Mr. Hovdebo:

Mr. King was defeated by the CCF in 1945 in a close election that hinged on the soldier vote. There is

December 13, 1979

The Budget-Mr. Hovdebo

many a veteran in Prince Albert who proudly proclaims that his vote sent Mr. King back east.

Mr. Speaker, I should like to say a few words about the constituency of Prince Albert. It is basically a rural constituency with 60 per cent of the voters living outside the city. It is an historic city, the oldest in Saskatchewan, situated approximately in the center of the constituency on the banks of the North Saskatchewan River in the parkland area of the province. It is a beautiful city in a beautiful setting, small enough to be friendly and large enough to provide facilities for the good life. Although forest products and northern development are now contributing considerably to the economy, Prince Albert is very closely connected to the agricultural communities which surround it. The constituency includes some of the best farm land in Canada, Domremy, where I was born, Birch Hiils, Kinistino, Wakaw, Shellbrook; Blaine Lake-where Jack Horner was born-Debden, Rosthern and Waldheim.

Prince Albert is the gateway to the north of Saskatchewan, where you will find some of the best fishing in Canada. An international playground, it includes the Prince Albert National Park. That area also has tremendous possibilities for development.

After the Red River rebellion, Mr. Speaker, many of the Metis moved to Saskatchewan and settled on the southern branch of the river. The two Saskatchewan Rivers meet about 20 miles east of the city. The Metis settled in St. Louis, St. Laurent, and Batoche. Duck Lake, Carleton and Batoche were, of course, the sites of some of the battles of the Riel rebellion. Scattered throughout the riding are 12 Indian reserves, mostly Cree, and one Dakota Sioux.

The Indians of northern Saskatchewan are strong, prosperous, and well organized. They contribute a great deal to the communities of that area.

I could spend a great deal of time detailing the hopes and needs of the people of Prince Albert on an individual and group basis. For instance, the Indians would like better housing and more freedom to control their own destiny. They are hoping to have the Saskatchewan formula implemented in dealing with their land entitlement claims. I support all those hopes and needs, and encourage this government to proceed as quickly as possible to their fulfilment.

The farmers of Prince Albert are being squeezed by increasing costs and insufficient prices for their products. Fuel price increases and high interest rates are hurting them. Besides that, the whole industry is being squeezed by the inability to transport grain, and by the abandonment of rail lines which are necessary for the economic delivery of grain. The cow-calf industry may look good at the moment but it is still reeling from four bad years. Farmers need legislation which will allow them to survive. The survival of farms, as we know them in Saskatchewan, is the survival of a way of life.

In Prince Albert members of the Public Service Alliance are feeling insecure and uncared for. Morale is low and many positions are going unfilled, to the detriment of the effective work of whole departments. A policy needs to be articulated

[Mr. Hovdebo.)

and implemented which the Public Service considers fair and equitable.

Labour is also feeling the pinch of interest rates and the general depression of the economy. Workers' purchasing power has been further cut by the increase in unemployment insurance premiums and increased costs of fuel. Construction workers are being laid off and look forward to a very dismal future brought on by the high mortgage rates which have curtailed housing starts.

Small businesses are also in need of protection and encouragement. 1 commend the Minister of Finance (Mr. Crosbie) on the long overdue move to allow the salaries paid to spouses to be deductible. That is some help, but will not overcome the other effects of the budget.

These are some of the groups of people in the constituency who have needs and hopes and look to this government to help fulfil those hopes. Instead what they got is this budget.

This budget does not deal with the real culprits in our system. It does not attempt to deal with inflation to any extent. The major factor in increasing costs now and in the future will be the interest rates being charged. Those interest rates are causing inflation, hardship, and bankruptcy. Let me be more explicit, Mr. Speaker.

During the recent election campaign in Prince Albert, I talked to many home owners who were worried about the effect of high interest rates on their mortgages. Their present rate on a mortgage is 10 per cent or less. Those rates are to be renegotiated, if you can call it that, up to 14% per cent or 15 per cent. On $40,000, 15 per cent means $500 interest. Many of their payments will be $500 per month before principal.

Let me be still more specific: one young couple with three children are planning to sell their home because their mortgage comes up for renewal this month. They cannot afford an increase. Their house will go on sale on a buyer's market, due to the sudden drop in the sale of houses. They are not even likely to be able to cash in their five-year equity. There are thousands of other young home owners just like them.

Most farmers on the prairies, regardless of the type of farming or even the size of the farms they operate, depend upon demand loans for operating at certain times of the year. The margin between cost of production and return from sales is very slim in many types of farm operations. The farmer has a choice of cutting back production or losing more money on a bigger operation. The extra 4 per cent to 5 per cent of interest on operational money will cut that margin still further, or may even eliminate it. If the losses go on long enough, the farmer will eventually be forced to sell. One more farmer will have left the industry. One more family will have been forced to change its way of life. One or two more people will be out looking for work that is not to be found.

Small businesses are very important to the economy of Prince Albert. I agree with a statement in the December 11 budget speech which says that "the small business sector is one of the great strengths of this country". Small businesses are good for Canada because they are usually Canadian-owned

December 13, 1979

and operated. Interest rates also have a devastating effect on small business. Again let me be more explicit. In Prince Albert last month, a dealer in carpets closed his shop. He had approximately $100,000 worth of carpets in stock. However, the interest on those carpets increased to the extent that he felt he could not afford to stay in business. There are thousands of stores like his. I predict a rash of bankruptcies among small businesses during the next year.

Interest rates have a domino effect. For example, a lumber mill closed a month ago at Meadow Lake just outside of my riding, which put approximately 100 men out of work. The mill closed down because it could not sell its lumber. The lumber yards quit buying lumber because the construction people stopped building houses. Orders for houses dropped drastically. The lumber yard laid off men because they were no longer needed. The house construction industry was not building houses because sales had dropped off. Again, men were being laid off because few houses were being built. Real estate people were having difficulty selling houses because mortgage rates were too high.

We all know the story of the battle that was lost for the want of a horseshoe nail. The analogy is clear, Mr. Speaker. The government may lose this battle because it has failed to deal with high interest rates.

Mr. Hovdebo:

I have heard hon. members opposite say that mortgage rates are going down. But, down from where? Interest rates have moved up from 11 per cent to in excess of 15 per cent and then have moved back to 14.75 per cent. I do not call that a reduction.

I want to speak now about the farmer. The farmer has been dealt a triple blow by this budget and this government. First, interest rates were increased by this government. They were not lowered in the budget. However, I have already dealt with that point.

Prices are being increased for farm fuel at a rate of approximately 60 cents per gallon by the end of next year due to the artificial increase in the cost of crude. In addition, the farmer will be required to pay 25 cents per gallon tax on all fuel he buys. Granted he will receive a 10 cent rebate, but he still has to pay the full amount to get the fuel. I hope that the government will consider paying 16 per cent interest on the money that makes up that rebate because that is what the farmer will be paying for it.

Incidentally, this 15-cent tax will cost Canadian farmers approximately $170 million. The farmer is devastated by these extra costs. That is how this government fulfils its promise to protect the family farm. These kinds of costs heaped on farms that are already marginal will cause bankruptcy. The family farm is in danger.

Statistics Canada, that much beleaguered entity, indicated that the number of families living below the poverty line in

The Budget-Mr. Hovdebo

Canada has increased by only 1 per cent. I stress the word "only" because the Statistics Canada report did so. Most of us are losing buying power through the effect of interest rates and inflation. But those who are on low or fixed incomes are hurting the most because they so easily slip below the poverty line.

It is a sad state when in a country as rich as Canada 700,000 families are living below the poverty line. Again, that figure is from Statistics Canada. This budget will increase that number by pushing up the cost of rent, fuel and other items. Meanwhile, corporate profits increased substantially during the last year, and this budget will not affect them. In fact it is likely to increase the profits of many companies. This budget will increase the number and speed by which people fall below the poverty line. Poverty is not an economic problem as much as it is a problem of lack of will and neglect on the part of the government.

During the last 100 years, people of the western world developed political democracy to a point where we pride ourselves on our freedom. But also during the last 100 years we have contradicted that by losing control of the economy. One hundred years ago, farmers, tradesmen, storekeepers and professionals owned and controlled the means by which they lived. However, the industrial revolution concentrated the machinery of production and of distribution in the hands of those who supplied the capital. While we won the right to vote, we lost control of the economy.

We are subjected to an almost continuous campaign to sell us on the idea of the free enterprise system. However, as Tommy Douglas put it in 1958, "The economic system under which we live is neither free nor enterprising".

We have heavy unemployment, a surplus of most staples and most manufactured goods, and if the free enterprise market system is working, then the cost of living and the price of retail goods should go down. This is the law of supply and demand. Instead, the cost of living continues to rise and retail costs continue to do likewise. The market system no longer works because most prices these days are set by agreement based on the cost of production plus a fairly hefty profit. The prices are set by the producer in every industry except farming.

While we have become politically free, we have become economically enslaved. It is still true today that he who controls the means by which we live, controls me. Political power follows economic power. People who control the economy take steps to control the political nation, and I want to stress that point-people who control the economy take steps to control the political nation to protect their investment in the nation. When decisions made in this House favour corporations and when budgets favour those corporations, then we confirm that that statement is true. We confirm that corporations that control the economy are protecting their investment by controlling the political action of the government.

We hear much about the dangers of government control of the economy. What is the danger of a country in which corporations control the government? In Canada we have not only accepted the idea of the state being controlled by corpora-

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The Budget-Mr. Hovdebo

tions, but we have even allowed the ownership of those corporations to be non-resident. Canada has more non-resident foreign ownership and non-resident control of its industry than all of the United States, western Europe and Japan together.

Mr. Hovdebo:

Recommendation No. 14 in the same Conservative report suggests that supplementary quotas should be allowed to terminals capable of cleaning grain for export. Will the minister assure us that such a decision, which would favour Cargill and the Weyburn terminal at the expense of co-operative elevator companies, will not be implemented?

Mr. Stan J. Hovdebo (Prince Albert):

Mr. Speaker, I have a question for the Minister of Transport. The Conservative task force on grain movement recommends a change in the car allocation formula which would encourage the private purchase and leasing of rail cars by companies. Can the minister assure us he will reject a proposal which would give a great

December 11, 1979

advantage to large corporations such as Cargill at the expense of farmer-owned wheat pools?

Elon. Don Mazankowski (Minister of Transport): We are

looking at various ways and means of increasing the grain hopper carrying fleet. They will all be used as part of the grain carrying fleet under the direction of the co-ordinator. I welcome the opportunity to clarify that matter in response to the hon. member's first question in this House.