November 15, 1982

PROCEEDINGS ON ADJOURNMENT MOTION

SUBJECT MATTER OF QUESTIONS TO BE DEBATED

LIB

Cyril Lloyd Francis (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Liberal

Mr. Deputy Speaker:

Order, please. It is my duty, pursuant to Standing Order 40, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the Hon. Member for Cariboo-Chilcotin (Mr. Greenaway)- Mines and Mining-Map distribution costs; the Hon. Member for Athabasca (Mr. Shields)-Energy-Cold Lake project- Loan made to Imperial Oil. National Energy Program- Request for withdrawal; the Hon. Member for Broadview-Greenwood (Ms. McDonald)-Energy-(a) Inquiry respecting Program cutbacks, (b) Chip and Off Oil Programs.

November 15, 1982

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Topic:   PROCEEDINGS ON ADJOURNMENT MOTION
Subtopic:   SUBJECT MATTER OF QUESTIONS TO BE DEBATED
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GOVERNMENT ORDERS

BUSINESS OF SUPPLY


The House resumed consideration of the motion of Mr. Stevens: That this House condemns the Government for its failure to introduce its promised comprehensive industrial strategy to rebuild the Canadian economy in the 1980's and for its failure to produce specific strategies to harness the potential of Canadian industry, to promote the advantageous utilization of Canada's human and natural resources, to increase exports of Canadian manufactured goods, and to provide incentives for training opportunities and to the private sector for new, and increased levels of research and development in Canada.


PC

Donald Frank Mazankowski

Progressive Conservative

Hon. Don Mazankowski (Vegreville):

Mr. Speaker, the C.D. Howe Institute in its regular report of July, 1982 entitled "Canada's Economic Predicament", commenting on the June 28 budget, had this to say and I quote:

Canada's primary problem has been mismanagement of its economic affairs since the early 1970s by its federal leadership. The latest budget message is an abysmal stewardship report on the results of past economic policy for which the federal government must take responsibility.

The report goes on to say that this kind of leadership has placed Canada in a very serious economic predicament. It was rather interesting to hear the previous speaker pleading for the private sector to respond, asking the business community to trust them, after the damage they have inflicted upon the economy. I mention this simply to lay the background for the economic debate in which we are involved today, because in order to move ahead, to propose and advocate anything, one cannot forget about the past sins of this administration. That is primarily what the Prime Minister (Mr. Trudeau) wanted to do in his three-part television presentation. Some of the things he had to say were correct, but we know from previous experience that a lot of the problem has been in fact created by the man himself and by the people who support him.

While the C.D. Howe Institute talks about the mismanagement of the seventies, we have to look at what happened in the last two years, since 1980. Clearly our economic fortunes have dipped very badly. As a matter of fact, they have been eroded disastrously. Why? First of all, the National Energy Program was a major contributing factor to the economic collapse of this country. Second is the prolonged and protracted negotiations with the producing Provinces over energy pricing, created primarily as a result of the irresponsible position which the Liberal Party took during the election of 1980. The effect of the NEP and the energy pricing agreement has imposed a very crippling federal tax upon the industry and upon consumers.

I can also mention the uncertainties and the confusion arising out of the number of budgets and economic statements which have been made. What was the effect? Primarily it has destroyed investor and consumer confidence in this country. The other problem we have is the unrelenting move of this Government towards greater state control and state intervention. The Government still does not believe that is one of the

major problems in this country. Ask the business people. I will have more to say about that a little later.

While the economic problems were materializing and we could have taken some measures over the course of the last two years, this country was engaged in, perhaps, one of the most bitter debates of all time, the debate on constitutional reform. In his frustration the Prime Minister said that federalism is dead, that there is no more co-operation. Well, Mr. Speaker, we certainly have confidence in the future of this country. We have confidence that Governments can work together and address the real problems of the country. What his statement implies is that there is no political co-operation; therefore, there can be no economic co-operation. The division and bitterness created during the debate over energy and the Constitution has not subsided. It is going to take more than time, it is going to take action by the Government to ensure that those wounds are healed.

All of these things, Mr. Speaker, have led us further into the depths of recession. As I said earlier, we do have an economic crisis in which there is no investor or consumer confidence; there is no confidence in the economic leadership provided by this Government. In fairness, sir, I have to acknowledge that there at least seems to be lip service being paid and some gestures being made towards improving the situation. The Government has started to recognize that it has made serious and grave errors, and at least there is more perception that it is mending its ways and changing direction.

We have had the game of musical chairs being played in the cabinet and I think from the business point of view there is some measure of optimism. I am pleased the Minister of Industry, Trade and Commerce (Mr. Lumley) is in the House because, while I do not want to commend him too loudly or in any prolonged fashion, it is fair to say, however, that it was a right move to put the Hon. Member in that position because 1 think he understands business and will do an excellent job. However, as my colleague, the Hon. Member for Kingston and the Islands (Miss MacDonald) pointed out, he is only one.

I wonder where he was when the Government imposed the devastating National Energy Program or the disastrous budget of November, 1981. That budget has had 44 changes and it is all but dead, but where was he then? He stood up and supported it. It was the most anti-business, anti-growth budget ever inflicted on Canadian business and the Canadian people, yet he stood there applauding the then Minister of Finance. I suppose he expects to make a name for himself by reversing the effects of that crippling budget. I hope he does, in the interests of Canada and the Canadian economy, Mr. Speaker.

Some Members across the way, Mr. Speaker, when I mentioned the National Energy Program was a disaster, said "nonsense". That is rather strange when we have had two major changes to the NEP. That in itself is a recognition that it was wrong in the first place. Unfortunately the damage was done, just like the budget. I cannot imagine how Members

November 15, 1982

across the way can live with themselves after having voted in support of that November, 1981 budget.

The fact of the matter is that over a one-year period we have had confusion, chaos and uncertainty in the business community, but Members across the way stood up and applauded the Minister of Finance and supported him. They should hang their heads in shame. Now the Government is trying to cater to the United States. We have the Minister of State for International Trade (Mr. Regan) journeying to the United States to try and get them back onside. We have the Prime Minister sort of giving the U.S. the back of his hand in his appeal for more trade with France. Of course, he is visiting other countries in Europe which are basically socialistic or communistic, so we still have that tendency toward kicking the U.S. in the teeth. The U.S. is our major trading partner, and if we can patch up the differences and work together to our mutual advantage in terms of trade, technology and jobs, I think we can make progress on this continent.

The Hon. Member who spoke just before me made a great pitch for the private sector, as did the Minister of Finance (Mr. Lalonde), suggesting that it will fuel economic growth. That is really hypocritical, Mr. Speaker. We need more than words to revitalize the private sector because there has been no Government in Canada, whether it be NDP, Liberal or Conservative, which has done more to stifle, frustrate and harass the private sector than this Government. Its whole economic thrust is based on more, not less, Government intervention. It wants to use grants and subsidies to force business to march to the tune of a board or army of bureaucrats. It is promoting the greater use and multiplicity of Crown corporations to get involved in business where the private sector could do the job. The Government is using leverage to achieve certain goals and objectives, leverage such as taxation, spending, procurement and regulation policies. It even uses confiscation to achieve its goals and objectives. So we have this assortment of sticks and carrots to manipulate business, to manipulate Canadians, to fine-tune them to produce the desired results. The bureaucrats are doing the fine-tuning, and of course the result is increased frustration, harassment and an increase in the army of non-productive bureaucrats. It is penetrating the whole marketing system, Mr. Speaker.

There is a myth within this Government that the bureaucracy can outperform and outwit the marketplace. In my view, there is no bureaucratic mechanism, regardless of computers, satellites, flow charts, or the armies of people, which can outperform the expertise of the private sector in the marketplace. One only has to look at the failings of Russia, particularly in its agricultural sector. Russia is now the world's largest importer of grain and meat. In the year 1970 it was a net exporter of grain. In the last ten years the U.S. has doubled the Russian output of grains. Russia has a centrally controlled and interventionist economy. They know how much fertilizer they are going to use in 1984 because it is all programmed. That kind of approach, Mr. Speaker, does not work there and it is not working here. As far as I am concerned, the invisible

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hand of the marketplace is far more effective than the visible hand of the Government,

The NDP, Mr. Speaker, simply want more of this kind of intervention. As I understand their industrial strategy, they really want to turn Canada's economic program into a National Energy Program. They want more centralized control and more intervention, the kind of control and intervention which frightened away the oil companies and destroyed the oil industry in this country. As far as I am concerned, the most important and constructive suggestion I can make is for the federal Government to make a clear commitment to return to a more market-oriented economy. This would do more to restore investor and consumer confidence than anything that has occurred in the last two years. We must concentrate on providing the best product at the best possible price. That is basic and fundamental to business.

Secondly, we must remove the impediments which discourage the spirit of enterprise in Canadians. We must encourage individual initiative and ownership. We must provide incentives to build, to restore the profit motive and revitalize the private sector in order to encourage growth and development, particularly in those areas where we have a natural advantage. I believe Canadians want to develop their own abilities and ambitions without excessive Government intervention. They want to own their own homes and businesses, to be active partners in the growth and development of this country.

We can do that, Mr. Speaker. We can remove those impediments by simplifying our tax system, one so complex and counterproductive that even accountants and tax lawyers cannot understand it. This has created, again, a huge and nonproductive bureaucracy. It is not producing wealth, it is discriminatory, it militates against productivity, efficiency, price competitiveness, and it stifles innovation and creativity.

Things like the capital gains tax destroy the incentive to invest. We must consider instruments like the agri-bond, the Small Business Investment Bond, municipal bonds and Industrial Revenue Bonds which will provide pools of capital and the impetus to grow, to build, and to produce wealth in this country. The tax system can be used to encourage productivity, to improve our competitiveness, to revitalize and retool the manufacturing sector, to improve research and development and to stimulate innovation and advanced technology. But we need more positive signs and not simply rhetoric, Mr. Speaker.

We must also engage in a major regulatory housecleaning in this country. Canadians of all stripes and in all walks of life are hampered by the bureaucratic web. We must reduce duplication, establish greater uniformity and remove the barriers which stifle innovation, competition and efficiency.

I support the call of the Canadian Manufacturers' Association for a two-year moratorium on regulation that does not contribute directly to the economic growth of the country. The utopian ideal that in this country we can plan and regulate everything to perfection has clearly been discredited. We must face reality and make a clear commitment to scaling down the

truly become a very dynamic, prosperous and caring society once again.

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY S.O. 58-INDUSTRIAL STRATEGY
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LIB

Aideen Nicholson

Liberal

Miss Aideen Nicholson (Trinity):

Mr. Speaker, I should like to congratulate the mover of the motion on his discovery that the Government has a role to play in our mixed market economy. Today's motion is perhaps an interesting change from some of the cries we hear from the Party opposite, which admittedly does not speak with one voice on the difficulties of government "interference" in the private sector.

The term "industrial strategy" is perhaps less useful than to think in terms of a set of credible, consistent and coherent policies designed both to adapt to current world difficulties and to overcome the structural obstacles to long-term growth within the economy. At Strasbourg last month, Mr. Van Lennep, Executive Director of OECD, said:

It has been another difficult year for the world economy. No one had thought that the task of defeating inflation and adjusting to the massive oil price shocks of the 1970s would be easy or rapid. But the process of adjustment has indeed been painfully long, and those of us in the business of economic forecasting have again predicted for 1982 an upturn that has not yet come.

Mr. Van Lennep went on to say that he believed there would be an upturn, but went on to say:

At the same time, we are to an important extent in unchartered territory, both as regards the strength of the conflicting forces of inflation and deflation at work, and the complexities arising from an unprecedented degree of international interdependence.

Recent developments in Europe have not been encouraging. Unemployment has risen more than expected. Demand and output have been weaker than expected. Demand is also weaker than expected in Japan. What does all this mean for Canada?

We face increased competition in our traditional markets and it becomes ever harder to penetrate new markets. We face competition from newly industrialized countries at the same time as less developed countries are finding it harder to purchase our goods, and we face competition from reindustrialized countries such as France and Japan. Canada is fortunate in having considerable natural advantages, including a well-educated work force, advanced technology and abundant resources; but expansion of our industrial sector has been constrained in many respects by a small domestic market. There is now a growing awareness of the need to improve productivity in order to protect and enhance our competitive position. We are the only industrialized country in the world which does not have access to a domestic market of 100 million or more. Our population is only about 25 million, dispersed over a large and difficult terrain.

We trade to live. Exports alone account for one-third of our gross national product, and 20 per cent of our work force is directly involved in producing goods for export. Because of our small domestic market and our heavy dependence upon exports, Canada has a disproportionately high stake in the health of the trading system. Therefore, it is clearly in Canada's interests to contribute to managing world trade in

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ways that avoid conflict and harsh beggar-my-neighbour approaches to trade.

We are one of the largest trading nations on a per capita basis. As I said, trade amounts to more than one-third of our GNP. Leaving aside services, something in excess of 50 per cent of what we produce is exported. We import a similar amount. Therefore, it is vital to our economy and standard of living to maintain a world trading environment which will enable this trade to continue to flourish.

Where does this trade lie? Trade in excess of $100 billion a year, or almost 70 per cent of our trade, is with the United States, which takes about 60 per cent of its imports from Canada in goods that have either been manufactured or processed. About 14 per cent of our trade is with Europe and about 7 per cent of it is with Japan. This means that about 90 per cent of the huge amount of trading that Canada does involving both imports and exports is conducted with the industrialized western world, particularly with Europe, the United States and Japan. We are in a disadvantaged state because of our small numbers and our small domestic market.

When the last round of the GATT is implemented in 1987, we will see visible tariffs reduced to levels which will not provide the protection for the Canadian manufacturing sector that has allowed it to grow over the years. As we move into a freer trading mode our manufacturing sector, which is not as competitive as it should be in world terms, will have to undergo serious restructuring.

Apart from Australia and to some extent the United States, we are alone in having a huge percentage of our economy and trading produce in resources. In the resource sector a higher proportion of our exports goes to Europe and Japan than to the United States. During the GATT negotiations we hoped to find support from our trading partners for the sectoral support which we suggested would lead to a reduction in tariffs and higher levels of additional value in some of our resource industries. However, our trading partners to date have been unable to go along with that approach, and we continue to be faced with the problem of running into restrictions when we add value to our resources before shipping them from our shores. There is a continued determination on the part of the Government of Canada to endeavour to upgrade our resources before we ship them abroad, and the Government will continue to press for this.

Our merchandise trade figures are in fact very good if looked at as a whole. Currently we have a substantial surplus in our balance of merchandise trade. Over the last few months the value of goods we exported was in excess of that which we imported by almost $4.5 billion, but this surplus stems from large net earnings from our trade in food products, crude materials and semi-finished goods. We still run a persistently large deficit in finished goods.

It is generally considered that the manufactured or finished product sector tends to provide for more job creation than resource development. Therefore, it seems clear that we must seek out opportunities and methods to develop our manufacturing capacity. At the same time we must continue our

November 15, 1982

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international marketing efforts both to improve our current market share and to identify additional markets where Canada can be competitive.

The question of research and development has been mentioned by previous speakers today. Canada's emphasis upon R and D has been low in comparison with other OECD countries. In 1979 our research and development expenditures were only 1 per cent of our gross domestic product as compared with 2.4 per cent in the United States, 1.8 per cent in France and 2 per cent in Japan. However, we have been increasing this somewhat, and our R and D expenditures are now at 1.3 per cent of the gross domestic product. The Government has formulated and is vigorously implementing a policy in support of our scientific development, with specific targets for 1985. Certainly the need is well recognized to establish a more comprehensive base for science and technology work in Canada.

Some of the building blocks of an industrialized strategy have been mentioned by previous speakers today. Apart from research and development, there is industrial restructuring, particularly to accommodate the microelectronic communications revolution. There are productivity measures which include job training. Here one must mention the National Training Act, which was recently passed precisely to deal with that. There are measures to deal with international trade, competition and promotion.

Last fall a document entitled "Economic Development for Canada in the 1980s" was tabled in this House. In that paper the Government addressed a number of essential building blocks for Canada's long-term economic vitality. These included a $60 billion commitment to developmental spending to 1986, including over a quarter of that sum for energy development expenditures.

The Government stated in that paper that priority would be given to industrial resource and regional development, transportation, export promotion and human resources. Innovation was mentioned as a major factor in enhancing productivity. A series of new initiatives was proposed in five key resource-based sectors-energy, agrifood, fisheries, forest-based industries and mining. The question, then, is not whether we have a long-term economic development plan or a set of industrial strategies, but rather whether the broad themes are understood and are being communicated effectively.

Finally, the question of foreign ownership has been addressed by two members opposite in two different ways. One suggested that the Government is not being vigorous enough. The other Member suggested that the Government was overactive in this area. This perhaps merely points out the difficulty of the issue.

I think we would all agree that Canada needs and welcomes foreign investment. The Hon. Member for Vegreville (Mr. Mazankowski) mentioned that we cannot afford to see capital leave this country. We would all agree with that. But also we cannot afford to see jobs leave this country. While nobody

wants to be unwelcoming to foreign investment-and we on this side would not like to see the extent of state control which the New Democratic Party advocates-surely there must be some sensible, prudent measures to assure that foreign investment benefits Canada.

What we now see is that our manufacturing sector, which is very heavily controlled by foreign owners, does most of its research and development offshore. There is, therefore, no benefit to Canada in the creation of new jobs and new products. We also see that foreign-owned businesses in the manufacturing sector import much more than similar Canadian-owned firms. I might just mention some figures. I say, not in any sense of being hostile to foreign investment but in order to emphasize the point, that however much we want and welcome foreign investment, surely we must be prudent when looking at our own long-term interests.

In 1978, foreign-controlled firms accounted for 72 per cent of our imports. Canadian-controlled firms imported only to the value of 4.3 per cent of their sales, while the value of imports for foreign-controlled firms, when looked at as a proportion of their sales, was 22 per cent. In the manufacturing sector the differences in import behaviour were even more pronounced. Foreign-controlled firms imported to a value of 29 per cent of sales, while Canadian firms had a ratio of only 8 per cent. When one also considers that Canada has a higher proportion of its industry under foreign ownership and control than any other industrial country in the world, we have to consider this rather seriously.

I mentioned earlier that research and development is generally done by foreign-owned companies outside of Canada. Our future high standard of living in Canada will depend more upon our mastering of industrial technology than on our accessibility to our natural resources. We must be keenly sensitive to the fact that science and technology are areas of enormously rapid evolution. If firms are doing their research and development offshore, we are losing a tremendous possibility for job creation within Canada.

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY S.O. 58-INDUSTRIAL STRATEGY
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PC

Harvie Andre

Progressive Conservative

Mr. Harvie Andre (Calgary Centre):

Mr. Speaker, just a couple of weeks ago I celebrated my tenth anniversary on being elected a Member of this House. I remember during that election campaign the promise made by the Liberal Party that an industrial strategy was actively being developed and would be ready to take Canada to a new nirvana.

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY S.O. 58-INDUSTRIAL STRATEGY
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PC

Donald Alex Blenkarn

Progressive Conservative

Mr. Blenkarn:

It is still coming.

Topic:   GOVERNMENT ORDERS
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Sub-subtopic:   ALLOTTED DAY S.O. 58-INDUSTRIAL STRATEGY
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PC

Harvie Andre

Progressive Conservative

Mr. Andre:

The Minister of Transport (Mr. Pepin) was then Minister of Industry, Trade and Commerce. He assured Canadians that the Liberal Party had things well in hand, that the final touches were being put on an industrial strategy and as a result of its sheer brilliance would lead Canada into unthought of horizons for growth, wealth, jobs and opportunities, things we could only heretofore dream of. That Minister did not manage to survive that election, but unfortunately the Liberal Party did. He was replaced by the Hon. Alastair Gillespie. He said: "I have picked up the baton and I am

November 15, 1982

running with it; just hold on, folks, soon we will have an industrial strategy that will address resources, technology, manufacturing. It will look after Canada's needs for the next century."

Were we ever lucky to have a Minister like that! Well, months and then years passed. The Minister was asked from time to time how things were coming. He said "We are on to it". At some point in time, though, something happened, because this magic answer, this industrial strategy, this answer to Canada, suddenly got replaced by a sectoral strategy. There were 19 sectoral groups identified by the Minister and his brave minions, I believe.

Topic:   GOVERNMENT ORDERS
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Sub-subtopic:   ALLOTTED DAY S.O. 58-INDUSTRIAL STRATEGY
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LIB

Edward C. Lumley (Minister of Industry, Trade and Commerce; Minister of Regional Economic Expansion)

Liberal

Mr. Lumley:

There are 23.

Topic:   GOVERNMENT ORDERS
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Sub-subtopic:   ALLOTTED DAY S.O. 58-INDUSTRIAL STRATEGY
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PC

Harvie Andre

Progressive Conservative

Mr. Andre:

Twenty-three, I am sorry. I am corrected by the Minister of Industry, Trade and Commerce (Mr. Lumley). These groups worked laboriously. We were promised that these documents were coming. Eventually, 23 sophomoric, thin documents, written in second year economic language, were produced dealing with these 23 sectors. Those sectorial studies disappeared into oblivion about 15 minutes after they were published, because that is what they were worth. It was a totally worthless production.

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY S.O. 58-INDUSTRIAL STRATEGY
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?

Alastair William Gillespie

The Hon. Alastair Gillespie moved

on to his reward as the Minister of Energy, Mines and Resources. The gurus in the Prime Minister's office and the Privy Council office, finding that this sectorial strategy would not work, decided that it must be a structural problem; it cannot be the fault of the Liberal Party. Therefore, they created the Economic Development Board and the position of Minister of State for Economic Development. The present occupant of that post is in the House today. Since the creation of that position, which was the new answer to our lack of industrial or economic strategy, absolutely nothing of value has been produced to this time.

However, over at the Department of Energy, Mines and Resources, Alastair Gillespie discovered the Holy Grail. He found an industrial strategy, one based on megaprojects. I recall the First Ministers' meeting of 1978 when he proudly produced that list of 40, 60 or 120 projects. It was a magnificent list. What it was, though, was a list of every project that was planned, considered or even dreamed of by every business, government, entrepreneur and wishful thinker in the country. It was mostly pure fiction. There was one part which was real. That was the megaprojects dealing with energy development, particularly oil and gas development.

With the election of a Progressive Conservative Government in 1979 these megaprojects got under way. Work had activly begun and there was even a great shortage of engineers because of the work and planning that was going into these megaprojects. Some of those projects are mentioned on page 94 of the National Energy Program. They include the Suncor expansion, the Syncrude expansion, the Cold Lake project, the Alsands project, the Canwest project, the Saskatchewan heavy oil tertiary project, the Judy Creek light oil tertiary project,

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and Hibernia. It is an impressive list. Each project was actively being pursued in 1979 and work was under way in 1980.

Before I deal with what happened to those projects I would also like to mention some gas-based projects which collectively represent megaprojects in that field. They are an ethylene plant by Alberta Gas Ethylene; an ethylene plant by Esso, Alberta Energy and Hudson's Bay Oil and Gas; a polyethylene plant by CIL and Trimac; a polyethylene plant by DuPont and Alberta Energy Company; a benzene plant by Esso and Alberta Energy; a styrene plant by Esso and Alberta Energy; an acetic acid plant by Celanese Canada; a vinyl acetate plant by Celanese Canada; an MTBE plant by Alberta Natural Gas; two Dow Chemical plants at Fort Saskatchewan; and an Alberta Gas chemicals methanol plant. They number 12 in all.

What is interesting about those oil and gas projects is that every single one has gone down the tube. The energy projects that were left from the mythical industrial strategy based on megaprojects produced by the Liberal Government were all destroyed by the National Energy Program. What is really galling is the audacity or stupidity, or perhaps both, of the content of this National Energy Program. I quote from page 94 where these oil projects were listed. It says:

The positive impact of the Program-

Referring to the National Energy Program:

-on oil sands development can be illustrated by its effect on the commercial viability of the Alsands project-

Can you believe the audacity, dishonesty or perhaps plain ignorance of someone to write such trash when, in fact, it destroyed those projects? The Alsands project was under construction in early 1980. Men and machinery were on site moving earth.

I do not want once again to go over all of the reasons the National Energy Program is wrong and discuss its disaster. There is no honest person in this country who does not recognize the disaster of the National Energy Program. Why was it such a disaster? One has to acknowledge that part of it is a result of the uncertainty. The newly elected Liberal Government argued, fought and disputed with the Provinces for two years before reaching some reasonable accord. It was an incredible display of mismanagement and stupidity. No industry, entrepreneur or investor can tolerate such a delay.

Second, the Government simply took too much money. It dipped in for a huge amount of money by way of tax increases which were justified on the basis of projections on revenue flow which were pure fiction. In that respect, Mr. Speaker, if you have not read Peter Foster's book called "The Sorcerer's Apprentice", subtitled "The Super Bureaucrats of the Energy Disaster", I highly recommend it. Those geniuses-one of whom is now in Paris at our expense to the tune of $200,000 a year-projected revenues that were pure fiction. They were calculations of the kind you would learn to do when taking a Ph.D in economics at the University of Toronto. They certainly bore no relationship to reality. These bureaucrats divvied up these fictitious numbers. The share of these fictitious numbers were certainly fair but they bore no relationship to reality. The

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Government simply took too much money. There was not enough left to keep people interested and provide the economic activity from which jobs and spin-off effects come.

In addition, a terrible precedent was set. For the first time in our history, the Government retroactively changed the rules in a highly pejorative way. The world being what it is, we expect that kind of behaviour, unfortunately, from a banana republic, dictatorship or some of the less stable Third World countries. No one expected that kind of behaviour from Canada. Canada was considered to be a stable, democratic country with a long history of fair play. If we made mistakes in the past, we lived with them and changed the rules in the future. We did not change the rules retroactively until this Liberal Government and this Minister did so.

The impact of all of that has caused the demise of all the energy projects which I have outlined, including oil and gas projects. If those projects were in place today, the jobs which would have been generated would not be in the thousands or the tens of thousands, but rather in the hundreds of thousands. In Canada today there are hundreds of thousands of families whose income earners are unemployed because of the National Energy Program and the demise of the only kind of industrial strategy left, the megaproject strategy.

I would refer Your Honour and the rest of the House to the seventeenth annual review of the Economic Council of Canada. Its predictions as to what disasters would befall this country if those megaprojects did not go ahead are turning out to be exactly on target. It was all there. Those were predictions of three years ago. Probably none of the Hon. Members opposite have read it because they would not like the message. However, we do not need a Royal Commission headed by Donald Macdonald and we do not need some fresh new insight. All we need is for someone opposite to read what has been done by this permanent Royal Commission, the Economic Council of Canada, and to heed its lessons.

I want to refer to what can be done and what needs to be done now. Clearly the most terrible and crucial problem facing Canada is the question of jobs. I had the misfortune of living in a home where the father was unemployed for a number of years and I know what devastation that can cause a family. The numbers involving the unemployed are so large that we sometimes do not comprehend them. We say that 12.2 per cent, 12.7 per cent or 1.5 million people are unemployed. They are numbers, but behind every one of those numbers is a family and I know, firsthand, what that means to a family. It is not enough that we say we will have a Royal Commission to look into the matter and report back in three years. It is not enough that we put together a committee of economists and say that from now on the Minister will listen to some outside advice. It is not enough that we reward the perpetrators of this tragedy by giving them year-long vacations in Paris at our expense. We must take action.

Let me speak in terms of what can be done. It has been noted by apologists on the Liberal side that there is not much we can do about world markets, and that is iccepted. There is

not much Canada can do now about the fact that the world has an oversupply of nickel, steel, copper, lumber, things that we produce in abundance, and therefore we cannot supply the world. We are unfortunately trapped in terms of those circumstances, but that is not true of our energy. The market is here in Canada. We can displace imports.

So there is no reason for us to blame the rest of the world or wring our hands and say there is nothing we can do, because we can, and we can in the area of energy. I am not referring to jobs in Alberta, Saskatchewan or British Columbia when I am referring to energy development. A recent study by the consulting firm, Foster Consultants (Calgary), on behalf of the Independent Petroleum Association of Canada illustrated that when money is spent for oil and gas in Alberta, when one dollar is spent, 40 cents ends up being spent in Ontario because that is where the pipe is produced as well as the valves, the machinery, equipment, trucks, cars and everything else used by the industry, some 16 per cent is spent in Quebec, with 28 per cent or 29 per cent actually ending up in Alberta and the remainder in the rest of the country. Therefore, we are not referring to something which benefits only one region but, rather, something which benefits the entire country.

The netbacks must be adjusted. During question period the other day, someone asked the Prime Minister (Mr. Trudeau) a question about lowering taxes. He replied by asking, "How can I lower taxes when we have such a terrible deficit? One cannot do both". I will give an example of where lowering taxes would decrease the deficit because it would produce more revenue for the Government than the current tax load. I will quote from a speech by the chairman of the board of Dow Chemical (Canada) Limited. He referred to the experience with the company's ethylene plant in Red Deer. In 1982 the company estimated that the ethylene plant would operate at 100 per cent capacity and, as a result, would create $60 million in income tax obligations, $45 million of which would go to the federal government and $15 million to the provincial government. However, the Feds put on an up front tax, the natural gas and gas liquids tax, which would supposedly gain $60 million a year from that plant, or double the the anticipated income tax revenue. Therefore, the Feds would be receiving in excess of $100 million, $105 million, and the Province would receive $15 million from income tax and, of course, would receive an additional $37 million from royalties on gas.

As a result of the natural gas and gas liquids tax, there was just enough of a marginal on the feedstocks to make it impossible for that plant to sell all its products. Therefore, instead of producing at 100 per cent capacity as planned and anticipated and for which markets were available before the federal tax was imposed, the plant was producing at 50 per cent, or half capacity. What was the result? The federal Government, instead of receiving $105 million as planned, instead of receiving the $45 million from income taxes that it would have received before it imposed the tax, will receive $20 million this year. The Province lost some $34 million in taxes and royalties. Therefore, the federal Government not only lost the extra $60

November 15, 1982

million in tax which it tried to collect but, in addition, cost themselves and the rest of Canada an additional $140 million. That is plain, stupid taxation. All the Government need do is reverse that stupid tax and it would reduce the deficit and put people back to work.

Second, the Government must cut red tape. Historically, for every three geologists working in the energy industry-those are the people who find the oil-one needed one paper shuffler. As a result of the National Energy Program, and goodness knows how many other things those geniuses in EMR have invented, the ratio is now reversed. Every geologist requires three paper shufflers to handle the red tape so he can do his job. We gnash our teeth about productivity and ask why we are so non-productive in this country. It is no wonder. All we do is produce work for paper shufflers. They do not produce anything but simply satisfy the bureaucrats in Ottawa, Edmonton, Regina and other capitals. Let us not blame it all on the Feds.

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?

An Hon. Member:

And Alberta.

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PC

Harvie Andre

Progressive Conservative

Mr. Andre:

I referred to Edmonton. That is in Alberta, in case the Hon. Member did not know.

Finally, we must restore trust. I want to quote from an article in The Calgary Herald. Francis Reinhardt of the New York investment house, Carl H. Pforzheimer & Co., in reference to Canadian oil stocks stated:

The mood has improved and some institutions are investing in Canada again. But more who have been long-term investors, and made money here in the past, are staying out because they don't trust Pierre Trudeau not to double-cross them again.

There is the problem, lack of trust.

The best solution is a change of Government. I recognize we are not going to get volunteers for that but at least let us hear a mea culpa, at least let them admit that that was a mistake in the National Energy Program, the 25 per cent back-in, that retroactive confiscation of private property was a mistake. Blame it on Ed Clark; blame it on Ian Stewart; blame it on Michael Pitfield, blame it on somebody, I do not care, but say a mea culpa and show the world that yes, Canada does recognize the retroactive confiscation of private assets is foreign to the policy of this country, and that we will not do that again in the future.

If we do those three things, Mr. Speaker, cut red tape, reduce the net-back and admit the error so as to try to restore some confidence, we can get this sector back to work and generate not a few jobs, not a few hundred jobs, not a few thousand jobs, but tens of thousands of jobs, and restore some sense of future to the many families in this country.

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LIB

Maurice James Harquail

Liberal

Mr. Maurice Harquail (Restigouche):

Mr. Speaker, I wish to begin my remarks by expressing appreciation to the Official Opposition for providing this opportunity to speak to this motion today. As has been acknowledged by one or two previous speakers, none of the Official Opposition speakers have brought themselves around to discussing their motion or

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laying out in specific terms for the Canadian taxpayer what they would do. They have failed to identify themselves with the question of industrial development in the country.

The Hon. Member for York-Peel (Mr. Stevens) talked about, in a critical way, moneys that are going to be made available to de Havilland and to Canadair. I find that very strange that an Hon. Member from Metro Toronto would speak critically of assisting that all-important aircraft manufacturing industry.

As was asked of him by one of the Hon. Members of the New Democratic Party, when will he identify what his Party might do if it ever has the opportunity to be a Government in this country? He said not to worry, there were other speakers following him and they would flesh this thing out as they went along.

The last speaker, the Hon. Member for Calgary Centre (Mr. Andre) spent his time talking about the only subject that he seems able to speak about, namely, oil and gas. He ridiculed the Government, went on in the most non-productive, negative way, and finally closed wth his usual attack on the Prime Minister (Mr. Trudeau). What is new about that?

Since they have not bothered to address the subject they have brought to the House today, as I started to say, I appreciate the opportunity of having a few moments of debate in the House to bring the other side of the story.

In industrial policy initiatives since 1980 the Government has, through capital investment, created a favourable investment climate, assured capital availability, set up viable projects in slow-growth areas, and, in exceptional circumstances, it has guaranteed loans. The question of support to high productivity manufacturing, such as Michelin, Chrysler, White Motor Corporation, Massey-Ferguson, Ford-

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PC

Donald Alex Blenkarn

Progressive Conservative

Mr. Blenkarn:

Bail-out.

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LIB

Maurice James Harquail

Liberal

Mr. Harquail:

The Hon. Member for Mississauga South (Mr. Blenkarn) wants to oppose and criticize the system to protect those jobs in Ontario, and now attempts to interrupt my remarks. That is fine. All Canadian taxpayers will take note and good count of this performance. When there is an election and they go into that voting booth, that is when we see the results as to their appreciation of the position of Members from Ontario with respect to serious decisions that are taken to assist plants to ensure and protect those all-important jobs.

Reference was made to the amounts of moneys that have been spent on research and development. In spite of the ridicule and negative talk, the number of dollars that have been assigned by the federal Government to this all-important work is very substantial.

I want to tell Canadians about the dollars that are allocated for ITC and DREE. The new Minister for Industry, Trade and Commerce and Minister of Regional Economic Expansion (Mr. Lumley) has the responsibility for something in the order of $3 billion through current budget expenditures to aid industry and small business. The Opposition Members talk

November 15, 1982

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about paper, they talk about negative things, but never do they acknowledge the fact that this type of commitment is made. In those areas where decisions are taken we see positive results from the expenditure of those dollars. When you look at small business, FDB, ILAP, STEP, tourism, and other areas of expenditures, current expenditures are over $2 billion.

Opposition Members talk of training people. I do not know of any other country in the world that is doing as much as this Government in providing funds for proper training of men and women in preparation for the work force. That program is not in an idle position. There is greater emphasis being put upon this important aspect of having men and women ready to go into the new high-technology jobs.

In so far as National Defence is concerned, again the Opposition claims that not a nickel is being spent by this Government. When the figures are considered, they are quite impressive, at $7.5 billion for the current budget, for the year-to-year operating expenses, not to mention the Aurora Program, the Leopard tank, the F-18, and the frigate program. In the next 12 years or so in excess of $20 billion is budgeted. The spin-off benefits, the ripple effects and the jobs that will be created by the Government's commitment to these important programs have been spelled out by the Minister of Supply and Services (Mr. Blais) and the Minister of National Defence (Mr. Lamontagne).

When we reach the stage of carrying out the commitment we will take the opportunity to highlight the need for directing some of the construction of the frigate program to the dry-docks at Saint John, New Brunswick. They have proven their competence, efficiency and ability to produce an excellent product at that facility. I want to support my colleague who represents that area as well as the other Hon. Members who have identified that need. We know that very shortly hard decisions will be taken as to the location, and successful bidders, with respect to these major projects, and the expenditure to construct these new frigates for National Defence. I certainly want to express my appreciation to the Opposition for this opportunity to highlight the support for the all-important location of those contracts and jobs when we arrive at the final decision to go ahead with the actual construction of the frigates, which are under design at the present moment.

I want to take this opportunity also to flag a very important project in northern New Brunswick, the much talked about zinc refinery which is to be constructed by Brunswick Mining and Smelting, a subsidiary of the Noranda group out of Toronto. We all recall the great enthusiasm when the announcement was made in the course of a budget debate in this House that the plant was going ahead and it was going to create 1,500 person-years of work during the construction stage, and in excess of 500 permanent jobs once completed. I will not take a lot of time to talk about the positive benefits of this type of project when Canadians must find jobs.

Notwithstanding the fact that we have the downturn in the economy of Canada and the United States, not much has been said about the fact that we have three pulp and paper mills

under construction in northern New Brunswick, with a total capital expenditure in excess of $700 million. You will not find anyone in the media, CBC or anywhere else, who wants to talk about it for the strange reason that it is too positive, has an upbeat to it. It is good news. Something is happening to create jobs. At the pulp mill at Atholville, New Brunswick, alone, there are over 700 construction workers employed during the modernization stage. That plant will cost in excess of $200 million. The CIP newsprint mill at Dalhousie will have expenditures in excess of $200 million. The Bathurst Consolidated Mill at Bathurst, New Brunswick, will have expenditures in excess of $200 million. These are not projects which are just in the discussion or planning stage. The construction is under way now. The jobs have been created. The money is being spent. All the very positive economic ripple effects from these projects are under way now. But you cannot find anyone, certainly not in the Opposition or in the news media, who wants to tell Canadians the goods news about what is happening at a time when there are difficulties with the economy.

We are very proud of the fact, certainly I am, that we have been successful in convincing these companies to take advantage of the incentive grants provided by the Government through DREE and other attractive programs such as the 50 per cent tax credit, special investment on capitalization, which was brought in. This brings me right back to the urgency of coordinating and providing leadership from within the Government, the various Ministries, to ensure that the captains of the industry, one of the largest corporations in Canada, Noranda, continue with their plan to construct this zinc plant at Bel-ledune, New Brunswick.

The Minister of Finance (Mr. Lalonde) has just announced the special allocation of $500 million for job creation, which was well received, and we congratulate him on this initiative, all the time knowing that it is temporary job creation. However, the project I have referred to, of course, results in permanent jobs. I have had meetings as recently as August of this year with officials of the Noranda Group who have stated they want to proceed with this plant, that they will need the plant when the economy turns around.

What I would like to stress today is that we must make sure all the various interested Ministries are very well attuned to the urgency of going ahead with this project in northern New Brunswick because of all of the jobs which will be provided during the construction stage, and, equally important, the permanent jobs which will result upon completion. While I remain optimistic because of the fact that the senior officers of the Noranda Group have stated on more than one occasion their need, desire and interest in going ahead, because of the soft market and the high cost of money in the early part of 1982, the project appears to have been moved to the back burner, certainly it is in the position of just idling at the moment.

What I would dearly love to achieve this afternoon is to focus on this project, bring some attention to it, to stress and underline the urgency of this project. I would also like to take

November 15, 1982

this opportunity to make an urgent request of the various Ministries concerned and responsible for the co-ordination of such a massive program as the construction of this $360-million plant, and to offer, of course, my energy and assistance in continuing the co-ordination of the work that has already gone into this project.

1 had occasion to have some discussion with the people in my area during the recent Remembrance Day observances and have found that there is, of course, a continuing concern as to whether in fact the plant will ever be brought into reality, notwithstanding the jobs that are already in place in the mines there, as well as in the operation of the other smelter, constructed some years ago, which provides more than 500 permanent jobs today. With the current unemployment situation in Canada and, certainly, in that part of Atlantic Canada, I need not take the time of the House to underline how much this project means to the economy and to that area. We must continue to keep the project on the rails, to keep that pressure on the officials of the Noranda Group as well as on the Government Ministries involved so we can see that important project brought to reality.

As I mentioned earlier, when I listen to some of the contributions which were made with respect to what is happening in this country, I came to the conclusion that there is simply gloom and doom, that nothing is happening, nothing is being done. 1 have been given the opportunity to put some of the figures on record, and they are not miserly or conservative figures; they are substantial figures. These figures are not only in the millions, they are in the billions of dollars, and they are not only being talked about, they are in place. They are being expended now within the economy of the country. Those areas which are represented by Members who are able to show initiative in carrying out the work to create jobs in a positive sense, are the areas which will be able to take advantage of the benefits of those dollars which have been allocated, and they will not have to whine or cry about the situation in the country. We must appreciate and deal with the dynamic entrepreneurial skills which Canadians have proved in the past they have.

1 invite, implore and urge all Hon. Members to take a very positive look at these excellent opportunities, certainly now with the interest rates coming down and with the upturn in the economy, according to the Conference Board and the Chambers of Commerce. The new Chairman of the Chamber of Commerce, who is from Moncton, New Brunswick, was talking about his optimism with regard to opportunities to create new industry and jobs. This, if we are sincere at all, is what we should be talking about and addressing ourselves to, in a collective and co-operative way, not in a negative way at all.

My purpose this afternoon, Mr. Speaker, is to make a positive contribution to this aspect of parliamentary procedure where the Opposition has a day to have a go at the Government and bring on a resolution. However, I must say that certainly this motion has been a feeble effort, as shown by its wording which is rather convoluted. Certainly the Opposition Members have demonstrated that they are not really prepared

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to discuss the issues. They have not brought any concrete recommendations or suggestions to the Government.

1 would like to conclude by quoting the Prime Minister's speech of October of this year when he said:

If we cannot fully employ ourselves in production, we must employ ourselves in preparation to produce and transport and complete and sell when the world is ready to buy.

And if we are to be ready when the world is ready we must recognize another reality, the nature of the competition we now face. Recession has driven other countries, because they are determined or because they are desperate to compete harder to keep their share of a shrinking world market. We face a world, as I have said, where the survival of the fittest nations has become the rule of life.

That certainly will be true for Canada. I certainly hope, Mr. Speaker, that this afternoon I have been able to contribute once again toward the realization of that major project to which I made reference, one which will see the expenditure of millions of dollars and the creation of hundreds of permanent jobs, namely the zinc refinery at Belledune, New Brunswick.

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PC

Donald Alex Blenkarn

Progressive Conservative

Mr. Don Blenkarn (Mississauga South):

Mr. Speaker, I was interested in the attitude of the Hon. Member for Restigouche (Mr. Harquail) when he questioned the Hon. Member for York-Peel (Mr. Stevens) and asked how a Member can possibly attack an investment by the Government in a business in or near his community. I want to say to the Hon. Member that Members on this side of the House were not elected to come to Government with a big pot of money to bail out their constituents, regardless of how it affected the economy of Canada. They were elected to do a job. That is what is wrong with the Government the Hon. Member is with. Members opposite have the idea that somehow they were elected to come here with the attitude that Government has lots of money, let's get some for my riding because that will make me a somebody. A bail-out by the Government, a free-lunch society, and that is what is wrong. Industry is developed by entrepreneurs, not by handouts. In the handouts we have made to the Hon. Member's riding over the many years of this Government have we created prosperity? Have we put people to work? Have we made that riding a viable place where people are going and business is prospering? What have we done with one DREE program, one handout program, one bail-out program after another? Is that an industrial strategy, or is that a strategy of welfare, unemployment and lack of prosperity? I say to you, Mr. Speaker, that is the kind of strategy the Hon. Member for Restigouche has advocated, that is this Government's strategy, and that is a strategy we must now defeat.

Let us speak positively, Mr. Speaker, about where we must go as a country. First of all, I say to Hon. Members opposite that we must have an industrial strategy of freedom. We have to remove the shackles of regulation and red tape from business. If you want to make people think, you have to make them free. Look at the restrictions in the oil and gas industry. They are not increasing production in this country one iota. Look at the restrictions on farmers. Can you really say that we are producing farm products as cheap as we can? Are you really helping the young farmer get organized and build and create

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and grow in this country with the restrictions of marketing boards, regulations and red tape? Are you really improving transportation rates, making it cheaper to move goods, with one regulation after another which tells you what you must charge to move a certain product or person from one place to another? Are you really doing anything by not letting the competitive marketplace work? Are you really improving culture and the expression of opinion by one regulation after another, promulgated by the CRTC and the Minister of Communications (Mr. Fox)? Are you really improving the productivity of Canada with those regulations concerning the Post Office now before the Cabinet which will prevent municipalities having their employees reading the meter and delivering the bill at the same time, thus cutting the cost of delivering utility bills? Are you really doing something, or are you really trying to preserve a vested interest here, protect a vested interest there, and make Canada less productive, less profitable and with more people shuffling more pieces of paper than are really needed? Is it not the job of Government to be involved only where the vast public interest is at stake, not the minor public interest of some individuals who might want to be protected and maintain the status quo? Should Government not get out of these areas and give the entrepreneurial spirit of Canada freedom? Do we not need a strategy of freedom? I say to the Government, that is the strategy we need and that is the strategy we should start with.

Let us go on to another strategy. Let us talk about the strategy for investment. My friends from the New Democratic Party mentioned the Foreign Investment Review Act. It was brought up in Question Period today. There was concern that certain investors had bought certain buildings in Toronto and the rents would automatically go up because of it. What utter nonsense. Rent control is handled by the Province of Ontario. This Government should not be involved, and Members need not raise that issue in this Parliament. But what are we really concerned about? Let us look at foreign investment. The test now is whether that investment is of significant benefit to Canada. I say, Mr. Speaker, that almost every investment in Canada is of benefit to Canada. We need money to build, grow, to create plants and equipment.

We do not need to turn it off. What we should be looking at is whether the investment is likely to do significant harm to Canadians. The test should not be significant benefit, it should be: is this investment likely to do harm? Well, if it is going to do harm, then let us stop it. But almost always new investment, new technology, new people and new ideas create new opportunities for Canadians and new jobs. What we must do as part of our industrial strategy is to remove the shackles put on foreign investment.

We need to have another strategy, Mr. Speaker, the strategy of hands off. When I began my remarks I was speaking about the attitude of the Hon. Member for Restigouche. His attitude was that these Government programs were great because here he could, with his political influence, maybe get his constituents a dip in the pot.

I see it is six o'clock, Mr. Speaker. May I call it six o'clock and return after dinner?

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November 15, 1982