October 25, 1979

NDP

Lorne Edmund Nystrom (Whip of the N.D.P.)

New Democratic Party

Mr. Nystrom:

I am really happy. Only two applauded the Minister of Finance, and about 15 are applauding me. The Minister of Finance should look over his shoulder because the long knives might be coming out very soon. I am interested in knowing where the hon. member for Qu'Appelle-Moose Mountain (Mr. Hamilton) is. I hear he has some very interesting comments to make about the bank rate.

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Subtopic:   BORROWING AUTHORITY ACT 1979-80 SUPPLEMENTARY BORROWING AUTHORITY FOR 1979-80
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An hon. Member:

What about Edmonton West?

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NDP

Lorne Edmund Nystrom (Whip of the N.D.P.)

New Democratic Party

Mr. Nystrom:

Perhaps, too, the hon. member for Edmonton West (Mr. Lambert). I know quite a few members of the Conservative party who came here full of vigor and enthusiasm who are not very happy with the Minister of Finance for raising the bank rate. Perhaps the true colour of the Conservative party is starting to show. The Minister of Finance who represents the big boys, the corporations, is an extreme right winger. Perhaps the true colour of the Conservative party is coming through.

I will be very interested in seeing some of the new backbenchers getting up in this House to tell us exactly where they stand. The hon. member for Kindersley-Lloydminster (Mr. McKnight) has already stated that his party is the high interest rate party. I would like him to get up in this House and tell us the philosophy behind that statement, so the Canadian people can get directly from his mouth that the Conservative party is for the fisherman, home owner, or the person who wants to build a house-the average Canadian. The Minister of Finance is more than just a bit of a hypocrite when he introduces policies like that, considering his past record as a critic in the opposition.

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LIB

Harold Thomas Herbert

Liberal

Mr. Hal Herbert (Vaudreuil):

Mr. Speaker, this week we have been treated to an extraordinary example of the attitude of the new government toward democratic parliamentary operation. It is fitting that we should have this opportunity in this House on this borrowing authority bill to be talking about a new government's approach to open government. An extraordinary situation we have found coming from a man who was probably the number one outspoken critic of the previous government for what he termed their arrogance. It was he more than anyone else who liked to talk about the arrogance of the former prime minister, yet this week we have seen an attitude that goes far beyond anything that can be termed

October 25, 1979

Borrowing Authority

plain arrogance. 1 was even searching for a word that would adequately describe the attitude of the Minister of Finance (Mr. Crosbie) toward parliamentarians.

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An hon. Member:

Impossible.

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LIB

Harold Thomas Herbert

Liberal

Mr. Herbert:

Because we have been treated to some stale jokes, maybe a word like pomposity is the best way to describe the attitude of the Minister of Finance. I find it almost impossible to believe that a minister would reach so far down to try to get his own way, to try to control what are and always have been accepted as independent committee activities.

By our tradition, the committee has been master of its own fate, yet we saw a deliberate attempt to interfere with the committee operation, I believe rather foolishly a futile attempt because, in the long run, it will not help either the Minister of Finance or the present government. Unfortunately, as one of my colleagues commented, it has seriously embarrassed members of his own party. It must have particularly embarrassed the chairman of the finance committee whom I might personally term one of the good guys on the other side. There are not many, but he is one of them. In fact the vice-chairman must have been embarrassed too because he voted with the members of the opposition parties in the finance committee supporting what I looked upon as a vote of censure of government ministers who could not find the time to appear as witnesses before the committee. But let me, after those introductory remarks addressed to the Minister of Finance, make some comments on the borrowing bill itself.

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Subtopic:   BORROWING AUTHORITY ACT 1979-80 SUPPLEMENTARY BORROWING AUTHORITY FOR 1979-80
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Some hon. Members:

Hear, hear!

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LIB

Harold Thomas Herbert

Liberal

Mr. Herbert:

The Minister of Finance has stated in this House that the borrowing authority he has requested in this bill has been reduced by some $3 billion. He says one of the reasons is because the Tories have the hon. member for York-Peel (Mr. Stevens) as President of the Treasury Board, thus inferring spending cuts. But the Minister of Finance then states that the reduction is possible because the government is using unused borrowing authority carried over from previous years. I find there is a little bit of conflict between those two statements simply because the fiscal year is now some six months gone. Government cash balances in this six-month period have dropped by nearly $4 billion and new net borrowings in the same period amount to nearly $3 billion. Thus, some $6.5 billion has been used up by the government in the first six months of this fiscal year. The Minister of Finance himself admitted that the figure was in the order of $5.5 billion, and I suppose between the Minister of Finance and me we shouldn't quibble about a billion dollars. Adding to this amount the $7 billion requested in the authority bill gives us a total for this fiscal year of some $13 billion, far greater than the $10 billion requested in the last Parliament by the previous government.

This increase in borrowing authority, the $6 billion-$5'A billion, $61/2 billion, depending on the way we count the figures-plus the $7 billion in the bill can only be attributed to

one of two alternatives, either an increase in spending over that anticipated by the previous government, or a decrease in revenue from that originally forecast. Or, of course, it could be a combination of the two.

However, it occurs to me that there is another possibility. The Minister of Finance could be padding his borrowing authority in order to take care of an increased deficit caused by unwise, unwanted, and ill-conceived spending programs. As one example, 1 refer to that incredible folly, the mortgage interest deductibility program which, by the minister's own conservative estimates, will cost the nation $2.3 billion in a full year. Add the inflationary factor and the probability that each and every spending estimate is on the low side, and we can anticipate in a few years an unconscionable and totally discriminatory give-away from the public purse of three or four billion dollars a year. Using the minister's low estimate, the cost to each and every taxpayer in this country will amount to 15 per cent of the personal income tax they presently pay, that is, 15 per cent more to be paid, or the elimination of an opportunity to reduce taxes by 15 per cent.

The tragedy of the plan is that the cost must be borne by every taxpayer in the country whether they own homes or not, and whether their homes are mortgaged or not. Every taxpayer, tenant, pensioner, single family head, as well as the wealthy, everyone who pays tax will be contributing 15 per cent of their personal income taxes to those who have mortgages on their homes.

We acknowledge that mortgage interest rates are now too high. As a builder I am well aware of the problem which present high mortgage rates present. We know that construction costs are making it extremely difficult for lower and middle income level persons to buy their own homes. But there are a multitude of better ways to help those who are really in need, without resort to a give-away program which could be so costly for renters, pensioners, and those who have strived for years to pay off their mortgages. It is this total irresponsibility on the part of the present government which is to blame, together with the attitude of the Minister of Finance that, come hell or high water, election promises are going to be kept, no matter that only 2 per cent of the population voted for the Tories because of their mortgage interest deductibility program, no matter that Quebec French-speaking residents will receive scarcely more than half the per capita amount received by their English-speaking fellow Canadians who have mortgages on their homes.

The Minister of Finance is going ahead despite the advice of senior departmental officials and is, by so doing, building even larger future deficits which are going to require even larger requests for borrowing authority than that which is contained in this bill. Of course, there is another alternative. The minister who was responsible for social programs until he was transferred or demoted-I don't know what the reason was- would cut old age pensions. Pensions or mortgage interest deductibility? Could any person of sane mind opt for a campaign promise at the expense of the poor?

October 25, 1979

A moment or two should be taken to consider another of the Tory election promises which is both highly discriminatory and ill-conceived-the measure introduced in this House on Monday to extend the supplementary pensions of widows aged between 60 and 65. This popular piece of legislation has a relatively small price tag attached to it and 1 suppose, when we are talking in billions in the present borrowing authority bill, the few million dollars involved to help widows and widowers is not a particularly large item. On the surface, this legislation is not likely to be criticized. What I want to do is to illustrate again just how discriminatory and unjust is the Tory approach to popular government.

Take, as an example, three widows of the same age, say 60 or 61, living side by side in similar small apartments. None of them ever worked when they were raising families, and none of them has any appreciable income. However, only one of those widows will benefit from the legislation which the government introduced on Monday. Why? The widow in apartment No. 1 was 59 when her 65-year-old husband died. The husband of the widow in apartment No. 2 died before his 65th birthday. Only the widow in apartment No. 3 is entitled to a pension, and the other two ladies must ask for welfare from the provincial government in order to live. It is surely infinitely preferable that all persons in similar circumstances are treated alike. It is this discriminatory attitude of the Conservative government which I find to be so abhorrent.

Let me ask what has happened to the budget of the new Minister of Finance? The Tory government could not have found too much wrong with the budget of the previous government. It is reintroducing the measures contained in that budget and taking some six months to introduce its own ideas. Do the Tories have any new ideas?

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Subtopic:   BORROWING AUTHORITY ACT 1979-80 SUPPLEMENTARY BORROWING AUTHORITY FOR 1979-80
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LIB

Peter A. Stollery

Liberal

Mr. Stollery:

No.

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LIB

Harold Thomas Herbert

Liberal

Mr. Herbert:

Why are we not given the government's forecasts of revenues and expenditures for this year? I ask this question specifically because of this request for additional authority to borrow funds. Should we not first ask the Minister of Finance what he is going to do with the requested borrowing authority? Was it not a seatmate of the minister's who suggested to the previous minister of finance that Parliament should not blindly hand borrowing authority to the government?

While 1 am referring to the colleague of the Minister of Finance, the present President of the Treasury Board, is it not extraordinary what a flip-flop he has done since the last Parliament? He was the critic who stoutly maintained that our dollar should be boosted to a level of 88 cents to 92 cents U.S. He was the man who stated that it was his party's economic strategy to boost our dollar to that level. Yesterday in the House he suddenly saw the light. The President of the Treasury Board, now in power in the government, said he had no choice but to admit that the fiscal policy of the previous government as it pertained to a floating dollar was the right policy, and that which was being adopted by his Tory party.

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What a change of heart from the criticisms he levelled at the previous government right here in this House!

Certainly interest rates are at an unprecedented level. If the Tories were indignant when the rate was 9 per cent, should they not be doubly indignant now that the rate is approaching double that figure? Only this week the prime bank rate in the United States reached 15 per cent, and last night the governor of the Bank of Canada raised the bank rate to a record 14 per cent. What is it going to be like in Canada in the bleak winter months ahead?

At the meeting of the Standing Committee on Finance, Trade and Economic Affairs this morning the governor of the Bank of Canada, Mr. Gerald Bouey, defended his actions and the actions of the Bank of Canada in his usual, calm, and efficient manner. I have been a member of the finance committee for seven years, and having listened to Mr. Bouey regularly year after year and having tremendous esteem for this man-not necessarily always agreeing with his point of view but respecting his ability-one thing was sure. We knew when Mr. Bouey came to the meeting this morning just about exactly what his position was going to be, what position he was going to be taking, why he was doing what he was doing, and what his responsibilities were.

Mr. Gerald Bouey naturally defended his actions and the actions of the Bank of Canada, and he did so in a very calm and a very efficient manner. However, it was abundantly evident tht Mr. Bouey's statement and arguments related to his specific responsibilities. He said, and I quote: "The government must take the ultimate responsibility for the general thrust of monetary policy". Mr. Bouey went on to add also that the government must explain its policy to Parliament and to the people.

Well, Mr. Speaker, we also thought that. That is why we members of the opposition parties were very anxious to hear from the Minister of Finance in committee. That is why we thought it was he, and he alone, who should explain the general thrust of monetary policy and why he, and he alone, should explain to the people of this country the government's policy concerning monetary policy. Also, interestingly enough, the views of members of all parties were represented in the steering committee report, which was ultimately rejected by the government majority.

I might say here, as I said earlier in my opening remarks, that it is certainly contrary to any rules of this Parliament, and certainly contrary to any past practice, that a minister of the Crown would dictate to a standing committee of this House. I must say, and I have said this to several hon. members opposite, that there have always been difficulties in the past in getting ministers to attend committees, and we are well aware that ministers will always find some excuse for not turning up on a particular date, but it is the manner in which this was handled that I find so extraordinary.

It was not a question of the minister's saying, "I am going to be out of town". In fact, the way it was presented to him was simply, "When can you appear, on what date and at what time?" I suggest that that is about as open an invitation as can

October 25, 1979

Borrowing Authority

be extended to any minister of the Crown. Interestingly enough, the only decision made in the steering committee was that we wanted to see the Minister of Finance first.

Mir. Deputy Speaker: Order, please. I hesitate to interrupt the hon. member. I was hoping he would come back to the subject matter of the motion before us, but I cannot let him continue what he has been attempting to do, discussing the proceedings of a committee of the House. In this regard I wish to refer the hon. member to citation 312 of Beauschesne's fifth edition at page 102 which says:

The proceedings of a committee may not be referred to in debate before they have been laid upon the Table.

I was willing to let the hon. member refer to the committee, but to analyse and examine committee work in detail in the House is not acceptable.

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LIB

Harold Thomas Herbert

Liberal

Mr. Herbert:

Mr. Speaker, I apologize for my digression. If I could explain my digression, it was simply because I had, as Your Honour is well aware, raised this matter personally in the House, and there was a House intervention. However, I accept your admonition and will continue my remarks.

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PC

Benno Friesen

Progressive Conservative

Mr. Friesen:

Seven years here and he does that.

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LIB

Harold Thomas Herbert

Liberal

Mr. Herbert:

Nevertheless, in seven years one learns a lot, and one learns to get in one's licks before one is chastised.

To get back to the subject under discussion, we were discussing the relationship between the Minister of Finance and the governor of the Bank of Canada. I think this is relevant to the bill. The Minister of Finance acted and responded in this House in a fashion which I considered-and I have stated this-irresponsible. I suppose this would at least serve as a suggestion of resignation, although the minister probably will not be taking my suggestion. However, the subject of resignation is probably in the mind of every one at the present time. It is causing some consternation in the country. I refer, of course, to the fact that the term of office of the present governor of the Bank of Canada will terminate at a fairly early date.

Personally, I find our present governor to be a man of extraordinary competence, and with that competence he certainly exudes charm and efficiency. If there is any suggestion in the mind of the present Minister of Finance that Governor Bouey is continuing policies of the previous government which he, the minister, might himself find unacceptable, then he should make that clear to Mr. Bouey. I am sure Mr. Bouey would not suffer any loss of prestige or pride from any early retirement.

The point I want to make very clearly, and to reiterate, is that Mr. Bouey stated this morning-and I will not refer to committee meetings because he has made public statements- that his policy is substantially the same as it was last year and the year before. In effect, he has not shown any change of mind. The Minister of Finance and the present President of the Treasury Board have been highly critical of that point of view in previous sessions, and I think it behooves the Minister of Finance to make it very clear to this House whether he now

has done a flip-flop, whether he now agrees that the general approach of the governor of the Bank of Canada, which has not changed over the years, is acceptable to him and that he will be fully and unequivocally supporting the governor of the Bank of Canada. Alternatively, the Minister of Finance should cease attacking the general policy approach taken by the Bank of Canada during the term of the previous government.

There is nothing to prevent the Minister of Finance from bringing down an early budget. He does not have to wait until the end of November.

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An hon. Member:

He has to ask the provinces.

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LIB

Harold Thomas Herbert

Liberal

Mr. Herbert:

That is exactly it. He has to ask the provinces and get the agreement of the provinces on oil pricing. Somehow I seem to doubt that he will have much success. Probably he will find that eventually they will have to come to some decision, as the previous government did, and impose some sort of policy on the pricing of energy which is good for the nation as a whole.

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An hon. Member:

The provinces are writing the federal budget now.

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LIB

Harold Thomas Herbert

Liberal

Mr. Herbert:

I have a couple of points I should like to bring out before I make my closing remarks. I have never been particularly ultra nationalistic in my point of view. Perhaps in some way that is because I have a large number of multinational corporations in my constituency which are foreign-owned.

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Some hon. Members:

Oh, oh!

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LIB

Harold Thomas Herbert

Liberal

Mr. Herbert:

Nevertheless, that does not get away from the fact that too much of our enterprise in Canada is foreign-con-trolled. I am not suggesting any punitive steps. After all, these multinationals came here freely. They were invited to come here, and they are still being invited. Quite obviously if we are to increase Canadian ownership in the country, and if we are to have more control over our own affairs, then we will have to start tearing ourselves apart a little bit from our association with the United States and its influence on our economy.

We cannot assist the domestic fight against interest rates unless we make some effort at co-ordinating foreign borrowing. At the present time we are a federal state which has given extraordinary powers to its provinces. Generally this is not realized. It is not talked about too much. More power has been given to the provinces than in any other similar country in the world. We are absolutely powerless, at the federal level, to have any say in the foreign borrowings of the provincial governments. Until we find some way-preferably by agreement with the provinces-to co-ordinate our foreign borrowing, then we will be looking at continuing difficulties such as we have experienced in the last day or two with interest rate problems, and the feeling that we must do, in turn, whatever the Americans do.

October 25, 1979

Capital can be obtained more cheaply by the federal government. The borrowing can be arranged in a more orderly fashion. Eventually it will be to the benefit of the country as a whole.

Another measure we should attempt to take, in order to decrease our dependency on the United States and its influence on our economy, is to encourage greater Canadian ownership by encouraging Canadian investors to invest in their own country. There are many ways that this can be done. One is to have the Government of Canada actively participating in segments of our economy which are presently foreign-con-trolled, or substantially foreign-controlled. Certainly the previous government went a long way toward ensuring, for the first time, a domestic presence in an almost entirely foreign-controlled sector of the economy, the oil industry. Now our friends in the government tell us that that was the wrong way to go, that we should not displease our American neighbours who control that segment of the economy.

I wonder what Canadians have to look forward to from the present government. We know about soaring heating costs, and soaring gasoline prices. We have rapidly increasing inflation which perhaps will result in fewer available jobs this coming winter. Of course that will result in substantially increased unemployment. By its policies the government has already sacrificed thousands of Canadian jobs to the order of Conservative policy.

In their campaigns, Tory members promised to stimulate the economy, but what has happened since? We lost out in Argentina.

I should like to say on the floor of the House of Commons that 1 received a telephone call sometime ago from a private company involved in negotiating the sale of Candu reactors. The gentleman wanted to know why the government was directly intervening in the negotiations going on then which undoubtedly would have some disastrous effect on the sale of Candu reactors. It was approximately three or four weeks after that telephone call that the Argentina deal fell through.

Despite the fact that the press has attributed, to some degree, that lost sale to the actions or statements of the Secretary of State for External Affairs (Miss MacDonald), I have no doubt that it was the division in the government cabinet between those who were for and those who were against the production and sale of nuclear reactors. The holdup in making a decision and the desire to ensure a "go-slow" until a government policy was finally adopted, perhaps were the real reasons why we lost the Argentinian deal. Also we lost out in Mexico and Japan.

We sure lost out in the Middle East. Again I received a telephone call. This time it was from an executive of Bell Canada, one morning. He said, "Hal, what are you going to do? We have over $500 million worth of contracts in suspense at the present time in the Middle East; it involves thousands of Canadian jobs."

I asked a question in the House of the Minister of State for International Trade (Mr. Wilson) because we do not have a

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minister in the House of Commons who is responsible for that particular area; he is in the other place. The Minister of State for International Trade answered in such a fashion which indicated he was aware of some difficulties, but he was not aware of any cancelled contracts. Then on the following Monday, the next working day, he stated that some $4 million worth of contracts had been cancelled. The point was that the question did not relate to $4 million of cancelled contracts, as serious as that may be. It referred to the $500 million worth of contracts that were in suspense, that were being negotiated, held up, and possibly lost. In my question I also mentioned the fact that, in Iraq, Canadian companies were not even allowed to submit bids. That was particularly difficult in the case of the airport in Tehran.

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An hon. Member:

That is $4 million down the drain.

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October 25, 1979