PAGE 4, THE HERALD, Monday, November 14, 1977

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Golden eggs
or job creation?

“Why don’t they creat
more jobs?” I've heard
that question. You’ve
heard the question and, at
some time or tohter, we
have probably al] asked
it.

Who are “They”? Why
shoould they create mroe
jobs and what is in it for
them? This applies
whether we consider
They as being the
government or _ the
private sector. If we
expect the government to
create more jobs, by
‘make work’ projects or
by assisting industrial
endeavours, we must
realise who is paying for
it — US!

Our problem may be
deciding whether we
would increase U.1.C.
payments to people
wanting work or spend
the money creating jobs.
Note the emphasis on the
word WE, government
has only one source of
income, you and me. It
does not have to balance
its books, nor make a
profit; in fact, its damned
if it does and damneed it
it doesn't.

So why don’t the big —
and the not-so-hig
companies (the private
sector) expand their
operations and make
more jobs? Simply
because, at this time,
they would lose money.
The use of industrial
plant is running about 85
per cent of its capacity.
Common sense says
owners would be foolish
to build more unless they
are sure that, in a short
time, new capacity would
be paying its way. That
feeling does not exist at
present and owners are
protecting their capital —
and their profits — by
opera;ting at less than
100 per cent.

It is easy to say that all
that is needed is to boost
sales. Yes, that is all that
is needed. Sell mroe, find
a greater demand.
There’s the difficulty.

Markets are slow in.

Canada, there is too great
a fear of unemployment
and inflation, too little
confidence for consumers
to increase their spen-

ing.

Why not sell abroad?
Yes, why not? Our
Premier has just
returned from a sales trip
in Europe, seeking new
customers for our in-
dustry,

Like many simple
solutions, there is a BUT
— our materials and

AERAAN

goods are not selling in
some areas because our
prices are not com-
petitive. Our falling
dollar cannot offset the
high wages and salaries
reflected in the price of
our exports and we have
priced kourselves out of
many markels.

The other villain ac-
cused is profit. Business
and companies are
started with one in-
tention, to make money,
to make a profit. There is
no reason to apologise for
this, profit is the in-
centive for taking the risk
of buying or starting a
business. It is the in-
centive, the possible
reward, for putting up
money and taking time or
suing talent to operate a
business. A business
which will provide jobs
for those who cannot, or
do not wish, to be self-

employed, =.

This all sounds very

reasonable, doesn't it? -

And yet profit has risen to
the top of most lists of
dirty words. It sits like
Pigpen, the character in
the comic strip Peanuts,
over in the far corner,
unloved and untoucched,
with a black cloud
hovering over it.

The misconceptions
about profit are even

mroe numerous than the °

east of Charlie Brown. A
Gallup Poll published
recently found that 3 out
of of 4 people believe that
profits exceed 20 per cent
of gross sales. That: is,
that an item selling for
$100 returns a profit of $20
to a retailer. Far from
being the truth, the
Grocery Manufacurers’
Association states that its
industry profit margin is
less than 3 per cent. In the
daily press we are in-
formed that the forestry
ind;ustry makes less
than a nickel on its
dollar sale. Other in-

dustries will produce.

similar figures.

Company profits partly
finance expansion of

lant and capacity, they

elp build new stores and
assist the development of
new areas.

A negative attitude to
profit will not help ex-
pansion and job creation.
Profit is an essential part
of business and industry.
They need it. We must
appreciate and  un-
derstnad this for unless
there are profits, all our
jobs are on the line.

pF,

i

}

C4977 Univertat Ores Sprdicate

Me A

ty

“D’you realize we've been married three
whole weeks and neither of us has even mentioned
the word ‘divorce,’

Quebec election anniversary

Levesque recalls first year as government

QUEBEC (CP) — Countries cannot neglect their
economy for long before others “literally clean them
out,” Premier Rene Levesque warned on the eve of his
Parti Quebecois government’s first anniversary.

In an hour-long interview in the squat concrete block
housing the premier’s office across the street from the
national assembly Levesque spoke of the hazards and
hopes lining the road te Quebec independence.

ntinued economic stagnation will hurt any
government, he acknowledged. But the premier
rejected the notion that unemployment or inflation
will automatically work against the PQ in its in-
dependence campaign.

Economic woes might rather prove the undoing of
federalist forces since the electorate is beginning to
understand that managing the economy is primarily
Ottawa's responsibility, he said. ;

Sporting in his lapel the insignia of the Legion
d'honneur, the mark of esteem he received from
French President Valery Giscard d'Estaing in Paris
two weeks ago, Levesque.talked almost incessantly
through the interview, puffing on cigarette after
cigarette, impatiently waving away the ashes as they

opped.
He warned that Quebec “‘is in danger of becoming a

society of pampered kids,’’ trusting in outsiders,

notably the United States, for economic salvation.

NO HAND-OUTS
“Nothing is going to be handed to us on a silver plat-
ter,” the premier said in an appeal to business and

ELEY rvoncen TuRHAL

labor to accept the sacrifices inherent in working a
little more and producing a little more.”

The PQ will spend the next year putting the finishing
touches on its plan for political independence coupled
with a Canadian economic cgmmon market, he sald.

But the government will not make its referendum on
independence the sole objective, to the detriment of
economic and social policy, he said. .

Levesque singled out a program guaranteeing free
drugs for senlor citizens as the one achievement which
“satisfied me most” during the government’s first
year in office. ,

On a political level, he expressed pride in Bill 2, the -

law which reformed the financing of Quebec’s political
rtles, outlawing corporate donations and strictly
imiting personal contributions. ;

Among disappointments, he listed the fuss
surrounding the government's Charter of the French
Language (Bill 101). That hubbub overshadowed all
else the government did, he complained. ,

But the language law itself was no disappointment,
and now that the first traumatic movements are
passed, the law seems to be getting the ‘even break"’
which he asked the public to give it, the premier said.
NOT AFTER POWER

Levesque dismissed the accusations of some, in-
cluding writer Pierre Vallieres, a former member of
the Front de Liberation du Quebec who repudiated
violence in 1971 and rallied to the Parti Quebecois, that
the government has become more attached to power

“I'd love to buy a new car, but I get car-sick ... every time I hear the price.”

South African policies not change
despite arms embargo

to the cause of political sovereignt '
But he also veyected federalist aggestions that the

government has already begun acting as if Quebec is
separate from Canada.

is government Is steering a middle course toward

eignty-association, he said. .
a espile ‘the “negative common front of other
provincial premiers against economic association
with an independent Quebec, Levesque said he was
heartened by the recent statements of Fre ier
Richard Hatfield of New Brunswick, recognizing t
some form of association may have merits. ‘

Levesque said he obtained solid support rom
Quebec on his recent visit to France, where ¢
reaction he got “proves that we'll be far from standing
alone when the changes that must come, do come.

Other trips abroad may be in the offing, including a
possible visit to French-speaking African countries
next year, Levesque said.

In the economie sphere, he boasted of the govern-
ment’s suecess in culting back on borrowing this year
and hinted, as Finance Minister Jacques Parizeau has
done, at the possibility of income tax cuts in the next
budget. ;

eet. ployment remains the stickler. Despite the
government's efforts, the jobless rate climbed to a
record high of 11.4 per cent last month. .

“The federal government, however, hasa crucial role
to play in this since it controls major economic tools
such as tariffs and fiscal and monetary policy,
Levesque said.

' Iona Campagnolo. MP

In 1978, the maximum for weekly insurable earnings
will rise from $220 weekly to $240. This means that
maximum benefit an unemployment insurance
claimant can get rises from $147 weekly this year to
$160 in 1978. Minimum weekly insurable earnings in
1978 will be $48 across Canada, as compared to $44 in
1977.

Employees and employers will pay higher
maxitnunns to cover these increases, but the basic
employer will remain at $2.10 per $100.00 of each
employee’s insurable earnings. Employer’:
maximum premiums for each employee will rise,
from $4.62 weekly in 1977 to $5.04 in 1978. Employee’s
maximum premiums will increase from $3.30 weekly
in 1977 to $3.60 in 1978. :

In 1977, the Unemployment Insurance program will,
pay out an estimated $4 billion in benefits to about 2.6
million claimants.

In other areas, I want to inform you that loan
ceinlings for the federal government’s Farm Im-

rovement, Fisheries Improvement, and Small
usiness Loans Acts have all been raised from $50,000
to $75,000 effective immediately.

British Columbians have made very good use of
these three separate programs in past years and |

: hope many of you will continue to take advantage of

these development opportunities and low intereat
rates. Loans under the three acts, administered by the
Department of Finance, are repayable over a period
up to 10 years at rates as low as 9per cent.

British Columbians borrowed over $17.6 million
under these programs in 1976.

The Canada Employment and Immigration Com-
mission wants to expand the number of participants in
the federal Job Experience and Training (JET)
Program this year and plans to inject up to $150
million into the project this winter. ~ ae

JET began last winter asa pilot program designed”

to provide recent school leavers, who were unable to
find work, with a period of subsidized employment so
that they could gain essential work rience and
training. The number of participants will expand this
year according to Ottawa sources, just as fast as
federal officials can persuade private employers to
take the young people on staff.

The program runs from September to May and will
focus on those between the ages of 15 and 24 whe have
been out of school between three and 24 months. The
federat government will subsidize this form of on-the-
job training for up to 26 weeks this winter. That is up
from 9 weeks last year.

if you have any comments on the above or other
matters, please write to me, care of the House of

JOHANNESBURG
(AP) — South Africa’s
racial policies have

brought it under an inter-

national arms embargo
and there is talk of a ban
on trade with the white-
ruled country.

But the United Nations
arms sanctions voted
earlier this month are not
expected to have much
impact and if public pro-
nouncements are any
guide they are not likely
to force any significant
change in South Africa’s
internal race policies. ‘

A trade embargo
against the most ad-
vanced industrial econ-
omy in Africa is con-
sidered highly unlikely at
this time, and it would
probably do more harm
to South Africa’s trading
partners than they can
afford.

In fact, politicians,
diplomats, academics
and other observers here
generally agree that only
& total and extended oil
embargo could seriously
disrupt South Africa’s
economy.

The UN _ Security
Council’s vote to impose
an international embargo
against sales of arms to
South Africa was the
stiffest action yet against
Pretoria's race policies.

The measure was
prompted by South
Africa's crackdown
against the black con-
sciousness movement
following a wave of
violence over the death of
black leader Steve Biko
in police detention last
September.

But rather than
moderate iis policies,
South Africa's response
has been more arrests
and the assumption of

war-time powers to force
any company operating
in the country to produce
strategic and military
goods on demand.

OWN ARMS INDUSTRY

A potential nuclear
power, South Africa’s
own arms industry can
overwhelm virtually
anything the country’s
blackruled neighbors can
muster, the country’s
leaders believe.

While South Africa
claims to produce 90 per
cent of its military needs,
independent analysts say
the figure is closer to 75
per cent.

But South Africa’s
armaments industry
appears capable of
producing everythin
needed for cenventiond
war, from light arms and
armored car's to artillery
and ground-to-air
missiles, 49!

No _ statistics are
published to indicate how
much of South Africa’s
$1.9-billion defence
budget goes towards
importing arms. But with
an estimated 362 combat
aircraft, including
French Mirage fighter-
bombers, an army of
41,000 backed by 130,000
reservists and a modest
navy, the country’s
defence against threats
from black Africa seems
secure.

R.W. Johnson, author
of the recently-published
book How Long Can South
Africa Survive, writes:
“The weaponry in which
she isn't self-sufficient—
for example the next
generation of jet fighters
and so forth—she won't
feel the need for a while
ye J

Some observers here
note that economic
sanctions, such as those
imposed on white-gov-
erned Rhodesia, are
never total and’ believe

. South Africa will be able

to meet some of. its mili-
tary needs through in-
ternational arms dealers
or sympathetic third-
party countries.

‘BOOMERANG’ EF-
FECT

But the likelihood of a
total trade embargo is
dismissed here for two
reasons:

—South Africa's vast
mineral wealth, including
gold, diamonds, chrome
and uranium, will always
find markets in the world.

—The repercussions on
the United States, Europe
and Japan of a trade
boycott could have
serious domestic
economic and foreign
policy implications.

“The threat of sanc-
tions and boycotts need
not alarm us unduly,”
says Finance Minister
Owen Horwood. |
“Common sense and
simple economic facts
make it unlikely, if not
impossible, for total
isolation of South
Africa,”

For example, South
Africa’s mineral —
production includes 90
per cent of the world’s
chrome, 70 per cent of the
world's gold, 50 per cent
of the world’s gem
diamonds and 16 per cent
of the world’s uranium.

It is the “boomerang”
effect on countries im-
posing a trade embargo
on which South Africa
counts the most.

Official figures here
show that Western
countries had a favorable
trade balance with South
Attica last year of §1 bil-
on.

A trade boycott would
mean a loss to countries
exporting to South Africa
and could aggravate
unemployment in the
U.S., South Africa’s
biggest trading partner,

as well as Britain, France ‘

and other countries,
South Arican officials and
economists believe.

The newspaper
Pretoria News quoted a
U.S. government econ-
omist as estimating more

“than 50,000 American

jobs depend on US.
exports to South Africa.

In addition; British
companies alone have

ured more than $4
illion into South Africa
over the years while the
figure for .the U.S. is
estimated at $1.7 billion.

An oil blockade of South
Africa is regarded here
as potentially the most
serious threat to the
country. Several. coun-
tries, led by Zambia, are
pushing for just such a

yeott.

While South Africa has
stockpiled in abandoned
coal mines enough ail for
2% years of consumption
at current rates, the
country could not survive
indefinitely even with the
help of its sophisticated
oil-from-coal. plants.

But the shah of Iran,
South Africa's chief
supplier of oil, has shown
no signs of favoring an oil
embargo.

Commons, Ottawa K1iA 0X2,
Tax problems
arent going away

Prince George —
Pereennial budget delays
coupled with legislative
overkill and attention to

“inconsequential” tax -

problems are distracting
the country from
roductive effort, a
eading chartered ac-
couantant said today.

Dennis F. Culver,
president of the Institute
of Chartered Accountants

of British Columbia, told:

the Rotary Club here that
thefederal government

has begun to show some-

attention to major
problems, but is still
spending too juch effort
on trying to plug all the
tax loopholes and issuing
too much paper on non-
productive measures.

He cited two recent
budget moves that he
said will require a lot of
time and attention. One is
the new insulation grant,

which will be taxed as:

though received by the
higher-income —_ spouse,
and the student education
allowance, which will
require a new certificaste
to be prepared by
universities and signed
and filed by Canada's
600,000 post-secondary
students,

“Complying with tese
changes, which require

* much attention to detail,

will be wasteful and
irritating and they
exemplify an in-
sensitivity to real world
conditions,’ Culver told
the Rotarians.

“They distriact the
attention and energies of
the producers from the
objective of increasing
the national product.”

Culver said more than
1,000 amendements have
been made to the income
tax act since tax reform
was introduced in 1971,
This has resulted in high
compliance costs,
Business has been unable
to comprehend the
changes, professional
advisors’ costs have
added to business ex-
penses, complexities af
corporate plannin ve
multiplied” and
assessment costs keep
rising. ’

With delays of up to a
year in implementation
of — federal budget
Propissals, an ‘inertia’
effect has been proudced
that makes
hesitate in doing
anything. To this can be
added ‘fear of misstep’
delays, ‘wait for more
information’ delays
jpostrone the tax’ delays

at stifle business ex-
pansion and inhibit
corporate distributions

_ Teorganizations
Culver said, '

We need the same
kind of leadership and
courage as the
businessman shows who
operates on a balanced
budget, who cuts his costs
in adversity, and who:
expects his government
to cut its costs, too,”
Culver said.

usiness |

nce ee ee