Mr. Gillespie:

-when man can destroy himself with the bomb and depopulate with the pill, when the sexual revolution can rock the very foundations of great religions, when the gap between the rich nations and the poor nations grows wider and when, against this background, even the most tentative steps in the direction of parliamentary reform are resisted in the name of freedom, is it any wonder that people ask how contemporary is the parliament of Canada today and, worse still, how relevant?

This sovereign body, it has been emphasized, protects our freedoms and the personal liberty of all Canadians as no other agency or institution does. Its ritual, its procedure, its symbols all emphasize that it won its freedom from executive power. Yes, Mr. Speaker, but the pace of events has quickened. What is needed now is a realization that the freedom to change is the most important freedom of all. What is needed now is the power to engineer change. I say to the opposition, do you not recognize change when you see it?

We operate as if television had never been invented, with no apparent awareness that a two-minute interview on the national network is more effective than an hour's debate. Let us recognize the importance of the electronic media. And let us be thankful that it can inform the people in a way that we cannot.

[DOT] (3:50 p.m.)

There is an enormous credibility gap in connection with the question of government efficiency, and it will remain a yawning chasm until such time as we place first priority on the efficiency of our own operations in this house. How can we criticize waste and poor productivity in the government service if we do not first of all raise the level of our own productivity? If we fail to convert this house into an effective instrument of change we shall have failed ourselves, we shall have

November 5, 1968 COMMONS

failed to understand democracy, we shall have failed to understand the mood of our country, we shall have failed the people of Canada.

We must, Mr. Speaker, make the most of the opportunity to build a stronger country with a greater culture by having a truly bilingual government. Both here and abroad, Canada will be recognized as a country in the lead.

Let us, as Canadians, welcome change for the opportunities it provides. Let us build our country with a distinctively Canadian entrepreneurial spirit.

Mr. Alastair Gillespie (Etobicoke):

Mr. Speaker, in this my first speech to the house I should like to draw your attention to the fact that Etobicoke is a new riding. It forms a large part of the old riding of York West which was represented with such distinction in this house by Mr. Robert Winters.

The lands, rivers and people of this area played an important role in the early development of our nation. Over three centuries ago it was the place for commerce, exploration and discovery. Its people looked to the future rather than to the past. They looked for and sought a future better than they had. They sought the good life for themselves and for others.

DEBATES November 5, 1968

And so it is today, Mr. Speaker. Our concern for the future must be based on the same principles; and it is in this context that I should like to talk about some of the conditions that we have to create in Canada for our future development. In particular I want to refer to creating conditions for investment, for fostering a strong Canadian point of view, and for sustaining confidence in our institutions, starting with the need to reform this house and its procedures.

The case against inflation has been made so many times and so cogently, Mr. Speaker, that I do not propose to repeat the arguments here except to draw your attention to the problems of government financing and oi financing our future economic growth in the private sector.

There are some who say that full employment and inflation go hand in hand, that one cannot enjoy the benefits of the one without paying the price of the other. They would promote the idea that a little inflation is a good thing, that it is good for business, that it promotes prosperity and keeps things going. In my view, Mr. Speaker, nothing could be more dangerous. This is the most corrupting philosophy of them all-short term euphoria, like the pathetic rationalization of the addict in the early period of his addiction protesting the wisdom of his own foolishness. Over a period of 15 years a 1 per cent deterioration per year in the value of our money amounts to a discount of 15 per cent. What man is going to lend $100 now, Mr. Speaker, if he can expect in return only $85?

The funds that are used to finance government deficits and extra budgetary needs, to purchase government bonds, federal, provincial or municipal, are mostly the collective savings of millions of Canadians. They are the premiums that are paid on life insurance policies and the deductions made from the weekly pay cheque for future pension benefits. Yet there has been a tendency in many quarters to identify those who purchase bonds with the "haves", as if the beneficiaries of the borrowings were the "have nots". Surely it is time to recognize that they are one and the same person.

The point to be made is this. Federal government extra budgetary needs plus provincial and municipal government spending are going to require enormous sums each and every year. Little of this development can take place unless we show the lenders that we can control inflation. And for the same reasons, Mr. Speaker, corporate expansion

November 5, 1968

will be curtailed unless we prove to those who would finance corporate borrowings that we are serious about controlling inflation. Obviously the uninterrupted series of budgetary deficits over the past ten years does not build confidence. That is why the minister's program for a budgetary balance by the end of the next fiscal year is so important.

Federal government policy must be designed to bring about and preserve an orderly capital market. This requires not only the management of its own debt and its own budgetary requirements; it requires on the part of the federal government a full appreciation of the capital needs of the provinces and municipalities and also the needs of the private sector. Just as in the tax fields arrangements must be worked out with the provinces so, too, is it important that there be collaboration on capital needs. There is, after all, a limited supply of money.

Nor can Canada rely solely on domestic sources of capital. Indeed, in recent years Canadian borrowings abroad have averaged close to $1 billion a year. Our ability to go to the United States market or to European markets will depend on the confidence we earn abroad, on confidence in our competitive position which must not be eroded by inflation at home, on their confidence that the risks of devaluation are negligible and that we are not always just about to change the rules.

Canada cannot insulate itself from world economic conditions and there is no use pretending that we can. This is all the more reason, therefore, to examine our vulnerability in areas which we ourselves do not control.

[DOT] (3:40 p.m.)

Within the last year there were three major international developments which seriously damaged confidence in the world's monetary system and in the Canadian dollar. I refer to the devaluation of sterling, to the United States guide lines and to French efforts to force devaluation of the United States dollar in terms of gold. Fortunately, after a rather uncertain period the value of the Canadian dollar has strengthened. This is not a time for complacency. There are many uncertainties facing the world monetary system today. Let us not forget that Canada is more vulnerable than most countries because of the large part, the enormous part, proportionately four times that of the United States, that foreign trade plays in our gross national product. Let us recognize that we rely at the present time on foreign capital flows to finance our balance of

The Budget-Mr. Gillespie payments. For these reasons we are vulnerable. For these reasons, too, I hope it will be possible to negotiate with United States authorities the removal of the upper limit of $2.6 billion on our foreign exchange reserves. We need this flexibility.

These truths, the need to establish confidence in our capital markets, the need to recognize the dangers of inflation, are central to the whole question of the future development of Canada. Yet in this area the two main opposition parties seem to me to be peculiarly inconsistent, though consistently ambiguous. They appear to have turned their backs on both monetary and fiscal measures. They seem to have discarded completely the idea that interest rates are an effective tool of monetary policy. Equally, they appear to ignore fiscal measures. They have been curiously silent on the desirability of a balanced budget. They deplore the effects of inflation but deplore even more doing anything about it. They profess, but they do not inform. Is this Progressive Conservatism at its modern best?

The N.D.P., on the other hand, seem to regard deficit spending as a way of life. They remind me of a man who would write a cheque for his favourite charity on a bank account that did not exist. Yet they talk of the eroding effects of inflation like the convivial roustabout who, anticipating his own overindulgence, lectures others on the predictable after-effects. When, for instance, has a spokesman for the New Democratic party publicly taken a position against wage increases which exceed productivity increases? When has a spokesman of the New Democratic party stated publicly that wage increases which exceed productivity increases are inflationary and therefore have to be paid for by every other wage earner in Canada- indeed by all Canadians? The N.D.P. behave as if cost-push inflation never existed.

I should like, Mr. Speaker, to turn now to the question of entrepreneurial spirit, initiative and enterprise from the Canadian point of view. As Canadians we need to concentrate on doing what we are best equipped to do. We can stimulate entrepreneurship through leadership by government, by insisting on a more efficient use of our research and development efforts and by insisting on a more selective effort. We have too often tried to cover too broad a spectrum and we have not concentrated on certain unique opportunities. Somehow or other we seem to have got caught up in a share the wealth approach to

November 5, 1968

The Budget-Mr. Gillespie investment in research, a something for everyone philosophy. I think the time has come to apply a very much more selective approach to research expenditures, and I think this approach should be tied directly to the idea of originality, to sponsoring Canadian originality.

We need to give our investment a Canadian slant. The character of a nation, the distinguishing quality of its people, is to be found in how it comes to terms with its environment, how it responds to the land, to the weather, to climate, to nature, to its natural resources, what it builds its houses out of, what it eats, how it works to sustain life above the subsistence level, how it plays, what it writes, sings and paints-in a word, in its capacity for originality.

We should realize that our originality has been subverted by our ability to obtain the benefits of foreign innovation. The Watkins report focuses on one aspect of this, the prevalence of the manufacturing licence, of the royalty agreement and of the engineering agreement. In return for a royalty on sales and, usually, an undertaking not to export, a Canadian company obtains the benefits of foreign research and development for its exclusive use in the Canadian market. This is the easy way; it takes the risk out of research because it requires none. In my view this particular device for obtaining foreign knowhow has had a more serious effect on Canadian entrepreneurial attitudes than any other single factor. The effect has been far greater, for example, than that of foreign ownership.

At the same time we must continue to concern ourselves with the development of our resources with Canadian ownership. That is not to say that we will be able to do the job alone. We must provide an hospitable climate for foreign investors, but we must also insist that future Canadian resource development will be undertaken in partnership with Canadians.

In this connection I think it most significant that the recent study completed by York University for the Toronto Stock Exchange indicated that there would be a serious lack of Canadian equities within five years. More particularly, the demand on the part of Canadians for equities will outrun supply in a ratio of approximately two to one. This has serious and far reaching economic implications in terms of foreign ownership and balance of payments difficulties.

One does not have to argue the case for efficiency in industry, nor does one have to

IMr. Gillespie.]

argue the case for efficiency with the Canadian public. How curious, Mr. Speaker, that one should have to argue the case for efficiency in this house with hon. members opposite.

At a time when man can contemplate the surface of the moon from a transmitter he has planted there, when he can watch in the comfort of his livingroom the carnage of war as it happens on the other side of the earth, when jumbo jets and supersonics will shortly revolutionize his mobility in the air and shatter his tranquility on the ground-

1. How is the degree of air pollution from aircraft engine exhausts determined and what measurements are made?

2. What is considered a dangerous level of concentration?

3. Have measurements been taken at Malton International Airport and. if so, what are they?