Agreed.

Mr. Speaker, in light of what has just happened, I will cut my intervention short so that other hon. members may also speak before six o'clock.

In my intervention last night at ten o'clock, when the debate was adjourned, I was wondering how I could explain that while we did not have any surplus for export before Febuary 28 last, we ended up overnight with an exportable surplus. It is quite simple, Mr. Speaker. The board changed its formula to determine whether there was a gas surplus. Before declaring a surplus for export, three different tests must be met. First, current supply possibilities; second, current reserves; and third, future supply possibilities.

By changing the formula for the second test the minister did a magic trick. In fact, the old formula was this: there is surplus of gas for export if proven reserves are equal to 25 times the projected Canadian demand four years hence. The new formula provides that proven reserves must be equal to 25 times the current demand instead of the one projected in four years. The anticipated requirement in four years from now is greater that current demand since it normally grows 3 per cent a year, and the difference between the two results is the new surplus. So it is by being less exacting that the board has declared a new surplus. [DOT]

By juggling with the figures and doing a magic trick, he ended up with a surplus. This surplus, let's face it, is more on paper than in the Canadian soil. Why then talk about a fictitious surplus? I want to come immediately to the crisis in Iran and the Exxon case. In 1974, when the Arab oil producer countries imposed an embargo, the Canadian government adopted Bill C-236 on allocation of energetic resources in a crisis situation.

Six years later, Canada is forced to pass another emergency bill, in this case Bill C-42, to cope with another similar crisis. This section will deal with the circumstances that led the government to introduce Bill C-42 and its subsequent amendments, its impact on Canadian corporations as well as its general ramifications. We want to emphasize that if Canadians are forced to accept this bill, that is mainly because of the incompetence of this government. It did not have enough presence of mind to plan and develop a long-term energy policy following the 1974 crisis. So they did not learn from 1974.

Two incidents particularly in recent months prompted the federal government to introduce Bill C-42. First, the internal crisis in Iran which temporarily stopped the oil exports of that country. For Canada, that meant the loss of 100,000 barrels a day, or 20 per cent of our oil imports. That loss was nevertheless made up from our reserves and additional oil purchases from other suppliers. But the crisis was not over by a long shot. Second, the multinational company Exxon decided unilaterally to divert to the United States 25,000 barrels of oil a day from Venezuela earmarked for its Canadian subsidiary Imperial. Under the pressure of the federal government, Exxon was to come back in part on its decision and divert only 10,000 barrels a day instead of 25,000. But the Minister of Energy, Mines and Resources (Mr. Gillespie) was far from satisfied with such a concession by that multinational.

So the state of crisis had materialized. On February 19, the government introduced Bill C-42 in the House of Commons. On March 13, it went even further with a series of amendments to that bill, and the day after, that is on March 14, the Minister of Energy, Mines and Resources ordered the Crown corporation Petro-Canada to undertake direct negotiations with Venezuela for the purchase of oil, thus shoving aside the intermediary company Exxon. We are wondering at this time whether it was not a well orchestrated scheme by this government to strengthen its control over provincial natural resources. And all that in a state of emergency that is too often induced.

Let us say that by and large this bill gives the governor in council the authority to declare a national emergency in case of an acute shortage of oil supplies. The government could then allocate available reserves on a priority basis and even, if necessary, issue rationing coupons.

The crisis Canadians are facing is more a question of management than supplies. Indeed, the government had six years to cope with another eventual crisis to make Canada more self-sufficient in energy, but it chose not to deal seriously with the problem, although the Minister of Energy, Mines and Resources says the contrary in a press release dated February 15 last.

Mr. Speaker, what could the government have done during those six years if it had shouldered its responsibilities? First it could have invested in research. The energy reserves available to us require a high degree of technical know-how to develop. That is the case, for example, of the oil sands. The government did very little to help research in general, and in this area in particular. The last budget speech made by the Minister of Finance (Mr. Chretien) clearly showed this. Second, extend the gas pipeline into eastern Canada. The National Energy Board, in their February report, stated that our oil dependency can be reduced. They indicated that national gas sales to the potential eastern Canada market could, and I quote:

-reach 180 billion cubic feet in 1990 and 225 billion in the year 2000. In this way oil imports could be reduced 20 per cent by slashing foreign purchases by 80,000 barrels a day in 1990 and 110,000 barrels in the year 2000.

We are waiting for the pipeline extension, First to develop a long-term energy policy. Canada has an urgent need for a well co-ordinated policy in energy matters. We must seriously consider possible alternatives for renewable energy sources, for instance, solar energy, wind energy and so forth. We must know where we are going.

But during those six years, the government procrastinated. They preferred the old Liberal way out, taking on more powers supposedly to meet an emergency situation created by the government themselves in order to get a strong central government. So we are now asked to give the federal government legislative powers to order and control the allocation of foreign energy supplies we still depend on by reason of this government's inaction. Are those dictatorial powers needed? A recent editorial in the Globe and Mail concluded this was not needed at all, and this raises serious doubts. Why, therefore, give extra powers to build a pipeline we already need now anyway? Why wait for an emergency?

At the latest federal-provincial conference on the constitution, the premiers discussed at length the scope of the phrase "overriding national interest" in the context of national resources. They could not reach agreement on its meaning. The legislation now before us uses a similar term that is just as much controversial. It is the expression "periods of national emergency". The definition given in the legislation is not precise and is rather vague. It would be quite easy for the government to declare a national emergency when it suited it. The government is a specialist in national emergency matters! One has only to remember the declaration on war measures. We must not forget that we are legislating on delicate ground, Mr. Speaker, since natural resources fall within provincial jurisdiction. If the government cries national emergency too often, it could Find itself stuck with serious jurisdictional problems vis-a-vis the provinces which themselves are also jealous of their jurisdiction over natural resources. Mr. Speaker, those are the brief remarks I had to make.

Energy Supplies

Right Hon. P. E. Trudeau (Prime Minister):

Mr. Speaker, Canada, along with the rest of the world, is in the midst of an energy revolution, a revolution not of our making but one in which we are very deeply involved nonetheless. Energy, especially petroleum, is the life blood of the industrial economy. When we have seen, as we have in the past five and a half years, an increase in the price of petroleum on the world markets of 700 per cent, we know that that massive increase can only affect our lives very deeply.

Petroleum and its products affect us in every way, from consumer goods to industrial production, to the heating of our homes, to clothing ourselves and to our leisure. This type of massive increase is one which has shaken the world, particularly the industrialized world but not forgetting the third world which in a sense has been crippled even worse than we have. It called for new and innovative actions by every society. We in Canada were not completely unprepared for that OPEC crisis, that increase of 400 per cent in^ few months and, as I said, 700 per cent over five and some years.

This government, the previous government, the Diefenbaker government and the St. Laurent government had all taken some measures in the energy field. The Tories are proud to refer to the Borden line. Indeed, it was an important decision in 1959 when that line was established. We think it was an important decision.

Hear, hear!

Mr. Trudeau:

I remind the Tories who say "hear, hear" that it was also a decision by the Diefenbaker government which prevented the line from going eastward from Sarnia to Montreal. There may have been reasons for that at the time. I find it a bit strange when the Tory leader earlier this month was reproaching this government for not having built the Sarnia line sooner when he knows it was his predecessor, the right hon. member for Prince Albert (Mr. Diefenbaker), who adopted the minority report of the Borden commission which, I repeat, prevented the line from going farther east.

They did, however, have this policy. It was undoubtedly important to the growth of resources in Alberta. It meant moving oil into the protected market of Ontario It is worth remembering that the oil could move because of previous Liberal policies which had built the pipeline and which in the late forties and fifties had passed legislation and adopted policies resulting in the TransCanada and Interprovincial pipelines without which the Borden policy would not have been possible, if we would not have had the pipeline to move oil from Alberta to central Canada.

There were all these policies in the past. Mr. Pearson's government created the Ministry of Energy, Mines and Resources to replace the ministry of mines and technical surveys, sensing the importance that energy would have in decades to come. The then minister of energy, mines and resources, Mr. Macdonald, published in the month of June

Energy Supplies

1973, "An Energy Policy for Canada" which laid the groundwork for many of the steps which were going to be taken later in the more recent paper by the present Minister of Energy, Mines and Resources (Mr. Gillespie) published in 1976. Those steps permitted this government within the weeks of the OPEC crisis to issue an energy statement which in reality constituted a base, and a very solid one, for the following half-dozen years up to the present time.

Rather than talk about Liberal energy policy and the particular role this bill has in that over-all policy-and I realize that if I talked about it once again there would be the sceptics who would say it was not much of a policy, it was not very good and so on. The most carping and constant criticism we have heard from the Tories, and many of the outside commentators who support them, has been to the effect that we really do not have an energy policy, that Canada was caught short, that it did not have any coherent and logical plan to deal with the energy revolution.

One would think after that constant, carping criticism about having no energy policy that five or six years after the OPEC crisis and some three years after the new leader of the Conservative party was chosen they would come up with one. What happened, Mr. Speaker? We waited and waited and we always got negativisms. In the present debate it is always no; it is filibustering, it is dragging your feet, trying to stall, trying to do nothing. However, at one point the Leader of the Opposition (Mr. Clark) had to come forward with a policy. He had begun to speak about it, you will recall, in his celebrated world tour. He told the Japanese that the Progressive Conservatives would swap oil sales for jobs. He went on to Israel and pledged Israel Canada's surplus oil.

He went to Montreal on March 6. Having promised it to the Japanese and having promised it to the Israelis, he thought he should promise it to the Montreal people as well. All this surplus oil was being distributed by the new discovery of energy by the Leader of the Opposition. It was being pledged in various ways in exchange for various commodities; votes in the case of Montreal, but other commodities in the case of Israel and Japan.

The trouble was that we were exchanging something we did not have. We do not have any surplus. There is no surplus oil in Canada; there is a shortage of oil. Thanks to the policies of this government, dependence on foreign oil has been reduced from some 50 per cent at the beginning of the decade to the remarkably lower figure of 29 per cent this last year. However, we are still dependent on foreign petroleum resources to the tune of 29 per cent of what we consume.

The Leader of the Official Opposition promised this "surplus" energy in various places. I repeat, there is no surplus; there is a great shortage of oil. There still is. What the government is doing to continue to make progress from a dependency of 50 per cent to 29 per cent will continue. However, for the time being we cannot trade that "surplus" for other commodities because it is not there.

Nonetheless the leader of the Tory party, having made these energy statements in Israel, Japan and then Montreal, felt that

he would have to explain somewhere where the energy was going to come from. He made a speech in Montreal on March 6 where he said, and I quote:

That policy will have five main elements.

I repeat, Mr. Speaker, after years of saying there was no Liberal energy policy, that the government had no energy policy, at last we were going to have an energy policy that would be coherent, complete and satisfactory and it had five elements. I will read them as they appear in the text of the speech of the Leader of the Opposition which I have before me.

The first element is a program of conservation. Our aim will be an average growth and demand for energy of only 2 per cent per year.

We do not see how he is going to do that. It is worth noting, as indeed the Financial Times did, that when you say you are going to implement a policy of 2 per cent growth per year you have to wonder what is going to happen to your economic growth. I quote from the Financial Times of March 12:

How, for example, is he going to cut the rate of growth in the demand for energy to 2 per cent a year from the average of 5.3 in the past? Because Mr. Clark has promised-

Mr. Knowles (Winnipeg North Centre):

Order.

Mr. Trudeau:

I continue quoting:

-Mr. Clark has promised a Progressive Conservative government would achieve average real growth of at least 5 per cent over its initial four-year term of office. This is a reasonable target but a speed-up in the pace of economic growth also means an acceleration in energy demand if the pattern of the past means anything.

So here is the first difficulty with respect to his undertaking to reduce growth in demand to 2 per cent: it does presume we shall be in a very slow growth or no growth economic situation, and I can tell the country and the House that that is not the Liberal position.

Hear, hear!

Mr. Trudeau:

We do believe there must be a program of conservation, so in this sense the first of the Tory policy elements is only what we have been saying for seven or eight years. There must be a policy of conservation. In fact, the policy put forward by the Minister of Energy, Mines and Resources attached a great deal of importance to that factor in his 1976 statement. And he has been rewarded with success, as we all have; energy demand was growing at a rate of about 6 per cent a year, a rate which has been reduced at the present time to 3.5 per cent.

Hear, hear!

Mr. Trudeau:

This was achieved in various ways which are well known to the House. We launched a public information program which was one of the most imaginative in the world. We applied tax incentives to energy conservation equipment and sales tax was removed from several items contributing to energy conservation. We established guidelines for the motor vehicle industry, we gave assistance to home owners in install-

ing home insulation, and so on-measures which were not always supported by the opposition.

We developed a new and more efficient energy building code and through intensive consultation with a number of energy task forces we have developed targets. These targets, which were established from 1973 to 1980, have led to a 7 per cent improvement in energy efficiency over the 1973-1977 period, right on schedule for a 12 per cent improvement in energy efficiency by 1980. This is what we have done about energy conservation, not to bring the rate down to 2 per cent immediately, although this might be something to which we can look forward in the medium or longer term future. Right now it is Vh per cent. Those are the measures we have taken.

Now listen to what the Leader of the Opposition is saying he would do to reduce growth to 2 per cent. I am quoting:

Specifically we would give tax incentives to encourage better home insulation, energy efficiency equipment and other conservation practices.

For ten years, or at least for seven, they have been saying we have no energy policy. At last they come up with one whose first element is an exact copy, except for the 2 per cent, of the Liberal policy. I am still reading from the speech of the Leader of the Opposition.

The second element is to develop Canada's energy sources. Specifically our goal would be develop the tar sands, gradually substitute gas for oil and give much higher priority to renewable energy technologies.

This must be great news to Canadians.

Oh, oh!

Mr. Trudeau:

Elect the Tories. They will have an energy policy. They will develop Canada's energy sources, suppor renewable energy technologies. Well, only last July, over and above what the government has been doing in connection with other energy technology-and I am sure some members of this House have visited certain of these projects; I did myself in Prince Edward Island not so long ago, for instance the minister of energy announced in the House last summer a $380 million policy for the encouragement of renewable energy technologies, particularly solar and biomass. So that is one find of the new Tory theologians. The second is to develop the tar sands-Syncrude, Mr. Speaker. We put $300 million into it several years ago.

Hear, hear!

Mr. Trudeau:

We did it. Not only that, but we put in place tax incentives which indeed, relative to world prices, have made other tar sands projects possible. The government is projecting possibly one million barrels a day by 1990; the Leader of the Opposition wants to be a bit original so he talks about 900,000 barrels a day by 1990. But how is he going to do it? Would his approach be different from ours?

What have we done? We introduced budgets in 1976, 1977 and 1978, when there were two, which have created the conditions under which these new tar sands projects could go forward. Admittedly some of them are not moving as fast as we would like, but many of them will go forward, at least in

Energy Supplies

the experimental stage, at no cost, or hardly any cost, to the companies themselves. The cost will fall on the Canadian taxpayer. What the companies are waiting for now-and some of the leaders of those companies have talked to me personally-is for Alberta to make up its mind on its tax regime, on its royalties. The companies have got from the federal government as much by way of concessions as they feel is reasonable. Now it is up to Alberta.

Do we hear the Tory leader asking Alberta to stop dragging its feet and finally get moving so that these projects might go forward? No, we don't hear anything from him along those lines. We hear general noises about the goal being to develop the tar sands. So much for the second element, which, as you see, Mr. Speaker, apart from putting a little bit of pressure on the government of Alberta, is exactly the same as our policy.

I am quoting again:

The third element is to begin immediately to expand the Sarnia-Montreal pipeline so that the total oil needs of Montreal area refineries can be met from Canadian crude oil supplies.

Well, here we have it. It was promised in Israel, it was promised in Japan and now it is going to Montreal. The trouble is, we don't have it. The Leader of the Opposition intends to build a pipeline without having the oil to go through it. Who is going to pay for that thing? How do you pay for a pipeline, how do you cover expenses, how do you cover devaluation, if you are not using the line to capacity? Perhaps the Leader of the Opposition does not realize this, but it doesn't only mean expanding the Sarnia-Montreal line; it would also mean expanding the Chicago-Lakehead link and it would imply getting together the resources to put in there. Because, once again, we are dependent on foreign oil to the tune of 29 per cent of our needs.

This raises another problem which I am sure the Leader of the Opposition would like to be informed about. 1 refer to the question of the Portland-Montreal pipeline.

[Translation\

The National Energy Board put it very clearly. If we do not transport enough oil through the Portland-Montreal pipeline, that pipeline will no longer be profitable and become obsolete. The National Energy Board suggested very clearly that it would be dangerous to carry more than the 300,000-odd barrels which now flow daily in the Sarnia-Montreal pipeline. Indeed, if-as I just explained-we do exceed that quantity by a wide margin it would mean that we can rely on a permanent, sufficient oil source which we do not have now in Alberta and it would also indicate that Montreal would not be fed by the Portland pipeline. Then, what would happen? We would then depend, that is Montreal and eastern Canada, on the oil to be discovered and developed out west or perhaps in northern Canada, but at prices, as we know, that are not economical for the time being. But once that pipeline is extended from Sarnia to Montreal, once its volume is increased and more expensive oil starts to flow from the tar sands, there is no doubt that two things will ensue: first, the Montreal pipeline will become obsolete, and second, we will not pay competitive prices. In

Energy Supplies

other words, we no longer will be able to go to Mexico, Venezuela or elsewhere and tell them: Sell us oil if you have some at a better price.

The second consequence is that we will be stuck with non-conventional oils coming from the tar sands, which could become costly, and we would no longer have the option of going out to world producers for competitive prices. What would be even worse is that, if we had enough oil in western Canada to meet the needs of the east, we could not reverse the pipeline from Montreal to Portland in order to send supplies to eastern Canada, Halifax, St. John and so on.

But all those consequences are naturally of little if any importance to the Leader of the Opposition who would have us start immediately to increase the volume of the pipeline from Sarnia to Montreal, even though we have no oil to ship through it.

The fourth element is to begin immediately-this Leader of the Opposition is always "beginning immediately"-the Sarnia-Montreal pipeline. He is going to begin immediately the planning and construction of a gas pipeline from Montreal to Quebec City and also to discuss the extension of that gas pipeline to the Atlantic coast. What is new about that, Mr. Minister?

Mr. Gillespie:

Nothing.

Mr. Trudeau:

Petro-Canada has already fostered an application before the National Energy Board for such a pipeline. In February of last year the federal minister produced great charts showing that that was one of the projects which the Government of Canada was fostering and which apparently was forgotten by the official opposition until some time earlier this month in the Montreal area when the Tories had to think up a policy. They repeated, once again, our policy. They said the Liberals had no policy for ten years, and now the Tories come up with five new elements. So far four are the same as ours with the exception of the Sarnia-Montreal line, which we built. They talked about it after having prevented it at the time of the Borden line; and now they want to expand it but they have no oil to put into it.

So what is new in the fourth element? It begins with the word "immediately". We have not said that. An application will be made in the usual way. We will make sure that gas is available, that pricing is right and that the cost of the line can be amortized. We would certainly want to build it to Three Rivers first-because the Minister of Finance (Mr. Chretien) believes in developing his area-and then on to Quebec City and then farther eastward. So what is new? The Tories would begin immediately, but let me read on from the very same speech at the very same page.

to begin immediately the planning and construction of a gas pipeline from Montreal to Quebec City. In so far as we are concerned, we are ready to undertake that extension unless more stable sources of supply are found through

either discoveries on the east coast or long-term exchanges with the United States.

They would begin immediately unless more stable sources of supply are found on the east coast or through long-term exchanges with the United States. I do not know what they are going to exchange with the United States. Maybe the hon. member for Edmonton Centre (Mr. Paproski) can tell me.