February 28, 1978

NDP

William Arnold Peters

New Democratic Party

Mr. Peters:

I would be pleased to table it but the rules of the House do not permit it. I am sorry that so many hon. members do not know the rules of the House. I will continue to read it. Hon. members will be very interested to hear that if they were smart enough to read this and understand it, they could profit from it. Yes, even hon. members from the mari-times might be interested, members from that "social paradise" in Canada, the maritimes. As Myers' states:

Literally hundreds of thousands of pounds have been bought on credit-

This is certainly true of Canada.

-with the expectiation that the world would continue to go ahead in the 70's as it did in the 60's. But if this expectation proves to be wrong, these farmers will not be able to pay. Already they are crying for a debt moratorium, but who is to finance the moratorium?

The banks have lent them the money. But the money belongs to someone else who deposits in the bank. When that someone else demands his money, the banks will have to pay him, and so the farmers will have to pay the banks. If they do not, either the banks or the farmer will go bankrupt. If either of them go bankrupt first, then the original depositor will not be able to get his deposits out of the bank-and he will go bankrupt.

It's really not hard to accept this case for world deflation. To me, it's a much stronger one than the projections of inflation by most newsletters and the prognosticators. It could start at any time. It could start with default by foreign countries. It could start in Europe. It could start by withdrawals of large amounts of Arab money; and Japan-or even at home.

I know hon. members do not pay much attention to this, but let me read them the advice this gentleman gave. He went on to advise people who want to buy something that they buy gold. This commentary was published on February 10.

Topic:   GOVERNMENT ORDERS
Subtopic:   BANK ACT
Sub-subtopic:   AMENDMENT TO EXTEND OPERATION TO APRIL 1, 1979
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LIB

Maurice Adrian Dionne

Liberal

Mr. Dionne (Northumberland-Miramichi):

What does he advise us to buy?

Topic:   GOVERNMENT ORDERS
Subtopic:   BANK ACT
Sub-subtopic:   AMENDMENT TO EXTEND OPERATION TO APRIL 1, 1979
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NDP

William Arnold Peters

New Democratic Party

Mr. Peters:

Gold, that yellow stuff found in the ground which has been fairly stable in value in unstable times. Myers states:

Gold therefore stands on solid base around $170 to $175 as it moves toward its first important barrier, $185. But this barrier could quickly crumble in face of unpredictable events. Also, Carter's total deficit, disclosed and undisclosed, for 1978 and 1979 will be close to $160 billion. Worldwide awareness of this is reason for dollar's recent weakness and will push gold easily above $200, perhaps $250 this year in its march to unexpected new highs later on.

On February 10 the price of gold in Canada was $172 an ounce, but because of the instability of the government and banking institutions in Canada the price of gold last Friday, before the end of the month, stood at $203 an ounce. This means, for my friend from New Brunswick-

Topic:   GOVERNMENT ORDERS
Subtopic:   BANK ACT
Sub-subtopic:   AMENDMENT TO EXTEND OPERATION TO APRIL 1, 1979
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?

An hon. Member:

Which one?

Topic:   GOVERNMENT ORDERS
Subtopic:   BANK ACT
Sub-subtopic:   AMENDMENT TO EXTEND OPERATION TO APRIL 1, 1979
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NDP

Stanley Howard Knowles (N.D.P. House Leader)

New Democratic Party

Mr. Knowles (Winnipeg North Centre):

There are three of them over there.

Bank Act

Topic:   GOVERNMENT ORDERS
Subtopic:   BANK ACT
Sub-subtopic:   AMENDMENT TO EXTEND OPERATION TO APRIL 1, 1979
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NDP

William Arnold Peters

New Democratic Party

Mr. Peters:

All my friends from New Brunswick, those four socialists from New Brunswick. If they had bought futures for a May delivery, it would not have cost them any money, if they had just learned to read and understand the system. If they wanted to buy futures-400 ounces is the minimum they could buy-they would have to make a deposit, but on $65,000 worth of gold it would not be a very large deposit. They would then be able to sell that gold at $203, thus making somewhat over $25 an ounce in round figures. That $25 an ounce for 400 ounces would mean slightly over $10,000 in profit. Even a socialist maritimer would not object to that kind of profit. Anyone who is smart enough to tell you how you can make $10,000 in two weeks on a small deposit should be worth listening to.

Our currency is in trouble. I raise this matter because the government is now going to the banks to borrow money. The government will borrow $2 billion. It has asked the United States or other foreign markets to supply us with another $2 billion. That is $4 billion. We probably still have $5 billion in foreign currency. If we start to put that out, thinking we will hold our Canadian dollar when we have a government which cannot even bring forward a new Bank Act, and when there are no plans for a new Bank Act or for the future, and if we think we can spend $100 million a day to raise the value of our dollar one quarter of a cent-and it will probably slip back at the end of the day-we will see how bankrupt this government is.

If the government were to put up the total amount, it might be able to hedge our dollar against the American dollar; but let us not forget that the American dollar is in very serious difficulty. The American dollar is not even worth 60 cents against the yen. Perhaps it is worth 65 cents against the French franc and about 68 cents against the Swiss franc, or vice versa. The American dollar is in a very serious position, and now we are going to put up whatever reserves we have to bolster our dollar when everyone knows that economically speaking this country has no government, no policy and no plan for a long-range solution to our economic problems.

There are advantages associated with our devalued dollar. If its value goes down to 60 cents American, I will be unhappy because my national pride will be hurt. However, we would sell tremendous amounts of lumber from northern Ontario because we would have a 40 per cent advantage over the United States. The Americans would shut down their mills and buy our lumber.

Topic:   GOVERNMENT ORDERS
Subtopic:   BANK ACT
Sub-subtopic:   AMENDMENT TO EXTEND OPERATION TO APRIL 1, 1979
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LIB

Edward C. Lumley (Parliamentary Secretary to the Minister of Finance)

Liberal

Mr. Lumiey:

Go back to the Bank Act.

Topic:   GOVERNMENT ORDERS
Subtopic:   BANK ACT
Sub-subtopic:   AMENDMENT TO EXTEND OPERATION TO APRIL 1, 1979
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NDP

William Arnold Peters

New Democratic Party

Mr. Peters:

My friend says I should go back to the Bank Act. This man speaks for the Minister of Finance (Mr. Chretien), who cannot bring in a bill which is already nine years overdue.

We are not talking about the 1980s for the revision of the Bank Act. We are talking about the 1970s. This minister who cannot bring in a new Bank Act is going to give us some advice

February 28, 1978

Bank Act

on currency and on the relationship between the banking industry and our economic problems. If he is, he should get cracking with some of the people at the Bank of Canada and other stupid financial institutions to whom he listens. He should be considering what would be to the best advantage of Canada.

I would not want to see the dollar go down to 60 cents American, but at 80 cents there would be a 20 per cent advantage. That would mean that even members of parliament would be cautious about going out of the country because it would cost too much. People would be making up our $4 billion tourism deficit here. They would be staying at home.

We would not be buying television sets from Japan, we would be making them. Perhaps those socialists from the maritimes should consider that. We have spent a lot of money on maritime socialists. We gave them a nationalized industry, Clairtone. We put DREE money into that.

Topic:   GOVERNMENT ORDERS
Subtopic:   BANK ACT
Sub-subtopic:   AMENDMENT TO EXTEND OPERATION TO APRIL 1, 1979
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IND

Leonard C. Jones

Independent

Mr. Jones:

And Bricklin.

Topic:   GOVERNMENT ORDERS
Subtopic:   BANK ACT
Sub-subtopic:   AMENDMENT TO EXTEND OPERATION TO APRIL 1, 1979
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NDP

William Arnold Peters

New Democratic Party

Mr. Peters:

We can talk about Bricklin too, it makes no difference. As long as the dollar stays at a 20 per cent advantage, investors would invest in Canada and there would be production in Canada. 1 suppose even rubber boots would be produced in Canada. We went out of that business years ago because we could not compete. With a 20 per cent advantage we could compete, and Clairtone could operate a television business, unless all its assets have been disposed of.

I have always said that a Canadian car should be produced. That could be done if we had a 20 per cent advantage. People would invest in Canada if they could get that kind of premium on their money. They would get high interest on that kind of high-risk money. They would not do too badly. We would see lots of money coming into this country. The banks would have to consider stopping money coming into the country. If they did not, we would be flooded with capital. In my opinion that would be detrimental because many branch plants would operate here and profits would be taken out of this country. There would be high profits because of high risks.

It seems to me that we should not just be revising the Bank Act. We should be looking at where we are going. I am sure the hon. member from Miramichi in the maritimes has gone to meetings in his area at which some dumb bunnies have asked him about the national debt.

Topic:   GOVERNMENT ORDERS
Subtopic:   BANK ACT
Sub-subtopic:   AMENDMENT TO EXTEND OPERATION TO APRIL 1, 1979
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LIB

Maurice Adrian Dionne

Liberal

Mr. Dionne (Northumberland-Miramichi):

Mr. Speaker, while I enjoy the hon. member's explanation of the financial situation in this country, which he obviously does not understand, I want to point out that I come from the riding of Northumberland-Miramichi and that there are no dumb bunnies in my riding.

Topic:   GOVERNMENT ORDERS
Subtopic:   BANK ACT
Sub-subtopic:   AMENDMENT TO EXTEND OPERATION TO APRIL 1, 1979
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NDP

William Arnold Peters

New Democratic Party

Mr. Peters:

Mr. Speaker, as I was saying, people must ask questions about the national debt in the hon. member's riding because they do in mine and in other parts of the country. When we have discussed the Bank Act in the 20 years I have been here we have never discussed the national debt, yet there are people in this country who believe that the national debt is

something they owe, that perhaps we should turn our attention to it, that for this reason we should not have huge deficits to carry the financing of the nation but that perhaps we should be reducing them.

There may be some merit in discussing these matters, and they might be discussed even in the socialist maritimes. I am not above admitting I am no expert on this subject.

Topic:   GOVERNMENT ORDERS
Subtopic:   BANK ACT
Sub-subtopic:   AMENDMENT TO EXTEND OPERATION TO APRIL 1, 1979
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PC

Eldon Mattison Woolliams

Progressive Conservative

Mr. Woolliams:

You could have fooled me.

Topic:   GOVERNMENT ORDERS
Subtopic:   BANK ACT
Sub-subtopic:   AMENDMENT TO EXTEND OPERATION TO APRIL 1, 1979
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NDP

William Arnold Peters

New Democratic Party

Mr. Peters:

I know a considerable amount about gold, but I do not know so much about the way the Liberal party finances the economy of the nation. I do know that we should have a serious discussion about it. I was very shocked a week or so ago, as I am sure the country was, that when the hon. member for York-Simcoe (Mr. Stevens) asked the Minister of Finance what he was going to do about the falling dollar, the minister flippantly said he was not going to do anything about it, that the dollar was fine and that everything was rosy.

Topic:   GOVERNMENT ORDERS
Subtopic:   BANK ACT
Sub-subtopic:   AMENDMENT TO EXTEND OPERATION TO APRIL 1, 1979
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PC

Sinclair McKnight Stevens

Progressive Conservative

Mr. Stevens:

We were all shocked.

Topic:   GOVERNMENT ORDERS
Subtopic:   BANK ACT
Sub-subtopic:   AMENDMENT TO EXTEND OPERATION TO APRIL 1, 1979
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NDP

William Arnold Peters

New Democratic Party

Mr. Peters:

Then later the minister said we would spend an unlimited amount of money to bolster our dollar. I think it is time the minister discussed the intentions of the government. How is the government going to finance our dollar?

Our dollar is obviously not floating now. It is being bolstered by American currency. I suggest that we should know how much of that $5 billion reserve fund is going to be spent. We should know how much of the $2 billion which has been borrowed from Canadian banks and how much of the line of credit which has been arranged with foreign agencies will be spent. We should know that because I am sure that $200 million is not going to help. That is obvious because a number of years ago the government under the right hon. member for Prince Albert (Mr. Diefenbaker) tried it and spent a lot of money trying to maintain the Canadian dollar without pegging it.

Topic:   GOVERNMENT ORDERS
Subtopic:   BANK ACT
Sub-subtopic:   AMENDMENT TO EXTEND OPERATION TO APRIL 1, 1979
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PC

Eldon Mattison Woolliams

Progressive Conservative

Mr. Woolliams:

Not as much as this government.

Topic:   GOVERNMENT ORDERS
Subtopic:   BANK ACT
Sub-subtopic:   AMENDMENT TO EXTEND OPERATION TO APRIL 1, 1979
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NDP

William Arnold Peters

New Democratic Party

Mr. Peters:

I am sure it was not as much as this government is going to spend because the international money market today is very pernickety. It is not sound in any country. The United States is trying to get Germany to peg the German mark and the Japanese the yen, but both countries are resisting because they do not want to price themselves out of world markets. I think we will be throwing a lot of money away, trying to keep reasonable limits on a dirty float of the Canadian dollar against United States currency.

The newspapers are full of declared bankruptcies, Mr. Speaker. They appear every day in the Montreal Gazette and in the Toronto newspapers, so Japan and other countries with which we do business are not the only ones with this trouble. If there is devaluation of our dollar I am sure my friends in the Social Credit party, who know quite a bit about international finance, would say it would be greatly to our advantage to

February 28, 1978

retain the deposits which we now hold in foreign currency. It would be a good thing to have that in a time of need when it will be required if we are to carry on trade.

I am sure the Minister of Finance and the government are getting much advice on how to stabilize our dollar and whether we should continue to back our currency with the International Monetary Fund. They could ask the hon. member for Eglinton (Mr. Sharp) to advise them on the latest developments of the tri-lateral commission of which he is one of the chairmen. The object of this tri-lateral commission, set up by David Rockefeller, is to replace the International Monetary Fund, which they believe is going bankrupt. I think they would be interested in having a former minister of finance discuss Canada's role in that new agency.

Hon. members opposite laugh. They do not believe they should have any control over the banking institutions of this country. In the last four or five years some hon. members in this House have suggested that we should have more banks, and they will remember that I disagreed. Banks in this country do not operate in a free enterprise system. Sometimes they compete with trust companies, but they own the trust companies so it does not matter whether the trust company or the bank makes a loan because the bank will lend the money to the trust company anyway. There is very little competition in banking in this country. That goes for the International Development Bank as well, which I have not found to be a paragon of generosity when dealing with people who want to borrow money.

I am prepared to agree that banks should be nationalized and brought more under government control than at present, although most of them would maintain that they are well controlled now. That is partly true. There is no point, however, in allowing banks to build office towers like that one on Sparks Street. If I were in charge of that banking institution and had money stored there I would have the mirrors on the inside so that everything would be rosy, and then instead of there being one pile of money there would seem to be three piles!

The Bank Act should be changed and the whole banking structure of the country should be changed, Mr. Speaker, because there is no banking competition. If you want to borrow money and are turned down by one bank you will likely be turned down by another; and if you are turned down by two banks the Industrial Development Bank will not let you borrow money.

I do not propose that we should return to backing our currency with gold, but we should back it with something. There seems to be little reference to the gross national product as a means of backing money which is outstanding. We do not seem to be making an effort to reduce the national debt. We are living on a credit card just as individuals are being encouraged to do.

It is all very well for a bank to send me a letter outlining all the ways I can borrow money on my Chargex card and complaining that I have not used the card in the last three months. I suppose it is all right to use the credit card as long as

Bank Act

there is money in the bank. But unless there is, I would be operating at a deficit. That may be necessary for me when I make a major purchase but it may not be an advantageous way for a nation to do business.

Someone who spoke earlier mentioned restrictions, and I should not be surprised to see some of them contained in a new budget, Mr. Speaker. We are borrowing money against the U.S. dollar in order to peg our dollar, but we have not done anything about the financial drain that is taking place in many areas. Some of this we can do something about and some we cannot, such as importing fruit and vegetables in winter. It may not be advisable for our tourists to spend $4 billion outside the country each year so controls may have to be put on travelling. I am sure some hon. members are not old enough to remember when that happened before, but it was since World Was II and travelers could only take about $200 out of the country. Such restrictions may have to be imposed again to help our balance of trade. That is the deciding factor in how other nations see us. How other nations see us is by their evaluation of our currency, and our dollar will reach that level of their support.

Again I tell those socialists in the maritimes to read Myers' report. He told us to buy gold. He told us not to buy certificates in South Africa because of the political climate there. His suggestion is to buy gold and nothing else. If the maritime socialists take his advice, they may find in that paradise that the sun may shine on them too.

Topic:   GOVERNMENT ORDERS
Subtopic:   BANK ACT
Sub-subtopic:   AMENDMENT TO EXTEND OPERATION TO APRIL 1, 1979
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PC

Robert Lloyd Wenman

Progressive Conservative

Mr. Bob Wenman (Fraser Valley West):

Mr. Speaker, the shifting of the financial centre of Canada to a most westerly position has occurred in Canada in spite of rather than because of the initiatives of this centralist government. It the government intended to pay more than lip service to the concept of regionalism that is being espoused across this land, they could have demonstrated it in this Bank Act. They could have demonstrated it in minor ways by making changes in the basic structure of the board of directors of the Bank of Canada. Perhaps they could have considered the reintroduction of bill C-7 which was brought forward in 1974.

The Bank of Canada is controlled by a governor, a senior deputy governor, two deputy governors and 12 directors appointed by the federal government for three year terms. The Bank of Canada is the most centralized of all the regulatory agencies in that it has no mechanism for regional accommodation at all. The Bank of Canada's macro-economic models are strictly national in scope and make no estimate of the bank's policy as it relates to the regions. Provincial officials have complained long and loud about the inadequate consultation between provincial governments and Bank of Canada officials.

If our government intends to review the banking legislation, it is not sufficient to receive briefs from and examine the chartered banks and near banks. The Bank of Canada's policies determine significantly the behaviour of all banking institutions. If regional aspirations are to be given the consideration they deserve, some day there should be direct

February 28, 1978

Bank Act

appointments by provincial governments to the board of directors of the Bank of Canada.

If the Bank of Canada considers it cannot find 12 directors outside of central Canada who have the financial capacity to represent or express regional aspirations, or if they consider the rest of Canada is incompetent financially, or if they fear the provincial governments and do not want direct provincial government input or appointment, perhaps they could in their own representation-

Topic:   GOVERNMENT ORDERS
Subtopic:   BANK ACT
Sub-subtopic:   AMENDMENT TO EXTEND OPERATION TO APRIL 1, 1979
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LIB

John Napier Turner

Liberal

The Acting Speaker (Mr. Turner):

Order, please. The Parliamentary Secretary to the Minister of Finance is rising on a point of order.

Topic:   GOVERNMENT ORDERS
Subtopic:   BANK ACT
Sub-subtopic:   AMENDMENT TO EXTEND OPERATION TO APRIL 1, 1979
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February 28, 1978