Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697722152307.pdf (Canada)
4740 COMMONS The Budget-Mr. Benson An act to amend the Loan Companies Act An act to incorporate Pltts Insurance Company An act to lncoiporate T ~ t t s Llfe Insurance Com- pany An act to prevent the introduct~on into Canada of ~nfectious or contaglous diseases An act respecting McOuat Investments Limited An act respecting Buccaneer Industries Ltd An act to incorporate ICG Transmission Limlted An act to amend the Small Busmesses Loans Act An act to amend the Railway Act An act to amend t h e Canada Student Loans Act An act to Implement a Supplementary Income Tax Agreement between Canada and Sweden An act to amend the Company of Young Cana- d ~ a n s Act At six o'clock the House took recess.
AFTER RECESS The House resumed at 8 p.m. GOVERNMENT ORDERS n THE BUDGET ANNUAL FINANCIAL STATEMENT O F THE MINISTER OF FINANCE Hon.

E. J. Benson ( ~ i n i s i e ; of Finance) moved: That this House approves in general the budget- ary policy of the government.

He said: Mr. Speaker, in presenting the budget to the House last June, I expressed the government's view that a strong fiscal posi- tion was essential to check the rise in prices and smooth the way toward more balanced and sustained economic growth.
We have maintained that position.

Fiscal and monetary policies have worked in tandem to establish conditions which should give us the upper hand in squeezing inflation out of the econo- my.

This year by a national effort we must reduce the rate a t which prices are increas- ing.

To accomplish this we must be resolute in continuing to restrain the demands that are made upon the economy.
We must also con- tinue to relieve situations where particular economic circumstances and the need to apply the big levers of economic policy may create difficulties.

This has already led to several adjustments of our policies.

The Economic Situation in 1969 In the Budget Papers which I tabled in the House on February 27, hon.

members will find a comprehensive revizw of economic [Mr.

Speaker.]

DEBATES March 12.

1970 developments in the past year.


As a back- ground to my remarks on our present situa- tion and to gain perspective on the prospects for the year ahead, I should like briefly to review the highlights of economic develop- ment in 19G9.

We in Canada have not been alone in con- fronting entrenched inflation.

The United States faces it.

Many countries of Europe fight the same fever.


The fact that our experi- ence is far from the worst gives us no com- fort for we know that the illness, if not cor- rected, will only deepen.

We also know that while the illness is to some extent contagious, every country has to make its own provision for c u i n g it.

The average rise in prices of all the goods and services that enter into the gross national product was of the order of 4.2 per cent last year compared to 4 per cent during 1968.
The consumer price index was 4.6 per cent higher in January, 1970, than a year earlier.

There are some recent glimmerings of evidence that the rate 01 increase of prices is no longer rising.

But however one these scraps of hopeful news, the hard fact is that both prices and costs-and wages and salaries still rising at quite unac- in particular-are ceptable rates.

interprets The Canadian economy made notable gains last year both in output and employment.
The growth of real output maintained the 1968 rate of 4.8 per cent.

Employment grew faster 3.2 per cent than in the previous year-by compared with 2.2 per cent.

But after the first quarter, as the restraining policies took hold, the rate of growth of demand slowed down.

This development was anticipated although it was delayed longer than we had wished.

I t is a necessary pre-condition for the modera- tion of price and cost increases which it is the object of policy to achieve.
Unemployment in December, 1969, was 4.8 per cent of the labour force, the same proportion as in December, 1968.

Seasonally adjusted, the pro- portion fell in January to 4.5 per cent.

In the personal sector of the economy, incomes after taxes rose more rapidly than in 1968.

Spending on consumers' goods and ser- vices rose even more quickly than personal disposable income.

Personal saving therefore declined.


The balances of consumer credit outstanding rose especially rapidly in the first their part of increased expenditure among categories of goods and services, consumers favoured ser- vices and non-durable goods in general.

I n distributing the year.

March 12, 1970 COMMONS DEBATES 4741 Information on business capital expendi- tures suggests that numerous projects planned for 1969 were postponed or cancelled in the latter part of the year.
A fall in profits per unit of output accompanied this apparent change in investment plans.

Manufacturers' inventories, especially of finished products, were also building up at a substantial rate in the final months of 1969.

Housing starts reached 210,000 units for 1969 as a whole but they declined successively each quarter of the year.

The government is now providing a substantially increased flow of funds for low- cost housing projects this coming year.
This reflects the high priority we place on meeting the need for housing in general and for low- rental homes in particular.

In our foreign transactions we had in 1969 a rather substantial increase in the deficit on our transactions on goods and services-the current account of the balance of payments.

Wheat sales were substantially lower.

Other exports increased but a t a slower rate than imports, which rose quite strongly early in the year.
There was a large inflow of long- term capital including the foreign borrowings of provinces and some municipalities.

Once again there was a significant outflow of short- term capital attracted by very high short- term interest rates abroad.

The over-all impact of all of these transactions upon our reserves was a modest increase of some $60 million (U.S.) during 1969.
The value of the Canadian dollar in foreign exchange markets continues to be very strong, and our reserves have increased by $318 million (U.S.) in Janu- ary and February.

I hope this will decry what many people have said about flights of capital due to our white paper.

Some hon.

Members: Hear, hear!

Financial Markets The B u d g e t M r .


Benson amount of our marketable securities outside government accounts declined somewhat, and there was a reduction in the net public debt for the first time since 1957.

Some hon.

Members: Hear, hear!

Mr. Benson: This feature of our operations helped the monetary authorities in their task of maintaining an appropriate degree of restraint.

It also permitted other borrowers- provinces, municipalities and businesses-full access to the funds available.
The funds accumulating in the Canada Pension Plan invested by my department in provincial and provincially guaranteed long-term bonds exceeded the total net new marketable bond issues of all kinds taken up by the Canadian bond market.

This fund has been a lifesaver in meeting the needs of provinces, municipali- ties, school boards and other public authori- ties during a difficult period.
Regional Aspects Although the various regions of the country had different rates of economic growth in the past year, all of them suffered higher prices.

In this sense all regions feel the problem of inflation.

Our fiscal and monetary policies have been directed to this general and wide- spread problem.

The government has explicit- ly recognized, however, that the total spend- equally ing pressures have not been distributed across the country.
Accordingly, we have adopted certain measures that dif- ferentiate between regions of higher and lower employment.

Our tax measure concern- ing depreciation charges on costs of commer- cial coflstruction is one example.

The request to the chartered banks to have special regard for borrowers in the less prosperous areas of the country is another.

In addition, in our expenditure policy, we have given high pri- ority to certain programs which attack specif- ic economic problems of regions of slow growth.
Among such programs are those of the Department of Regional Economic Expan- sion, the Manpower Training Program, the Farm Credit Program and the Wheat Inven- tory Reduction Program.

Equalization grants to the provinces of slower growth amounted to $750 million in the past fiscal year, an increase of 16 per cent over the previous year.

record Mr. Benson: Financial markets reflected the restraining influence of the monetary authori- ties in Canada and elsewhere.

Interest rates levels by year-end.


The reached growth of the assets of the banking system was about 5 per cent for 1969, and the liquid asset ratio of the banks was pushed to a record low.

Net new issues of securities by Canadian borrowers were nearly $850 million lower in 1969 than in 1968, though the issue of securities denominated in foreign curren- I turn now to the fiscal position for the year eies rose substantially.

Apart from the very successful issue of Canada Savings Bonds the 1969-70.
Of course, there are some weeks remaining in the fiscal year so that the results government of Canada was not a net borrow- I present are the best estimates we are able to er in the bond market in 1969.

In fact, the The Fiscal Position i n 1969-70 4742 COMMONS DEBATES March 12.

1970 The Budget-Mr. Benson make at this juncture.

Last June I forecast a budgetary surplus of $250 million.

In the Budget Papers tabled February 27 I estimated the surplus at $455 million for the current fiscal year.
The difference from the budget arises mainly from the more rapid growth in our tax revenues.

Total revenues are expect- ed to be some $245 million above the earlier forecast; expenditures, $40 million above.

Since the Budget Papers were printed, the government has decided that the very serious excess of wheat stocks in Canada must be drastically reduced by emergency action.
Consequently, Parliament has been asked to appropriate immediately a sum of $100 mil- lion to enable Prairie farmers to reduce their acreage planted to grains this year and enable them to adjust to a system of wheat delivery quotas intended to move the existing stocks off the farms.

We are proposing to charge this appropriation to this current fiscal year's accounts, increasing budgetary expenditwes to $11,915 million in 1969-70, and reducing the budget surplus to $355 million.
Last June I foresaw cash requirements for non-budgetary purposes, apart from exchange transactions, of some $650 million, before allowing for the offset to the write-off of the Expo deficit to expenditures.

It now appears that our non-budgetary requirements will be much less than was forecast at that time.

A is implied in the Budget figure of $365 Papers.


This figure will be reduced by $100 million, representing a contra non-budgetary credit to the budgetary charge for the appro- priation for the wheat inventory reduction program, since the funds will not be dis- the year-end.

Other bursed until after changes in expected year-end items have involved a further reduction to a total net non-budgetary requirement of only $105 mil- lion.
To this we must add an amount on account of exchange transactions of about $310 million up to the present, somewhat more than was recorded earlier in the Budget Papers.

Offsetting these cash requirements on non-budgetary account against the budgetary source of cash, we anticipate that our net over-a:!

cash requirement for the fiscal year ending March 31 next will have been about $60 million.

I have already explained that our marketable bonds in the hands of the public decreased slightly.
However there was a net increase in Canada Savings Bonds outstand- ing of $374 million, and small increases in treasury bills outstanding, and in non-marke- table securities held by the Unemployment Insurance Commission.

These were more than enough to meet the net cash requirements, [Mr.

Benson.]

and should result in an increase in our Canadian dollar cash balances of about $400 million, to a figure which I now forecast at about $1 billion a t the year end; that is March 31.
Economic Prospects Let me turn now to the year behind.

I shall speak first of the prospects for the economy and of the fiscal outlook under these circum- stances.

Then I shall turn to policy issues and proposals.

With the pace of economic activity now somewhat reduced, I expect that the economy will continue to move upward in 1970, but at a lower rate than in 1969.

In terms of volume of output, the rate of growth in 1970 may well be I & or 2 percentage points lower than last year's 4.8 per cent.
Employment will continue to rise, but more slowly than in 1969, and I anticipate some increase in unem- ployment.

There will also be difficult wage negotiations.

Some of these negotiations mav proionged o n e s r issue in strikes-perhaps before settlements are reached.

Profits, which have already begun to fall, are likely to fall further in the coming year, in total dollars and per unit of output.
Mr. Speaker, we have a hard task ahead of us in bringing about a significant reduction in the rate of rise of prices and costs.

It is the the government to restrain the policy of growth of total spending in the economy, for that is a necessary condition for achieving our primary economic objective.

We shall coiltinue to support the work of the Prices and Incomes Commission which is striving to engage business, labour, consumers and gov- ernments in a united resistance against infla- tion.
To the extent they succeed, the objective can be reached with less severe fiscal and monetary measures than would otherwise be necessary.

To translate a 3 per cent growth of real output in 1970 into value terms requires a forecast of the success to be achieved in all our efforts to stem inflation.

This is particu- larly hazardous this year.

We just cannot tell how soon or how far the slowing of growth in demand and in production will bring about a slowing down in price increases.
In forecasting revenues we assumed that prices will increase slightly less than last year.

But if we could cut the rise in prices to say three-quarters of the rate last year, and i f as the year pro- gresses this trend is clearly evident, we shall March 12, 1970 C O M M O N S DEBATES 4743 The Budget-Mr. Benson the fact that been in our We have improving technology tax ment of the Eskimos.

focused upon the sharing of have good cause to be pleased.
Any shortfall Fiscal Prospects in our revenues for this reason would be welcome.

What are the prospects for our fiscal posi- tion, given our present programs?

My col- league, the President of the Treasury Board efforts to check the inflationary rise of costs (Mr. Drury), has tabled the estimates of and prices by the co-o~erative approach of expenditure for the coming fiscal year.

On the the provincial governments.


This Was made basis of these estimates, and making some clear, as honourable members will recall, at modest allowance for contingencies, as well as the conference of first ministers in mid-Feb- for lapses in appropriations, I am forecasting ruarY.

The consensus contained in the confer- budgetary expenditures in 1970-71 of some ence communique indicated the broad support $12.9 billion.
My colleague has drawn the of the provinces for the Program of voluntary attention of hon.

members to the important restraint, and their own intentions, so far as part of the projected expenditure increase their particular circumstances permit, to which consists of the items we share with the apply the proposals of the Prices and Incomes provinces and over whose magnitudes we do not have much control.

Members are aware of Commission within their own jurisdictions.
our sustained effort to restrain the growth of (8:20 p.m.) expenditures over which we do have control, There was, of course, continued emphasis at including those to which we attach a particu- the conference on the financial pressures larly high priority a t the present time- We facing provinces and municipalities, as pro- have given highest priority to such expendi- jected in the report of the Tax Struchre tures as those for regional expansion, for the Committee.
Much of this emphasis was natu- development of bilingualism, for improve- in industry and for rally resources.

However, there was also evident a the position of 1ndians and deeper awareness of Our budgetary revenues based on the exist- demands upon governments at all levels for ing tax law will be higher in 1970-71 than in new and improved services of all kinds-and from all parts of society-are outrunning the the past year, as the economy continues to growth of revenues.

This is the fundamental grow.


But because growth will be slower our problem responsible for financial pressures revenues will not be as buoyant as in the past upon governments.

It is also true that the year.

The receipts from the corporate income tax will be particularly affected both by the brunt of these demands has fallen upon the provinces and municipalities.
Their expendi- lower levels of profits that we anticipate and tures have been rising rapidly as a percentage by the fact that the revenues have already of the gross na!ional product during the past the once-and-for-all gain dozen years, while those of the federal gov- from the speed-up of corporate tax payments.

ernment, excluding transfers to the provinces, Moreovdr, as part of the program of restraint have remained relatively constant.
However, in price and cost increases we have postponed there was a clear recognition that in an envi- a number of increases in charges for govern- ronment of erosive inflation it is necessary to ment services, and the implementation of the contain these rising demands.

Consequently, air fares tax.

We are forecasting revenues of the projections of provincial $13.2 billion.

We expect the budgetary surplus even though budgets for 1970-71 showed a very large to be $300 million.
This is to be compared increase in potential deficits, most of the with the surplus of $355 million in the Cur- provinces indicated their everything possible to reduce or eliminate the Our net non-budgetary cash requirements, projected increases.

The Ontario government apart from those arising from exchange trans- is a particularly significant Case in point, actions, are expected to be its budget approximately $775 million.
Of this total, $100 having in mind and the predominant position of the Ontario million will arise from the cash outlay for the economy in the total national picture.

If Ontario is successful in achieving its stated wheat inventory reduction pros-am.
Leaving objective of a balanced budget, the fiscal posi- this wheat item out of account in each Year, the increase has been from about $650 million tion of provincial and municipal governments in the aggregate should not be markedly dif- forecast last June for 1969-70 to about $675 ferent in 1970-71 from the position achieved million now forecast for 1970-71. in 1969-70.

This is an important element in the national struggle to beat inflation.
In fact, however, the net amount required for those non-budgetary purposes in 1969-70 intentions to do rent fiscal Year noted above.

reflected most of in 1970-71 the size 4744 COMMONS DEBATES March 12.

1970 The B u d g e t M r .

Benson has turned out to be much less.


for several reasons as I have previously noted A number (8:30 p.m.) Our of the national income accountp, as In lending prOgramsp such as those for compiled by the Bureau of Statistics in recent farm credit and international development, as years and used by economists, we estimate well as the investment programs of our that the federal government sector, excluding Crown companies, required less than we fore- the Canada Pension Plan, has had a surplus cast.
These changes, together with the sub- of $570 million in 1969-70 and, on the fore- stantial budgetary surplus, reduced our net casts I have given, would show a surplus of cash requirements to a n unexpected but wel- come low level.

$180 million in 1970-71.

-about -nearly less restraint on $150 million more for loans to We cannot expect a similar reduction this year.
While our estimated non-budgetary requirements include Some allowance for con- ~t is evident that the federal government's tingencies, as they should, they also reflect fiscal position as a whole in 1970-71 will be increases in a number of firmly established exerting somewhat the programs of high priority.

Among these economy than in this year.

In part this will be increases are the following: due to the emergency wheat inventory reduc- tion program.
I am satisfied that the measure Central Mortgage and Housing Corpora- will be in the interest of the nation as well as tion to assist in offsetting an expected in the long-term interest of the wheat pro- decline in the flow of private funds into ducers in Canada.
I n part the change in our financing housing, to give more"emphasis fiscal position is due to expenditures, particu- to low-cost rental housing, and to finance larly the transfers to the provinces for health more municipal Sewage plants urgently and education, rising somewhat more rapidly than revenues.
It is also due to our increased needed to reduce pollution; -about $25 million more in mortgage funds lending programs for housing and farm credit for farm credit, chiefly to assist prairie where the capital market is not providing an farmers in readjusting to meet the new adequate flow of private funds to meet the needs of balanced growth and development.
outlook for grains; for Atomic In general, the fiscal effects of Our operations Energy of Canada to invest in advanced will be better distributed regionally than last power plants and a large heavy water Year.

Our regional expansion expenditures, plant to meet the urgent shortage of that revenue equalization grants and other pay- less important material; revenues, of where ments will be higher in the areas of inflationary pressures.

Our developed countries as part of our exter- course?
are growing more nal aid program; incomes are increasing more rapidly.

$40 million more for loans to less $40 million more -about -about repayments, will be ,+,50 million more for loans for loans are' important uses of savings for These forecasts are based upon expectations regional economic expansion, on which of lower rates of growth in employment and production, and an economy operating a t a all of us place high priority.
lower percentage of capacity than during As a result, the forecast total of our lending 1969-70.

If we could be concerned only with programs, net of the pressure of total demands upon our pro- increased from about $1,150 million in 1969-70 ductive capacity and markets, further action to about $1,675 million in 1970-71. would not be necessary.

However, there has the been no slowing down in the rate of increase These investment Purposes.

of prices and wages and other incomes.


Costs nation's However, their economic impact must be continue to push prices up.

Slower real assessed, and they must be budgeted as care- growth has not yet reduced inflation.

I sin- fully as expenditures.

Moreover, they have cerely expect it will do so as the year pro- important effects on our government financ- ceeds.

TIle code of price behaviour arranged the management of between the Prices and Incomes Commission inS pr06ram9 and On monetary policy.
the Taking the projected budgetary surplus and in bring- net non-budgetary requirements together, our net cash requirements for the year 1970-71 ing about some reduction in the rate of price are expected increases.

We must give i t a chance to take excluding amounts that may be required to effect.

We must also give organized labour time to decide whether and how it should join finance foreign exchange transactions.
and representatives of business and to be some $475 million- P ~ ~ ~ ~ [Mr. Eenson I ~ ~ ~ ~ ~ ~ P March 12, 1970 COMMONS DEBATES 4745 The Budget-Mr. Benson Some hon.

Members: Hear, hear!

Mr. Benson: In these circ-stances, in some sort of agreed program to moderate force of the depreciation measure we intro- duced last June.

Hon.

members will recall the pressure of costs on prices.
that the right to claim depreciation for tax purposes was postponed for two years on I feel commercial construction b e a n after budget some additional specific restraints upon the night.

The postponement applied only to con- economy are necessary to maintain the pres- struction C O S ~ ~ S incurred on these projects up to sure against the price and cost increases.

I am the end of 1970.

Initially, then, it applied to tax increases in this work done within the following 18 months.
not proposing any However, now, in its present form, it applies budget.

only to work done in the nine months until Some hon.

Members: Hear, hear!

the end of 1970.

Conseauentlv.

the force of the measure has been reduced b y the lapse of Some hon.

Members: Oh.

oh!

time.

I am now proposing that, for projects Mr. Horner: You have Your white Paper.
commenced between toni&t and the end of to con- Mr. Benson: I am terribly upset that the struction costs incurred up to the knd of 1971. opposition wanted tax increases which I have The effect of this change will be to restore not provided.

I am informed that this will be approximately the same impact to the meas- the first budget since 1913 in which there ure as it had when it was first introduced.

It will apply only to buildings to which the were no Wavs and Means motions.
original measure would have applied.

1970, the postponement will ~ D D ~ Y What more do you need?

- .

Mr. Diefenbaker: When will be the next This decision will be implemented, as last year, by a regulation under the Income Tax budget-in six months?

Mr. Benson: I am proposing, however, two Act.

measures of a special character that will help to implement our determination inflation under control.
The second action I propose is that Parlia- to bring ment enact a control over the terms of con- surner credit similar to the act passed in another inflationary situation 20 years ago.

- Proposals The first concerns construction.

This indus- try has been a leader in the inflationary spiral, even though the total volume of con- struction has not increased substantially since 1966.

There are special characteristics of this industry which make it particularly prone to "cost-push" inflation.
As a government we are encouraging the construction of housing on a large scale, and also industrial construction in those regions in need of expansion.

We think both deserve priority in all parts of Canada.

On the other hand we do not wish to aggra- vate the peculiarly inflationary situation in this industry-which was vividly in evidence last year.
Last June we introduced a measure of mild restraint on commercial construction applying to the main urban areas of the three provinces of most rapid economic growth.

This appears to have had some effect in de- ferring projects of lower priority or profitabili- ty, though it is hard to disentangle its effects from the many other influences at work.
The reccnt medium-term survey of the capital investment outlook published by the Economic Council forecasts a rapid expansion of commercial investment in 1970-a rate of increase several times that for business gen- erally.

This and other information leads me to the conclusion that we should maintain the Some hon.

Members: Hear, hear.

Mr. Benson: It would be a temporary anti- inflationary measure, intended, in the national interest, to safeguard the integrity of our cur- rency.
I t would authorize the government to regulate the terms of credit extended to con- sumers by various kinds of lending institu- tions and mwchants.

It would apply to banks, sales finance companies, consumer loan com- panies and other lenders, and to department stores, automobile dealers and other mer- chants.
In general, our intention would be to use this act to require a minimum down pay- ment for large purchases being financed by credit extending for more than one year, and to limit the period ov'er which such credits must be repaid.

We would not propose to interfere with credit for small purchases-say under with ordinary charge accounts, payable within 60 days, nor with revolving credit or budget accounts requiring regular monthly payments that would repay them within 12 months.
It would not apply to outstanding loans or the terms of purchases already made on credit.

$100-nor The purpose of the action proposed is to limit the growth of consumer expenditures in 4746 COMMONS DEBATES March 12.

19708 Mr. Speaker, the The Budget-Mr. Benson the present inflationary situation.

We have in mind not only spending on durable goods but also on other goods and on services such as travel.
In recent years the rate of increase of consumer expenditure has been stimulated and supported by substantial, though some- what uneven, increases in consumer credit outstanding.

I can well understand the smile of the Leader of the Opposition (Mr. Stan- field) who was threatened by a bomb yester- day, and he may not want to travel any more.

increase in consumer credit was particularly rapid in the first half of last year.
It slowed down after mid-year because of the levelling out of unsecured per- sonal loans by the banks, but the latest fig- ures indicate that growth in consumer credit has been resumed.

It now seems probable that the expansion of consumer spending this year will be reinforced by a large increase of credit unless some action is taken to check it.
We believe that selective action along the lines proposed would be better than more general measures that would interfere with the flow of funds required for housing and for industrial and urban development in our country.

We do not intend to restrict loans for busi- ness purposes, including farming, or loans for the acquisition, construction or improvement of houses.

Student loans for education would, of course, also be exempt.
It is difficult to forecast the quantitative effect on consumer expenditure of requiring specified down payments and limiting the period of repayment.

We are planning to require down payments of 20 per cent where credit is extended for more than a year and to require repayment within 30 months for automobiles and 24 months for other pur- chases.

We think these terms will have only a very moderate impact on the purchases of new cars which are already temporarily low just now.
We think it will bear directly some- what more heavily on other purchases par- ticularly of durable goods and holiday trips.

The reduction in spending will probably affect indirectly a wide variety of goods and services, as many consumers can be expected to divert their spending from less desired things in order to make the down payments on what they want most, and to pay off their credit more rapidly they otherwise would.
In all, we think that the total of con- sumer expenditures might be reduced by $300 miilion or $400 million a year, which is less than one per cent of the total of consumer purchases.

than [Mr. Benson.1 In order that the legislation and regulations can propci-ly take into account the variety of institutions and practices involved in extend- ing credit to consumers, I intend to have my department consuit with representatives of those who provide credit or sell on credit.
I would expect the government to be in a posi- tion to introduce the iegislation in about s i x or eight weeks.

I am not proposing any legislation on taxes or tariffs a t this time.

We will need to keep a close and continuing watch on the condition of the economy and particularly the success achievgd in checking the rate of increase i n prices and wages.

Possibly legislation will be needed in the autumn.


Meanwhile, I do not anticipate any lack of interest in any parlia- mentary discussion of the subject of taxation.

to I n 'egard to tariffs, I should say that since the last Eudget I have received a number of the Customs requests for amendments increases and some for Tariff, some for decreases.

1 have decided that I would not introduce any changes at this time.
This will mean postponing any action on two reports in which the Tarii-f Eoard recommended higher one case on live turkeys, in anoth- duties-in er on polyethylene.

Some hon.

Members: Oh, oh!

Mr. Paproski: How long?

An hon.

Member: This budget is a real turkey.

Mr. Benson: 1 consider that this is not a n appropriate to propose even modest increases in protective tariffs in Canada.

I will be prepared to take decisions on these reports a t a later date.

time Some hon.

Members: Hear, hear!


Mr. Benson: I wish to make a n important announcement concerning air and water pol- lution.

We have permitted accelerated capital allowances under the Income Tax Act to encourage and assist industry to invest i n structures or equipment for the primary pur- pose of preventing or reducing the pollution of Canadian waters.

This section of the regu- lations expires December 31, 1970.

We a r e 'now proposing to revise and extend i t for another three years.
Before it is necessary to extend i t beyond 1973, I expect it will be reconsidered in the light of more general policies and programs in respect of pollution.

We have also decided in principle that we should grant a similar special allowance in March 12.

1970 COMMONS DEBATES 4747 The Budget-Mr. Benson Some hon.

Members: Hear, hear!

respect of structures and equipment acquired coming year.
Taking the $50 million into after tonight primarily for the purpose of account will reduce our budgetary revenues in 1970-71 to $13,150 million and reduce the preventing or reducing air pollution.

prospective budgetary surplus to $250 million.
At this point, Mr. Speaker, I would ask permission of the ~ouse-first to insert in Han- sard a small table giving the estimated yield of our main categories of budgetary and old age sec~u-ity revenues for 1969-70 and for 1970-71 and secondly, as in recent years, to include with the Budget Papers, as an appen- dix to Hansard, tables and explanatory notes giving the budget figures for 1968-69, 1969-70 and 1970-71 in terms of the national economic accounts in the form published by the Bureau of Statistics, together with a reconciliation with the budgetary accounts.
Mr. Benson: In the case of air pollution, some need to minimize smoke and fumes, however, has usually been taken for granted and regarded as a normal cost of production, while other measures are undertaken in part to improve efficiency or to produce saleable by-products.

Therefore, I wish to consider the details that should be included in a regulation on this subject and would welcome receiving the views of those concerned.

This concludes the proposals and announce- ments I wish to make.
Since the proposed measure in regard to consumer credit will Mr. Speaker: Is the minister's reduce consumer expenditures, it will also agreed to?

reduce our various revenues by about $50 million during this coming fiscal year.

I do not expect the other proposed changes to have any significant effect on our revenues this [Editor's note: The tables above referred hen' Idlembers: Agreed.
to are as follows:] request - - BUDGETARY AND OLD AGE SECURITY REVENUES ($ million) 1969-70 Preliminary 1970-71 Forecast Budgetary Rmenues ........................................................

Personal Income Tax..

Corporation Income Tax.. ..................................................... Non-resident Tax.. ............................................................ Estate Tax.. Customs Duties.. .............................................................
Sales Tax ...................................................................... Other Duties and Taxes.. ..................................................... .................................................................. m Total Taxes.. ............................................................. ........................................................... Non-tax Revenues.. Total Budgetary revenues.. ............................................... Old Age Security Retienues Personal Income Tax.. ........................................................
Corporation Income Tax.. .....................................................

Sales Tax.. .................................................................... Total Old Age Security Revenues.. ........................................ 1,027 227 569 1.170 230 600 - - 1,823 2,000 4748 COMMONS DEBATES March 12.

1970 The Budget-Mr. Benson FEDERAL GOVERNMENT REVENUE AND E X P E N D I T U R E ON NATIONAL ACCOUNTS BASIS A. Reuenue 1.

Direct.

taxes, persons.. ...................................... 2.
Direct taxes, corporations.. ................................. 3.

Withholding taxes.. ........................................ 4.

Indirect taxes.. ............................................. 5.

Investment income.. ....................................... 6.

Employer and employee contributions to social insurance and government pension funds.. ................................. 7.

Total revenue.. ............................................ B. Ezpenrliture 1.
Goods and services: defence.. ............................... 2.

Goods and services: others.. ................................ 3.

Transfers to persons.. ....................................... 4.

Interest on public debt.. .................................... ................................................... 5.

Subsidies 6.

Capital assistance.. ......................................... 7.

Transfers to other levels of governments.. ................... 8.
Total expenditure.. ....................... .1;.
............... ................................... C. Surplus I+) or Deficit f-).. 1968-69 1969-70 Preliminary 1970-71 Forecast (millions of dollars) 4,455 2,025 205 3,830 990 5,725 2,090 240 4.035 1,180 6,575 2,085 255 4,220 1,395 895 - - - 12,400 15,620 14,310 1,040 1.110 1.845 1,845 2,775 3,280 3.430 3,680 1,445 1,660 395 450 65 105 - - - 2,525 2,720 12,480 - 80 1.875 3,640 4,010 1.785 475 115 3,590 4- 130 4- 570 13,740 15,490 FEDERAL GOVERNMENT REVENUE 1.
Budgetary revenue.. ..................................... 1968-69 1969-70 Preliminary 197lF71 Forecast (millions of dollars) 12.270 Dedwt: 2.

Budgetary return on investment.. ........................... ....................................... 3.

Post Office revenue.. 4.

Other non-tax budgetary revenues.. ......................... 5.

Corporate income tax, excess of accruals (+) over collec- ............................................... tions (-) Add: tions..

Extra budgetary funds revenue: 6.


Old age security taxes.. .................................... 7.

Unemployment insurance fund-employer-employee contri- butions.. ............................................... 8.

Government pension funds-employer-employee contribu- ................................................. 9.

Prairie Farm Assistance Act levies.. ........................ Government investment income.

10.

Interest on loans, advances and investments.. ............... 11.
Interest receipts on social insurance and government pension funds.

.................................................. 12.

Profits before taxes (net of losses) of government business enterprises.. ............................................ 13. miscellaneous^^) ............................................. 14.
Total Revenue, National Accounts Basis.. .................. (')These miscellaneous adjustments represent revenues from miscellaneous direct and indirect taxes and adjust- ments for the supplementary period.

In the National Accounts, revenues in the supplementary period are shifted h t o the following fiscal year.

[Mr.

Speaker.]

March 12, 1970 COMMONS DEBATES 4749 F E D E R A L GOVERNMENT E X P E N D I T U R E PUBLIC ACCOUNTS AND NATIONAL ACCOUNT@ RECONCUIA~ON The Budget-Mr. Benson 1.
Budgetary expenditure.. .................................... 10,767 1969-70 Preliminary 1970-71 Forecast - (millions of dollars) Deduct: ................ .................................... - 716 2.

Budgetary transfers to funds and agencies(').

- 342 3.

Post Office expenditure.

4.

Deficit of government business enterprises.. ................. - 82 5.

Reserves and writ*offs.. ................................... - 157 6.

Purchase of existing capital assets.

.......................... - 11 7.


Budgetary revenue items offset against budgetary expendi- ture(').

................................................. - 84 (- 1,392) Add: Extra budgetary funds expenditure: 8.

Old age security benefits.. .................................. ......................... 9.

Unemployment insurance benefits.. ..................................... 10.

Government pensions.. ......................... 11.

Prairie farm emergency payments.. ............ 12.


Expenditure of government funds and agencies(').

13.

Miscellaneous(n 14.

Total expenditure, National Acqounts Basis.. ............... ....... 15.

Surplus (+) or deficit (-), Natlonal Accounts Basis.. ............... 16.
Surplus (+) or deficit (-), budgetary basis.. ............................................. 1,541 459 158 7 ( 2.166) 702 237 12.480 - 80 - 576 (])In the national accounts, budgetary appropriations t o various funds and agencies are replaced by the expendi- ture actually msde by these funds and agencies.

@)This item m a ~ n l y consists of revenue from sales of goods and services by t h e government.

These sales appear as find expenditure of the private sector and are deducted to avoid double counting.
',)This item includes the supplementary period adjustment.

In the national accounts, expenditures on ~ o o d s and services in the supplementary period are dlvided between adjacent fiscal years; most other expenditure are shifted entirely to the next fiscal year.

Mr. Benson: Mr. Speaker, the reduction of $50 million in our revenues will also increase our net cash requirements for the year 1970- 71 to some $525 million, excluding amounts to finance foreign that may be required exchange transactions.
While our prospective cash requirements for the next fiscal year are higher than those of the fiscal year now closing, I am confident they can be met in a manner consistent with our anti-inflationary policy.

We shall, of course, have to enter the market from time to tiwe if only to refund our maturing debt.

Our cash balances a t the beginning of the year will be about a billion dollars and can safely be reduced somewhat during the year.
It should be possible again to raise funds by a Canada Savings Bond campaign.

I would expect that these factors, together with the improved state of the bond market and persistence in our anti-inflationary meas- ures will make possible a smooth and success- ful dekt management program this coming fiscal year.

In concluding, Mr. Speaker, I would like to emphasize several simple points.

First, we must continue with iirm measures to accom- plish our purpose in checking the rise in prices.
This is essential in itself to convince those in the capital r ~ a r k e t , the labour market and the markets for goods and services that they should not expect inflation to continue year after year.

Second, we must continue to do what we can to recognize the differences in the various parts of our country and the several sectors of our economy.

Third, we must be flexible in our ability to respond to changes in the economic situation.
The record of recent years proves that Parliament and the government can act promptly when that is necessary to meet new or changing circumstances.

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