The Gazette from Montreal, Quebec, Canada • 31

CN hotels boss talks merger with CP Hotels Page C-9 rx MONTREAL. TUESDAY, FEBRUARY 4, 1986 warned of waii: day Canadians will see lower gascn line prices at the pumps if Saudi Arabia continues to lead the increase' in oil production. Haynes said retail gasoline prices usually lag behind a drop in the' world price of crude oil by 60 to 90 days as the lower costs move through the oil company's refining and marketing network. Haynes acknowledged that the Canadian market has been slower than" the U.S. market in reacting to falling prices, but he said the domestic industry will not be able to maintain its current pricing given the level of competition.

He estimated that the value of Canada's oil inventory has dropped at least $5 billion since the price de-cline began. AP, Financial Times, Southam News But Saudi Arabia, Indonesia, Venezuela, the United Arab Emirates, Qatar and the other members want to raise the ceiling to 18 million barrels a day, intensifying the glut at the expense of prices in efforts to force non-OPEC producers to cut production. "These countries are afraid that the oil price could drop as low as $10 a barrel in the coming spring or summer should OPEC lose control," according to the report. Some analysts speculate that the Saudis are pushing for higher production because they foresee an eventual end to the world's dependence on oil and believe they must preserve a market share while there is still time. In Toronto, Imperial Oil Ltd.

chairman Arden Haynes said yester dustry analyst at First Boston Corp. "Somebody has to cut production, and nobody has the mindset to do that right now." Mexico joined Venezuela last week in reducing prices $3 to $4 for a 159-litre barrel of oil. West Texas Intermediate, the benchmark U.S. crude, dropped below $19 a barrel Friday and fell to $17.36 a barrel yesterday in contracts for March delivery on the New York Mercantile Exchange. Prices at those levels have not been seen since early 1979.

In London, the price of oil at Brent, the European benchmark, hit $17.20 U.S. a barrel for March delivery and the British pound dropped more than 2 cents against the U.S. dollar as a result. Ahmed Zaki Yamani, Saudi Ara- split emerged over how to respond to competition from non-OPEC producers, mainly Britain, Norway and Mexico. The report, denied later by Kuwait Oil Minister Ali Khalifa al-Sabah, said there are fears that prices may fall to $10 a barrel by spring.

As recently as 1081, some oil prices were hovering around $40 a barrel. The three-day committee meeting came against a background of a worsening glut and widespread pes--simism that OPEC, which dictated the market a decade ago, could reverse a decline that has caused prices to drop more than 25 per cent this year and nearly half since November. "I don't know where the bottom is," said William Randol, an oil-in Gazette News Services VIENNA Oil prices tumbled below $18 U.S. a barrel yesterday for the first time this decade and OPEC's president predicted a "major price collapse" unless producers restrain output. Arturo Hernandez Grisanti, the oil minister of Venezuela and president of the 13-country Organization of Petroleum Exporting Countries (OPEG), urged the producers to avoida price war.

Hepoke after a special OPEC corjSiriittee conferred for nearly three hours on the cartel's prospects of stopping a further decline in its market share. Details of the committee's discussions were not disclosed, but a Kuwaiti news report said a sudden bia's oil minister, was quoted as saying that his attempts to get European non-OPEC members, mainly Britain, to limit production from its North Sea fields had failed. "No possibility of reaching agreement (with non-OPEC producers) is visible," Yamani said. One oil analyst in London said yesterday: "There is no reason why the Saudis cannot sweat it out until they get concessions they are looking for." The Kuwait News Agency quoted an unidentified oil ministry source as saying OPEC members have split over how to handle a price collapse. It said Iran, Iraq, Libya and Algeria want to retain OPEC's production ceiling of 16 million barrels a day, arguing it will eventually lessen the glut and make prices rise.

Paying interest on debt takes biggest chunk of federal funds Cooper sfif Everything else Defence I Subsidies to business Payments to individuals Payments to governments Jf Cliff Gabel, Canadian Sporting Goods Association president, at CSGA show. Gazette graphics How government is spending $105 billion this year. itness fad beefs up store sales Gazette an electronic readout of your strokes per minute and sets your pace." A home gym will set you back about $700, he said, noting that this is about the price of a two-year membership in a good health club. Heinz Piotrowski, vice-president of marketing for Adidas (Canada) said Canadian consumers should benefit from the recent lifting of footwear quotas. "The market will become more competitive with many new brands.

There are at least 50 footwear exhibitors at this show and they'll probably be a lot more next year." He said the total sporting-goods market is saturated in terms of growth and retailers are just fighting for market share. "The federal government's Participation program has helped, but there is still a large non-participant segment of society out there that can't be moved." No accurate figures exist on how much Canadians spend on sporting goods, but Gabel estimated the wholesale market, excluding footwear, was worth close to $800 million in 1985. In an effort to gauge the size of the domestic sporting goods market, the CSGA has commissioned Statistics Canada to conduct a survey on the industry. By BRIAN DUNN of The Gazette The fitness boom continues to bolster sales of Canadian sporting-goods retailers. But sales of hockey equipment, once a mainstay of the trade, have stopped growing.

"Hockey is a no-growth market right now with registrations (of players) levelling off," said Cliff Gabel, president of the Canadian Sporting Goods Association J(CSGA), which is holding its an--'niol convention and exhibition at 3T3fe Bonaventure until tomorrow. Another factor affecting the market for hockey equipment is the growing cost to manufacturers of liability insurance premiums. Premium increases, in some Cases as much as 600 per cent over last year, are being passed on in part to consumers. For exam-ptei Sport Maska Inc. of Montreal already has hiked the price of its hpgkey helmets by $5 and may add another $3 to the price tag.

While hockey-skate production has levelled off at an estimated million pairs annually, most Canadian sporting-goods retailers closed out 1985 with lower inventories than usual and stronger sales, said Gabel, who is also executive vice-president of Cooper Canada Ltd. Apart from fitness, Gabel said Third in a series By HUGH ANDERSON of The Gazette The main business of Canada's national government is moving billions of dollars from one Canadian to another. It's called the redistribution business, and it's what all of today's democratic governments in industrialized countries mostly do. This fact is what makes curbing the government's spending bill, to help reduce its annual financial deficit, so extraordinarily difficult in political terms. Every Canadian is both beneficiary and paymaster.

And every adult Canadian has a vote with which to enforce his or her claim to a piece of the action. That action, moreover, is on a big-time scale. Quarter of economy By the time the federal government closes its books on the current financial year, at the end of next month, it will have spent roughly $105 billion in 12 months. That's just under a quarter of the whole economy, or about $4,200 for each man, woman and child in the country. But only $15 billion, or less than 15 cents in each dollar, goes to actually run the government pay civil servants and MPs, buy the stationery, heat the office buildings and so on.

The remaining 85 cents of every dollar is mostly paid out to Canadians, one way or another, with a small portion going to foreigners. A big slice, amounting to roughly $20 billion, goes directly to Canadian individuals. It includes such things as old-age pension cheques ($13 billion), family allowances ($2.5 billion) and the government's share ($2.6 billion) of unemployment insurance cheques. Another $20-billion slice goes to provincial governments to help pay for such things as medicare, education and welfare, and to subsidize government services in poorer provinces. Subsidies to business A sizeable $12-billion portion goes on subsidies to Canadian business enterprises large and small, government and privately owned.

These include such things as incentives to explore for oil and gas, to locate plants in poorer parts of the country, to put people on the payroll, and to support the income of farmers in various ways. And a whopping $26 billion 25 cents in every dollar was needed this year to pay the interest on the government's debts from this and previous years. NORMAN BETHUNE A self-portrait Royal Victoria Hospital and Hopital du Sacrc Coeur before joining the Communist Party and becoming involved as a physician Canadians have, of course, heard this sort of thing before. Indeed, between 1975 and 1979 the Liberals in Ottawa did manage to bring down the share of the economy absorbed by federal spending. That did little for the deficit, however first, because the government's tax revenues lagged behind the growth of the economy as well and second, because spending took off again from 1979 onward.

In contrast, the present deficit-reduction plan depends partly on a strong rise in tax revenue this year and next. The largest single chunk of revenue, personal income tax, will climb from just under 7 per cent of total national income last year to over 7.5 per cent next year, according to the estimates in last year's budgets. And the government's total budgetary revenue from all sources should rise to about 16 per cent from just over 15 per cent. That will still leave a big gap to be covered by borrowing, though. According to Ottawa's own forecasts, spending next year is likely still to amount to just under 23 per cent of the national economy.

Reducing that gap will have an impact on almost every Canadian. Business must share burden. Page C-8 Hugh Anderson's column returns tomorrow. TSEj (: 2842.9 Down 0.06 DOW 139.51 Up 0.23 1594.27 Up 23.28 d5 JgOLD iL But defence spending, once a high priority in most governments' budgets, is taking a comparatively small slice. The huge annual deficits of recent years have forced governments into trying to curb the growth in their annual spending bills.

This never actually means the government spends fewer dollars than in the previous year. But it has meant that from time to time in the last 10 years Ottawa's spending bill did rise less than the growth in the national inoome pie. That went by the boards during the 1981-82 economic slump, of course, when spending growth far outpaced the economy itself. And even in the recovery years of 1983 and 1984, the annual spending totals still rose a little faster than the total national income. If things work out as today's Progressive Conservative government in Ottawa plans, that pattern will change, however.

For instance, according to the official forecasts, budgetary spending in the fiscal year that begins April 1 will rise to just under $110 billion. But that increase of around 4.5 per cent should be considerably less than the probable expansion in the economy over the same period. As a result, the spending bill will be a slightly smaller slice of the economy and that will help nudge the deficit downward, in actual dollar terms as well as a share of the economy. on the Republican side of the Spanish Civil War and later with Mao Tse-tung's fighters against the Japanese army. lie became a friend of Mao and died in China, of blood poisoning, in 1939.

Bethune, said Li, "is well known everywhere in China, including among schoolchildren" because of the political significance the Chinese place on his having given his life for their fight against the Japanese invaders. The Bethune film entitled Bethune: The Making of a Hero is the biggest production yet for Filmline, a five-year-old company that produced Heartaches and Cross-Country and was co-producer of Hotel New Hampshire. Filming in China, Canada and Spain will take about seven months, and the film is to be released in both its mini-series and feature film versions toward the end of 1987, Kroonenburg said. cycling and jogging continue to be strong while skiing is currently enjoying a banner year. Beneath the surface of this week's successful convention, a showdown appears imminent between the CSGA and the National Ski Industries Association (NSIA), which holds its show in March.

According to an NSIA bylaw, no member may exhibit at a public show before the ski show. To circumvent this clause, many ski-wear manufacturers who also are CSGA members were showing their lines in their hotel rooms. Sun Ice of Calgary, Canada's largest skiwear manufacturer, was openly showing its line on the convention floor of the Bonaventure Hilton this week, resulting in its suspension from NSIA. Ian MacDonald, the company's vice-president, sales and marketing, said it is necessary to show the line early because of manufacturing lead times. "If I can't show now, I stand to lose hundreds of thousands of dollars in sales," he said.

Meanwhile, the hottest item in exercise equipment is the rowing machine, according to Andy Keer of Montreal-based Weider Sports Equipment Co. Ltd. "It's an all-encompassing exercise," Keer said. "A rowing machine can cost as little as $139 or as much as $499, which gives you PIETER KROONENBURG Financing completed tions in five provinces. The Chinese production assistance, which is still subject to final agreement on some details, com China to help finance Montreal firm's movie on Bethune pletes the movie's financing, permitting filming to begin in China in September, Kroonenburg said.

Other backers include French co-producer Jacques Dorfman, the Canadian Broadcasting which will broadcast a mini-series version of the film, and Telefilm, the federal agency that helps to finance Canadian films. Although China has become experienced with co-production arrangements, with about 10 feature films shot there under such deal each year, Li said in an interview that the Bethune production is larger than average in size, and "very big in its significance" for relations between China and Canada. Because ot this, it is being given a high priority by the Chinese co-producers. Bethune, who came from a prosperous Ontario family, practiced as a thoracic surgeon at Montreal's By JAY BRYAN of The Gazette Filmline International a producer of feature films, has reached an agreement in principle with China for the single biggest chunk of financing for a $10-million movie about Norman Bethune, Filmline vice-president Pieter Kroonenburg said yesterday. Kroonenburg and Nicolas Clermont, the film's producers, have been meeting for the past week with a delegation from Peking headed by Li Zhimin, acting director.

of the China Film Co-Production Corp. Under the co-production deal, which Kroonenburg values at $3 million to $4 million, the Chinese 'will provide almost everything needed during four months of filming- in China, including actors, equipment and loca- 69.56 Down 0.64' $344 Down $5.