1993-04-01

Hon. Doug Lewis (Solicitor General of Canada):: Madam Speaker, I have the honour to present the public report of the director of the Canadian Security Intelligence Service. I do not have it to formally table now. It is available and I can provide a copy if the Table does not have it. Both lobbies should have it for distribution to members.
What I had intended to do was to make a statement.


Mr. Dingwall:: Madam Speaker, I think I understand what the minister is suggesting, that we proceed with statements by ministers and thereafter we would revert to the tabling of documents whereby he could table the report which he refers to. That is my understanding of the minister's request.


TABLING OF PUBLIC REPORT 1992
Douglas Grinslade Lewis: Madam Speaker, I have the honour to table in both official languages two copies of the Canadian Security Intelligence Service public report 1992.
I want to thank my hon. friend, the Opposition House Leader, for assisting me in that procedure which I seem to have forgotten over the last two years how to do.


NATIONAL SECURITY SYSTEM
Douglas Grinslade Lewis: Madam Speaker, my statement today marks the second occasion on which I have provided Parliament with an overview of the three main elements of the national security system for which I am responsible.
These elements are security intelligence, security enforcement and protective security. As last year, my remarks will complement the release of a public report by the director of the Canadian Security Intelligence Service.
This statement and the public CSIS report form part of an effort by the government to provide Canadians with information about their national security system and about the threats that it works to counter. Together with the annual reports of the Security Intelligence Review Committee, not only ministers and parliamentarians but all Canadians are afforded a window on security intelligence issues.
Canadians receive daily from many points around the world reports of unrest and upheaval, witnessing a constantly changing geopolitical landscape. They want to know what their government is doing in constantly tracking world events for an evaluation of their possible effects on Canadian interests.
At the same time, they know that the cold war is over and that allies such as the United States with its vast intelligence and defence systems have in consequence begun a re-examination of their priorities.
I am keenly aware that here at home there are expectations for this government to adjust to rapid change and shifting circumstances. Being asked are questions such as: How is the Canadian Security Intelli-

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gence Service moving to respond to rapidly changing world circumstances and the emergence of new risks?
As I announced last year in this place, I asked the director of CSIS to prepare for me an assessment of how the evolving security environment might affect the service's mandate over time. The director was to consider future security intelligence needs, examine how the service ought to be structured to meet those needs and determine the resource implications of any recommended measures, mindful of the budget realities and the government's commitment to improve the efficiency of organizations.

The Director of CSIS has assigned this job to a working group. I would like to tell you about the findings of this group and the decisions I made accordingly.
The working group has requested the input from 28 departments on the security threats facing Canada in the years ahead.
The group has also called upon the expertise of CSIS by asking its employees for ideas on the best way to carry out the mandate of the organization.
Finally, the working group has conducted an in-depth analysis of resource requirements in the context of the budget realities and the situation of the intelligence community in 1993.

This analysis has confirmed that since the end of the cold war a progressive reduction of resources which are typically allocated to traditional counterintelligence services and operations which are quite labour intensive was warranted.
An analysis of the global security environment has presented the government with the opportunity to now make over-all reductions while ensuring that the security intelligence mandate has met an acceptable level of risk.
Therefore, the government is reducing the number of positions for CSIS from 2,760 to 2,465. That is a reduction of about 11 per cent. These reductions are being achieved primarily through attrition and by tight control of the staffing process.
As many may know, the government expanded the service's personnel complement in response to a very thorough review in 1987 which was carried out by an
independent review team led by Gordon Osbaldeston. This team found that the new service, bearing in mind that CSIS came into existence in 1984-1985, was understaffed and underfunded to meet the changing security intelligence demands of the government. I refer to the CSIS public report for an informative, detailed discussion of resource issues as they have evolved since 1984.
Equally important is that the director's review has identified a range of activities and best management practices that emphasize the importance of intelligence analysis and operational flexibility.
We in this House realize that forecasting is an imprecise art. I want to share the general long-term outlook for those areas of particular concern for national security. I want to make it clear that my number one consideration in directing the service and the RCMP in its national duties is public safety. Canadians expect no less.
CSIS projected five years ahead to identify the kinds of national security risk that we might face. The implications for Canada were examined with reference to the service's responsibilities to investigate threats associated with espionage, foreign influenced activities and politically motivated violence.
First, the nature of espionage will certainly change in years to come. Hostile intelligence services will be paying more attention to economic and technological targets. Although economic espionage is not new and existed regardless of the cold war, some countries will likely increase their efforts to obtain our considerable industrial and technological expertise the fast and cheap way.
I personally intend to do my utmost to ensure that Canada's economy does not suffer because others want to take unfair advantage and gain at our expense. As a result CSIS will continue to ensure the protection of information and assets of national economic significance through assessment of potential threats and warning to government.
In line with this responsibility, I am pleased to advise that the service has established a liaison program with the private sector to enhance understanding and awareness of the vulnerability of information to clandestine acquisition. I will continue to pay close attention to CSIS activities in this area. I wish to emphasize that the service's role in economic security is defensive; that is we play an advisory and precautionary role.
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Our mandate is to monitor and advise on state sponsored economic espionage. CSIS does not and will not concern itself with private sector industrial espionage. This is strictly the responsibility of the private sector.
In the area of proliferation, this government's commitment to the promotion of international peace and security obliges us to monitor the deadly traffic in weapons and technology of mass destruction, particularly when Canada and Canadians are involved. CSIS will continue to play an appropriate role in that effort.
As we know from recent events, terrorists remain active in many parts of the world, some of them close to home. Canada is used regrettably for fund raising, procurement of weapons, planning and as a safe haven by a number of extremist groups. CSIS has a vital role in monitoring these activities, as does the RCMP in investigating and apprehending those who conspire to commit criminal acts.
Regrettably the continued existence of international state sponsored terrorism is a cause for concern to all states which follow the rule of law. The director's task force found no expectation that international terrorism would diminish. The recent bombing in New York City underlines the vulnerability of free and open democratic societies to terrorism.
Global trends, including growing movements in pursuit of ethnic nationalism in various regions of the world, the growth of religious fundamentalism and increasing ideological extremism among certain right-wing groups, clearly warrant continued vigilance by the service. As the Secretary-General of the United Nations has warned, the new danger that will appear is more state fragmentation. He notes that rather than 100 or even 200 countries in the world we may well see up to 400 countries by the end of the century.
Canadians are largely a nation of immigrants. It is our heritage to give refugees and immigrants the opportunity to build new lives. As Canada becomes home to more refugees and immigrants-almost one million have arrived here since 1987 and one million more by 1997-for-
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eign influenced activities and homeland quarrels are likely to be a growing concern.
Emigre populations in Canada may be coerced, manipulated or exploited by homeland based interests. By the same token, insurgent or terrorist groups may try to use Canada and the local expatriate population as a source of aid and comfort.
Nevertheless I have a responsibility to help ensure that old quarrels are not brought to Canada by those few newcomers who cannot leave behind the political violence of their homelands.
I should also note that we have recently amended our immigration legislation to strengthen its control provisions. These provisions will help authorities deal more effectively with potential threats from terrorists and violence-prone individuals seeking admission to Canada.
The Royal Canadian Mounted Police is an essential element of my national security mandate and it continues to be responsible for the protective security and enforcement of laws relating to security offences. The RCMP plays an extensive role in security enforcement with respect to the Security Offences Act and other laws but also in providing protective security to VIPs, federal properties, airports, embassies and missions.
CSIS works in close co-operation with the RCMP, ensuring the exchange of criminal extremism and terrorism information relevant to law enforcement. As Solicitor General it is my job to emphasize the continued co-operation between the two agencies.
On a personal note I would say that Director Ray Protti and Commissioner Norman Inkster have given me every assistance in my task as Solicitor General for the past two years. There is a good working relationship between the personnel of the two forces and specifically between Mr. Protti and Mr. Inkster. I believe the difficulties of the past are not our concern now.

To conclude, the national security system in Canada has demonstrated its impressive capacity to adjust and change in response to changing circumstances.
I think that the findings of the Director's working group and the ensuing decisions will be indeed the tradition of excellence in dealing with major national security issues.

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Other democratic nations have noticed how successful we have been and are now asking Canada for advice on balancing individual freedoms and effective national security measures.

In a discussion last year with the British Home Secretary I explained the Canadian experience with a new Security Intelligence Act and the Security Intelligence Review Committee process.
I have encouraged both the RCMP and CSIS to discuss with their eastern European counterparts how police and security agencies function in a democratic society. This is surely a sign of how the times have changed.
At home and abroad change is overtaking and transforming many things we once accepted as fixed and immutable. I want to assure Canadians that we are alert to the potential effects of change, and we are working to ensure the continued safety and security of Canadians through an effective national security system. I am confident that Canadians can continue to enjoy a degree of safety and security that places our nation in the ranks of a fortunate few in the world.


Mr. Derek Lee (Scarborough-Rouge River):: Madam Speaker, I am pleased to be able to respond to the Solicitor General's second annual statement based on the public report of CSIS.
The annual statement has evolved out of a process of review of security and intelligence, as the Solicitor General has indicated, that began a number of years ago and which culminated in the five-year review of CSIS by Parliament a couple of years ago. It is hoped that the annual statement and the annual public report of the CSIS director will add to Parliament's understanding of the role of CSIS in national security.
I want to point out, as I did last year and as I think should be pointed out for the next while, that Parliament's five-year review involved 117 recommendations.
I sat on the committee and, while it certainly was not our belief that the government would immediately adopt all 117 recommendations, all of us who participated in the committee were disappointed that at the end of the day
only one or two recommendations were actually formally adopted.
However, the government and CSIS have responded in other ways to those reports, not just the parliamentary report but others, and one of those responses is this annual statement which we all agree is constructive.
For the record I want to point out that the role of monitoring CSIS and other players in the national security field is a job that has been given to the Security Intelligence Review Committee. This is a body appointed by the government which reports to the House of Commons as it sees fit, but at least once per year. The other structure that monitors is the subcommittee of the House of Commons justice committee which monitors SIRC and the other players as best it can. I see the chairman of that committee smiling at me from across the floor today.
In any event, the task of monitoring our national security agency is not one that parliamentary systems have taken to easily. We hope that we have found some of the right tools and are doing the job properly.
I want to make reference to portions of the annual report as discussed by the Solicitor General. From our perspective in Parliament we invest large sums of money in gathering security intelligence from many perspectives, including counterintelligence and counterterrorism. I think all Canadians would agree that the moneys we spend on those functions are actually moneys spent as a kind of insurance policy which permits our country to adapt, respond and prevent certain types of occurrences that would be very negative to our public interest. I think by and large we are getting value for our money but our job in Parliament is to make sure that we get value for money. That is one of the focuses I bring to my remarks now.
One of the newer areas of concern and focus for CSIS and other elements of our national security establishment is economic security, the potential for theft of our economic secrets, our technologies, most of which is in private hands but some of which is in government hands. As the Solicitor General pointed out, the role of CSIS now is only to monitor, do surveillance and protect against economic thefts of the nature that are sponsored by foreign states.
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There are in existence all around the world many initiatives in the private sector where companies steal from other companies. At this point I do not believe that CSIS is authorized to chase those, but the Solicitor General has pointed out that CSIS is now liaising with elements of the private sector in an effort to make the private sector aware of the context of the risks, of the background of the players and of those against whom the private sector should be protecting itself. That is a useful taxpayer paid function.
However, not just in Canada but in other countries in the west there is now an issue being debated publicly as to how much the taxpayer should invest in protecting private assets and the technology of private companies. That is a legitimate concern. We have not fully debated or answered the question, but it is one that we, CSIS and the Solicitor General, will want to address in the months or years to come.
I want to point out what I believe may be omissions. I realize that the annual statements of the Solicitor General and the public report of CSIS will build year after year. We cannot knock off all issues in one sitting but there is one item of unfinished business that I will only make reference to, which is the Air India investigation that is still outstanding. Many Canadians are very concerned about that. We are awaiting a conclusion of the investigation and a decision by the government as to what will be done with the evidence it has accumulated on that situation.
Another omission to date, one that I hope will be dealt with in the future by the Solicitor General, is the security and intelligence operations and surveillance done by the Communications Security Establishment, known as CSE. That particular agency, while not under the jurisdiction of the Solicitor General, does gather intelligence information, electronic signals intelligence information. That has not as yet come under the proper ambit of this Parliament. We have not yet put in place procedures to monitor as we should.
I note that with the Supreme Court of Canada decision in Duarte and the provisions of Bill C-109 currently before committee and this House there may be occurring an inadvertent circumscription of the activities of CSE. Its electronic monitoring involving electronic signal surveillance, which is now done without warrant, may come under the ambit of Bill C-109. The comments of the Supreme Court of Canada in Duarte signalled that the state may not routinely monitor its citizens and invade their privacy without authorization or warrant. That is a matter that I know will come up in the future as well.
I want to raise another matter that I do not think the Solicitor General made reference to but which I am sure he would if I had placed it before him first, and that is we want to continue to remind CSIS to continue to be sensitive to Canadians bom in other countries who are now full-fledged Canadian citizens, particularly when incidents involving our national security arise. These people have to be treated as Canadians and not be assumed to be risks simply because they were bom in other countries.
There is a grey area here. I know that CSIS is aware of it. We have dealt with it at the national security subcommittee. I hope my remarks will encourage CSIS to be very vigilant and sensitive to the positions of these many Canadians as CSIS does its work attempting to deal with counterintelligence and counterterrorism within the context described by the Solicitor General.
I also want to acknowledge the staff reductions indicated by CSIS in the counterintelligence area. They are probably a function of the reduction in cold war intelligence battles that went on for many years. The need to engage in that whole round of activities with the former Soviet bloc is not as vital as it once was and may continue to diminish.
I hope those staff reductions would allow cost savings to the taxpayer. I am not so sure I saw it in the estimates. The budget appears to have continued on at the same level, notwithstanding the proposal to have staff reductions. It is hoped we can take a closer look at that issue at the subcommittee.
Finally I want to reconfirm for all of us in this House that the structures of the Security Intelligence Review Committee and the national security subcommittee will hopefully continue to do their jobs in monitoring our security and intelligence establishment in this country throughout the denouement of the cold war and this period of an apparent increased threat of terrorism emanating from the various conflicts around the world.

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Mr. Derek Blackburn (Brant):: Madam Speaker, as a member of the House subcommittee on national security I am pleased to respond to the minister's statement today with respect to his second annual report on the Canadian Security Intelligence Service. I thank him for giving me the information ahead of time. It came to my office late yesterday afternoon.
First I congratulate the minister on making an announcement that calls for a reduction in staff. Many of us on this side of the House over the past few years have been somewhat critical of the increase in the funding to CSIS, when other departments were being cut back at a time of restraint, and the proliferation of staff.
I realize a report was done a number of years ago by Mr. Osbaldeston that called for an increase in staff. We accepted that as having been necessary at that time. It is a good move at this point, now that the cold war has wound down or is winding down, to reallocate resources within the intelligence community and in doing so to find a way of actually reducing staff. I believe this mainly will be done through attrition and fortunately not through lay-offs.
The whole area of economic intelligence, espionage, counterespionage and so on is something, as the previous speaker and the minister have said, that has been with the world for a very long time. If we read about the historical antecedents of the intelligence world we find that it was essentially economic in the first place. As empires developed, governments felt they had to protect their foreign interests. Usually those foreign interests were economic and material. They were not so much political because the old trading companies controlled the monopoly on foreign trade. It was not really a government initiative in those days, although governments did open up avenues of exploitation through political processes and military processes.
The military intelligence and the economic intelligence went hand in hand to develop commercial empires. In effect we are actually returning, in a historical perspective, to some of the origins of the intelligence world.
The difference today is the obvious difference in technology. Quite frankly the minister, or any minister in his position, has a dilemma here.
It is one thing to say that the intelligence community, in this case CSIS, will liaise with the private sector. That is a duty. It has to perform that exercise. However it is much more difficult and confused to say this is where liaising ends and this is where participation begins in the process of protecting economic interests, in this case technology, technology transfer, research and development and so on.
Canada, along with the United States and western Europe, is a country that is on the leading edge in many of these technological fields so obviously we are prime targets.
I do not know how we can solve this problem. We cannot really solve it today or even this year because it is a growing problem. It is going to be an expanding problem. With high technology, computers, and information technology growing at such a rapid rate when government institutions such as CSE and CSIS become involved in finding out how they can protect Canadian economic, industrial and technological interests I am quite certain, just as certain as I am that I am standing here today, that will involve us somewhere down the road with active participation, not just passive.
That is the time that very serious considerations will have to be made and decisions taken. As the previous speaker said it involves taxpayers' money. We are going to have to ask the question: Should government or its agencies which are funded by taxpayers be out there gathering information to protect private sector technological developments, research and development and so on? This is something that cannot be codified today. It cannot be regulated because it is moving so quickly. The whole process is moving quickly.
I call upon the minister and his senior advisers in this area to keep a very close watch on how deeply CSIS, CSE and the RCM Police actually become involved in what I would consider a private sector problem, even though I would argue that the state has not only a right but a duty to protect economic interests in a general way.
Just to repeat myself for a moment, it is a very murky line. It is a very blurred area between liaising on one hand and actually, before we know it, becoming directly involved in the protection of private sector economic and technological secrets and so on.
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That is an area to which we are going to have to give ongoing consideration. I would hope that the subcommittee of this House on national security and intelligence would have as one of its prime subjects over the next several years working with SIRC, the Security Intelligence Review Committee, and the minister and his staff on an ongoing basis.
The minister also made reference to international terrorism and the fact that Canada is used from time to time for fundraising for these various groups. The IRA is one glaring example, one hideous example, but there are several others.
Canada is also used as a haven, a safe house, for international terrorists. They can come here and sleep it off for a few days, a few weeks or a few months in relative peace and tranquillity. To say this is irritating is to put it mildly.
I recall that a number of years ago previous governments were warned that certain elements were coming in from Asia, that the Asian gangs were arriving in this country. I know it was extremely difficult to try to survey them, to try to investigate and determine who were legitimate refugees and who were gangsters, political thugs and so on.
The boat people are a very good example. Many of these people came in with no identification. There was no way to trace their origins or their country of nationality. Many of them were ethnic Chinese whom the Chinese authorities forced into North Vietnam in the 1960s. Ho Chi Minh did not want them.
When the Vietnamese war was over they flooded south into South Vietnam and joined the legitimate refugees, the boat people. Eventually they ended up here in Canada. A lot of these Asian gangs, Vietnamese, Chinese or from Hong Kong, have been coming into Canada with great regularity. We have not really made the effort we should have made to sort these people out, detain them and hold them until we are perfectly satisfied they are not members of these gangs.
I have made reference to Asian gangs. There are political and criminal undesirables from all over the world coming into our country. I am not saying they are coming into Canada in vast numbers, but we have to
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keep up our surveillance. This is where CSIS, along with the immigration department, plays a very important role.
If it takes longer then we should take longer to investigate these would-be refugees, or immigrants for that matter, if there is any doubt as to whether they are related to these gangs, political terrorist groups and criminal organizations. Quite frankly legitimate refugees and immigrants to this country and indigenous Canadians do not want that political and criminal riff-raff from the world coming to poison our society. We have to do everything we can to get a handle on this and to keep these thugs out of Canada.
There was another reference to the foreign nationalist political groups in the country. I realize that the world is in a flux right now. We are speaking of course of countries such as the former state of Yugoslavia, but there are many other examples. On the one hand we want to accept legitimate refugees. We want to give them a safe haven. We want them to come here because we know they will make useful, productive Canadian citizens and will add to the great cultural mosaic of our country. On the other hand, however, we have to be extremely vigilant in making certain that we are not setting up little nationalist political groups transplanted overseas in order to carry on the same nefarious activities they did back home.
The Liberal spokesperson just before me made a passing reference to CSE and Bill C-109. We finished the bill last night without amendment. I was chair of that committee and I will be presenting the report in a few minutes. I just want to say in passing that I sincerely hope that Bill C-109 will relate to the activities of CSE.
I would like to ask the minister, although he cannot respond at this time, if he would consider checking to see how that bill will impact on the Communications Security Establishment. CSE is such a secret organization. It has been extremely active without any parliamentary control, as far as the House of Commons is concerned at least, since its origin.
On the one hand I realize we need surveillance and increased technological surveillance in this highly technological age in which we live, but on the other hand the protection of private citizens' activities must also be considered as well.

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I am going to close on this last note, which is not in the report for obvious reasons. We appreciate what the minister had to say yesterday with respect to Leslie James Bennett who is now and has been for many years living in Australia. I am not going to go into all the details. The minister said yesterday in the House I believe that the government does not and never has considered Mr. Bennett to be a spy, a mole or disloyal.
I would ask the minister today in the House if he would seriously consider some kind of monetary recompense for Mr. Bennett. Mr. Bennett left this country in disgrace in the eyes of the public. Although he was innocent he lost his career and his family. He went to Australia to try to start a new life. He went, I believe, with a pension of $4,500 in 1972. To the best of my knowledge he has no other source of income or had no other source of private income at that time, and I do not believe he has to date. He sat there and suffered in the Perth area of western Australia all of these years trying to get redress.
The minister went a long way yesterday and I thank him for that. However, I call upon him now to try to come to some kind of monetary solution to assist this man. He is getting on in years and will not be living for that much longer. I believe he has lived in relative poverty all because he was under suspicion in an intelligence community that almost thrives on suspicion at times. I think he was dealt with by the RCMP and his superiors in a very unfair way.
I am happy to have responded to the minister's statement this morning. I look forward to the work of the House committee on national security and intelligence getting deeper into these issues that the minister has raised and that we have raised on this side of the House.


INTERPARLIAMENTARY DELEGATION
Mr. Terry Clifford (London-Middlesex):: Madam Speaker, pursuant to Standing Order 34(1), I have the honour to present to the House, in both official languages, the report by the Canada-Europe Parliamentary Association of a meeting with the Council of Europe
Standing Committee on Agriculture, held in London, Middlesex, March 1 to March 4, 1993.
That meeting came as a direct result of a report given in this House by the association where we found that European parliamentarians in the main were not knowledgeable about Canadian policies and practices in areas such as agriculture, forestry, environment, et cetera, to the detriment of Canada in its world trading possibilities and things such as the GATT. It became apparent that a meeting of this order was necessary and 34 parliamentarians responded. It was a good opportunity.
I thank the government for its involvement. I urge the government and all parliamentarians to keep up the knowledge of Canada and express it around the world.


HOUSE MANAGEMENT
[Stage Direction]
81ST REPORT OF STANDING COMMITTEE
Mr. Charles A. Langlois (Parliamentary Secretary to the Leader of the Government in the House of Commons and to Minister of National Defence):: Madam Speaker, I have the honour to present the 81st report of the Standing Committee on House Management concerning parliamentary reform. If you will allow me, Madam Speaker, I would like to make a few comments on that report.
The report I am tabling this morning contains about 30 recommendations for parliamentary reform. It is the result of innumerable hours of work, discussions and compromises on the part of all members of the committee; it is also the result of the patience and efforts they have devoted to it over the last 18 months.

I would like to take a few minutes to acknowledge the special contribution of the members of the subcommittee on parliamentary reform who have participated since the beginning of the exercise in the fall of 1991.
I would like to mention the hon. member for Winnipeg Transcona, the hon. member for Kingston and the Islands, and my hon. colleague, the hon. member for Peace River who not only presided over the subcommittee's work but also chaired the committee for 18 months and steered its deliberation on parliamentary reform until the very end.
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I would like to stress the tact and leadership of the hon. member for Edmonton Southwest who from November 1992 until last week has guided our work and, as committee chairman, skilfully piloted the project to a successful end. As you all know, the hon. member for Edmonton Southwest is Mr. Jim Edwards.

Finally I would like to give special thanks to our staff who worked with us during the whole process, our clerks, and in particular the outstanding support and drafting skill provided by Jamie Robertson, our research officer who rendered our task possible and our work feasible.
I have sat at many meetings and deliberations of the committee on House management on parliamentary reform. I would like to pay special tribute today to my colleague, the member for Peace River. Throughout the deliberations he led our discussions. He has been the lightning rod, if I can use that term, behind the work that has been done.
We are tabling today a report that will help streamline the work of the House of Commons. It will bring in several significant changes to the work of the House of Commons.

Therefore, it is with great pride and with gratitude towards all the members of the committee that I table this major and innovative report which I submit to the House today.


JUSTICE AND SOLICITOR GENERAL
[Stage Direction]
13TH REPORT OF STANDING COMMITTEE
Mr. Bob Horner (Mississauga West):: Madam Speaker, I have the honour to present, in both official languages, the 13th report of the Standing Committee on Justice and Solicitor General.
Pursuant to the order of reference of Friday, February 12, 1993 your committee has considered the 1993 proposals for a Miscellaneous Statute Law Amendment Act
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and your committee has agreed to report it without amendment.


BILL C-109 REPORT OF LEGISLATIVE COMMITTEE
Derek Nigel Ernest Blackburn: Madam Speaker, I have the honour to present, in both official languages, the report of the legislative committee on Bill C-109, an act to amend the Criminal Code, the Crown Liability and Proceedings Act and the Radiocommunication Act without amendment.
[Editor's Note: See today's Votes and Proceedings.]


CRIMINAL CODE
Mr. Lyle Vanclief (Prince Edward-Hastings) moved: for leave to introduce Bill C-419, an act to amend the Criminal Code, the Customs Tariff, violent cards and games.


Madam Deputy Speaker:: Pursuant to Standing Order 68(2), the motion is deemed adopted.


Lyle Vanclief: Madam Speaker, it is an honour today to present this bill, an act to amend the Criminal Code and the Customs Tariff.
The purpose of the bill is to prohibit the production, sale and circulation of cards and games of a violent nature and to prevent their importation into Canada.
I propose this legislation in response to the outrage many Canadians and many of us in this Chamber felt and still feel after hearing of the importation into Canada of the so-called serial killer cards and games and the production in the United States of those board games as well.
The minister of revenue has said that he would prohibit the importation of these products into Canada but his department told him that he could not under the present laws. Rather than wait for the government to amend the law to permit the banning of this offensive material I am proposing the appropriate amendments in this bill.

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Thousands of signatures on petitions have been presented in this Chamber calling for a ban on this type of material. I am confident colleagues on all sides will agree this type of material which glorifies mass murderers and heinous criminals is inappropriate in our society.


Madam Deputy Speaker:: Mr. Vanclief moves that the bill be now read the first time and printed.
Pursuant to Standing Order 69(1), the motion is deemed adopted.
Bill read the first time and printed.


TRANSPORT
Charles A. Langlois: That on behalf of the Standing Committee on Transport, one staff person be authorized to travel to Toronto on April 6, 1993 to attend the Canadian Short Line Railroad Conference.


[Stage Direction]
Motion agreed to.

Charles A. Langlois: That four members of the subcommittee on senior citizens health issues and two staff persons be authorized to travel to Washington, D.C., from April 27 to 29, 1993 in relation to their study on elderly abuse.


[Stage Direction]
Motion agreed to.

Mr. Jim KarpofT (Surrey North):: Madam Speaker, I have the privilege to present a petition pursuant to Standing Order 36 signed by hundreds of people within my riding of Surrey North.
The petition points out that the planned closure of the immigration office in Surrey and New Westminster will result in people having to travel to Vancouver to receive
service. There are severe processing delays at the Vancouver office. This is going to result in diminished service in spite of the fact that the office in Surrey took in over $4 million in fees last year.
The petitioners call upon the government to reverse its decision and leave the immigration offices in Surrey and New Westminster open.


Mr. Alex Kindy (Calgary Northeast):: Madam Speaker, I rise to present a series of petitions in memory of all children who have suffered from the hands of others.
The petition states that this petition has been formed to stress our beliefs that the penalties in retrospect of child molesters and child murderers are far too lenient in this country. The petitioners strongly request that this petition be heard as the people's vote to reinstate capital punishment for child murderers and stiffen penalties for child molesters. If we cannot protect our children from the people who commit these heinous crimes then who will?
Therefore the petitioners call upon Parliament to enact legislation against these types of offenders.


Derek Vincent Lee: Madam Speaker, I have a petition from a number of people in the Ottawa area who bring to the attention of the House the fact that retail gasoline prices are significantly higher here than they are in other parts of Ontario.
The petitioners state that the pricing differential is discriminatory and unfair. They call upon Parliament to ask the government to correct this disparity.


Terrence (Terry) Clifford: Madam Speaker, pursuant to Standing Order 36, I have a petition to present to this House on behalf of thousands of citizens of London with regard to the Mohammad Doleh family in its quest to be granted landed immigrant status.
This family obviously has influenced and been a main part of life in London, as witnessed by thousands of then-fellow Londoners who want this family to remain in Canada and be part of the quality of life that we have in London and London-Middlesex.



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I urge the government and its minister of immigration to listen to these Canadians who have told us what other people they want in this country. I urge that the Mohammad Doleh family be considered.


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Charles A. Langlois: Madam Speaker, I suggest that all the questions be allowed to stand.


Madam Deputy Speaker:: Shall the questions be allowed to stand?


Some hon. members:: Agreed.



GOVERNMENT ORDERS


Hon. Marcel Danis (for the Minister of Finance) moved: that Bill C-92, an Act to amend the Income Tax Act, the Canadian Pension Plan, the Income Tax Conventions Interpretation Act, the Tkx Rebate Discounting Act, the Unemployment Insurance Act and certain related Acts, be read the third time and passed.


Mr. Marcel R. Tremblay (Parliamentary Secretary to Deputy Prime Minister and Minister of Finance):: Madam Speaker, I am pleased to have this opportunity to begin the debate on third reading of Bill C-92, which amends the Income Tax Act and various other laws.
This bill will implement some important measures announced for the first time in the 1992 budget. It follows up an important promise made by this government to reduce spending so that we can lower taxes and
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promote growth and competitiveness. This bill also includes some technical changes to the Income Tax Act.
These technical changes are the result of constructive comments we received from taxpayers and their advisers in recent years. The purpose of these changes is to maintain and increase the fairness and efficiency of the tax system. This is an important element of this government's commitment to strengthen the Canadian economy by eliminating barriers and distortions in the tax system.
Let me first of all discuss the proposed tax reductions.
Above all, Bill C-92 would assure legislative approval of the reduction of 1 per cent in the surtax on individual income which took effect on July 1, 1992 as well as the additional reduction of 1 per cent which took effect on January 1, 1993. With these measures announced in the February 1992 budget, the surtax falls to 3 per cent of basic federal tax; 14.6 million Canadian taxpayers will benefit from these reductions. The total impact of federal revenues is expected to amount to $6.6 billion over the period from 1992-93 to 1996-97.1 should point out, that these reductions are being covered by cutting expenditures elsewhere in government.
In addition, the House is being asked to consider a number of changes in the tax treatment of Canadian businesses. We propose to reduce the tax rate on income derived by corporations from manufacturing and processing from 23 per cent to 21 per cent, in two stages. The first decline takes effect on January 1, 1993. The second one, a one point reduction, is scheduled for January 1, 1994.
The goal of these initiatives is to assist companies in the manufacturing and processing sector as they restructure their operations and take advantage of new opportunities. This legislation also implements a number of other tax measures announced in the February 1992 budget.
The Income Tkx Act will be amended to no longer provide the $100,000 life-time capital gains exemption on real estate purchased after February 1992. The exemption will apply only to real estate purchased before March 1992.

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The rules concerning labour-sponsored venture capital corporations are amended to increase the maximum credit for investments in these funds, increase the size of the company in which the funds may be invested and relax the eligibility criteria for the fund sponsorship.
The Income Tkx Act will also be amended to implement the Home Buyers' Plan. This measure allows homebuyers to withdraw up to $20,000 in existing funds from registered retirement savings plans and to use the money to finance the purchase of new or existing homes. Where the home is being occupied as the buyer's principal residence, there is no tax on the withdrawal. So far, there have been 130,000 withdrawals since the plan was announced.
The tax system will be modified to treat common-law couples in the same way as married couples. The broader definition of "spouse" that is currently used in the Income Tax Act for provisions relating to pensions and other retirement plans will be extended for all other purposes under this act. Under this broader definition, the term "spouse" will include both married and common-law spouses.
After discussing the measures in this bill that were announced in the 1992 budget, I would now like to return to some of the technical amendments we are proposing to the Income Thx Act.
First of all, we propose to reverse the ordering of the credit currently provided for the large corporations taxed in the special Part VI tax on financial institutions against the corporate surtax and income tax. This will allow foreign parents of Canadian companies to obtain recognition abroad for a larger portion of the Canadian taxes for which they are liable and provide an added incentive for them to continue investing in the Canadian economy.
Second, we propose to amend the Income Tax Act so that once the bill is enacted, the government can collect a portion of the taxes in cases where there is a dispute. This provision will apply only to disputed taxes of companies that are liable to the tax on large corporations. Individual taxpayers and small companies will not be required to pay over disputed taxes until a court has ultimately ruled on the question of liability of those taxes.
Finally, we are proposing certain changes to the 21-year rule for trusts. When the capital gains tax system was introduced in 1972, the then Minister of Finance said
it was necessary to tax cumulative gains at the time of decease, to prevent perpetual deferment of income tax and indefinite deferment of capital gains tax through the use of long-term trusts. One of the measures introduced for this purpose was the 21-year rule. This rule provides that the value of trust assets be determined every 21 years, beginning in 1993, and that any accrued capital gains on the assets in the trust at that time be taxable.
However, the 21-year rule had some flaws. Trusts were able to avoid the application of that rule by transferring trust assets to a newly created trust, thus benefiting from a new 21-year period. Moreover, the legislation then did not recognize that the conditions applicable to certain trust arrangements did not allow the distribution of trust assets to beneficiaries before the end of the 21-year period.
The proposed changes were initially announced on February 11, 1991. A provision will ensure that the 21-year period cannot be renewed through the rollover of trust assets to new trusts; in other words, it will no longer be possible to start from the beginning again and thus avoid the deadline set by the 21-year rule.
The second change will extend, for eligible trusts, the 21-year period, that is the date for reporting capital gains which have been accrued but not realized. We proposed this change so that the capital gains tax consequences will be essentially the same whether individuals give property directly to their children or to trusts for the benefit of such children.
Some members of the opposition suggested that the rich can avoid paying taxes by setting up trusts. This is simply not true. When assets are transferred to a trust, the accrued capital gains on those assets must be reported at that time.
Moreover, trusts or their beneficiaries are taxed each year on the income of the trust, just like any other taxpayer. The capital gains realized on assets held in a trust are treated as accruing to the beneficiaries of the trust, thus taking into account the legal reality of these arrangements.
In spite of the fact that the proposed changes to the 21-year rule prevent the indefinite rollover of taxable gains, they have been perceived as a giveaway. Nothing could be further from the truth.
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I want to make it clear that trusts are not designed to be tax evasion schemes. They mainly serve to ensure the orderly transfer of assets in a family planning context. This concept should pose no problem to the members of this House, in that parents must be allowed to distribute their assets to their children and other heirs as they see fit.
The proposed changes will ensure that each generation will pay its fair share of tax on the accumulated wealth.
Madam Speaker, as you certainly know, an issue was raised in committee concerning proposed changes to the provisions of the Income Tkx Act on the confidentiality of taxpayer information. The issue has to do with the implementation of these arrangements and of the proposed changes for Revenue Canada employees.
This issue has already been brought to the attention of the senior managers of Revenue Canada by the Privacy Commissioner, Bruce Phillips. I have here a letter from Mr. Phillips in which he indicates that he is confident that the proposals can be integrated in a regime which will adequately protect the right to privacy of these employees.
In conclusion, the tax measures announced in the February 1992 budget, including those being implemented through this bill, are part of this government's action plan to set up an economic program supported by Canadians from all regions of the country. This plan includes measures to stimulate economic activities through personal income tax reductions, measures to stimulate the construction industry through the Home Buyers' Plan and measures to promote productive job-creating investments.
The bill also includes necessary technical amendments to the tax system.
In view of the above and in the interest of all Canadians, I urge the members of this House to support Bill C-92.


Mrs. Diane Marleau (Sudbury):: Madam Speaker, I rise today to speak against the passage of Bill C-92 and against this government.
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The people of Canada have to realize this is a bill to implement measures brought forward in the February 1992 budget. That was over a year ago. Pray tell why it would take over a year to bring forward measures that were to be implemented in 1992.
The bill was introduced for first reading on November 26, 1992. It took a full 10 months for this government to move on this major tax bill. In England, when a budget is brought down, the bills implementing the measures in the budget are introduced almost simultaneously.
Why would it take 10 months for this government to bring forward this bill when it claims it is such a wonderful and terrific package? That is the first question I asked. Is it because the government could not ram it through its bureaucrats? Is it because this government was trying to be devious and bring forward measures in this package that were not particularly good for the people of Canada, along with some that were? It was a way of making the people forget and taking the heat off some things contained in this bill. It galls me to see some of the ways this government treats Canadian taxpayers, Canadian people.
It has taken 10 months to bring forward this bill. We had first reading on November 26 and second reading on February 23. Then we were in a big hurry of course. We had to hurry it through the committee. We had to rush and get everything all set up, because the government has to have this bill now. Now it is really urgent. The government has an opportunity to bring in closure, shut off debate and try to stop any kind of opposition there might be to some of the measures contained in this bill.
One of the things that happened particularly galls me. I was on the committee studying this bill. There was a clause in it having to do with personal tax returns. Frankly to this day I am not convinced whether the government was right in bringing forward this measure or not. I do know there was a lot of fear at the snooping powers that particular provision was giving the supervisors and employers of tax data employees about their personal tax information.
At committee stage that particular clause was removed from the bill. I have some press clippings here. At the time it sounded quite good. It said: "Ottawa drops plan to boost tax man snooping powers". One has to realize

April 1, 1993
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this happened on March 23. Opposition MPs and the committee convinced the government that the Public Service Alliance of Canada had raised sufficient concerns to warrant deletion of this clause. There was no debate on this clause and it was deleted from the bill.
Lo and behold, report stage started on March 29 and the clause was reintroduced completely as is. There was no debate on whether it should be there or not. Just ram it through.
This government believes in top down democracy. It is its way or the highway. That is why the people of Canada are so disgusted with what is happening here. They feel so left out of any debate or any kind of consultation. They feel they cannot get their opinions through.
If we feel that way how can the people of Canada not feel that way? It is absolutely the most despicable, duplicitous way of behaving. It carries on and on.
I have to oppose this bill on the grounds that this government is doing things with this bill that are absolutely wrong for large numbers of Canadians. On the other hand, being as duplicitous as it is, it does things and proposes things in this bill which are quite good. Actually,the government has things in this bill we have asked for. It is its way of playing the political game so it can go to Canadians and say: "Look at those terrible Liberals; they oppose everything we do, even when it is things they have asked for". The government plays its crazy political games with the lives of Canadians and that is absolutely, unequivocally wrong. I do not want to be a party to this kind of deviousness.
It continues. Look at the newspapers today and pick out some of the headlines about the way this government operates. This headline is dated today, April 1, from The Ottawa Citizen and states: "Tories Force Vote on Free Trade Bill". We all know the U.S. is probably not going to move forward on this North American free trade bill. There is no rush for us here because there are a number of areas in the negotiations that have not been clarified and should be reworked. There are parallel agreements that have to be brought in.
Are the Conservatives interested in hearing what the Canadian people are saying? Absolutely not. They would not hold any hearings if they could get away with it, but they will not get away with it.
I must remind the Canadian people that second reading of the NAFTA bill occurred during one-half of a short day, which was yesterday afternoon. That is a very limited number of hours of debate on an extremely crucial piece of legislation that the people of Canada are very worried about. They have suffered from the effects of the free trade agreement which this government also rammed through without regard to the kinds of programs that-


Mr. Leblanc (Longueuil):: Madam Speaker, I would point out to you that there is no government member in the House while we are studying a money bill. I think that is unacceptable. I ask you therefore to take a quorum count.
And the members having been counted:


Madam Deputy Speaker:: We have a quorum again, so the hon. member has the floor.


Diane Marleau: Madam Speaker, I must take a moment to thank the member for Longueuil, because I did not realize there were no Conservative members in the House during my speech. I know that they do not like to hear what I have to say because I denounce these Conservatives who use the people of Canada and try to put things over them that are not good. It is called pulling a fast one. I know that they do not like to hear such things, but one of the reasons we are here is to represent Canadians and listen to them and do what is good for them, not the Conservative Party.
Excuse me if my language is a little strong, Madam Speaker, but it is disgusting to think that the Conservative Party's coffers are full-I must say that I cannot get over it. It angers me and all Canadians to think that Canadians' pockets are empty but the Conservative Party's coffers are full to overflowing.
That sends a message to people. Who is being served here? Is it the Conservative Party or Canadians? With all I see now and all that has gone on, I wonder if the people of Canada have been well served by this Conservative Party. I do not know whom they have served, but it is certainly not the average man and woman.
If they do not like what I am saying, then they should do something, but they should listen.
April 1, 1993



I find it very difficult to be a member of this House of Commons when this government continually treats Canadian people with disgust, thinking they have no heads on their shoulders and do not know what is going on.
I have news for the members of the Conservative Party. Canadians know what they have done and they understand it. This particular bill is a classic example of what they do continuously. They pretend to give with one hand to ordinary Canadians when they really are not. They are just looking after a few of their rich friends and that has to stop.
I have a feeling this Conservative government has been doing things to further the cause of the Conservative Party and not the people of Canada. I believe it is time we started representing those whom we have been elected to represent and that is average Canadians. It is essential.
Madam Speaker, you are going to say: "Well, maybe Liberals in the past were not that great". That bothers me because I have often heard a lot of accusations. As you know I have only been a member of the House of Commons since 1988. The other day I was in this House and questioned one of my colleagues who has been a member of Parliament for 25 years. I wondered if it is because I am in opposition. Is this a disease that happens to governments in power? It worries me because I know we will form the next government and I want to make sure we do not succumb to a disease such as that. I want to make every effort to make sure I do not succumb to that kind of disease.
I asked the member of Parliament who has sat as a Liberal for 25 years: "Was it that way when we were on the government side? You were there, tell me".
He said: "Diane, I have to tell you. We were always so worried about doing the right thing for the people of Canada. We always tried and went back to the drawing table and consulted. We did not bring in closure this way. We co-operated with other people in the House of Commons".
This is coming from someone else. I do not know but I hear the Conservative government saying that it is going to reform the institution of Parliament. Believe me, the only way to reform this institution of Parliament is to get
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rid of this Conservative government because it does not know what it means to have democracy. It does not know the definition of democracy.
It certainly does not believe in anything that has anything to do with what ordinary Canadians feel and think, or else it would not have stifled the debate on the NAFTA.
There have been two half-days of debate on this crucial issue of free trade. Madam Speaker, you tell me I should not be speaking on NAFTA. What I am trying to say is that the government does the same thing over and over and over again. It is doing it with Bill C-92. It has brought in closure on Bill C-92 because suddenly there is a big rush. There was not a big rush a year ago but now there is a big rush.
It does the same thing in every other thing it deals with. These are all today's headlines. This is again in the The Ottawa Citizen of April 1, 1993: "Tory slams PCs 'shirking' lobby review".
There is a committee looking at the lobbyists in this country. No one is showing up at the committee so it cannot do its work. No one wants to look at what is happening with these lobbyists. What is the fear? The fear is that these are their friends and, hey, maybe we better keep our friends outside because that keeps us rich and healthy. It does not keep Canadians rich and healthy but it sure keeps the Conservatives rich and healthy.
That is another headline from today. Another one is The Globe and Mail of April 1, 1993: "Inquiry may get censored memo". This of course concerns the terrible tragedy at the Westray mine where 26 people lost their lives. There is an inquiry going on as to whether the governments knew of the safety problems at the mine when the project was approved.
We have had all kinds of statements that all the documents were made public and were given to the inquiry. Of course they were not. Who are we serving there? The government is serving itself. That is what it is doing. It is serving itself. More things will come of that.
Then I have this other one which concerns of course the one clause that the government reintroduced at the report stage stifling total debate. It is again from The Ottawa Citizen of April 1, 1993: "A government of snoopers".

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At a single stroke about 20,000 taxation employees will lose a right of privacy guaranteed to every other Canadian: the right to keep their financial affairs confidential. How disgusting and insensitive. Why does this government intend to do this? Why does it insist on having this power? Of course we cannot get any answers because it rammed the thing through and it refuses to do anything about it. I notice that once again it cannot stand the heat of my speech here. Those members have all left again. I appeal, Madam Speaker-


Nic Leblanc: This is unacceptable. On a point of order, Madam Speaker. For the second time, there are no Conservative MPs in the House right now. This is totally unacceptable. There are about ten of us here. I know there is a leadership campaign going on, but they still have to deal with the affairs of the state. I call for a quorum count.


Madam Deputy Speaker:: Call in the members.
.(1135)
And the bells having rung:


Madam Deputy Speaker:: There being a quorum, the debate shall continue.


Diane Marleau: Madam Speaker, I am pleased to see that we again have a large number of Conservatives in the House of Commons to listen to my sage advice. However, let me remind the Conservatives on that side of the House that we are opposed to this bill. It is not our responsibility to have and maintain quorum and to have a large number of members here. It is their responsibility to have their members sitting in this House to ensure that this piece of legislation passes. They claim they absolutely have to have it and that is why they imposed closure. They hold it near and dear to their heart.
I have a feeling that these people are embarrassed by some of the things they are doing and therefore it is veiy difficult to sit in the House and be told that this is not a good way to proceed. I would ask them to continue
sitting here and I will try to limit my speech to the content of this particular tax bill.
I will speak to the 21-year rule on trusts. We have heard a lot of things from this government on the reduction of debt and deficit. We have heard ad nauseam how great it was at reducing the debt and deficit. We all know that it does not know how to do it because the debt and the deficit are extremely large and it has been running this country for almost nine years. Obviously its talk is cheap. Its actions are what we have to watch.
Look at what is happening with the almost indefinite extension of the 21 years. Look at when capital gains were introduced. We have to remember that prior to 1972 capital gains or appreciation in value of any assets, whatever they were, were not taxed. When that was brought in it was decided that because trusts in essence never die-they are not human-there should be a way of taxing the capital gains held in them. At that time it was felt that 21 years was really a reasonable time.
Let me remind this House that this particular extension of the 21-year rule is extremely important to those trusts that were already set up prior to 1972. Remember that these assets have never had any kind of capital gains taxation. These assets, many of which are very large, have been held in these trusts for longer than 21 years but there has been no deemed realization. The only way not to have capital gains at this time, if they wished to avoid them, would be to distribute the assets to the beneficiaries. However, it is far better for those people who control those trusts to keep them as is.
This government has decided that these people would be allowed to defer taxation on the capital gains held in those trusts almost indefinitely. It is saying that they will be taxed some day. Yes, they will be taxed some day. We do not know when exactly. However, we do know that any kind of a tax deferral is generally a benefit. It is a huge benefit if it is deferred for a year, but if it is deferred for 50 years many things can happen and many laws can change. In essence it is as if there is no taxation on that for a very long time. This government that needs those tax dollars is saying: "We are going to allow them
April 1, 1993

not to pay taxes now on capital gains in those trusts for perhaps another 30 or 40 years".
When we were in committee we asked the finance officials if they could give us any kind of an estimate. Of course they could not. I have said this before. I have never heard of financial officials who could not give us an estimate on whatever it is they wanted. I am convinced that there are some facts and figures somewhere that would give a ballpark figure of the kind of tax revenues that are being forgone for the immediate and maybe the next 20 years. I think they are very substantial.
I want to believe when this government goes down to defeat that this will be seriously looked at and that this exemption will perhaps not be allowed to sit as it is being proposed today. It is a serious matter. The debt and deficit of this country are serious matters. Trusts by and large are a tax shielding mechanism.
I want to denounce this particular part of that bill. It has been trying to bring this in, trying and trying to bring this in. I will say that it is going to do it by ramming it through and not letting too much debate go on. It thinks the Canadian people are going to forget about it because there are good things in this bill and things that they might want. As usual the government carries on doing what it wants at the expense of ordinary Canadians.
It brings to mind what is happening in another area and that concerns the poverty line. A committee of this House is being boycotted by all opposition parties. The Tories do not like the statistics on poverty in Canada. They do not like the sheer numbers they see and have decided to redefine what it means to be poor so that they can have statistics that will favour them more.
How horrible to think that rather than address the real problems of joblessness and hopelessness, they would change the definition of poverty to suit their ends. How low can they go? I hope they cannot go much lower than they are going now and I hope it does not last much longer.
I wait, and I know that Canadians wait, to have an election so that they can voice their opinions and let the politicians know just how much they have had it with
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their policies, with their lack of consideration of ordinary Canadians.
Another section of the bill concerns the taxation of capital gains, the $100,000. We know that capital gains exemptions were brought in by this Conservative government. We also know that by and large it is mostly wealthy Canadians who have been able to take advantage of the exemption on capital gains. The government told us that the excuse for bringing in the capital gains taxation exemption was to allow more investment in business.
We also know, we have the facts and figures to prove it, that it actually did not generate anywhere near the kind of investment in business that the government thought it would, not even one-half. I believe it is in the neighbourhood of perhaps $6 billion, but we know that it cost the government in tax revenues $20 billion and up. Those figures go back to perhaps 1991.
Now the government has decided it really should get out of capital gains exemptions, but rather than make a decision and treat all Canadians the same, it has decided to pick on one segment of society. It happens to affect those who can least defend themselves. It almost appears as if the government does it on purpose, attack those that cannot defend themselves. We see it over and over again.
Who does it attack? It attacked the seniors back in 1984-85 but, lo and behold, the seniors were better organized. They fought back and the government had to backtrack.
Just this year, at a time of total despair in the Canadian work force, we know the loss of jobs has been monumental. We know the unemployment rate is extremely high. We know those who have jobs are worried about keeping their jobs. We know those who have jobs have to work twice as hard as they have ever worked before just to make sure they can produce. We know all of that. Yet this government decides it is going to try and blame the woes of this country on the unemployed. It is going to try to make Canadians believe that large numbers of Canadians quit their jobs and go on holidays.
I do not know very many Canadians who quit their jobs these days because if they leave a job without really good reasons they are not going to get another one, and living on unemployment insurance is not the way most Canadians want to be.

April 1, 1993
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Again the government is picking on those who really cannot defend themselves or have a difficult time defending themselves. When we look at the $100,000 capital gains we know that once again it is using the excuse that it wants to keep capital gains exemption taxation for those people to invest in business. Does a person who builds a small apartment building and who works very hard not contribute to the well-being of the business community in this country? I believe he does.
In Ontario the NDP has done everything in its power to kill the small investor. That is a shame. These people work very hard and perhaps have built a duplex or a small apartment building for income for their retirement. It is their retirement insurance. They have mostly built it themselves, maybe using small subcontractors. Maybe they bought an old house and converted it. If any capital gains at all is to be made by these people they are going to be hit by the federal government.
When I introduced the motion my feeling was that we should consider whether we want to have capital gains exemptions in the tax system. Perhaps we should not have them. However we should not pick on one group that tends to be the most defenceless versus the other, the friends of the Conservatives, the Bay Street boys, the brokers. If they make a gain because they have gone to their broker and played the stock market, that is all right. If they have not taken their 100,000 capital gains already, they can still use it.
I find it despicable that we play this kind of game with the ordinary people of Canada. It has to stop. That is one of the reasons I am totally opposed and will not support this bill even though there are measures in it that I support.
I know that in the past this same Conservative Party, when the Liberals had tried to bring in a many faceted tax bill, caused the bells to ring in this House for two weeks non-stop until the Liberals broke the bill apart and agreed to present it in different sections. That is what should happen to this bill.
Of course the Conservatives being in power have changed all the rules. Now members of the opposition have very few ways of delaying or stopping anything that goes through this House. What is happening here is by and large the death of democracy. The committee system does not work the way it should work, not if we look at
what is happening with this bill and what the committee did. Then the government turned around and reintroduced it as is.
That should send a message to people. Those members do not care. They just want their way no matter. They are told. It does not matter what kind of information is brought forward they choose to ignore it and go on to impose their will on average Canadians.
I want to stress that this bill contains some measures that if they were not passed would help bring down the deficit. They would help bring down the deficit this year. Perhaps we could then be somewhat closer to reaching the deficit targets that have been set previously. We could come somewhat closer.
Every year the government tells us in its budget that it is going to have these wonderful reductions in the deficit. It never happens. It does not happen if measures such as these are brought forward.
I beseech you, Madam Speaker, to let me address the people on the other side. Let me tell them that for all that is sacred in this democratic country and for all that we are facing serious financial problems, to delete that section of the bill. The government cannot allow these trusts to go on for another 20, 30, 40 or 50 years without getting the capital gains taxation, without those revenues which could help fund this debt and deficit. If the government does not want to use the money against the debt and deficit, perhaps it could use it to create some jobs, to do some of the infrastructure programs, to help Canadians get back to work and to help those in red despair in this country.


Madam Deputy Speaker:: I wish to inform the House that because of the ministerial statement Government Orders will be extended today by 39 minutes beginning at 1 p.m., pursuant to Standing Order 33(2)(a).


Mr. Bill Blaikie (Winnipeg TVanscona):: Madam Speaker, I might begin by telling the hon. member for Sudbury who just spoke that the Conservatives did not ring the bells on an income tax bill. They rang the bells back in the spring of 1982 over an energy bill. It was an omnibus energy bill that prompted them to act in that way. It had nothing to do with income tax.

April 1, 1993

In any event there are a number of things I would like to say at third reading on this bill and some of them relate to the hon. member for Sudbury, particularly with respect to the question of trusts.
The member said, and quite rightly, that the government acts as if it does not expect the Canadian people to notice what it is doing and that it assumes it can get away with certain things. Extending the capital gains tax exemption for these trusts was one of the things that it thought it could get away with.
I guess what I would like to say to the hon. member for Sudbury is that the Conservatives got away with it with her. At second reading of this bill, when I was making the very same arguments that she made this afternoon, she was on her feet siding with the government. She was saying that the NDP were making a big deal out of nothing and that she was thankful to the minister at that time for clarifying the matter. There was no willingness on the part of the Liberal Party to deal with the offence that this extension of the exemption for the trusts actually constitutes.
I raised this matter in the House time and time again in the months leading up to the time when we had the opportunity to debate this legislation. Not once, never, on no occasion was this ever raised by the Liberal Party. Thus, I found this whole debate about the trusts passing strange.
The best face that I can put on it for the Liberal Party is that some of them are teachable or that the hon. member for Sudbury was taking the party line on second reading and, to her credit perhaps, was persuaded in committee that the Liberal Party position on this, which was one of silence and collaboration, stunk and that maybe she should do something about it. You could see her mind changing from one of acquiescence to one of scepticism, to finally one of opposition, which is what we see here today. That is the kind of thing you like to see. We should not all come here with fixed positions and closed minds about issues.
I do not think it should go unmentioned that there has been a development in the Liberal position, not unlike developments in Liberal positions on other things. The NDP raised a fuss and managed to get some attention
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paid to the issue. The Liberals hoped it would go away. Then they said: "It is not going away. We better change our position. We do not want the NDP to outflank us on this one".
Then we had the spectacle of the member for Sudbury moving an amendment at report stage to eliminate the very measure which she had thanked the Conservative Minister of Finance for clarifying and defending at second reading debate. Fair enough, people learn and we are glad to see that, but we think that people ought to be aware of how these things sometimes unfold.
Another matter that the hon. member for Sudbury mentioned, and quite rightly so, concerned time allocation and the fact that we are debating Bill C-92 at third reading in the context of time allocation.
I might mention, before I even touch on the larger question of time allocation, one of the things we need to look at. It seems there is never any end to the things that we need to look at in terms of rule changes to cover a new development or new combinations of the ways that rules interact with each other.
We had a quorum call earlier, and quite rightly so because the government could have shown the decency to maintain at least one person in here to listen to the opposition arguments on this bill. It now has more than that and we are glad to see that.
What struck me when quorum was called was that we were using up the time of the opposition, whose time was already limited by time allocation. Perhaps we need to look at ways in which the government can be prevented from further using up the time of the opposition by not maintaining its own responsibility for quorum and forcing opposition parties or members, or for that matter backbenchers of any sort, into the position in which they have to choose between using up time which is limited because of time allocation and forcing the government to live up to its responsibilities to maintain a quorum.
This was never a problem before because we never had time allocation in the same routine way that we now have it. Nothing could be more routine than the fact that the government moved time allocation on Bill C-92.
This is not a debate that would have lasted a long time. It is a bill that the government took 10 months to bring forward. It is a bill that only had two committee meet-

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ings. Wow, boy, did we ever hold things up. There must be a real need to get this through third reading after that lengthy, exasperating, frustrating, and never-ending process that the opposition forced the government through in committee.
It is a joke. The government across the way is turning this place into a joke by constantly moving time allocation when there is no need to or moving it when it is totally inappropriate, as it did yesterday with respect to the North American free trade agreement.


An hon. member:: Thlk about the bill.


William Alexander (Bill) Blaikie: I am talking about time allocation. We are under time allocation right now so it is perfectly relevant to talk about time allocation.
I want to say that again the hon. member for Sudbury, or at least her party, displays strange ambiguities when it comes to her and her party's outrage about time allocation.
Today the Liberals when debating Bill C-92 are speaking out against time allocation on NAFTA, which happened yesterday. Where were they yesterday? Why was there no point of order raised by the House leader of Her Majesty's Loyal Opposition with respect to the motion of time allocation on NAFTA? Why were there dozens of Liberals absent from the vote last night with respect to the vote on the North American free trade agreement? Why is the outrage saved for the day after on a bill that has nothing to do with NAFTA?
Maybe these two things are linked. Maybe they are linked in that both with respect to the trusts and NAFTA the Liberals are playing the same political game. They want to be on the record as being opposed to these things so they are not vulnerable to criticism from the NDP and from others that they are taking the same position as the Conservatives. Yet they do not want to make too big a deal out of it because they do not want to raise the ire of those who in the final analysis call the tune for the Liberal Party as well as the Conservative Party. The corporate elite are the same people who have the trusts and who support the North American free trade agreement.
It is no surprise to me or my colleagues that no fuss is raised about what has happened here in the last little while with respect to the North American free trade agreement and that what fuss there has been with respect to the trusts has been last minute and very minimal.
I would like to speak about two or three elements of the bill that is before us. It is a large bill and there are things in it that we could have given a lot more attention to, but we would not have been allowed to pay attention to them anyway. Had we indicated in any way that we wanted the committee to look at other significant elements of what was in the bill the committee would have been shut down and we would have been back here anyway.
The issue of trusts was the main thing. We did succeed, and this happened because the NDP requested it, in having some witnesses before the committee with respect to the 21-year tax exemption for trusts. We had some excellent testimony from Professor Neil Brooks and from Mr. Sidney Goldstein, a practising tax lawyer.
It was interesting to watch because by the time the witnesses finished not only had the hon. member for Sudbury seen the light but the members on the government side had been quietened. Their former exuberance, their former uncritical defence of this measure was silenced. Even the member for Mississauga South, and it is hard to imagine, seemed to be a bit on the quiet side by the time the witnesses got through explaining just what a real tax benefit this extension is for all the people who will be affected by it.
The Revenue Canada officials who appeared tried to argue that there is no tax benefit in trusts, no tax advantage. Amazing. People go to all the trouble of setting up these trusts for nothing, just because they like trusts. In some cases they may set them up in order to maintain control over certain assets, et cetera, but they certainly also do it because there is a tax advantage to be had. This tax advantage is extended and made more offensive by the measure that is before us in Bill C-92.
I am glad, even though we have not succeeded in defeating Bill C-92, that we have played a role over the last year or so in making sure that Canadians actually do know just what is going on here.
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Had we not raised this, and for that matter had I not raised it as the NDP tax critic over the last several months, it would have just happened and it would have continued to have been what I called it once in this Chamber: a dark dirty secret about what the government was doing for the rich in this country.
It is not a secret any more. It is not as widely known as I would like, but it is not a secret any more. The government will have to answer for this. It will have to answer for the lie that this gives to its rhetoric about deficit reduction. How are ordinary Canadians to believe that the government is serious about deficit reduction when it sees that in spite of its rhetoric about deficit reduction it persists in maintaining and extending certain tax loopholes for wealthy Canadians?
If it was willing to close these loopholes and then say that it has closed a lot of these loopholes, closed them all, and its back is still to the wall fiscally then all this rhetoric about tough decisions might have some credibility. In the absence of that action that kind of rhetoric does not cut it with ordinary Canadians, even though they might be concerned about the deficit, as we all should be. People want to know that if governments are going to address the serious question of deficit reduction they are going to do it in a way that is fair, that calls upon everyone to sacrifice according to their means, and that does not exempt certain classes of people from contributing their fair share to the over-all common good.
That is what we have here. Certain classes of people are being exempted. In the meantime the poor are getting poorer and the middle class, as an hon. member said in this House the other day, is getting the shaft. That is certainly the way the people in my riding feel. They feel they are the people who are paying the bills in this country, who are obeying the rules in this country, who do not expect any special favours from government, who are working and contributing to their community, raising families, and going to work every day. Their income tax is coming straight off their cheques. They do not have any fancy pants lawyers and accountants to figure out how not to pay taxes.
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There is a whole industry out there devoted to cheating the Canadian public. It is led by a host of lawyers and accountants, most of whom should wind up at the bottom of the sea.


Douglas Grinslade Lewis: I rise on a point of order, Madam Speaker. I know that comment was made in the midst of debate, but as a lawyer and an accountant I resent the inference that there is a whole industry out there dedicated to cheating. I think my hon. friend might better review that remark to see if he might want to think better of it in terms of the way he approaches entire professions.


Madam Deputy Speaker:: I think the hon. member for Winnipeg Transcona might want to review his remarks. I am sure he did not want to impugn the motives of the entire legal profession.


William Alexander (Bill) Blaikie: Madam Speaker, I will think about it and if I think better of it I will let the hon. member know. The fact is that there is an entire industry in this country devoted to advising people on how to avoid taxes.


Douglas Grinslade Lewis: You are a poor excuse for an ordained minister.


William Alexander (Bill) Blaikie: Yes, I am an ordained minister. I think there are a lot of people who should be driven out of the temple with a whip, and lawyers and accountants are a good place to start, particularly those who make their living advising people on how to avoid taxes, on how to avoid paying their fair share. If the member is offended by this I am sorry, but it is perfectly within my purview to attribute motives to certain professions. I can tell I have really hit a nerve here.
The other issue that came to the fore with respect to this particular bill was raised by the hon. member for Sudbury. It has to do with the way all the people who work for Revenue Canada are going to be in a special class of taxpayers now. Their employer is going to be able to look through their personal tax files and use whatever information it can find there to pursue disciplinary or other management related objectives.
I think this is an invasion of the privacy of these employees. It is a violation of a longstanding tradition with respect to taxpayers' files and it was quite rightly protested by the privacy commissioner.

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The privacy commissioner is now satisfied that the government will provide the appropriate safeguards and in some sense has withdrawn his objection. But this has not satisfied the people who work for Revenue Canada. They continue to be concerned as are members of the opposition. That is another reason for Canadians to be very concerned about some of the precedents being set in this bill.


Diane Marleau: Madam Speaker, I am pleased to stand to ask a question of the NDP member. He said I thanked the Minister of Finance for clarifying his position when he spoke to this bill and explained how trusts were taxed and just exactly how the laws were applied. I did thank him because I was about to clarify it as well.
I have seen householders going out that were totally, grossly wrong and misleading. They were actually telling the people in different ridings in this country that trusts paid no income tax whatsoever and that is false.
I was pleased that the government was also on the track of making sure it understood what trusts were all about because it had absolutely no idea.
I can say once more that trusts do pay taxes at the top marginal rate on any earned income within that trust. If they have Canada Savings Bonds they pay the top tax rate on whatever interest is earned, so I had to clarify
that.
I also want to know whether the NDP members now understand that this was about capital gains and appreciation of assets that have been held in trust.
When I spoke at second reading on this bill I did state that I wanted more information. I wanted to know the rationale behind what the government was proposing to do because I like to be informed before taking violent stands one way or the other.
I did not get the information I was seeking from the Conservatives. I did not get the facts and figures. The information I did get led me to believe this would be very unfair and we actually need the tax revenues now and not 20 or 50 years from now.
Has the NDP finally learned what is in trusts and what it all means? I want to know this because it is essential. If it wants to pretend it knows how to run the economics of this country, it had better be informed.


William Alexander (Bill) Blaikie: Madam Speaker, we understood from the very beginning the difference between income tax and tax on capital gains.
I challenge the member to produce a householder or anything from any member that says these trusts pay no income taxes, because that was not what was said.
We were saying these trusts paid no capital gains tax and it was to have been paid at the end of the 21-year period that existed from 1972 to 1993. They paid no tax in that 21-year period. They were expected to pay tax at the expiry of that 21-year period and they were now not going to have to pay tax after the expiry of the 21-year period.
The hon. member may have been offended by some of the estimates that were used, but they were received from one of the witnesses whom she quoted in this House. I wish the hon. member would make up her mind. The only information we have been using when critcizing this is estimates given to us by the very same witness the member has quoted herself in this House, Professor Brooks.
If the hon. member is intent on exposing this, I do not know why she would try to muddy the waters by making false accusations about what the NDP has been saying about this.


Mr. George S. Baker (Gander-Grand Falls):: Madam Speaker, I would like to ask the hon. member a question. It relates to his last point, which I do not think he had time to complete.
It concerns the use of people's income tax returns, which is a major change in this legislation. I want to refer him to the fact that the final change in this bill is quite different from what was explained in the standing committee. I do not know whether he or the Public Service unions have picked it up.
I just want to read it for him very briefly. It says:
-taxpayer information solely for a purpose relating to the
supervision, evaluation or discipline of an authorized person -
employed-to assist in the administration or enforcement of this
Act, the Canada Pension Plan or the Employment Insurance Act -
It includes all the employees of Employment and Immigration Canada and Health and Welfare Canada who deal directly or indirectly with Canada Pension Plan, as well as the employees of Revenue Canada. I spent
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three years as a law clerk in a provincial legislature just reading bills. I know what is in the bill.
This has now expanded to three government departments. All these federal government employees will now be supervised and evaluated by their income tax returns. That is what is in the bill. Do not tell me it is not in the bill because I know it is. I just read it. It is on page 248 of the bill. How does the hon. member think the Public Service unions are going to react to this?


William Alexander (Bill) Blaikie: Madam Speaker, I think the hon. member knows how the members of the Public Service unions will react to this. They will react to it with outrage. By reintroducing exactly what was defeated in the committee, the government not only did not take the committee process seriously, as the hon. member points out; it may have actually extended the reach of what was found offensive in committee.
This is a new twist on how not to pay attention to committees. The committee defeats something because it thinks it goes too far. The government agrees and says it will solve the problem; get it defeated in committee and then when it comes to the House, it will bring in something that goes even further.
Whatever the case may be, a horrible precedent has been set that will provide a real and unjust imbalance in the relationship between labour and management at Revenue Canada and any other place where this might apply. I thank the hon. member for making sure I had an opportunity to comment more on this as my time had run out.


George Baker: Madam Speaker, to continue along that same line of explanation for the bill presently going through the House of Commons, I draw the attention of members to page 248 of this bill.
It says:
- the supervision evaluation, or discipline of an authorized
person-employed by or engaged by or on behalf of-to assist in the
administration or enforcement of this Act, the Canada Pension Plan
or the Unemployment Insurance Act -
It is quite an infringement to judge somebody for supervision or evaluation purposes.
Would the employer find out how much money the person does or does not have, whether or not he or she is
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supporting children somewhere, what charities he or she gives to, or what political parties he or she contributed to? That is all information available under the privacy of a person's income tax return to the entire Public Service of Canada now. It would involve employees of employment and immigration who deal indirectly with the Unemployment Insurance Act in employment measures such as section 25, all employees of the Unemployment Insurance Commission, all employees who deal directly or indirectly with the Canada Pension Plan, and all employees who deal directly or indirectly with Revenue Canada.
What is this? The Public Service Alliance of Canada must immediately act and demand a hearing because there is closure in this place. This bill will come to a vote in this place without having any hearings on that section of the act. It will come to a vote this evening so there is nothing the unions can do. There is nothing the employees can do. There is nothing members of Parliament can do. The only option, I suppose, under our system is to go to the Senate and ask it for hearings.
That is what we are passing in this bill. Just imagine when all the employees in the McCurdy conference in Gander, Newfoundland, are being looked at for promotions or salaries. They will have their income tax returns examined. That authorization is given under this bill. All the employees in Grand Falls, Newfoundland, working with employment and immigration can have their income tax returns sent to their bosses to evaluate. That is what is in the bill. That is what we are passing today in the House of Commons.
The member for Mississauga South stood in this Chamber the other day and gave the rationale for this change. Somebody in Revenue Canada appeared before the Federal Court relating to a case in which the person's income tax return was necessary but could not be obtained in advance of the charges being laid. This is why the change was being made in the law because this person could have been disciplined before the case came to the Federal Court.
That member stood and said it and another member stood and said it. Imagine. Because of a case before the Federal Court involving somebody at Revenue Canada, the bill is being changed to give the income tax return of everybody working for the federal government to their bosses for supervision and evaluation purposes. That is not the only change made in the bill.

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There is another change here that I just noticed. It did not receive any discussion in committee. It is for people who expect returns from Revenue Canada. Ordinary taxpayers have to pay interest from the time they file or April 30, whichever is later. The government has now changed three sections of the bill: clauses 77(1), 78(1) and so on. Interest will not be paid back now until 45 days after April 30 or after the date filed plus 45 days, whichever is later.
In the fairness package introduced by the Government of Canada last year in this Chamber, it said under fairness that Revenue Canada would pay interest back to the taxpayer just as the taxpayer had to pay interest to Revenue Canada. Now it has changed under this legislation.
This is most incredible, mind-boggling and baffling. We talk about lawyers. There were two members arguing a point a few moments ago. A legal opinion was given in this Chamber and it was given before the committee concerning the reason for the change in the trust law. All people had to do was to use the member's reasoning.
The member for Mississauga South says that all one has to do is to change the trustees. Imagine, all one has to do, he said, was to change the trustees to get around paying the tax. I hope the people in the auditing section of Revenue Canada were listening to members of Parliament when they stood in this Chamber and said that all one had to do was to change the trustees.
We have people employed in the Government of Canada. When one files a return on a trust, a T-3, and it comes up that the trustees are changed there is a little light that goes on in the computer. They want to know why. If it is found that those trustees were changed to avoid the taxes then somebody would be in trouble. GAAR, the General Anti-Avoidance Rule, would be after them. That is the law of this country.
There is a law in this country so that one cannot intentionally avoid paying taxes by simply changing the trustees in a trust. One cannot do it. If one can then a lot of people should be fired in Revenue Canada. I suppose there is something even more alarming than that nonsense that all one has to do to get around paying taxes is to just change a few trustees.
Apart from that, there is the incredible rationale used by the Government of Canada. Here we have the dean of law of the University of Victoria, the associate dean of law of Osgoode Hall and two tax experts, one in Toronto and one in Ottawa, claiming that this is a giveaway to some of the wealthiest people in Canada.
Members of Parliament did not say it. Some members of Parliament have said it over the years. One can read it sometimes in books that have been written to analyse our income tax system. Here we have the experts saying that this is a big giveaway. At the same time we have cut back our transfers to the provincial governments. We have not only cut back to the province of Newfoundland but we have demanded money back.
Imagine this. On the same day that one says one is going to forgive $145 million to two foreign banks that have nothing to do with trade with this nation, there is a bit of diplomacy.
One says to the Government of Newfoundland: "You have to pay back another $100 million because we believe you were overpaid". "Because the system has changed in counting people and we miscounted the population, you have to pay back money, province of Newfoundland, province of Saskatchewan, province of Nova Scotia and province of Prince Edward Island".
It brings in the GST and it taxes people and now it has the experts saying: "But it is giving the biggest tax break that we know of to the wealthiest people in Canada". How does one rationalize that? How does one rationalize putting off the payment of taxes that would have come due this year in 1993? How does one rationalize putting off the payment of those taxes while one puts the GST on ordinary people?
There is no rationale to any of this. There is no reasoning that the Government of Canada can come up with to do what it is doing here today.
A lot of new things happened to our income tax system in 1993. For the first time in 1993, for example, if somebody owes money to the Unemployment Insurance Commission they now have their rebate attached for the
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first time in Canadian history. It was never done before. If one owes money to the Unemployment Insurance Commission, if one is not on claim, if one owed it from two years ago or more, or if one is on a claim from a year ago or more, then one can have it attached from one's rebate that is due from Revenue Canada.
Somebody might say: "Oh, yes, but a lot of these cases are fraud cases". However, what is fraud under the Unemployment Insurance Act? I will say what fraud is. I represented a group of carpenters before a federal judge one day. These three carpenters had incorporated themselves-there were other people involved-into a company for what they called bidding purposes, to do bids on jobs. It was judged by national revenue that their unemployment insurance contributions were not for insurable employment because it was not, what is called under the act, at arm's length from the administration of the company.
We had to prove that the company was not formed for the purpose of collecting unemployment insurance. A judgment is given by the judge in this case. Therefore one is left with having to determine whether or not they formed the company just to collect unemployment insurance. One of the chaps was on the stand and the judge said: "Did you form the company so you could collect unemployment insurance?" The fellow says: "Yes, sir, of course that was one of the reasons. I would be a fool not to. What can one do in the middle of winter? Of course one is going to claim unemployment insurance". The judgment came down against those three carpenters. They have to pay back money now from about the last five years. There are endless numbers of these cases.
However, under the meaning of the Unemployment Insurance Act they committed fraud. They fraudulently obtained unemployment insurance. It was unknowing but it is fraud. They will not get a Revenue Canada return until all that money is paid back. It will just be seized now. All the arrangements that were made for pay back are all cancelled. All their returns from Revenue Canada will be seized. Not a week goes by that it does not happen. The unemployment insurance offices throughout this country supply a list of names to Revenue Canada in that province and the action is taken. That is every week.


An hon. member:: Hear, hear.


George Baker: The hon. member says: "Hear, hear". There is a real Tory talking: "Hear, hear". Sock it to the poor guys. The rich get richer, the poor get poorer and the middle class get the shaft. That is Tory philosophy and that is what has happened under this bill.
Just imagine our country in the state it is in financially and with the debt up. Just examine the debt. The hon. member for Broadview-Greenwood just did an analysis of the cost of collecting the GST versus the revenues. Everybody is in a situation where they are examining taxes. They are examining what to do to cut and they are examining what to leave out. What are we doing in the House of Commons? We are passing a bill that experts- two deans of two law schools, one associate dean of a law school and two tax experts-claim is the biggest giveaway to the wealthiest people in this country in a long time. That is what we are doing in the House of Commons.
Throw in at the same time these facts. For people in Employment and Immigration connected with the Unemployment Insurance Commission, people in the Canada Pension Plan offices connected with Health and Welfare Canada and all the employees of Revenue Canada, their bosses will be able look at their income tax returns through evaluation and supervision measures. This is quite a day.
All of this is being done under closure. The hon. member has criticized the Liberals for closure. There is an interesting number that he should remember. Closure has been moved in this Chamber since 1988 under the Tories more often than it was from 1933 to 1988. In the last four years in this Chamber it has been moved more often than in those 50 years. Thlk about closure. That is what was done. It is no wonder the Tory coffers are so filled with contributions. It is no wonder.
As the Liberal critic, the hon. member for Sudbury, said in this House a few moments ago, the Prime Minister in his resignation speech said: "I have left the Tory party in an extremely good financial position". He took off his glasses and he repeated it: "I have left the Tory party in an extremely generous financial position". Too bad he did not leave this country in the same position.

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Mr. Eugene Bellemare (Carleton -Gloucester):: Madam Speaker, thank you for giving me the floor.
I congratulate the hon. member for Gander-Grand Falls for his excellent speech. He underlined the fact that this bill is meant for the wealthy, for the very rich, to allow them to accumulate even more money, to grant them even more tax exemptions, while hitting the other people, the less well off and the medium income citizens.
We have only a few hours, not several days, to consider this bill. I find it surprising, even scandalous, that the government through this legislation will be able to assess the performance of its employees, in some areas, by looking at what used to be secret and sacred, namely their tax returns.
When Canadians fill out their income tax returns, they do it in all honesty, confident that the federal government will never use the information for performance assessment purposes such as promotion, demotion and even dismissal. This is surprising, but it is also shameful.
It is often said, in-

-Public Service 2000 that managers should manage a great bible of public service of the present government. Let managers manage.
Will this mean that from now on the managers in managing their employees in certain departments, certain sections, will now look at the income tax returns and in their nice human way decide whether or not someone should have a promotion, demotion or a transfer maybe across the country? Perhaps they made a contribution to the wrong party, perhaps they gave to the wrong faith or wrong linguistic group. That is abominable.
I would ask the member from Gander to perhaps elaborate some more on what I call a catastrophe in the faith we have in our government.


George Baker: Madam Speaker, I will read the exact section: "use or provide to any person taxpayer information solely for the purpose relating to the supervision, evaluation or discipline of an authorized person who assists" in any way, shape or form "administration or enforcement of this act" which is the Income Tax Act,
the Canada Pension Plan or the Unemployment Insurance Act. That is exactly what it is.
Yet when these employees fill out their income tax returns it will not be confidential. Of course I have this little old special tax guide. Oh how uncomplicated my financial affairs must be. This little guide, even a reduced form, shows a declaration of taxpayers' rights, privacy and confidentiality. It covers every taxpayer, but that goes right clean out through the window in these circumstances.
In relation to the hon. member's first observation, he is right because back in 1971 we had an inheritance tax. The Liberals cancelled it, threw it out.
It was replaced by the capital gains tax which at that time was half the normal rate of taxation. It was replaced. The members who were bringing it in, the Minister of Finance at the time upon advice of the finance department and the revenue department said: "Look, what about people who might not pay what was the inheritance tax prior to 1971, replaced by the capital gains in 1972 upon death, because their assets are in trust?"
The 21-year rule was passed. Some people call it an arbitrary figure but I do not think any figure is more arbitrary than death under this bill. The law was that every 21 years it would have to be paid. The money that would normally have been paid, that every small businessman pays, that every normal person pays, would have to paid in 21 years. Twenty-one years from 1972 is 1993, this year. Lo and behold, the government brings in a bill now to cancel the 21-year rule and to let it go for another 40 or 50 years.
Those are the undeniable, indisputable facts behind this legislation that not one member on the government side can deny. Nobody in Canada can deny that and that is why it is such an outrage.


Mr. Rene Soetens (Ontario):: Madam Speaker, I rise to participate in this debate to try to refute some of the nonsense that I have been listening to from the other side. There are two particular points I would immediately like to address, one from the speaker who just sat down commenting about how our Prime Minister has left our party in great shape.
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I guess I would only compare it to the prime ministers who preceded our Prime Minister, who not only left our country in absolutely terrible shape but left the Liberal Party virtually bankrupt. Not only did the Liberals wreck the country financially with their profligate spending methods, after they lost the election federally they transferred all those people who used to work for the Liberal government in the early eighties to Ontario where David Peterson gladly said: "Join us; we would love to have you". They then proceeded to increase spending in the province of Ontario at a rate of about 15 per cent a year and did exactly to the province of Ontario what they had done to the whole country. But so much for the Liberal record of the past.
I find it somewhat disturbing that an opposition member would stand and say that because there was a quorum call; we are using up debating time. They are the ones who called these things. I can assure everybody there are lots of Conservatives listening to what they have to say. However, they choose not to speak; they would just as soon choose to count.
I would like to get to the subject matter of Bill C-92 because I am sure that is what members would like me to comment on. There are a number of factors in Bill C-92. The first I would like to deal with is this issue of the $100,000 capital gains exemption.
I understand the concern that exists with removing the $100,000 exemption on passive investments. Passive investments such as real estate are probably the most well-known example. An individual may decide to purchase a second house or a third house and because of inflation it increases in value after a given period of time, whether it is two months or two years, sell it and take the capital gain.
Under the old system they could generally have a capital gain of up to $100,000 and not have to pay tax on it. Under this system they are going to have to pay tax on that income. Some will argue, what about those people who take that second property and use it as a rental property, possibly help provide low cost housing or rental housing in a market that desperately needs it? Yes, those people are looking for capital gains to accrue on that particular property.
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What usually happens on those properties is that the person who owns the property is depreciating it through wise accounting methods to increase, if there is any profit in the rental business, that profit by taking capital losses or by depreciating the property value.
They are in fact trying to avoid paying taxes legally. It is not an illegal thing to do, and is very appropriate for those who wish to invest. They can still do it and have their capital gain on the property if they set themselves up in a small business with shares. The shareholdings of that company will increase in value. That becomes an active investment rather than a passive investment.
They have injected some capital into a small business. They have gone into the rental business and at the end of whatever period of time they think is appropriate to take their capital gain, they can take it. It is not just on $100,000, but since they have set it up as a business and the business has some equity and assets, they could potentially go up to $500,000 in capital gain because they are going to be actively investing and promoting a business.
That is what this legislation is designed to do. It is designed to reward people who invest actively in the creation of wealth within Canada; the creation of wealth through the creation of rental properties, if that should be the decision of the investor; or the injection of capital into a small manufacturing company or a small service company. At the end of the period of time it can be sold and they can have up to a $500,000 capital gain.
We on this side of the House are saying, if they are going to have a capital gain it is because they have actively invested in an enterprise that is creating wealth and economic activity rather than a passive investment which is simply sitting on a house and because it has gone up in value through inflation, they have a capital gain.
Certainly in my riding, back in 1988 and 1989, in fact in most of the greater Toronto region and in fact probably in a lot of Canada, people were being, shall we say, junior Reichmanns. The idea was to buy a property because it was going to go up in value. They would then buy a second and a third property, not because they had invested anything in increasing the value of that property. They simply wanted to take a capital gain because of inflation.

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We know what has happened to the Reichmanns. It is fair to say that a lot of that has happened to the small Reichmanns. It does not make me happy to see people losing money they have invested, but in this world when they invest money they have an opportunity to make a gain. Similarly because of our system of free enterprise there is also an equal opportunity to lose. People will just have to be very cautious about how that works.
Another portion of this bill deals with trusts. The trust rules were established back in 1972 to deal with the change in the tax structure, as was mentioned by members of the opposition. We were going to replace an estate tax with a capital gains tax. There was a transition period where trusts had been established and there had to be some mechanism to deal with those trusts.
We have heard a lot of comments about witnesses who appeared before the committee. Certainly they are very knowledgeable people, I do not question that at all, and very talented in their particular fields. But as always happens, as I have found, Madam Speaker, and I am sure you have found in your experience here in the House, on any given subject we can have a whole series of expert witnesses each saying something totally opposite to what the other expert has said. It is our role as members of Parliament to listen to all the expertise that is available to us and arrive at a decision, a conclusion.
Some members of the opposition have listened to Professor Neil Brooks, who I might add is very closely tied to Bob Rae and his friends in Toronto, who have accepted the advice of Bob Rae. We know what Bob Rae is doing to the province of Ontario. We know that he is a profligate spender. We know how he loves to tax. We will accept that Neil Brooks in his reflections to the committee had a point, very knowledgeable in his own right, but not a point that I would necessarily agree with.
I think we will find as we look at all these committee reports that we each have to make judgment calls. I am not suggesting that the NDP judgment on Professor Neil Brooks is right or wrong. Suffice to say it is different than my judgment on what he had to say and I prefer my judgment over theirs in this particular instance.
What we have is a problem of this perception being created that trusts are created for the wealthy only and that there is some huge pile of money, billions and billions, sitting there untaxed.
First off, trusts are not created by the wealthy only. They are created for almost anybody who would like to take advantage of them. Let me give some examples because undoubtedly we can reference some large, wealthy families who would establish trusts. However we do not really know who has all these trusts.
There can be circumstances where a family owns a family cottage. The parents have four children and would like to make sure that this cottage stays in the family for all the family to use in the future. They establish a trust so that the family does not get into a squabble over which of the four kids owns the cottage. Do they each have 25 per cent? What happens when the bills come in? Who pays? All those things can happen. It is possible for couples to establish a trust to oversee the management of assets such as a cottage. In order to establish that trust they have to pay capital gains tax on the cottage.
Today we are going to take this cottage from the private ownership of this couple and put it into a trust. They have to value the cottage and to pay capital gains on the cottage. We have eliminated the $100,000 capital gains so we will assume that this is a second home for the people. They have to pay the capital gains on the increased value of the cottage as they put it into the trust. It was not free of tax going in.
For argument's sake the cottage is rented out all year round and it generates revenue to the trust. That revenue minus the expenses-we will assume that there is a profit at the end of the year-each and every year is taxed so that any profit accruing to the trust has income tax paid on it.
That trust under these rules can run until the death of the last of the four children. At that point if the trust or the children who are in a sense the beneficiaries of the trust have decided they are going to leave the cottage to their children, the trust should at the death of the last of the original four children value the cottage, declare the capital gains that have accrued from the day the cottage went into the trust to the day the cottage went out of the trust because of the death of the last child, pay the capital gains and a new trust is therefore created for the next generation.
April 1, 1993

All the way through there is avoidance or delay of tax. In fact one might argue that this couple who put the cottage in trust 40 years before they died and declared capital gains at year one lent the Government of Canada the tax they paid at that point interest free for 40 years because they would not have had to pay it until they died.
I realize that is an argument that is not being made by others on the other side, but the fact of the matter is that the trust is paying, up front, the capital gains accrued which it would not have to pay under normal circumstances until the death of both parents.
I have used the cottage as a very simple example. It could be a small business where there is an entrepreneur with a local hardware store, a grocery store or a comer store. The entrepreneur could be leaving the business to his or her children. The same rules apply. This idea that it is for the rich is nonsense.
Yes, they can take advantage of these rules just as well as anyone else can. Yes, they may have a greater interest in doing so. The fact of the matter is that these rules are not just created for them.
There is this perception that there are these huge sums of money out there. The fact is that simply because one owns an asset does not mean one has to pay capital gains on it. One only has to pay capital gains when one sells the asset. They would lead one to believe on the other side that one has these trusts sitting with $6 billion, $8 billion, $10 billion or $12 billion worth of assets tax free.
There is no tax owing on them. It is no different for you or I. What is our asset value? For argument's sake we would possibly own a house. We may have some minor investments. It does not matter what they are worth. There is no tax owing on them. It is the same with a trust. Simply because the trust has $100,000 in assets or $1 million in assets or $100 million in assets does not mean there is any tax owing on that money.
The only time a trust owes tax is when the trust generates income. They pay income tax at one of the highest going rates in Canada. A trust is not some way of sheltering income because the trust pays income tax invariably at a rate higher than an individual would pay. All the way through for 5, 10 or 15 years, every year, the trust must file a tax return and pay the tax owing on the income it has generated that year. Of course at the end of the time, if the trust is closed down, if it is transferred
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to other beneficiaries because of the death of the last beneficiary of the trust, a capital gains tax must be paid on the increase in value of the assets. This idea that trusts sit there tax free outside the rules is really not correct.
There is concern raised about the 21-year rule as it was created in 1972. Now we have come to 1993 and 21 years is up, and these trusts that were a function of 1972 all of a sudden owe a fortune in taxes.
First, they may owe a fortune in tax if there was any capital gains. There is no knowledge of whether there was or was not. There have been an awful lot of companies in this country with assets that have shrunk tremendously over the last 21 years and are technically bankrupt. There is no argument that says they owe a nickel. They may. That is true.
What is not mentioned is that under the rules created in 1972 if a trust ran the entire 21 years it would have to pay the tax. However, it is possible after 18 years or 19 years for the trust to owe a lot of tax in two years' time so it creates a new trust with a new trustee. All the assets from the old trust will be transferred to the new trust. No tax would be owed on that transfer. Lo and behold, what do they have? They have another 21 years to go.
The idea that tax was owed after 21 years is absolute nonsense because it was possible based on the 1972 rules to simply transfer from trust to trust to trust ad infinitum. In 500 years from now one could have these trusts still going and never paying capital gains.
That is why I am surprised that the opposition would be opposed to what we are doing. We are saying no longer can one go ad infinitum transferring from one trust to the next trust to the next trust. We are saying there is a beneficiary recognized in the trust. When that last beneficiary dies, which can only be immediate members of the family, the trust has to declare and pay its capital gains even though the trust may in fact be putting the money into another trust for the grandchildren or great-grandchildren. The fact is that every time there is a transfer of the trust from generation to generation there must be a payment of capital gains, whereas under the existing rules of 1972 there never needs to be a payment of capital gains because the trust can go on ad infinitum for as long as it wishes.

April 1, 1993
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One can see I do not have any problems supporting this particular requirement because we are bringing into force some regulations on trusts and their ability to avoid paying taxes.
If assets are put into a trust, which is obviously what has excited most members of the opposition, then capital gains are paid going into it, as I mentioned. Income tax is paid on the increased valuation based on income earned rather than on inflationary valuation. Income tax is paid as the years go by. Let us presume that a trust, instead of going for 21 years or going to the next generation, simply goes for five years. At that point they decide they are going to take something out of the trust to give to the beneficiaries and pass the value to the people, usually children, who are looking for some cash so they can meet mortgage payments or whatever.
Under the rules the trust would have to value the assets, pay capital gains at that point and then make its payment to the beneficiaries.
From my perspective on the trusts there is every control to make sure that taxes are paid all the time all the way through the system. In fact we closed what I think was a major loophole in allowing the trust to continue to be rolled from one trust to the other.
I just want to make sure I have covered all the major points in my presentation. I see that I have hit everything I wanted to raise. I only have one minute left anyway. I will sit down and that will give the opposition another minute to ask a question or two.


Mrs. Marlene Catterall (Ottawa West):: Madam Speaker, we on this side of the House are concerned about the protection of estates in trust. We are very concerned about that both from the point of view of the taxpayer and fairness in the taxation system. I will be speaking shortly on subclause 137(1) and specifically subparagraph (h) of that clause on page 247.
The member who has just spoken on behalf of the government will be well aware that this clause was not reported from committee. It was removed from the bill. It has now been reintroduced and even expanded by the government at this stage.
I was quite surprised since this clause deals with the right to have private taxpayer information for the purpose of the supervision, evaluation or discipline of an
employee of the Government of Canada not only in the department dealing with taxation but in two other departments.
The President of the Treasury Board, who is nominally the employer of these employees to be supervised, evaluated or disciplined, knows nothing about this clause. That is understandable because this is a bill arising from another minister.
I wonder if the member who has just spoken on behalf of the government could explain why this clause is here and why the government wants to be able to dig into people's personal tax forms for supervising, evaluating or disciplining employees of the Government of Canada.
It already has very strict guidelines, regulations or even legislation as to how supervision, evaluation or discipline is to be carried out. It has just expanded the discretion that the employer has with respect to discipline. I am at a loss. No member of the government has yet explained why the government feels it needs this excessive power.


René John Soetens: Madam Speaker, it is evident as I made comments in my opening remarks about how experts appear before committee. Individuals make an interpretation of what they have to say.
The fact of the matter is that the government has very clearly said that it does not need to go through each and every income tax return of Canadians in establishing a case for or against a Revenue Canada employee.
Again I believe it is simply a matter of interpretation as to what is being mentioned. I understand the interest of the member. She certainly campaigned very hard to make sure that the Public Service of Canada had all the rights and that the Government of Canada had no rights. That has certainly been my observation of her interventions on behalf of her constituents.
I guess I would just say that somewhere there has to be a balance. This piece of legislation creates a balance that gives the Government of Canada and the people who work in Revenue Canada an opportunity to make sure that they have access, without going through the personal income tax return, to decide whether an employee in Revenue Canada should be disciplined or not based on work habits or whatever other reasons may be appropriate in the fulfilment of his or her employment with the Government of Canada.
April 1, 1993


Marlene Catterall: Madam Speaker, I would like to comment on the reply just given by the hon. member for Ontario who obviously is not aware that I am the critic for the Public Service.
A small number of public servants live in my riding. Some 70 per cent of the 250,000 public servants in fact do not even live in the region of the national capital. He might want to be aware of that. I commented from the perspective of public policy with respect to the Public Service and not from parochial concern for my own constituents, which I carry into everything I do in this House.
I am afraid we have not had a terribly good explanation, considering this is really an exception to our normal rule of privacy about people's income tax returns. The member for Ontario might want to try to explain again why the government feels it needs this authority. It has substantial authority, which he seems not to be aware of, under the Financial Administration Act, the Public Service Employment Act, policies of the departments and codes of conduct of the departments, to discipline, supervise and evaluate. It has almost total discretion to do precisely that, far more than in the private sector.
In light of that I would like to give the member another opportunity to explain why the government feels it needs this authority. Clearly this makes it possible for the government to release personal income tax forms to other persons, such as somebody's supervisor, director or chief, for any purpose relating to supervision. Tb me that means any supervisor can ask to see the income tax form of a certain employee for any reason and it may be released to him or her.
I would really like the hon. member to try to clarify why it is there. It was removed at committee so why did the government seek not only to reintroduce it but expand it to include anybody working on the Canada Pension Plan directly or indirectly and anybody having anything to do with the Unemployment Insurance Act?


René John Soetens: Madam Speaker, I would first like to state I was not being negative about the efforts the member makes on behalf of her own constituents. I would hope we all take similar approaches to representing our constituents, but sometimes there is a fine line between
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the interests of our constituents and the interests of Canada as a whole.
The member for Mississauga South spoke extensively at report stage on the particular question she is raising. I guess I would encourage her to read the comments of the member for Mississauga South, which I think will quite adequately reflect and answer the concerns she has raised.
I would also ask the member to refer to the representations of the Privacy Commissioner of Canada, Mr. Bruce Phillips, who also issued both letters and comments to the committee on the matter she is raising. As the privacy commissioner Mr. Phillips is certainly not raising any major concerns as he sees it with regard to the bill, the particular clauses and reference.


Mr. Fred J. Mifflin (Bonavista-THnity-Conception):: Madam Speaker, there are a couple of principal points I want to raise before I discuss the measures, some of which have been the subject of discussion this afternoon and some of which have not.
There are a number of things that bother me about this bill. First, we are now going back to measures that were passed on February 25, 1992. It is now April 1,1993. Notwithstanding the closure we have discussed in this House and the slowness of doing business, and totally irrespective of the closure procedures this government continues to invoke, this is an unconscionable time to actually implement tax measures given the difficulty we have with our well-known public deficit and our federal and total national debt.
I want to put into perspective the background of my concern over the length of time it has taken and some of the measures that are contained in this bill as a result of the first 1992 budget if we discount the December budget.
We are now in a position where our national debt has become an instrument and an issue of great concern to all Canadians. It is very difficult to pick up a newspaper or a magazine or listen to any radio station, AM or FM, country and western or serious classical music, without a mention being made of the national debt of Canada within a relatively short time. Although it gives me no comfort that the national debt of most of the G-7 countries is a concern, I take no comfort in knowing we

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are second only to Italy with regard to this sad situation we are in.
As I have said in this House more than once, and I need to repeat it again as a backdrop to the presentation I have today, it is not just the amount of the national debt or the federal debt, and I differentiate between them. The federal debt is what the federal government owes and the national debt is what the federal government plus the provincial governments owe. To use a figure alone, although it might be startling, may not be the true measure of what it is we actually owe. Let me amplify that.
In 1984, which I am going to use as a benchmark when this government came to power, the federal debt of the country was $168 billion. I have heard $170 billion used for round figures, but I think, Mr. Speaker, you will find $168 billion is the correct figure.
In a speech given by the finance minister of the day when the government took over shortly after Labour Day in 1984, the deficit was in the vicinity of $35 billion. Through rearrangement of the figures and creative accounting within a short time the deficit went up to about $38 billion. In round figures the deficit in 1984 was around $35 billion. Whether it was $38 billion or $33 billion, through bookkeeping it was in the vicinity of $35 billion.
In four years not much has changed. In almost nine years we are left with essentially the same deficit of $34.5 billion projected on December 3. The finance minister is only too quick to point out they are 1993 dollars and are a lot less than they were in 1984.1 will grant him that. That is a fair statement to make.
What the finance minister does not say is that the national debt has doubled. It was $168 billion and two weeks ago a clock in Vancouver showed the doomsday national debt at $450 billion, which is much more than double, and it is going up at the rate of over $1,000 a second.
The true measure of our debt is how much we owe compared to how much we make. In 1984 when we had a debt of $168 billion we owed 42 per cent of our Gross Domestic Product. In other words we owed less than 50
per cent of what we made. That is pretty high. If I owed 50 per cent of what I made I would be a little bit worried. If a business owed 50 per cent of what it made, generally speaking it would be worried about its cash flow and its future.
Almost nine years later where do we stand? We stand in a much worse condition because right now we are approaching a ratio of debt to Gross Domestic Product of 70 per cent. The closest figure I can come up with is 68 per cent. That means we are more than 50 per cent worse off than we were eight and a half years ago.
I do not care how one cooks the books. I do not care how one presents the figures. I do not care how one measures trade deficit imbalances and consumer spending. That is considered by most economists and most people in the business to be an accurate assessment of the financial ability of a country to continue.
Clearly the finance minister is worried about this and the government is worried about this. If one reads through his statements, and I believe he has as much as come out and said it, one will find that the December 3 mini budget, the financial statement of the government, was to calm and assuage the concerns of the foreign countries to which we are in debt.
This is much more of a problem than it was nine years ago, because nine years ago less than 10 per cent of that 42 per cent of our GDP that we owed was owed to foreigners. Today it is now 30 per cent and growing.
I would suspect that when the Minister of Finance comes forth in April, May, or June, whenever it is he is going to present his budget, we are going to be looking at not sorting out the problems of the country but once more assuaging and comforting those foreign interests that are watching us very closely with respect to our credit rating and our ability to borrow money as we continue to get ourselves more deeply mired in the situation.
It is my regrettable belief that we are living in a world of advanced disillusion. I used to think that with every budget the government would be able to sort this mess out.
April 1, 1993

I am now convinced that it has lost control. It has taxed as much as it can. There is no room for taxation. We have the goods and services tax. Services are being taxed. We have borrowed as much as we can borrow. Now we are in a position where all that is left for the government to do is to blame it on the Liberals nine years ago and to implement, I was going to use the expression nickel and dime but that is not a very sophisticated expression, measures like those measures being implemented in Bill C-92. It will barely scratch the surface of what we really need to get this country back in shape financially.
Let me speak to this bill. It went through first reading on November 26, 1992. It had second reading in February, started report stage on March 29 and resumed it on March 30, the day before yesterday, and it is now going through third reading.
There is another aspect of this bill that bothers me. I have found myself as a legislator, a member of Parliament and a parliamentarian caught in the dilemma of looking at bills put forward by the government. This one is over one inch thick. I would say it is about one and a quarter inches thick. I have been through it. It is very difficult to go through it in detail with the time one has, but I have zeroed in and focused on those parts of the bill with which I am concerned.
There are some very good measures in this bill, such as the reinstitution of the small business development bond program, and reduction of the manufacturing and corporate income tax rates which may be debatable. There is also the introduction of the homeowners plan which allows individuals to use up to $20,000 of their RRSP funds to purchase a home before March 2 of this year, a reduction of the individual surtax from 5 per cent to 3 per cent, and a measure to assist Canadians with disabilities. There are other measures of which I am very much in favour. They have been a long time in coming and I am very much in support of them.
However there are other aspects that have been discussed in this House, and I am not going to go through them all. The one thing that I find to be very inconsistent with the reported quest of the government to find every penny it can to retire the debt of the country is that it would implement such a measure concerning private trusts.
My hon. colleague from Sudbury has done considerable and excellent work in committee, in the House and
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in her role as a critic in bringing to the attention of the Canadian public the difficulties that we have with a clause in the bill that refers to the 21-year rule of private trusts.
If one reads what is in the bill, starting in clause 42, it would be very difficult for the average person to really understand what it was that was taking place here. Essentially what clause 42 does is continue the extension of the 21-year exemption. In effect this clause really opens a loophole to those Canadians who are in the highest income bracket and those who can afford to have million dollar trust funds set aside.
It opens a loophole which really allows them not to pay taxes until a time in the future, anywhere from 20 to 40 years from now. We do not know how long because it depends on the demise of the last member of a family who would be the recipient of the trust fund. It could be 80 years. Eighty years from now my grandchildren and perhaps my great-grandchildren, and the grandchildren and great-grandchildren of members of the House of Commons, will be looking at different problems.
Our problem with the national debt is a problem of today. The government introduced the GST at the most inopportune and difficult time, when more than 90 per cent of Canadians disagreed with the principle of the goods and services tax and with its implementation at a time when the country was about to go into a recession that was made by our own government, by its own admission.
I am told by the experts that in order to collect a dollar through the goods and services tax when the tax was implemented it cost the government 51 cents. In other words for every dollar that was paid by a consumer on goods and services only 49 cents went to retiring the debt.
Then I juxtapose that against the manufacturers' sales tax which it was supposed to replace, and which was not a tax on services. Maybe 20,000 businesses were subjected to the tax at 13 per cent, which was raised from 8 per cent over the years as part of the 38 tax increases that this government has imposed on Canadians. It took in $17.5 billion, $2 billion more than the net impact of the goods and services tax. More important, with that tax it cost only five cents to collect a dollar.

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By anybody's imagination that manufacturers' sales tax, irrespective of its pros and cons, advantages and disadvantages, from an administrative and an efficiency perspective was 10 times more efficient than the goods and services tax. It was certainly a lot more popular too.
I am told by organizations in the business that the goods and services tax will cost businesses $3 billion to collect and around $5 billion to be compliant with. We are looking at $10 billion that businesses had to spend in order to implement this tax.
I cannot understand the inconsistency of allowing loopholes that will allow hundreds of millions of dollars, even billions of dollars, to escape the tax collector. I do not know what the figure is; nobody knows what the figures are. How do we know how much a trust is going to be in future years?
One of the figures that I have heard mentioned in a newspaper article is $10 billion. This would be an open loophole that would allow $10 billion to slide through the taxman's fingers at a time when we are looking for every cent from the lower class, the middle class and people without jobs. They have to pay GST on the very food they buy, that is taxable, and the services they receive, from a haircut to a mechanic working on their car to do required maintenance so they can provide transportation for a family. That is very unfair.
I heard three or four hon. members from the other side defend this tax, and I would expect them to defend it because it is part of the government's bill. I would say that I would not like to be in the position, at least in the constituency that I represent, of having to get on my feet and defend the passage of billions of dollars not being collected from those who could most afford it compared to those who can least afford it, those who have to pay over 90 per cent of their disposable income to the taxman in goods and services. It is grossly unfair and it is a measure of which the government cannot be proud.
While the Prime Minister may boast that his party coffers are in good shape financially, I do not expect that many members of the few who are running again on the other side of the House will be using this as an election issue. It is something of which I do not believe even those who speak in favour of it are proud.
There is another aspect of this bill that I find inconsistent. It is inconsistent with any government that supports its employees. I refer to the roughly 20,000 public servants who are employed in Revenue Canada.
I happen to have a great deal of respect for the Public Service of Canada. I think we have one of the finest public services in the world. I have had experience with many. I have worked with public servants and we should be proud of the work they do. They are not just in Ottawa; they are all throughout Canada. In my riding they operate federal offices from fisheries inspection offices to unemployment insurance centres. While we do not always agree on the way things should be done, I have found that in their application and their professionalism they are as good as there is. Their reputation will stand up against any in any country.
There is a lot of stress involved in working in the Public Service. Public servants are under a lot of pressure to produce. I would like to digress for a second with regard to the cod moratorium. While I do not always agree with the officials of the Department of Fisheries and Oceans I have nothing but the greatest respect for the way they have applied themselves in their jobs in an attempt to provide a service to people. Their package is not always acceptable to constituents who do not qualify, but nonetheless one has to have the highest regard for the amount of work they do in trying to deliver the service they have been asked to deliver by our government.
The clause to which my hon. colleague from Ottawa West made reference is inconsistent with fair treatment of government employees. I have been in this House for a relatively short time and I have been unhappy about some of the comments that have been made and some of the measures that have been taken. I do not want to open old wounds, but I cannot let this go without comment.
I want to make a point about clause 137, which was not initially there but was actually introduced. It takes away the privacy of these 20,000 public servants who are under pressure as it is and allows the system to look at their income tax returns in situations of supervision, discipline or something of that nature.
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Those two aspects, the loophole for the rich and the business of lack of privacy for individuals in the revenue department, should be disallowed. It is because of those two negative aspects, despite the good things in this bill, that I will not be able to find it possible to vote for the bill.


Madam Deputy Speaker:: The hon. member's time has now expired.

We can proceed with questions and comments when we resume Government Orders after Question Period.

It being 1.40 p.m., I do now leave the Chair until two o'clock this afternoon.
The House took recess at 1.40 p.m.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.

Mr. Maurice Foster (Algoma):: Mr. Speaker, a few weeks ago the Department of the Environment announced that it would terminate the contract this fall that has provided a manned weather station at the Gore Bay-Manitoulin airport and automate the system. This decision would cost the community six jobs in a district in which unemployment is already too high.
However the implications of this action go far beyond the provision of weather information and unemployment. An automated system will not provide the information on air traffic, airport runway conditions or personalized weather information to pilots and mariners in the north channel area and could jeopardize public safety.
Likewise, because the Department of Transport does not provide services at this airport, the weather station personnel have provided the refuelling of aircraft, parking, landing fees collection, and customs and tourist
information at the airport. If these services were removed the airport's viability would be drastically downgraded to the point where the regularly scheduled NorOntair services could be put in jeopardy.
We intend to fight this wrong-headed decision with every means at our disposal. I call on the Minister of the Environment to reverse this decision and renew the contract for a manned weather station at the Gore Bay-Manitoulin airport.


ATLANTIC SALMON FISHERY
Charles A. Langlois: Mr. Speaker,
I would like to mention that the Government of Canada, by participating in the program to buy back commercial fishing licences for Atlantic salmon on the North Shore, is contributing directly to perpetuating this species and also contributing to the development of sport fishing in Quebec.
With the program, of which 70 per cent is funded by our government, more than 60 commercial licences in the riding of Manicouagan will be bought back. This will help the Atlantic salmon stocks recover in all the rivers between Franklin and La Romaine on the North Shore of the St. Lawrence. It will also emphasize the development of sport fishing, which helps stabilize the economy of isolated communities on the North Shore.
The program will treat commercial fishermen fairly by giving them reasonable compensation for their gear and for the loss of income that they will incur. This participation is made possible by the Federal Office of Regional Development in Quebec.
This is something concrete that our government is doing for sustainable development and the survival of the Atlantic salmon.


UKRAINIAN CANADIANS
Mr. Ross Harvey (Edmonton East):: Mr. Speaker, Canadians were astonished to learn Monday that the government has now determined that the internment during World War I of more than 5,000 utterly blameless persons of Ukrainian origin was "not of national historic significance".

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Therefore there will be no interpretive centre near the largest internment camp at Castle Mountain in Banff National Park and no markers at the other 25 camps, this despite the fact that it was the Ukrainian internees whose forced labour built much of Banff park.
By unanimous resolution this very House deemed the internments to be unwarranted and unjust and called on the government to mark the 26 camp sites and establish "a permanent historic educational exhibit" at Castle Mountain.
The entire NDP caucus stands by that motion. We call on the government to reverse the decision made public this week, build the interpretive centre, mark the other internment sites, formally apologize to the Ukrainian community, and speedily settle the other outstanding redress questions.


PHARMACEUTICALS
Mrs. Edna Anderson (Simcoe Centre):: Mr. Speaker, the Patented Medicine Prices Review Board gained tough new power under Bill C-91 that will allow it to review the prices of new patented medicines.
All medicines are not patented. In fact most drugs in drug stores are not patented. When the patent on a drug expires it can be produced by anyone. The Patented Medicine Prices Review Board does not have any power over drug prices once the patent has expired.
I would like to point out that some time ago the Minister of National Health and Welfare asked his officials to work with their provincial counterparts to develop a Canadian agency for pharmaceutical information assessment so that Canadian consumers would have the necessary information to compare the prices of non-patented medicines, ensuring that they could get the correct drug at the best possible price.


DOGRIB NATION
Ms. Ethel Blondin-Andrew (Western Arctic):: Mr. Speaker, on March 18, 1993 the Dogrib people signed a
$125 million agreement with the Northwest Territories Power Corporation for the development of hydroelectric power in the Dogrib-North Slave region of the Northwest Territories.
This historical agreement is a commercial undertaking that will balance the interests of both parties and will address the legitimate concerns and sensitivities of the traditional economy of the Dogrib with today's opportunities for development in the region.
This brave and bold move by the Dogrib has set an example for all Dene. In developing environmentally sound partnerships with industry they are providing economic security and meaningful job training for their people. It also gives them tremendous strength at the negotiating table for land claims.
I would like to wish the Dogrib nation a very happy and prosperous future. In doing so I congratulate Grand Chief Joe Rabesca of Rae, Chief Isadore Zoe of Lac La Martre, Chief Heniy Gon of Rae Lakes, and Chief Joseph Judas of Snare Lake.


Mr. Ken James (Sarnia-Lambton):: Mr. Speaker, I rise today to express my strong support for the recent agreement by the governments in Canada to reduce internal trade barriers.
The principle that governments will now treat people, goods, services and capital equally, irrespective of where they originate in Canada, is indeed positive news for our small businesses in Canada.
The growth, development and encouragement of our entrepreneurs and small businesses have been seriously hindered by these unnecessary limitations to free movement.
An efficient, open and integrated market in Canada is a must. It will improve the competitiveness of our small businesses in the domestic market and in export markets as more and more of them look outward.
The recent agreement to reduce interprovincial trade barriers is a major step forward for Canadian small business.
April 1, 1993


NORTH AMERICAN FREE TRADE AGREEMENT
Mr. David Barrett (Esquimalt-Juan de Fuca):: Mr. Speaker, during the intense debate on the North American free trade agreement that would bind us to Mexico, a low wage partner, and threaten thousands of jobs here in Canada intensity was shown on all sides of the House.
The government was in favour of the legislation. The Liberals allegedly were opposed, and so were the New Democrats and some of the Independents. The crunch came after time allocation, which in effect was closure.
The moment came for the vote to be taken. The government stood up and supported its policy. The combined opposition was prepared to stand and defeat the government. When the vote took place we found that there were 113 members for it and 94 against. Half the Liberal caucus did not show up for the vote.
Everybody in this country who is opposed to NAFTA should recognize that the Liberals did not show up in the House. They could have beaten the bill. Only six members paired. They could have defeated the bill when they had the chance but they did not show up. Why? You figure it out, Mr. Speaker.


SENIORS
Mrs. Suzanne Duplessis (Louis-Hebert):: Mr. Speaker, it is with enthusiasm and pride that I welcome the announcement of the renewal of the federal government strategy concerning the elderly that was made today by the Minister of State for Seniors.
Since 1988, when the first strategy was put in place, the quality of life of senior Canadians has been constantly improving. Indeed, many seniors from all over the country have, at one time or another, enjoyed the New Horizons Program or the Seniors Independence Program, for example.
The main objective of the renewed strategy is to build on the solid foundations of the first strategy in order to allow senior Canadians to take the place that they deserve in society.
The new elements of the renewed strategy, the Ventures for Independence Program and the development of
a federal policy on aging, should largely contribute to meet that objective.
At a time when departments are asked to reduce their programs, the commitment and the investment that have just been announced are a clear evidence of the long-term vision of the government and its firm commitment to enhance the independence and the quality of life of seniors in Canada.


TAXATION
Derek Vincent Lee: Mr. Speaker, in the government's mini budget last December the Minister of Finance announced that there would be an indefinite freeze on increases in grants in lieu of taxes to municipalities.
Residents of the city of Scarborough object to the federal government downloading its tax burden on to local property and business taxpayers. The federal government benefits from municipal services as do all property and business taxpayers.
This unilateral decision not to pay any increase in municipal taxes has the effect of off-loading those costs on to the weakest of our government structures and into a tax structure that is the least flexible and the most regressive.
I call upon the Minister of Finance to reverse his decision to freeze these grants and pick up the federal government's fair share of the local tax burden on Scarborough's constituents.


SENIORS
Mr. Gabriel Desjardins (Temiscamingue):: Mr. Speaker, the Minister of State for Seniors has announced today that the federal government will extend the Seniors Strategy for another five years.
This announcement shows our government's concern for the senior citizens of Canada. It is also an excellent way of helping our society prepare itself to meet the special needs of an aging population.

April 1, 1993
We are also introducing a new program called "Ventures for Independence". This program will give priority to innovative suggestions aimed at improving the quality of life and independence of seniors.
The development of a federal policy on aging is another new and important element of this strategy. By the year 2031, one in five Canadians will be over 65, and if we want today's and tomorrow's seniors to enjoy independence and dignity in their retirement, we can only be delighted about the renewal of the Seniors Strategy.


PHARMACEUTICALS
Mr. Stan Keyes (Hamilton West):: Mr. Speaker, Canadians should know that Bill C-91, legislation implementing the drug patent legislation, was passed back on December 10, 1992, thanks to the 21 NDP members who failed to show up for that crucial vote.
If the NDP had actually opposed giving multinational drug firms carte blanche with brand name drugs sold in Canada for the next 20 years, as it alleged, it would have demanded that every living, breathing member of its caucus show up. Instead, only half of the NDP caucus arrived for that final vote on what was described as the largest single affront to Canada's universal health care system since it was created.
Even the former B.C. premier, the member forEsqui-malt-Juan de Fuca, who opposed that Draconian drug patent legislation, did not show up in this House.
As a result of the fact that the NDP did not demand full attendance of its caucus for that crucial vote Canadians are facing higher costs for patent drugs in Canada. By failing to demonstrate its resolve the NDP has helped the Conservative government to allow-


Mr. Speaker:: The hon. member's time has expired. I know that other members in the House will breathe a sigh of great relief.


TOBACCO SMUGGLING
Marcel R. Tremblay: Mr. Speaker, this morning, CBC quoted a spokesperson for the Royal Canadian Mounted Police as saying that only 5 per cent of proceeds from cigarette smuggling are seized. It was also reported that, without a stricter law, the RCMP cannot deal with the problem.
I would like to point out that Bill C-102, which is now at report stage in the House, is designed to provide our police forces with the tools they need in their fight against tobacco smuggling.
I want to remind the House that the government is open to discussions with the provinces in order to address the issue of smuggling.


LANGUAGE RIGHTS
Hon. Warren Allmand (Notre-Dame-de-Grace):: Mr. Speaker, the recommendations made yesterday by the Quebec Conseil de la langue franqaise for the replacement of Bill 178 are not acceptable.
This Draconian law, which bans English on commercial signs in Quebec, will automatically expire this year because it was passed in 1988 by using the notwithstanding clause to override the charter of rights, the Supreme Court, the Quebec Court of Appeal and the Quebec Superior Court.
Considering the importance of this matter, not only for Quebec but for minority language rights throughout Canada, I ask the Prime Minister and all members of Parliament to approach the Quebec government and urge it to opt for a replacement law which fully respects the 1988 Supreme Court decision and does not require the notwithstanding clause.
Such a solution should also respect the principle set out in the Charlottetown accord that Canadians and their governments are committed to the vitality and development of minority language communities throughout Canada. Let us build respect and understanding between our two great language communities, not division and conflict.
April 1, 1993


DECORATIONS AND AWARDS
Mr. Yvon Cote (Richmond-Wolfe):: Mr. Speaker, I find it extremely gratifying to draw your attention to a truly exceptional event I attended last week in my riding. More than 680 people came to show their gratitude and respect to more than 40 persons who received the Governor General's 125th anniversary medal, in recognition of their volunteer work and their involvement in the economic and socio-cultural activities of their community.
I want to take this opportunity to express my admiration and to thank these residents of Richmond-Wolfe.


Mr. Steve Butland (Sault Ste. Marie):: Mr. Speaker, at the Clinton-Yeltsin summit this week the Prime Minister will announce, in his words, a considerable Russian aid package. The package will address most appropriately wheat shipments and technical assistance.
If Russia is to enjoy economic revitalization we must also support elements essential to industrial growth. One crucial area of unlimited potential is Russian oil and gas reserves.
Many Canadian companies have been negotiating contracts but due to political instability and lack of capital funding the deals are not finalized. One example, Algoma Steel of Sault Ste. Marie, a $50 million seamless tube order was announced by the Prime Minister, signed by our minister of trade and Russia's finance minister. A year later there is still no deal.
A positive development could be the expanded mandate of the Export Development Corporation which will allow it to become more involved in these deals. An example is to take on equity shares in projects.
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I ask the Prime Minister to take this weekend's opportunity to finalize any pending Russian-Canadian contracts which will be mutually beneficial.


PATENTED MEDICINE PRICES REVIEW BOARD
René John Soetens: Mr. Speaker, the Patented Medicine Prices Review Board has released its report which says that Canadian drug prices are among the highest of those with which Canada was compared.
During the passing of Bill C-91, known as the drug patent legislation, the opposition argued that it was our generic drug industry and compulsory licensing that kept our prices lower. So much for that argument. Similarly the price of Canadian prescription drugs was supposed to be lower because in Canada we had only 20 years of patent protection and any change would make us pay more.
The Liberals are wrong again. Those countries that we were compared with in Europe have an average of 24 years of protection while in the U.S. they have an average of 25 years. Thus increasing the lifetime of a patent does not increase the price and in fact the opposite may be the reality.
The questions remain then: Has the Patented Medicine Prices Review Board been incapable in the past of controlling the price of prescription drugs and will the new powers given to the board because of Bill C-91 correct this apparent imbalance?



ORAL QUESTION PERIOD


Hon. Jean Chretien (Leader of the Opposition):: Mr. Speaker, my question is for the Prime Minister.
When the government proposed Bill C-91 we were told that drug prices would not increase for prescription drugs. Now a study confirms that Canada has some of the highest prices in the world.
I would like to know from the Prime Minister if it is true that the government proposed Bill C-91 to please the Bush administration during the NAFTA negotiations, as it was alleged yesterday by the senior senator

April 1, 1993
Oral Questions
of Arkansas who said that the government caved in under pressure from the Bush administration.


Hon. Pierre H. Vincent (Minister of Consumer and Corporate Affairs and Minister of State (Indian Affairs and Northern Development)):: Mr. Speaker, I have not seen the statement by the senator mentioned by the Leader of the Opposition. However, his question does come as something of a surprise, when I consider that his party and he himself voted against Bill C-91, which would, among other things, give the board additional powers.
If he had voted for Bill C-91, the board would have had additional powers more quickly to monitor the price of drugs.


Joseph Jacques Jean Chrétien: Mr. Speaker, the minister did not answer my question.
We want to know why this government always sides with the big multinationals instead of taking care of people who need drugs in this country, the poor and the sick. When will this government make it a priority to look after the weakest members of our society instead of siding with the multinationals who contribute to the coffers of the Conservative Party?


Pierre H. Vincent: Mr. Speaker, it is easy to be negative; however the hon. member forgot to mention the investments made in Quebec. He also forgot to mention the position of the Quebec government, something the hon. member does quite often. Investments that are being made thanks to Bill C-22 in 1987 and Bill C-91 today will ensure that research and development in the pharmaceutical sector takes place in Canada. That is good for Canadians.


Joseph Jacques Jean Chrétien: Mr. Speaker, I cannot justify that the poor in our society, the sick in our society, have to pay these high prices which are higher than anywhere else in the world according to a report from his own department.
When will the government realize that a lot of those costs are paid by the provincial governments and the federal government and at this time the country cannot
afford to deduct big sums of money for the big international corporations?


Pierre H. Vincent: Mr. Speaker, once again, the hon. member overlooked something. He forgot that Bill C-91 applies to one category of drugs. He forgot to say that 80 per cent of the drugs used in this country have absolutely no connection with the legislation contained in Bill C-91, which was passed by the House.
Canadians will not be affected, although the Leader of the Opposition contends they will be, by a bill that, I repeat, will put Canada on the map as a good place to invest in the pharmaceutical sector, where we take a leading position.
Not so long ago, an article stressed how important it was for Canada to have this special niche in research and development with respect to Canadian pharmaceutical products.


Mr. Ron MacDonald (Dartmouth):: Mr. Speaker, my question is for the minister of health.
Yesterday the minister of health claimed in the House that the government's policies have led to lower drug prices for Canadians. One of the government's own departments obviously disagrees with him.
In a letter sent to all Canadian veterans the department says: "In recent years the cost of health care benefits has risen sharply. The cost of prescription drugs has been one of the main reasons for this increase".
Yesterday the minister dismissed the findings of the regulatory agency, the PMPRB. I want to ask the minister if today he will stand in his place and accept the findings of one of his own departments, the Department of Veterans Affairs.


Pierre H. Vincent: Mr. Speaker, unfortunately, the hon. member's question is much the same as the previous one. However, he failed to mention that it is important to have this board, which has the power it needs to review what is happening here in Canada. I would like to state more specifically the additional fines that can be imposed and the fact that the board may
April 1, 1993

review whatever is going on with respect to pharmaceutical products in this country.


Ronald MacDonald: Mr. Speaker, my supplementary question is for the same minister.
I will give the minister one more chance. Green Shields, a private insurer, the province of Ontario, the province of British Columbia, the Patented Medicine Prices Review Board, and now the Department of Veterans Affairs are telling the government that its drug patent policy simply does not work for Canadians.
I want to ask the minister if he will finally wake up and realize that the policy he has been pursuing is not for the benefit of Canadians. It has been solely for the benefit of international pharmaceutical companies.


Pierre H. Vincent: Mr. Speaker, if $500 million worth of investment in Canada does not benefit Canadians, I wonder what the hon. member expects and what he sees as benefiting Canadians.


Hon. Audrey McLaughlin (Yukon):: Mr. Speaker, I too have a memo from Veterans Affairs Canada in which Veterans Affairs Canada writes to veterans.
In recent years, the cost of health care benefits has risen sharply. The cost of prescription drugs has been one of the reasons for this increase. The challenge for Veterans Affairs is to continue meeting your health needs at a reasonable cost. One way to do this is by filling your drug prescriptions with lower-priced generic drug products.
Yesterday when I asked this question of the minister in the House, he told me:
We have no intention of conducting an investigation into the price of drugs, since we have the appropriate mechanisms to ensure that prices remain at reasonable levels for Canadian users.
I want to say to the minister responsible that here is further evidence that drug prices are hurting Canadians. They are hurting veterans. The government's own departments recognize it. Will the government reconsider and hold an inquiry into high drug prices in Canada?
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Pierre H. Vincent: Mr. Speaker, Canada has taken the necessary steps to ensure two things: First, that pharmaceutical industries come and operate in Canada- which is good for the country in terms of investments- and second, that a board be put in place to make sure that patented medicines are sold in Canada at a justifiable cost.
Bill C-91 gave more powers to the board, thereby guaranteeing that patented medicines would be sold at a reasonable price.
Therefore, I think that the hon. member's question is irrelevant.


Audrey Marlene McLaughlin: A supplementary, Mr. Speaker. Since its creation five years ago, the Patented Medicine Prices Review Board has initiated only one inquiry. One inquiry in five years is not what I would call an efficient way of monitoring prices. Drug prices in this country are 56 per cent above the international average. This is hurting senior citizens and chronic care patients who have to pay. Please, launch a ministerial inquiry.


Pierre H. Vincent: Mr. Speaker, what my colleague is forgetting when comparing Canada with other countries is that those countries do not necessarily have generic products and might have longer patent protection than the one we have recently had under the new legislation.
If I follow her reasoning, Bill C-91 should have given even longer patent protection to innovative companies.


Audrey Marlene McLaughlin: Mr. Speaker, the government's own Department of Veterans Affairs acknowledges that generic drugs are lower priced and urges clients to get lower priced generic drugs.
The cost to Canada of this awful legislation is tremendous. I just want to say to the government that we are asking Canadians to expect less and less in health care. Ontario estimates it could lose $100 million because of this legislation. Saskatchewan and Manitoba could lose $10 million a year and New Brunswick almost $15 million a year.

April 1, 1993
Oral Questions
I want to say, while we are asking Canadians to take less and less and we are giving to multinational corporations, surely the government has a responsibility to stand and have an inquiry into high drug prices in Canada. Will it do it?


Pierre H. Vincent: Mr. Speaker, the answer is yes, the Government of Canada has a responsibility and that is making sure that research and development is carried out in the pharmaceutical industry in this country. We need research and development activity in that field, and our government acted accordingly.


WESTRAY COAL MINE
David Charles Dingwall: Mr. Speaker, we on this side of the House have been asking repeatedly for many months questions of the government to provide all of the documents, including the censored documents, in order to shed light on the facts surrounding the Westray coal mine disaster.
I have in my hand a letter addressed to me signed by Justice Peter Richard, wherein he states: "The order was served on the Government of Canada with notice to the Minister of Justice through an associate deputy minister. I was assured by the associate deputy minister that the federal government would co-operate with the inquiry".
I ask the right hon. Prime Minister if he would indicate to the House whether or not the then Minister of Justice was acting alone or acting in full concert and knowledge of the entire cabinet.


Hon. Tom Hockin (Minister for Science and Minister of State (Small Businesses and Tourism)):: Mr. Speaker, the hon. member raises questions about this government co-operating with the provincial commission of inquiry.
He knows that we have co-operated right from the beginning, over 7,500 pages worth of documents. We will be tabling further documents with the commission. We have co-operated with them from the beginning to the end.
The previous Liberal government never co-operated with provincial inquiries. We are.


David Charles Dingwall: Mr. Speaker, it is clear from the response of the minister that not only was there no co-operation forthcoming, but the Government of Canada has deliberately withheld information, censored documents from the judicial inquiry and from the Parliament of Canada.
Yesterday the minister made mention in this House repeatedly about the families of the deceased miners. I have in my hand a letter from a brother of a deceased miner who states in a letter written December 2, 1992 and I quote: "Quashing inquiries and protecting the rights of those responsible only reinforce the prevailing opinion of a massive cover-up. We will not let the federal or provincial governments steamroller us on this one".
I again ask the right hon. Prime Minister: Was the then former Minister of Justice acting alone or with the full consent and knowledge of the entire cabinet? Yes or no.


Thomas Hockin: Mr. Speaker, I said yesterday, and I am going to have to say it again, the only cover-up that has existed with regard to this matter is the hon. member who comes in here with documents that he has had for three or four months which he says purport to reflect on why these miners died, and he does not table them before the House and he did not tell the House about them until two days ago.
I want to give my hon. friend three pieces of information that he should listen to very carefully. First of all, the CANMET report which he said had not been tabled with the commission was tabled with the commission six months ago and the commission counsel confirmed that two days ago; no apology from the hon. member for alleging otherwise.
April 1, 1993

There was an additional red herring. They said: "No, there are seven pages missing from the CANMET report". I received a letter from our counsel to the commission counsel confirming this morning that there are no missing seven pages. The CANMET report was nine pages yesterday, the day before, forever. It is still nine pages.
The third particular matter which I think the hon. member should understand is that we want to co-operate with the commission because we want to get to the bottom of why these miners died. Safety being a provincial jurisdiction it is properly the purview of a provincial commission. We are happy to co-operate with them.
Here is what Mr. John P. Merritt, the commission counsel, said late yesterday in a letter that I received from the government's counsel. He said: "All information which may be received or gathered by the commission staff during the period that criminal charges are outstanding will be kept confidential by the commission and not be released".
He has also said: "Parties with status will have access to that information once any risk of jeopardizing the criminal proceedings has been removed".
We are concerned about the criminal proceedings, about the RCMP inquiry. Because of that we were very concerned that tabling documents with the commission that were not confidential could impede that inquiry.
We are satisfied with this letter from John Merritt, the commission counsel. I asked my officials, pursuant to this letter that we received late yesterday giving us assurance to speak to the commission, to contact them so that we can transfer these documents most convenient to them as soon as possible at a time appropriate for them.


Mr. Brian Tobin (Humber-St. Barbe -Baie Verte):: Mr. Speaker, my question is for the Prime Minister.
The minister who has just answered talked about everything but the question that was put by the opposition House leader. I want to quote again from the letter written by Justice Richard to the opposition House leader in which he says: "The order was served on the Government of Canada with notice to the Minister of Justice through an associate deputy minister. I was
Oral Questions
assured by that associate deputy minister that the federal government would co-operate with the inquiry".
The federal government has not co-operated with the inquiry. Evidence has not been forthcoming.
I want to ask the Prime Minister as the chief of cabinet whether or not the then Minister of Justice was acting alone when she withheld the necessary evidence from a judicial commission of inquiry, or was she acting with the knowledge and consent of cabinet, including the Prime Minister?


Right Hon. Brian Mulroney (Prime Minister):: Mr. Speaker, the suggestion that a minister, the then Minister of Justice, withheld information either from the cabinet or from the commission of inquiry is of course false, misleading and should be withdrawn on the floor of the House of Commons by the hon. member.
Second, in regard to-


Mr. Axworthy (Winnipeg South Centre):: Why? She withheld it.


Martin Brian Mulroney: Well now the member from Winnipeg is making an even more serious accusation. He is saying that the Minister of Justice knowingly withheld information from an inquiry, presumably with the view to undermining the integrity of that inquiry. That is very serious.


Lloyd Axworthy: Have we got under your skin?


Martin Brian Mulroney: If my hon. friend wants to make that charge-


Mr. Speaker:: Just a minute. It might be easier if all hon. members listened to the question and then listened to the answer. The right hon. Prime Minister has the floor.


Martin Brian Mulroney: Mr. Speaker, I am merely indicating, as the minister indicated, that the government has co-operated fully with the inquiry.
I am not acquainted with the particular correspondence that was cited by my hon. friend a few moments ago, and he may care to table it, from the chief justice or the justice who chairs the inquiry. Once we find out when that was sent and what it says we will take a look at

April 1, 1993
Oral Questions
it. If there is any difficulty I or the minister will be happy to clarify any difficulties that may arise.
The allegation that has been made seems to be clearly a concerted one coming from the Official Opposition, directed against the former Minister of Justice, and suggesting that she deliberately conspired with someone to withhold information from a judicial inquiry. That is a very serious accusation.
Normally in this Parliament if you make that kind of accusation you rise and you put your seat in play and if you are wrong, resign.


Brian Vincent Tobin: Mr. Speaker, the Prime Minister knows and it is an acknowledged fact that the counsel for a judicial commission of inquiry took the extraordinary step of going public to rebut the assertion by the government House leader that all of the information that had been asked for had been received. That extraordinary measure was taken.
The government has acknowledged repeatedly that it is refusing under cabinet confidentiality terms to release 18 pages of documents including specifically a memo written to the minister of energy. That is all acknowledged fact.
What is now clear is that the request for information was conveyed to the Government of Canada through the office of the Minister of Justice.
The only question being asked of the Prime Minister is this: Was the then Minister of Justice acting alone or was the then Minister of Justice acting with the knowledge and consent of cabinet? Was this a cabinet decision to withhold from a judicial commission of inquiry the very evidence it sought to investigate this Westray coal mine disaster, Prime Minister? Yes or no.


Mr. Andre:: He apologized for it.


Thomas Hockin: It is acknowledged fact.


Martin Brian Mulroney: Mr. Speaker, one day they are after the minister of defence for helicopters and then one day they are after the former Minister of Justice on something else.
Let us examine this. The member just made a statement about the commission counsel of the royal commission in Nova Scotia. It is my understanding that statement by my hon. friend is one that he ought to have
known had already been corrected by the commission counsel who apologized to the government. That information was conveyed to my hon. friend yesterday on the floor of the House of Commons.


Harvie Andre: Absolutely, absolutely.


Brian Vincent Tobin: No.


Joseph Jacques Jean Chrétien: She made the statement, not us.


Martin Brian Mulroney: I am not going to yell back and forth across the floor at my hon. friend. It seems to me it is a simple proposition. Either the commission counsel in Nova Scotia apologized to the government and acknowledged he was wrong or he did not. If I am wrong in making that statement I will be happy to withdraw it but that is the information that I have received. That is the information that has been conveyed to the House.


Brian Vincent Tobin: It is wrong.


Martin Brian Mulroney: My hon. friend says I am wrong. If I am I will be happy to examine the documents again. The information that we have is that the commission counsel so acknowledged his error; that the government had responded fully to the requests that had been raised by the Official Opposition.


Lloyd Axworthy: It's wrong. He didn't say that.


Martin Brian Mulroney: The second question raised by my hon. friend is in regard to the Minister of Justice. The question presumes and suggests that the Minister of Justice did something other than pursue her duties in an honourable and entirely appropriate way. Of course she did no such thing. She conducted herself at all times as Minister of Justice in a manner in keeping with the highest standards of the leading law officer of the Crown, which means that there was no such suggestion of any kind made by my hon. friend, and he would do well to withdraw that allegation right now.


CIGARETTE SMUGGLING
James Capsey (Jim) Karpoff: Mr. Speaker, I have a question for the Solicitor General.
The RCMP today stated that cigarette smuggling has now been taken over by organized crime. On Tbesday the minister of revenue admitted in the House that tobacco companies are not co-operating in preventing cigarette
April 1, 1993

smuggling and are in fact making it impossible for the RCMP to trace contraband cigarettes.
In view of these developments, will the minister now reimpose the $8 per carton export tax and cut the feet out from under organized crime?


Douglas Grinslade Lewis: Mr. Speaker, I can advise my hon. friend that although the job of the Solicitor General seems to cover a multitude of things it does not cover raising taxes, so I will skip that one, if he does not mind.
I would say that he raises a very important point. There is no question that the smuggling of cigarettes is a serious matter, one that the government views with a great deal of concern. We are presently consulting internally and with provinces in an effort to mount an offensive to stop the smuggling.


James Capsey (Jim) Karpoff: Mr. Speaker, the Solicitor General was present when the export tax was removed and took part in the press conference so I thought he knew something about it.
I want to give the minister every opportunity to get tough with organized criminals smuggling cigarettes, even though this government caved in last year when the tobacco lobby came calling.
The RCMP now admits it is able to only intercept 5 per cent of smuggled cigarettes. What new measures is this government prepared to bring forward to assist the RCMP? That is within his jurisdiction.


Douglas Grinslade Lewis: Mr. Speaker, there is no question that we are going to develop as many new methods of dealing with this matter as possible. I am not prepared to deal with them on the floor of the House of Commons until they are finalized. Until such time as they are finalized I am only going to lay out in public those matters which it makes sense to lay out in public. The rest of them we use to get the smugglers.


FEDERAL PENITENTIARIES
Robert Nesbitt Horner: Mr. Speaker, my question is directed to the Solicitor General. Yesterday
Oral Questions
we were informed that the government was considering raising the pay of inmates in federal penitentiaries.
I thought this was too silly to get too concerned about, until I read the newspaper this morning and saw that the leprechaun Sean Durkan from The Toronto Sun had stated that this was indeed a fact, that we were going to raise the salaries of inmates in federal penitentiaries.
I ask the Solicitor General to please stand in his place and state, at a time when Canadians are taking cutbacks in their pay, at a time when Canadians are having their pay frozen to aid us in coming out of this recession, that he will not go ahead with this ludicrous procedure of raising the pay of inmates.


Douglas Grinslade Lewis: Mr. Speaker, I appreciate my hon. friend's question and the concern with which he approaches this matter.
There have been considerations in terms of allowances and the way we deal with corrections and a draft paper has been circulated.
As part of the consultations in discussions that I wanted to have as Solicitor General I met with the Union of Solicitor General's Employees yesterday. I met with the Professional Institute of the Public Service and I also met with the justice committee which is composed of members from all sides of the House.
As a result of those consultations and the suggestions made to me, some very interesting suggestions as to how things could be approached and the temper of the times, I have decided that we will do a complete review of the matter.


WESTRAY COAL MINE
Mr. Don Boudria (Glengarry-Prescott-Russell):: Mr. Speaker, my question is for the Prime Minister.
Judge Richard of the commission of inquiry on the explosion at the Westray mine said in a letter that he had filed a notice with the government and with the Minister of Justice and that the government had promised its full co-operation.

April 1, 1993
Oral Questions
Given that some pages are missing from the document that the commission has, did the Minister of Justice hide documents with or without the consent of the Prime Minister and Cabinet?


Martin Brian Mulroney: Mr. Speaker, a stupid question in English does not become an intelligent one in French.
This is nonsense directed at the reputation of a member of this House. Normally when someone makes such accusations, he has the courage or the decency to put his seat on the line if the assertion is proven false.
I asked his colleague in English to table the letter in question and we will see what the chief judge and the judge say. Furthermore, it should be noted that the minister responsible for this issue here in the House answered several times yesterday and again today that not only the minister but also the government had met their obligations to the commission of inquiry.
I can tell my friend that we are co-operating fully and fruitfully with the royal commission of inquiry and continuing to do so right now.


Don Boudria: With all due respect to the Prime Minister, the letter that the minister tabled in the House yesterday says nothing of the sort. I quote an excerpt from the letter: "The commission is still waiting for an answer as to whether the nine pages constitute a complete report." We know that there were 16 pages.
Bernadette Feltmate said this in a letter she sent to the Leader of the Opposition: "Please help us. We need answers so that we can tell our children in future that we did everything to find out what happened to their fathers."
So I will ask the Prime Minister once and for all: Why do the Prime Minister and the Minister of Justice not table the missing pages today so that we can know the truth in this affair? Why?


Thomas Hockin: Mr. Speaker, as I said yesterday, we sent the CANMET report six months ago. The Commission confirmed that we did that.
Furthermore, this morning, we received a letter confirming that there are not more than nine pages but only nine pages, so I hope that the member will apologize for everything he said.


PHARMACEUTICALS
Hon. Herb Gray (Windsor West):: Mr. Speaker, I have a question for the acting minister of industry in the absence of the minister himself.
I want to return to the bitter pill of the closing of the Wyeth pharmaceutical plants in Windsor. In June 1992, speaking in support of Bill C-91 and speaking of the Canadian patented pharmaceutical industry, I am told the minister of industry said: "We will give the industry the incentive it needs to strengthen the Canadian base for international investment".
How does it strengthen the Canadian base of that industry to close the productive, efficient and profitable Wyeth plant in Windsor and instead of creating more jobs, to eliminate 129 jobs altogether and to transfer the remaining 90 out of the city? What sense does that make?


Thomas Hockin: Mr. Speaker, the hon. member knows, but of course is not willing to share with the House, the pharmaceutical research that has been conducted under Bill C-91 has produced hundreds of millions of dollars worth of research and jobs that ordinarily would not be there. That is because we have protected intellectual property in a way which encourages that investment.
In terms of this company in Windsor, I share my hon. friend's regret that the Windsor plant had to be closed. It is consolidating the operation in Montreal, making the company more competitive as a result. In addition, positions of the old Windsor plant have opened up which will be made available elsewhere for the employees.
What the company is trying to do is to become more competitive as it goes into the future so that it can expand further.
April 1, 1993


Herbert Eser (Herb) Gray: Mr. Speaker, in 1987 employees at Wyeth in Windsor were asked by the company and the pharmaceutical manufacturers of Canada to write to senators to support Bill C-22 and to say in their letters: "My job is protected only if Bill C-22 passes".
Well, Bill C-22 passed, but the jobs in Windsor have not been protected. I ask the minister: Will the government intervene now to keep the Windsor employees of Wyeth working at their jobs in Windsor so that their lives will not be destroyed by this Conservative government's policies? Will he act now?


Thomas Hockin: Mr. Speaker, what the hon. member forgets is that without Bill C-22 manufacturing establishments and research establishments like that would be falling like flies right across Canada.
Instead these firms generally are stronger. They are expanding. They are doing millions of dollars worth of research they ordinarily would not do. That is what the hon. member knows but will not share with the House.
I remind him that he fails to see the tremendous job creation that has occurred as a result of that bill.


An hon. member:: They had to resign.


Thomas Hockin: Tell them to go to Montreal. Tell them to go to Toronto. Tell them to go to southern Ontario or somewhere else. What the hon. member has to remember is that to be competitive, we have to support intellectual property and encourage investment and this we have done.


DEFENCE INDUSTRY
Mr. Gilles Duceppe (Laurier-Sainte-Marie):: Mr. Speaker, my question is directed to the Prime Minister. The Expro chemical manufacturing plant has been forced to lay off some 200 workers. Expro is the only explosives and propellant powder producer in Canada, and 90 per cent of its products are for the U.S. market.
Since 1987, defence industry activity has dropped 20 per cent and 8,600 jobs were lost; that is 22 per cent of
Oral Questions
the work force in that industry. The situation is likely to get worse as President Clinton has announced an $88 billion cut in the U.S. defence budget. On the other hand, President Clinton also announced a $19.6 billion industrial reconversion plan aimed mainly at promoting civilian uses of military technologies.
I ask the Prime Minister: Will he consider establishing such a fund in Canada to preserve jobs for one thing and also to draw upon high tech knowledge to boost the economy?


Hon. Paul Dick (Minister of Supply and Services):: Mr. Speaker, the Expro situation developed a number of years ago. We were able then to provide some funds in a working capital loan which maintained 550 jobs in modernizing the industry and putting it in a position where it could meet the environmental standards.
The industry, which generally has been going through some difficulty, has a fund of almost $200 million through the DIPP process in which it can modernize and change into a civilian type of work.


Gilles Duceppe: Mr. Speaker, I know that the defence industry is slowing down because of the international state of affairs and that is a good thing. The fact remains, however, that there are still people working in that industry. I think President Clinton made the right decision in cutting the defence budget, but he had the foresight of creating at the same time an industrial reconversion fund to both prevent job losses and convert these military technologies to civilian uses for mankind instead of doing away with them.
I think it would be important, considering this is a major industry in Quebec, that the same kind of fund be created to prevent job losses and encourage profitable and long-term investments.


Paul Wyatt Dick: Mr. Speaker, I thought I was quite clear the first time.
I said yes, there have been some military reductions in its budget. We do have in place the Defence Industry Productivity Program which has been changed in its focus

April 1, 1993
Oral Questions
to help military industries transfer more of their work into the civilian mode.
I explained that in my first answer and it is the same answer now.


WIST RAY COAL MINE
Lloyd Axworthy: Mr. Speaker, my question is for the Prime Minister. He recognizes our questions deal with the very important issue of public accountability and trust of members of the government.
We have a letter that was written by the commissioner of the inquiry last summer indicating that an order was submitted to the Minister of Justice requiring full disclosure of all information relating to the Westray tragedy.
Yesterday, the Minister of State for Small Businesses and Tourism acknowledged that not all information was given. There was still more to be given. We even have a letter again recognizing that not all the information was given. There was a gap of over 10 months in which an order was given and not fulfilled.
I come back to the simple question previously raised by my colleagues. Was this decision made solely by the Minister of Justice? Did the Prime Minister make the decision? Or was it the full cabinet that decided that the order of request submitted by the commissioner, Peter Richard, was not fulfilled by this government?


Martin Brian Mulroney: Mr. Speaker, I answered two of the hon. member's colleagues and perhaps I will repeat it to him.
He indicates that he has a letter. Am I right in concluding from what my hon. friend said in his prefatory remarks that this letter from the justice in Nova Scotia is seven or eight months old? Am I right?


Thomas Hockin: Almost a year old.


Martin Brian Mulroney: The conclusion that was being conveyed was that this was something new floating around.
Perhaps my hon. friend could begin by tabling that eight, nine or ten-month old letter on the floor of the House. Then we will look at it, examine it and see if
there is anything inconsistent with what the justice said in respect of the government's obligations.
The government views this matter with extreme seriousness, as I am sure do all members of the House of Commons. There was loss of life involved.
There was the question of a judicial inquiry having been constituted by a duly elected provincial government to determine areas of responsibility. There has been involvement by the Royal Canadian Mounted Police in respect of possible prosecutions that might ensue. There has been the intervention of an appellate court in this matter holding in abeyance evidence that might have been adduced before this particular royal commission.
There has been a full and ongoing degree of co-operation by the Government of Canada, given those realities to which I have just referred. The Minister of Justice, as she then was, and all ministers of the government have co-operated fully. We will continue to do so with the justice, with commission counsel and with all appropriate officers of that commission.
If my hon. friend has something at variance with what I have just said I would be happy to listen to it, take a good look at it with him and make sure that the proper thing is done. So far, I can assure him that the co-operation of the Government of Canada has been full and complete. We want to continue to help that commission because we want the truth to come out.


Lloyd Axworthy: Mr. Speaker, there was an editorial in The Chronicle-Herald this morning. Speaking about the matter of truth, I would like to quote it to the Prime Minister: "The truth is that Ottawa has not only embarrassed itself politically in this matter, it has also disgraced itself morally". That is from the newspaper that reflects the point of view of the people of Nova Scotia. That is an editorial of The Chronicle-Herald, a newspaper which this government quotes at length to support its position time after time.
The Prime Minister has not satisfied the question we asked. The letter I quoted from of last August indicates that an order was issued by the commissioner of the inquiry. It was an order to the Minister of Justice that all documents be provided.
We have had acknowledged in this House-
April 1, 1993


Mr. Speaker:: Given the time, could the hon. member put his question, please.


Lloyd Axworthy: Mr. Speaker,
I am responding directly to the inquiry and to the Prime Minister.
Why is it that the Government of Canada, by the Minister of Justice or the collective entity of the cabinet, did not provide all the documents as requested last August and is still holding out on those documents today?


Martin Brian Mulroney: Mr. Speaker, my hon. friend surely will acknowledge the inherent unfairness in the question that he has just asked. He has not tabled the document that is now some nine or ten months old. We have not been able to compare this document against the allegations that he has just made. He impugns the integrity of a minister of the Crown without any evidence.
Moreover, regarding the information to which he refers as having been withheld, there is an apology on the record from commission counsel saying that is not true.
I just want to tell my hon. friend, Mr. Speaker, he is right in two areas. First, it is of course a very serious matter and the Chronicle-Herald is a very serious newspaper. I do not dismiss any views on this casually and we are going to co-operate very fully with the commission of inquiry.
If my hon. friend has any specifics of any kind which suggest misfeasance or malfeasance or improper conduct of any kind by any minister of this government, I urge him to bring it forward with specifics on the floor of the House of Commons and I assure him in the interests of the 26 people who lost their lives I shall follow through swiftly.


CANADA COUNCIL
Mr. Simon de Jong (Regina-Qu'Appelle):: Mr. Speaker, my question is for the Minister of Communications. Earlier this week Vanderhoof and Associates released a study which demonstrates that the cuts to the Canada Council will in fact increase the public debt. The study
Oral Questions
showed that the cuts will result in lost tax revenue and increased UI payments for a net loss to the Treasury.
Can the minister tell the House if this government conducted an economic and cultural assessment before announcing the cuts? If not, why not? Now that there is proof that these cuts in fact will actually result in an increased deficit, will the government restore the funding to the Canada Council?


Hon. Perrin Beatty (Minister of Communications):: Mr. Speaker, I thank the hon. member for his question. The department is looking very closely at the report in question. Certainly we will be glad to look at any of the recommendations that are made there. We want to put whatever money the taxpayers of Canada can afford to pay in support of the arts.
However, the hon. member takes the position that it is possible for Canadians to spend themselves rich. If we could do that we would not have had a situation where on the front page of the Toronto Star of March 2 there is a headline saying: "NDP premiers urge action to cut pressing debt load".


David Barrett: You doubled the debt.


Henry Perrin Beatty: Mr. Speaker, you cannot have it both ways. If you want to control the debt, you cannot spend yourself rich.


SPORTS ILLUSTRATED
Simon Leendert de Jong: Mr. Speaker, the fact of the matter is this government doubled the debt. In its attempt to reduce the debt this study shows it has in fact increased the debt. That is the point of the study.
My supplementary is for the same minister. Today Time Warner Inc. will place on the news-stands the Canadian edition of Sports Illustrated. Time Warner is clearly circumventing Canadian customs and skimming scarce Canadian advertising dollars. It plans to publish six Canadians editions during the year, yet this government refuses to act until a task force reports at the end of the year.
Why will the government not show some backbone, seize the Canadian edition of Sports Illustrated and enforce the laws of the land?

April 1, 1993
Business of the House


Henry Perrin Beatty: Mr. Speaker, it is hard for me to see how that question was supplementary to the previous one, but I am glad to respond to it anyway.


David Barrett: You figure it out.


Henry Perrin Beatty: The hon. member says I should figure it out. Anybody looking at the two questions would have a hard time figuring it out.
In so far as Sports Illustrated is concerned, the policy of this government is to ensure that the letter of the law is followed fully. What we want to ensure is that the policy that was put in place in 1965 is respected. We have created the task force to look into this sort of issue. There is no requirement that the task force wait until the end of the year. Any time the task force is prepared to make an interim report or a final report, the government will be pleased to receive it.
Our goal is to ensure that the Canadian magazine industry is fully protected.


POINT OF ORDER
David Charles Dingwall: Mr. Speaker, before I ask the government House leader and actually question the business of the House for the remainder of today and tomorrow, I want to co-operate with all members of the House and table a document which I referred to in Question Period. I believe, Mr. Speaker, that there would be unanimous consent for me to do that.


The Acting Speaker (Mr. Paproski):: Is there unanimous consent?


Some hon. members:: Agreed.


BUSINESS OF THE HOUSE
David Charles Dingwall: Mr. Speaker, my question to the government House leader is with regard to the House business for tomorrow.
The House will be adjourning for approximately two weeks for members to return to their constituencies to do their constituency work. I am wondering if the minister could indicate to the House the business for those first few days back keeping in mind that we meet on a regular basis on each Tuesday of the week.
Second, while the Minister of Finance is in the House could he indicate the date of the next budget so that members can prepare accordingly?


Harvie Andre: Mr. Speaker, this afternoon we will be continuing with Bill C-92, the income tax technical amendments. On Friday we hope to get complete passage of Bill C-114 as well as complete passage of Bill C-83, the transport of goods by water act, and Bill C-97, the marine insurance act. These two companion pieces of legislation were passed through the House concurrently at second reading. Hopefully we can do the same for report stage and third reading.
I do not believe there are any particular partisan differences on that.
On Monday, April 19, when we return after the two-week break, it is my intention to call Bill C-62, the telecommunications act.
In terms of business for the rest of that week, I will have to get back to the hon. House leader and other members of the House to arrange details.
In terms of the question of a budget, it will undoubtedly be soon after we get back.


David Charles Dingwall: Mr. Speaker, I am well aware of the rules of this House and I know the hon. member opposite is well aware of the rules as well.
On the basis of some degree of understanding so that proceedings in this House can move at more than a snail's pace, I think it would be in the interests of not only members of the House but also Canadians to know the date of the budget I am sure. As the minister can well understand, if we come back on Monday, April 19, to find out that the budget will be the following day or later that week, then I think members on this side would like to have notice in view of the fact that the government has attempted in the past to have a regular date for the setting of the budget.
If the minister does not have the answer immediately perhaps later this day or indeed tomorrow the House could be informed before adjourning for the Easter recess as to the date of the federal budget.
April 1, 1993


Harvie Andre: Mr. Speaker, I certainly recognize that with the House not sitting for the next couple of weeks hon. members will want to know whether they should spend their time studying up on budgetary matters and so on.
I heartily suggest that that is a good way to spend the Easter break. I can suggest a bibliography of materials to read that would be very helpful in that regard. Perhaps they could start with the economic statement of December 2, 1992.
In fact I think the preparation for the budget is primarily the preoccupation of the Minister of Finance and undoubtedly he will be very busy over the next two weeks preparing for that budget because I would expect to see a budget soon after we return on April 19. Of course we will try to be specific on the date at a time when we can be.


James Capsey (Jim) Karpoff: Mr. Speaker, on a point of order, during Statements by Members the member for Hamilton West indicated that on the third reading of Bill C-91 there were 22 New Democrats absent.
An examination of both-


The Acting Speaker (Mr. Paproski):: I regret that is debate.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Mazankowski that Bill C-92, an act to amend the Income Tax Act, the Canada Pension Plan, the Income Tax Conventions Interpretation Act, the Thx Rebate Discounting Act, the Unemployment Insurance Act and certain related acts, be read the third time and passed.
The Acting Speaker (Mr. Paproski):: The hon. member for Bonavista-Trinity-Conception had 10 minutes of questions and comments.
The hon. member for Brant on a question or comment.
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Derek Nigel Ernest Blackburn: Mr. Speaker, I rise on a point of order. The Liberal member for Bonavista-Trinity-Conception had used up almost all of his time. That is why I was rising. It is to continue with debate, not questions.


The Acting Speaker (Mr. Paproski):: Order please. Let me check with the Clerk.
The hon. member for Bonavista-Trinity-Conception had used up his time but the question and comment period has not started, so I am therefore going to ask for questions and comments one more time.
The hon. member for Western Arctic on a question or a comment.


Ethel Dorothy Blondin-Andrew: Mr. Speaker, thank you very much for the opportunity for me to make a comment.
It is highly appropriate in the discussion on this tax bill that we bring to mind the whole plight of the disabled and the income tax system. A report was done by the Standing Committee on Human Rights and the Status of Disabled Persons. It brings forward the issue of taxation and the disabled because disability involves costs. There were some very specific recommendations made.
The Department of Finance, for one, should become a full and active partner in the national strategy for the integration of persons with disabilities. In relation to the costs and the reintegration of disabled people into mainstream economy and society, there were a number of specific recommendations made. I would like to cite three very briefly and ask my hon. colleague to comment on them.
The changes to the tax system should reflect the following principles:
First, that taxes that people with disability pay should be reduced by measures that offset all their disability-related costs.
Second, the tax system should be used as a delivery mechanism for benefits to lower income individuals with a disability. This relates to income reform as well.
Third, the tax system should be used to remove or reduce the disincentives for disabled people to join the work force.

April 1, 1993
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This is a fairly major issue and concern for people who are basically impacted on by the constraints produced by a person's disability. All programs have a social component, including the income tax system, and should be designed to alleviate the disadvantage experienced by people with disabilities in an equitable and fair manner. Bear in mind that these programs should enhance the independence and particularly the employment opportunities for disabled people.
I would like to ask my hon. colleague how he feels about the support there for these recommendations. This is highly appropriate because the Association for Community Living for the Disabled is meeting in Ottawa. I am sure that they have had contacts with many hon. members.


Fred J. Mifflin: Mr. Speaker, I want to thank my hon. colleague from Western Arctic for that question. Indeed I want to thank her particularly for raising some of the positive aspects in this bill.
She and I have discussed this aspect in advance of her question and I am very much aware of the ongoing work and the work of the committee that had made the recommendations. I want to add that we may recall that I reflected on the nine or ten separate aspects of the items that are included in this bill. This is essentially a bill that includes numerous technical amendments and changes to the Income Thx Act.
It is regrettable that these very positive aspects such as the recommendations made in this report, many of which are incorporated in the bill, are overcome by some of the negative aspects of the bill with respect to essentially opening loopholes for the rich when it should be closing loopholes for Canada's most wealthy. The other somewhat inconsistent and I believe shameful aspect of the bill is that it does not permit the kind of privacy that we, in a Canadian society, would want for employees. These are the 20,000 members of the Public Service who are involved with Revenue Canada.
As a finale statement to this and on a personal note I want to tell the hon. member that for many years I have been a director of the Canadian Paraplegic Association and have worked with the community living movement which is a very important movement in my riding. That was the point that she made at the very beginning. It gives me great personal satisfaction to see that the
disabled are considered in this bill. In my opinion I think the plight of the disabled is one of the most positive aspects of the bill. This is in response to the tremendous bootstrap work that they are doing in the Canadian Paraplegic Association and the Institute for the Blind, which has been in the public eye in the last few days, and other areas of community living. Again I would also say that I believe they are making great strides and this is another indication of that. Therefore I thank the hon. member for her question. I was pleased to be able to highlight that positive aspect of the bill.


Derek Nigel Ernest Blackburn: Mr. Speaker, I am pleased that I am able to enter third reading stage debate on Bill C-92. It is an omnibus bill. I am only going to confine my remarks though to one part of it, the part dealing with the extension of the capital gains exemption for principally the very rich and the very powerful families of this country.
I think it is an absolute disgrace for this government or indeed any government at this time. We are in the depths of a recession. Middle income earners have been overburdened with tax increases for the past several years. User fees are going up. Provincial taxes are going up. Deficits are ballooning out of sight. There are poor, hard-working, middle income earners. There are those households where incomes are around $40,000 to $50,000 a year if they are lucky and two persons are working in that family. Now this Conservative government has to bring in an amendment to the Income Tax Act that would further exempt family trusts for up to another 75 or 80 years.
The history to this family trust debacle in this country goes back to 1972 when the then Liberal government decided to bring to an end succession duties and estate taxes, particularly estate taxes at the federal level. In place of the estate taxes they introduced a system of taxes on capital gains which hitherto had gone untaxed. At that time of course that was looked upon as being unfair as well.
In place of the estate tax, and when they brought on the capital gains tax in 1972, the government of that day-I was here in the House of Commons at that time-brought in the 21-year rule which said that family trusts would have up to 21 years in order to prepare for a capital gains tax on their private family estates. Most of them, believe me, took advantage of it.
April 1, 1993

Contrary to the impression left by some Conservative speakers in this debate, this family trust is not your ordinary, run of the mill kind of legal and financial arrangement that your average taxi driver engages in or that your average nursing assistant has or that your average truck driver is able to afford. For one thing, to set up a family trust costs several thousands of dollars so automatically most ordinary taxpayers of middle-income status are unable to set up a family trust.
Second, most families in this country, the great majority of them, have no financial reason to set up a family trust. They simply do not have assets large enough to warrant that kind of expenditure or legal cost that is required to set up the family trust.
What we are really talking about here is primarily, not exclusively, the very rich in this country. We are talking, for example, about the K.C. Irvings, the Reichmanns, the Bronfmans, the Westons, the Thomsons, the Rogers and the Blacks. We are talking about very, very rich and powerful families that have been able to shelter or avoid paying capital gains on their family wealth for 21 years.
This government through Bill C-92 has decided to let them go for another, as I said earlier, 75 or 80 years. It now says that when the capital gain is sold, it will not be taxed until the last beneficiary dies. Today, if I was very rich and I left the whole family trust to a child just bom this week, the chances of that child living to be 75 or 80 is very great in this modem age in which we live, so in effect the capital gain accumulating over the years on that family trust will go untaxed for another 75 or 80 years.
What kind of a message is this sending to the middle income earner, to the low income earner, to people out there who are trying to make ends meet?
Since 1984 this government has increased just federal taxes alone on average Canadians by about $3,000 a year. Because it has off-loaded much of its financial responsibilities and deficit on to the provinces by cutting back the rate of increase in transfers, the Canada Assistance Plan and other financial devices or mechanisms that it has established over the years by which it sends or transfers funds to the provinces, it will just cut back on the increase caused by inflation over the past few years. The provinces are now having to cut back very drastically.
Government Orders
We see it in the province of Newfoundland. We saw it just this week in the province of New Brunswick. In Saskatchewan, after eight years of profligate Conservative spending in that province, the NDP government has had to slash expenditures, cut back on programs, having to borrow more money and in a very dire deficit situation.
British Columbia is not as badly off, but there are also cutbacks there I understand. The province of Ontario I suppose is the best example of all. It came into office in September 1990 with a ready-made deficit of $5 billion. Because of declining revenues due to the recession that was setting in at that time and also the profligate spending again, this time not a Conservative government but a Liberal government under David Peterson, which presided over Queen's Park during the five richest years of Ontario's history, Ontario still managed to come up with a deficit of half a billion dollars in the treasury.
Because of all these changes and because today civil servants are threatened with their jobs or pay freezes or cutbacks in wages and private sector employees have lost their jobs to a great extent-there are 400,000 or 500,000 jobs that have gone down the tube as a result of restructuring and the free trade agreement-and companies are going bankrupt, because of all of these reasons, private sector and public sector employees are finding it extremely difficult to cope with taxation and increased user fees and the cutback on government services at all levels, federal, provincial and municipal.
We then have to contend with this kind of easy soft treatment that this Conservative government is now offering the richest 200 or 300 families in this country whose combined total assets are in the neighbourhood of about $70 billion. We are not talking about hundreds of thousands of families here. We are talking about, relatively speaking, a very small number of rich and powerful families in this country that can yet again defer capital gains tax on their family trusts for another 75, 80 or 85 years.
This is an intolerable situation. How can a government on the one hand talk about restraint and cutting back on government expenditures and on the other hand increase taxes to ordinary Canadians and then let the very rich and the very powerful off the tax hook as far as their family trusts are concerned?

April 1, 1993
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It just does not make any sense. Worse than that, it sends a signal to ordinary Canadians that this government does not care a dam about equity and fairness in the tax system, but will continue to protect those few rich families in this country who, probably without exception, support the Conservative Party either directly through funding or certainly at the ballot box.
Many, many people have made comments about the unfairness of Bill C-92 as it affects family trusts. It is not just members of the New Democratic Party who are opposed to it, it is not just labour, it is not just anti-poverty groups, but many professional institutions and professional people have also made comments. For example, Sidney Goldstein of Goldstein and Goldstein in Ottawa, who is a tax lawyer and consultant, says and I quote: "There is no question that it"-that is Bill C-92-"represents a massive windfall for existing trusts".
Why would a person with his knowledge and with his experience-he is not only a lawyer but he is also a tax consultant and tax expert-make a statement like that if it were not true? I doubt very much that he is a supporter of the New Democratic Party.
It is not just us here on this side of the House who are condemning this as an unfair and inequitable approach to an over-all fair taxation system that we are desperately trying to bring in in this country.
Kathryn Bush of Blake, Cassels & Graydon had this to say and I quote: "A cynical person might suggest that pressure from influential political supporters also should be listed as a reason for the draft legislation". This is when she was commenting on the original legislation when it was first drafted. It has not changed in respect of family trusts since then.
Neil Brooks, associate dean of Osgoode Hall Law School, said and I quote: "The government has given Canada's wealthiest families notice that it intends to give them a gift worth several billions of dollars".
These are knowledgeable people, an associate dean of Osgoode Hall Law School in Toronto and members of the financial community whom I have just quoted, who are putting it on the line and saying this is what the bill is all about. To paraphrase what they are saying is to say
that this is a gift, a handout to the very rich people in this country. At the same time this government purports to have a deep sympathy for the hard working middle income earner who pays the bills, abides by the law and tries to look after his family. That is a mythology.
I just read a book by an American Republican, Kevin Phillips, a political analyst, called Boiling Point. It is a book which I suggest every Conservative should read. In that book he explains how Governor Clinton of Arkansas was able to overthrow President George Bush in the presidential elections of last November.
In that book he describes how Bush's predecessor, Ronald Reagan, the great communicator, was able through his eight years, two administrations, from 1981 to 1988 to constantly remind the hard-working middle income earner in the United States, the industrial worker, the truck driver, the taxi cab owner and operator and so on that the reason their taxes were going up was because those profligate states and those profligate welfare agencies and those profligate municipal governments all over the United States were spending more and more of their hard earned tax dollars to pay the welfare rolls for the lazy who would not work. As long as Ronald Reagan could keep the hard working middle-income earner convinced that that was why his taxes were going up and he was continuing to slide from middle class into poverty in many cases, the industrial middle class continued to support Reagan as they had done probably for the first time in the presidential elections of 1980.
When fumbling George Bush came along and discovered all of a sudden that he could not communicate quite as well as his mentor Ronald Reagan, the situation began to change and Governor Clinton and his brain trust who helped him run his campaign brought in a whole new set of statistics and figures and facts.
To make a long story short, they were able to show through those two successive income tax reform regimes under Ronald Reagan and George Bush that it was not the low income or welfare recipients who were causing the middle class to have to pay higher taxes and user fees at the federal, state and municipal levels. Rather it was because the Republicans had actually lowered the effective taxes that the very rich in the United States had to pay. Therefore he was able to cast the eyes of the middle
April 1, 1993

class away from the poor and the helpless upward to the very rich and the powerful.
That sealed George Bush's doom. The middle class went back to the Democratic Party convinced it was not the poor who were dragging them into poverty but the fact that the rich were in a privileged tax position in the United States and they were not paying their fair share.
We can use the identical argument in this country because that is precisely what has been happening in Canada since this Conservative government, like its Republican cousins in the United States, took power.
If we look at the national debt in this country, we find that 50 per cent of that national debt increases as the result of compounded interest. Forty-four per cent of that debt is caused by tax avoidance. That is a legal term I know and I do not mean it in a legal sense. They are not doing things that are illegal, but the very rich families in this country at the personal income tax level and the very rich corporations all through the 1980s, and I am not talking about the recession years of 1991-92,1 am talking about all through the 1980s, were not paying their fair share of taxes. Statistics Canada figures will show that 44 per cent of the national debt of this country came about as a result of those loopholes, shelters or deferments, whatever we want to call them. They did not pay their fair share. They did not carry their weight. Therefore, Conservative government after Conservative government in the United States and Canada off-loaded that unfairness on to the backs of the struggling and hard working middle-income earners.
That is why their taxes are going up in this country and have gone up over $3,000 a year since the Conservatives came into office. Only 6 per cent of the national debt is the result of government program expenditures. Of that less than 3 per cent is on social programs.
To listen to some of our Conservative friends and even some of our Liberal friends, one would think that all this massive government spending and overspending is the result of things like medicare, transfer payments through the Canada Assistance Plan to help the poor, those who are unemployed, the UI fund and all the rest.
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The trouble is this government has been reading too many articles about Preston Manning and has probably even read his book. That is one of the major problems. If we look at the real facts and the real figures, we find that the debt in this country has accumulated because of compounded interest and unfair taxes that allow the rich corporations and rich individuals not to pay their fair share of the tax burden.
The situation in Canada is exactly the same as it was in the United States. That is why we on this side of the House look forward to the next election, knowing that the people of Canada are going to do the same thing that the people of the United States did. The middle-income earner is fed up with taxes. He is fed up with the increase in user fees. He is fed up having to pay out to governments at all levels every time he gets his pay cheque. Now he is being informed by many of us and other people in the country that the reason for this is not because his tax dollars are being wasted on the poor, but because there is unfair taxation in this country. If the rich individuals and rich profitable corporations were paying their fair share of taxes, he would not be paying nearly as high taxes.
This is the problem we have today. It is being exacerbated by this government through Bill C-92, where once again the family trusts are allowed to continue for as I said earlier another 70, 75, or 80 years or even more.
It was pointed out earlier today by one of the Conservative speakers in this debate that those trusts do pay income taxes on what they earn year after year.
Nobody disputed that. Nobody ever said they did not. This is the irony of it. They are not paying a tax on the accumulated trust, the value of the trust. Each year as that trust makes money there is income tax paid. They can still shelter that money. They have very rich lawyers, they have very expensive tax preparers that really understand the tax act.
Let us say a family trust generated $100,000. They may be able to shelter $50,000 of that through real estate, RRSPs and of course political donations. There are all kinds of ways this can be done so there is still unfairness built into the system.

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I see that my time is up. I hope that this government will come to its senses if it wants to survive the next election. More important than the political aspect of it, it is about time the Conservative government came clean with the taxpayers of this country and brought in real tax reform that would create a tax fairness in the system that everybody could accept. Then we would understand that there is a need to tackle the deficit if the burden fell fairly and equitably on all of us, not just some.


Eugène Bellemare: Mr. Speaker, I wish to comment on Bill C-92, a bill to amend the Income Tax Act.
By reading this bill I have discovered on pages 247 and 248 that from now on any person can get taxpayer information if it is for the reason of supervising or evaluating or disciplining any personnel in the Public Service that work either at Revenue Canada to implement this act or works at Canada Pension Plan or works with the unemployment insurance.
I find it absolutely abominable that this is added, especially in the same year that the government passed a law to change the Public Service Act and also took great pride in talking about Public Service 2000.
I have received copies of the 1991 and 1992 guides to income tax. The 1991 guide talks about privacy and confidentiality. It states to the person filling in his or her income tax: "In addition to other constitutional and legal rights, you have a special right that personal and financial information provided to National Revenue Taxation will be used only for the purpose allowed by law".
In this year's 1992 guide, again it has a declaration of taxpayer rights. Under privacy and confidentiality I see that the restriction is stronger and words have been changed. I would like to read the wording: "You are entitled to expect that we will use the personal and financial information provided us only for the purpose the law allows".
It would be very interesting to get a legal interpretation of both of these comments that are given to people who fill in their income tax. It is very interesting that all of a sudden after passing this law today, it would be as the government says and has been saying "let the managers manage".
As you are aware, Mr. Speaker, this year in the new public service law we now know that managers can
discipline, can transfer their employees, can promote their employees and their recourse is about nil if there is any recourse at all. Now we see that these same managers in either supervising, evaluating or disciplining their staff at either Revenue Canada, Canada Pension Plan or at the Unemployment Insurance Commission, will now be able to call in the income tax returns of their employees to see how they filled in their returns, to find out if they gave to one party or another, if they gave to one lodge or that association. I wonder what the interpretations will be. I find that we are going more and more into a dictatorship.


The Acting Speaker (Mr. Paproski):: I do not know whether there was a question there.


Eugène Bellemare: It was just a comment.


Mr. Dennis Mills (Broadview-Greenwood):: Mr. Speaker, I want to start by saying there are some aspects of Bill C-92 that meet the test I have always used toward tax reform.
Specifically, when I test a particular tax measure I first of all ask, is it fair? Is it efficient? Is it simple? Most important these days, I ask: Is it a tax measure that will assist in putting people back to work?
I believe the sections in the bill that deal with the reinstitution of the Small Business Development Bond Program is a good part of the bill.
I believe the section in the bill that talks about the introduction of the home buyers plan which allows individuals to use up to $20,000 of RRSP funds to purchase a home before March 2, 1993 is a good part of the bill.
I know in my own community there were many real estate agents who told me when that aspect of the bill was announced it spurred a lot of activity in the real estate field, especially for young people. That part of the bill I support.
I also support the measure to assist Canadians with disabilities. Those are aspects of this bill that had the government lumped them together and put it through the House, it would have been a much different debate. Because other components were woven into this bill like the family trust and the amendment that allows the public servants to have their tax returns reviewed, how could we possibly stand up here and support this bill?
April 1, 1993

How could we possibly go home to our constituents and say: Oh yes, we supported a further extension of the unaccountable, unknown amounts in the family trusts that have not been looked at for 21 years. We now want that renewed for an indefinite period of time.
This is the problem I have with the government. It comes forward in a way in which it is preoccupied with its tactics, preoccupied with creating illusion but the reality is quite a bit different.
I listened earlier to the member for Ontario. He kept repeating during his remarks: "This bill is designed to put people back to work. This bill is designed to improve this aspect of the Income Ihx Act." This word "design" seems to be the buzz word in the Conservative government. It has been using it for many years. The problem the government has is that the average Canadian knows there is a long way between the design and the reality.
I think specifically about the GST which really has represented the cornerstone piece of design work for the government. The GST was supposed to be a better tax, a more efficient tax. We now know as a result of the public accounts committee two weeks ago that the GST has been the most poorly designed tax that has ever been perpetrated on a nation.
I am going to be very specific to show in my remarks and to repeat to some government members what the Deputy Minister of Revenue informed us of last week in committee. The Deputy Minister gave us information last week. The facts are that the gross GST income last year was approximately $30 billion. After we subtract the cost of the low income tax credits and the cost of operation of the GST we are left with a gross net GST, not net net, but a gross net GST of approximately $15 billion.
My leader has stated repeatedly that we, the Liberal Party of Canada, are going to scrap or replace or remove, whatever word you want to use, Mr. Speaker-scrap means we are just going to get rid of it-the GST, the line comes out from the-


Mr. Thompson:: A point of order, Mr. Speaker, you might question whether this is a legitimate point of order, but when speaking of the GST and scrapping or
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replacing, could the hon. member explain the difference between those two terms.


The Acting Speaker (Mr. Paproski):: The hon. member may have that opportunity after the hon. member finishes his debate.


Dennis Joseph Mills: Mr. Speaker, I am happy to clarify that. I was trying to make a point that there are many different words coming from different quarters, but scrap to me means abolish. It is going to be removed.
The line that comes out of the government side is: "Where are you going to get the $15 billion?" The government has created the illusion that there is between $15 billion and $16 billion after the credits, et cetera.


Mrs. Sparrow:: Right, $15.2 billion.


Dennis Joseph Mills: Right, the hon. member for Calgary Southwest said $15.2 billion. I asked the Deputy Minister of National Revenue last week in the public accounts committee if the department has ever done a cost benefit analysis on the GST by sector and the answer was, no, it had not done a cost benefit analysis. He did admit that there was in fact a cost to the registrants.
I did a little bit of sampling and I would challenge any members on the other side to check my numbers. We have about two million registrants according to the Department of National Revenue. Most registrants will say that the cost of administration in their small business or big business, whatever it is, is approximately $3,000 a year. Most people do not argue with that. There are many small businesses that will say the cost is much higher because they prepay the GST sometimes when their receivables have not come in, and that puts stress on their cash flow.
There are many who argue that it would be much more than that, but the bottom line is that from that $15 billion we have to deduct the cost to the registrants. There is about a $6 billion cost to the businesses, or registrants, in Canada.
On top of that, there is not a person in this House of Commons who will argue against the assertion that the GST has exacerbated the underground economy in this country. In 1985 the then minister of revenue estimated that the underground economy then, which was before

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the GST, was around $45 billion and the cost to the Treasury on that $45 billion was approximately $9 billion.
A lot of people today guestimate that the underground economy exacerbated because of the GST is probably in the area of $15 billion to $20 billion.


Barbara Jane (Bobbie) Sparrow: But that's hypothetical. How do you know that?


Dennis Joseph Mills: It is not hypothetical if it is happening, and we all know it is happening. There is not a member in this House of Commons who will stand up here and say there is no underground economy because of the GST.
The bottom line is-


Mrs. Browes:: Get to the facts.


The Acting Speaker (Mr. Paproski):: Order, please. There will be an opportunity for questions and comments. Please allow the hon. member to finish his debate and then we will get into questions and comments.


Dennis Joseph Mills: I appreciate that, Mr. Speaker. The members say I should give facts.
The point I am trying to make is that the government very rarely deals with the facts. It has been creating this illusion, this mythology with Canadians for the past nine years. If there is one thing we must do now, and we have to work with facts, and this came out of the public accounts committee, well the facts are that there is no cost benefit analysis. It has not even completed a cost benefit analysis within the department.
If we do a complete cost benefit analysis on the GST we are just dealing with the $15.2 billion, less the cost for registration, less the cost for the underground economy. We cannot even calculate the lost business confidence. There is absolutely no cost known to the tourism sector in this country yet tourism operators say the GST has cost their business.
Executives of the T. Eaton Company of Canada estimate that the GST has cost the retail business in Canada, clothing, refrigerators, stoves, et cetera, close to $10 billion. For food service and hospitality the number is incalculable. The point is that the GST is a net loser.
There is no way anyone can prove to me there is anything on the plus side as a result of the GST.
My point is that this government says it designed this tax to achieve a better environment, a better competitive environment, a better environment for a whole litany of things. The bottom line is that the design of this tax has had no real benefit to any sector of our economy.
I would submit-


Pauline Browes: How about exports?


Dennis Joseph Mills: I am going to respond. I knew the government would mention exports.
I would submit that our exports, and we must remember that the manufacturers' sales tax was not really applied to exports, are booming right now because of our lower cost of production and our lower dollar.
There is not an economist in Canada who will refute this. In 1987 exports were in fact higher than they are now.
Here is the point that I am trying to make. There is a long way between the design and the reality. I am shocked when Conservative members refute that statement because they talk to the same people that I talk to when they go home.
I cannot believe that their constituents are telling them that they love that design of the GST or the fact that the government is going to allow these trust funds, that are estimated to be worth anywhere from $15 billion to $50 billion, to go on for another unlimited period of time.
I cannot believe that their constituents love the fact that the government, ignoring what the parliamentary committee said in terms of how to treat income tax forms, is going to ram through a bill in which the management of not only Revenue Canada but also aspects of Health and Welfare Canada and Employment and Immigration can look at employees' tax returns.
If Conservative members' constituents are telling them that they like that kind of tax design then my constituents are totally different because they think it is unfair. The first point I tried to make was: Does it meet the test of creating new jobs?
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I started off my remarks by citing certain aspects of this bill that I think will create jobs. However, there is no way anyone can convince me that by throwing the family trust section into this omnibus bill and rationalizing that extended untouched, unaccountable, and unknown amount in the family trust portion of the act, it should go on without any accountability. I defy anyone to prove to me how that will create more jobs.
Illusion and reality, myth and reality, design and reality, are different things. My community, and I believe every community across the country, has reached the boiling point, as the member from the New Democratic Party said earlier. He talked about the Canadian public's boiling point.
The Conservatives have had as their leader for the last nine years one of the best communicators as a Prime Minister that this country has seen for a long time. The problem is that he is no longer there to communicate, to schmooze and do all the things that he did so well in terms of the big sell. It is over.
People now realize that there is a distance between the design and the reality. The next election, which is only four or five months away, will certainly prove the point that if they are going to put forward a tax measure that does not meet the tests of fairness, efficiency and putting people back to work they are going to be blown out of the water.


Gregory Francis Thompson: Mr. Speaker, the member just gave a wide-ranging speech. I will have no problem questioning or attacking certain parts of it.
Much of what he says flies right in the face of reality. He is talking about the GST, the hatred of the tax and the complications of the tax, et cetera. Let us accept that part of the argument.
What I cannot accept is that it is dragging down the Canadian economy, as he has implied. In fact it is doing just the opposite.
I have an article from The Globe and Mail on March 23 of this year, headlined: "Retail sales continue to climb in January". It lists the numbers, and they are very impressive. The Canadian economy is moving out of the
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recession, and some of that is showing up at the retail sales level.
I will quote one paragraph from this article. It states:
On a year over year basis, January retail sales were up 5.6 per
cent. Drug stores reported a 13 per cent sales increase to lead the
pack -
-et cetera. Retail sales are moving forward.
In terms of the GST, because this is something that the member's party does not understand although I will admit that he understands economic policy better than his own leader does, there is a very real connection, as the member for Calgary Southwest tried to point out, between the GST and our export capacity.
I have another article in my hand that points out that our exports are at an all-time high. That is related to the dropping of that old manufacturers' sales tax which discriminated against our own manufacturing in terms of exporting out of the country.
The headline on March 19 of The Globe and Mail reads: "Trade surplus biggest since 1985". It lists the numbers, and they are very impressive. I might note that 1985 was just one year after we took power after successive years of Liberal mismanagement in the country. We had some big numbers to match, and match them we did. The numbers speak for themselves.
If the hon. member is going to get up in a rambling sense and cover as much territory as he normally does in debate he has to stick to the facts. They speak very well for this government in terms of economic management.
Earlier in the day one of his members from Newfoundland got up and talked about the national debt. I am not going to accuse the member of this one because he is smart enough to know that we do have a problem. I think he buys in to some of the things we are trying to do on this side of the House, but his party certainly does not. He is one of the few on that side of the House who understands what we have to do and do what we are doing.
I would be interested in listening to the member's response. I do hope that he is very specific when he mentions these numbers because the numbers are very much on our side.


Dennis Joseph Mills: Mr. Speaker, I want to begin by responding to the last part of the member's question relating to the national debt.

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Gregory Francis Thompson: The member's understanding of the economy would be a better point.


Dennis Joseph Mills: I think we should deal with the national debt. I want to make the point about how the government has managed to spin or create this illusion that it is a better fiscal manager.
The reality is that in the last nine years in the government's effort to ratchet inflation to almost zero it has put so many people on unemployment. Does the government realize how much money it has had to pay out because of the damage it has caused in terms of unemployment? Does the government think that Canadians realize that as a result of its economic policy it has spent on disbursements, between welfare and UI, close to $170 billion? That is money the government has paid out for people to be in unproductive roles. It has spent almost 40 per cent of the national debt to pay people who it has basically put out of work because of its obsession with an idea called zero inflation. Most economists are now admitting there has never been a precedent anywhere in the world that it really works to go that hard on inflation.
I want to talk about the difference between Conservatives and Liberals when it comes to debt management. We are not perfect and there is absolutely no doubt that we would have incurred a lot of the same debt. However, the difference between Liberals and Conservatives is the fact that we, when times are tough, have programs.
Conservatives talk about program spending being reduced to surplus in their operation of government, but at the end of $170 billion that they paid for welfare payments and UI, what is there to show for it? There are 3.2 million people who have lost their dignity.
We at least would have roads, sewers, bridges, airports. We would put money into high-tech industries. We would put money into training. Then at the end when we came out of the recession we would have a serious asset.
Aside from this poorly designed, ill-timed GST-and most members know about that and I am not going to belabour the point on the GST-the real legacy of this government-and it is certainly not traditional Toiy thinking, I do not know how they got trapped into this plan-is that in its first five years the government incurred $50 billion worth of personal tax increases. On
top of that, over nine years the government spent $170 billion, 40 per cent of the national debt, on disbursements to people on welfare and unemployment insurance, all in the name of zero-zero inflation.
I have said in this House many times that we must focus and keep inflation in order, but not to overkill to the point where there are so many people out of work and the level of confidence in this country shrinks the GNP. I cannot believe that there are not members over there who feel guilty about the fact that the government has spent $170 billion paying people not to work. Would they not feel much better having roads, bridges and airports?
Four months from now the people will decide which party has a track record of putting people back to work. I am pretty confident that our track record stands on its own.


The Acting Speaker (Mr. Paproski):: I regret questions and comments are now terminated. On a point of order, the hon. member for Her Majesty's Loyal Opposition.


David Charles Dingwall: Mr. Speaker, on a point of order, there might be unanimous consent in the House to allow me to ask a question of my colleague. I just wonder if there would be.


An hon. member:: No.


The Acting Speaker (Mr. Paproski):: Debate. The hon. member for Carleton-Charlotte.


Gregory Francis Thompson: Mr. Speaker, I will allow the member to ask me a question when I am finished with my remarks. I hope he stays around and takes part in the debate.
Again, there is a great difference between those parties over there and this party. There is no question about that. That is part of what we are talking about today when we speak of Bill C-92.
I cannot go any further without commenting again on what has been said on the other side of the House, particularly from members of the Liberal Party in terms of what they would do versus what we are doing. They left the country a burden of debt, as most of them will admit to, that put us in a very difficult position when we took the reins of government in 1984. In fact the record will show that many of the front bench members of the former Liberal government in 1984 bragged that they did indeed leave the cupboard bare. They left us with a mountain of debt, as some call it.
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The mechanics of that debt, and just the sheer numbers of that equation, made it very difficult for the government at the time and it still does, but what is the sense in going through those numbers, which we do constantly in this House in terms of what was happening then and what is happening now. The fact is it is now 1993. We have to deal with 1993 and the future. If we want to continually go back and dig up what the Liberals did versus what we are doing, well I think it is pushing the argument in a direction which will not do any of us any good.
There is no magic on this side of the House when you take office and have the responsibility of forming a government and doing what is right for the country. I want to point that out because it is important that we focus on what is happening today in the various provinces, what they are doing in terms of taxation and reducing their debt load. We are always being blamed. I guess it is the role of the opposition to blame us for everything that happens, whether it is good or bad. Obviously however, the opposition does not credit us with having done a whole lot of good.
I want to point out what happened in the province of New Brunswick yesterday. It brought down a budget yesterday. I want to point out the difficulty of having the responsibility of forming the national government and the difficulties of working with the provinces to do the right thing.
One of the things we have done in this House is we have reduced income tax. I am talking specifically about the surtax which has been reduced from 5 per cent down to 3 per cent. It is part and parcel of Bill C-92, the bill on which we are speaking today. Average Canadians are going to be paying less tax because we have reduced the surtax from 5 per cent to 3 per cent.
I will step through the numbers and what this means to an average family, but do not let me forget to remind everyone that what the province of New Brunswick did yesterday basically flies in the face of what we are trying to do.
Bill C-92 reduces income taxes for 14.6 million Canadian taxpayers. The legislation we are debating now will confirm the one point reduction in that surtax which came into effect on July 1, 1992. There also of course was
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a one point reduction on January 1 of this year. Therefore, in the last two years this government has reduced the personal income tax.
Yesterday the province of New Brunswick flew completely in the face of that. It was announced in its budget yesterday in Fredericton. The provincial income tax rate now rises to 62 per cent from 60 per cent of the basic federal tax and it will go up another two percentage points next January to 64 per cent. That is the second highest rate in Canada. I am not talking about the rate itself, although it is high enough and it is too high. I know that in all honesty one could argue that our rate of personal tax is too high as well and I guess most of us in this House, all politics aside, would agree with that.
However, what is happening here is that we have given a tax break to the citizens of Canada, only to have the provinces come in on this side to take it away. It simply neutralizes any tax break that the citizens back home in our respective provinces have received at the hands of the federal government.
The province of New Brunswick is not the only province to have done that. It is being done from one end of this country to the other. We can argue here until we are blue in the face as to why they are doing it. We understand fiscal responsibility. Believe me, we do. We have had to bite the bullet on many tax issues as well. Some of them have cost us dearly in terms of public support. That is something politicians are obviously aware of.
The difficulty today in our system of government is that there is no co-ordination between us and the provinces in some of these tax matters. Therefore, what you give with one hand, they take away with the other. Does that really have anything to do with politics or political parties as such? I suppose it does. I can lay it clearly at the feet of the Liberal government in the province of New Brunswick.
The NDP is doing it as well in Saskatchewan, in Ontario and in British Columbia. When those NDP members get on their feet in this House they completely remove themselves from those premiers and governments back home. That is because they are doing the very thing that they have supposedly railed against for years and years in this House.

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I bring that to everyone's attention because it is happening regularly out there. What do we do about it? I guess what we do about it is bring the premiers together with the Prime Minister, the federal finance minister and all the provincial finance ministers, sit them down and sort some of this nonsense out. It is not the first time that we have given a break only to have it taken away from Canadians by another branch of government.
I will mention what that reduction in the surtax would save the average Canadian family. In 1993 it would save a single taxpayer earning $30,000 approximately $76 in tax. It would be a $162 reduction for a one-income couple with two children with earnings of $50,000. Those are not insignificant numbers. We have to be conscious of them because there is a limit to how much we can tax.
The members on the other side of the House are famous for attacking us. The member for Broadview- Greenwood and I were engaged in debate a few minutes ago on the GST. The devil that the GST is and the difficulty it has created for us politically in terms of having to bite that very tough bullet, the problem when it gets to the floor of the House of Commons is that members on that side of the House do not want to tell us what they would do to replace it, scrap it or whatever word they want to use.
The Liberal Party at this veiy moment has an internal document which to my knowledge has never been made public. That document discusses the various mechanisms or tax machines the Liberal Party would put into play if it did replace the GST. I think everyone will find this quite fascinating. I know it has been spoken of in this House before. One of those is called the BTT. It is the business transfer tax. The interesting thing about this tax is that it is like the GST, but it means that every single item in the economy is taxed, including groceries.
Those members talked about it privately but they do not want to talk about it publicly. They want to play that cute little game they continually play running up into an election. Mr. Speaker, you have a good memory, particularly a good political memory. Do you remember the last two times a Liberal Party formed the government? When was it? In 1974, they formed the government. They ran
through a five-year mandate and then in 1979, they went back to the people. They lost that 1979 election.


Eugène Bellemare: For six months.


Gregory Francis Thompson: That is right. They were out of power for she months and I am glad the member reminded me.


Barbara Jane (Bobbie) Sparrow: Nine months.


Gregory Francis Thompson: Nine months, okay, give or take three months, what is the difference. The reason I mention that is because it is a strange coincidence but we are leading into an election. The last two elections that the Liberal Party won, as I mentioned, were in 1974, they lost in 1979 and nine months later, they were back in 1980. They won those elections on misinformation, if you wish, the big lie.
In 1974, the reason they won is that they disagreed with us, the Conservative Party, when we suggested price and wage controls. They said no, they would not campaign on price and wage controls and they did not. They campaigned against us because we suggested price and wage controls. Lo and behold, they won the election.
Remember what happened then? Six months later that famous line; "zap, you are frozen", came into play, it came into being. They did exactly what they said they would not do.
They went back to their same old tricks in 1980. It is another election. That election was on an 18 cents per gallon tax that the present Minister of Fisheries and Oceans brought in wearing mukluks. Remember that one?


Barbara Jane (Bobbie) Sparrow: On gasoline.


Gregory Francis Thompson: On gasoline, right. We were going to address the debt problem. We were going to address the deficit problem. We were going to do it via an 18 cents per gallon tax on gasoline. We had a plan whereby if we implemented that tax plan, we would wipe clean our debt totally within four to five years.
It was a plan that most economist bought into, but it was a tough one because we were telling the Canadian people exactly what they did not want to hear, they were going to be taxed.

5#

April 1, 1993

When the Clark government fell that winter evening of 1979, it fell precisely because the folks on the other side of the room, that is the combined opposition, could smell success or failure or defeat of this government because we were a minority government.
Back out on the campaign trail in 1980 they fought against that 18 cents per gallon tax and said: "The Liberal Party would never do it. We would never tax gasoline at 18 cents a gallon". We took the crack and said that it is short-term pain for long-term gain. That was the line we used.
We were not successful with that line because none of us wanted to inflict apparently short-term pain on ourselves for long-term gain. We did not see any need for it. Most Canadians quickly did the calculation. Mr. Speaker, if you buy 20 gallons of gasoline, that is $3.60, and $3.60 was a lot more in 1980 than it is today. Believe me, you know that and I know that.
This goes right back to what I was suggesting before and that is what we are debating in this House, reality versus fantasy. We were rejected because we were telling the Canadian people the truth. The fact is the Liberal government raised the price of gasoline within two and one-half years by $1 a gallon. It was $1 a gallon, not 18 cents a gallon.
After taking office in 1980 it went on a spending spree the likes of which we have never seen in Ottawa. It created the very problems that we are saddled with today. We had increases in government spending between 1980 and 1984 of 16 per cent and 17 per cent per year consecutively. When the Liberals left office the percentage of debt that they had collected or accumulated was approaching 10 per cent of our gross domestic product.
They were spending $1.31 on programs for every dollar in tax they took in. How long can a government sustain itself at that kind of a spending clip? A government cannot sustain itself spending in such a horrendous way. It was a wanton disregard of the taxpayer.
When we took office in 1984 that is what was over our heads, a huge accumulated debt of $210 billion, a debt that was piled up over the years.
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On the other side, they gave us an annual deficit, that is the amount of money that the federal government was overspending on a yearly basis, of $34 billion.


Some hon. members:: Thirty-eight billion dollars.


Barbara Jane (Bobbie) Sparrow: It is $38 billion.


Gregory Francis Thompson: Excuse me, $38 billion. I am off by $4 billion. Thank you, Bobbie. We were left with a structural deficit and a mountain of accumulated debt.
The line they used in 1984 when we took office was they left the cupboard bare. They left us in a position from which it would be very hard to operate the reins of government efficiently. They really did leave the cupboard bare.
What did that first government do at that time? I call it a structural deficit because some of the programs and some of the things the government bought into we simply could not cut off the tap overnight and shut them off. Those spending ways followed us for the first couple of years of our mandate after forming the government in 1984.
They are up to the same sort of tricks today in 1993, a decade away from 1983, the year the present Prime Minister took over the leadership of this party and only nine years ago after he became Prime Minister.
Despite the difficulties we inherited as a government in 1984 we have made remarkable progress. I mentioned the level of debt in relation to our gross domestic product being in the order of approaching 10 per cent. We cut that in two. As the Canadian economy has continued to grow over the years we have cut that percentage down. We cut it exactly in two.
Some of the measures we are talking about over the years in the various budgets that we have brought in as a government have been intended to do that very thing, not only bring down the level of debt but encourage investment. That is what Bill C-92 will do.
We had some members on this side of the House over the last number of days stand up and explain in detail some of the aspects of this bill, particularly in regard to trusts and the closing of loopholes in regard to taxation of big corporations, et cetera.
We have done what we have had to do. I feel quite confident that Bill C-92 if passed by this House will lead

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us down the road in the direction that we believe that Canada has to be taken. Canada needs a full economy, a productive economy while we continue to make the tough choices, to do the tough things that are necessary to achieve that.
I will leave it at that. I look forward to questions and comments from the members across the room.


Eugène Bellemare: Mr. Speaker, I found the speech by the member for Carle-ton-Charlotte rather interesting when he was trying to explain to us what good managers the Conservatives have been since 1984.
I would like to do two things. First, I wish to make a comment to clarify some figures and pose two short questions.
In the last full year of the federal sales tax, that is 1989-90, the gross take was $18 billion and the net was $17 billion. In the first full year of the GST the gross collection in 1991-92 was $30 billion and the net was $15 billion, less half a billion dollars for administration and collection, which brings it down to $14.5 billion.


Barbara Jane (Bobbie) Sparrow: That's not true. Come on, Eugene, get your figures straight.


Eugène Bellemare: I have been challenged from across the way to give my source. I have just come from meetings in the public accounts committee where we had the Revenue Canada Deputy Minister and his team show up. These are the answers I was provided with. I took care to write my questions down to get written answers and these are the bottom lines that I received from the last meeting.
In other words, when the government had the federal sales tax, for every dollar it collected in 1989-90 it kept 95 cents. In 1991-92 for every dollar it collected it kept less than 49 cents. Is that good management?
My two short questions for the member for Carleton- Charlotte are these. Why did the finance department get rid of the cost benefit analysis committee just about a year ago? My second question is, what was the national debt in 1984 and what is it today in 1993?


Gregory Francis Thompson: Mr. Speaker, I will tell the hon. member exactly what the debt was in 1984, as I did in my opening remarks and I will tell you what it is today. I will
not disguise the figure. Back in 1984 the debt was $210 billion when we assumed office.


Eugène Bellemare: One hundred and sixty.


Barbara Jane (Bobbie) Sparrow: That is not true.


Gregory Francis Thompson: The figure is $210 billion. We can argue whether it is that or something else, but that is the figure that I am using and it is accurate. The debt today is in the vicinity of $450 billion.
Members opposite take great delight in those numbers because they simply point at that number and say: "It went from 210 to 450, so therefore it is your fault". What they do not consider is the fact that they could not pay the groceries back in 1984. What they were running back in 1984, we mentioned the figure and the member for Calgaiy Southwest corrected me on it, that they had an annual deficit when we took office of $38 billion.
It means that they could not even pay interest on their debt because they were overspending to such a high degree. In other words, they could not pay down the debt because they were running a $38 billion deficiency yearly.
Since then the overspending on an annual basis which we are still caught up in has allowed compound interest on that debt to simply escalate the debt from $210 billion to $450. Every single nickel of the debt today is simply interest on the debt. It is not because of government overspending.
The thing we can take a great deal of pride in on this side of the House is that last year we had a $5 billion surplus in our operating account. That was during a recessionary year. The year before we had a surplus of over $12 billion in the operating account.
We apply that against debt servicing. Our goal on this side of the House is to get down to what we call a zero borrowing position so that we can actually start paying down the debt. However, when one inherits a structural deficit as we did when we took over the reins of government from the Liberals in 1984, that restricts one from doing that and it has restricted us from doing it.
We are going to crunch that number but we are not going to do it by listening to those folks across the hall because they have voted against every single item we have brought into this House and every single budget measure to reduce the level of debt in this country.
April 1, 1993

Guess what else they voted against? Look at the spending controls that we imposed upon ourselves as a federal government. Guess what they did? They voted against it. Just about a year ago it looked as if they could take office and they would love to take office with no spending controls because that is the way they run government.
The other thing we did was to create a dedicated fund for debt reduction. They voted against establishing that as well. They voted against every single measure we brought into this House to get out from underneath the burden of debt.
They cannot disagree with me on that one because I challenge every Canadian out there to examine the voting record of those folks across the hall. We will find out that it is recorded that they voted against every single measure we brought into this House in order to get our debt position under control. They made it practically impossible to get it under way any sooner.
They are prolonging this debate today because they do not want Bill C-92 to go through because it flies in the face of the kind of reality they do not want to own up to.


Mr. Don Blenkarn (Mississauga South):: Briefly, Mr. Speaker, I was wondering whether the member for Carleton-Charlotte would tell the House why the Liberal Party is opposed to the restitution of the following: small business development bonds, the reduction in the manufacturing corporate tax rate by 2 per cent, the introduction of the home buyer's plan that allows individuals to purchase houses with RRSP money, the reduction of the individual surtax from 5 per cent to 3 per cent, measures to assist Canadians with disabilities to allow those who are supporting a disabled Canadian to deduct the unused portion of disabled deductions from their personal income tax on a tax-credit basis, the right to deduct $680 tax credit for education and have the right to have that deduction transferred to parents and grandparents, the child care credit increase from $2,000 to $3,000, the increase of the child care credit for children under seven from $4,000 to $5,000 and the provision in the bill for the rollover of family farms to working sons and daughters of those farms without the imposition of capital gains tax.
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Indeed, are they really opposed to all of these corrective measures that are in this bill to make the collection of tax more fair and to block loopholes? Is that what they are opposed to? Why in his view are they just yammering about this bill?


Gregory Francis Thompson: Mr. Speaker, that fits in very well with what I was mentioning. Not only have they opposed measures we have taken on this side of the House to reduce the cost of government-that is to reduce government spending-they have opposed some very measures in this House that would not only lead to increased productivity within the Canadian economy, but they flew in the face of some-what we would call-social measures that we have taken in this House and to which the member has alluded.
I do not know how they can take much pleasure in this debate considering their track record over the last three to four years.


The Acting Speaker (Mr. Paproski):: It is my duty, pursuant to Standing Order 38, to inform the House that the questions to be raised tonight at the time of the adjournment are as follows: the hon. member for Notre-Dame-de-Grace-Grants to municipalities; the hon. member for Trinity-Spadina-Immigration; the hon. member for Cape Breton-East Richmond-Sexual harassment; the hon. member for Algoma-Agriculture.


Mr. Mark Assad (Gatineau-La Lievre):: Mr. Speaker, the debate on Bill C-92 is drawing to a close, and I have only five minutes to provide a summary of this bill. Since the legislation itself is far too complex to explain in a few minutes, I will concentrate on the important principles we should observe when governing a country with a population of over 27 million people.
First of all, what is essential in a democracy is the way we tax our citizens and ourselves. Nothing could be more basic. The way we are taxed and tax others should be fair and equitable, irrespective of the taxpayer's position in society. This is an important principle of democracy and responsible government, which we have inherited and which goes back for centuries. It has evolved over time, but the ultimate goal remains the well-being of our fellow citizens.

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What has happened recently? We had the so-called tax reform. I know they used the word "reform", but that is not necessarily what it means. We had tax increases, but the burden of those increases was felt to a far greater extent by the middle class than by the wealthiest segment of our society. These increases came in the form of indirect taxes, consumer taxes and, finally, the GST, a tax that has created so much frustration for entrepreneurs and retailers in this country. Even today, two years later, there is still a general feeling of frustration as a result of this tax.
Reform was the order of the day. They introduced the GST, and gradually people are realizing that the GST did not deliver the expected results. People predicted there would be serious problems but they went ahead anyway. Today, the figures are coming out at various committees mentioned by the hon. member from Ottawa: a certain amount was collected by the government which had to use part of it to finance operations. Rebates had to be paid as well. All this goes to show that the net benefit of all these taxes leaves a lot to be desired.
However, what I find particularly interesting in Bill C-92, after talking about the fairness principle and the need to have a tax that is fair and equitable, is the part that deals with family trusts. Bill C-92 contains a truly bizarre provision which defies justification and flies in the face of the principle of tax equity. Twenty-one years ago the Liberal government at the time introduced amendments to the family trust provisions. It decided to adopt the 21-year rule, in other words, irrespective of the type of family trust, after 21 years the accrued value of these trusts would be taxed. It was a way to get rid of this tax shelter for the country's wealthiest families. On January 1, 1993 all trusts were obliged to pay the taxes which had accrued during those years.
The bill provides that the 21-year rule will no longer apply and that family trusts will be taxed only after the youngest member has died. In some cases this may take 20, 30 or even more than 40 years. So this is another substantial benefit.
Experts and tax lawyers appearing before the parliamentary committee argued that it was a tremendous advantage for the wealthiest families in our country.
Where is the fairness and justice in all this? I would say that of all the tax bills that have been passed in this House, this is the worst.
I think this is a disgrace. When we form the government this fall, our first responsibility will be to rescind this bill and apply the 21-year rule.


The Acting Speaker (Mr. Paproski):: It being 4.45 o'clock p.m., pursuant to an order made Tuesday, March 30, 1993, in accordance with the provision of Standing Order 78(3), it is my duty to interrupt the proceedings and put forthwith every question necessary to dispose of the third reading stage of the bill now before the House. Is it the pleasure of the House to adopt the motion?


Some hon. members:: Agreed.


Some hon. members:: No.


The Acting Speaker (Mr. Paproski):: All those in favour of the motion will please say yea.


Some hon. members:: Yea.


The Acting Speaker (Mr. Paproski):: All those opposed will please say nay.


Some hon. members:: Nay.


The Acting Speaker (Mr. Paproski):: In my opinion the
yeas have it.
And more than five members having risen:


The Acting Speaker (Mr. Paproski):: Call in the members.


PAIRED MEMBERS
[Stage Direction]
Charest	Darling
Hopkins	Jelinek
Jordan	Kilger (Stormont-Dundas)
Redway	Romp key
Shields	"Rimer (Vancouver Quadra)
Madam Deputy Speaker:: I declare the motion carried. Motion agreed to, bill read the third time and passed.


Madam Deputy Speaker:: Pursuant to Standing Order 30(6), the House will now proceed to the consideration of Private Members' Business as listed on today's Order Paper.



PRIVATE MEMBERS' BUSINESS


James Capsey (Jim) Karpoff: That, in the opinion of this House, the government should consider
adopting as binding in Canada the World Health Organization's
International Code of marketing of breast-milk substitutes.
He said: Madam Speaker, I am most pleased to rise today and speak to this motion. There are very few subjects on which I have received so much correspondence and promotion other than this one since I have been elected.
There are a large number of people in Canada who have been trying to deal with this health related issue for a number of years. Unfortunately, to this date they have not been successful.
I want to pay tribute to some of them because their perseverance has ensured that this matter be debated within the House of Commons. People like Jack Newman in Toronto, Renee Hefti in Vancouver, Jean Geary and Elisabeth Sterken have kept this issue alive in spite of the opposition from the rather large lobbies within the infant formula companies.
Much to my amazement within the last three days when it became known that this bill was going to be discussed this afternoon, I received a number of faxes from right across Canada supporting this motion. They were from health organizations, health workers, paediatricians, nurses and others who have become interested in the whole issue of breast-milk substitutes.

April 1, 1993
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I want to discuss the subject by laying out three or four areas. First, why should we be promoting breast-feeding? Second, what is the international code? Third, what has been the voluntary code that the companies claim they have been following in Canada? Fourth, what in fact is actually happening in this country?
Breast feeding is a serious health matter. We are more and more switching our concept of health to preventive health. Preventive health means that we ensure how we practise our lifestyles promotes the optimum health in people.
Information is now increasingly being accumulated that shows breast feeding has significant health improvements for infants. Breast-fed infants experience lower gastrointestinal disease rates and reduced respiratory illness. The ratios are quite striking.
There is an incidence of four to six times more gastrointestinal infections in bottle-fed infants. Respiratory illnesses are five times as high. There is indication that breast feeding reduces the incidence of bacterial meningitis.
There is some interesting information being accumulated which shows that bottle-fed babies have an increased risk of insulin dependence. Lymphomas are six times more common in babies who have not been breast fed.
We have a whole series of medical reasons as to why infants should be breast fed. There are benefits to the mother. There are medical reports that indicate there is a reduced incidence of breast cancer and ovarian cancer in women who breast feed babies. Not only is it medically beneficial to the infant it is medically beneficial to the mother.
There are also economic reasons for breast feeding. Right now the cost of infant formulas or breast-milk substitutes range anywhere from $1,200 to $3,000 a year. When you start looking at a mother who is on a low income, this represents a significant expenditure. It is particularly significant for women who are living on income assistance or women who are supporting themselves on one income, so we have an economic reason for breast feeding also.
Most literature certainly indicates that infants should be breast fed for as long as possible, six months to a year.
Right now between 20 per cent and 25 per cent of babies are basically fed on formula only. Some reports indicate that 50 per cent of mothers stop nursing within three months.
If there is a medical reason or it is not possible for the mother to nurse that is one thing, but what we have is the infant formula companies convincing women that they should not nurse, that there are better ways of feeding their infants.
I hope the parliamentary secretary to the minister of health who seems to defend the big multinational infant formula companies will speak on this bill and will explain why the government is tolerating the kind of marketing practices that are taking place by the companies.
There is a World Health Organization code that has been developed to set a code as to what the marketing practices for breast-milk substitutes should be. The code is fairly detailed. I would like to read just the summary of the 10 major points: "There shall be no advertising of these products to the public, no free samples to mothers, no promotion of products in health care facilities, no company mothercraft nurses to advise mothers, no gifts or personal samples to health workers, no words or pictures idealizing artificial feeding, including pictures of infants on the labels of the products. Information to health workers should be scientific and factual. All information on artificial infant feeding including the labelling should explain the benefits of breast feeding and the costs and hazards associated with artificial feeding." There are other parts to the code but those are the significant ones that I want to spend my time addressing this afternoon.
The industry decided it would adopt a voluntary code of practice for the Canadian Infant Formula Association. I want to read some of the things it said it would do voluntarily. Its code is quite extensive but I will just read a few of the points.
It says: "Member companies recognize that the decision to breast feed or not to breast feed, to discontinue breast feeding or to supplement breast feeding should be made by mothers with the counsel and advice of other health professionals and infant formula companies should not be involved in such decisions. Product claims will only contain statements that are consistent with sound medical and scientific data".
April 1, 1993

It goes on: "Infant formula companies will not make grants or contributions to support research, educational programs, fellowships, participation in professional meetings or the like or provide incidental services or professional courtesies for the purpose of discouraging breast feeding or encouraging hospitals or health care institutions to favour the donor's infant formula products and related products".
They will not make donations in order to encourage hospitals or health care institutions to favour the donor's infant formula products or related products. The donating company will inform the beneficiary institution such grants or contributions are made free, gratis, without any commercial conditions.
There are other things. It says that: "Samples of infant formula products will be provided only to medical facilities and health professionals for their discretionary distribution to mothers".
All of these things they glowingly say they are going to do. Let us look at what the major producers of infant formula are doing in Canada. I have pages of information where they simply totally disregard their own code, let alone the much more strenuous World Health Organization code.
I want to talk about them in three general areas. First of all, they give out misleading information. I have some examples where they say: "Just what the breast-feeding mother ordered". This is what they give to mothers directly: "Congratulations. Ross Laboratories joins you and your doctor, nurse and hospital extending to you, your baby and family the best wishes and good health and happy new year", just what the breast-feeding mother ordered. They give her this with a sample.
Here is one from Carnation, misleading advertising: "A new nutritionally complete infant formula". We have a lot of medical information that there are things missing in even the best infant formulas that affect the health of the child.


Barbara Jane (Bobbie) Sparrow: What happens if you just cannot do it?


James Capsey (Jim) Karpoff: There are women who just cannot, but for women who can why should we allow companies like this to promote misleading information that says: "It is specifically processed to be hypo-allergenic and prevent
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the symptoms of food allergy". That is implying that breast milk creates food allergies. What hogwash. They simply promote with misleading advertising.
One of the things that the codes clearly say is they are not to market directly to people. They are only to market to the health care professionals, but they repeatedly give out free samples.
I have lists, pages of codified violations for direct advertising to the lay public in Canadian magazines, direct advertising to lay public on computer terminals in doctors' offices, patient hand-outs being given directly to people, brand advertising and patient hand-outs saying: "Breast feeding is the preferred method of feeding for newborns", and suggesting early weaning. That is a hand-out that they are giving directly to mothers, booklets that contain sample packs and advertising, all of the things that they said they will not do. They would go to big stores and get them to put direct advertising promotions on displays to try to influence women not to breast feed but to use their infant formula.
The most disgraceful part is what they have now started to do with health care facilities in this country. They have started to systematically make deals with health care facilities against the recommendation often of their medical staff, their paediatricians, the public health nurses, saying: "We will give you a grant if you give us exclusive right to hand out our samples in your hospital and exclusively you use only our product in your hospital". They think if a woman starts using a breastfeeding substitute in hospital she will stay with the brand she has become familiar with.
This is not small or inconsequential hospitals. One of the more prestigious hospitals in Canada, the Women's College Hospital in Toronto, has within the last months signed a $1 million agreement with Mead Johnson. It is giving them $1 million for renovation so it can have access. In exchange Mead Johnson gets access to new mothers and to give out free formula.
That is in total violation of the code. This is opposed by the Canadian Medical Association. We should think about the number of free samples that are given out. A maximum of 25 per cent of mothers do not nurse in hospitals. There were 360,000 births last year. Mead

April 1, 1993
Private Members' Business
Johnson gave out 300,000 samples to mothers in hospitals, nearly one for every nursing mother.
Ross Laboratories distributed 18,000 videos promoting its product in hospitals. Mead Johnson has signed a five year contract with the Royal Columbian Hospital in New Westminster, British Columbia that gives it exclusive use of its product in hospital. It immediately surrounded that area with a promotional program in drug stores promoting its product and having gift packs handed out to mothers of newborns. Carnation did a direct mail-out.
There is a little heat coming from a number of sources saying: "You are not living up to your own voluntary code". It is very clear that they are repeatedly not living up to their voluntary code.
Ross' solution is it has simply pulled out of the infant formula association. It says: "We no longer have to even bother to follow the code of practice that is a watered down code of practice. We will ignore everything and whatever we can do to promote, we will".
This has become a major problem in overseas countries but it is an increasing problem in Canada. One of the companies that we talked about here today that is closing its drug pharmaceutical plant in Windsor, Wyeth, continues to promote gift packs and suggestions for early weaning.
I see that I have only two minutes left. I want to say three things. First, this government has been less than helpful. It is on record that I asked the question in the House previously as to why it would not enact it. They sent me back a long letter of gobbledegook and a statement that said: "In 1987 departmental negotiations with the formula industry led to the industry agreeing to respect the aim and principles of the international code of marketing of breast-milk substitutes".
That is what they tell you and this is what you get.
The government itself in some of its promotional stuff discourages breast feeding. Some of the information handed out in immigration information tells immigrant women they should not breast feed in Canada in public. This is hogwash.
There is indication that the free trade agreement may stop Canada from implementing a code. However it is clear to me that the industry will not voluntary police itself. It has had a code. It has chosen to ignore that code and therefore I am asking this House to ensure that the code is followed by making it mandatory.


Barbara Jane (Bobbie) Sparrow: Mr. Speaker, I truly appreciate this opportunity to say some remarks with regard to the motion before the House. I have four youngsters and indeed did nurse four youngsters.
I have to say that when I took a set of twins home from the hospital and nursed both babies three hours apart, then I was very glad to have some formula around, thank you.
What my colleague is bringing forward has to do with a health issue and it affects every new mother, there is no doubt about it, and every baby around the world and I certainly concede to that.
For many years Health and Welfare Canada has been instrumental in promoting breast feeding as an ideal and the most preferred form of nourishing babies. Since 1985 Health and Welfare Canada has encouraged all hospitals to adopt policies and to adopt practices in support of breast feeding and of the international code of marketing of breast-milk substitutes adopted by the World Health Organization.
The government as well has encouraged the industry that produces and distributes infant formula in Canada to carry out self-regulation. The industry through the Canadian Infant Formula Association has adopted a code of practice that supports the aim and the principles of the international code of marketing of breast-milk substitutes.
The declared purpose of the code of practice is to ensure that the marketing practices of Canadian manufacturers of infant formula support Canada's national goal to promote breast feeding and ensure safe and adequate nutrition for all infants.
The first sentence of the code of practice declares that breast feeding is the preferred way of feeding most infants. The code of practice goes on to describe many

commitments, prohibitions and limitations on marketing practices.
Such detailed information on the claims of infant formula products will be directed only to the physician, so what they advertise goes only to physicians or other health professionals. Communication with scientific organizations and government agencies assures that marketing is in concert with their efforts to promote breast feeding, infant health and well-being.
This motion now before the House proposes that the government adopt as binding in Canada the international code of marketing of breast-milk substitutes issued by the World Health Organization. If one looks at the universal scope of this code and some of the provisions, they are neither applicable nor appropriate for implementation in Canada.
The code calls on member states to give effect to its principles and aim in the form they deem appropriate.
Canada has already done this through policies and practices which are appropriate and comprehensive. More than 10 years ago, after the adoption of the code by the World Health Organization, our Government of Canada obtained unanimous support for the aim and the principles of the code by all the provincial governments. The governments agreed that in Canada the code should be implemented not through legislation-this is all the 10 provinces plus the federal government-and regulation but through education, health promotion and co-operation.
Almost 80 per cent of the mothers in Canada start by breast feeding their babies and more than 40 per cent continue to breast feed their babies for at least three months. Health and Welfare Canada has carried out and will continue to carry out comprehensive programs that promote breast feeding such as the Breast Feeding Advocacy Kit, the National Guidelines on Family-Centred Maternity and Newborn Care, a publication called You and Your Baby and brochures such as Ten Great Reasons to Breast Feed and Ten Valuable Tips for Successful Breast Feeding.
In fact these efforts were underscored even further by the Minister of National Health and Welfare last year. He introduced an initiative called Brighter Futures that puts $500 million in new moneys for targeting areas of
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concern with regard to youngsters up to seven years old. Brighter Futures recognizes the vital importance of breast feeding as a means of improving the health care of all infants.
Provincial governments continue in their partnerships with promoting programs. Non-governmental organizations throughout Canada and around the world continue their successful efforts to inform and educate parents on why breast feeding is by far the most beneficial way. Health professionals recognize and they know the effectiveness that their role has in promoting and supporting breast feeding.
This co-operative approach right across our country through the provincial governments, through all the agencies, and indeed with the federal government is serving mothers and children very well. Some people out there may ask: Who is making sure that our public policies, our national goals throughout this country and the international code are being followed. Why is there not legislation, as the hon. member across the way has asked? Why are there not regulations? Who is enforcing these codes?
I am sure that almost everybody in this House is aware that more legislation, more regulation and more policing is the last thing that we need. I think that the people of Canada as individuals are very responsible and they have to accept responsibilities, and indeed it is the woman's choice. Yes, she should be made aware of the benefits of breast feeding, but indeed the choice is hers. There are other implications that we do not know that may change her attitude. Indeed, it is up to the woman and her family with regard to breast milk.
Sure we have a code and a practice with the Canadian Infant Formula Association. As I said, we will work with all the provinces and we will not implement legislation. We will educate and make people aware and work with our provincial counterparts to make sure that the youngsters have the best.


Mr. Rey Pagtakhan (Winnipeg North):: Mr. Speaker, I am delighted to speak to this motion:
That, in the opinion of this House, the government should consider adopting as binding in Canada the World Health Organization's International Code of marketing of breast-milk substitutes.
introduced by my colleague for Surrey North. I congratulate my colleague for taking this initiative.

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Private Members' Business
Let me start by saying that breast milk is a natural product of a woman and it is free. Let me say that the Montreal Diet Dispensary, which helps 250,000 Quebec mothers each year to eat healthier foods, encourages mothers to breast feed because it is the most nutritious way to feed babies and it promotes a strong bond between mother and child. The child feels secure and loved.
What is the need for this motion? It is the aim of the World Health Organization in adopting the code to ensure that the slick advertising by infant formula manufacturers may not prompt mothers to buy formula rather than breast feed their babies. The importance of breast feeding cannot be over-emphasized.
In September 1991 the government acknowledged, as recorded in Hansard of the House of Commons, that it supported in principle the WHO international code. It said that it had played a key role in developing and promoting the code and that the department of health obtained unanimous support for the aim and principles of the code from all the Canadian provinces.
Furthermore, the government stated that it had taken a strong position with the Canadian infant formula industry by asking it to assume the responsibilities under the international code.
Things have happened differently. There have been many instances where mothers have been persuaded to start with the breast-milk formula because of the advertising approach and because formula is given free in the hospitals. That has been shown to in fact be a very persuasive tool.
If in fact this government is committed to this code, why does it not carry it to the logical conclusion and enshrine it into law, in legislation and regulation to prove its sincerity? Why not do it all: education, health promotion and a governing regulation and legislation so that when there is an infraction of this code the necessary teeth are there to ensure that the health of our babies and the health of our mothers are protected? That is the minimum that we can do for the health and welfare of mothers and babies in this country.
A headline recently published in The Montreal Gazette dated March 6,1993, read: "Hospital sold its soul for a $1 million grant". Dr. Haslam, president of the Canadian Paediatric Society, wrote and registered his protest to this approach. The Canadian Paediatric Society is the professional society that leads all paediatricians subscribing to the importance of breast feeding.
Breast feeding, as I said, is a natural and free product from a mother. The many medical advantages of human milk are known. It is known that breast-fed babies are not prone or are less prone to disturbances of the gastrointestinal tract. They have greater resistance to infection of the respiratory system. Breast feeding creates enhanced bonding between mother and child.
Just recently I spoke with Ms. Jean Geary of INFACT Canada who told me of her concerns as she had seen them in practice. There are no teeth in the voluntary compliance with the presently existing code in Canada. Breast feeding itself is not being protected. In fact, by the giving of free samples we are allowing those samples to be used immediately and that is known to inhibit lactation. She also told me that a video film has been produced by an infant formula company that will certainly downplay the role of breast feeding. All of these are counterproductive to the goal of ensuring that breast feeding is promoted in Canada.
I also spoke to Dr. Jack Newman of the University of Toronto Hospital for Sick Children, who is an expert in the field. He conveyed two messages to me. First, Canada has an obligation to adopt the international code. Since it has been acknowledged by the government that Canada has participated in a key way in the development of this international code, this code must be binding on all Canadian manufacturers of infant formula. This code must have teeth.
We should have regulation or enabling legislation in Canada to ensure that the intent and principle of the international code are followed in our country.
Dr. Newman related to me the many problems he had encountered in his clinical practice. Many babies become ill because of contaminated and improperly used formula. In fact, formula should be labelled as medication, just to be used only in certain circumstances. It should not be
April 1, 1993

the food of choice for infants. The milk product formula was never meant to be the food of choice. Breast milk ought to be the food of choice for all babies in our country.
On this note, I would like to lend my support to this motion. I hope the government will be challenged enough to adopt enabling legislation so that the intent and purposes of the international code are truly adopted in Canada without any doubt, with all the necessary safeguards and thereby ensure the health and welfare of our newborn Canadians and of our mothers.


Mrs. Louise Feltham (Wild Rose):: Mr. Speaker, thank you for allowing me to speak to this motion.
I welcome the opportunity to discuss both our government's commitment to the principles of the international code and our concerted efforts to ensure that newborns in Canada benefit from the best available nutrition, their mother's milk.
All levels of care in Canada recognize and promote breast feeding as the preferred method of infant feeding, particularly in the first six months of life when infants are most vulnerable. The advantages of breast feeding include optimal infant nutrition, immunologic protection and psychological benefits.
Breast feeding had declined in many parts of the industrialized world including Canada. As a result, the promotion of breast feeding became a primary goal of the World Health Organization and Health and Welfare Canada.
In 1979, the World Health Organization and the United Nations Children's Fund proposed an international code governing the marketing of commercial infant formulas and other breast milk substitutes including bottle fed complementary foods.
Canada played a key role in developing the international code which is called the WHO International Code of Marketing of Breast-milk Substitutes. The World Health Assembly passed the international code in May 1980.
Canada has also played a key role in promoting this important code. In 1981, the year after it was passed by the world health body, the Department of National Health and Welfare obtained unanimous support from all provinces for the aim and principles of the marketing code.
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At that time the provinces endorsed using educational and health promotion initiatives to implement the code rather than using a legislative and a regulatory approach. The federal government continues to endorse this position. It also fosters an encouraging resurgence in popularity of breast feeding among new mothers.
Thirty years ago, only 38 per cent of the newborns in Canada were breast fed. By 1982 that number had nearly doubled reaching 70 per cent. Recent studies indicate that nearly 80 per cent of all newborns are now initially breast fed.
Comprehensive national health and welfare approaches which are also part of the code's recommendations are designed to increase awareness of the superiority of breast milk for the health of infants.
The department widely distributes a publication for new parents called You and Your Baby. It was formerly known as The Canadian Mother and Child. For years, this has promoted breast feeding as the preferred method of infant feeding.
Also two pamphlets for parents including Ten Great Reasons to Breast Feed, Ten Valuable Tips for Successful Breast Feeding and a breast feeding advocacy kit produced for health professionals and for the public encourage hospitals to adopt policies and practices in support of breast feeding and the WHO international code.
As well, the promotion of breast feeding is an integral part of the post-partum parent support program for the parents of newborns and for the family centred maternity and newborn care. These are national guidelines.
In recent years, the department has also worked closely with a variety of health professionals and advocacy groups to raise public awareness of the benefits of breast feeding. These efforts will continue with the government's commitment to children and to their families under the child development initiative of Brighter Futures.
Current objectives of breast feeding promotions are these and I would like to emphasize them: To increase the initiation and duration rates of breast feeding, thereby improving the health of infants and to encourage and support breast feeding as the culturally accepted norm in our communities.

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Adjournment Debate
Moreover, the federal government recently reaffirmed its support for breast feeding as a contribution to children's help by signing the United Nations Convention on the Rights of the Child. Signatories agree to ensure access in their countries to education about the advantages of breast feeding.
In addition, the composition and the production of infant formulas are strictly regulated under the Food and Drugs Act. Infant formula manufacturers must notify the Department of National Health and Welfare prior to making a major change in an existing formula or before introducing a new product.
Health and Welfare Canada has supported the selfregulation of the infant formula industry to ensure that the industry complies with the code's marketing objective. The department also promotes breast feeding to ensure that prospective parents and mothers of young infants are aware that the benefits of breast feeding to a child far outweigh the benefits of infant formulas.
As a result of negotiations with the Canadian Infant Formula Association, the infant formula industry agreed that education and advertising materials should not imply equivalence of the two sources of nutrition and should not discourage breast feeding. This is one of the basic principles of the international code of marketing of breast milk substitutes.
The industry also agrees to limit product promotion. The Canadian Infant Formula Association's own code stipulates that "infant formula companies will conform to the position of the Canadian Paediatric Society- which recommends that all advertising of infant formula products be directed to health professionals and not to the lay public".
Health and Welfare Canada encourages the infant formula industry in Canada to adhere to its voluntary commitment to the principle of the WHO code.
I will summarize by saying that the Department of National Health and Welfare will continue its co-ordination role in this important area, reflecting the federal government's policy of consultation and negotiation. Companies must provide information on a composition of the formula and submit the results of studies that demonstrate that the product will promote acceptable growth and development.


The Acting Speaker (Mr. Paproski):: I regret that the hon. member's time has expired. I must say it must be a coincidence that we are discussing breast feeding since your chair officer and his wife are proud grandparents of a beautiful baby girl, Kathleen Elizabeth Kemp, bom to us on March 30. The mother is breast feeding and both baby and mother are doing fine.
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.



PROCEEDINGS ON ADJOURNMENT MOTION

[Stage Direction]
A motion to adjourn the House under Standing Order 38 deemed to have been moved.

William Warren Allmand: Mr. Speaker, on February 111 asked the Minister of Finance to cancel or postpone his announcement of December 2, 1992 to freeze grants in lieu of taxes paid to municipalities.
Many Canadians might ask: What are grants in lieu of taxes that are paid to municipalities? Prior to 1950 the Crown, that is the federal government, did not pay any taxes or grants to cities for their properties within those cities: post offices, airports, ports, office buildings and so on. It did not do so even though those federal buildings received services such as garbage collection, fire protection, snow removal, the roads and streets in the cities and so on. Those federal buildings received those services but until 1950 the federal government did not pay any city taxes.
In 1950 the federal government agreed that it should do so. Therefore it passed the Municipal Grants Act, which provided for grants in lieu of taxes to be paid to the cities. In that program there was a mechanism to adjust those taxes from year to year in accordance with the rates of inflation and increasing costs of the cities. The cities relied on that program as written and expected to get from year to year certain increases in those grants when there were increases in taxes.
April 1, 1993

On December 2 in the mini budget presented by the Minister of Finance he announced without any warning or consultation with the cities that he was freezing the grants to the cities in lieu of taxes at the 1992 level. He did that after many cities in Canada had already prepared their budgets for 1993.
They prepared their budgets on the basis of the agreements as they existed. As a result of that freeze the cities stand to lose approximately $80 million. The biggest loser of all the cities is the city of Montreal, my city, which will lose approximately $10 million.
A city like Montreal, having prepared its budget and having expected a certain amount of money from the federal government, now must scramble to deal with that unexpected loss. It will either have to further raise city taxes or cut out vital programs.
Some people may say that it should cut programs, but I do not think many would say that today if it was to cut out snow removal or garbage removal or whatever.
This is no way to run a country. Who else in this country can decide without any consultation or warning they are just not going to pay their taxes?
The reply from the minister to me on February 11 was that there were great increases in these grants in 1990, 1991, and 1992. He said that the amounts were very large.
That may be so, but those were large payments because they were based on the size and number of the federal government's buildings in those cities and the services that they received. The increases were based on cost of living increases and increased costs, so that is not an answer.
There may have been good grounds for the federal government to want to discuss with the cities revisions or changes in the program, but it should have done that. It should have proceeded with the discussions and then maybe after the discussions it could have arrived at a new program that would provide for lower payments if warranted. As I said, it went ahead and announced this freeze without any warning or any discussions with the cities.
I ask at least that the freeze be removed, or at the very least that it be postponed. I ask the parliamentary
Adjournment Debate
secretary once again to consider lifting the freeze or postponing it.


Marcel R. Tremblay: Mr. Speaker, as you know, a freeze on grants in lieu of property taxes was announced in the economic and fiscal statement of December 2, 1992. Consequently, this measure is part of a broadly based expenditure restraint program designed to reduce the deficit and provide for reallocation of resources to investment in sectors that will enhance economic growth, such as the public infrastructure initiative. The December economic statement contained many restraint measures. Some of these measures will reduce program spending. Others, such as those affecting grants in lieu of taxes, will simply have the effect of freezing program spending.
It would be useful to recall the purpose of the grants in lieu of taxes program. Under the Canadian Constitution, the federal government cannot be taxed by another level of government. However, the federal government has deliberately chosen to pay equivalent amounts in lieu of property taxes. We have paid property, and continue to pay, more than $400 million annually in grants, a very substantial contribution by any standards.
Over the past few years, grants in lieu of property taxes have increased at a rapid rate. For instance, in 1986-87, the total amount of grants in lieu of taxes on departmental property was $217 million. In 1992-93, this number almost doubled, rising to $424 million. During the past two years alone, grants in lieu of taxes have increased by more than 30 per cent. Considering the federal government's financial situation, that is clearly not sustainable.
The federal government is accountable to Canadian taxpayers. It must ensure that the payments it makes voluntarily are reasonable and appropriate, considering the equivalent tax rates they represent. After all, there is only one taxpayer.
Public Works Canada is responsible for the administration of the program and has decided how the freeze will be implemented. No municipality will receive less money in grants in 1993 than it did in 1992, unless there was a change in value of the federal property or a drop in local taxes. Funding will be available to municipalities that are looking for legitimate increases. It is therefore prema-

April 1, 1993
Adjournment Debate
ture to speculate on the specific impact on each municipality.


IMMIGRATION
Mr. Dan Heap (THnity-Spadina):: Mr. Speaker, on March 17,1993 I said to the Minister of Employment and Immigration:
The immigration mail-in application system has been failing in Toronto for a year.
I spoke from 11 years of serving constituents in Trinity-Spadina, who are mostly foreign bom. Service by the immigration department has never been so bad, never been so careless, never been so negligent, and never been so contemptuous of the customer as it has been for the past year. That continues right up to April 1.
I also said, and this is the point:
MPs' inquiries often go unanswered for more than a month and too often the answer when it comes is there has been no officer working on that file for these months.
One example is a sponsorship that was undertaken on December 3, 1991. The constituent contacted this office in April 1992 and the office was told that there would be an answer by May 11, 1992. On May 26, 1992, the office was told that the file had not yet been processed and would probably be done in two months' time. In August the CIC said the application had not been looked at yet. "Someone is going to review original humanitarian and compassionate grounds, has not done it yet, not top priority".
By January 22, 1993 there was nothing on any answer from the Canada immigration service. On February 1 a call from the immigration service promised that the file would be taken care of. On March 9 in a call from the CIC it was indicated that the case file would be assigned to an officer. On March 15, 1993, there was a fax from the CIC and a call back to the CIC brought the information that it was not known who was in charge of the file for decision on H and C grounds.
Today, April 1, well over a year and a half after the application, the message the CIC sent was that the case file is with the assistant manager and our office should call back again in two weeks' time for further updating.
There is another ridiculous case. A lady applied to sponsor her mother in September 1991. The lady wrote to the CIC requesting an update and got no answer on the case. In December 1992, 15 months later, the CIC staff told my staff that the case was put into inventory and never looked at. They said it would be assigned to an officer with an urgent tag and if the constituent had not heard from immigration by January, the constituent should call. The constituent never heard from immigration. Two and a half years later, on February 22, 1993 a fax was sent to the immigration office requesting an update and there has been no answer as of April 1, today.
This is contemptuous behaviour toward the taxpayers who are paying the bills for this department.
My third and last example is a fax request to the department in December 1992 which was answered. This time I will have to admit it was answered later saying that they had faxed to the RCMP. The CIC had called back saying the RCMP reported that it was still outstanding. The update was requested December 4,1992 and was not back yet. Report 27 had to be written up on the client because of late extension of visa. Then, on March 13, a fax was sent after further conversations. It states: "This client is reportable under section 27 of the Immigration Act as she did not extend her visa in time. A report has to be written by an officer. To date the report is outstanding. We will transfer the file back to the officer dealing with this case".
They are simply contemptuous of the public who pay their fees, contemptuous of the members of Parliament who represent the public. They do not do the work because the staff has been so chopped, so reduced, so demoralized that it is impossible for them to carry out their duties. I ask the minister to cancel this stupid unworkable mail-in program.


Barbara Jane (Bobbie) Sparrow: Mr. Speaker, I think the hon. member has raised a couple of issues. One has to do with client service and the other has to do with restructuring.
First, we are all aware that all levels of government are under fiscal constraints and we are well aware that we have limited tax dollars. However, the restructuring of the Canada Immigration Centre network is going to provide what we believe to be more efficient and effective client service while saving the taxpayers dollars.
April 1, 1993

The enhanced use of technology over the past number of years in the case of the processing centre is scheduled to begin in April 1994. All the efficiencies that we have gained through mail-ins are going to add up and we will save about $6.5 billion. That $6.5 billion is going to be used within the department to ensure that we have good client relationship, that we have good service and we maintain it at the highest level. We also of course will enhance the enforcement aspects of the immigration program in order to maintain its integrity and that is something we have all heard from Canadians from coast to coast.
While we are saving taxpayers dollars our strategy is mainly to maintain client service at a high level.
Of the existing 64 points of service we will maintain a community presence with full-time immigration staff in 51. It is not a rampant reduction of the inland delivery network. We are redefining the structures of the Canada Immigration Centres and we also have a presence in the smaller communities.
We will maintain client service. Because of advanced technology we will be able to utilize the data processing and the money that we-


The Acting Speaker (Mr. Paproski):: I regret the hon. member's time has expired. The hon. member for Cape Breton-East Richmond.


SEXUAL HARASSMENT
David Charles Dingwall: Mr. Speaker, before I begin my remarks let me take this opportunity on behalf of the Liberal Party of Canada to extend its congratulations to you on once again becoming a grandfather. I do not know how many times it is exactly, three times?


The Acting Speaker (Mr. Paproski):: Four.


David Charles Dingwall: Congratulations on behalf of our party.
On December 4, 1992 I had asked a question of the Minister of Finance with regard to the high unemployment in my district. I made reference of course to the provisions and amendments to the Unemployment Insurance Act with regard to sexual harassment.
Adjournment Debate
On page 14647 of Hansard in my question to the Minister of Finance I wanted the minister to explain to the people of my constituency as to how the provisions in the amendments to the Unemployment Insurance Act would benefit them.
I wish to say to members opposite that the response I did receive from the minister was totally unacceptable, inappropriate and ill-advised. Indeed in some ways it was quite insulting to those who are unemployed and looking for meaningful work in my district of Cape Breton-East Richmond.
I want members opposite to realize and understand that the people in my constituency, when they get the opportunity, are good hard-working Canadians. They do not wish to be on welfare. They do not wish to be on unemployment insurance. They wish to have an opportunity to make a meaningful life for themselves and for their families and to make a contribution to their community.
I suggest that the Government of Canada has betrayed at every opportunity those individuals who reside not only in my constituency but indeed in the other constituencies of Cape Breton as a whole.
The government has made major cutbacks without consultations. It has cut back with regard to money for post-secondary education. Our health care system has many holes in it at the present time. Unfortunately the government would give the impression that somehow it is doing all sorts of wonderful things for the unemployed in this country and nothing could be further from the truth.
I think of the numerous people in Saint-Leonard, Winnipeg, in northern Ontario, in the construction industry who are unemployed. In my district it is in excess of 75 per cent.
What does this government do? Absolutely nothing. It has rejected outright the proposals we have made as a national political party. In terms of a municipal infrastructure program it has laughed at that particular suggestion.
There are unemployed Canadians all across this country, in Montreal, Winnipeg, northern Ontario, Cape Breton. All the communities of Glace Bay, New Water-

April 1, 1993
Adjournment Debate
ford, Dominion, Reserve, Sydney River, L'Ardoise have high unemployment.
I do not seek handouts from the Government of Canada but meaningful programs to put people back to work. We need facts and honest programs from this government, not the sarcastic, ill-advised, inappropriate responses we receive on a daily basis during Question Period. We need substantive answers.
I suggest to members opposite if they are not prepared to give those substantive answers and respond to the needs of the unemployed and the individuals on welfare in our society then they should step aside. They should allow another group of Canadians to assume that responsibility to provide the leadership and the direction which this country so drastically needs. It is not fair. It is not appropriate for the government to turn its back as it has over the last number of years on the unemployed of this great country. It is not fair. They are citizens who have rights like others, and as I said earlier they wish to make a contribution to Canadian society.
I look forward to hearing from the government opposite as to what specific programs it will put in place to assist the unemployed and to tell the constituents of Cape Breton-East Richmond how the amendments to the Unemployment Insurance Act will reduce the frightfully high unemployment in Cape Breton. How will it do that, Mr. Speaker?
We look forward to a substantive and not a vague, wishy-washy answer that we have received repeatedly from the Minister of Finance and in particular from the parliamentary secretary who sits opposite.


Barbara Jane (Bobbie) Sparrow: Mr. Speaker, there were quite a few allegations in the opposition member's statement, but I think one that he made quite clear that I heard had to do with the insensitivity or the unfair dealings at the Canada Employment Centres.
First of all, I have to say that all across the country the employees at the Canada Employment Centres are very sensitive, they do care and do work hard to get people back to work.
The member made reference to sexual harassment and I am glad he brought that up. I sat on the legislative committee on Bill C-113 and I have to say that sexual harassment was discussed for a very long time. There
were some very misleading documents given out with regard to exactly what it was.
Sexual harassment is just cause, and any woman who quits her job due to sexual harassment will obtain UI. I have to say to you that the employees at the Canada Employment Centres have been trained or will be with regard to the sensitivity of sexual harassment cases. Meetings can be held in camera if the person claiming harassment so chooses. We realize this is very sensitive, but if there happens to be any issue where they feel there is not enough information, the person claiming sexual harassment will receive UI.
There is $3.8 billion in the 1992-93 budget that will go into job training for Canadians all across this country. I wish it were more, but we are working with limited funds.


AGRICULTURE
Maurice Brydon Foster: Mr. Speaker, I want to extend my warmest congratulations to you on the birth of another grandchild, Katie I believe it is, Kathleen Elizabeth, the night before last. I wish you well as a great grandparent.
I put a question to the Minister of Agriculture a couple of days ago and pointed out to him that over eight major organizations had spent five hours that day before the agriculture committee, every major farm organization and community organization from Saskatchewan, from the rural municipal groups, the urban municipal groups, the prairie pools, the National Farmers Union, all of these groups.
They are trying to impress upon the minister there is a major crisis out there, that net farm income is dropping by over 40 per cent from what it was last year, and last year was a disaster.
The response I got from the minister is disheartening because the minister is so concerned about the politics of the situation that he actually came to the agriculture committee meeting and sat there. We do not see that very often, where he is in so much political trouble that he-


An hon. member:: Did he have his earmuffs on?


Maurice Brydon Foster: He must have, because I do not think he caught the urgency, the challenge, the crisis that exists. Net farm income works out to $5,000 for a family farm. An average family farm in Canada has a capital investment of $525,000. They have to have things like combines that cost $100,000.
April 1, 1993

The minister came to the committee meeting but he did not hear. He must have had his earmuffs on. The group was saying to him: There is a crisis out there. Net farm income across Canada is dropping by $1 billion this year. It is not all due to the international situation. Partly it is due to crops but also to the failure of the government's support program.
The first recommendation of the Prairie Pools Inc. was to provide immediate third line defence financial assistance to the grain and oil seed industries to offset the damage caused by seven years of the international trade war. What could be more explicit than that? Instead of saying: "Yes, there is urgency out there, seeding is going to be starting in places like Brandon, those areas that have suffered so much in the past few years".
The hon. member for Brandon-Souris knows what the problem is. He knows that the Minister of Agriculture should be responding. What does he say? Just listen to this gobbledegook. The Minister of Agriculture said:
I say again that we intend to do what we can what we have been doing.
That is really when I got concerned because the government has been doing nothing. The minister went on to say:
That is to work with the amount of money that is presently on the table, that is contributed by both levels of government and by the producers to see if we can design a program that will be maximum assistance to the producers. That is exactly what we intend to do.
That is the Minister of Agriculture. The problem is that the present amount of money is inadequate. There needs to be an emergency third line of defence assistance now so farmers can put their crops in the field. I hope, Mr. Speaker, that you will support me in making representations to the parliamentary secretary. He knows the situation and he has the power to respond here tonight and to put the money on the table that the minister did not give this week.


Mr. Lee Clark (Parliamentary Secretary to Minister of the Environment):: Mr. Speaker, let me join in the words of congratulations that have already been expressed to you and your family. We express the hope that you will be able to cope with your new additional responsibilities, I am sure in a very competent and experienced manner.
Adjournment Debate
The question of my hon. friend, the hon. member for Algoma, brings back memories for me because I had the opportunity to answer his questions in the past when I was Parliamentary Secretary to the Minister of Agriculture.
I would like to take this opportunity to say personally I believe that both of us are retiring at the end of this term and because we may not have an opportunity for another exchange, I would like to wish him well in life after politics because I believe that there is life after politics.
Having expressed those kind wishes, however, I must say that I believe his remarks this evening are somewhat lacking in that he has failed to take into consideration the contributions which this government has made to agriculture during the course of the last eight years.
As he knows well but has forgotten to mention, this government has increased assistance to prairie farmers, indeed to all farmers, by almost 600 per cent since the level of assistance which was being made available when we came to power in 1984. Of course, without that support, many of the farmers who are farming today would not have been able to remain on the land.
Certainly the circumstances in terms of cash income are less than we would like it to be. It is down approximately to what were the 1990-91 levels. What we must do is to improve upon the programs which are already in place.
I would like to make mention of both GRIP and NISA. Quite frankly I was disappointed to learn the other day that the Saskatchewan government has decided at this point to withdraw from GRIP and I believe from NISA as well by 1995. I think what we need is the federal government, the provincial governments and the various parts of the farm sector to work at improving what is there, rather than asking us to start afresh.
We have been there in the past for the Canadian farmer. We will continue to be there in the future because the Canadian farmer, as you know very well, Mr. Speaker, as indeed do many other members of this House, continues to be the backbone of the Canadian economy, at least in my part of the world and indeed I think it is true for the hon. member as well.
Unfortunately the type of assistance which is available to us is not as much as we would wish it to be. We live in an age of required fiscal restraint but we will continue to do the very best we can.

April 1, 1993
Adjournment Debate


The Acting Speaker (Mr. Paproski):: 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 10 a.m., pursuant to Standing Order 24(1).


[Stage Direction]
The House adjourned at 6.28 p.m.
[Stage Direction]
Friday, April 2,1993