November 24, 1978

?

Some hon. Members:

Hear, hear!

Topic:   GOVERNMENT ORDERS
Subtopic:   THE BUDGET
Sub-subtopic:   FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink
LIB

Alexandre Cyr

Liberal

Mr. Alexandre Cyr (Gasp6):

Mr. Speaker, first I would like to congratulate the new cabinet members, the members for Matane (Mr. De Bane), Kenora-Rainy River (Mr. Reid) and Scarborough East (Mr. O'Connell) and to wish them all the success they deserve in their new duties.

Mr. Speaker, I would like to dwell on a few points of the budget speech delivered by the Minister of Finance (Mr. Chretien). Allow me to point out that the moderate growth of the Canadian economy in 1978 is mainly the result of low consumer expenditures. I therefore want to congratulate the minister for reducing the federal sales tax from 12 per cent to 9 per cent which will promote, I hope, increased consumer expenditure while containing inflation at a time when the Canadian economy is no longer subject to price control.

The control of inflation has always been and will remain the concern of the Liberal government's economic policy. And it is precisely the widespread inflation experienced from the beginning of this decade which has been one of the main factors responsible for the decreased competitiveness of Canadian products on international markets. It cannot be denied that this is the main source of our balance of payment difficulties which have brought about the Canadian dollar devaluation over the past two years. The significance of this devaluation should not be exaggerated however as it is one of the factors which are now contributing to the economic recovery of Canada as a whole and of Quebec in particular. As a matter of fact, this factor will doubtless contribute to the rising growth rate of the Canadian economy forecast for next year.

Mr. Speaker, the Gaspe peninsula has traditionally been recognized as an area of slow growth, in spite of the sustained efforts and repeated interventions of the government which sought to favour the development of this area through its regional expansion policy. This policy is now in full swing, thanks to the special fiscal incentives the Minister of Finance has reserved for the Gaspe peninsula and the Atlantic provinces in his budget speech. On behalf of all Gaspesians, I want to thank the Minister of Finance for the special attention he has paid to the slow economic growth of their region, and I am sure that a few hours from now, the hon. member for Gloucester (Mr. Breau) will do the same on behalf of his constituents.

November 24, 1978

The Budget-Mr. Cyr

As a matter of fact, Mr. Speaker, the investment tax credit program which was to expire on June 30, 1980, has been extended for an indefinite period, and the basic rate has been increased from 10 per cent to 20 per cent. This is a change which I had sort of suggested myself last year. I certainly hope that these sectoral incentives will stop some of our young graduates from leaving, for lack of adequate employment opportunities in the area. Another fiscal policy which should hopefully improve the economic outlook of the Gaspe peninsula concerns the write-off for mining development expenditures which is being raised from 30 per cent to 100 per cent, as well as the fact that townsites and social assets required for new mines will qualify to earn depletion.

Mr. Speaker, the mining industry in the Gaspe peninsula is mainly based on the production of copper in the region of Murdochville. Despite the continuous problems that this industry was faced with in recent years, I do hope that these tax reductions together with the improvement of the competitive level of the mining production as a result of the drop of the Canadian dollar, will contribute to assist the mining industry in the Gaspe peninsula. These fiscal benefits are a new factor which could lead to the opening of the Madeleine mines, in Saint-Anne-des-Monts which have been closed down for two years now. I think we will come to a similar situation in the forest industry, especially in the pulp and paper sector. Mr. Speaker, the financial critic of the official opposition, the hon. member for York-Simcoe-who fortunately does not have to worry about a high unemployment level and about the insecurity in the activity of the two industries of wich I just talked-seems to be totally unaware at these facts.

Another measure announced in the budget speech by the Minister of Finance has to do with increasing the air transportation tax to improve government revenues necessary to finance airport services and investments. I do hope this measure will generate enough additional revenue to allow the Minister of Transport to carry out as soon as possible the commitment made by his predecessor in 1973 and reiterated by himself since he took over his portfolio to give the Gaspe area and the Iles-de-la-Madeleine a decent air transportation service. That, Mr. Speaker, is something I have been fighting for vigourously for over ten years. That lack of air service has been and will continue to be a major obstacle to the economic development of the Gaspe area wich could reduce the impact of the particular tax incentives the Gaspe area was given in the form of investment tax credits which I referred to earlier.

One last budget measure I would like to deal with has to do with the extension of the tax incentive for residential buildings. That, Mr. Speaker, is a measure which the financial critic of the opposition omitted to mention for very obvious reasons. Although those tax incentives are mainly for Canada's urban ridings, the people in the Gaspe area were able to benefit under several programs recently introduced by the Minister of

State in charge of Urban Affairs, and let me name a few: Under its Residential Rehabilitation Assistance Program, the Central Mortgage and Housing Corporation is offering federal funds to repair and improve single-family houses. Furthermore, the National Housing Act provides for various forms of assistance to private non-profit housing corporations trying to arrange for low rental housing for families, old people or groups like the handicapped. Under that same act, the Central Mortgage and Housing Corporation also offers various forms of assistance whose primary objective is to provide adequate low rental housing, which can be personal residences, homes for the elderly or collective residences.

Mr. Speaker, since 1971, the Central Mortgage and Housing Corporation has contributed to the construction of 525 low rental housing units in the riding of Gaspe. CMHC loans total $9.4 million. The Central Mortgage and Housing Corporation also contributed to the construction of two homes for the elderly and loans stand at about $2 million.

For three years, people in the Gaspe area have been able to take advantage of the Residential Rehabilitation Assistance Program. This new Central Mortgage and Housing Corporation program, which is called RRAP for short, will provide loans totalling $1.5 million and grants totalling $700,000 and will enable more than 200 homeowners to repair and improve their homes. Under the three programs for non-profit housing and for the rehabilitation of owner-occupied dwellings, the constituency of Gaspe has received subsidies totalling $14 million.

However, in 1976, the Quebec government, through the Central Mortgage and Housing Corporation, authorized the construction of low-rental housing in three different municipalities of my constituency, that is Gaspe, Grande-Riviere and Ste-Anne-des-Monts. The Levesque government has not followed up on the projects for non-profit municipal associations. Moreover, a letter addressed to the hon. Andre Ouellet and dated January 18, 1977, says the following:

The Gaspe, Grande-Riviere and Ste.-Anne-des-Monts projects are expected to be dealt with within the 1977 programs of the Quebec Housing Corporation and to be the subject of a subsequent agreement. Our Quebec regional office, which is responsible for this file, will therefore know the details of this project only when the Quebec Housing Corporation submits its assistance requests following the signature of a new agreement.

We are now near the end of November 1978 and nothing has been done yet. This situation has gone on long enough and there is an urgent need for the Quebec government to accept the millions of dollars that the Ottawa government has placed at its disposal to provide residents of the Gaspe area with low-cost housing for low-wage earners and senior citizens. I submit that the Quebec government has deprived the constituency of Gaspe of 200 housing units and of an investment of nearly $5 million in the last two years.

Another program of the Central Mortgage and Housing Corporation which is very popular in the Gaspe peninsula is the one which aims at providing low-cost housing to individu-

November 24, 1978

als, families, elderly people or special groups such as the handicapped. Forty-eight housing units at a value of $1.2 million are now under construction at Chandler. Several nonprofit agencies are participating in this program at Ste-Anne-des-Monts, Gaspe, Grande-Riviere and Chandler. Our forecast, Mr. Speaker, is that within two years the riding of Gaspe, thanks to this new program, will have 300 additional housing units if the government of Quebec decides once and for all to authorize the building of new low-price housing in those localities as indicated in the January, 1978 letter of the minister. In two year's time the riding of Gaspe will have 500 more housing units.

Mr. Speaker, before concluding my remarks, 1 would like to speak a few minutes about the fishing industry in Canada. I would feel guilty if I were not to mention the improvements which have taken place in the Atlantic fisheries since the hon. member for Westmorland-Kent (Mr. LeBlanc) took over the fisheries department. In a speech which he delivered in Moncton last November 10, on the occasion of the meeting of fisheries ministers for the Atlantic region, he said and I quote:

Our policy was based, secondly, on our wish to control fisheries for the good of the people. Although we are entertaining hopes of expansion for our fleet, too many extravagant projects have fallen through. We did not want, at any cost, to be fooled by the extension of our fishing zone to 200 miles. We wanted to use our resources, first of all, to improve the lot of the fishermen, who very often are at a disadvantage, and make them feel they were the main beneficiaries of that common property.

To stabilize fisheries and give control back to the fishermen, we needed sound foundations such as quotas, restricted access and the fishery plan which every year from now on coordinates the development of ground fish. We have emphasized the quality aspect of the products and the importance of orderly industrial operations.

Our efforts have worked. It is no longer a time for laments or blackmail. Never has the fishing industry been so well.

I agree with the Minister of Fisheries and the Environment (Mr. LeBlanc) when he says that the fishing industry is better off than ever before. However, in Quebec and particularly in Gaspe we have serious problems of supply, especially as far as herring is concerned. There is a lack of co-operation between the provinces, fishermen and producers to give Quebeckers access to the herring stocks. As fish go beyond limits without being aware of it, Quebeckers should be able to take advantage of the herring fishing industry just like maritime fishermen and producers. Herring stocks are limited and the question is who owns that herring?

It is unfair to let maritime fishermen catch all the herring; Quebec fishermen should also have access to those resources since herring is fished a few kilometers off the Gaspe coasts. The fishing fleet of Quebec cannot be equipped for purse seine fishing since the Government of Canada has not issued any licence since 1970. Fishermen and producers of New Brunswick have 27 licences for purse net herring fishing and those of Newfoundland have 32 licences. Not a single licence was issued in Quebec.

The Budget-Mr. Gillies

The herring plants of the Gaspe peninsula and the Magdalen Islands operated only for a few weeks in 1978. The fishermen of New Brunswick were supposed to deliver part of their catches to the plants in Quebec but the agreement was not respected. Gill net fishermen cannot supply the plants because their catches are too small. The Minister of Fisheries and the Environment was made aware of the situation in Quebec by hon. members of the Gaspe peninsula, as were also his civil servants and those of Quebec fisheries.

Mr. Speaker, on behalf of the fishermen, of the workers in the processing plants and the producers, I appeal to the minister and ask him to take steps-the matter is urgent-to ensure that Gaspesians and "Madelinots" can be equipped and get licences like their neighbours in New Brunswick, Nova Scotia and Newfoundland, that they can get their share of the herring quotas in the Gulf of St. Lawrence and Chaleur Bay. Unless a favourable decision is soon reached with regard to issuing licences to the seine fishermen, the herring processing plants which operated only briefly in 1978 will have to shut down, and that, forever. The jobs in the plants which process the larger herring and the value of their production have both increased by about 500 per cent in the maritime provinces in the last few years. Mr. Speaker, the situation is not the same in Quebec. We must find the remedial correctives that are required. The fate of the herring processing plants in Quebec is therefore in the hands of the Minister of Fisheries and the Environment of Canada.

Topic:   GOVERNMENT ORDERS
Subtopic:   THE BUDGET
Sub-subtopic:   FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink
PC

James McPhail Gillies

Progressive Conservative

Mr. James Gillies (Don Valley):

Mr. Speaker, it is a great pleasure to participate in this budget debate. I am particularly pleased to follow the Deputy Prime Minister (Mr. Mac-Eachen), who talked about a great number of things and concluded his speech-I do not have the "blues" before me- with the implication that members of my party and my leader have been spreading across this country a great deal of information with respect to the acquisition by Petro-Canada of Pacific Petroleums which is not correct. I listened with interest to what the Deputy Prime Minister had to say about this, and it seems to me that if anyone is spreading false information or alluding to aspects of this acquisition which need interpretation, it is the government.

Let me review what the Deputy Prime Minister said. By implication he said that by taking over Pacific Petroleums, Petro-Canada was increasing the supply of energy for Canadians. At this stage that is patently unprovable. The reality is that Pacific Petroleums is a well operated company. It is operating in Canada and finding reserves. By any measure it is managed well. By the measure of profit Pacific Petroleums is being managed much better than Petro-Can. But no one in this House can say that an increased or assured energy supply will be the result of the acquisition by Petro-Canada of Pacific Petroleums. One has to be somewhat skeptical.

November 24, 1978

The Budget-Mr. Gillies

We do not know whether the management of Pacific Petroleums will remain with Petro-Canada. We do not know whether the management of Petro-Canada, a nationalized company, will be as efficient as the management of a private company. If we look at other nationalized organizations in this country such as the Post Office, and if we look at the scandalous management of Atomic Energy of Canada Limited a few years ago, how can we be sanguine about the prospect that the management of Petro-Canada will be any better? We certainly do not know. Therefore the first statement made by the Deputy Prime Minister this afternoon was certainly open to question.

The Deputy Prime Minister dealt with security of supply for Canadians, as if the National Energy Board does not exist. Surely the Deputy Prime Minister knows that there is no export of energy from this country without permission from the National Energy Board. Has he no confidence in that agency, which his government had a great deal to do with setting up?

I do not have the words of the Deputy Prime Minister in front of me, but his words with respect to security of supply are clearly open to challenge. When he says that there has not been a nationalization because the government has not expropriated, that seems to be a very peculiar understanding of what nationalization is all about. To anyone who understands these things at all, government ownership is nationalization. It is national ownership. Just because there is no expropriation does not mean there is not nationalization. The confusion of the Deputy Prime Minister about this matter gives me a great deal of concern. If a senior spokesman of this government thinks something is not nationalized because it is not expropriated, we are going to have very serious problems.

If the government moved in and took over the department stores of Canada but did not expropriate them, I suppose the government would not consider those department stores nationalized. Of course they would be. Why is the government pretending that the Petro-Canada acquisition of Pacific Petroleums is something other than what it is?

I was in the committee when Petro-Canada was established. As a member of that committee I asked the then minister of energy, mines and resources whether the position of the Government of Canada was that the private sector could not develop our resources effectively. The answer of the minister at that time was that that was basically the position. The government is nationalizing, and pretending it is doing something else.

The most important issue, the one which brings me into this debate, is that every time members of the government talk about this acquisition they say it is a perfectly private transaction and that the money is being borrowed from banks. We are told that the assets of Pacific Petroleums are being pledged for security for those loans and that the Government of Canada is not involved. Well, that is not true. The fact is that under the Petro-Canada Act and under the Financial Administration Act there is a contingent liability on the people of Canada in relation to this transaction. Perhaps it is the position of the

government that contingent liabilities do not matter, but that is dangerous thinking. It is the kind of thinking in which this government has indulged for a number of years.

The government thinks there is no need to be responsible about spending, about accounts, or about liabilities of any kind. I am sure the government does not know whether the people of Canada would be much better served if those contingent liabilities, which are not endless, were used to back loans for housing or to back loans in other areas. Who knows? But when we are talking about this transaction and about borrowing and then not making a final statement, or following the transaction to its conclusion and pointing out that Petro-Canada as an agency of the government, either under its act or under the Financial Administration Act, has a liability and is creating a liability for the people of Canada, that seems to me to be something less than open.

If the government wants to argue that these liabilities do not mean anything, that is all right, but today the Deputy Prime Minister said that the Conservative party is misinforming the Canadian people. He did not follow the transaction through to its conclusion and point out that a liability is being created for the people of Canada. That seems to me to be less than open. It is the government that is misinforming the people of Canada.

In terms of financial obligations, financial accounting, and recognizing liabilities of one kind or another, there is a difference between the party of which I am a member and the government. The position of the government is that these things do not matter, and the government does not talk about them. It was this very type of thinking, as the Auditor General pointed out-that taxpayers' money is a bottomless pit-which has placed us into this trouble that we are in today in the operation of our economy.

It is interesting to participate in the budget debate on its last day. The economic indicators in the country show that the cost of the living is up a full point, the Canadian dollar has declined again, unemployment is still high, and our trade balance is down. These are all negative factors in the operation of our economy. Why do we not, in a rich and prosperous country like Canada, have an economic performance which is more tolerable than we have been getting? No longer can Canadians believe that it is because of what is happening in the rest of the world. Surely Canadians realize now that we are in the economic difficulty we are in because of the total mismanagement on the part of the government.

What is a budget about, Mr. Speaker? Up until the middle 1930s, indeed up until World War II, it had a very simple purpose, to raise the money necessary to finance expenditures which are in the estimates. It seems really naive to think that way today. Nobody today thinks that the purposes of the budget is to raise money to finance the expenditures of the Government of Canada. If the people on the government benches would realize that the things they are promoting have

November 24, 1978

to be paid for and had the courage to tax for them, then I think we would have some restraint.

After the 1940s, budget-making changed, and the purpose of the budget was more or less to set an economic policy for the nation. The goals of that economic policy-making are reasonably well known-to have relatively full employment and relative price stability. If the government is not going to use the budget to raise money to pay for its expenditures, I suppose it could always cop out and say, "We are going to use the budget to direct the economic performance of the nation in the course of the next year or two to get reasonably full employment and relative price stability."

The Minister of Finance (Mr. Chretien) has brought down a budget which increases the deficit, so out the window goes any idea that the budget is used to raise finances for expenditures. The minister predicts that the unemployment rate will rise and that we will end up with an inflation rate of around 6 per cent. A year ago he said the inflation rate would be around 4 per cent. This budget does nothing for our economic policy and nothing to raise the revenues that we need for expenditures about to be undertaken by this nation. This budget simply deals with the mechanics of the operation of the government cash balances and cash needs.

Some people have said that we have a very responsible Minister of Finance because he did not bring down a political budget. In fact, it is one of the most political budgets that has ever been brought down, because what has to be the bottom line for this budget is that this government is not prepared, under any circumstances, to see the value of the Canadian dollar drop below 84-85 cents on the foreign exchanges. Indeed, in the budget address the Minister of Finance said that it is the position of the government that the value of the Canadian dollar should remain around 85 cents as compared to the U.S. dollar. What he is really saying is that the Liberals have to get ready for an election and that they cannot afford for the Canadian people to see the economic failure of this government dramatised by a falling dollar.

This government does not care about the millions of Canadians who are out of work or about inflation. It wants to keep the dollar at around 85 cents so that Canadians will not have a clear and simple indicator of how great the mismanagement of this nation has been under the administration of this government. Politically, it is unacceptable for the dollar to fall below 85 cents. I do not see how anyone can make the interpretation that this is a responsible budget and a responsible minister when the budget does nothing to meet the needs of the people of Canada, but merely attempts to ensure the political survival of a party.

If we ever needed in this country a budget with imagination that would do something for our problems, it is now. Yet the Minister of Finance did nothing, clinging to the hope that somehow he would manage to get along, fooling the Canadian people for another few months that the economy is not in as bad shape as it truly is.

The announcement by the Prime Minister (Mr. Trudeau) today of his cabinet shuffle is another disappointment. The

The Budget-Mr. Gillies

Minister of Finance, who has presided over an increasing deficit, increasing unemployment and increasing inflation, is left in his portfolio. The Minister of Industry, Trade and Commerce (Mr. Horner), who has been something less than a world leader in his department, is left in his portfolio. Canadians who are really concerned about their country must be wondering what is happening. We get something called a board of economic development that leaves the Minister of Finance in an ex officio position. What kind of Minister of Finance would stand for the establishment of such a board without a major role being played by the minister himself? As for the Minister of Industry, Trade and Commerce, they even took his deputy minister away for this new board. Another bureaucratic structure is created when what is really needed is strong competent ministers who understand the problems and have the courage to bring in the solutions that are necessary to get this country moving forward again.

We need reform of economic policy-making in this country. It has been spelled out many times by members of my party. We need reform in the operations of the finance committee. We need to have hearings, before the budget is brought down, with competent people around the country, and we need to have some control over expenditures in this House of Commons. Every member of parliament knows that when he or she is elected, his or her constituents think he or she is going to do something about controlling expenditures, and every member here knows, if he is honest with himself, that this government has no control over the expenditures in the way they are set up at the present time.

Instead of moving where we need to move to strengthen our key portfolios, we find today that the Prime Minister has done nothing and has allowed to remain in these key positions ministers with proven records that they cannot handle their job.

I would like to put on record that I believe, and the members of my party believe, that Canada can enter, and is about to enter, one of the most prosperous periods in its history. I am very bullish on the next decade for Canada. There is so much to do in terms of pipeline, energy development, steel construction, light manufacturing and so on. The most prosperous nation in the world, bar none, in the 1980s can be and probably will be Canada. In that prognostication 1 am not speaking as a member of parliament. I am speaking as an economist. The strength of Canada is ahead of us.

This rightful prosperity will happen, however, only if we have the benefit of a government which knows how to manage the economy. What we have had for the last ten years will not do. We require a government which understands that the private sector uses resources efficiently. We require a government which has confidence in individuals and believes in rewarding initiatives. We require a government which will turn the strengths of the nation loose. We were built as a nation of entrepreneurs and individuals who had enormous confidence that they could operate within the framework of a government

November 24, 1978

The Budget-Mr. Penner

which understood its responsibility and left individuals alone to work and prosper.

I do not think there is any question that after the next election there will be a new government in the country. The speech of the Minister of Finance on budget night and the speech of the President of Privy Council today indicate the need for a new government, not more of the same.

Canadians have a clear-cut choice in the next election. Do they want a government which believes in government involvement in large segments of the economy, government regulations in large segments of the economy, and more and more nationalization? Do they want a government that believes the state operates things more efficiently than the private sector? I don't think so. What Canadians want is a government which will provide a framework in which they may work, prosper, and be rewarded. They want a government which believes in them as people and in enterprise as a system. My party will give Canadians such a government, a government which will turn the country around, so we may move into the last 20 years of this century and become, without question, one of the most prosperous nations on the face of the earth.

Topic:   GOVERNMENT ORDERS
Subtopic:   THE BUDGET
Sub-subtopic:   FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink
?

Some hon. Members:

Hear, hear!

Topic:   GOVERNMENT ORDERS
Subtopic:   THE BUDGET
Sub-subtopic:   FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink
LIB

B. Keith Penner

Liberal

Mr. B. Keith Penner (Thunder Bay):

Mr. Speaker, on budget night it was most heartening to hear the Minister of Finance (Mr. Chretien) say, "Let me turn now to the resource industries, and mining in particular". It was heartening because of the important role the mining sector plays in the economy of the country.

Since 1950 mineral production in Canada has contributed directly approximately 4.5 per cent to our gross national product. Minerals, excluding fossil fuels, account for 10 per cent of the value of Canada's exports, and fabricated mineral products account for another 10 per cent. Last year nearly $3 billion in wages were paid to workers engaged in mining industry activities. Mining continues to be an important influence in the frontier development of the country. With that background, it was heartening to hear the Minister of Finance turn his attention to this sector.

Despite what mining has contributed to Canada, the Canadian mineral industry continues to be under-developed compared to that of the United States and New Zealand. Studies have shown that higher exploration costs, falling returns, and increased risks have had a negative impact upon mineral enterprises in Canada. In April of this year the Department of Energy, Mines and Resources published a survey entitled; "Known Mineral Deposits in Canada that are not Being Mined". This rather substantial document presents a compilation of known Canadian mineral deposits which, while neither in production now nor announced for production, are either economically exploitable today or are within the reach of becoming so during the next 25 years, as a result of foreseeable economic and technological changes.

The authors of this survey have attempted to identify certain bottlenecks which have hindered primarily mineral resource development. Of course they mentioned national economic

conditions, the international market situation, and metal prices. All of these play a large role in development decisions. One obstacle which stands out in the report is that of the unpredictability of trends in real costs of financing, development, and mining. The Minister of Finance helped in a significant way to offset this uncertainty by announcing that the current write-off for development expenditures in mining is to be raised from 30 per cent to 100 per cent.

In his budget address the minister noted that federal and provincial resource ministers have done an in-depth review of the tax situation in mining. This analysis was badly needed because of the uncertainty created for the mining industry by changing provincial taxation and the federal-provincial dispute on mineral taxation. During the 1970s increased taxation levels resulted in lower mineral production expenditures. The sector task force on the Canadian non-ferrous metals industry concluded the following:

The taxation of mining income across Canada is chaotic and perverse. It has resulted in a situation in which development of all but the richest discoveries would be uneconomic even when demand and prices improve. As a result, exploration activity in this sector is far below the levels needed to sustain present production, let alone provide for growth.

To establish a level of confidence which will ensure future growth and stability, the mining industry has recommended that federal and provincial governments agree upon a uniform definition of taxable mining income, and a combined federal and provincial tax rate or rates not exceeding 45 per cent net of resource allowance.

By means of taxation, governments should be encouraging the growth and expansion of mining. The industry should be helped to become more competitive on an international scale. I know that not everyone agrees with this position. There are those who argue strongly against any tax preferences for the resource sector. In their minds, these preferences discriminate against investment in the manufacturing and service industries. I should like to challenge that thesis.

[DOT] (M32)

First, I would point out that mining, at best, is a high-risk enterprise. There is a high degree of risk involved in mineral exploration. For every mine eventually brought into production, there are hundreds of uneconomic "prospects" which have been evaluated at great expense of time and money.

Secondly, it seems to me that if we discourage the investment of capital for mineral exploration and development in Canada, it does not then follow that this capital will automatically flow into manufacturing or into the service sector. Instead, what is likely to happen is that we will choke off the inflow of foreign capital, and this capital that would have come into Canada, plus Canadian capital that would be designated for resource development, will simply go somewhere else in the world. It will go where the investment climate is more favourable than it is here. So there is no way in which, if we discourage mineral exploration and development, we are going to help any other sector in the country. In the long run we will simply be hurting ourselves.

November 24, 1978

Thirdly, Mr. Speaker, mining, rather than detracting from the manufacturing and service sectors, provides some very definite benefits. Canada is a world leader in the production of mining equipment and machinery. We have an enviable international reputation for the expertise of our professionals in the fields of mining and exploration.

There is a research paper, with which members may be familiar, produced by the Library of Parliament, on the subject of mining in Canada. This paper speaks of the changing image of our mining companies from that of hardy pioneers to one of profit-hungry plunderers of our irreplaceable natural resources. The paper makes it clear, as I want to do, that both these images are, of course, extreme. The mining industry, like any other business enterprise seeks to earn a reasonable return and it wants to operate under a set of rational rules which will not be subject to change at a whim. Our tax structure ought to promote the healthy, long-term growth of the mineral sector, while at the same time providing fair returns to the provincial and federal governments.

Any discussion about mining, Mr. Speaker, is bound to centre on such topics as investment, exploration, development, taxation, international markets and prices. But as well there is a very human side to be considered. Mining means jobs, and mining development involves the building or the expansion of communities. When an ore body becomes depleted, or when a mine cuts back because markets are soft and prices are too low, then we witness a community in crisis.

Atikokan, Ontario, which is in my constituency, is today facing the grim reality of a rapidly depleting ore body. Atikokan has a highly developed townsite, an existing pellet plant and other infrastructure necessary for a mining operation. What it needs now is another source of ore. It so happens that there is nearby, at Bending Lake, an iron ore deposit which is close enough to Atikokan that the townsite could continue to be used and the concentrates could be transported via slurry pipeline to the pellet plant in the town. Unfortunately, because of the over-supply of iron ore pellets in the Great Lakes region, it has been announced that at this time it is not possible to proceed with the development of the Bending Lake project.

Such a notice in the business section of the Globe and Mail probably gets no more than a passing glance from most readers, but in Atikokan the repercussions of this decision are deeply felt. The Bending Lake project would have provided almost full employment for the 600 employees now working for Steep Rock in Atikokan and who will, within the next year or so, be laid off.

The Royal Commission on Corporate Concentration did a study or a background report which was entitled "The Social Characteristics of One-Industry Towns in Canada." Many mining communities fit into this category. In summary, the report referred to the precariousness of such communities, and how uncertainty about the future encourages residents to perceive that they share a common fate. The report goes on to mention feelings of dependency, powerlessness, resignation, and fatalism which prevail. I refer to this social phenomenon, sir, because it is so easy to consider the mining industry only in

The Budget-Mr. Penner

statistical terms, and to fail to appreciate that there is a human dimension as well. Government programs and policies must more and more address themselves to this reality.

The royal commission background report to which I have referred uses a 1971 study by Rex Lucas entitled "Minetown, Milltown, Railtown: Life in Canadian Communities of Single Industry." Lucas has identified four stages in the development of single-industry communities, and those of us who represent resource regions know these stages all too well.

The first stage is that of construction, where the community attracts a highly mobile population willing to make many short-term sacrifices in exchange for some quick money.

With the construction stage under way, the second stage of recruitment begins. Here, the company seeks out professionals and labourers as company employees. For these people, resettlement from somewhere else is often difficult. The townsite itself, or the expansion of an existing one, is under construction. The emphasis of those who come is upon occupational opportunities. Population turnover nevertheless remains very high. Many young couples, for example, leave shortly after arriving, and they leave because there are few job opportunities in such circumstances for women, and there is a lack of physical amenities in the town. There is also an absence of recreational and entertainment facilities.

It is at this stage that governments could be of greatest assistance with various forms of financial support for infrastructure development. In his budget the Minister of Finance has proposed that for new mines the costs of associated townsites and social assets should earn depletion. This is a step forward and should ease some of the problems associated with the development of new mines. As housing and community facilities improve, the rate of population turnover slows and there is a reduction in various types of social problems.

Stage three is that of transition, during which control in the town passes from company or provincial administration to the citizens themselves. During this stage we see the genesis of a stable community, a substantial reduction in population turnover, and an upturn in and positive emphasis upon more community participation.

After a number of years the community may reach the stage of maturity. At this stage there is very little mobility in the adult work force. Retired workers remain in the community. Some of the young people become employed in the local industry. Workers build up seniority and benefits. Money is invested in homes. Nevertheless, people in these communities remain in a state of dependency, because they are aware that the industry could shut down due to factors completely beyond anyone's control. So feelings of insecurity and pessimism are common. As one researcher put it, "Only with a diversified economic base can a community achieve full maturity."

In mining, the productivity of labour and capital has been declining since 1960. The Science Council of Canada suggests that the origin of this problem lies in labour shortages and turnover, in the low level of technological innovation because of low return on investment, and in the low yield of ores that

November 24, 1978

The Budget-Mr. Corbett

[DOT] are being extracted. All of these, of course, are in addition to what I mentioned earlier, the high rate of taxation.

The Royal Commission on Corporate Concentration background study to which I referred earlier, suggests that to Lucas' four stages we might add a fifth, that of decline. Here, the industry does close down and the town goes on the skids. Those who cannot find work elsewhere are left with virtually nothing. There is little market value for the houses. Bitterness and desperation set in among those who have invested their lives in a community which is now dying.

I have taken a little time to describe this Pilgrim's Progress into the "Slough of Despond" so that other Canadians from settled urban areas may know a little of life in the developing resource regions of Canada. For those who live and work in those regions, I would suggest, as I have on other occasions, that there ought to be some special tax benefits. To reduce the turnover rate, and to attract employees from urban areas where unemployment is high into regions where jobs go begging, we should offer some form of personal income tax relief, at least for those employees who remain on the job for a minimum of two years.

The Sector Task Force on the Canadian Non-Ferrous Metal Industry recommends a graduated scale of income tax remission varying with the degree of isolation and latitude. Another suggestion was that the incentive scale be graduated on the basis of temperature, by isotherms rather than geographic parallels.

Canada's economic identity has largely been based on a long tradition of growth in resource-based exports. The probability of this pattern continuing for much longer is very low, even though much of this country's huge area has only recently been the subject of intense mineral exploration. It is not, therefore, that we are running out of these resources, but that increasingly other countries are emerging as competitors and cutting into Canada's traditional share of international sales and laying first claim to any market growth. The U.S.S.R., for example, is only now beginning significant entry into the world mineral markets, and it has a vast resource base with much capability to exploit it.

Canada is vulnerable to these changes. We must continue to be supportive of our resource industries by means of public policy-including a fair tax system, incentives for exploration and development, and built-in economic advantages for those who invest their working lives in mining communities. The regional increases in the investment tax credit can be of some value to the mining sector. Above all, strong domestic growth is urgently required. This is a time for more stimulus in the economy. Contrary to what the previous speaker said, I believe that the budget now before us moves cautiously and quite responsibly in that direction.

Topic:   GOVERNMENT ORDERS
Subtopic:   THE BUDGET
Sub-subtopic:   FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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Some hon. Members:

Hear, hear!

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Subtopic:   THE BUDGET
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PC

Robert Alfred Corbett

Progressive Conservative

Mr. Bob Corbett (Fundy-Royal):

Mr. Speaker, it is a privilege and an honour to have been given the opportunity to

speak in this House. My compliments to you, Mr. Speaker, for the admirable fashion in which you conduct the business of this House under what certainly has to be described as adverse conditions on occasions. Please convey my best wishes to the representative of the Crown and the personal emissary of Her Majesty the Queen in this country, His Excellency, the Right Hon. Jules Leger, Governor General of Canada, and his lovely wife, Madame Leger.

My congratulations to the other fourteen successful by-election candidates recently elected. Some have had the opportunity of presenting themselves to the House during this debate or in other fashions, ahead of me. They certainly have done so in a most admirable fashion.

As you know, Mr. Speaker, Fundy-Royal which was so respectfully and admirably represented in this House by the former Progressive Conservative member, Gordon Fairweath-er, is a diverse constituency, nestled in Her Majesty's picture province of New Brunswick, extending from, and including, a portion of the eastern section of the city of Saint John, to the borders of the city of Moncton, on the east. It runs from the west, from more or less the boundaries of the beautiful Saint John River valley, which is known among geographers as "The Rhine of North America", up to and including a portion of Sunbury county, which lies in proximity to the capital of New Brunswick, Fredericton.

It then extends along a northern boundary which includes the principal coal mining regions of New Brunswick, the towns of Minto and Chipman. In the heart of Fundy-Royal is Sussex, the dairy centre of Canada.

There are many areas I could speak of in relation to economic development-or perhaps I should say the lack of it-in the constituency of Fundy-Royal, including agriculture, coal mining, the forest industries, potash development in the Sussex region, the Fundy trail which this government and the provincial government of New Brunswick have been talking about for so long without seeming to get any closer to agreement, but, unfortunately, time does not permit me to do so. I will have to deal with these subjects at a later time.

1 should like to discuss, however, the business of unemployment in Fundy-Royal. It is certainly an area that is neglected and one where we feel there is great room for improvement and changes.

The Atlantic region, as perhaps you know, Mr. Speaker, is handled by Statistics Canada on a seasonally adjusted basis. This is extremely misleading. There is a very high seasonal component to unemployment in the Atlantic region, and in Fundy-Royal it renders the figures provided by Statistics Canada meaningless on most occasions.

The proposed changes under consideration by this House to the Unemployment Insurance Act are very critical to New Brunswick. Under present circumstances, if the bill passes the way it was presented, it is estimated there will be an additional 10 per cent load on the social services budget of the province. At a recent meeting of the federal and provincial ministers of social services it was suggested that the government consider a

November 24, 1978

two tier rate structure. I put this to the House and to the government for consideration. Very simply, it is based on a 50 per cent maximum insurable earnings structure without dependants, whereas clients who have families or dependants would remain at the 66% per cent level or possibly be reduced to the suggested level of 60 per cent.

The saving in New Brunswick alone is estimated at something in the vicinity of $26 million for this year, which is worthy of note. Of course the saving across the nation would be much greater.

I was pleased to hear that the Standing Committee on Labour, Manpower and Immigration has apparently agreed to allow provincial ministers to participate. I am sure they will benefit from the experience and knowledge of those ladies and gentlemen who will be contributing to the proceedings.

The lower regions of the riding encompass the bedroom communities of New Brunswick's largest city, Saint John, and includes Kennebecasis Park, Renforth, Riverside, Kinghurst, Rothesay, Fairvale, Gondola Point, Quispamsis and Hampton, on the Kennebecasis River, and Grand Bay and Westfield on the Saint John River.

Mr. Speaker, Fundy-Royal is, as I have outlined, a diversified constituency which depends, to a great extent, economically, on the intuition and ingenuity of the people who make up the population. There is within its borders a goodly number of small business people, including a high portion of the productive farmers of New Brunswick. There are fishermen along the Fundy coast who depend on the seas for a living. There are small manufacturers, not so small manufacturers, service industries, and household managers, commonly known as housewives. All of these people have to try to make it in an economic environment which, thanks to the present government, is totally incompatible with the aspirations, hopes, and ambitions of an ambitious, conscientious and arduous population.

From the standpoint of the household manager, what has been offered in this budget for her? A paltry one dollar per week maybe! As for the rest of the small business community, nothing. There is absolutely nothing except a promise to professions, such as medical doctors and lawyers, that if they previously used a vehicle developed by the government to their advantage, which is what any prudent business person would do, be it someone running a multi-national company, or a small country doctor, then they were labelled as bad scamps, unfair, cheaters of the government, and they must be stopped.

Let us deal with a typical rural doctor. First of all he is regulated in most provinces across this nation by a medicare program, which regulates and dictates his schedule of fees, whether it be for the administration of a common laxative, or the delivery of a baby in a hospital 30 or 60 miles away from his office. He is, in most cases, on call 24 hours a day and tends patients in a hospital most every day miles from his office.

The Budget-Mr. Corbett

He maintains a telephone system, which is sophisticated enough to transmit and respond pertinent information to him when he is away from home. He inserts ads in local newspapers when he will be away from his office for more than a few hours. He maintains an office which is completely equipped with enough medical paraphernalia that would make most small hospitals of a decade ago look antiquated. He maintains a staff of at least two, that is, if he wants to clean up the office himself. He maintains records that are suspiciously similar to most legitimate businesses including accounts receivable and accounts payable. He attends seminars and continuing education programs to ensure that he is kept up to date with the latest technology. He often is a dispensing physician, which means that he must maintain an inventory of drugs and medications accounting for same, just as a druggist would. His salary, after expenses, is probably $30,000 to $40,000 per year, much less than that of many of the bureaucrats gracing this hill.

This is the villain, Mr. Speaker, that this government says is no different managerially speaking than the guy who goes to work at 9 a.m. in the morning and returns at 5 p.m. at night, and who collects his pay cheque every week. This is the villain, Mr. Speaker, that this government probably considers as another enemy. If it is the government's intention to discourage, and scourge society of this particular rascal, the family doctor, it is doing a particularly efficient job of it. Before the present measures that effectively ensure that a legitimate businessman is eliminated from taking his rightful place in the business community, the situation for MDs surgeons and others in their related fields, was unpalatable enough. This government knows they have been leaving the country in droves for greener pastures in the United States. It will be interesting, and I predict tragic, for this country to witness what the present measures brought in by this government will do to aggravate further an already serious situation.

But this is the attitude that this government has toward small business. They are to be used and intimidated. Not destroyed, yet, because they are the largest group of taxpayers, producers, and employers in the country. But they are certainly to be intimidated.

The Department of Justice keeps on staff a "stable of legal beagles" paid for in the most part by the labour of small business, whose sole purpose it is to prosecute, persecute, and short of execute whoever the Department of Justice can get their clutches on, as long as the villain is from the private sector.

Woe befall "chump citizen, small businessman", if he does not have resources equal to the Bank of Canada to take on this battery of would-be deputy ministers. Although admittedly that is not as ridiculous a thought today as it might have been in better times. No, I suspect the facts will bear me out that the majority of Goliath and Tom Thumb legal engagements end up with a hasty capitulation by Tom, not because he knows he is wrong, but because of the sheer financial terror with which he is not so gently faced.

November 24, 1978

The Budget-Mr. Corbett

Fundy-Royal is a constituency steeped in tradition, Mr. Speaker. It is a portion of the country that believes in the basic principle of freedom. Its people recognize the sacrifices that Canadians have in the past made for their country materially, psychologically, and physically. We honour and revere the symbol of the sacrifices our forefathers, sisters, brothers and cousins have made on our behalf to preserve the freedom of our nation.

The Crown is a symbol of these sacrifices. The Crown is the symbol of freedom. The Crown was the source, the blood, the cause that inspired free men to lay down their lives so that we may be free. I am reminded, Mr. Speaker, of that old verse, time worn but as meaningful now as it was then:

"It is only an old piece of bunting.

It is only an old piece of rag,

But millions have fought for its honour,

And thousands have died for the flag."

I know that those of us in Fundy-Royal, as well as by far the majority of Canadians, do not want any lessening of the role of the symbol of democratic freedom that has made this country great. Fundy-Royal will not tolerate any infringement upon the sanctity of the role which the Crown and monarchy have in this country. Canadians will not tolerate any infringement upon the role which the Crown and monarchy have in this country.

I see the present government's move in this direction as being most sinister indeed. In the process of the establishment of a totalitarian, one-party government system, the one measure universal and peculiar to all who seek to establish themselves in this fashion is to seek out and destroy the people's rallying point, their inspiration, the symbol of their freedom, the symbol of their future. They strive to seek out and destroy the institution, the heritage, the spirit, and the truth of the people. This is socialist ideology, Mr. Speaker. My socialist neighbours refer to the private sector as some sort of bogeyman. I would remind them that it is due to the perseverance of this group of ambitious and far-sighted individuals in the private sector that the country has given them the opportunity to espouse their rhetorical nonsense. They should be reminded that the public sector and the private sector in this country are comprised first and foremost, of human beings who all breathe and bleed, and who in most cases are Canadian.

The squacks and bleats so often heard from my immediate left are indicative of the disdain, disregard, and contempt in which most of them hold the House in our system of democracy. That, of course, is not surprising, as democracy is hardly their bag or game unless taken in the context of sport, in which case it is fair game, and they would destroy the animal. Any jackass can kick a barn down, but it takes a damn good carpenter to build one. The only time that these dreamers are quiet or still is when one of their own gaggle is spewing some of their ideological twaddle.

It is distressing that frequently the House has difficulty distinguishing between the party presently in power and these social whiners to my left. Although the direction that the government has taken recently with reference to its budget has

not been inclined away from a more realistic attitude toward a reasonable and sane direction in political philosophy, this is not to be interpreted by the Canadian people as any great permanent change in political direction by the leader of this government whose socialist background-and I am being kind,-is well known to many Canadians, but it is rather a matter of political expediency.

It is obvious that the people of this nation agree that we, as a nation of Canadians, are psychologically and mentally sophisticated enough to cope with and thrive on the free market system and that we do not need, nor indeed want, Big Brother orchestrating and directing our affairs.

I am distressed and concerned, along with my neighbours and constituents in Fundy-Royal, and thousands of my fellow Canadians, when the Prime Minister of this country publicly states, as was reported on the front pages of the Toronto Star on November 18, that the media and the opposition are the enemies of the government. This attitude by the Prime Minister is indeed dangerous, and one to which 1 know the people of the country take great exception. What he has done is attack two foundation stones of our basic freedoms, one being the freedom of the press, and the other being the function, purpose and right of not only Her Majesty's Official Opposition, but indeed the freedom of expression of all citizens of this country.

We know that this is the same Prime Minister who instigated the War Measures Act in 1971. We know that this same Prime Minister has said that the free enterprise system no longer works. We know this same Prime Minister has developed friendly rapport with countries such as Algeria, Red China, and Poland, and we know as well his great love affair with Cuba and its dictator, the notorious communist, Fidel Castro. We know that this same Prime Minister allowed millions of Canadian dollars to be spent in Cuba during 1976-77 when that country was waging a bitter and bloody war in Angola, Africa.

This all points to an extremely ominous direction for this country, and one which 1 urge the people of this nation to recognize. Too often lethargic peoples awake to the fact that it no longer matters that yesterday they were lethargic. We, as Canadians, are not lethargic, and we must take care and pay particular attention to ensure that we do not awake one morning to find that yesterday we were that way.

The Prime Minister of Canada has conveyed the message to me and all other members on this side of the House that he considers me an enemy. The Prime Minister of Canada holds the most powerful position in the land. This is the Prime Minister who leads the government that has thrown this country of ours into the greatest economic calamity since the great depression, that has nurtured and fostered unemployment to an unprecedented one million work-seekers, that has throttled the dollar to a miserable 85 cents of its counterpart, the United States dollar.

And now, the same Prime Minister, leader of the Liberal party, leader of the country, the head of this government, is

November 24, 1978

telling the people of this nation that he has had nothing to do with the plight of Canadians, that unemployment and economic stagnation are none of his doing. No, even the people of Fundy-Royal must have been somewhat taken aback to hear the Prime Minister tell the world that I, as a member of the opposition, in the short period of time that I have been in this House, a matter of days, that 1 am really responsible for the whole mess, that I am the enemy.

In view of the Prime Minister's statement 1 do not think that I could be accused of being paranoid when 1 say that I do not trust the Prime Minister of Canada, I do not trust the party that he leads, and I do not trust the government that he heads. Further, I submit that the people of Canada do not trust this government, that the people of Canada do not trust their leader, and they will convey this message loudly and clearly when given the opportunity.

In summation, the problems that beset the people of this country prior to the budget, still beset and will continue to beset the nation. The budget is about as much use to Canadians as a hairnet is to Yul Brynner.

This party and its members have and will continue to act in an accountable manner as the official opposition in this House. It is our duty to criticize, and with the present government our task is not difficult. We will continue to be constructive, we will continue to be responsible, and I suppose in the eyes of the Prime Minister and his followers, we will continue to be the enemy. But let me assure you, Mr. Speaker, that we will persevere, we will not be deterred, we will not be intimidated, nor will we falter, nor will we fail.

Topic:   GOVERNMENT ORDERS
Subtopic:   THE BUDGET
Sub-subtopic:   FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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Some hon. Members:

Hear, hear!

Topic:   GOVERNMENT ORDERS
Subtopic:   THE BUDGET
Sub-subtopic:   FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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NDP

Francis Andrew Brewin

New Democratic Party

Mr. Brewin:

Mr. Speaker, I rise on a point of order. I did not want to interrupt the hon. member who has just spoken because I understood it was his maiden speech. Therefore, I did not think he should be interrupted. However, he did make some comments about the fact that members of the party I belong to did not believe in democracy. Let me assure him, in case he is worried about it, that there are no more stout defenders of parliament and democracy than the members of this party.

Topic:   GOVERNMENT ORDERS
Subtopic:   THE BUDGET
Sub-subtopic:   FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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?

Some hon. Members:

Hear, hear!

Topic:   GOVERNMENT ORDERS
Subtopic:   THE BUDGET
Sub-subtopic:   FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

John Napier Turner

Liberal

The Acting Speaker (Mr. Turner):

Order, please. I suggest to the hon. member for Greenwood (Mr. Brewin) that that is not a point of order but a point of debate.

Topic:   GOVERNMENT ORDERS
Subtopic:   THE BUDGET
Sub-subtopic:   FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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NDP

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

New Democratic Party

Mr. Knowles (Winnipeg North Centre):

It is a point of fact.

Topic:   GOVERNMENT ORDERS
Subtopic:   THE BUDGET
Sub-subtopic:   FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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NDP

Francis Andrew Brewin

New Democratic Party

Mr. Brewin:

Mr. Speaker, I have not come to my point of order yet. I am not asking the hon. member to withdraw, or raising a question of privilege. I am merely asking him to consult his predecessor, the generous and fair-minded former member for Fundy-Royal, to ask of him the facts.

Topic:   GOVERNMENT ORDERS
Subtopic:   THE BUDGET
Sub-subtopic:   FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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?

Some hon. Members:

Hear, hear!

Topic:   GOVERNMENT ORDERS
Subtopic:   THE BUDGET
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LIB

Herb Breau

Liberal

Mr. Herb Breau (Gloucester):

Mr. Speaker, I am very happy to take part in this most important budget debate. As I

The Budget-Mr. Breau

represent a constituency in the province of New Brunswick, I believe it is fitting for me to congratulate the hon. member for Fundy-Royal (Mr. Corbett). It is an honour for a member to arrive at this House of Commons, as I did some ten years ago with you, Mr. Speaker. I am sure the hon. member will do a good job of representing the constituents of Fundy-Royal.

It is not customary that we criticize or respond too harshly when a member speaks for the first time. The fact that we respectfully listened to the speech of the hon. member for Fundy-Royal does not mean that we cannot respond to it. However, we will wait until he has made a few more speeches, listen to them carefully, and note what he says. Being a fellow New Brunswick member, I again congratulate him on the presentation of his maiden speech in the House today.

It is important in this budget debate to situate the perspective or economic context in which the government had to present its budget. In my view the Minister of Finance (Mr. Chretien) has presented a very responsible budget. The economy of the western world is recovering from and adjusting to the very severe economic dislocations created by the energy crisis of 1973-74.

If one looked at the economy of Canada today, he would realize that over two-thirds of what we produce in this country is exported, mainly to the United States. One cannot talk about the economy of Canada and, therefore, the policy of this government, without situating that policy in this kind of context.

Therefore it is important in my view to realize the Canadian government's objective is, first to influence the domestic economy, and second to help those who are in greatest need of help to adjust to economic conditions, and help mitigate the negative effects of these conditions on Canadians with the lowest salaries and those who live on pensions and cannot by themselves adjust to the new economic situation.

I submit this is a responsible budget, sir, because it aims at influencing the Canadian economy, to the extent the government can do so. Reference is made of course to economic stimulation. Hon. members opposite, especially Conservative members, suggest we should use the fiscal system to stimulate the economy. But, Mr. Speaker, how could we stimulate the economy and in addition have a budget deficit topping $12 billion? Some 25 per cent, or rather 30 per cent of the total Canadian government budget is made up of government deficit. Such being the case, I do not feel it would have been possible for the government to provide much more stimulus than they did. My opinion is we did so, as far as the domestic economy is concerned, by indexing income tax at 9 per cent for this year, which means more than $1 million when the reduction in unemployment insurance premiums is added. And with the reduction from 12 per cent to 9 per cent of the federal sales tax, this means more than $1 billion will be left in the hands of Canadians, not to mention the effects of the tax changes on Canadian firms which are difficult to estimate accurately.

The Budget-Mr. Breau

However I am firmly convinced these changes will bring at least three-quarters of a billion's worth of stimulus to Canadian firms and Canadian entrepreneurs.

I would like to stress that, as far as the Atlantic provinces are concerned, the government operated along the policy established in the last budget-I mean the one before that of November 16, namely to use the fiscal system to help regional development.

Mr. Speaker, the 10 per cent investment tax credit will be increased to 20 per cent when investments will be made in the Gaspe area and in the Atlantic provinces. In my view, I think it ought to be pointed out. As a representative of the Atlantic provinces, the northwestern part of New Brunswick, I want to thank the government and congratulate it for its initiative because indeed the incentives granted by the Department of Regional Economic Expansion to industries are most important for us.

However, it must be stressed that such incentives apply only when a new enterprise is operated, a manufacturing enterprise modernized or in order to enlarge or develop the handling or manufacturing industry or any other secondary industry. But by using the tax system through investment tax credit as the Minister of Finance (Mr. Chretien) did in his budget of November 16, one helps all Atlantic manufacturing industries which would like to invest either simply to increase their efficiency or for purposes of modernizing or enlarging. These measures also have a positive impact on those who wish to invest in their industries and increase their production capacity.

I think, Mr. Speaker, that this is not a reason to drop the industrial incentive program of the Department of Regional Economic Expansion. I think that both policies are compatible and this is something I wish to emphasize as it demonstrates this government's determination to encourage regional development and particularly to help the Atlantic provinces, the Gaspe area and other areas which in the past did not benefit from the same level of industrial development as other regions of the country.

I also wish to stress that this budget should be considered not only from the standpoint of the economic situation in the occidental world but also that budgetary measures should be closely related to other programs, other decisions, other policies of the government aimed at helping Canadians. As some members said this afternoon that the budget does not do enough for low wage earners, I wish to point out that the government has tabled a bill, and I think it has priority as concerns parliamentary business, that will bring a significant change to the family allowance program so that these funds, or a good part of them, will be used to give a $200 tax credit for every child of families with a net income of $18,000 or less according to their income tax return. Mr. Speaker, for those who earn more than $18,000 this tax credit will be progressively reduced up to a net family income of about $30,000.

(Mr. Breau.]

Mr. Speaker, this is just an example which shows what the government can do to influence the Canadian economy. Families receiving every year the $200 tax credit for every child will use that money to buy things for themselves. It will help our economy but it will also help Canadians, low wage earners, people with a lower income to adjust to changing economic situations.

[DOT] (1512)

Members of the New Democratic Party have been telling us in this House for the last weeks that inequalities are not being reduced. Indeed, they argue that the gap in incomes as between the rich and the poor is widening. In the course of a debate which took place here not long ago I challenged the position taken by the leader of the New Democratic Party, the hon. member for Oshawa-Whitby (Mr. Broadbent) who asserted, during the debate on the Speech from the Throne, that inequalities have not been reduced in the last ten years. I say that such a statement is false. It is not in accordance with the facts at all and the hon. member, by repeating it, does not make his assertion more true. He is not looking at the facts at all.

Before I begin using figures, I should like to make it clear that when we are talking about the equalization of opportunity, about means of fighting poverty and helping people who cannot help themselves, it is, in my view, a mistake to reduce the argument strictly to figures; one cannot measure the welfare of human beings on such a basis. Thus, even though I use figures today, I do not wish to be taken as meaning we ought to be satisfied or that we have done enough to eliminate poverty and bring about greater equalization of opportunity. Nevertheless, I believe that figures, if used accurately, can show a tendency. Look at some recent statistics, for example. In 1968, salaries and benefits to workers in Canada accounted for 54.2 per cent of the gross national product.

[DOT] (1522)

In other words, workers were taking 54.2 per cent of the gross national product. In 1976, 57.4 per cent of the gross national product was going to workers in salaries, wages and fringe benefits. That does not mean that there is not still a gap, and it does not mean that we should be satisfied, but when the hon. member for Oshawa-Whitby (Mr. Broadbent) pretends to speak in this House for workers and says we have not done anything to reduce inequities in this country, he is just not looking at the facts, or he cannot recognize them when he sees them. We have increased the share of workers in relation to the gross national product by some 3.2 per cent in only ten years.

I want again to refer to some Figures, not because I choose to, but because, of all people, the hon. member for Winnipeg North Centre (Mr. Knowles), when speaking about the child tax credit bill in this House some time ago, referred to figures to help him make the argument that we have not reduced inequities and that we have not helped in closing the gaps.

November 24, 1978

The hon. member for Winnipeg North Centre said that in 1951 Canadians in the lowest 20 per cent of the income group were earning about 4 per cent of the total national income. He said that in 1975 the figures had not changed much. I have the figures the hon. member used here today. I regret that the hon. member for Winnipeg North Centre was misled regarding these figures. The figures he used were for all units, that is, unattached individuals and family units. He said that in 1951 they were receiving 4.4 per cent of total income in Canada, that in 1965 they were getting 4.6 per cent, and that in 1975 they were getting about 4.1 per cent. I say that the hon. member was misled. I know he is in the House most of the time, he works hard, but I think a New Democratic Party researcher handed those figures to him, and he thought that they would be an accurate reflection of the facts. Those figures came from a Statistics Canada study on total national income before taxes, but they do not represent a true measure of the extent to which we have helped people. They represent merely a measure of the capacity of Canadians to earn income. They include interest income, dividend income and even some business income which is earned by individuals as opposed to corporations.

The hon. member for Winnipeg North Centre could have used another Statistics Canada study which showed income distribution by size after taxes in Canada. The New Democratic Party researcher to whom I referred could have provided that study to the hon. member for Winnipeg North Centre, but he chose a study which would help with the political argument of the New Democratic Party. The study which was chosen just happened to be very bad because the figures used were for total income. They had nothing to do with income after taxes. They were for the years 1951 to 1975. I have found a report for 1976, so I can update the figures. The figures used by the New Democratic Party do not reflect what is referred to as transfers in kind; in other words, what governments have been doing since the 1950s to redistribute income through hospitalization, health care and education programs. Not only did the hon. member for Winnipeg North Centre not use a figure for income after taxes, but he also did not take into account that federal and provincial governments in this country have done much to redistribute income in order to reduce the expenditures of poor people on medical treatment, hospitalization and the education of their children.

I know that the hon. member for Winnipeg North Centre always wants to be honest, so I suggest that next time New Democratic Party researchers give him figures he should ask from where the figures came and make sure that his political arguments are based on true facts. He always makes good political arguments, and I just point these things out because I want to help the hon. member continue to make his political arguments.

Topic:   GOVERNMENT ORDERS
Subtopic:   THE BUDGET
Sub-subtopic:   FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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NDP

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

New Democratic Party

Mr. Knowles (Winnipeg North Centre):

Were the facts not true?

Topic:   GOVERNMENT ORDERS
Subtopic:   THE BUDGET
Sub-subtopic:   FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

Herb Breau

Liberal

Mr. Breau:

Of course the facts were true, but New Democratic Party researchers advised the hon. member for Win-

The Budget-Mr. Crouse

nipeg North Centre that the study they were giving to him was good, and there was an error made because that study dealt with total income, which has nothing really to do with the benefits governments have tried to redistribute to Canadians. That study did not deal with income after taxes, health care, hospitalization and education which have been provided to Canadians by federal, provincial and, in some cases, municipal governments. Those governments have taken in taxes and spent them to benefit all Canadians.

Perhaps the hon. member for Winnipeg North Centre would like to refer to Statistics Canada catalogue number 13-210, "Income after tax, distributions by size in Canada, 1975." Perhaps the hon. member would like to write that down. The figures contained in that report are the latest available. According to that report, all units, including unattached individuals and families, which represent the 20 per cent of the population which has the lowest income earned 4 per cent of total earnings in 1975. But what is the figure for income after tax? It is 4.6 per cent. It is true that in 1975 the 20 per cent of the population which had the highest income earned 42.6 per cent of the total income, but what did those people get by way of income after tax? The figure went down to 40.6 per cent. If the hon. member for Winnipeg North Centre wants to use figures, he should look at what the figures say. If we look at after tax figures, the reverse of the hon. member's conclusion is the case. The 20 per cent at the bottom are getting more, and the 20 per cent at the top are getting less.

Topic:   GOVERNMENT ORDERS
Subtopic:   THE BUDGET
Sub-subtopic:   FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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NDP

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

New Democratic Party

Mr. Knowles (Winnipeg North Centre):

How much more?

Topic:   GOVERNMENT ORDERS
Subtopic:   THE BUDGET
Sub-subtopic:   FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

Herb Breau

Liberal

Mr. Breau:

Not enough.

Topic:   GOVERNMENT ORDERS
Subtopic:   THE BUDGET
Sub-subtopic:   FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

John Napier Turner

Liberal

The Acting Speaker (Mr. Turner):

Order, please. I regret to inform the hon. member that his allotted time has expired.

Topic:   GOVERNMENT ORDERS
Subtopic:   THE BUDGET
Sub-subtopic:   FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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November 24, 1978