bargaining position and then consolidate and rationalize, all to the detriment of Canadian industry and Canadian jobs. I wonder if he would take a moment to reflect on the implications of this statement.


Steve Butland: I would be more than happy, Mr. Speaker, to respond.
May I suggest that it is too seldom that we would say anything positive about what the government might bring forward. Perhaps it is appropriate that in this small moment, within a 10-minute speech and a couple of minutes to answer a question, that I say that I stand by my statement. I think it is good.
If it were solely at the discretion of the minister I would agree with the member. I have read the bill and the amendments with great deliberation so I am quite assured that there is teeth where previously there were no teeth. The substance leads me to say that I support this very strongly. The fact that the minister has a last call does not upset me at all.
I suspect that the minister will not come from that side so I am somewhat more relieved because people from this side would have more consideration of Canadian content. So the substance of the bill is the reason I said what I said. The minister, if he or she is a responsible individual, and I am sure there would be a certain



May 11, 1993

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amount of strong lobbying from the publishing industry to say: "Look, minister, you had better take one more look at this". I have no problem at all with allowing the minister some discretion, or a great deal of discretion as long as the substance of the bill is there. It is fairly strong, Mr. Speaker.


The Acting Speaker (Mr. DeBlois):: The hon. member for Edmonton East for questions or comments.


Ross Harvey: No, I am taking up the second half of the debate, if I may.


The Acting Speaker (Mr. DeBlois):: It is not time for debate. Another question or comment, the hon. member for Eglinton-Lawrence.


Steve Butland: A point of order, Mr. Speaker. I did mention, and I thought it was abundantly clear although maybe I went over, but I had suggested that I was going to share some time with the member for Edmonton East. I hope he will have that opportunity.


The Acting Speaker (Mr. DeBlois):: The hon. member is right and I give the floor to the hon. member for Edmonton East for 10 minutes.


Ross Harvey: Mr. Speaker, I propose in the next 10 minutes to deal with one very small element of the bill. I read clause 3 in its entirety. I quote: "Paragraph 14.1(8)(a) of the said act is repealed".
That is it, Mr. Speaker. No indication in that wording of what it is that is being repealed. The act, of course, is identified as the Investment Canada Act so we must go to the Investment Canada Act to find out what it is we are repealing.
What we find is the sections introduced in the act in 1988 in consequence of the negotiation of the free trade agreement with the United States. It took the limits for investment review that had been in the act and changed them, not for everybody, just for American investors. What for everybody else would automatically trigger a review by Investment Canada if an investment was proposed in excess of $5 million, for American investors that limit is now about $152 million. For a category of investment for anybody else which would trigger a review at $50 million, that category of investment is no longer reviewed at all for American investors.
That still leaves us wondering what exactly we are dealing with in 14.1(8)(a). So, flipping through the Investment Canada Act we find this section and it reads, and this is (8):
This section does not apply in respect of an investment to acquire control of a Canadian business that (a) engages in the development or production of oil or natural gas and owns an interest in proven reserves of oil or natural gas in Canada.
That meant that the special, much more generous review thresholds for Americans generally incorporated into the act were not incorporated for the purpose of oil and gas. For the purpose of oil and gas the older, more restrictive review thresholds still applied. They still applied as well for the mining and production of uranium, for any financial service, for any transportation service and for any cultural business.
What the act before us today, Bill C-89, purports to do in that innocuous teeny little clause 3 is remove those lower review thresholds for oil and gas.
This is actually the third of a three part policy that has been sought by this government to remove virtually all controls on foreign investment and ownership in the Canadian oil and gas industry. It started on March 25 of last year with the minister's announcement that the previous policy restricting foreign ownership in the Canadian oil and gas industry outside the Canada lands was no longer in effect. That policy was ditched. Henceforth, the sky was the limit for foreign ownership in oil and gas companies outside the Canada lands.
This was followed by Bill C-106, which most people expect will receive second reading tomorrow, which removes exactly the same ownership restrictions with regard to the Canada lands. With the passage of Bill C-106 no longer will there be Canadian ownership requirements in the Canada lands. Bill C-89 in its innocuous little clause numbered three is the third of the three horses in this particularly odious troika that is riding cheerfully over the frontiers of Canada's oil and gas industry, indeed Canada's strategic interest in its oil and gas industry, strategic interest that this government has systematically squandered.
Why has it done so? I would direct you to the U.S. president at that time, Mr. Reagan's message transmitted to Congress on July 25 of 1988 in a document entitled "Statement of Administrative Action". This

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document, and I quote from its first page: "describes significant administrative actions proposed to implement the FTA." Here is what it says on page 88 about Canada's energy investment rules:
The administration is committed to further liberalization in the field of investment.
Subsection 304(a) of the implementing bill authorizes the President to negotiate an agreement with Canada on the liberalization of investment rules. Section 304(b)(2) sets out the objectives of future negotiations on this subject including the extension of the principles of the agreement to energy.
The Americans have achieved that, hands down, no contest. We roll over and play dead. The Americans get it all.
It is distressing to have to say that, especially in light of the Investment Canada mandate which, as was observed correctly by the hon. member for Sault Ste. Marie, is to ensure net benefit to Canada of foreign investment.
The record in the oil and gas industry is clear. From 1980 to 1991 foreign-controlled companies shipped $26.8 billion out of the Canadian economy. Gone, close to three times the size of Alberta's ever more pathetic little heritage savings trust fund.
During exactly the same period Canadian-controlled companies in the oil and gas industry generated a net inflow of $2.1 billion. If you want to talk net benefit, the record is clear. Foreign control results in net cost. Canadian control results in net benefit. The Conservative government has opted for foreign control. They have no justification for further governing. I wish to God they would get out.


Giuseppe (Joseph) Volpe: Mr. Speaker, far be it for me to incite the member further, especially since he is so eloquent on the nefarious deeds visited by the Tory government upon this nation, but I notice that no government members are standing up to defend a record that is beyond defence.
I would like to ask the hon. member, if in view of the fact that the items of legislation presented by the government to date, including that which came out of the FTA, have essentially abandoned one component of the energy sector of Canada into the hands of a foreign power and thereby diminished what little sovereignty we have left over a crucial element necessary for the
development of this country, what he proposes that we should do.
Obviously in this case we do not want to support this item of legislation. Yet the member for Sault Ste. Marie stood up a moment ago and said that he could support the additional authority vested in the hands of the minister, authority that has until this stage been used to diminish the sovereignty of Canada and to diminish the interests of Canadians in the industrial sector, in the manufacturing sector and as he sees in the energy sector.
He well knows that in the years 1988 and 1989 the Canadian government, that which we see opposite from us, so fond of staying out of the marketplace, gave greater inducements to the energy sector, especially from his province, to the tune of $832 million over those two fiscal years as a tax incentive for exploration at the same time that it was taking away from Canadians the opportunity and right to build greater investment in Canadian ownership in such a crucial field.


Ross Harvey: Mr. Speaker, I must confess I am having trouble discerning a question in there. The comment was interesting enough.
I think the hon. member should bear in mind what the hon. member for Sault Ste. Marie was talking about when he spoke of support for a particular element of the bill, was that element of the bill which grants greater authority to the minister to defend Canada's cultural industries. It has nothing to do with the energy industry. It has nothing to do with the other industries covered by the bill. It is specific to the cultural industry.
Although we would very much like to support that section of the bill, because we think it progressive and worthy, the rest of the bill is such that we will not be able to support it so, no, we are not buying the whole bill. We are rejecting the whole bill, with some regret, vis-a-vis that particular point.
To move just briefly to the question of what we think ought to be done: at very least those tawdry few residual, vestigial controls still remaining on foreign ownership in the energy industry ought not now to be abandoned. At very least those few remaining controls ought to be kept. Beyond that, ways must be found to foster and develop an indigenous Canadian energy industry, not restricted to oil and gas, but at least to similar degrees fostered in the new technologies, the soft technologies, the new energy paths. That is where the future lies.
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It is going to be an extremely bright future in the next century. Those companies which develop the new energy industries now are going to be servicing gigantic multibillion dollar world-wide markets 20, 30, 40, 50 years from now. That is where the future lies. It can be, in part, a Canadian future if we move now.
Unfortunately the sort of nonsense we find before us this afternoon in fact and again precludes our doing so.


Dennis Joseph Mills: Mr. Speaker, I see that the clock will probably mean that I will not get through all of my remarks, but I will begin.
This whole notion of foreign investment has to be reviewed. I think of the very first bill that this government put in place when it became a government was Bill C-115, Investment Canada, Canada open for business. Quite frankly at that time I was supportive of the fact that we do a streamlining of the Foreign Investment Review Agency. The way the Investment Canada operation has unfolded is not working. Before I deal with the specifics of the bill I want to go back to the Foreign Investment Review Agency that was so popular under the Trudeau administration.
Canadians should understand that this was an agency of government that reviewed any investment that came to Canada. One of the great features of the Foreign Investment Review Agency was its ability to suggest to investors that we did not just want their money in this country; we wanted them to invest in a manufacturing operation. If they were coming to this country to do business in terms of sales or products we also wanted them to invest some money in research and development. I think of all the resistance we had over the years to the Foreign Investment Review Agency but 95 per cent to 96 per cent of the people who went through the Foreign Investment Review Agency were ultimately approved.
I can think of one example in particular. I remember in 1981-1982 Mercedes-Benz of Canada, the car dealer, wanted to expand its operations and sell more Mercedes-Benz cars in Canada. In order to have greater access to the Canadian market it had to go through the Foreign Investment Review Agency or FIRA. It told Mercedes-Benz of Canada, a division of Daimler-Benz of Germany, that it was welcome to sell its product in
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Canada but at the same time it had to put something back into the country in terms of its ability to market and manufacture a world-class competitive product.
At that time there was a company in western Canada in Vancouver called Freightliner. Freightliner was on its hands and knees and was about to be closed down. Freightliner Canada was a division of the Freightliner organization based in Oregon and it wanted to bring its manufacturing plant back to the United States. The Foreign Investment Review Agency said it would not let Freightliner do that. If it wanted to sell more products in Canada, more Mercedes-Benz, then it had to commit to keeping Freightliner's manufacturing capability going in Canada.
I remember there were months and months of arguing with the Mercedes-Benz Corporation in Canada and I was directly involved. In the end the Mercedes-Benz approval begrudgingly went through but it also committed to keeping Freightliner as a manufacturing concern in Canada.
Freightliner, which at that time employed roughly 200 people now employs over 600 people in a brand new plant in St. Thomas, Ontario which was opened about a year ago.
Before I joined this debate today I spoke on the telephone with one of the senior executives of Freightliner who said business is booming. It has a full order book, is manufacturing the product and things are in good shape. This is a direct result not of the new approach to investment in Canada that this government is talking about but of the Trudeau approach to foreign investment where he told Mercedes-Benz if it wanted to sell its product in Canada it would have to keep that Freightliner manufacturing plant in Canada. It was not going to let it fold up shop in B.C. and go south to Oregon.
That is the difference. We, as Liberals, in a very respectful way would stand up to these transnational corporations and say: "If you want to sell your product in Canada, if you want to sell your merchandise in Canada, then we want you to make some products in Canada". Within six months we are going to go back to that policy and I will continue tomorrow.

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Private Members' Business


The Acting Speaker (Mr. DeBlois):: It being 5 p.m., pursuant to Standing Order 30(6), the House will now proceed to consideration of Private Members' Business as listed on today's Order Paper.



PRIVATE MEMBERS' BUSINESS


Mr. Chris Axworthy (Saskatoon -Clark's Crossing) moved: that Bill C-396, an act to amend the Criminal Code and the Customs la riff in consequence (child pornography), be read the second time and referred to a legislative committee in the Departmental envelope.
He said: Mr. Speaker, it is my pleasure to rise to debate Bill C-396, an act to amend the Criminal Code and the Customs Tariff with relation to child pornography. I think most Canadians would be surprised to learn that the possession of child pornography is not a criminal offence in Canada.
I have petitions from what looks like thousands of Canadians who are in support of this bill and in support of measures to curtail what is one of the most heinous of offences, that of maintaining a permanent record of a child being sexually abused. That is what child pornography is.
Each time someone taps into the pornographic underworld regarding children, the children are victimized over and over again. Bill C-396 would amend the Criminal Code to put an end to this cycle of child sexual abuse. This bill has six aspects and I will go through each one.
First of all, the bill provides a definition of child pornography. It proposes that the definition of the term child pornography contained in this bill indicates that pornography relating to children takes place where a child is used in pornographic performances or where somebody who appears to be or is depicted as being under the age of 18 is used in the production of pornographic materials.
Any pornographic material in which a child or someone who appears to be, or is depicted as being under the age of 18 would constitute child pornography.
The bill also creates new offences concerning the possession of child pornography, dealing in child pornography and using children in pornographic performances. The offences relating to pornography in Canada are presently covered under a very broad umbrella of obscenity legislation. This bill proposes that child pornography be dealt with specifically and separately. This legislation introduces a new crime, that of the possession of child pornography.
The bill also sets out rules for some of the defences available for these offences. If the communication or performance which is being discussed has artistic merit or is of an educational, scientific or medical purpose that would be a defence to the crime of possessing or dealing in child pornography.
The bill would also add child pornography to the list of prohibited goods for the purposes of the customs tariff to make it illegal to import or attempt to import child pornography specifically.
The bill provides for parliamentary review every five years so any technological developments affecting the production and dissemination of child pornography can be reviewed and the legislation amended accordingly.
This is particularly important because of the growth and advance of technology which now makes the dissemination of all materials, including child pornography, vety much simpler than it has ever been in the past. It is possible to take a video tape in one country, translate it from one computer to another and get a video tape at the other end. The transmission of child pornography is now very difficult to detect. Consequently, it is very important that we keep track of new technological developments.
Anyone found guilty of possession of child pornography under Bill C-396 would serve no more than two years in jail. A person guilty of dealing in child pornography under this bill would be liable to serve not more than 10 years for a first offence, not less than one or more than 10 for a second offence and not less than two or more than 10 for a third or any subsequent offence.
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The purpose of the bill is to be clear about what child pornography is; to make possession of dealing in child pornography and use of children in pornographic performances a specific crime and to ensure that child pornography can be stopped or confiscated at the border.
I would like to thank the hon. member for Prince Albert-Churchill River, the hon. member for Trinity- Spadina as well as the hon. member for Surrey North who seconded the bill. They, as well as others in the House, have indicated support for this legislation.
I would also call attention to the House the work of the hon. member opposite for Kitchener who has also put forward a private member's bill dealing with pornography.
If we canvassed the House we would find almost unanimous support for Bill C-396. However the bill was not deemed votable by the Private Members' Committee. In spite of that many people wrote to the committee and the chair of that committee seeking to ensure that the bill would be votable because of the widespread support for this measure across Canada.
It is worth remembering that in 1988 the Minister of Justice at that time, who also happened to be the hon. member of Parliament for the area I now represent, introduced broad based legislation dealing with obscenity and pornography. He included in that legislation provisions dealing with child pornography which received the general support of the House, those involved in policing pornographic materials and the public at large.
That was an omnibus piece of legislation which did not go on to be enacted but from 1988 the government opposite has indicated its commitment to dealing with this problem. Subsequently the Minister of Justice, now the Minister of National Defence, indicated her intention to introduce very soon, and this was some time in 1991, legislation dealing with child pornography. She did not do that and to date there has been no initiative from the Government of Canada dealing with what I think we all agree is something we really need to deal with in this country.
The present Minister of Justice has indicated that he does intend to introduce legislation dealing with child pornography, although as we all know we are veiy late in this parliamentary term and that would appear to be
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more politics than an earnest desire to get this issue dealt with in legislation. If the members opposite had wanted to move this matter along, they could have ensured that Bill C-396, the bill we are debating today, was made votable.
I wish to draw attention to the support this bill has. As I have mentioned the 1988 legislation from the government included child pornography.
In June 1990 the special adviser to the Minister of National Health and Welfare in one of his recommendations called for the introduction of legislation "to address the protection of children from the harmful effects of pornography including a revision of the Criminal Code, harsher penalties for using children in the production of sexually explicit materials, and stricter monitoring of our borders by Customs and Excise officials. The processing of enacting legislation dealing with issues related to children and child pornography should be separated from that dealing with adults". As I say, there has not been any initiative in this House from the Government of Canada since that time.
The Fraser committee recommended revision of obscenity laws in 1985 and also was specific about child pornography. The Badgley committee in 1984 reported that domestically produced child pornography existed in an "informal and fragmented" system of private production and recommended that it be dealt with.
The head of Canada's only anti-pornography police squad, Detective Staff Sergeant Bob Matthews of the Ontario Provincial Police, has indicated that an average of 400 pieces of child pornography have been intercepted at border crossings in Canada each year over the past five years and I think we have to assume that there are many other pieces not found by customs officials and also many which are transmitted through electronic devices as I have mentioned.
The Conservative Party's family caucus has also recommended that the Criminal Code be changed to include specific reference to the use of children in a sexual manner, in other words in a special provision dealing with child pornography. I have received hundreds of thousands of signatures and dozens of phone calls in support of the legislation from all across

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the country. I think it is clear that most Canadians support this initiative.
In closing this list of support, it is also the case that in signing the UN Convention on the Rights of the Child the Prime Minister on behalf of Canada committed "to take all appropriate legislative, administrative, social and educational measures to protect the child from all forms of physical or mental violence, injury or abuse, neglect and negligent treatment, maltreatment or exploitation including sexual abuse while in the care of parents, legal guardians or any other person who has the care of the child".
Canada has made an international commitment to the world that it would deal with this issue of child pornography. The government has yet to move in this area.
During the preparation of this bill I was lucky to have the earnest efforts of the staff of the House of Commons and also the support of Detective Staff Sergeant Bob Matthews, the head of Project P, Canada's only full-time anti-pornography squad, who has spoken often and strongly in favour of this piece of legislation.
I think we are all familiar with the subject. While most of us have not been exposed to this subject matter we know how damaging sexual abuse of children is and how long ranging the effects and the impact of that sexual abuse can be. We also know that it is an important and persistent problem in our society and we know that child pornography reflects and in fact distributes the visual effects of that child's sexual abuse.
I think all of us in the House would agree that we need to ensure that the distribution, possession and trading of child pornography should be stopped. In fact I suspect that if I ask for unanimous consent of the House to have this bill deemed votable that I might get it. I do not know if I could test the mood of the House in that regard. Do I have unanimous consent?


An hon. member:: No.


Chris Axworthy: Again we have members of the government not supporting proper measures to deal with child pornography, something which I think is most unfortunate.
In conclusion, I think it is only a matter of time before public pressure to deal with child pornography is enough to persuade even the government that some action is necessary. I look forward to that day. I thank all those who have indicated their support for this bill. I look forward to seeing the thrust of this bill, that is the creation of a criminal offence for the possession, trading and distribution of child pornography, introduced into the Criminal Code in the not too distant future.
Any initiative by the government or by any other member of Parliament to that effect would certainly receive my support.


Mr. Rob Nicholson (Parliamentary Secretary to Minister of Justice and Attorney General of Canada):: Mr. Speaker, as hon. members are aware the subject of pornography is one that has been of concern to many Canadians. It has been studied by the Standing Committee on Justice and Legal Affairs which came out with a report in 1978. The Badgley committee in 1984 and the Fraser committee in 1985 studied issues related to pornography and made recommendations as to how our laws might be changed to address this problem. Particular recommendations were made with respect to child pornography.
In the last 15 years, particularly the last nine years of which I am aware, the federal government has made two attempts to change the law with respect to pornography, including child pornography. The most recent bill was Bill C-54. It generated a considerable amount of controversy. It was one to this day I feel very badly about. It was the second attempt by the government to update Canada's pornography laws. Both bills died on the Order Paper.
What happens in this. As I say it is one of the disappointing things. Many groups say: "Yes, please do something about pornography. Pornography is vicious. Pornography is degrading to women. Pornography hurts people". Many individuals and groups say that but as soon as you put a definition on pornography then there are no shortages of critics who say: "Ah well, we are against pornography but you did not get it right. There are problems with your definition of pornography and of course we cannot support that". On the debate it somewhat degenerates and in the end somebody is
May 11, 1993

saying: "Well the government is trying to ban the Bible". That could be captured within this definition. So it was a very difficult one.
If any members want to talk to the hon. member for Kitchener, he too was quite interested in both those pieces of legislation. The people who wanted to see us do something in the area of pornography were very quiet. In fact the silence among people who were willing to give the government a hand was deafening. Of course the individuals on most pieces of legislation say: "Well nice try but you did not get it right". They of course were in full force on both those pieces of legislation.
As I say, for me it was one of the few disappointing initiatives of the 33rd Parliament that something in the area of pornography did not get put through. I thought the definitions were pretty good, but unless you come down from the mountain and these things are on tablets it is pretty difficult to get people to give you a break and support them.
The Supreme Court of Canada rendered its decision just this last year in the case of Regina and Butler. It upheld the current definition of obscenity. In the Butler decision, Mr. Justice Sopinka, writing for seven members of the court, referred to Bill C-54 which died on the Order Paper. I think his comments concerning the difficulty in trying to draft a piece of legislation in the area of pornography are good.
With respect to the attempt here by the hon. member for Saskatoon-Clark's Crossing I am not going to be like all the critics in this area and try and start to take apart the bill. I am tempted to go through and say where I think it could be improved, but suffice it to say that I agree with the hon. member.
It was not long ago that the member for Edmonton- Strathcona, who has been very interested in seeing that something is done in the area of child pornography, was talking to me and other of his colleagues about bringing forth a piece of legislation to deal with this area. I personally would not have minded seeing something broader in the area but I think we should go with what we can get.
Certainly we have had guidelines in the Butler decision as to what would withstand a charter challenge. I think there is a consensus among most Canadians that
Private Members' Business
child pornography is abhorrent, that it is vicious and exploitive. It is the kind of thing that Canadian society will not tolerate.
The hon. member is impatient, he wants to see it. I can tell you, there has been no shortage of initiatives from the Department of Justice. I think he and most members would be aware that from the Department of Justice there has been a steady stream of good legislation, legislation that helps Canadians and legislation worthy of the support of Canadians.
In the wire-tap legislation the only part of it that seemed to get a lot of publicity was the part about cellular telephones. This is a very important instrument in the hands of police who are trying to control another aspect of crime, the area of drug investigations. We have that sort of thing. We have the proceeds of crime bill before Parliament. There are a number of them.
I take exception to any suggestion that the Department of Justice has not been working very diligently because other than finance, there is no other government department that has put more initiatives before this Parliament or indeed the last Parliament than the Department of Justice.
I can say to the hon. member that he is going to see government legislation in the area of child pornography. It will be specific. I think it will be a little more focused than the hon. member's private member's initiative, and I think he and other members of this House will be quite pleased. I can tell him that he will see that legislation very soon.
We have indicated this government's intention to bring forward child pornography legislation. I ask the hon. member to be patient just a little bit longer. He will see that legislation very soon. I hope, and I take him at his word, that it will have his support. We need that support.
I will tell him why. They are pretty sharp at the Department of Justice, but not perfect. No piece of legislation is perfect. On this we will need people's help. I have no doubt there will be no shortage of critics who will say we did not get it right or it is not perfect or we did not get this, that or the other thing. However time is short in the 34th Parliament. We will need the help of hon. members who will say: "Yes, this is a pretty good attempt. This gets at what we find abhorrent in Canadian society". It did not come down from the mountain on tablets. It came from the Department of Justice. They are pretty sharp. They do a good job. They have got a lot

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Private Members' Business
of good legislation introduced by the minister and the previous minister before Parliament right now.
As I say I think he will see very soon government legislation specifically focusing in the area of child pornography. I call on all hon. members to get behind that government initiative and see that it becomes the law of this country.


Ron J. Duhamel: Mr. Speaker, I welcome this opportunity to express my support for Bill C-396, introduced by the hon. member for Saskatoon- Clark's Crossing.

This is a crime and justice issue as far as I am concerned and therefore I am delighted to be able to support it.
Just briefly, Bill C-396 would prevent the repetitive victimization of children by limiting the importation of pornographic material and imposing harsh penalties against the offender.
I think it is time that something was done and I commend my colleague for having taken this initiative. Perhaps it will at the same time give some impetus to the government to act on this particular issue.
I should point out that this bill is in keeping with article 19 of the UN Convention on the Rights of the Child and is in keeping with society's condemnation of child abuse generally.
In the crime and justice package my party proposed almost 10 days ago amendments to the Criminal Code would make it a crime to produce, sell, import, or possess child pornography. The promised reform was never acted upon by the Conservative government but we hear it may in fact happen very soon.
I want to add as well that Bill C-396 would amend the Criminal Code and Customs Tariff to eliminate protection from obscenity legislation. I think that is a step forward. Offenders could now be charged if found in possession of pornographic material.
Child pornography is in the same category as all other pornography. Implementation of this bill would facilitate the prosecution of known or suspected paedophiles.
I want very briefly to refer to the crime and justice package that the Liberal Party under our leader, helped by colleagues such as the hon. member for Cape Breton-The Sydneys and the hon. member for Moncton proposed a short while ago.

We proposed a number of policies under the heading "Crime and Justice" reflecting Liberal views on the subject. I will only mention the headings but I think this should be of interest to many Canadians: "The battle against crime and for urban safety" is one subject that was considered in depth. Another one is "juvenile delinquents". We feel it is time to take a different and more serious approach to this group.
We also talked about gun control, a subject that has been widely discussed across Canada and on which action is really necessary. There was also prostitution and under that theme we talked about the rehabilitation of sex offenders. We also discussed violence against women and children, a terrible thing in our society that must be corrected.
We have also taken a position on forfeited property, sentence determination and social reintegration in the case of persons involved in various crimes. We also talked about conditional release, another burning issue in this countiy. I will get back to pornography later on when I will have a few things to say about it as one of the subjects included in the paper.
I would like to emphasize that my party intends to reinstate the Court Challenges Program and the Law Reform Commission because we feel the program and the commission had a vital role to play in our society.
Finally we have a section on so-called hate crimes. I would advise members of all parties to look at this policy paper which was released a short time ago.

With respect to pornography and that particular issue we have proposed amendments to the Criminal Code so that it would be a crime to produce, sell, import, or
May 11, 1993

possess child pornography, a reform that was promised but never acted upon by the Conservative government.
I want to share with my colleagues a section within this particular package on pornography that I think is useful. I quote from that document:
Pornography has been with us throughout history, and while there
have almost always been some restrictions placed on it, current
concerns stem from its increased availability, explicitness and a
growing awareness of the link to violence against women.
The principal existing sanction against pornography is found in the criminal law. Section 163 of the code makes it illegal to fabricate and distribute obscene publications or to possess them for the purpose of distribution. This law with its emphasis on sexual explicitness is seen by many as inadequate.
It should be noted that in North America pornography has exploded from a $5 million industry in the early 1970s to a $10 billion business today. That is a monumental growth and clearly one that has to be looked at very seriously.
Of the 10 most profitable magazines on the market today, six are "men's entertainment" magazines such as Playboy and Penthouse, outselling Time and Maclean's. Thirty per cent of all Canadian news-stand sales now consist of pornographic magazines. I find this statistic quite alarming.
Today many scholars and writers on the issue of pornography would like to see a differentiation made between pornography and erotica with the former being sanctioned against legislatively and the latter remaining legal.
Pornography could be defined as material designed to sexually stimulate the consumer by showing or describing a power imbalance among participants. This stimulates by showing or describing violence against or the degradation of a human being. Erotica could be defined as non-violent, non-degrading sexual material which also seeks to sexually stimulate the consumer, but not by depicting a power imbalance among participants.
These two definitions seem to be generally supported by the Supreme Court's recent ruling in the Butler case. Mr. Justice Sopinka held that existing sanctions against pornography, even in a society which protects free speech, are acceptable because of the harms which may
Private Members' Business
flow from such material to society and to women in particular. This case is particularly important in its recognition of the harm that pornography can cause.
Justice Sopinka said that while a direct link between obscenity and harm to society may never be conclusively established, there is sufficient evidence of harm to justify laws which restrict pornography. He noted as well that if true equality between men and women is to be achieved, we cannot ignore the threat to equality resulting from violent and degrading material. Justice Sopinka thus concluded that legislation describing obscenity has a valid objective that justifies some encroachment on the right to freedom of speech.
The Butler case has opened the door for legislation prohibiting violent and very degrading pornography and to regulate the display and location of sale of materials which, while pornographic, are neither violent nor very degrading.
Let me terminate my remarks by saying I am particularly pleased that members of Parliament would in fact address this exceptionally important issue. I am delighted that my colleague from Saskatoon-Clark's Crossing has taken this initiative. I am exceptionally pleased that my party has come forward with a crime and justice package that addresses several issues which I have mentioned, including the issue of pornography. I am hoping that these various initiatives will encourage the government to go forward.

It is time to move ahead. The matter has been debated often and at length, but it is now time to act.


Thomas (Tom) William Wappel: Mr. Speaker, I am pleased to have the opportunity to say a few words tonight about this private member's bill, Bill C-396, an act to amend the Criminal Code and the Customs Tariff in consequence thereof.
I want to use the few minutes I have to point out the things I think are extremely noteworthy in the bill, to point out some of the concerns in the area of child pornography and some of the actions and inactions of the Government of Canada and, if I may say so, some of the concerns that I would have specifically with the bill we are discussing today.

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Private Members' Business
First of all, it is important for people watching to understand that it is currently not a crime in this country to possess child pornography for personal use. That is completely legal. Most people would not believe this. Most people would not believe that it is absolutely legal to possess depictions of children, photographs of children in sexually compromised situations and that there is absolutely nothing we can do about it.
Why is this important? This is crucially important because the only people who are interested in the possession of child pornography are paedophiles. I would also say it is true that there are very few passive paedophiles, if I can put it that way, those who are prepared to go no further than to look at pictures.
We also know from various studies that paedophiles prey on children. There are no one-victim paedophiles. In fact most of the studies that have been done show that paedophiles, both heterosexual and homosexual, prey on more than 200 children each in their lifetimes.
Who are we benefiting by not making child pornography illegal? Paedophiles are the people who are interested in looking at young children, children as young as infants, involved in sexual acts.
Why do I say this? I say it because we should not even be discussing a bill like this. That situation should not even be allowed to be the law of Canada at the present time. In my view that is the direct responsibility of the Government of Canada.
Nine years ago this issue was not one that was talked about. We did not know too much about it. The information that we now have was really hidden. Over the course of nine years it has become clear that child sexual abuse is far more rampant in our society than we ever thought it was or would be.
What has happened? Nothing. It is still quite legal to possess child pornography in this country provided that the person does not want to sell it. What are we talking about? Let us say we are talking about a photograph or a video. What is that? That is the capturing on film of the sexual exploitation of children. That is what it is. Every photograph, every video shows the victimization of a child.
We also know from people like Detective Sergeant Bob Matthews from Project P in the Ontario Provincial Police that many pieces of child pornography are amateur. What does that mean? That means that these paedophiles lure our Canadian children into situations where they take photographs or videos of them and then use those photographs or videos of our Canadian children for their own pleasure. What is more, they trade them. They cannot sell them because selling any sort of pornography is illegal. However they can trade one type of video or one type of photograph or series of photographs with other paedophiles.
How would they know about other paedophiles? There are groups of people who get together as paedophiles, proudly I might say, and say that they are paedophiles and that there is absolutely nothing wrong with this. One of those groups is the North American Man-Boy Love Association which advocates absolutely no age of consent law whatsoever so that even our youngest infants would be subject to sexual exploitation by paedophiles.
That group and its aims are perfectly legal at the present time. What kind of a country do we have if we do not protect our children from paedophiles? What has our government done about it? It has done absolutely nothing.
In the dying days of a Parliament we are told by the Parliamentary Secretary to Minister of Justice that lo and behold the government has suddenly discovered this issue and it is going to bring forth something that it thinks we will like. How horribly cynical it is that after nine years of inaction it has all of a sudden discovered sexual exploitation of children and is going to do something about it.
One of the problems was, and the government was told more than once, that it should not lump all pornography together. Let us deal strictly with child pornography. It did not listen. Now all of a sudden it sees the error of its ways.
One of the things I like about this bill is that it recognizes that child pornography is wrong, that it is not a victimless crime. Every child depicted is a victim for life. They are scarred forever and those are the people we have to protect in this country.
The bill proposes to make the possession of child pornography illegal. I applaud the hon. member for that
May 11, 1993

sentiment. He also does something which is interesting. When we hear lawyers talking, and I am one too, we talk about all kinds of technical details. He deals with one, which is what is a child? He says, and many would disagree but I agree with him, that for this purpose a child is anyone under the age of 18 years.
He also provides what I would consider to be reasonable deterrent penalties for the possession of child pornography, not Draconian but reasonable penalties to deter people from owning and possessing child pornography.
One of the problems I have with the bill is the attempt to define child pornography. In my view it is far too specific. Whenever we try to define something we end up leaving out so many other things.
I would have preferred to see a far more broadly based definition such as any video picture or written description which in any way advocates the sexual exploitation of children and let the courts decide based on the evidence in front of them whether or not there is the advocating or actual sexual exploitation of children.
The member goes through very specific details but my concern is, and this is a legal matter, if we set out very specific details in legislation and the case does not fall within those very specific details then there is no crime. That is a problem.
I do not say that in a negative sense to the hon. member, but I do say to the government that in whatever bill it has suddenly discovered is on the legislative agenda it should provide for the broadest possible spectrum of what could be defined as child pornography because I would rather err on the side of protecting child victims than on the side of protecting child paedophiles.
I commend the hon. member for recognizing a problem which the government has failed to recognize and for at least having the initiative to bring it to the House so we can talk about it. I, for one, am not prepared to let the government off the hook.
Private Members' Business
It is important for the people of Canada to know that at this very moment as we speak anyone can possess child pornography in this country. That in itself is a crime.


Mr. Ron MacDonald (Dartmouth):: Mr. Speaker, I want to start off by commending the member for Saskatoon-Clark's Crossing for his perseverance in bringing this particular private members' bill to the floor.
I also want to say that I am rather annoyed but not surprised that there was not unanimous consent to have this as a votable item. People who watch us, either from the gallery or at home on television, wonder how in the name of goodness we ever get our business done. They wonder how we priorize our activities in this place. I guess even members who have been here a lot longer than I sometimes question those priorities as well.
Surely if there is one thing we are sent here to do it is to try to make this place that we live in, Canada, a more decent place to live. Surely if there is one thing that we are sent here to do it is to try to pass legislation and set the parameters of morality by our regulations and our actions here. Most important, we have a special responsibility to those individuals who are not able to look after themselves, be they the old and the infirm, the sick, those who are economically disadvantaged or our children, our most precious resource as parents, members of communities, and Canadians.
They are our future but they are defenceless. When they come into this world they would not be able to survive for a few hours if it were not for the love, comfort and caring that a parent and a mother brings. As they grow up they develop almost on a daily basis and find new things to do and new joys to give their parents.
As a parent I will tell you that one of the things that strikes fear in my heart is the possibility that one of my children, either the nine-year-old, the six-year-old and one just a little under two-years-old, would become the victim of a sexual assault. It scares the life out of me because I do not know how I would cope with it. I certainly do not know how a child could recover from it.
A lot of times when we are debating people's rights and who has the right to do this, that or the other thing,

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Private Members' Business
surely members on all sides must understand that we owe our children the utmost degree of protection from exploitation in any form but most particularly sexual exploitation.
This bill brings forward the whole subject of child pornography, child abuse and sexual exploitation of our children by individuals that I guess can be described in some pretty miserable terms, but certainly individuals who are not well balanced. Anybody that would abuse a child physically or sexually cannot have it together. Rather than strike out at those individuals harshly, perhaps we should try to deal with their problems. But most of all, we have to protect our children.
Bill C-396 seeks to do that. If this bill were a votable motion and was enacted by this Parliament, it would make it illegal for people to possess child pornography. My colleague behind me just spoke about that. Think about it. It may be illegal to sell it but we have clubs, as we have just heard, of paedophiles with amateur photographs of our children perhaps and it is not illegal for them to trade them. It is like a book of the month club of exploitation of our most precious resource and the most vulnerable in our society, our children.
The bill seeks to impose penalties on those that would possess child pornography. I am not a lawyer and I do not know what would be an appropriate penalty, but two years in prison for possession of child pornography somehow does not seem like very much to me, knowing how our criminal justice system works and knowing that they would not see two years. It would only be a number of months before they would be out.
For the production and sale of child pornography, five years. I know that we are supposed to have a Christian heart and we are supposed to look at rehabilitation. Somehow if it were my child, I would find it very difficult that somebody who had taken advantage of my children in that situation would, if they got the maximum sentence, be out in probably about one-third of their sentence.
Rather than deal with the problem after it happens why is it that this is not a priority? Back in my riding of Dartmouth we are dealing with a community and personal tragedies on a daily basis. We have children in our community, juveniles under the age of 18 who have been the victims of pimps. Everybody has read about it right across the country in the newspapers.
True low-lifes, bottom dwellers, scum who take advantage of young girls and young boys, but mostly young girls in our community, who suck them in at 11, 12, 13. Imagine, at 11 years of age. The task force on prostitution told me 11 years of age. That is a child. They cannot make up their minds whether to go to McDonald's or Pizza Hut for supper and they were forced and pushed into prostitution and drug abuse by low-lifes because they need the bucks. The dollar is more important to the pimp than anything else.
A lot of these girls who were lured into prostitution, hooked on drugs and exploited were also exploited for the purposes of child pornography. Even when they are taken out of that situation and rehabilitation is tried, they do not know that there is not a man down the street who has a picture of them in a compromising position from when they were exploited by their pimp. They live in fear for the rest of their lives that that type of publication is there.
Children that have been exploited physically, mentally, emotionally but most of all sexually, have been scarred for life. It is not a matter that the day after they say: "It has all been done, the person has been put in jail, I can go on and lead my life". It does not happen that way. That is convenient. Would it not be easy if we could compartmentalize those types of traumas in our lives? The psychiatric wards would not be filled up in hospitals right across this country with abused adults or adults that were abused as children.
Most of us here have children. If we do not have them ourselves we have grandsons or granddaughters or nephews or nieces. This should be a priority for us. We are dealing with assault on our children in the school yards. I was at a meeting in Dartmouth last night-that is why I was not here yesterday-of concerned parents. They are concerned about the rising escalation of violence against their children in their schools: five, six, seven, eight, ten, twelve-year olds who are being victimized by older students. They are concerned and trying to figure out ways to grapple with it. About 150 people showed up last night.
We are legislators. We are parliamentarians. We are the ones that can make the laws that can make a difference. When this motion came up before, the hon. member for Saskatoon-Clark's Crossing sought unanimous consent to make it a votable motion. I am trying not to make this a partisan issue, but I am not the person

that puts bills on the Order Paper. It is the government. It is the people opposite. It has to be priorized.
It is said that this came in the dying days of this session of this Parliament. Everybody knows in another 10 days or two weeks there is not going to be another Parliament. There will be an election. No wonder there is cynicism by people out there at the priorization action by the Parliament of Canada.
I hope that this type of initiative from the member from Saskatoon-Clark's Crossing will be applauded by all members. I hope individuals who are out there watching, and I know there are some people who do watch what we do here, would write to their member of Parliament and say this is exactly the type of action that must be taken. The bill may be imperfect, but it is going in the right direction.
I would say to the member that I want to thank him for bringing this to the attention of the House. If government members opposite are truly interested in stopping this type of abuse, they should bring a bill before this Parliament. I for one on this side will support and try to expedite the passage of that legislation so our children are no longer at risk of sexual exploitation.


The Acting Speaker (Mr. DeBIois):: There being no further members rising on debate, the time provided for the consideration of Private Members' Business has now expired.
Pursuant to Standing Order 96(1), the order is dropped from the Order Paper.


[Stage Direction]
SUSPENSION OF SITTING
The Acting Speaker (Mr. DeBIois):: Pursuant to the Standing Orders the sitting of the House is suspended until 6 p.m. when we will proceed to consideration of the adjournment motion.
The sitting of the House was suspended at 5.52 p.m. SITTING RESUMED
The House resumed at 6 p.m.
Adjournment Debate



PROCEEDINGS ON ADJOURNMENT MOTION

[Stage Direction]
A motion to adjourn to the House under Standing Order 38 deemed to have been moved.
['Pursuant to Standing Order 38(5), the motion to adjourn the House is now deemed to have been adopted. Accordingly this House stands adjourned until tomorrow at 2 p.m., pursuant to Standing Order 24(1).']
The Acting Speaker (Mr. DeBIois):: Is the hon. member for Cape Breton-East Richmond ready to take the floor? I think the House is ready to hear his intervention.


David Charles Dingwall: Mr. Speaker, I do not wish to give up any portion of my time, but I thought my colleague from the New Democratic Party was going to be speaking first on a subject that he deemed to be appropriate and that hon. members opposite were prepared to give the appropriate response.
I am at the guidance of the Chair in how I should proceed.


The Acting Speaker (Mr. DeBIois):: I believe my only option is to give the hon. member the floor. Occasionally a member may not be in the House to introduce the question he intends to raise during the adjournment debate. In that case the Chair recognizes the next member on the list that is announced before 5 p.m.

I have no other option than to give the floor to the hon. member for Cape Breton-East Richmond.



David Charles Dingwall: Mr. Speaker, on April 28, 1993 I put a question to the right hon. Prime Minister and the response came from the Minister of State and Leader of the Government in the House of Commons. It was with regard to the issue of Somalia and what was taking place there. Specifically I was talking about the board of inquiry which the Minister of National Defence announced would investigate some of the allegations of events that had taken place.
Part of our thesis at that time was that the board of inquiry ought not to be held in secrecy but that it ought to open itself to public hearings so that many individuals

May 11, 1993
Adjournment Debate
would have the opportunity to express themselves with regard to the serious issues of the day.
In point of fact I asked the government House leader:
-the minister knows very well that there are many unanswered questions still to be discussed.and answers to be provided.
For instance, why did the senior military commander in Somalia try to conceal one of the four deaths as the minister claimed? Why was the minister not told it was homicide for two weeks, so the minister claims?
Now General MacKenzie-said: "I am very concerned for the morale of our troops in Somalia".
The inquiry announced by the minister of defence is being held from the point of view of a person who had to find some way to deflect or to delay.
I want the House to understand that many of us on the opposition benches are extremely supportive and have been for many years of the Canadian Armed Forces. We hold in high regard the distinguished, reputable careers and reputations of the men and women of the Canadian Armed Forces, but we do not believe it is in their best interests or in the best interests of Canada that the minister responsible for the Department of National Defence hold an inquiry in secret.
Having an inquiry behind closed doors will not adduce the kind of evidence and the kind of testimony which will be important for Canadians to see and to understand. I hope the parliamentary secretary who will be answering on behalf of the minister here tonight will see that what we are asking is both reasonable and appropriate.
The board of inquiry should be made public. It should open itself to testimony from a variety of sources so that we can have full accountability of the minister's role as to what is taking place in the Canadian Armed Forces.
I am sure the parliamentary secretary opposite, who is a reasonable and distinguished individual and happens to be with the Government of Canada at the present time, would accept my submission as being reasonable and objective. It would be in the best interest not only of the Canadian Armed Forces but indeed all of Canada to have this kind of evidence and testimony presented in an open public forum as opposed to behind closed doors in secret where no individual has the opportunity to question or raise doubt in terms of the efficacy of that particular testimony.
I would ask that the parliamentary secretary give careful consideration to this very reasonable request. I think it is warranted and certainly Canadians need to have all the facts as to what has taken place in that situation.


Charles A. Langlois: Mr. Speaker, I will take the next few minutes to answer some of the points brought by the member from Cape Breton-East Richmond. I hope that my comments will help him understand the situation and will clarify the whole affair.
As we know there has been a great deal of uninformed comments on four recent events in Somalia. There have been suggestions that incidents have been covered up and that investigations are proceeding in secrecy. Concern has also been expressed about the suitability of the Canadian forces unit sent to Somalia.
I would like to put to rest first the notion that there has been any kind of cover-up or whitewash. Each of the four events has been or is being investigated. In each case the Canadian forces gave public notice of the incident. The details are on public record and are summarized in the minister's statement in the House on April 26, 1993.
Departmental communication policy was adhered to in all cases. When weaknesses in this policy became evident the minister acted quickly to improve departmental procedure to ensure that it worked effectively.
I would like to comment on the board of inquiry on the Canadian Airborne Regiment battle group which has been convened by the chief of defence staff at the minister's request.
The board of inquiry is to examine whether any of the concerns arising from the Canadian forces operation in Somalia are the result of systemic problems, particularly in the Airborne Regiment. More specifically this board of inquiry is tasked with the broad mandate of investigating the leadership, discipline, operation, actions and procedure of the Canadian Airborne Regiment battle group.


The Acting Speaker (Mr. DeBIois):: Order, please. The time has now expired.
May 11, 1993


MAGAZINE INDUSTRY
James Scott (Jim) Peterson: Mr. Speaker, in 1965 our government realized that Canadian magazine publishers did not have a level playing field or an equal opportunity to compete with their American counterparts.
They felt that it was very important to have in Canada an indigenous magazine publishing industry, so-called cultural industries which are necessary in order to reinforce what it is to be Canadian. What happened is our government took measures to ensure that the Americans could not compete unfairly.
One of the ways they were competing unfairly was very simple. With their big markets south of the border, they were able to do all of the editorial work, the writing, all the staff work on a magazine. Then they could ship it into Canada without any changes, soak up Canadian advertising revenues and take that money out of Canada. This made it very difficult for Canadian magazines to compete.
A number of steps were undertaken, including tariff items, which would have precluded this dumping of U.S. editorial content into the Canadian market. We are saying if you are a foreign magazine and you want to come into Canada you must act like a Canadian magazine. You must have your writing here, your editorial staff here, your support staff. In other words act the same way a Canadian magazine does if you want the benefits of being in Canada.
Through high-priced lawyers, Time Warner in the United States which publishes Sports Illustrated found a loophole. Under our tariff rules if you do not have the Canadian content requirements our tariff officials could stop you at the border and preclude that shipment of magazines from entering Canada. They found a loophole. What they do is prepare the magazine entirely in the United States, or almost entirely. Then they electronically ship it into Canada right into a printing shop so that it gets printed here. Through technological means they are able to get around the spirit and intent of our 1965 laws.
This has serious implications for Canadian magazine publishers. There are many foreign magazines which are now waiting to see what this government's reaction will
Adjournment Debate
be so that they can take advantage of sopping up Canadian advertising dollars for their magazines but putting very little into Canada itself. There are a number of jobs, over 6,000, that are at stake, but what is more important is what is at stake is our cultural future.
When confronted with this loophole which it has known about since last fall, the government said it would not act. It would not go to Time Warner and tell them it could not bring Sports Illustrated in this way. It said it would let them bring it in and see what it looks like. It would not presume.
That is not the way it acted with a number of other publications. This was a special favour it gave to Sports Illustrated. Why? What were the personal connections that this government had that made Sports Illustrated special?


Marcel R. Tremblay: Mr. Speaker, my comments may take more than four minutes, but since I have only two minutes, I will accelerate.
The Minister of Communications has asked me to thank the hon. member for Willowdale for the opportunity to confirm this government's commitment to policies that create a positive environment for the growth of a strong Canadian-owned magazine industry that contributes to our cultural and economic development.
To be more precise, let me answer directly the hon. member's question: Will the Minister say no to Sports Illustrated and to all other foreign publishers that seek to violate Canada's laws and to ruin Canada's magazine industry?
For more than 25 years the government has strengthened the Canadian magazine industry through legislation designed to maintain advertising revenues in Canada through direct support from the Canada Council and through the postal subsidy.
The legislation and policies which have been in place since 1965 are intended to ensure Canadian's continued access to as wide a range of Canadian magazines as possible. The government's measures which have contributed to the development of the Canadian magazine industry include Code 9958 of the Customs Thriff. This measure prohibits the importation into Canada of subsequent issues of a magazine in which the advertishing

May 11, 1993
Adjournment Debate
content was directed at the Canadian market. This measure remains in force.
In addition, section 19 of the Income Tax Act disallows a deduction for advertising expenditures in non-Canadian magazines where the advertising is directed primarily at a market in Canada.
This government recognizes that Canadian magazines are an important medium of cultural expression among Canadians and that access to Canadian advertising dollars is vital to maintaining a healthy Canadian periodical industry.
In the Sports Illustrated case, I understand that Revenue Canada has determined that the Canadian edition of this magazine does not contravene tariff 9958 because it is printed in Canada.
Should foreign publishers decide, during the work of this task force, to undertake any new publishing activity in Canada which would contravene or sidestep the government's policy objectives for the magazine industry, they would be doing so at their own risk.


PUBLIC WORKS
Steve Butland: Mr. Speaker, if I could take 15 seconds to digress just a bit from the appropriate question I am going to ask, I would like to suggest that the Memorial Cup is in Sault Ste. Marie this year. The Sault Ste. Marie Junior Greyhounds are in the Memorial Cup for the third consecutive year. I invite all of Canada to Sault Ste. Marie. Now I will get to the issue, Mr. Speaker, and I appreciate the latitude you allowed me.
The P.E.I. link question is a disaster no matter how you slice it: How not to propose a study; how not to propose financing for a small project, let alone a megaproject. It has been an absolute chaotic nightmare for all of those involved.
I want to say that this bridge proposal was privately driven. No government said: "We need to have a tunnel or a bridge or whatever between Prince Edward Island
and Nova Scotia or New Brunswick". It was private industry that said: "We want to build this".
I would hope that people would be altruistic and say that they want to build it to benefit the Islanders. The way it has unfolded has been a source of controversy and a source of more studies. I am told by the minister that they would reach the very ceiling of this House of Commons.
The studies go on but the final definitive study that should have been tabled by the Government of Canada has not yet been tabled despite the fact that study after study suggested that we require a full environmental assessment before we can proceed. We have financial problems with it. There are some mathematical problems. It is perhaps not economical. We kind of sense that the ice flow is going to create serious damage for the scallop industry. It is going to put hundreds of people out of work.
All these were brought forward and yet the government proceeded. Now we are long down the road and we have not yet had the final definitive study.
The Federal Court said: "No, you must have this full environmental review". Very very quickly the proponents came up with an environmental evaluation of SCI's proposed Northumberland Strait crossing project. That I believe was put together in a couple of weeks' time.
It was suggested today by my colleague from British Columbia that it is the taxpayers who are going to foot the bill for this. Yes, we are going to inherit a bridge 35 years from now but should anything happen in the interim who will be responsible? It will be the taxpayer.
The bottom line is that all of the opposition that I spoke to at committee said that if there is an environmental review, a full environmental assessment, and it comes out positively, they will support the link.
Hindsight is easy but I am sure had the government known that it would have conducted that full environmental review, its own review process it should have followed, could have followed and must have followed. Now it is faced with a major dilemma, going against its own experts suggesting a year and a half ago-but, no, this was not good enough-a generic study. A generic study was done. Of course, a generic study does not foot
May 11, 1993

the bill when you have an actual proposal in front of the government.
To complete my question, why is the government going forward with this proposal when it knows know there are environmental concerns and financial concerns? Why does it continue the way it is? Why not do the full environmental assessment? If it proves positive everybody in Canada will be pleased and accept this link.


Dave Worthy: Mr. Speaker, the fact is that most people in Canada are and should be excited about the fixed link project.
First off, it was a project initiated by the maritime provinces in Atlantic Canada. They are not only very interested in this project but they feel it is crucial to the long-term viability and economic well-being of the people of Prince Edward Island.
If the hon. member was really concerned about the taxpayers across the country, he would see that they will end up far better off over the long term.
I feel very comfortable that this project is in the best interest of my constituents in British Columbia as well as the people from Atlantic Canada.
In the last seven years since the idea of the construction of a fixed link from Borden to Cape Tormentine has come up, the federal government has insisted that the matter proceed with care and thoroughness and that all processes, legal and otherwise, be respected. No short cuts have been taken, but as the hon. member has indicated, there have been many reviews. In fact, there have been over 64 public meetings.
The department is currently conducting another review as directed by the federal court. In conjunction with that, there have been four more public meetings, two in Prince Edward Island, one in Nova Scotia and another in New Brunswick.
The department is going to be recommending to the minister very shortly based on the input the department has received: the written information that has been sent in, the 1-800 information that has come in, the over 90 studies that had already been conducted and the 64 public meetings that have been held.
Adjournment Debate INDIAN AFFAIRS


John Williston (Bud) Bird: Mr. Speaker, I want to discuss a subject that involves implicit fiduciary responsibility on behalf of the federal government with respect to contract works on native reservations and the matter of financial responsibility for the administration of the funding and payment of those contracts.
In many cases, particularly where there is a dispute in the contract, there is a predicament for contractors or suppliers to exercise financial judgments on native reservations because of provisions of the Indian Act which prevent the seizing of real property or real assets to satisfy a judgment.
In the case of a contract dispute, for example, irrespective of who is at fault, the native administration is in a position to arbitrarily withhold payment. Even though the contractor is able to seek and obtain a judgment, he is not able to exercise that judgment so in the final analysis he has no legal or financial recourse.
On those projects on native reservations that are funded by the federal government, there is perceived by many business citizens of Canada to be a significant moral and fiduciary responsibility on the part of the federal government to ensure that those funds flow in such a way that contractors are assured of payment before final hold-backs are released as is the manner in normal contract provisions outside native reservations.
Will the government consider introducing a process for publicly-funded projects on native reservations that does conform to the contract law and the financial funding provisions that are normally applicable under Canadian contract construction administration? Will the government accept a fiduciary responsibility to ensure the payment of those contracts and the protection of the interests of both non-native contractors and natives, depending upon how the dispute is resolved in future contract work on native reservations?
I think there is a very significant implicit responsibility on the part of the federal government. There is a manner through the hold-back process, the contractor approval process and the funding approval process where the interests of all parties can be protected, even in the cases of matters in dispute, where funds can be placed in escrow while the dispute is being resolved.
The question is, where public funds are involved will the federal government accept a fiduciary and financial

May 11, 1993
Adjournment Debate
responsibility to ensure that the financial obligations of the contract are fulfilled?


Dave Worthy: Mr. Speaker, the hon. member for Fredericton-York-Sunbury has expressed a very legitimate concern in regard to the policy of the department in situations where suppliers or contractors are experiencing difficulty in collecting outstanding accounts from Indian bands.
Since the 1970s the federal government has been transferring responsibility for the delivery of community services to Indian bands. This has been done to break a legacy of dependency.
In 1993-94 First Nations will manage 78 per cent of the funds directed to community services. This amounts to approximately $2.5 billion. It will involve many thousands of agreements between Indian councils, suppliers and contractors. It will involve a broad range of goods and services.
I view this as a very important issue that must be dealt with responsibly and effectively. However these are agreements between private parties and for their mutual benefit. The department is not a party to these transactions. With any transaction there are risks and the parties to the agreement must weigh these risks as they would with any other commercial undertaking.
As Indian bands assume management of their affairs they develop more effective business relationships. They realize the importance of these relationships to securing quality goods and services at a reasonable cost. This is a fundamental step on the path to self-sufficiency.
The department encourages First Nations to develop and maintain effective business relationships. It encourages sound financial management as well as accountability. However it does not intervene in agreements freely entered into between two private parties. The issue is really one of accountability and it must be to the local level of government.


The Acting Speaker (Mr. DeBlois):: Pursuant to Standing Order 38(5), the motion to adjourn the House is now deemed to have been adopted. Accordingly this House stands adjourned until tomorrow at 2 p.m., pursuant to Standing Order 24(1).


[Stage Direction]
The House adjourned at 6.27 p.m.
[Stage Direction]
Wednesday, May 12, 1993