Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697706397479.pdf (Canada)
3722 HOUSE OF COMMONS Industrial Status of Women and abroad.

It is a progressive type of legis lation which fits well into the changing em ployment conditions of our time and I solicit the support of every hon.

member of this house in re~ard to this legislation.

The house divided on the motion (Mrs, Fairclough) which was negatived on the fol· lowing division; YEAS Mcssrs: AlIken, M!~s ArJl:ue l!aiccr Barnett Bell Blackmore Blair Brown IBrantrordl Br.vson Cameron (Nanaimo) Campbell Cardiff Casselman.
Castleden Charlton Churchill Coldwell Crestohl D!nsdale Drew DupuIs Ellis Eyre FalrclouRb, Mrs. FlemlnJl: Fraser (Peterboroul{hl Fulton Oalmon Oillb Goode Green Hahn Harkness Hen JIerrldlle Hodllson Holllnllworth Howe lWellinlrton.

Huron) Johnson IKlndersley) Johnston (Bow River) (Lambton West) Jones Knl.llht Knowles L<"'" Lf'nnard Lo.
Macdonnell MacDoullall Macinnis MCCllllou/l"h (Mo~ MOllntain) McGrc.llor McL~od Monteith Murphy Nesbitt NiCholson Nickle Noseworthy Patterson PhilpCltt Purdy QUf'lch RCJl:ler Robinson (Bruce) Rowf' Shipley, Mrs. Simmons Small Stanton Starr Thatcher Tustin White (HastlnJl:s_ Front/maC> White (1IIIddles('x EIIstl Whitf' (Waterloo South) Winch Wylie ZapUtny_78.
NAYS Messrs: Anderson Applewhalte Ashboume Batten Bertrand Blanchette Bobvert BoIvin Bonnier Boucher /ChateaullUay_ HuntlnJl"doll-LaPrairlel Bourllf't Bourque Brlsson Brown (Essex WClIt) Buchanan Cameron (Hll!

:h Park) Campney Cannon Caron Carter Cavf'rs Chf'vrler (Mrs. Falrclough.l Cloutler Cote Veco", Vemers Veschatelets DesUereli Dumall Enfield FlIire.y Follwell Fraser (St. John's East) GardIner Gliriand Garson.
Gauthlu (Lake St. John) Gauthier INickel Belt) Gauthier (Portneuf) Glnllr3ll GlnlWeli Glrard Oour (Russelll Gourd (Chapleau) GrUll" H"nna Harris Harrison Hellyer H"nderson Henrv HosklnJl: Houck Howe (Port Arthur) Huffman Hunter James Jutras Kickham Kirk lAntil{onish_ Guysborou.llh) Kirk (Sb"lburne_ Yarmouth-Clare) Lafontaine Landois (Gaspe) Laoolnte Leduc Lefr:lnl;Olli Le9alte Lusby MacEachen MacKenzie MacNaullht Macnaull:hton McCann McCubbin McCulloch (PIctou) McIlralth McMillan McWilliam Manit Masse Meunier Michaud Mitchell (SUdbury) Nixon Pearson Plck"rsl!lll Pinard Pommer Poulin Pouliot Power (St. John's Wf'stl Proudfoot Prudham RatcHe Robcrlle Ro1X'rtson Robichaud Robinson (Simcoe East) RM' St. L.1urent Smith Stlck Studer Vlau Wea"f'r Weir Weselak Winters Wood_I09, Mr. Speaker: The time allocated tor private and public bills having expired, the house at eight o'clock will consider the business which was previously announ«d, As it is six o'clock, I do now leave the chair, I Perhaps should remind hon.
members th.ut during a division they should not leave thc house and also that they should not leave the house until the chair.

the Speaker has left At six o'clock the house took recess.

AFTER RECESS The house resumed at eight o'clock.

THE BUDGET A:-lNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE Hon.

Douglas Abbott (Minbter of Financel moved: That Mr. Speaker do now leave the chaIr for the heuse to go Into committee of way, and means.
He said: Mr. Speaker, I from my carefully prepared text depart express my appreciation for the greeting of my friends behind me.

think I must to the warmth of This is my eighth year as Minister of Finance and my tenth budget speech.

When I brought down my first budget the world had just emerged from a long and costly war.

Looking back at the views I then expressed about our own affairs it now I can say that APRIL 6.
19S' 3123 far fallen have been more than justified, but our inter national hopes have short of realization.

We have had to cope with recur ring threats to peace and security, and we have had to incur heavy costs, in co-opera tion with our friends and allies, in buildinl; up the defensive strength of the free world.

Solid progress, however, has been made during 1953 and we can face the future with growing confidence.
The growina: strength of the North Atlantic alliance has done much to reduce the dangers of armed aggression, but fundamental solu tions arc still denied us.

A just settlement of these questions requires the free world to continue to improve its detensive position in order to negotiate from strength.

We cannot yet afford to relax.

In the economic sphere, 1953 has been a much better year.

Industrial and agricul tural production in almost all countries has continued to expand, and consumption has risen.
Supplies of many products entering into international trade are becoming more plentiful.

and international markets more competitive.

The reet!very of Gennany and Japan has contributed to this deyelopment.

It is becoming increasingly evident that after many years of scarcity and inflation we are returning to morc normal competitive con ditions.

is It the encouraging to note further improvement which has taken place in trade and payments relations between the dollar and the non-dollar countries.
The clearest increase indication of this is the substantial in the gold and dollar reserves of overseas countries.

During 1953 the sterling area achieved a substantial over-all surplus with the rest of the world.

The central reserves held by the United Kingdom rose by $670 million during 1953 and have continued to rise in the first quarter of 1954.

As a result of these favourable developments the posi the sterling area has strengthened tion of in considerably.
A substantial the over-all balance of payments and ex change reserves has also been experienced by most European countries.

improvement The progress of the United Kingdom to trade is most significant.

Large ward freer lectors of trade have been decontrolled; com mo.

:lity markets have ~n rcopened; and importllnt raw materials find foodstuffs have been placed under open general licence.
As result of these changes, United Kingdom • impor~rs are now free to purchase a large their b::lsic requirements from the part of including the dollar coun cheape15t sources.

relaxations in trade and Significant tries.

The Budl1et-Mr. Abbott exchange controls have also been introduced by Germany, Belgium, Holland, South Atrica and a number of other countries.

far still While short of what falls In many respects toward tbis worth-while progress freer trade and payments is a souret!
of satis faction it is needed.

the balance of world trade, altbough very much improved, still It cannot be otherwise as long as major currencies are inconvertible, and there continues to be a widespread use of restrictionism and dis crimination.

lacks defence in depth.

Perhaps the most encouraging feature of recent developments in this field is the change in the attitude of many countries to their external financial problems.
There is a grow ing impatience with the existing system of direct trade controls and discriminations and an increased awareness of the serious ec~ nomic damage which results from the per petuation of such policies.
To a greater ex tent than at any time since the end of the war, overseas countries are showing a will ingness to envisage basic changes in their trade policy in order to deal with their ex change problems in a fundamental wa;r. This attitude is most clearly expressed in the "collecth'e approach" proposals formu lated on the initiative of the United Kingdom at the commonwealth economic conference in December 1952.
These proposals envisage the restoration of an effective s)'stem of multilateral trade, and the achievement of currency convertibility over the widest pos sible area through co-operative International action.

I stated that Canada had participo.ted fully in the development of the "collective approach" and would be willing to co-operate in any required to achieve these common efforts goals.
Today, I am glad to report that real progress has been made over the past year in laying the foundations for the implementation of this constructive program.

In the course of my last budget conference ot In January, as the house knows, I attended finance commonwealth the ministers in Sydney, Australia, which-by the way-I consider to be the most satisfac tory conference of this kind since the end In reviewing developments since of the war.

the conference the December 1952 meeting.


agreed that improvements the substantial which had token place connrmed the funda mental soundness of the policies and objec themselves.

tives which they had set Without reservation aU commonwealth coun tries itlincd in a clear the "collective approach" proposals for currency convertibility and freer trade.
reil.ffirmation of for 3124 HOUSE OF COMMONS For most of The Budget-Mr. Abbott During the past year constructive develop ments have also taken place in other coun this period the United tries.

States has been in the process of re-examin ing its foreign economic policies.

An impor tant stage in this process was completed in January, when the United States commission on foreign economic policy issued its report.
this commission The recommendations of better known as the Randall report-provide, in my view, a reasonably promising basis for action by the United States in a co-operative movement towards a sounder system of trade and payments.
Progress has also been made by interna tional agencies with responsibilities in this ficl::L The international monetary fund has made changes in its rules and practices to its resources can be used more ensure that effectively to support a major move to con In Europe the OEEC has under vertibility.

taken a study to see how the European pay.

ments union can best be integrated.


into a br~der payments system, and powerful new voiCt5 have recently been raised in western Europe in favour of an early move to con vertibility and multilateral trade.

instruments of J'.S part of this general move to strengthen International economic tho:!

co-operation, the contracting parties to the ge:ler~1 a;;reement on tariffs and trade have ur:ciertaken an important program of work for the coming year.
GATT h3s made a most vCllu<'!b1e con.ribution to the expansion of world trade, and we welcome the decision to undertake a general review of the agree ment with a view to making it a more ef7e::tive instrument.

The session which is faU will also consider the planned for next prcspects for new multilateral tariff negotia to safe tiens.

guard the stability of present tariff arrange ments, the existing agreements have been extended to the end of June, 1955.
In the me:lOtime, in order it From what I have said, Is clear that c....(lnts arc shaping up to make the coming YC:lr an important one for progress in inter national economic co-operation.

The new and positive attitudes ot many countries, their improved trade and payments position, and the substantial progress towards domestic economic stability have combined to create a more favourable climate for advance than at any time since the end of the war.
No single country can by Itself ensure the success of an enterprise which must essentially be ll; collective, cQ-ooperative effort.

At the same time, I think it fair to say that the policies and attitudes of the United States in this regard occupy a place of central importance.

The United States has been one of the strongest exponents of policies directed (Mr. Abbott.l international towards the rC!duction of trnde barriers and the expansion of trade.
The success that h3S been achieved in this fteld is in large part due to the steady encourage.

ment the United States people and their government have given to the countries of the free world.

Canada has welcomed these policies and has played Us full part in this constructive enter_ prise.
and substantial assistance that that ago I It was recognized attended the Three weeks first the joint United States-Canada meeting of committee on trade and economic affain where ministers of our two countries had an opportunity to examine economic problel1lJl of common concern.

Consideratlon was given throughout the discussions to the need for action towards freer trade and payments on It was agreed that few things a broad front.
would contribute more to the well-being and economic stability of the free nations of the world ihan a forward move in this direction, and enlightened economi-:: policies on the part of both the United States and Canada would contribute materially to the achievement of a better trade and payments system throughout the fr~ world.

United States minis'ers warmly weko!Ilcd the evidence of a desire in many countries to take decisive steps towards the restoration of a broad area ot converlibUity.
I came away from these meetings with a the United States distinct administration is willina to do its part in making such a movement To tl':is end the United States administration has just placed before congress :1 program de~ signed to give effect to the main recommenda_ is tions of greatly to be hoped that the actions of the United States in the trade field will continue to provide effective leadershIp at this critical time.

impression that the Randall commission.

successful.
successful.

It these important responsibilities Canada, as the third largest trading coun to try, also has At in fulfil Sydney and at Washington I reaffirmed our willingness now, as in the past, to play an in bringing about a freer appropriate part world system of trade and payments.

co-operative efforts.

that Earlier in my remarks I referred to the there has been a return to m'Ore fact in world conditions competitive normal markets.
Al; might be expected, this devel opment has brought with it growing protec tionist pressures in many countries, including Canada.

It should be clear that any retro time would not only grade step at prejudice the achievements we have already made but would also jeopardize the prospects for real progress which are now at hand.
this APRIL 6, US4 3725 I come now to a review of economic developments in Canada during 1953 and the ouUook for 1954, In 1953 the Canadian economy reached new peaks of production, employment and consumption.

A year ago I based my budget on the expectation that the gross national product would increase by about 4 per cent; actually it increased about 5 per cent.
Since population increased less rapidly than national product and since the average Canadian prices were stable, worker and consumer had more dollars to spend and was able to obtain more goods for his dollars in our history.

than in any year The main factors responsible for the high level of production of 1953 were much the same as those of 1952 although the relative Importance of some of them varied.
Our very large defence program continued to give strong support to production and per this element has become sonal incomes, but a sustaining rather than an expansionist In each of the years 1951 and 1952 force.
defence increased by about in 1953 they were $600 million, whereas about the same as in 1952 and there will be not much change in 1954, This slowing down in the growth of defence expenditures no doubt contributed to the levelling off of production in some industries that became evident toward the end of 1953. expenditures On the other hand, a very substantial increa!

;(' in consumer expenditures, and an expanding program of private capital invest ment, were strong stimulating forces.
Con sumer the COntinued rise in real incomes, showed a par tiCUlarly large increase, and were the most dynamic force in the upward movement of 1953. strengthened by expenditures, the total New investment in plant, equipment and housing rose by 10 per cent.

New housing showed the most striking increase, rising by about 30 per cent, and was responsible for almost two~thirds of increase in durable physical assets put in place in 1953.
There was a considerable increase in con struction in the sectors of trade and com merce and in institutional building, where investment had previously been postponed by government restrictions during the early defence build-Up period.

Capital expendi.

tures in manufacturing declined slightly, but investment in mining and resource develop ment continued to increase.
There was a significant inventories increase in business during the first nine months of the year, con· centrated largely in the manufacturing and The decline in inventories retail groups.

The Budget-Mr. Abbott though it contri during the final quarter, buted to the levelling off of business activity, was basically a constructive adjustment.

Finally, 1953 was also another big year for Canada's external Imports continued trade.
the upward trend which first became apparent in the latter part of 1952, and were 9 per cent greater than the previous year.

Exports, on the other hand, while still at very high levels showed a decline of 4 per cent trom the record established in 1952.

The substantial increase in demand for imports reflects in large part the high levels of investment and consumer spending which characterized the economy during 1953.
It also reflects the improved supply situation in many countries and sharper competition in world markets.

These factors also con tributed to the small decline in Canadian including such traditional export exports, farm as wheat, woodpulp and products machinery.

A significant change took place in the direction of our export trade.
Sales to the United States rose by over $100 million, whii6 the proportion of our exports going to the United Kingdom and other commonwealth markets declined, reversing the trend which had prevailed during 1952.

On the other hand, there was some increase in the propor tion at our imports coming from the United Xingdom.
The emergence ot an import surplus on merchandise account was the main reason for the swing in Canada's balance of pay ments position from a current account sur plus of $157 million in 1952 to a deficit of some $467 million in 1953.

Short-term capital movements during the past year showed a much smaller net out flow on balance than in 1952.
At the same time there was an increased inll.ow ot long term capital associated with an expansion in direct investment in Canada and net sales ot new Canadian issues abroad were again sub stantial.

These capital movements produced a surplus on capital account roughly equiva lent to the deficit on current account, and there was little net change in our foreign exchange reserves.

The foreign exchange value of the Canadian dollar showed almost It declined no net change during the year.
moderately from January to May, and then moved up slowly to the end of the year.

Coming now to the present position, the first thing to observe is that the real income of the Canadian people has been expanding at a rapid rate for a number of years.

The the economy in 1953 was able to fact achieve further gains of the magnitudes I have sketched suggests to me that we shoulo.

that 3726 HOUSE OF COMMONS The Budget-MT.


Abbott not feel unduly concerned with a temporary Indeed, slowing down of this rate of advance.

in the dynamic kind of economy we have In Canada an occasional hesitation In its for ward movement may weI!

be one of the consequences of the buoyant character of our economic growth.

Most of the elements which supported the growth in n<ltion<ll product in 1953 are still preH'nt, and 1 believe that the forces of long· term expansion will soon reassert themselves.
in But some readjustments in produclion, costs and in pricing policies are necessary, and are ind~d going on.

There is no need for me to go into detail concerning the nature of the present eco nomic situation.

It is characterized by more unemployment than we had last year at this same time, and by more unemployment than any of us like to see.

It is marked also by a slackening in the growth of production and by declines In c<!rtain industries.

in the An expianiltion of this state of alTalrs in Can:'ld1l.
can be fO:.Jnd in a series of changes which huve been at work during the last year or more, both international economic field and here in Canada.

These changes have given rise to a greater de;ree of imr>ort and export competition, and to a more cautious attitude on the part of indus:ry.

These facters have led some industries to reduce their rates of production, or of Inven In passing, tory accumulation.
1 may note, that the main explan<ltion for the recession in business in the United States given in the F'ri!Sidcnfs repert to congress was a change from inventory accumulation to Inventory reduction.

Added to this there has been a small decline In net farm income ~sulting from a reduced volume of agriCUltural pro duction, and lower farm prices.

We have also experienccd <I small decline in exports.
Although the effect of these declines in farm income and In exports should be measured the very high levels achieved in the against previolls year If we are to keep things in propl'r perspective.

the fact remains that they in turn have tended to limit the demand of the prodllcers affccted for the products of the other sectors of the economy.
The increase in Imports, especially of those kinds of things that we make in Canada in reasonable volume, and the decline in our though these changes may be, exports, small inevitably raise the question of our efficiency and of our cost and price structure.

1 do not agree with the suggestion occasionally heard that Canada has become a high cost economy.

That may be true of some few sectors.

but It is not true of our basic industries.


But it is true that for seven or eigM years business has been travelling along a comparatively (Mr.

Abb.lU.)

easy road.

After the war we had an unscarred and greatly expanded economy.

We had learned a technical lot and made great In a world beset with shortages advances.

and great reconstruction we have tasks of been admirably situated to supply both oU!'

own needs and the needs of our customers.


Many countries have now recovered their productive capacities; they can meet a larger part of their own needs and they have more for export.

Competition both for our market and theirs has become keener.

Until quite rceently our industries have been protected more by external shortages than by our traditional tariff structure.
This special form of protection is now disappearing, and some of our industries are finding that they have not watched their costs as carefUlly as they should, their brenk-even points are uncomfortably high, and thnt their costs and prices are out of line.

One result of all Ihis is that I have had more requests for tariff increases or other forms of protection during the past than in any year since J became Minister of Finance.

This government, as the house knows, has steadily f<lvoure<!
reducing obstacles to trade, and we must move in this direction If we expect others to do likewise.

It we were to meet every breath of new competition by increased protection we would certainly become a high cost economy and progressively alL"tavate our problems.

few months that The re·emergence of keen competition In trade means readjustment and reappraisal.

It means a shar;lening of pencils and a can!

ful re·examination of managerial and labour efficiency.
This is not an easy process, but it is a very necessary one, and the longer it is postponed the more difficult it becomes.

I do not believe that the current slowIng down of expansion will be serious or pro Inventory accumulation is a volatile longed.

in an economy as dynamic as ours factor but the total of demand both at home and abroad is being well sustained, the present situation should be quickly self-correcting.
in mind that if we bear My reasons for saying this are, first, that the support to be given to production in 1954 In the principal areas where demand origi· nates is well assured.

This statement holds good whether we look at the intentions of to new in· Canadian business with respect vestment, or at the probable expenditures of Canadians as consumers or builders of new houses, or at the rate of government expendl the prospects for exports.
The tUn!s, or at second reason Is that we already have a series of supports which should prevent the present readjustments from becoming more generalized and seU·aggravating.

APRIL 6.

1954 3727 that intentions It is clear industry as a whole has such confidence in the future of the economy that it intends to undertake greater capital than ever before.
The annual investment survey recently investment of tabled by my colleague, the Minister of Trade and Commerce (Mr. Howe), shows that 1954 will see nearly $6 billion spent on new invest ment, or three per cent more than in 1953.

Though some industries will spend less on new investment industries, especially the public utilities, mining, and commercial establishments will spend more, and more than enough to maintain the extra ordinarily high levels reached in recent :years.
Housing requirements remain substantial and the recent changes in the housing act should help to translate these needs into results.

in 1954, other The expenditures of the federal govern ment on goods and services, as well as those of provincial and municipal governments, will increase moderately this year.

Given the incomes, and present high level of personal the high volume of available personal sav ings, there is a strong basis for maintaining or increasing consumer expenditures during 1954.
So far as exports are concerned, the out In the last few look is a little less certain.

years unusually high sales of wheat and coarse grains have contributed to increase our exports.

But by normal standards, the prospects for grain sales remaIn good, For other significant commodities changes seem likely.
though much will depend on markets in the United States, So far as our European and commonwealth markets the basic economic position are concerned, improved and an of these countries has increase over the export levels of 1953 is a reasonable expectation, export no As in so many other questions affecting our development much will depend on the economic situation in the United States, This is, of course, the open season for forecasting the behaviour of the United States economy, but I do not propose to join in this particular exercise.
I shall merely note that responsible opinion in the United States seems to be confident that the present downturn will not be deep or prolonged, and that there is a &rowing consensus of view that an upturn can be expected soon, In the light of all these considerations, I do not feel that drastic measures by government are appropriate to the present economic situa tion.
As I have said on many previous occa sions, there are bound to be both ups and downs in an economy enjoying an unusually high rate of growth.

Our present adjustments are taking place at a level of activity which The Budget-Mr. Abbott is higher than anything we have been accus~ inter· tamed to in the past.

Governmental vention or expenditure is not a cure for the problem of those industries where supply has temporarily outrun demand, at home or abroad, or where costs and prices have got out of line.
The basic solution in these Indus· tries must be to produce more efficiently, to eliminate waste, to reduce costs and to search out new markets, with new or better products.

In many instances I know that these processes are already under way.
There is, of course, a good deal that can be done by government by measures which have the effect of sustaining demand and produc The government's projected capital tion, expenditure program for the coming year, as indicated in the estimates, takes into account the higher priority which is now being given to federal projects, Even In this field, how· ever, the present plans of industry to embllrk upon new capital constr..lction, and the expec ted high level in housing activity, leave little room for any greatly expanded program on federal account.
And I do not believe, in any case, that increased public works of the kind appropriate for the federal government can remedy a p,oblem which is to a large extent local in character, The amount of transfer payments made by the federal government has grown consider ably in recent years and provides an under· pinning of consumer expenditures.

Some of these payments, such as unemployment bene fits, necessarily increase when earnings fall off and thus support the level of expenditures.
Most of these transfer payments, such as old age pensions and family allowances, are made to groups who spend nearly all their incomes In agriculture and on goods and services, fisheries, price support legislation has been in operation since the end of the war, to put a floor under the incomes of primary pro ducers when economic stability is seriously threatened, My general conclusion is that our ,national product in 1954 will be at least equal to 1953, in other words I think and probably higher; that 3n upswing in the second half of the year will more than compensate for the declines that are evident in certain branches of industry at present.
I should like now to report briefly on our revenues and expenditures for the fiscal year which ended last Wednesday.

The usual detailed statements of the accounts are in the tabled yesterday and white paper which I I do not propose to take time in covering this ground again, However, I should remind hon.

members that the final results of the year's operations will not be known for some time 3728 HOUSE OF COMMONS The Budget-Mr. Abbott yet.
Consequently the I1gures in the white paper and those which I shall use tonight are based on estimates and must be regarded as preliminary.

In my budget speech last February, I esti mated budgetary revenues for 1953-54 at $4,473 million, expenditures at $4,452 million and our prospective surplus at $11 million.

It appears now that our actual revenues for the ;year were about $4,400 million, our ex $'1,390 million and our penditures <:bout budget surplus about $10 million.
less than I Despite the tax reductions announced in the last year's budget, revenues in 1953~54 were the largest on record.

The total of $4,400 mimon is $73 million, or about a per cent foreeast a year ago, but about $40 million more than we collected In tt.e preceding year.

Personal and corporatc!

inco:':'J.e tax and e::l;c!sc duty collections have been short ot my budget forecast, but customs, sales and excise taxes nnd non-tax receipts have all exceeded my earlier expectations.
Of the total revenues for the year, personal and corporate income taxes, succession duties ;and other direct taxes produced 56 per cent, com modity and other indirect taxes 35 per cent, and non-tax revenues 9 per cent.

The expenditures last year, at $4,390 mil lion, were $72 million or Ij per cent less than my budget forecast, but about $53 milllon more than the total spent in 1952-53.
Again the most notable feature of our expenditure program has been the continued importance of de!ene~ which constituted over 43 per cent of all government outlay in 1953-54.

Full details are given in the white paper, and I shall only point out that, apart lrom defence, our total budgetary expenditures in round figures amounted to $21 billion.
Of this sum nearly $500 million was for interest and serv~ ice of the public debt; $750 million-in addi tion to $340 million paid out of the old age security fund-was for family allowances, veterans' benefits and other welfare and social security services; about $340 million for subsidies and tax rental payments to the provinces; and $110 million for services and assistance to agriculture.

In other words, these tour classes of expenditure accountc{!
lor more than two-thirds 01 all our civil or non-defence expenditures.

aspects position and those I should like to S<lY something about our cash of our financial operations which lie outside the in addition to our out budget.

Once again, lay for governmental services which are included in the budget proper, we have had to provide large sums for loans, investments and working capital advances and for a variety of other purposes.

During the fiscal (Mr.

Abbott.]


year, these outlays, all of which of course were authorized by parliament, amounted to $430 million.

To meet these requirements we hove had available from non-budgetary sourccs the very large sum of $810 million, 01 which $445 million came from the repay.

ment of loans and advances and $200 million from net receipts and interest accumulations in various ~nnuity, insurance and pension accounts.

Details or all these lran:;3etioos are given on page 62 of the white paper.
After transactions, debt for taking into account our buda:etary surplus oC $10 million and the net amount or $380 million remaining from all these non· $390 million was budgetary Actually, available funded debt in the hands of the public was reduced during the year by 300ut $:jO mil lion, and our cash balances at the: end of the year were $120 million bigher than they were at the bi:!ginnir.g.

reduction.

the and have included rC{!emption result, as I The public debt operations durin.
: the put year or reCtnancing of a large volume of matu:-ed or called bond issues.

l~ addition to the usual refunding or convef!ion of short term Sl!<:uri· ties, we issued new securities amountini in round figures to $3,150 million and redeemed old securities and acquired others for our fund sinking investment securities in the amount of $3,420 million.

acco!.

:nts indic3ted a momC!nt ago, As 11 we were abl!;!

to reduce our unmatured funded debt outstanding in the hands of the pubUc by $270 million.
The average rOite at interest paid by the ,overnment on its funded debt was slightly the higher at the year-end than it was at beginning.

ratl!

was Two years ago the 2'67 per cent and last year it was 2·j1 per cent.

At March 31, 1954 it was 2·83 per cent.

I turn now to a consideration of a tax policy appropriate to the coming year.
a Our present lax structure under prosper ous conditions, without inflation, and allow ing Cor normal growth factor, would produce revenues ot about $4,500 million this year.

Present indications, in my opinion, point to an early resumption of an upward trend in business, and a good prospect of tbU figure being realized.

It is, of course.
It is, of course.

possible that externai factors might be such the present pause in our expansion that would continue through most ot the year, and if that happened our revenue would be in lower.

basing my tax policy on a liberal rather lban a conservative estimate of 1 propose, to take $4,500 million as therefore, fully justified, however, the future.

leel I APRIL 6.
leel I APRIL 6.

1954 3129 my revenue base; and if I may have unani mous consent 1 shall insert at this point in Hansard a table giving the details which make up this total.

Mr. Speaker: Has the minister the consent of the house to place the table on Hansard?

Some hon.

Memben: Agreed.
Mr. Abbott: The table follows: Table I Revenues Before Tax Changes (in millions of dollars) 1954-55 PeI'$Onal Income tax .........•.. $1.~ Non_~sldent Income tax 55 Corporation Income tax .......•.• 1.200 40 Succe~slon dutlei 415 CUlltoms Import duties Sales tax 610 Other excise duties and taxes.... MO 15 M1J«ll~neous taxes Total tax revenues Non-tax revenues SpecIal receipts and eredilll 4.nO 340 5(1 Total revenues ....•......... 4,500 Old All:e Security Taxes 2 per cent sales lax :2 per cent personal Income tax.. :2 per cent corporation Income lax 153 97 56 Total 1953-54 (Preliml- nary) $1.189 M 1.194 4() 408 592 518 14 4.0'09 311 74 4.400 148 91 55 ".
The main estimates of expenditure have ftlready been tabled and total $4,492 million.

With the co-operation of my colleagues and the treasury board staff, I have been follow ing each year a policy of steadily improving the quality and the completeness of the main estimates, and I believe that this year they are as complete as it is possible to make them.
There will, of course, be some supplementar· ies, but I can foresee no large items overhang· ing us, such as we had last year in the losses related to foot-and-mouth disease and in the costs of the general salary increase for the public service, which together totalled nearly $100 mHiion.

Each of the more than 500 items which make up the total estimates are individual maximum authorizations, and there is bound to be a certain amount of underspending and lapsing.
The original estimates have been carefully screened and the lapsings will not be large, but they can bardly average less than 1 or 2 per cent.

All in all, I have come to the conclusion that a prudent estimate of our total budgetary expenditures is $4,460 million.

My general philosophy with respect to taxa· 'Uoo has always been that in good, prosperous years we should balance the budget with a bit over for the reduction of debt.

When we The Budget-M1'.


Abbott have had exceptional years, and especially under conditions of intl.ationary pressures, I have never apologized for having a substantial surplus for debt reduction.

I am also con· vinced that whatever merit there may be in large scale deficit financing under severe con those conditions neither exist nor ditions, are they in prospect.
On the other hand, I do not think one should be unduly cautious and refuse to consider desirable tax reduc tions just because conditions might deterior· ate and we might have a small deficit.

Taking, therefore, $4,500 million as my revenue base, and $4,460 million as my I have a modest sum of about expenditures, $40 million available for tax abatement.

cash to make Beyond the budgets we shall, as usual, have to find authorized loans, advances and Investments.
We shall prob ably require about $125 million for loans to Central Mortgage and Housing Corporation.

The Canadian National Railways capital requirements in 1954, which are initially financed by advances from the government, will come to about $190 million.

Funds will be needed tor other crown corporations and for loans under veterans' legislation and other authorized purposes.
There are likely to be n~t disbursements from the defence equip ment and it would the old age the revenues of appear security fund will again fall short of pay these requirements, ments.

there will be from oon budgetary sources, mainly from the repay ment of loans and advances and from the various insurance, pension and annuity ac counts which the government holds and administers.
is not possible to forecast these non-budgetary items accurately, but I expect that, excluding funded debt opera the C.N.R., tions and the requirements of there wlll probably be a small net balance in our favour.

replacement account, cash available To finance all that It Another matter that I am required to re port upon to parliament is the position of the I have included this old age security fund.

report in the white paper at pages 67 and 68.

Hon.
Hon.

members will recall that payments under the Old Age Security Aet began in January, 1952, but contributions to the fund became payable at different dates-the 2 per cent sales tax in January of that year, but the 2 per cent personal and corporate income taxes not until July, 1952.

There was therefore a long lag between payments out of and pay ments in to the fund.
This lag created a deficit in the fund of $50 million in the first three months of 1952, and contributed largely to the deficit of $99'5 million in the year ended March 31, 1953.

Recognizing this lag, 3130 HOUSE OF COMMONS reported to parliament The Budget-Mr. Abbott parliament in 1952 appropriated funds from general revenue to extinguish the first three months' deficit.
Last year I that because of the continuing effects of the initial time lag I would have to wait another year judgment on before I could form a proper income and outgo in the real balance of the old age security fund.

At time I had expected revenues 01 $278 million, pay* ments of $345 million.

and a probable short* fall of $67 million.

the results have been much better.

Payments were $6 million less than I had forecast.


revenues $16 million higher, and the deficit at $45 million is one third less than expected.

In fact that Looking at the year just beginning, it seems probable that we shall again have a deficit of about $50 million.
A precise accounting approach might suggest that [ ought to pro pose an increase in the scale of contributions; but, as I said a few minutes ago, I do not think this is a time to be increasing taxes in Canada if I propose therefore to carry on with the same scalc of contributions for another year.

that can possibly be avoided.

Under the Old Age Security Act, deficits in the fund are met by temporary loans from the Minister of Finance and these loans are carried as active assets on our balance sheet.
The $99·5 million deficit of 1952-53 resulted in large measure from the original time lag between the commencement of payments and contributions.

I do not believe any useful purpose is served by carrying this liability of the fund forward into another year, and I propose, with the consent of parliament to write it off against our accumulated active asset reserve.
FEDERAL-PROVINCIAL FINANCIAL RELATIONS Before completing this statement of tax policy for the ensuing year, I must make some reference to the general federal* provincial financial relations by reason of the fact that the province of Quebec has decided to impose again a personal income tax.

field of The right of any province to impose such a tax has never been questioned.
The pre~ amble to the recent Quebec statute imposing the tax contains a statement, however, which cannot be allowed to pass unchallenged.

That preamble contains the following words: Whereas the Canadian constItution concedes to provinces priority In the field ot dIrect taxatl':>n: There is no foundation in fact or in law for such a statement.

The provisions of the B.N.A.

Act in this regard are clear and unam~ oiguous.

Federal taxing power is unlimited.


ProvInces are limited to direct taxation within [Mr.

Abbott.!

the province for provincial purposes.

No priority is stated and none is implied.

On the contrary, both levels of government have equal and concurrent rights in the field of direct taxation.

taxes, Within their powers of direct taxation, provincial governments have imposed general taxes in respect of par.
retail sales ticular commodities such as gasoline, tobacco and liquor, security transfer taxes, and so on, In fact, with the exception of customs duties, [ know of no important source or revenue used by the federal government which has provincIal not governments.

provincial If provincial pri* taxes are direct ority in taxation is admitted, it follows that they have priority in the case of all the taxes which they levy, including these sales taxes and commodity taxes of all kinds.
available Presumably taxes.

field of direct to all been also the Under such a doctrine, the provinces would have the right the federal to demand that government, In effect, abandon taxes up to the extent of provincial use.

The federal government would be bound to accommodate tully whatever level of direct taxes the pro vinces wished to impose, and federal taxes would have to be abated to the extent called for by provincial authorities.
There is, or course, nothing whatsoever In our constitution to support such a doctrine of provincial priority, and no federal state eouid survive as a nation under such an arrange· ment.

So far as personal income tax is concerned, the federal government entered this field in 1917 and has remained In it continuously since that time.

Today, the personal income tax is one of the main pillars of the federal revenue system.
My own province of Quebec did not enter the personal income tax field until 1940 with a tax applicable to the year 1939.

It was then abandoned at the end at the following year when wartime tax agreements were entered into.

Thus for only two years out of the eighty·seven years since confederation has the province of Quebec attempted to exercise its right to levy such a tax.

This Quebec income tax was Imposed as a fiat percentage of the federal tax currently in force at that time.
As such, it carried the same level of exemptions and, accordingly, was payable by the same people as were tax.

The Quebec tax subject to the federal was in addition to the federal tax.

No tax* federal payer was allowed to reduce his tax by the amount paid under the provincial law.

They were two parallel taxes on the same income payable to two governments.

APRIL 6.

1954 3731 follow this pattern.


The present Quebec income tax law does not It levies the tax under a separate rate structure, provides for different exemption Ilmits and deductIons snd imposes a tax upon some only of the persons liable for income tax.

On federal those to whom the Quebec tax does apply, my understanding is that the rates work out at about 15 per cent of the federal rates.
their taxes federal income Since 1947 the federal law has contained a provision allowing taxpayers to offset up to tax through 5 per cent of payment of a provincial income tax.

Gener ally speaking, the credit in the federal law in respect of succession duties, corporation income taxes and personal levied by provinces gives leeway approxi mating the previous level of use of these taxes by provincial governments prior to the war.
It was introduced as a measure to accord some degree of relief to taxpayers taxed at It was the same time by two governments.

entirely a unilateral concession which called for no comparable concession of any sort by a province.

So far as I am aware, this type of tax concession is unIque and is found in no other federal tax system.

instance, in the United States of For America, income in addition to the federal tax some thirty different states levy personal income taxes.
These state taxes are at vary ing levels.

]n New York state, for example, a married person with no dependents with an income of $5,000 a year pays $45 to the state of New York, and $660 to the federal govern ment.

It may be of interest to observe that a taxpayer in Quebec with the same income and marital status will pay a provincial tax of $49 but has the right to a credit of $28.50 against his privilege not enjoyed by his fellow sufferer in the siate ot In the neighbouring state at New York.
Pennsylvania no state personal income tax is imposed.

Accordingly, a resident of Pennsyl vania pays less income tax than does the resident of New York.

The weight ot com bined federal and state taxes will vary with the different states.

the essence of state or provincial autonomy that It is this very their tax levels may differ.

right is so jealously that to be different guarded.
The idea that there is anywhere a in a federal state recognized principle that the combined taxes levied by all governments shOUld be no greater in one part ot the coun try than in another is without foundation.

Perhaps it federal is of tax, a provincial The principle underlying the suggestion that generally be tax should allowed as an offset against federal tax strikes the very root of the system at federal at tax agreements which have been provincial The Budget-Mr. Abbott developed in this country.
It might be useful, therefore, to out11ne what it has been sought to accomplish by these agreements.

Prior to 1940. seven of the then nine provinces, as well as many municipalities, income taxes.

Today were levying personal income taxes in there are only two personal force--thc federal and that of the province of Quebec.

Prior to 1940, seven of the prov~ inces imposed taxes on the profits of corpora tions at varying rates.

All provinces imposed -a complicated series of misceUaneous cor poration taxes.
Today there are only two corporation income taxes-the federal and Quebec-while Quebec also resorts to a series of other miscellaneous taxes.

Previously all the provinces levied succession duties.

Today succession duties are imposed by only the federal government, Ontario and Quebec.

The heavy costs incidental to the mere collection of taxes from Canadians as a whole have been greatly reduced.
In this respect agreements federal-provincial have been of the greatest benefit to the prov inces, to the federal government and to the whole body of Canadian taxpayers.

corporation the the While complete removal of double taxation over so wide a field with the bene fits of simplification and efficiency is impor the most significant tant, it is probable that and fundamental feature of the agreements is the way in which they have provided financial stability for the less well-oft prov inces.
The house will recall that in the later thirties a number of provincial governments were in dire financial straits, and were facing the necessity of curtailing essential services to an extent which would have imposed great strains on our federal structure.

The situation was very serious.


The federal-pro vincial agreements have provided, through the avenue of friendly discussion, a system under which reasonable and stable revenues are currently being provided to those prov~ inces whose fiscal needs call for more reve nue than they could be expected to colled These agreements by their own methods.

have helped to enable these provinces to maintain minimum national standards of provincial services.
The third main purpose of the agreements has been to enable tile federal government, with the co-operation of provincial govern ments, to carry out fiscal and other national policies which help to maintain high levels of employment and production in Canada.
Summing up the value of this system of federal-provincial I might be allowed to quote one paragraph agreements, perhaps 3731 HOUSE OF COMMONS The Budget-Mr. Abbott statement which I made to the from a federal-provincial conference in 1950: thl, table for 1 have laid that lOme eredlt II due to everYone seated at Ihe remarkable prolresa towardl a sane tax Iy..t~ which hal been made In rlf!

(:ent years.
(:ent years.

The provinces whleh have been to the federal government wllllnR to rent their Important rilfhts In the fields 01 Ineome and cor poration bxu and luc:<:esalon dull" have contri buted ltTeaUy to this dellratHe result.

Under the al:"reem~ts.

literally hundredl of taJl;es of one sort or another bave been IUlpenc!ed and replaced by .. relatively few.

Meantime.

these provinces have received in remuneration rental p ..yments.
Iteadily ris.inR with the Increase In national Ineome and provindal populaUon and of a maa:nltude a:reater.

than could have bun obtained by the 1 bcolleve.

In dlre<:t provlnelal eultlvaUon Of question-at least unlHs the Intenaity of eulUva.

Uon had been pushed to a point which would sc:an:ely have been tolerable under today·.. eon.

dlUons.
dlUons.

Thus at one Itroke a creat many old and diverse levies have been nllpended While reason able returns ttlroulfh payments from the federal a:overnment have been auured by 1.

'le acreements.

To my mind.

thla Ia the ~ee or effective ta,r adm:nlstratlon.

the tax fI,.

)dl This Canadian plan of tax rental agree ments as a method or device for dealing with the financial problems of the members of the federal state has been developed on a Following the rejection of practical basis.
the Rowell-Sirois recommendations, the fed eral government proposed the wartime tax agreements under which all provinces for the duration of the war, In consIderation of cer tain rental payments, suspended their income and corporation taxes.

After the war same old problem the presented itself again and at the 1945 federal· provincial conference the federal government put forward a comprehensive plan as a sub· stltute for This plan was found to be not acceptable to all provinces.

the wartime afTeements.


Again the federal government, without the benefit of any workable alternative proposals from the provincC!s, had to devise some prac ticable solution to meet the post-war situa tion.

The tax rental agreements were the result and their great virtue in achieving important objectives they do not depend upon unanImous acceptance by all provinces.

that is Bny alternative comprehensive method of solving the over-all problem of conflicting tax jurisdictions in Canada.
The various options offered under the pres ent agreements have been developed In a genuine attempt to meet the diverse financial needs of provinces which, unfortunately, are not all equally endowed with natural advan tages.

Naturally provincial governments will continue to argue that the agreements should provide higher rental payments, but by and larg:?

terms are tolerably acceptable to all.


the to rent The province of Quebec alone has decided its income and corporation tax not fields to the federal government.

I wish to make it perfecUy clear as I have on other the federal government has oceasions that DOt urged the province to enter Into sucb an agreement and bas no quarrel with the deci.

sion taken by the government ot that prov.

ince to use its own talt fields rather than to rent them to the federal government.
The statute imposing the new personal in.

come tax in Quebec was adopted witbout any prior consultation with the federal govern_ I do not suggest.

ot course, that such ment.

consultation was necessary, but the tax was imposed with full knowledge of the extent of the tax credit available under the federal law since 1947. which is limited to 5 per cent of the federal tax.
careful It is now suggested that the federal govern ment should allow taxpayers in Quebec to reduce the income tax otherwise payable by them to the federal treasury by the full they are required to pay to the amount I have given thIs suggestion the province.

most consideration.
most consideration.

Clearly, however, the obvious implication of is the principle Involved In this proposal this parliament should recognize that that any province has the right to determine the amount by which the people ot that province may reduce their national I consIder that Bny such principle is completely unacceptable.

tax liability.
tax liability.

serious and Prior to the termination of the first series of agreements which had been entered into by seven provinces, a federal-provIncial con ference was called In 1950 to discuss with aU the the renewal of the acreements and any sugges tions for modidcation in their terms.

Again forward for there were no proposals put the prospects provinces for it would appear If a credit up to 15 per cent ot the federal tax were accepted, to be difficult in principle to later deny full credit tor.
say, a 30 per cent.

a 60 per cent or even It a province a 100 per cent provincial tax.

had the suggested constitutional prIority in the field ot direct taxation, then nothlnl short of the right to reduce federal tax by 100 per IMr.

Abbott.)

APRIL 6, 1954 3733 This cent would be the stopping point.
would imply that a provincial government without imposing any additional burden on its own taxpayers could secure to its own treasury the full amount which would other wise be payable by its people to their national government.

This would be the obvious con sequence of allowing a province to determine the degree of offset against federal tax to I can here only accommodate its own tax.

repeat what I said earlier on this point.


There is no justification under our constitution for Its acceptance would not only such doctrine.

treasury in an intolerable place the federal position but it would completely destroy any baSis for federal-provincial tax rental agree ments.

While this, of course, might not be a matter of serious concern to the wealthy provinces, it can scarcely be disregarded by others.
I have indicated the efforts made by the federal government since 1945 to find a basis for fiscal co-operation which would be fair to all the provincial governments, would fully respect provincia,l autonomy, and at the same time enable the government of the nation to the citizens discharge its obligations to all of Canada in all the provinces.

The tax rental agreements represent the best solution it has so far been possible to find.
if It is obViously impossible to conduct inter governmental discussions through press con ferences and pUblic statements, but the premier of Quebec wishes to follow up his frequently expressed desire for co-operation and collaboration, and will make concrete proposals to the federal government which respect the rights of both federal and provin cial authorities under the constitution, which would be fair to all ten provinces and leave the federal government in a position to d1s~ charge its national obligations, he will always And the door open for full and frank dis cussion in the hope of finding a mutually satisfactory solution.
Finally, perhaps I should say a word about what appears to be the attitude of the Con· 8ervative opposition on this subject as evi denced by the resolution recenUy adopted by the Progressive Conservative association.

The resolution is reported in the press as follows: "The Conservative party advocates the principle that any provincial Income tax levied by the gov ernment of any province be deductible from Income tax payable to the federal government by any tax Jlayer of such province.
provided the amount ot that 'uch taxation does not exceed the amount 83276-236 The Budget-Mr. Abbott such province would have received from the federal government 1t such a tax aveement bad been negotiated."

This resolution clearly does not support the doctrine of provincial -priority in the field taxation asserted in the Quebec of direct statute.

Rather it is a general proposition that stems from the tax rental agreements.
It appears to propose that any province whicb does not rent its tax fields should be accom.

modated indirectly from the federal treasury it would have up to the amount of rent received if it had rented its tax fields.

I must confess I find that principle somewhat bewil dering, but it would appear to be as effectively destructive of any basis for federal-provincial tax rental agreements as the priority doctrine to which I have alluded.

However, if I have misunderstood the purport of the resolution.
I am sure hon.

gentlemen opposite will clarify the matter during the course of this debate.

TAX CHANGES The incentive legislation for May I now place before the house my pro· tax changes.

As I said earlier, posals for there is not much margin for tax reductions.

and I have had to consider carefully how I can get the most equity and the best economic results with the resources at my disposal.
Clearly it is not possible to make any gen eral reduction in the income tax rate struc ture, either for individuals or for corporations.

The most I can do in this field is to make a few desirable adjustments.

None of them will have any significant effects on revenue.

the oil, gas and mining industries will be extended for a further year.

In the case of deep-te6t wells, however, this special concession will in future be r~stricted to more complicated structures such as occur in the foothills.
An amend· ment will be introduced to re-establish past policy with respect to the tax status of fire and casualty mutual insurance companies.

It is proposed to withdraw the -provision in the income tax regulations which limits thel deductions for capital costs to the amount taken on the taxpayers' books of account.

The maximum deduction allowed for contributions to pension funds will be increased from -$900 to $1,500 for both employers and employees.
These are the main changes involving ques tions of principle, though the amending bill will as usual contain a number of technical changes to keep the law up-tO-date and as fair as possible.

SUCCESSION DUTIES Our succession duty law is in need of revi sion.

Within the past few years a great deal 3734 HOUSE OF COMMONS tax laws.

that an excellent It is generally agreed, The Budget-Mr. Abbott 01 progress has been made in improving our federal I think, job has been done through rewriting our Income Tax Act.
The Excise Tax Act has been streamlined, simpli fied and made more systematic.

Up until now I have not been able to devote enough time to a similar improvement in succession duties.

However, I have recently asked officials of three departments concerned-finance, the national revenue and justice-to commence work on rewriting the law.
In the next few months, while the redraft ing is proceeding, the views of informed and interested persons, or groups of persons, would be welcomed on any provision in the law which deserves reconsideration.

In the meantime no change will be made in the present law.

CUSTOMS TARIFF A new tariff item has been established to provide for duty-lree entry of personal gilts not exceeding $2:> in value sent [rom members of the Cilnadiiln forces scrving abroad to rela_ tives or lriends in Canada.
This item con_ tinues the exemption provided for by order in council P.C.

6598 of December 6, 1951.

Last year we pl'ovided duty-free enlry for goods valued at not more than $1,000 imported by the Canadian forces after an members of absence from Canada of not than a year.

I now ,propose to abolish this $1,000 limit, and to provide statutory authority for the long established practice of extending the same privilege to employees of the Canadian government returning from foreign postings.
less of While each of these tariff reductions will the producers or to revenue their over-all be real benefit individuals atTedcd, implications are not significant.

I items.

am proposing changes The budget resolutions relating to the Cus toms Tariff which I am tabling touch 74 tariff in these items which wording in about 50 of would remove uncertainties, anomalies, and administrative difficulties which have arisen.

The other changes all involve reduction or suspension of duties.
No increases in duty are proposed.

The duty is being eliminated on machinery and apparatus, including tubing of a class or kind not made in Canada, for the opera tion of potash and rock salt mines.

A former drawback item is being re-established to provide for a drawback of 99 per cent of the duty paid on ftre clay fire brick used by basic producers of iron or steel.

Duty free entry is provided for materials and parts used In the construction and repair of railway on systems.
motor rail cars or units are suspended until July I, 1956, and on uranium until July 1, 1958. signal duties The authorities, Some of the principal items on whleh the tariff has been substantially reduced include automatic controls tor certain sterilizing pro tear gas ammunition tor use by law cesses, enforcement and impregnated jute fabric used by nurserymen.
Motor vehicles are presently exempt from duty and taxes when valued at not more than $1,500 but duty and taxes apply on any value in excess of that amount.

ThIs exemption has been increased to $2,500.

imported as settlers' effects [Mr.

Abbott.]

sets, regret COMMODITY TAXES I have decided, both for reasons of equity and economic effects, that the bulk of the avail_ able tax abatement should be in the com_ I do not propose any modity tax field.
change in the general sales tax rate, but I can recommend some useful changes with regard to the 15 per cent sl)eclal excise tax, that I am not able to recommend I taxes on automobiles, any change in the television and phonographs cigars.

The revenue from this group is quite substantial and is more than I can forgo at this time; and consumer demand tor these products has been well maintained.
Further more, radios and television sets, last year parUament withdrew the radio receiving licence fee, and directed that in its place the 15 per cent excise on sets should to the Canadian be assigned as revenue Broadcasting Corporation.

think it would I be inappropriate to recommend any change in this tax for the time being.
in respect of radios, I recommend a can, however, reduction from 15 per cent to 10 per cent on such items tires and as soft drinks, candy, cosmetics, tubes, motor accessories, matches, coin operated amusement devices, fountain pens, clocks, watches and jewelry.

smokers' cycles, I can also recommend that the 15 per cent special excise tax be removed completely from furs; electrical household appliances such as vacuum cleaners, floor polishers, irons and ironers, coffee makers, toasters and food APRIL 6.
1954 3735 firearms, golf clubs.

fishing equip mixers; ment; cameras and films; merchandise vend ing machines; and luggage.

The revenue loss involved in rate reduc tion from 15 per cent to 10 per cent for the one group, and in the complete exemption of the other, will amount to approximately $33 million.

While the sales tax rate will remain unchanged, I am recommending the addition of certain items to the schedule of exemp It is proposed to include in the exempt tions.
list certain classes of road machinery and fire fighting equipment when purchased for their own use by municipalities.

Wall panels will be added to the list of exempt building materials.

Miscellaneous items include the small sizes of drain tile, sheet music and hearing aids.

Total revenue loss under all these sales tax changes will be about $3 million.

Taxes in the field or liquor and tobacco products will continue at their present levels.

A technical change will be made in the method of taxing beer.
The present tax on malt used in making beer will be replaced by a gallonage tax.

the change is to introduce a more modern method taxation without affecting substantially of the general level of taxation in the industry.

The purpose of All customs and commodity tax changes will be effective tomorrow, April 7.
My col~ league the Minister of National Revenue (Mr. McCann) has asked me to give notice that in accordance with stondard practice no claims for refunds arising out of tax reductions in respect of goods on which tax has been paid will be entertained.

CONCLUSION I Clln now summarize my revenue and the coming year.

expenditure estimates for in taxation which I have The reductions announced will mean a loss of revenue of about $36 million.
and that reduces my revenue figures from $4,500 million to $4.46~ million.

Since I have estimated my expendi~ I am budgeting for tures at $4.460 million, a surplus in the nominal amount of $4 mil lion.

I shall insert here in Hansard the usual table showing the details.

It I mlly have unanimous consent, Mr. Speaker: Is it agreed?

Some han.

Members: Agreed.


8327G-230l The Budget-Mr. Abbott Mr. Abbou: Table II Revenues After Tax Changes (In millions of dollars) 19S4-55 $1,235 Personal Income tax Non-resident income tax.................. 55 Corporation Income tax ........•...•••••.

1,200 ,.....

Succession duties 40 ,.,..........


Customs import duties 415 Sales tax .. " ..... ,........................ 607 507 Other excise duties and taxes .•.......... Miscellaneous taxes 15 Total tax revenues , .. , Non-tax revenues , ... , .. ,................. Special receipts anc1 crec1its ...•.......... Total revenues , ", 4,074 340 50 4.464 Old Age Security Taxes 2 per cent sales tax."

, .-.,.................


2 per cent personal income tax............ 2 per cent corporation Income tax •...•... 152- 97" 56 , Total ".... very "" ..

,."

heavily I have reminded han.

members 305 almost every year that in dealing with ligures of these magnitudes slight changes in revenue can create big changes in the residual surplus.

Each one per cent change in revenue means $45 million.

A two or three per cent change means a difference of $100 to $125 million.
As I explained earlier, my revenue figures are based on reasonably optimistic assump tions.

I have said frankly that their realiza tion depends upon an early resumption of our rate of expansion.

which in turn normal external the on depends influences affecting our economy.

It these conditions do not materialize, there could be a moderate deficit of two or three per cent.

That, Mr. Speaker.

concludes my presenta tion of the contents of my budget.
We have completed a year which has broken all our past in records of economic achievements in housing and production, in standards of living.

The past six months have seen some mixed trends; some sectors are expanding as rapidly as ever.

some have levelled off and a few have actually declined; but I am confident that unless external factors work against us.

we shall soon be moving into· a new and healthy period of expansion.
in investment, Internationally the political situation re mains clouded and uneasy.

but I believe the' prospects for fundamental economic improve ment are brighter than at any time since I am hopeful that the year ahead of us 1947. constructive see new and important will moves in the direction of improved inter trade and payments arrangements.

national 3736 HOUSE OF COMMONS to new markets.


The Budget-Resolutions which will enlarge our established markets and open doors These markets and ours will be competitive, and will constitute a challenge to management and labour, to farmers and merchants.

The outside world is under no obligation to main tain the Canadian stand'1rd of living.

That is something we have to do for ourselves.

Our costs and our prices will have to be kept in need hardly add that high efficiency.
standards of living and low costs of produc tion cannot be permanently divorced; indeed, the whole last hundred years shows that they go together.

I am confident that we in Canada can achieve and retain both.

in line by continuous improvement economic history of the I INCOME TAX ACT Resolved, that it is expedient to introduce 11 measure to amend the Income Tax Act and to provide, amongst other things: 1.
That the exemption of from metalliterous or industrial mineral mines for the first three years of production be ex tended to mines coming into production dur ing the calendar year 1957. income 2.
That the special deduction from income allowed to taxpayers whose principal busi ness is production, refining or marketing of petroleum, petroleum products or natural gas or exploring or drilling for petroleum or for expenses of exploring or natural gas, drilling for oil or natural gas in Canada, be allowed for expenses incurred in the calendar year 1957, and that in addition a similar deduction be allowed to corporations whose principal business is mining or exploring fot minerals, for expenses of exploring or drill ing for oil or natural gas in Canada incurred in the calendar year 1957.
3.
That the special deduction from income allowed to corporations whose principal busi ness is mining or exploring for minerals, for expenses incurred in searching for minerals in Canada be allowed for expenses incurred in the calendar year 1957; and that in addi tion a similar deduction be allowed to tax payers whose principal business is produc tion, refining or marketing of petroleum, petroleum products or natural gas or explor ing or drilling for petroleum or natural gas, for expenses of searching for minerals in Canada incurred in the calendar year 1957.
4.

That the special deduction from income and taxes allowed to taxpayers whose prin cipal business is production, refining or mar keting of petroleum or drilling for petroleum [Mr.

Abbott.]

and to taxpayers whose principal business is mininG or exploring for minerals, for ex penses incurred in respect of deep-test oil wells be allowed for expenses incurred in spudded in respect of deep-test oil wells during 1955.

5.
5.

That for the 1::154 and subsequent taxa tion ye:l.r5 the deduction allowed to an em ployer or employee in respect of amounts paid or contributed to or under an approvC!d superannuation fund or plan shall be in creased from $900 to $1,500.

6.

For the taxation of a resident mutual insurance corporation, other than a life in_ surance ccr;>oration, as though the surplw arising fr;:lm its insur3nce activities on and after January 1.
1954 were a profit from a business, and declaring that a non-resident mutual than a insurance corporation, other life insurance corporation, shall be deemed to be and always to have been subject to taxation on that basis.

EXCISE TAX ACT Resolved, that it is expedient to introduce a measure to amend the Excise Tax Act and to provide, among other things: 1.

That the excise tax on the following goods be repealed: (a) furs; (b) electrical appliances adapted to house hold or apartment use.
namely: blankets; chafing dishes; coffee makers; curling irons or tongs; dish washers; food or drink mixers; food choppers and grinders; floor waxers and polishers; garbage disposal units; hair dryers; juice extractors; kettles; irons and ironers; and shavers; portable humidifiers; toasters of all kinds; vacuum cleaners and attachments therefor; waffle irons; razors (c) firearms and complete parts thereof and ammunition; fishing rods and fishing reels; (d) golt clubs and golf balls; (e) (f) cameras, camera lenses and unexposed photographic films and plates; projectors for pictures; (g) trunks; suitcases; bags and luggage at all kinds; purses; wallets; blll!olds; key and jewel cases; dressing card cases; handbags; and toilet cases; shopping bags; golf and otber sports bags; (h) coin, disc or token operated vending machines.
2.

That the excise tax on the following to goods be reduced from fifteen per cent ten per cent: (a) articles, materials or preparations of whatever composition or in whatever form,