Mr. Hubert Badanai (Fort William):

Mr. Speaker, the budget speech, delivered in a very elegant, effective fashion, contains so many stimulating and sensible proposals that it has earned for the Minister of Finance (Mr. Turner) superlative praise. That is the way one can describe the widespread approval of the document that spells and easier load for pensioners and the disabled and more jobs for the unemployed. It is a document, sir, which marks a long advance in Canada's economic and social maturity. It spells confidence, which some people in this country had lost. The need of the time is the recovery of confidence, confidence that we can beat the unemployment problem.

The tax benefits to expand manufacturing and industrial development will certainly stimulate the business community to accept the challenge and become more successfully competitive in selling our products abroad. I congratulate the minister for his refreshing faith of which, unfortunately, members of the opposition appear to have so little.

In a recent news release, the Canadian Chamber of Commerce expressed pleasure with regard to the constructive budget presented by the Minister of Finance. I quote:

"The measures outlined to stimulate Canadian manufacturing and processing industries should do much to reduce unemployment and to make our competitive position stronger in domestic and international markets," said Neil V. German, president of the Canadian Chamber.

The Budget-Mr. Badanai

In particular, the overall effects of the tax measures in the budget will help Canadian industry to offset the adverse effects of DISC.

The Chamber was also pleased with the measures proposed in the budget to relieve the financial burden borne by those groups hardest hit by inflation such as pensioners, veterans and students.

A review of the debate on Bill C-201, a measure to provide for control of foreign ownership of Canadian companies, reveals some misunderstandings but some of the speeches were reflections of pure anti-Americanism. Fortunately, the Minister of Finance does not see it that way. The unrealistic dream of members of the committee for an independent Canada of eliminating foreign ownership is running against a contemporary world trend to internationalism and, in any case, their theories are not valid in the world in which we live today any more than when we needed foreign capital to develop our industries and create jobs to meet the needs of an expanding and growing population. Had it not been for American capital, there would not have been an iron ore mine in northwestern Ontario. I am referring to the development of the Steeprock Iron Mines in the town of Atikokan, 130 miles west of my constituency. Atikokan would still be a small hamlet. It was risk capital that insured jobs and prosperity for hundreds of people working in that area.

I wish to quote from an editorial that appeared in a recent edition of the Calgary Albertan:

In the much-discussed subject of foreign ownership of Canadian industry to that of foreign ownership of Canadian land, both crown-owned and public, there are many grey areas. While this, on the surface at least, appears to be a laudable endeavor, the problems which will arise if the policy is adopted, first on a national, and then on a provincial scale, can be enormous.

If the respective governments really intend to go whole hog on the latest bit of Canadian nationalism, two important points will have to be determined to the satisfaction of all. These are what constitutes a "foreigner," and what constitutes a "Canadian citizen."

In Canada, which will soon reach a population of 22 million, or just about one-tenth of the population of the United States, there are millions of British subjects who are not Canadian citizens, if the narrow interpretation of the word is to be employed. In the first row are the English, Scottish, Irish and Welsh.

Then come all the immigrants from the 23 Commonwealth countries, white, black, and various shades of brown.

As Canada is a member of the British Commonwealth, all of these people possess the same legal rights as native-born Canadians, once they have been accepted for domicile and have settled down in this country, and as such they are entitled to all the rights and privileges of native-born Canadians and those who have emigrated from other countries outside of the Commonwealth but who have acquired Canadian citizenship after residing here for the period prescribed by law.

The first thing that has to be determined therefore before governments get too deeply involved in the land ownership problem is-what constitutes a "foreigner," and whether British subjects who do not hold citizenship papers are to be barred from buying crown lands. Does it also mean that no person except those who hold Canadian citizenship papers are to be permitted to homestead on crown lands?

The new restrictive legislation now under review by provincial governments across Canada, is merely another chapter in the "Keep the Americans out" policy so popular nowadays.

However, the majority of the governments affected do not possess the intestinal fortitude to name the country they are legislating against, so the legislation will be such as to confine the sale of crown lands to "Canadian citizens." It would be very injudicious to name the Americans in legislation of this kind when the whole

3056

June 12, 1972

The Budget-Mr. Badanai

country is still desperately anxious to enlist the aid of American capital in the continued development of natural resources and industry.

I can understand why British Columbia, with its miles of ocean front, lakes, plus a myriad of islands, is anxious to reduce the volume of the sale of land to the Americans.

I too have toyed with the idea of following the birds to Victoria, or to acquire a small piece of Salt Spring Island, and there to be nuzzled by the balmy Pacific coast breezes. Every time I think of Alberta's seven to eight month winter, I find it difficult to understand why the Americans, or any other group presently being designated as "foreigners," would be interested in trying to buy Alberta land at seriously inflated prices.

Those who did buy land in the early days of the oil invasion at moderate prices, now possess a solid investment, but times are different now in the wake of the urban sprawl and inflated land values.

I thought that the Alberta government displayed great prudence when it did not rush passage of amendments to the Land Act, at the recent session of the legislature. This is a problem which is by no means as simple as it may appear.

Ever since the North West Mounted Police rode west in 1874 to bring law and order to what is now the province of Alberta, Americans have been prominent in development. They brought in the first big cattle herds from Texas in the early 1880's and in the boom years prior to the First World War, they poured across the border in an unending stream, bringing their furniture and livestock with them. Later, they provided most of the capital for the development of Alberta's oil and gas resources, and practically all of the first geologists and drilling crews were either American or American trained.

For this one reason alone, I find it impossible to join in the "Yankee, Go Home" cry presently being chanted by the Johnny-come-lately minority, whose contribution to development still has to be assessed.

The opposition is forever pounding on the gloomy side of the unemployment picture which, of course, everyone admits is not what the government had hoped it would be. On the other hand, the prophets of doom are trying to make it look far worse than it is. For example, when estimating employment statistics for young people in the 14 to 24 age bracket, the difficulty is to arrive at anywhere near the number of unemployed.

Students who register with Canada Manpower and placement officers at the various colleges and university offices, often do not notify the agency when they obtain work. There is no way of checking up on students who go out to find jobs by themselves. Many students who applied for permanent positions have not notified the manpower centres of their decision to return to postgraduate school in the fall. Several thousand students, unsuccessful in their job search, are flying to Europe and elsewhere and therefore cannot be classified as actively seeking employment. Some unemployed students have taken temporary summer work, or obtained "Opportunity for Youth" grants, and cannot be classified as permanently placed, while others wait until summer is over before looking for work.

Many corporations delayed their hiring this spring. They are still going through the process of hiring at the present time. Some universities now operate on a co-operative plan which staggers the graduates' entry into the labour market to other months of the year. The latest unemployment figures for the 14 to 24 age group available are for March and indicate an unemployment rate of 12.6

per cent, or about 273,000. This compares with 12.9 per cent jobless students a year ago. On the whole, bachelor-level graduates in commerce and business administration are finding jobs; in some instances, there are not enough commerce graduates to meet the demand from the accounting profession. Graduates from the professional schools of medicine and dentistry are always in demand, but others, especially those with just a B.A., find it most difficult to obtain jobs.

Then, there is the woman factor. A few years ago married women did not, as a rule, enter the labour market when their husbands were gainfully employed. Now, even though the husband may have a good job, the wife wants a job too, and when unemployed she registers at manpower centres as well, thus compounding the unemployment figures. Lest I be accused of being against a married woman seeking employment, I should hasten to say that she has a right to look for a job, if family conditions will allow. But let us also realize that the jobless figures do not really mean the disastrous conditions that the opposition are trying hard to convey to the people of Canada.

With respect to immigration, I should at once express my satisfaction with the new Minister of Manpower and Immigration's attitude toward applicants for admission to Canada as landed immigrants. I admire his forthright statement aimed at granting a little more flexibility in the area of personal judgment to immigration officers, such as boosting the point ratings, if necessary, given previously to unsuccessful applicants; in other words, using the criteria with flexible judgment and compassion.

With regard to the Sedgwick report of October, 1970, prepared by a Toronto lawyer who has never had the experience of being an immigrant, I suggest that it be shelved for some other era when Canada will have doubled its present population. The minister, very properly, rejected the contention that visitors are abusing the relaxed immigration provisions; and I would recommend increased reliance on the discretionary judgment of overseas' immigration officials, who are, by and large, the best trained and responsible individuals in the public service. I was pleased to take note of a substantial increase in this year's budget for increasing the number of officers, and of expanding facilities in our immigration offices around the world.

I should also add that the Prime Minister (Mr. Trudeau) should be congratulated on the appointment of the present Minister of Manpower and Immigration (Mr. Mack-asey) who, when he was Minister of Labour, showed his capacity for commiseration in the face of injustice and who, in his new responsibilities, meets the problems of his department with dedication and compassion.

Canada, as a nation, will be 105 years old in less than two months from now. But Canada as a place for European settlement dates back to 1534 when Jacques Cartier came to our coast seeking a seaway to the Orient. He found, instead, a country, vast and beautiful, beyond his dreams. After the first settlers came to this land, the French and the English they were followed much later by streams of immigrants from almost every country of Europe bringing to our shores millions of men and women of many other cultures who made their homes here and helped in the development of what is now a great nation.

June 12, 1972

Baron Tweedsmuir, one of the best known Governors-General of Canada, once said when speaking to Ukrainian-Canadians:

I want you to remember your old Ukrainian traditions, your beautiful handicrafts, your folksongs and dances and your folk legends. Your traditions are all valuable contributions toward our Canadian culture which must be a new thing created by the contributions of all the elements that make up the nation.

It is with this thought, Mr. Speaker, that I express the gratitude of countless immigrants who are now enjoying the privilege of being Canadians.

A dedicated group of citizens in the City of Thunder Bay have taken on the task of organizing a campaign for funds to establish an arts centre which would include an auditorium. This city of 107,000 people lacks a suitable theatre complex to accommodate an average audience of 1,500 people. Every year those in charge of the music festival are hard-pressed to find accommodation for the various events. The various arts' societies, such as the Cambrian Players, the Lakehead Symphony Orchestra and others are experiencing difficulty in finding suitable quarters for their performances. The arts centre complex is also needed for teaching all facets of the arts, workshops and convention meetings. The federal government, under the Local Initiatives Program, has made a grant of $18,720 toward hiring a co-ordinator, a secretary, and ten surveyors to evaluate the need of the community cultural program. For this, the city is very grateful. The Mayor has indicated that the corporation will lend active support and financial assistance to the project it is hoped, which, once underway, the federal government will also assist with a grant or a loan so that this worthwhile project may be brought to fruition.

One of the most exciting projects that has ever been voiced by a Prime Minister of Canada, ranking with Sir John A. Macdonald's vision of a transcontinental railway a century ago, is a proposal outlined by the Prime Minister to build a highway to connect existing stretches of roads from the border of Alberta, at the 60th parallel, to the Arctic Ocean, at Tuktoyaktuk, a distance of 1,050 miles. In a letter to the Globe and Mail of May 2,1972, Mr. P. Pepperrall, a professor of history from Willowdale, said in part:

In the decade of the 70's nearly a century ago, a dream of similar magnitude that was to open transcontinental communication and to perpetuate a Canada from sea to sea was also denounced as a "preposterous proposition", and "an act of insane recklessness". After all, Sir John A. Macdonald's proposed Canadian Pacific Railway to remote British Columbia would be a road to nowhere of forbidding length, built with money he didn't have, over an undertermined route, and through terrain as formidable as any in the world.

Yet these very obstacles, which people ignorant of the Canadian identity considered to be insurmountable, were the very elements which have characterized the Canadian existence, made its people unique, and impelled them to meet the challenge that was the CPR. The sense of interminable distance, lonely space, and rugged vastness was as much a distinctive part of the Canadian character and consciousness as the country that had created it. And to have failed in response to this challenge that was Canada would not only have betrayed the natural tendency and

The Budget-Mr. Coates

uniqueness of the Canadian identity, but also have stifled the thrust that was to carry it as a nation intact over the threshold of the twentieth century.

Canadians might do well to remember the heritage of our Canadian identity, and in particular the solitary figure of Sir John A. Macdonald earnestly making his proposal for the CPR. Sir John was the "old chieftain" whose national dream culminated in the Canada of a century ago, but the Prime Minister may well be the "new chieftain", whose vision of the north builds a Canada for the twentieth century.

Mr. Badanai:

The ultra nationalists and socialists do not like voices of people like the late Ross Thatcher or of the premier of Quebec.

Mr. Badanai:

Under the new policy, foreign investment will continue to play that vital role and, notwithstanding Mel Watkins, Walter Gordon, Mel Hurtig and the whole Committee for an Independent Canada, our identity will be as secure as it has ever been. Mr. Alfred Powis, President of Noranda Mines, speaking at the annual meeting of

shareholders of the company held on April 28, 1972, had these significant observations to make:

Canadians are quite rightly concerned about how to provide the additional employment needed to accommodate the fastest growing labour force in the industrialized world. Many proponents of an industrial strategy start from the assumption that primary industry cannot provide the level of employment needed and that we must foster more rapid growth in the manufacturing and service sectors.

In its more extreme form, the argument assumes that Canada has a chronic shortage of capital and surplus of labour. It alleges that past national policies designed to stimulate investment, such as tax incentives, have fostered capital intensive industries such as mining at the expense of other sectors of the economy. It is said that these industries pay very little in taxes, and in addition have not only created too little employment but have also resulted in foreign domination of our economy. Therefore, the conclusion is that we need a national industrial strategy which will divert capital from primary industry to the secondary manufacturing and service sectors where many more jobs will be created per unit of investment. To the extent that this reduces or eliminates the growth of such industries as mining, it is said that nothing will be lost in the long run because our resources are vital to the rest of the industrialized world.

Such arguments have a superficial plausibility, and they are being repeated often enough that there is some danger that they are becoming accepted as conventional wisdom, at least in certain influential circles. They are probably the reason why the mining industry fared so badly in the so-called tax reform exercise. In fact, these arguments are dangerous nonsense and, with respect to the mining industry, they are based on official statistics which are fragmented and highly misleading.

Another point to consider is the extent to which the rest of the world really depends on our natural resources. In some circles, there seems to be an assumption that we have a sort of monopoly on natural resources, and that we can hold the rest of the world to ransom for them and use them as bargaining counters in international trade negotiations. As far as mine products are concerned, this is sheer nonsense. Although we are the world's largest producer of nickel and zinc, 80 per cent of the world's known reserves of these metals are outside Canada, and in all other important metals our share of known reserves is considerably smaller. Moreover, the statement that the rest of the world is running short of mineral reserves so that ours will become increasingly valuable is untrue in the case of mine products. Leaving aside the potential for new discoveries on land, there are almost limitless reserves of most metals on the floors of the oceans which are now close to being within technological reach. Clearly, our mineral resources are only an asset if they are found and developed, and if we fail to do this the rest of the world will simply pass us by.

The last point to consider is the question of foreign ownership of the Canadian mining industry. A great deal is made of the figures produced by Statistics Canada which purport to show, for example, that 80 per cent of our smelting and refining capacity is foreign controlled. However, as indicated previously, these figures are fragmented and highly misleading. The fact is that Canadians control 67 per cent of our copper refining capacity, 70 per cent of zinc capacity and 100 per cent of lead capacity. It is only in aluminum and nickel that so-called foreign control is predominant, and this is because Alcan and International Nickel are considered to be foreign companies because somewhat less than half of their shares have been owned in Canada. However, if the trend of increasing Canadian ownership of these two companies continues, a majority of their shares will soon be held in Canada and the statistics will then show that all major sectors of the smelting and refining industry are overwhelmingly controlled in this country. This is not to argue that there is not an important degree of foreign ownership in Canadian mining. There is. But the real point is that there is also a substantial and healthy Canadian component, and its relative importance is growing.

Thus, the arguments raised against continued emphasis on development of our resources simply do not stand up. The best

May 30, 1972

national industrial strategy is to concentrate on the things we do well, where we have a demonstrated record of international success. This is not to deny the importance of the manufacturing and service industries. We obviously need balanced growth, and this is the direction in which any national strategy should point us. However, unless we stimulate the development of primary industry, we are likely to have no growth at all.

The late Ross Thatcher, former premier of Saskatchewan, argued eloquently for many years against any attempt to halt or reduce the flow of much needed foreign capital for the development of Canadian resources and secondary industry. While members of the NDP, of the waffle group as well as others advocated buying back Canada, and they were making loud noises in the province of Ontario especially, Premier Thatcher was heading to the United States to tell American businessmen that, so far as he was concerned and Saskatchewan was concerned, they were welcome in Canada as good corporate citizens.

Mr. Badanai:

However, those people living in areas where large amounts of capital are needed to provide jobs and improve living standards will be happy. The people of northwestern Ontario, where I come from, need more capital. They do not care where it comes from since it is needed to provide jobs for the people of our province.

Mr. Hubert Badanai (Fort William):

Mr. Speaker, I am very much interested in this particular bill, which is to provide for the review and assessment of acquisitions of control of Canadian business enterprises by certain persons, because it deals with a question of great concern to areas where foreign capital is needed to establish a business or an industry, and which have little or no appeal to Canadian investors, to provide jobs and improve local conditions. After several months of study the Minister of National Revenue (Mr. Gray) made a statement of policy designed to regulate foreign investment in takeovers of Canadian based enterprises. I was rather pleased that his statement did not take the hard line of the supernationalists. Instead, he brought forth a sensible document of policy which the majority of Canadians can and will support.

I express the hope that the minister entrusted with the administration of the act will use discretion and common sense. I have great faith in the present minister. I do not believe he will jeopardize the good that many companies, with shares held by foreign investors, are doing for the communities in which they are located. But suppose another minister were to lean heavily on the ideas of the so-called Action for an Independent Canada, it would then become very difficult for companies, however successful, to expand their businesses in that their shareholders, though a minority, could be classified, at least technically, as foreigners. Of course, I would shudder to think what could happen if, by a fluke of circumstances, the NDP were to win power and form the government some time in the future. That is a very remote possibility, but nevertheless it would be a disaster.

I am therefore concerned, and very much concerned at the possibility, however distant, that virtually any acquisi-

Foreign Takeovers Review Act

tion, even by a minority interest, in any Canadian business, by a non-resident or by virtually any company, will be subject to the almost unlimited discretion of the Minister of Industry, Trade and Commerce (Mr. Pepin). This thought was very well expressed in an article on foreign ownership policy which appeared in the May 22 issue of the Financial Times. On the other hand, I am encouraged to think that after due consideration of all the angles of this very important bill, the final draft of the legislation will allow capital to start new enterprises, or expand existing ones that are foreign-owned or to develop Canadian resources, to continue to enter the country. For those of us who appreciate that this type of investment has stimulated Canada's economy in the past and contributed heavily to the nation's present state of prosperity, this is good news. It will not please those who believe that foreign capital is a threat to our independence.

In the future, Mr. Speaker, Canadians who own enterprises in this country and wish to sell them to Americans will be subject to government scrutiny, and will be permitted to do so if it can be shown to be in the national interest. The policy reflects the expressed views of the new Minister of Finance (Mr. Turner), that given a choice between extreme nationalism as expressed by some members of the Independent Canada Committee and prosperity, Canadians will choose prosperity. Of this, I have not the slightest doubt.

The opposition and the news media expressed impatience, which was not really justified, at the delay in introducing this measure. People will realize that the time spent by the government in reaching these conclusions was time well spent. It remains for Canada to continue to attract foreign investment where it can do the most good and to ensure, in every way we can, that the prime benefits accrue to Canadians in terms of prosperity and jobs. Under the new policy, Canada will continue to offer a hospitable climate for foreign investment. The difference between Canada and so many of the other developed countries is that we have, still, so much left to develop and we can use so much help in doing the job.

It should like to quote from the report of the Minister of National Revenue, which sums up the question in these words:

Important benefits have been and can continue to be obtained from foreign direct investment. The data comparing the performance of Canadian-controlled firms to foreign-controlled firms indicates that Canadian control of a business is not, in itself, a guarantee of sound performance; and is not, therefore, a satisfactory means of achieving Canada's broad national objectives.

For instance, general legislation providing for 50 or 51 per cent Canadian ownership, either in the economy as a whole or in particular industries, can be very costly to the economy.

Professor Melville Watkins of the NDP said that the remedy for foreign ownership in Canada was a system of complete state socialism. Mr. Watkins faced the issue in his "Waffle Manifesto", but that document was too hot for his own New Democratic Party to handle. What we have, in these new proposals, is a traditional Canadian solution designed to give us maximum benefits at minimum cost. Consideration has been given to the fact that the provinces attach high priority to rapid economic development

May 30, 1972

Foreign Takeovers Review Act

and are inclined to feel that Canada will continue to require a substantial volume of foreign investment to achieve this objective. I am referring, particularly, to those provinces which possess large mineral, forest, and energy resources and which have been keen for investment funds. For these provinces, foreign investment means an important source of economic development and jobs.

As an example, Mr. Bourassa, the Premier of Quebec, a strong opponent of economic nationalism, thanked the Canadian government for its prudence in limiting itself to "restrained" controls. He said that his government will not accept further controls in the future which could hamper the inflow of job-creating foreign investment. "We don't want to close the door on any foreign investment which will bring more jobs for more Quebeckers" he said; "We can't afford to refuse."

An economist, Ian MacDonald, offers this answer to the argument that Canada is trading away her independence:

As long as non-residents are behaving as good corporate citizens, there is no danger ... If they are not, the government is free to control them. American capital has not come to this country as part of an imperialist plot and Parliament remains sovereign as the appropriate guardian of the public interest should foreign-owned firms behave in a way which threatens Canadian independence or sovereignty.

Briefly, the benefits which have accrued to Canada from foreign investment have given us, first, an inflow of capital without which Canada could not have developed to the present state of economic stability; second, access to the United States managerial skills which have been considerably more developed than those in Canada; third, the benefits of the most advanced United States technological knowledge in fields which Canadians would have required long years of research to develop on their own; and fourth, direct access to the vast United States market for many of our products.

In a special study prepared for the Royal Commission on Canada's Economic Prospects in 1957, Professor Irving Beecher and Professor S. S. Reisman summarized the advantages in this way:

From the search by foreign investors for profit, Canada has received a supply of capital, enterprising skills, technological know-how, and markets which for magnitude, quality, and stimulus to economic growth, has probably never been surpassed anywhere in the world.

Canadian nationalists have been very active in recent years. Walter Gordon, Mel Watkins, Mel Hurtig, the Committee for an Independent Canada and other spokesmen have made "nationalism" the fashionable wisdom. Mr. Crump, the retiring Chairman of the Canadian Pacific Railway, during the course of an interview recently, said that he has no quarrel with foreign ownership and that money has no nationality.