The Acting Speaker (Mr. Turner):

Order, please. I regret I have to inform the hon. minister that his allotted time has expired. He may continue with unanimous consent. Is there unanimous consent?

Agreed.

No.

Hon. Alvin Hamilton (Qu'Appelle-Moose Mountain):

Mr. Speaker, before the House tonight is a very simple motion to let the Parliament of Canada have an opportunity to take a deep look at the various arguments expressed not only in this country but in other countries about the proper way to handle the economic crisis that faces us at the present time. It is not necessary for me to argue over what the parameters of that crisis are. Every person in Canada knows the extent of the rise in prices in the last four or five years, the extent of the insistent unemployment, and certainly the deficit in our budget. Serious-minded people in every country of the world are debating this fact, but here we are being denied the chance to take a deep look at it.

I thought it would be worth while to put on the record what is happening in other countries. For example, the United States has exactly the same type of policies as we have for coping with the same sort of difficulties. They, too, have a deficit; they, too, have a negative balance in international trade; they, too, have high prices. But what are they doing about these things? Are they keeping them quiet, not mentioning them? Let me read what appeared in the magazine Saturday Review on January 6 this year. I shall read it slowly because I think it is our duty to listen to this.

There is a new theory circulating around Washington these days that is riding roughshod over the existing debates of the economics profession and the political configurations of contemporary America. It has ambushed the predictions of political pundits. It has baffled the congressional leadership. It is promoting the political fortunes of its proponents while evoking turbulent reactions from economists of widely differing persuasions. Cabinet officials have been denouncing its prescriptions. And the President has been faced with major legislative challenges to a number of his initiatives-challenges based on this new concept.

What is this new concept that has the whole United States intellectual community in a furor today and has upset Congress to the extent of defeating three major portions of President Carter's budget last month? Do our media show any awareness that there is a great debate going on in the United States over the same subject we are concerned about in Canada? A deathly hush, a silence hangs over this nation. All that is being discussed in the United States is a simple, elementary truth, that for 30 years the economists who have been guiding governments in the United States, Canada and other countries, have been consistently wrong. That is what they are discussing.

Surely the quantitative evidence of the last 20 years in every western nation shows that something is desperately wrong with the theory being used by the advisers of this and other governments on economic matters. I am referring not only to

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the monetary side, but to the fiscal side which concerns us the most. I say that this subject has been put before the government, this alternative theory has been put before this parliament, as recently as three years ago-the very things they are talking about with great excitement in Washington with the whole Republican party joining in this new theory and a large number of Democrats joining with them, sufficient to defeat the administration in the House on three votes. We did not wait till 1979 to start talking about this theory.

I have the Hansard of three years ago reporting the first budget of the Minister of Finance (Mr. Chretien) when this party, in opposition, tried to give him some alternative theories to those he was getting from his own advisers. I cannot and do not intend to read the whole speech that I made on June 8, 1976, but I should like to put parts of it on the record. I started off by saying:

The hon. member for Waterloo-Cambridge put forward not a new philosophy, but one that was laid clear as an alternative by the Economic Council of Canada six or seven years ago, namely, that when you have a large number of unemployed and 15 per cent or 20 per cent of the plant capacity unused, if you put that group of people to work and put that plant capacity to use, then there is no inflation.

That theory was enunciated by the hon. member for Waterloo-Cambridge (Mr. Saltsman). It was a serious effort on his part to get this debate started. I might say that I have been trying to do so for 15 years, but I stood up and pointed it out and in my own way congratulated him on taking a serious interest in this subject. I then went on to call it by the name that was used in describing his theory by the Economic Council of Canada, the potential budgeting theory. Four or five reviews by the Economic Council of Canada, an institution set up by this parliament to give alternative advice to the Minister of Finance and, the Bank of Canada, mentioned potential budgeting as something that is used when there are unemployment and unsued plant capacity available to produce new wealth to get the country out of its difficulties.

As the hon. member for Don Valley (Mr. Gillies) said this afternoon, you measure a country's performance not against Timbuktu or Japan, you measure it against your potential to produce. If you are producing only 70 per cent or 80 per cent of potential, every dollar that you do not produce must be marked down as a loss forever; that is the human problem of the unemployed, unused plant capacity, the debts and worries of our people.

We would like to know more about this matter we are discussing. For a country in Canada's position, no one knows at what level our dollar should be when it is floating. We have to feel for that point. We would like to get some advice. When this government announced it was going to float the dollar, every party in this House supported that stand. Do not forget it. But what caused the uproar between us was when the advisers to the government got the minister to stand up and say the dollar was still floating when it was not floating. Instead the government was pouring in reserves trying to keep the dollar from going down; it was borrowing money trying to

February 13, 1979

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keep the dollar from going down. But the worst sin of all was to raise the bank rate seven times in less than a year, to raise interest rates, as if that would keep our dollar from going down. Quantitative evidence shows, as the hon. member for Don Valley mentioned this afternoon, that raising interest rates as part of the theory to hold the dollar up has had no effect. That same sort of evidence has been produced in country after country. I am thinking specifically of the United Kingdom. That country has tried raising rates and raising rates, but to no avail.

We as parliamentarians have a responsibility to the people of this country that goes beyond the winning of elections by our party against another party. You would think from the debate in the House this afternoon-from the heckling that we received when our leader was speaking, making a simple request-that this was a ball game. It is not a ball game. This is a matter of serious impact to all the people of country, and I might say to all nations of the west. No one knows the truth for sure. That is why we called for a detailed look.

We congratulate the governor of the Bank of Canada for having the courage to come forward and defend his policies. We know he is worried. We know that he knows about this theory they are debating in the United States. The Economic Council knew about this theory being debated in the United States, as if it were God's word anew. But never is it mentioned by the governor of the Bank of Canada. Never is it mentioned by the Economic Council of Canada, because the big thumb of big brother is on them. Everyone in this House should know who big brother is.

A few years ago in 1972 the battle between the Prime Minister's office and others was lost, but it has been restored in a new way. Big brother now works through a secret gestapo type of organization based on commissars. Each department of government has a commissar that goes past the minister, by the deputy minister, and reports directly back to the Privy Council office to big brother. That is why the civil servants in this city are demoralized and fearful. That is why they are determined in this capital city, where they have always voted Liberal as a matter of faith in their bosses, they are not going to vote Liberal for a long time in view of this type of commissar who is watching over every move made.

Mr. Paproski:

Romeo knows about it.

Mr. Hamilton (Qu'Appelle-Moose Mountain):

We have a right and duty in this House to be able to draw some advice from people who each have a little to offer. We suspect that the theory that has been operating behind the advisers for government for the last 30 years has been wrong. I know it is wrong because I can add and subtract. It was a Canadian by the name of Mundell who produced this alternative theory. To my knowledge only two members of parliament during the last six years have ever mentioned his name in this House, the hon. member for Don Valley and myself. I recommend to Canadians, speaking for the people of Canada, not for political parties, that they read the efforts that we made in all humility, admitting that we did not know the final answers, in speeches

made by myself on July 8 and by the hon. member for Don Valley on July 9. He dealt with the international posture and I tried to deal with the domestic posture. The speech shows four alternative courses which the new Minister of Finance should have considered. I knew in my heart that the chance of having him consider this was very small.

I knew from bitter experience of my own, in government and in opposition, that we were facing a monolithic pyramid which did not allow any difference of opinion. It refused and rejected the advice of the Economic Council of Canada, it looked askance at the Conference Board, it looked down its nose at the C. D. Howe Institute, and it looked down at this new institute of Walter Gordon's two weeks ago. They believe that God created wisdom and he put it into the hands of the 250 professionals who work in the Department of Finance, and God help any economic council or anything else. That is the situation.

We as members of parliament are responsible to the people of our constituencies and to the country as a whole. Are we going to stand by and see ourselves dominated and ruled by a group who have been proven wrong for 30 years?

Mr. Railton:

Prove it.

Mr. Hamilton (Qu'Appelle-Moose Mountain):

At least in the government that I belonged to we took it up face to face with those who approached us, and we are the only government over the last 30 years that challenged this concept of monopoly of wisdom. We went the full route and fired the governor of the Bank of Canada because he would not consider our views as being worthy.

I speak to you chaps who sit on the government benches. You should have seen what happened on this side then. You should have seen how the scenario worked out; of going to an advertising agency, of getting the cameras all set up, of having a committee of the Senate, getting certain arguments made, and then to bring out the victim who was fired by this great majority of 200 conservative members. A loyal public servant wanted to restrict this economy, stop all goods coming into Canada and raise taxes 25 per cent. They destroyed us as a political party by the techniques of public relations. However, this time the people sitting on the hot griddle are right over there. They have to face the whirlwind. They have to face the fact that they have indoctrinated the people of the big cities to believe that only the Liberals can rule, that God only speaks to the Liberal party.

More and more people are learning it is not the Liberal party that runs this country. It is a group of mandarins who seized control during the war years, and they have extended that control into a complete monopoly. The only way the Liberals can try to control is through the Prime Minister's staff in the Privy Council office, using the technique of a commissar, a gestapo. It is not working, Mr. Speaker, because you can't win unless you know something. What you need is an alternative.

February 13, 1979

I have a lot of other quotes here, but I think I have made my first point clear. There is an important issue here. I cannot stand here, nor can any other member, and say that I am right, because I do not know. All I know is what we have had from government advisers over the past 30 years has been wrong every time. Look at what happened to Walter Harris, Donald Fleming, and Mitchell Sharp. Look what happened to poor Benson.

Mr. Railton:

Look what happened to Joe Clark.

Mr. Hamilton (Qu'Appelle-Moose Mountain):

Look at what happened to Donald Macdonald and John Turner. Look at what is now happening to a very fine person, the present Minister of Finance, who comes here and says the most horrible things. The hon. member for Don Valley said that he lost credibility by saying these things. It is worse than that. The fact is that by saying one thing and doing another for ten years, the people of Canada no longer trust the Prime Minister (Mr. Trudeau). That lack of trust is in others too because they hang with the Prime Minister. He is going to leave them twisting in the wind.

Oh, those poor members from Toronto! I can see their problem. There is nothing you can do when a city turns pathological and makes up its mind that it cannot trust the Prime Minister. It will chuck out every Liberal candidate, good or bad. That is not a matter of satisfaction because, as human beings, you hate to see anybody get knocked off when it is not his fault. However, do not come into this House screaming and yelling at us because we simply ask to look at the problem to see whether we can come up with enough information to make a better decision.

We know this is a lame duck government. It is carrying on because it does not have the strength or the will to bury itself. It is a walking dead. They are too fat to fight and too frightened to run. They are paralysed with panic. If I keep this up much longer, people will think I am the hon. member for St. John's West (Mr. Crosbie).

I want to make one point clear. Early last fall the leader of the Conservative party stated in Vancouver that he thought if Canadians had to compete with Americans as individuals, our tax level should be the same. A few weeks later during the by-elections, he said that if we formed the government he would like to make the interest rate on mortgages and taxes by municipalities deductible under the Income Tax Act as it is in the United States. You should have heard the yelling in Toronto. Newspapers, pundits, civil servants and, yes, Liberal candidates all dutifully yelling this is terrible, it is the end of the world. When the votes came in, 50 per cent were Conservative. The people had gotten the message. The significance of that has not sunk in over there.

What our leader was expressing was a policy of reducing taxes to get growth. It was a policy of reducing the taxes to balance the budget. If you reduce taxes when you have unemployed and unused plant capacity, more people go out to work, more taxes are paid, and the budget is balanced. My closing words are a quote.

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Mr. Deputy Speaker:

Order, please. I must interrupt the hon. member. I have allowed him an extra minute. His time has expired. Does the House give consent to allowing the hon. member to complete his remarks?

Agreed.

Mr. Deputy Speaker:

The hon. member for Westmount (Mr. Johnston) is seeking the floor. I have to recognize him.

Mr. Donald J. Johnston (Westmount):

Mr. Speaker, perhaps I misunderstood the purpose of the debate today. I have been waiting patiently since three o'clock in anticipation of somebody in the opposition putting forward some ideas. I attended the committee meeting when governor Bouey was questioned. In fact I questioned him myself. A number of opposition members who are here this evening also had the opportunity of questioning governor Bouey.

The policy of the government and of the governor of the Bank of Canada requires no defence here today. The policy is well known. It has been explained repeatedly. I had assumed that we would hear today even a germ of an idea as an alternative policy that could form the basis of a debate. I have heard nothing.

I listened to Mr. Gillies-

Order.

Mr. Johnston (Westmount):

-a professional economist, attack the Minister of Transport (Mr. Lang) personally. I heard him attack the Minister of Finance (Mr. Chretien). He declared the Minister of Finance is the worst in the history of Canada-

Mr. Gillies:

An understatement.

Mr. Johnston (Westmount):

-that the economy is in a situation of crisis-

Mr. Gillies:

True.

Mr. Johnston (Westmount):

-and that off the Hill there is no one who believes the Minister of Finance has any credibility.