No.

Mr. Sinclair Stevens (York-Simcoe):

Mr. Speaker, my question is for the Minister of Finance. With this morning's disappointing inflation figures showing a three-month CPI rise of 8.4 per cent, a rate considerably in excess of the second year target of the anti-inflation program and even above the first year target, would the minister indicate if he is still confident that we will achieve a 6 per cent inflation level based on the implicit price index and the C.P. index by the end of this year?

Hon. Donald S. Macdonald (Minister of Finance):

Mr. Speaker, as I previously indicated to the House, we were anticipating the event which occurred both this month and last month; that is to say, an increase in food prices in the country. It seems to me that more than ever this is the reason we should seek greater success in the non-food price element of the consumer price index, while even further restraint in that area is necessary. If we can maintain additional restraint and achieve a further reduction on the non-food price side, then indeed the target can be attained.

Mr. Stevens:

Mr. Speaker, I note that the most recent three-month rate of. increase in the consumer price index exceeds the second year target of the anti-inflation program, but more importantly, the implicit price index was actually 9.4 per cent in 1976. That is a much more comprehensive measure of inflation in this country. Statistics Canada makes it clear that the single most inflated ingredient of that index was government-incurred expenditures, which were up 13.4 per cent in 1976. Would the minister indicate if any further restraint at the federal level is planned in the expenditure field to ensure that a further inflationary impact will not be felt? Second, does he intend to take up with the provinces the matter of trying to get them to restrain their spending?

Mr. Macdonald (Rosedale):

The federal government will continue to exercise restraint on the rate of increase of expen-

ditures, although I must say I find it rather odd that that plea should come from the hon. gentleman who just a week ago was asking for a big increase in federal government expenditure on urban transit.

Shame.

Mr. Stevens:

Mr. Speaker, I suggested to the minister where he could get funds to help with urban transit. It is a question of priorities.

Mr. Macdonald (Rosedale):

It is still an expenditure.

Mr. Sinclair Stevens (York-Simcoe):

As the minister himself has noted, the only truly effective method of controlling inflation is monetary and fiscal restraint. Bearing in mind that the minister has stated that the controls are hardly a tonic for capital investment, which the minister knows is seriously lagging in Canada and is contributing to our relatively high unemployment rate, and while the anti-inflation program does not appear to be achieving the price targets which were set, would the minister indicate if prior to March 31 he will make a statement as to the government's current position on terminating the anti-inflation controls?

Hon. Donald S. Macdonald (Minister of Finance):

Mr. Speaker, I would like to make several comments on the hon. gentleman's brief speech. Whatever the source of funds for urban transit, the fact of the matter is that that would be an increase in expenditures which, if I understood the hon. gentleman, is something he is against. Second, with regard to the hon. member's urging us to tighter fiscal and monetary policy, we have, of course, been maintaining a strict monetary control through the Bank of Canada on the increase in the money supply. His advocacy for a tighter fiscal policy falls on my ears in an interesting way as well. I guess he is suggesting a more restrictive rather than stimulative budget. With regard to the statements about the timing of the anti-inflation program, I expect to be able to make some statements in that regard in the budget context.

Mr. James A. McGrath (St. John's East):

Mr. Speaker, a supplementary question. Given the fact that today's consumer price index shows a two percentage point increase in the cost of food, the highest over-all monthly increase since July, 1975, and given the declining value of the Canadian dollar and the prospect of drought conditions in the west, we can expect that

March 11, 1977

this condition will get considerably worse thereby throwing out the entire controls program or make it almost inoperable. May I ask the minister what steps he is prepared to take to provide some relief to Canadian consumers who are controlled on the one hand and so have to experience the continuing phenomena of rising prices?

Hon. Donald S. Macdonald (Minister of Finance):

Mr. Speaker, I would just remind the hon. gentleman that there has been a dramatic drop in the cost of food over the past two year period. In that sense, while there has been some recovery in the food component, the rate of increase in the consumer price index in comparative terms remains very much lower than the over-all cost of living in Canada two years ago. With regard to the impact of climatic changes such as drought-

Mr. Stanfield:

We are back to the weather.

Mr. Macdonald (Rosedale):

-I acknowledge that this may indeed cause difficulties from a consumer and price point of view. Even the hon. member for Halifax should be capable of understanding that from time to time weather may have an impact on agriculture.

Mr. Stevens:

Always the weather; never the Grits!

Mr. Macdonald (Rosedale):

Yes, Mr. Speaker, the weather does have an impact on crops.