1941-06-02

[Stage Direction]
Hon. J. E. MICHAUD (Minister of Fisheries) presented the third report of the special committee on the defence of Canada regulations, and moved that the report be concurred in.
Motion agreed to.

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)

Mr. CHURCH:: 1.	Are life assurance companies, under the Canadian and British Companies Act, allowed to own and operate public utility companies in Canada?
2.	Does the Sun Life Assurance Company of Canada own, operate or control the Stormont Electric Light and Power Company, Cornwall, Ontario ?

Questions
3.	Did the Sun Life Assurance Company of Canada obtain control of, own or operate any other public utilities in Canada? If so, when were such properties acquired?
4.	What office does, or did, Mr. Lawrence Jack, of Montreal, occupy in the Sun Life Assurance Company?
5.	What regulations have been imposed on these public utilities of the Sun Life by the superintendent of insurance?


Mr. ILSLEY:: 1.	Canadian life insurance companies have been restricted by The Insurance Act, 1910, and successor statutes including The Canadian and British Insurance Companies Act, 1932, from acquiring more than 30 per cent of the common stock, or of the total stocks, of any corporation. Control of any corporation acquired before 1911 may continue to be exercised thereafter.
2.	Yes.
3.	Yes, two others, both before 1911.
4.	Mr. Jack is an employee in the investment department of the company.
5.	There is no provision in the insurance laws of the dominion for the regulation by the superintendent of insurance of corporations controlled or operated by insurance companies.


CANNED LOBSTER CONTROL-PRINCE EDWARD ISLAND
[Stage Direction]
Mr. O'BRIEN:
1.	Who is the assistant controller or manager
for Prince Edward Island under the canned lobster control scheme?	_
2.	Is his appointment seasonal, full-time or otherwise ?
3.	What salary does he receive?
4.	What sums have been paid him as salary?
5.	What sums have been paid him as expenses?
6.	What has been the total cost to date of operations in Prince Edward Island under this scheme?
7.	What have been the departmental or general cost for advertising and other expenditures and the proportion of same chargeable to Prince Edward Island?
8.	What have been the total number of cases handled, (a) from Prince Edward Island; (b) from New Brunswick; (c) from Nova Scotia; (d) all sources?
9.	What have been the total expenses?
10.	What have been the total receipts from the lobsters handled under the scheme?
Mr. MICHAUD:: 1.	There is no assistant controller or manager for Prince Edward Island.
2.	and 3. Answered by No. 1.
4. and 5. W. H. Tidmarsh of Charlottetown was employed as depot manager there from May 28 to October 31, 1940, and during that period received,-salary, $1,025.81; expenses, $44.20.
6.	$1,774.63.

7.	General cost of advertising based on total production of 58,898 cases-$50,000; proportion to P.E.I. based on 17,284 cases produced, $14,748.70; expenses other than shown in No. 6-chargeable to P.E.I., $1,405.47.
8.	(a) Prince Edward Island, 2,556 cases; (b) New Brunswick, 2,370 cases; (c) Nova Scotia, 5,196 cases; all sources, 10,122 cases.
9.	Exclusive of advertising, $123,727.57.
10.	Sales of canned lobster in Canadian and United States dollars, $96,977.02; United States exchange, $6,901.51; sale empty containers, $256.75; inventories other than canned lobster, $7,121.07; total, $111,256.35; net cost of operations, $12,471.22.


PRESS CENSORSHIP-&quot;THE TREND&quot;
Mr. CHURCH:: 1.	Was a pamphlet or newspaper, dated March 20, 1941, called The Trend, censored at Montreal by press censor?
2.	If so, for what reason?
3.	Who was the censor?
4.	How many copies of The Trend, in excess of two hundred, were allowed to be published and circulated?


Mr. CASGRAIN:: 1.	Yes.
2.	Because in the opinion of the press censor, certain material in it, consisting of an inaccurate report of a speech, contravened the defence of Canada regulations, 39A.
3.	Mr. E. McMahon, assistant press censor in charge at the Montreal office.
4.	None in excess of 200.


ADDRESS OP FRENCH CONSUL-GENERAL IN MONTREAL ON TUNISIA
Mr. CHURCH:: Has the attention of the government been called to an address delivered at Montreal in March, 1941, by the consul-general of the French government, on Tunisia, and containing comments reflecting on the United Kingdom and her allies, and the conduct of the war?


Mr. MACKENZIE KING:: No.


CANADIAN MINISTER TO FRANCE
Mr. CHURCH:: 1.	Has Canada now an envoy or minister or ambassador to the Vichy government of France?
2.	If so, who is he, where is he located and what functions does he perform?
3.	Will he be recalled?


Mr. MACKENZIE KING:: 1.	Yes.
2.	The Canadian minister to France is Lt.-Col. G. P. Vanier, D.S.O., M.C., who is now in Montreal. He is serving as a member of the Permanent Joint Board on Defence established by the governments of Canada and the United States. The Canadian lega-

Questions as Orders jor Returns
tion to France is now established in London in charge of Mr. Pierre Dupuy, first secretary of the legation who is also in charge of the Canadian legations to the Netherlands and Belgium.
3.	This is a matter of government policy which will depend on circumstances.


VICHY GOVERNMENT AND THE WAR-CANADIAN SEAMEN FROM SS. &quot;PORTADOc&quot;
Mr. CHURCH:: 1.	Will the government ask the French government, under Marshal Petain, what its present war aims are towards the British empire and Canada?
2.	What replies have been received from the Prime Minister of Great Britain, or from the French government, through its local legation, to information asked for by the government, as announced in the House of Commons on May 19, 22, and 27, last?


Mr. MACKENZIE KING:: 1.	This too is a matter of government policy with respect to which it is considered inadvisable to make any statement at present.
2.	The information requested of the French government regarding the position of Canadian seamen from the SS. Portadoc who were landed in French Guinea has not yet been received. In view of the known difficulties in communication, the delay in receiving this information is not unreasonable.



MUNITIONS AND SUPPLY-H. H. BELL

Mr. FLEMING:: 1.	What position does H. H. Bell hold in the Department of Munitions and Supply? .
2.	Did he enter government service through the civil service commission, and, if so, at what grade and what salary?
3.	What are his educational qualifications?
4.	What experience did he have prior to his entry into government service?
5.	What is his present salary?


Mr. HOWE:: 1.	Departmental purchasing agent, grade 2.
2.	Appointed through the civil service commission as clerk, grade 3, at $1,380.
3.	One year high school and one year commercial.
4.	1930-32, investigation officer, customs excise preventive service, Department of National Revenue, Niagara Falls, Ontario; 1934-39, salesman, Waverley Motors Limited, Ottawa; 1939-40, salesman, Pinks Limited, Ottawa.
5.	$2,220 per annum.



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. DIEFENBAKER:: 1. How many contracts have been awarded since the outbreak of war to International
Water Supply Company, Ltd., of London, Ontario?
2. What are the particulars of the nature and amount of such contracts?


Mr. POULIOT:: 1.	Referring to sessional paper No. 303 (a) of this session and to attached circulars until August 4, 1939, was it permitted under the regulations of any department to call "gin" anything else than "potable spirit sweetened or unsweetened prepared from grain spirit specially rectified and redistilled with juniper berries and flavouring herbs, etc." as described by section 11 of the regulations under the Food and Drugs Act?
2.	Why were the collectors of customs and excise and excise officers in charge of distilleries "required to ensure that no spirit other than spirit distilled from grain is used in the manufacture of gin, etc."?
3.	When did it become permitted for the
first time to label as "compound gin" a "beverage made by adding neutral spirits to a distillate obtained from a mixture of alcohol, juniper berries and other flavouring herbs, without subsequent redistillation of the whole, etc.", as described by section 11	(a) of the said
regulations?
4.	What was the reason of such a change in the said regulations?
5.	At whose request and through what counsel, solicitor, agent or .lobbyist was it made?


Mr. POULIOT:: 1.	Referring to sessional paper No. 303 of this session, during the last six years, did any department analyse the beverage labelled "genuine Hollands-Geneva-John de Kuyper & Sons, etc."?
2.	If so, how many times?
3.	Each time, was it, (a) "prepared from grain spirits specially rectified and redistilled with juniper berries, etc.", or (b) "made by cold mixing molasses alcohol with malt wine, without being redistilled, etc.", or (c) "by first using spirits not made from grain mashes and secondly not redistilling such mixture with juniper berries, etc."?
4.	Was the beverage referred to in No. 1 permitted to be labelled as "gin"?
5.	If so, when for the first time?


Mr. POULIOT:: Mr. Speaker, I should like to amend part 5 of question 16 by adding after the word "time" the words "during the last six years".


[Stage Direction]
Amendment agreed to.

Mr. ROSS (St. Paul's):: For a copy of all correspondence, telegrams and other documents exchanged between the Canadian Broadcasting Corporation and any department of government; or any official thereof, and the association of technical employees, and also copy of the ruling made by the Department of Justice with regard to



Labour Conditions-War Contracts
the ability or inability of the Canadian Broadcasting Corporation to do business with the trades union.


Mr. HOWE:: Return tabled.


DOMINION BRIDGE COMPANY-CALGARY ROLLING MILLS
Mr. JOHNSTON (Bow River):: For a copy of all letters, telegrams and other correspondence exchanged between the dominion government and the Dominion Bridge Company, and/or other interested parties, since the beginning of the present war to date, in connection with the Calgary Rolling Mills.


LORETTEVILLE, QUE., INDIAN RESERVE WATERWORKS SYSTEM
Mr. ROY:: For a copy of all reports, contracts, letters, telegrams and other documents exchanged between the ministry of health of the province of Quebec and the Department of Mines and Resources (Indian affairs branch), and between the latter and Mr. Ludger Bastien of Lorettfc-ville, Quebec, relative to the purchase of a waterworks system on the Loretteville reserve.
REGULATIONS UNDER SECTIONS 11 AND 11(a) OF FOOD AND DRUGS ACT


Jean-François Pouliot: For a copy of all correspondence, memoranda, briefs, telegrams, and reports in relation to the enactment of sections 11 and 11 (a) of the regulations under the Food and Drugs Act.


Jean-François Pouliot: Before this is carried, I should like to amend it by adding the words "and application" after the word "enactment" in the second line.
Motion as amended agreed to.


CANADIAN NATIONAL RAILWAYS
[Stage Direction]
Hon. J. L. ILSLEY (Minister of Finance) moved that the house go into committee at the next sitting to consider the following resolution:
Resolved, that it is expedient to bring in a measure to authorize the Canadian National Railway Company to issue securities not exceeding $29,414,206 in principal amount to provide the moneys necessary to meet capital expenditures made or capital indebtedness incurred during the calendar year 1941; to make provision for the purchase or refunding of capital obligations of the company or of any company comprised in the Canadian National Railways system and for the issue of substituted securities for such purposes; to authorize the governor in council to guarantee the principal, interest and sinking funds of securities issued by the company for the purposes aforesaid; to authorize the making of temporary loans to the said company secured by such securities and not exceeding $29,414,206 in principal amount to enable the said company to meet such expenditMr. Douglas G. Ross.]
tures and indebtedness; with authority to give financial aid and assistance to other companies of the said national system; to authorize the company to pay supplementary contributions to certain railway employees' provident funds; and to authorize the making of further temporary loans to the said company for interim deficits, said loans to be reimbursed from the annual revenues.
He said: His Excellency the Governor General, having been made acquainted with the subject matter of this resolution, recommends it to the consideration of the house.
Motion agreed to.


William Lyon Mackenzie King: That on and after Tuesday, June 3, 1941, until adjournment on completion of current business, the house shall meet at 11 o'clock in the morning of each sitting day and that in addition to the usual intermission at 6 o'clock, p.m., there shall also be an intermission every day from one to three o'clock.


[Stage Direction]
Motion agreed to.


[Stage Direction]
On the orders of the day:
Hon. R. B. HANSON (Leader of the Opposition):: I desire to direct a question to the Minister of Labour with respect to an order in council reported to have been passed on May 31 providing for increases in minimum wage rates for the manufacture of supplies for the government, and providing that government contractors must now pay not less than the rates set up under the law of the province where the work is performed and never less than 35 cents per hour for adult male employees and 25 cents per hour for adult female employees. This is said to be retroactive in effect.
Having regard to the steady rise in the cost of living I am in accord with the principle underlying this announcement. I understand it is felt that the minimum wage paid in certain cities in the province of Quebec is too low. The question arises: Does this order in council apply to all contracts let by the government on a competitive basis, and if it is to be retroactive in effect, is it the intention of the government that the difference in cost occasioned thereby in respect of competitive contracts let prior to the passing of the order in council will be made good by the government, or will the contractor be obliged to make good the difference?

Commonwealth Air Training


Hon. N. A. McLARTY (Minister of Labour):: The leader of the opposition (Mr. Hanson) was kind enough to give me notice of his intention to ask this question. I think the use of the word "retroactive" has proven to be a little misleading, and if I read section 2 of the order in council it might answer his question:	It reads:
The terms of all existing contracts of the type to which the said "B" conditions apply, shall be revised by the insertion therein of the foregoing schedule of minimum wages, such revision to become effective ten days after written notice thereof has been communicated to the contractor.
I think it would be a fair interpretation to say that this applies to all new contracts and to other contracts in connection with which notice has been given pursuant to the terms of the order in council. I shall table the order in council. I think any adjustments will have to be considered not by the Department of Labour but rather by my colleague the Minister of Munitions and Supply (Mr. Howe). It would be unfair for me to undertake to say what will be done in connection with existing contracts.


Richard Burpee Hanson: The question whether the contractor or the government will have to absorb the additional cost has not really been settled.


Clarence Decatur Howe: The adjustment of contracts is a matter that arises from time to time in connection with the interpretation of the fair wages act. All I can say is that this depends upon the contractual obligations. I cannot say offhand that in every case the contractor will be reimbursed; it will depend upon the nature of his contract.



COMMONWEALTH AIR TRAINING


[Stage Direction]
On the orders of the day:
Mr. J. G. ROSS (Moose Jaw):: I should like to put a question to the government based upon a news item which appeared in most of the Canadian newspapers during the last week-end. This news item is dated at Washington and indicates that the United Kingdom government proposes to train a large number of British air crew in the United States. Will the government inform the house, first, whether it was consulted with respect to this proposal, and, second, as to the effect, if any, of such a proposal upon the British commonwealth air training plan?


William Lyon Mackenzie King: I have been expecting for some days that a question like this would be raised, and I have had in my portfolio a letter which I received from the high commissioner of the United Kingdom in reference to the matter to which my hon. friend has just referred. The letter is dated May 13, 1941, addressed to myself as Secretary of State for External Affairs, and reads:
My dear Prime Minister,
I am writing about the proposal that the United Kingdom government should avail themselves of certain facilities for civil flying training in the United States of America, which Sir Archibald Sinclair discussed with Colonel Ralston at the time of the latter's visit to London.
The United Kingdom government are grateful for the Canadian government's cooperation in the consultations on the subject which have proceeded between the two governments since, and are glad that there is agreement that the proposal offers advantages that we should unhesitatingly accept. The United Kingdom government wish me to repeat at the same time that these plans will in no way reduce the scope of the joint air training plan in Canada, wrhieh, together with those other measures of assistance in the field of air training so generously afforded by the Canadian government, are being developed much beyond the maximum degree originally planned and at a pace which is far ahead of the original schedule. This constitutes a remarkable achievement by the Canadian authorities who are mainly responsible for this scheme, which will, we believe, be one of the most weighty and decisive factors in gaining victory for our arms.
Yours sincerely,
Malcolm MacDonald.


Richard Burpee Hanson: There is no question of Canada's sovereignty involved in this proposal, is there?


William Lyon Mackenzie King: It is not a
question of Canada's sovereignty.


Richard Burpee Hanson: That was
the question three years ago.


William Lyon Mackenzie King: That was the question?


Richard Burpee Hanson: Three
years ago.


William Lyon Mackenzie King: I think my hon. friend is far afield.


Mr. LAPOINTE (Quebec East):: The
United States were not concerned.


William Lyon Mackenzie King: I do not understand the significance of my hon. friend's remarks. Perhaps he will explain them.


Richard Burpee Hanson: They will speak for themselves.
Dairy Products-Cheese



DAIRY PRODUCTS


[Stage Direction]
On the orders of the day:
Hon. J. G. GARDINER (Minister of Agriculture) :: Mr. Speaker, I should like to make an announcement on behalf of the dairy products board.
The agreement between the governments of Canada and the United Kingdom completed on the 31st October, 1940, provides that Canada will supply the United Kingdom Ministry of Food with 112,000,000 pounds of cheese manufactured during the year ending March, 1942. The United Kingdom Ministry of Food has agreed to accept such additional quantities as may be available for export. The price to be paid by the United Kingdom Ministry of Food is 14-4 cents per pound on board ship eastern Canadian ports. The government of Canada has supplemented this to the extent of -6 cents per pound, making a basic price of 15 cents per pound for first grade cheese on board ship.
The dairy products board on the 20th May, 1941, issued an order requiring that during an indefinite period commencing 26th May, 1941, all cheese manufactured in the provinces of Ontario and Quebec are to be large white cheese and to be exported.
The dominion government is supplementing the price of cheese for export to the extent of another cent per pound, making a basic price on board ship of 16 cents for first grade cheese. This extra price will be applicable to cheese manufactured on and after the 26th day of May and exported. The dominion government is, therefore, supplementing the amount paid by the United Kingdom to the extent of 1-6 cents per pound.
On a basis of the minimum quantity to be exported, namely, 112,000,000 pounds, Canada's contribution at 1-6 cents per pound amounts to $1,792,000, but if the quantity actually exported exceeds 112,000,000 pounds this amount will be increased by 1-6 cents per pound on each pound over 112,000,000 which is exported.



SPECIAL WAR REVENUE ACT

[Stage Direction]
The house resumed from Friday, May 30, consideration in committee of Bill No. 88, to amend the Special War Revenue Act- Mr. Ilsley-Mr. Fournier (Hull) in the chair.
Section 16 agreed to.
On section 17-Gasoline.
Mr. DIEFENBAKER:: Mr. Chairman, I was unavoidably absent when this question

was previously before the house, and for that reason I should like to speak on this item at this time.
I have received a large number of protests against the imposition of the gasoline tax so far as agriculture is concerned, in that it means an increase in the cost of production for the western farmer at a time when the government is doing nothing to assure him of a fair return for the products which he sells. Every other industry but agriculture is in the position of receiving a fair return. I was surprised to read all the arguments advanced by the Minister of Agriculture for supporting this tax. At page 3052 of Hansard he said:
It is a tax which, even as now proposed, is levied on a very small percentage of the farmers of Canada.
So that his justification was that only a few were affected thereby. At page 3054 he set out the reasons why he was supporting this tax. I quote:
Coming to the question whether this tax should be imposed on farmers, or whether there should be any tax on farmers, I think we shall all agree that the farmer does pay his share of taxation, whether this three-cent tax is imposed or not. I am not arguing the question from that point of view at all. A three-cent tax on gasoline does mean something to many farmers. It does not mean as much as some of us would seem to have convinced ourselves that it does with regard to many farmers of certain types.
A little further down he says:
But I think I am in agreement with at least sixty per cent, and probably seventy-five per cent, of the membership of this house when I say there never has been introduced in this house a budget which was so completely a farmers' budget as the budget introduced by the present Minister of Finance. That is recognized by farmers all across Canada.
He refers to the budget as a farmer's budget. No doubt he has some reasons for making that statement. If I understand it correctly it means this, that it is a farmer's budget because of the fact that in the main it imposes increased income taxes; and by reason of the operation of the policies of this government and its failure to assure the farmer an income, there being therefore no income, it is a farmer's budget for which the government should be commended.
No one is arguing against any of the taxes in this budget on the basis that the people of Canada are not willing to pay them. I realize the difficulty which confronts the Minister of Finance in raising taxes; I appreciate the necessity of securing revenue. But the best way for the minister to make a success of the campaign for the loan which is now before the people of Canada would be to go on the radio and assure the people

Special War Revenue Act
that their sacrifices and their willingness to make them are appreciated, and that this government is going to cut out unnecessary expenditure for non-war purposes and pare down necessary ones to the limit.
A return has been made to the house this very day in connection with which I wish to protest in that it shows that the governmenat is continuing to increase nonwar expenditures at a time when ever-increasing taxation is being imposed upon the people. Referring to the Minister of Agriculture's new policy for reducing wheat acreage by summer-fallowing, according to this return, which was brought down in reply to my question whether he had any men out in western Canada explaining the scheme, the Minister of Agriculture has thirty-seven men going about the country, each at a salary of $150 a month, plus living expenses when away from headquarters and mileage for use of cars, explaining to the western farmer the need of this legislation. Is there any justification for it at a time like this, I ask the Minister of Finance? Instead of reducing nonessential, non-war expenditures, one department alone proceeds with an expenditure of about $6,000 a month in order to explain to the farmer what he already knows through advertisements which have appeared in the press.
I suggest this-and I have not spoken before in reference to these various measures introduced by the Minister of Finance that when you expect people to make sacrifices so as to be able to contribute to the war loan, and when you impose taxation such as this upon the farmer, non-war expenditures should be reduced to the greatest possible extent, and it is difficult to see that this is being done.
In looking over the list of these expenditures I find that for the years 1938 to 1941 the estimated amounts of expenditure were approximately as follows, the year in each case ending on March 31: 1938, $125 millions; 1939, $411 millions; 1940, $455 millions; 1941, $434 millions, and the estimated expenditure for the year ending March 31, 1942, is $431 millions.


Mr. ILSLEY:: In two of those years we
had two sets of estimates, the main estimates and the special supplementary estimates, and then a third set, the ordinary supplementaries. I believe the hon. gentleman has compared the main estimates only in those two years with the main estimates of the last two years. We had only two sets of estimates in the last two years, as distinguished from three previously. I think the hon. gentleman has fallen into an error in his comparisons.


John George Diefenbaker: No, I am taking
the same set of figures all the way through,
and I am asking the Minister of Finance what is being done to reduce non-war expenditures. Apparently they have not been reduced more than a few millions. I find instances such as this which came to hand to-day, of thousands of dollars being expended in order to create jobs for friends in western Canada. There is no justification for this sort of thing.
I appreciate the industry which the minister applies to his position, and I assure him that if he would- tell the people of Canada that the estimates before the committee, and those to be brought down during the next few days, will be very considerably reduced, it would make a great deal of difference to the success of the loan campaign. As one example, take the Montreal terminal. The expenditure on that project in the coming year, in order to carry into effect a political promise, will amount to $4,466,596. I plead with the minister that political promises be not honoured in these times. I plead with him, so far as political promissory notes are concerned, either to extend the time for maturity or cancel them altogether.
Here we are in the last few days of the session, asking people to submit to ever-increasing taxation, which they are prepared to do for war purposes but not for controllable non-war expenditures. We as members of this committee have the right to protest against the government's having held back most of the non-war estimates until a time when, with termination of the session pretty well set for the end of the week, it will be impossible for us to deal with each one individually and give it the attention it should receive. The people are asking us to give these matters attention. They are willing to make sacrifices, but they expect us to see to it that the slogan "business as usual" is not to be applied to, or made an excuse for, continuing non-war expenditures at the amounts at which they now stand.
All over western Canada the farmers are asking that they be exempted from the gasoline tax. I have not at any time, in the committee or in the house, spoken in protest against any other tax. I recognize that taxation is necessary, but this particular tax is, in my opinion, most unfair. The Minister of Finance, in his argument, admitted it. He conceded its unfairness by saying that he had considered various avenues of escape, but that, because it would be difficult to arrange for exemptions, no course was open to him other than to put it into effect.


James Lorimer Ilsley: I said that if we had had exemptions we would have had a considerably higher tax.


John George Diefenbaker: Yes, but the minister also said that the reason the farmers and
335S
Special War Revenue Act

fishermen were not exempt was that he, his colleagues and those associated with him, could not find any effective means of preventing evasions. He pointed to the situation in one province-he must have referred to Saskatchewan-and the difficulty of enforcing the ' provincial legislation as to refunds of gasoline tax.
I am registering my protest. I realize that our protests do not mean much, but I protest against the tax, and in doing so, I couple with it the suggestion that the minister immediately see to it that non-war expenditures be reduced, so that there may be no question of the performance of political promises at a time like this.
Now that we are trying to get tourists from the United States, the effect of this tax will be particularly undesirable. All over the United States, although I speak particularly of the west, the people are being warned by nazi propagandists not to come to Canada. All kinds of reasons are given, such as alleged difficulties at the boundary and interference with free ingress and egress. A recent article in the Financial Post shows that one of the chief arguments used against tourists coming to Canada, thereby providing us with United States dollars, is the fact that the Minister of Finance, on the occasion of the conference on the Sirois report, warned the Canadian people that rationing gasoline might be necessary. By increasing the tax you keep out more tourists. Within the last week I have had letters from people in the United States who regularly visit Canada, stating that in view of this tax they do not intend to do so any more.
In connection with the acquiring of United States dollars, here is an advertisement on behalf of the Canadian government which to my mind is the most unusual and peculiar which has ever been put out on behalf of Canada. It is issued by the Canadian government travel bureau in the United States and appears in the April issue of National Geographic magazine. What a description of Canada's war effort! I quote:
_ Canada at war is still the greatest playground in the world.
The word "still" is underlined. This is an advertisement that is to bring tourists into Canada! I ask for exemption, first, for farmers and, second, for tourists in order that United States dollars which we need shall not be diminished in their flow into Canada through reduction in tourist traffic consequent on the imposition of this tax.


Mr. FAIR:: I do not think I should let this opportunity pass without once more

protesting against this tax on gasoline as it applies to farmers and fishermen. I have already referred to the good times which have been enjoyed by industry. Labour is now enjoying the level of remuneration that prevailed between 1926 and 1929. If the farmers were receiving to-day the price for their wheat that they received at that time, they would be in a better position to face this tax. If we were getting the price paid between 1926 and 1929 we should be receiving $1.35 a bushel for No. 1 northern at Fort William, but instead of that we are getting 70 cents. Why are farmers singled out for unjust taxation when the prices they receive for their products are so unfair? One-third of Canada's population is on the land, and a large proportion of the people are directly dependent upon the farmers for their living. Why, then, are we discriminated against?
In the last analysis, farmers are the ones who have to bear the brunt of Canada's taxation. They are asked to send their sons to fight the battle overseas, and we want to know why we are discriminated against not only in the matter of prices but also in the matter of taxation. I am not speaking for the farmers of my constituency alone but for farmers across Canada, because it appears that a number of farmer representatives do not think it worth while protesting. My voice may not have any effect on the government's programme, but I think as a farmer representative I should at least protest against a tax which I regard as unjust.


Mr. CASTLEDEN:: What is the estimated revenue from the farmers through this gasoline tax?


James Lorimer Ilsley: There is no estimate.


George Hugh Castleden: Can the minister give no estimate?


James Lorimer Ilsley: No.


George Hugh Castleden: Even on the basis of the number of tractor farmers there are in Canada?


James Lorimer Ilsley: No.


Mr. BLACK (Cumberland):: Has the minister given further thought to the representations which I and others have made, that farmers and fishermen be exempt from the gasoline tax? If the minister has not been able to do so as a federal measure, has he communicated with the provincial government to see whether a further rebate can be allowed to farmers and fishermen in Nova Scotia so that they will not have to pay more for their gasoline? They will be subject to

Special War Revenue Act
the highest gasoline tax in all Canada, and they are the people who are least able to pay it.


James Lorimer Ilsley: The farmers and fishermen in their work will pay the three cents in Nova Scotia just as others anywhere else will. It is the same, because there is an exemption of farmers and fishermen from the gasoline tax in Nova Scotia, apart from this impost.


Percy Chapman Black: I was asking whether any representations had been made to the effect that as a contribution to the war and a special concession to the farmers and fishermen in Nova Scotia in carrying on their vocations, there be an allowance by the province so that these classes of users would be relieved of the new tax on a commodity which is so essential in their occupations.	[DOT]


James Lorimer Ilsley: Does the hon. member mean that we should suggest to the government of Nova Scotia that they should make a rebate of part or all of the gasoline tax on gasoline used by farmers and fishermen for pleasure purposes?


Percy Chapman Black: I did not say that. I said, in their occupations as farmers and fishermen.


James Lorimer Ilsley: In that respect they are now exempt.


Percy Chapman Black: Does the minister suggest that this three-cent tax does not apply to the farmers and fishermen in that province?


James Lorimer Ilsley: No, but the hon. gentleman has asked whether I would make representations to the government of Nova Scotia for a refund or some exemption from the tax on farmers and fishermen. They have no tax except a tax on gasoline used for pleasure purposes. That is why I asked the hon. member whether he wanted me to make representations for a remission of part of that tax.


Percy Chapman Black: I suggest that representations might be made by the minister to the government of Nova Scotia whereby the classes of users of gasoline in that province to whom I have referred might be compensated for this tax.


James Lorimer Ilsley: I have not made any such representations. I am not sure I understand what they are, but I have not made them.


Mr. WRIGHT:: I protested against this tax when we were discussing the resolution and I do not intend to go over the arguments again. Since then, however, the minister has made the statement that this tax will affect only
a small percentage of farmers. I do not agree with him. It will certainly affect 90 per cent of the farmers of Canada, because there is not a farmer to-day who is not using gasoline for some purpose. He uses it in his threshing and other work as well. In western Canada last fall the cost of operations increased and the farmer absorbed that additional expense. With this added cost on gasoline, and with the wage increase that will come again this fall, the extra burden will be passed on to the farmers. This gasoline tax will be passed on to every farmer both in the west and in the east.
We have a shortage of agricultural products in practically every line except wheat. The Minister of Agriculture has announced that the price of cheese has been raised a cent a pound, the object being to promote greater production. We shall be faced this winter with a shortage of other dairy products, and in this tax we are putting an additional cost on the farmer which will tend to diminish his production of these things. I protest against this addition to the cost of agricultural production in Canada, when not only we but the people of Great Britain as well need the things that we can produce.


James Garfield Gardiner: I might direct attention to the remarks of the hon. member for Lake Centre (Mr. Diefenbaker) and make what I am sure he will agree is a necessary correction. The questions asked were these: How many persons are employed by the federal Department of Agriculture in explaining the summer-fallow bonus system in the three western provinces? What are their names? What remuneration and expenses does each receive? The answer is as follows:	At the present
time, thirty-seven persons are employed in field work in connection with the wheat acreage reduction programme in the western provinces. That work does not consist of just what my hon. friend referred to a few moments ago, explaining the summer-fallow bonus system. I have before me a list of those persons. I am not familiar with all the names, but I would say that with the exception of possibly half a dozen all these men were already in the employ of the federal government or of one or other of the provincial governments. That is, they were either in the employ of this government under the Prairie Farm Rehabilitation Act or the Prairie Farm Assistance Act, or they have been in the employ of the government of one of the provinces in connection with relief matters, or in similar work among the farmers of that province. Those who have come from other governments have been given leave of absence for the time they will be working for this
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government, which may be only a few weeks. The others, who have been employed in connection with the Prairie Farm Assistance Act and the Prairie Farm Rehabilitation Act, will carry on some of their previous activities in conjunction with the work they do in reference to the wheat acreage reduction. In other words, as I explained to the house earlier this session, the prairie farm assistance organization is being used for the purpose of administering the wheat acreage reduction plan; and many of the persons whose names appear in this list were employed in connection with our other activities, but are being paid for the time being under this appropriation.


Mr. MAYBANK:: What is the total number of completely new employees, and what is the total expense in respect of them?


James Garfield Gardiner: I am not entirely familiar with these names, so that I am not in a position to say exactly how many of the thirty-seven are new, but my estimate would be that probably not more than half a dozen new men are on the list. The others are men who have been employed in these other activities. The total expense while they are doing this work will be at the rate of $150 per month per man. We do not know yet how long they will be on this work, but it will be for some weeks during the summer while seeding and summer-fallow operations are being carried on.


Ralph Maybank: Would $2,000 or $3,000 cover it?


James Garfield Gardiner: I would judge so. I should think that my hon. friend, in giving his figures a few moments ago, probably multiplied twelve by $150 and then by thirty-seven, but of course the total will not be anything like that amount.


John George Diefenbaker: The minister says there are six new employees.


James Garfield Gardiner: Do not make it too specific; I am not absolutely sure, but it is about that number.


John George Diefenbaker: Does that include those who were formerly in the employ of the provincial governments?


James Garfield Gardiner: No; there are about six in addition to those formerly in the service of the dominion or provincial governments.
I think only about five or six of these men were with the provincial governments.


John George Diefenbaker: Then we have about six men who are new employees and another six who were formerly with the provincial governments, and who therefore would not be on the dominion payroll.


James Garfield Gardiner: No.


John George Diefenbaker: Then how many more were formerly employed under the Prairie Farm Assistance Act?


James Garfield Gardiner: Some of them.


John George Diefenbaker: How many?


James Garfield Gardiner: I would have to check the list to say. I am not sure of the number, but the remainder would be employed under the Prairie Farm Rehabilitation Act, the Prairie Farm Assistance Act, and in similar activities.


John George Diefenbaker: Would those
formerly connected with the administration of the Prairie Farm Assistance Act be in the service of the dominion government at the present time, as Prairie Farm Assistance Act employees?


James Garfield Gardiner: Those who are employed under the Prairie Farm Assistance Act are only called up for a few weeks during the summer. They are not what you might call permanent employees. They are called up just as hail inspectors are called up under hail insurance, to carry on their duties for perhaps three or four weeks, or two or three months. Those are the men who have been employed in this case.


John George Diefenbaker: So that these men who are designated as employees under the Prairie Farm Assistance Act have not been in the employ of the dominion government in recent months?


James Garfield Gardiner: Well, the first man on the list has been in the employ of the dominion government for the last twelve months. I do not know how many more are in the same position; I would have to check the whole list.


Mr. PERLEY:: Then there is an expense account, as I understand it?


James Lorimer Ilsley: On a point of order, Mr. Chairman, I do not want this converted into a discussion of agriculture estimates. Certainly it is out of order to discuss in detail the question which has been raised. I try not to raise points of order, but we are on the gasoline tax, and apparently we are in for an afternoon of discussion on the Prairie Farm Assistance Act, or wheat reduction, or something of the kind.


Mr. COLDWELL:: I concur in what the hon. member for Lake Centre has said with regard to criticisms. We have appealed to the minister to remit this tax as it applies to farmers and fishermen. The other evening I

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said the minister was stubborn. Perhaps that was not the word to use; possibly I should have said he is determined. In any ease it would appear that while this is a tax which the farmer and the fisherman should not be called upon to bear, the government is determined to impose it. Hon. members should realize that when our farmers are being asked to reduce their income by reducing their production, this additional burden will become almost a tragedy for a large number of those who are trying to carry on their operations. I just want to make this one further protest, because I am well aware of the fact that at this stage at least, it is useless to make an appeal.


Mr. QUELCH:: When we were discussing this matter in the resolution stage I protested against the imposition of this tax. Already a good deal of time has been taken up in a discussion of the matter. It was considered on May 20, 21 and 22; and up to the evening of May 21 practically every hon. member who had taken part in the discussion had spoken against the imposition of this tax on farmers and fishermen. On May 22 the Liberals had a caucus, and apparently the members were whipped into line, because after that we had no further protests from that party.
One cannot help feeling that it is futile to oppose anything brought into the house by this government, even though the majority of hon. members may be against it. It is not a very nice criticism to have to offer against a so-called democratic institution, but apparently members are compelled to vote against their conscience or against the wishes of their constituents. During the whole debate the minister has not given one sound reason why exemption should not be granted in respect of coloured gasoline for agricultural purposes. There would be no possibility of abuse, and there would be no trouble about refunds. The Minister of Agriculture used a peculiar argument when he said there would not be more than 57,000 tractors in western Canada burning gasoline, and that therefore the problem would not be of very great importance. I suggest to him that 57,000 farmers have a right to expect from this house just and equitable treatment. On the other hand if his figures are correct it is an argument in the opposite direction, because if only 57,000 farmers are to be affected, the amount of revenue lost by the exemption would not be very great.
The hon. member for Portneuf said that the average amount of gasoline used by a farmer would not be more than 300 gallons a year. Of course that statement is incorrect. It may be true for Ontario, but in my own 14873-213
case, for instance, on a farm of not more than average size, I use anywhere from 1,500 to 1,600 gallons a season. That is very different from 300 gallons; it means an additional tax of about $45 or $50 each season. Multiply that by 57,000 and it will be found that these farmers will be compelled to contribute over $2,000,000 each year. It is a contribution they should not be called upon to make.
I say again to the minister that if it is a question of raising revenue, and if he feels that the government cannot do without the revenue, let him tap other sources which can be taxed with far greater justice. Again I suggest that one of those sources is advertising.


[Stage Direction]
Section agreed to.
Section 18 agreed to.
On section 19-Building materials excluded.
Mr. MACDONALD (Brantford City):: When the resolution was before the committee I brought to its attention the serious shortage of housing in Brantford. Since that time I have returned to Brantford, and have had further interviews with his worship the mayor and members of the city council. I am informed that the housing situation in Brantford is indeed acute. I understand that the mayor is almost besieged by residents of Brantford who are about to be evicted or who have received notices advising them that they must move on or before a certain day. Unfortunately many of these people are wives of soldiers who are not now in Brantford. The situation is most distressing. To-day there are not enough houses in Brantford to accommodate the working people of that great industrial centre. Most of those people are engaged in essential war industries. I assume it is agreed that those employed in such industries should be housed under proper conditions.
Yesterday I read in the New York Times the following notation from Washington:
The United States Housing authority approved to-day a $2,896,000 contract to M. S. Kelliher Company of Boston for construction of 744 homes in Orchard Park, Boston. It also approved a $2,620,000 contract to Psaty & Fuhrman, Inc., of New York, for 744_ homes in the Roger Williams Homes Project at Providence.
This shows that in the United States, as in Canada, in many centres there are not enough houses to accommodate the working population.
When the resolution was before the committee I suggested there might be two ways of assisting the building trades in connection with low-cost housing. I asked whether it would be possible to remit the tax on building materials put into low-cost houses. I under-



PKVI8ID EDITION

[Stage Direction]
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[Stage Direction]
stand that here an administrative problem might arise, but I should like to know whether it can be done. Further, the National Housing Act might be widened so as to allow a maximum loan on a house costing $3,000. The act provides that a maximum loan up to ninety per cent may be allowed on housing which costs $2,500 or less, including the price of the land. My information is that it is impossible to build a house to-day for $2,500. An additional sales tax has been imposed, and there have been some further increases in costs. I am informed that if the figure of $2,500 were stepped up to $3,000, the number of houses built would be increased. I leave these two suggestions with the minister. I cannot impress upon him too strongly the very great shortage of houses which prevails in Brantford, as I understand, it does also in other parts of Canada.
Percy Chapman Black: I wish to
join with the hon. member for Brantford City in expressing my regret that the government has felt it wise to place this tax on the building industries. I have expressed my disappointment with regard to the tax on children's theatre tickets and the tax on gasoline used by farmers and fishermen. This, however, I regard as the most regrettable and unfortunate tax imposed by the minister, and I hope it is not yet too late for him to reconsider it.
In recent years this government, and I believe most of the provincial governments, have encouraged the ownership of property and the building of small houses. Over a period of years many millions of dollars of government money have been spent to encourage the ownership of property by citizens of Canada. All will agree that the ownership of property by citizens is the very basis of contentment in any country. It has been the established policy of governments in Canada to encourage the people to build their own homes. In recent years in many parts of Canada, including Nova Scotia, it has not been practicable from the point of view of investment to build the workman type of house, or to invest in farm properties. It is very desirable that people should live in their own homes and have ownership of the property in their own right. This tax will make it impossible for many people to do that.
The hon. member for Brantford City has pointed out the scarcity of low-cost houses in that city. The same condition applies to many places in Nova Scotia. There is a great scarcity of workmen's houses in Halifax, New Glasgow, Sydney, Yarmouth, Amherst, Springhill and other centres. The minister

stated-I believe these are his figures-that he expected this tax would bring in a revenue of $15,000,000. This will mean taxation of almost $200,000,000 worth of building construction. Some building will not be affected because it is financed by the government. The tax will be payable by the government, increasing the cost of the properties. To that extent it is unsound and at the cessation of hostilities the government will have high cost property and suffer a substantial loss because this eight per cent tax has been imposed.
In the old days people who had money invested it in land and buildings and farms. That is not done to-day because the ownership of such property is a liability rather than an asset, except for those who occupy it. To-day they invest in bonds. Those who desire to own their own homes or farms should not have to pay this 8 per cent tax on building materials to provide or improve their houses or barns or farm buildings. In Nova Scotia there is still unemployment, and many people who might otherwise be able to obtain employment in the construction of new residences will not be able to do so because of this tax. Employment of that kind will be discouraged. From the point of view of the municipalities, it is essential that there should be as much building as possible by present and prospective home owners. It increases the assessments and makes for a contented people.
The encouragement of building is most important from the point of view of the lumber producers. In eastern Canada the lumber industry is in a difficult condition because of inability to ship overseas due to the scarcity of tonnage. A large quantity of lumber is available for construction, but the heavy tax of 8 per cent will discourage such work or make it impossible for people to proceed with the building of new homes and making improvements that they have had in mind. I join with the hon. member for Brantford City and other hon. members in expressing regret at the imposition of this tax and I ask the minister to reconsider the matter. He is obtaining some additional revenue from the increased tax on amusements, and he should cancel this tax or place it elsewhere. As the hon. member for Acadia has just suggested, he should listen to the appeal made by hon. members of this house, by the working men of Canada and by the municipalities; he should cancel this tax upon building materials, a tax which is most unjustifiable under existing conditions.


Richard Burpee Hanson: Mr. Chairman, it was with great regret that I noted the removal of the exemption of building materials from sales tax. I do not intend to

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traverse the ground covered by the hon. member for Brantford City and the hon. member for Cumberland. I reaffirm the principle enunciated by the hon. member for Cumberland, that a country of home owners is the ideal thing. I am glad to be able to tell the committee that this principle prevails in my county, where the majority of houses are owned by the people living therein. Last year there was a substantial increase in the number of houses built in Fredericton. When I returned from the Easter vacation after the budget had been brought down and this exemption had been removed, my information was that a substantial number of people who had contemplated building had cancelled their arrangements. When I was home a week ago Saturday I was informed that for the first time in a number of years not a single house was being built in the city.
If the minister cannot go the whole way with respect to this, I suggest that he can at least go part way. In 1929 and all through the depression years there was a considerable amount of what I would call deferred maintenance. This condition continued through 1937, 1938 and 1939, and it is only in the last two years that people have begun to repair their buildings. I think the minister could have made an exception in the case of building materials used in the repair of homes or of properties rented as homes. These exemptions could have been limited to fairly small invoices, which would have the effect of allowing repairs long overdue to be made. I realize that there might be some difficulty in administration.
We know that such items as sashes and doors and so on are made in wood-working factories to-day, and not on the job as was the case a few years ago. I suppose these factories will have to take out licences under the sales tax provisions, and it would be easy to arrange for exemptions on comparatively small invoices covering materials for repairs to houses. In many parts of Canada buildings have been allowed to become dilapidated because their owners have been out of work and could not afford to carry out repairs. It is a sad commentary to go through the countryside and see how dilapidated many farm buildings are. I think the minister could have made some accommodation such as I have indicated.
The minister has wiped out all the exemptions. We all know the difficult times faced by the construction industry during the depression. Nothing gave the former government more concern than the fact that a large number of competent mechanics, such as carpenters and bricklayers, found it impossible to make 14873-213i
a livelihood. One of the reasons why the former prime minister and the former minister of finance established a government building scheme and started a housing scheme even in a small way was to give an impetus to the building trades of Canada. I believe, that had a good effect. But that forward step is now to be wiped out. For the first time in many years people have steady employment and are contemplating making repairs upoD their buildings, but they think twice now before carrying out their plans in that regard.
In one instance a group of men owned a vacant property in a certain community. A chain store company wished to establish itself in that community, and arrangements had been made and a loan from an insurance company actually negotiated to build the property that was to be rented to this company. This tax came on and added $8,000 to the cost of construction, and the whole deal fell through. I can give the minister the particulars if he so desires. There is one building that will not go on. This is regressive taxation of a very serious kind. The instance I have related was in connection with a property that was to cost $100,000. I am not pleading for that class of property to-day because I do not think we should embark on large or fairly large enterprises of that kind now, but I am pleading for the small home owner who for the first time has had a steady job in years and now has a little surplus money with which to put a new roof on his house, or to make necessary repairs. This tax is penalizing him. I ask the minister to reconsider it, if it is not too late.


Major James William Coldwell: I too ask the minister to reconsider this tax. I realize that there are administrative difficulties in exempting material for repairs or to be used in building modest houses for working people and people in the lower income groups. But I suggest to the minister that probably the time has arrived when in this matter, as in the manufacture of automobiles and some other things, the government should say that construction of houses of the luxurious type will not be permitted, and that the labour and material, if it is to be used at all for civilian purposes, shall be used for those who need housing and homes.
As the hon. member for Brantford City, the hon. member for Cumberland, and the leader of the opposition have said, housing conditions across this country are deplorable. I recollect that in my own city of Regina in 1931, when the census was taken, we were told that the average number of persons per room was two, and I am told by those who
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live there now that the crowded condition in Regina, owing to concentration because of the war, is even worse than it was then.
I brought upon myself a little criticism the other day because I referred to conditions which I saw in the city of Halifax, Nova Scotia. I said that years ago I had visited the slums of the great metropolis of London, England, and spent several days in going through them, but that I had never seen anything worse there than I saw in the city of Halifax, Nova Scotia. There were crowded thousands and thousands of our people. One of the newspapers in Halifax said that I did not know Halifax, that my knowledge of the city was so limited as to preclude any authoritative statement, and that of course is true; but I did happen to be piloted around the city by someone who is an authority and I did see its slums.


Mr. ISNOR:: Where were they?


Major James William Coldwell: On Maynard street, Market street, Argyle street, Grafton street and a number of other streets I visited.


William Ross Macdonald: You know your Halifax.


Major James William Coldwell: Yes, I have been there before. I would tell the hon. member for Halifax this, that in one place on Maynard street I saw something so shocking that I have never seen anything worse in my life- six or seven houses opening on a very small yard not nearly in length the width of this chamber, and in that yard, upon which there were dilapidated and filthy houses crowded with people, there was one small shed and under the same roof a common toilet and common water supply for all the people inhabiting those six or seven houses.


Gordon Benjamin Isnor: What would be the total number of places such as the hon. member describes in the city of Halifax?


Major James William Coldwell: I could not say. I hope at least that that kind of thing is found only infrequently. But the very fact that people have been living in Halifax under those conditions and that the municipal authorities have allowed them to exist in the middle of the city is a blot on the administration of Halifax.
I have a report here of the Nova Scotia Housing Commission for the year ended November 30, 1939. I am going to read just one paragraph from page thirteen. The report says:
The survey showed that of the number of places inspected-

This was in the city of Halifax alone.
-122 were unfit for habitation, in addition to 12 basements; while the number which did not conform to proper housing conditions was 129. The number of places considered unsuitable for human occupancy unless improved was 50. A total of 18 places which had been repaired were still not regarded as satisfactory. Only 4 places were recommended as suitable for habitation. Close to 3,000 people are living under conditions which are not satisfactory, the largest percentage of whom are existing under shocking conditions-the housing situation in Halifax is far more serious than perhaps it has ever been.
That was before the war was under way and before the city became crowded1. The government is making the gravest error at this time in placing an additional burden on the building of low-cost homes. The health of our people in the final analysis is our greatest asset, and no people living under conditions of this sort can be healthy. What is the use of building tuberculosis sanatoria, hospitals, and so on, if we allow housing conditions to exist in our cities such as I have described and such as this report indicates?
I am urging the minister to reconsider this proposal. If he must impose a tax-and he must, of course, somewhere else if exemptions are granted-then, if administrative difficulties are in the way, let the government prohibit the building of luxurious and extravagant houses. I cannot say that a $2,500 house ought to be the limit that should be permitted to be built at this time, because building costs vary in different parts of Canada. In some western cities it would cost from $4,500 to $5,000 to build a house that could be built for at least two-thirds of that amount in Ontario. But I believe a plan could be worked out of at least introducing some system of priorities in order to see to it that the health of our people is not impaired by a lack of housing, and this applies particularly to housing in places such as I have mentioned. I know that the government has been considering a plan for housing in Halifax and some other places, but I have not seen any definite announcement as to whether building has actually been authorized in that city.
There are other places besides Halifax dt is true; I have mentioned Halifax because I saw the conditions there and was criticized for having expressed my opinion as a result of what I saw. I know it to be the truth, and incidentally this report bears it out. The government should not discourage the building of modest houses, because poor housing interferes not only with the health but with the morals of the community. I certainly concur in what the hon. member for Brantford City, the hon. member for Cumberland and the leader of the opposition have said in regard to this matter.

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Mr. BRUCE:: I should like to add my voice to that of hon. members who have just spoken, in regard to the unwisdom of removing this exemption. I approve of everything which has been said by the hon. member for Brantford City. I have had some experience in the problem of housing, having spent some months in 1934 in a study of housing conditions in the city of Toronto. I do not intend to go into this question at length, but I can say to the hon. member for Rose'town-Biggar that the conditions he found in Halifax can be duplicated in the fair city of Toronto. I regret to have to say that. I was charged with having cast an unnecessary slur upon Toronto in respect of its housing conditions. But after an investigation of many months we found that the slums there, although limited to small areas, were as bad as any I have seen in the city of London, where, some few years ago, I passed several weeks in investigating housing and slum conditions.
I strongly approve of the housing act which this government put into force in 1935. The act facilitated the building of a great many houses. The chief drawback, in my opinion, was that it did not go far enough; it failed to make provision for the low income group, those who could not afford houses costing more than, say, $1,500. The difference between that amount and the actual cost of the house will have to be taken care of by somebody. In my opinion it is the combined responsibility of the municipality, the provincial and the dominion governments.
A few years ago Mr. Purvis made a report on this subject. I commend particularly to the attention of all hon. members the appendix to that report dealing with low-cost housing, and I hope the time will come when those recommendations will be implemented.
In his own department the Minister of Finance has an excellent branch, headed by Mr. Nicolls, who have done splendid work. As I said a few months ago in this chamber, the work of this group should be extended and more money provided to enable them to prepare plans to deal with the situation after the war. When our soldiers come home from overseas it will be too bad if they have to settle down amid the slum conditions which, I am afraid, some of them left to serve their country. If we intend to take care of this very important post-war work we should begin now. It will require several years of careful planning to be ready to go ahead with it when it is most needed.
The hon. member for Rosetown-Biggar spoke of the health conditions associated with poor housing. I can confirm what he said. We found such cases as that of one person with tuberculosis sleeping in a room
with children who were susceptible to the disease and who would, I have no doubt, in the course of a few months, contract the disease. Another serious aspect of the housing problem is overcrowding. It was not an unusual experience to find three or four different families occupying the same house, with one family to a room. One can understand that this has a bad moral effect. Such slum districts are frequently centres where crime is bred; for children are forced to spend their time in the streets where they soon learn to gang up with other children and thus often become centres of criminal activity.
I shall not dwell further on this subject. I merely suggest to the minister that he should find some means of maintaining this exemption for the cheaper houses, say those which cost in our province $3,000 to construct, as suggested by the hon. member for Brantford City. It may be necessary in the west to raise the exemption to a higher figure. The leader of the opposition made a very good suggestion when he pressed for the exemption from the tax on lumber and materials for repairs. I hope that the minister will give this matter his very careful and sympathetic consideration.


Mr. FRASER (Peterborough West):: It is not my intention to protest to-day against this tax, because, as the minister knows, I did so on May 5 and May 22. Rather I am going to plead with him to reconsider the changing of the tax so that it be not applicable to houses of the value of $4,000 and less which come under the provisions of the national housing act. Because this country does need houses for its working men. I know that the national war-time housing organization is erecting houses all over the country, but they are for the use of those engaged in national defence work, and they will be taken down after the war is over. Speaking on May 22 I urged the minister to consider this proposal from the point of view of giving the working man something to work for, so that he would have a home of his own. I do not know whether the minister has built a house for himself, but if he has he will know there is great pleasure in doing it. These workmen get much pleasure out of it, and it makes them better citizens. On May 22 the minister said:
Now it is desirable for them to make the old house do, as far as they possibly can, so as to leave the steel for the radiators free-if it is steel.
Commenting on that the other day, a man remarked to me that he did not think the minister should have said that, when this
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government is having carload after carload of steel go into that "hole in the ground" in Montreal. One beam used in that construction would more than provide all the radiators in one of those small houses.
I have previously asked whether this tax could not be removed in view of the fact that it adds from $150 to $240 to the cost of each house. This extra cost falls upon men who are in receipt of only small wages and simply cannot afford it.
I suggest that in connection with national housing the government should permit the allowance to be increased from 80 per cent to 90 per cent. The amount is 90 per cent on the small homes, costing $2,500; but, as the hon. member for Brantford City has said, a house cannot now be built for that amount, because the cost of building materials has increased in the last year over 12i per cent. The cost of the average house under the national housing scheme in 1940 was something over $2,900. With a sales tax added to the increased cost of materials, it is going to be over $3,000. I plead with the minister; please take that tax off.


Douglas Gooderham Ross: I have just a word or two to say. I have been a director for fifteen to twenty years of the Toronto housing company. That company is a semi-philanthropic institution: 15 per cent of the stock was paid in, and the bonds were guaranteed by the city of Toronto up to 85 per cent of their value. In Toronto we have a large property comprising about 350 apartments ranging from one room to apartments of six rooms. They serve a definite purpose and rent at from about $20 a month up to $45. What worries me is the cost of keeping up the repairs on such properties. The majority of them were built in 1913, so that they are getting fairly old. We have kept them in good shape, but repairs on that property will probably cost from $20,000 to $30,000 a year. The result is that the tax on material going into those repairs will run from $1,600 to S2,400 a year, and that means that we shall have to raise the rents. Not only that, but the city of Toronto had to come to the assistance of the housing company, and they urge that we keep the rents down. I mention the Toronto housing company as an illustration to show that many houses in Toronto which are of the same age must be kept up, and this tax will affect them. Whether the tax goes on or not, material will have to be bought for repairs so as to enable people to live in these houses.
I doubt whether it is the intention of the minister to tax repairs to properties in this

way. There is an increasing demand for houses, and in the centres of these cities there are houses that can very well be made over. The home improvement plan was something that gave impetus to the making over of old houses so as to render them habitable. Although the money for the home improvement plan is out, there is an opportunity for people to do the same work without the assistance of the government, but it seems to me to be quite a burden to ask them to pay eight per cent on the cost of the work. It is all to the advantage of cities that are growing, if people try to retain the population within the city instead of having it spread to the outskirts. It saves overhead. But people will not pay an added eight per cent tax on repairs to old houses. I do not believe it is the minister's intention that they should. Without the assistance of the national housing act, workmen and others can put up small houses because their incomes are greater. I think it would be better if the tax were limited to houses not exceeding $3,000. There should not be a tax on material going into such houses, nor should the tax apply to repairs to apartment buildings. Repairs must be kept up. In Toronto there is a by-law that authorizes the city to compel the repairing of any house. It is a hardship to be obliged to repair a house and to pay the extra tax on it. I wish the minister would reconsider the eight per cent sales tax on repairs of this kind.


Mr. BENCE:: Hon. members have discussed this problem from various angles, particularly the scarcity of houses and the question of encouraging people to own their own homes. The question has also been discussed of improving what in some cases are deplorable living conditions. In these sentiments I must express complete concurrence. I would emphasize one thing that has not been discussed extensively so far and that is the position of those who are employed in and expect to continue in the construction industry. I would also consider the subject from the point of view of the unemployment problem on the western prairies. Out there we have not yet received any appreciable amount of work through the efforts of this administration, although a number of us from the prairies have urged upon the government from time to time the advisability of taking advantage of the resources of man-power and material in that section of the country. In addition to that, under the present policy introduced in connection with wheat, the income of the prairie provinces has been considerably reduced. In fact, this year it will be less than fifty per cent of what it was last year. Gener-

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*lly speaking, the living standard of the western prairies has been greatly reduced and is going down rapidly from what is already an extremely low level.
Many people in western Canada and particularly in the prairies have been depending on the increased activity in construction to bring them employment. I would point out to the minister what I interpret as two objects of the legislation which in my opinion do not apply to the prairies. In the first place, I presume that one reason for a tax like this would be that man-power is required in other industries, particularly war industries, but so far as the west is concerned, the government has not seen fit to take advantage of our man-power there, and therefore that object for the legislation is not applicable. The second object, as I see it, is revenue; and again, so far as the prairies are concerned, this tax, according to what I am informed by those who know the building industry better than I do, will almost completely retard any progress in construction out there. Consequently revenue does not enter into the consideration from our point of view. The minister should consider that in all likelihood the increased activity in those sections of the country which are not already employing all their man-power in the construction of buildings, houses and so on might bring him in another way more revenue than he will obtain under this provision. Men employed in construction work, labourers, artisans and so on would have their income increased as a result of the encouragement of construction, particularly on the prairies, and I suggest that in that way the minister would get more money from that particular section of the country if he encouraged the people instead of discouraging them as is being done under this provision.


Gordon Benjamin Isnor: I should be remiss in my duty if I did not take exception to some statements made by the hon. member for Rose-town-Biggar in his reference to the constituency and particularly the city of Halifax, which I endeavour to represent. I may not be on my feet as frequently as the hon. member for Rosetown-Biggar; neither am 1 in the habit of making the extravagant statements, which he appears to delight in making from time to time-


Major James William Coldwell: Is the report of the
Nova Scotia commission an extravagant statement?


Gordon Benjamin Isnor: -not only to members of this house but to the people of all Canada, with regard to certain sections of the country.
Apparently, from the criticism which has been offered with reference to his remarks on previous occasions, this view is held by many; and the statement he has made with regard to Halifax, which I know to be extravagant, would appear to be on a par with the statement he made las* session with reference to the health situation in Halifax.


The ACTING CHAIRMAN (Mr. McCann):: I would direct the hon. gentleman's attention to the fact that we are dealing with section 19, concerning building materials. Standing order 58. subsection 2, reads:
Speeches in committee of the whole house must be strictly relevant to the item or clause under consideration.
I hope the hon. gentleman will bear that in mind in making his remarks, so that we may expedite the business of the house.


Gordon Benjamin Isnor: Thank you, Mr. Chairman;
I always try to keep my remarks within the limits of the particular matter we are discussing. At present I am dealing with the question of housing, in connection with which building materials figure so largely.
I shall come back to the hon. member for Rosetown-Biggar in a moment, but I should like to pay my respects to the hon. member for Brantford City and to congratulate him upon the constructive suggestion he offered the Minister of Finance with regard to raising the loan limit in connection with the construction of low-priced houses. If I remember correctly, the leader of the opposition gave credit to a former Conservative administration for introducing the home improvement plan. I think that was a mistake; I believe the home improvement plan was inaugurated under the present government, when Mr. Dunning was Minister of Finance, and the same remark applies to the exemption of building materials from the sales tax. It is only because of the present emergency, and the need for revenue, that the minister is again applying the sales tax to building materials. Therefore I commend the suggestion advanced by the hon. member for Brantford City, because I believe the construction of medium and low-priced houses should be encouraged on account of the beneficial effect it would have on all our citizens, particularly those who would like to own their own homes. I hope the minister will give serious consideration to that suggestion, and if nothing can be done under this measure, perhaps the provisions of the housing act might be enlarged to meet the situation.
I disagree to some extent with what was said by the hon. member for Cumberland
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with regard to the construction of homes being carried on in Nova Scotia, and particularly in the city of Halifax. I do not know how well versed the hon. member is with reference to the situation in Halifax. I give him credit for being sincere in his efforts on behalf of certain interests throughout Nova Scotia. He is particularly concerned with an important branch of industry in that province, namely lumbering, and I was glad to hear him present that side of the picture. During the past few years that industry has enjoyed increased activity. Naturally I should like to see that continue, and therefore I join with him in his efforts in that regard. But when he refers to the construction of homes on farms, I do not think the government has need to worry very much.


Percy Chapman Black: I was referring to repairs to farm houses and farm property. I had in mind the desirability of people owning their own farms and their own homes.


Gordon Benjamin Isnor: I quite agree with what was said by the hon. member for Cumberland with regard to improvements on farms. I like to travel throughout the province as much as possible and look at the beautiful farms, and I have been happy to note that during the last two or three years many farmers have been improving their buildings in many ways. I would suggest to the hon. member for Rosetown-Biggar that instead of sticking to such streets as Grafton and Market, he should get out and see the beauty spots in and around Halifax. Then I think he would come back with an altogether different idea.


Major James William Coldwell: I saw them.


Gordon Benjamin Isnor: I agree with the hon. member for Cumberland when he suggests that the home improvement plan might be carried out to a greater extent, but I am happy to say that the farmers have improved their properties to a marked degree, so that I believe anyone travelling through Nova Scotia will find the farms and farm buildings in very good condition indeed.
I now come back to the hon. member for Rosetown-Biggar. I think it is a great mistake, and certainly does not help our war effort, to have such statements made on the floor of this house, on the public platform, or over the air. When people hear such things said about one part of the country they immediately wonder whether they are true. The hon. member for Rosetown-Biggar occupies an important place in this house as leader of a group that has a goodly representation. To judge from his tactics of

recent date, he is quite hopeful of leading, in the not too far distant future, not a minor group but the official opposition. I do not think he has ever aspired to leadership of a government; I suppose he realizes that this would be impossible until he acquired wider, broader and fairer views concerning the different parts of Canada; but there is no question in my mind and in the minds of a great many members of this house that he does hope to take over the position of leader of the opposition.


James Joseph McCann: I presume this is a special type of building material?


Gordon Benjamin Isnor: I am dealing with building material.


Major James William Coldwell: I wonder whether I am to judge the hon. member's intelligence by his last remark.


Gordon Benjamin Isnor: The hon. member who has the floor has always been able to take care of himself pretty well; and most of those with whom he associates agree that he has a fair amount of intelligence, perhaps not equal to that of the hon. member for Rosetown-Biggar but still enough to enable him to get along fairly well. My hon. friend referred to an item which appeared in the press. I am going to read that item in full:
M. J. Coldwell, acting leader of the Cooperative Commonwealth Federation in the Commons, was appalled by housing conditions in Halifax, he told a C.C.F. gathering in a public address on Saturday night.
That address was, if I remember aright, made in Toronto.


Major James William Coldwell: But it was not a Cooperative Commonwealth Federation audience.


Gordon Benjamin Isnor: The article continues:
Mr. Coldwell was a recent visitor to Halifax. His stay here was brief. Yet, though he was in the city only a few brief hours, he became so full of knowledge on housing affairs here that he was able to broadcast with the voice of authority to all Canada, for all Canadian newspapers carried an account of his address.
We hesitate to suggest that he spoke with a hidden motive-


Major James William Coldwell: No; the words are, "an ulterior motive". I have the article here.


Gordon Benjamin Isnor: Then why did the hon. member not read it all?
-yet the gentleman leaves himself open to suspicion. If he said what he did because of lack of knowledge of the facts, then he stamps himself as a very undependable person and one not to be taken seriously in anything he says.

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If he spoke as he did for the sake of political effect, then he is a dangerous person. In either case his action was unwise.
The C.C.F. leader does not know Halifax.


Major James William Coldwell: Pretty well.


Gordon Benjamin Isnor: His knowledge of this city is so limited as to preclude any authoritative statement. With their customary charity, Haligonians will probably decide that he spoke too hastily but they are forced to conclude, at best, that he was most foolish to make the absurd statements credited to him.
Dealing now with the housing situation-


Major James William Coldwell: From what was the
hon. member reading?


Gordon Benjamin Isnor: The hon. member has just
stated he has a copy of it. However, it is from a Halifax newspaper.


Major James William Coldwell: Which one?


Gordon Benjamin Isnor: On the Monday following the date the hon. member gave his address. It is from the Halifax Star.


Mr. GILLIS:: The official organ of the
Liberal party in Nova Scotia.


Richard Burpee Hanson: Oh, not
now; it used to be. I am glad, however, to tell the committee that now it is against this government, so far as I can see. It is very critical of this government.


Gordon Benjamin Isnor: I agree with the observations of the hon. member for Brantford City respecting this section. In closing, I would say that I sincerely hope the Minister of Finance will take into consideration the constructive suggestions of the hon. member.


Clarence Gillis: All hon. members who have
voiced their opinions as to why this tax should not be imposed have spoken from different angles. I suppose if every hon. member spoke we would have reasons from all parts of Canada as to why the tax should be modified in some instances and exempted in others.
I believe the hon. member for Brantford City has made a proper suggestion. We realize, as has been pointed out by the hon. member for Rosetown-Biggar, that it is necessary to raise money at this time. It is not sufficient or proper simply to rise in one's place and oppose the tax. I have one or two definite reasons why arrangements such as those suggested by the hon. member for Brantford City should be made effective in my section of the country.
Before, however, going into that matter at length, I would say that for many years I viewed Nova Scotia as part of confederation. We were a member of a Canadian family,
entitled to take our share of the good and obligated to accept our share of the bad. Many times I wondered why the problems of that province were not better known by the federal government. I wondered why 80 per cent of Canada's wealth was centred in one province, and I believe that this afternoon I have got the answer. The hon. member for Halifax (Mr. Isnor), in his restricted city view of a national problem, has given me the answer. If in the constituency which he represents only a dozen families would be affected, yet I would point out to him that they are still Canadians and are entitled to a Canadian standard of living in respect of housing and other matters.
The hon. member used bad judgment when he rose in his place in this chamber and ridiculed and belittled someone who does not live in his section of the country, but who has tried to bring a condition to the attention of the government, and has done that, not for political purposes, but to expose conditions which breed Hitlers, and people of that kind. That was the object of the hon. member for Rosetown-Biggar. I wish to add that in the time I have been associated with him I have no hesitation in saying I consider him one of the most conservative and fair-minded-


Herbert Alexander Bruce: Come over here.


Mr. McIVOR:: And Liberal.


Clarence Gillis: -men it has ever been my privilege to meet. I believe that, if anything, he understated the case this afternoon, and in my opinion the attack made upon him was uncalled for.


James Joseph McCann: Order. The hon. member is entirely out of order.


Clarence Gillis: I understand that.


James Joseph McCann: Very well; if the hon. member understands. I wish he would pay attention to the rule which states that members must confine their observations to the section under discussion.


Clarence Gillis: I am endeavouring to do
that. When, however, the Chair allows sufficient latitude to one member to precipitate an attack, then I suggest it must expect another hon. member to be out of order in trying to answer that attack. I was surprised to hear an hon. member from Nova Scotia attacking another hon. member who was endeavouring to improve conditions in that province.


Gordon Benjamin Isnor: Defending Nova Scotia.
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Clarence Gillis: I know the city of Halifax almost as well as does the hon. member from that city, and I am sure that the housing condition has been understated. That general condition cannot be viewed from the driveway here in Ottawa; it must be analysed as a whole.
I wish to bring to the minister's attention a problem in my section of the country with which I am familiar. When, about thirty years ago, coal mining developed in Nova Scotia, a community was built up round the mines with housing accommodation sufficient to accommodate about 50 per cent of the men employed in and around the mine. Houses in these mining sections are absolutely deplorable. In the eastern end of Nova Scotia the only improvements in housing have been made by individuals who have endeavoured to secure pieces of land, to erect houses on them, and thus to maintain their families. A good deal of that has been done in the last two years.
In addition to that, the housing problem has been dealt with by cooperative organizations in that part of the country. The provincial government has cooperated to the extent of inaugurating a housing programme whereby groups are formed. These groups, each of which consists of twelve men, secure pieces of land. Through the medium of their credit union, sufficient money is raised to make down payments on the land. Eighty per cent of the total cost of the building is lent by the provincial government.
Five groups have been organized which have completed their homes. The amount allowed for each home is $1,800. Each man must build his own home; that is, he must draw the plans and build the house. I know of many groups which are prepared to go ahead this summer with buildings of that kind, thereby solving for themselves the housing problem existing in mining communities. Whole villages are being created in this way. They can put up such a building for $1,800; but if a contractor were hired, the cost would be $3,500. This additional tax of 8 per cent upon the lumber will cost them $144. The only cost entering into the house is that of material, the labour being all done by themselves.


James Lorimer Ilsley: The eight per cent tax is reckoned on the wholesale price. Therefore it would be at least 20 per cent less.


Clarence Gillis: That is some help. This tax will discourage many of these groups. I think they are carrying on one of the most practical plans for the solution of the housing problem, and this is being followed in nearly every district where there are coal mines. I think

the leader of the opposition will tell us that the same applies to Minto. With the help of the provincial government these cooperative housing groups are formed. A credit union is first formed, and then they tackle the housing problem. Many of these men earn only $15 to $20 a week and are now occupying two or three rooms for which they must pay $20 a month. They are trying to get themselves out of that atmosphere, and we should not do anything at this time to discourage them. If the suggestion of the hon. member for Brantford City (Mr. Macdonald) is followed, this type of house would not be taxed.


James Lorimer Ilsley: The hon. member has said that if the house were built by a contractor, it would cost about $3,500.


Clarence Gillis: But there is no contractor. Each group does its own work. A man digs his foundation and puts in his concrete. He may spend four or five months in studying things out before undertaking construction. Everything is installed by the men-the furnace, radiation and so forth. I understand that the labour cost on any building is about one-third.


James Lorimer Ilsley: That type of house would not come within the class mentioned by the hon. member for Brantford City, who referred to a house costing about $3,000. The material cost ordinarily is about 50 per cent of the value of the house.


Clarence Gillis: If a contractor were to erect this house, I would say that it would cost about that. The house has a six-foot basement and is completely equipped with modern conveniences; yet, because of this cooperative effort, the total cost is only $1,800.


Gordon Knapman Fraser: On Saturday I was speaking to a gentleman who said that he was putting up eight houses in Toronto and was figuring on a profit of $220 on each house. These houses will sell at about $3,500, but this profit covers his time and everything else.


James Lorimer Ilsley: We were talking about the proportion that the cost of materials bears to the cost of the house, and I am informed it is about 40 or 50 per cent.


Gordon Knapman Fraser: The minister said that the tax would be 20 per cent less on account of its being imposed upon wholesale prices. When a man buys materials he will receive 20 per cent less for his money because the retailer will have to take his profit on the eight per cent tax; when a man buys from him he pays eight per cent, not only on the material but on the labour.

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James Lorimer Ilsley: I did not intend to get into an argument over prices, because that has nothing to do with the principle. Hon. members have been talking about houses costing $2,500 and $3,000 and have been saying that this tax will amount to so much. If a house costs $3,000, and 40 per cent is the material cost, that would amount to $1,200.


Gordon Knapman Fraser: Sixty per cent would be material.


James Lorimer Ilsley: My information is that 50 per cent is about right, which would be $1,500 based upon the retail price. Twenty per cent off that would make it $1,200, and the tax at eight per cent would work out to $96. It should not be said that the tax would be $200 or thereabouts when it is not anything like that.


Mr. ROEBUCK:: The hon. member for Acadia (Mr. Quelch) expressed regret that some hon. members of this house were forced by some compulsion to vote against their conscience. If that be so, I have not noticed it. I realize that I have not been as long in the house as some have, but as yet I have not noticed any compulsion of that kind. The hon. member for Acadia was a little severe upon those who may vote for this measure notwithstanding the arguments which have been advanced against it. There is a compulsion upon hon. members on this side of the house which is greater than that imposed upon hon. members on the other side. Hon. members on this side are responsible, through the committee of council which they support, for the carrying on of the war effort. It is true that members of the opposition also have responsibilities in that regard, but not in the same intimate way.


Richard Burpee Hanson: That is a new theory; we all have equal responsibility.


Arthur Wentworth Roebuck: I am glad the hon. gentleman feels that he has a responsibility. I wondered sometimes whether that responsibility was realized. Perhaps it should be there, and to that extent I withdraw my remark. There rests, however, upon the shoulders of hon. members on this side of the house who support the administration, a responsibility which others may claim if they so desire. What is the compulsion? It is the compulsion resting upon the Minister of Finance to provide the funds with which to carry on this war effort. It is the belief of members on both sides of the house, with some few exceptions, that this money should be raised by the orthodox and traditional methods of
taxation which have been in vogue in this country for a number of years. Some hon. members do not always realize their evil effects. I hold a certain view in connection with these methods of taxation, which increase the cost of living, check production and tend towards poverty among our people. I am not alone in holding that view, but perhaps I have expressed it more frequently than some others. One of the most objectionable taxes we have is the sales tax. I think it is perhaps a little less objectionable than tariff taxes, but it is a destructive tax on 'business, one which checks building, checks buying, increases the cost of living and tends towards poverty. Therefore, if this house and the Minister of Finance could see their way to raising the revenue in some other way, I would be happy.


An hon. MEMBER:: How would the hon. member raise it?


Arthur Wentworth Roebuck: I was going to ask that question of the hon. member for Rosetown-Biggar. He says that he wishes the burden placed somewhere else, and I think he should have proceeded to tell us where.


Mr. COLD WELL:: I have done so a number of times.


Arthur Wentworth Roebuck: Then perhaps the hon. member and I will agree that less destructive forms of taxation might be adopted. I do not, however, think we are in a position at this moment to adopt those methods, and therefore we are faced with the necessity, if we are going to get the money, of adopting some taxation of this kind which, in my judgment, is objectionable.
The hon. member for Halifax (Mr. Isnor) took exception to the statements made ' by the hon. member for Rosetown-Biggar with reference to the deplorable conditions existing in the city of Halifax. I say "deplorable"; he did not. I do not know the conditions; but I do know this, that the hon. member for Halifax was perhaps unduly sensitive about the conditions which were revealed. It is true that if you pass through the better part of Halifax or any other city you would not see the deplorable conditions, and unfortunately that is what we have been doing for many a day-we have been passing by on the other side. If the hon. member for Halifax wishes to object to the statements made with regard to slum conditions in his city by the hon. member for Rosetown-Biggar, I think he desires to place his city in a category alone by itself because all the cities that I know have conditions of that kind existing. Perhaps the best thing that
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the hon. member for Parkdale ever did-I will not say the best 'thing he ever will do, because he is a young man yet-


Herbert Alexander Bruce: Thank you.


Arthur Wentworth Roebuck: It was a splendid thing he did when he headed the housing committee which inquired into conditions in Toronto. I was in office at that time, and I think the hon. member for Parkdale will credit me with having given all the assistance I could to the examination into building and housing conditions in our city.


Herbert Alexander Bruce: You did.


Arthur Wentworth Roebuck: I shall read just one
paragraph from that committee's report:
Our survey of Toronto housing conditions reveals that there are thousands of families living in houses which are insanitary, verminous, and grossly over-crowded.


Richard Burpee Hanson: Thousands.


Arthur Wentworth Roebuck: Yes, thousands, and
thousands is correct. There are somewhere about 150,000 housing units in Toronto.


Richard Burpee Hanson: I beg pardon; I thought the hon. member was referring to Halifax.


Arthur Wentworth Roebuck: And thousands is not
wrong in the light of that sentence I have quoted. I know from personal knowledge of my city. The report continues:
The committee confidently estimates that the number of dwellings which for these and other reasons constitute a definite menace to the health and decency of the occupants is certainly not less than 2,000 and may be more than 3,000. In addition there are probably half as many houses again which, while not in the same sense menacing, nevertheless lack the elementary amenities of life.
Bad houses are not only a menace; they are active agents of destruction. The committee is satisfied from its investigations and inquiries that they destroy happiness, health and life. They destroy morality and family ties. They destroy the basis of society itself by their destruction of self-respect and their promotion of delinquency and crime.
That committee examined as many as 1,332 dwellings, and their summary shows that 96 per cent, not of all dwellings but of those 1,332 dwellings, fell below the minimum standard of amenities; 75 per cent of those dwellings fell below the minimum health standard, and 55 per cent of them were verminous. There is nothing that can be said on the floor of this house in criticism of the housing conditions of our cities which would be extravagant or overstated. And, Mr. Chairman, the finest excuse for this tax which I have yet heard voiced from the floor of this house is

that it was designed for the purpose of stopping building. That was the expressed purpose of the Minister of Finance.


Richard Burpee Hanson: Large
building.


Arthur Wentworth Roebuck: No; I do not think so. I think the minister went all the way because the tax goes all the way-8 per cent. I congratulate him upon not increasing the sales tax. I cannot congratulate him upon the extension of the sales tax, for it has for its purpose the stopping of building as well as getting the money. The minister, as I gathered from reading his speech, seems to have realized that taxes of this kind do destroy enterprises of this kind. I take it that the tax is temporary, and that it will be removed as soon as the drastic need for money is passed or some other and better and less destructive form of taxation can be adopted by virtue of public opinion at large and by public opinion in this house. Therefore I am hoping that this tax will disappear just as soon as the need for the money has gone by. I am not going to vote against this tax, much as I dislike it, because I realize-not that I am compelled at all-that it is necessary to support the administration in the measure which they have adopted, no doubt after considerable consideration, to raise the necessary money to carry on the war.
I want also to congratulate my fellow-member, the hon. member for Brantford City. If it were within the range of possibility, in view of the problems that he faces, for the Minister of Finance to ameliorate this tax, even in its temporary form, on the lower housing units, I am sure that it would be accepted by all members of this house with pleasure and satisfaction. I realize, however, the difficulty in so doing. It is a sales tax. It is not a specific tax, and you cannot make fish of one and flesh of the other without practical administrative difficulties.
There is this further point I wish to make in connection with the tax. A tariff tax obstructs the business of the country.


Mr. MacNICOL:: It does nothing of the
kind.


Arthur Wentworth Roebuck: Why, of course it does.


John Ritchie MacNicol: I have seen a business
grow, under a tariff, from thirty-seven employees to 925.


Arthur Wentworth Roebuck: Yes. You can grow
bananas in this country under those conditions. I am not going to debate -

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John Ritchie MacNicol: You cannot do any such
thing. You cannot grow bananas in this country.


Arthur Wentworth Roebuck: I have been delighted with the type of argument addressed to a taxation measure which I have heard from the opposition, and I hope that if they ever take office they will remember the things they have said, which are contrary to the kind of debate that went on in years gone by.


Richard Burpee Hanson: What
about sugar?


Arthur Wentworth Roebuck: The tax on sugar?


Richard Burpee Hanson: Yes.


Arthur Wentworth Roebuck: Well, of course, I do not like that type of taxation.


Richard Burpee Hanson: But the
hon. member will vote for it.


Arthur Wentworth Roebuck: I am going to vote for
it because I cannot help it.


Richard Burpee Hanson: Go back
to 1933 and see what your leader said about it.


Arthur Wentworth Roebuck: He did not like it. Of
course he did not like it. We, no doubt, will abolish it as soon as the Minister of Finance can get money other ways.


Richard Burpee Hanson: Oh, yes!
They did not abolish it in 1935. There was no war on then.


Arthur Wentworth Roebuck: No; but there was a
Tory opposition which no doubt supports that kind of taxation, not in its particular items, but in the main.
Let me finish the point so far as housing is concerned. A tariff tax, as I said, destroys the business of the country. Hon. members will find that that is so.


John Ritchie MacNicol: Your temporary deskmate, the hon. member for Brantford City (Mr. Macdonald), does not agree with you.


Arthur Wentworth Roebuck: Well, that is all right.
My hon. friend can make a tariff speech some day, and I will answer him with a free trade speech, or a freer trade speech. But we are not discussing that now.
What will be the result of this tax? In the first instance it will increase the cost of materials which go into a house; how much, I leave others to debate; but there will be an increase, and to that extent it will make the building of houses more difficult and costly.
There are two items which enter into costs of houses. First, there is the cost of the
land, and, second, there is the cost of the building. The building costs are determined by such items as these.


Richard Burpee Hanson: That is
deep stuff!


Arthur Wentworth Roebuck: Taxes and so forth are
all added to the cost of the house. The cost of the land is what the owner can get. Is that not true?


Richard Burpee Hanson: Yes; this is deep stuff!


Arthur Wentworth Roebuck: My hon. friend the leader of the opposition has made many speeches to which I could refer with sarcasm, but I have never yet interrupted him, and I do not think a statement of that kind by him in this chamber is becoming.


Richard Burpee Hanson: I am
sorry.


Arthur Wentworth Roebuck: All right. Then I withdraw what I said.


Richard Burpee Hanson: Carried.


Arthur Wentworth Roebuck: Unanimously. The two costs are, first, the cost of the house and, then, the cost of the land. The cost of the land is what the owner can get for it. The increased cost of the buildings will for a while check building, but the final effect will be that the land-owner will take less for his land, and building will go on.


Gordon Knapman Fraser: He is not getting much for his land new.


Arthur Wentworth Roebuck: In my opinion he is getting too much.


Gordon Knapman Fraser: I
know of lots which are sold for $^5.


Arthur Wentworth Roebuck: The hon. member for Parkdale got nowhere with his building project. Why? I do not know whether he will agree with me in this statement, but practically every building project we ever had was ruined by the rapacity of the landlords.


Herbert Alexander Bruce: My view is that municipal taxation had a great deal to do with it.


Arthur Wentworth Roebuck: Yes, perhaps.


Herbert Alexander Bruce: Very high municipal taxation.


Arthur Wentworth Roebuck: Yes. There was too little on land values. What will happen is that, if this tax continues until adjustment takes place, there will be a decrease in the price which the owner of the lot can hold out for, and probably building will continue. That will apply, partly, if not wholly,- check for a while, a readjustment, and I hope building will continue. I also hope that in
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due season the Minister of Finance will report that this tax has been removed, is out of the way.


Mr. BLACKMORE:: I wish to say a word about this item before it passes. I believe it is necessary for the committee and the minister to bear in mind that we are concerned not only with raising money but with maintaining morale. There are at least three things which are necessary to the maintenance of morale. One of these, which already has been referred to several times, is health. Another is the cost of living. Yet another is the cost of production. This tax will affect disadvantageously our Canadian economy in all three of these respects.
I believe that it will be quite in order, and it may interest the committee, if I read a letter which I have received from the International Union of the United Automobile Workers of America, district council No. 26 of Ontario, dated May 20, sent from Wyandotte street, Windsor, Ontario. Long before we finish this war we shall have to take carefully into account the effect of our acts upon our labour unions and upon our working people generally. I shall leave out the address:
Dear Sir:
Attached is a copy of a resolution which was passed by District Council 26, UAWA-CIO, on March 30 and since adopted by all UAWA-CIO locals in Canada.
We respectfully ask that you give your utmost support to this resolution.
Yours truly,
John A. Taylor, Secretary pro tem.
To me that has an ominous significance. Here is the resolution:
Whereas: the rapid expansion of industry and the resultant demand for labour in the various industrial centres has caused an acute shortage in housing, and
Whereas: this shortage in housing is causing an overcrowded and unhealthy condition which will result in the development of disease and general epidemics, and
Whereas: this problem is an immediate one and if neglected may seriously hinder the war effort, and
Whereas: the dominion government is contemplating the spending of huge sums of money on projects such as the St. Lawrence, whose benefits will not be felt for years to come, and which government spending at this time will cause dissatisfaction among the people,
Be it therefore resolved:
That we, this District Council 26, of the United Automobile Workers of America, demand that the government immediately launch an ample and effective housing programme in order to adequately meet this serious crisis that is developing in housing.
May I, quite calmly, draw the minister's attention to the fact that the letter states

that that resolution has been passed by every local throughout Canada? May I also draw his attention, very sympathetically and firmly, to the fact that, not only is the government apparently taking no steps to institute a housing programme, but the minister is proposing a tax which will have the very opposite effect on housing conditions?


James Lorimer Ilsley: As the hon. member knows, there is a housing programme. There is the war-time housing programme.


John Horne Blackmore: Would the minister say that this programme would offset the deleterious effects of this tax?


James Lorimer Ilsley: I do not admit that the tax will have deleterious effects.


John Horne Blackmore: The minister has
established a reputation in this chamber for several characteristics during this debate, and now the characteristic of optimism comes out, I am afraid the minister is unduly optimistic about the tax. No further comment is necessary on the evil effects which this tax will have on people generally throughout the country, the poor people, those in the lower-income brackets, the sort of people who will save for two years in order to put on a front-door protection. I wonder how many members have been in that class, the class to whom it is a thrill just to put a verandah on a little shack. There are too many people in that class in Canada, and they are not looking with any degree of optimism upon the minister's proposal to impose this sales tax.
I wish to deal briefly now with the effect which the tax will have on the farming population. While I represent an urban population, I also represent, in the main, farmers. This year, I fancy, a great many bins will be necessary all over western Canada. Many people will grow wheat notwithstanding the desperate efforts of the government to reduce acreage. They will grow barley and oats, and they will require bins. The amount which will be added to the cost of farmers' bins by the discontinuance of this exemption is a matter that deserves careful consideration. The hon. member for Cumberland referred to the need for the reconstruction and repairing of barns. There is a great need for repairing barns throughout the west, wherever I have been. If farmers have not been able to do anything in the way of repairing buildings all through these wearisome and desolating depression years, now when they might be able to recoup their losses and make good the depreciation they are forbidden by taxation like this. How long will the farmers continue to have buildings

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on their farms? I do not wish to labour this matter, but I do not want to point out that this little item will add to the costs of production for the farmer.
Before closing, I would refer to another matter which should affect the minister, and I believe it does. I have great respect for his application, intelligence, understanding, and all these fine qualities, but I wish to point out to him a fact which I have mentioned in debates at which he might not have been present, that the cost of living of the western farmer has increased since 1913, according to the Searle report, in these proportions. In 147 items which the western farmers buy, the cost has risen from 100 to 145; it was 100 in 1913-14, and it is 145 now. In so far as our farmers are carrying on and trying to live, they must buy these commodities and contrive to pay for them, and they must contrive to pay that 145 as against 100 which they paid in 1913-14. While they are endeavouring to do that, a gasoline tax is added; the sales tax is applied to lumber; they are discouraged from producing the quantity of wheat they ordinarily do, and they are unable to sell wheat for the cost of production. Hon. members need only put themselves in imagination in the position of the farmer and ask themselves whether it is wise, even for revenue, to apply this measure to the lumber which farmers buy. I protest against it.


William Ross Macdonald: Will the minister say whether the National Housing Act will be amended so as to raise the $2,500 to $3,000 and allow the 90 per cent?


James Lorimer Ilsley: I did not reply to the hon. member's suggestion because I did not realize from the manner in which he spoke that he expected an answer now. It was not because I did not appreciate the tone and spirit of the suggestion. I hesitate about making a speech on the whole situation for fear I shall start another round of speeches which might take all evening. I hesitate, but not because the government considers that it has no good reasons. It has good reasons. It is of opinion that most of the building which will be discouraged by the tax, if any volume of business is discouraged-and probably some will be- could far better take place in the immediate post-war period than now, when our object should be to devote our resources, material and human, more directly to the prosecution of the war than we should be doing by building homes and improving those that we have.
There may be instances where improvements are urgently needed, instances where the building of some homes is urgently required. With regard to the latter, the programme of the war-time housing corporation
takes care of the situation so far as the housing of workers for war-time industries is concerned. I am of opinion, however, that to permit this exemption to continue at a time like this would do more harm than good. The object of our governmental activities is not now primarily to improve the conditions under which our people live. Our peace-time thinking is likely to carry over into the period of war. Members of parliament would naturally like to see their constituents as comfortable and prosperous as possible, but I say again-and it may sound odd; it may sound as if we have not an adequate sense of responsibility

that the prosperity of our people, their material wellbeing, their comfort and convenience-perhaps I should leave our the word "convenience"- and so forth, is not the primary consideration at the present time. There should be no want or unemployment, but there should be none of that comfortable type of prosperity which is associated with a boom. I wish to make it perfectly clear that this is the policy of the government, whether or not that policy is attacked; I do not wish to make any bones about standing on that.
It was for these reasons, Mr. Chairman, we considered that this exemption should not be continued. It must be remembered that if building materials had not been removed from the list of taxable items, as they were in the spring of 1938, we never would have had this debate at all; it never would have occurred to any hon. member that they should have been removed at this time. Building materials were always taxable, even during the depression years of 1932, 1933, 1934, 1935 and 1936. It was not until 1938 that we took building materials out of that list, in order to meet the unemployment situation; and the reason for removing building materials from the list of taxable items has now disappeared. The hon. member for Saskatoon City says that there is some unemployment on the prairies, but generally speaking there is no unemployment situation in Canada to-day. As a matter of fact, Ontario members from rural constituencies have risen in their places one after another and asked if we realized how hard it is for farmers to get help on their farms. There are wide areas in Canada where the problem is not one of unemployment; the trouble is to get people to do the work. Under those circumstances we are not in favour of policies which will promote building that may very well run into excess building, which could far better be done in the period immediately after the war,
Those are the reasons for this policy. There will be some instances where somebody may desist from building when that building would
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be a good thing, everything considered, but those instances will be only a very small percentage of the total number affected. It is impossible to frame taxes that will apply with precise equity in 100 per cent of the cases, but I am satisfied that this tax will substantially meet the requirements of the situation.
With regard to the question of the hon. member for Brantford City, unless the government is prepared to introduce an important amendment to the housing act this session- which I must say is not on the sessional programme-the limit will have to remain at $2,500, because that is statutory. It is a matter for consideration as to whether that limit should be increased, but I am afraid my answer to the hon. gentleman will have to be that it will not be increased this session.
With regard to the other suggestion-and I am sorry he has put me in the position of having to turn down his suggestions-that we exempt building materials from the tax in so far as they go into low-cost houses, I am advised that it would be impossible to trace the materials. The administrative difficulties would be so great that the suggestion could not be favourable considered.


Douglas Gooderham Ross: Would the minister say just a word about repairs? I suggest that the tax on repairs was rather unfair, and might cause rents to be increased in some instances.


James Lorimer Ilsley: You could not follow the
materials into the repair jobs.


Richard Burpee Hanson: Oh, it could be done.


Douglas Gooderham Ross: There is no doubt that the margin of rentals in certain places is so close at the present time that this tax may have some effect. At least it will provide an excuse for raising rents. When I was speaking about the Toronto Housing company I neglected to mention that for many year3 the shareholders of that company received no dividends at all. As a matter of fact, they have had hardly any return on their money.


[Stage Direction]
Section agreed to.
On section 20-Nicotine.
Mr. STIRLING:: Would the minister explain
this change?


James Lorimer Ilsley: Sections 20, 21 and 22 are consequential upon tariff changes. They are simply to bring sales tax items into conformity with certain customs tariff items which have been amended, either this session or, in one instance, last session.


[Stage Direction]
Section agreed to.
Sections 21 to 28 inclusive agreed to.
Title agreed to.
Bill reported.
Mr. SPEAKER:: When shall said bill be read the third time? Now?


Jean-François Pouliot: No, Mr. Speaker. When this bill was in committee I was called to order by the chairman when I attempted to discuss the Bank of Canada and other matters. I do not wish to obstruct this bill, but I should like to know if there will be any opportunity to discuss the Bank of Canada in general and the foreign exchange control board in particular. Up to now it has been impossible to touch these people. When the matter is brought up in committee the chairman says we must adhere strictly to the rules. It is only under the shadow of the Chair-I mean the big one-that there is the real freedom of speech that I expect in this house. I do not wish to oppose the third reading of this bill, provided I have an opportunity some time to discuss these other matters.


James Lorimer Ilsley: On one of the finance estimates the hon. gentleman will be given an opportunity to discuss the operations of the foreign exchange control board, if that will be sufficient for his purposes.


Jean-François Pouliot: And the Bank of Canada?


James Lorimer Ilsley: The Bank of Canada is not a government department; it is a separate organization, whose directors are nominated by the government. I should not like to give any undertaking about the Bank of Canada, except as far as the hon. gentleman can relate anything he would like to say about its operations to the discussion of the foreign exchange control board, which is an agency of the Department of Finance.


Richard Burpee Hanson: On the administration item under finance would there not be an opportunity to discuss any corporation or board controlled by the government? Surely there must be that opportunity somewhere.


James Lorimer Ilsley: I will go as far as I can on the matter of the Bank of Canada, but I do not think I would agree to a discussion of the policies or internal administration of the Bank of Canada, because it is a separate organization.


John Horne Blackmore: Do I understand the minister to say that the Bank of Canada is not directly under the control of the Department of Finance?


James Lorimer Ilsley: Correct.

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John Horne Blackmore: That it is independent of the finance department, and therefore independent of this house?


James Lorimer Ilsley: Correct.


John Horne Blackmore: Independent of the administration, too?


James Lorimer Ilsley: Well, Mr. Speaker, I do not know what stage we are at, but the Bank of Canada is a separate organization, just like the Canadian National Railways or the Canadian Broadcasting Corporation. These separate corporations are owned by the government; in the case of the Bank of Canada the stock is owned by the government and the directors are nominated by the government, but once the directors are appointed, I have no right, nor has the government any right, to dictate to the Bank of Canada as to what its policies shall be.


Richard Burpee Hanson: I distinctly dissent from that proposal, that in all these government-owned organizations parliament has lost control. That is distinctly not true in connection with the Canadian National Railways; and it must never be the accepted principle in this House of Commons or in this Canada of ours that any of these boards set up by the government as public agencies shall never be referred to in this house. I wish to register a protest against that statement of the minister.


Georges Parent: Order, please.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.
Mr. ILSLE1 moved the third reading of the bill.


Jean-François Pouliot: Mr. Speaker, this is a good time to remind hon. members of certain views which have been expressed about taxation. There is across the boundary line a gentleman most favourably known over there; I am referring to the under-secretary of the treasury, Mr. Hanes of Washington.
I have in my hand the magazine section of the New York Times for April 9, 1939-over two years ago-and I find contained therein some of the views expressed by Mr. Hanes, a gentleman who had had practical experience before he attempted to apply his theories to the business of the country. This is what I find in the New York Times magazine:
There emanated from the treasury a series of suggestions, all with the Hanes stamp on them, to reduce the number of tax levies upon corporations in the interest of getting money to work;
to lay out a "five-year plan" of taxation so that business could know, for a time at least, what to expect;-
That is very important.
-and to eliminate all tax exemptions on future securities and salaries of federal, state and local governments.
Then it continues:
All the while Mr. Hanes continued to preach cooperation-between government and business, between industry ,and labour, even between labour and labour. "Our country is highly interrelated," he told this interviewer, "and we must all go up or down together. We must respect each other's ideas; even those we like least may sometimes give us a valuable idea if we grant the right to speak freely."
Note the -words "if we grant the right to speak freely." It continues:
"We don't want any suppressed or persecuted group in this country. For my own part one of. the things I work at hardest is my trusteeship in the Hampton institute for improving the lot of the negro,-"
I may point out that the Hanes family came from the south, and secured the help of negroes to establish their fortune. It continues:
"-and I realize that no matter how hard I work I can never repay more than a fraction of what the negroes' labour did in building up the Hanese in the south.''
Then Mr. Hanes is quoted as follows:
"Material, economic recovery," he said, "is the first problem in this democracy. In those parts of the world where democracy has been forced to give way to one-man government, it has come about when the economic condition of the people was unbearable."
Let us not forget that.
"One of the most important economic movements to-day is remedial federal taxation that will make for recovery."
Then the article continues:
What of Mr. Hanes's philosophy of taxation? Would he say that he was against using taxes to effect reforms, and for regarding taxes solely as a means of getting money to run thj government? The question, he found, was hard to 'answer in that form.
"The matter of ability to pay is fundamental to our tax system," he said. "We have to start with -that. Then we have to admit that all taxes, of any sort, have social repercussions upon our economy and on individuals. But I do not believe in setting out to write a tax bill to do by indirection what you dare not do by direction."
That is very aptly put.
"The motive for any tax, whether for reform or anything else, should be made clear to congress, which will then be in a position to accept or reject. In a democracy the people are trusting their public servants and should not be deceived."
That is another very good thing.
"I believe," he said, "that the treasury will collect a larger total of tax dollars with a tax
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bill that takes into broad consideration the effect of the dollars it will leave the taxpayer for expansion and development than it will by concentrating on the highest possible dollar it can extract from the business, profession or occupation of the taxpayer."
Mark you, sir.
"In other words, what is left to the taxpayer is as important to the country's economy as what is taken from him.
"The point is that, in my judgment, harsh or deterrent tax laws do not produce the maximum flow of revenue. I firmly believe that the one way to lighten the load of to-morrow is to adjust in fairness the load of to-day."
That is one of the wisest presentations on taxation I have seen. Of course someone will tell me that that was written a few months before the war.
All right; let me now quote from a Canadian publication known as Canadian Business. In the April, 1940, issue of this publication I find a worth-while article written by no less a person than Mr. C. Fraser Elliott, K.C.,. income tax commissioner for Canada. The article has been summarized in a frame in the middle of the page. This summary is contained in a few brief sentences, and is headed "Highlights". I assume every hon. member has seen the article, because the magazine has been sent to us free of charge, and it is worth reading. The boxed-in portion of the article is as follows:
Highlights
Tax Administrator and taxpayer have a common interest in:
1.	The minimizing of taxation's detrimental effects.
2.	A simplicity in tax laws.
3.	The encouragement of profits.
4.	An absence of wilful evasion.
5.	The minimizing of administrative difficulties.	_	_
6.	An avoidance of tax discrimination.
7.	A cooperative effort to finance the war efficiently.
That is concise and also sensible. The difference is mainly in phraseology; the meaning of what Mr. Hanes and Mr. Elliott said on two different occasions is about the same. As I say, about the only difference is in the expression. One was written before the war; the other, several months after the war had started. It is written by a Canadian who is more familiar with our problems than the average citizen. In February last, no less a man than Mr. P. D. Houston, president of the American bankers' association and chairman of the American National bank of Nashville, Tennessee, made an important statement at a convention which took place in Chicago on February 12. I have the reports of the New York Herald-Tribune and the New York Times of February 13. Of course his remarks apply to the United States, but I should like to quote this report as follows:

Banking aid urged in defence orders.
Government credit now will lead to dependence later, P. D. Houston declares.
Business challenge seen.
Any failures will be blamed on trade by "alibi boys" head of the A.B.A. says.
We have a lot of alibi boards. I wonder what is the responsibility of these men in the United States? Here they are irresponsible. It is impossible to say anything about them. May I read a letter which I wrote to the Prime Minister (Mr. Mackenzie King) in connection with the matter of free speech in the house. It is to be found on page 4599 of Hansard of May 26, 1939, and I am asking that it be placed again on Hansard. I think it should be placed on Hansard at every session in order that we may have free speech in this house. It reads:
My dear Chief:
Referring to vour remarks at page 1862 of Hansard of March 14, you stated that you did feel that, as leader of the House of Commons, it was part of your duty to see that members of the public service "who are not in a position to speak for themselves during the course of debates which take place in this house, should be protected against any remarks in the nature of a reflection upon themselves".
The suggestion that the wrongdoings of public servants cannot be discussed in the house was at first an invention of the Ottawa papers which cater to the public service and it was brought to the house in the first place by the members of the C.C.F. party to prevent any exposure of their own friends in the service.
I submit respectfully that according to British parliamentary practice, every civil servant is represented in the house by the head of his department. Therefore, as you stated that you were the last person in the house who would wish to curtail in any way my freedom of discussion, I have the unquestionable right of expressing my opinion about any civil servant who cannot sit in the house and be present there because he receives an emolument from the crown. The minister is there to take cognizance of and answer any complaint made by any member of parliament. If the minister is familiar with the matter, he may answer at once; if not, he shall take note of what has been said and give an answer in due course.
Some ministers assume that they always have to take the side of all civil servants in their departments, even when some things have been done against their own instructions or outside of their own knowledge. It seems all wrong because it is an incitement to civil servants to do worse, as they can rely upon their minister's continuous defence to consider themselves unimpeachable, except perhaps when they have been found guilty of a criminal offence.
You went further in objecting to the "references to their personal history such as the hon. member I gather was about to make".
It is pretty hard on a member to object on a guess on what he is going to say. For your information, I must tell you that what I intended to show was the record of experience of the deputy minister of finance, to which your predecessor had vaguely referred but which he. himself, had conspicuously hidden._ I agree with you that "members of the public service

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have to look to the administration for protection in the discharge of their duties", but on the other hand, it is the duty of members of parliament to inform the government on everything they find wrong in the civil service, in order to secure a possible improvement.
For the above-mentioned reasons, I regret to have to disagree with your statement that "if deputy ministers or leading public officials or any members of the public service are to be attacked here, in justice to them they should have the right to make reply on their own behalf from wherever they may happen to be".
They are entitled to no right of reply to what is said by members of parliament, but it is the duty of the minister concerned to reply, in his capacity as head of the department.
Again for the above-mentioned reasons, if the method which you have suggested "were to be adopted with regard to the conduct of our public affairs I am afraid the public service of the country could not be carried on in the manner in which the country has a right to expect it will be carried on". I want you to understand clearly that I did not intend to bring "personal matters" in the debate; my intention was solely to tell the house about the record of experience of a man who is mainly responsible for the blind and bold dictatorship of the finance department in dominion government.
Standing order No. 41, speaks for itself:
"No member shall speak disrespectfully of his majesty, nor of any of the royal family; nor of the governor or person administering the government of Canada; nor use offensive words against either house, or against any member thereof."
It makes no mention of anyone in the civil service.
My intention was not at all to attack you nor your colleague of the finance department, but to inform both of you on matters of public interest which are purposely kept in the dark by those concerned.
The first duty of a member of parliament is to inform the government on what he considers of public importance, and it is only after he has done so that he may be justified in attacking the ministers concerned, in case no action is taken to redress the wrong which was complained of.
I would not feel myself "justified" of "attacking" any cabinet minister for anything done outside of his knowledge by anyone in his department, unless such minister were previously informed about the facts and where is it to be done elsewhere than in the house?
Then you said I was "quite within (my) his rights in bringing to the house anything at all in connection with the attitude of individual civil servants", etc.
The competence and qualification of any civil servant are even more important than his attitude and how can they be rated if their record of experience is to be left outside the picture?
I am just reading the -wonderful biography of your illustrious grandfather who was a champion of free speech and I hope that all the sacrifices that he made during his lifetime for the freedom of speech in the legislative assembly were not made in vain and that we have not regressed a century backwards, to the time of the "family compact". Otherwise, it would be just as well to suppress parliament.
Faithfully yours,
Tean Frangois Pouliot.
What I find strange is that instead of giving us the information about Canadian affairs for which we have been asking so long, the Bank of Canada gave us information about German finance, described the way in which Germany was financing the war and pictured Hitler as a great financial hero. It seems to me that, as this war proceeds, our main business is to know how much the Canadian citizen can pay in the prosecution of the war, what taxes are being collected from him and what taxes can be collected with a view to creating the least possible disturbance in finance. Those are my humble views about taxation, and I hope, sir, that I shall not be considered too hard when I say that I find Mr. Towers' dissertation on German finance in the annual report of the Bank of Canada both uncalled for and ridiculous at this time. I am not going to read it here; I have no time to waste. I will just draw the attention of my hon. colleagues in this house to the fact that it can be found in the Canada Gazette of February 13, 1941.
Exactly two years after the interview with Mr. Hanes, published in the New York Times, an interesting article appeared in the Toronto Daily Star of April 9, 1941. The heading on the article reads, "Pictures Canada as richer after war-Poorer too, greater resources, skill, fewer material things, Professor predicts

Saddled with debt." The article reads:
In the aggregate Canada will be richer after the war than she ever has been before, Professor J. McCurdy of the department of philosophy at the university of Toronto told members of the So-Ed club of the Central Y.M.C.A. last night.
"Canada will have greater resources and vastly more still both among trained workers and leaders in statesmen, in administering a bigger business in social ownership," he declared, "but distributively Canada will be poorer. There will be more cash in the pockets of the workers and less in those of the middle class and salaried workers. We will be poorer in material things-fewer new roofs on houses, fewer replaced cars and clothing that we wear longer."
It is precisely the middle class which is contributing its money in taxation to finance the war. Everybody is ready to contribute his share of taxes, provided that the money is well spent and provided that accounts are furnished to the people. It is to my great surprise that the accounts are incomplete. There are, of course, no regular estimates for the war departments; as was pointed out earlier in the session, the reports of the auditor general are incomplete, and therefore it is impossible to get information on -where the money goes. "It is a war secret", and so on. These fellows are there, and it is impossible for members of parliament to check them and to give fruitful advice to the minister
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although we are always willing to do so. They make it impossible for us to cooperate with the minister, and what are they? They are pictured as angels; they are pictured as saints; they are pictured as experts, and they are pictured as the only saints and the only experts in this country. We have to listen to them. We are willing to help, but we cannot help because of that.
Yesterday I took the trouble to go home, covering a distance of 800 miles, just to speak in favour of the victory loan and to encourage my people to subscribe to it. On the other hand, I said to them, "I am suggesting that you subscribe to the victory loan, but when I get back to Ottawa I assure you that I will scrutinize all expenditures even more closely than I ever did before. I will scrutinize them with a magnifying glass. I have urged you to subscribe to the victory loan, and you are entitled to full information as to how the money is being spent." There is no possible reason why this information should be refused to members of parliament, and the leader of the opposition (Mr. Hanson) was absolutely right in what he said just before the recess. There is no possible reason why anybody who is employed and paid by the government should hide any kind of expenditure, and there is not a single Canadian citizen outside this house who would ever submit the contrary. The suggestion would be absurd.
On the very same day, April 9, 1941, the Toronto Daily Star had another article headed, "Supply Department soon to spend $5,000,000 daily.	Has	placed	total	of
81,500,000,000 in war orders in year's operations. Birthday review." But again no information.
I told my electors at home yesterday that I was in favour of the victory loan but, on the other hand, that the best way to get large subscriptions to the loan was to give members of parliament the information for which they asked. Hide nothing. Put all the cards on the table. That is what I am asking on behalf of my people, and I am sure that that can be said for every constituency. I have the utmost respect for the Minister of Finance (Mr. Ilsley). I have told him repeatedly that I have confidence in him, but I have lost confidence in the experts placed round him because they have been placed there by a man who was supposed to have converted John Strachey and Trebistch Lincoln. The former was considered so crazy that he was deported from the United States. Even with a letter of recommendation from R. B., the latter was again deported from England. It is that man who has shown such good judgment in the selection of his

good friends, Trebistch Lincoln and Strachey, who infested the civil service with cranks who are still there and who are a curse to the country. I may be considered sacrilegious for saying this. It is time for us to wake up. It is time for us to do what William Lyon Mackenzie did, and fight for responsible government. I sometimes hear some ministers say "We have assumed a great responsibility." It is no ministerial responsibility at all. It is done as a matter of course. They are there in those posts, and they have to take action. That' is not ministerial responsibility. Ministerial responsibility is the rendering of accounts for every cent that comes from the taxpayers' pockets. Everyone knows that is ministerial responsibility.
One other thing. It is even suggested that in time of war we should not discuss in the House of Commons or in committee matters of sentiment, that we should have the kind of speech that Isaac delivered when he was going to be burned as a sacrifice. Isaac was there ready to be cremated, offering himself as a sacrifice. It should not be that at all here. In the House of Commons we must have the spirit of fighters, the same spirit as the soldiers have on tlje battlefield, not that of prisoners of war in a concentration camp. That is my humble view. Moreover, instead of considering matters from the point of view of sentimentalism, we should be able to reason about them. To do that, we must have information, and no one can deny us information which is due to us. Of course, sometimes hairs are split very fine. What is said to us is not a lie; it is not a distortion of the truth; it is not even a fib; it is a kind of juggling with the facts. Information given to us must be plain, complete and accurate, and the accounts given us must be such as we can understand. That has not always been the position here. I have had to teach some of the officials of the service how to do their work; it rvas much the same as teaching a professor how to spell. I say again that there are numbers of people who think they can read and write and who do not know even their alphabet, but so long as they wear a mortarboard they are experts and geniuses.
Here is another clipping from the same paper, the Toronto Star of April 9, 1941:
Credit account may be set up to aid Canada..
Forecast King, Roosevelt, to plan closer cooperation between nations. Lease munitions?
This is interesting. We are on good terms with the neighbouring republic, and that fact may mean a great deal to us. The committee may remember that the member for Temis-couata was one of the first to advocate an alliance with the United States. The Prime

Special War Revenue Act
Minister told him that it was not the time to speak of that; that it was dangerous; that he was hurting the whole show by suggesting that he was in favour of an alliance. Then, I remember, my friend the hon. member for Leeds (Mr. Fulfordt) also spoke of it the same day in August of last year. We did that because we consider that, when we have a powerful neighbour next to us, we must be on good terms with him. Occasionally we need his help, and we must have it. But that does not mean that we must copy from him all that is bad; we must copy from him only what is good.
My last remark is that we should not consider taxation as though the war were being lost. We are all determined to win the war, but taxation must be related to our needs. At the present time taxation is just the same as though the deluge were coming to-morrow -"after us, the deluge." Taxation should be clear, progressive, and in accordance with the means of the people.
Not only that; the policy which has been preached by Messrs. Towers et al., the policy of restriction and curtailment, is a policy of misery. Everyone knows that the prosperity of a nation is not shown only by the bank accounts; they are only part of the picture. National prosperity is indicated in the clearings of the banks, meaning that the nation is richer because there are more sales, and then it is easier to collect from savings. This is the reason why so many important data are collected by the bureau of statistics with regard to bank clearings. They show the course of the dollar which goes from pocket to pocket, enriching everyone and permitting everyone to pay more taxes. That is opposed to the policy of curtailment and of restriction, which has been preached by the Towers' group. He is the highest paid civil servant in Canada and one of the highest paid in America; he receives 830,000 a year, and Iris advice is, "Don't spend. Tighten your belts." Where shall we be headed for if that policy is adopted? What will happen is that the government will have a great deal of difficulty in collecting enough taxes to meet its requirements.
Therefore I am always ready to cooperate with the minister, provided that I am not regarded as a country cousin. I represent a rural seat; but I contend that any member of parliament, even the humblest, he who represents the district farthest from Ottawa, is better qualified to offer suggestions to the Minister of Finance than any one of these men. I have not mentioned them all; I have not time to do so. But if a man comes here with a Ph.D. honoris causa, he is deemed qualified to give advice to the Minister of Finance,
and his erratic views become government policy. Have I to subscribe to it and support it as the government's programme? Well, well!
I want the war to be conducted upon an effective basis. I want my people to suffer the least possible during the war, and I want this government to keep power, but I want also to get rid at once of all the asses that have been put in high places by R. B. Bennett.


Thomas Langton Church: I wish for just four or five minutes to discuss the third reading of the bill. I am sorry that, since, I had to leave at four o'clock on Friday, I was not here when it came up in the committee stage.
I believe that it is a mistake for the government to adopt the principle set out in part XV of the bill, namely, that the governor in council shall have power to make rules and regulations regarding amusements, leaving the whole problem in mystery and doubt, and in politics. So far as this problem is concerned, the third day after the war broke out I urged upon the house and upon the government that the government should declare a national policy for amusements and sports in Canada, that they should have a survey made of all amusements, amateur sports and professional sports in the country and in relation to the war, lay down a principle or a coherent policy with respect to sports and amusements and whether everything should be as usual in Canada. Like the British, we are a sport-loving people.
Sports are of two kinds, professional and amateur. The Canadian intercollegiate union suspended all their schedules, not only of football but as regards hockey, track, soccer, boxing, basketball and other sports, for the whole period of the war. In so doing they followed the principle which the college union adopted in the great war. Also the Big Four in rugby suspended operations in the great war, not in this. I am not here to say anything on that matter. What I am suggesting is that the government would be well-advised to have a survey for ne^t year made showing what sports are being carried on, the number of those participating who have undertaken the thirty-day and four-month programmes of training, the number who have enlisted, and the contribution of each branch to our war effort. Sports' funds have done a great deal in this war for the cause.
As regards amateur sports, and particularly regarding the Big Four of rugby, I have here a letter from the president of the Argonaut rowing club, a splendid soldier, citizen and
Special War Revenue Act

amateur sportsman, Major T. H. C. Alison. He was president of Royal Henley and the Big Four in rugby.
As you know, being a past president of the Argonaut club, we depend solely on football to keep the club going. We never make a profit, and always have a deficit. In fact our overdraft at the bank right now is close to $2,000.
Next year the club celebrates its seventieth anniversary and we may be closed up if we caunot keep football going.
I think you will agree that we have done a lot for amateur sport in Canada.
Lord Strathcona once said that an Argonaut crew in England did more for Canada than all the immigration agents there.
We had a crew in England in 1939 when they celebrated their hundredth anniversary at Henley.
That is just one amateur club. Other rowing clubs in Toronto district have been closed up, the Dons, Varsity and others; they cannot make things go, owing to the depression, the war and one thing or another. The canoe clubs are in the same position. The harbour commissioners had a program of rebuilding the port; one half was a beautification and amusement schemes, and the other half an industrial scheme.
In the early days of our city the late Edward Hanlan went all over the world and did a great deal to advertise the city, while champion oarsman of the world. The winning of the war is Canada's first, last and only ousiness; nothing else counts. Consider that in this question.
In my opinion a national survey should be made along that line so that the government might be able to gather information for submission to parliament at the next session. So far as baseball and a number of other sports are concerned, they have been in the red for many years. The Toronto baseball club did a lot for the city and that sport, and many public-spirited men-the late Lawrence Solman, for instance-who have been associated with these sports and have done a good deal to promote them in the interests of the Canadian people, have never made anything out of them. This is true of amateur hockey and other sports. I suggest that the government has gone too far in imposing a tax of 20 per cent to start with. True, some amendments are in the act. They might have reduced it to 10 per cent or even to 5 per cent for amateur contests and smaller amusements, and made it applicable to all theatres and professional sports without discrimination, but I do not think it is at all fair as it stands. The amateurs should not pay. I might mention, incidentally, with reference to the interest taken in amateur sports, the Canadian secondary schools' splendid regatta in Toronto in

which several high schools and six collegiate institutes participated. No gates were taken. It was all free and a wonderful sight. These high school young people are doing their part in the war, both in connection with munitions and in the work they do on the farms to secure a matriculation, and they should have some recognition. Take the Argonauts in Toronto. They have to supply oars, boats, and everything else to teach these high school youths, and they make nothing. There are no gates in aquatic sports like canoeing and rowing. There are no paid managers in these clubs. There is a paid trainer and sometimes a coach in football, but there are no paid managers.
I agree with leader of the opposition in what he has said with regard to amateur sports, but so far as professional hockey is concerned, I think the government has gone, in the rate in the bill, much too far. A large number of public-spirited business men in Toronto built the magnificent Maple Leaf Gardens in that city, where meetings can be held three hundred and sixty-five days in the year. They did a great work for Toronto, and never got a nickel out of it. It is unquestionably a great asset not only to the city of Toronto but to the country generally, and those associated with this patriotic sporting enterprise have done a great deal to promote the welfare of various classes in connection with sports and community work as has their manager of the arena. I suggest that the government would be well advised to study the whole question more closely, by a national survey, and bring down a workable amendment next year with a study of the enlistments from each sport.
I am surprised that the bill did not contain a clause for the taxing of grain pools. There is a legal question involved in that connection, and in my opinion the day is not far distant when we shall have to follow the British example and tax all cooperative grain agencies and middlemen who handle grain. We shall have to do this as a means of raising revenue for the country in view of the large amount of money which the government spends in administering the grain act.
There should be give and take so far as amusements are concerned. I know some of the professional hockey men who went to the thirty-day camp, and they have said that they are willing to be called up if, as and when required, for further military service, but they have not yet been called. Again, 1 suggest it would be well to have a survey of this whole question with a view to adopting a national policy from coast to coast, so that everyone would do his part, and that we would

Income War Tax Act
cease to have everything as usual in Canada. The trouble in this country is, everything as usual so far, and our war effort is lagging. We do not know what is going on. We do not know who is going to own the country by the end of the year. The government should lay down a national policy as the Canadian universities have done. Amateur sports, with one or two exceptions, have not made any money. The various boards of education contests for various sports should continue for the war period. I hope the minister next year will bring down a measure which will be more equitable, fair and just to all concerned and be a safeguard for sports for sport's sake.
I object to this legislation being made a political football, giving the governor in council power to discriminate between one part of Canada and another, and so make rules. The governor in council may exempt one sport in the west, say in Winnipeg, and another down east. This simply drags the whole thing into politics. There should be a clear-cut definition so that we could know those who would be exempt and those who would not, and identify each sport. Leaving it to the governor in council is another matter of politics. So far as my experience goes, to leave such matters to rules and regulations of the governor in council is to open the door to politics, undesirable influence and sectional treatment, and that should not be allowed in sport.
Motion (Mr. Usley) agreed to and bill read the third time and passed.



INCOME WAR TAX ACT

[Stage Direction]
Hon. J. L. ILSLEY (Minister of Finance) moved the second reading of Bill No. 87, to amend the Income War Tax Act.
He said: There are a few remarks I should like to make on the second reading of the bill. There are two sections, 16 and 17, which I propose to ask to have stand until to-morrow. They are the sections relating to the nonresident tax, the proposal being to raise that tax from five to fifteen per cent. I do that because this matter is the subject of some correspondence by telegram between the Prime Minister and the Premier of Ontario, which I believe is not completed. There is one point about this correspondence which I should like to make clear but which apparently is not clear to the public and probably to the house. At least, some of the newspapers seem to have entirely misapprehended it. The telegrams were placed on the table. They included, dated May 28, one from the Premier of Ontario to the Prime Minister. It has been
assumed by some persons that this government attempted to link two matters together, namely, the acceptance of the dominion-provincial offer and the non-resident tax, and I believe this government has been attacked for so doing.
Richard Burpee Hanson: By whom?


James Lorimer Ilsley: By certain sections of the , press. In order to make the matter clear, I wish to read to the house two paragraphs from a long telegram from the Premier of Ontario to the Prime Minister. It is the telegram to which I have referred, that of May 28. After objecting very strongly to the proposal to raise the non-resident tax on interest on provincial bonds from 5 to 15 per cent, Mr. Hepburn went on to say:
Now that you have made it abundantly clear to Ontario that you are determined not to remove the injustice against which Ontario and others have lodged emphatic protests, but that you propose to persevere in an action which is clearly designed to degrade the credit of the Canadian provinces, I deem it my duty to inform you that this your latest irritating act against the good relations which should exist between the dominion and provincial governments leaves the Ontario government no alternative but to advise you that it has decided to keep in its own hands the means whereby the services necessary to the well being of the citizens may be maintained at the highest state of efficiency. In no other way does the government of Ontario believe that its revenues and credit may be kept on the present levels, and you have given this province the very best reasons in the world for retaining full control and management of its own fiscal machinery.
In that paragraph the Premier of Ontario used the dominion proposal to increase the non-resident tax from 5 to 15 per cent as the reason why the government of Ontario felt that it could not accept the offer which the dominion government made to the provinces. That was a serious decision for the government of Ontario to make, and the ground upon which it made it, as stated in this telegram, seemed in many respects disproportionate to the seriousness of the decision; at least that was the view taken by this government.
Mr. Hepburn then went on to say:
You are hereby assured that this government, which has and is giving fullest cooperation in all matters pertaining to the prosecution of the war, will continue to cooperate with a view to bringing about what is most urgently required, namely, a full-out war effort to save Christian civilization.
Upon consideration of that position taken by the Ontario government, the reason given by the Ontario government for not accepting the dominion-provincial offer, which of course would have a most serious effect upon taxpayers, both corporate and individual, in this province, this government felt that it should
Income War Tax Act

avail itself of Mr. Hepburn's offer in the second paragraph to which I have referred, namely, to cooperate, and therefore the Prime Minister sent Mr. Hepburn this telegram, dated May 30.


Richard Burpee Hanson: Was it tabled?


James Lorimer Ilsley: No; this telegram has not yet been tabled. I wish to read it to the house:
Honourable Mitchell F. Hepburn,
Premier of Ontario,
Toronto, Ontario.
Referring to your telegram of May twenty-eighth my colleagues and I learn with keen regret of the attitude which you continue to take in regard to the increase of the tax on certain interest going to non-resident bondholders and that as a result of the imposition of this increased tax the government of Ontario has no alternative but to reject the offer made by the dominion to the provinces in the dominion budget of April twenty-ninth. I shall refrain from making any comments on your personal references or your observations with regard to other provincial governments and I shall not repeat the arguments advanced in my last telegram in regard to the proposed increase of the tax on non-residents. It is sufficient perhaps to say that after again reviewing the whole matter we are as strongly as ever of the opinion that this tax measure is a fair and reasonable one; that it involves only an increase in a tax which has been in effect since nineteen thirty-three without protest from the province of Ontario; that the proposed rate of tax is low as compared not only with taxes imposed on other income earned in Canada but also with similar taxes on income going to nonresidents imposed by countries of which our foreign bondholders are citizens; that it constitutes no threat to the credit of Ontario or of any other province, and that the tax is validly imposed and can be enforced. While we strongly hold this view nevertheless we are equally convinced that it would be most unfortunate were there to be any serious controversy between the dominion and the largest and wealthiest province of Canada at a time when the major consideration of all Canadians should be the most effective and most united prosecution of the war. Furthermore it is a matter of particular regret to us that under such conditions the government of Ontario should feel it necessary to regard the increase in this tax on foreign bondholders as a reason for refusing to accept the offer made to the provinces in the dominion budget. Were the matter to be left in this position, the citizens of Ontario would be prevented by prospective double taxation of their incomes from making as large subscriptions to the victory loan, to be offered on Monday next, as otherwise they would be able and willing to make. In view of these considerations and in order as quickly as possible to clarify the situation we would be willing to restore to its previous level the tax on provincial obligations held by foreign bondholders provided the government of Ontario on its part would be prepared to give the dominion prompt assurance of its willingness to accept the offer made to the provinces in the dominion budget.
W. L. Mackenzie King.


Richard Burpee Hanson: Was there an answer to that?


James Lorimer Ilsley: There has been no answer to that telegram.
Mr. HANSON (York-Sunbury); There was something in the press about the eat being out of the bag.


James Lorimer Ilsley: Yes; the Premier of Ontario, ' on receipt of that telegram, is reported to have made some observation about the cat being out of the bag or something of that sort, and saying that he would lay the whole question before his government. If he has done so, no word of his decision has been received, and it is for that reason that if we reach those two sections, 16 and 17, to-night, I am going to ask the house to let them stand.
The main purpose I had in speaking as I am doing on the second reading of this bill was to make it perfectly clear that the two subjects were not linked together, not connected by us in the first instance with what the Premier of Ontario gave as his reason for not being able to accept the offer which the dominion made to all the provinces, namely, the raising of this non-resident tax from 5 to 15 per cent. While, as the Prime Minister said in the telegram, the government is of the opinion that the increase was quite justified, it did not feel that it should allow that matter, not as important in magnitude as the other, to stand in the way of the acceptance of that offer, so we telegraphed the Premier of Ontario, stating that if the withdrawal of that provision, putting the tax back to 5 per cent, would enable them to accept that offer, we would take that stand. It was not an attempt by us to use this as a way of forcing or hammering the province of Ontario into doing something we wanted them to do, but it was an endeavour on our part in that conciliatory way of accepting the offer of cooperation which is contained in the telegram of the Premier of Ontario, to meet him on his own ground and do what he said in order to remove the ground advanced by him for the province of Ontario not accepting this offer.


Richard Burpee Hanson: I do not rise for the purpose of discussing the matter immediately under review by the Minister of Finance (Mr. Ilsley). To do so would not in my view serve a useful purpose at this time when the nation is appealing for the largest sum of money in its history'. I have read the correspondence with a great deal of interest, all except the last telegram which the minister has now placed

Income War Tax Act
upon the record and which was not available in the return that was brought down in the house a few days ago. I am of opinion that- and I say this after a great deal of consideration and after having tried to think the matter through in all its implications-if I were to-night, at this opportunity presented by the the Minister of Finance to take either side- to make an attack upon the Premier of Ontario for the attitude which he has taken, or, conversely, to make an attack upon the government of Canada for the attitude which it has taken-I should, I think, be justly accused of playing politics as between these two branches of the Liberal party, and of doing a distinct disservice to my country at a time when, of all times in the immediate period of our history, we should have the best exhibition of national unity that it is possible for us to have.
I have a view on this question with respect to the 15 per cent tax, but it is irrespective of the views attributed to the Minister of Finance or the Premier of Ontario. In my view it would be better if the government did not proceed with this provision. I do not, however, advance that view because of anything that has been said in this correspondence. I think I can safely leave this question, occupying the position which I do at this moment at ail events, on the ground that I have mentioned, namely, that to stir up a controversy or to provide an issue of, shall I say, provincial rights, at a time when our war situation is growing more critical from day to day and when the need of success for this great national loan is so great, or to throw in a spark of dissension that might kindle a flame, which, as between Ontario and the dominion, would sever this country, and would split public opinion wide open, would, in my opinion, be absolutely wrong, and I do not intend to do so.
I would rather suggest to the minister and to the Prime Minister (Mr. Mackenzie King) that the view expressed by the leader of the opposition in the Ontario legislature was a most constructive one. It was suggested that the Prime Minister of Canada should ask the premiers of the provinces to come together to see if, by round-table conference, an accommodation could not be arranged among the provinces with respect to, first, the whole question of the vacation of the field of income and corporation tax, and, second, the question of the taxation of provincial bond issues. That was a constructive suggestion, and I commend it to the Minister of Finance and to the Prime Minister, believing that it is not yet too late for them to take action. Perhaps I should treat this whole matter as a family row between members of the Liberal party, 14873-214
and drop it at that. It is not fitting to have this squabble going on at the present time, and I suggest that the only way to end it is by a conference round a table. That position I commend to all interested parties.
Having said that, I intend to proceed to another phase of the matter immediately tinder discussion. When the bill was in the committee stage, I adverted to a matter which I considered of considerable importance. It will be recalled that in his budget speech, on April 29, the minister, as reported at page 2345 of Hansard, made a statement and an announcement concerning proposals with respect to the vacation by the provinces of the income and corporation tax fields. At the risk of wearying hon. members for a few moments-and only for a few moments-I intend to cover that ground, and ask the minister for a declaration as to the position of the government with respect to only two aspects of the matter. I quote from the minister's speech:
After the most careful consideration of all the questions involved we have reached the conclusion that the rates of personal and corporation incomes taxes should be raised by the dominion to the maximum levels which would be reasonable at this time, if the provinces were not in those fields. Our plans are drawn, therefore, on that basis, and in due course I shall outline proposals to increase the minimum rates of corporation income tax to 40 per cent; to increase the rates of personal income taxes very considerably and to increase the national defence tax.
But these increases if taken together with the existing provincial rates would result in too heavy a burden and it is proposed, therefore, as a temporary expedient for the duration of the war only, to ask the provinces to vacate these two tax fields.
I am writing to the provincial premiers informing them that the dominion will offer to pay each year for the duration of the war, to any province which, together with its municipalities, will temporarily vacate the personal income tax and corporation tax fields either.
(a)	The revenues which the province and its municipalities actually obtained from these sources during the fiscal year ending nearest to December 31, 1940, or
(b)	The cost of the net debt service actually paid by the province during the fiscal year ending nearest to December 31, 1940 (not including contributions to sinking funds), less the revenue obtained from succession duties during that period.
Such payments will be augmented by appropriate fiscal-need subsidies where it can be shown that these are necessary. At the same time, it is proposed to discontinue the present special grants which are voted annually by parliament.
I pause at this juncture to point out that in making that statement the Minister of Finance realized, as we all do, that if an accommodation is not reached between the provinces on the one hand and the dominion on the other, those citizens of the provinces

Income War Tax Act

which are in the income tax field, and those corporations which are paying corporation taxes, will be compelled to bear a considerably increased and very heavy taxation. That is not a desirable thing.
Let me point out that there are at least two provinces which have no income tax. The citizens of Ontario will be obliged to bear-an additional burden and an additional load over and above what the citizens of Nova Scotia will bear. For that reason I urge the minister to come to some arrangement with the Premier of Ontario, if it is humanly possible to do so, in order that this discrimination against the citizens of this great province may not occur.
The Minister of Finance then went on to say:
The plan which I have outlined for alleviating [DOT]the present difficulties is by no means perfect and is not intended to be more than a temporary war-time expedient. However, it has the merits of simplicity. It will permit the dominion government to levy the necessary taxes without injustice to residents of different sections of the country or to different income groups.
That is exactly the position to which I have just referred. The minister continued:
As far as the provinces are concerned, it will ensure them a fixed revenue for each year during which the war continues, based upon the level of such revenues during the past year. In other words, the dominion guarantees the provinces an annual payment equivalent in all probability to the maximum amount which they have ever received from the two tax fields under discussion. It is true that if incomes continue to rise the provinces might receive even larger revenues from these two sources in the future than they did in the year 1940, but this would depend in part upon the course and nature of the war, in part upon the level and nature of dominion taxation and upon many other questions which cannot be foreseen or assessed at this time.
Then, this further brief extract from the same speech:
The alternative offer of the dominion to pay the cost of a province's debt service is intended for those provinces which have not developed to the same extent, the personal income tax and corporation tax fields and for those provinces which represent that they must be given some measure of relief pending a final solution of their present difficulties.
In the remarks I made on the budget I referred to these two proposals. It was my view then and it is my view now that the proposals were generous to the provinces, whichever alternative they desired to accept. I still am of that view, and I am still hopeful that the provinces, one and all, will accept. I understand that the smaller provinces are exploring the position, and that they are making their calculations. I had hoped that arrangements would have been concluded before this.

With respect, however, to certain provinces there is apt to be difficulty. I shall not refer again to the correspondence with the Premier of Ontario except to say that apparently at one stage he closed the door. In the oase of another province, Alberta, the premier has intimated, if one is to believe press reports, that he has adopted an attitude of watchful waiting, that he intends to see what the other provinces will do. I reaffirm and reiterate the opinion which I hold, that with respect to the great province of Ontario, no stone should be left unturned to get an accommodation, even though this government has to retrace its steps with respect to the 15 per cent tax. I think I should leave that position right there. I am expressing the hope that an arrangeement will be made. I do hope that an accommodation can be reached by meeting and discussing round the conference table the position that each jurisdiction has assumed. It can be done if there is the will to do. Knowing the Prime Minister as I do, I appeal to him to take the initiative in starting these discussions; otherwise the taxpayers of Ontario will suffer; an issue will be created, and there will be disunity in this country.
An entirely different situation exists with respect to Alberta. As I appreciate the situation, Alberta is not one of those provinces which have developed the personal income and corporation tax to a great degree. I may be wrong in that assumption, but that is the hypothesis upon which my remarks will be based. It is probable that in normal circumstances that province, assuming that it comes into the scheme, would accept alternative B, although it is only fair to say that so far as is known that province has not committed itself to the principle of either proposal. As I stated a moment ago, if newspaper reports are to be considered as accurately representing the position, Alberta has adopted a policy of watchful waiting to see * what other provinces will do. Be that as it may, however, if it adopts alternative B, then I put this question to the government: What is to be the attitude of this government with regard to that province, having regard to the fact that for several years the government of Alberta has repudiated its solemn obligation to pay in full the interest upon its bonds, much to the loss of its credit and also potentially affecting the credit of other provinces? Is this government, in dealing with Alberta, to pay only to that province the actual amount of bond interest paid by that province and thus recognize its default and thereby in effect condone its action? Or will it insist upon an arrangement being made by that province whereby the Alberta govern-

Income War Tax Act
ment will respect its responsibilities? If I can get the attention of the minister I should like to pursue this a little further.
Let us examine it in a little more detail. The offer under alternative B is such that there can be hardly any question but that Alberta will take alternative A. But if the application of B to Alberta were on the same basis as to the other provinces, namely, full payment of bond interest, there would be a much greater likelihood of Alberta taking B.


James Lorimer Ilsley: Very little then.


Richard Burpee Hanson: Possibly it is a matter of balance and calculation.


James Lorimer Ilsley: If we paid the province on condition that they paid the bondholders, they would be worse off financially than if they accepted proposal A.


Richard Burpee Hanson: That is a matter of calculation. What I want this ministry to do is to declare whether they are going to condone the action of the Alberta government in withholding bond interest by paying it in full on the basis of their debt and not having the province of Alberta pay it over to the bondholders. That is what I want to know. What is going to happen? Surely, if Alberta chooses A because of the fact that B may be construed as being only an offer of reduced interest payments, the dominion by its action is in effect pushing the Premier of Alberta into alternative A and in that way is condoning Alberta's action.
Another approach to this problem may be stated thus:	The government of Canada is
imposing certain taxes upon the citizens of Alberta. I wish to speak to the people of Alberta to-night. In the case of the other provinces, the federal government is offering, as alternative B, to pay the whole of the province's interest bill, less any amount collected for succession duties and, I believe, deductions for sinking fund. In the case of Alberta it is thus offering to pay only half this interest bill, unless provision is made for the payment of the full bill. It is quite true, I think, that even if the whole interest were offered to Alberta under alternative B, the Alberta government might still choose alternative A. But if it did so, it would then be reasonably clear that it had not been sincere in saying that it was not paying interest in full because it could not do so, inasmuch as the means of doing so would be available to it. I think the house and the country should have an explicit statement from the Minister of Finance as to the policy of the government and as to what it proposes to do. I press the minister to give us this statement, either now or at a later stage in the proceedings.
I come now to another aspect of this matter which has to do with the municipalities in the provinces which may adopt this grant in lieu of income and corporation taxes. In those provinces in which there is, and has been for many years, a municipal income tax, the whole question is presently being explored. In New Brunswick the provincial government has called a meeting, to be held on Tuesday, June 3, with the representatives of all municipalities. From the minister's statement it is not quite clear that the municipalities, either by vacating voluntarily or by being obliged to vacate the income tax field as a result of legislation to be passed by the provincial government giving effect to the proposal, are to be protected from loss of revenue. This is most important to those municipalities which have depended heretofore to a considerable degree upon this source of revenue, and most particularly to the cities and larger towns in New Brunswick. While I am instructed that other smaller municipalities have had this power of assessing and levying income tax, it is true that until very recently most of them had not fully carried out the law, and only in recent years have they been looking to this field as a source of revenue.
I am instructed that a summary of the dominion tax proposals has been submitted to New Brunswick and other provinces in a similar position. This is a summary of the dominion's proposals to the provinces, such as I have indicated.
(1)	The provinces will collect the personal and corporation income taxes on incomes of the year 1940 and any arrears of taxes applicable to prior years.
(2)	The provinces will cancel their personal and corporation income taxes on incomes of the year 1941.
(3)	In the case of corporations whose fiscal year-ends do not coincide with the calendar year, the provinces will collect a tax on the proportionate amount of the income of the corporation which is applicable to the calendar year 1940. For example, if a corporation ended its year on January 31, 1941, the provinces would collect the provincial corporation income tax on eleven-twelfths of the corporation's profits for the year ending January 31, 1941. This agreement will synchronize with the increase of 10 per cent in the minimum rate of tax under the dominion Excess Profits Tax Act which will apply from January 1, 1941.
(4)	The provinces will refund to taxpayers the amount of any taxes which may have been collected already on 1941 incomes.
(5)	The provinces will collect any flat rate or specific taxes on corporations which became
338S
Income War Tax Act

a liability of the taxpayer as at or prior to December 31, 1940, irrespective of the date when payment is due. If they are not a liability of the taxpayer as at or prior to December 31, 1940, they will be cancelled by the provinces and not collected; if collected already, they will be refunded.
(6)	The general principles outlined under items 1, 2, 3, 4 and 5 will apply upon the termination of the agreements with the provinces and the reintroduction of the provincial income and corporation taxes.
(7)	The annual payments by the dominion to the provinces will be paid on a quarterly basis. There will be deducted from the amount of the annual payments that would otherwise be made to the provinces, the total collections by the provinces upon incomes of 1940 and prior years and collection of flat rate taxes applicable to 1940 and prior years. The total amount of all such deductions will be paid to the provinces on the termination of the agreement.
I know the minister's answer will be that he deals only with the provinces, but he certainly can make it a condition precedent to any agreement being reached that the benefits accruing to the provinces in lieu of the sums that the municipalities will be asked or may be compelled to give up shall definitely be passed on to the municipalities. He will say to me, I am sure, that he has no other thought in his mind. I say to him that that is not good enough, that we must have a definite statement that the municipalities will be absolutely protected under any agreement made with the provinces.
The municipalities are the creation of the provinces. Their jurisdiction to impose income tax is derived from the province. The province has the power and authority by legislation to take this jurisdiction away; and if it does so without making arrangements for proper compensation, the municipalities, in order to carry on their services and, with regard to the larger cities and towns, many of their social services, will be obliged to have recourse to an increased impost on real estate. I protest as vigorously as I know how against any such suggestion. Real estate to-day, and for many years, has been bearing an undue proportion of municipal taxation.
I invite the minister here and now to state definitely what his proposals are in respect of the municipalities and especially what he proposes to do to protect the municipalities to which I have referred.


Major James William Coldwell: Mr. Speaker, I am not going to intervene in any quarrel between the federal government and the Premier of Ontario, but I wish to express some regret that such a situation has arisen and that it was not possible when the dominion-provincial conference met in January to continue its proceedings and arrive at certain conclusions. I believe that the Rowell-Sirois inquiry, as it was called, has given us probably more information regarding our dominion-provincial relationships than we could possibly have gleaned by the reading of many volumes. Out of that report there could have arisen a discussion, if the participants in the conference had wished, of any and every phase of our economic and social life. I thought it was regrettable that the conference did not proceed. I am not going to attempt to place the blame, but I say that had the Prime Minister (Mr. Mackenzie King) taken a more definite stand, the conference might have proceeded in spite of the fact that some of the provincial premiers were antagonistic to it.
I am also of opinion that it wras unfortunate that public opinion had not been prepared for that conference by fuller information being given as to what was in the Rowell-Sirois report. Had public opinion been better informed as to the purpose and need of the inquiry, I believe that the division which arose subsequently would not have been so acute.
One of the matters which is under discussion under this bill and which was dealt with by the leader of the opposition (Mr. Hanson) is, I think, a natural outcome of our federal system of government. That federal system was established in 1867 when problems such as marketing, unemployment relief and all the rest were virtually unknown as national problems. At that time they were problems largely for the individual communities themselves, and the communities pretty well took care of them. But the world has moved since 1867, and the experience that we are having in the Dominion of Canada is the experience of all federal states and federal governments in the last several decades. The United States has experienced much the same conflict between the powers of the various states and the federal government. Even Australia, the newest of the federal states, has been subjected to a good many strains in the past few years, and we are now experiencing something of that sort. It is regrettable that this difference between the province of Ontario and the dominion government has arisen on the clause contained in the bill before us. I can see no reason why the government of

Income War Tax Act
Canada should not tax non-resident holders of Canadian securities. After all, this war is being fought to save Canada from domination by those who would destroy every interest which these people have in the country in which we live. Consequently, it seems to me, if we are taxing our own people owning our own securities, we should tax also the securities held by others who are not resident in this dominion but who are benefiting from the defence of our institutions by the people of Canada at the present time. Therefore I am hoping that this difficulty which has arisen will be straightened out and that the tax will remain.
I should like to add my view to that of those who are suggesting that a conference should be held, not necessarily on the basis of the Sirois report, but founded upon the comprehensive inquiry and a wide consideration of problems which are arising now and will inevitably rise when the war ends. I fear for the post-war period unless some government- and it must be the federal government-has power to deal with the domestic issues which will emerge from the present war. Therefore I would add my support to those who suggest that a conference be called on the widest possible basis; and might I suggest that when such a. conference is called, participation should not be limited to persons representing various governments, but should include some representatives of the opposition groups in our legislatures, in order that any agreements arrived at will have some continuity and consistency of purpose, because, as I remarked a few moments ago, we as a dominion must have power to deal with dominion-wide problems-a power which in many respects does not lie at the moment with the dominion. I hope that some way will be found of ironing out the present difficulties between the province of Ontario and the federal government.
This bill contains a number of clauses. I am glad that the income tax schedules are on a graduated scale and that they rise in their imposition as they go upward in the scale. That is a good principle. We may have to take more later on from incomes in the higher brackets. I wish that more were being taken now, because, as I have often said, what counts is not the amount which the taxpayer pays, but the amount which he has left.
I do not wish to delay the house, because I believe these proposals received a pretty thorough discussion when they were before us in resolution form. I wish to protest again, however, although I suppose there is not much use in asking the minister to make a change at this stage, against the low exemptions in the national defence tax. The bill states that
the exemption for a single man shall be on an income of $660 a year; that upon an amount over that, 5 per cent will be taken, and that 5 per cent will be exacted from the income of a married man over S1,200 a year. Those exemptions are much too low. With the increase in the cost of living, and with all the calls which are being made upon everyone, including the low-paid workers, to contribute to various funds, the amount left is not sufficient to maintain anything approaching the standard of life which our own bureau of statistics has, on a number of occasions, laid down as a minimum. I should like to have seen the exemptions raised to $750 and $1,500 respectively; even then they would have been quite low.
With regard to the other parts of the bill, I have not very much to say, because the resolutions upon which the bill is based received consideration at various times when they were before the house, and at this late stage of the session it is useless to put up any long argument against portions of this measure. I hope that if the minister sticks to these exemptions, he will see his way clear, when the next budget is introduced, to raise them to some extent. I believe- he will be almost compelled to do so because, with the tremendous loans which we are raising and the enormous expenditures that are to be made this year, it seems inevitable that there will be some increase of prices, particularly if goods of various kinds become scarcer as a result of the necessities of the war situation. That is to say, the cost of living may rise, and the amount left over after paying these taxes will not be sufficient to maintain either single or married people.
With these few words I am going to leave the matter, because I do not think much is to be gained by bringing pressure to bear upon the minister after the resolutions have been adopted and the bill has been introduced in its present form.


Thomas Langton Church: Coming from a city which is paying very nearly one-third of the national income tax, I wish to occupy about five minutes, on behalf of trade and commerce, small wage-earners and those with fixed incomes, in a discussion of this particular bill.
The first part of this bill sets the rates of income tax on individuals, and I may say that the whole principle of the bill is involved on the second reading. Is the amount of money which this bill proposes to levy for the purposes of the war necessary? Is it not too much? Will it be well spent? Is it in the public interest, or of the war-Canada's only business that now counts-and will the effect of
Income War Tax Act

it be a restraint on those who are doing something for the country, the business community, trade and commerce? I say that the total amount of money which this bill is intended to raise is not needed for war purposes, and that half should be charged to capital instead of only one-third, and half raised from revenues.
The government proposes in the first schedule of the bill a tax on individuals. The original schedule has been repealed, and a new one subsituted, marking up everything from away down as low as S150, up to the top. It is the man with the fixed income, the white-collar worker and the industrial worker, who will have to pay a large part of these increases, as well as the more well to do who are also heavily taxed.
The exemptions are also reduced. Then there is the question of dependency. Many people would be on relief, and either this government or some other government would have to maintain them, were it not for the fact that some of their friends are taking care of them, and consequently are taxed for it ind their allowance therefor reduced to practically nothing in this bill. In my opinion, instead of collecting all this money, for the war and civil government, out of income and revenue, the government should make 50 per cent of it a charge on capital. In the last great war the United States'charged the cost of the war and of civil government to income and capital in the ratio of one-third to income and two-thirds to capital. There is a great amount of money in the banks and insurance companies; in fact, so much money that they cannot get more than a fraction of one per cent, or none at all, for it. I contend that Bill No. 87 takes altogether too much in one year out of income from the taxpayers of the country, when one considers other taxes, dominion, provincial and municipal, a burden which they cannot carry to-day.
No doubt the minister needs the money. He has to get it somehow, and the Canadian people will support him if they know that the money is for the war and is necessary. He has to get that money either from income or by borrowing, but in my opinion this bill is asking for too much from income, and the huge jump in schedules is far too great. It seems that we can afford the luxury of the party system, the league, and a duplicate railway system without any effort at coordination, and many other wasteful expenditures, and now the minister adds to the burden of the taxpayers this further imposition which he has brought down in Bill No. 87. For many years I have been urging reform in this direction. In fact, when the late Hon. J. A. Robb was Minister of Finance I urged, in a

motion discussed for a day, a reform in connection with income tax, to restore it to the municipalities. Prior to 1918 the income tax was the exclusive field of the municipalities, but in the great war it was taken away from them by the federal power. The higher federal power at that time promised that after the war this right would be restored to the municipalities, but the promise was never fulfilled.
From 1927 on, I have been urging reform in taxation. We are overgoverned and overtaxed, and reform in these respects, together with parliamentary, cabinet, constitution, law and taxation reform, should be made the subject matter of careful study on the part of the government. The income tax burden bears heavily on those with fixed income, both in private and in public office, and I do not know how long this will continue. I suggest that so far the minister has been using too many big-stick methods.
There is one feature that I commend, namely, with regard to rentals. The taxation on real estate is now on the net amount earned. The Victorian era built up assets for the future, and we are squandering them in various ways. In the early days of the Victorian era the people kept the state; now we are heading for an era where the state is keeping the majority of the people. The city of Toronto was the first to apply for the right to impose death duties, gasoline tax and other duties, and then it asked that income tax be restored to it. But the moment the municipalities discover a tax, the province appropriates it, and then the dominion comes along and takes away from the municipalities and the provinces this source of revenue and puts it into its own exchequer. This is what is being done in Bill No. 87. I am afraid this bill is a step in the wrong direction. It is placing too great a burden on those people who have very small holdings in property and wealth, and they will probably lose more than the country will gain.
In the early days when this was a young country every government encouraged saving and thrift among the people, with the result that the small wage-earner was able to buy a home or a small farm or a market garden. These savings became the small man's investment-small personal estate or real estate. It was all the capital that the small man had, savings that came from thrift, encouraged by all governments. But by successive inroads from taxation the right to hold and possess property has been taken away from the common, man-the farmer and the industrial worker. I am and always have been a supporter of income tax and death

Income War Tax Act
duties, but there is a wrong and a right principle involved, and I suggest that you can go too far in what you charge to income, instead of utilizing money that is lying idle in the banks and elsewhere- money which, as I said before, is not earning a fraction of one per cent. A large part of that money could be utilized for this fiscal year. Prior to the present year all governments in Canada have encouraged people in thrift, to accumulate small amounts of wealth and property, and this has been a means of building up the country. It developed men of character, stability and business ability who by their small savings and thrift could take care of their children and the thrifty man's children could inherit his savings instead of getting nothing. But what can people do when so much of our debt is charged to income instead of being fifty-fifty-50 per cent to income and 50 per cent to capital?
I have already referred to schedule A. I suggest	that	the	rate	therein	on the	lowbrackets	to $9,000	is altogether	too high	forthe small man when one considers the other taxes he has to pay. The minister is carrying on an expensive publicity campaign at the present time	in connection	with	thevictory	loan.	He is	asking	everyone	toinvest.	But	how	can	people	invest whena bill like this, and other measures, impose such burdens upon them. Before the war, the small business man and the artisan had made commitments on mortgages, on their homes and on life insurance policies; but what with income tax and other levies that have been added, nearly everything the small man earned has been invested and committed, so that to-day he has not a copper left to invest in this victory loan, as he would like to do. All the high pressure	publicity	to get	him in	will	not
amount to a snap of the finger as an inducement to people to invest, because ' their money has been spent, and allotted, although these honest people are eager and anxious to help.
I have urged the minister to consider a national moratorium with regard to mortgages, insurance and so forth. I have paid, like many others, by way of insurance more than I	shall get	out of	the policy,	andI shall continue paying as long as I live, without any remedies in a straight life policy.	The government	might	very	well
look into this question. The minister wishes to make a success of the victory loan. Well, the loan is linked up with this bill. There ought to be some principle by which a small wage-earner with a policy, if he has
kept up his insurance for five or six years, might be allowed to postpone the payment of premiums until after the war at the rate of interest paid on the victory loan so that he may have some small share of that loan.
So far as exemptions are concerned, I cannot see any reason for reducing them. It costs more now for a man to live than before the war. Some of these exemptions should be retained in the 'lower class of income. Dependency is another matter. The last one is double taxation. Where is all this going to end? There was a debate on the question the other night.
Another tax is on page 6 of the bill, sections 16 to IS, the tax on non-residents. I was talking to a business man from Cleveland the other day. The American people have put a good deal of money into buildings on Bay street in Toronto and other cities in Canada and around lake Erie and lake Ontario, and into large and small buildings in our cities. This tax on non-residents of fifteen per cent will, I believe, be a restraint on investments coming into the country, and so have a very serious effect for the remainder of the war and after the war on building construction, public and private bonds, if these investments are to be dried up. They saved the day in many of the cities along the lake Erie shore and western Ontario to the head of the lakes by these cities being able to get real money from across the border.
Real estate rentals will be taxed on a gross income basis; the net income would be the wiser basis. I ask the government not to go too far. I believe they went too far in this for the first year. I believe half the schedule for those under $8,000 or $9,000 wmuld have been right. If the government had made any real effort to take advantage of the lease-lend bill for the large amount of money to be provided by Canada under this budget for the war to protect the shores of the United States and our own neutrality in case America is attacked, they could have got a substantial relief on our income tax and the other taxes in this budget. I am sorry that the minister has not decided on monthly instalments. After all, the small wage-earner just gets his monthly cheque, and it would be far better if there was a provision for payment of this tax by equal monthly payments over twelve months in the year.
These matters I have raised are worthy of consideration, as the war is Canada's only business that counts, and the people will pay if they know it is needed.
Income War Tax Act


Ralph Maybank: If one thing more than another makes me sick, it is to hear Toronto complaining about how much any budget is going to cost it. After having lived on the rest of the country as richly as Toronto has for so long, it ill becomes any person speaking for Toronto to complain about taxation. The city of Toronto has more grasping, greedy, unctuous people in it than any other city in the world. That statement does not need to be agreed to by any person, but it is my opinion-


John Ritchie MacNicol: The most generous city in Canada.


Ralph Maybank: That is a generous
remark which the generous hon. gentleman has made.
I had intended to speak for a few minutes with reference to the telegram read a short time ago by the Minister of Finance (Mr. Ilsley) from the Prime Minister (Mr. Mackenzie King) to the Premier of Ontario. I suppose sending that telegram was the right thing to do; anything at all tending to ease this situation was probably the right thing to do. Yet I doubt if it was really necessary to give the Premier of Ontario this cushion to fall upon. If the people of Ontario desire to have double taxation, it is entirely in their own hands. If they do not desire double taxation, they can make known their wishes to their premier and he can arrange that there shall not be double taxation. If, however, they desire it, we do not need to worry ourselves over it. You know, Mr. Speaker, I think the rest of Canada is getting somewhat sick of continually playing up to the Premier of Ontario and endeavouring to smooth and soothe him. I sometimes think our Prime Minister has turned the other cheek once, twice or three or four times too often to Ontario's premier, and it might now be a good idea if he would stop doing that and leave it to Ontario's premier to come to his senses by himself in quietness and without further urging. I have, however, no definite objection to the course that has been taken; I hope it works.
With relation to the 15 per cent tax on non-residents, I understand that the bondholder in the United States actually gets an exemption from his own government for any money he pays to the Canadian treasury. I happen to have a certain client out west who comes from Minneapolis, who pays a considerable sum of money in this way into the Canadian treasury. He is given full credit by the United States authorities for the money

that he pays into our treasury under this particular tax, 5 per cent as it was, 15 per cent as it appears to stand at the moment. In such circumstances there is not any person in the United States for whom the Premier of Ontario needs to fight. It is true that there will be certain persons in the United States, artificial persons, such as mutual companies, who may not pay any tax at all there, and therefore no exemption could be granted them by the United States for the taxes they pay here. These would seem to be the only taxpayers who would be in any way injured by this tax. As against that, however, we must remember that any Canadians who earn income in the same way in the United States do not pay 5 per cent, do not pay 15 per cent but pay 16i per cent. That is my information; If I am not correct I should like to be corrected.


James Lorimer Ilsley: That is right.


Ralph Maybank: There remain, then,
some bondholders outside Canada who claim the protection of the Premier of Ontario. There are those persons living in the Bahamas, Canadians who grew wealthy here and moved away in the hope of drawing money out of this country and not being taxed. They do not need our sympathy. There is nothing unjust to them about this tax. Those Canadians should be here standing shoulder to shoulder with their fellow-countrymen.
One other subject to which I should like to advert for a moment is this question of more and more and better and bigger conferences. I certainly would have no objection to more conferences if I could believe, as the leader of the opposition (Mr. Hanson) seems to do, that they could do any good. But here is the position we are in to-day; the echo of the footsteps of the three wrecking premiers, men who came here and wrecked the conference, has only just ceased ringing in these halls. There would not be any use at all in this government calling them back at this time. Every person is entitled to his own opinion; the leader of the opposition seems to think we might effect something by recalling these men. But with all respect, I do not believe it. I do not believe it would be any use at all at this time for this government to call another meeting. The same people, or some of them, this time would probably only put their heads in the door and laugh and walk away.


James Joseph McCann: Does the hon. member
suggest that the exchange of telegrams is a better method of reaching an agreement on this particular problem? Seeing that he is

Income War Tax Act
giving gratuitous advice to the province of Ontario, he might be good enough to answer that question.


Ralph Maybank: With regard to that I
can give a categorical answer. Yes; I think that is the better way to try to reach an agreement. To have everything on record before the public in that way is decidedly better at the present time than to call another conference. I am not so sure that to-day's method will be successful, because I doubt if anything will be successful, with that man. But in any event I doubt if a conference would do any good, certainly not at this time. Should others desire a conference, I understand the door is wide open for them to have it. If there be any indication from the premiers of the provinces that they would like to confer, certainly this government would not stand in the way; nor do I think it should. The point at the moment simply is whether, at this time, this government could do any good in calling another conference.
There is the suggestion by the leader of the Cooperative Commonwealth Federation, that if there were a conference-and he said he thought there should be one-that it should be attended by the various opposition leaders, as well-


Richard Burpee Hanson: No,
thanks.


Ralph Maybank: That is just the sort of difficulty I had in mind. The opposition leader who sits closest to me says, "No, thanks." We could not get very far with that kind of conference. We would probably get too many "no thank you's" from the invited ones. Moreover, if such a meeting were convened, we would have to consider whether the premiers of the provinces would be willing to come here and have representatives of the various oppositions speaking on equal terms with them in presenting the opinions of their respective provinces. I do not fancy that would net us anything.
It seems to me, with respect to the general subject of conferences, that the only thing we can do at the present time is to let the matter rest as it is, until some of those who wrecked the last conference show a change of heart. I should hope that before long that might come to pass, and I should think that so far as Ontario is concerned, the people of Ontario will see to it that such a change of heart does occur.


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Vien in the chair.
On section 1-Rates applicable to all individuals.
Richard Burpee Hanson: I must
express my regret and surprise that the Minister of Finance ignored the position I took and the request I made for a statement respecting the principle of the bill. I do not know whether he intended it as a discourtesy to me, but I certainly suggest I was entitled to a considered reply before the debate on second reading was closed. I am, however, charitable enough to think that perhaps the minister did not understand that that was expected of him, and I should hope that he would give a reply at a later stage.
While I am on my feet I would ask a question, as to why the two young ministers from Ontario have not had anything to say about this matter. These two gentlemen have been in the government now for about a year- and this is a matter of vital importance to Ontario, the province which they are supposed to represent. Are they tongue-tied or are they ham-strung?


John Ritchie MacNicol: Both.


Richard Burpee Hanson: That is the question I should like to put to the two new ministers from Ontario.


Mr. MULOCK:: Mr. Chairman, I had hoped the leader of the opposition would follow the good resolve he stated earlier in the debate this evening. He pointed out that he was desirous of showing a conciliatory manner, and that he did not wish to cause any trouble in what he described, I believe, as an embarrassing situation. Does he not think that at this time, when we have such vast difficulties in the world, when everything possible is being done successfully to launch the victory loan, and when every effort is being made to assist in saving democracy and freedom for the world, it is a poor time to engage in picayune party politics?


Richard Burpee Hanson: Both
tongue-tied and ham-strung.


James Lorimer Ilsley: When the leader of the
opposition put his questions to me he was speaking on second reading of the bill, and he invited me to answer certain questions "here and now", to use his own words.


Richard Burpee Hanson: Or at a later stage.


James Lorimer Ilsley: I had already spoken in
the debate on second reading, and the hon. member was followed by other hon. members. I took it that if I undertook to reply to his



Supply-Parks and Forests Branch
questions-and I shall do my best to reply to them, on one of these sections-it would be done in committee.


Richard Burpee Hanson: That will be satisfactory.
Section stands.


James Lorimer Ilsley: There is a desire to go
into supply, and therefore I shall move that the committee rise, report progress and ask leave to sit again.
Progress reported.

The house in committee of supply, Mr. Vien in the chair.



DEPARTMENT OP FINANCE

[Stage Direction]
J/6. Departmental administration, $356,425.
Mr. CRERAR:: It is our desire to call an item in each of three or four departments, so that we may proceed with those departments at another time.
Item stands.



DEPARTMENT OF NATIONAL DEFENCE

[Stage Direction]
182. Cadet services, $171,500.
Item stands.

[Stage Direction]
326. Departmental administration, $92,565.
John Ritchie MacNicol: I suggest that one of
the ministers ought to explain why the auditor general's report has been cut down in size. I have been trying to make comparisons between this year's report and the reports of previous years, and I find it impossible to make those comparisons because so much of what was found in earlier reports cannot be found in the present one.


The CHAIRMAN:: "Tie question might
properly be asked on item 33.


Thomas Alexander Crerar: It is not our intention to discuss these items to-night; we are calling them merely in order to go into the departments on Thursday and Friday. A full opportunity will be given later for a discussion of the point raised by my hon. friend.
Item stands.
AUDITOR general's OFFICE
S3. Salaries and expenses of office, $455,790.
Item stands.



MINES AND RESOURCES

[Stage Direction]
136.	Lands, parks and forests branch. Government of the Yukon territory-administration, $41,750.
Thomas Alexander Crerar: This item covers the administration costs of the Yukon. There is a slight reduction of a little over $2,000 from last year.


[Stage Direction]
Item agreed to.
137.	Lands, parks and forests branch. Grant to Yukon council, $50,000.
Thomas Alexander Crerar: There is an amendment to this item to reduce it by $2,500.


William Pate Mulock: I move accordingly.


Major James William Coldwell: In Saskatchewan are a number of aged people who lived for a number of years in the Yukon and then moved to the province. Although they have never resided outside Canada, they are not eligible for an old age pension because apparently residence in the Yukon is not considered as being residence in any province. Under the agreements made between the dominion and the provinces, no province will take the responsibility for the payment of the dominion's share of 25 per cent of the pension in addition to their 75 per cent. In my opinion this ought to be ironed out. The hon. member for the Yukon (Mr. Black) will be better informed about this, but it may be that those who live in the Yukon have other ways of providing for old age.
I have in mind one case of a man whose wife resided in Saskatchewan for a number of years, but he did not establish domicile in the province to come within the meaning of the act. For a time he did get an old age pension, but he was cut off and has had to repay the overpayment made. Because of his residence in the Yukon it was considered to have been an improper payment. The Minister of Mines and Resources is in charge of Yukon affairs, and I suggest to him that some consideration should be given to this point. There are many cases of real hardship. This one old gentleman has suffered because he has been unable to get a sufficient pension, and even when he did get one for a while because the provincial authorities thought they were justified in paying it, he has since had to suffer a reduction to repay the overpayment. I ask the minister to consider these cases and endeavour to find some way to provide for these people, either through his department, or through the Old Age Pensions Act under the Department of Finance by fgreement with the territorial administrator.

Supply-Parks and Forests Branch


Mr. BLACK (Yukon):: The Old Age Pensions Act does not apply to the Yukon. No arrangement has been made between the federal government and the territorial government similar to the agreements entered into with the various provinces. At present the dominion government pays 75 per cent of the pension paid, while the provincial government pays 25 per cent. In my opinion, this whole matter should be a federal responsibility, and residence in Canada should be the ground upon which a pension is paid. I must say that men and women who are no longer able to take care of themselves are treated more generously in the Yukon than they are in the other provinces. A pension of $20 a month would be of no use to anyone living in the Yukon because of the much higher costs of living. I agree, however, with the hon. member who has just spoken, that many hardships have been caused where people have left the Yukon after living there some years. A man may live in the Yukon for ten years and then move to Saskatchewan, Alberta or British Columbia. If he gets a pension, it is based upon the length of his residence in the province. As I say, this should be a federal responsibility, and residence in any part of Canada should be the governing factor.
The Postmaster General (Mr. Mulock) has moved to reduce this vote of $50,000 by $2,5u0. I happen to know why the Minister of Mines and Resources wants to have this vote reduced. I am aware that later on a similar amount will be provided in the supplementary estimates to be devoted to a certain purpose. I commend the minister for taking action in a deserving case. Compensation of at least some $2,500 is to be paid to a father for the loss of his son while a passenger on a government owned and operated ferryboat in the Yukon territory. The law is such that this man was precluded from going even to the exchequer court in order to establish his rights. The matter was considered by the Minister of Mines and Resources and the Department of Justice, and this grant of $2,500 is to be made and will, I know, be gratefully received.
I suggest to the minister that it might be well for him or some member of his staff to intimate to the comptroller of the Yukon and the council the inadvisability and impropriety of voting money on the strength of the federal estimates before these estimates become, in fact, votes or grants of money. The passing of any item in the estimates is a speculation. The fact that it is in the estimates does not mean that inevitably there is going to be a grant and I think these expectant recipients of public money should 14873-215}
not presume to appropriate it or begin to expend it before it is granted by vote of this parliament on the advice of the respective ministers.
I have not taken up very much of the time of the house at this session, but since this is a vote to the government of the Yukon territory, perhaps it would not be out of place if I had a word to say about the Yukon. Probably there are not very many members of this house who know much about that far-distant territory. I shall not weary them with statistics but touch on just a few of the highlights.
To begin with, the Yukon has an area of 207,076 square miles and a population of little over 5,000 people. That means there are forty square miles to every one of the population. Consequently we are not overcrowded.
The Yukon was created a separate territory, carved out of the Northwest Territories in 1898, by the Yukon Act, which is the constitution of that territory. We were given a local government, consisting now of a comptroller appointed by the dominion government, and a territorial council or legislature consisting of three members, one from each of the three electoral districts in the territory. That council with the comptroller has practically the powers of a provincial legislature. Under the Yukon Act they can legislate concerning many matters including property and civil rights, and the members of this house well know how far that goes. When a legislature has the power to legislate on property and civil rights, there is practically nothing on earth that it cannot do.
We were given representation in Canada by a special act called the Yukon Representation Act. Never, even at that time when the population of Yukon was much greater than it is now, did we have a sufficient population to entitle us to representation in parliament. But because of the importance of the territory as a market for Canadian goods and its great gold production, all governments have continued the policy of keeping the Yukon represented in this parliament. Local laws are passed by that local council to govern local matters. Our mining laws, on the contrary, are all acts of this parliament of Canada.
Originally the mining laws of the Yukon were orders in council subject to change overnight, and they were changed in many instances without notice to the mine owners and others interested in the mines, with the result that we had a state of chaos there and a multiplicity of lawsuits. Once we got representation in parliament, it was not long before that condition of affairs was changed, and

Supply-Parks and Forests Branch
stable and permanent mining laws which can only be altered by an act of this parliament were enacted and are in force.
As a member of that local council I had the honour of assisting in drafting what is known as the Yukon Placer Gold Mining Act, and then of coming to parliament as the Yukon's representative. I had the duty of drafting, with the approval, support and assistance of the Hon. Charles Stewart, then Minister of the Interior, the bill which was enacted by this parliament and became the law of the Yukon, known as the Yukon Quartz Mining Act. To arrive at the terms of those acts as to both placer gold mining and lode mineral mining, meetings of the miners, both employers and employees, were held all over that territory, of men who came from all parts of the world where mining is done. Their views were heard and their suggestions taken and boiled down, and out of those conferences these acts of parliament became the law of the land.
The principal mining business of the Yukon is the mining of gold, as well as the mining of silver and lead. Last year the Yukon produced 108,077 ounces of a monetary value of $3,782,726, an increase over the year before of 17,568 ounces, of a value of about $615,000. The total amount credited in the public accounts of Canada to the Yukon as having been collected as royalties on gold mines up to March 31, 1940, amounted to $5,197,123.
Originally a royalty of 10 per cent on the gross output of gold was charged. That was afterwards reduced to 5 per cent, and the rate is now 2J per cent on the gross output. The royalty is now paid by the transfer of the gold into cash at the various banks, and the banks see to it that the royalty is paid. Formerly gold was collected by royalty collectors who went from mining claim to mining claim and collected the gold in specie, gold dust, gold nuggets and gold.
Knowing the conditions that existed up in that country at that time and the strange things that happened under the midnight sun, I feel that there was a great deal collected that never found its way into the books of the receiver general of Canada, and that if all the royalties on gold collected had gone into the public accounts and into the public treasury, the Yukon would be credited with an amount far greater than $5,197,123.
Extensive deposits of galena ore are known to exist in the Yukon, galena being a combination of silver and lead, and many millions of dollars have been produced in mining that area. The chief operator in silver lead mines is the Treadwell Yukon corporation

which has mined with great success and profit and paid the federal government substantial returns in taxation based on profits.
The system of taxation on lode mines is a graded system of taxation on profits. On placer gold the tax is on the gross output, regardless of profit or loss. That company buys hundreds of thousands of dollars worth of Canadian goods and pays substantial sums into the federal treasury in excise and customs duties. But the Yukon does not get credit for that, because the great bulk of its purchases are made at the city of Vancouver and that port of customs gets credit for them. These things are overlooked when people remark as to whether the Yukon is a bill of expense or profit to the dominion. Those of us in the Yukon who can be classed as old-timers appreciate the improved conditions in that territory, not only in the system and methods of government but in the conditions of life generally. We have seen transportation in that country progress from the dog team and canoe to steamboats and railways, and now we have a splendid aeroplane service carried on by the British-Yukon Navigation company, a British company with a fleet of passenger boats, a railway, and a fleet of up-to-date aeroplanes.
The Yukon also produces a considerable amount of fur, upon which, too, the government levies a tax.
Lode mining in Yukon began on an extensive scale as late as 1939, when the first gold brick was poured. In 1940, 1,147 ounces of gold were produced by that method. The remoteness of the country and the expense of equipment have made capital slow in investing in that far-distant land, but I have no doubt that eventually lode mining will be one of the great industries of the Yukon. In passing, I should like to pay a tribute to one gentleman of the geological survey parties which the minister sends up to the Yukon each year, namely, Doctor Bostock, who is most attentive and considerate in his attitude towards the miners in that country. He spares no time or effort in visiting and examining mining properties, giving the prospectors valuable advice as to formations and methods. Speaking for Yukoners, I may say that they are always pleased to see him come.
By those not familiar with the facts, the Yukon has been looked upon as nothing but a bill of expense to Canada, without adequate revenues and returns. In the early days that may have been true; but even then, if credit had been given for its value as a market for Canadian goods, and the government's returns in gold royalties, customs and other sources of revenue had been taken into

Supply-Parks and Forests Branch
account, I am of opinion that it would not have been in the red on that account. To-day the Yukon undoubtedly pays its way so far as the cost of administration is concerned.
The public accounts show that the federal revenues in the Yukon during the past fiscal year amounted to 8349,252. In addition to that, the revenues of the territorial government were 8153,485. The federal government expended $478,310, showing a surplus, taking into account the two governments, of $24,427. In addition to that, the federal government has large revenues from the Yukon business from which the Yukon gets no credit. As I said before, the Yukon buys the bulk of its goods in Vancouver. Let us for a moment take the approximate figures for four of the chief buyers of goods in the Yukon. First, the Yukon Consolidated Gold Corporation, an English company mining placer gold in an up-to-date way, paid last year, on goods purchased in Canada and imported to the Yukon, sales and excise taxes of $60,000 and cutoms duties of $30,000, plus income tax for which I have no figures; and last year they paid out $1,260,300 in wages in that territory. The sums of $60,000 and $30,000 which I have mentioned were paid to the collectors of taxes at Vancouver, British Columbia, and not into the Yukon. Take the Treadwell Yukon Corporation, a silver-lead mining company They paid in the same year in the same sort of taxes, $80,000. One firm of merchants having trading posts throughout the territory paid in the same sort of taxes, $10,000. In the case of another commerical company I have the figures for only two of its depots, where it paid in taxes, $32,410. The total in respect of the four companies I have mentioned is $212,410, all from Yukon companies, and all paid into the treasury through the port of Vancouver, British Columbia. I am confident that on careful examination a much larger amount could be credited to the Yukon; probably it would run as high as $300,000.
Or consider the figures of collections made in the Yukon. For the past fiscal year the customs, excise and income taxes amounted to $214,160. For the last fiscal year the income tax was $90,530, and for the nine months of the present fiscal year, 1940-41, it is $181,171, an increase of over 100 per cent in the nine months of this year. Post office revenues have increased steadily in each of the past ten years. Yukoners import all their clothing, all their machinery, all their tools, most of their timber and practically all of their food. They produce little but gold, silver, lead and fur.
The cost of all federal services in the Yukon is played up in the public accounts. For instance, if you turn to the item which the
committee will be considering before long, namely, the expense of administration of the Department of Indian Affairs, you find that it cost Canada this year $5,465,187. Of that amount, the cost of maintaining Indians in the Yukon was less than $50,000. No particular mention is made of what it costs in the various provinces, but the Yukon is singled out as a horrible example of government expense.
Turn to an item in the estimates for the maintenance of a telegraph service. It is listed, northern British Columbia and Yukon, $129,508. Inquiry shows that $107,508 is spent in British Columbia and only $22,000 in the Yukon.
Or take the federal grants for mining roads. Last year they amounted to $1,208,920. Where did that money go? Quebec got $245,000; Ontario, $245,000; British Columbia, $240,000; Manitoba, $210,000; Saskatchewan, $130,000; the Yukon, less than $40,000.
Hon. members may have observed that I have made these rather voluminous notes on material which comes to me through the mail from the director of public information. In passing, may I remark, with all due respect, that the money which is expended on the department of public information is not well spent. Reams of so-called information come through the mail to every hon. member, although any items of interest may be found in the daily newspapers or heard over the radio. In my opinion it is a waste of money, salaries, time and material.
Another project which is of great interest to the Yukon is the Alaska highway. Various routes have been reported on to this government by an international committee. It is estimated by that committee that the cost of the Canadian section will be $25,000,000. That is for an unpaved, dirt road. Any hon. member who has had experience in government expenditures knows that when they say it will cost $25,000,000,. you will not be far wrong if you say that it will require double that amount, or $50,000,000. We have had experience of the great difference between the estimates of what a public work will cost and what it actually costs. Older members will recall the estimates submitted for the construction of that famous bridge across the St. Lawrence. It cost millions more than was estimated. Take the construction of what is now the Canadian National Railways. At the outset, that was not estimated to cost Canada much more than $15,000,000. Everyone knows that it cost hundreds of millions, and to-day we have unfortunately an unnecessary duplication of railway service over thousands of miles of the country. All the traffic, passenger,

Supply-Parks and Forests Branch
freight and express could be handled by one road. Take another instance of estimates being away under actual cost of construction. Take that monument to unnecessary and ill-advised expenditure, the Hudson Bay railway. That was not going to cost much. What has it cost?
With regard to the Alaska highway, we should not lose sight of the fact that the mileage of that road through Canada-British Columbia and the Yukon-will far exceed the mileage necessary to build the Alaska road. The road when built must of necessity go through the Yukon. As a Yukoner, representing the Yukon in this house, I might be said to be disloyal to the Yukon if I did not advocate the building of that road. But, as a Canadian, I say that the money of the taxpayers should not at this time be spent on that project, nor should money be spent at this time on the completion of the railway terminal at Montreal. Neither project will help in winning the war; and unless we win this war, what use will any of these projects be to any of us? If the United States want a highway to Alaska across British Columbia and Yukon, and are willing to bear the expense of building and maintaining it, I am all for it. Let them come. Encourage them to come and do it. In view of the friendly relations which now exist, and which have existed for so many years between that great republic and Canada, which friendly relations, I am free to admit, have recently been so palpably strengthened and further cemented by the diplomacy of the present Prime Minister of Canada (Mr. Mackenzie King), Canada should not hesitate to allow the United States at their own expense to construct and maintain that highway across western Canada to their territory of Alaska.
In normal times, with prosperity prevailing in Canada, I would not make that suggestion. I should prefer to have Canada build and maintain the Canadian section of that road. There is, however, no discounting the fact that we have not now the money with which to do it. It may be said that Canada is prosperous. Perhaps it is by comparison with some countries of the world, many of which, instead of enjoying prosperity, are enduring slavery, degradation, poverty, misery and want under the heel of their savage conquerers. If it is suggested that Canada is prosperous, we know it is to a large extent false prosperity, built on the exchange among our people of huge sums of money being taken away from them in many forms of taxation, and some paid back to them for lands, goods, high salaries, services and labour said to be needed in this war. That spending has created a
[Mr. G. Black.)
boom; but there will come an end to all that, and we should face the future and anticipate the return to normal life and business. Meantime, I say that, apart from war expenditures, only those expenditures that are absolutely needed should be made now. The construction at this time in Canada by Canada of the Alaska highway is not one of those necessary expenditures.
For a moment may I refer to the recruiting campaign. The Minister of National Defence very properly suggests that members of parliament should help. They should help, and I for one will help. But when one approaches a young healthy man of war age and suggests that lie should join the army, the navy or the air force, and one gets this reply: "I will, if John Doe or Richard Rowe or somebody else will, but why should I go and let them step into my job that pays me well, while I go and fight for them?"- that is a hard question to answer. The word "conscription." meaning compulsory military service, is taboo. Why? Every member of this house knows why. It is for political reasons and nothing else. Leaders of both great Canadian political parties in the last election pledged those parties against conscription; but notwithstanding the fact that the leader of the party I have supported took that attitude, I did not hesitate during that campaign to say publicly, as I say now, that in my opinion the only fair and just way to raise an army is by compulsion. Capital owes a debt to the state. It is compelled by law to contribute the sinews of war; it is compelled by taxation. It would be as reasonable to say that only those who volunteer to do so should pay income tax. The payment of income tax, the payment of any tax, is the performance of a duty to the state, the payment of a debt to the state. All fit young men in Canada owe to the state a debt which can be paid only by their entry into the fighting forces. If they join voluntarily, so much the better; all honour to them for it. But if they fail in that duty, if they fail to pay that debt which they owe their country, they like the taxpayer should be made to pay. It is manifestly unfair to carry on recruiting in any other way.
I was glad to hear the Minister of Agriculture the other day declare among other things that conscientious objectors will be put into labour camps. I suggest to him that he ought to go further. I suggest that conscientious objectors so-called, Doukhobors, Mennonites, Hitterites and Dunkers, should be disfranchised federally, provincially and municipally; and when the time comes, their property acquired in this free Canada of ours

Supply-Parks and Forests Branch
should be taken from them at a fair price, and they should be sent back to the country whence they came. I do not think there is such a thing as a conscientious objector. That is a hypocritical objection. I suggest to the minister that in supplying these so-called conscientious objectors with picks, shovels and board and lodging, he equip them with foot-warmers. It is their cold feet that bother them, not their consciences.
To get back to the Yukon, we have there a splendid system of public schools, good hospitals, enough churches. The people have comfortable homes and fine families. On the whole, the people are industrious, prosperous, happy and contented. They realize that they are going through this life only once, and what they have here they cannot take with them, so that they make the best of it while they have it. I must pay a tribute to the women of the Yukon. Even in normal peace times the consideration they show those in need because of illness, old age or hard luck is remarkable. In this war, as in the last, they have been doing magnificent work in the Red Cross and the Imperial Order of Daughters of the Empire, and have made large quantities of useful clothing and sent them to Canadians overseas and to the suffering people of England. I am happy to say that, per capita, the Yukon purchases of war savings certificates were greater than those of any province in the dominion.
In passing, may I say a word about that splendid force, the Royal Canadian Mounted Police. Ever since the Yukon was the Yukon, that is the force in which the people have had unbounded confidence and to which they have looked up as being responsible for law and' order prevailing in that territory. They exercise their power in a commonsense way and with discretion.
Although I sit on the left of Mr. Speaker, I believe in giving credit where credit is due, and I congratulate the Minister of Mines and Resources and those of his staff who take part in the administration of the government of the Yukon. It is an economical businesslike government and a pattern for many if not all of the provincial governments. In fact, the dominion government might very well take a leaf out of the Yukon book as to methods of government. For the most part the Yukon government gets a dollar's worth for every dollar spent, and I doubt whether many members of this house can say that is so of governments in those parts of Canada from which they come. I support the minister's motion to vote this sum, and I only regret that it is not a much larger one.


[Stage Direction]
Amendment agreed to.
Thomas Alexander Crerar: I should like to make a brief remark on the point raised by the hon. member for Rosetown-Biggar when the item was called. Hon. members are aware that the federal government does not pay old age pensions. Old age pensions originate in the provinces and are paid by the provinces, and the federal government makes a contribution to the amount paid.


John Ritchie MacNicol: Of 75 per cent, is it not?


Thomas Alexander Crerar: Yes, 75 per cent. If, for instance, there were a province that did not initiate and pay old age pensions, no old age pensions would be paid in that province by the federal government. The Yukon territory is in a sense similar to a province. It has a territorial government which operates under an act of parliament, and it is really a matter for the Yukon territorial council, which is an elective body, to initiate old age pensions. It has the power to do so, I understand, should the council in its wisdom decide it to be advisable.


John Ritchie MacNicol: And if it did, the federal government would make the same contribution of 75 per cent?


Thomas Alexander Crerar: I have no doubt the federal government would make the same contribution.
I appreciate very much what the hon. member, who represents in this house,-very worthily, may I say,-'the Yukon territory, has said this evening. I value the compliment he has paid to the Yukon administration. It is due almost entirely to the character and efficiency of the officers of the department who have to do with the administration. We endeavour, so far as possible, to- have that administration efficient, economical and worthy of the territory. Usually we get brick-bats from the opposition instead of bouquets; to-night I have had a bouquet, and I thank my hon. friend for it.
Item as amended agreed to.
1S5. Lands, parks and forests branch. Eastern arctic expedition, $25,700.


John Ritchie MacNicol: Does this item include the cost of sending the Nascopie into the Arctic?


Thomas Alexander Crerar: Yes. My hon. friend has stated correctly what the item is. It is to care for disbursements in sending the Nascopie to the far northern and eastern arctic, which is done once every year.


John Ritchie MacNicol: Does the Nascopie carry geologists or mining engineers to survey or discover evidences of mineral along the trip?
Victory Loan


Thomas Alexander Crerar: Not many mining engineers or geologists make the trip on the Nascopie. I believe there have been a few occasions when that has been done. There are studies conducted by scientists in other fields, and they of course make their journey to the eastern arctic by this boat. In addition, the boat transports the mounted police who may be going to relieve detachments which have been on duty at the various outlying posts, takes in supplies, medical doctors and nurses who may be going to replace others coming out. It is the general service for all the government departments in the eastern arctic that comes under this vote.


[Stage Direction]
Item agreed to.
lSJ/. Lands, parks and forests branch. Government of the Northwest Territories-general administration, operation and maintenance of services, including Wood Buffalo park, $266,655.
John Ritchie MacNicol: On page 111 of the estimates where we find the statement of how the item is made up, the first item reads:
Superintendent, Mackenzie district, Northwest Territories and secretary, Yukon affairs.
Why is the secretary, Yukon affairs, not tabulated under the other item, 137, which pertains to the Yukon?


Thomas Alexander Crerar: I am advised that the
reference to Yukon affairs there is due to the fact that the secretary performs dual functions. We have head office administration for the Yukon territory as well. This official who is described as secretary for the Northwest Territories performs somewhat similar functions in respect of the Yukon administration.


[Stage Direction]
Item agreed to.
Progress reported.
It being three minutes after eleven o'clock, the house adjourned, without question put, pursuant to standing order.
Tuesday, June 3, 1941.